Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

money.cnn.com

Post reply on HN
Print view View original

161–170 of 181 posts

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

#161

Post by jdietrich »

djcapelis wrote: post #112
hugh3 wrote: post #50

Earlier quoted context omitted.

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.

One reality show I would really like to see would be about sending entitled people into low income neighborhoods so we can all watch them realize just how hard working some people are and just how well most people manage their money. Maybe then they'd stop saying misinformed stuff like "all that person really needs is someone to help them with a budget." A budget helps you cut excess spending. There's not a lot of sp…

I grew up in one of the poorest parts of the UK. After leaving school, I volunteered for an advice charity for eighteen months, spending two and a half days a week going over (predominantly poor) people's finances with a fine-toothed comb.

Out of the hundreds of people I worked with and kept extensive records on, I found four who were in serious financial difficulty through no fault of their own. Four. I saw people manage perfectly well on £9000 a year and people on £40,000 a year hiding their car from the bailiff.

Correlation between quality of life and income was remarkably weak - the ability of clients to stretch their income and conversely their ability to fritter it was often astonishing. Middle class clients took on unmanageable mortgages and racked up huge credit card bills. Working class clients took out payday loans every week, bought consumer electronics on expensive hire-purchase and spent their housing allowance at the pub. I did observe one strong correlation - the more serious someone's financial problems, the more likely they were to walk out through boredom or frustration, or become abusive when it became clear that I could not fix all their problems.

Of course, we have a welfare state. From my perspective, the political environment in the US seems to be dominated by people who actively hate the poor. It may well be the case that Britain is exceptionally supportive of the poor, or that American society is exceptionally hostile towards them.

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

#162

Post by pasbesoin »

billybob wrote: post #6

If you don't have enough money to handle an emergency, you have an emergency. Go ahead and panic. Trade your car for a cheaper one, move into a cheaper apartment, stop eating out, sell your TV, and get an emergency fund . If you're already living on toasted rats in a cardboard box, that's different, but if you've got unnecessary expenditures, you should really cut those out and get an emergency fund. To do otherwise…

And you're cheating yourself of sleep and peace of mind.

This. The "sacrifices" you make are not a loss, but a gain.

Edit: Assuming you are not yet "down to basics" -- which more and more people are, these days.

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

#163

Post by sunchild »

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…

Seems to be akin to religious debates. The brain (and more importantly, the mind) is one of those areas where modern science has too little traction to speak in absolutes.

Anecdotally, I had a breakthrough with mood control when I eradicated "jumping to conclusions" from my idle thought patterns. That made a HUGE difference in my outlook on life.

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

#164

Post by bryanlarsen »

illumin8 wrote: post #67
sosuke wrote: post #26

Earlier quoted context omitted.

A lottery-linked savings account sounds awesome since I already play low-odds lottery and put money into savings every month. Texas won't give up their lotteries or multi-state lotteries for anything though.

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.

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

#165

Post by patrickgzill »

anonymouser wrote: post #43

I have a question for HN hackers. I make over 6 figure a year. My wife doesn't work. She keeps telling me that we are not middle class, and that I should earn more if I want to afford us a middle class lifestyle, because everything is very expensive now. She also thinks that I'm a bit of an underachiever, professionally, for earning only 120K a year. Am I an underachiever or is she out of touch with Midwestern Americ…

Many ways to approach this. I suggest a few weeks of tracking each and every expense, then look over it with her. She is wrong, of course, but if you can show her some numbers and get her thinking about it on her own, then you have the possibility of winning her over.

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

#166

Post by hugh3 »

2arrs2ells wrote: post #154
meric wrote: post #145

Earlier quoted context omitted.

>>Acquiring it through a credit instrument didn't pass the test, since you just moved the obligation forward in time, and if you couldn't come up with it now then why do you think you can come up with even more later? What about stocks? I need three days for a sale of stocks to settle and take the money out. If I have an emergency I can use my credit card. (and pay it back at the end of the month).

Stock (plus a credit card while you wait for settlement) is certainly fine, but be careful... The times that you are more likely to need liquidity (loss of job, economic crisis) are also the times that the stock market is likely to be incredibly low. You might end up like many hedge funds who (as a result of some toxic assets) ended up having to sell good assets at firesale prices during the recent recession.

True, but on the other hand, with US-dollar interest rates being what they are at the moment, the alternative to keeping your money in shares (or a similar volatile liquid investment) is keeping it your savings account at 1% or less. I keep a few grand in cash, but everything else goes in the sharemarket.

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

#167

Post by hugh3 »

veyron wrote: post #106
PagingCraig wrote: post #94

Earlier quoted context omitted.

On top of an Emergency fund, I find taking money out for KNOWN expenses makes sense. Like putting aside money for car repair, basic home repairs, etc separate from emergency stuff.

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 thinking in these terms.

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

#168

Post by hugh3 »

sebkomianos wrote: post #153

According to wikipedia[1] the population of the USA is 308,745,538 (2010 census). Is, even the majority of those, 1,900 Americans a really low figure to be a solid source for any argument?

If you'd like to know the answer to this question I suggest reading a statistics textbook. I think you'll be pleasantly surprised to hear that we can not only answer your question but put nice precise error bars on all our answers.

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

#169

Post by kamaal »

djcapelis wrote: post #112
hugh3 wrote: post #50

Earlier quoted context omitted.

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.

One reality show I would really like to see would be about sending entitled people into low income neighborhoods so we can all watch them realize just how hard working some people are and just how well most people manage their money. Maybe then they'd stop saying misinformed stuff like "all that person really needs is someone to help them with a budget." A budget helps you cut excess spending. There's not a lot of sp…

Yes, that is always the case. Poor people often work hard and save money for many reasons. One obvious reason is they really have no way out. If you are given one and only one chance to do something, you are left with no choice but to do it well.

The other aspect I see is upbringing, when all you see around is poverty and and way out being working hard, you grow a natural tendency to think of hard work that way. You also learn to live frugal, and manage even with little resources. Later on life when you earn well, these habit help in saving and making proper investment decisions.

On the other hand people raised in spend thrift environments, try to match their living accordingly. For example even if they do no have money they try to buy things through debt and credit.

Saving and making investment decisions overtime make you rich, this is obvious and nothing surprising. But people rarely realize this.

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

#170

Post by fezzl »

jtbigwoo wrote: post #70
anonymouser wrote: post #43

I have a question for HN hackers. I make over 6 figure a year. My wife doesn't work. She keeps telling me that we are not middle class, and that I should earn more if I want to afford us a middle class lifestyle, because everything is very expensive now. She also thinks that I'm a bit of an underachiever, professionally, for earning only 120K a year. Am I an underachiever or is she out of touch with Midwestern Americ…

$120k a year is more income than about 90% of U.S. households. The median household income in the U.S. is about $45,000. Your wife needs to find different friends.

Either that, or he needs to find a different wife.
Post reply on HN