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Nearly Half of Americans Are ‘Financially Fragile’
Wall Street Journal Blogs ^ | May 25, 2011 | Phil Izzo

Posted on 05/25/2011 11:46:22 AM PDT by rightwingintelligentsia

Nearly half of Americans say that they definitely or probably couldn’t come up with $2,000 in 30 days, according to new research, raising concerns about the financial fragility of many households.

In a paper published by the National Bureau of Economic Research, Annamaria Lusardi of the George Washington School of Business, Daniel J. Schneider of Princeton University and Peter Tufano of Harvard Business School used data from the 2009 TNS Global Economic Crisis survey to document widespread financial weakness in the U.S. and other countries.

The survey asked a simple question, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable. The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair,” the authors write. On a more concrete basis, the authors cite $2,000 as the cost of an auto transmission replacement and research that reported low-income families claim to need about $1500 in savings for emergencies.

Financial fragility isn’t limited to low-income groups. “Households with socioeconomic markers of vulnerability (income, wealth, wealth losses, education, women, families with children) are more likely to be financially fragile, and substantially more so,” the authors write. “The more surprising finding is that a material fraction of seemingly ‘middle class’ Americans also judge themselves to be financially fragile, reflecting either a substantially weaker financial position than one would expect, or a very high level of anxiety or pessimism. Both are important in terms of behavior and for public policy.”

(Excerpt) Read more at blogs.wsj.com ...


TOPICS: Business/Economy
KEYWORDS: 2thousanddollars; bhoeconomy; debt; default; depression; depression2point0; economy; finances; financialnews; getreadyhereitcomes; globalism; greatestdepression; greatrecession; preparedness; preppers; prepping; survivalping; thousand; twothousand; twothousanddollars
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1 posted on 05/25/2011 11:46:26 AM PDT by rightwingintelligentsia
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To: rightwingintelligentsia

Scary.


2 posted on 05/25/2011 11:48:35 AM PDT by CommieCutter (Promote Liberal Extinction: Support gay marriage and abortion!)
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To: rightwingintelligentsia

and fertile fishing grounds for Socialist demagoguery


3 posted on 05/25/2011 11:49:48 AM PDT by Buckeye McFrog
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To: rightwingintelligentsia

Anecdotal evidence is that some who appear to be in gangs, or are “baby mamas”, have nice cars and wear “bling”. These sorts of people may not have a lot of cash for unexpected expenses, but seem to spend what they do have to buy whatever they want.


4 posted on 05/25/2011 11:49:48 AM PDT by Dilbert San Diego
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To: rightwingintelligentsia

I’ll bet its a lot more than half. Especially when you throw in the tens of millions of people who are in the country illegally.


5 posted on 05/25/2011 11:52:03 AM PDT by crosshairs (Say what you want about the South, but you never hear of anyone retiring and moving north.)
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To: rightwingintelligentsia

I have the advantage of being broke.


6 posted on 05/25/2011 11:52:12 AM PDT by cripplecreek (Remember the River Raisin! (look it up))
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To: rightwingintelligentsia

When the POTUS is a diverse urban person the only thing more amazing than the volume of stuff that ends up hitting the fan is the number of ways that conjured up to spin it as POSITIVE.

1. people losing their jobs is really Obama coaxing them to the things REALLY important in their lives.

2. When they can’t afford expensive gas, that’s actually an innovative way of incentivizing alternative energy research.

3. When you’ve got scads of PO FOLKS, they’re actualy “financially fragile”.


7 posted on 05/25/2011 11:53:22 AM PDT by gaijin
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To: rightwingintelligentsia

Wow I knew things were bad but that is such a low amount not to be able to come up with in a month?


8 posted on 05/25/2011 11:54:19 AM PDT by chris_bdba
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To: Hoosier Catholic Momma; CottonBall; TenthAmendmentChampion; Chickensoup; JDoutrider; ...

Keep being weird.

Dave Ramsey Fan Ping List.

If you would like to be added to the “Live like no one else, so that you can LIVE like no one else” list, feel free to Freepmail me.


9 posted on 05/25/2011 11:54:41 AM PDT by CSM (Keeper of the "Dave Ramsey Fan" ping list. FReepmail me if you want your beeber stuned.)
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To: Jet Jaguar; NorwegianViking; ExTexasRedhead; HollyB; FromLori; EricTheRed_VocalMinority; ...

The list, ping

Let me know if you would like to be on or off the ping list

http://www.nachumlist.com/


10 posted on 05/25/2011 11:55:41 AM PDT by Nachum (The complete Obama list at www.nachumlist.com)
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To: rightwingintelligentsia

Millions of people have not paid a mortgage payment in months and you want to know if they can come up with 2000 dollars in 30 days. DUH?


11 posted on 05/25/2011 11:56:56 AM PDT by org.whodat
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To: rightwingintelligentsia

Might have it, but don’t want to use it. The emergency would have to be very, very important.


12 posted on 05/25/2011 11:59:28 AM PDT by madison10
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To: rightwingintelligentsia

“If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?”

Yieks!!! That is so frightening. We really need to do something or folks are going to be in the streets during retirement time. Some of these folks are educated and relatively successful folks who would have this problem. Businesses need to go back to the pension program. Yes it might cost more but we are going to pay for these folks one way or another. Pensions were the best thing for America and now they are practically gone. When pensions were around, people used to work at one company for 50 years.....there is no loyalty anymore at all.


13 posted on 05/25/2011 12:00:25 PM PDT by napscoordinator
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To: chris_bdba

“Wow I knew things were bad but that is such a low amount not to be able to come up with in a month?”

The sad thing is that the folks answering that they couldn’t come up with it, didn’t even default with the thinking of getting a second job or selling something.

ANYONE could come up with 2K in 30 days by delivering pizzas or selling some of their extra “stuff” on e-bay.


14 posted on 05/25/2011 12:00:29 PM PDT by CSM (Keeper of the "Dave Ramsey Fan" ping list. FReepmail me if you want your beeber stuned.)
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To: org.whodat

Yeah, no kidding. And according to my financial adviser everyone is supposed to have enough cash reserves on hand to last six months (if unemployed).

I’m financially quite stable and I don’t even have that kind of cash laying around.


15 posted on 05/25/2011 12:00:37 PM PDT by Peter from Rutland (!@)
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To: rightwingintelligentsia

Perhaps I misinterpreted this, but it sounds to me like they are talking about coming up with $2,000 from current/new income. It looks like, if you have to take the $2,000 from savings, you are in the fragile group, which would seem to make this a very stupid study with unsupportable conclusions. ?? Maybe I did not understand.


16 posted on 05/25/2011 12:02:03 PM PDT by NEMDF
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To: rightwingintelligentsia

Fra-gee-lay. They must be Italian.


17 posted on 05/25/2011 12:03:02 PM PDT by dfwgator
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To: rightwingintelligentsia

And the higher the gas and food prices go, the more of us will be added to that list.

Did they have a choice for “sure, I’ll rob Peter to pay Paul”?


18 posted on 05/25/2011 12:03:39 PM PDT by Grumpybutt
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To: rightwingintelligentsia
The study defines financial fragility as certainly unable or probably unable to obtain $2000 within 30 days of facing an emergency.

Later in the article, it says: “The more surprising finding is that a material fraction of seemingly ‘middle class’ Americans also judge themselves to be financially fragile"

If this is an accurate reflection of the study, I'd like to know what percentage constitutes the "material fraction" of the middle class Americans who probably can't raise $2000 in an emergency.

19 posted on 05/25/2011 12:03:53 PM PDT by lonevoice (Where the Welfare State is on the march, the Police State is not far behind)
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To: CSM

ANYONE could come up with 2K in 30 days by delivering pizzas

Really???? That seems a bit unrealistic. You get minimum wage which is practically zero dollars. So basically you are hoping for 2 grand in tips. I don’t think that this is possible.


20 posted on 05/25/2011 12:04:28 PM PDT by napscoordinator
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To: rightwingintelligentsia
Time to bring out the pitchforks!

Government employees and career welfare dependents aren't feeling the pain.

Those of us who have worked all our lives are watching the results of our labor sliding away.

We are ignored because it is relatively safe to ignore us.

21 posted on 05/25/2011 12:05:35 PM PDT by SWAMPSNIPER (1)
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To: NEMDF

It is a little unclear, but the article seems to say that if you have to pawn your possessions or take out a payday loan to come up with the $2K, rather than dip into savings or ask friends and family, then you’re classified among the “fragile.”


22 posted on 05/25/2011 12:06:32 PM PDT by rightwingintelligentsia (Be careful of believing something just because you want it to be true.)
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To: rightwingintelligentsia
Meanwhile, Lusardi, Schneider and Tufano also looked at how different countries compare. They consulted with local partners to set the number used in local currency at a comparable level. “Perceived capacity to cope with an emergency is lowest in the U.S., U.K. and Germany, all countries in which 50% of households or more would probably or certainly be unable to come up with the emergency funds,” the authors wrote. “France and Portugal occupy an intermediate position; 46% of respondents in Portugal would certainly or probably be unable to come up with the funds as would 37% of those in France. The highest levels of coping capacity are found in Canada (28% certainly or probably unable), Netherlands (27.9%), and Italy (20%).”

I'd find it shocking if Italy turns out to be the paragon of G7 personal financial prudence. I wonder about the survey methodology.

23 posted on 05/25/2011 12:07:03 PM PDT by Sooth2222 ("Suppose you were an idiot. And suppose you were a member of congress. But I repeat myself." M.Twain)
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To: rightwingintelligentsia

I expect having to spend several thousand dollars on the daughter’s wedding if things work out. Shouldn’t be a problem for us.


24 posted on 05/25/2011 12:07:14 PM PDT by Arrowhead1952 (zero hates Texas and we hate him back.)
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To: rightwingintelligentsia
“If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable.

And yet - they seem to be able to come up with the money for their iPhone and cigarettes...

25 posted on 05/25/2011 12:08:34 PM PDT by 2banana (My common ground with terrorists - they want to die for islam and we want to kill them)
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To: crosshairs

I could handle a 2K hit. I could not handle TWO 2K hits.


26 posted on 05/25/2011 12:09:51 PM PDT by ichabod1 (Nuts.)
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To: rightwingintelligentsia

Unsurprisingly, 47% is the exact number of Americans paid by the Federal Government to be dependent upon government checks.

You get what you pay for: Dependency.


27 posted on 05/25/2011 12:10:25 PM PDT by Uncle Miltie (0bamanomics: Trickle Up Poverty.)
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To: rightwingintelligentsia
Oh, no worries! Obie & Co will just take from the savers to give to the takers, no? Redistribute the wealth.
28 posted on 05/25/2011 12:11:25 PM PDT by Jane Long (2 Chron 7:14)
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To: NEMDF

http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=4488

MORE PEOPLE HAVE NO SAVINGS AT ALL: An increased percentage of workers report they have virtually no savings and investments. Among RCS workers providing this type of information, 27 percent say they have less than $1,000 in savings (up from 20 percent in 2009). In total, more than half of workers (54 percent) report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000


29 posted on 05/25/2011 12:12:27 PM PDT by Anitius Severinus Boethius
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To: CSM
ANYONE could come up with 2K in 30 days by delivering pizzas or selling some of their extra “stuff” on e-bay.

Seriously? You can net 2K/month delivering pizzas part-time? I may have to look into that.

30 posted on 05/25/2011 12:14:34 PM PDT by Still Thinking (Freedom is NOT a loophole!)
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To: rightwingintelligentsia

And that’s just the ones who aren’t on the dole...


31 posted on 05/25/2011 12:18:27 PM PDT by Little Ray (The Gods of the Copybook Heading, with terror and slaughter return!)
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To: Arrowhead1952

“I expect having to spend several thousand dollars on the daughter’s wedding if things work out. Shouldn’t be a problem for us.”

Don’t most weddings cost at least $10k?


32 posted on 05/25/2011 12:20:03 PM PDT by SVTCobra03 (You can never have enough friends, horsepower or ammunition.)
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To: dfwgator
I'll give you 20 bucks for it.


33 posted on 05/25/2011 12:20:57 PM PDT by WOBBLY BOB ( "I don't want the majority if we don't stand for something"- Jim Demint)
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To: napscoordinator

I work around the collegiate sports schedule. Therefore, I am done working (at least hard) for the next six weeks.

Every year at this time, I make a pass through the house and cull out crap that I havent used (either in my profession or in my leisure time.)

In the last week and half, I have cleared (after expenses) $600 on eBay. And this is not BIG stuff.

So, if push came to shove, I could unload $2k in a month.

But, then again, if I don’t have about $8k in the bank by the end of May, I will be selling blood to make the September mortgage payment.


34 posted on 05/25/2011 12:21:37 PM PDT by Vermont Lt (Is there anyone that Obama won't toss under the bus?)
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To: Grumpybutt
Did they have a choice for “sure, I’ll rob Peter to pay Paul”?

Your comment relative to this thread reminded me of Jim Carrey and Tea Leoni's career as convenience store robbers in Fun with Dick and Jane.

35 posted on 05/25/2011 12:25:24 PM PDT by Still Thinking (Freedom is NOT a loophole!)
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To: cripplecreek
I have the advantage of being broke.

I have the advantage of a truck and a walletful of cash, whenever you decide to have that garage sale.

36 posted on 05/25/2011 12:25:41 PM PDT by Alex Murphy (Posting news feeds, making eyes bleed: he's hated on seven continents)
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To: rightwingintelligentsia

Well, Obqamas goal is half way met.


37 posted on 05/25/2011 12:27:06 PM PDT by Bitsy (!)
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To: SVTCobra03

More like $20 - 25 K these days.


38 posted on 05/25/2011 12:29:22 PM PDT by Arrowhead1952 (zero hates Texas and we hate him back.)
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To: rightwingintelligentsia

I’m not surprised at all by these results. Call it insight into the 50% of Americans that pay no Federal income taxes.

Also, being financially irresponsible is not confined to just that lower 50%. A lot of people live month to month with no financial planning and no savings. I’ve known people who have $25,000 - $30,000 on credit cards and spend every penny of their paycheck. They pay their expenses first and then blow ALL of the rest. If something comes up like auto repair or an emergency, the cost goes on the credit card. They pay whatever they want to on the cards with no real plan or expectation of paying off the balance. A lot of their money goes to credit card interest.

Just insane. I am talking career professionals here, not burger flippers. They are financially oblivious.


39 posted on 05/25/2011 12:36:03 PM PDT by Freedom_Is_Not_Free (Josh Ferrin for President - he is my new hero.)
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To: Grumpybutt

Maybe Paul should have a talk with Pete.


40 posted on 05/25/2011 12:36:53 PM PDT by stuartcr ("Everything happens as God wants it to...otherwise, things would be different.")
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To: CSM

I know a number of young families that couldn’t come up with an extra $2k. It would be really hard if not impossible for them to get another job or sell much that is worth 2k.


41 posted on 05/25/2011 12:38:57 PM PDT by stuartcr ("Everything happens as God wants it to...otherwise, things would be different.")
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To: rightwingintelligentsia; Notary Sojac; dalebert; Qbert; jeltz25; ncalburt; ilgipper; ...
RE:”The survey asked a simple question, “ If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable. The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair,” the authors write. On a more concrete basis, the authors cite $2,000 as the cost of an auto transmission replacement and research that reported low-income families claim to need about $1500 in savings for emergencies.

Are these the folks Ryan thought would support medicare privatization/reform? Ryan thinks these people would rather have more ‘choices’ than their medical bills paid by the government? I think they know what would happen to them at retirement in that case.

I remember in 2009 I posted a few comments that said that many Americans would rather deal with government 'death panels' than have to pay their own medical bills, many replied "NOOOOO, everyone wants freedom just like me" LOL.

42 posted on 05/25/2011 12:39:33 PM PDT by sickoflibs (If you pay zero Federal income taxes, don't say you are paying your 'fair share')
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To: napscoordinator

especially if you need the 2k for your auto emergency.


43 posted on 05/25/2011 12:40:15 PM PDT by stuartcr ("Everything happens as God wants it to...otherwise, things would be different.")
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To: Freedom_Is_Not_Free
I'm not surprised if a lot of Americans are financial morons. I'm surprised that it's half. My own estimate would be the historical share of the vote that goes to Democrats -- not quite half. If it's half or above -- it's all over for this country.

I might need to retire to Italy.

44 posted on 05/25/2011 12:42:44 PM PDT by Sooth2222 ("Suppose you were an idiot. And suppose you were a member of congress. But I repeat myself." M.Twain)
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To: rightwingintelligentsia

I wonder how many of these people who can’t come up with $2,000 have a large flat screen at home? A cell phone in their pocket? Enjoy their $6.00 Starbucks every day? Play the lottery? Have plenty of cold beer in the fridge?

And on and on....

Look. We make choices in life. Some people make the choice to live broke.

Are they stupid? After all, THEY have Uncle Obama as their sugar daddy.

Life is good.


45 posted on 05/25/2011 12:45:25 PM PDT by Responsibility2nd (I'm a Birther - And a Deather)
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To: rightwingintelligentsia

Uncounted millions owe the effing IRS, so many in fact that it’s spawned the thriving “let us help you with the IRS” industry. It really is an unrecognized scandal.


46 posted on 05/25/2011 12:45:44 PM PDT by Wolfstar ("If you would win a man to your cause, first convince him that you are his friend." Abraham Lincoln)
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To: rightwingintelligentsia

I didn’t see any comments on this new term “Financially Fragile”...never heard of that before.
Personally I’d rather say I’m poor which = broke
rather than say I’m fragile which = broken


47 posted on 05/25/2011 12:46:32 PM PDT by savage woman
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To: sickoflibs

Yeah ;-)


48 posted on 05/25/2011 12:47:22 PM PDT by stephenjohnbanker (God, family, country, mom, apple pie, the girl next door and a Ford F250 to pull my boat.)
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To: NEMDF

The responses don’t even match up with the question!
-
“If you were to face a $2,000 unexpected expense in the next month,
how would you get the funds you need?”
In the U.S.,
24.9% of respondents reported being certainly able,
25.1% probably able,
22.2% probably unable
and 27.9% certainly unable
-


49 posted on 05/25/2011 12:47:32 PM PDT by Repeal The 17th (Proud to be a (small) monthly donor.)
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To: sickoflibs
People see the Ryan Medicare deal for what it is, attacking a benefit instead of cutting the size of government. It is past time for congress to put up are shut up . Cut the size of government first, has Ryan offered to cut any department of the government, will he ever??
50 posted on 05/25/2011 12:47:47 PM PDT by org.whodat
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