can you come up with $400 in an emergency

152 Replies

Hi,


I was reading an article a few days ago that said 40% of Americans can't come up with $400 if they had an emergency. I couldn't believe almost half the country is that broke. The median household income is 60k, so where is the money going. Was Senator Chuck Grassley right that they were spending it on booze and women lol. I usually don't spend more than 1000 a month. I own my own place so there is no mortgage and I'm single. Please let me know if you could come up with a $400 in an emergency and what your expenses are.

-200--food

-400- car payment, gas and insurance

-100- utilities

-100- internet and phone

-200-- property taxes and house maintenance

Total

-1000

Originally posted by @Laith Ali :

Hi,


I was reading an article a few days ago that said 40% of Americans can't come up with $400 if they had an emergency. I couldn't believe almost half the country is that broke. The median household income is 60k, so where is the money going. Was Senator Chuck Grassley right that they were spending it on booze and women lol. I usually don't spend more than 1000 a month. I own my own place so there is no mortgage and I'm single. Please let me know if you could come up with a $400 in an emergency and what your expenses are.

-200--food

-400- car payment, gas and insurance

-100- utilities

-100- internet and phone

-200-- property taxes and house maintenance

Total

-1000

 Its wild - but its true

Medium smartland logo rgb blackSteven Gesis MBA, Smartland | [email protected] | 440‑374‑8403 | http://www.smartland.com

it's not that wild when you think about regular people with low paying jobs and kids. $15/hr 40 hours a week =$600 (if u get40hrs. After taxes 600 is more like $500. So you got $2000/ month. rent: $600-700 car payment $200-300 gas$$$100 (low) car insurance$100-200 cell phone$100 utilities: gas/electric/water$200 more than half of your monthly income is already eaten up before grocery and other incidentals. add in a child or 2 or 3 that you have to feed and clothe, send to daycare or buy pampers etc and suddenly it's not so hard to see why people are broke. that's why check advance tote places exist. allot of people are out here living check to check literally and any little hiccup can throw everything off track.

It's going into paying for things people probably don't really need

Some people probably really down bad. Some people probably make quality/decent money, but just have poor spending habits.

Like Leon said, they pay rent and that is the reason they are renters.  There has been a lot of discussion here about the trend for younger people renting now instead of owning. They like to move around, switch up jobs, no anchors.  Press your kids on money management, beat it into them. Save. The sad part is that the pool of people with no savings includes a lot of older baby boomers. Going to be an awakening for many. 

Americans are saving the least amount of $ in recorded history and are in debt the most in history. When this happens any slight downturn in the market or increase in interest rates creates a snowball effect of defaults

By 2020 many analysts predict with interest rate hikes and some slowing of the economy to buckle up as we may go on another wild ride

Number one rule for financial success, no matter how much or little you make:  Spend less than you make.  This is a hard rule to follow, no matter how much or little you make.

Jon Holdman, Flying Phoenix LLC

@Laith Ali   I can tell you live in a fairly cheap area.  Here just the water bill can be $100 without any outside watering.  You also did not mention health insurance and the fortune some people spend on other medical bills every month.

Chris, that's a smart idea. I should start looking for poor friends so I can use them as a gauge when to exit the market.

I thought teachers, police officers, firefighters and other government workers were making like 60k and some I heard in san Francisco were making 120k a year. No wonder they go crazy when someone wants to cut their pension.

@Laith Ali

For us medical/dental bills have been our biggest expense. WITH retiree INSURANCE including our premiums we have averaged over $2000 every month for the last six years in medical expenses. Once you have an acute event that becomes a chronic illness it just keeps piling up. My husband is eligible for medicare at the end of next year, that will help some but I still have 9 more years to go.

But yes, we could still come up with $400 in an emergency.

Once I learned how to save I enjoyed watching my account grow. I will never live pay check to pay check again. I save 50% of my take home pay.

I work with a lot of people in this category. They live paycheck to paycheck and have been for years. All of them make over $20 an hour. When I ask them if they want some overtime, they usually turn it down. These are the same ones that talk about their $50-60k cars or trucks they drive and the $250-300k houses they live in. My wife is a teacher and I'm a production manager at a paper company. We could afford a bigger house and luxury vehicles but choose to live well below our means so we can build wealth and retire in relative comfort. I drive an '06 Nissan truck and my wife drives a '08 Ford Escape. Our 3 grown kids drive better vehicles than we do. I keep telling my wife "if it ain't broke, we ain't replacing it". My goal is to hit 300,000 miles on my truck (at 220k now) before I even consider buying something else. I've always been good at saving money. If my bank account ever got below $1,000 I would start to panic. Now that we have a few rent houses, we always have to keep money on hand for emergency repairs. If I couldn't come up with $400 I would be out there looking for a second job.

Originally posted by @Michael Biggs :

@Laith Ali   I can tell you live in a fairly cheap area.  Here just the water bill can be $100 without any outside watering.  You also did not mention health insurance and the fortune some people spend on other medical bills every month.

I think the midwest in general is pretty cheap if you live outside the city. I laugh when I hear people say they spent 800k on a house in a big city that would cost 80k here. I eat pretty good for 200 a month which is 50 a week. I usually get orange juice, steak, boneless chicken to make a sandwich, and a 5lb of potatos is pretty cheap like $2.50, and flour is only like $2.5 for 5lb. You just need to take time to learn to cook and you can food better than any restaurant. 

I don't have health insurance. I cut my hand pretty badly and I just went to the urgent care and it only cost 100 for a visit. I went back again for a 2nd checkup and in total it cost 200. Although I don't really recommended everyone do what I do, I think its pretty sad that people feel like they will die tomorrow if they don't get insurance. A co-worker got laid off and he was paying 900 a month in health insurance from his own pocket. He had to dip into his 401k just to pay his bills.

I wouldn't be able to cough up $400 that quickly and I'm single with no children or, even, pets to tend to! Honestly, not a lot of people I know, personally, would be either. This is a part of why I got into real estate investing. 

- RHY

There is some Forbes article floating around with a point that "if you've got $10 in your pocket and no debt, you're richer than 15% of American households put together!" I guess I'd believe it. 

It's crazy that so many people can't scrounge up 400 bucks, but at the same time, I've been close to that struggle. Though, it was in my early 20s. I can't fathom having kids and not knowing if I'll be able to pay for the next doctors visit. 

And I'm always astounded and shocked by American's ability to save by the number of nice cars I always see when I drive past trailor parks. Seems like a decent number of people that live in mobile homes can afford an Escalade, but that $400 emergency fund is just a pipe dream. 

@Laith Ali I work with a lot of people that couldn't come up with $400 dollars for emergency, but can come up with $400 dollars to go to the bar.

@Laith Ali  I do know many people that wouldn't be able to produce $400 on request but I can safely say that I am not one of those. Sad part is many people don't even think they can make the changes to improve their financial state. 

I can gladly say that I could come up with $400 if I needed to, but many of my friends and people I know could probably not do the same. A majority of the people that I know are spending all of their money on experiences or luxury items vs saving for their future.

I read this article yesterday and it just blows my mind that my generation believes that they can retire with next to nothing in savings.

https://www.cnbc.com/2018/01/16/how-much-money-millennials-think-they-need-to-retire.html

Honestly, I don't think that the issue is that someone can't live off of $60K.  I think it comes down to the fact that people live beyond their means.  So, that $60K person is living in a house with a $1,500 house payment, $200-$300 in utilities, a $100+ cell phone bill, $200 in food at home, but another $200-300 eating out, a $500 car payment, Full package Directv at $180 per month, drinking starbucks coffee at $5 a cup that they pick up on the way to work....and the list goes on.

Not any one of the items listed seem unreasonable, but combined with the salary to support that kind of lifestyle is excessive for that person, making them live outside of their means.

Originally posted by @David Graham :

I can gladly say that I could come up with $400 if I needed to, but many of my friends and people I know could probably not do the same. A majority of the people that I know are spending all of their money on experiences or luxury items vs saving for their future.


Seems like every single woman's profile on every single dating app has "traveling the world" as their #1 priority. I always wonder how they're going to afford that. I enjoy and do travel myself, but never had (or will) gone into debt for it.

Originally posted by @Cara Lonsdale:

Honestly, I don't think that the issue is that someone can't live off of $60K. I think it comes down to the fact that people live beyond their means. So, that $60K person is living in a house with a $1,500 house payment, $200-$300 in utilities, a $100+ cell phone bill, $200 in food at home, but another $200-300 eating out, a $500 car payment, Full package Directv at $180 per month, drinking starbucks coffee at $5 a cup that they pick up on the way to work....and the list goes on.

Not any one of the items listed seem unreasonable, but combined with the salary to support that kind of lifestyle is excessive for that person, making them live outside of their means.

$60k in OK is not $60k in CA, also. I'd venture you'd need at least $90-100k in that place. 

You will see some of the nicest cars around in apt bldg parking lots and trailer parks.  That just blows me away.

I've been broke and grew up broke, but not poor.  Poor to me is a lifestyle and mindset. 'I am poor.  That's the way it has always been and is the way it's going to be'. Broke is a temporary condition to be improved upon.  'My finances are short right now, but I have an action plan to earn more and save more and keep my priorities right.'

I know a lot of people 'at the bottom' trying to sober up from substance abuse that have lost everything. I try to help them with a hand up if they ask and are ready. I'm almost 8 years sober myself. 

I also work with some HUD tenants that no way could come up with $400. If they hint at wanting to improve, I try to help offer them connections or a job if they're worthy. Most just complain as they select one of their 200 channels or face in $800 phone as they drive away in a nicer car than I have.

Nothing wrong with being broke as long as you still have hope and are willing to prioritize and improve.  Yes it is very sad that in a country like ours with more opportunities than ever that $400 can tie so many people up.

@Laith Ali the median household income is $60K but keep in mind that includes two income earners in many cases. So in your example of a $60K teacher, they may be married so total household income is probably over double that. Teachers, police officers and firefighters are not poor by US standards. Those are actually good paying jobs. Those households are in the top 50% of wages. Factory workers, customer support, retail and similar are the low paying jobs. Many of those people make $20-30K per year and they have NO pension. Really no business has a pension any longer, that time has passed long ago with the advent of IRA/401K.

Your example of household costs is very low (great for you). You also have to add rent or mortgage, because most people have an expense there of $800 or more. It is pretty easy to get to $2000 per month in essential expenses. Of course that doesn't include fun money for eating out, cable, alcohol, toys and the like. Some households spend $200 on cable and $1000 just eating out each month. 

This isn't completely income related. There are many people earning a great salary that can't come up with $400. It is the continuous spending cycle that is to blame. Expectations have changed. Young people today refer to it as a hardship if they can't go on vacation with friends to a tropical paradise. I have heard that multiple times on this forum, people say they cut spending by "sacrificing vacations". Look back at older generations and most went their entire life without ever leaving the country on vacation. It is great that our standard of living has increased, but some people need a reality check on what hardship and sacrifice really is.

Yes , I can . Since I have been 17 years old . I always have $200 cash in the back of my wallet for emergencies .  Not including walking around money . I NEVER use my credit card for food , or fun . I have backup financial plans for major problems , and backups for those backups .  

Buying investment properties I ALWAYS go in as a CASH buyer . It speeds up the process , refi afterwards if need be . 

Sad but true. I recently had someone wanting a rental. They had to put off moving in because they didn't have enough to pay prorated rent to move in early. However, they drive two cars that cost 90K total...and they pay notes on these. They have their priorities. They pay me on time every month, but doubt they have much, or anything, left over. I see lots of people that will be tenants forever...some by choice, others by finances. Look how much the average person has in their IRA or 401K.

No company avatar mediumJohn Thedford, John Thedford | 239‑200‑5600 | http://www.capehomebuyers.com

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