If you don't have enough money to handle an emergency, <i>you have an emergency.</i> Go ahead and panic. Trade your car for a cheaper one, move into a cheaper apartment, stop eating out, sell your TV, and <i>get an emergency fund</i>.<p>If you're already living on toasted rats in a cardboard box, that's different, but if you've got unnecessary expenditures, you should really cut those out and get an emergency fund. To do otherwise is reckless. And you're cheating yourself of sleep and peace of mind.
I certainly don't have any put away for a rainy day. After a bit of time being jobless, I finally found some underpaying work to get back on my feet. Coupled with various bills and medical bills, etc., I'm sitting at a paycheck to paycheck point. I get paid again tomorrow and I have $5.00 in the bank. It's quite depressing. Couple that with my girlfriend also losing her job and we tore through any savings pretty quickly.<p>I have a side project going that I'd love to launch in the next month or so, but I'm also polishing up the resume to begin sending out June 1.<p>Time for me to start pulling myself out of this rut now that I've got things in my life stabilized again.<p>I actually feel a little embarrassed posting this here, but what the hell. This will act as motivation for me. I seem to have forgotten along the way that I'm a good developer and worth more than the small salary I have right now. (I took on some consulting work that sort of turned full time. The salary was not/is not great but I kind of ended up 'trapped' there. Stockholm syndrome for the employed?)
I think it's very important to instill saving behaviors early on in your adult life. After graduating college, I had plenty of debt, but still made sure I was putting money into a savings account.<p>Technically, it would have been much wiser to put any excess money towards 15% APR credit card debt than in 5% saving accounts (5% savings accounts did exist for a few years prior to the 2008 collapse), but actually having money to pay for unexpected expenses rather than building the debt I was trying to pay off, felt better.<p>---<p>Freakonomics did a podcast a few months ago, using either this study or a similar study as part of the podcast. The podcast was about lottery-linked savings accounts. The other half of the equation was that the same 50% of Americans who could not come up with $2,000, were also the ones most likely to play low-odds lottery games. Lottery-linked Savings accounts take the relatively minuscule interest gains on each account, and throws them into a lottery pool, where one or several winners will win the "prize".<p>This style of savings account worked very well in one country (I believe it was South Africa). The incentive to save, with minimal interest gains, was low. However, the idea of a big payday, which technically was free (you only surrender your interest), led many more people to put money away.<p>These bank accounts are largely illegal in the United States. Partially because of their image, and partially because states don't want to sacrifice their own state-owned lottery cash cows. I believe a credit union in Michigan was able to work around some laws and find a legal way to offer a lottery-backed savings account.
I have a question for HN hackers. I make over 6 figure a year. My wife doesn't work. She keeps telling me that we are not middle class, and that I should earn more if I want to afford us a middle class lifestyle, because everything is very expensive now. She also thinks that I'm a bit of an underachiever, professionally, for earning only 120K a year. Am I an underachiever or is she out of touch with Midwestern America? I keep telling her that the average family can only dream of the money I bring home every month with my two jobs.
I've been working my butt off in the corporate world, trying to save a year of living expenses for my family of 5 in the suburbs, in hopes of quitting and doing my own thing once I had that cushion.<p>I hit the 9 month mark, then had major health issues that are wiping a lot of it out.<p>At first, I was fairly devastated. Then someone told me, "Isn't this exactly the kind of thing that savings is for?"<p>And you know what, it is. Sure, I wanted to quit my job in the near future. Sure, I wanted to be the rare married family guy who still had the flexibility to do startup work.<p>But how blessed and thankful I am that I am "only" going to have 3 months stored away after this is all done.<p>It is always good to keep things in perspective.
I'd be curious what the survey would have shown if it were given in 2007.<p>I bet at least some of the people who can't come up with $2000 today is because they've already eaten into their emergency funds due to lost jobs, economy, etc...
When I started college, I had 1000$ to my name. I didn't take out any loans and worked my way through a full load every semester for four years. Graduated and found a job and lived in places well below what I could afford. Every pay check I put between 55-65% of what I earned into savings. A couple years later I bought a house. Took the rest of that savings and put it into the market. Now, eight years later, I've got six figures in the bank and another five in the market. It isn't impossible to come up with money, you just have to think longer term and be disciplined about it.
I wonder whether or not there is a difference between the 'ability' and the 'perceived ability' to raise cash quickly.<p>Many people are cash-poor, yes, but I am surprised that over half the population has no cash equivalents, hard assets, or access to credit (even from a relative or friend).<p>N.B. This is not meant to be financial advice, but just to point out that people usually have many more options than they think they do.
One of the reasons the UK government bailed out the major banks here in the last financial crisis is that they feared what would happen if the retail banking system stopped working - if our chip-n-pin cards and ATMs suddenly stopped working.<p>I did wonder if it might be sensible to keep a chunk of cash somewhere safe for unpredictable times - having plenty of cash on tap won't help much if it is tied up in a bank that has just stopped working.
What interested me was the cross-cultural comparison, which is only alluded to in the CNN article but explained a bit more in depth here: <a href="http://blogs.wsj.com/economics/2011/05/23/nearly-half-of-americans-are-financially-fragile/" rel="nofollow">http://blogs.wsj.com/economics/2011/05/23/nearly-half-of-ame...</a><p>> Meanwhile, Lusardi, Schneider and Tufano also looked at how different countries compare. They consulted with local partners to set the number used in local currency at a comparable level. “Perceived capacity to cope with an emergency is lowest in the U.S., U.K. and Germany, all countries in which 50% of households or more would probably or certainly be unable to come up with the emergency funds,” the authors wrote. “France and Portugal occupy an intermediate position; 46% of respondents in Portugal would certainly or probably be unable to come up with the funds as would 37% of those in France. The highest levels of coping capacity are found in Canada (28% certainly or probably unable), Netherlands (27.9%), and Italy (20%).”
I'm definitely not in the part of my life yet when I have to worry about money...but still I do. I actually just made my first proper budget (proper as in not just write down what I'm expecting to spend, on the back of a napkin, but doing it by month, comparing it to what I get per month, planning stuff.) and you know what? It actually made me feel good.<p>Knowing exactly what I can spend on what is a really comforting thought. When I'm in a shop and I see something I want, before I would have to quickly count up the big expenses of the coming months, see what I have left, and decide if it's worth it. Now I know exactly in what category the item is, and how much money I have left. If I don't have enough and I feel like I really need it, I can take a look at my budget and adjust it slightly.<p>On a sidenote, I'd love to start a business one day, but as long as it's not completely necessary (and safe) I would never want investments. I'd much rather bootstrap my product instead: the risk is much lower, and the relaxed feeling much higher.
I use a Roth IRA for most of my long-term savings, can withdraw contributions very quickly with no penalty whatsoever. My investments are riskier but even if they tank I can still afford a $2000 type emergency. To me this makes more sense than wasting savings in a low-yield non tax-advantaged account.
If you're in this situation, get yourself an account at an online bank (ING Direct, Everbank, etc.) with an automatic savings plan, then create a dedicated savings account for emergencies and label it <i>Emergency Fund</i> (important!). If there's no automatic plan, just set a portion of your paycheck to be direct deposited into that account. Just put in $50 or $100 per paycheck.<p>Once the account balance gets to a level you're comfortable with, you can divert that excess monthly savings into CDs and other safe (less-liquid) investments, that you can periodically cash-out to build up your emergency fund for bigger, longer emergencies. The added security will help you sleep better. At least it did for me.
I cheat a little. I'm still a student, so $2k is still a significant chunk of my net worth.<p>My strategy to allow myself to own a decent car, a computer, etc revolves around a credit card I secured with a very high credit limit. I have $2k I can "borrow" against my future, and then I have a 30-day grace period in which I can sell possessions to come up with the money. In other words, I use my credit card and its 30-day grace period to increase the liquidity of my possessions.<p>This has two caveats: 1) Keep that credit card paid off to allow use of the grace period 2) I suffer a net loss when I resell something, but that's a small gamble I decided to take.
2,000 bucks is a lot, I know the rule of thumbs is like 3 months net salary to keep for bad days but that's just hard for people like most on HN that are young, trying to either bootstrap a business or have a ton of student debt.<p>Not sure what I would do but I think I could sell enough non-essentials to make up the money if it was a really bad situation.
participating in a zero sum or negative sum game makes you, on average, poorer. we all need to play the status game, we have to keep up appearances in order to function smoothly with others in both the personal and business worlds. but explicitly reason about which activities are actually delivering the utility.<p>one of the ways that other people's thinking strikes me as insane (and not in a hyperbole sense, but literally <i>insane</i>) is not considering the alternative uses of any given chunk of money when making buying decisions. I watch time and again the people around me purchase something they want <i>less</i> for <i>more</i> money, simply because their thinking is compartmentalized i.e. the two items don't get thought of at the same time.
According to wikipedia[1] the population of the USA is 308,745,538 (2010 census). Is, even the majority of those, 1,900 Americans a really low figure to be a solid source for any argument?