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38% could cover it out of pocket that's not sensationalized
The other methods are either borrowing 28% or 26% cutting spending elsewhere, meaning not being able to cover something until more income came in. That's pretty sad imo
Like I mentioned earlier, this data is based on "cash they have on hand in a savings account or checking account" which means it would exclude any investment accounts. The fact that I'd have to put something on a credit card until I moved money back from my investment account would technically mean I can't cover it out of pocket, but I hardly consider that sad.
Also, realistically, for me I would put an unexpected repair on a card, but pay the balance off next month. That would technically put me in the borrowing category, but I do that for the convenience so that I don't have to liquidate anything or move money around.
I'd also say that even some of the group who needs to cut back on spending is probably ok because the fact that someone needs to cut down on how much the eat out and spends on luxuries to afford a one off emergency wouldn't be bad. If they had to cut back on basic food and start cancelling utilities then it's a problem, but the category is a bit vaugue. A guy making a $100k a month but spending all of it probably wouldn't have enough cash on hand for an emergency without cutting back on spending, but he could easily do it.
I really don't think the study as phrased tells you anything. The categories are too easily divided.
01-13-2015, 08:51 PM
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Quote:
Originally Posted by Lowexpectations
38% could cover it out of pocket that's not sensationalized
The other methods are either borrowing 28% or 26% cutting spending elsewhere, meaning not being able to cover something until more income came in. That's pretty sad imo
If the actual question was "How do you tend to deal with unexpected expenses, such as $1,000 for an emergency room visit or $500 for a car repair?" then it doesn't follow from the responses that only 38% can cover it just because only 38% said that's how the "tend to deal with unexpected expenses." If I were asked that question, I'd probably answer "reduce spending on other things" even though I'm fully capable of yanking the cash out of savings.
The claim in the article isn't actually supported by the data provided.
Like I mentioned earlier, this data is based on "cash they have on hand in a savings account or checking account" which means it would exclude any investment accounts. The fact that I'd have to put something on a credit card until I moved money back from my investment account would technically mean I can't cover it out of pocket, but I hardly consider that sad.
Also, realistically, for me I would put an unexpected repair on a card, but pay the balance off next month. That would technically put me in the borrowing category, but I do that for the convenience so that I don't have to liquidate anything or move money around.
I'd also say that even some of the group who needs to cut back on spending is probably ok because the fact that someone needs to cut down on how much the eat out and spends on luxuries to afford a one off emergency wouldn't be bad. If they had to cut back on basic food and start cancelling utilities then it's a problem, but the category is a bit vaugue. A guy making a $100k a month but spending all of it probably wouldn't have enough cash on hand for an emergency without cutting back on spending, but he could easily do it.
I really don't think the study as phrased tells you anything. The categories are too easily divided.
Quote:
Originally Posted by JasonF
If the actual question was "How do you tend to deal with unexpected expenses, such as $1,000 for an emergency room visit or $500 for a car repair?" then it doesn't follow from the responses that only 38% can cover it just because only 38% said that's how the "tend to deal with unexpected expenses." If I were asked that question, I'd probably answer "reduce spending on other things" even though I'm fully capable of yanking the cash out of savings.
The claim in the article isn't actually supported by the data provided.
okay we can pretend the article is slanted and most people have enough money in savings and taxable investments to cover unexpected expenses, I believe this is far from true
Stop rolling your eyes and try some reading comprehension and critical thinking.
The body of the article makes a claim. The question the article gives us (whether or not that's the question that was asked is unanswered) cannot be used as evidence of that claim. Period.
Now take your CNN and NPR links. The "research" says ~half of households have enough to cover three months of expenses or more. How is it possible that half of households have three months expenses saved up, yet only 38% can cover a $500-$1000 expense with their savings? Doesn't make any sense.
Writing good surveys is hard. Making sound conclusions that are supported by the data is also hard (well, not really, it just requires actually understanding the data you have).
Most people will tell you that your emergency fund should not be in the stock market or even in bonds. It should be in a savings, money market, or CDs (since CDs can be withdrawn from early if necessary), etc. Emergencies typically happen when the market is down, etc. so your money in equities for your emergency funds might only be 50% what it is today, etc.
I haven't read this particular article but they also should segment these studies by age group, geography, etc. In any case, I think we all know that most people have almost nothing in their bank accounts and live paycheck to paycheck and this is more and more true the younger you are (millenials more than baby boomers, etc.).
Stop rolling your eyes and try some reading comprehension and critical thinking.
The body of the article makes a claim. The question the article gives us (whether or not that's the question that was asked is unanswered) cannot be used as evidence of that claim. Period.
Now take your CNN and NPR links. The "research" says ~half of households have enough to cover three months of expenses or more. How is it possible that half of households have three months expenses saved up, yet only 38% can cover a $500-$1000 expense with their savings? Doesn't make any sense.
Writing good surveys is hard. Making sound conclusions that are supported by the data is also hard (well, not really, it just requires actually understanding the data you have).
when you really look under the hood none of the statistics about peoples finance's make sense and add up.
there is a reason : no one really knows what anyone has . except for a relatively few questionaires that go out with the census there is noooooo official tally on anyone.
personally who cares , people adapt and live on whatever they have. there are far greater things to worry about.
Most people will tell you that your emergency fund should not be in the stock market or even in bonds. It should be in a savings, money market, or CDs (since CDs can be withdrawn from early if necessary), etc. Emergencies typically happen when the market is down, etc. so your money in equities for your emergency funds might only be 50% what it is today, etc.
You can get around this problem by not over-concentrating in a single country. Very rarely is the whole world down 50% (not sure it's ever even happened).
That said, a cash emergency fund still gives you the benefit of knowing you don't have to sell at a loss.
Quote:
Originally Posted by RVD90277
I haven't read this particular article but they also should segment these studies by age group, geography, etc. In any case, I think we all know that most people have almost nothing in their bank accounts and live paycheck to paycheck and this is more and more true the younger you are (millenials more than baby boomers, etc.).
Well, sure, when you are just starting out and have only had one year of income to even save in the first place, of course you won't have as much.
I do invest some in international equities and international bonds but iirc 2008-2009 was pretty bad globally as well.
And yeah, it's obvious that those starting out will have less savings since they only recently started working. I was just not sure if the article accounted for that or just lumped in all Americans into one big bucket without segmenting their data. Even with that said, I'm pretty sure that many folks over 40 don't have proper savings either.
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okay we can pretend the article is slanted and most people have enough money in savings and taxable investments to cover unexpected expenses, I believe this is far from true
