ECON Millions of Americans one paycheck away from economic disaster

[Dozdoats]

But this is the Trump Economy. Everything is fine! Just Fine!

 

[PghPanther]

Let me take this quote out of a racial context and put it in a large scale prospective....

" Most irresponsible people buy what they want.......and then beg for what they need"

On the other hand...........going this route still makes me laugh.......

"I spent all my money on booze, women and gambling........and the rest of it I wasted" - Edwin G. Robinson.

 

[Tristan]

In the words of Yogi Berra, "It's Dejavu all over again." At any rate, while this certainly isn't news to regular Timebomb denizens, it still highlights how even the "Trump miracle economy," is based on smoke, mirrors, and pot fumes. The link is below. The article is one of the better ones that highlights just how bad the American economy truly is.

Millions of Americans are just one paycheck away from ‘financial disaster’


Millions of Americans are just one paycheck away from ‘financial disaster’

Published: May 17, 2019 11:08 a.m. ET

Many consumers would turn to dangerous fallback options in order to make ends meet

Missing more than one paycheck is a one-way ticket to financial hardship for nearly half of the country’s workforce.

A new study from NORC at the University of Chicago, an independent social research institution, found that 51% of working adults in the United States would need to access savings to cover necessities if they missed more than one paycheck.

Research from the Federal Reserve found that 4 in 10 Americans couldn’t afford a $400 emergency, and 22% say they expect to forgo payments on some of their bills.

Certain communities were more prone to economic hardship in the event of missing a paycheck. Roughly two-thirds of households earning less than $30,000 annually and Hispanic households would be unable to cover basic living expenses after missing more than one paycheck, the researchers found.


“Even so, notable differences remain across race, ethnicity, education groups, and locations and many individuals still struggle to repay college loans, handle small emergency expenses, and manage retirement savings,” it added.

The findings were based on a survey of more than 1,000 adults. The researchers interviewed a nationally representative panel designed to be indicative of the U.S. population.


The survey provides a sobering look at Americans’ precarious finances even as the economy is improving, jobs are more plentiful and the stock market has — despite this week’s volatility — generally continued its upward trajectory this year.

Prosperity Now says too many families are either struggling to make ends meet, ‘or are just one emergency away from a financial disaster.’

Prosperity Now, a Washington, D.C.-based think tank focused on expanding economic opportunity for low-income Americans, said 40% of U.S. households lack a basic level of savings.

These “liquid asset poor” households don’t even have enough savings to live at the poverty level for three months if their income was interrupted.

The data is even worse for people of color, with more than half of households of color (57%) being liquid asset poor, it found.

“The 2019 Prosperity Now Scorecard shows that too many families are either struggling to make ends meet, or are just one emergency away from a financial disaster,” it said.
Millions of Americans don’t have savings to fall back on

A separate survey from home repair service HomeServe USA found that almost 1 in 5 Americans (19%) reported having no money set aside for dealing with the costs of an unexpected emergency expense. That report said 31% of Americas don’t have at least $500 set aside to cover an unexpected expense.

At the other end of the spectrum, over a quarter of Americans (26%) said they had $8,000 or more set aside for unexpected emergency expenses, it added.

Americans aged 65 and over are likely to have the most money set aside for unplanned expenses: 48% of people within the age group reporting having $8,000 or more in emergency funds (versus 20% of those ages 18 to 64).

“Nearly half of Americans (49%) cited medical emergencies as a potential unexpected expense for them in the next 12 months, a finding with added significance given the level of national attention and political debate around the topic of health care in recent months,” it added.

Though wage growth has accelerated recently, those gains have been concentrated among the wealthiest Americans most.

In addition, research from the Federal Reserve found that roughly 4 in 10 Americans couldn’t afford a $400 emergency. It said 41% would have to dip into savings, slightly less than 44% in 2016, 46% and 50% in 2013.

Roughly two-thirds of households earning less than $30,000 annually and Hispanic households would be unable to cover basic living expenses after missing more than one paycheck.

Approximately 22% say they expect to forgo payments on some of their bills and nearly half of those who don’t pay their bills also fail to pay off their credit-card bills every month, racking up double-digit interest rates.

The Fed’s 2018 report found that 74% of adults reported they were doing “at least OK financially” the previous year, up 10 percentage points from the first survey in 2013.

“Short disruptions in pay can cause significant hardship, as most Americans appear to be living paycheck-to-paycheck,” Angela Fontes, director of the Behavioral and Economic Analysis and Decision-Making (BEAD) program at NORC at the University of Chicago, said in the report.


The savings rate in the U.S. fell to 6.5% in March from a recent high of 8.8% in 2012.

The NORC study found that most workers would manage a missed paycheck by cutting spending on non-essential items (73%). But other methods consumers would employ to handle a gap in income could have serious long-term ramifications.

Around 2 in 5 consumers said they would stop putting money away into savings, while more than a quarter reported that they would stop making retirement contributions.

Arguably more concerning though is how many Americans would turn to debt. Almost half of households in this situation (47%) would turn to credit cards, while a similar share would borrow from friends or family.

And nearly a fifth of consumers would rely on a payday, auto or other short-term loan. These loans, which can carry interest rates upwards of 600%, can easily sink borrowers into an inescapable debt cycle and wreak havoc on their credit score.
More from MarketWatch

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The vast majority of women who receive an abortion say they cannot afford a child



Jacob Passy is a personal-finance reporter for MarketWatch and is based in New York.
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So, over two years on from this report, I wonder if things have improved or gotten worse?

OTOH, lots of businesses closed, or reduced hours.
OTOH, lots of 'Free Money' from the Govt. (assuming they could manage it...)
OTOH, ... well you get the drift.

Haven't seen a definitive study, but my guess is that overall there are more Americans one paycheck away from economic disaster; although perhaps many have already gone through that disaster so don't even have that paycheck... So would they count?

 

[Tristan]

Let me take this quote out of a racial context and put it in a large scale prospective....



" Most irresponsible people buy what they want.......and then beg for what they need"



On the other hand...........going this route still makes me laugh.......



"I spent all my money on booze, women and gambling........and the rest of it I wasted" - Edwin G. Robinson.

I know a couple folks like that - all their money is spent on Cigs

Let me take this quote out of a racial context and put it in a large scale prospective....

" Most irresponsible people buy what they want.......and then beg for what they need"

On the other hand...........going this route still makes me laugh.......

"I spent all my money on booze, women and gambling........and the rest of it I wasted" - Edwin G. Robinson.

It appears to me that many folks don't want help, they want a handout.

Maybe it's just my experience.

 

[20Gauge]

As a poor American myself (bwahahaha... we're so wealthy in the things that COUNT, it's not funny...but most people would blanch and run screaming if told they had to live on our income for even 3 months, much less forever), I have some sympathy. BUT... how many of these households have cell phones (and full service plans for $100 or more a month?) How many have cable TV? Amazon Prime (yes, it can save money on shipping, but people near the poverty level have NO business buying brand new merchandise at full price; that's what thrift shops, garage sales and e-bay are for). How many smoke, drink soda, eat chips and other expensive snacks more than once or twice a YEAR, and buy cold cereals and toaster pastries for breakfast?

For those who are doing all that right, and are still pinched badly... I feel for them. If they're working more than 40 hours a week, AND/OR cooking and baking everything from scratch, mending or sewing their own clothing, and doing their own basic home and car repairs, I absolutely feel for them.

If they aren't... well, poor choices have consequences. You don't know how to do any of the above? YouTube (you can use the internet at your local library, or use free WiFi on a cheap laptop at the local McDonalds and a dozen other locations) has videos on almost everything. The 'net also has cooking classes and instructions, and a billion recipes on using low cost foods to cook tasty meals. Your local library has a ton of resources as well. Start by borrowing Amy Dacyzyn's books "The Tightwad Gazette". They're priceless for those who need to be on a strict budget.

Listen to Dave Ramsey and follow his advice. Many people who are struggling to make ends meet could find they are no longer "poor" in under 5 years if they just did those two things... read her books and followed Ramsey's advice.

Most won't do it.

Summerthyme

99% of them to answer your question.

Often they think life is like that movie. Build it and it will come.

So they spend as if they had money, hoping money will just show up.

 

[20Gauge]

Yeah, I agree with you. If you want one example, here it is. I used to buy coffee at Peets on a daily basis. One day I looked at the $2 per cup I was spending, and then looked at the $60 plus per month I was spending, and then looked at the $720 or so per year I was spending. Ergo, I went and bought a plastic cover, some filters, and a couple of coffee cups and made a cup every morning.

Well, that was several years ago, and I essentially paid my phone, electric, and internet bill with the money I saved on buying coffee.

About 10 years ago, maybe a bit longer, we did the same thing.

It improved our lives in ways that are still reaping benefits.

 

[20Gauge]

I'll bet at least 30% or more of those people that don't have $400 liquid spend at least that much on cigarettes annually.

Better yet, beer on Friday.

I worked in construction (bookkeeping) and it always amazed me the number of guys (99+%) who bitched about being broke the day they got paid. Why?

They spent all their money on eating out / booze / cigs.

Every single Friday was stock up on beer day. I never understood why the local package store had 350 cases of beer brought every Thursday night. That was until I saw them Saturday morning when they had less than 10. The construction guys came through.

 

[Doomer Doug]

It is interesting 20 gauge that I have now given up BOTH coffee and cigs, with a total savings of $90 a month for the coffee, $3 a cup and $8 a pack, with one half pack per day. A total of $200 per month.

It paid for my rifle, my revolver, and my mossberg 20 gauge.

 

[mikeabn]

A $7 pack per day costs over $2500 per year.

And name brands $10 a pack or more.

 

[20Gauge]

It is interesting 20 gauge that I have now given up BOTH coffee and cigs, with a total savings of $90 a month for the coffee, $3 a cup and $8 a pack, with one half pack per day. A total of $200 per month.

It paid for my rifle, my revolver, and my mossberg 20 gauge.

I never started. Where is my check?

 

[rob0126]

Too many people...no matter what the economy...no matter what their income...will spend every dime they make.

That is the root of the problem.

But that's what the public school system has taught for decades, indirectly.

 

[WalknTrot]

But that's what the public school system has taught for decades, indirectly.

This is a 2+ year old thread, but...that's what parents and common sense are for.

 

[West]

I never started. Where is my check?

Need to copyright that....

"Where's My Check" put it on coffee cups and tee shirts.

 

[jward]

I don't fault young folk for not having common sense- we let ignorant children spawn them, then send them to the 'cog finishing and indoctrinating' compounds, train them to limit their communication to 280 characters per tweet, blare nonsense and upside down inside out "facts" at them from every print & digital headline they encounter....

We need to find a way to stop kvetching about the state of the world amongst ourselves and doing something to actually improve it- or else accept our share of the responsibility for it being an utter, tragic, disgraceful mess.

But, as to OP, money is but one small measure of wealth. We have friends, families, basements, attics, closets n pantries stuffed with "stuff"... and live in a society that has a plethora of free / subsidized services. We are not poor.
..though granted, they are making inroads, and will get us there before long, at this rate.

 

[raven]

First posted in May 2019,
it has been two years,
50 paychecks,
one pandemic,
supply chain meltdown,
a lingering employment lock down
and yet
they are still one paycheck from economic disaster

 

[fish hook]

I've got a friend who shacks his head over people who live week to week AND have their credit cards maxed out, 30 yr mortgages, 2nd mortgages, and only pay the minimum on everything. All that money going towards the interest, is throwing it away.

He has an uncle who owes more on his house now than when he bought it 30 years ago, and the uncle is 75.

A man once said :there are two kinds of people in the world, those that understand interest, and those who don't. Those who don't pays it, those who do collects it.

 

[fish hook]

This thread is essentially the story of my life. Doing a little better now, but most of my life i felt like if i were one paycheck away from disaster i was doing pretty good.

 

[Barry Natchitoches]

Times ten years is 52,000.00 for star bucks gag me coffee that to me don't even taste good.

Holy Spaghettios!

$52,000 spent on Starbucks coffee over a 10 year period?

The house I live in only cost $65,000 (I bought it in the late 1980s, when things were a tad cheaper than they are today).

Somehow, I never thought of paying for daily Starbucks coffee as running similar to the cost of my - admittedly modest - home...


BTW, I have never bought a Starbucks coffee. It is just not something I was ever tempted to spend my hard earned money on.

 

[Milk-maid]

...
It appears to me that many folks don't want help, they want a handout.

Maybe it's just my experience.

I'm dealing with that right now. Husband and wife friends are down and out. I've helped them a few times, sent them some food, sent them some money. But later when they came into some extra money, instead of saving it for a rainy day, they blew through it.... and now they're in a real predicament... about to be kicked out on the street. No money in savings.. but dayam, they have their 4 wheeler toys they can ride!

When she told me that it was happening again, I told her it was about her previous "Choices"
Like their buying 4 wheelers to have fun, instead of putting the money into savings. She got really mad at me.
I think she was hoping by telling me their sad story I'd offer to help, but I just can't. I keep thinking about their stupid 4 wheelers that they bought when they were flush for a few months.

This time the lesson has to be really tough, even to being homeless for awhile. Maybe then they'll learn.
(I just love this friend, but 'Stupid' should hurt.)

 

[vestige]

I'm dealing with that right now. Husband and wife friends are down and out. I've helped them a few times, sent them some food, sent them some money. But later when they came into some extra money, instead of saving it for a rainy day, they blew through it.... and now they're in a real predicament... about to be kicked out on the street. No money in savings.. but dayam, they have their 4 wheeler toys they can ride!

When she told me that it was happening again, I told her it was about her previous "Choices"
Like their buying 4 wheelers to have fun, instead of putting the money into savings. She got really mad at me.
I think she was hoping by telling me their sad story I'd offer to help, but I just can't. I keep thinking about their stupid 4 wheelers that they bought when they were flush for a few months.

This time the lesson has to be really tough, even to being homeless for awhile. Maybe then they'll learn.
(I just love this friend, but 'Stupid' should hurt.)

Stand firm.

Nice post

 

[tm1439m]

Well their are over three hundred million people in this country so asking a 1,000 to guage what is going on will in no way say what is going on in the country.

There you go. I was waiting to post pretty much the same things and then came across this my brother. People believe these articles all the time. Most are just studies done by people just making a paycheck. There are a million reasons why this study is useless.