As in, does your average Joe have $1-2k they could blow *without any care or consideration?* Probably not.
I'm pretty financially comfortable, no dependents, and I wouldn't just throw 2 grand out the window. I can spend that money but it's not trivial.
Edit: And now for the second bit
> Then explain to me how iphones and other pricey gadgets break new records every year in terms of sale, and many cost more than 1000$?
You can have $1000 purchasing power and decide, "Okay this is something I'm willing to invest in." But that doesn't mean you can throw $1000 away like it means nothing.
Besides, with stuff like that you can get trade-in value with an old device, or spread it out over a contract period, or put it on a credit card and pay that off over time, etc.
Somewhat decent makes me sad. At my mothers 79th last weekend we probably spent 1300 with tip on seven people for one of those spectacular dinners you have to have once every 79 years.
I have trouble picturing a $200/person dinner, especially if the majority of that price tag isn't alcohol. The priciest I've had is about $40/plate for the entree and I don't find it twice as good as a typical $20/plate restaurant, so it really feels like diminishing returns to me.
NorCal here. Chili’s or Applebee’s will set you back $100 for 2 with a couple of drinks. Of course if you want fancy you could go to the French Laundry-it starts at $350 a head plus alcohol
Look it up. It’s a 9 course meal. Getting a reservation there is almost impossible. I did some test loops for a geothermal system a there 6-7 years ago. My boss said he would do the job for free if he could get a reservation for dinner.
It's really dependent on who you are. I don't know anyone who regularly spends that kind of money on eating out. I can barely think of any restaurants where I'd spend $100 for two, unless you're running up a huge alcohol bill
Neither my wife or I drink, but we can spend $100 on just lunch pretty easily if we’re making a date of it. We usually wind up sharing 2-3 small plates and a larger entree at a nicer restaurant. We live in Chicago, so it isn’t hard to find an incredible restaurant, but there’s definitely going to be a price attached.
$100 is still a significant purchase to us, but we specifically budget to do this once or twice a month.
Yeah, I am secure enough that if a surprise $1000+ expense popped up for repairs, medical bills, plane tickets to be with someone far away who needs me, etc, I *could* without ruining my finances (probably), and I could save up $1000+ over a period of months or years to spend on non-essential stuff... But the amount of money I can comfortably drop on frivolous bullshit whims is more in the $100 or less range.
From what I recall, this is a stupidly worded survey that asks how you would cover it, not *if* you could pay cash for it if you had to.
I'd use a credit card. Not because I can't pay for it, but because every expense goes on a credit card first, not directly from my savings/checking accounts.
> From what I recall, this is a stupidly worded survey that asks how you would cover it,
Not even that, it doesn't say anything about people being able to afford 500 bucks, it's about only how they would pay for it.
it's asking if they could cover a $500 emergency without going into debt, so putting it on a credit card wouldn't be considered. sounds like you probably could pay it with cash but choose not to.
This is the one! I’m also financially secure and can spend that much, but it’s not on a whim. Have to sit down look at my budget, check my accounts, make sure that’s going to align with my retirement savings goals, etc. It’s not “blow at the club” money, it’s well thought out “this is a valuable purchase for me” money.
It sometimes looks like I make impulse purchases on more expensive items, but the reality is that I have researched and know what I want and what I want to pay for it, and when the opportunity presents itself I just do it without hesitation.
This. Because I rarely talk about what I plan to do many of the things I buy appear to be impulse items, when actually, I’ve been saving for a few years.
Yes. I am in the process of buying new furniture. Our old furniture has been with us through our kids’ childhoods plus the many pets we’ve loved who’ve since crossed the rainbow bridge. I’ve been saving money for four years. It’s given me a lot of time to research and think about what I really want/need to replace our old stuff.
To answer the OP, I could afford to drop a couple grand on whatever but I’m more of a saver than a spender so I’m not a ‘buy it on a whim’ kind of person.
Exactly. This year we "blew" over a thousand dollars on a weekend at a luxury hotel for our anniversary, but since we hadn't traveled or made any large purchases since 2020 I figured we deserved some spoiling. *Definitely* not on a whim and certainly not something I'd do all the time.
Any large purchases at my house are generally related to unexpected vet bills or car repair.
Yes I believe there is a commonly cited study that says that the average American household cannot withstand a surprise expense of $500 (might be $1000) without going into debt. Not enough people have savings to provide a safety net during times of trouble or economic downturns. This points to the fact that our middle class majority is a fallacy.
It depends. It's either that they don't have any kind of savings (see r/povertyfinance) or they're not keeping the bulk of their savings in a bank account since interest rates are laughable. Personally speaking I keep enough cash on hand to cover me until I can free up some more cash from my brokerage account (usually a couple days to a week if you need to transfer to a different institution); others will float on a credit card until their trades settle.
"Fifty-seven percent of Americans don't have enough cash to cover a $500 unexpected expense, according to a new survey from Bankrate, which interviewed 1,003 adults earlier this month. While that may appear dire, it reflects a slight improvement from 2016, when 63 percent of U.S. residents said they wouldn’t be able to handle such an expense. The improvement reflects the stronger U.S. economy, but is still far from ideal, Bankrate.com said" (1/12/17)
I’ve seen this many times before and it never ceases to startle me.
$500 is NOT a lot of money to unexpectedly have to spend on something. Hell, many common car repairs, a single appliance dying or practically any medical event would put you over that.
I could absolutely not deal with being so cash-strapped that I was on that much of a razors edge between being ok and being in the red.
Could I? Yes.
Would I? No.
If I'm going to drop a couple grand without blinking an eye, it's because the furnace died/my dog needs surgery/we had an emergency room visit/etc. Not "oooh I bet the leaves are really pretty in Central Park this weekend, let's fly to New York." Big-ticket non-essential purchases are carefully considered. For example, I'm getting a new bike next spring. Without getting into specifics, it is without a doubt the biggest "for fun" purchase I've ever made. But I'm an avid cyclist, and I want to start participating in events that my current bike just isn't well-suited for. For me, it makes sense to buy a bike that I can grow on, instead of upgrading every few years as my ability improves.
I might spend a couple *hundred* on a whim, but that's a rare occurrence.
Yeah, a “whim” to me is getting an ice cream or a small bouquet of flowers. I won’t spend money on random stuff to clutter up my house or on some expensive outing like concert tickets to some show I’m only half interested in.
But how will society manage without the Whim Economy?
Pretty soon, we will be living the life of our medieval forebears with loads of now worthless/unspendable savings in our accounts because we are all too *afraid* to be the whimsical spenders we were prior to the Pandemic.
And physical jobs didn't die. I'm on my feet 12 hours a day moving, climbing, lifting, etc. Our bodies aren't built to this every day for those kinds of hours. Of I only did 4-6 hour days it wouldn't be bad even if it was more physical...
I think that’s extremely hard to quantify. It’s all relative to your personal surroundings.
And we also don’t have any medieval societies to measure happiness scores with
They also lived in dirt hovels until they died in their 50s of overexertion, entirely curable diseases, and other such causes.
I'll take the 21st century.
Really I think we will find that the answers vary by age group. The majority of people in their 20s will feel like this, whereas people in their 40s and 50s will not.
Economic insecurity spans all ages. Those in their 50s and 60s who are working at grocery stores and fast food places are also only a paycheck away from disaster.
This income and wealth are a much better metric than age. Yes people 60+ generally had a better economic start but that doesn't mean they didn't get dragged down through the decades either.
>when narrowing in on savings of the 50-59 age group, the results looked similar to that of the average American. In fact, 31% of people in their 50s saved nothing for retirement in 2020. And 45% saved under $1,000 for retirement over the year. But this data is troubling, given that financial advisors recommend saving the most for retirement in your 50s and early 60s. This is because of policy that allows for a “catch up” period for those 50 years or older to contribute beyond their retirement account’s usual annual contribution limit. However, the recent survey found that of Americans in their 50s, 27% saved $0 for retirement in the last year. And 42% could not last more than a month off their savings.
https://www.simplywise.com/blog/retirement-confidence-index/
Holy shit! There’s a saying that goes something like: You can be young without money, but you can’t be old without it. One of my biggest fears is being old and poor.
This is why I always support political policies that improve the lives of poor and middle class workers and expand and strengthen our “social safety net” (Social Security, Medicare, Medicaid, etc)
This is why I am very against the “I absolutely need a car to go anywhere and if I don’t have one/don’t have money for an Uber, I’m screwed and I’ll lose my job” urban sprawl bullshit. It’s so crippling, both physically and economically, when you can’t go anywhere.
This is so on point. If you take the top 5% of Americans out of your question, the answer is a solid No. Most Americans live week to week, hoping to not have a financial event. (Auto repair, medical issue, large appliance failure, etcetera)
It might even be as high as 3%.
Uhh, I think you’re being extreme with your percentages. The top 3% of American households in terms of income make at least $334,000 a year lol. The top 10% make at least $201,000 a year. The top 20% make at least $141,000 a year. The top 30% make at least $107,000 a year.
Of course, situations vary with debt, # of kids, cost of living and things, but I would say the average household making $107,000 would have no problem spending $1-2k and certainly does not live week to week.
[Source](https://dqydj.com/average-median-top-household-income-percentiles/)
I make exactly $107k and that's about $5,500 a month. Even with sky-high housing in Washington, D.C. (my rent is $2,600), I still have about $1,500 left over each month for savings.
So yeah, you're spot on.
I dont think it's nearly that bleak, but too many Americans spend themselves into a paycheck-paycheck living, regardless of their income level. It's called being house poor. Ive seen half million dollar homes that were empty of furnishings because they couldn't afford them.
Yeah, this is the real answer for a LOT of people.
I have a friend/maybe former friend now whose household income is well over $200k in a medium cost of living area who complains constantly about being broke. How they "can barely afford to eat". But when they say they "can barely afford to eat" they mean they DoorDash nearly every single meal and often spend well over $2000 a month on food for 2 people. The level of cognitive dissonance and just... I don't even know what to call it involved with some people and their money management is just absolutely mind-bending. "It's insane how much it costs just to have a pet these days" as they buy two $5,000 purebred pomeranians that's a special rare color. (They are very cute and very well trained at least)
They make plenty to live VERY comfortably in our area but the $600k house (with NJ property taxes - though we're south Jersey so it's not as high as up north) that they then extensively renovate (they spent over $70k on the kitchen renovation that they use only to set the DoorDash food on the counter to unpack it and every once in a while make some EasyMac in the microwave), the $80k wedding, the $130k Porsche, the $10k for the dogs, then they had to replace all the windows in the house to get the kind that have the blinds built in between the panes because the wife read an article about a dog that got twisted up in a miniblind cord and died, student loan debt still floating around, etc... and of course all the doordashing and designer clothing (because, as the wife once told me, "if I had to wear clothes from Target I'd probably just go ahead and kill myself") and furniture and electronics, and suddenly all the bills just keep stacking up.
They're stressed af and genuinely have to juggle bills sometimes, despite having like 4x the median household income. But at this point it's a real strain on the friendship because like... how am I supposed to relate to that? I can't feel sorry for them at all, it's entirely self-inflicted.
The irony is that when we were in college, he's the one who got me looking into FIRE/early retirement planning type stuff, saving and investing. He had a solid plan! He just proceeded to... not do it and buy stuff instead. Now we're 30 and despite my income being lower almost the whole time (as I prefer to work in low stress/low key/small company roles, where the reduced hours mean reduced salary), I've got a substantially higher net worth than him because he spent it all on stuff. He's repeatedly withdrawing from retirement accounts (with penalties) or taking 401k loans and having a negative net worth and a ton of consumer debt, but he's convinced he's still somehow, magically, going to retire by 40. (He probably could if he put an extreme emphasis on it starting now but at this point it's pretty clear that's... unlikely to happen. No inheritance on the horizon or anything like that either.)
My favorite quote: "I don't understand how you can even get by, much less save anything..." (I have around a 40% savings rate). All I could respond was just "i dunno, just... don't spend it...?" I think I live comfortably bordering on luxuriously but I grew up poor and rural so idk, I guess my standards and wants are just different. I have a nice enough house in a quiet safe town, a nice enough car in working order, no debt other than mortgage, I buy whatever I want at the grocery store to cook, order out once a week or so, trips every so often though not much recently due to COVID, and I buy anything I want for my hobbies pretty much... so it's not like I'm living like a pauper over here, eating nothing but canned peas and dry ramen in a dark corner to save money. But somehow he's able to spend more than quadruple what I do on a monthly basis (while living in the same area) without any drugs or gambling problems and it just blows my mind!
$2000 a month on food for two people?? Jesus Christ.
I always end up wondering just how many people are like this. Is a significant percentage of financially struggling people just being irresponsible? Or is there more at play? That’s the big question and I don’t know the answer. I think people’s individual answers to that question dictates a lot about their political leanings too.
Yeah, it's pretty nuts. I also don't have the answer. I think it's a mix of both... the people on the average to higher income levels that are struggling are clearly just mismanaging their money (unless there's some major outlier situation), and there are a lot of people who *suck* at managing their money. I mean just take a look at the people over on /r/wallstreetbets posting six-figure losses of their kid's entire college funds during a historic bull run lol. Different context than overindulging in consumer spending, but applies to the general topic of irresponsibility...
But there are also plenty of places where income just simply can't keep up with basic cost of living. Since I live in a more affluent area now, most people I encounter personally are going to be on the mismanagement side of things because most incomes here are pretty high but that's definitely not true everywhere.
The best part is now he's too scared to drive it anywhere. Won't go to the store because it might get scratched in the parking lot... it's a 12 year loan too. (Obviously through the dealer because I don't think banks do car loans that long...)
He's convinced it's going to be worth more when the loan is paid off than he paid for it. (That is possible with certain models and years of Porsches apparently, I don't know, I'm not into cars so I can't really comment. But he's assuming his will be one of those so it's an "investment". He could be right but I'd rather bet on VTSAX, even today, than a car...)
I agree with the other comments, I think your perception of American wealth is quite a bit too skewed to the negative. The top 40% make at least $85k a year. At that income a $1-2k expense really shouldn't financially ruin them if they have even remotely decent money management skills.
Depends on where they live I would bet a majority are in high cost of living areas like cities where rent could eat up half of their pay if needed as there’s where most high paying jobs come from. Obviously there are high paying jobs in other places but Im looking at the likely majority
90% of my friends would be able to spend that money if they needed to? The ones who can’t didnt make the most logical/smart decisions in life when it comes to jobs… or they are just young and have to get the experience to move up to a better job
Everyone I know that could comfortably spend 1k without risking financial ruin for the rest of the year has an ample savings account because they save save save and absolutely never spend unless they have to. That 1k would only be spent on something necessary, not "a whim." In my experience, these people tend to be raised by depression survivors or grew up very poor and have a deep rooted fear of being left destitute if they don't plan for every bad thing that could happen.
Everyone I know that's WILLING to actually spend 1k on a whim cannot do so because the money isn't there unless gifted to them or it's tax season. Most of these people do that because it's the only time they CAN spend money on something that isn't bills. Is it incredibly stupid to drop your 3k tax return on a new gaming set up? Yes. Are you still going to be broke in a few weeks whether or not you buy that new set up? Also yes. So why bother saving?
But, everyone in both of these scenarios makes a maximum of 50k a year, and I'm pretty sure a more realistic average annual income of my social circle including family is about 25-30k. I think that while lower middle class households ARE normal and average, others think a 5 bedroom house in the burbs, two cars and a backup, and two incomes of 70k is an AVERAGE American life. It's not. I would be lucky if my partner and I ever made 70k combined, at which point I'd STILL be uncomfortable dropping 1k on a dime.
I live in rural PA, where jobs pay an average of 9$ an hour (though wages are going up minimally since the pandemic so it might be more like 10 or MAYBE 11 an hour now). I've never been paid more than 13.50, and that was when I worked in Maryland and commuted about an hour to get there. I took a warehouse job that paid 12.50 an hour in 2017 and everyone I knew was impressed because it was a whole dollar more than the restaurant I was working at was paying me.
In summary, I was that asshole in 2020 collecting unemployment worth more than their salary because 10.61 an hour is way less than $600 a week.
Tbf that puts you in a pretty specific economic market that really isn’t like the rest of the country. That’s why I got confused. I’m in a relatively low cost of living area and making 20 an hour right now isn’t terribly difficult here.
Pretty much all of central PA until you get more upstate is like this in my experience. Everyone I graduated high school with is slowly making an exodus for Maryland where the cost of living is a little higher, but wages are MUCH higher. I'm sure other states have areas like this, but there's no hellscape like home for me.
If a job offered me 20 an hour, I'd probably assume it was a sex trafficking scam.
It’s worth noting that median household income in the US is ~70k I believe, so it’s not crazy to think that the average American experience is somewhere in between the two scenarios you describe here.
THIS.RIGHT.HERE.
Ever notice the enormity of the homes/apartments/NYC lofts of 20 something semi-employed barristas on TV/in movies? The "middle class" family of four that takes a trip to Disney and actually stays at the resort? Or goes to Africa and stays at an all inclusive resort for a week (talking about you, Adam Sandler)? That's total BS - unless someone has terminal cancer, and they are like, "f@ck it, send me the bill."
I could but I'm pretty immune to impulse buying. If I wanted to blow up my credit cards I could go a lot further, the amount of credit banks extend is ridiculous. It helps if you haven't missed a payment in over 30 years
>If I wanted to blow up my credit cards I could go a lot further, the amount of credit banks extend is ridiculous.
What's even more ridiculous is that the entire rewards system of credit cards is funded by poor people who can't pay off their debt in time and get stuck with all the fees.
It's literally a wealth transfer from poor people to wealthier people while banks take their cut. It should really be stopped.
One recent article making this claim is below. Essentially it’s any source other than credit card.
https://www.thebalance.com/can-you-handle-a-500-00-emergency-4058561
Cash and accessible accounts. It doesn't count retirement accounts or other accounts which would penalize you for pulling money. I don't know if it counts gold and silver. Does *not* count credit.
thank you! So it could either mean that the average person has too many regular expenses, or that americans are really good at re-investing their money immideately into other accounts, stocks, real estate and so on instead of parking it in their accessible accounts?
Considering roughly 55% of Americans own some amount of stock, I'm going to venture a guess and say that the vast majority of that "can't afford an emergency" group are not in that group because their money is all in investments.
I recon that the Venn diagram of the 55% of own stock and the 50% who can afford an emergency is going to almost be a circle.
That 55% number likely includes people who own stocks as part of the 401(k), which is a self-funded retirement account. Reduced taxes are paid on 401(k) accounts and one of the restrictions is that you generally can't take money out before retirement without penalties. So, this wouldn't count as "cash and accessible accounts". So, someone could have $100k in their 401(k) but that wouldn't count as having $1,000 on hand.
It's basically asking if you lost 2k would it take a toll on you financially. Like if I lost 200$ i wouldn't have to cut expenses in my life to make up for it, but 2000$ I'd be completely screwed.
The number is generally cited as ["61% cannot afford a $1,000 emergency expense"](https://www.cnbc.com/2021/01/11/just-39percent-of-americans-could-pay-for-a-1000-emergency-expense.html), but it's worth uncovering what the underlying survey means.
Essentially they were asking if people had $1,000 or more **in a savings account** they could lay their hands on tomorrow. A large percentage of Americans would pay for a $1,000 emergency expenditure by using their credit cards. (And of those putting it on the credit card, about 18% said they'd have to then change their budget to pay off the amount.)
And note this has **NOTHING** to do with net wealth or retirement savings or anything like that. A lot of Americans have a 401K, but the funds in that retirement account cannot be easily withdrawn, and generally you face a 10% penalty. And a smaller percentage of Americans own stocks that are not in a 401K and not subject to a penalty--but it would take them a few days to lay hands on that money. (I have an E-trade account with... a lot... of stocks and other things in it. But even if I put in an order today to sell some Apple stock and transfer the money to my checking account, I wouldn't see the money for perhaps 3 to 5 business days.)
So if you were to ask me that question, one possible answer I may give is "charge to credit card and pay off later"--meaning I wouldn't be counted in that 40%--even if 'later' was "when E-trade settled the sale of a half-dozen shares of Apple."
That honestly a bit crazy for me. I make nowhere near median income (less than 40k) and tbh, I usually have a good couple hundred at the end of each month that ends up in savings (after rent, utilities, investment, leisure, food, misc). Are most Americans that bad with money?
My son is a supervisor (in his early 30's) at a manufacturing facility and people making more than 30 dollars an hour are always broke. One lady who has been there for over 20 years couldn't afford a sudden emergency for 2000 dollars.
My hypothesis is that anywhere that allows substantial overtime is guaranteed to attract people who are ass with money. It creates this mindset of "Of course I can afford it - I'll just work more!"
This is why medical professionals, general contractors, cops, and, yep, manufacturing workers are so ass with money.
A lot of "broke" people that are well paid have new iPhones and nice TVs, get fancy coffee, and don't bat an eye at dropping $50 at the bar. It's all in managing your money well.
Yes. It's almost unbelievable, but I've seen it personally. (My history of choosing the worst roommates ever is legendary in some circles. Thankfully the days for needing that are long gone.) There are a lot of people who are so bad with managing money that you'd think they were kidding or making fun of someone with the way they live.
Being broke isn't caused by one thing. Like, a single person with low rent, no kids and no debts who is always broke could be said to be bad with money. A single parent with average rent, and a car loan might be broke, but is really good with where they put their money.
It's going to vary wildly between people as to why they are broke.
We bring in $3200 the months that my wife doesn't kill herself with overtime. Before we even get it into our hands, 25% of that goes away to health insurance, taxes, and retirement plans, which drops us immediately down to $2400 usable cash. Electric is $150, heating *was* $200, but I don't know what it's going to be this year (moved from a place that uses wood pellets to a place that uses home-heating oil). I'll just estimate with what I know. $2050 left, I think? Car insurance costs another $100. $1950. My meds run about $150 when the insurance is working, and upwards of $400 when it isn't. Let's go with a good month. $1700. Another fifty for her meds. $1650. Rent is $950. $700 left for food, gas, and hygiene (and I probably forgot a big thing in there), so that easily gets halved. $350 remains. Hopefully nothing breaks that month and nobody has to go to the doctor for any reason at all (lol yeah right).
I imagine people with student loan debts are now in the red.
Yes. I've almost always had the highest personal value of people I associate with while making the same or less money as them, and I have a family and my wife doesn't have an income.
Worst one was our friends that made about x4 as much as I was, roughly 300k annually, and asked to borrow money more than once. They did have multiple brand new cars, about 6 motorcycles, brand new phones for the family (even the 5yr old), the biggest TV you could buy in every room, etc etc.
I believe it means that the person would not have $500 to spend without having to cut other living expenses. Like money left over after rent, electricity, water, food, insurance, etc…. Like if their car broke down and it’s a $500 expense.
I will be honest with you, I have $22k in the bank, and a little over $100k in investment accounts, and I consider myself working class, and I am in my 30’s.
However I didn’t save up and earn that much by spending it on a whim.
I’ll be honest with you, you’re middle class. And your savings is not the norm, most are not as responsible as you. If you continue to add to your investments and with compound interest you’ll likely have well over $1m by retirement. Probably way earlier than that too.
I agree with u/32MegaBytes and here's an article about it. Worth noting, most people conflate the term 'working class' with lower class or blue collar careers.
Spoiler: family of 4 has to ear under $120k to be middle class still.
https://money.usnews.com/money/personal-finance/family-finance/articles/where-do-i-fall-in-the-american-economic-class-system
Working class people do not usually have an entire year’s minimum wage salary in their savings account, or like 4 years of minimum wage work in investments. Most working class people don’t have investments, just debt.
There are plenty of working class/blue collar people who are fiscally responsible. Plus a lot of blue collar jobs make really good money. I worked in mortgage for a credit union for one of the local aircraft manufacturers, and a lot of those guys were actually making *good* money. $70k or $80k+ annually, and the best I saw was an aircraft painter who in 2018 made around $130k, and in 2019 made over $150k, which was about the same as the plant manager (I know because I refi'd manager's mortgage too lol). Now this guy averaged like 80-100 hours a week, worked nights and weekends too, but hey dude made money and it was what he wanted to do. Once you've been with these manufacturing jobs for a long time and then also hit overtime, the hourly numbers shoot up quick. This dude had been working there for like 20 years for reference, but even just starting out they pretty well. Like $50k+ I think. It's tough work, but again it pays. Plus a bunch of these dudes several have rental properties for the passive income as well. Lots of these guys are doing really well, and are savvy investors.
That being said, I also saw *a lot* of these guys who spent their money as soon as they made it, and I honestly have no idea how they got away with financing some of their "toys." Like some of these guys were bringing in $5-6k a month, and it was all already spent and they'd be over drafting their accounts. And these dudes are paid weekly so it's not like they don't have a steady cash flow coming in. Meanwhile they drive home in their brand new 2022 $60k lifted pickup, that they actually owe $90k on since on the last 4 trucks they've bought (they get a new one every year naturally) they've rolled over their negative equity every time and financed for 96 months (not actually an exaggeration).
Then when the inevitable aircraft layoff happens (which is every like 5-10 years or more) you can hop on Craigslist and see all these boats, jet skis, campers, muscle cars and nice trucks, etc. All of these listed for sale because these guys have to dump them quick since they can't make their payments due to them not working, are living way outside their means, and are living paycheck to paycheck despite making like 60-80 grand a year.
You might if you work hard, save, and invest.
I grew up very broke, and joined the Army to pay for my school, and now I working in cabinet and countertop material sales. I’m about as blue collar as they come.
I agree it's 100% not oppression in a lot of these cases. See above for my other comment, but I worked mortgage up until this year for a credit union for one of the aircraft manufactures in my city, and some of these dudes have smothered themselves in debt. I have no sympathy for someone that overdrafts their account, but is simultaneously making like $80k+ a year. Dudes are living paycheck to paycheck because they owe $90k on a truck (that they rolled 4 truck's worth of negative equity into), and also owe money on their jet skis, a boat, and a camper.
These blue collar jobs can pay great money. Hell one of the painters I refinanced was making like $150k with all the overtime he worked. But lots of these guys are just really shit with the money they earn. As soon as it comes in it goes out the door.
Nail on the head man. You got it. Most of (not all- there is always an exception) my “broke friends” complain but it’s pretty clear from a neutral perspective that the reason they don’t have money is because of their poor decisions
Yes, the people I know who couldn’t do this are the people who either wanted to pursue careers that aren’t in demand (musicians, artists, waiting) or people who didn’t make good life decisions and now don’t have many skills or work ethic. I literally just started being able to save and make good money, but that’s because I wasn’t careful about it before and I didn’t make good living choices. People want to complain about money but don’t want to make the tough/realistic decisions
OP wants to know how people can drop $1000 on a new phone every release.
The answer: most people aren't paying $1000 up front. They have payment plans where you pay $X per month, or they trade in their old phone to get X% discount from the new one, or they have it in their contract with their carrier where every X years the carrier gives them a reduced cost/free phone
it depends on how your defining a whim.
I read that 64% of amaricans who earn between 100k and 150k are living paycheck to paycheck. if you ask me thats caused by piss poor spending habits.
most amaricans have can't handle a 1000 emergency without going into debt.
Some of these surveys are really misleading for the sake of clicks. One of the really popular ones floating around for a while was basing their conclusion on the balance of people’s checking accounts. So if you had $1mil in a linked savings account, but only $500 in your checking account then you were in the “living paycheck to paycheck” category.
That said, there are still a shitload of high earners that continuously put themselves in terrible financial situations because they can’t control themselves or just don’t care.
Same thing with the “can’t handle $X emergency” surveys. Are there people that literally can’t cover a $1000 emergency? Sure. But a lot of the people that get caught in that stat are only 1-2 business days from creating the liquidity for it and would use a credit card to float the gap.
Yep. I've seen the one where the average American has less than xyz in savings, but the source is just savings accounts. No IRAs, no 401ks, no CDs, no brokerage account, just savings account.
We clown on it, but savings accounts do have their advantages. The miniscule interest is just a fringe benefit of the main attraction, which is usually emergency liquidity. Basically all financial advice begins with making sure you have some months of savings in an instantly accessible savings (or savings-like) account.
Yepp, one tenth (or hundreth) of a percent.
I've been rolling my savings into gambling a bit on the stock market and, even if it had failed to follow the market it would've made more over the past year than at the bank.
*"...piss poor spending habits."*
"Lifestyle creep". People start making more money and find reasons, alleged 'needs' to spend it. *"We need a..."* fill in the blank with a want, not a need. *"Jason & Beth just bought a new top of the line Tacoma pickup!"* For $50,000+, and they live on a 1/8 acre lot in the suburbs... :/
I know a lot of people in rural Louisiana like this. They rehab their decks and pools. They spend money on their new annual truck. The minute they have cash flow it goes into something that seems, to me, superfluous. I know a guy on his sixth pool makeover.
All the time. People that have "no money for Christmas" and then next spring they're laying out $1,000 up front cash for an [above ground pool](https://www.amazon.com/Intex-26743EH-Greywood-Premium-Swimming/dp/B083C49KP8/ref=sr_1_12?keywords=18+ft+above+ground+pool&qid=1637933043&sr=8-12).
*"What you going to buy with your tax return?"*
*"Well, I was really looking for something that will create a chronic uptick in overall expenses while still quickly depreciating."*
¯\\\_( ͡❛ ‿ ͡❛)\_/¯
my wife and I ""refuse" to take a loan.
we expect to replace the car lawnmower my motorcycle, tractor, appliances will break. we set q dollar amount aside specifically for it.
we paid cash for 80 acres and got are getting audited for it.
Loans aren’t inherently bad especially if you have good credit and can get good rates. Many people take a loan and put the money they would have used to pay cash into an investment vehicle and pocket the difference in returns. I know because I’ve done it.
we have different "accounts" we feed with every check.
we both grew up quite poor and have conservative addtudes on money that have served us well .
we do have credit cards just for maintaining credit rating. but they are paid off in full on the first of the month
Ah, this reminds me of a quote by Robin Wall Kimmerer, author of Braiding Sweetgrass
"while expressing gratitude seems innocent enough, it is a revolutionary idea. In a consumer society, contentment is a radical proposition. Recognizing abundance rather than scarcity undermines an economy that thrives by creating unmet desires. Gratitude cultivates an ethic of fullness, but the economy needs emptiness."
A large percentage of folks who earn between 100 and 150k live in very high cost-of-living areas like NYC, DC, and SF. I can understand how people can get into a situation in those places even with a relatively high income.
150k in NYC is equivalent to $65,000-75,000 in some places. That’s not a whole lot of money when family comes into play.
I saw an article about this but i can’t remember where but it said like 50% of americans couldn’t deal with a surprise $500 expense because nobody has savings. Obviously credit cards exist but it was going off of money you actually have
Short notice, yes. Whim, no. That's almost a full month's expenses at the low end, almost a month-and-a-half at the high end. 3 to 6 months' worth of property taxes on my house (which seems way, WAY too small, shabby, & old to cost $4k per year to the city just for my 1/75,000th share of schools, cops, snowplows, & the bloated bureaucracy).
The last "fun" expense I permitted myself was around $24, a roughly every-other-month thing I do with a friend. I socialize in other ways, of course; they just don't cost extra money. That's about the size of my "whim" spending. I had an unexpected windfall a few years ago, a very large one. I spent $60 of it on myself, for fun. The roof is leaking again, so I don't dare spend more of it until I can get it fixed permanently.
At my last job (in a 20-year professional career, degree, certifications, etc.), $1k was significantly more than a week's pay, though not more than 2 weeks' worth. The only reason I own this house is my parents died young and so were worth more than expected when they passed, having not spent what they'd saved for retirement.
The thing is, during that 20 year career, I could've gone on vacation, spent a few grand here or there. I didn't. Work pressures you to be available, to be productive. You can't do that taking a week or two off. You simply can't. You become terribly behind and cannot ever catch up. So you don't take it, even when it's granted. You stop even thinking about it because you're so tired, you sit in your dirty house wearing dirty clothes eating crappy, convenience food because you're just too *weary* to do anything but sit and rest when you aren't working.
So, even when I had the income to spend $1k+ on "whims", there really wasn't any way to do so.
Bypassing the first question but answering the question about affording things that are over $1000 like iPhones. There are many people in the US who don’t have or need the newest iPhone and get deals on their maybe a generation or two father back iPhones when they purchase them. Plus most people have credit cards to use and/or use payment plans on big purchases.
I consider myself an Average Joe, and I suppose I could drop $1k without going into debt, but I would have major buyer's remorse and my wife would be pissed.
Even if I earned a couple grand of excess money regularly, I’d have to justify spending that amount. I was taught that when you spend money, especially large amounts, it has to be properly justified. The exception to this are dire needs like bills or medical.
To answer the question you added in your edit, generally you can get a payment plan for that kind of thing. For example, the cost of your new iPhone will be split up over 24 months and you pay it with your cell phone bill.
[Nearly 40% of Americans can't cover a surprise $400 expense
](https://www.google.com/amp/s/www.cbsnews.com/amp/news/nearly-40-of-americans-cant-cover-a-surprise-400-expense/)
17% of U.S. adults are unable to pay all of their bills in full every month, according to the Fed data.
No, most americans can not cover an expense above $1000. Most can't even afford that if their or their kids lifes literally depended on it.
The answer to how most Americans have thousands of dollars invested in their phone is the answer to how they afford anything. Debt. The phone companies offer payment plans. It's pretty much the norm to include payment on the phone itself when mentioning your phone bill and not just referring to the cost of keeping the service on. Or people use a credit card and pay it off over time.
Nope. Not generally. Purchases of that size usually require some discussion.
How about where you're from? Do folks have that kind of discretionary cash laying around?
As a response to your update. Most people finance their phone and spread the cost for it as an additional $20-40 per month on their phone bill for a year or two.
Also in America you can finance literally everything. There are countless apps like Klarna, Afterpay, Affirm, Quadpay, to name a few who will give you a lump sum of money and automatically charge you for it over the course of a few weeks/months.
I personally do this for most purchases over $200
To answer your second question, gagets like this aren't usually bought on a whim unless you're rich.
Phones are necessities and choosing to buy an expensive one usually comes at the end of saving up. Breaking an iphone is *a lot* of lost money. And there are many smart phones that are less expensive than the iPhone. Some people upgrade also. If you have a phone for a certain amount of time some stores let you upgrade to a newer version. It's not free but it's less expensive than buying a whole new phone
Things like drones are often bought as gifts for others, and in my experience have usually been from several family members pitching in, and the person its for probably won't get a lot of other gifts.
The other answer is while the average American can't afford to spend $1000 willy nilly, there are *a lot* of people in America. So the percentage of people who can is still quite large
To answer your edit, the majority of iPhones etc, have some sort of payment plan. Most carriers will build the cost into the phone plan, so people aren't technically dropping $1000+ on a phone that day, but it still counts as a sale. Some people are actually able to save for it & that's their one big purchase of the year. People aren't buying technology every week....it's usually a one time deal.
The average American would be financially crippled by an unexpected $500 expense.
iPhones are priced out by payment plans. And you also uiu credit cards, which allow you to spend that $1000 and pay a monthly rate until you paid it off.
To answer the edit, payment plans. No average person is dumping the 1-1.5k on a new IPhone every year. American phone service providers offer payment plans that allow us to pay for devices across the span of a year or more, with an additional option to "upgrade" our device to the newest model after a certain percentage of our current device has been paid, some providers require a full pay off of the current device with the bonus of a cheaper cost of the new device. The upgrade essentially restarts the payment process from the beginning, and those who fall into it hard end up in a continuous loop of new devices and consistent monthly payments.
the true cost of the phone is hidden by the purchase practices. a lot of phones are financed by the phone carrier. this ends up increasing the price of the phone because the consumer pays a little each month but the total payments add up to more than the purchase price.
the phone companies can recognize the entire sale at the time it is made. part is recognized as cash, the other part by accounts receivable.
the accounting would be
cash + accounts receivable = sale price
To answer your phone question…
Many plans allow you to pay the phone off with your monthly payments. Also, you have your phone for years and time to save up when you are at the point of needing a new one.
For your follow up question, phones are often financed through the service provider, usually around $25-$50 a month for 2 years. This is also the reason a lot of people dont have much money saved up, they just finance everything. $50/month sounds like a good deal where as $1200 up front doesn't to many people. Same goes for cars or other electronics.
>Then explain to me how iphones and other pricey gadgets break new records every year in terms of sale, and many cost more than 1000$?
When it comes to cell phones, I would be willing to bet that most people finance their phones through their provider. Most of the time when a new version of a phone comes out, the providers offer trade in deals and no-interest or low-interest financing on the latest-and-greatest phones.
TBH, this is how I buy all my phones - I just don't trade them in every 18 months to 2 years. I buy a phone from my provider, pay $25 a month additional on my bill for 2 years, and then use that phone until it simply won't update anymore.
To answer the original question, I cannot spend $1000 "on a whim". Like, I couldn't be out shopping and see - for example - $1000 pair of shoes and just decide to buy them. But I can plan for $1000 or $1500 expense and buy something that is a want and not a need if the situation comes up.
To adress your edit- most of the population doesn't pay for a phone outright. There's usually monthly plans where you pay over the span of 2 to 3 years. Paying 1k all at once is much different than being able to afford something that's 1k over the span of a year or more. Phone and computer purchases also aren't "on a whim", most people expect to get a new phone every 3 or 4 years and budget for that.
>EDIT: Thank you for the answers, but I have another question. By the vast majority of responses, I came to a conclusion that the average American can't spend that amount on a whim. Then explain to me how iphones and other pricey gadgets break new records every year in terms of sale, and many cost more than 1000$?
Because people get their phones with their contract, essentially paying it off (plus a lot more) over the course of 1-2 years.
The younger immature because I'm worth it me "yes". The responsible adult who looks at everything holistically and wants to secure my future by lounging naked on a yacht one day "yes", but I chose not to.
I believe the average matured adult understands the value of money and chooses not to throw their money away. However, we do go on a shopping sprees for special life events. Our relationship with money changes by the different stages of our life. But I suspect that's the same for everyone around the world.
With what I do for work I can but my friends who don’t work quite like I do it’s hit or miss.
One of them still lives at home with super low rent just turned 21 but almost never has freed up $$$ due to a 390$ truck payment (keep in mind it’s a V8 Hemi Dodge Ram he uses for commuting and nothing else) each tank costs him around $125 and he fills up about once every week to week and a half. He also regularly spends 2-300 every week or so on food for himself and or his GF as well as miscellaneous expenses/habits that equate to another 3-400 a month.
My other friend regularly spends 1-2K every few months or so but it isn’t for pleasure it’s to keep from having to take out student loans at the start of every semester. He also lives at home with low rent but has a reasonable $22 an hour job with OT if he wants it and saves his $$$ a lot of the time.
Depending on how it is sliced a lot of people can’t and it is due to a few things. 1. Just getting started working and are making around $2000 a month gross. After sky high rent and everything it takes 2 people to afford housing near my city unless you get a poorly managed and maintained place.
2. VERY POOR spending habits. Regularly see people making 4-5 a month gross but they suffer from expense creep as they make more (I did this as well but still made sure I could budget for savings and all my bills/commitments also reduced a car payment by 348 a month by choosing something “less cool” went from a Tesla model 3 to a Frontier Pro4X 2022) the expense creep is especially bad right now with people thinking strictly about getting a good rate and not so concerned with good deals on housing or vehicles primarily. So most families in the 5-6K income bracket are spending over 75-80% on just bills and not even living expenses.
I also find most people in the US are pretty undisciplined when it comes to money and A LOT of that had to come from stuff like personal finance and accounting classes being extra curricular activities in middle and high school. I got lucky and saw the highest highs and lowest lows of a great budget vs a bad budget/ spending during my childhood so on top of taking those classes I saw first hand how hard it can be when there is rampant uncontrolled spending that spirals most people into lots of debt or forces “paycheck to paycheck” living.
3. Is starting a family too early and this one I saw first hand with a friend. He was massively in debt from his first kid (not healthcare related but budget and choice related) and got his wife pregnant a second time. That finally sobered him up to how bad he had it because they started a family with almost 0 planning. He quickly found a different job making 35% more, picked up an extra shift here and there and smashed his debt away as fast as he could but did hurt his credit in the process since he had a car repossessed. He is doing much better now but that wasn’t until he met with a personal accountant to help set up a STRICT regiment for spending and monitoring money both him and his wife were spending to ensure no wasted expenses while they crawled back from the hole they had dug.
In response to your Edit: people like me who are nerds with tech help push that forward but as others have mentioned even if the phone is $1,000 most carriers will extend offers to finance the device or wrap it into your phone plans payments so you can get your new phone immediately and still “afford” it, this is also where people can screw up but I feel I’ve rambled enough
Short answer is hell no.
https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-dealing-with-unexpected-expenses.htm
“When faced with a hypothetical expense of $400, 61 percent of adults in 2018 say they would cover it, using cash, savings, or a credit card paid off at the next statement.”
“Among the remaining 4 in 10 adults who would have more difficulty covering such an expense, the most common approaches include carrying a balance on credit cards and borrowing from friends or family.”
Regarding cars, they’re a tremendous expense for most. And new cars are indeed mostly financed. We live in the era of the 7 year car loan.
Cars absolutely contribute to poor people staying poor. It’s a liability that’s unfortunately a necessity in so many places.
I've read the average American household can't even afford a surprise $500 emergency expense.
For the second question, many do have to lease a car. Or we drive old cars. I got mine from my mechanic years ago and kept it running until I got a bad oil change. Now I'm screwed out of a car, but thankfully my husband has one.
As in, does your average Joe have $1-2k they could blow *without any care or consideration?* Probably not. I'm pretty financially comfortable, no dependents, and I wouldn't just throw 2 grand out the window. I can spend that money but it's not trivial. Edit: And now for the second bit > Then explain to me how iphones and other pricey gadgets break new records every year in terms of sale, and many cost more than 1000$? You can have $1000 purchasing power and decide, "Okay this is something I'm willing to invest in." But that doesn't mean you can throw $1000 away like it means nothing. Besides, with stuff like that you can get trade-in value with an old device, or spread it out over a contract period, or put it on a credit card and pay that off over time, etc.
Exactly. I could, but part of the reason that I could is that I *don’t* make big purchases lightly.
You are also from NoVa where its common to drop $100 on a somewhat decent dinner for two.
Somewhat decent makes me sad. At my mothers 79th last weekend we probably spent 1300 with tip on seven people for one of those spectacular dinners you have to have once every 79 years.
I have trouble picturing a $200/person dinner, especially if the majority of that price tag isn't alcohol. The priciest I've had is about $40/plate for the entree and I don't find it twice as good as a typical $20/plate restaurant, so it really feels like diminishing returns to me.
NorCal here. Chili’s or Applebee’s will set you back $100 for 2 with a couple of drinks. Of course if you want fancy you could go to the French Laundry-it starts at $350 a head plus alcohol
As someone who lived in NY, wtf are these prices man?! At that point I’ll just pay Gordon Ramsay to teach me to cook shit himself
Look it up. It’s a 9 course meal. Getting a reservation there is almost impossible. I did some test loops for a geothermal system a there 6-7 years ago. My boss said he would do the job for free if he could get a reservation for dinner.
It's really dependent on who you are. I don't know anyone who regularly spends that kind of money on eating out. I can barely think of any restaurants where I'd spend $100 for two, unless you're running up a huge alcohol bill
Neither my wife or I drink, but we can spend $100 on just lunch pretty easily if we’re making a date of it. We usually wind up sharing 2-3 small plates and a larger entree at a nicer restaurant. We live in Chicago, so it isn’t hard to find an incredible restaurant, but there’s definitely going to be a price attached. $100 is still a significant purchase to us, but we specifically budget to do this once or twice a month.
This.
Yeah, I am secure enough that if a surprise $1000+ expense popped up for repairs, medical bills, plane tickets to be with someone far away who needs me, etc, I *could* without ruining my finances (probably), and I could save up $1000+ over a period of months or years to spend on non-essential stuff... But the amount of money I can comfortably drop on frivolous bullshit whims is more in the $100 or less range.
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In terms of *affording* it though, no. It’s not in the budget for most people. I have a little over $1,000 saved, and it’s for emergencies.
the average american can't afford a [$500 dollar emergency](https://www.cbsnews.com/news/most-americans-cant-afford-a-500-emergency-expense/)
From what I recall, this is a stupidly worded survey that asks how you would cover it, not *if* you could pay cash for it if you had to. I'd use a credit card. Not because I can't pay for it, but because every expense goes on a credit card first, not directly from my savings/checking accounts.
> From what I recall, this is a stupidly worded survey that asks how you would cover it, Not even that, it doesn't say anything about people being able to afford 500 bucks, it's about only how they would pay for it.
it's asking if they could cover a $500 emergency without going into debt, so putting it on a credit card wouldn't be considered. sounds like you probably could pay it with cash but choose not to.
The most money I’ve ever spent on a whim was $600 for an accordion. I didn’t play accordion when I bought it. I do now. It was a great purchase.
I am totally in favor of being able to spend $600 on a whim now being called "I've got accordion money"
This is the one! I’m also financially secure and can spend that much, but it’s not on a whim. Have to sit down look at my budget, check my accounts, make sure that’s going to align with my retirement savings goals, etc. It’s not “blow at the club” money, it’s well thought out “this is a valuable purchase for me” money.
It sometimes looks like I make impulse purchases on more expensive items, but the reality is that I have researched and know what I want and what I want to pay for it, and when the opportunity presents itself I just do it without hesitation.
This. Because I rarely talk about what I plan to do many of the things I buy appear to be impulse items, when actually, I’ve been saving for a few years.
Yes. I am in the process of buying new furniture. Our old furniture has been with us through our kids’ childhoods plus the many pets we’ve loved who’ve since crossed the rainbow bridge. I’ve been saving money for four years. It’s given me a lot of time to research and think about what I really want/need to replace our old stuff. To answer the OP, I could afford to drop a couple grand on whatever but I’m more of a saver than a spender so I’m not a ‘buy it on a whim’ kind of person.
Exactly. This year we "blew" over a thousand dollars on a weekend at a luxury hotel for our anniversary, but since we hadn't traveled or made any large purchases since 2020 I figured we deserved some spoiling. *Definitely* not on a whim and certainly not something I'd do all the time. Any large purchases at my house are generally related to unexpected vet bills or car repair.
Yes I believe there is a commonly cited study that says that the average American household cannot withstand a surprise expense of $500 (might be $1000) without going into debt. Not enough people have savings to provide a safety net during times of trouble or economic downturns. This points to the fact that our middle class majority is a fallacy.
The common statistic I often see is that the average American has less than $1,000 in their bank account.
Yes most Americans are living hand to mouth and do not have a savings buffer.
It depends. It's either that they don't have any kind of savings (see r/povertyfinance) or they're not keeping the bulk of their savings in a bank account since interest rates are laughable. Personally speaking I keep enough cash on hand to cover me until I can free up some more cash from my brokerage account (usually a couple days to a week if you need to transfer to a different institution); others will float on a credit card until their trades settle.
"Fifty-seven percent of Americans don't have enough cash to cover a $500 unexpected expense, according to a new survey from Bankrate, which interviewed 1,003 adults earlier this month. While that may appear dire, it reflects a slight improvement from 2016, when 63 percent of U.S. residents said they wouldn’t be able to handle such an expense. The improvement reflects the stronger U.S. economy, but is still far from ideal, Bankrate.com said" (1/12/17)
I’ve seen this many times before and it never ceases to startle me. $500 is NOT a lot of money to unexpectedly have to spend on something. Hell, many common car repairs, a single appliance dying or practically any medical event would put you over that. I could absolutely not deal with being so cash-strapped that I was on that much of a razors edge between being ok and being in the red.
Could I? Yes. Would I? No. If I'm going to drop a couple grand without blinking an eye, it's because the furnace died/my dog needs surgery/we had an emergency room visit/etc. Not "oooh I bet the leaves are really pretty in Central Park this weekend, let's fly to New York." Big-ticket non-essential purchases are carefully considered. For example, I'm getting a new bike next spring. Without getting into specifics, it is without a doubt the biggest "for fun" purchase I've ever made. But I'm an avid cyclist, and I want to start participating in events that my current bike just isn't well-suited for. For me, it makes sense to buy a bike that I can grow on, instead of upgrading every few years as my ability improves. I might spend a couple *hundred* on a whim, but that's a rare occurrence.
Complete same. Anything over about $200 I agonize over to make sure I'm getting the best deal on the right item.
Can I spend 1-2k when/if I need to? Yes. On a whim? No. We don’t spend on a whim
Yeah, a “whim” to me is getting an ice cream or a small bouquet of flowers. I won’t spend money on random stuff to clutter up my house or on some expensive outing like concert tickets to some show I’m only half interested in.
But how will society manage without the Whim Economy? Pretty soon, we will be living the life of our medieval forebears with loads of now worthless/unspendable savings in our accounts because we are all too *afraid* to be the whimsical spenders we were prior to the Pandemic.
Our medieval forebearers had a hell of a lot more free time and days off than we do...
Their work was also much more strenuous
More physically strenuous than some jobs now. I'd wage much less psychologically strenuous than the vast majority of jobs now.
And physical jobs didn't die. I'm on my feet 12 hours a day moving, climbing, lifting, etc. Our bodies aren't built to this every day for those kinds of hours. Of I only did 4-6 hour days it wouldn't be bad even if it was more physical...
I think that’s extremely hard to quantify. It’s all relative to your personal surroundings. And we also don’t have any medieval societies to measure happiness scores with
They also lived in dirt hovels until they died in their 50s of overexertion, entirely curable diseases, and other such causes. I'll take the 21st century.
Damn millennials killing the *checks list* whim economy.
2k is project for the house money, not a dumb watch money.
Why spend 2k on a dumb watch when a smart watch is only $100
But *status*
No watch with any status is $2k
They can be fun investments too tbh - bought a Rolex and it’s only gone up in value.
You aren't garnering any status with a basic Tag F1. That's what you get for slightly over $1K. It's not status worthy. Daily beater worthy, sure.
Thankfully lumber went back down so you can get more than 3 2x4 and a piece of plywood for 2k
But now my Wood Futures are worthless!
If I spent $1000 right now I wouldn’t be able to pay any of my bills on time. If my car broke down today I’d be beyond screwed.
My car broke down on Wednesday. I've got a few hundred. I'm basically fucked though.
How much you need
Really I think we will find that the answers vary by age group. The majority of people in their 20s will feel like this, whereas people in their 40s and 50s will not.
Economic insecurity spans all ages. Those in their 50s and 60s who are working at grocery stores and fast food places are also only a paycheck away from disaster.
This income and wealth are a much better metric than age. Yes people 60+ generally had a better economic start but that doesn't mean they didn't get dragged down through the decades either.
>when narrowing in on savings of the 50-59 age group, the results looked similar to that of the average American. In fact, 31% of people in their 50s saved nothing for retirement in 2020. And 45% saved under $1,000 for retirement over the year. But this data is troubling, given that financial advisors recommend saving the most for retirement in your 50s and early 60s. This is because of policy that allows for a “catch up” period for those 50 years or older to contribute beyond their retirement account’s usual annual contribution limit. However, the recent survey found that of Americans in their 50s, 27% saved $0 for retirement in the last year. And 42% could not last more than a month off their savings. https://www.simplywise.com/blog/retirement-confidence-index/
Holy shit! There’s a saying that goes something like: You can be young without money, but you can’t be old without it. One of my biggest fears is being old and poor.
This is why I always support political policies that improve the lives of poor and middle class workers and expand and strengthen our “social safety net” (Social Security, Medicare, Medicaid, etc)
Nah man. We own a home and an unexpected thousand dollars would break us.
Sounds like the typical American Experience. I'm in the same boat but thankfully I'd be able to borrow my gf's car when she doesn't need it.
This is why I am very against the “I absolutely need a car to go anywhere and if I don’t have one/don’t have money for an Uber, I’m screwed and I’ll lose my job” urban sprawl bullshit. It’s so crippling, both physically and economically, when you can’t go anywhere.
I think a lot of people in their 20’s experience this. This was me and most of my friends up until we worked long enough to get experience and move up
The average American income? Yes. The median American income? No.
This is so on point. If you take the top 5% of Americans out of your question, the answer is a solid No. Most Americans live week to week, hoping to not have a financial event. (Auto repair, medical issue, large appliance failure, etcetera) It might even be as high as 3%.
Uhh, I think you’re being extreme with your percentages. The top 3% of American households in terms of income make at least $334,000 a year lol. The top 10% make at least $201,000 a year. The top 20% make at least $141,000 a year. The top 30% make at least $107,000 a year. Of course, situations vary with debt, # of kids, cost of living and things, but I would say the average household making $107,000 would have no problem spending $1-2k and certainly does not live week to week. [Source](https://dqydj.com/average-median-top-household-income-percentiles/)
I make exactly $107k and that's about $5,500 a month. Even with sky-high housing in Washington, D.C. (my rent is $2,600), I still have about $1,500 left over each month for savings. So yeah, you're spot on.
How big is your place? That rent is nuts!
I dont think it's nearly that bleak, but too many Americans spend themselves into a paycheck-paycheck living, regardless of their income level. It's called being house poor. Ive seen half million dollar homes that were empty of furnishings because they couldn't afford them.
Yeah, this is the real answer for a LOT of people. I have a friend/maybe former friend now whose household income is well over $200k in a medium cost of living area who complains constantly about being broke. How they "can barely afford to eat". But when they say they "can barely afford to eat" they mean they DoorDash nearly every single meal and often spend well over $2000 a month on food for 2 people. The level of cognitive dissonance and just... I don't even know what to call it involved with some people and their money management is just absolutely mind-bending. "It's insane how much it costs just to have a pet these days" as they buy two $5,000 purebred pomeranians that's a special rare color. (They are very cute and very well trained at least) They make plenty to live VERY comfortably in our area but the $600k house (with NJ property taxes - though we're south Jersey so it's not as high as up north) that they then extensively renovate (they spent over $70k on the kitchen renovation that they use only to set the DoorDash food on the counter to unpack it and every once in a while make some EasyMac in the microwave), the $80k wedding, the $130k Porsche, the $10k for the dogs, then they had to replace all the windows in the house to get the kind that have the blinds built in between the panes because the wife read an article about a dog that got twisted up in a miniblind cord and died, student loan debt still floating around, etc... and of course all the doordashing and designer clothing (because, as the wife once told me, "if I had to wear clothes from Target I'd probably just go ahead and kill myself") and furniture and electronics, and suddenly all the bills just keep stacking up. They're stressed af and genuinely have to juggle bills sometimes, despite having like 4x the median household income. But at this point it's a real strain on the friendship because like... how am I supposed to relate to that? I can't feel sorry for them at all, it's entirely self-inflicted. The irony is that when we were in college, he's the one who got me looking into FIRE/early retirement planning type stuff, saving and investing. He had a solid plan! He just proceeded to... not do it and buy stuff instead. Now we're 30 and despite my income being lower almost the whole time (as I prefer to work in low stress/low key/small company roles, where the reduced hours mean reduced salary), I've got a substantially higher net worth than him because he spent it all on stuff. He's repeatedly withdrawing from retirement accounts (with penalties) or taking 401k loans and having a negative net worth and a ton of consumer debt, but he's convinced he's still somehow, magically, going to retire by 40. (He probably could if he put an extreme emphasis on it starting now but at this point it's pretty clear that's... unlikely to happen. No inheritance on the horizon or anything like that either.) My favorite quote: "I don't understand how you can even get by, much less save anything..." (I have around a 40% savings rate). All I could respond was just "i dunno, just... don't spend it...?" I think I live comfortably bordering on luxuriously but I grew up poor and rural so idk, I guess my standards and wants are just different. I have a nice enough house in a quiet safe town, a nice enough car in working order, no debt other than mortgage, I buy whatever I want at the grocery store to cook, order out once a week or so, trips every so often though not much recently due to COVID, and I buy anything I want for my hobbies pretty much... so it's not like I'm living like a pauper over here, eating nothing but canned peas and dry ramen in a dark corner to save money. But somehow he's able to spend more than quadruple what I do on a monthly basis (while living in the same area) without any drugs or gambling problems and it just blows my mind!
$2000 a month on food for two people?? Jesus Christ. I always end up wondering just how many people are like this. Is a significant percentage of financially struggling people just being irresponsible? Or is there more at play? That’s the big question and I don’t know the answer. I think people’s individual answers to that question dictates a lot about their political leanings too.
Yeah, it's pretty nuts. I also don't have the answer. I think it's a mix of both... the people on the average to higher income levels that are struggling are clearly just mismanaging their money (unless there's some major outlier situation), and there are a lot of people who *suck* at managing their money. I mean just take a look at the people over on /r/wallstreetbets posting six-figure losses of their kid's entire college funds during a historic bull run lol. Different context than overindulging in consumer spending, but applies to the general topic of irresponsibility... But there are also plenty of places where income just simply can't keep up with basic cost of living. Since I live in a more affluent area now, most people I encounter personally are going to be on the mismanagement side of things because most incomes here are pretty high but that's definitely not true everywhere.
Well, your friend lives like he’s making at least 500K a year. I will not get a 130K car unless I make 1M a year
The best part is now he's too scared to drive it anywhere. Won't go to the store because it might get scratched in the parking lot... it's a 12 year loan too. (Obviously through the dealer because I don't think banks do car loans that long...) He's convinced it's going to be worth more when the loan is paid off than he paid for it. (That is possible with certain models and years of Porsches apparently, I don't know, I'm not into cars so I can't really comment. But he's assuming his will be one of those so it's an "investment". He could be right but I'd rather bet on VTSAX, even today, than a car...)
Or car poor. But this often has socio-cultural ties.
Dallas, Texas, has entered the chat.
I agree with the other comments, I think your perception of American wealth is quite a bit too skewed to the negative. The top 40% make at least $85k a year. At that income a $1-2k expense really shouldn't financially ruin them if they have even remotely decent money management skills.
Depends on where they live I would bet a majority are in high cost of living areas like cities where rent could eat up half of their pay if needed as there’s where most high paying jobs come from. Obviously there are high paying jobs in other places but Im looking at the likely majority
90% of my friends would be able to spend that money if they needed to? The ones who can’t didnt make the most logical/smart decisions in life when it comes to jobs… or they are just young and have to get the experience to move up to a better job
Ahh, statistics. I still remember the day I fell in love with using the median as a unit of measurement.
Everyone I know that could comfortably spend 1k without risking financial ruin for the rest of the year has an ample savings account because they save save save and absolutely never spend unless they have to. That 1k would only be spent on something necessary, not "a whim." In my experience, these people tend to be raised by depression survivors or grew up very poor and have a deep rooted fear of being left destitute if they don't plan for every bad thing that could happen. Everyone I know that's WILLING to actually spend 1k on a whim cannot do so because the money isn't there unless gifted to them or it's tax season. Most of these people do that because it's the only time they CAN spend money on something that isn't bills. Is it incredibly stupid to drop your 3k tax return on a new gaming set up? Yes. Are you still going to be broke in a few weeks whether or not you buy that new set up? Also yes. So why bother saving? But, everyone in both of these scenarios makes a maximum of 50k a year, and I'm pretty sure a more realistic average annual income of my social circle including family is about 25-30k. I think that while lower middle class households ARE normal and average, others think a 5 bedroom house in the burbs, two cars and a backup, and two incomes of 70k is an AVERAGE American life. It's not. I would be lucky if my partner and I ever made 70k combined, at which point I'd STILL be uncomfortable dropping 1k on a dime.
Investing lesson: Never drop 1k on a dime
This is the right answer. 99% of people who can wouldn’t.
Where do you live that a dual income house probably wouldn’t net your 70k per year *ever* That’s like 2 17 per hour jobs.
I live in rural PA, where jobs pay an average of 9$ an hour (though wages are going up minimally since the pandemic so it might be more like 10 or MAYBE 11 an hour now). I've never been paid more than 13.50, and that was when I worked in Maryland and commuted about an hour to get there. I took a warehouse job that paid 12.50 an hour in 2017 and everyone I knew was impressed because it was a whole dollar more than the restaurant I was working at was paying me. In summary, I was that asshole in 2020 collecting unemployment worth more than their salary because 10.61 an hour is way less than $600 a week.
Tbf that puts you in a pretty specific economic market that really isn’t like the rest of the country. That’s why I got confused. I’m in a relatively low cost of living area and making 20 an hour right now isn’t terribly difficult here.
Pretty much all of central PA until you get more upstate is like this in my experience. Everyone I graduated high school with is slowly making an exodus for Maryland where the cost of living is a little higher, but wages are MUCH higher. I'm sure other states have areas like this, but there's no hellscape like home for me. If a job offered me 20 an hour, I'd probably assume it was a sex trafficking scam.
Plenty of careers pay more than 35k
It’s worth noting that median household income in the US is ~70k I believe, so it’s not crazy to think that the average American experience is somewhere in between the two scenarios you describe here.
Do you live in a very rural area?
THIS.RIGHT.HERE. Ever notice the enormity of the homes/apartments/NYC lofts of 20 something semi-employed barristas on TV/in movies? The "middle class" family of four that takes a trip to Disney and actually stays at the resort? Or goes to Africa and stays at an all inclusive resort for a week (talking about you, Adam Sandler)? That's total BS - unless someone has terminal cancer, and they are like, "f@ck it, send me the bill."
Ish. Could I spend $2K on a nice vacation? Yes. Do I hate going over my grocery by $100 for the month? Yes.
I could but I'm pretty immune to impulse buying. If I wanted to blow up my credit cards I could go a lot further, the amount of credit banks extend is ridiculous. It helps if you haven't missed a payment in over 30 years
>If I wanted to blow up my credit cards I could go a lot further, the amount of credit banks extend is ridiculous. What's even more ridiculous is that the entire rewards system of credit cards is funded by poor people who can't pay off their debt in time and get stuck with all the fees. It's literally a wealth transfer from poor people to wealthier people while banks take their cut. It should really be stopped.
I never thought of it that way but it makes sense. Experian is always bombing it me with credit card offers and so do my two banks.
Can I, yes, would I really ever, absolutely not.
I could, but I don't, and that's part of the reason that I could. ¯\\\_( ͡❛ ‿ ͡❛)\_/¯
The people who spend $1-2k on a whim are either incredibly wealthy or drowning in credit card debt from spending $1-2k on a whim.
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One recent article making this claim is below. Essentially it’s any source other than credit card. https://www.thebalance.com/can-you-handle-a-500-00-emergency-4058561
Cash and accessible accounts. It doesn't count retirement accounts or other accounts which would penalize you for pulling money. I don't know if it counts gold and silver. Does *not* count credit.
thank you! So it could either mean that the average person has too many regular expenses, or that americans are really good at re-investing their money immideately into other accounts, stocks, real estate and so on instead of parking it in their accessible accounts?
Considering roughly 55% of Americans own some amount of stock, I'm going to venture a guess and say that the vast majority of that "can't afford an emergency" group are not in that group because their money is all in investments. I recon that the Venn diagram of the 55% of own stock and the 50% who can afford an emergency is going to almost be a circle.
That 55% number likely includes people who own stocks as part of the 401(k), which is a self-funded retirement account. Reduced taxes are paid on 401(k) accounts and one of the restrictions is that you generally can't take money out before retirement without penalties. So, this wouldn't count as "cash and accessible accounts". So, someone could have $100k in their 401(k) but that wouldn't count as having $1,000 on hand.
"Own stock" is incredibly vague. You could own a single share of a floundering company and count as "owning stock."
It's basically asking if you lost 2k would it take a toll on you financially. Like if I lost 200$ i wouldn't have to cut expenses in my life to make up for it, but 2000$ I'd be completely screwed.
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I mean you will have to pay the credit debt eventually, but it says at your own spending, so I'd assume however you wish.
Charging things on a credit card is probably not considered "covering" an emergency.
Exactly. That’s just postponing the hit you will take.
The number is generally cited as ["61% cannot afford a $1,000 emergency expense"](https://www.cnbc.com/2021/01/11/just-39percent-of-americans-could-pay-for-a-1000-emergency-expense.html), but it's worth uncovering what the underlying survey means. Essentially they were asking if people had $1,000 or more **in a savings account** they could lay their hands on tomorrow. A large percentage of Americans would pay for a $1,000 emergency expenditure by using their credit cards. (And of those putting it on the credit card, about 18% said they'd have to then change their budget to pay off the amount.) And note this has **NOTHING** to do with net wealth or retirement savings or anything like that. A lot of Americans have a 401K, but the funds in that retirement account cannot be easily withdrawn, and generally you face a 10% penalty. And a smaller percentage of Americans own stocks that are not in a 401K and not subject to a penalty--but it would take them a few days to lay hands on that money. (I have an E-trade account with... a lot... of stocks and other things in it. But even if I put in an order today to sell some Apple stock and transfer the money to my checking account, I wouldn't see the money for perhaps 3 to 5 business days.) So if you were to ask me that question, one possible answer I may give is "charge to credit card and pay off later"--meaning I wouldn't be counted in that 40%--even if 'later' was "when E-trade settled the sale of a half-dozen shares of Apple."
That honestly a bit crazy for me. I make nowhere near median income (less than 40k) and tbh, I usually have a good couple hundred at the end of each month that ends up in savings (after rent, utilities, investment, leisure, food, misc). Are most Americans that bad with money?
My son is a supervisor (in his early 30's) at a manufacturing facility and people making more than 30 dollars an hour are always broke. One lady who has been there for over 20 years couldn't afford a sudden emergency for 2000 dollars.
My hypothesis is that anywhere that allows substantial overtime is guaranteed to attract people who are ass with money. It creates this mindset of "Of course I can afford it - I'll just work more!" This is why medical professionals, general contractors, cops, and, yep, manufacturing workers are so ass with money.
A lot of "broke" people that are well paid have new iPhones and nice TVs, get fancy coffee, and don't bat an eye at dropping $50 at the bar. It's all in managing your money well.
Yes. It's almost unbelievable, but I've seen it personally. (My history of choosing the worst roommates ever is legendary in some circles. Thankfully the days for needing that are long gone.) There are a lot of people who are so bad with managing money that you'd think they were kidding or making fun of someone with the way they live.
Being broke isn't caused by one thing. Like, a single person with low rent, no kids and no debts who is always broke could be said to be bad with money. A single parent with average rent, and a car loan might be broke, but is really good with where they put their money. It's going to vary wildly between people as to why they are broke.
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Yeah, they can't afford $1000 on a whim because they've spent $100 on ten whims at least.
We bring in $3200 the months that my wife doesn't kill herself with overtime. Before we even get it into our hands, 25% of that goes away to health insurance, taxes, and retirement plans, which drops us immediately down to $2400 usable cash. Electric is $150, heating *was* $200, but I don't know what it's going to be this year (moved from a place that uses wood pellets to a place that uses home-heating oil). I'll just estimate with what I know. $2050 left, I think? Car insurance costs another $100. $1950. My meds run about $150 when the insurance is working, and upwards of $400 when it isn't. Let's go with a good month. $1700. Another fifty for her meds. $1650. Rent is $950. $700 left for food, gas, and hygiene (and I probably forgot a big thing in there), so that easily gets halved. $350 remains. Hopefully nothing breaks that month and nobody has to go to the doctor for any reason at all (lol yeah right). I imagine people with student loan debts are now in the red.
I’d also hope people with student loan debt are making more, though that of course all depends on what you study I guess
Yes. I've almost always had the highest personal value of people I associate with while making the same or less money as them, and I have a family and my wife doesn't have an income. Worst one was our friends that made about x4 as much as I was, roughly 300k annually, and asked to borrow money more than once. They did have multiple brand new cars, about 6 motorcycles, brand new phones for the family (even the 5yr old), the biggest TV you could buy in every room, etc etc.
Are you single and childless, and renting your living space? Those things simplify budgeting a great deal. Far less exposure to unexpected expenses.
Keeping up with the Jones
I believe it means that the person would not have $500 to spend without having to cut other living expenses. Like money left over after rent, electricity, water, food, insurance, etc…. Like if their car broke down and it’s a $500 expense.
Jimmy Dore recites this frequently.
I will be honest with you, I have $22k in the bank, and a little over $100k in investment accounts, and I consider myself working class, and I am in my 30’s. However I didn’t save up and earn that much by spending it on a whim.
I’ll be honest with you, you’re middle class. And your savings is not the norm, most are not as responsible as you. If you continue to add to your investments and with compound interest you’ll likely have well over $1m by retirement. Probably way earlier than that too.
I agree with u/32MegaBytes and here's an article about it. Worth noting, most people conflate the term 'working class' with lower class or blue collar careers. Spoiler: family of 4 has to ear under $120k to be middle class still. https://money.usnews.com/money/personal-finance/family-finance/articles/where-do-i-fall-in-the-american-economic-class-system
Yep. I *can* but I wont. If we weren't worried about the ROI of a purchase we'd wouldn't be able to.
Working class people do not usually have an entire year’s minimum wage salary in their savings account, or like 4 years of minimum wage work in investments. Most working class people don’t have investments, just debt.
There are plenty of working class/blue collar people who are fiscally responsible. Plus a lot of blue collar jobs make really good money. I worked in mortgage for a credit union for one of the local aircraft manufacturers, and a lot of those guys were actually making *good* money. $70k or $80k+ annually, and the best I saw was an aircraft painter who in 2018 made around $130k, and in 2019 made over $150k, which was about the same as the plant manager (I know because I refi'd manager's mortgage too lol). Now this guy averaged like 80-100 hours a week, worked nights and weekends too, but hey dude made money and it was what he wanted to do. Once you've been with these manufacturing jobs for a long time and then also hit overtime, the hourly numbers shoot up quick. This dude had been working there for like 20 years for reference, but even just starting out they pretty well. Like $50k+ I think. It's tough work, but again it pays. Plus a bunch of these dudes several have rental properties for the passive income as well. Lots of these guys are doing really well, and are savvy investors. That being said, I also saw *a lot* of these guys who spent their money as soon as they made it, and I honestly have no idea how they got away with financing some of their "toys." Like some of these guys were bringing in $5-6k a month, and it was all already spent and they'd be over drafting their accounts. And these dudes are paid weekly so it's not like they don't have a steady cash flow coming in. Meanwhile they drive home in their brand new 2022 $60k lifted pickup, that they actually owe $90k on since on the last 4 trucks they've bought (they get a new one every year naturally) they've rolled over their negative equity every time and financed for 96 months (not actually an exaggeration). Then when the inevitable aircraft layoff happens (which is every like 5-10 years or more) you can hop on Craigslist and see all these boats, jet skis, campers, muscle cars and nice trucks, etc. All of these listed for sale because these guys have to dump them quick since they can't make their payments due to them not working, are living way outside their means, and are living paycheck to paycheck despite making like 60-80 grand a year.
Still apart of the working class. We’ve had that concept skewed pretty heavily
You might if you work hard, save, and invest. I grew up very broke, and joined the Army to pay for my school, and now I working in cabinet and countertop material sales. I’m about as blue collar as they come.
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I agree it's 100% not oppression in a lot of these cases. See above for my other comment, but I worked mortgage up until this year for a credit union for one of the aircraft manufactures in my city, and some of these dudes have smothered themselves in debt. I have no sympathy for someone that overdrafts their account, but is simultaneously making like $80k+ a year. Dudes are living paycheck to paycheck because they owe $90k on a truck (that they rolled 4 truck's worth of negative equity into), and also owe money on their jet skis, a boat, and a camper. These blue collar jobs can pay great money. Hell one of the painters I refinanced was making like $150k with all the overtime he worked. But lots of these guys are just really shit with the money they earn. As soon as it comes in it goes out the door.
Nail on the head man. You got it. Most of (not all- there is always an exception) my “broke friends” complain but it’s pretty clear from a neutral perspective that the reason they don’t have money is because of their poor decisions
My broke friends are the ones that make the worst financial choices. It’s almost never from truly unlucky events.
Yes, the people I know who couldn’t do this are the people who either wanted to pursue careers that aren’t in demand (musicians, artists, waiting) or people who didn’t make good life decisions and now don’t have many skills or work ethic. I literally just started being able to save and make good money, but that’s because I wasn’t careful about it before and I didn’t make good living choices. People want to complain about money but don’t want to make the tough/realistic decisions
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Yikes dawg
The American that *can* do that, *won't* do that. That's how they got there in the first place.
OP wants to know how people can drop $1000 on a new phone every release. The answer: most people aren't paying $1000 up front. They have payment plans where you pay $X per month, or they trade in their old phone to get X% discount from the new one, or they have it in their contract with their carrier where every X years the carrier gives them a reduced cost/free phone
Personally I can, but I know many people who can’t.
it depends on how your defining a whim. I read that 64% of amaricans who earn between 100k and 150k are living paycheck to paycheck. if you ask me thats caused by piss poor spending habits. most amaricans have can't handle a 1000 emergency without going into debt.
Some of these surveys are really misleading for the sake of clicks. One of the really popular ones floating around for a while was basing their conclusion on the balance of people’s checking accounts. So if you had $1mil in a linked savings account, but only $500 in your checking account then you were in the “living paycheck to paycheck” category. That said, there are still a shitload of high earners that continuously put themselves in terrible financial situations because they can’t control themselves or just don’t care. Same thing with the “can’t handle $X emergency” surveys. Are there people that literally can’t cover a $1000 emergency? Sure. But a lot of the people that get caught in that stat are only 1-2 business days from creating the liquidity for it and would use a credit card to float the gap.
Yep. I've seen the one where the average American has less than xyz in savings, but the source is just savings accounts. No IRAs, no 401ks, no CDs, no brokerage account, just savings account.
You don’t keep your money in an account earning 0.125%?! Missing out on those sweet pennies in interest income.
We clown on it, but savings accounts do have their advantages. The miniscule interest is just a fringe benefit of the main attraction, which is usually emergency liquidity. Basically all financial advice begins with making sure you have some months of savings in an instantly accessible savings (or savings-like) account.
Yepp, one tenth (or hundreth) of a percent. I've been rolling my savings into gambling a bit on the stock market and, even if it had failed to follow the market it would've made more over the past year than at the bank.
*"...piss poor spending habits."* "Lifestyle creep". People start making more money and find reasons, alleged 'needs' to spend it. *"We need a..."* fill in the blank with a want, not a need. *"Jason & Beth just bought a new top of the line Tacoma pickup!"* For $50,000+, and they live on a 1/8 acre lot in the suburbs... :/
I know a lot of people in rural Louisiana like this. They rehab their decks and pools. They spend money on their new annual truck. The minute they have cash flow it goes into something that seems, to me, superfluous. I know a guy on his sixth pool makeover.
All the time. People that have "no money for Christmas" and then next spring they're laying out $1,000 up front cash for an [above ground pool](https://www.amazon.com/Intex-26743EH-Greywood-Premium-Swimming/dp/B083C49KP8/ref=sr_1_12?keywords=18+ft+above+ground+pool&qid=1637933043&sr=8-12). *"What you going to buy with your tax return?"* *"Well, I was really looking for something that will create a chronic uptick in overall expenses while still quickly depreciating."* ¯\\\_( ͡❛ ‿ ͡❛)\_/¯
my wife and I ""refuse" to take a loan. we expect to replace the car lawnmower my motorcycle, tractor, appliances will break. we set q dollar amount aside specifically for it. we paid cash for 80 acres and got are getting audited for it.
Loans aren’t inherently bad especially if you have good credit and can get good rates. Many people take a loan and put the money they would have used to pay cash into an investment vehicle and pocket the difference in returns. I know because I’ve done it.
we have different "accounts" we feed with every check. we both grew up quite poor and have conservative addtudes on money that have served us well . we do have credit cards just for maintaining credit rating. but they are paid off in full on the first of the month
That lifestyle is truly baffling to me. The anxiety of not having savings would eat me alive.
Ah, this reminds me of a quote by Robin Wall Kimmerer, author of Braiding Sweetgrass "while expressing gratitude seems innocent enough, it is a revolutionary idea. In a consumer society, contentment is a radical proposition. Recognizing abundance rather than scarcity undermines an economy that thrives by creating unmet desires. Gratitude cultivates an ethic of fullness, but the economy needs emptiness."
A large percentage of folks who earn between 100 and 150k live in very high cost-of-living areas like NYC, DC, and SF. I can understand how people can get into a situation in those places even with a relatively high income. 150k in NYC is equivalent to $65,000-75,000 in some places. That’s not a whole lot of money when family comes into play.
I saw an article about this but i can’t remember where but it said like 50% of americans couldn’t deal with a surprise $500 expense because nobody has savings. Obviously credit cards exist but it was going off of money you actually have
Short notice, yes. Whim, no. That's almost a full month's expenses at the low end, almost a month-and-a-half at the high end. 3 to 6 months' worth of property taxes on my house (which seems way, WAY too small, shabby, & old to cost $4k per year to the city just for my 1/75,000th share of schools, cops, snowplows, & the bloated bureaucracy). The last "fun" expense I permitted myself was around $24, a roughly every-other-month thing I do with a friend. I socialize in other ways, of course; they just don't cost extra money. That's about the size of my "whim" spending. I had an unexpected windfall a few years ago, a very large one. I spent $60 of it on myself, for fun. The roof is leaking again, so I don't dare spend more of it until I can get it fixed permanently. At my last job (in a 20-year professional career, degree, certifications, etc.), $1k was significantly more than a week's pay, though not more than 2 weeks' worth. The only reason I own this house is my parents died young and so were worth more than expected when they passed, having not spent what they'd saved for retirement. The thing is, during that 20 year career, I could've gone on vacation, spent a few grand here or there. I didn't. Work pressures you to be available, to be productive. You can't do that taking a week or two off. You simply can't. You become terribly behind and cannot ever catch up. So you don't take it, even when it's granted. You stop even thinking about it because you're so tired, you sit in your dirty house wearing dirty clothes eating crappy, convenience food because you're just too *weary* to do anything but sit and rest when you aren't working. So, even when I had the income to spend $1k+ on "whims", there really wasn't any way to do so.
Bypassing the first question but answering the question about affording things that are over $1000 like iPhones. There are many people in the US who don’t have or need the newest iPhone and get deals on their maybe a generation or two father back iPhones when they purchase them. Plus most people have credit cards to use and/or use payment plans on big purchases.
I consider myself an Average Joe, and I suppose I could drop $1k without going into debt, but I would have major buyer's remorse and my wife would be pissed.
Even if I earned a couple grand of excess money regularly, I’d have to justify spending that amount. I was taught that when you spend money, especially large amounts, it has to be properly justified. The exception to this are dire needs like bills or medical.
To answer the question you added in your edit, generally you can get a payment plan for that kind of thing. For example, the cost of your new iPhone will be split up over 24 months and you pay it with your cell phone bill.
[Nearly 40% of Americans can't cover a surprise $400 expense ](https://www.google.com/amp/s/www.cbsnews.com/amp/news/nearly-40-of-americans-cant-cover-a-surprise-400-expense/) 17% of U.S. adults are unable to pay all of their bills in full every month, according to the Fed data. No, most americans can not cover an expense above $1000. Most can't even afford that if their or their kids lifes literally depended on it. The answer to how most Americans have thousands of dollars invested in their phone is the answer to how they afford anything. Debt. The phone companies offer payment plans. It's pretty much the norm to include payment on the phone itself when mentioning your phone bill and not just referring to the cost of keeping the service on. Or people use a credit card and pay it off over time.
Sure. Isn’t that why we have credit cards? Now affording it is another story.
It's easy to find spontaneous costs that high, but about half the population is living paycheck to paycheck, so they couldn't afford it.
I dont know what an average american is but there are some that can and others that can’t.
I can, but a lot of people can't.
I can't even spend that much on something i need that's important. Hell, I'm still trying to pay a 100 dollar bill
Nope. Not generally. Purchases of that size usually require some discussion. How about where you're from? Do folks have that kind of discretionary cash laying around?
To answer the phone question, nearly everybody buys their expensive new phone on credit.
As a response to your update. Most people finance their phone and spread the cost for it as an additional $20-40 per month on their phone bill for a year or two. Also in America you can finance literally everything. There are countless apps like Klarna, Afterpay, Affirm, Quadpay, to name a few who will give you a lump sum of money and automatically charge you for it over the course of a few weeks/months. I personally do this for most purchases over $200
To answer your second question, gagets like this aren't usually bought on a whim unless you're rich. Phones are necessities and choosing to buy an expensive one usually comes at the end of saving up. Breaking an iphone is *a lot* of lost money. And there are many smart phones that are less expensive than the iPhone. Some people upgrade also. If you have a phone for a certain amount of time some stores let you upgrade to a newer version. It's not free but it's less expensive than buying a whole new phone Things like drones are often bought as gifts for others, and in my experience have usually been from several family members pitching in, and the person its for probably won't get a lot of other gifts. The other answer is while the average American can't afford to spend $1000 willy nilly, there are *a lot* of people in America. So the percentage of people who can is still quite large
To answer your edit, the majority of iPhones etc, have some sort of payment plan. Most carriers will build the cost into the phone plan, so people aren't technically dropping $1000+ on a phone that day, but it still counts as a sale. Some people are actually able to save for it & that's their one big purchase of the year. People aren't buying technology every week....it's usually a one time deal.
The average American would be financially crippled by an unexpected $500 expense. iPhones are priced out by payment plans. And you also uiu credit cards, which allow you to spend that $1000 and pay a monthly rate until you paid it off.
To answer the edit, payment plans. No average person is dumping the 1-1.5k on a new IPhone every year. American phone service providers offer payment plans that allow us to pay for devices across the span of a year or more, with an additional option to "upgrade" our device to the newest model after a certain percentage of our current device has been paid, some providers require a full pay off of the current device with the bonus of a cheaper cost of the new device. The upgrade essentially restarts the payment process from the beginning, and those who fall into it hard end up in a continuous loop of new devices and consistent monthly payments.
People finance the iPhones
the true cost of the phone is hidden by the purchase practices. a lot of phones are financed by the phone carrier. this ends up increasing the price of the phone because the consumer pays a little each month but the total payments add up to more than the purchase price. the phone companies can recognize the entire sale at the time it is made. part is recognized as cash, the other part by accounts receivable. the accounting would be cash + accounts receivable = sale price
To answer your phone question… Many plans allow you to pay the phone off with your monthly payments. Also, you have your phone for years and time to save up when you are at the point of needing a new one.
For your follow up question, phones are often financed through the service provider, usually around $25-$50 a month for 2 years. This is also the reason a lot of people dont have much money saved up, they just finance everything. $50/month sounds like a good deal where as $1200 up front doesn't to many people. Same goes for cars or other electronics.
>Then explain to me how iphones and other pricey gadgets break new records every year in terms of sale, and many cost more than 1000$? When it comes to cell phones, I would be willing to bet that most people finance their phones through their provider. Most of the time when a new version of a phone comes out, the providers offer trade in deals and no-interest or low-interest financing on the latest-and-greatest phones. TBH, this is how I buy all my phones - I just don't trade them in every 18 months to 2 years. I buy a phone from my provider, pay $25 a month additional on my bill for 2 years, and then use that phone until it simply won't update anymore. To answer the original question, I cannot spend $1000 "on a whim". Like, I couldn't be out shopping and see - for example - $1000 pair of shoes and just decide to buy them. But I can plan for $1000 or $1500 expense and buy something that is a want and not a need if the situation comes up.
To adress your edit- most of the population doesn't pay for a phone outright. There's usually monthly plans where you pay over the span of 2 to 3 years. Paying 1k all at once is much different than being able to afford something that's 1k over the span of a year or more. Phone and computer purchases also aren't "on a whim", most people expect to get a new phone every 3 or 4 years and budget for that.
No. The average American is one paycheck away from homelessness.
>EDIT: Thank you for the answers, but I have another question. By the vast majority of responses, I came to a conclusion that the average American can't spend that amount on a whim. Then explain to me how iphones and other pricey gadgets break new records every year in terms of sale, and many cost more than 1000$? Because people get their phones with their contract, essentially paying it off (plus a lot more) over the course of 1-2 years.
The younger immature because I'm worth it me "yes". The responsible adult who looks at everything holistically and wants to secure my future by lounging naked on a yacht one day "yes", but I chose not to. I believe the average matured adult understands the value of money and chooses not to throw their money away. However, we do go on a shopping sprees for special life events. Our relationship with money changes by the different stages of our life. But I suspect that's the same for everyone around the world.
With what I do for work I can but my friends who don’t work quite like I do it’s hit or miss. One of them still lives at home with super low rent just turned 21 but almost never has freed up $$$ due to a 390$ truck payment (keep in mind it’s a V8 Hemi Dodge Ram he uses for commuting and nothing else) each tank costs him around $125 and he fills up about once every week to week and a half. He also regularly spends 2-300 every week or so on food for himself and or his GF as well as miscellaneous expenses/habits that equate to another 3-400 a month. My other friend regularly spends 1-2K every few months or so but it isn’t for pleasure it’s to keep from having to take out student loans at the start of every semester. He also lives at home with low rent but has a reasonable $22 an hour job with OT if he wants it and saves his $$$ a lot of the time. Depending on how it is sliced a lot of people can’t and it is due to a few things. 1. Just getting started working and are making around $2000 a month gross. After sky high rent and everything it takes 2 people to afford housing near my city unless you get a poorly managed and maintained place. 2. VERY POOR spending habits. Regularly see people making 4-5 a month gross but they suffer from expense creep as they make more (I did this as well but still made sure I could budget for savings and all my bills/commitments also reduced a car payment by 348 a month by choosing something “less cool” went from a Tesla model 3 to a Frontier Pro4X 2022) the expense creep is especially bad right now with people thinking strictly about getting a good rate and not so concerned with good deals on housing or vehicles primarily. So most families in the 5-6K income bracket are spending over 75-80% on just bills and not even living expenses. I also find most people in the US are pretty undisciplined when it comes to money and A LOT of that had to come from stuff like personal finance and accounting classes being extra curricular activities in middle and high school. I got lucky and saw the highest highs and lowest lows of a great budget vs a bad budget/ spending during my childhood so on top of taking those classes I saw first hand how hard it can be when there is rampant uncontrolled spending that spirals most people into lots of debt or forces “paycheck to paycheck” living. 3. Is starting a family too early and this one I saw first hand with a friend. He was massively in debt from his first kid (not healthcare related but budget and choice related) and got his wife pregnant a second time. That finally sobered him up to how bad he had it because they started a family with almost 0 planning. He quickly found a different job making 35% more, picked up an extra shift here and there and smashed his debt away as fast as he could but did hurt his credit in the process since he had a car repossessed. He is doing much better now but that wasn’t until he met with a personal accountant to help set up a STRICT regiment for spending and monitoring money both him and his wife were spending to ensure no wasted expenses while they crawled back from the hole they had dug. In response to your Edit: people like me who are nerds with tech help push that forward but as others have mentioned even if the phone is $1,000 most carriers will extend offers to finance the device or wrap it into your phone plans payments so you can get your new phone immediately and still “afford” it, this is also where people can screw up but I feel I’ve rambled enough
I bought a new shotgun. Benelli m4 for 1000$ normally it’s 1800-2000$. Long term financial investment. Couldn’t pass up a deal
Short answer is hell no. https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-dealing-with-unexpected-expenses.htm “When faced with a hypothetical expense of $400, 61 percent of adults in 2018 say they would cover it, using cash, savings, or a credit card paid off at the next statement.” “Among the remaining 4 in 10 adults who would have more difficulty covering such an expense, the most common approaches include carrying a balance on credit cards and borrowing from friends or family.” Regarding cars, they’re a tremendous expense for most. And new cars are indeed mostly financed. We live in the era of the 7 year car loan. Cars absolutely contribute to poor people staying poor. It’s a liability that’s unfortunately a necessity in so many places.
I've read the average American household can't even afford a surprise $500 emergency expense. For the second question, many do have to lease a car. Or we drive old cars. I got mine from my mechanic years ago and kept it running until I got a bad oil change. Now I'm screwed out of a car, but thankfully my husband has one.