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> 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.

> 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.
TheCoelacanth 8y ago
That seems like an extremely foolish investment strategy. If you don't even have $400 in cash you can't even cover some minor unexpected car or house maintenance. Even a minor market correction at the same time as a month or two spent out of work could end up costing you many times more than you could lose in investment income by keeping a few months of expenses in cash..

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.

TheCoelacanth 8y ago

That seems like an extremely foolish investment strategy. If you don't even have $400 in cash you can't even cover some minor unexpected car or house maintenance. Even a minor market correction at the same time as a month or two spent out of work could end up costing you many times more than you could lose in investment income by keeping a few months of expenses in cash..