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40% of Americans can't cover a $400 emergency expense

223 points by uptown 8y ago

johnm1019 8y ago
I think we as a nation should consider this an issue of national security. This type of financial instability in such a large percentage of the population could lead to making short-sighted or bad decisions in tough times, increased violence, increased rates of incarceration (both of those increasing the cost of government for all), among many other things. The reasons for it are multi-faceted I'm sure. I hope voters and politicians recognize statistics like this as an opportunity for reflection and change.
- sjg007 8y ago
  We should but you know personal responsibility and all that jazz. The wealthy only care when the pitchforks come out. The biggest achievement of the wealthy has been to convince the middle class to eat itself.
  - ralusek 8y ago
    But personal responsibility is actually an important concept. It is completely unacceptable to not have $400 on reserve for an emergency as a functioning adult. That is a situation that can only be achieved by poor decision making and a lack of personal responsibility. Any strategy that is employed to remedy this has to contend with the fact that the individuals who need to have this situation remedied for themselves are the same ones who have gotten themselves into this situation. I will say this again. As a mobile adult, in the United States, to not have $400 on reserve for an emergency is simply not possible with proper decision-making. Individuals at that level of poverty have national and state level food stamps, welfare, disability, affordable housing, rent control, minimum-wage laws, child-support, often social security, medicare/medicaid. It's not as though the country has a non-existent social safety net. You simply can't propose that the solution can exist independently of the personal decisions made by the individuals in this position.
    - mattnewton 8y ago
      Bahaha, yes, if you make perfect decisions you will have over $400. The whole point is people don’t make perfect decisions. Should they become homeless when they get hurt as a result? Does that threat help them make better decisions? Does it help society to let a small problem escalate into a larger one like that? I’d answer a resounding no on all fronts.
      - rectang 8y ago
        It gives the wealthy a pleasing sense of moral superiority to see the poor fail. Humans compete not only for resources but for status. This alone is sufficient motivation to drive policies which ensure not just inequality, but humiliation of the losers.
    - dragonwriter 8y ago
      > I will say this again. Repetition doesn't actually make your claim any better supported, so maybe instead of repeating it, provide better support or, failing that, just stop instead of reiterating.
    - somerando 8y ago
      And here I was feeling bad because I have less than $100k on hand.
    - xena 8y ago
      What about people whose life situations constantly rip money out of them and their pay is just fundamentally insufficient to cover their expenses?
      - yermom 8y ago
        nah, they should just work harder
        your-nanny 8y ago
        Forgot your sarc tags
  - roenxi 8y ago
    The problem with personal responsibility, which I am very much in favour of and wish we promoted a bit more, is that the deck is so stacked against people who don't have assets that I'm not sure average person can keep up. I keep saying it; the amount of money in the system has increased +50% since 2008 [1], and worker compensation has gone up +25% (the BLS publishes a lot of series, I use [2]; hope it is right). So someone is getting a lot of money and it isn't obvious to what end - it isn't helping the workers or the poor, and nobody can make up that sort of difference by working harder. Workers are reaping a smaller percentage of society's bounty. [1] https://fred.stlouisfed.org/series/M2 https://fred.stlouisfed.org/series/M2 [2] https://fred.stlouisfed.org/series/A033RC1A027NBEA https://fred.stlouisfed.org/series/A033RC1A027NBEA
    - taysic 8y ago
      Is this due to QE? edit: I am wondering about why the money supply has increased 50%. Wouldn't that require a massive printing of money?
      - pnj9 8y ago
        It’s due to a long and storied history of elites manipulating the masses through intimidation and fear It went from overt violence to less obvious propaganda programs tuning our feelings I wish the “smart” crowd would look into the history of government-corporate propaganda research I’m not talking “deep state”. It’s plainly recorded in government record how they financed propaganda research and gifted it to media for advertising and corporate use Look at the joke history classes taught in public school Look at the efforts to hide info about the environment by this admin There is a concerted effort in our faces to deceive and misdirect is Economics, jobs, and government scandals are distractions in support of these efforts Read up on Greenspan’s comments in the 90s about growing worker insecurity being a boon to beneficiaries of supply side economics Watch Varoufakis explain how during the Greek debt crisis German tax payers took out loans from German banks to have it to Greece who gave it right back to German banks This is a generations long boondoggle unrelated to one policy decision 10 yrs ago It’s a round n round we go with numbers because even the educated masses are too on the periphery to see or outright prevented from being in the room
  - scarface74 8y ago
    Why do I have the feeling that most posters on HN who consider themselves the "middle class", actually fall well above of the middle quintile of household income and most are in the 5th quintile. The true Middle Class probably don't make any distinction between anyone who is in the top 20% (household income over $116,000) or especially the top 10% ($161,000). https://dqydj.com/household-income-percentile-calculator-2016/ https://dqydj.com/household-income-percentile-calculator-201...
    - dragonwriter 8y ago
      > Why do I have the feeling that most posters on HN who consider themselves the "middle class", actually fall well above of the middle quintile of household income and most are in the 5th quintile. Because middle class in a capitalist society is an economic relationship between the captialist and working class (characterized by mixed dependence on capital and labor, most archetypically the independent operator who supports themselves by applying their own labor to their own capital rather than primarily by renting labor to apply to capital or selling labor to capitalists), and its members are usually well above middle income (though, on average, far below that of the capitalist class.) The middle income quintile is largely members of the proletariat, not the petit bourgeoisie.
      - jadedhacker 8y ago
        This is a concept I haven't yet seen a good definition for though I know it is rigorously defined. What is the difference between the bourgeoisie and the petit bourgeoisie?
        dragonwriter 8y ago
        In discussion of capitalist economies, a rough definition (loosely following Marx) of the major classes is: haut bourgeoisie (capitalists): those who own capital and rent labor to apply to it. petit bourgeoisie (middle class): those who live by a combination of labor and capital, particularly those who apply their own labor (perhaps alongside a small amount of rented labor) to their own capital. proletariat (working class): those who derive income mainly by selling labor to members of either of the preceding classes.
  - mayniac 8y ago
    >The wealthy only care when the pitchforks come out. I can't find the link right now, but there was a TedX talk by a multi-millionaire arguing that he wants to be taxed more. And it's a growing trend, a lot of very wealthy people are starting to plead for higher taxes. The reasoning being if wealth inequality continues to widen, eventually it won't be a case of shaking the rich to empty their pockets a bit, it will be a case of hanging the rich from lampposts. I've met a lot of anti-capitalists who are mildly Posadist/accelerationist for this reason. For all of the ideas in this thread regarding increasing taxes on the rich and social welfare problems, I cannot help but believe that ultimately, we are overdue large scale social unrest in 1st world countries. Placating the proletariat with incentives like tax breaks and welfare programs is great in the short term, but in the end it might just be delaying the inevitable, and making it far worse. I'm firmly of the belief that a new economic system needs to be part of mainstream discussion as soon as possible, because otherwise we will eventually have riots which cause a power vacuum, and history has shown nothing good comes from that.
    - thedragonline 8y ago
      >The wealthy only care when the pitchforks come out. I can't find the link right now, but there was a TedX talk by a multi-millionaire arguing that he wants to be taxed more. This? https://www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitchforks_are_coming/up-next#t-1210455 https://www.ted.com/talks/nick_hanauer_beware_fellow_plutocr...
    - dorgo 8y ago
      Why do rich people want to pay more taxes? Why not directly invest in improving the situation of the poor? This way they remain in control of how money is spent. Tax money will just be spent for more wars.
      - AstralStorm 8y ago
        It is labour intensive to directly infest into poor. It involves setting a good programme and/or charity and managing it... Technically government is already equipped to do everything a charity can and more eith superior information so should be more efficient at it. Although it depends on the country/state in question.
  - kamaal 8y ago
    >>The wealthy only care when the pitchforks come out. Generally by that time the wealthy are long out of the country. In fact in most revolutions where people imagine they will take from the rich, people are generally in for a shock when they realize the rich are long gone. And now the door for a peaceful taxation is also gone. >>The biggest achievement of the wealthy has been to convince the middle class to eat itself. The wealthy have to convince nothing. Middle class is full of people who want instant gratification, and are bad at savings and investments.
- Florin_Andrei 8y ago
  I cannot possibly comprehend how could anyone consider this situation and go "yeah, this is surely stable in the long run".
  - twblalock 8y ago
    In the historical long run, few people have ever had financial security until the 20th century. People have much more financial security now than in, for example, the 19th century when there was no welfare safety net or bank deposit insurance. Yes, it sucks to have trouble coming up with $400 for an emergency. But it's not a serious threat to the ongoing stability of society.
    - pishpash 8y ago
      Only because of social programs. If those are gutted all bets are off.
    - Florin_Andrei 8y ago
      I'm pretty sure most people would not be okay with going back to the 19th century living conditions, to say nothing of the medieval era or before that.
  - flubert 8y ago
    I believe I've been hearing stories like this (about the lack of liquid savings for Americans) for something like 30 years now. Anyone able to dig up the historical data on this? I kind of think Milton Friedman wrote about this in one of his books.
- rndmize 8y ago
  Your post is optimistic to the point I choked on my coffee. Our economy is predicated on consumer spending; we have a whole set of industries built on the backs of poor financial decision making and being near-broke (payday loans, credit cards, overdraft charge reordering, debt collectors, etc.) all of which pull power away from desperate people and give it to others (now your landlord/phone company/ISP/etc have legal grounds to kick you out, terminate your service, etc.) Never mind the difficulty of making use of a court system stacked against the poor... > I hope voters and politicians recognize... Actually, it appears that voters and politicians have zero interest in improving this situation, seeing as the current administration is making every effort to demoralize and defang the CFPB[0], which was literally created to do some of the things you're interested in. I especially like how Mulvaney is moving everything into "financial education", as if an agency with 500M budget is going to make a dent against the billions spent on marketing related to financial "services". [0] http://www.latimes.com/business/la-fi-cfpb-student-loans-20180509-story.html http://www.latimes.com/business/la-fi-cfpb-student-loans-201...
  - ioquatix 8y ago
    Modern day slavery. Wow, never did I see it like this before.
  - master-litty 8y ago
    It's so childish putting optimistic people down. Our economy, habits, and mindset can change with a great deal of work and energy. People are becoming more connected than ever before, and with that we can build a new kind of social momentum. Hey, you're right, things suck now, but it doesn't have to be like this.
    - jadedhacker 8y ago
      The piece you're missing is that none of this is a mistake, the entire economy is designed to do this. Apathy and hoping it'll get better will if anything make it worse (not that I'm implying that's your position). The only thing that will make it better is demanding that things change. This means mass unionization, strikes, worker owned businesses, protests, leftist politicians like Sanders and Corbyn, and a whole program of fundamental goods provided free at the point of service like healthcare, education, and child care. We have a lot of work ahead of us.
- mid 8y ago
  Spin. From the actual survey data at https://www.federalreserve.gov/consumerscommunities/files/SHED_2017codebook.pdf https://www.federalreserve.gov/consumerscommunities/files/SH..., page 6: Overall, which one of the following best describes how well you are managing financially these days? 14 (0.1%): Refused 893 (7.2%): Finding it difficult to get by 2,395 (19.2%): Just getting by 4,930 (39.6%): Doing okay 4,215 (33.9%): Living comfortably
  - babaganoosh89 8y ago
    Are you sure that's right? I don't get how that adds up to 40%.
    - veidr 8y ago
      If 40% of people can't find $400 in a pinch, then it means at least some of those people self-reporting as "Doing OK" still can't find $400 in an emergency.
  - oldcynic 8y ago
    How is it spin? Just means there are a lot of people who believe doing OK encompasses having less than $400 ready cash. I might call it blind optimism seeing as pg 21 of the same PDF shows the sources they would consider to fund an emergency expense, but not spin.
- ravar 8y ago
  If this is an opportunity for change then what is a positive change that you would suggest?
- 0x4f3759df 8y ago
  There's just so many ways Americans are getting wrecked. College debt, housing crisis, terrible public transit, ruinous health care prices, and looming pension crisis that the government will have to print its way out of.
cryptoz 8y ago
This makes it clear why our current capitalism doesn't work. The ruling class / rich and wealth people and businesses could extract more wealth out of the middle and lower classes than they do now, if the lower classes were more stable and secure. In the US especially, but nearly everywhere, there are hoards of people trying to lower or eliminate social services, basic science research, etc, with the dog-whistle claim that those things are not necessary and should not be provided by the state or using state funds. This line of thinking is extremely common in conservative circles, where they claim that societal prosperity would come from hurting the poor as much as possible in order to extract the greatest amount of wealth from them. But when you look at statistics like these, it is clear that there is no more wealth to be extracted from the lower classes - they are all just merely trying to survive. Provide UBI or something like it, along with all other things necessary for a strong social net, and watch the rich get even richer while the poor grow into a stronger middle class. It is especially confusing that this outcome seems to be hated by the rich, despite it certainly lifting their wealth. It makes me wonder if much of conservative policy is just as much about hating the poor as it is helping the rich - because conservative policies that hurt the poor are increasingly obviously hurting the rich. I just don't understand why it isn't taken for granted that we need a stable society to make more money over time. That seems clear to me. Many of those in poverty today are there because of the systematic oppression of the poor across America for the last many hundreds of years. Blaming them for it isn't going to help - they aren't even being provided basic education, as that is also being cut in many places in the USA (so how do you expect them to become financially aware, anyway, if they are not taught that growing up in school? Parents raising children in poverty are in no place to teach their own kids financial management skills). To lift people out of poverty we must change our attitudes towards class and capitalism and be more compassionate to create a more stable society.
- matthewmacleod 8y ago
  I’m not entirely sure why you’ve been downvoted, because this also seems intuitively obvious to me. A long-term stable society, with a controlled income and wealth gap, seems to be in the general long-term best interests of everybody, rich and poor alike.
projectileboy 8y ago
Wealthy investors are happy to tell founders that a smaller percentage of a bigger pie is a better deal, but then seem not so happy to make their percentage smaller in order to increase the size of the pie for society at large.
- matte_black 8y ago
  Investors have to fight hard and endure a long time for every % of return. Society on the other hand will never be satisfied with their piece, they will always need more, and sooner not later.
  - nrb 8y ago
    "Workers have to fight hard and endure a long time for every $ of income. Investors on the other hand will never be satisfied with their piece, they will always need more, and sooner not later."
  - jadedhacker 8y ago
    Society has to fight hard and endure a long time for every % of return. Investors on the other hand will never be satisfied with their piece, they will always need more, and sooner not later. Or as Adam Smith put it: "All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind." https://www.quora.com/What-did-Adam-Smith-mean-when-he-said-%E2%80%9CAll-for-ourselves-and-nothing-for-other-people-seems-have-been-the-vile-maxim-of-the-masters-of-mankind-%E2%80%9D https://www.quora.com/What-did-Adam-Smith-mean-when-he-said-...
  - dv_dt 8y ago
    IMHO, this is 180 degrees backwards. It feels like most of the financial industry now is focused on short term profit optimization over long term value growth. Long term investors are notable exceptions.
- fhkatari 8y ago
  Not sure why you got downvoted. Upvoted
transfire 8y ago
Well on our way to to he oft depicted dystopia of sci-fi movies. I figured Trump would go down in history as a modern money baron president, the likes of Coolidge, Harding and Hoover.
- ng12 8y ago
  That number has decreased since the Obama administration.
georgrwasington 8y ago
America is over. The class divide has surpassed any reasonable threshold and in time it will only further crystalize. This country needs an Elon Musk to replace every part of the government, which is itself a jobs program at this point. We do not live in "America" anymore.
- nathanaldensr 8y ago
  I was with you until your Musk comment. We don't need more centralization of power; instead, we need decentralization--more local sustainability in place of the just-in-time global economy we live in now.
  - ccajas 8y ago
    The other side of his comment about the class divide is kind of telling though. It implies that the middle class is the most unstable of the three major economic classes in the long run. And with the current system of constraints, contents only want to settle in the top or in the bottom.
    - nathanaldensr 8y ago
      I have to agree. No matter what one's political leanings or who one believes is responsible, it seems true. Perhaps this is a reversion to a historical (read: modern civilization) mean? One theory is that the period immediately after World War II was an abnormal period of prosperity for the United States, seeing as how much of the developed world elsewhere was simply destroyed.
  - georgrwasington 8y ago
    My Musk comment was more about how much of NASA had turned into a jobs program than anything. Take a very simple example, the BMV. We've had good internet now for a couple decades and you still can't do basic transactions without going to the BMV in the middle of the day. Almost all other government agencies have been entirely immune to technological change as well. They are, jobs programs.
StephenSmith 8y ago
There's a lot of negativity in this thread and the title is very sensational. The point that should be highlighted in the article - "The bright side? That's an improvement from half of adults being unable to cover such an expense in 2013. The number has been ticking down each year since."
- Meegul 8y ago
  I wonder if that's tracked to inflation. A $400 medical expense from 2013 is likely closer to $500 today, which might account for the difference from 50% to 40%.
  - nwj 8y ago
    Inflation just hasn't been that high lately. $400 in 2013 dollars is $428.50 in 2018 dollars.
  - jsat 8y ago
    Inflation has been historically low recently https://tradingeconomics.com/united-states/inflation-cpi https://tradingeconomics.com/united-states/inflation-cpi
  - twinkletwinkle 8y ago
    The BLS calculator (https://www.bls.gov/data/inflation_calculator.htm https://www.bls.gov/data/inflation_calculator.htm) says $400 in 2013 is ~ $430 today. Seems unlikely to account for that much of the change.
    - onecooldev24 8y ago
      Govt inflation numbers represent a portfolio consisting of all commodities in equal quantity. But if you hold a portfolio of iPhones, Toyotas, and etc (assuming they are non depreciating assets) that number would double very easily.
      - aarongray 8y ago
deleted 8y ago
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ugh123 8y ago
Perhaps the bigger issue is: X% amount of Americans can't afford to lose work for N days. Where X is likely very large and N is < a week.
maerF0x0 8y ago
I had a coach that when I'd ask about how to get out of tricky situations he'd often respond with something along the lines of "Bro, you f'd up a long time ago"... I don't think 40% is some magic number to begin hysteria. Neither is $400. Selling something to cover your expenses might be a blessing in disguise if the thing you sell is a liability in the first place (ex: a car you cant really afford). My observation of America is that for a whole lot of people we F'd up a long time ago... These people need financial education, they need to be taught to not buy things they dont need, they need to be taught delayed gratification and to not be consumerists.
- zeth___ 8y ago
  Unfortunately if we did this we would be in a much deeper hole than the great depression. The economy only works because people have been trained for 80 years to buy things they don't need, throw them out when they shouldn't and replace them with pretty much exactly the same thing they got rid of. This might be a bad state of affairs to be in, but before we go trying to change people we need to change the system. Else we will be looking at Hitler as a moderate who had some reasonable national policies.
- deleted 8y ago
  [deleted]
- s73v3r_ 8y ago
  "Selling something to cover your expenses might be a blessing in disguise if the thing you sell is a liability in the first place (ex: a car you cant really afford)." In that specific case, no. In the US today, a car is damn near mandatory. Otherwise you'll be spending hours commuting on a bus, and that's if you're lucky enough to be somewhere with decent bus service. And that's assuming you have the type of job schedule where you can have that kind of time. Many times, not being able to keep your car, even if it's expensive in maintenance costs, means you could lose your job.
- airstrike 8y ago
  > they need to be taught delayed gratification and to not be consumerists. Except the American economy essentially banks on this fact, so you'd actually likely do more harm than good if people decided not to spend so much
gerdesj 8y ago
"More concerning are the 25% of Americans with no retirement savings whatsoever, according to the report." Is that true? What happens when those 25% retire or can no longer work? Ahh: https://www.telegraph.co.uk/finance/personalfinance/pensions/9902745/The-best-pensions-in-the-world.html https://www.telegraph.co.uk/finance/personalfinance/pensions... - not too bad - the US got a C, UK got a C+. Now back to the headline: $400 in available readies? You do have to start measuring somewhere when looking into poverty but it is harder than it seems on the face of it. Many people will drain their balance regardless to zero or below, (nearly) no matter how well off. I recall being a youngish lad with an income of £30 per hour - let's realistically say ~£50,000 per annum (gross, pre IR45). At that point in my life, I too would often qualify for "can't find £350" right now. My real point is that you have to be really careful how you measure this sort of thing, ie trying to quantify bits of people's lives with simple pithy statements.
- vkou 8y ago
  > What happens when those 25% retire or can no longer work? They eat cat food on their meager social security payments.
  - ryanwaggoner 8y ago
    I’m skeptical that this happens much. It reeks of urban legend. Now, I’m sure some seniors do this, but I suspect it’s due mental issues rather than fiscal concerns. Is cat food even cheaper than really cheap canned food?
    - dionidium 8y ago
      In my experience, nobody wants to hear this, but basic food is damn near free. I get it, I get it -- it's just a silly thing Sean Hannity says. It also happens to be true. Nobody has to eat cat food to save money. Have you priced beans and rice lately? It barely costs anything.
      - ridgeguy 8y ago
integration 8y ago
40% of America’s lowest-income families’ consumption goes to luxuries. The bigger problem is American’s terrible spending habits not lack of real income. https://www.google.com/amp/s/www.marketwatch.com/amp/story/guid/A6F97A7E-5C30-11E7-A41A-5BB15E25ABAD https://www.google.com/amp/s/www.marketwatch.com/amp/story/g...
- magicalist 8y ago
  Those aren't luxuries as the word is often used. > For its part, the Deutsche Bank report explicitly defined luxuries as goods or services consumed in greater proportions as a person’s income increases and necessities as those goods or services that make up a smaller proportion of spending as a person’s income increases. > It’s worth noting that by the specialized nomenclature of the dismal science, even eating at McDonald’s is a luxury — that is, we do it more as our incomes rise — while smoking and lottery-ticket buying are categorized as necessities.
  - integration 8y ago
    It’s a better definition of luxuries. If someone is spending more on food, clothing, electronics as their income rise those things are clearly discretionary.
    - georgrwasington 8y ago
      No it's not. Poor people live in food deserts and buy 5000 calorie dinners for $2 at Dollar General. It's hardly discretionary to try to feed yourself real food. Now let's tie in the cost of healthcare associated with eating cheap junk food and you've got a problem. This is like an argument with someone who denies global warming.
      - integration 8y ago
        Unless someone is starving, spending more on food as income rises is discretionary. A proper food budget is stable, it should not change as someone earns more money. As someone who ate well on minimum wage, you’re not going to convince me low-income families can’t afford food in America if they’re properly budgeting.
eanzenberg 8y ago
I find this truly hard to believe. Half of the country is on the verge of homelessness and poverty? Bullshit. Get out of your bubble and go see other parts of the country. See the rampant consumerism and tell me this isn't fake news.
- darkstar999 8y ago
  > go see other parts of the country. See the rampant consumerism How does that dispute the article at all?
  - eanzenberg 8y ago
    Then you should dutifully put the blame on the users, not the system.
kbrwn 8y ago
No surprise that low income consumers choose to consume rather than save as saving account with a low balance has no direct impact on generating additional wealth.
sigstoat 8y ago
https://www.thestreet.com/story/14296470/1/americans-spend-big-on-lotto-tickets-and-here-they-spend-4-times-the-average.html https://www.thestreet.com/story/14296470/1/americans-spend-b... so the average american doesn't have $400 saved up, _and_ spends $206 per year on lotto tickets. if we're in society collapsing danger, maybe we could look at the organizations running the lottos?
- dpark 8y ago
  The average American spends about twice that on just beer (not all alcohol) every year. I share your concern for poor people dumping money into the lottery, but that’s actually a pretty small vice.
  - sigstoat 8y ago
    easier to get rid of lotteries; no constitutional amendment required. some of the beer spending also comes from people more able to tolerate the wasted funds; those with the least are the most likely to play lotteries. https://journalistsresource.org/studies/economics/personal-finance/research-review-lotteries-demographics https://journalistsresource.org/studies/economics/personal-f...
    - dpark 8y ago
      I’m not sure that’s true. The Supreme Court just struck down an anti-gambling federal law. https://mobile.nytimes.com/2018/05/14/us/politics/supreme-court-sports-betting-new-jersey.html https://mobile.nytimes.com/2018/05/14/us/politics/supreme-co... It’s not clear at all that the federal government could ban the lottery without a constitutional change.
      - gizmo686 8y ago
        Here is the opinion: https://www.supremecourt.gov/opinions/17pdf/16-476_dbfi.pdf https://www.supremecourt.gov/opinions/17pdf/16-476_dbfi.pdf The court found the law unconstitutional on procedural grounds. In particular, the federal government did not ban gambling. It required states to ban gambling. The court ruled that the federal government cannot force states to pass laws.
cwperkins 8y ago
Does anyone know of a datasource that analyzes this as the number of people living paycheck to paycheck vs. spending habits?
protomyth 8y ago
People wonder why payday loan companies are becoming more popular. It might be kicking the can down the road, but when $400 is a killer then people will kick the can.
himom 8y ago
UBI N O W.
makecheck 8y ago
We can’t improve the money situation without improving the “free time” situation too. For people with 2+ jobs and hours of commuting, when is there time to do anything that would remotely fix their financial situation? Exhaustion for starters. No time for more school or other improvements that might net a better job. No time to even research where a better place to live might be. Heck, even voting for someone to help change your situation takes a lot of time, if you want to figure out which candidate is truly in line with what you want.
prewett 8y ago
Wow, everything in this thread is "those evil rich people, fleecing the poor." Quite aside from the fact that the target audience of this site can expect to make around 2X the median income of the US--meaning that we are those evil rich people--surely the problem isn't this one-sided. The poverty rate in the US is about 13% [1]; we would expect those people to not have any savings. That leaves about 33% unaccounted for. It looks like 42% of workers in the US make less than $15/hr [2], which does fit the figure fairly close. However, some of those are teenagers, so they don't count as they aren't living on their own. I'd like to see some analysis of spending. How many people don't have any savings because they aren't spending wisely. This girl [3] discovered that she could actually save for a deposit for a house in London, despite making under £40k (about $53k). That's less than the median US income and presumably doesn't go all that for in London. She was simply spending a lot of money on food, drinks, and specialty coffee. [1] https://poverty.ucdavis.edu/faq/what-current-poverty-rate-united-states https://poverty.ucdavis.edu/faq/what-current-poverty-rate-un... [2] http://fortune.com/2015/04/13/who-makes-15-per-hour/ http://fortune.com/2015/04/13/who-makes-15-per-hour/ [3] https://www.theguardian.com/money/2018/jan/29/can-you-really-save-for-a-deposit-by-ditching-coffee-and-avocado-toast-i-tried-to-find-out https://www.theguardian.com/money/2018/jan/29/can-you-really...
- zaksoup 8y ago
  I would push back on this bit about teenagers: > so they don't count as they aren't living on their own. I think it's a significant assumption to make that parents would be able/willing to cover a random $400 expense. The study did not specify a specific type of emergency expenditure, just that it was unexpected. I can fully imagine a scenario where parents would cover hospital visits for a bad case of the flu, but not cover an abortion, or repairs to a car from an accident where the child was at fault. The latter two examples still seem like fair 'unexpected expenses' for the child dependent making < $15/hour
  - ryanwaggoner 8y ago
    I think this was a survey about households though, so not clear if teenagers living at home would count.
skookumchuck 8y ago
> Those who don't have the cash on hand say they'd have to cover it by borrowing or selling something. Be careful about concluding that these people are poor. I'm not poor, and I have no cash. Everything is invested. Piling up cash in a savings account just means it'll get eaten away by inflation. This is hardly uncommon. If you've got a house with a large payment, you aren't poor, even though you may not have any cash. Your money is invested in the house.
- dionidium 8y ago
  A version of this comment appears every time this is discussed. This isn’t what we’re talking about. These aren’t liquidity problems. People really just don’t have the money.
  - skookumchuck 8y ago
    It's literally what the article is talking about. I included the quote. I suggest they are misinterpreting their data, and are measuring the wrong things. It's like that daft statistic a few years back that 40% of corporations don't pay any income tax. This raised all sorts of righteous hysteria. Never mind that 40% of corporations lost money that year, and income taxes are not due when you lose money.
    - dionidium 8y ago
      Maybe the best thing I can do here is concede that "can you find $400 for an emergency" is an imprecise question that this article doesn't (and can't) answer. I think I know what it's saying (probably because I have a lot of experience with the type of people I'm imagining) and you guys think you know it's saying something else (because of your own experiences having money that's inaccessible), but, ultimately, the question is too imprecise for either of our claims. So, yes, I strongly suspect I'm right -- "selling something" is pretty plainly not referring to financial instruments -- but it's true that it's more intuition than fact.
  - gizmo686 8y ago
    That may very well be true. But the point still stands that "can you find $400 for an emergency" does not measure what you think it measures. Having said that, it is still problematic that %40 of the population answers no to this; and I suspect that in most cases it is actually the case that they simply do not have the wealth. In fact, I think the phrasing in this article is far less problematic than the "in savings" phrasing one often sees. Further, I would go so far as to say that people, who have wealth but cannot cover an unexpected $400 expanse are genuinely victims of poor financial planning. If you are in that position, open a line of credit. Most credit cards will give you at least 1 month of 0% interest; and if you have equity in your house you should be able to use that to secure another low interest line of credit if you need to. Sure, you don't want to rely on either of these for day to day expenses, but they are a fine solution to solve the liquidity problem of emergencies. EDIT: I suppose my solution may fall under the catagory of "borrowing" which the article says is how the quoted %40 would cover such an expense. I read that line as talking about borrowing from friends/family.
simonsarris 8y ago
The question I'd love to know the answer to is: If we gave every American $2000, what would the % be by the end of the summer?
RickJWagner 8y ago
Yet 77% of Americans have a smartphone. (Not a cell phone. A more expensive smartphone.) This is a self-induced injury. Financial education should be mandatory, and started in elementary school.
joeblow9999 8y ago
I do not believe this. Even when I was flat broke starving I could always scrape up 400 somewhere and that was decades ago. Credit cards, friends and family, pawn shops. There's a way. This is a VERY misleading headline.
- enraged_camel 8y ago
  So basically, things were different for you decades ago, therefore the article headline is misleading? You may want to rethink that.

223 points by uptown 8y ago

I think we as a nation should consider this an issue of national security. This type of financial instability in such a large percentage of the population could lead to making short-sighted or bad decisions in tough times, increased violence, increased rates of incarceration (both of those increasing the cost of government for all), among many other things. The reasons for it are multi-faceted I'm sure. I hope voters and politicians recognize statistics like this as an opportunity for reflection and change.

sjg007 8y ago
We should but you know personal responsibility and all that jazz. The wealthy only care when the pitchforks come out. The biggest achievement of the wealthy has been to convince the middle class to eat itself.
- ralusek 8y ago
  But personal responsibility is actually an important concept. It is completely unacceptable to not have $400 on reserve for an emergency as a functioning adult. That is a situation that can only be achieved by poor decision making and a lack of personal responsibility. Any strategy that is employed to remedy this has to contend with the fact that the individuals who need to have this situation remedied for themselves are the same ones who have gotten themselves into this situation. I will say this again. As a mobile adult, in the United States, to not have $400 on reserve for an emergency is simply not possible with proper decision-making. Individuals at that level of poverty have national and state level food stamps, welfare, disability, affordable housing, rent control, minimum-wage laws, child-support, often social security, medicare/medicaid. It's not as though the country has a non-existent social safety net. You simply can't propose that the solution can exist independently of the personal decisions made by the individuals in this position.
  - mattnewton 8y ago
    Bahaha, yes, if you make perfect decisions you will have over $400. The whole point is people don’t make perfect decisions. Should they become homeless when they get hurt as a result? Does that threat help them make better decisions? Does it help society to let a small problem escalate into a larger one like that? I’d answer a resounding no on all fronts.
    - rectang 8y ago
      It gives the wealthy a pleasing sense of moral superiority to see the poor fail. Humans compete not only for resources but for status. This alone is sufficient motivation to drive policies which ensure not just inequality, but humiliation of the losers.
  - dragonwriter 8y ago
    > I will say this again. Repetition doesn't actually make your claim any better supported, so maybe instead of repeating it, provide better support or, failing that, just stop instead of reiterating.
  - somerando 8y ago
    And here I was feeling bad because I have less than $100k on hand.
  - xena 8y ago
    What about people whose life situations constantly rip money out of them and their pay is just fundamentally insufficient to cover their expenses?
    - yermom 8y ago
      nah, they should just work harder
      - your-nanny 8y ago
        Forgot your sarc tags
- roenxi 8y ago
  The problem with personal responsibility, which I am very much in favour of and wish we promoted a bit more, is that the deck is so stacked against people who don't have assets that I'm not sure average person can keep up. I keep saying it; the amount of money in the system has increased +50% since 2008 [1], and worker compensation has gone up +25% (the BLS publishes a lot of series, I use [2]; hope it is right). So someone is getting a lot of money and it isn't obvious to what end - it isn't helping the workers or the poor, and nobody can make up that sort of difference by working harder. Workers are reaping a smaller percentage of society's bounty. [1] https://fred.stlouisfed.org/series/M2 https://fred.stlouisfed.org/series/M2 [2] https://fred.stlouisfed.org/series/A033RC1A027NBEA https://fred.stlouisfed.org/series/A033RC1A027NBEA
  - taysic 8y ago
    Is this due to QE? edit: I am wondering about why the money supply has increased 50%. Wouldn't that require a massive printing of money?
    - pnj9 8y ago
      It’s due to a long and storied history of elites manipulating the masses through intimidation and fear It went from overt violence to less obvious propaganda programs tuning our feelings I wish the “smart” crowd would look into the history of government-corporate propaganda research I’m not talking “deep state”. It’s plainly recorded in government record how they financed propaganda research and gifted it to media for advertising and corporate use Look at the joke history classes taught in public school Look at the efforts to hide info about the environment by this admin There is a concerted effort in our faces to deceive and misdirect is Economics, jobs, and government scandals are distractions in support of these efforts Read up on Greenspan’s comments in the 90s about growing worker insecurity being a boon to beneficiaries of supply side economics Watch Varoufakis explain how during the Greek debt crisis German tax payers took out loans from German banks to have it to Greece who gave it right back to German banks This is a generations long boondoggle unrelated to one policy decision 10 yrs ago It’s a round n round we go with numbers because even the educated masses are too on the periphery to see or outright prevented from being in the room
- scarface74 8y ago
  Why do I have the feeling that most posters on HN who consider themselves the "middle class", actually fall well above of the middle quintile of household income and most are in the 5th quintile. The true Middle Class probably don't make any distinction between anyone who is in the top 20% (household income over $116,000) or especially the top 10% ($161,000). https://dqydj.com/household-income-percentile-calculator-2016/ https://dqydj.com/household-income-percentile-calculator-201...
  - dragonwriter 8y ago
    > Why do I have the feeling that most posters on HN who consider themselves the "middle class", actually fall well above of the middle quintile of household income and most are in the 5th quintile. Because middle class in a capitalist society is an economic relationship between the captialist and working class (characterized by mixed dependence on capital and labor, most archetypically the independent operator who supports themselves by applying their own labor to their own capital rather than primarily by renting labor to apply to capital or selling labor to capitalists), and its members are usually well above middle income (though, on average, far below that of the capitalist class.) The middle income quintile is largely members of the proletariat, not the petit bourgeoisie.
    - jadedhacker 8y ago
      This is a concept I haven't yet seen a good definition for though I know it is rigorously defined. What is the difference between the bourgeoisie and the petit bourgeoisie?
      - dragonwriter 8y ago
        In discussion of capitalist economies, a rough definition (loosely following Marx) of the major classes is: haut bourgeoisie (capitalists): those who own capital and rent labor to apply to it. petit bourgeoisie (middle class): those who live by a combination of labor and capital, particularly those who apply their own labor (perhaps alongside a small amount of rented labor) to their own capital. proletariat (working class): those who derive income mainly by selling labor to members of either of the preceding classes.
- mayniac 8y ago
  >The wealthy only care when the pitchforks come out. I can't find the link right now, but there was a TedX talk by a multi-millionaire arguing that he wants to be taxed more. And it's a growing trend, a lot of very wealthy people are starting to plead for higher taxes. The reasoning being if wealth inequality continues to widen, eventually it won't be a case of shaking the rich to empty their pockets a bit, it will be a case of hanging the rich from lampposts. I've met a lot of anti-capitalists who are mildly Posadist/accelerationist for this reason. For all of the ideas in this thread regarding increasing taxes on the rich and social welfare problems, I cannot help but believe that ultimately, we are overdue large scale social unrest in 1st world countries. Placating the proletariat with incentives like tax breaks and welfare programs is great in the short term, but in the end it might just be delaying the inevitable, and making it far worse. I'm firmly of the belief that a new economic system needs to be part of mainstream discussion as soon as possible, because otherwise we will eventually have riots which cause a power vacuum, and history has shown nothing good comes from that.
  - thedragonline 8y ago
    >The wealthy only care when the pitchforks come out. I can't find the link right now, but there was a TedX talk by a multi-millionaire arguing that he wants to be taxed more. This? https://www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitchforks_are_coming/up-next#t-1210455 https://www.ted.com/talks/nick_hanauer_beware_fellow_plutocr...
  - dorgo 8y ago
    Why do rich people want to pay more taxes? Why not directly invest in improving the situation of the poor? This way they remain in control of how money is spent. Tax money will just be spent for more wars.
    - AstralStorm 8y ago
      It is labour intensive to directly infest into poor. It involves setting a good programme and/or charity and managing it... Technically government is already equipped to do everything a charity can and more eith superior information so should be more efficient at it. Although it depends on the country/state in question.
- kamaal 8y ago
  >>The wealthy only care when the pitchforks come out. Generally by that time the wealthy are long out of the country. In fact in most revolutions where people imagine they will take from the rich, people are generally in for a shock when they realize the rich are long gone. And now the door for a peaceful taxation is also gone. >>The biggest achievement of the wealthy has been to convince the middle class to eat itself. The wealthy have to convince nothing. Middle class is full of people who want instant gratification, and are bad at savings and investments.
Florin_Andrei 8y ago
I cannot possibly comprehend how could anyone consider this situation and go "yeah, this is surely stable in the long run".
- twblalock 8y ago
  In the historical long run, few people have ever had financial security until the 20th century. People have much more financial security now than in, for example, the 19th century when there was no welfare safety net or bank deposit insurance. Yes, it sucks to have trouble coming up with $400 for an emergency. But it's not a serious threat to the ongoing stability of society.
  - pishpash 8y ago
    Only because of social programs. If those are gutted all bets are off.
  - Florin_Andrei 8y ago
    I'm pretty sure most people would not be okay with going back to the 19th century living conditions, to say nothing of the medieval era or before that.
- flubert 8y ago
  I believe I've been hearing stories like this (about the lack of liquid savings for Americans) for something like 30 years now. Anyone able to dig up the historical data on this? I kind of think Milton Friedman wrote about this in one of his books.
rndmize 8y ago
Your post is optimistic to the point I choked on my coffee. Our economy is predicated on consumer spending; we have a whole set of industries built on the backs of poor financial decision making and being near-broke (payday loans, credit cards, overdraft charge reordering, debt collectors, etc.) all of which pull power away from desperate people and give it to others (now your landlord/phone company/ISP/etc have legal grounds to kick you out, terminate your service, etc.) Never mind the difficulty of making use of a court system stacked against the poor... > I hope voters and politicians recognize... Actually, it appears that voters and politicians have zero interest in improving this situation, seeing as the current administration is making every effort to demoralize and defang the CFPB[0], which was literally created to do some of the things you're interested in. I especially like how Mulvaney is moving everything into "financial education", as if an agency with 500M budget is going to make a dent against the billions spent on marketing related to financial "services". [0] http://www.latimes.com/business/la-fi-cfpb-student-loans-20180509-story.html http://www.latimes.com/business/la-fi-cfpb-student-loans-201...
- ioquatix 8y ago
  Modern day slavery. Wow, never did I see it like this before.
- master-litty 8y ago
  It's so childish putting optimistic people down. Our economy, habits, and mindset can change with a great deal of work and energy. People are becoming more connected than ever before, and with that we can build a new kind of social momentum. Hey, you're right, things suck now, but it doesn't have to be like this.
  - jadedhacker 8y ago
    The piece you're missing is that none of this is a mistake, the entire economy is designed to do this. Apathy and hoping it'll get better will if anything make it worse (not that I'm implying that's your position). The only thing that will make it better is demanding that things change. This means mass unionization, strikes, worker owned businesses, protests, leftist politicians like Sanders and Corbyn, and a whole program of fundamental goods provided free at the point of service like healthcare, education, and child care. We have a lot of work ahead of us.
mid 8y ago
Spin. From the actual survey data at https://www.federalreserve.gov/consumerscommunities/files/SHED_2017codebook.pdf https://www.federalreserve.gov/consumerscommunities/files/SH..., page 6: Overall, which one of the following best describes how well you are managing financially these days? 14 (0.1%): Refused 893 (7.2%): Finding it difficult to get by 2,395 (19.2%): Just getting by 4,930 (39.6%): Doing okay 4,215 (33.9%): Living comfortably
- babaganoosh89 8y ago
  Are you sure that's right? I don't get how that adds up to 40%.
  - veidr 8y ago
    If 40% of people can't find $400 in a pinch, then it means at least some of those people self-reporting as "Doing OK" still can't find $400 in an emergency.
- oldcynic 8y ago
  How is it spin? Just means there are a lot of people who believe doing OK encompasses having less than $400 ready cash. I might call it blind optimism seeing as pg 21 of the same PDF shows the sources they would consider to fund an emergency expense, but not spin.
ravar 8y ago
If this is an opportunity for change then what is a positive change that you would suggest?
0x4f3759df 8y ago
There's just so many ways Americans are getting wrecked. College debt, housing crisis, terrible public transit, ruinous health care prices, and looming pension crisis that the government will have to print its way out of.

cryptoz 8y ago

This makes it clear why our current capitalism doesn't work. The ruling class / rich and wealth people and businesses could extract more wealth out of the middle and lower classes than they do now, if the lower classes were more stable and secure. In the US especially, but nearly everywhere, there are hoards of people trying to lower or eliminate social services, basic science research, etc, with the dog-whistle claim that those things are not necessary and should not be provided by the state or using state funds. This line of thinking is extremely common in conservative circles, where they claim that societal prosperity would come from hurting the poor as much as possible in order to extract the greatest amount of wealth from them. But when you look at statistics like these, it is clear that there is no more wealth to be extracted from the lower classes - they are all just merely trying to survive. Provide UBI or something like it, along with all other things necessary for a strong social net, and watch the rich get even richer while the poor grow into a stronger middle class. It is especially confusing that this outcome seems to be hated by the rich, despite it certainly lifting their wealth. It makes me wonder if much of conservative policy is just as much about hating the poor as it is helping the rich - because conservative policies that hurt the poor are increasingly obviously hurting the rich. I just don't understand why it isn't taken for granted that we need a stable society to make more money over time. That seems clear to me. Many of those in poverty today are there because of the systematic oppression of the poor across America for the last many hundreds of years. Blaming them for it isn't going to help - they aren't even being provided basic education, as that is also being cut in many places in the USA (so how do you expect them to become financially aware, anyway, if they are not taught that growing up in school? Parents raising children in poverty are in no place to teach their own kids financial management skills). To lift people out of poverty we must change our attitudes towards class and capitalism and be more compassionate to create a more stable society.

matthewmacleod 8y ago
I’m not entirely sure why you’ve been downvoted, because this also seems intuitively obvious to me. A long-term stable society, with a controlled income and wealth gap, seems to be in the general long-term best interests of everybody, rich and poor alike.

projectileboy 8y ago

Wealthy investors are happy to tell founders that a smaller percentage of a bigger pie is a better deal, but then seem not so happy to make their percentage smaller in order to increase the size of the pie for society at large.

matte_black 8y ago
Investors have to fight hard and endure a long time for every % of return. Society on the other hand will never be satisfied with their piece, they will always need more, and sooner not later.
- nrb 8y ago
  "Workers have to fight hard and endure a long time for every $ of income. Investors on the other hand will never be satisfied with their piece, they will always need more, and sooner not later."
- jadedhacker 8y ago
  Society has to fight hard and endure a long time for every % of return. Investors on the other hand will never be satisfied with their piece, they will always need more, and sooner not later. Or as Adam Smith put it: "All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind." https://www.quora.com/What-did-Adam-Smith-mean-when-he-said-%E2%80%9CAll-for-ourselves-and-nothing-for-other-people-seems-have-been-the-vile-maxim-of-the-masters-of-mankind-%E2%80%9D https://www.quora.com/What-did-Adam-Smith-mean-when-he-said-...
- dv_dt 8y ago
  IMHO, this is 180 degrees backwards. It feels like most of the financial industry now is focused on short term profit optimization over long term value growth. Long term investors are notable exceptions.
fhkatari 8y ago
Not sure why you got downvoted. Upvoted

transfire 8y ago

Well on our way to to he oft depicted dystopia of sci-fi movies. I figured Trump would go down in history as a modern money baron president, the likes of Coolidge, Harding and Hoover.

ng12 8y ago
That number has decreased since the Obama administration.

georgrwasington 8y ago

America is over. The class divide has surpassed any reasonable threshold and in time it will only further crystalize. This country needs an Elon Musk to replace every part of the government, which is itself a jobs program at this point. We do not live in "America" anymore.

nathanaldensr 8y ago
I was with you until your Musk comment. We don't need more centralization of power; instead, we need decentralization--more local sustainability in place of the just-in-time global economy we live in now.
- ccajas 8y ago
  The other side of his comment about the class divide is kind of telling though. It implies that the middle class is the most unstable of the three major economic classes in the long run. And with the current system of constraints, contents only want to settle in the top or in the bottom.
  - nathanaldensr 8y ago
    I have to agree. No matter what one's political leanings or who one believes is responsible, it seems true. Perhaps this is a reversion to a historical (read: modern civilization) mean? One theory is that the period immediately after World War II was an abnormal period of prosperity for the United States, seeing as how much of the developed world elsewhere was simply destroyed.
- georgrwasington 8y ago
  My Musk comment was more about how much of NASA had turned into a jobs program than anything. Take a very simple example, the BMV. We've had good internet now for a couple decades and you still can't do basic transactions without going to the BMV in the middle of the day. Almost all other government agencies have been entirely immune to technological change as well. They are, jobs programs.

StephenSmith 8y ago

There's a lot of negativity in this thread and the title is very sensational. The point that should be highlighted in the article - "The bright side? That's an improvement from half of adults being unable to cover such an expense in 2013. The number has been ticking down each year since."

Meegul 8y ago
I wonder if that's tracked to inflation. A $400 medical expense from 2013 is likely closer to $500 today, which might account for the difference from 50% to 40%.
- nwj 8y ago
  Inflation just hasn't been that high lately. $400 in 2013 dollars is $428.50 in 2018 dollars.
- jsat 8y ago
  Inflation has been historically low recently https://tradingeconomics.com/united-states/inflation-cpi https://tradingeconomics.com/united-states/inflation-cpi
- twinkletwinkle 8y ago
  The BLS calculator (https://www.bls.gov/data/inflation_calculator.htm https://www.bls.gov/data/inflation_calculator.htm) says $400 in 2013 is ~ $430 today. Seems unlikely to account for that much of the change.
  - onecooldev24 8y ago
    Govt inflation numbers represent a portfolio consisting of all commodities in equal quantity. But if you hold a portfolio of iPhones, Toyotas, and etc (assuming they are non depreciating assets) that number would double very easily.
    - aarongray 8y ago

deleted 8y ago

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ugh123 8y ago

Perhaps the bigger issue is: X% amount of Americans can't afford to lose work for N days. Where X is likely very large and N is < a week.

maerF0x0 8y ago

I had a coach that when I'd ask about how to get out of tricky situations he'd often respond with something along the lines of "Bro, you f'd up a long time ago"... I don't think 40% is some magic number to begin hysteria. Neither is $400. Selling something to cover your expenses might be a blessing in disguise if the thing you sell is a liability in the first place (ex: a car you cant really afford). My observation of America is that for a whole lot of people we F'd up a long time ago... These people need financial education, they need to be taught to not buy things they dont need, they need to be taught delayed gratification and to not be consumerists.

zeth___ 8y ago
Unfortunately if we did this we would be in a much deeper hole than the great depression. The economy only works because people have been trained for 80 years to buy things they don't need, throw them out when they shouldn't and replace them with pretty much exactly the same thing they got rid of. This might be a bad state of affairs to be in, but before we go trying to change people we need to change the system. Else we will be looking at Hitler as a moderate who had some reasonable national policies.
deleted 8y ago
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s73v3r_ 8y ago
"Selling something to cover your expenses might be a blessing in disguise if the thing you sell is a liability in the first place (ex: a car you cant really afford)." In that specific case, no. In the US today, a car is damn near mandatory. Otherwise you'll be spending hours commuting on a bus, and that's if you're lucky enough to be somewhere with decent bus service. And that's assuming you have the type of job schedule where you can have that kind of time. Many times, not being able to keep your car, even if it's expensive in maintenance costs, means you could lose your job.
airstrike 8y ago
> they need to be taught delayed gratification and to not be consumerists. Except the American economy essentially banks on this fact, so you'd actually likely do more harm than good if people decided not to spend so much

gerdesj 8y ago

"More concerning are the 25% of Americans with no retirement savings whatsoever, according to the report." Is that true? What happens when those 25% retire or can no longer work? Ahh: https://www.telegraph.co.uk/finance/personalfinance/pensions/9902745/The-best-pensions-in-the-world.html https://www.telegraph.co.uk/finance/personalfinance/pensions... - not too bad - the US got a C, UK got a C+. Now back to the headline: $400 in available readies? You do have to start measuring somewhere when looking into poverty but it is harder than it seems on the face of it. Many people will drain their balance regardless to zero or below, (nearly) no matter how well off. I recall being a youngish lad with an income of £30 per hour - let's realistically say ~£50,000 per annum (gross, pre IR45). At that point in my life, I too would often qualify for "can't find £350" right now. My real point is that you have to be really careful how you measure this sort of thing, ie trying to quantify bits of people's lives with simple pithy statements.

vkou 8y ago
> What happens when those 25% retire or can no longer work? They eat cat food on their meager social security payments.
- ryanwaggoner 8y ago
  I’m skeptical that this happens much. It reeks of urban legend. Now, I’m sure some seniors do this, but I suspect it’s due mental issues rather than fiscal concerns. Is cat food even cheaper than really cheap canned food?
  - dionidium 8y ago
    In my experience, nobody wants to hear this, but basic food is damn near free. I get it, I get it -- it's just a silly thing Sean Hannity says. It also happens to be true. Nobody has to eat cat food to save money. Have you priced beans and rice lately? It barely costs anything.
    - ridgeguy 8y ago

integration 8y ago

40% of America’s lowest-income families’ consumption goes to luxuries. The bigger problem is American’s terrible spending habits not lack of real income. https://www.google.com/amp/s/www.marketwatch.com/amp/story/guid/A6F97A7E-5C30-11E7-A41A-5BB15E25ABAD https://www.google.com/amp/s/www.marketwatch.com/amp/story/g...

magicalist 8y ago
Those aren't luxuries as the word is often used. > For its part, the Deutsche Bank report explicitly defined luxuries as goods or services consumed in greater proportions as a person’s income increases and necessities as those goods or services that make up a smaller proportion of spending as a person’s income increases. > It’s worth noting that by the specialized nomenclature of the dismal science, even eating at McDonald’s is a luxury — that is, we do it more as our incomes rise — while smoking and lottery-ticket buying are categorized as necessities.
- integration 8y ago
  It’s a better definition of luxuries. If someone is spending more on food, clothing, electronics as their income rise those things are clearly discretionary.
  - georgrwasington 8y ago
    No it's not. Poor people live in food deserts and buy 5000 calorie dinners for $2 at Dollar General. It's hardly discretionary to try to feed yourself real food. Now let's tie in the cost of healthcare associated with eating cheap junk food and you've got a problem. This is like an argument with someone who denies global warming.
    - integration 8y ago
      Unless someone is starving, spending more on food as income rises is discretionary. A proper food budget is stable, it should not change as someone earns more money. As someone who ate well on minimum wage, you’re not going to convince me low-income families can’t afford food in America if they’re properly budgeting.

eanzenberg 8y ago

I find this truly hard to believe. Half of the country is on the verge of homelessness and poverty? Bullshit. Get out of your bubble and go see other parts of the country. See the rampant consumerism and tell me this isn't fake news.

darkstar999 8y ago
> go see other parts of the country. See the rampant consumerism How does that dispute the article at all?
- eanzenberg 8y ago
  Then you should dutifully put the blame on the users, not the system.

kbrwn 8y ago

No surprise that low income consumers choose to consume rather than save as saving account with a low balance has no direct impact on generating additional wealth.

sigstoat 8y ago

https://www.thestreet.com/story/14296470/1/americans-spend-big-on-lotto-tickets-and-here-they-spend-4-times-the-average.html https://www.thestreet.com/story/14296470/1/americans-spend-b... so the average american doesn't have $400 saved up, _and_ spends $206 per year on lotto tickets. if we're in society collapsing danger, maybe we could look at the organizations running the lottos?

dpark 8y ago
The average American spends about twice that on just beer (not all alcohol) every year. I share your concern for poor people dumping money into the lottery, but that’s actually a pretty small vice.
- sigstoat 8y ago
  easier to get rid of lotteries; no constitutional amendment required. some of the beer spending also comes from people more able to tolerate the wasted funds; those with the least are the most likely to play lotteries. https://journalistsresource.org/studies/economics/personal-finance/research-review-lotteries-demographics https://journalistsresource.org/studies/economics/personal-f...
  - dpark 8y ago
    I’m not sure that’s true. The Supreme Court just struck down an anti-gambling federal law. https://mobile.nytimes.com/2018/05/14/us/politics/supreme-court-sports-betting-new-jersey.html https://mobile.nytimes.com/2018/05/14/us/politics/supreme-co... It’s not clear at all that the federal government could ban the lottery without a constitutional change.
    - gizmo686 8y ago
      Here is the opinion: https://www.supremecourt.gov/opinions/17pdf/16-476_dbfi.pdf https://www.supremecourt.gov/opinions/17pdf/16-476_dbfi.pdf The court found the law unconstitutional on procedural grounds. In particular, the federal government did not ban gambling. It required states to ban gambling. The court ruled that the federal government cannot force states to pass laws.

cwperkins 8y ago

Does anyone know of a datasource that analyzes this as the number of people living paycheck to paycheck vs. spending habits?

protomyth 8y ago

People wonder why payday loan companies are becoming more popular. It might be kicking the can down the road, but when $400 is a killer then people will kick the can.

himom 8y ago

UBI N O W.

makecheck 8y ago

We can’t improve the money situation without improving the “free time” situation too. For people with 2+ jobs and hours of commuting, when is there time to do anything that would remotely fix their financial situation? Exhaustion for starters. No time for more school or other improvements that might net a better job. No time to even research where a better place to live might be. Heck, even voting for someone to help change your situation takes a lot of time, if you want to figure out which candidate is truly in line with what you want.

prewett 8y ago

Wow, everything in this thread is "those evil rich people, fleecing the poor." Quite aside from the fact that the target audience of this site can expect to make around 2X the median income of the US--meaning that we are those evil rich people--surely the problem isn't this one-sided. The poverty rate in the US is about 13% [1]; we would expect those people to not have any savings. That leaves about 33% unaccounted for. It looks like 42% of workers in the US make less than $15/hr [2], which does fit the figure fairly close. However, some of those are teenagers, so they don't count as they aren't living on their own. I'd like to see some analysis of spending. How many people don't have any savings because they aren't spending wisely. This girl [3] discovered that she could actually save for a deposit for a house in London, despite making under £40k (about $53k). That's less than the median US income and presumably doesn't go all that for in London. She was simply spending a lot of money on food, drinks, and specialty coffee. [1] https://poverty.ucdavis.edu/faq/what-current-poverty-rate-united-states https://poverty.ucdavis.edu/faq/what-current-poverty-rate-un... [2] http://fortune.com/2015/04/13/who-makes-15-per-hour/ http://fortune.com/2015/04/13/who-makes-15-per-hour/ [3] https://www.theguardian.com/money/2018/jan/29/can-you-really-save-for-a-deposit-by-ditching-coffee-and-avocado-toast-i-tried-to-find-out https://www.theguardian.com/money/2018/jan/29/can-you-really...

zaksoup 8y ago
I would push back on this bit about teenagers: > so they don't count as they aren't living on their own. I think it's a significant assumption to make that parents would be able/willing to cover a random $400 expense. The study did not specify a specific type of emergency expenditure, just that it was unexpected. I can fully imagine a scenario where parents would cover hospital visits for a bad case of the flu, but not cover an abortion, or repairs to a car from an accident where the child was at fault. The latter two examples still seem like fair 'unexpected expenses' for the child dependent making < $15/hour
- ryanwaggoner 8y ago
  I think this was a survey about households though, so not clear if teenagers living at home would count.

skookumchuck 8y ago

> Those who don't have the cash on hand say they'd have to cover it by borrowing or selling something. Be careful about concluding that these people are poor. I'm not poor, and I have no cash. Everything is invested. Piling up cash in a savings account just means it'll get eaten away by inflation. This is hardly uncommon. If you've got a house with a large payment, you aren't poor, even though you may not have any cash. Your money is invested in the house.

dionidium 8y ago
A version of this comment appears every time this is discussed. This isn’t what we’re talking about. These aren’t liquidity problems. People really just don’t have the money.
- skookumchuck 8y ago
  It's literally what the article is talking about. I included the quote. I suggest they are misinterpreting their data, and are measuring the wrong things. It's like that daft statistic a few years back that 40% of corporations don't pay any income tax. This raised all sorts of righteous hysteria. Never mind that 40% of corporations lost money that year, and income taxes are not due when you lose money.
  - dionidium 8y ago
    Maybe the best thing I can do here is concede that "can you find $400 for an emergency" is an imprecise question that this article doesn't (and can't) answer. I think I know what it's saying (probably because I have a lot of experience with the type of people I'm imagining) and you guys think you know it's saying something else (because of your own experiences having money that's inaccessible), but, ultimately, the question is too imprecise for either of our claims. So, yes, I strongly suspect I'm right -- "selling something" is pretty plainly not referring to financial instruments -- but it's true that it's more intuition than fact.
- gizmo686 8y ago
  That may very well be true. But the point still stands that "can you find $400 for an emergency" does not measure what you think it measures. Having said that, it is still problematic that %40 of the population answers no to this; and I suspect that in most cases it is actually the case that they simply do not have the wealth. In fact, I think the phrasing in this article is far less problematic than the "in savings" phrasing one often sees. Further, I would go so far as to say that people, who have wealth but cannot cover an unexpected $400 expanse are genuinely victims of poor financial planning. If you are in that position, open a line of credit. Most credit cards will give you at least 1 month of 0% interest; and if you have equity in your house you should be able to use that to secure another low interest line of credit if you need to. Sure, you don't want to rely on either of these for day to day expenses, but they are a fine solution to solve the liquidity problem of emergencies. EDIT: I suppose my solution may fall under the catagory of "borrowing" which the article says is how the quoted %40 would cover such an expense. I read that line as talking about borrowing from friends/family.

simonsarris 8y ago

The question I'd love to know the answer to is: If we gave every American $2000, what would the % be by the end of the summer?

RickJWagner 8y ago

Yet 77% of Americans have a smartphone. (Not a cell phone. A more expensive smartphone.) This is a self-induced injury. Financial education should be mandatory, and started in elementary school.

joeblow9999 8y ago

I do not believe this. Even when I was flat broke starving I could always scrape up 400 somewhere and that was decades ago. Credit cards, friends and family, pawn shops. There's a way. This is a VERY misleading headline.

enraged_camel 8y ago
So basically, things were different for you decades ago, therefore the article headline is misleading? You may want to rethink that.