13 ms·

Many don't have $2,000 for a rainy day

95 points by lion0 15y ago

deleted 15y ago
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robflynn 15y ago
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. 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. Time for me to start pulling myself out of this rut now that I've got things in my life stabilized again. 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?)
- thomasgerbe 15y ago
  I can understand why you'd feel embarrassed, but as long as you collect yourself from your rut and keep pushing with what motivates you, you can point back to this point where you turned things around.
- sunchild 15y ago
  Don't be embarrassed. Many "rich" people have similar problems. It's just that, in their case, the cash flow figures are larger by orders of magnitude. Desperation can be a tremendous motivator, and a great way to set priorities. Think of yourself as a newly-arrived immigrant. Now make your way in your new world. Whatever you do, don't let depression set in. Depression = failure. Even if you struggle to pay the bills for the rest of your life, if you stay positive, you'll keep the people you love in your life. It might help to imagine yourself getting that big break, and making enough money to never worry about money again. If that happens, how will you remember the tough times? Will you be proud of yourself, or ashamed? Will you regret that you treated others (and yourself) poorly? The history of the world is chock-full of successful people who were haunted by their past. I'm on a roll here, so let me finish with this existential note: life is a bloody, sweaty mess, and there is no natural justice. From the day you're born to the day you die, you're flailing about on a tightrope over infinite emptiness. There's plenty to fear, and the easiest thing in the world is to fall. But don't you really want to be the guy dancing on that tightrope and laughing at the void?
  - pyre 15y ago
    > Depression = failure Just to clarify, depression (mostly) leads to failure. Depression doesn't define you as a failure.
    - robflynn 15y ago
      Correct. I got what he was saying but I can see how it could be read another way. Depression did set in for a while, which is why I allowed myself to get stuck with the unsatisfying job. "Work is work, right?" I've since kicked the depression from everything that happened in those few years and am feeling great. I can finally see where I need to be and the path to get there... so that feels good. :)
    - sunchild 15y ago
      Hmm. Not interested in getting into a debate about whether depression is an illness or whatever, so I'll just say "OK".
      - nopassrecover 15y ago
        I think depression, as distinct from unhappiness, is something you dismiss as unhappiness (i.e. circumstance driven) until you experience it and realise it is an illness. The clearest example I can imagine is, take someone who is down on their luck, unemployed, in debt, medical problems etc. and fly them to the best doctors in the world, then give them a great new job with a million dollar signing bonus - I think they'll typically be pretty happy. Do this to a depressed person and they'll probably try and kill themselves because they consider themselves unworthy.
        sunchild 15y ago
        Seems to be akin to religious debates. The brain (and more importantly, the mind) is one of those areas where modern science has too little traction to speak in absolutes. Anecdotally, I had a breakthrough with mood control when I eradicated "jumping to conclusions" from my idle thought patterns. That made a HUGE difference in my outlook on life.
- getsat 15y ago
  > I'm also polishing up the resume to begin sending out June 1. Why are you reading HN instead of doing this? Close your browser, finish your resume, and apply for ten jobs online before you go to bed tonight. Apply for ten more tomorrow. Repeat until you're employed. Good things come to those who hustle.
  - hugh3 15y ago
    I gotta agree with this. There's no darn way that "polishing up" your resume can possibly take a full week. That sounds way too much like procrastinating.
    - deleted 15y ago
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    - robflynn 15y ago
      Alright, alright, I'll make time for it tonight.
deleted 15y ago
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nkassis 15y ago
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. 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.
- artmageddon 15y ago
  >I know the rule of thumbs is like 3 months net salary to keep for bad days I was under the impression that the rule was around 6 months.. then again, I'm talking about monthly expenses,as opposed to salary(which hopefully a person isn't spending 3 month's worth of salary in 3 months under normal circumstances). It probably goes up somewhat proportionally with age, if you factor in a home / dependents. I'm in the process of looking for a home now, so my decision on "how much home" I buy will be influenced by the notion of wanting to keep around a year's worth of monthly expenses should I find myself unemployed suddenly.
  - robflynn 15y ago
    Six months salary is what I'd always aimed for. I managed that well until recently. Now it hurts.
    - artmageddon 15y ago
      I read your other posts and hope you are able to work toward better days sooner than later. I have to wonder though - if you hadn't been prudent before everything happened, how much worse off would you be now? Something of a rhetorical question, of course :)
      - robflynn 15y ago
        I probably would have been quite screwed. I didn't think that I would end up needing a bigger safety net than that, but I'm glad I had that around. Saved my butt!
  - 15y ago
billybob 15y ago
If you don't have enough money to handle an emergency, you have an emergency. Go ahead and panic. Trade your car for a cheaper one, move into a cheaper apartment, stop eating out, sell your TV, and get an emergency fund. 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.
- deleted 15y ago
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- pavel_lishin 15y ago
  Does having a credit card count? What if someone has a $5k debt on a credit card, and only $1k in savings? Should they prioritize getting more cash into a low-interest savings account, while racking up interest on the CC?
  - fr0sty 15y ago
    Unless you are carrying low/no interest debt you should really pay it off rather than put money into savings. As long as your bank is not evil and keeps dropping your credit limit as your balance decreases you can always borrow again against that line of credit if needed.
    - elbelcho 15y ago
      I disagree. Saving money for an emergency should be a priority over paying off a credit card debt. In an emergency, you cannot count on the credit card bank keeping your account open. You cannot count on them maintaining your current credit line. ALL banks are "evil" in the sense that they operate with their best interests at heart, and no matter how horrible of a position it may put you in, the CC bank has no obligation to maintain your current credit line. Having a $2000 emergency fund, even if it's in a shoe box under the bed, is more important and more VALUABLE than $2000 worth of open credit on a credit card. The $2000 under the mattress is almost entirely under your control. The $2000 in open credit is almost entirely OUT of your control. If you're in a real emergency, what would your rather rely on?
arn 15y ago
I'd be curious what the survey would have shown if it were given in 2007. 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...
- kwis 15y ago
  I've seen similar studies about emergency funds for many years. They all say roughly the same thing: most people don't save money. To the point that not only do they not have $2,000, they can't borrow $2,000 to handle an emergency.
  - nazgulnarsil 15y ago
    define "most". saving is a cultural norm in china. I've heard figures of as much as 50% of many family's income being saved.
fr0sty 15y ago
I wonder whether or not there is a difference between the 'ability' and the 'perceived ability' to raise cash quickly. 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). 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.
- robflynn 15y ago
  Based on my post below, I do not have, on hand, $2000 that I could use in case of emergency. I am fortunate enough, however, that if I absolutely needed it, I have ways of getting the money. (Via family mostly, but I really dont like tapping into that unless it truly is an emergency.) I'm also extremely thankful for a couple folks that approached me to write some web apps (php/rails) for them. Without them those last few medical payments would have crushed us. My crappy situation came from double job troubles (gf and I) + dying car + hospital visits. We've stabilized finally and now it's time to get out of this hole and get my life back together.
  - gte910h 15y ago
    Medical payments are the most easy to renegotiate. As long as you are paying something continually, almost all hospitals are very understanding. Don't beggar yourself to pay medical bills in the amount they originally ask on the timescales they originally ask.
- brg 15y ago
  That was my first thought as well. Outside of hard assets which could be liquidated without affecting ones future ability to earn; we also have that credit is still widely available, although the interest rates are higher than before. Short term loans from social channels are usually available, unless one has recently moved thousands of miles from their hometown.
- chailatte 15y ago
  Most Americans have their assets stuck in their house and 401k and other toys. House: It would take you 6 months to sell a house (good luck with all those foreclosures out there), 3 months to get a loan against your house (hard to get a loan these days). 401k: It would take you 1 month to withdraw from your 401k (if your 401k plan allows it). Car/TV: There's an abundance of car/TV inventory out there, and it might take 2-3 months to move those. Relatives: if half of Americans don't have $2000 for rainy day funds, chances are you're not gonna have much luck asking your relatives. So realistically, if you needed $2000 tomorrow to bail out your family member (or $40k for that surgery tomorrow), it wold be very hard.
ssharp 15y ago
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. 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. --- 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". 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. 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.
- ydant 15y ago
  I find the idea behind the lottery linked savings account very interesting. In order to save others the trouble of looking for it (although it was a quick Google), I believe this is the podcast you were referring to. http://www.freakonomics.com/2010/11/18/freakonomics-radio-could-a-lottery-be-the-answer-to-americas-poor-savings-rate/ http://www.freakonomics.com/2010/11/18/freakonomics-radio-co...
- sosuke 15y ago
  A lottery-linked savings account sounds awesome since I already play low-odds lottery and put money into savings every month. Texas won't give up their lotteries or multi-state lotteries for anything though.
naner 15y ago
$2,000 is not a "large medical bill" in the US. An unexpected medical problem will likely cost a lot more.
- vaksel 15y ago
  yeah, $2,000 is pretty much just an emergency room visit.
- PonyGumbo 15y ago
  An appendectomy with an overnight hospital stay (went in at 8pm, left around 3pm the next day) was $24,000.
  - troels 15y ago
    Ouch. Is this because you don't have any insurance?
  - GeneralWaste 15y ago
    As a UK resident, I find that distressing. The idea that needing medical treatment might impoverish me or poverty leaves me unable to obtain the treatment I need seems exceedingly cruel.
    - dmm 15y ago
      He's not going to pay $24k. Either he has insurance to cover most of it or he'll just not pay it. Bill collectors can't harass you for medical debts. Hospitals have to treat you regardless of your ability to pay. The whole situation is far from optimal though.
      - PonyGumbo 15y ago
        We had insurance, although nearly a year later we received a call from the hospital saying that our insurer had refused to pay, and that we'd be responsible for the bill if the insurer didn't come through. The insurance company claimed that the hospital hadn't provided the complete paperwork, and the hospital claimed it had provided the information multiple times. We received two more calls about it, each about six months apart. It's been a couple of years now, but it still feels like it's hanging out there - that we may get a call at any time claiming that we owe this huge sum of money.
arethuza 15y ago
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. 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.
- pkamb 15y ago
  Does the UK not have something like FDIC Insurance?
  - jswinghammer 15y ago
    No very few countries do.
    - pgh 15y ago
      Yes, the UK does have something like FDIC. It's called FSCS http://www.fscs.org.uk http://www.fscs.org.uk. Moreover quite a few EU countries have something similar too: http://en.wikipedia.org/wiki/Deposit_insurance http://en.wikipedia.org/wiki/Deposit_insurance
  - arethuza 15y ago
    I meant physical cash, not a number in a computer system somewhere. I don't use cash that often - which made me wonder about having a roll of cash stashed somewhere.
    - hugh3 15y ago
      At the very least, it's worth having dealings with multiple banks (eg your savings account with one and a credit card with another). It wouldn't take a financial collapse to make your money temporarily vanish -- I mean, how long was Playstation Network down for? It's entirely conceivable that one day a major bank will have a serious computer problem that'll shut them down for days. Or failing that: heck, what happens if you lose your wallet? Yeah, a few hundred bucks (or quid) in a piggy bank isn't a bad idea.
jhamburger 15y ago
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.
padmanabhan01 15y ago
1900 is too low a number to sample. And there is no mention as to whether that 1900 is actually random enough. I doubt this statistic.
- wazoox 15y ago
  For your information, about all polls are done on about 1000 people (slightly less to slightly more). You need to poll a lot more people to reduce significantly the statistical error level. See http://en.wikipedia.org/wiki/Margin_of_error http://en.wikipedia.org/wiki/Margin_of_error
anonymouser 15y ago
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.
- FraaJad 15y ago
  encourage her to go and get the best job available for her qualification. She will come to a more grounded opinion.
- nhangen 15y ago
  Depends on where you live, but 100k+ is well-to-do where I come from. Most people I know aren't making half of that, and they are working 60 hour weeks. She's out of touch.
- wazoox 15y ago
  Most people, even those in the top 1%, think themselves as middle-class. You're probably still middle-class, but definitely quite close to the upper bound.
- vaksel 15y ago
  middle class is something like $40K family income...so you are more than double that.
  - reemrevnivek 15y ago
    $40k is roughly average income, which is not the same thing as middle class.
- webXL 15y ago
  You're not an underachiever. Class is all relative. "Middle class" in America translates to "extremely wealthy" for the average human being. My wife and I were just in Newport Beach, CA over the weekend, and we felt very poor. But back here in Nevada, we feel very blessed. Here are some links to make your wife feel better: http://politicalcalculations.blogspot.com/2010/12/whats-your-us-income-ranking.html http://politicalcalculations.blogspot.com/2010/12/whats-your... http://en.wikipedia.org/wiki/Household_income_in_the_United_States http://en.wikipedia.org/wiki/Household_income_in_the_United_...
jsdalton 15y ago
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: http://blogs.wsj.com/economics/2011/05/23/nearly-half-of-americans-are-financially-fragile/ http://blogs.wsj.com/economics/2011/05/23/nearly-half-of-ame... > 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%).”
- darklajid 15y ago
  Disclaimer: Been in the UK rarely, never to the US. I don't claim to know a lot about these places. My impression is that it's just far less dangerous (and so a lot more compelling?) to go without an emergency budget here in Germany, so I wonder if this comparison misses to include the risks involved? Sure, if you have family and a good deal of property/a mortgage to pay, you've got a lot of incentives to stay in business. But if you're renting? Already living in the lower middle class? No kids? Worst case scenario: You lose your job (2-4 weeks notice) and are bankrupt at the end of the month. You can apply for help from the state (unless you find something else). You'll get a (60%? No idea, but something like that) percentage of your last salary for a while, afterwards you end up on a different and quite a lot lower benefit level, but you'll most certainly keep a TV, keep a (reasonable) flat, get good healthcare. If you do have kids you get (a bit) more money, education is mostly free for them. I don't want to claim that it's all roses, but this is the worst that you actually need to worry about in my very humble opinion. What would happen in the UK or US if you run out of cash completely?
  - Mz 15y ago
    What would happen in the UK or US if you run out of cash completely? Last I heard, homelessness is on the rise in the US and has been for some time.
webXL 15y ago
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 Emergency Fund (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. 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.
JCB_K 15y ago
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. 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. 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.
sliverstorm 15y ago
I cheat a little. I'm still a student, so $2k is still a significant chunk of my net worth. 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 $2k I can "borrow" against my future, and then I have a 30-day grace period in which I can sell possessions to come up with the money. In other words, I use my credit card and its 30-day grace period to increase the liquidity of my possessions. This has two caveats: 1) Keep that credit card paid off to allow use of the grace period 2) I suffer a net loss when I resell something, but that's a small gamble I decided to take.
nazgulnarsil 15y ago
participating in a zero sum or negative sum game makes you, on average, poorer. we all need to play the status game, we have to keep up appearances in order to function smoothly with others in both the personal and business worlds. but explicitly reason about which activities are actually delivering the utility. one of the ways that other people's thinking strikes me as insane (and not in a hyperbole sense, but literally insane) is not considering the alternative uses of any given chunk of money when making buying decisions. I watch time and again the people around me purchase something they want less for more money, simply because their thinking is compartmentalized i.e. the two items don't get thought of at the same time.
droz 15y ago
When I started college, I had 1000$ 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.
synnik 15y ago
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. I hit the 9 month mark, then had major health issues that are wiping a lot of it out. At first, I was fairly devastated. Then someone told me, "Isn't this exactly the kind of thing that savings is for?" 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. But how blessed and thankful I am that I am "only" going to have 3 months stored away after this is all done. It is always good to keep things in perspective.
eli 15y ago
Crazy. The scary part is that $2,000 isn't very much money at all. It really would only take a very minor emergency to blow through that.
sebkomianos 15y ago
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?
- hugh3 15y ago
  If you'd like to know the answer to this question I suggest reading a statistics textbook. I think you'll be pleasantly surprised to hear that we can not only answer your question but put nice precise error bars on all our answers.

95 points by lion0 15y ago

deleted 15y ago

[deleted]

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. 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. Time for me to start pulling myself out of this rut now that I've got things in my life stabilized again. 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?)

thomasgerbe 15y ago
I can understand why you'd feel embarrassed, but as long as you collect yourself from your rut and keep pushing with what motivates you, you can point back to this point where you turned things around.
sunchild 15y ago
Don't be embarrassed. Many "rich" people have similar problems. It's just that, in their case, the cash flow figures are larger by orders of magnitude. Desperation can be a tremendous motivator, and a great way to set priorities. Think of yourself as a newly-arrived immigrant. Now make your way in your new world. Whatever you do, don't let depression set in. Depression = failure. Even if you struggle to pay the bills for the rest of your life, if you stay positive, you'll keep the people you love in your life. It might help to imagine yourself getting that big break, and making enough money to never worry about money again. If that happens, how will you remember the tough times? Will you be proud of yourself, or ashamed? Will you regret that you treated others (and yourself) poorly? The history of the world is chock-full of successful people who were haunted by their past. I'm on a roll here, so let me finish with this existential note: life is a bloody, sweaty mess, and there is no natural justice. From the day you're born to the day you die, you're flailing about on a tightrope over infinite emptiness. There's plenty to fear, and the easiest thing in the world is to fall. But don't you really want to be the guy dancing on that tightrope and laughing at the void?
- pyre 15y ago
  > Depression = failure Just to clarify, depression (mostly) leads to failure. Depression doesn't define you as a failure.
  - robflynn 15y ago
    Correct. I got what he was saying but I can see how it could be read another way. Depression did set in for a while, which is why I allowed myself to get stuck with the unsatisfying job. "Work is work, right?" I've since kicked the depression from everything that happened in those few years and am feeling great. I can finally see where I need to be and the path to get there... so that feels good. :)
  - sunchild 15y ago
    Hmm. Not interested in getting into a debate about whether depression is an illness or whatever, so I'll just say "OK".
    - nopassrecover 15y ago
      I think depression, as distinct from unhappiness, is something you dismiss as unhappiness (i.e. circumstance driven) until you experience it and realise it is an illness. The clearest example I can imagine is, take someone who is down on their luck, unemployed, in debt, medical problems etc. and fly them to the best doctors in the world, then give them a great new job with a million dollar signing bonus - I think they'll typically be pretty happy. Do this to a depressed person and they'll probably try and kill themselves because they consider themselves unworthy.
      - sunchild 15y ago
        Seems to be akin to religious debates. The brain (and more importantly, the mind) is one of those areas where modern science has too little traction to speak in absolutes. Anecdotally, I had a breakthrough with mood control when I eradicated "jumping to conclusions" from my idle thought patterns. That made a HUGE difference in my outlook on life.
getsat 15y ago
> I'm also polishing up the resume to begin sending out June 1. Why are you reading HN instead of doing this? Close your browser, finish your resume, and apply for ten jobs online before you go to bed tonight. Apply for ten more tomorrow. Repeat until you're employed. Good things come to those who hustle.
- hugh3 15y ago
  I gotta agree with this. There's no darn way that "polishing up" your resume can possibly take a full week. That sounds way too much like procrastinating.
  - deleted 15y ago
    [deleted]
  - robflynn 15y ago
    Alright, alright, I'll make time for it tonight.

deleted 15y ago

[deleted]

nkassis 15y ago

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. 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.

artmageddon 15y ago
>I know the rule of thumbs is like 3 months net salary to keep for bad days I was under the impression that the rule was around 6 months.. then again, I'm talking about monthly expenses,as opposed to salary(which hopefully a person isn't spending 3 month's worth of salary in 3 months under normal circumstances). It probably goes up somewhat proportionally with age, if you factor in a home / dependents. I'm in the process of looking for a home now, so my decision on "how much home" I buy will be influenced by the notion of wanting to keep around a year's worth of monthly expenses should I find myself unemployed suddenly.
- robflynn 15y ago
  Six months salary is what I'd always aimed for. I managed that well until recently. Now it hurts.
  - artmageddon 15y ago
    I read your other posts and hope you are able to work toward better days sooner than later. I have to wonder though - if you hadn't been prudent before everything happened, how much worse off would you be now? Something of a rhetorical question, of course :)
    - robflynn 15y ago
      I probably would have been quite screwed. I didn't think that I would end up needing a bigger safety net than that, but I'm glad I had that around. Saved my butt!
- 15y ago

billybob 15y ago

If you don't have enough money to handle an emergency, you have an emergency. Go ahead and panic. Trade your car for a cheaper one, move into a cheaper apartment, stop eating out, sell your TV, and get an emergency fund. 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.

deleted 15y ago
[deleted]
pavel_lishin 15y ago
Does having a credit card count? What if someone has a $5k debt on a credit card, and only $1k in savings? Should they prioritize getting more cash into a low-interest savings account, while racking up interest on the CC?
- fr0sty 15y ago
  Unless you are carrying low/no interest debt you should really pay it off rather than put money into savings. As long as your bank is not evil and keeps dropping your credit limit as your balance decreases you can always borrow again against that line of credit if needed.
  - elbelcho 15y ago
    I disagree. Saving money for an emergency should be a priority over paying off a credit card debt. In an emergency, you cannot count on the credit card bank keeping your account open. You cannot count on them maintaining your current credit line. ALL banks are "evil" in the sense that they operate with their best interests at heart, and no matter how horrible of a position it may put you in, the CC bank has no obligation to maintain your current credit line. Having a $2000 emergency fund, even if it's in a shoe box under the bed, is more important and more VALUABLE than $2000 worth of open credit on a credit card. The $2000 under the mattress is almost entirely under your control. The $2000 in open credit is almost entirely OUT of your control. If you're in a real emergency, what would your rather rely on?

arn 15y ago

I'd be curious what the survey would have shown if it were given in 2007. 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...

kwis 15y ago
I've seen similar studies about emergency funds for many years. They all say roughly the same thing: most people don't save money. To the point that not only do they not have $2,000, they can't borrow $2,000 to handle an emergency.
- nazgulnarsil 15y ago
  define "most". saving is a cultural norm in china. I've heard figures of as much as 50% of many family's income being saved.

fr0sty 15y ago

I wonder whether or not there is a difference between the 'ability' and the 'perceived ability' to raise cash quickly. 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). 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.

robflynn 15y ago
Based on my post below, I do not have, on hand, $2000 that I could use in case of emergency. I am fortunate enough, however, that if I absolutely needed it, I have ways of getting the money. (Via family mostly, but I really dont like tapping into that unless it truly is an emergency.) I'm also extremely thankful for a couple folks that approached me to write some web apps (php/rails) for them. Without them those last few medical payments would have crushed us. My crappy situation came from double job troubles (gf and I) + dying car + hospital visits. We've stabilized finally and now it's time to get out of this hole and get my life back together.
- gte910h 15y ago
  Medical payments are the most easy to renegotiate. As long as you are paying something continually, almost all hospitals are very understanding. Don't beggar yourself to pay medical bills in the amount they originally ask on the timescales they originally ask.
brg 15y ago
That was my first thought as well. Outside of hard assets which could be liquidated without affecting ones future ability to earn; we also have that credit is still widely available, although the interest rates are higher than before. Short term loans from social channels are usually available, unless one has recently moved thousands of miles from their hometown.
chailatte 15y ago
Most Americans have their assets stuck in their house and 401k and other toys. House: It would take you 6 months to sell a house (good luck with all those foreclosures out there), 3 months to get a loan against your house (hard to get a loan these days). 401k: It would take you 1 month to withdraw from your 401k (if your 401k plan allows it). Car/TV: There's an abundance of car/TV inventory out there, and it might take 2-3 months to move those. Relatives: if half of Americans don't have $2000 for rainy day funds, chances are you're not gonna have much luck asking your relatives. So realistically, if you needed $2000 tomorrow to bail out your family member (or $40k for that surgery tomorrow), it wold be very hard.

ssharp 15y ago

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. 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. --- 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". 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. 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.

ydant 15y ago
I find the idea behind the lottery linked savings account very interesting. In order to save others the trouble of looking for it (although it was a quick Google), I believe this is the podcast you were referring to. http://www.freakonomics.com/2010/11/18/freakonomics-radio-could-a-lottery-be-the-answer-to-americas-poor-savings-rate/ http://www.freakonomics.com/2010/11/18/freakonomics-radio-co...
sosuke 15y ago
A lottery-linked savings account sounds awesome since I already play low-odds lottery and put money into savings every month. Texas won't give up their lotteries or multi-state lotteries for anything though.

naner 15y ago

$2,000 is not a "large medical bill" in the US. An unexpected medical problem will likely cost a lot more.

vaksel 15y ago
yeah, $2,000 is pretty much just an emergency room visit.
PonyGumbo 15y ago
An appendectomy with an overnight hospital stay (went in at 8pm, left around 3pm the next day) was $24,000.
- troels 15y ago
  Ouch. Is this because you don't have any insurance?
- GeneralWaste 15y ago
  As a UK resident, I find that distressing. The idea that needing medical treatment might impoverish me or poverty leaves me unable to obtain the treatment I need seems exceedingly cruel.
  - dmm 15y ago
    He's not going to pay $24k. Either he has insurance to cover most of it or he'll just not pay it. Bill collectors can't harass you for medical debts. Hospitals have to treat you regardless of your ability to pay. The whole situation is far from optimal though.
    - PonyGumbo 15y ago
      We had insurance, although nearly a year later we received a call from the hospital saying that our insurer had refused to pay, and that we'd be responsible for the bill if the insurer didn't come through. The insurance company claimed that the hospital hadn't provided the complete paperwork, and the hospital claimed it had provided the information multiple times. We received two more calls about it, each about six months apart. It's been a couple of years now, but it still feels like it's hanging out there - that we may get a call at any time claiming that we owe this huge sum of money.

arethuza 15y ago

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. 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.

pkamb 15y ago
Does the UK not have something like FDIC Insurance?
- jswinghammer 15y ago
  No very few countries do.
  - pgh 15y ago
    Yes, the UK does have something like FDIC. It's called FSCS http://www.fscs.org.uk http://www.fscs.org.uk. Moreover quite a few EU countries have something similar too: http://en.wikipedia.org/wiki/Deposit_insurance http://en.wikipedia.org/wiki/Deposit_insurance
- arethuza 15y ago
  I meant physical cash, not a number in a computer system somewhere. I don't use cash that often - which made me wonder about having a roll of cash stashed somewhere.
  - hugh3 15y ago
    At the very least, it's worth having dealings with multiple banks (eg your savings account with one and a credit card with another). It wouldn't take a financial collapse to make your money temporarily vanish -- I mean, how long was Playstation Network down for? It's entirely conceivable that one day a major bank will have a serious computer problem that'll shut them down for days. Or failing that: heck, what happens if you lose your wallet? Yeah, a few hundred bucks (or quid) in a piggy bank isn't a bad idea.

jhamburger 15y ago

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.

padmanabhan01 15y ago

1900 is too low a number to sample. And there is no mention as to whether that 1900 is actually random enough. I doubt this statistic.

wazoox 15y ago
For your information, about all polls are done on about 1000 people (slightly less to slightly more). You need to poll a lot more people to reduce significantly the statistical error level. See http://en.wikipedia.org/wiki/Margin_of_error http://en.wikipedia.org/wiki/Margin_of_error

anonymouser 15y ago

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.

FraaJad 15y ago
encourage her to go and get the best job available for her qualification. She will come to a more grounded opinion.
nhangen 15y ago
Depends on where you live, but 100k+ is well-to-do where I come from. Most people I know aren't making half of that, and they are working 60 hour weeks. She's out of touch.
wazoox 15y ago
Most people, even those in the top 1%, think themselves as middle-class. You're probably still middle-class, but definitely quite close to the upper bound.
vaksel 15y ago
middle class is something like $40K family income...so you are more than double that.
- reemrevnivek 15y ago
  $40k is roughly average income, which is not the same thing as middle class.
webXL 15y ago
You're not an underachiever. Class is all relative. "Middle class" in America translates to "extremely wealthy" for the average human being. My wife and I were just in Newport Beach, CA over the weekend, and we felt very poor. But back here in Nevada, we feel very blessed. Here are some links to make your wife feel better: http://politicalcalculations.blogspot.com/2010/12/whats-your-us-income-ranking.html http://politicalcalculations.blogspot.com/2010/12/whats-your... http://en.wikipedia.org/wiki/Household_income_in_the_United_States http://en.wikipedia.org/wiki/Household_income_in_the_United_...

jsdalton 15y ago

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: http://blogs.wsj.com/economics/2011/05/23/nearly-half-of-americans-are-financially-fragile/ http://blogs.wsj.com/economics/2011/05/23/nearly-half-of-ame... > 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%).”

darklajid 15y ago
Disclaimer: Been in the UK rarely, never to the US. I don't claim to know a lot about these places. My impression is that it's just far less dangerous (and so a lot more compelling?) to go without an emergency budget here in Germany, so I wonder if this comparison misses to include the risks involved? Sure, if you have family and a good deal of property/a mortgage to pay, you've got a lot of incentives to stay in business. But if you're renting? Already living in the lower middle class? No kids? Worst case scenario: You lose your job (2-4 weeks notice) and are bankrupt at the end of the month. You can apply for help from the state (unless you find something else). You'll get a (60%? No idea, but something like that) percentage of your last salary for a while, afterwards you end up on a different and quite a lot lower benefit level, but you'll most certainly keep a TV, keep a (reasonable) flat, get good healthcare. If you do have kids you get (a bit) more money, education is mostly free for them. I don't want to claim that it's all roses, but this is the worst that you actually need to worry about in my very humble opinion. What would happen in the UK or US if you run out of cash completely?
- Mz 15y ago
  What would happen in the UK or US if you run out of cash completely? Last I heard, homelessness is on the rise in the US and has been for some time.

webXL 15y ago

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 Emergency Fund (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. 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.

JCB_K 15y ago

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. 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. 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.

sliverstorm 15y ago

I cheat a little. I'm still a student, so $2k is still a significant chunk of my net worth. 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. 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.

nazgulnarsil 15y ago

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. one of the ways that other people's thinking strikes me as insane (and not in a hyperbole sense, but literally insane) 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 less for more money, simply because their thinking is compartmentalized i.e. the two items don't get thought of at the same time.

droz 15y ago

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.

synnik 15y ago

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. I hit the 9 month mark, then had major health issues that are wiping a lot of it out. At first, I was fairly devastated. Then someone told me, "Isn't this exactly the kind of thing that savings is for?" 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. But how blessed and thankful I am that I am "only" going to have 3 months stored away after this is all done. It is always good to keep things in perspective.

eli 15y ago

Crazy. The scary part is that $2,000 isn't very much money at all. It really would only take a very minor emergency to blow through that.

sebkomianos 15y ago

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?

hugh3 15y ago
If you'd like to know the answer to this question I suggest reading a statistics textbook. I think you'll be pleasantly surprised to hear that we can not only answer your question but put nice precise error bars on all our answers.