Hazelwood, MO · Member since 2017 · 40 posts · 21 votes
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.
Louisville, KY · Member since 2015 · 26 posts · 75 votes
8y
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$$$100 (low)
car insurance$100-200
cell phone$100
utilities: gas/electric/water$200
more than half of your monthly income is already eaten up before grocery and other incidentals.
add in a child or 2 or 3 that you have to feed and clothe, send to daycare or buy pampers etc and suddenly it's not so hard to see why people are broke.
that's why check advance tote places exist. allot of people are out here living check to check literally and any little hiccup can throw everything off track.
Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
8y
Its way more complicated than " you make plenty of $$, you just don't know how to wisely spend it, or save it". Costs for even basic stuff has risen faster than the average salary in America. The gap is getting bigger. You used to be able to have a decent lifestyle at $15-20/hr....at least enough to live in a decent apartment and eat....but after taxes, health insurance, basic utilities etc, that $$ is gone quick.
No doubt there are plenty of people that just don't know how to save......ANY $$ they have sitting in their pocket will get spent on something non-essential.....but for many there just isn't much "extra" to start with....
Have a car break down with a major expense......have a health issue..... get laid off......and you can quickly be in debt for a LONG time when you only making 60k a year......add a kid or 2......
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
8y
Several years ago I coached a girls AAU basketball team. Each girl was responsible for $150 a month to cover the costs of practice gym and tournament fees. One girls parents both drove BMWs and they had a huge house, designer clothes and such. They always needed to write a post dated check for the $150
Many families place way too much importantance on "keeping up with the Jones'"
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
8y
I know not everyone here is a believer in Dave Ramsey. I also believe everyone here is trying to have some financial stability. The very first step in his process is a "$1000 baby emergency fund". If you cannot come up with $1000 in cash RIGHT NOW then getting that $1000 should be your singular financial goal. Until you have it you should not spend even one dollar on food or drinks that you don't make in your own kitchen. You should not be paying for cable TV or Netflix. If you have a car payment you should sell that car and buy a cheap beater. You should certainly not be paying any money for anything related to real estate investing. Because there are just too many situations where a car breakdown, doctor visit, broken furnace or something else where a few hundred dollars RIGHT NOW is the difference between a pain in the rear end and a disaster.
Took me a long time to learn this. I spent many years where, even after getting raises year after year, I was still pretty much paycheck to paycheck. About 10 years ago, after buying a couple of rentals, I took a step back and said I have to get my act together. I focused on paying off debt and getting some cash in the bank rather than buying more rentals. Its a huge weight off my shoulders to know that if a car or furnace breaks its only a pain to get it fixed and not riding a bus (and walking) to work (I've been there) or shivering in the cold.
@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.
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.
Joe, so true about past generations. I'm 25 and have done well at my commissioned sales job since graduation, doubling my W2 year-over-year since 2015. My father has been a mailman for as long as I've been alive and, even though he meant it in a way to express how proud he was, it broke my heart when he told me that even in 2016 I made more than he ever had a year in his life.
My work ethic comes from him, and growing up I watched him crank out the overtime anytime a vacation was coming up (they didn't come up often, which makes the memories that much better).
He's 60 years old and has never had a passport--until last month, because I've arranged for us to go to London, Paris and Munich together this summer. Call me an old soul, but It's amazing what my generation feels entitled to vs. how our parents lived at our age.
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.
$60k in OK is not $60k in CA, also. I'd venture you'd need at least $90-100k in that place.
Every place is going to have their affordable housing areas, and their luxury areas. Obviously, a person making $60K isn't living in Malibu, but there are alot of options further inland, or in other cities. THe point is knowing your budget and accommodating it, not trying to live beyond where your paycheck will take you.
Santa Rosa, CA · Member since 2017 · 325 posts · 701 votes
8y
I really dont think it is about income. For example, this Federal Reserve report shows that of households making greater than 100,000 a year, 20% could not pay a $400 emergency (bottom graph, page 23)
Personal anecdote. I happen to live in Sonoma County, we had the recent wildfires. The area that burned was primarily the most expensive real estate. These are homes that cost multiple millions of dollars. Not just retirees, but active employees that make in the multiple hundreds of thousands of dollars. And when the fire hit and they found themselves homeless, they needed emergency payments from insurance just to get a hotel room. They have NOTHING in emergency funds. Yes, insurance will pay, eventually. But people are settling for fractions of a dollar with insurance because they need the money now and can't wait to negotiate a better deal. This is just ludicrous to me.
I keep 6 months of expenses, at my current spending rate, on hand in cash. A boring stupid savings account earning 0.001%. I have a written plan on what I would cut to reduce those expenses such that it would actually last 12+ months if needed. 50 years ago this was considered responsible, now it is considered stupid to have so much (tens of thousands) "dead money" just doing nothing.
It is not the income, it is the discipline. Anyone who has watched a Dave Ramsey "Debt Free Scream" can figure that out.
Marysville, WA · Member since 2018 · 60 posts · 35 votes
8y
Yes we can come up with $400 in an emergency.
We (Myself, girlfriend, and a toddler) stick to a strict budget and pay only with cash for everything that isn't on autopay in order to stick to our budget. Any unused portion of the budget gets added to the next month. Any extra income goes to pay off debt, savings or investments. We live in the greater Seattle area.
Huntington Beach, CA · Member since 2014 · 15 posts · 6 votes
8y
$400 isn’t a lot of money for most emergencies either. Consider what an emergency really is... medical bills or car repairs out of nowhere. I live in Southern California so maybe I’m a little biased but I can’t even think of anything that I’d consider an emergency I’d be able to resolve with only $400. That’s barely a month of gas money.
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
8y
@Laith Ali Sadly, we live in an era of instant gratification, which leads many to lead a life way beyond their paychecks. The banks and credit cards love it.
Oh, to answer, Yes, I can. Just in case you were taking a tally.
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
8y
Its about mindset in many cases. I personally could come up with it but I have two sons. One could handle an emergency, he saves. The other well he just started to learn how not to overdraw his bank account. His friends are clueless. They could not afford to put a spare on the car, it sat there for 10 days because they didnt have the money to fix it but they can afford to smoke and go to the hookah club, go figure...
Fayetteville, AR · Member since 2017 · 18 posts · 5 votes
8y
I get it.
I am single, 33, I keep my budget within reason. I only make 24ish thousand a year.
I am also on my 5th heart surgery, and deal with a multitude of chronic health conditions. None of which are my fault.
I have basically been a insurance wage slave all my life. I always have to worry about having another 2016-17 on my hands. Where I had three heart surgeries, 4 CT scans and dozens of trips to the doctor. I have to apply to the ACA debt forgiveness program. otherwise I wouldn't own the house I do right now and I would be stuck with medical debt for the next decade or two.
I think people in my generation are okay with money. At least for how much financial education they got.
My mom taught me to balance a checkbook and even though I make a little over $11 an hour I still manage to but 14% of my paycheck back into my 401k. Which allowed me to pull closing costs out in a loan.
Sorry this seems not too concise. I also didn't answer the question. Right now I could probably get a loan on pretty decent terms for $400. I can't yet.
Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
8y
Retracting and Saving money, reducing our budget, and buying a vehicle for better gas mileage... is not our problem. Income is our problem. Increase our income and let’s expand.
Franklin
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
Simple Answer: Yes I can come up with $400 in an emergency. I think most people on here could too. But most Americans aren't in these forums.
Rental Property Investor · Ocala, FL · Member since 2016 · 226 posts · 140 votes
8y
Yes, we could come up with $400 a month if needed. This is a site for RE investors, so probably most of us could.
I know a superintendent for a large residential builder. He has a big boat and a nice big truck to pull it, and has many other toys. Recently, he was driving a brand new pickup. I asked if he traded his 3 year old truck in. He said, yes, that truck needed new big tires, and he didn't have the money, but he could afford another $48 a month for a truck payment. He also smokes cigarettes. There are THOUSANDS of people that have similar attitudes about money.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
8y
$12/hr x 2,000 hrs a year = 24,000. monthly expenses rent 1,200 car, 400 gas, 200 food, 300, utilities and phone 100. couldn’t even afford a haircut after that or new boxers for that reason. emergency funds? what’s that?
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
I used to live off $12K or less too. I live off abou $30K or less now, so still pretty modest compared to many. If you are young it's good to live within your means but you are only young once. Get out there and enjoy life a bit. You've got the rest of your life to make money so don't hesitate to spend time with friends, go on trips, and enjoy the world.
For your initial question it is surprising but true, too many live week to week. Even when I was "broke" I had access to more than $400 if needed. Quotes like this are why I have always argued that all high schools should have a mandatory financial education class for all students.
Investor · Kennedale, TX · Member since 2016 · 219 posts · 349 votes
8y
I'm currently reading "The Millionaire Next Door" and it talks about some of the stuff I read here. It's crazy how much people spend vs how much they make.
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
8y
I will bend over to pick up a penny laying on the ground , its money . Last week , I made a scrap steel run . At my shop I tell friends and neighbors to drop old washers , refrigerators , any metal . I made 2 trips to the scrap yard , Made $ 480 . Took me 3 hours .
making money is the easy part , learning how to spend is the hard part
Real Estate Broker · Westminster, MD · Member since 2017 · 159 posts · 101 votes
8y
Not all people who rent are poor. Buying a home is not sign of wealth. I have plenty of friends who are very wealthy and they rent nice apartments. They own properties but not where they live. People move around now more than ever, the ability to chase economic opportunity is part of what makes America a great place to live. Perhaps if people who have limited opportunity in the area they live moved to a place with more opportunities they could have that $400 savings.
Long Beach, CA · Member since 2017 · 107 posts · 82 votes
8y
I am and always have been allergic to spending. Currently (not counting investment property income or expense), I spend about $500 a month total. I am really good at getting free food, I have unlimited everything on my cell phone for $22.50 a month. I do not pay for cable and utilities are included in my shared living space that I pay $285. I bet there are some months where I spend less than $400 easy. So I am saving up to 90% of my salary every month. It is almost like a game to me. Weird thing is, I did not learn this t home as my mom has always had a spending problem (not materialistic at all, she tends to spend on others, something I need to get better at actually)