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Many don't have $2,000 for a rainy day

money.cnn.com

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Re: Many don't have $2,000 for a rainy day

#171

Post by kamaal »

ChuckMcM wrote: post #40
ebiester wrote: post #24

Earlier quoted context omitted.

You're looking at it from a middle class perspective. Unfortunately, most of these people are also deep in debt and have already made such cuts. This is the byproduct of double digit unemployment as much as anything. As much as we talk about consumption, most of it is at the middle class level. Now, I've seen poor people make very bad decisions, but many are on purchases you and I would make without a second thought.…

"... most of these people are also deep in debt ..." At least on the news we see this a lot. The folks who are "screwed" by the banks because they raised their credit card rate and are going broke. When they cover those stories you often get to see how much credit card debt these folks have and it is always > $10,000 and often > $20,000. To the comment above, at that point you had an emergency a long time ago. If you…

Well the first question that needs to asked here is why do those people borrow money after knowing very well they can't pay it back?

Its purely their mistake, and nobody else (society, government etc) can be blamed here.

Re: Many don't have $2,000 for a rainy day

#172

Post by kamaal »

jrockway wrote: post #69
Duff wrote: post #55

Earlier quoted context omitted.

Responsibility is not a class issue. The lady who cleans our office is poor by any definition. She works 14 hours a day, every day. She has two kids, no TV, and has cash saved up to buy Christmas presents and school uniforms. The guy in the next office makes $110k/year leases a BMW 5 series, owns a new condo, and goes out of the country on vacation 3 times a year. Who's irresponsible?

Neither? When you get paid a lot of money, it's easier to be less careful with your money and not have anything bad happen. It's easy to contribute the maximum to your 401k, have the best health insurance and flexible spending account, save $1000 a month, and still buy a lot of things. If you lose your job, you'll probably get another one. And banks are more than happy to loan you money to bridge the transition. All…

I think the guy earning high is to blame here. Nobody else is responsible for one's financial mess(Recession, Inflation, government etc) if one doesn't know how to manage their money well.

All measurements in the world are relative. One person lives frugual, saves and invests money. Another person doesn't.The spend thrift guy will have himself to blame. You can't have good earning conditions all your life, good and bad times come alternatively in every person's life.There will always be recessions, wars and inflation. There will always be health problems, there will always more competition.

The responsibility to secure your future when you have the chance is yours.Savings and good investment decisions make people incrementally richer. A person may not become a millionaire next year with this strategy, but over time savings and good investment decisions can make you really rich over time(When you need it the most).

Re: Many don't have $2,000 for a rainy day

#173

Post by Mz »

darklajid wrote: post #110
jsdalton wrote: post #64

What interested me was the cross-cultural comparison, which is only alluded to in the CNN article but explained a bit more in depth here: http://blogs.wsj.com/economics/2011/05/23/nearly-half-of-ame... > Meanwhile, Lusardi, Schneider and Tufano also looked at how different countries compare. They consulted with local partners to set the number used in local currency at a comparable level. “Perceived capacity to cope…

Disclaimer: Been in the UK rarely, never to the US. I don't claim to know a lot about these places. My impression is that it's just far less dangerous (and so a lot more compelling?) to go without an emergency budget here in Germany, so I wonder if this comparison misses to include the risks involved? Sure, if you have family and a good deal of property/a mortgage to pay, you've got a lot of incentives to stay in bus…

What would happen in the UK or US if you run out of cash completely?

Last I heard, homelessness is on the rise in the US and has been for some time.

Re: Many don't have $2,000 for a rainy day

#174

Post by Duff »

nopassrecover wrote: post #160
Duff wrote: post #62

Earlier quoted context omitted.

It depends on where you live. Where I am, a 4 bedroom house in the city (mediocre school district) is $180k. So $120k is a good chunk of change, and you can comfortably live on a single income. If her vision of a "middle class lifestyle" is buying lots of shiny things, you're screwed.

Wow, 180k for a 4BR house!? Houses in the poorer suburbs of my city (the poorest capital in Australia) are still $400-500k +. Rent for a 4BR is about 450+ a week.

I'm in upstate New York. Not a ton of opportunity in these parts, but if you're fortunate you can live well.

Re: Many don't have $2,000 for a rainy day

#175

Post by T-hawk »

bryanlarsen wrote: post #164
illumin8 wrote: post #67

Earlier quoted context omitted.

Lottery is just a tax for those that are bad at math. Why would you do both? Putting money into a low yield savings account will get you a statistically better return over your entire lifetime than buying a few powerball tickets every week.

Have you actually done the math? It's certainly not hard to find lotteries where the expected payout is above 100%. In the big rolling jackpot games, the average payout is about 50 cents on the dollar, but after weeks and weeks of paying 10 cents on the dollar with no big winner, the jackpot builds until it's higher than the expected number of dollars coming in.

It's certainly not hard to find lotteries where the expected payout is above 100%.

This is true, but there's more to it. It's not so easy to find a lottery where the expected post-tax payout is above 100%, since you'll need the pre-tax expected payout to be about 160%. You also have to figure in time value of money, since all large lottery prizes pay the advertised face value as an annuity up to 20-30 years into the future, so you're paying in 2011 dollars but receiving part of the prize in 2031 or 2041 dollars. Finally, you have to be the lone winner to come out ahead, and not be splitting the jackpot with another winner.

Multiply that all together and the situation does not happen. The largest Powerball jackpot ever was $365M, which barely overcomes just the loss to taxation on the 195M to 1 odds.

Re: Many don't have $2,000 for a rainy day

#176

Post by bryanlarsen »

T-hawk wrote: post #175
bryanlarsen wrote: post #164

Earlier quoted context omitted.

Have you actually done the math? It's certainly not hard to find lotteries where the expected payout is above 100%. In the big rolling jackpot games, the average payout is about 50 cents on the dollar, but after weeks and weeks of paying 10 cents on the dollar with no big winner, the jackpot builds until it's higher than the expected number of dollars coming in.

It's certainly not hard to find lotteries where the expected payout is above 100%. This is true, but there's more to it. It's not so easy to find a lottery where the expected post-tax payout is above 100%, since you'll need the pre-tax expected payout to be about 160%. You also have to figure in time value of money, since all large lottery prizes pay the advertised face value as an annuity up to 20-30 years into the…

In Canada, lottery winnings aren't taxable. Buying lottery tickets can't be claimed as a business expense, so paying tax on the winnings would be hypocritical. Of course, being hypocritical rarely stops governments.

Lottery winnings in Canada are always advertised in the "lump-sum payout" amount.

The threshold varies slightly depending on how many tickets are sold, but for Lotto 6/49 in Canada, any payout above about $32M is "in the money". This isn't common, but it does happen several times every year.

Re: Many don't have $2,000 for a rainy day

#177

Post by bconway »

hugh3 wrote: post #50
ebiester wrote: post #24

Earlier quoted context omitted.

You're looking at it from a middle class perspective. Unfortunately, most of these people are also deep in debt and have already made such cuts. This is the byproduct of double digit unemployment as much as anything. As much as we talk about consumption, most of it is at the middle class level. Now, I've seen poor people make very bad decisions, but many are on purchases you and I would make without a second thought.…

Unfortunately, most of these people are also deep in debt and have already made such cuts. Sometimes I wonder about this. How many poor folks are wasting their limited budget on frivolous crap? One reality show I really would like to see would be about a sensible financial advice type who parachutes into the lives of low-income, deeply-in-debt people and shows them how to budget properly.

There is such a show, it follows Suze Orman on CNBC on Saturday nights (I forget the name off the top of my head, something about being married to debt). It's not all low-income people, but it meets the rest of the criteria.

Re: Many don't have $2,000 for a rainy day

#178

Post by allwein »

nopassrecover wrote: post #159
sunchild wrote: post #149

Earlier quoted context omitted.

Hmm. Not interested in getting into a debate about whether depression is an illness or whatever, so I'll just say "OK".

I think depression, as distinct from unhappiness, is something you dismiss as unhappiness (i.e. circumstance driven) until you experience it and realise it is an illness. The clearest example I can imagine is, take someone who is down on their luck, unemployed, in debt, medical problems etc. and fly them to the best doctors in the world, then give them a great new job with a million dollar signing bonus - I think the…

The greatest thing my Grandma ever taught me was that it's okay to be sad when bad things happen. It used to be that I'd get sad for some reason, then I'd feel bad for feeling sad, and this would just set up a tight vicious cycle until I literally became depressed. Once I gave myself permission to feel sad and not feel bad about it, I was able to stop that from happening in the future.

Re: Many don't have $2,000 for a rainy day

#179

Post by PagingCraig »

hugh3 wrote: post #167
veyron wrote: post #106

Earlier quoted context omitted.

Should be the other way around. Money taken out for known expenses should be on par with money for bills.

I assume he meant known, yet undetermined, expenses, which is sensible. For instance, you know that your house and car are going to need repairs eventually, so it makes sense to have some money set aside for those rather than dipping into your "emergency fund" -- otherwise what happens if a real emergency occurs before you finish paying it off? Once you have enough money in your savings, though, I think you can stop…

Yeah, it's stuff you know you'll need money for that won't be an emergency. Just like saving for anything else (like a new laptop).

Re: Many don't have $2,000 for a rainy day

#180

Post by billybob »

hugh3 wrote: post #47
artmageddon wrote: post #10

Earlier quoted context omitted.

>I know the rule of thumbs is like 3 months net salary to keep for bad days I was under the impression that the rule was around 6 months.. then again, I'm talking about monthly expenses,as opposed to salary(which hopefully a person isn't spending 3 month's worth of salary in 3 months under normal circumstances). It probably goes up somewhat proportionally with age, if you factor in a home / dependents. I'm in the pro…

My rule of thumb is "as much as you reasonably can". Always be throwing money into your savings. First you're saving for emergencies. Then, you're saving a deposit for a house. And finally, you're saving for retirement. There's never a point at which you should say "Phew, I've got six months' living expenses now, I can stop saving!" The only point at which it's okay to stop saving is when you say "Phew, I've got more…

Also for a car. You're going to buy a car eventually, right? Do you want to borrow the money and pay interest while it's wearing out, or save the money and BE paid interest while your current car is wearing out? Notice that either strategy will tend to repeat itself, so the net difference over time is huge. One person said saving and getting paid interest amounts to "getting free cars."
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