In a sign of the times, a recent survey indicates that if consumers had to come up with emergency funds, they’d be hard-pressed to do so.
Half of Consumers Surveyed Can’t Come up With $2,000:
Almost half (46%) of 2,148 consumers surveyed recently said they weren’t confident they could come up with $2,000 within a month in a crisis–from savings, family, friends, credit cards or other sources.
Even among those earning $100,000 to $149,000 a year. almost 25% doubted they could raise it, according to the survey conducted by research firm TNS with academics from Harvard Business School and Dartmouth College.
While one could have guessed that someone making $35,000 – $50,000 might have a hard time coming up with $2000, it is alarming to see those in the $100,000+ range with the same problem.
Where does that roughly $8,000 ($10,000 less payroll deductions) per month in income go for the 25% that can’t come up with the cash?
One could argue that over half of Americans are paycheck players. Lose your job, and you’re toast within 60 days, and that’s being generous.
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This data is not surprising. What is surprising to me is the masses keep spending on the junk like there’s no tomorrow. Where is this money coming from?
I can’t speak for all the folks in the $100,000 plus range, but I can tell you my situation. We bought a house larger than we needed at the time in order to avoid having to trade up in a few years after kids, as a lot of people do. Thinking I was actually a head of the game, I saw my taxes skyrocket in the past several years to the point where I’m not sure how I’m going to pay them next year. I also counted on annual raises back then which turned out to be a cruel lie. I commute 30 miles one-way to work and although I try to work from home whenever I can, the gas prices still hurt. As anyone with kids in school today knows, nothing is provided as it once was when we were kids. Everything from kleenex to tennis balls to fit over the bottom of the chairs must be purchased for the teachers. I wish I were making this stuff up. It’s really death of a thousand cuts for families these days.
Bottom line is, and this is the scary thing, $100,000 is nothing these days. So many folks in this bracket are getting wiped out. I can’t even imagine the families making half that – what they’re going through.
And if Obama thinks that those making over $250,000 are rich, well he needs to visit these people’s homes.
Chris, very good points. I can’t speak for the 100,000+ people either, but I can say, as a paycheck player, I totally relate to the kids in school scenario. I often wonder how they can continue to increase the per student budget each year, yet I still have to supply everything. On top of that, to prevent gang violence and such, the kids have to wear uniforms now. It seems as if we are being nickel and dimed from all angles!
I do know several people in the $100K+ bracket that have lost their jobs, and it is not a pretty picture. Once you get used to a certain type of lifestyle and monthly spending habit, it is difficult to adjust quickly when your income is cut in half because the husband or wife lost their job.
I am guessing that most American families are like mine and have set a Christmas budget this year. Ours is $300 for everyone, that includes immediate fam, cousins, sisters, brothers and grandparents. What’s the point of buying BS presents for $50 that no one will use anyway? My wife and the kids are making present for all the older family members this year — and I think they get much more out of it. The American consumer has been duped into believing he/she is supposed to be a consumer. I think this will change over the next decade. I am avoiding credit like the plague right now, and I suspect millions of others are as well, though there are millions more that have no clue or simply don’t care if they are handcuffed by the chains of debt for the next 20 years.
When I talk to my wife’s grandparents, who lived through the Great Depression you can see that in 80 years they still haven’t bought into the consumerism hype. They have seen SHTF before, and I think they were ‘wired’ completely differently than us as a result. Grandmas (from both side of the fam) still save jars, and bags, and boxes, and pretty much anything that they think may be useful for something else. It’s really fascinating to see it, because our generation is used to just throwing things away and replacing them… I get a hole in my socks, and I toss them, go to Target and score a 6 pack of Hanes for $8.99. Growing up, this was not the case — my mom would sew those bad boys up (as well as pants, shirts, etc.) and send me on my way.
Anyone remember the days when we’d turn our worn out jeans into jean shorts? My kids certainly don’t!
Comments…..Last summer was walking down a back lane and there is this little old man who could barely walk from the lane way into his garage. He had sh.. er, stuff piled so high like pipes, car parts, wire etc, that it literally was spilling out like a broken down transformer.
Now I get why he did it. The money to be made if brought to the metal recyclers would feed him for a year.
Oh yeah Mac, I remember my Mom rinsing and reusing plastic sandwich bags, and not the Ziploc ones, those were too expensive in our family, we used the kind that you simply folded over with the flap… do they even MAKE those anymore?  I also took an emotional beating for my Trax tennis shoes (remember KMart, the red “K” and the aquamarine “wality” lol) and Husky jeans with the dark blue iron-on patches on the knees.  Even with that, we had it damn good.  Family and friends are what matters, and what lasts.  Even I feel “soft” nowadays.  People under 40 have NO IDEA what even cutting back is, much less true sacrifice or doing without.  At least for now, my kids haven’t a damn clue what that’s like.  Times are a changin’ though, and they may yet… but I hope not.
A similar survey was done not that long ago in NZ and the average savings would last people barely one month. I can’t help but wonder how it is that so many people are going through life asleep and so unaware. Their decisions in life seem to be guided by what they can get out of it in the here and now and not so much about the rainy day times. Is it unfair to say that when the SHTF that they are mostly to blame by not being prepared?
What is it going to take for people to wake up? I agree with the above comments and as I have always lived within my means I feel comfortable that I can deal with whatever gets thrown at me but I worry about people in general. It will really be a domino effect when the pressure gets too high…
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Just a general comment about “frugality”…I think I’ve said it here before.
I’m not sure Patrick meant the same thing I do, but times are changing. I think we ARE entering “age of frugality.” I’m not sure how “bad” it will get, but the first things I think you will see phased out are $200 blue jeans, getting a new car every four years, vacations, eating at “nice” restaraunts, etc.
I don’t have any kids, so I obviously don’t have the financial obligations that some of you guys have, but I know I’ve changed a bit. I really don’t buy anything I don’t at leat arguably “need” anymore…and when I do, if it’s going to be c. $50 or more, I research it pretty thoroughly and look for coupons/the best price I can possibly find. Five years ago, that was not the case.
It will be interesting to if/when consumer spending really comes back. With the changing attitudes and drop in consumer credit, my opinion is that it’s going to take quite some time…which, as you all know, would not bode well for our economy, being based c. 70% on consumer spending.
…and if somehow consumer spending does miraculously rebound swiftly (i.e., we don’t enter an age of frugality), that would be perhaps an even worse sign for whatever it is that lies ahead…
I believe I took this particular survey or a variation of it; and in the survey the question specified you could not use CC, loans or borrow money.
A person earning $100,000 is paying between 30 – 40 % in tax withholding (fed, state, local income taxes, FICA & medicare)
They have loans for cars, homes, school. They were told by the government and their Realtor “buy all the house you can afford it will be your bank account”
Now they are upside down on a house, their property taxes have gone up and up, while their stock portfolio and 401K went down.ÂÂ
Their local taxes are still going up, and they don’t see a raise or a bonus in their future.
Leannain, you expressed perfectly what’s happened to the middle class over the last 10/20 years.
If I couldn’t use borrowing, CC or loans, then yes. One month sounds a bit right. I have loans for everything (as do most middle class people who “bought” into the system), so if the paycheck goes away I am literally under water in just several weeks. I only wished I knew then what I know now when I was taking out these loans. Live and learn I guess.
I live in NY. Governor Patterson is taking the first steps to withhold state aid to hospitals and schools. I already pay outrageous property taxes but this means I will be paying significantly more, just so we can keep the present system going (don’t have to layoff teachers, continue to fund their pensions, etc.). The taxes are absolutely killing us and it’s only going to get worse. Me thinks the system was designed to collapse this way, with the man on the street getting shafted for everything.