20 ms·

It is a myth that a large share of people can’t cover a $400 emergency expense

anigbrowl 7y ago
I am troubled that 12% say they couldn’t cover the $400 expense, and that 14% claim it would stop them from paying some of their other bills. But even if respondents are accurately reporting on their finances, these numbers suggest their situation is relatively uncommon. That's between 1/7th and 1/8th of adults responding to a survey, some of whom presumably have kids to look after. This guy seems so in love with demonstrating his statistical abilities that it's made him dismissive of ~30-35 million people with severe cash flow problems.
- lukevdp 7y ago
  He isn’t dismissing those people or their hardships, he is saying that the actual number of 40% that many politicians use is disingenuous.
  - dv_dt 7y ago
    He's dismissing it by saying people who can't come up with $400 in cash, can put it on their credit cards or borrow it from friends or family. That's pretty dismissive because the issue is that most people doing even reasonably well should really should be able to pay an emergency $400 bill in cash.
    - grkvlt 7y ago
      Except for the fact that the sort of person who cannot come up with USD 400 in cash is also the sort of person who has a poor credit rating and no credit cards, and most likely their peer group of friends and family are in exactly the same situation. This is the same sort of tone deaf advice that rich people give about starting your own company - "Why can't these poor people just borrow a few hundred thousand dollars from the family trust fund like I did, they must just be shiftless and lazy" - and should be dismissed in the same way. I suspect the author has neither been short of money in their life, nor met anyone else who was...
      - moonka 7y ago
        Not to mention the fact that a $400 dollar emergency is on the low end. In my experience, most emergencies that have cropped up have been closer to the $700-800 price (Doctor bills (after negotiation), vet bills, temporary relocation, etc).
        deleted 7y ago
        [deleted]
  - anigbrowl 7y ago
    I'm not having trouble understanding the article, I'm responding to the specific part that I quoted, and fairly I think.
  - turk73 7y ago
    It is bs. So is the one about "the average 401K only $8K in it" or whatever. I changed jobs a couple of times. I get a 401K at each job, it gets up to like $5-10K or whatever and then it sits unattended whereupon I eventually roll it over to my IRA account. Point being, I'm pretty damn wealthy but I have a couple of those "average 401K" accounts. Statistics is hard because correlation does not imply causation, something your average J-school grad seems to not be able to even fathom as concept.
  - shereadsthenews 7y ago
    He does dismiss it right there in the same sentence, saying "I’m dubious about [12%] as well." It's obvious that this guy who equates $400 with a new tire is out of touch and I guess he drives a Porsche. Poor Americans drive on the same tires until they explode and then they get another $20 tire. Also rich to equate it with a dishwasher repair bill; only 2/3rds of Americans can look forward to one of those because the other 1/3rd don't even have a dishwasher. The specialist on American poverty at the AEI is not the kind of person to whom you should turn for factual statements about poverty in America. AEI is an organization founded upon and dedicated to deception.
wilg 7y ago
I somehow read this article the first time without realizing it's totally wrong. Here's the direct quote from the original government report [1]: > If faced with an unexpected expense of $400, 61 percent of adults say they would cover it with cash, savings, or a credit card paid off at the next statement—a modest improvement from the prior year. Similar to the prior year, 27 percent would borrow or sell something to pay for the expense, and 12 percent would not be able to cover the expense at all. That means 39% of people say they either cannot pay or must sell something or borrow for it. Representing that as "40% of Americans can't come up with $400 in an emergency" is perfectly fair in my view. [1] https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf https://www.federalreserve.gov/publications/files/2018-repor...
- leereeves 7y ago
  This seems to hang on the definition of "come up with $400". To me that includes being able to sell or borrow something, but clearly the interpretation varies.
- thaumaturgy 7y ago
  Credit cards that offer rewards muddies up the waters here a lot. In that case, it's smarter to put the $400 on the card (and pay it off before paying interest) for the 1.5% discount or the air miles or whatever.
  - perennate 7y ago
    I don't believe it muddies things at all. A sub-quote from wilg's quote: > 61 percent of adults say they would cover it with cash, savings, _or a credit card paid off at the next statement_ If some of the other 39% pay with a credit card, they are saying they would carry a balance and pay interest.
  - olliej 7y ago
    If you’re on the bottom rung I’m guessing your interest rate is >20%, (the max is apparently 29.9%). Divide by 12 and one month of interest rate is as much, if not more, than 1.5% cash back. Using debt to save money depends on starting with a reasonable amount of money.
SerLava 7y ago
This is splitting hairs. 40% of Americans can't come up with $400 but luckily a majority of those know a financial institution that can come up with $400 for them. Anyone who does not have an emergency $400 is not going to have a great time with an unexpected $400 debt on top of whatever else their debt obligations and expenses are. Is it so hard to believe that we want to live in a country where pretty much everyone has four hundred measly god damned dollars.
- Gibbon1 7y ago
  I see it as the neoliberal revolution has failed to deliver and it's apologists are grasping at straws to avoid staring down the damage they have done to the bulk humanity. They'll also say things like well it was bad for people living the Midwest but look at all the Chinese lifted out of poverty. Ignoring that China was too large and coherent to beat into submission like smaller countries were. And thus they didn't inflict those policies on their people.
- jackfraser 7y ago
  Of course you want that country. The thing is, the magical panacea of giving out free money to everyone just devalues the money. $1000 Yang Bucks will become the equivalent of $100 now within short order, as prices for things go up.
  - SerLava 7y ago
    No yang bucks. Better wages, publicly funded health care, no more war grift without an actually good reason. I dont understand why Americans lack this magic spell you're talking about, meanwhile Harry Potter is running around Europe handing out healthcare and extending life spans and shit. Are we just worse at life or something? Maybe we're not good enough?
rhacker 7y ago
It's beyond me why two classes aren't in school today that SHOULD have been taught by ones parents: * Golden Rule * Budgeting (I think we know the reasons why parents don't teach this.)
- loco5niner 7y ago
  Why?
  - rhacker 7y ago
    Golden rule - it's quite obvious this lesson is lost on today's generation - basically called the "me generation". That's quite clearly the opposite of the golden rule that would have you focus on other people's plight to understand what you're doing wrong. Budgeting - The notion that half of Americans can't afford a $400 mistake (and I know this is contested and there are credit cards, etc.. but the stat came about from something). In any case, I've met a lot of people that know the "budgeting" exists but don't actually know how to do it or that it would even apply to a person. They think of it as something a business or government does. Parents don't teach these skills because they don't have them either.
    - loco5niner 7y ago
      > Parents don't teach these skills because they don't have them either. Definitely agree with this! And yes, The Golden Rule and Budgeting should be taught in our schools.
ikeboy 7y ago
The median household net worth is around 100k. If your house or whatever is worth 100k more than you owe on it, there's little meaningful sense in which you can't afford a $400 expense. You've got a liquidity problem, that's all.
loudandskittish 7y ago
> You’d frequently have a coworker out of the office who can’t afford to buy a new tire. You’d frequently hear from friends and neighbors who can’t afford to fix their dishwashers. Ugh. The people who can't come up with $400 to cover an emergency DON'T OWN CARS! That's why you don't hear about them missing work because they couldn't afford a new tire. They take public transit, or they walk because they can't afford bus fare due to an emergency and probably don't talk about it at work due to feeling ashamed (I know, I've been there). Nor do they own dishwashers...this is some of the worst logic I've ever heard and the author of this article really needs to get out of his bubble. (Can't believe I wasted my last "last free article" on this nonsense.)
- SerLava 7y ago
  You'd see golf tournaments canceled nearly every season
- salawat 7y ago
  Clear your cookies for the site, mate. Pro-tip: Most paywalled are dependent on you maintaining some record of having visited the site before via the presence of a tracking cookie. You have no obligation to maintain it. If you're using Chrome on some flavor of Android, go to Settings->Site Settings->All sites->type in the domain name, select the cookies that show up, and click clear and reset. Congratulations. You're now free of being tracked and hounded...by those paywalls anyway.
  - r721 7y ago
    Pro-tip: In desktop Chrome you can get to "clear cookies" popup via clicking on padlock icon in the URL bar.

I am troubled that 12% say they couldn’t cover the $400 expense, and that 14% claim it would stop them from paying some of their other bills. But even if respondents are accurately reporting on their finances, these numbers suggest their situation is relatively uncommon. That's between 1/7th and 1/8th of adults responding to a survey, some of whom presumably have kids to look after. This guy seems so in love with demonstrating his statistical abilities that it's made him dismissive of ~30-35 million people with severe cash flow problems.

lukevdp 7y ago
He isn’t dismissing those people or their hardships, he is saying that the actual number of 40% that many politicians use is disingenuous.
- dv_dt 7y ago
  He's dismissing it by saying people who can't come up with $400 in cash, can put it on their credit cards or borrow it from friends or family. That's pretty dismissive because the issue is that most people doing even reasonably well should really should be able to pay an emergency $400 bill in cash.
  - grkvlt 7y ago
    Except for the fact that the sort of person who cannot come up with USD 400 in cash is also the sort of person who has a poor credit rating and no credit cards, and most likely their peer group of friends and family are in exactly the same situation. This is the same sort of tone deaf advice that rich people give about starting your own company - "Why can't these poor people just borrow a few hundred thousand dollars from the family trust fund like I did, they must just be shiftless and lazy" - and should be dismissed in the same way. I suspect the author has neither been short of money in their life, nor met anyone else who was...
    - moonka 7y ago
      Not to mention the fact that a $400 dollar emergency is on the low end. In my experience, most emergencies that have cropped up have been closer to the $700-800 price (Doctor bills (after negotiation), vet bills, temporary relocation, etc).
      - deleted 7y ago
        [deleted]
- anigbrowl 7y ago
  I'm not having trouble understanding the article, I'm responding to the specific part that I quoted, and fairly I think.
- turk73 7y ago
  It is bs. So is the one about "the average 401K only $8K in it" or whatever. I changed jobs a couple of times. I get a 401K at each job, it gets up to like $5-10K or whatever and then it sits unattended whereupon I eventually roll it over to my IRA account. Point being, I'm pretty damn wealthy but I have a couple of those "average 401K" accounts. Statistics is hard because correlation does not imply causation, something your average J-school grad seems to not be able to even fathom as concept.
- shereadsthenews 7y ago
  He does dismiss it right there in the same sentence, saying "I’m dubious about [12%] as well." It's obvious that this guy who equates $400 with a new tire is out of touch and I guess he drives a Porsche. Poor Americans drive on the same tires until they explode and then they get another $20 tire. Also rich to equate it with a dishwasher repair bill; only 2/3rds of Americans can look forward to one of those because the other 1/3rd don't even have a dishwasher. The specialist on American poverty at the AEI is not the kind of person to whom you should turn for factual statements about poverty in America. AEI is an organization founded upon and dedicated to deception.

wilg 7y ago

I somehow read this article the first time without realizing it's totally wrong. Here's the direct quote from the original government report [1]: > If faced with an unexpected expense of $400, 61 percent of adults say they would cover it with cash, savings, or a credit card paid off at the next statement—a modest improvement from the prior year. Similar to the prior year, 27 percent would borrow or sell something to pay for the expense, and 12 percent would not be able to cover the expense at all. That means 39% of people say they either cannot pay or must sell something or borrow for it. Representing that as "40% of Americans can't come up with $400 in an emergency" is perfectly fair in my view. [1] https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf https://www.federalreserve.gov/publications/files/2018-repor...

leereeves 7y ago
This seems to hang on the definition of "come up with $400". To me that includes being able to sell or borrow something, but clearly the interpretation varies.
thaumaturgy 7y ago
Credit cards that offer rewards muddies up the waters here a lot. In that case, it's smarter to put the $400 on the card (and pay it off before paying interest) for the 1.5% discount or the air miles or whatever.
- perennate 7y ago
  I don't believe it muddies things at all. A sub-quote from wilg's quote: > 61 percent of adults say they would cover it with cash, savings, _or a credit card paid off at the next statement_ If some of the other 39% pay with a credit card, they are saying they would carry a balance and pay interest.
- olliej 7y ago
  If you’re on the bottom rung I’m guessing your interest rate is >20%, (the max is apparently 29.9%). Divide by 12 and one month of interest rate is as much, if not more, than 1.5% cash back. Using debt to save money depends on starting with a reasonable amount of money.

SerLava 7y ago

This is splitting hairs. 40% of Americans can't come up with $400 but luckily a majority of those know a financial institution that can come up with $400 for them. Anyone who does not have an emergency $400 is not going to have a great time with an unexpected $400 debt on top of whatever else their debt obligations and expenses are. Is it so hard to believe that we want to live in a country where pretty much everyone has four hundred measly god damned dollars.

Gibbon1 7y ago
I see it as the neoliberal revolution has failed to deliver and it's apologists are grasping at straws to avoid staring down the damage they have done to the bulk humanity. They'll also say things like well it was bad for people living the Midwest but look at all the Chinese lifted out of poverty. Ignoring that China was too large and coherent to beat into submission like smaller countries were. And thus they didn't inflict those policies on their people.
jackfraser 7y ago
Of course you want that country. The thing is, the magical panacea of giving out free money to everyone just devalues the money. $1000 Yang Bucks will become the equivalent of $100 now within short order, as prices for things go up.
- SerLava 7y ago
  No yang bucks. Better wages, publicly funded health care, no more war grift without an actually good reason. I dont understand why Americans lack this magic spell you're talking about, meanwhile Harry Potter is running around Europe handing out healthcare and extending life spans and shit. Are we just worse at life or something? Maybe we're not good enough?

rhacker 7y ago

It's beyond me why two classes aren't in school today that SHOULD have been taught by ones parents: * Golden Rule * Budgeting (I think we know the reasons why parents don't teach this.)

loco5niner 7y ago
Why?
- rhacker 7y ago
  Golden rule - it's quite obvious this lesson is lost on today's generation - basically called the "me generation". That's quite clearly the opposite of the golden rule that would have you focus on other people's plight to understand what you're doing wrong. Budgeting - The notion that half of Americans can't afford a $400 mistake (and I know this is contested and there are credit cards, etc.. but the stat came about from something). In any case, I've met a lot of people that know the "budgeting" exists but don't actually know how to do it or that it would even apply to a person. They think of it as something a business or government does. Parents don't teach these skills because they don't have them either.
  - loco5niner 7y ago
    > Parents don't teach these skills because they don't have them either. Definitely agree with this! And yes, The Golden Rule and Budgeting should be taught in our schools.

ikeboy 7y ago

The median household net worth is around 100k. If your house or whatever is worth 100k more than you owe on it, there's little meaningful sense in which you can't afford a $400 expense. You've got a liquidity problem, that's all.

loudandskittish 7y ago

> You’d frequently have a coworker out of the office who can’t afford to buy a new tire. You’d frequently hear from friends and neighbors who can’t afford to fix their dishwashers. Ugh. The people who can't come up with $400 to cover an emergency DON'T OWN CARS! That's why you don't hear about them missing work because they couldn't afford a new tire. They take public transit, or they walk because they can't afford bus fare due to an emergency and probably don't talk about it at work due to feeling ashamed (I know, I've been there). Nor do they own dishwashers...this is some of the worst logic I've ever heard and the author of this article really needs to get out of his bubble. (Can't believe I wasted my last "last free article" on this nonsense.)

SerLava 7y ago
You'd see golf tournaments canceled nearly every season
salawat 7y ago
Clear your cookies for the site, mate. Pro-tip: Most paywalled are dependent on you maintaining some record of having visited the site before via the presence of a tracking cookie. You have no obligation to maintain it. If you're using Chrome on some flavor of Android, go to Settings->Site Settings->All sites->type in the domain name, select the cookies that show up, and click clear and reset. Congratulations. You're now free of being tracked and hounded...by those paywalls anyway.
- r721 7y ago
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