8 ms·

Most Americans don’t have enough assets to withstand 3 months without income

98 points by hhs 6y ago

beer_cub 6y ago
If I missed one paycheck I'd be hosed, so this isn't surprising.
smart_jackal 6y ago
But America does give unemployment allowance to the laid off, so no need to worry?
- sethammons 6y ago
  It is different from state to state, but when I found myself on unemployment many years ago, it was less than my already meager earnings. It helped float us, but each month was negative cash flow.
  - kube-system 6y ago
    Isn’t unemployment less than earnings just about everywhere? I think the typical approach to unemployment isn’t really to make it like you never lost your job, but to provide just enough to get by temporarily.
    - guerrilla 6y ago
      Not less than their meager earnings. They were saying that they weren't making enough already and this was less, not that it being less than what some people make is bad. If you make the absolute minimum for survival, it shouldn't be less than that.
      - kube-system 6y ago
        Negative cashflow doesn’t cause immediate death. Many (most?) people who suddenly lose income have a a negative cashflow in the immediate term (especially in consumerist societies) — many expenses take time to adjust. And people generally aren’t planning to be on unemployment for the long term anyway.
        guerrilla 6y ago
        To not be catastrophic does not necessitate being good or even acceptable. Our systems of insurance can treat people better and we should want this because any of us can end up in that situation due to unforseen and even unforseeable events.
- finaliteration 6y ago
  My wife’s business had to shut down due to COVID-19 in early April. We filed for unemployment through PUA at that time and have yet to hear ANYTHING other than “your claim was accepted and we are processing it”. On top of that, the phone lines are totally backed up. We’re extremely fortunate because my income covers our monthly expenses, but it was a huge financial blow for us and we are conserving cash like crazy. I can’t even imagine someone who lost all their family income going through the same thing. So, yes, there absolutely is need to worry.
recursivedoubts 6y ago
And, what is worse, Americans have lost most of their non-monetary social capital: large extended families, neighborhood churches, civic groups, mutual aid associations, etc. https://en.wikipedia.org/wiki/Bowling_Alone https://en.wikipedia.org/wiki/Bowling_Alone Things are never as good or as bad as they seem, but it sure seems bad right now.
- deleted 6y ago
  [deleted]
- core-questions 6y ago
  Very good point. Social capital has arguably been under attack for decades. > large extended families There has been a continual anti-natalist push in the West for many years, from the propaganda side convincing people it's too much work to have kids, or that it will be way more fun to drink and party through your 30s than it will be to watch your family grow up and eventually have grandchildren; to the ever-more-easy access to abortion and birth control. Combined with the removal of all fertility-retaining social and religious structures around reproduction, the result has been a precipitous drop in the birth rate. What is not shown, however, in articles like the recent BBC one is the actual demographic makeup of the population and the birth rate faceted by various salient factors. It's certainly clear to anyone looking at that data that the demographics in 2050 or 2100 are going to make the West look unrecognizable, as there has been a massive influx of groups that still retain all of the social capital you're talking about and all of the reproductivity-enhancing structures I'm talking about. I'm all for people having control over their bodies and their reproductivity, but a complete picture of what happens to both one's own life and one's city and country is not made available to younger people who are making important life decisions in an individualistic, oftentimes solipsistic bubble. Later regrets when you're beyond the age of being able to easily have children can be turned to the profit of expensive fertility clinics, or simply silenced with quiet sadness and proxy replacements, whether they take the form of cats and boxed wine or other more expensive forms of compensation. > neighborhood churches As an ex-Christian myself, I understand the critique of Christianity-as-Science, i.e. Christianity as a system for describing the physical world, or history, or what will happen in the future is not particularly valid. However, by using heavily philosophical arguments to throw away the substance of the religion, the attendant social capital that went with it is also lost, replaced by nothing. A church is not just the words read inside of it; it's the people, the connections, the charity and acts of service, the volunteers that hold a community together and help facilitate handing the structure off to the next generation. All of this is gone, and while the critiques about specific implementations were valid, the critique of "getting together as people in an area and professing our willingness to be good people publicly to one another" cannot be made, at least not in good faith. > civic groups, mutual aid associations Note that these still exist, but they either have to be focused on utterly generic causes, or focused on particular minority groups (e.g. Chinese Benevolent Associations and so forth). In no way do I discount or discourage the actions of these groups, but it's worth noting that it would be optically impossible and even legally difficult to try to establish groups for the native or founding-stock populations in many countries in the West. > Things are never as good or as bad as they seem, but it sure seems bad right now. It's critical to remember that these situations came about in no small part because of policy decisions. It's not random, it's not unplanned, even if it is chaotic; it's the result of many hands' work, so like any complicated software system there may never appear to be any overarching unifying infrastructure other than what is papered on top of it by abstraction. Still, policy decisions like the 1965 Hart-Celler act have had ramifications that are felt in this exact way, and will continue to propagate both their negative and positive effects down through populations over time unless action is taken to prevent or revert effects that harm people and cities.
kanobo 6y ago
When you're living paycheck to paycheck your IQ and decision-making ability is effectively handicapped from having to constantly worry about eating and security. Combine that with a system that can be brutal if you don't have the means, this stat is not at all surprising.
- BLKNSLVR 6y ago
  > Combine that with a system that can be brutal if you don't have the means And there's the crux of it. "The system", when it's working towards a sustainable civilisation, must provide some level of protection for those who don't have the ability to make good decisions. Scammers and advertising as one example. Regulation and fines that are enforced and sufficiently discouraging. It's too easy to profit off the bottom end. Finding where protections intersect with personal freedoms / responsibility is the perpetual impossibility.
  - sv1123 6y ago
    Correction: who don't have the privilege to make good decisions, not ability :)
- aliante 6y ago
  Most poor Americans are quite fat. They are nowhere near in danger of starvation. They are just undisciplined.
  - agdtdudhegsjhs 6y ago
    Why wouldn’t you eat all you can when you’re not sure you’ll continue to eat?
    - aliante 6y ago
      Because the fear is clearly not based on reality given the extra 60 pounds most have. Nowhere are Americans starving in any meaningful numbers. Sure they might not always know a week in advance what they are going to eat, but they could cut their food spending by 1/3 and it would average out.
adamnemecek 6y ago
It's not most Americans, it's "77% of low- to moderate-income American households fall below the asset poverty threshold".
thrownawaygone 6y ago
When is America going to wake up to how it's becoming a failed state? Keep electing nincompoops and science deniers. So many are struggling because there does not seem to be a functional government or a society that is striving towards the overall well-being of its citizens. Sorry for the negativity, but the pandemic has exposed how truly dysfunctional this society has become. Unable to ban together to take care of a common, global health emergency. I've seen people disregard health department orders, and guidelines for stupid, selfish shit like keeping their kids in sporting leagues. Meanwhile, schools cannot open because infection rates are too high. </rant>
- ponker 6y ago
  “Failed state” is a technical term that does not mean what you are using it to mean. Please don’t hijack the term as it is useful to describe entities like Somalia, Yemen, Afghanistan, etc.
- bluedevil2k 6y ago
  “Failed state” is a total bogus hyperbole. American society is and has been one that favors self-reliance over community support. It’s probably religious in nature with the Puritans early on being a good example. Work hard, support your family and good things will come to you. Just cause you may disagree with that general societal belief doesn’t mean it’s wrong, and definitely doesn’t make it a failed state. Many people do very well here, better than they possibly could do in Europe or Asia. Some people don’t do well and end up worse off than they would be in Europe. That’s what we as a society have chosen, as evidenced by our elections, with Republicans doing very well election after election.
  - devin 6y ago
    When the country is struggling, it is not unpatriotic to look inward and wonder how we could do better. You seem to think that criticism of our cultural norms is beyond consideration. That lack of creativity is how we got here.
    - 6y ago
trilinearnz 6y ago
The study focused on low-moderate income households and whether they had any financial assets like stocks/bonds and mutual funds. That this segment has low representation in this respect doesn't surprise met at all, given the level of education / discretionary income needed to pursue such investments. Also, Western capitalist society saturates the populus with consumerism (which to be fair supports the economy), so there's that force at play as well.
snow_mac 6y ago
It's so stupid. Spend less then you earn, save, don't buy the latest shit. So many people waste their money buying new toys like the latest iPhones or Androids, fancy ass cars and expensive vacations. All my neighbors make like blue collar salaries; $50k at the most, but they have the latest treager grills, fancy infinitis, audis in their driveways, new tvs every year; and guess what tens of thousands in credit card debt
- snow_mac 6y ago
  But then theres me and my wife, we bought the cheapest house in the neighborhood, we bought and paid off cheap cars, we designed our finances so we could easily life off my wife's teacher salary. Sure I take dev money and we buy more with it, but our total cost of living fits right around $2900 with half of that going to my mortgage. We've added nice perks to the house: deck, redid the bathroom & kitchen etc... but those are for us and making us happy. We didn't do it to keep up with the jones
  - devin 6y ago
    I'm not sure the point of this comment in this context. Congratulations?
    - acquacow 6y ago
      The point is, that is how this should be done.
  - opwieurposiu 6y ago
    I live the same way, small house, cheap car. No debt. Then I see all the irresponsible people/biz/localgov getting bailed out and wonder why I bother. It would have been smarter If i could have figured out how to work the (fractional reserve banking) system, instead I just avoided it as much as possible.
- slavapestov 6y ago
  > Spend less then you earn, save, don't buy the latest shit. This logic breaks down when you get an unexpected medical bill, or the car you rely to get to your job breaks down and you get fired, etc. The latest iPhones and Androids are quite affordable compared to healthcare and rent in this country.
whatl3y 6y ago
Couple of thoughts: 1. Although I agree it’s a problem, this isn’t new news I don’t believe. I don’t have good references to point to right this second, but I swear I hear almost monthly if not more often that most people couldn’t come up with $500-1k in an emergency, much less multiple months of expenses. 2. The article points to COVID-19 exacerbating these findings, but on top of the cash every US tax payer received who made under the defined threshold, there were a ton of things put in place or implemented like aid, loan forbearance plans, rent extensions etc. as apart of COVID-19. It seems a little (but I guess not totally) surprising that this crisis is what brought to light this issue.
- snow_mac 6y ago
  Dave Ramsey would say ANYONE can come up with $1000 for an emergency fund...
  - drunkpotato 6y ago
    Dave Ramsey can say whatever he likes, he's the head of a massive personal finance brand. Having listened to a fair bit of him, and Mister Money Mustache, I can say it's a mix of decent advice and completely oblivious out of touch-ness, as well as a complete unwillingness to face how incentives actually work in the real world, despite an insistence, contrary to all evidence, that they are somehow hard-nosed realists dispensing truth. As in, their advice is worthwhile, in as much as it helps you live your life in a way that makes you happier. Beyond that, they're just as stupid as everyone else.
  - sethammons 6y ago
    is that missing a sarcasm tag? I've been poor to the point where saving _anything_ was not possible for years on end.
yalogin 6y ago
This is well known. The income inequality is high as is, but the number of below middle class to poor is also increased. Unfortunately there is no political will to help the situation. We are more than happy to provide trillions to wasteful spending but severely against spending on people. Decades of such behavior will of course hurt the country. The sad part is we stopped caring about fixing our house in prosperous times as well.
- rayiner 6y ago
  Not really: https://www.nytimes.com/interactive/2015/01/25/upshot/shrinking-middle-class.html https://www.nytimes.com/interactive/2015/01/25/upshot/shrink.... The percentage of households making below $35,000 (inflation adjusted) has shrunk since 1967, though it's up modestly since 2000.
  - zigzagzog 6y ago
    Does inflation account for housing costs?
umvi 6y ago
Even in the middle class people live unsustainable lifestyles above their means. We need to bring back a culture of living below means and self-reliance.
- slavapestov 6y ago
  The problem is that "living below your means" continues to decrease over time. Once you take housing, healthcare and college into account, inflation-adjusted wages have decreased over time, and more and more jobs are moving to a precarious "gig economy" model with no benefits.
- Accujack 6y ago
  No one likes being poor, and most people learn to live as well as they can with the income they have. Our society encourages this because it makes workers happy with less pay. Banks and businesses prefer consumers this way, and any attempt to get people to live "within their means" will fail because of the push back from that side as well as the general discomfort and distaste for living less well (and less healthily, at least in the US - quality food is expensive). A far better solution is to address income inequality and to bring equity to the results of everyone's work. Wage growth has been too low for decades which has been great for corporate owners and investors, but bad for society.
11thEarlOfMar 6y ago
> ... U.S. wealth inequality is more pronounced than income inequality. This should be obvious? Wealth can grow exponentially and more or less indefinitely, but income does not. Since 1990, median hourly wages are beating inflation by a slim margin. An investment in the S&P 500 in 1990, adjusted for inflation, would be worth 7x. With 4 companies now in the Trillion Dollar Club, that inequality seems to be accelerating. Does that imply that Americans are not wealthy because they don't plan their finances for the purpose of growing wealth? Andrew Yang wants to help with UBI, but I wonder if people would simply spend up to their new income and be in the same 3 month boat. They'd have more stuff and more fun and eat better and live in a better location. But many would still 3 months from insolvency. Personal financial management should be taught as a life skill in high school. technically, it does, but in practical terms, there is essentially no wage growth above inflation, 7% since 1990: https://www.brookings.edu/blog/up-front/2019/09/10/are-wages-rising-falling-or-stagnating/# https://www.brookings.edu/blog/up-front/2019/09/10/are-wages...
sabujp 6y ago
apparently "huge" businesses/franchisees don't either : https://moneywise.com/a/these-restaurant-chains-are-closing-2020 https://moneywise.com/a/these-restaurant-chains-are-closing-...
samsquire 6y ago
If you don't have an emergency fund of money, begin saving one now. You don't want to get ill and have no emergency money left besides.
ekianjo 6y ago
> A new study from Oregon State University found that 77% of low- to moderate-income American households fall below the asset poverty threshold, meaning that if their income were cut off they would not have the financial assets to maintain at least poverty-level status for three months. Low-to-Moderate income, if defined by the median being moderate, would count up to 50% as a whole group. 77% of 50% of the population is NOT "Most Americans", another deceitful headline not supported by data.
- boomboomsubban 6y ago
  How many members does a household have above 50% and below 50%? Further, the study is paywalled but some percent of the 50% above the median likely also fall below the asset poverty threshold. The headline may be wrong, I'm unsure, but you aren't even looking at the data.
MattGaiser 6y ago
Someone with unemployment insurance is classed as going to starve in a few months without a job. Except they paid into that. For the purposes of unemployment, insurance is saving. Someone without retirement savings is declared to be unable to retire. Except for Social Security and Medicare. They paid into those. Those are saving. What these miss is that plenty of saving is being done by people, but it is done through government programs so it does not get classified as saving.
jimrandomh 6y ago
This is a misinterpretation of what the survey data says. It's a widespread one, and worth correcting. A large fraction of people have debt, such as student loans, mortgages, car loans, etc. If they have a significant amount of extra cash, they'll use it to reduce their debt, because money sitting in a bank account makes less interest than the interest on a mortgage or any other sort of loan. So if you look at these peoples' bank accounts, they don't have any savings. Scary, right? But most of them do have lines of credit, so if they have a financial setback, they won't lose the ability to buy groceries, they'll just take on additional debt.
- sethammons 6y ago
  likely additional "unserviceable" debt.
Omie6541 6y ago
can someone please put a number on low-to-moderate-income? as in lower bound, upper bound. Couldn't find this in the article, and hence it makes less sense to me being a non-american.
RickJWagner 6y ago
I've always been amazed that basic money-handling skills are not the top of the curriculum starting in elementary schools. Everybody should know how to manage money, yet only a few people do-- and they are self-educated! There will always be a tiny percentage of people who are in financial trouble because they had some catastrophic illness, or they got fired repeatedly through picking bad employers, or something else. But the vast majority of people could learn to spend less than they make and invest for the future. It's completely simple. But it also requires discipline. I think therein lies the rub.

98 points by hhs 6y ago

beer_cub 6y ago

If I missed one paycheck I'd be hosed, so this isn't surprising.

smart_jackal 6y ago

But America does give unemployment allowance to the laid off, so no need to worry?

sethammons 6y ago
It is different from state to state, but when I found myself on unemployment many years ago, it was less than my already meager earnings. It helped float us, but each month was negative cash flow.
- kube-system 6y ago
  Isn’t unemployment less than earnings just about everywhere? I think the typical approach to unemployment isn’t really to make it like you never lost your job, but to provide just enough to get by temporarily.
  - guerrilla 6y ago
    Not less than their meager earnings. They were saying that they weren't making enough already and this was less, not that it being less than what some people make is bad. If you make the absolute minimum for survival, it shouldn't be less than that.
    - kube-system 6y ago
      Negative cashflow doesn’t cause immediate death. Many (most?) people who suddenly lose income have a a negative cashflow in the immediate term (especially in consumerist societies) — many expenses take time to adjust. And people generally aren’t planning to be on unemployment for the long term anyway.
      - guerrilla 6y ago
        To not be catastrophic does not necessitate being good or even acceptable. Our systems of insurance can treat people better and we should want this because any of us can end up in that situation due to unforseen and even unforseeable events.
finaliteration 6y ago
My wife’s business had to shut down due to COVID-19 in early April. We filed for unemployment through PUA at that time and have yet to hear ANYTHING other than “your claim was accepted and we are processing it”. On top of that, the phone lines are totally backed up. We’re extremely fortunate because my income covers our monthly expenses, but it was a huge financial blow for us and we are conserving cash like crazy. I can’t even imagine someone who lost all their family income going through the same thing. So, yes, there absolutely is need to worry.

recursivedoubts 6y ago

And, what is worse, Americans have lost most of their non-monetary social capital: large extended families, neighborhood churches, civic groups, mutual aid associations, etc. https://en.wikipedia.org/wiki/Bowling_Alone https://en.wikipedia.org/wiki/Bowling_Alone Things are never as good or as bad as they seem, but it sure seems bad right now.

deleted 6y ago
[deleted]
core-questions 6y ago
Very good point. Social capital has arguably been under attack for decades. > large extended families There has been a continual anti-natalist push in the West for many years, from the propaganda side convincing people it's too much work to have kids, or that it will be way more fun to drink and party through your 30s than it will be to watch your family grow up and eventually have grandchildren; to the ever-more-easy access to abortion and birth control. Combined with the removal of all fertility-retaining social and religious structures around reproduction, the result has been a precipitous drop in the birth rate. What is not shown, however, in articles like the recent BBC one is the actual demographic makeup of the population and the birth rate faceted by various salient factors. It's certainly clear to anyone looking at that data that the demographics in 2050 or 2100 are going to make the West look unrecognizable, as there has been a massive influx of groups that still retain all of the social capital you're talking about and all of the reproductivity-enhancing structures I'm talking about. I'm all for people having control over their bodies and their reproductivity, but a complete picture of what happens to both one's own life and one's city and country is not made available to younger people who are making important life decisions in an individualistic, oftentimes solipsistic bubble. Later regrets when you're beyond the age of being able to easily have children can be turned to the profit of expensive fertility clinics, or simply silenced with quiet sadness and proxy replacements, whether they take the form of cats and boxed wine or other more expensive forms of compensation. > neighborhood churches As an ex-Christian myself, I understand the critique of Christianity-as-Science, i.e. Christianity as a system for describing the physical world, or history, or what will happen in the future is not particularly valid. However, by using heavily philosophical arguments to throw away the substance of the religion, the attendant social capital that went with it is also lost, replaced by nothing. A church is not just the words read inside of it; it's the people, the connections, the charity and acts of service, the volunteers that hold a community together and help facilitate handing the structure off to the next generation. All of this is gone, and while the critiques about specific implementations were valid, the critique of "getting together as people in an area and professing our willingness to be good people publicly to one another" cannot be made, at least not in good faith. > civic groups, mutual aid associations Note that these still exist, but they either have to be focused on utterly generic causes, or focused on particular minority groups (e.g. Chinese Benevolent Associations and so forth). In no way do I discount or discourage the actions of these groups, but it's worth noting that it would be optically impossible and even legally difficult to try to establish groups for the native or founding-stock populations in many countries in the West. > Things are never as good or as bad as they seem, but it sure seems bad right now. It's critical to remember that these situations came about in no small part because of policy decisions. It's not random, it's not unplanned, even if it is chaotic; it's the result of many hands' work, so like any complicated software system there may never appear to be any overarching unifying infrastructure other than what is papered on top of it by abstraction. Still, policy decisions like the 1965 Hart-Celler act have had ramifications that are felt in this exact way, and will continue to propagate both their negative and positive effects down through populations over time unless action is taken to prevent or revert effects that harm people and cities.

kanobo 6y ago

When you're living paycheck to paycheck your IQ and decision-making ability is effectively handicapped from having to constantly worry about eating and security. Combine that with a system that can be brutal if you don't have the means, this stat is not at all surprising.

BLKNSLVR 6y ago
> Combine that with a system that can be brutal if you don't have the means And there's the crux of it. "The system", when it's working towards a sustainable civilisation, must provide some level of protection for those who don't have the ability to make good decisions. Scammers and advertising as one example. Regulation and fines that are enforced and sufficiently discouraging. It's too easy to profit off the bottom end. Finding where protections intersect with personal freedoms / responsibility is the perpetual impossibility.
- sv1123 6y ago
  Correction: who don't have the privilege to make good decisions, not ability :)
aliante 6y ago
Most poor Americans are quite fat. They are nowhere near in danger of starvation. They are just undisciplined.
- agdtdudhegsjhs 6y ago
  Why wouldn’t you eat all you can when you’re not sure you’ll continue to eat?
  - aliante 6y ago
    Because the fear is clearly not based on reality given the extra 60 pounds most have. Nowhere are Americans starving in any meaningful numbers. Sure they might not always know a week in advance what they are going to eat, but they could cut their food spending by 1/3 and it would average out.

adamnemecek 6y ago

It's not most Americans, it's "77% of low- to moderate-income American households fall below the asset poverty threshold".

thrownawaygone 6y ago

When is America going to wake up to how it's becoming a failed state? Keep electing nincompoops and science deniers. So many are struggling because there does not seem to be a functional government or a society that is striving towards the overall well-being of its citizens. Sorry for the negativity, but the pandemic has exposed how truly dysfunctional this society has become. Unable to ban together to take care of a common, global health emergency. I've seen people disregard health department orders, and guidelines for stupid, selfish shit like keeping their kids in sporting leagues. Meanwhile, schools cannot open because infection rates are too high. </rant>

ponker 6y ago
“Failed state” is a technical term that does not mean what you are using it to mean. Please don’t hijack the term as it is useful to describe entities like Somalia, Yemen, Afghanistan, etc.
bluedevil2k 6y ago
“Failed state” is a total bogus hyperbole. American society is and has been one that favors self-reliance over community support. It’s probably religious in nature with the Puritans early on being a good example. Work hard, support your family and good things will come to you. Just cause you may disagree with that general societal belief doesn’t mean it’s wrong, and definitely doesn’t make it a failed state. Many people do very well here, better than they possibly could do in Europe or Asia. Some people don’t do well and end up worse off than they would be in Europe. That’s what we as a society have chosen, as evidenced by our elections, with Republicans doing very well election after election.
- devin 6y ago
  When the country is struggling, it is not unpatriotic to look inward and wonder how we could do better. You seem to think that criticism of our cultural norms is beyond consideration. That lack of creativity is how we got here.
  - 6y ago

trilinearnz 6y ago

The study focused on low-moderate income households and whether they had any financial assets like stocks/bonds and mutual funds. That this segment has low representation in this respect doesn't surprise met at all, given the level of education / discretionary income needed to pursue such investments. Also, Western capitalist society saturates the populus with consumerism (which to be fair supports the economy), so there's that force at play as well.

snow_mac 6y ago

It's so stupid. Spend less then you earn, save, don't buy the latest shit. So many people waste their money buying new toys like the latest iPhones or Androids, fancy ass cars and expensive vacations. All my neighbors make like blue collar salaries; $50k at the most, but they have the latest treager grills, fancy infinitis, audis in their driveways, new tvs every year; and guess what tens of thousands in credit card debt

snow_mac 6y ago
But then theres me and my wife, we bought the cheapest house in the neighborhood, we bought and paid off cheap cars, we designed our finances so we could easily life off my wife's teacher salary. Sure I take dev money and we buy more with it, but our total cost of living fits right around $2900 with half of that going to my mortgage. We've added nice perks to the house: deck, redid the bathroom & kitchen etc... but those are for us and making us happy. We didn't do it to keep up with the jones
- devin 6y ago
  I'm not sure the point of this comment in this context. Congratulations?
  - acquacow 6y ago
    The point is, that is how this should be done.
- opwieurposiu 6y ago
  I live the same way, small house, cheap car. No debt. Then I see all the irresponsible people/biz/localgov getting bailed out and wonder why I bother. It would have been smarter If i could have figured out how to work the (fractional reserve banking) system, instead I just avoided it as much as possible.
slavapestov 6y ago
> Spend less then you earn, save, don't buy the latest shit. This logic breaks down when you get an unexpected medical bill, or the car you rely to get to your job breaks down and you get fired, etc. The latest iPhones and Androids are quite affordable compared to healthcare and rent in this country.

whatl3y 6y ago

Couple of thoughts: 1. Although I agree it’s a problem, this isn’t new news I don’t believe. I don’t have good references to point to right this second, but I swear I hear almost monthly if not more often that most people couldn’t come up with $500-1k in an emergency, much less multiple months of expenses. 2. The article points to COVID-19 exacerbating these findings, but on top of the cash every US tax payer received who made under the defined threshold, there were a ton of things put in place or implemented like aid, loan forbearance plans, rent extensions etc. as apart of COVID-19. It seems a little (but I guess not totally) surprising that this crisis is what brought to light this issue.

snow_mac 6y ago
Dave Ramsey would say ANYONE can come up with $1000 for an emergency fund...
- drunkpotato 6y ago
  Dave Ramsey can say whatever he likes, he's the head of a massive personal finance brand. Having listened to a fair bit of him, and Mister Money Mustache, I can say it's a mix of decent advice and completely oblivious out of touch-ness, as well as a complete unwillingness to face how incentives actually work in the real world, despite an insistence, contrary to all evidence, that they are somehow hard-nosed realists dispensing truth. As in, their advice is worthwhile, in as much as it helps you live your life in a way that makes you happier. Beyond that, they're just as stupid as everyone else.
- sethammons 6y ago
  is that missing a sarcasm tag? I've been poor to the point where saving _anything_ was not possible for years on end.

yalogin 6y ago

This is well known. The income inequality is high as is, but the number of below middle class to poor is also increased. Unfortunately there is no political will to help the situation. We are more than happy to provide trillions to wasteful spending but severely against spending on people. Decades of such behavior will of course hurt the country. The sad part is we stopped caring about fixing our house in prosperous times as well.

rayiner 6y ago
Not really: https://www.nytimes.com/interactive/2015/01/25/upshot/shrinking-middle-class.html https://www.nytimes.com/interactive/2015/01/25/upshot/shrink.... The percentage of households making below $35,000 (inflation adjusted) has shrunk since 1967, though it's up modestly since 2000.
- zigzagzog 6y ago
  Does inflation account for housing costs?

umvi 6y ago

Even in the middle class people live unsustainable lifestyles above their means. We need to bring back a culture of living below means and self-reliance.

slavapestov 6y ago
The problem is that "living below your means" continues to decrease over time. Once you take housing, healthcare and college into account, inflation-adjusted wages have decreased over time, and more and more jobs are moving to a precarious "gig economy" model with no benefits.
Accujack 6y ago
No one likes being poor, and most people learn to live as well as they can with the income they have. Our society encourages this because it makes workers happy with less pay. Banks and businesses prefer consumers this way, and any attempt to get people to live "within their means" will fail because of the push back from that side as well as the general discomfort and distaste for living less well (and less healthily, at least in the US - quality food is expensive). A far better solution is to address income inequality and to bring equity to the results of everyone's work. Wage growth has been too low for decades which has been great for corporate owners and investors, but bad for society.

11thEarlOfMar 6y ago

> ... U.S. wealth inequality is more pronounced than income inequality. This should be obvious? Wealth can grow exponentially and more or less indefinitely, but income does not. Since 1990, median hourly wages are beating inflation by a slim margin. An investment in the S&P 500 in 1990, adjusted for inflation, would be worth 7x. With 4 companies now in the Trillion Dollar Club, that inequality seems to be accelerating. Does that imply that Americans are not wealthy because they don't plan their finances for the purpose of growing wealth? Andrew Yang wants to help with UBI, but I wonder if people would simply spend up to their new income and be in the same 3 month boat. They'd have more stuff and more fun and eat better and live in a better location. But many would still 3 months from insolvency. Personal financial management should be taught as a life skill in high school. technically, it does, but in practical terms, there is essentially no wage growth above inflation, 7% since 1990: https://www.brookings.edu/blog/up-front/2019/09/10/are-wages-rising-falling-or-stagnating/# https://www.brookings.edu/blog/up-front/2019/09/10/are-wages...

sabujp 6y ago

apparently "huge" businesses/franchisees don't either : https://moneywise.com/a/these-restaurant-chains-are-closing-2020 https://moneywise.com/a/these-restaurant-chains-are-closing-...

samsquire 6y ago

If you don't have an emergency fund of money, begin saving one now. You don't want to get ill and have no emergency money left besides.

ekianjo 6y ago

> A new study from Oregon State University found that 77% of low- to moderate-income American households fall below the asset poverty threshold, meaning that if their income were cut off they would not have the financial assets to maintain at least poverty-level status for three months. Low-to-Moderate income, if defined by the median being moderate, would count up to 50% as a whole group. 77% of 50% of the population is NOT "Most Americans", another deceitful headline not supported by data.

boomboomsubban 6y ago
How many members does a household have above 50% and below 50%? Further, the study is paywalled but some percent of the 50% above the median likely also fall below the asset poverty threshold. The headline may be wrong, I'm unsure, but you aren't even looking at the data.

MattGaiser 6y ago

Someone with unemployment insurance is classed as going to starve in a few months without a job. Except they paid into that. For the purposes of unemployment, insurance is saving. Someone without retirement savings is declared to be unable to retire. Except for Social Security and Medicare. They paid into those. Those are saving. What these miss is that plenty of saving is being done by people, but it is done through government programs so it does not get classified as saving.

jimrandomh 6y ago

This is a misinterpretation of what the survey data says. It's a widespread one, and worth correcting. A large fraction of people have debt, such as student loans, mortgages, car loans, etc. If they have a significant amount of extra cash, they'll use it to reduce their debt, because money sitting in a bank account makes less interest than the interest on a mortgage or any other sort of loan. So if you look at these peoples' bank accounts, they don't have any savings. Scary, right? But most of them do have lines of credit, so if they have a financial setback, they won't lose the ability to buy groceries, they'll just take on additional debt.

sethammons 6y ago
likely additional "unserviceable" debt.

Omie6541 6y ago

can someone please put a number on low-to-moderate-income? as in lower bound, upper bound. Couldn't find this in the article, and hence it makes less sense to me being a non-american.

RickJWagner 6y ago

I've always been amazed that basic money-handling skills are not the top of the curriculum starting in elementary schools. Everybody should know how to manage money, yet only a few people do-- and they are self-educated! There will always be a tiny percentage of people who are in financial trouble because they had some catastrophic illness, or they got fired repeatedly through picking bad employers, or something else. But the vast majority of people could learn to spend less than they make and invest for the future. It's completely simple. But it also requires discipline. I think therein lies the rub.