60% of Americans Do NOT Have an Emergency Fund.

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Sentry18

Sentry18

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I am definitely in the 40%.


https://www.theorganicprepper.com/w...nd-you-are-one-missed-paycheck-from-disaster/

60% of Americans Do NOT Have an Emergency Fund. They’re One Missed Paycheck From Disaster

October 2, 2019

By Daisy Luther
What would it mean to you if you had an unexpected trip to the emergency room? If your car required an expensive repair? What if your income was interrupted for a week, or two weeks, or even longer? Do you have an emergency fund built into your budget to see you through these everyday calamities, or are you only one missed paycheck from disaster?

According to a survey released by Bankrate, 60% of Americans do not have the emergency savings to take care of a crisis that costs $1000 or more. How do people handle unexpected expenses? According to the survey:

  • 40% would use savings
  • 15% would use credit cards
  • 14% would cut back on other spending
  • 13% would borrow from friends or family
  • 6% would take out a personal loan
Many said they had no idea how they would cover an unexpected expense of this magnitude. And Forbes says that 23% of Americans save no money at all – but I suspect that number is higher since other reports say that 43% of Americans struggle to pay for food and rent. And when you’re in a financial hole, it’s harder than ever to dig yourself out with a system that seems to be designed to work against you. (If you’re in a situation in which you can’t even pay your current bills, see this article.)

So what about you? Do you have an emergency fund? It’s really just one more prep that you should put aside for a rainy day.

An emergency fund is a vital prep
When your finances are tight, sometimes your first impulse is to spend every dime. Many people focus on things like paying off debts, stocking up on food and supplies, or paying more than the minimum payments on bills.

However, that may not be your best bet. Don’t get me wrong – paying off debt is absolutely vital, but most experts recommend establishing an emergency fund as the first step back to financial security. There are several reasons why this should be a priority for you:

  • What if you suddenly lost your job and it was 6-8 weeks before unemployment payments began to trickle in?
  • What if your child suffered a medical emergency and you needed to purchase an expensive medication?
  • What if your refrigerator began making a death rattle and you needed to buy a new one immediately in order to save your expensive frozen food stockpile?
  • What if your car, that you needed to get back and forth to work, required a costly repair?
The reasons you might need to tap into an emergency fund are as varied as the news headlines – there are many different disasters that can arise, and nearly every single one of them will require that you have some additional funds available. You simply cannot call yourself “prepared” if you don’t have the currency on hand to see you through the rough spots.

It’s important NOT to rely on credit cards, overdraft, and lines of credit for these unexpected events – these things will cost you far more in interest in the long run. Credit cards are NOT an emergency fund. An emergency fund is currency that you have on hand that will not cost your interest. Don’t make your personal disaster worse than it already is by paying compounded interest on it for the next two years.

How much should be in your emergency fund?
This is one of those numbers that will vary with different families. Most experts recommend a starting point of 1-3 months of expenses. And by expenses, I mean everything from house payments to car payments to projected utilities to food costs.

Don’t underestimate how much it takes to run your household every month – be sure to account for all of the regular expenses you might need to cover during an emergency situation.

In addition to an emergency fund in cash, other prepper items can help see you through a rough spot. Your general supply stockpile and your food pantry mean you have to spend less money on day to day items when times are tough.
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When budgets are tight, how can you bankroll your emergency fund?
If you don’t have some rainy day money set aside, it is of the utmost importance that you fund this right away It’s time to change your financial lifestyle. This isn’t really fun, but the economy is continuing to freefall (despite the blithe reports from the White House and mainstream media). Hardcore frugality is the answer. If you don’t have enough money set aside to weather a crisis, then you need to cut your spending to the bone until you do.

  • Most of us have some places that we can cut the budget. To put it into perspective, a fancy frozen coffee concoction from Starbucks is about $6. Today, the price of silver is just under $20 per ounce. Three and a half days without Starbucks =1 ounce of silver. Exercise some “tough love” and strip your budget down to the bare bones until you have a month’s worth of expenses put aside.
  • Sell something. Do you have a basement full of unused relics? Exercise equipment, old furniture, unused appliances -all of these things taking up valuable storage real estate can help you to establish your emergency fund. Hang on to things like gold and silver jewelry, though – it will increase in value.
  • Get a second job. You don’t have to plan to work two jobs indefinitely, but spending one day a week babysitting or taking on a different part-time job can help you get your savings into the comfort zone.
  • Make only your minimum payments. I realize this is not the standard financial recommendation, but until you have a one-month rainy day fund set aside, you should forgo making the extra payments even on interest-bearing accounts.
  • Eat cheap for a few months. If you can manage one cheapo meal a day, this can result in massive savings. Look into different meals that are less than a dollar per serving – generally, these will be vegetarian offerings like beans and rice, a bowl of cereal, or eggs and toast. Soup is also a great budget-stretcher. Cheap doesn’t have to mean unhealthy – we never eat things like Ramen noodles in our family but we manage to have frequent low-budget meals that are tasty and filling. For the love of Pete, don’t eat out – the cost per serving is 5-10 times the cost of making the same dish at home.
  • Get rid of some fixed expenses. If you can get rid of some of your monthly fixed expenses, you can build your emergency fund very quickly. Cancel gym memberships, extracurricular activities, phones, satellite, cable, and internet. Funnel all of that money towards your emergency fund. Once the fund is built, you may discover you didn’t really need those services as much as you thought you did.
What constitutes an “emergency” worthy of dipping into the fund?
Once you have your emergency fund established, you might wonder, “What can I spend this on?”

Ideally, nothing. The goal is never to spend this money. This little safe full of money squirreled away is there for situations that cannot be addressed with your regular income.

Here are some things that are NOT emergencies:

  • Trips to the mall
  • Concert tickets
  • Vacations
  • Your 346th pair of shoes
  • A celebratory dinner at a nice restaurant
  • Cell phone bill
Ask yourself a few questions. Will it cost me more money if I do this later rather than sooner? Is the expenditure related to a safety issue? Is the expenditure related to a health issue? When will you have the money to pay for this out of your regular income?

  • Refrigerator
  • Car Repair
  • Medication/Medical Bill
  • Washing Machine (not in all situations, but if you have a baby in cloth diapers it’s pretty vital!)
  • Utilities that will result in reinstatement charges
Only you can judge whether or not an event constitutes an emergency. If you must use money from your emergency fund, make it a priority to replace that withdrawal as quickly as possible.

Make this the year you get your finances under control
If you don’t have an emergency fund, take your preparedness to the next level. Get financially prepped for those unexpected “rainy day” moments. Then, make a concentrated effort to reduce (or completely get rid of) debt. If a financial disaster were to strike, the less debt you have, the fewer payments you would have to make until you got back on your feet. Other preps will go a long way toward helping you through a financial emergency, too. Never underestimate the value of a fully-loaded pantry.

For those of you with a little bit of money squirreled away, have you ever experienced an event that made you relieved that you had an emergency fund? Your comments can be very inspiring to those who are new to preparedness.
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I am in the 40%, but I wish my fund was much larger. Things happen: medical expenses, car repairs, life. And then there is the possibility of our country having a financial collapse. My retirement fund could disappear, poof! So could yours! Retirement funds are not stable. Probably the best states to have a retirement fund with are Alaska, Wyoming and North Dakota, but even those could go upside down.
 
Weedygarden said:
I am in the 40%, but I wish my fund was much larger. Things happen: medical expenses, car repairs, life. And then there is the possibility of our country having a financial collapse. My retirement fund could disappear, poof! So could yours! Retirement funds are not stable. Probably the best states to have a retirement fund with are Alaska, Wyoming and North Dakota, but even those could go upside down.
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My state pension is fully funded and is run by an investment team that seems to be doing a good job. Just the same you're right, it could go poof. Which is why we have a separate retirement savings, my wife's retirement + profit sharing, my wife's separate retirement savings, etc. But even then...
 
I have no idea why......but I've always been extremely conservative with money. I guess when I was a kid, I would live allowance to allowance. I had to work for my allowance, but when I got paid, I got on my bike and took off towards the corner store 2 miles away to buy goodies. Those were good memories! Hubba bubba bubble gun, star wars gum packs with trading cards, sprees, ice cream bars, etc. For bigger items like toys and comic books, I'd put on a list for Christmas and B-Day gifts. My parents never had to ask me what I wanted at any given time......I had a list! LOL! I went to work as soon as I was allowed to and when I made my own money I spent it much more conservatively, and have ever since.

I have a well padded emergency fund and, thank the lord, have had one since I was old enough to drive. Rarely have I had to use it, and when I did, I replaced it ASAP. I cut expenses drastically or sold stuff to make sure I had a well funded emergency fund. I probably have more in there now than I should, but I have a very large health insurance deductable and will keep at least that much in the fund, plus some.

Not being prepared with an emergency fund seems to invite Murphy into the mix. Someone else can invite Murphy in. I want nothing to do with him!:p
 
In my late 20's I got sick and couldn't work for 8 months, the doctor told me to stay inside with the drapes closed or go blind. I had an emergency fund but not enough. I had less than $100 when I found a new job. I had a cupboard full of food, but it was empty before I went back to work. I have increased my preps since then.

The wife has a State of Alaska retirement. It is quite possibly the most secure government retirement going yet we have had a reduction in our medical benefits. President Trump opened up ANWR but it will be years before new oil starts flowing and the new taxes show up. The liberals have been "saving" Alaska at great cost to our economy. I don't trust any retirement. The reason that Alaska has any money at all is that when the oil started flowing they had the good sense to establish a Permanent Fund for the day when the oil stopped. Subsequent legislators have spent like drunken sailors.
 
According to a survey released by Bankrate, 60% of Americans do not have the emergency savings to take care of a crisis that costs $1000 or more. How do people handle unexpected expenses? According to the survey:

40% would use savings
15% would use credit cards
14% would cut back on other spending
13% would borrow from friends or family
6% would take out a personal loan
Click to expand...

They present these things as if they were all bad. First off, I would charge the expense on my credit card. That puts me in the 15% group. This is paid off every month, so there is no interest charge. Plus, I get rewards off of the card. I usually use the Costco Citi card because those rewards are in cash. This generally amounts to a few thousand per year. So why not MAKE MONEY off of the expense?

Secondly, I would use my savings to pay off the credit card if the expense was huge. That puts me in that 40% group. We have several different levels of savings. I'm not talking about raiding our 401K's or anything, but we are not in the habit of leaving thousands and thousands of dollars laying around languishing in low rate-of-return checking accounts. We have plenty of fluid money we could get at for a large expense, but technically we call this "our savings". It's rare that we couldn't handle a reasonable expense out of pocket money, but if, say, we were faced with an unexpected $10,000 expense, we would need to move some money around to pay that off immediately. Not a big deal. Does anybody here leave $10,000 laying around in low-interest accounts? You need to keep at least that amount in fluid accounts, probably much more than that, but certainly you would not leave it in a simple checking account I don't think.

Finally, we would look at our spending. That puts us in the 14% group as well. We always review spending when faced with a large expense. That's how you stay wealthy. It's called managing your money. IMHO, you should constantly be reviewing your habits and money allocations.

We are not in the 13% or 6% groups though, as we would not need to borrow from friends or family or take out a loan. That comes with being older, having worked a good career, and appropriately managed our money.

Even if I were a multi-billionaire, I would still use credit cards, savings, and review spending. That's how one becomes a super-multi-billionaire!
 
Hard to find anything with a decent interest rate on your savings. Private brokers offering 2%, banks maybe 1% on CD's. Crazy. Hope we don't go negative like Europe has. Interesting that people are using credit cards to get a cash back amount, like interest. That would of been unheard of, once upon a time.
 
Another 40 % er here. At last research into Australian households 22% had no emergency fund and the ones that are saving are saving on average 2.3 % of their disposable income (nowhere near enough) which is better than the 60 % over there which is a horrifying figure to be honest.

Most things would be covered by our emergency funds being one cash one at home, or one in bank or if really bad redraw on the advance in our home loan repayments. Neither of us have family to fall back on and they all would most likely want to extract any money from us that we had as they have a track record of being fiscally irresponsible.
 
Let's talk about better ways to keep money that is your emergency money. Some in savings in the bank. Some invested in stock market or Mutual Funds? How much is good to have in cash? And then, where to keep your cash, besides your pocket or purse? I am trying to figure out about how to keep money for my property taxes. Someone suggested it is best to keep in a savings account so that it will get interest. I agree and that is what I am doing. I want a way to designate that this money is for property taxes. Maybe a special savings account? I want to know that I have tax money set aside.
 
@Weedygarden we set up different accounts for different things and they are all linked to our normal working account. For instance one has electricity/grocery/pantry stock up money in there. You can do the same with yours. We have one high interest account that has the annual bill money in there that earns interest so we are only drawing money from there a couple of times a year to pay bills with.
 
Sewingcreations15 said:
@Weedygarden we set up different accounts for different things and they are all linked to our normal working account. For instance one has electricity/grocery/pantry stock up money in there. You can do the same with yours. We have one high interest account that has the annual bill money in there that earns interest so we are only drawing money from there a couple of times a year to pay bills with.
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We tried doing that but the bank closed the account for inactivity. Aparently you have to add or remove money every month or the account goes inactive.
 
Review spending habits- pare down even more.
Have saving account.
Have money in checking account.
Have a small amount of cash in hidey hole.
Pantry is fully stocked, including under the bed.
Freezer isn't as full as I would like, but working on it.
Don't use credit card unless absolutely necessary.
Won't borrow money from friends or family.
Get car paid off as soon as possible.
I am very frugal.
Probably in 14%.
 
Weedygarden said:
Let's talk about better ways to keep money that is your emergency money.
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Do some Googling on "Bond Ladder". Basically, you are buying bonds with different maturity dates, so that something is always coming to maturity. You then reinvest that into another bond that you add to the ladder, or take it as cash if you have an emergency expense.

Although it's called a "bond ladder", it is not limited to bonds. You could do the same strategy with CD's. Anything that had a timed maturity date.

I get the feeling that many (most?) of us here are no longer teenagers - far from it! - so we are probably into more conservative investments. At this point protecting what we have more than trying to make more money. So actual bonds may not be such a bad thing to use in your "bond ladder", which is in turn used to maintain your "emergency fund". Remember, bonds are more than just "US Savings Bonds". They are considered conservative, but you can get reasonable rates of return (much better than a checking account) for funds that you want to protect and not invest in higher risk equities.
 
Weedygarden said:
Let's talk about better ways to keep money that is your emergency money. Some in savings in the bank. Some invested in stock market or Mutual Funds? How much is good to have in cash? And then, where to keep your cash, besides your pocket or purse?
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We have a "wealth manager" who invests our money for us. Each month we add to the accounts and he reinvests our returns. His services are a paid benefit from my wife's employer for personnel of a certain income level, we only pay him a percentage if our annual return exceeds 10%. Which is a performance bonus for both of us. I also own a few thousand shares of stock just for the fun of it. I took an emptied and old slow moving mutual fund and bought a bunch of S&W Holding Co. who later became Outdoor Brands Corp. This way when I buy a Smith & Wesson or Thompson Center I feel like I am just putting money back into my investments. :)

We keep about $5,000 at home in one of the gun safes. My wife has a special cash wallet for her purse with individual compartments for different purposes. She keeps about $300-500 on her most of the time and I carry around about $50 in my wallet and two $100 bills for emergencies in my badge wallet. Of course we live in a low crime community with more than adequate home and personal security.
 
We're another that keeps emergency cash in a safe. To pay off taxes, we put money into broker CD's running 2% interest right now. Some mature after 3 months, some 6 months. Right now, treasury bonds aren't too bad, either. Savings at the banks we use are only 1%, so not worth it. Whatever you do, make sure you don't put all your eggs in one basket, and make sure it's secured. I would go for a broker or a smaller state bank rather than Bank of America or Wells Fargo. We just moved our money out of stocks. October is always bad for stocks. With this Trump stuff going on, don't know if stocks will pick up.
 
The DW and I are "risk adverse", so our portfolio is around 40% bonds, 60% stocks, managed by our wealth advisors. They also plan our money moves to best advantage the tax situation at the time :) Forced retirement almost 5 years ago, but it's all been good :) We both have over 1500$ in our checking accounts(no fee minimum) and a little money at home for unexpected expenses :)
 
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There are some good ideas here. Thank you. I will continue to work on these ideas until I come up with solutions that work for me.

Haertig said:
Do some Googling on "Bond Ladder". Basically, you are buying bonds with different maturity dates, so that something is always coming to maturity. You then reinvest that into another bond that you add to the ladder, or take it as cash if you have an emergency expense.
Click to expand...

Sewingcreations15 said:
Bearing in mind any money you put into the share market you have to be willing to loose the lot if it comes to it is my advice.
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Sentry18 said:
We keep about $5,000 at home in one of the gun safes. My wife has a special cash wallet for her purse with individual compartments for different purposes. She keeps about $300-500 on her most of the time and I carry around about $50 in my wallet and two $100 bills for emergencies in my badge wallet. Of course we live in a low crime community with more than adequate home and personal security.
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One of my grandfathers invested some money for us when we were children, after our parents died. It wasn't a lot then, but it was a good way to contribute to our future, since we did not have parental financial support or a future inheritance from them. I have really never touched it, but I have never added to it either. I do not trust the stock market. It has really grown since Trump was elected, but that could change.
 
Weedygarden said:
I do not trust the stock market. It has really grown since Trump was elected, but that could change.
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One of the best reasons to diversify your investments :)

Google "3 bucket strategy", ie :
 
Right now we have money in two banks, a savings and loan, and a bit of cash at home. I believe in spreading it around to different institutions and different types of institutions. A state bank and savings and loan, and a federal bank and savings and loan gives you four types to spread your money into. I remember when all the cash in savings and loans were frozen and it took people years to get their money out. I don't trust banks, nor do I trust the government. If they limit the amount that you can withdraw per day or week and you have two banks then you should be able to get your money out twice as fast. In Venezuela and other places the amount you were allowed to withdraw was not enough to survive on.

Keep some cash on hand. If all you have is a months worth that will put you far ahead of most people it they spring a bank holiday on us.

One option my family has used in the past is envelopes. Rent or mortgage in one, utilities in another envelope and so on.
 
Caribou said:
Right now we have money in two banks, a savings and loan, and a bit of cash at home. I believe in spreading it around to different institutions and different types of institutions. A state bank and savings and loan, and a federal bank and savings and loan gives you four types to spread your money into. I remember when all the cash in savings and loans were frozen and it took people years to get their money out. I don't trust banks, nor do I trust the government. If they limit the amount that you can withdraw per day or week and you have two banks then you should be able to get your money out twice as fast. In Venezuela and other places the amount you were allowed to withdraw was not enough to survive on.

Keep some cash on hand. If all you have is a months worth that will put you far ahead of most people it they spring a bank holiday on us.

One option my family has used in the past is envelopes. Rent or mortgage in one, utilities in another envelope and so on.
Click to expand...

Thank you.
I know that different financial institutions have had problems. I remember when savings and loans were a problem. I do my banking at a credit union and have for decades. I used to read the analysis in the newspaper on Sunday and it was always rated as the safest financial institution in my area.

I have had a savings account at a bank in South Dakota. It was easy enough to send money there to save, but not so easy to remove some from a distance. I did this on purpose.

I do like to keep a good stash of cash on hand. I could live off of what I have on hand for a while. I haven't always had this because of all the activity in my home when my daughter was younger and still at home. My concern is what if something happens to me? Will it be found by the people who need to find it? I need to work on that. I also need to lock it up. I remember talking to grandparents about the 30's. If you had money in the bank, you couldn't get it. I imagine it didn't take long and most people didn't have much or any money anywhere.
 
in the UK most people don't have emergency funds either, most are in debt, the average personal debt(not including mortgages or rent arrears but just what debt is on credit cards etc) is £15,000 for every man, woman and child in the UK. I wonder who's got ours? because we don't owe anything.
 
Caribou said:
Right now we have money in two banks, a savings and loan, and a bit of cash at home. I believe in spreading it around to different institutions and different types of institutions. A state bank and savings and loan, and a federal bank and savings and loan gives you four types to spread your money into. I remember when all the cash in savings and loans were frozen and it took people years to get their money out. I don't trust banks, nor do I trust the government. If they limit the amount that you can withdraw per day or week and you have two

Keep some cash on hand. If all you have is a months worth that will put you far ahead of most people it they spring a bank holiday on us.

One option my family has used in the past is envelopes. Rent or mortgage in one, utilities in another envelope and so on.
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Did you mean to post that twice? I mean it was good information the first time but not sure we needed it twice. :) Then again maybe we did.
 
Sentry18 said:
Did you mean to post that twice? I mean it was good information the first time but not sure we needed it twice. :) Then again maybe we did.
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That's your job. You been lollygagging around for too long, get to work and delete.:peace:
 
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