In a pinch, half of U.S. families can’t find $2,000

[SoCalDem]

http://www.daytondailynews.com/business/in-a-pinch-half-of-u-s-families-cant-find-2-000-1182312.html

n-Depth coverage
In a pinch, half of U.S. families can’t find $2,000



By Mark Fisher, Staff Writer Updated 10:54 AM Saturday, June 11, 2011

Half of American families — including a growing portion of the country’s middle-class — would not be able to cope with an unexpected expense that required them to come up with $2,000 within 30 days according to a study that illustrates both the fragile nature of family finances and the depth of the nation’s financial crisis.

snip

The researchers wanted to measure American families’ ability to access emergency funds, so they asked 2,148 people between 18 and 65 the question, “How confident are you that you could come up with $2,000 if an unexpected need arose with the next month?” The amount of money and time frame reflects the cost of an unanticipated car repair, home repair, medical or legal expense. More than a quarter of Americans (27.9 percent) reported that they would not be able to cope with such an expense, while another 22.1 percent responded that they probably would not be able to come up with the money.

When asked the same question posed to the national survey respondents, Amy DeMordaunt, 43, of Beavercreek, said she “probably could” come up with $2,000 within 30 days — but would likely obtain it by not paying off her entire credit card bill.

snip

DeMordaunt’s response mirrors those in the survey who suggested they would resort to measures that personal-finance experts don’t recommend in order to cope with a financial emergency. The study’s authors conclude that financial hardship in America “is not limited to the poor or to a small group of the population” but instead extends to “those with higher-and-average income and higher educational attainment.”

The survey showed that while most people who said they could come up with $2,000 responded that they would withdraw from their savings, nearly one in five (19 percent) would sell some of their personal property to generate the cash and more than one quarter would do so “by resorting to what might be seen as extreme measures.”

snip

[MrScorpio]

1. I know that I can't

At the end of the month, I'm lucky that I can even find $20

[Liberal_in_LA]

3. :-(

[bbinacan]

2. This has already been posted. n/t

[SoCalDem]

4. excuuuuuuse me for not being here 24-7

thanks for your concern:rofl:

[bbinacan]

5. Just do a simple search first. n/t

[SoCalDem]

6. aye aye, Captain Internet.. I'll get right on that

[bbinacan]

10. Thanks!

You're a good sport.

[neverforget]

26. Haha......Captain Internet....Good one

:rofl:

[pnwmom]

11. Why? You are assuming that every person who might be interested

in READING the article here would do an search on a topic they hadn't even known existed. Or that every DUer who might be interested happened to see the article when it was first posted.

I think this article can't be posted too often. It's a good reminder of just how shaky the economy is.

[bbinacan]

13. When you post,

The admins ask you to look at the recently posted OPs. I've certainly been guilty of a dupe post and definitely heard about it. Thank you.

[Bonobo]

19. I didn't see it so the OP did a good thing.

As for you, I don't see what your beef is.

There are about 50 Wiener threads out there for ya.

[bbinacan]

25. Good point. n/t

[pnwmom]

30. "Recently" is the operative word. Not "ever." n/t

[bbinacan]

60. Valid point. n/t

[elocs]

20. Evidently some get a special dispensation from being a good citizen.

http://upload.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=103&topic_id=607537&mesg_id=607537

Yeah, it's really tough to take a minute to do a search.

[SoCalDem]

22. Wow.. tag-teaming me now

mea culpa..mea maxima culpa

[Art_from_Ark]

40. Ha ha ha ha ha ha ha

I just had to laugh out loud when I saw that cat picture! :rofl:

[likesmountains 52]

27. well,the OPs are in two different forums...relax

One is in Editorials, the second is posted in GD

[left is right]

15. thank you for posting this

I am not here but an hour or so a day. I read only the latest page. I start at thebottom and read up, I may refresh once or twice. I would have missed this interesting item had you not posted. I do not understand the hubub about reposting But I would offer a simple suggestion. If anyone is offended by a reposting, perhaps they could not read it

[pnwmom]

8. So? Maybe it should be posted everyday. n/t

[femrap]

33. Yes. Let's.

And let's do a DU poll as well.

What is this the DU Homeland Security Police??? Geez.

[hobbit709]

7. I'm willing to bet a good percentage couldn't come up with $1000

[left is right]

18. I could possibly come up with a

nickle.98

[NYC_SKP]

9. I'm kicking this.

And recommending.

:hi:

[JVS]

12. I can understand this being a problem for really poor people, but if you're nearly 50th percentile..

and can't swing that (as some of these respondents must be) then you really suck at handling your money.

[Yavin4]

35. Not Necessarily. Take Transportation.

In most of this country, you need a car to do anything, and many people completely underestimate how expensive it is to own a car. Those kind of expenses can eat up your savings.

[hunter]

14. We're on the "Crushing Medical Bills for Life" plan.

If something else comes up, we just don't pay 'em that month.

My favorite pastime is joking around with collection agents. The cheerier I am, the less likely they are to call back.

:patriot:

[Bonobo]

16. Dental costs, hernia operation or any of dozens of comment medical problems...

That's all it's going to take it to knock you into homelessness...

You can ignore it if it's just you, but what if you have children.

Did you ever have to give your kid an aspirin because you can't afford dental care?

Or maybe go to Walgreens and buy one of those temporary filling things or oil of clove?

America is dysfunctional.

[w8liftinglady]

17. Thank you. I've been there. It sucks.

[bhikkhu]

21. Cancel Christmas, birthdays, and a summer trip...

and we could. The last couple of years we have been able to stretch out our tax refund to cover the gaps left by a not-quite-adequate monthly income,, and allow the holidays to be fairly normal. This summer we're visiting San Francisco for a day, staying with relatives, and hitting a show my daughter wants to see.

I could come up with $2,000, but I would sure feel poor and like not a very good parent for the next few months...

[SoCalDem]

24. When my best friend's son was killed in a car accident

she had $320 in her checking account, and a house payment due the day of her next paycheck..We gave her the money to bury her son because she just did not have it.

He had a small insurance policy that she did not know about until after the burial, & she paid us back, but there was no way she could have come up with that money in a hurry..

[obxhead]

23. I would have to answer "probably"

Meaning I probably could. However, I would become unemployed as I would have to sell my vehicle to get it. Living where I do, that would be a rapid path to becoming homeless.

I wonder how many of the probably and certainly answers would be in a similar situation.

[blueamy66]

51. Yep, I could sell my car

or take out a big fat title loan or ask my boss or my fiance's brother for the money?

But I don't have it in savings.

[obxhead]

54. I almost had to get a title loan at one point.

132% interest with no benefit from paying it off early. I chose other less than kosher means of getting the $500 I desperately needed.

[blueamy66]

55. I've done it once.

For $200....paid back $227, I think, 2 weeks later. It was a lifesaver for me at the time.

[roamer65]

28. I am in the "certainly" category.

I am really surprised that category percentage is so low. It is scary.

[pa28]

29. Alarming. Even worse is the 25% who said "probably".

That means only the remaining 25% could come up with $2,000 "for sure". I'd almost hate to see the breakdown for dealing with a major emergency. Like 10K or so.

K&R

[DBoon]

31. The same 50% that "don't pay any taxes"

and so life is easy?

People who are in the top 25% of the income range have a hard time understanding how badly off the median income family has it.

People in the top 1% of the income range have absolutely no clue.

[high density]

32. Does that mean 75% of the country has no savings at all?

After that, not even $2000 in free credit on a credit card you could use as a cash advance?

That's kind of hard for me to believe.

[Yavin4]

36. "Does that mean 75% of the country has no savings at all?" Yes.

Wages have been stagnant for years while the cost of living had increased, esp. energy costs. People underestimate the costs behind owning and operating a car.

[slackmaster]

34. I'm so glad that I bought a house in 1994 and haven't leveraged my equity

I could come up with $100,000 on short notice if I really needed it.

[kelly1mm]

41. Yes, kind of scary that the figures are so low. I can have $3000 in about

5 seconds as I almost always have that kind of cash with me as I buy cars all the time. $15k would take a trip to the house safe. I could probably get $100k but just barely if that in 30 days if I did not want to tap into 401ks

[here_is_to_hope]

37. If I can rob a bank or two, sure. n/t

[Odin2005]

38. And yet the elites bitch at the poor, telling us to save.

Fuck those elite fucks.

[lildreamer316]

39. Hell, we can't find $200.

Are you kidding? Sheesh.
..and I am in the middle of bartending school, btw.

[snooper2]

46. Out of all my bartending friends I know of not one who went to school for it

Everyone learned the trade by working their way up....

I thought those things were a scam?

[FreeJoe]

42. Survey Says

Here is what the actual survey that was the basis for the article says:
http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2011_spring_bpea_papers/2011_spring_bpea_conference_lusardi.pdf

To be clear, the survey wasn't based on an analysis of people's ability to pay. It was based on their responses to the question. Whether people are too optimistic or pessimistic in their responses is unclear. I suspect that a large majority of the people could raise the money if necessary, but that it would be very, very painful for some.

I found this quote interesting "It seems somewhat unbelievable that nearly a quarter of households making between $100,000 and $150,000 claim not to be able to raise $2,000 in a month". I work with a lot of people in this income category and live in a low cost of living area. I know many that are saving money like crazy but I know others that spend every last penny that they earn. I suspect many of them would have trouble raising $2,000 at many points during the year.

It has always been drilled into me that you need to have at least 3 months of expenses in liquid funds and another 3 months accessible in a pinch. I realize that a great many people aren't in a position to do that. The fact that Starbucks sells $4 coffees by the boatload, that the movie theaters are crowded with people buying food at their concession stands, that people buy lottery tickets, that huge numbers of people pay for cable/satellite TV, and that our cars and houses keep getting bigger is interesting in light of this survey. It tells me that we have way too many people that don't realize the danger of living financially close to the edge.

[SoCalDem]

43. Millions of people a a few missed-paychecks away from living in their cars

When so many people have debts they cannot easily pay off, a suddenly-lost job can catapult them right into disaster.:(

[FreeJoe]

I agree

I agree and I think we need to tackle two different issues. On one hand, we need to make financial catastrophes less frequent by establishing universal health care and providing a broader safety net.

On the other hand, we have a lot of people that shouldn't be living close to the financial edge that are. I'm not sure how you fix that. There could be some inducements. We could create Emergency Savings Accounts that are exempt from means tests and have other attributes to encourage people. We could do a better job of teaching about compound interest (in both directions) in school.

My social group consists primarily of people with good incomes. A lot of them are financially incompetent. They live paycheck to paycheck with no savings but still spend money on all sorts of luxuries. I know someone at a company putting in a new HR system and he seriously said that if they delayed payroll by a few days, he'd be totally screwed. This is a guy that buys new cars every few years, has cable TV, eats out every day for lunch, and takes nice vacations every year.

Some people have no choice because they can't afford to save. A lot of people have a choice and are just too short sighted to do it.

[FreeJoe]

58. I agree

I agree and I think we need to tackle two different issues. On one hand, we need to make financial catastrophes less frequent by establishing universal health care and providing a broader safety net.

On the other hand, we have a lot of people that shouldn't be living close to the financial edge that are. I'm not sure how you fix that. There could be some inducements. We could create Emergency Savings Accounts that are exempt from means tests and have other attributes to encourage people. We could do a better job of teaching about compound interest (in both directions) in school.

My social group consists primarily of people with good incomes. A lot of them are financially incompetent. They live paycheck to paycheck with no savings but still spend money on all sorts of luxuries. I know someone at a company putting in a new HR system and he seriously said that if they delayed payroll by a few days, he'd be totally screwed. This is a guy that buys new cars every few years, has cable TV, eats out every day for lunch, and takes nice vacations every year.

Some people have no choice because they can't afford to save. A lot of people have a choice and are just too short sighted to do it.

[Rex]

44. Very few people I know can do so.

And most of them make 'good money'. The ruling party is going to get us all killed via poverty soon if they don't actually start acting like adults and fix the economy.

[FreeJoe]

59. I can't think of any

I know a lot of people that are lousy with their finances, but I can't think of anyone off the top of my head that couldn't raise $2,000 in 30 days. They might have to take out a home equity loan, trade down a car, or borrow money from a friend/relative, but they could do it.

[varelse]

45. K&R

and thank you - from one of the 'lurkers' who mainly looks at the DU front page now, and rarely anywhere else.

[kick-ass-bob]

47. And I thought I was doing a bad job by not having cash for 3 months of bills available.

n/t

[SoCalDem]

48. The new version of that is EIGHT MONTHS of income in reserve

because it takes so long to find a new job now:(

[kick-ass-bob]

49. Yeah, my goal is 6, but I don't yet have 3.

Blech.

[SoCalDem]

50. and for most people, it's impossible to NOT "borrow" from it

as "mini" emergencies crop up.. Every time we have a car in for just about anything it's at least $500.. We have enough liquid funds to cover, but probably most families do not..

When my friend left her scumbag husband, it cost her $2200 just to get a place to rent on her own.. She did not have it, so I loaned it to her, or she would still be living with that creep:grr:

[hfojvt]

52. How many of them could - by adding to their credit card bill?

My own credit line is probably 130% of my yearly income if I maxed all of them out.

But 50% of the population does not even have $2,000 of home equity, to say nothing of a savings account? Or does borrowing not count in this question?

Making a less than full credit card payment is just another form of borrowing, and usually not a good one.

[SoCalDem]

53. That's the ONLY way many people can handle an "emergency"

at least for the ones who still have access to a credit card:(

[RebelOne]

56. Fortunately, at the present, I could.

I was forced into retirement in 2010 because I was laid off. I had some savings and a 401K (but not a whole lot in it). But I am fixed financially for a few years until I have to eat cat food. But if there was an emergency, I could come up with $2,000. I just had to loan my son and his wife $500 for an emergency. Hopefully, they will pay me back.

[Blue Owl]

57. I'd have to sell a bunch of shit to get an extra $2K

And it's shit I don't wanna sell!