Half of Americans don't have $2,000

[Pkg Man]

I modified my earlier comment as such: "There is no doubt that some people make poor choices".  I did not mean to imply that anyone without formal education makes poor financial decisions, and my earlier statement could be construed as such.  Neither of my parents finished high school, but they taught me a lot about money.  And of course, education is no assurance of sound financial management.  An attorney friend of mine has racked up thousands of dollars of debt on credit cards.

I can see the appeal of trying to protect people from themselves, and occasionally I even agree with it, but my default position is that preventing mutual exchange rarely improves anything.  I'm not sure that someone who frequently gets a payday loan or cash for their title is going to be much better off in the long whether those services are readily available or not.  I view their usage as a symptom, not the cause, of a larger problem.

[smurff]

Smurff, I see your point, in that a lot of Americans use their home equity as a savings account and might not see the need for cash, but I would argue that this is wrong.  With no emergency fund, if you lose your job, you will fall behind on mortgage payments and lose your house, including all equity you once had.

Some people say "I keep credit cards and home equity credit lines around for emergency purposes."  Again, I think this is wrong, because in a time of financial hardship, credit card companies and banks can and will change the terms of or revoke credit at a moments notice.  You cannot depend on credit availability in a hardship because in the end the creditors need to look out for their own best interests, as it should be.

The other point I would make is that anyone that is unable to save a $2,000 emergency fund is living beyond their means.  This means that every single dollar is spent and you've probably had to tap into your credit cards a little bit to get by.  If you are unable to set aside even $100 a month for 20 months to save a small emergency fund, you should cut back on your expenses and stop eating out, buying all the cable channels, spending too much on a car, shopping excessively, or whatever it is you are doing to live beyond your means.

In the end, a lot of the European countries have 12-18 month safety nets where you continue to be paid an almost full salary while you can look for another job, or even go back to school tuition free to update your skills.  Someone in a European country that says "that's ok, I have a social safety network that will pay me a stipend" is just as irresponsible as someone in America that says "that's ok, I have home equity I can tap into in an emergency."

I agree with you on all of these points, Storm.  Those same Europeans who do not save because they expect the social safety net to catch them, will march in the streets and burn down city hall and local shops if there is even a hint that that safety net might be tightened. 

I used to live in Europe, and I assure you, there is the kind of financial irresponsibility you describe on both sides of the Atlantic.  Which is why I tend to object to characterizations of Americans as being, overall, less savings-oriented than Europeans.  Wastrel adults exist all over; sometimes Americans are made to look worse on this point because of our openness. 

[smurff]

Anyhow, as a sort of side issue, I wonder if some people don't understand the options they have available to them to raise cash.  If you absolutely, positively have to raise cash, you can:

• Use your savings (if any)
• Take out a loan against your 401(k) (if any)
• Dramatically scale back your spending
• Borrow from friends or family
• Carry a balance on your credit card
• Get a new credit card
• Take out a reverse mortgage
• Open a HELOC
• Sell or pawn items (such as jewelry or furniture)

And it's not just poor people who do some of these things--selling/pawning especially.  Many an asset-rich/cash-poor family's financial crisis is dealt with by selling or pawning items--in these cases, the items may be Old Masters artwork, genuine antiques, Art Deco jewelry, etc.--and the pawn shop is a place like Provident, Circa Jewels or Sotheby's. 

[vnatale]

I modified my earlier comment as such: "There is no doubt that some people make poor choices".  I did not mean to imply that anyone without formal education makes poor financial decisions, and my earlier statement could be construed as such.  Neither of my parents finished high school, but they taught me a lot about money.  And of course, education is no assurance of sound financial management.  An attorney friend of mine has racked up thousands of dollars of debt on credit cards.

I can see the appeal of trying to protect people from themselves, and occasionally I even agree with it, but my default position is that preventing mutual exchange rarely improves anything.  I'm not sure that someone who frequently gets a payday loan or cash for their title is going to be much better off in the long whether those services are readily available or not.  I view their usage as a symptom, not the cause, of a larger problem.

My jaundiced view is that it's basically the American way to make poor financial choices. It's our culture. I remember during the August 2011 government shutdown and I was looking around me and seeing that aside from me, my close friends, my organization for which I worked, and my country were all in dire straits -- all because of poor financial decisions.

Vinny

[mathjak107]

we really don't know what people have .. you can look at the poorest communities here in nyc and statistically they are poor . but many have quite a lot from the over 1 trillion dollar under ground economy .. i have little interest in what others have . good or bad it is what it is and there is nothing i can control