When the unexpected strikes, most Americans aren't prepared to pay for it.So people are a minor emergency away from financial doom. Good to know.
A majority, or 64%, of Americans don't have enough cash on hand to handle a $1,000 emergency expense, according to a survey by the National Foundation for Credit Counseling, or NFCC, released on Wednesday.
Only 36% said they would tap their rainy day funds for an emergency. The rest of the 2,700 people polled said that they would have to go to other extremes to cover an unexpected expense, such as borrowing money or taking out a cash advance on a credit card.
"It's alarming," said Gail Cunningham, a spokeswoman for the Washington, DC-based non-profit. "For consumers who live paycheck to paycheck -- having spent tomorrow's money -- an unplanned expense can truly put them in financial distress," she noted.
That's the case for Allyson Curtis, 35. "I think about it every day," she said.
Curtis was unemployed for only three months last year, but in that time she accumulated $5,000 in credit card debt that she's now struggling to pay down. In the case of an emergency, Curtis said she would likely postpone other payments and pile on additional debt.
She is already putting off $450 in dental work and a car inspection due to a crack in her windshield, which will cost $300 to replace, she said.
Budgeting for an emergency fund
Many respondents, 17%, said they would borrow money from friends or family. Another 17% said they would neglect other financial obligations -- like a credit card bill or mortgage payment -- in order to free up some funds.
Alternatively, 12% of the respondents said they would have to sell or pawn some assets to come up with $1,000 and 9% said they would need to take out a loan. Another 9% said they would get a cash advance from a credit card, according to the NFCC.
Cunningham finds that particularly troubling. Neglecting other debt obligations -- or worse piling on more debt -- "really exacerbates the problem," she said.
An earlier study by the same organization found that 30% of Americans have zero dollars in non-retirement savings. A separate study by the National Bureau of Economic Research found that 50% of Americans would struggle to come up with $2,000 in a pinch.
But, hey, at least the richest people are happy, right? Well, no. Warren Buffett wrote a big ol' piece in the Times talking about how he thinks the current situation is nonsense as well.
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.Many, yes. The problem is that the ones who aren't decent—like, say, the arch-conservative Koch brothers, the Coors family, and Scaife—are expending a ton of time, effort, and money into supporting a whole system of bullshit "free market" think tanks, institutes, media outlets, and other organizations that exist solely to screw the middle class and apologize for their billionaire backers.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent...
...I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.
Warren, if you want things to change, stop writing Op-Eds and start underwriting groups that counter the destructive influence of your far-right counterparts. Start making sure that progressives have the same sort of influence and reach that conservatives do. Start ensuring that Grover freakin' Norquist isn't the only voice that matters in Washington.
Talk is cheap. You have loads of money, and this is all ABOUT money. You can afford more. So do something about it.