Collapsing saving rates leave consumers at risk, experts say

What the dive in personal savings means for America and how to turn it around

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  • Third try screen name Mapleton, UT
    Aug. 20, 2012 10:18 a.m.

    Inflation is running at 2%. Do the math.

  • toosmartforyou Farmington, UT
    Aug. 19, 2012 11:23 p.m.

    @ Neil T

    I am one who buys new vehicles. Then when I trade them they are worth something. I never have to buy tires, a battery, fan belts, wiper blades, tune-ups, etc and anything that goes wrong is under full factory warranty. So I only need oil changes and fuel. Plus, I trust that the vehicle will likely get my family safely to Park City or St. George without a breakdown.

    Another reason to buy new is if you are going to wear the wheels off the vehicle and drive it forever and a financial return isn't a factor,---why start with someone else getting the best 50,000 + miles of service and leaving you the left-overs with repairs 3 years sooner than a new car?

    Vehicles are not an investment they're a necessity, although I have sold two used vehicles for more than I paid for them new and I once bought a pick-up truck for $10 over invoice. So it can be done.

  • xscribe Colorado Springs, CO
    Aug. 19, 2012 8:11 p.m.

    No one putting money in banks is earning much interest, but that should not stop one from saving. Something is better than nothing! Again, it's everyone's personal responsibility to put money away. If you are paying any kind of interest, other than maybe on a mortgage, then you most likely have too many things you don't need wherein that extra money could be put away.

  • SEY Sandy, UT
    Aug. 19, 2012 7:35 p.m.

    @xscribe: it could have something to do with the fact the real inflation rate cancels out any "savings" you make at a bank. Although the official inflation rate is under 2% annually (that pretty much wipes out the 1% savings rate and then some), Shadow Government Statistics shows that the real inflation rate is over 4%.

    Americans are doing all they can to keep from losing money, but banks are not the place to do it. They try to stock market and 401k's, but you know how successful that is for small investors without high-powered computers and algorithms to make trades for them.

    The Federal Reserve has made it their mission to bring interest rates as close to zero as possible for the benefit of borrowers and spenders. Savers (in their minds) are the enemy and must be punished.

    Any suggestions?

  • xscribe Colorado Springs, CO
    Aug. 19, 2012 4:11 p.m.

    @Third try screen name: Please explain how earning 1 percent is a loss.

    No one has brought up the fact that it is personal responsibility to save your money. It's not the government's fault, the bankers' fault, anybody's fault but your own if you do not save money, period!

  • Third try screen name Mapleton, UT
    Aug. 19, 2012 1:51 p.m.

    The article misses a BIG point here: Rate of return.
    Why put money in the bank if it is going to earn 1%? That's a loss.
    As a kid I got 4% on a passbook.
    Something's gotta give if we're going to put money away.
    On another note, running up debt is easier these days when Uncle Sam steps in and forgives credit card liabilities.

  • NeilT Clearfield, UT
    Aug. 19, 2012 11:58 a.m.

    Ir is called the paradox of thrift. Saving money benefits the individual. They pay cash and avoid interest and debt. Saving money does not benefit an economy that relies on consumer debt.

    A smart consumer would never purchase a new vehicle. A late model low mileage auto is a far better option. The problem is if everyone did this GM, Ford and the other automakers would dissapear overnight. Someone has to purchase new or there would be no used. To some degree greed is good. By purchasing a new vehicle someone can else purchase used. Smart consumers use debt and money wisely. I purcahsed my first home for $48,900 and sold it for $175,00. I was terrified when I signed the mortgage papers.

  • andyjaggy American Fork, UT
    Aug. 19, 2012 10:46 a.m.

    I'm actually not for taxing the rich more than the poor, I am all for an equal percentage tax on all. The problem is, even though the rich are taxed more in theory, in actual practice they usually pay a far less percentage than the average American.

    So I advocate for eliminating or reducing large amounts of deductions, closing loopholes, and creating a flat tax for everyone.

    If we got rid of deductions, and everyone paid the same percentage, I would imagine we could actually get away with a lower tax rate overall. I'm not an economist but it makes sense to me.

  • andyjaggy American Fork, UT
    Aug. 19, 2012 10:38 a.m.

    "ONE OF THE GREAT EVILS with which our own nation is menaced at the present time is the wonderful growth of wealth in the hands of a comparatively few individuals. The very liberties for which our fathers contended so steadfastly and courageously, and which they bequeathed to us as a priceless legacy, are endangered by the monstrous power which this accumulation of wealth gives to a few individuals and a few powerful corporations. By its seductive influence results are accomplished which, were it more equally distributed, would be impossible under our form of government. It threatens to give shape to the legislation, both State, and National, of the entire country. If this evil should not be checked, and measures not taken to prevent the continued enormous growth of riches among the class already rich, and the painful increase of destitution and want among the poor, the nation is likely to be overtaken by disaster; for, according to history, such a tendency among nations once powerful was the sure precursor of ruin."

    All you right wingers might think that comes from Obama...... well it was actually written by the first presidency. Proclomation on the economy, look it up.

  • Nosea Forest Grove, OR
    Aug. 19, 2012 9:30 a.m.

    This commentary belies the fact that the top 20% in wealth distribution take 84% of the pie for themselves, while the bottom 40% only get 0.4% (and the bottom 60% only get just over 4% of the wealth). With such distribution of course the bottom half are not going to be able to save anything, as all they get goes merely to subsisting and even then barely enough to survive. Maybe the savings rate would increase if the income and wealth distribution were more equitable? It is unreasonable to point a finger of blame at the poor when in fact it is the wealthy with unprecedented concentration of wealth and power making the decisions that have created so many blatant problems in our society.

  • Emajor Ogden, UT
    Aug. 19, 2012 7:41 a.m.

    Your assertions are ridiculous and pure speculation. What proof do you have that the bad spending habits of our federal government have any influence on the spending habits of individual families? Who models what they do after federal fiscal policy? And if that was the case, wouldn't it primarily be the liberal families in financial trouble, because conservatives are suspicious and critical of the federal budget and less likely to follow what the feds were doing?

    Regarding personal savings and the economy: Our economy is driven by consumer spending. Saving more of your income is undoubtedly wise, but will also reduce the amount of goods and services you purchase, the very source of income for many businesses. The family saving money in the photo by laying their own laminate flooring? That's one less job for someone else.

  • UtahBlueDevil Durham, NC
    Aug. 19, 2012 6:42 a.m.

    "From a philosophical view......why does the government decide how much money I get to keep?"

    Wazzup.... it is called a Democracy. Never from this first day of this nation was there ever a notion that a popper should pay the same taxes as a banker. If you under that impression, you need to brush up on your history. This is a country run by representative, freely elected by their peers.

    Adam Smith was the founding father of the capitalist system. Even as far back as when Smith envisioned this whole system, he too called for a progressive system. The notion that a person barely living on what they make, with no little to no extra income, should pay the same level of taxes as one who as extra in the order of hundreds of millions is folley.

    Let me put it this way for you. The average joe/jane blow pays currently 5% of their income in social security tax. If Mitt Romney made just 2 million last year, his social security tax rate calculates out to .0025%, because his tax is capped, as was mine.

    Is that what you consider being taken advantage of, paying 4.75% less.

  • common sense in Idaho Pocatello, id
    Aug. 19, 2012 5:25 a.m.

    C'mon wazzup you know what Utahbluedevil meant. Romney paid about 15% of his income in taxes. Far less than middle class householdes PERCENTAGE WISE. That's because capital gains are taxed at a much lower rate than ordinary income. Then the rich who pay less percentage wise will use their windfall to create jobs and employ workers. At least that's the theory. The old trickle down economic model.

    Someone has to decide how much we pay in taxes. If not the government elected by the people, then who? You tell me.

    I'm a little lost on your statement "Based on money they shell out to gain favor and votes." What do you mean by that? Example: The billions we are spending on the never ending war in Afganistan is to gain favor with who? And how does that money spent there buy votes. Please explain.

  • My2Cents Taylorsville, UT
    Aug. 19, 2012 4:30 a.m.

    Banks and govt still don't get it, class warfare and who pays what in taxes is not why this economy is in the gutter. Its bureaucracy and corporate blackmail forcing debt.

    Romney 13% is well above of what most American tax payers pay, we only pay 7-9% tax rate even without the high cost tax attorney. What he pays in taxes does not include what most wealthy donate in cash to many charities and city venues.

    It is not cost effective to save cash, you get no compensation and inflation devalues the dollar faster than it can be earned. So the smarter Americans seen the light of investing in "tangible" physical assets that have a higher rate of return than a saving account can offer. It's like the corporate motto of burn the consumer we have had enough of.

    Many Americans of this generation have began a bartering and trade and recycle economic system that leaves banks, government, out of the loop reducing personal debt. It's a forced consumer economy of adapt and overcome. Reducing debt is destroying corporate and bank economy and its time they adapt and overcome their greed.

  • northstar1 Kaysville, UT
    Aug. 19, 2012 2:53 a.m.

    It's quite simple. America will introduce a national sales tax (VAT) by 2015, likely as much as 10%. Ultimately the debt will continue to accumulate with China, Japan, Russia and Middle East holding the bulk of the notes. Sometime in the future, perhaps 2017-18, Americans and the rest of the world will have woken up one morning to see that 3 or 4 zeros have been lopped off their US Dollar-based savings, bonds and certificates of deposit. Ditto for the US Dollar-based debt held by the Chinese & Russians, etc. This has happened throughout history. Poof, is the first day of the rest of your life.

  • wazzup Cottonwood Heights, UT
    Aug. 18, 2012 10:49 p.m.

    UtahBlueDevil.....Romney paid less in taxes than the majority of middle class Americans? $2.8M is less? In who's book? From a philosophical view......why does the government decide how much money I get to keep? Based on money they shell out to gain favor and votes. Does that seem fair to anyone?

  • A1994 Centerville, UT
    Aug. 18, 2012 10:40 p.m.

    To quote J. Reuben Clark:

    “Thems that understands interest receives it, thems that don’t pays it.”

    Basic economics should be a requirement in Jr. High and High School. That way, when someone in college comes offering a free t-shirt for signing up for a credit card, the kid will know how stupid a decision that would be.

  • toosmartforyou Farmington, UT
    Aug. 18, 2012 9:26 p.m.

    It's not just the government, but greedy bankers as well. I used to think bankers were a noble lot; then I see where they have scandels and corruption while paying their top brass millions.

    Here's an example of how they have stuck it to us: At my Credit Union, I get a whopping one tenth of one percent return on my savings. But they charge almost 14% for credit card purchases. The difference is well over 12% and it used to be about 5 %. So who's making big bucks? (HINT: It ain't the guy with the savings account.)

    I defeat the rich money lenders every possible chance. I am a "deadbeat" and not a "revolver." That means I totally pay off all my credit cards every month. This year I've had one little glitch where I paid $1.29 in interest on one card, while using two cards and making purchases that amount to just under $50,000.00. I NEVER sign up for a new card or accept credit I haven't requested. I have absolutely no mortgage. My credit score's over 800. Go weep, lenders.

    Savings should pay better interest!!!!

  • UtahBlueDevil Durham, NC
    Aug. 18, 2012 9:07 p.m.

    This would all be very good is any of it were true.

    For example most of America's debt isn't help out side of this country, but actually the majority(over (70%) is held by both US institutions and private investors. China holds less than 8 percent of our debt.

    The Government doesn't print money like crazy - devaluing your dollar. The Dollar is actually up over 10 percent this year alone against most global currencies.... so this just isn't tue.

    And the government doesn't spurn the wealthy. How has the "government" spurned him. Romney pays less of his annal income in taxes than the majority of middle class Americans. The Top 30 corporations pay their chief executive more than they pay in taxes - in total. How is that spurning the rich.

    I am not sure who you have been listening too, but they haven't been telling you much based on facts. Your idea that we should further deregulate the financial industry and leave them up to their own devices is just scary.

    Jefferson said the only thing we need to fear more than a foreign army is bankers. Some things haven't changed much.

  • Pippin Kaysville, UT
    Aug. 18, 2012 5:48 p.m.

    People don't save because the government/Fed runs an aggressive campaign that discourages saving. Here’s how:

    1) The government spurns the wealthy. Look at the campaign against Romney. It aims to turn voters against Romney because he has savings. Savings is wealth.

    2) The government borrows heavily from abroad (and now from itself) largely to help ensure plenty of dollars are available thus resulting in very low interest rates. The theory: if the government lends a lot of money, thus temping people to spend a lot of money, the economy will be healthier. And most of America believes it.

    3) The government prints money like crazy. Printing money devalues your dollar's buying power. But if you have no dollars in the mattress or in the bank, you are not directly affected. Printing money is a very flat tax upon those with savings. Who wants to pay that extra tax?

    So, it's not that we need to indoctrinate the populace about saving, it's that we need to get the government out of the finance industry and let folks behave rationally according to economic laws and not the whimsical financial fairy land the government/Fed creates.