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62% of Americans Have Under $1,000 in Savings, Survey Finds

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Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#351

Post by branchless »

ghaff wrote: post #349
kdamken wrote: post #315

Earlier quoted context omitted.

Yes, we all have bills that need to be paid. But many people (especially those who aren't making great money) continually and stupidly buy stuff they don't need, not even realizing they can't afford it. You make 35k a year? Then you really shouldn't be buying a brand new iPhone with a large data plan, or a new car with monthly payments that eat away at your already limited income. Or maybe instead of going out for lu…

I'm really not sure how this thread turned into a honeypot for "Kill the landlord" types. Especially given how things turned out the last time public policy decided to make it relatively easy to get mortgages even for people who were a bit shaky on being able to make regular payments and cover upkeep.

Again this is totally the wrong end of the stick. We have loose credit, that's what rentiers love. Credit is a claim on your labour and they can issue it with zero effort.

Sub-prime hurt the poor, since 2008 with QE we've seen the gap widen as more banker credit is created and flows into land prices.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#352

Post by branchless »

toomuchtodo wrote: post #312
lmm wrote: post #298

Earlier quoted context omitted.

The landlord is selling the service of "having a lot of money". It's usury by the back door.

Not even having a lot of money. Their service is having a credit score high enough to obtain low-rate mortgages, which they then arbitrage against "market rate rent". People complain we shouldn't subsidize people buying homes who can't afford them. Then why the f____ are we subsidizing landlords instead?

Yeah you get it. Worrying how bad HN is at economics.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#353

Post by lmm »

OrwellianChild wrote: post #310
lmm wrote: post #307

Earlier quoted context omitted.

$1.4k is way too much for somewhere that you're still driving to work from. I think a lot of people overestimate the value of a big house. You just end up filling it with junk. If you get a smaller house - say $1k/month - suddenly you can afford to live very comfortably, and save some as well. $52k is absolutely a lot of money; of course there's always more things to spend it on, and I won't pretend more money isn't…

I appreciate the critique - I'm not from the KC area, so I don't have local intuition. Seattle rents in the city are about $1.2k to $1.6k for a single-bedroom apartment, and a 2-bedroom (as would befit a couple or small family) are north of $2k, so I don't have local context. Can I ask what you mean by "really should be plenty"? I left out costs which, in my part of the country, would vastly exceed the remaining $1.2…

I'm not from KC either, so I may be off base there. I do live somewhere with a higher average salary than nationally though.

Certainly there are places (SF in particular) where you're in a pretty bad place if you're making the national median, but I think anyone making the local median in those places is doing all right. The median is by definition not going to be a good place for keeping up worth the joneses. But if you opt out of the competitive things and just spend on what you need, I really think $52k is a pretty good place to be, and if you're struggling at that level (and aren't tied to a job in an expensive city) you should seriously look at downsizing your house/car/whatever your biggest expense is, because I have to wonder where all that money's going.

Of course plenty of people really are struggling - half of the country is on less than $52k after all. Below about $40k I'd definitely say "it's not you, it's your income" or something on those lines.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#354

Post by lmm »

AjithAntony wrote: post #327
lmm wrote: post #302

Earlier quoted context omitted.

I've been overpaying on my mortgage by 150% all year; that's the money that I would otherwise have saved. Savings account would give me 3% tops; stocks would give me more but not risk-adjusted more. Paying my mortgage off early is 4.2%, risk-free. Am I being dumb? It's quite possible there's something I've missed.

Long term fixed rate? Why bother paying early. Interest rates must rise eventually. If even if they don't the future dollars are much cheaper anyway becuase inflation won't stop. In real terms, your interest rate goes down every year, to the point where is can reach 0 or negative. Locking the money in the house means opportunity costs to take advantage higher rates later.

Medium-term I guess. I've got 2 years left on the fix, then it floats.

Everyone says rates have to rise eventually. But so far we've gone 7 years of near-zero rates. If there were a dramatic shift I could take a payment holiday and put it all into savings, but I doubt I would. As for inflation, it affects any form of saving equally - nominal 4% interest is better than nominal 3% whatever that is in real terms.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#355

Post by tootie »

ryandrake wrote: post #69
tootie wrote: post #34

Earlier quoted context omitted.

My net worth is probably top 5% or so and I haven't even had an open savings account in 10 years. Cash on hand or it's invested in stocks, bonds and my home.

Curious, not criticizing: What is your plan if you get sick or laid off, or for some other reason need a large amount of cash immediately? I always thought it was common advice to keep ~6mo living expenses in cash savings for emergencies.

I can put $10K on my CC and not have to pay for 30 days which is plenty of time to cash out investments. I'd rather take the hit on selling low in an emergency then proactively give up gains by having cash sit idle for years.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#356

Post by tootie »

fluidcruft wrote: post #290
tootie wrote: post #34

Earlier quoted context omitted.

My net worth is probably top 5% or so and I haven't even had an open savings account in 10 years. Cash on hand or it's invested in stocks, bonds and my home.

ITT the top 20% pat themselves on the back and imagine their life-bubbles are somehow similar to that of the poor. "It's the data that's obviously flawed."

Surely, but then you have to subtract 20% from the number in the headline.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#357

Post by lmm »

kdamken wrote: post #315
lmm wrote: post #297

Earlier quoted context omitted.

> Most people do spend large amounts of their paycheck on things they don't need. Maybe. Or maybe they're spending their paycheck on things that they do need because they have to work for a living, they can't live by renting out their assets like MMM can. Example from the other branch: MMM can say "buy a bike instead of a new car" because he had the privilege of putting his "job" (rental properties) as close as he li…

Yes, we all have bills that need to be paid. But many people (especially those who aren't making great money) continually and stupidly buy stuff they don't need, not even realizing they can't afford it. You make 35k a year? Then you really shouldn't be buying a brand new iPhone with a large data plan, or a new car with monthly payments that eat away at your already limited income. Or maybe instead of going out for lu…

You're right that I don't know MMMs specifics. But I think at this stage I'm justified in being skeptical of anyone who claims to be self-made - far too many people gloss over their inherited advantages. It's possible he's one of the exceptions.

No doubt much of his advice is correct, and all of it well-intended. But one has to be careful about advice from people in very different circumstances. They can get it disasterously wrong.

Landlords absolutely do make large, unearned amounts of money. Think about it for a minute: MMM is a finance expert, why would he put his money there if it didn't generate the best return. The idle rich (rentiers) in general are hated, but landlords in particular make additional money through sharp practices. The profession inherently involves (legal) tax avoidance, because a landlord makes a lot of their money through appreciation of their properties which is not taxed, and their rental income is usually taxed at a lower rate than ordinary earnings. Finally, while it's unfair to pin this on MMM, many landlords take advantage (wittingly or not) of their tenants' ignorance of their rights.

Finally, when a rich person says "it's easy to make money", it's a very small step from there to "the reason I have more money than you is that I'm smarter/more self-controlled/etc." Which is often a lie; often inherited privilege has a much bigger impact than personal qualities.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#358

Post by JoeAltmaier »

lmm wrote: post #357
kdamken wrote: post #315

Earlier quoted context omitted.

Yes, we all have bills that need to be paid. But many people (especially those who aren't making great money) continually and stupidly buy stuff they don't need, not even realizing they can't afford it. You make 35k a year? Then you really shouldn't be buying a brand new iPhone with a large data plan, or a new car with monthly payments that eat away at your already limited income. Or maybe instead of going out for lu…

You're right that I don't know MMMs specifics. But I think at this stage I'm justified in being skeptical of anyone who claims to be self-made - far too many people gloss over their inherited advantages. It's possible he's one of the exceptions. No doubt much of his advice is correct, and all of it well-intended. But one has to be careful about advice from people in very different circumstances. They can get it disas…

We're all embedded in an economic infrastructure, that's unavoidable. Its not black/white. Everything from the internet to traffic lights helps speed commerce, and all of us inherit benefits from society.

So circumstances are everything, that part rings true. We're born into a good bit of that, and trained into the rest. From accent, to attitudes about race and religion we spend our lives accumulating advantages and albatrosses.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#360

Post by Vraxx »

branchless wrote: post #202
a_c_s wrote: post #194

Earlier quoted context omitted.

He publishes his family's spending every year: http://www.mrmoneymustache.com/2015/01/16/exposed-the-mmm-fa...

That's not his income . I see his mortgage / rent is zero. So if we all had no mortgage/rent to pay MMM would see his income fall as he has rental properties. I'm sure many families renting would love to "build stuff out of wood" but most have to have both parents working to pay the rent and bills. If only they had no mortgage. Still it's tough what with all the speculators in the market feeding off basic human needs…

Well if everyone buys property and owns it I think he could find enough demand for property to be able to sell his property and invest it in something else with returns.
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