Nearly Half of Americans Are ‘Financially Fragile

Nearly half of Americans say that they definitely or probably couldn’t come up with $2,000 in 30 days, according to new research, raising concerns about the financial fragility of many households.

Many Americans aren’t able to cope with an unexpected bill.
In a paper published by the National Bureau of Economic Research, Annamaria Lusardi of the George Washington School of Business, Daniel J. Schneider of Princeton University and Peter Tufano of Harvard Business School used data from the 2009 TNS Global Economic Crisis survey to document widespread financial weakness in the U.S. and other countries.

The survey asked a simple question, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable. The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair,” the authors write. On a more concrete basis, the authors cite $2,000 as the cost of an auto transmission replacement and research that reported low-income families claim to need about $1500 in savings for emergencies.

Financial fragility isn’t limited to low-income groups. “Households with socioeconomic markers of vulnerability (income, wealth, wealth losses, education, women, families with children) are more likely to be financially fragile, and substantially more so,” the authors write. “The more surprising finding is that a material fraction of seemingly ‘middle class’ Americans also judge themselves to be financially fragile, reflecting either a substantially weaker financial position than one would expect, or a very high level of anxiety or pessimism. Both are important in terms of behavior and for public policy.”

http://blogs.wsj.com/economics/2011/05/23/nearly-half-of-americans-are-financially-fragile/

Already maxed out, and the retirement savings have long been spent, you re screwed.

Unless you are bank of America, Goldman Sachs or any of the other Too Big To Fail crowd. Then you are like pigs in shit, thanks to Paulson/Bernanke/Geithner.

Disgusting

Peace,
Max

Most/(Nearly Half) are barely covering basic expenses and living paycheck to paycheck, and if they are lucky enough to have anything lefty over, they save if for unexpected emergency expenses.

Big screens and vacations are a thing of the past.

:shrug:

Maybe you've been in the same job for a dozen or more years, and haven't gotten a raise in half that time. Or maybe you're one of the many who've had to take a cut in pay. Maybe you've got a kid in college, and it seemed like a good idea a couple of years ago to go ahead and commit to some hefty loans, because after all, your kid is pretty smart, and a college education is a good investment, right?

And so now the kid decided to drop out, just six credits short of a diploma, or majored in something for which there's not a ready job.

Or your job got moved so that now you have to commute an hour each way, and even though you own a pretty fuel-efficient car, you're filling it twice a week. You don't smoke, you almost never eat out, only watch movies on broadcast TV, or maybe check out a DVD from the library.

Everyone else here can come up with some other scenarios that don't involve foolhardy choices, just an inability to have foreseen just how things would go.

Everyone in the middle and low income group, that is. Even those who are "insured'.