2006 Personal Savings at a 74 Year Low!!

[beeblebrox]

http://news.yahoo.com/s/ap/20070201/ap_on_bi_go_ec_fi/economy;_ylt=All8n..4js.Pk1PniMnGWeus0NUE;_ylu=X3o DMTA3OTB1amhuBHNlYwNtdHM-

I can't believe this considering that we talk about savings so much on the board.

[pisces2473]

Well, we're only a small part of the population.


And I know that I've had to charge necessities just because other necessities were more expensive than I had planned. A move, vet bills, gas prices going really high, etc.

[PenforPrez]

It's consumerism run amok. People need to learn to live within their means. Sadly, I don't think they will until it is forced upon them.

[pisces2473]

It's consumerism run amok. People need to learn to live within their means. Sadly, I don't think they will until it is forced upon them.
I don't think that's always the case, though. My PP says that. I am very good about not spending too much, but when bills come in, unexpectedly, that are more than my paycheck, what am I supposed to do? I'm sure I'm not the only one...

[wordsmith]

I know my saving is hindered mostly by shit wages, not overspending on frivolities. I doubt I'm alone.

[Syracuse]

It's consumerism run amok. People need to learn to live within their means. Sadly, I don't think they will until it is forced upon them.
Yeah I don't think people have changed that much. Just wages haven't increased as much as the cost of living has. Lot of different causes, mostly globalism.

[SmilesSoSweet]

I save all the time. I will use my credit card when I have an unexpected purchase, like the four new tires and rear brakes I recently had to buy.

But I pay it off with some of my savings within a month or two. I've managed to save about 10% of my annual income, but then again I'm very, very frugal.

[yankeeyosh]

While I think the number of "supersavers" is steadily increasing, I do think that the damage is done...there is far too much debt in this country, and while I can't pinpoint when, I suspect in the not too distant future, this will come back to haunt us.

For me, I really don't save as much as I should. I spend far too much on entertainment and rent, and while the second should be fixed soon, I like having fun, and don't want to give up the second. And I don't do really expensive things...I never go on vacation. Even a simple 'burger and beer in this town is sixteen dollars!

[PenforPrez]

While I think the number of "supersavers" is steadily increasing, I do think that the damage is done...there is far too much debt in this country, and while I can't pinpoint when, I suspect in the not too distant future, this will come back to haunt us.

I've been expecting that for a long time.

[slimjim]

This "number" is somewhat understated based on the "formula" used. It doesn't account for 401k, 403B, etc. So let's say you make $50,000 a year and put $15,000 into your 401k, pay $5,000 in taxes and spend the remaning $30,000 on living expenses and other stuff while not banking any of the remaining $30,000. You have infact saved 30% of your salary, however to the government, you have a personal savings rate of 0%.

[redav]

I can't believe this considering that we talk about savings so much on the board.
It's no different than dieting/nutrition/fitness. Everyone talks about it, but the majority of Americans are overweight.

[PenforPrez]

It's no different than dieting/nutrition/fitness. Everyone talks about it, but the majority of Americans are overweight.

I've noticed that too. They have all sorts of tips on the news and such about saving money on this and that, yet Americans constantly spend more and more. It cannot last.

Paul

[lostindc]

It's consumerism run amok. People need to learn to live within their means. Sadly, I don't think they will until it is forced upon them.

I think it is banking run amok. When companies offer 300K home loans for $656/month which people can use to "consoldate" all their other debts, it encourages overspending (whether it be for the price of a house, renovations, or daily CC purchases that can be rolled into the home loan). Heck just accepting this negative amortizing loan is negative saving.

It doesn't help that interest rates for savings accounts are really low and are taxed at your full marginal rate. Many banks offer less than 1% so there is little incentive to save.

Considering we live in a period of very high inflation for big ticket items (housing, health care, education) there is actually a very strong disincentive to save, since saving will actually reduce purchasing power for these big ticket items if these inflationary trends continue.

I also think too many people overspent their paper gains they saw from the housing boon which ironically just increased their housing costs because of higher taxes.

[PenforPrez]

Exactly. "The American Dream." Chasing material wealth and living lives of debt for the priviledge. People need to live more simply.

Paul

[dacrunkest]

I know a couple of people who have racked up serious credit card debt. Sometimes it is necessary because of life situations. Unfortunately, these people will be paying down that debt (or worse, maintaining it) for a long time. I wouldn't dare judge this behavior because, well, there but the grace of God go I...

However, I know some people that have racked up serious debt on needless stuff. Sometimes it is the result of bad habits/addictions: people who take cash against their credit cards to gamble, people who spend an exorbitant amount of money they don't have on they don't need. This is also very unfortunate, because these people have underlying problems that need to be solved before you even look at the debt...

[PenforPrez]

I know a couple of people who have racked up serious credit card debt. Sometimes it is necessary because of life situations. Unfortunately, these people will be paying down that debt (or worse, maintaining it) for a long time. I wouldn't dare judge this behavior because, well, there but the grace of God go I...

That's certainly true. Nobody can fault people stuck in such a situation. I'm talking about people in your second category.

However, I know some people that have racked up serious debt on needless stuff. Sometimes it is the result of bad habits/addictions: people who take cash against their credit cards to gamble, people who spend an exorbitant amount of money they don't have on they don't need. This is also very unfortunate, because these people have underlying problems that need to be solved before you even look at the debt...

Which I believe is endemic in our society.

Paul

[redav]

Here is another disturbing anti-savings trend: the housing boom lie.

Why do I call it a lie? Because we've been hearing about how homeowners have become more wealthy by tapping into the increased value of their homes as the market price goes up. However, there is no such thing. Unless the homeowner sells the house, "tapping into" that wealth is just borrowing money. It is no different than putting it on a credit card (aside from the lower interest rate & tax advantages).

If the homeowner sells the house, then what? He has to buy a new one, and guess what, they will have gone up just like his did. If he downsizes, again he has less than he had before. So, the only way to truly get at that money is sell & move to another place where housing is more affordable, but that generally means moving across the country or to a place less desirable/convenient. If he is lucky, he can find a place that is undervalued, but that gets into speculation, and we all know where that leads.

[nikorock28]

Here is another disturbing anti-savings trend: the housing boom lie.

Why do I call it a lie? Because we've been hearing about how homeowners have become more wealthy by tapping into the increased value of their homes as the market price goes up. However, there is no such thing. Unless the homeowner sells the house, "tapping into" that wealth is just borrowing money. It is no different than putting it on a credit card (aside from the lower interest rate & tax advantages).

If the homeowner sells the house, then what? He has to buy a new one, and guess what, they will have gone up just like his did. If he downsizes, again he has less than he had before. So, the only way to truly get at that money is sell & move to another place where housing is more affordable, but that generally means moving across the country or to a place less desirable/convenient. If he is lucky, he can find a place that is undervalued, but that gets into speculation, and we all know where that leads.

My parents sold in CA (where they lived for 30 yrs) and bought in AZ where houses are cheaper, though still higher than the median in the country. They are now considering relocating elsewhere to where houses are even cheaper. This is the only way to do it.

Excellent post redav. Taking money out of your house is never a good idea and is a surefire sign that you are living above your means.

[wordsmith]

Don't forget that the pay in many sectors for many Americans is such that you are by necessity living beyond your means simply to afford the basics. Living beyond your means to splurge on extras is obviously irresponsible, but when you're living beyond your means just to obtain the basics to care for yourself, your family, and meet your obligations, that's a completely different story.

[nikorock28]

Don't forget that the pay in many sectors for many Americans is such that you are by necessity living beyond your means simply to afford the basics. Living beyond your means to splurge on extras is obviously irresponsible, but when you're living beyond your means just to obtain the basics to care for yourself, your family, and meet your obligations, that's a completely different story.

I agree. Many people just do not make enough and have to take money out of their house, which is a better than option than credit cards.

[wordsmith]

It still sucks, when wages are such that working people still can't meet their families' basic needs without overextending.

[nikorock28]

Yes, it does. This is one reason why people are delaying having families.

[wordsmith]

Yes, it does. This is one reason why people are delaying having families.

I could delay all I want, my salary's still not going up unless I quit my job and get another one.