Many Americans do not have any kind of savings
We've opted to put the money that we would normally put in savings into
trying to pay off the mortgage early. It gathers no interest sitting in savings
and has shaved years of payments off the mortgage.
I learned an interesting lesson when I bought my last car 12 years ago. I knew
that a car came with a car payment so if I could make the payment for a while I
would have some money to start. It took me 27 payments to both decide on what
car to buy and to find the right deal in buying that model and suddenly I was in
a position to pay cash using the payments I had made with some other savings.
And that car has now lasted 12 years and now has 235k miles on it. I plan to
repeat the experience in a couple of more years. If I had continued to save the
car payment in the intervening years I could really have a lot of choices.
Instead I have done other similar projects with similar strategy. So
pretend you already have that bill and make payments on it so when the time
comes that payment is due, you can raid the savings account to pay it. Or if
payment due is too much then it means a smaller residual bill on that credit
card. But keep making the payments whether due or not.
I agree with Voice of Reason. Also, if you left any money in the stock market,
they would have gone way up in the last three years.
I have a really hard time believing that 72% of Americans have savings accounts
that they can draw from for common problems like a broken-down car.You can't usually use a 401K for that kind of thing, even if you *do*
have a tiny 401K working some kind of corporate or government job (the common
rule is that you can "borrow" a certain percentage to pay for an
emergency ... but most people I know end up doing that for their *first*
emergency and then they aren't allowed to take out more loans against their
401K and their new "emergency" isn't considered 'life or
death' by the 401K administrators who don't allow actual
withdrawals).Personally, I only know about 1 in 10 people in my
suburban neighborhood who have actual *cash* savings accounts that they can tap
for normal monthly emergencies. I truly hope that my neighborhood is the
anomaly. Hopefully, things are in better shape out there than I realized. But
my guess is that the methodology of this polling was deeply flawed.
county mom,"We have toys but when money is tight they sit in our
outbuildings unused.... Any Ideas?"--Yes, sell
them.There is always a way when you are willing to look for it.
If you are buying your clothes and other possible items from the D.I., and you
don't have cable t.v. etc and you still don't have enough money to
save, then you have an excuse. Otherwise you are able to save and you should.
You don't start a 30 year mortgage at 55 and 60. Hopefully by 55 you have
more than 25K saved up. That's $80 a month per working life not growing at
all. So much has happened to the family in the article. I hope life
doesn't throw them anymore curves.
and the reason......hope n change!!
There are fewer things nicer than not having the weight of debt and worry
hanging over your head. My wife and I did not make much money when we first
got married. Still, we insisted on saving 15% of our income. We had no TV.
We moved closer to town where we could walk and we sold our old car. We ate a
LOT of rice and beans during those times. We also saved a lot of money. When
we graduated from college and got decent jobs we didn't buy a big house but
we bought a good house in a great location. We've grown as a family and
our budget has grown comfortably too. Many years later we still save money and
live frugally. I'll never regret the way we've handled money.
Thanks Papa for the advice given long ago.
@ zabildeYou are right on! Local governments can't wait to
spend our money. How many cities have new city halls or a new library? How
many can't wait to build a recreation center or a theater or some other
thing that a fraction of the tax payers will use but that all will fund?
There's something addictive in being able to raise taxes and if you
don't believe that just look at the school districts. Austerity is a word
they know nothing about and which they loathe. How have property taxes been
affect by the Jordan, Canyon, Salt Lake, Davis and Granite School Districts in
the last decade? Then there are "user fees." Then
there's the HOV lane that everyone paid for but it can't be used by a
single-occupant vehicle at 3 a.m. unless you "buy the privilege."Government spending has run amuck in Utah!!!!!!!!
@ oh my heckJust a question -- no judgement -- but how do you have a
mortgage with 25 years left to pay at age 65? That seems like jumping into a
hole without even knowing detail one about your finances. Remember the sage
advice of "Get a modest home and get it paid for; that way if something
happens you'll at least have a home for your wife and children." Maybe
you were riding the real estate bubble like millions of others. Like I say, no
judgement on my part but I wish you the best in getting a better financial
picture for your future. Maybe downsizing your home might be a start, in a few
years, if values rebound enough by that time.
xscribe; I make my own bread, raise my own beef, have a really large garden and
and fruit trees,I bottle my own food. I do not pay for TV, I shop for clothing
etc. at the DI and I dry my clothing on the clothes line. We have our own well
and we have food storage, along with gas, propane and ammo. We have shares of
water which we irrigate our land with. My entire utility bills are less then
$200 a month. I know how to live cheap. We have toys but when money is tight
they sit in our outbuildings unused. Don't drive them, they don't eat
gas. As far as a savings account, most of ours tanked with the economy and the
rest went to the care of elderly parents. Any Ideas?
alt134, what world are you living in? All of our small business taxes have gone
up every single one! Fifty dollars here and added regulation there with costs to
comply. This is the worst president we have had in my life time. He is an
economical and social disaster for our country and bent on destroying all small
businesses. Baillouts all around for big business and manufacturing at the
expense of the small businesses.
IT doesn't help that your average savings account is now earning less than
1% annually. Makes it hard to teach an encourage savings when there is no
growth to the savings over time. And federal tax rates may not have
risen but it's funny how while the economy was crashing, our property
values were diving, but property taxes increased every year. Other local and
state taxes and fees also climbed. So even while we the citizens were having to
tighten our belts, government didn't want to so it just raised tax rates.
Or imposed new fees (Unified PD anyone, how did the UPD suddenly become so much
more expensive than the old Sheriff's dept it replaced?) to raise money.
I suggest going back to the tried and true savings method of our grandparents -
take a cardboard oatmeal canister, coffee can or the container from those tabs
you drop in the dishwasher, put it on a shelf as far up as you can reach in the
closet or garage, and whenever you find yourself with cash in your pocket, reach
up and put half in the can. Don't pull the can down unless you have an
emergency, or really need help with a purchase. Don't take it down to
count it. You will be amazed how fast it adds up. Ours has accumulated $832 in
just 6 months.Do the same with loose change. An oatmeal canister
holds about $130 of change.Now - Do the same with your bank
accounts. Online banking and automatic transfers are available to everyone.
Set up a $20 or $10 or even $5 transfer from checking to savings for once a
month, or right after every payday. You CAN save. Even saving a little is
better than saving nothing.
Savings? All of your money is supposed to trickle up to the 1%, and they
won't have to pay a dime in taxes for it. That's been the gop plan for
how many years?
I have a test for people who say they have no money or can't save. If you
pay more than zero dollars a year for television, you have too much money.
County Mom: Please delineate what tax hikes you have. I'd also like to
take a look at your grocery cart and toys. Maybe you only buy necessities, and
maybe you don't. Only you know. But to say you can't put away money
is usually because you choose to spend it on other things you don't need.
@county momTax hikes? Maybe at the state level but taxes have only gone
down under Obama with the exception of cigarette taxes.
County mom, I understand what you are saying! We had about $25,000 in an IRA,
and when things kind of crashed a few years ago, that got reduced to about
$16,000. Since then we've had to draw from this fund for medical bills and
other emergencies, and finally just had to transfer the last of it into savings.
It is very discouraging. That was our retirement money, and it's gone. My
husband was out of work for 7 months about 5 years ago, and that began the drain
on this money. He has a 401k at his place of employment, but has only been
paying into it for 4 years. I'm 65, he's 59, and we are out of time to
prepare for retirement. He works, and I work part time, but we barely make it
from payday to payday, and if an extra expense comes up we end up having to use
a credit card for it. We have 25 years left on our mortgage, and once we have to
rely solely on Social Security for our income, we will not be able to keep our
home. Would LOVE to save some money!
Those of us who did have savings and investments lost them all to this economy
and tax hikes. We are making less money and paying more money out to everything
from food to taxes. Our homes are either unsaleable or worth a great deal less.
Our assets are deminishing and we are barely able to pay our bills. We
can't even consider starting a savings account while we are just surviving.