Nearly Half of Americans Are ‘Financially Fragile’

Wall Street Journal Blogs ^ | May 25, 2011 | Phil Izzo

[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.”

[stuartcr]

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.

[sickoflibs]

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.

[stuartcr]

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

[Sooth2222]

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.

[Responsibility2nd]

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.

[Wolfstar]

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.

[savage woman]

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

[stephenjohnbanker]

Yeah ;-)

[Repeal The 17th]

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
-

[org.whodat]

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??

[cynwoody]

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.

Pensions are still around, just not so much in the Dreaded Private Sector. At least until we taxpayers decide to default.

In any case, pensions are evil. Saving and investing is good. And who needs or wants a reason to be loyal to an employer other than it's fun and it pays well?

[napscoordinator]

Pensions are still around, just not so much in the Dreaded Private Sector. At least until we taxpayers decide to default.

One of the problems with the private sector is that they pay way too much to their employees. If they would have given a reasonable pay check to each person then pensions would still be around. The reason that the government employees can still get pay checks is because they receive such a low amount of money. For example a GS-5 gets 2,100 dollars a month. Who can even live on that? I know there are some government employees that are over paid but they are very few in the big picture. Of course those stories that are distorted are loved here on Free Republic.

[Repeal The 17th]

“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.”
-
Though I agree that is is a sad thing, you seem to be out of touch with the reality.
For many, getting a second job is impossible.
Their primary jobs may already require working extra hours or traveling, or there may be children at home to care for.
Plus, in many areas, there simply are no jobs.

If you seriously think you can clear 500 bucks a week delivering pizza, I would love to see you try.

There are are quite a few (2 of my young adult kids) who don’t own 2 grand worth of stuff to sell on ebay or anywhere else.

Again, you are right, it is a sad thing.

[samiam1972]

I don’t want to be weird anymore! I want new furniture!! Whaaa! I’m having a HUGE battle with Dave inside my head right now. My sofa has sharp springs coming up through it that are scratching the kids and that are poking holes all over the cushions. I don’t want to wait three more months to pay cash. I want to go this weekend when everything is on sale. Nothing says ‘Happy Memorial Day Weekend’ like a good furniture sale. Harumph!

[ladyjane]

27 percent say they have less than $1,000 in savings

I can understand a 20 or 21 year old kid would fall in that category. Other than that I have no understanding how an adult could live like that.

[Paperdoll]

Not bad when you consider l out of 4 are on the dole today! Dave Ramsey is available on any radio. Why does money burn such a hole in the pockets of those born after the Great Depression? Probably because we furnished our kids with all the things our parents couldn’t afford. Not that we missed them at the time. In fact, I had a wonderful childhood. My kids, though, afe very materialistic and want instant everything. They don’t save for, but charge. We didn’t have charge cards until after the ‘50’s.
Things were better in the old days.

[Anitius Severinus Boethius]

I work for a non-profit and until 6 months ago, I didn’t have the resources to save anything. I was at $0 in savings. Thank God I have been able to start saving and investing this year and am starting to build up a nest egg.

And no, I don’t have cable (got rid off it 10 years ago), I don’t own a car, I don’t have a cell phone, and I even got rid of my online game account last year ($12 a month).

Some people just don’t make the money needed to save.

[sickoflibs]

RE :”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,...“

That is not what everyone thinks:

1) conservatives want Ryan to cut government first
2) liberals want Ryan to raise taxes first
3) Independents want Ryan to cut spending (not theirs) and increase taxes(not theirs) first.
4) RINOs want Ryan to ????? give amnesty to illegals and give them medicare too, and invade Libya and give them medicare too, LOL, but no taxes OR spending cuts

Someone has to point these things out :)

[CodeToad]

Probably 4 out of 5 people I work with live hand to mouth; paycheck comes in and bills goes out with little money left. These are also fairly well paid professionals, too, so they shouldn’t be living that way.

[cynwoody]

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.

Benefits is where the money is. The choices are (1) get out the meat cleaver and just cut or (2) figure out a way to deliver more benefits for less money. Choice (1) is too hard to get enough votes for. The Donks are against (2) because it cuts into their power by reducing the role of government in micromanaging the benefits. And the RINOs just want to get along and be reelected.

Cut the size of government first, has Ryan offered to cut any department of the government, will he ever??

Which department should he start with?