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The stat is from Bankrate's annual survey [0]. Every year all the outlets breathlessly report on how many Americans can't afford a $1000 expense, but this is a

by c22 2y ago

The stat is from Bankrate's annual survey [0]. Every year all the outlets breathlessly report on how many Americans can't afford a $1000 expense, but this is a disingenuous reading of the data. The actual question asked is: "Which of the following best describes how you would deal with a major unexpected expense, such as $1,000 for an emergency room visit or car repair?" And the number reported (which is usually above 50%) is derived from everyone who didn't respond: "Pay the cost from your savings" [0]: https://www.bankrate.com/banking/savings/emergency-savings-report/#sudden-bill https://www.bankrate.com/banking/savings/emergency-savings-r...

relaxing 2y ago
How is it disingenuous? The only other option for affording that ER visit is the 16% who say they could cut $1000 in discretionary spending to cover it. Taking out an unsecured loan isn’t it.
- c22 2y ago
  Well, 5% said "Something else," so the most charitable reading already puts us at 65% being able to afford it. But the way the question is worded leaves a lot of fuzzy room around the edges. For instance, a financially illiterate person may elect to put it on credit despite having enough liquid wealth not to need to (to get the airline points perhaps?) A shrewd investor may be able to cover it with a personal loan or by borrowing from family with a favorable rate that is lower than the expected return on their investments. The question asks which best describes what you would do in an emergency and only invokes $1000 as an arbitrary example. Some respondents may simply be confused or pedantic in their response. Additional bias can be injected when this number is re-reported by third parties, I've seen it reported as "X% of Americans..." "...Don't have $1000" "...Can't afford $1000 expense" "...Don't have $1000 in savings" "...Couldn't come up with $1000 in an emergency" And several other hyperbolic variations.
3eb7988a1663 2y ago
I am not sure the reading is entirely unfair. If you cannot pay for the emergency in cash, the alternatives on the table are not great. The breakdown of answers: 44% Pay the cost from your savings 21% Finance with a credit card and pay it off over time 16% Reduce your spending onother things 10% Borrow from family or friends 4% Take out a personal loan 5% Something else

by c22 2y ago

relaxing 2y ago

How is it disingenuous? The only other option for affording that ER visit is the 16% who say they could cut $1000 in discretionary spending to cover it. Taking out an unsecured loan isn’t it.

c22 2y ago
Well, 5% said "Something else," so the most charitable reading already puts us at 65% being able to afford it. But the way the question is worded leaves a lot of fuzzy room around the edges. For instance, a financially illiterate person may elect to put it on credit despite having enough liquid wealth not to need to (to get the airline points perhaps?) A shrewd investor may be able to cover it with a personal loan or by borrowing from family with a favorable rate that is lower than the expected return on their investments. The question asks which best describes what you would do in an emergency and only invokes $1000 as an arbitrary example. Some respondents may simply be confused or pedantic in their response. Additional bias can be injected when this number is re-reported by third parties, I've seen it reported as "X% of Americans..." "...Don't have $1000" "...Can't afford $1000 expense" "...Don't have $1000 in savings" "...Couldn't come up with $1000 in an emergency" And several other hyperbolic variations.

3eb7988a1663 2y ago

I am not sure the reading is entirely unfair. If you cannot pay for the emergency in cash, the alternatives on the table are not great. The breakdown of answers: 44% Pay the cost from your savings 21% Finance with a credit card and pay it off over time 16% Reduce your spending onother things 10% Borrow from family or friends 4% Take out a personal loan 5% Something else