can you come up with $400 in an emergency
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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.
152 Replies
Great question. Save up your $400.00 and put it in your safe. In 3 years it will be worth about $350.00 in today's money, In 5 years about $125.00. In 2001, I bought a gold coin for $325.00 and a house for $43K. Today that gold coin is worth $1325.00 and the house is worth $127K. Both of those markets have gone up and down since then, but they have held their value in relation to inflation. IF I didn't have the $400 (which I do) , I could sell that $325.00 gold coin for $1200.00 in 15 minutes.
This is not a new issue. This problem has been around since the dawn of time. Most people are spenders and a few are savers. It may be more extreme today than in the 1950"s ( due to people living through the Great Depression ).
In addition, there are also some cultures that place a higher value on saving and money management than others. In America, we have become too used to cheap credit and the importance of status. I know I'm speaking to the choir on BP, but just think what a great position we will be in when the spenders can't make payments on their houses, cars, etc. The things we delayed buying today will be had tomorrow are bargain basement prices.
See you at the foreclosure auctions. ;-}
Americans living paycheck to paycheck is not a problem it is a life style choice that your society encourages.
Having to put only 3.5% down on a personal home is a perfect example. Terrable system that allowed home ownership to those that clearly can never afford it.
Originally posted by @Guy Yoes:
Great question. Save up your $400.00 and put it in your safe. In 3 years it will be worth about $350.00 in today's money, In 5 years about $125.00. In 2001, I bought a gold coin for $325.00 and a house for $43K. Today that gold coin is worth $1325.00 and the house is worth $127K. Both of those markets have gone up and down since then, but they have held their value in relation to inflation. IF I didn't have the $400 (which I do) , I could sell that $325.00 gold coin for $1200.00 in 15 minutes.
This is not a new issue. This problem has been around since the dawn of time. Most people are spenders and a few are savers. It may be more extreme today than in the 1950"s ( due to people living through the Great Depression ).
In addition, there are also some cultures that place a higher value on saving and money management than others. In America, we have become too used to cheap credit and the importance of status. I know I'm speaking to the choir on BP, but just think what a great position we will be in when the spenders can't make payments on their houses, cars, etc. The things we delayed buying today will be had tomorrow are bargain basement prices.
See you at the foreclosure auctions. ;-}
It's actually due to credit, more specifically the ease that it is available. Prior to the 1950s it was mostly limited to department stores... then later on it became more widespread. It wasn't till almost the 60s did we have credit cards like we do today, and even then they were much harder to get etc...
- Investor · Morrisville, NC · Member since 2012 · 1k+ posts · 673 votes8y
I really think it is about mindset and education (in terms of information and knowledge). I used to mentor lots of young people, who just don't have the right understanding of how certain basic things work and how they can influence those things by taking actions daily. Saving $1 per day can make all the difference in the world. If you saved $1 for each day lived, by the time you hit 30, you would have put aside almost $15k. (without compounding interest). I meet a lot of people who tell me how they wished they could win the lottery ... then I asked them if they knew how much money they would have, if they saved between $5 - $10 per day ... their jaw drops !!!
When you grow up in an environment where things like "saving money", "Investing", "entrepreneurship" are not discussed concretely, it is not easy to start thinking about it once one become an adult. Lots of things that seem common sense for some are not always that trivial for others.
I believe that some of these things must be taught at the high school level. One doesn't need to take economics or MBA classes to really grasp the concept of investing, compound interest, entrepreneurship. This should not be a concept reserved for the select few. Everyone of us should look at themselves as an "entrepreneur" of their own lives.
What true emergency costs only $400? And who says there will only be one?
IMHO a lot of so-called "emergencies" are really planning failures. If you drive you your tires WILL wear out, your brake pads WILL need to be replaced, your car WILL need repairs. If you have set aside $ for the inevitable it is a mere inconvenience vs an emergency. (if you have kids they WILL get sick, and virtually everyone who is employed will at some point be not employed).
I've been self-employed for almost 24 years in a field that is very vulnerable to economic conditions (large event production). For years I have had a plan A, B, C & D.
Plan A - everything is going great. Stash $ in the retirement funds, upgrade the vehicles from Saturns to Toyotas, buy a bunch of gear. Starbucks & smoked salmon. I LOVE smoked salmon.
Plan B - things are a bit wobbly in the economy. No unnecessary expenses, tighten the belt a bit. Still buy coffee at Starbucks on work days.
Plan C - (Dot.com bust, 9/11, '08). Nothing gets spent that isn't mandatory. Save every $ possible, take absolutely any work that comes along, even if I'm wildly over-qualified (not a good long-term strategy BTW). Cook at home, bring lunch to work.
Plan D - Batten down for the Zombie Apocalypse. Beans & rice, sell everything, move in with family & get rid of the horse
Fortunately I've never had to go to plan D. In the current economy I am hovering between A & B, but watching carefully, & ready to shift to plan C quickly if needed.
So yes, significantly than $400 avail. I'd still have more than $400 avail AFTER an emergency ('cause who says you can't have more than one?).
I've also done a lot of planning ahead to keep incidents from being emergencies. For example I always own two cars, thus a flat tire or dead battery (or even a motor blowing up) is an annoyance, not an emergency. Uber would be a functional work-around if needed, but for me the convenience of owning the extra car is worth the several hundred $ per year for insurance & registration.
- Saint Cloud, MN · Member since 2017 · 90 posts · 70 votes8y
It would be much too stressful if I could not afford a $400 emergency. I'll never let myself get into a situation such as that.
- Investor · Los Angeles, CA · Member since 2012 · 1k+ posts · 500 votes8y
Most people save no money and the others that make money spend way too much. Life style creeps up on people who begin earning money. Learn to save money while you don't have any and this will lead to being able to save most of your money when you receive big checks. I suggest always having at least 6 months of living expenses in reserves, ideally a year.
- Corpus Christi, TX · Member since 2017 · 36 posts · 6 votes8y
I can, plus no debt other than my house and a 6 month emergency fund saved up.
Two words, Dave Ramsey... (I owe most of it to him)
- Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes8y
Yes, I could come up with $400 (or $4000 or $40000) in an emergency. If all of my rentals blew away in a tornado and everyone who owes me money stopped paying, all at once, I could still cover all of my expenses for well over a year, maybe two. It hasn't always been that way, but since Hubby and I married (when I was 18) we have never had less than $500 in the bank. Even in 1985, when our family of 4 had a total income of less than $5000 for the year.
Generally speaking, having money set aside for emergencies is more about life choices than income. How much you have set aside is of course dependent on many factors, but anyone who earns money can choose to save something for emergencies.
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.Why $1000 a month. That's too much. He or she is only four years old. What are they teaching her that's worth $1000, I'm sure its not nuclear physics. I'm joking lol. I understand where you come from though but I like to get the best value for every dollar I spend.
Obviously $400 is nothing. I just think its really shocking that a large number of people have so little in savings. Obviously its their fault for being so stupid, and it shows a lack of a long term planning for their future. I think its wrong to suggest that schooling will help them, I'm sure it will help a bit, but there is a saying that you can't help someone who doesn't want to help them-self. Some people are just stupid. I went to a not so great school and there were kids who were really dummies. Now that I think about it, I really think they should really classify it as a mental disorder. The teacher would give them C because they "tried" well in the real world there is no extra points for trying.
@Christopher B. I definitely want to travel the problem is I only get two weeks of vacation at work.
@Nicole A. I never heard of a fee, but I didn't pay anything. I hope the insurance companies didn't write a law that you have to insurance or they will tax you.
@Terry Miller Brent is right Taxation is theft. My fair share is 0.
- @Laith Ali you're right, it is a lot, but giving my kids every opportunity has more value than money. She has been at this school for 3 years and at 4 years old, She can read and write, speak Spanish and some Chinese, and do simple math problems. For me, it is worth every penny. My point was more to the fact that all situations are different and you being able to keep your expenses so low is great for you, but it's not realistic for some and even the basic necessities can add up quickly for a family of 4.
- Investor · Oakland, CA · Member since 2017 · 41 posts · 25 votes8y@thomas s I respectfully disagree with you, An FHA LOAN CAN WORK if used properly. I for one bought my first house with an FHA loan @ age 21. made payments on time for 10 years and made a 200k+ profit when I sold it. I think I won in this scenario. This money will now be used towards acquiring rental properties.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Matt K.:
Originally posted by @Guy Yoes:
Great question. Save up your $400.00 and put it in your safe. In 3 years it will be worth about $350.00 in today's money, In 5 years about $125.00. In 2001, I bought a gold coin for $325.00 and a house for $43K. Today that gold coin is worth $1325.00 and the house is worth $127K. Both of those markets have gone up and down since then, but they have held their value in relation to inflation. IF I didn't have the $400 (which I do) , I could sell that $325.00 gold coin for $1200.00 in 15 minutes.
This is not a new issue. This problem has been around since the dawn of time. Most people are spenders and a few are savers. It may be more extreme today than in the 1950"s ( due to people living through the Great Depression ).
In addition, there are also some cultures that place a higher value on saving and money management than others. In America, we have become too used to cheap credit and the importance of status. I know I'm speaking to the choir on BP, but just think what a great position we will be in when the spenders can't make payments on their houses, cars, etc. The things we delayed buying today will be had tomorrow are bargain basement prices.
See you at the foreclosure auctions. ;-}
It's actually due to credit, more specifically the ease that it is available. Prior to the 1950s it was mostly limited to department stores... then later on it became more widespread. It wasn't till almost the 60s did we have credit cards like we do today, and even then they were much harder to get etc...
Matt when I bought my first home in Milpitas 1978 ish banks would only lend 80% that was it you need 20% down or they would allow a 10% second.. the HML company I ended up owning that's all they did for 30 years small seconds for homeowners.. so many ( myself included) did 80 10 10 the second 10 was HML at 5 points and 15% but I only borrowed 8k and paid it off in 3 years..
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Laith Ali:
Obviously $400 is nothing. I just think its really shocking that a large number of people have so little in savings. Obviously its their fault for being so stupid, and it shows a lack of a long term planning for their future. I think its wrong to suggest that schooling will help them, I'm sure it will help a bit, but there is a saying that you can't help someone who doesn't want to help them-self. Some people are just stupid. I went to a not so great school and there were kids who were really dummies. Now that I think about it, I really think they should really classify it as a mental disorder. The teacher would give them C because they "tried" well in the real world there is no extra points for trying.
@Christopher B. I definitely want to travel the problem is I only get two weeks of vacation at work.
@Nicole A. I never heard of a fee, but I didn't pay anything. I hope the insurance companies didn't write a law that you have to insurance or they will tax you.
@Terry Miller Brent is right Taxation is theft. My fair share is 0.
A lot of times in schools that are not so great the dummies as you call them are kids with learning disabilities like Dyslexia .. Teachers don't know what to look for and there are no special class's for them and they get labeled and carried through the system.. I know I had a child like this.. Thankfully we were in the Palo Alto School system this was diagnosed by the Teachers they had special class's and teachers to handle it and now he is fine at 35 Y Old.. although never going to be a speed reader.. but my brother had the same thing in the 60's and early 70s and he had a terrible time in school.. you got shuttle into the special class they never learned how to read and many end up in trouble in society or get labeled like you are labeling them. like many Dyslexic kids they are very bright in certain areas.. My son is a master carpenter can build about any thing just from looking at a picture.. my Brother drives heavy equipment and can build roads to grade by eye ball.. Education is important and money well spent I for one commend parents who make that a fiscal priority.
- Rental Property Investor · Barrington, IL · Member since 2017 · 208 posts · 310 votes8y
@Laith Ali Great post, thank you!
@Alan Pederson The Millionaire Next Door is a great book, have read it several times and recommend it to everyone. As a matter of fact, I think it is time for my teenage kids to read it.
@Chris Rivers AKA our sensei ;) You're the second person who has recommended The Richest Man in Babylon in the last two days...I'm on it! The first person who mentioned it is why I'm adding to this thread...Mr. Money Mustache
If you have not checked out Mr. Money Mustache's site or heard a podcast with him...I insist you give him a try, at least once. His philosophy goes beyond personal finance, he makes living lean and being financially efficient a lifestyle. The guy lives a very "rich" life on approximately $30K/year and retired when he was around 30. Ironically, he is now making a killing on his blog, which he is transparently disclosing and making a difference in the world.
http://www.mrmoneymustache.com/ hit his "Start Here" link is probably the easiest
http://www.mrmoneymustache.com/2018/01/02/why-bitc... - "Why Bitcoin is Stupid"...something that we can all relate to ;)
And as a added bonus Bigger Pocket's new Money podcast by @Mindy Jensen and @Scott Trench had Mr. Money Mustache as their first guest, https://www.biggerpockets.com/renewsblog/biggerpoc...
Cheers! Enjoy your weekend.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Deanna O.:
What true emergency costs only $400? And who says there will only be one?
IMHO a lot of so-called "emergencies" are really planning failures. If you drive you your tires WILL wear out, your brake pads WILL need to be replaced, your car WILL need repairs. If you have set aside $ for the inevitable it is a mere inconvenience vs an emergency. (if you have kids they WILL get sick, and virtually everyone who is employed will at some point be not employed).
I've been self-employed for almost 24 years in a field that is very vulnerable to economic conditions (large event production). For years I have had a plan A, B, C & D.
Plan A - everything is going great. Stash $ in the retirement funds, upgrade the vehicles from Saturns to Toyotas, buy a bunch of gear. Starbucks & smoked salmon. I LOVE smoked salmon.
Plan B - things are a bit wobbly in the economy. No unnecessary expenses, tighten the belt a bit. Still buy coffee at Starbucks on work days.
Plan C - (Dot.com bust, 9/11, '08). Nothing gets spent that isn't mandatory. Save every $ possible, take absolutely any work that comes along, even if I'm wildly over-qualified (not a good long-term strategy BTW). Cook at home, bring lunch to work.
Plan D - Batten down for the Zombie Apocalypse. Beans & rice, sell everything, move in with family & get rid of the horse
Fortunately I've never had to go to plan D. In the current economy I am hovering between A & B, but watching carefully, & ready to shift to plan C quickly if needed.
So yes, significantly than $400 avail. I'd still have more than $400 avail AFTER an emergency ('cause who says you can't have more than one?).
I've also done a lot of planning ahead to keep incidents from being emergencies. For example I always own two cars, thus a flat tire or dead battery (or even a motor blowing up) is an annoyance, not an emergency. Uber would be a functional work-around if needed, but for me the convenience of owning the extra car is worth the several hundred $ per year for insurance & registration.
Good strategy.. as someone who was fully engaged in real estate in 07 08 at the end of a 30 year run.. this hit like a ton of bricks dot com bubble was a blip for us.. but 07 08 was real.. it was full blown Armageddon. It cost me personally millions.. but I did the A B C D thing your talking about.. Gone was the 5k sq ft home that just two of us lived in ( thank fully I had great equity so that went to cash) moved into one of my rentals... Gone was Airplane 2nd airplane down to one and that one with a partner so cut that down by 75%... gone was the 100k cars .. bought a Rav 4 :)
Gone was just about everything that was an excess.. and I rode it through.. it was not pretty having to bring 10 to 30K checks to closing instead of making it.. and watching my net worth drop like a Rock... Rentals went 100% vacant what do you do.. no renters in sight.. no one buying anything.. credit frozen.. But because of reserves and the ability to go back to plan C and not worry about lifestyle lived to fight another day..
And its like right now on BP all the refi to you die max leverage crowd.. that's great I get it to start but for me its all about NO DEBT everything paid for and I am just about back there.. and getting ready to retire in 10 years when this run is over.. but saving that cash.. and stacking up VERY good notes..
- Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes8y
@Jay Hinrichs luckily, I got into REI after 2008, but I saw the affects and learned from other people's example and I am determined not to make the same mistakes. I use leverage, but sparingly and I pay it as quickly as possible. The guys that are just getting started at this point in the cycle should print your words and hang them on wall.
- Munster, IN · Member since 2017 · 19 posts · 9 votes8y
Originally posted by @Terry Miller:
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."
There is no "fair share", taxation is immoral. You're not entitled to the fruits of someone else's labor. - Contractor · Loganville, WI · Member since 2015 · 65 posts · 44 votes8y
My wife mentioned this fact a couple days ago. A bit surprising at first but the more you think about it the more true it is.
Last month we had negative 20 degree weather and a lot of batteries in cars died that where parked outside. I was shocked to hear how many people could not afford the 100 dollars or less to buy a new battery until their next paycheck.
Even when I was in college working part time I still could afford a 1000 dollar unexpected bill. Had it happen a few times to. Never fails you spend 500 dollars to treat yourself on a rare purchase and your car is in the shop the next week.
- Akron, OH · Member since 2015 · 178 posts · 189 votes8y
[side-tracked tax discussion final thought]
How does society function without some form of contribution? Hint: it doesn't.
Since the advent of human civilization, ALL societies have had some form of contribution system for the group good. ALL of them. There have even been wars fought, warm and cold, over exactly how it should be administered, how much should be contributed, and by whom.
Depending on your spiritual/philosophical belief system, for several hundred thousands of years, or several thousand years, people choosing to live together have contributed something to the group cause.
No one 100% agrees with government spending. No one. I can't just pick and choose among military, police, firefighting, transportation infrastructure, education, arts, etc. categories. But, not being able to contribute a la carte is the compromise for the foundation of society.
Taxation without representation is immoral. Excessive taxation is immoral. Paving a dirt road for a Lexus is not immoral.
[done]
- Rental Property Investor · Oakalla, TX · Member since 2015 · 67 posts · 24 votes8yIt’s all relative. You may live in a cheaper area. I live on Long Island. Property taxes here are $10,000 and up. (My sister pays $22,000). Overall higher utilities and such in these areas but also higher salaries.
- Real Estate Investor · Milford, NE · Member since 2011 · 201 posts · 140 votes8y
yes
- Rental Property Investor · Charlotte, NC · Member since 2017 · 298 posts · 232 votes8yI can now but have spent considerable periods where I couldn’t. I spent a considerable amount of time intentionally running tighter on cash than I should have until I ran into a hiccup at my job that forced me to rethink that strategy. I have since found @Scott Trench’s book Set for Life and am now rethinking my entire financial approach.
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