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Nearly half of Americans are living in a state of "financial fragility," a new paper by the National Bureau of Economic Research reveals. To determine this statistic, researchers from the George Washington School of Business, Princeton University, and Harvard Business School asked survey participants whether they would be able to come up with $2,000 for an "unexpected expense in the next month." 22.2 percent predicted they would be "probably unable" and 27.9 percent said they'd certainly be unable to foot the unplanned bill.
Even living on a $40K income in San Jose - highest median rent in the country - I made sure to have $5K at all times and aimed for $10K. Now that I'm making $70K, I haven't changed a thing. My balances are going up each month and I have a steady flow of cash going into retirement.
I think the lack of savings and its twin sibling, financing your life to the hilt, come from two beliefs-- irrepressible optimism, all too often unwarranted, and a sense of entitlement-- that because you worked hard and got a college degree (or whatever), you should drive a Beemer. My wife, for some reason, has a moderate addiction to HGTV, but I can't stand watching all these people who MUST have all brushed aluminum appliances, a three-story atrium front entry way, and, well, whatever. For their first house! Buying your first house for a half million dollars is something I not only can't wrap my mind around, it positively offends me.
its funny how people are so dumb with their money and then we are all supposed to feel some obligation to help them out. i dont mind helping people who cant help themselves but helping people who waste their money and never thought to save is really aggravating.
My brother, an auto mechanic, thinks it's dumb that people can't repair their own cars and save a heap of money.
The Doctor probably thinks it's dumb that people come to see him, when they could have cured their problem with some common sense.
I've become much more compassionate, over the years, with people who simply can't save or manage money. I did accounting work for 10 years, so it's been a long haul for me to recognize individuals who, inherently, have no capacity for managing their money, and feel some compassion for them.
Yes, it's extremely irritating, if you're a superb money-manager, like myself, even to have someone ask me for a cigarette who hasn't been near a stove to once cook for themselves and brags how they only spent $5.99 for a lunch that day!
But, let's get it straight, there's people out there who will never, ever be able to manage their money. My condolences to them!
Last edited by tijlover; 05-24-2011 at 11:06 PM..
Reason: edit
I've become much more compassionate, over the years, with people who simply can't save or manage money. I did accounting work for 10 years, so it's been a long haul for me to recognize individuals who, inherently, have no capacity for managing their money, and feel some compassion for them.
Yes, it's extremely irritating, if you're a superb money-manager, like myself, even to have someone ask me for a cigarette who hasn't been near a stove to once cook for themselves and brags how they only spent $5.99 for a lunch that day!
But, let's get it straight, there's people out there who will never, ever be able to manage their money. My condolences to them!
I hope I develop that compassion.
I get irate with my sister about money. She and her husband make somewhere around $100K a year (and live in rural GA so that could go a LONG way). Between them, they have five kids, but only one lives with them full time (others are grown). They never have any money. They go on cruises, buy NEW cars (my sister's car payment alone is $600 / month) and other crap, and booze it up; but my sister hits my mom up whenever she has classes to take or seminars for work. My parents live off their pensions and bring in about $40K year. I get crazy when my mom tells me my sister hit her up for $600 for some dumb class that she should pay for herself.
Sure, my mom should quit giving her money and I've told her so, but at 45 years old, my sister should not be asking. She's even asked us for money, and we make less than they do too. ANNOYING! What's worse, I think, is that my sister rarely sees our parents. She lives 8 hours away (I currently live 6 hours away but did live 20 hours away), and she'll visit every 4-5 years. Very classy.
When my mom becomes incapacitated or dies, my sister is gonna be in a world hurt because my husband and I won't finance her frivolities.
its not what you make,its what your expenses are . heck living at home with mom and dad it was easy to save earning almost nothing.
earning 25k a year in some areas is enough to live on and save. 25k in other areas will let you live the life of a dumpster diver.
Here in Louisiana my 32k income is enough to make it by. I could see this level of income being useless in many other places though. Im also pretty sure the job I do is probably paid better in other places too even though it does not particularly require a degree (fuel truck dispatching)
Let's face it: Most American have decided for years to live off debt and not bother to save. If you can't scrape together some minimal amount of savings, it's your own fault. Blaming the government or evil corporations is very shortsighted.
I wonder how many (what percent) of those people have Starbucks five times a week, overpriced ipods, fancy rims on their cars, magazine subscriptions, 120+ cable channels, lease cars every two years, order beverages other than water at restaurants, pay someone to mow their lawn so they have time to walk on a treadmill at a gym, and buy lottery tickets.
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