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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

#71

Post by webXL »

If you're in this situation, get yourself an account at an online bank (ING Direct, Everbank, etc.) with an automatic savings plan, then create a dedicated savings account for emergencies and label it Emergency Fund (important!). If there's no automatic plan, just set a portion of your paycheck to be direct deposited into that account. Just put in $50 or $100 per paycheck.

Once the account balance gets to a level you're comfortable with, you can divert that excess monthly savings into CDs and other safe (less-liquid) investments, that you can periodically cash-out to build up your emergency fund for bigger, longer emergencies. The added security will help you sleep better. At least it did for me.

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

#72

Post by artmageddon »

AndyKelley wrote: post #65
PonyGumbo wrote: post #32

Earlier quoted context omitted.

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

What part of that does insurance play?

I had a problem similar to this about two years ago. 9 hours in the ER on a Friday night to get checked out for a pain cost $13,000. I had to pay around $100 upfront, and then insurance kicked in and took care of the rest.

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

#73

Post by hugh3 »

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 think it's very important to instill saving behaviors early on in your adult life.

Why early in your adult life? People should begin saving as children.

My parents were sensible. I got my first bank account at the age of five, I think. They paid me some small amount of pocket money (two dollars a week?), and encouraged me to save it up to buy things I wanted, and to worship the magic of compound interest (it helps that interest rates were actually decent in those days). I enjoyed watching the amount in my bank account go up much more than I enjoyed actually buying things with it, so I got into good saving habits.

I can't fathom the idea of an adult (or at least, an adult with a job) not having a mere two grand in their savings account, and certainly not of having negative net wealth (ie credit card debt).

Parents! Teach your children about money early!

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

#74

Post by dmm »

GeneralWaste wrote: post #54
PonyGumbo wrote: post #32

Earlier quoted context omitted.

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.

He's not going to pay $24k. Either he has insurance to cover most of it or he'll just not pay it. Bill collectors can't harass you for medical debts.

Hospitals have to treat you regardless of your ability to pay.

The whole situation is far from optimal though.

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

#75

Post by canadiancreed »

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 is middle class and considered underachieving? She needs a dose of reality.

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

#76

Post by [deleted] »

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…

[deleted]

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

#77

Post by jrockway »

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…

She's out of touch.

The problem that I've found is that most people live way beyond their means when they are selecting housing. This means that if you want to live with people like yourself, you have to too. If you spend what you should on housing, you end up "in a bad neighborhood".

So I feel like your wife has fallen victim to this problem. To live with the people she wants to associate with, she has to spend a lot more of your money.

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

#78

Post by ohashi »

GeneralWaste wrote: post #54
PonyGumbo wrote: post #32

Earlier quoted context omitted.

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.

That's a really depressingly accurate way of putting it.

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

#79

Post by ChuckMcM »

elbelcho wrote: post #51
ChuckMcM wrote: post #42

Earlier quoted context omitted.

"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 o…

"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."

I think we're in strong agreement. I was thinking of your two examples as being subcomponents of the base emergency "We're living beyond our means." Once you are in an emergency situation, your safety systems are compromised and additional emergencies become much more likely.

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

#80

Post by noodle »

dailyrorschach wrote: post #68
noodle wrote: post #45

Earlier quoted context omitted.

this is how i typically recommend people to prioritize their money: (1) pay your bills (2) get a small emergency fund together (enough to pay for a small emergency, car breakdown, 1 month's living expenses, etc) (3) pay down high interest debt (credit cards, etc) (4) get a large emergency fund together (enough to support you for a few months if you lose your job, major emergency, etc) (5) invest and pay down low inte…

This is exactly how I've been doing it. Auto-transfer set up on the bank account, and taking cash out for spending money instead of just letting myself use a credit or debit card.

credit cards are useful tools. i use mine and just pay it down monthly. if you have any plans on obtaining a loan/mortgage at any point in time, the easiest way to establish yourself with good credit is through actually using a credit card.
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