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

51–60 of 181 posts

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

#51

Post by elbelcho »

ChuckMcM wrote: post #42
elbelcho wrote: post #36

Earlier quoted context omitted.

I disagree. Saving money for an emergency should be a priority over paying off a credit card debt. In an emergency, you cannot count on the credit card bank keeping your account open. You cannot count on them maintaining your current credit line. ALL banks are "evil" in the sense that they operate with their best interests at heart, and no matter how horrible of a position it may put you in, the CC bank has no obliga…

"If you're in a real emergency, what would your rather rely on?" I think the point was that if you have credit card debt then you are in a emergency situation already. So using money to pay off that debt means you can get 'out' of the emergency. Paying off the debt and then putting $2,000 into a liquid account allows you to declare the emergency over. The trick that folks often don't quite realize is that when you ca…

I understand that minimum monthly payments and interest only payments are absolutely wasted and provide you with no benefit.

However, the emergency I'm referencing is not a general "my finances are a disaster" emergency. I'm talking about an emergency that has an impact far beyond your immediate financial situation.

I'm talking about "I cannot afford food" or "I cannot afford transportation to a job interview" type of emergency. That's a real emergency, in my opinion.

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

#52

Post by nhangen »

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…

It's easy to say that, but the reality is that many of these people probably blew through their savings while enduring job loss, medical bills, increased energy and food costs, etc.

Most people aren't programmers, and are at the mercy of the job market, which sucks right now.

There are many cases of irresponsible behavior, but I know of far too many responsible people that tried everything they could to right the ship and kept hanging on, hoping that things would change...with no luck.

It would be one thing if gas prices were going down, utilities were getting cheaper, and food prices were getting back to normal, but they aren't.

Most of us are fortunate enough to turn to freelancing when money runs out, but much of America is screwed.

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

#53

Post by wazoox »

padmanabhan01 wrote: post #37

1900 is too low a number to sample. And there is no mention as to whether that 1900 is actually random enough. I doubt this statistic.

For your information, about all polls are done on about 1000 people (slightly less to slightly more). You need to poll a lot more people to reduce significantly the statistical error level.

See http://en.wikipedia.org/wiki/Margin_of_error

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

#54

Post by GeneralWaste »

PonyGumbo wrote: post #32
naner wrote: post #16

$2,000 is not a "large medical bill" in the US. An unexpected medical problem will likely cost a lot more.

An appendectomy with an overnight hospital stay (went in at 8pm, left around 3pm the next day) was $24,000.

As a UK resident, I find that distressing. The idea that needing medical treatment might impoverish me or poverty leaves me unable to obtain the treatment I need seems exceedingly cruel.

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

#55

Post by Duff »

ebiester wrote: post #24
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…

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.…

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?

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

#56

Post by sunchild »

robflynn wrote: post #3

I certainly don't have any put away for a rainy day. After a bit of time being jobless, I finally found some underpaying work to get back on my feet. Coupled with various bills and medical bills, etc., I'm sitting at a paycheck to paycheck point. I get paid again tomorrow and I have $5.00 in the bank. It's quite depressing. Couple that with my girlfriend also losing her job and we tore through any savings pretty quic…

Don't be embarrassed. Many "rich" people have similar problems. It's just that, in their case, the cash flow figures are larger by orders of magnitude.

Desperation can be a tremendous motivator, and a great way to set priorities. Think of yourself as a newly-arrived immigrant. Now make your way in your new world.

Whatever you do, don't let depression set in. Depression = failure. Even if you struggle to pay the bills for the rest of your life, if you stay positive, you'll keep the people you love in your life.

It might help to imagine yourself getting that big break, and making enough money to never worry about money again. If that happens, how will you remember the tough times? Will you be proud of yourself, or ashamed? Will you regret that you treated others (and yourself) poorly? The history of the world is chock-full of successful people who were haunted by their past.

I'm on a roll here, so let me finish with this existential note: life is a bloody, sweaty mess, and there is no natural justice. From the day you're born to the day you die, you're flailing about on a tightrope over infinite emptiness. There's plenty to fear, and the easiest thing in the world is to fall.

But don't you really want to be the guy dancing on that tightrope and laughing at the void?

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

#57

Post by artmageddon »

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…

Well, I wouldn't suggest a person ever stop saving, I agree. However it just depends on the savings mode that you're in at any given time. If I anticipate a huge expense coming up (house / car), I'm going to penny pinch as much as possible. If things are seemingly normal and I have a good amount saved up, I might spend a little bit more of it enjoying life.

This might go beyond the depth of the article, admittedly.

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

#58

Post by vaksel »

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…

middle class is something like $40K family income...so you are more than double that.

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

#59

Post by webXL »

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…

You're not an underachiever. Class is all relative. "Middle class" in America translates to "extremely wealthy" for the average human being. My wife and I were just in Newport Beach, CA over the weekend, and we felt very poor. But back here in Nevada, we feel very blessed.

Here are some links to make your wife feel better:

http://politicalcalculations.blogspot.com/2010/12/whats-your... http://en.wikipedia.org/wiki/Household_income_in_the_United_...

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

#60

Post by jerf »

ssharp wrote: post #11

I think it's very important to instill saving behaviors early on in your adult life. After graduating college, I had plenty of debt, but still made sure I was putting money into a savings account. Technically, it would have been much wiser to put any excess money towards 15% APR credit card debt than in 5% saving accounts (5% savings accounts did exist for a few years prior to the 2008 collapse), but actually having…

I find it helpful to convert debt interest rates to real money. My student loans are down to the point where I could drain my savings and pay for them, and while they are low interest they're still above inflation. (Probably. It's kind of getting close.) But if I actually calculate in real money what's left, it's about $125 in interest left to pay over three years. I'd rather hold on to the cash; at this point in my life, that's a rounding error. A largish one, but still a rounding error. Whereas losing all my savings could really hurt; we dipped into them quite deeply recently when I had both my cars break down in the same week and also a moderate house issue.

Keeping cash on hand instead of paying off cheap debt can prevent you from having to incur expensive debt, which functions as a non-obvious term in deciding how much cash to keep around.

Post reply on HN