Posted on 09/21/2005 6:35:44 AM PDT by Maria S
I thought we were discussing the savings rate, not emergency preparedness.
The historical average here at home does not take into account the significantly increased level of home ownership in the past 25 years.
"I always though it was "Be Repaired""
Only if you drive a Chevy Vega.
Agree with every thing you say. 70% of Americans live paycheck to paycheck.- Scary
Also, I think I read 35-40% of all homes sold now are purchased by people as 2nd homes or investment properties (flipping). Even scarier
"and found that when all assets are measured, Americans are about where they've always been in assets-to-debt;"
Do you know if they're including retirement savings as an asset? If so, that's likely to skew the picture when compared to the past where you employer's set aside for your pension would not have been included.
"and that when you measure forced savings like Social Security and include housing"
Housing isn't savings, its an investment. And SS? Hopefully by now we all know that flows directly through to the general fund. Its not savings.
I agree. I've seen entire threads here debate what should be considered savings. The article suggests we should have six months worth of expenses saved and readily available.
For many American's that's probably good advice but for many others this would constitute tying up a very large sum of money. That I should forego a 10% average return for a 2.5% return, just so I can be ready for unforeseen circumstances, doesn't seem like the best advice to me. I can always borrow from my 401(k), or from any number of zero percent or low percent credit cards, to meet for unplanned issues. Personally, I would rather do that than lose the opportunity to earn an additional 7.5% on six months worth of expenses. That would add up significantly over the years.
"Intelligent people" may "recognize Intelligent Design", but intelligent people also recognize that this story comes from Aesop's Fables, not the Bible. Sheesh.
"The difference between "saving" and "investment" is pretty small and for things like 401ks not to be tracked really throws off the numbers..."
Actually, to economists, the two reall are different. If they start including investment into savings now, that would throw off comaprisons to the past when they didn't.
A personal finance rule of thumb is to save six months' worth of wages. The object is to protect the family against the loss of a job. How many of you out there have six months' worth of savings?
He's not saying have six month worth of savings in 401K. No one thinks about 401K, and you don't use 401K that way.
Once these people see that the carrying costs become burdensome to the point of equaling or exceeding the appreciation they are likely to get, they will have second thoughts.
The worst part about this is that many local people have been priced out of the market in the places they grew up to people who don't even use the house that much and don't spend that much money in the local economy.
"Charcoal futures"? Which exchange are those traded on?
I guess it depends in part on how many dollars we're talking about. Personally, I think of emergency money as just that: emergency money. I don't fret about getting a return on it, because that's not what it's for. To me, I'd be very sorry if I put the money into stocks or whatever, and then had an emergency come up. So I do both: I save for emergencies, AND I invest and get as good a return as I can. And anyway, don't most people hedge a bit anyway? Why not think of your emergency savings as a hedge? For me, it doesn't constitute a huge sum of money, and whatever I lose in interest or gain is worth it for the security it brings. Call the difference between 2.9% and 7% earnings an insurance payment to myself.
So where'd the extra money go if it wasn't spent? The federal debt didn't go down at all from 1993 through 2000. So if the money wasn't spent and the debt didn't go down, where's the money?
| Annual Historical Debt Outstanding | |
|---|---|
| Date | Amount |
| 09/30/2000 | $5,674,178,209,886.86 |
| 09/30/1999 | $5,656,270,901,615.43 |
| 09/30/1998 | $5,526,193,008,897.62 |
| 09/30/1997 | $5,413,146,011,397.34 |
| 09/30/1996 | $5,224,810,939,135.73 |
| 09/29/1995 | $4,973,982,900,709.39 |
| 09/30/1994 | $4,692,749,910,013.32 |
| 09/30/1993 | $4,411,488,883,139.38 |
| 09/30/1992 | $4,064,620,655,521.66 |
There never was a surplus, just smoke and mirrors.
Just out of curiosity, Maria S., can you tell me specifically how GWB's so-called irresponsible federal spending has caused you or your family any harm?
I keep hearing these "sky is falling" type of people, and yet I haven't been able to get a straight answer as to how it has made their lives any worst.
In fact I've been hearing that same "sky is falling" stuff since the 1970s and 1980s.
Ironically, the federal deficit in 2005 is a lower percentage of the entire budget as it was back in the 80s, or so I've read in Financial Times and other publications.
Remember all the teeth gnashing and hair pulling when the Japanese were buying our federal debt back in the 80s, when Hollywood and other anti-Republican anti-American types proclaimed that Japan was the truly responsible country, and would soon be taking over the world???
I do, and in hindsight it was laughable, don't you agree?
Anyway, I am babbling, aren't I. Suffice it to say that the deficit is not causing the cataclysmic end of the world, as some naysayers like to proclaim.
Stay safe. Cheer up.
If I'm not mistaken, the interest on the debt causes the number to keep going up, even when we pay down the principal, as we did in the late 90s. I don't have any data available at the moment, though.
"this does not mean that the 600K will slump to 300K. Housing demand may grow more slowly, but the amount of people who already want houses will not diminish significantly."
I guess the mechanism of a bust here, if it were to happen, would be that rising interest rates force forclosures which in turn flood the market w/ housing. I don't know anything about these new interest only loans, but couldn't decreased housing value also force essentially a "margin call" at some point too?
The title refers to the author's hysterical belief that there will soon be a total economic meltdown - he is not talking about preparedness for a personal financial emergency (job loss, illness, etc.).
His argument is that savings rates are low and that somehow this is Bush's fault. He mentions the "six month rule" parenthetically to shame the reader into agreeing with him.
He's not saying have six month worth of savings in 401K. No one thinks about 401K, and you don't use 401K that way.
Again, as I pointed out, a home equity line is a way of accessing assets without substantial penalties.
There are more flexible means of financial planning than keeping a few grand in your mattress or the next-best thing - a checking account.
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