I read that half of Americans couldn’t cover an unexpected $1,000 expense. This sounds crazy to me. I understand that poverty exists, but the idea that an adult with a job doesn’t even have that amount saved up seems really strange.
What’s your relationship or philosophy with money? What do you credit for your financial success, or alternatively, what do you blame for your failures?
For the extra brave ones: how much savings do you have, and what are you planning to do with them?
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I have always strived to keep between 1-2 month’s worth of expenses in savings at all times. That small buffer has allowed me to ride out almost everything without going into debt, then when I am in debt I pay it off as quick as possible.
The worst thing you can do is get on a payment plan, as that normalizes having debt and you end up paying thousands in interest. All interest is, is you giving your money to someone else. I like to keep my money, so if I have to live off of ramen and hot dogs for a couple months, so be it.
My wife and I are comfortable. Both of our parents have worked in banking and taught us budgeting beyond what school taught us.
Keeping a steady well paying job is key. Sadly, there are so many people who no fault of their own can’t get well paying jobs or live in areas where well paying jobs are rare.
Live below my means, invest the rest.
I don’t dress or act like people in my pay range. My house is small and in a quiet neighborhood and cost less than my salary. Car is older but paid off and I know all the quirks and have the toolbox in the back to fix it. It is probably one of the top 5 most reliable cars in history. My work dress shoes are 10 years old and my around the house shoes were new in 2019.
I spend my money where I spend my time. So I have a nice phone, a very nice monitor and mechanical keyboard, and a good computer. And all with the right to repair philosophy. Same for my wife and kids. And also good running shoes, good exercise equipment.
The plan is to get to a point where I can just not work at all and maintain my lifestyle. Three percent rule and all that. And also help launch my kids.
Something about a 25 year roof and a Japanese shit box car in my fortress of solitude.
FWIW I grew up really really really poor like you wouldn’t believe so I’m okay with this.
top 5 most reliable cars in history.
i’m listening. is it an old corolla?
Camry
So I have a nice phone, a very nice monitor and mechanical keyboard, and a good computer. And all with the right to repair philosophy. Same for my wife and kids.
Jeez man, I’m happy for you, but most of us are stuck with stock model bullshit that broke in 2016. Go brag about your consumer friendly right-to-repair family in c/BuyItForLife.
(I kid, of course 😊 Solid approach you have there, smart and sustainable)
Yeah, thanks. Between ThinkPads and system76 and Fairphone, it’s pretty easy to maintain. Monitor is a Dell U3014. It was over a thousand dollars new but these days it’s under $200 used and I’ve replaced the mainboard in it twice for about $145 each time. Everything was purchased slightly used so that saves a lot.
All of this is great except the shoes, get some new/better shoes it’s worth it, your body will thank you later.
This is essentially my situation too. I spend quite a bit of money on these small purchases for hobbies. But I’m easily clearing a couple hundred a month to buy stocks, save, do something really stupid, et cetera.
I grew up upper-middle class and have largely the same philosophy. Always thought my friends’ parents were idiots for buying these gas guzzling Ford/Chevy monstrosities just to haul around 1-2 kids and a dog on occasion. Regular salaried people spending/financing more than half their income every few years on cars they don’t need just to keep up with the Joneses who don’t really care in the first place.
I don’t skimp on quality when I buy something, but I only buy what I actually need and if something serves its purpose, I hold onto it for as long as it works. My wife and I do very well now, but aside from living in a fairly nice neighborhood with great public schools and amenities, you wouldn’t think it from the cars we drive and the way we dress.
I just don’t understand it. I see some people with $1000 car payments and nothing toward retirement. What ever happened to looking for good deals? We had a kind of “rugged ingenuity” thing growing up where you respected people who took care of their older stuff, and I guess that still holds true today. $1000 car payments, I would have paid off my car in under a year.
Honestly, I’m scared to spend. Which I guess is okay because I’m comfortable with how we live and sometimes you have to spend on life events out of your control.
I’m with you on most of this but I think having a reliable car is pretty important in the US due to lack of good public transport. In many cases, after a car gets to be a certain age you end up having to repair too many things on it and it becomes an unreliable money pit. I’m very glad that hasn’t happened to you, but I think for a lot of people it makes sense to get rid of their car once it gets too old. And then try to buy a lightly used car outright.
I kind of don’t really drive much. Between biking and living close to a lot of things, I’ve put about 40,000 miles on the car in 7 years. Car is in its third decade and has about 70k miles on it.
After school I had one week of cash left when I got my first job. I moved to a tiny town to work in the mining industry. Pay to cost of living is very good. I’ve always been careful with money and dislike shopping.
I save about 50% annual income. This is piled up in various investments. I can retire before 40.
I have about 1 year worth of expenses in cash I can access tomorrow. I try to keep at least 3 months but I’m squirreling away extra for known upcoming expenses.
It’s not remotely crazy, and I have lived there. I had times where I foraged for berries and plants for food, and was lucky enough to know how and where to do so. That was a long time ago, before wages stagnated and inflation went bananas. I’m surprised more people aren’t starving to death today, just looking at the numbers.
It’s a little crazy when we’re talking about half of the population.
Look up prices for housing, food, etc. in your area and compare that to full time at minimum wage. Then consider a lot of companies only hire part-time and not full time. Then consider minimum wage is still the federal $7.25 in a lot of the country. See how that math looks.
I get job contracts for a few months at a time. Sometimes there are months when I’m unemployed, and those are hard on my savings. I used to do just fine, but this year has been very difficult and my normal savings are pretty much gone. (I still got some in funds/investments though.) So basically, I had a buffer but I had to use it, and now I have nothing. I guess it’s because of the rise in prices? I don’t “waste” money on frivolous things like I might have in the past, but it’s only getting more and more difficult. Add to this student loans. I wouldn’t have €1000 to spare for an unexpected expense. I am really angry at society, to be honest. If the job market wasn’t so ass, I wouldn’t have to deal with these short contracts.
It comes down to if you rent.
If you have a fixed mortgage, shit gets easier fast. If you rent, any wage increases is often offset by rent increases.
Less people are able to save, because they never get out of those “tough first years” of a mortgage
I have rent control. Buying is the worse financial choice for me.
Renting is such bullshit these days. The payments they ask for rivals mortgage payments from just 15 years ago.
Less than that, especially in areas that used to be cheap.
It took less than 5 years for my decent sized house on almost an acre in a middle sized city to be less than a 2/2 apartment.
It’s fucking insane.
Idk it’s pricy to own a home nowadays unfortunately. I bought only last year and my mortgage payments are a bit higher per month than people seem to pay for rent on a similar type of unit. It’s not that I got a “bad deal” on the residence either. Home prices just don’t make sense nowadays.
I will say that around 2931, rent prices in my area skyrocketed up a whopping $400-600 in one year, but they have since seemed to stabilize.
While your fixed rate mortgage costs don’t go up every year, your property taxes, insurance, and HOA fees will. So with the above in mind, it doesn’t really seem as economical anymore to own a home.
The last year has been rough on my savings. The retirement savings are untouched but the general savings have been emptied by a combination of travelling for family weddings and a downturn at work. I’m not worried but I do need to make a change.
I can currently cover a $1000 expense, but if something else happens that costs that much I’ll have to use my credit card, and if a third thing happens I’m fucked.
My relationship with money isn’t good (“not wise” might be a better term), and now that I know my parents as an adult, I understand that both of them are terrible with money. Do I blame them? I try not to, but sometimes that’s hard when I see how they continue to make poor $$ choices. My mom constantly made over 6 figures for a good portion of her later life, but now can’t work, and she has nothing but social security to live off of. Through the years she’s used up all her retirement and savings a few times on things like saving houses she eventually loses anyway.
My dad just dropped the news that he owes 80k to the IRS because he’s been pulling from his retirement for years now to sustain his lifestyle in a high-cost area.
Myself? I didn’t really get my shit together financially until I was in my mid 30s. Mostly my fault, though there were a few things that happened outside of my control that forced me to “start over” financially. That’s life.
My relationship with money now is respectful. I take the time and care to slowly work my way through understanding what to do and how to do it. I only have one credit card and it’s a low amount, so it can’t get wildly out of control but it’s there if I need it.
Right now I’ve got around 1.5k in savings (not including my 401/Roth). My plan is to save up to 10k for an emergency fund and then start to invest what I save up after that.
I listen to a lot of Caleb Hammer on YouTube. It helps, haha.
Same… Except my parents were teachers, so we were poor, because society is crap and doesn’t pay teachers what they should be getting paid
My mom was a speech therapist in schools and my dad was an aerospace engineer. Theoretically they should have a very cushy retirement life. Nope.
Could be better.
A 200k expense won’t destroy me or lock me out of my house or completely destroy my retirement. No inheritance, went to college, and knew buying a house early was key, saved about 25% income for 3 years to put 45k down on house.
Since I left college and started out into the “adult world”, I’ve always spent less than I made, the rest going to savings or investments toward retirement. I accomplish this by “paying myself first”. If I have already saved the money as my first priority, I can’t spend it on things like rent or groceries. So my financial choices are forced to be more conservative by design.
Example: I forget what the max limit to IRAs were at the time (say $5k/yr) but for my first job I set up auto contributions each month and mentally took a $5k/yr salary “cut” for that job. Every time I got a raise, I made sure that at least a portion of that raise went to increasing my savings rate and attempted to avoid lifestyle creep.
Thanks to my savings, I’ve been able to handle some emergencies in cash vs having to utilize debt to cover the expenses. It really is a snowball. I started out small, now my savings is significant compared to my income.
I attribute a lot of my “pay yourself first” approach to reading The Automatic Millionaire, Expanded and Updated: A Powerful One-Step Plan to Live and Finish Rich early on.
All my jobs have been paycheck-to-paycheck until about 3 years ago. My last job allowed me to save up $24k, but then I lost my job. Now I’m down to $7k and getting worried.
I know the feels, you are not alone
It sounds crazy to you because you have apparently had success handed to you through no work or special virtue of your own. Maybe get out of your comfy bubble a bit
They may be in a comfy bubble but that doesn’t necessarily mean that haven’t worked hard and/or been lucky. Kind of a harsh assumption about a stranger.
Please tell me more about me
I fall between the government won’t give me SSI because I’m not disabled enough in there fucking eyes. And being disabled and can’t work.
So financially I’m fucked and nothing I can do about it.
Even if I had said It would only be iirc around 800 a month.
It’s part of Amerikkka hidden eugenic programs. (Not verified but living with a disability it sure fuckin feels like it)
