can you come up with $400 in an emergency

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can you come up with $400 in an emergency

Laith Ali
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.

-200--food

-400- car payment, gas and insurance

-100- utilities

-100- internet and phone

-200-- property taxes and house maintenance

Total

-1000

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Leon F.
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.
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  • Nicole A.Pro Member
    Rental Property Investor · Baltimore County Maryland and Tampa Florida · Member since 2013 · 2k+ posts · 2k+ votes
    8y

    @Bettina F. It is quite possible that there are several people on this board unable to come up with $400 today. But the great thing is that they are here to learn how to better themselves. That's a great first step!

    @Laith Ali Isn't there some sort of fee/fine you have to pay if you do not have health insurance?

    For me, I understand and am very thankful for the bubble that I live in. That bubble being the area I live in with tons of well-paying jobs for the government (although we might have a shutdown by tonight!). On top of that, I fall in the "DINK" category, which stands for "Dual Income, No Kids." So for me and my significant other, things are automatically easier. I won't go into all my expenses here, but there was a time that between my savings account and renting out 2 extra bedrooms in my home allowed me to stress less about being unexpectedly unemployed for 5 months. In fact, I declined the first job offer 2 months in because it sounded like a terrible office and I was so happy to be prepared enough to be able to decline crappy jobs. Thanks to renting out rooms, I hardly put a dent in my savings during that time.

    I have met people who also have no kids and extremely high-paying jobs, yet they spend their money like crazy. I'll never forget a guy I met while deployed to Afghanistan...we "dirty contractor" types making tons of money.... he calls me over to his computer to ask my opinion on some decorative pillows. These pillows were for some overpriced couch in his huge house that he hardly even spends time at because he's the type of contractor to always deploy. The pillows were $200 a pop. Crazy. I met a whole new type of person (others like him) who would seemingly never be home for long before redeploying. They got used to that hazard pay and no longer could afford their normal CONUS pay. While deploying was one of the most amazing experiences of my life so far, I couldn't live that life style. Money doesn't get you all that missed time back away from home.

    There was a time in my life, though, that I, too, was awful with my money. I had no budget and no idea where my money was all going. I found myself in thousands of dollars of debt and very little in savings. I was given an Excel spreadsheet where I could type in my monthly after-tax income and every single expense and savings. Using that and being strict, I paid off the debt.

    Not much annoys me terribly, but I've found one line that does really irritate me. "Must be nice." It tends to come from people that direct it towards me even though their situation in life was only brought on by themselves. I find the line to be saying that I should feel bad for having it good in life because it seems to have that underlying tone to it. Never let others make you feel guilty for having strong finances.

    6Reply
  • Brent Tomczak
    Munster, IN · Member since 2017 · 19 posts · 9 votes
    8y

    Taxation is THEFT...

    6Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    8y
    Originally posted by @Matthew Paul:

    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 

    From the remodel of our current house (complete rewiring of the electric and a good bit of replumbing) we had a copy paper box of copper to recycle. Took it to the recycler on a whim (had a low-money experience with recycling cans at apparently their lowest price ever) and was pleasantly surprised to find that I had $95 worth of copper in that box. Could have been more if I had stripped the wiring, but lesson learned for next time. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    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.

    I was at my annual holiday lunch with one of my attorneys.. and we got on the coffee habit... not to mention smoking habit at 7 to 10 bucks a day.. but in Portlandia were coffee is a thing.. she said many of her staff ride down the elevator buy the fancy 5 buck coffee and do it 2 to 3 times a day 5 days a week.. that's a 200 to 300  a month coffee habit right there.. smokers 300 a month  drinkers etc etc..  but when your entry level job you really need to watch what you spend on items that can be cut out ....

    And why I say ESPECIALLY in low end rentals.. your tenant is one flat tire away from not paying rent.. they will pay their cell phone first and foremost.

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  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Ken Virzi:

    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)

     do you ever think your habits came about because of what you say from your mom?

    1Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Jay Hinrichs:
    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.

    I was at my annual holiday lunch with one of my attorneys.. and we got on the coffee habit... not to mention smoking habit at 7 to 10 bucks a day.. but in Portlandia were coffee is a thing.. she said many of her staff ride down the elevator buy the fancy 5 buck coffee and do it 2 to 3 times a day 5 days a week.. that's a 200 to 300  a month coffee habit right there.. smokers 300 a month  drinkers etc etc..  but when your entry level job you really need to watch what you spend on items that can be cut out ....

    And why I say ESPECIALLY in low end rentals.. your tenant is one flat tire away from not paying rent.. they will pay their cell phone first and foremost.

     I tried to start a pool for fantasy football, 10/wk. Some of the biggest objectors to this were people that are dropping 15+ a DAY on lunch. Then they try and say no way, 10/wk far to expensive..... lol

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Matt K.  or you should have seen when I suggested at our Golf club ( private) that we raise the stakes on the Saturday morning game to 3 10s  from 3 2's  had a riot.. LOL..

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  • Sasha Chang
    Cottonwood, AZ · Member since 2018 · 1 post · 0 votes
    8y
    Standard of living has definitely increased. I love conveniences that my parents didn’t have like air-conditioning and cable. For many years they shared one car but yet my husband and I have our own cars. Besides, balancing a checkbook was the only thing taught in school- not investing or Basic economics. I’m really trying to be a good role model to teach my children basic financial tools.
    0Reply
  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    8y

    @Jay Hinrichs "they will pay their cell phone first and foremost"  Oh you're bringing back memories...

    Driving with my dad late and night to pick up a (partial) late rent payment.  Open the door and there's a 24 pack of Coors and a couple of boxes of pizza.  Not that people need to live on hot dogs and spaghetti but when the tenant is still short, it's hard to really love seeing those dietary life/spending/prioritizing decisions...just...staring...you...in...the...face.  But what really got stuck in my craw (as a kid) was that they would have HBO, ESPN, or something else on in the background.  My parents didn't pay the extra $10/month for HBO and I we didn't have ESPN either.  Not that lacking those is some sort of marker for an impoverished childhood but the same folks that were late with the rent, only had a partial payment, well...they had pizza (yum!), beer (no thanks), and HBO (yay!)  Needless to say there was a conversation (more like a monologue) from my dad to me on the drive home about life decisions, priorities, etc.  

    Try telling the bank you're late with the mortgage because you couldn't bare to miss out on Game of Thrones...

    Anyway, if you can't come up with $400 in the case of an emergency the last thing I'd do is own real estate.  It's all well and good to say "it's an asset not a liability" and all of the rest but none of that matters if the pipe bursts because of freezing temps in Ohio in the winter.  It's going to cost you more than $400 and I've yet to meet a plumber that works for IOUs... 

    8Reply
  • Ken Virzi
    Long Beach, CA · Member since 2017 · 107 posts · 82 votes
    8y
    Originally posted by @Matt K.:
    Originally posted by @Ken Virzi:

    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)

     do you ever think your habits came about because of what you say from your mom?

     Well my mother grew up in the projects of Newark and had nothing so I am guessing her free spending is a reaction to that. Mine might be, but my siblings are not as tight fisted as I am in. I am one of 7 kids, and I was always a saver. I would strategically get pieces to a stereo, computer, tv system as a kid, asking for one piece each birthday and christmas for like 3 years before i had it all together. My siblings would get a boom box and it would be lost or broken the next year. So hard to say.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Andrew Johnson  I would think other than the beginners that get on here and admit they have no to limited funds and need to wholesale to get started.. most that are actually buying have some money.

    I think the 400.00  or lack thereof is mainly delegated realistically to the tenant base.  And I am sure some homeowners as well.

    part of it is just a testament to our credit society.

    I look at selling new houses.. or in dealing with buyers of real estate in general to live in.

    when they get pre approved if the lender says your approved to 500k... by gosh they will buy a 500k house not a 300k house.. Generally speaking.. for whatever reason we max out our credit capacities and underscore the importance of reserves that are liquid..

    I think that's why Ramsey does a great job for many..

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    2Reply
  • Anthony Dooley
    Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
    8y

    It's all about choices. I see 20 year olds driving very nice cars, wearing $200 basketball shoes, eating out at very nice restaurants when I'm there, and shopping at expensive stores. I can afford to do these things, but I choose not to most often.  People under 30 don't make a lot of money, but they are living larger than me sometimes. This is why the rich get richer because they don't blow their money on lifestyle as a percentage of their income.

    3Reply
  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    8y

    @Jay Hinrichs The whole "maxing out your pre-approval" thing has always been a mixed bag of emotions for me

    1.) On one hand, it doesn't (to me) make smart financial sense to max out on the $500K property instead of the $300K.  Economies grow and shrink, you go through changes in life, it won't always be a giant rocketship of increasing returns straight to the moon!  Shoot, we backed into our "ideal" loan amount by looking at W2 incomes, figuring out what would happen if a lot of things went wrong, came up with an "easy number" to pay in a "bad time" and turned that monthly number into a loan amount.  We combined that loan amount with what we had for a downpayment and "poof" there's the +/- purchase price number.  

    2.) On the other hand, if maxing out (today) gets you out of the "upgrade every 3-5 years" cycle that much of the world operates on, I think it's smart.  If maxing out gets you into a better school district, an extra bedroom, and represents a home that you could happily be in for 15 years instead of 5 then I think there's a great argument for it.  Eating seller commissions every 3-5 years isn't a fun prospect.  Now people *thinking* they will stay for 15 years and actually doing it are two different things.   Odds are most of the people that go "to the max" and use that as a reason are just trying to rationalize their decision.

    3.) I could also see "maxing out" because 30-year fixed mortgage rates are still cheap.  It still boggles my mind how many investors think that 8% for a mortgage rate would be "expensive".  Not that I think we're headed back to the 18% world of the early 80's but I don't know if 4% is sustainable either.  It's part of the reason that I don't love the models about 1031ing yourself over and over again.  I think the theoretical idea but I've never seen an actual plan/model that says "hey, we think interest rates for that new larger debt amount when we 1031 will be 6.5% instead of 4.5%"  They always use the same (always low) interest rate...

    I'm rambling now...and hungry...rambling when hungry isn't good...

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Andrew Johnson  I think the issue is we as americans live on a fine edge with not enough savings  that's the bottom line.. look at other countries  I was just over in the Holy land you have to put 50% down to buy a home in Tel Aviv for instance.. and in many areas there is no financing so folks SAVE

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  • Jana Hristova
    Property Manager · Tampa, FL · Member since 2016 · 34 posts · 25 votes
    8y

    @Chris Seveney I think about that moment a lot and it's very scary.

    1Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y

    I'd say a lot of all this has to do w/ the fact that most people in this country simply have ZERO clue how money works. Plenty of marketing info out there to "show" people how affordable something is, yet not many are able to understand the true cost of that purchase...

    4Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    8y

    Delayed gratification sucks!!  But it works in personal live  and in investing.

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  • Chris Rivers
    Fort Lauderdale, FL · Member since 2017 · 17 posts · 10 votes
    8y

    I use to be this person! Then i read "Richest Man in Babylon" changed my life. I highly recommend it to everyone whether you have the $400 to spare or not lol. Money/cashflow is like a loaded gun, the damage OR security in provides all depends on the person holding the weapon. That's my sensei knowledge for today. ;) 

    3Reply
  • Marcus Johnson
    Investor · Saint Paul, MN · Member since 2015 · 663 posts · 512 votes
    8y
    Since this is a real estate forum, if you cannot come up with $400 dollars, then you shouldn’t be investing in real estate.
    5Reply
  • Jason D.
    Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    8y
    @Laith Ali just a little perspective for you, being single and assuming you have no kids.... your total monthly expenses are $1000/mo. Preschool for my 4 year old is $1000/mo.
    2Reply
  • Ken Virzi
    Long Beach, CA · Member since 2017 · 107 posts · 82 votes
    8y
    Originally posted by @Jason D.:
    @Laith Ali just a little perspective for you, being single and assuming you have no kids.... your total monthly expenses are $1000/mo. Preschool for my 4 year old is $1000/mo.

     Dang I gotta open a preschool

    3Reply
  • Terry Miller
    Akron, OH · Member since 2015 · 178 posts · 189 votes
    8y
    Originally posted by @Brent Tomczak:

    Taxation is THEFT...

     "It is criminal to not pay your fair share."

    "It should be criminal to pay MORE than your fair share."

    1Reply
  • Mark F.
    Investor · Orange County, CA · Member since 2009 · 230 posts · 138 votes
    8y

    Unfortunately, for many people the lack of ability to come up with $400 is completely self-inflicted. I remember a guy from a company I worked at years ago who probably made around $32K/year (and lived in the Los Angeles area) and always drove the latest and fanciest luxury cars. I'm sure he always leased his cars, but even then the payments were probably more than half of one of his biweekly paychecks. I'm sure he had lots of fun driving around trying to look rich and successful (that's obviously what was important to him), but barring a change, someday he's going to roll out of bed and realize he's on the threshold of retirement and dead broke. Not a good place to be. 

    1Reply
  • Matt K.
    Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Ken Virzi:
    Originally posted by @Jason D.:
    @Laith Ali just a little perspective for you, being single and assuming you have no kids.... your total monthly expenses are $1000/mo. Preschool for my 4 year old is $1000/mo.

     Dang I gotta open a preschool

     I'm at 1500 for daycare.... :(

    0Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    8y

    @Ken Virzi  When my 2 boys were in day care , all year . An infant and a 3 year old cost me  $ 29,900 for the year .  Wife job is the medical benefits , I am self employed .  It was the cheapest and best option . 

    You dont want to be in the daycare business , you are dealing with 30 year old yuppie mommies , and have a staff of early 20 young women .   The drama .........

    Worse than dealing with low rent tenants

    3Reply
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