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Why Most Of Us Don’t Have Two Nickels To Rub Together

personal savings rateWe don’t have any savings because we’re paying for yesterday using tomorrow’s money. Let’s get off the roller-coaster.

BankRate releases a study telling us that 27% of people surveyed have no savings whatsoever.  In other words, one missed paycheck – or even a check that’s slightly short of what’s expected – can throw you into a financial death spiral.

The study, of course, is all hype and very little substance. After all, the survey included a mere 1,000 people.

You can find more than 1,000 people in a Costco on a Saturday afternoon.

I think a wider audience would reveal far worse numbers.

Too Much Money Goes Out The Door

Our national savings rate is in the toilet, largely because we’ve been struggling with huge unemployment figures for the past five years. The government doesn’t count people who have simply given up on looking for work, but if it did then I wouldn’t be shocked to find out that 25% or more of able-bodied adults were out of work for a chunk of that time period.

Our debts are enormous. Student loans come in at more than $1 trillion.  Mortgage payments eat a huge chunk of our take-home income. Car loans and credit card payments leave us with a pittance to sock away for the proverbial rainy day.

The cost of health care is laughable. Until recently we were covered under COBRA through my wife’s former employer, and my heart stopped every time I had to write a check.  To say nothing of the copayments and deductibles. One sniffle and most people are in deep trouble.

Forces Conspire Against Us

We’re all living longer now than at any other time in the history of humanity.

Social Security was created with an actuarial table that’s now completely useless, which means the system isn’t going to provide us with the safety net we were originally promised.

Banks charge interest at rates far above the rate at which they borrow money, which enables them to profit from the spread in ways that would make a loan shark sweat.

Mortgage lenders are caught cheating the system at every turn.

The cost of education outstrips starting salaries by ever-greater amounts each year, yet we’re continually sold on the notion that higher education is a ticket out of poverty for our children.

Don’t Think You’re Alone

Your neighbor’s driving around a brand-new car and talking about that kitchen renovation. It doesn’t make him or her wealthier than you – remember, fewer than 25% of people in this country have enough money in their savings account to cover at least six months of expenses. 50% have less than a three-month cushion and 27% have no savings at all.

That car’s financed to the hilt, and the only way that renovation is happening is if the refinance comes through.

Mr. Moneybags down the block is strangling himself. And if you believe anything different, you’re fooling yourself.

You Need To Find Your Own Better Way

You’re on a treadmill, running continuously yet going nowhere.

It’s time to sit down, assess your financial situation, and resolve it in a way that’s best for you – not the banks or the nameless, faceless, “them.”

Can’t pay your debts without starving yourself? Look into bankruptcy.

Mortgage strangling you? Sell the house, take whatever equity you’ve got, and move to a place you can afford without forgetting your long-term savings.

Your neighbor’s got a more expensive car or a bigger house? That makes your neighbor an idiot who measures his or her self-worth by trying to outshine everyone else on the block.

Worried about the impact on your credit score? Does a high credit score put food on the table and medicine in the cabinet?

Someday, you won’t be nearly this young or quick. Your body will slow down, and you’ll want to spend some time enjoying what time you’ve got left on this earth.

Do it in poverty or wake up and take some action. Your choice.

Image credit:  theilr

By |June 27th, 2013|

About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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