I COULD just pay off an emergency expense ‘without borrowing’, it would just be stupid for me to do so when I have a lot of options for getting the money that’s better than me reaching under the mattress for a bundle of cash.
No, I don’t feel guilty. I had more than $1000 saved up when I was working minimum wage, or close to it.
Why would I feel guilty because my parents raised me responsibly? Maybe somebody else’s parent didn’t - that’s bad, but I don’t feel guilty about it.
It is not necessarily the case that no one can save up $1000 unless their parents give it to them. If you can’t save up $1000 because your parents never taught you how to save, then you have to learn how to save in some way other than learning it from your parents, or else you won’t be able to do it.
If the average person is living paycheck to paycheck, and you don’t want to live paycheck to paycheck, then you can’t live like the average person. You have to live differently.
Is that hard to do? Yes, it is. Is it even harder if you didn’t have any good example growing up? Yes, it is. Does that mean it can’t be done? No, it doesn’t.
Maybe if you try, it still won’t happen. If you don’t try, you can be dead sure it won’t. “I tried that and it didn’t work” is different from “I can’t”. And nobody else can do it for you. That’s why lottery winners go bankrupt. If you can’t handle money, more doesn’t help.
Regards,
Shodan
I haven’t worked a minimum wage job since I was 15. Even in high school, my community offered jobs to teenagers that paid way more than minimum wage. I didn’t choose to live in that community. My parents gave me that opportunity.
I saved a lot while working minimum wage because I never had to contribute to my family’s finances. That’s a privilege not every kid has.
I didn’t manage to save $1000 during that job only because I got a better, higher-paying job before I reached $1000.
I don’t think guilt is the right framework, because I, nor seemingly you, did anything wrong to get to where we are that should make us feel guilty. But it’s worth looking back at where you had opportunities to succeed that others lacked and be honest about how they helped you. Assuming that your success in life is all because your parents raised you right is simplistic and solipsistic.
I didn’t see where anyone said this was the only way to get $1000. Where do you find the materials to build all these straw men?
Do you believe this is the only reason people fail to save $1000? Not that some people have reasonable expenses and resulting debt that consume all their money?
Again, no one said that it can’t be done. It looks like there are some people who haven’t done it yet. I don’t have statistics, but I don’t believe that all the people who lack $1000 today will will still lack $1000 next year. Some will dig themselves back to some semblance of financial stability. Many of those people and some new ones will face later setbacks that will leave them with less than $1000. With high housing costs, increasing education costs, high medical expenses, low support for new mothers, and stagnating wages, it’s getting harder and harder to become financially self-secure. Those factors don’t all come down to individual responsibility.
To be fair, the question wasn’t “would you handle an emergency expense in this manner” but rather COULD you do so.
My last two unexpected expenses - an MRI and emergency truck repairs - were handled by a payment plan for the MRI cost not covered by insurance and the truck repairs to the credit card I keep on my when traveling for such purposes. I COULD have paid both off immediately, but it would have depleted my emergency funds. So I opted differently. That still makes my answer to the OP a “yes”.
A period of unemployment or a health crisis is an emergency, it’s reasonable that a person could have trouble staying afloat with consecutive emergencies. But I don’t buy “bad luck with home repairs”. If you aren’t budgeting for a new roof/furnace/water tank then you are simply not living within your means. People often buy too much house but still think they’re being prudent because “hey, I’m not throwing my money away on rent”. Some people act like having to replace the brakes on their car is some unlucky expense that has dropped in their lap.
I am not talking from a high horse here. I have done this myself. But I can look back and see that I clearly wasn’t living within my means if I can’t handle a routine or even occasional surprise expense.
I wasn’t living with my folks - I was renting a room and riding the bus everywhere I went.
I am being as honest as possible about my advantages. My parents raised me responsibly, and that was a huge advantage. My judo instructor and other friends helped me find jobs so I could save enough to pay tuition my first year in college, and that was a huge advantage. My GPA was good enough that I could apply for and get scholarships to cover tuition after my first year, and that was a huge advantage.
Maybe other people don’t have judo instructors who are manufacturer’s reps who can point them to factory jobs. Saying that their lack of success in life is all because they don’t know any manufacturer’s reps is equally simplistic.
No, they don’t all come down to individual responsibility. The point of the lottery comparison is that, without individual responsibility, nothing else will work.
OK, let’s assume it’s harder to save up $1000 than it used to be. You still have to do it.
Sometimes people are poor, or financially insecure, or don’t have a grand in the bank, thru no fault of their own. But usually? My mileage varies.
Regards,
Shodan
Bad luck with home repairs can also be “bought” - if you buy a home that passes inspection, you don’t expect water in your basement the first Spring, you may not realize that the kitchen circuit is overloaded and you need more outlets if you are going to run your Keurig, you may be budgeting for a shingle replacement in five years - and discover it needs it two years after you move. You may not realize the windows are drafty in the Winter, or the retaining wall - covered in snow when you bought the house - is crumbling.
But it takes more than just individual responsibility. It does take connections. It takes some amount of talent in something. It takes health. It takes a decent school system - because if you come out of a bad school system, you won’t meet the GPA requirement to keep those scholarships. It takes the luxury of being able to afford the opportunity cost of going to college - if your family is depending on you bringing home a full time income, you can’t afford college - your family won’t eat. You don’t have a Judo instructor if your parents could never afford classes.
One of my friends is a 24 year old college grad. Her first professional job came from a mutual family friend.
Then I guess you shouldn’t have cheaped out on the home inspector. There’s no way a decent home inspector is going to miss shitty wiring and a roof close to replacement time.
I don’t feel guilty, but I also don’t want to throw my higher income in people’s faces either.
One of the downsides of working for almost 20 years in Manhattan is that your perception on how much people make and how much things cost gets a bit skewed.
Certainly luck plays a role. But other decisions are at least as important, such as getting my MBA or choosing a career path or location. Choosing the path of a schoolteacher, for example, saving money would be more problematic.
If the $1k ‘emergency’ expenses are coming along regularly either
a) we’re not talking about a large % of people or
b) they aren’t really emergencies but foreseeable
So again IMO the overwhelming reason for lack of savings, if not considering genuinely poor people, 10 or 20 or some other moderate % at the bottom, is people living beyond their means.
People in the 60%-tile of income could save at least several $k/yr if they lived like people in the 50%-tile of income, given a 50%-tile of roughly $60k. Speaking very roughly about specific numbers, but the basic point is that $1k is not very much compared to the variations in household incomes, and again if the $1k ‘emergencies’ come several a year for many or most, they aren’t really emergencies. People ‘living paycheck to paycheck’ near or above the median, and there are lots, are generally choosing (at some level) to do that. A lot of the posts speak about people starting out in very bad places (in parental guidance or lack of, dysfunctional subcultures, poor education etc) or ending up in very bad places (bad illness, etc). That certainly happens but doesn’t explain large absolute %'s of all households in polls saying they basically don’t save anything ($1k, a median income household in late youth/early middle age should have maybe $30k set aside for emergencies, and could in general if they lived frugally enough and weren’t particularly unlucky).
Yes, we could cover it with no problem. We live well below our means and save/invest the remainder.
Two months ago, we had a $9500 repair bill from the marina. I pulled it from an investment account and although I was grumpy about it, it had no effect on our day to day lives. Last week, a blown RV tire cost $600 just to get back on the road. Still finding out how much the wheel well damage will cost me, but beyond a few hours delay it had no effect on our vacation.
Of course not. Mizpullin and I have been on our own since our late teens, and have earned every cent we have. No inheritance, no bonds, and no assistance from families. And no government help of any kind; no assistance, food stamps, or even government-backed loans. Our money is just that – ours. We’re quite aware that when out on the water, we’re consuming the dockhand’s weekly income every hour (at cruise speed, anyway). Why would that bother me? He’s welcome to earn it the same way I did.
Could I pay for an unexpected $1000 expenditure without trouble?
Sure… Most of the time I can just handle it out of checking. Definitely out of the savings account, and in extremis, I have a really high credit card limit (as in could buy a mid range new car with it).
Hasn’t always been this way; right after grad school I would have been sorely tried to cover a $150 unexpected expenditure.
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Of course it takes more than just individual responsibility. But as the lottery example shows, without individual responsibility, “more” doesn’t work.
Individual responsibility is a necessary but not sufficient condition.
You need luck, too, but as they say, the harder you work the more luck you tend to have.
Regards,
Shodan
Oh… Do I feel guilty about it?
No, I don’t. I am acutely aware that my family’s income is not the norm, but I don’t feel bad about it either. Neither my wife nor I cheated, stole or otherwise did anything shady to get where we’re at. We’re the product of a couple of middle class families who have stressed financial responsibility, education, hard work, and building for the next generation for several generations.
So we come by it honestly, so to speak.
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I don’t think anyone should feel guilty about being comfortable enough to handle an unexpected expense. But there’s nothing wrong with being aware that you are more fortunate than many. I mean, you can look at the people in the first-class section of the airplane and feel poor compared to them, but if you’re also on the plane, you’re richer than millions (billions?) who could never afford to fly anywhere.
It depends on what you consider ‘borrowing’. I have about £2000 in my current account, and more in a long term savings account, however, I’m a current student, just working part time and have student loans which roughly equal my savings.
My savings are mainly inherited from my Grandmother, though I have added to them from earnings since (with the UK student loan setup, it makes sense for me to borrow the state loan rather than exhaust my savings). I’ve only ever been on a pretty low income, but I found it far far easier to save once I had enough money to risk screwing up, and had the capacity to pay for decent stuff straight up, rather than having to stretch every penny. If you’re on a low income with no money to fall back on, you can’t afford to plan long term. All you can do is stave off disaster for another day. Say the car’s due for a service, but you’d need to borrow the money to get it done? You don’t get it serviced, and you keep your fingers crossed. It’s dumb and short sighted, yeah, but so is taking on a loan you can’t afford.
I went 5 years without having the car serviced at one point, btw, only even got the oil changed once; ancient Hondas are amazing.