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?
You must log in or register to comment.
every time I read one of those statistics, I feel the same way.
I’m doing very well relative to that statistic.
I live fairly simply, but I don’t consider myself particularly frugal.
I like traveling, learning, eating, watching and reading stuff, and making things, which are all pretty cheap interests.
If I were to credit anything with my financial success, it would be a practiced awareness of financial opportunity and persistently learning about and attempting every viable opportunity I’m interested in to gain a practical knowledge of cost-benefit streams.
I’ve tried many ways to make money and work less, and some of them worked out.
I’m traveling this year, so I save most of my income, and with the IRS’ FEIE I don’t pay income tax(up to 120k).
I have a few investments and some ten thousands accruing interest.
i don’t have immediate plans, but I want to buy some land at some point, basically so I have more area to build stuff and make stuff, sign up for cryonics and get a new electric bike or the Aptera if it every goes into production.
c’mon aptera.
It’s a difficult subject to discuss without sounding like you’re either bragging or talking down to those less well off.
I recently bought a new-to-me truck. I paid in cash, and if I wanted to, I could’ve bought two more. If I liquidated my investments, I could have bought three more, so six in total. I’m self-employed now, but I built all my wealth while working for a (plumbing) company where I was surrounded by people earning twice as much as I did. Yet, these are the people who need to finance their cars, have massive mortgages, and are always in a bad mood due to stress.
I understand that some people have been really unlucky and struggle to improve their financial position despite their best efforts, but these aren’t the people I’m talking about when I wonder how a working-age person can’t come up with a thousand bucks for an unexpected expense. I hardly even consider that a lot of money.
but I want to buy some land at some point, basically so I have more area to build stuff and make stuff.
I feel you there. What kind of things would you like to build? For me, it’s things like a rainwater harvesting system, solar/wind power, a pond with a pier and sauna, a chicken coop, a heated workshop with a car lift, a root cellar… I basically have an infinite list of projects I’d like to pursue.
“I basically have an infinite list of projects I’d like to pursue.”
this is about where I’m at.
All the homesteading stuff, I want to try breeding meat rabbits, I want to try geothermal air conditioning, buy used cars and flip them (I started working on cars a few years ago and ended up enjoying it much more than I thought I would).
a whole separate area for home brewing and jerkying stuff too, canning, all that.
I like the idea of building different types of housing and read books and watch videos all the time, like straw bale or clay or underground, whatever the heck experimental cabins I could build, and I’ve further toyed with the beginning of an idea of how to turn that into low income housing after I land on the simplest, sturdiest and least resource intensive houses to build.
carpentry. I’ve built small tables and desks and chairs for classrooms, but I’d like to experiment with larger furniture.
I did a lot of solar power experimentation when I was living in a motorhome that turned out Great, and I expect many of my projects outside would be solar and wind powered.
fish farming, vermicomposting, yeah, just a thousand billion things haha.
I like making things, building things, and new experiences.
I’ve done smaller projects within most of the fields I’ve mentioned as the opportunity arose, but even when I’m renting a house somewhere for a couple months I can’t easily conduct long-term larger living experiments, so I’ll have to get a house and land at some point so I can fiddle at scale.
…“always in a bad mood due to stress.”
circumstance and opportunity.
some people don’t have the opportunities, many do have the opportunities but don’t recognize them or choose not to take them because anything outside of what they already know makes them uncomfortable where is seen as difficult, and they haven’t been taught or learned themselves through experience to push past that discomfort or initial effort.
Yeah I love all that. Flipping old cars is something I’ve thought about as well but something I’d be even more interested in is doing the same with boats. Now that I’m self-employed I’ve tought about getting a project boat that I could work on when ever business is otherwise slow. I couldn’t fit a large one on my yard but some smaller fishing boat would be interesting to start with. When looking at old boats they often look like just even a simple pressure wash would double their price.
Went from living paycheck to paycheck to having a full $1k in my account right now after dumping my ex and moving out. I always thought that having two incomes combined would be better than just my own, but never realized how massive a drain my ex was compared to just taking care of myself.
That being said, I’m able to live cheaply because I use public transit, cook all my own meals, and I don’t eat that much. I think for most adults in the U.S., especially those who need a car for transit, the honest truth is that their wages just barely cover all their necessary living expenses.
I’m doing well, but the job is sucking my will to live, and I think about quitting and going to work in a bakery or farm every day
I’m doing well at the moment. The problem is that no matter how well I do, eventually something destroys my savings and eventually there’s a layoff at my company.
Even if I’m doing well at the moment, I’m still a couple paychecks from not doing well, and am no where near on track to eventually be able to retire
I have five digits of savings for the first time since my kids were born, but I also have college expenses for them, and at least that much in deferred house maintenance
I credit Apple, of all things. I always chose credit cards to minimize interest and fees, so this is the first time I’ve had one with significant cash back. Now I pay essentially everything with Apple credit card, pay off at the end of the month, get a surprising amount of cash back, directly into the high yield savings account. While of course my job is the reason I’m doing well, I credit this for turning things around to actually let me put money aside, to boost my savings
Im doing well. Started off in my mid twenties reading books on finance and investing. Lived in a drug house where I rented out a room and had a dead end job. Got an education, decent job, and invested aggressively for the next 20 years. Im planning on retiring in my mid 50’s if everything goes to plan. 🤞
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
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.
I have rent control. Buying is the worse financial choice for me.
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.
School and medical debt as well… The more you make, the more they take… Always keeping you at barely scraping by
I am one broken leg away from being homeless and losing everything, and it’s been like that my entire working life. I’ve never been able to make enough to actually save. Currently I have -100 in the bank and some debt I’m trying to pay off on top of that. My rent is literally half my income.
I have enough in my emergency fund that if I lost my job I’d be ok for about a year.
I’m nearly to my goal, after that I’m going to change my focus to expanding my portfolio.
Still no way I can buy a house though. Need to make about 3x more money for that to happen.
I credit it to having a property owner that’s kept rent cheap and having low overhead, and being frugal borderline cheap.
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.
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 annual 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.
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.
top 5 most reliable cars in history.
i’m listening. is it an old corolla?
Camry
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.
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.
What’s your relationship or philosophy with money?
A life-changing shift to my approach has been to worry about absolute amounts rather than percentages. Saving $10 on a $20 item feels great but ultimately is the same thing as saving $10 on a $500 item (which feels like nothing).
I grew up lower middle class: never had to worry about not having a roof over my head, but there were times we were somewhat food insecure, and spending money on leisure/entertainment or anything unnecessary for survival was a foreign concept until I got to high school and some my parents’ career moves paid off and put us in upper middle class. It took them a good 10+ years before they could relax a little bit and feel secure with their money, though, and that was as much driven by the fact that their kids were adults who had moved out.
So life has been about deciding which of my parents’ frugal attitudes and approaches to money to keep and which to discard.
Things I decided not to adopt:
- I slowly learned to stop caring as much about wasted food. Food is just cheaper now compared to when I was growing up (even if the last 5 years has shown an uptick), and as a society we have more issues with obesity than hunger, so cleaning off a plate seems like it doesn’t actually do that much good.
- My time is worth something to me. I will gladly pay the few dollars here and there for convenience.
- I’m glad I ignored my parents advice to buy a home as soon as I could and build equity or whatever. I rented and it worked out great for me, giving me the flexibility to make changes at different stages of my life.
Things I kept:
- Life is uncertain. Always be prepared with whatever you can accumulate for financial resilience: cash, other property, lines of credit, marketable job skills, literal insurance policies, etc. Don’t underestimate the importance of personal relationships, whether it’s “credit” from friends and family who can help you out of a bind, colleagues who can refer work to you, bosses who will fight for your career, etc.
- Develop your career. Education and credentials are important early on, and up-to-date skills and a good understanding of the landscape in your field (both in the type of job and the type of industry you work in), plus solid relationships with people, can help you know when switching jobs is right for you.
Things I had to learn on my own:
- Life is unfair. Many types of unfairness are systematic. So why not position yourself to where the unfairness works in your favor, if available?
- Higher income makes it easier to survive mistakes on the spending side. To flip around Ben Franklin’s quote, a penny earned is a penny saved.
- Know yourself and your own laziness. Set up automatic functions wherever possible: automatic bill pay, automatic savings, automatic investments, etc. Steer away from any strategy that requires active management, and towards strategies that tend towards a set it and forget it philosophy.
I’ve also made a shitload of mistakes, some of them pretty costly, especially back in my 20’s:
- Paid probably thousands in credit card interest in my early 20’s chasing lifestyle bullshit.
- Paid thousands in unnecessary car loan interest in my mid 20’s by getting suckered by a dealer.
- Paid hundreds, maybe thousands, in late fees and interest from forgetting deadlines to pay shit I actually already had the money on hand for.
I’m rich now, most of it from luck (especially timing), much of it from personal relationships (good family, good marriage, good friends), some of it from actual effort (good grades from a good law school), and some of it from conscious decisions to steer towards my strengths and away from my weaknesses (lazy but smart, prototypical “gifted” slacker with undiagnosed ADHD).
It took a while to get here, though, and I was financially insecure well into my 30’s. Sorta figured shit out then, and then married someone who complements me pretty well on these things, and covers my blind spots.
For the extra brave ones: how much savings do you have, and what are you planning to do with them?
I have some savings, and it’s an emergency fund. It’s representing 1-2 months of typical spending, that could be stretched to 3-4 months if I needed to stop the frivolous spending. But I have credit beyond that, and less liquid assets I’d be able to tap into if I were facing a longer term issue.
But I’m not saving for any particular thing other than retirement. If things accumulate and grow, great. I’ll make a judgment call on when to retire based on how I feel and how much I have and what I want to do. I anticipate my wife and I will probably want to retire in our early 60’s, based on our anticipated career trajectories and the ages of our children.
Really interesting read. Thanks for the response.
Why do you only have a few months’ worth of savings despite considering yourself rich? Or are you just speaking about cash reserves?
Or are you just speaking about cash reserves?
Yes. Cash reserves are like unused RAM to me: I have it, so I might as well put it to work. If it turns out I need it somewhere else, I can always go rearrange things to make that possible.
Realistically, I think I’m rich because my wife and I both have strong ability to command high salaries, switch jobs, etc., even in a pretty severe downturn. The main things that might tank the value of that expected future cash flow are disability or death, and we at least insure against those.
We also only need one of our two incomes to support our lifestyle, so we have a certain resilience that just comes from having that buffer. At our current ages, we also already have substantial retirement savings, so we have some resilience there, too.
The but about higher income making it easier to have mistakes is a big one.
I have a friend online who wants to make money, but doesn’t seem to have the ability to do so without going back to school. Going back to school would incur student loan debt, so they do not wish to do so.
I have a crazy amount of student loan debt, maybe $150k. But people don’t understand that federal student loan debt is absolutely nothing like credit card debt. There are basically no downsides to it besides paying another monthly bill (that you can use an income based repayment plan for).
People don’t understand how incredibly useful excess income is even if it ends up with a lot of loan debt. I had a similar hesitancy back before I went back to school, but I don’t regret it at all. I think I ended up like tripling my income.
Even if you end up with a lot of loans, making say $80k/yr is astronomically easier to survive on than $40k/yr for example. You have to think that something like rent or food prices are going to be somewhat similar in your area no matter how much you make. Sure, you could choose to live in a lavish place I suppose, but if you live reasonably then it’s more than worth it.
As an example, the average rent price for a not shitty one bedroom apartment in my area is maybe around $1.6k, which would equate to $19.2k/yr. That’s almost 50% of the gross income of the person making $40k/yr while only around 25% of the person making $80k/yr. So even if the person making $80k/yr has a $1k/mo student loan bill (you can get it cheaper if you wish), the difference is dramatic.
The person making $40k/yr will have a little over $20k left over at the end of the year for remaining expenses and savings, but the person making $80k/yr will have more than double that at $48k left over. Obviously there are a lot of nuances in this but still.
So it’s absolutely worth it to incur federal student loan debt if it means you will make a lot more more money. Private loan debt is a bit different.
Yeah, I’m not going to pretend like I’m good with money. I’m not. I have a decade of experience of being a young adult on a tight budget to know that’s not one of my strengths. I wasn’t great at stretching each dollar to its most efficient use. And I still am not.
I won’t speak on whether student loans are worth it. I think, like everything, it depends. I think a bachelor’s degree is definitely worth the cost (both in tuition and time), but it might still be worth doing it cheaper if there’s a cheaper path available.
Am early in my career. no debts out of college due to lots of scholarships and a bit of hwlp from my grandparents helped a lot. Bought a house, have a wife in grad school so pretty much just living off of one paycheck. Had to cover a 10k roof replacement last year which sucked, but am back up to about 25k saved up should I lose my job or face another major expense.
I am pretty frugal in general but spend money on a hobby every once in a while. Not into drinking or any legal or illegal drugs so that has peobably saved me thousands of dollars too at this point.
I have a job. It’s technical, requires a fair amount of skills and abilities, yet I cannot cover a $200 emergency after bills and rent. Rent has jumped from $600 a month to $950 in less than four years, and the internet I need for my job has doubled in two years. Of the rent increases? Most of them were in the past year.
They release data for stuff like this. Currently 46% can cover a cost of $2K or more with just savings. 57% for $1K or more.
But it’s even worse than that - what kind of emergency is that cheap? Sure I could replace tires in my car within that amount, but could not repair a car accident. I could visit an ER within the amount but could not pay for medical care for sickness or injury. I could call a plumber within that amount, but not not repair or replace things after a leak. I could travel to see my elderly Mom if she were sick, but could not afford a place to stay there within that amount
I have $15.
Not just that I can spend. Not “until sometime in the future.” Just $15.
feel ya. i had $8 left before my last payday and I’m guessing it’ll be like that before my next payday too.
Im doing pretty well. Living in Germany, educated parents. Did okay in school, never studied much though. Went to university, got my Masters in Mathematics (needed to study a lot for that, but its my passion anyway). Started working at an IT company in the same city.
3 years later, I have around 50k in savings now. We live in a small apartment, are in the middle of buying a house.
Capitalism is really fckd up, especially in the US. I try not to take advantage of it too much, up my monthly donations with every raise, vote left-ish, dont support big corporations.
I think the biggest factor for success is luck for being born under the right circumstances. Thats like 99%, the rest is having some self control.
