Posted on 07/28/2013 9:04:15 AM PDT by Kip Russell
Or would you feel pinched?
If your roof sprung a leak or your dentist said you needed a crown, would you be able to write a check to cover such an emergency?
Either might cost $2,000, but about half of Americans say they couldn’t come up with that much cash within 30 days.
That’s according to a paper published by the National Bureau of Economic Research, using data from the 2009 TNS Global Economic Crisis survey aimed at showing the extent of financial weakness in the U.S. and other nations.
The survey asked, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” As reported in the Wall Street Journal, only 25% of American respondents said they could gather that much money in a month, while another 25% said they were “probably” able and 28% said they were “certainly unable” to do so.
The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses or a home repair,” the authors wrote. Specifically, they chose $2,000 as the probable cost of replacing your car’s transmission.
Most respondents said they’d cope by dipping into savings, borrowing from family and friends, using credit cards, seeking payday loans, pawning their belongings or selling some possessions. “Taken together with those who would sell their homes,” the authors said, nearly half of all respondents “are living very close to the financial edge.”
If half of Americans can’t come up with two grand in an emergency, imagine their reaction to our advice that you maintain as much as two years’ worth of spending in cash reserves. For most Americans, $2,000 wouldn’t even cover costs for much more than a month.
To find out how much you should have in your emergency fund, talk with a financial planner.
I bet you could :)
When half of Americans are on the Government dole, that is to be expected.
I can, but I know a whole lot of people who would be hard pressed to come up with half of that.
Exactly so. They're supported by The State, so why should they have savings? If something goes wrong, it's the responsibility of someone else to pay for it.
Not a problem here either.My in-laws however........
Can you front me a $20 spot?
I has $2000 ,but don’t tell the wife
Bingo! The government teaches dependence. Why should an Obama drone save? As far as the article comment, that people should have as much as two years expenses saved, few could meet that standard.
Most emergency funds are savings, aren't they? Or does he mean retirement savings?
75% of Americans need to read a Dave Ramsey book.
Was this always the case? Could Americans in 1955 raise a proportional amount? Or did we not even ask the question, because it wasn’t the public’ business to know?
That's the whole reason you have savings in the first place. Why is this a "coping" mechanism? It's the raison d' etre for saving money in the first place. It's stupid to say people can't raise $2,000 unless they cope by dipping into savings.
If you're able to save money, be sure to save for different needs: long-term (kids' college, retirement), intermediate-term (house down payment, car down payment), and short-term (roof leaks, crowns on your teeth, back-to-school expenses, layoffs from work).
Most respondents said they’d cope by dipping into savings,...ANNNND why do you have savings, if not for emergencies? I dip into mine when I want to go deep sea fishing. This January I will dip into my IRA to go deep sea fishing in Hawaii. What is the problem? If I wait longer, I might have a heart attack, stroke or lung cancer. Why not spend it now, while I’m able? Sheesh these people are stupid.
Dave Ramsey rocks!
There is not much incentive to save money these days, with interest rates so low. But people neglect to recognize how expensive it can be to borrow money.
The first thing any responsible person should do, regardless of how little money they may be making, is to save some money for emergencies.
Right after paying rent and utilities, the next highest priority should be putting some money aside, THEN figure out how you live on what’s left and what are your real NECESSITIES — and figure out if there is any extra work you can do for a little extra money.
/johnny
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