Most Americans can't afford a $1,000 emergency expense

I'm still digging myself out of a credit card whole I made last time I had to deal with an unexpected emergency. I know it technically would have made sense to pay it all off, but on principle I've tucked away enough to handle an emergency again first, with tax returns and savings. Now I'm almost done paying off my credit and I still have my backup. I shouldn't ever have to go into credit card debt that can't be paid off again.

 

A thousand dollars? Yeah, right! More like hard put to come up with an emergency couple of hundred.

 

I'm ready.

I am prepared for a "leave the country" emergency. It wouldn't be a burden at all (aside from the couch). I keep at least enough money to survive frugally for a year without a job. It's a pain in the ass because I've been loading that account for the cash purchase of a house (so close) but I could liquidate it and escape to MexiCanada in a matter of 72 hours. Crap example, though. I don't have kids, I'm not married, I didn't pay a dollar to get a college degree and I spent several Spartan years in a stupid uniform earning decent money. Most of my coworkers can't go a month without a job.

 

There was a time where I was pretty much living cheque to cheque. It's one of the things that happens when you have a kid at a very young age. You have a few more expenses than someone like Plan9 (as he readily acknowledges).

I made it a priority to get rid of all of my debt and to start saving. Getting rid of the debt took a bit of time but I managed to get it done, incrementally at first, and later in big chunks. Selling my house last year, got rid of the last bit of debt I had.

So, until about seven years ago, I probably couldn't have afforded an emergency of $1000 without going further into debt (credit card companies were always willing to give me more credit, even if I didn't want it). Now, I wouldn't have trouble with it.

 

I'm surprised the figure is as low as it is. From anecdotal experience, I see WAY too many apparently financially sound people who couldn't cover an unexpected expense. Our education system raises financial illiterates, and is woefully inadequate in life-skills teaching, especially in the handling of money. Somehow, this is seen as the sole responsibility of the parents, and trying to teach kids basic fiscal management is like trying to teach religion. It's a no-go.

So parents who have trouble managing their own finances end up teaching their own kids the same problems.

There are lots of books on financial management, and most of them will bore a person to death. But I really do highly recommend the book "The Wealthy Barber" by David Chilton (I do not know him, or have any relationship with him ). He's Canadian, but there is an American edition. It isn't revolutionary, or even right all the time, but it has most things right, especially the basics. And it's READABLE. It's funny, enjoyable, and easily understood. Every member of my extended family who finishes college gets handed a copy.

 

Up to my neck in debt, from several $1000+ emergencies over the years. Medical bills suck. I make a pretty good salary, but it's spent on food and paying bills. I'm hoping my daughter is done with surgeries, she's had about 5 in her almost 14 years. I can see the light at the end of the tunnel though. If things go well in the next couple of years, I'll be payed off, and can start saving. Then my daughter will be college age, yeeeeesh

 

$1000? We could purchase a new car tomorrow without a loan. My wife and I are both highly financially conservative, and were very fortunate that our parents paid for college so that we didn't start out with college loans.

 

Amen.

 

I can afford it yes. I feel that people have instead of saving have been working hard to tackle and remove debt that they owe. Americans currently owe in credit card debt an average of $4,679 as of the end of the first quarter. This is the lowest since 2000. In 2009 and 2010 consumers paid off 72 billion more then they borrowed. These stats were released by Transunion about a month ago.

I think because interests rates are low, savings accounts are mostly useless, and people do lose site of the necessity of having an emergency fund. But I do think while in a way its a negative for the economy it is a good thing that people are learning to be more thrifty.

 

In general, it wouldn't be a problem.

However, the purchase of a new motorcycle helmet combined with 2 slashed tires a day later has my liquid cash flow a bit stretched at the moment.

My 401k has enough funds to pay off the house and live for a few years, though it isn't easily accessible, yet.

 

I dont have 1000 cash saved, but I do keep an unused credit card with a 1500 limit reserved for emergency cash if/when its necesary.

 

Most of what everyone has been saying rang true for me for a while. We had a decent savings account and then one thing led to another and we had thousands in CC debt. The flip-flop came fast and hit hard. Then my wife had a few big checks roll in from real estate transactions and we are debt free, but not sure that our savings is back to where it needs to be. Most of the issues that came up are things you just can't plan for, and loose spending practices. It's all about planning and being careful. We're getting back on track, but it's so easy to derail.

 

Most Canadians can't either... Ooof!

I'm supporting my partner through school right now, so everything is tight. I make enough so she gets bumped down in her student loans, so yeah, it would take me about three months of living on rice to save up 1000 bucks with all of our expenses right now (and that's after dramatically paring things down after our last move). Tuition sucks.

 

I work in a coal mine here in Oz and my after tax pay is nearly $20,000 more than my school teacher wifes before tax pay. We're doing good. Going to buy another house to let out soon. Hopefully a 250 ton truck wont run over me and spoil my plans for world real estate domination.