NPR - "Americans' Savings Offer Little Shelter For Rainy Day"

[TomCADem]

I think this report confirms not only that people are starting to save more, but that the pre-recession "good times" of the Bush years were entirely illusory and driven by debt and easy credit. In other words, we were going bankrupt far earlier than the 2008 financial crisis, but the availability of easy credit obscured this fact. Indeed, prior to the financial crisis, the U.S. savings rate had declined to levels not seen since the Great Depression.

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For nearly two years, the U.S. economy has been struggling with a recession brought on by excessive borrowing, both for home mortgages and consumer purchases. Economists say many people have learned a lesson; the personal savings rate is inching back up as more Americans embrace the "new frugality."

Still, half of U.S. households don't have even modest savings, according to a new study conducted by TNS Group, a market researcher, with help from professors at the Harvard Business School and Dartmouth College.

The researchers conducted a survey to see how many households could round up $2,000 within 30 days to cope with an emergency, such as having a car breakdown or needing a major home repair. About half said that even if they turned to relatives for help, they could not come up with $2,000 for a "rainy day," the study found.

Earlier in this decade, consumers had easier access to credit to help with emergencies. For example, rising home values made it relatively easy to get a home equity line of credit to tap in case of an unexpected expense. But with real estate values down sharply, home-equity lines have dried up for many. At the same time, credit-card interest rates have soared.

The tougher credit environment makes it even more important for households to have their own savings to handle emergencies, according to one of the researchers, Dartmouth economics professor Annamaria Lusardi. The personal savings rate has crept back up from zero to about 3 to 4 percent, but is still about half the norm of a generation ago.

[barbtries]

1. savings?

what's that?

[laconicsax]

2. Who knows?

[kevinbgoode1]

3. My response exactly. . .

sheesh. . .even when I got a "raise" this year in salary, every single mandatory expense item also went up. Well beyond my raise. The utility bills have gone up (in one case 20%, in another over 33%), my car insurance rose slightly (I always wondered how I could have no claims for years...like...ever. . .the car depreciates in value each year, but it costs at least the same to insure), the interest rates went up on two credit cards (even though I always made payments on time). One MINOR medical surgery (and a car repair) wiped me out.

[Nikki Stone1]

6. The healthcare mandate bill will take another bite out of your income

...

[TomCADem]

9. Currently, Most Personal Bankruptcies Are Health Related - Elizabeth Warren

[Nikki Stone1]

10. That doesn't mean that being forced to pay for health insurance won't also cause financial problems

In fact, it will.

The only thing that would really solve these problems would be single payer.

[Naturyl]

4. Savings?

As a kid, I had a $50 savings bond...

That was the extent of my experience with "savings."

[cornermouse]

5. The insanity of what passes for personal finance management

theories. We're supposed to get out there and buy, buy, buy and spend, spend, spend to keep the business sector afloat. But we're also supposed to save, save, save for old age retirement and invest in the stock market so that (so that we will have money for old age except when the market stands on the brink of collapse and we lose most of the money we put into the stock market) it doesn't collapse while bailing out banks with our tax payer dollars so that they can kick people out of their homes and play all sorts of insane games with the credit card fees. All while we're getting less and less actual spending power from our jobs.

This business model is not going to be successful.

[Nay]

7. Don't forget--we're also supposed to put the kids thru college, put

the old folks into a nice retirement home, and do it all with a job that pays less and less.

[cornermouse]

8. Yep.