CNN: The zero-savings problem ("saving rate at zero - that's right, nada")

[DeepModem Mom]

The zero-savings problem
Some savings measures show households are flush, but consumers are spending every dime they make.
August 2, 2005
By Chris Isidore, CNN/Money senior writer


NEW YORK (CNN/Money) - The savings of U.S. consumers are:

a) at the lowest rate since the Depression.

b) at peaks not seen even during the stock market boom of the late 1990s.

c) all of the above.

If you're wondering how "all of the above" could be the correct answer -- and it is -- walk outside your front door and look around.

Even as a government report Tuesday showed the national savings rate at zero -- that's right nada -- the rise in the value of homes has given the average U.S. household a net worth of greater than $400,000, according to a separate report from the Federal Reserve.

Household real estate assets have risen by just over two-thirds since 1999, and the run up has enabled consumers to spend more money than they are bringing home in their paychecks. They're viewing their homes almost like ATM machines, using home equity loans and refinancings to pull out cash and support a higher level of spending....


http://money.cnn.com/2005/08/02/news/economy/savings/index.htm?cnn=yes

[Art_from_Ark]

1. Tulips! Get your tulips here!

Get 'em while they're hot!

[PurityOfEssence]

4. Ya got that right.

We'll fall apart just like the Dutch did, too. They screwed themselves up so thoroughly most people don't even know what a powerhouse they once were.

It's things like this that get me involved in inane threads where people are insulting others for saying that history repeats itself.

Another crazy measure is the types of vehicles people drive; you just know they're struggling with whopper payments and certainly didn't actually BUY the damned things.

Sigh.

[Sub Atomic]

6. funny you should mention the vehicles they drive.

http://www.livescience.com/humanbiology/050802_masculinity.html

[osaMABUSh]

8. I drive a Honda Civic and don't even like war movies

[raccoon]

17. But look at them now

"They screwed themselves up so thoroughly most people don't even know what a powerhouse they once were."

Wish the US was like Holland is today.

In my dreams. Or long after I'm gone.

[1932]

27. Good point. Article says one of two ways people finance deficit spending

is by selling assets. Well, with so many people leasing cars, you know that your car isn't one of the assets people have to sell.

[girl gone mad]

49. Don't even get me started on cars.

I think that's one of the worst things you can spend money on, especially if you are leasing or take out a loan.

I'm having some work done on my house and thinking of a kitchen renovation, which we can afford to do because I drive a reliable used car that I paid about 3k cash for.

[MissB]

54. 2 cars, both cash.

Neither is an SUV nor a Mercedes (nor a Mercedes SUV). But they work and they are easy on the pocketbook.

[ninkasi]

56. We have 2 vehicles

Both are paid for. One is 91, the other is 96. We will drive them til they are no longer driveable, but the 91, since we try to limit trips, has fewer than 17,000 miles on it, and I bought it brand new.

[Dora]

68. I don't understand.

What happened to the Dutch?

[Changenow]

32. I have a Princess Di beanie, third edition

for sale for a good price.

[Lisa]

37. at least you can eat the bulbs if things get really bad

Big shiny SUVs are far less digestible.

[high density]

2. I've been able to save some money for when I find a new job

and need to relocate. Living with my parents helps a lot. ;) The funny thing about the whole situation is that I can't find another job.

[1932]

3. The article says retirement savings are counted as savings even though

the money isn't available (without tax penalty). So a person with a zero savings rate who puts 10% of their income into a 401k is acutally spending 10% more than they make, and going into debt or liquidating assets to do so.

[pitohui]

30. no you are misunderstanding

the 401(K) is deferred income which goes directly into the tax-protected retirement acct

had the person taken the money in salary instead of using the 401(K) it would be immediately taxed at their highest marginal income tax rate

so they might be signed up to save 10 % of income but they never would have gotten the full 10 % of that money if they hadn't

in addition most companies have a partial and a few have a full matching program, for instance, the first 3 % might be instantly matched by another 3 % bonus from your co.

further your 401(K) is safe from bankruptcy and lawsuits in most situations, whereas you would lose your regular savings account to creditors in a bankruptcy or lawsuit

tho the 401(K) has the inconvenience of being illiquid, the fact that it is more difficult to touch actually makes it the better savings vehicle

quite right to include it in yr net worth calculation, if you ever get sued, it may be the only thing you walk away with

[1932]

48. Check the article.

I understand how 401(k)s work. The point in the article is still important. If the savings rate is zero, and 401(k) investments are counted as savings even though you can't access them without penalty, then one of the places people keep their money that keeps them in the black is something that isn't liquid and is supposed to pay for your retirement.

It also means that many people are actually spending more than they make than the number first suggests.

Oh, and don't forget that a 401(k) isn't a totally safe investment. Even if you have 1:1 matching, if the investment goes below 50%, you loose money.

If people are putting 401(k) money into an investment that has returns that are better than the interest rate at which they're financing their debt, then they'd be better off not putting money into the 401(k) (after tax considerations) and using it to try to stay out of debt.

[pitohui]

76. interest rates are low

i guess i don't understand yr point

the 401(K) and the house are much better investments than a savings acct paying 3.15% or paying off a credit card which goes for months with a 0 % interest

i literally get several offers a week to transfer my credit card balances to 0% accts for 6 mos, 12 mos, 18 mos

i have not paid interest on a credit card balance in over a decade

so what kind of idiot would you have to be to deprive yourself of buying a home or funding a 401(K) to pay off the credit card balance?

people are making pretty good financial decisions if they've got an average net worth of $400K in this tough economy, sounds like smart cookies out there to me

[1932]

84. I don't think it's investor intelligence that is making home prices rise.

I think the Bush administration is making a conscious effort to ensure that home prices rise so that people feel rich enough to consume without corporations having to pay higher wages in order to encourage consumer spending.

Furthermore, I'm not sure how much people are benefitting from those home price rises since, if you lock in your gains (sell your house) you're left having either to rent or buy again into an inflated market, which makes that gain ephemeral. Furthermore, in addition to those who are financing deficit spending based on the possible illusion of having built-up equity (if values fall) there are those who are actually taking out that equity through second and third mortgages, and they're paying interest on that debt in addition to taking the risk that their homes might decrease in value, meaning they'll ultimately have to pay back their indebtedness out of stagnating wages.

[fortyfeetunder]

5. The bling culture

There is this pervasive need to have bling- instant gratification of material items instead of disciplined saving for the future and unforseen events.

Stay tuned for the collapse of the Murkan economy....

[KT2000]

7. Greenspan!

besides the spending, interest rates for savings pushed people into the stock market where they can make their periodic sweeps.
Part of the plan.

But I have to say that people really do have a lot of crap and think of themselves as deprived if they don't have what they want.

[Hekate]

9. Wow. Imagine what all these folks could do with...

...the money they won't have to pay into Social Security!! No doubt some wise investments on Wall Street, right?

Or not. With their houses mortgaged and refinanced to the eaves, they won't even have a home to call their own when they retire, or get outsourced and laid off. If they can afford to retire.

Very scary.

Hekate

[aint_no_life_nowhere]

10. Somehow, the government gets away with saying there's no inflation

Yet real estate, which is the primary engine driving consumer spending and debt financing (home equity borrowing as an ATM machine) has seen absolutely astronimical inflation. It seems almost all of the inflation is in one type of item, the family home.

[WannaJumpMyScooter]

16. It is not inflation if they don't devalue the currency

that is where they hold the cards on that one.

A mere techncality.

[applegrove]

11. Neocons like it because it means that banks are not holding back that

10 % they have to hold back by law. Perpetual markets & perpetual war. What a pretty picture.

[kodi]

12. if people begin saving then companies will not make their profits

Remember Bush told America to go out and shop.

Classical political thought says that the purpose of government is to do justice for its citizens. Part of this obligation is to foster conditions in which wealth is produced. The obligation is not met by substituting the wealth-producer for the government.

[teryang]

13. It's okay to be illiquid when credit markets are too easy

When they tighten up and they will, there will be a "super recession."

[sadiesworld]

14. An average U.S. household net worth of $400K+?

Thankfully, the presence of Bill Gates, et al, makes this stat technically accurate. :eyes:

Shameless.

[sendero]

15. Exactly....

.... there are lies, damned lies, and statistics.

[central scrutinizer]

44. in this case, the wrong statistic

this kind of data is obviously strongly skewed, so they should report the median, not the mean

[FreeStateDemocrat]

78. Median in 2002 from one source is 59, 706(adj), anyone have a later no.?

The median net worth in dollars of white, black and Hispanic households in 1996 and 2002, adjusted for inflation, and the percent change between those years, according to an analysis of Census Bureau data by the Pew Hispanic Center. Figures for whites and blacks refer to those not of Hispanic ethnicity:

Category 1996 2002 (%)
Hispanic 6,961 7,932 14.0
Black 7,135 5,988 -16.1
White 75,482 86,651 17.4
All households 53,160 59,706 12.2
Source: Pew Hispanic Center.

I read in another article dated 1995 that the bottom 30% had a zero net worth so Gates should be easily wealthier than that huge group of about 90,000,000 plus Americans combined. We sure need to eliminate the estate tax to keep it fair.

[FreeStateDemocrat]

81. The median net worth of all U.S. households is $100,894 - Aug. 20, 2004

Nearly 31 percent of U.S. households have a net worth below $25,000, according to market research firm Claritas. Of those, nearly 11 percent have a negative net worth.
The median net worth of all U.S. households, meanwhile, is $100,894, meaning half of all homes have less.
On the high end, only 11.4 percent of U.S. households have a net worth of $500,000 or more.
of credit. I hope someone come up with better numbers I am interested in what the supposed reality actually may be?

[architect359]

20. And on top of that...

...you have housing markets in places like the San Francisco region, for example, where a "fixer-upper" is already in same extreme cases to be in the 300K to 400K range. With figures like this, no wonder the mean gets skewed.

[endarkenment]

65. Most of that is inflated real estate value

You cannot spend your house (you can extract equity of coruse, but then you have to pay it back with interest.)

When I figure out when I am going to be able to retire I ignore real estate value. (The answer of course is always 'never' :-)

[Coventina]

18. Can someone please explain to me how it works

Let's say a family bought a house for $200,000 two years ago. They paid 20% down, so that means they mortgaged $160,000. Since then they've paid, what? Another $10,000 against the principle? So they still owe $150,000. But now their house is worth $400,000.

How does that make their "net worth" $400,000????

They OWE money on the house. They are NEGATIVE. If they sold their house, sure, they would come away with cash, but they would have to plug it right back into another house!!!

I just don't see these soaring property values as being a benefit to the average family, who actually needs a place to live! :shrug:

[pitohui]

28. i can explain

net worth is easy calculation, assets minus liabilities

the couple in yr example has a net worth of $400K (the asset) - $150K (the loan) for a total net worth of $250K

so they're below the average yet they're doing pretty well and there is a one-time exclusion on the profits from sale of their home, so they can sell their home at retirement, down-size to a cheaper home or area, and pocket the difference cash-free

a savings acct, you pay taxes on your gain, the interest paid, ea. yr

clearly the intelligent investor will concentrate on the tax-free investment with greatest appreciation first

in an emergency, the home-owner can take a home equity loan and also receive some tax benefits while paying off the loan over time

americans aren't stupid, they are doing what their accountants tell them makes sense to provide for the future

i fear for the renters, when they're old and can't work, what are they going to have, their expenses (rent) will continue to grow in retirement while the home-owner who down-sizes will actually lower expenses and have more $$$ in pocket

in addition to their home, many americans in the property-owning class would also have a 401(K) or other retirement savings acct, not included in this study

i would say an average net worth of $400K is not far off -- certainly not for the home-owner over 40

the liability for a $30K auto and a $350 TV set is not going to wipe out the owner of a home in a good location that continues to increase in value

[Moondog]

38. The one time exclusion

of the profits on the sale of your home has been changed as of a few years ago. Now you can do this every two years, assuming that it is your principal residence, and you've actually lived in it for those two years.

Although I didn't plan it this way, the way it has worked out, I've done it twice in the past few years, and I'm getting ready to do it again. Left the DC area in early '01, sold my house, and moved to FL. Bought a house here. The area I moved to then got "discovered", crowded, and prices went way up. So I sold in early '03, and moved to another area in FL which hadn't been discovered yet. Unfortunately, the same thing has happened - it has also gotten "discovered" and prices have shot way up since I bought.

So I'm going to do it again. And since I'm getting really tired of the fundies that currently run the politics of this state, and getting a job is not an issue, when I sell this time I'm moving back to a blue state.

Anyway, you can do this every two years, and pull the extra money out tax-free, assuming that you can make the math work for you and not against you. Thus far, I've been lucky enough to make out quite well each time. Even though all I was trying to do was to find a relatively pleasant place to live.

[pitohui]

40. even better!

thank you for correcting my error

[snippy]

55. 401k contributions are included in the BEA calculation of the savings rate

In determining the national savings rate, all income, including employer contributions to retiremment plans and the employer's share of Social Security taxes are counted as personal income. The savings rate is equal to personal income minus personal expenditures. However, unrealized gains are not included in personal income.

[ElsewheresDaughter]

19. NO the bank owns most of those homes until mortage is paid....

what a bogus report

[SOS]

33. Add to that

an asset isn't "wealth" until it's sold.
It's a figure on a piece of paper.
The homeowner must sell the property to realize his gain.
People can't pay their bills with a property assesment.

[pitohui]

42. not true at all

when you are older you can get a reverse mortgage and thus remain in your home while getting a monthly check, the bank does not get your home until you die

even if you sell your home, you can sell it with usufruct -- the right to live in the home until you die -- a friend of mine just did that, she's 67, her cousin died at age 102, so she could be living in the home rent-free for a very long time

younger people have the option of being able to work, in an emergency, if their home has appreciated greatly in value, they can get a low interest home equity loan, which they can pay back over time

so you see you can still live in your home and still get cash if need be without losing your home

too much negativity and panic here

a home is the better investment than the savings acct so people, not being complete fools, prefer to invest in the home

[UncleSepp]

57. Just bought a co-op unit, first home, on the same logic

It seemed to me a better use of money than paying rent or sticking the money in the bank, and much better than stocks. However, I didn't go with the biggest mortgage I could get, and end up with House-Zilla. The place is a modest studio in a neighborhood I like a lot, and the monthly cost of ownership is about 15% of my gross monthly income. This is good - if I lost my job tomorrow, I would be screwed for a little while, but I could keep my home with a job making half as much and still be within a good percentage of housing expense to income.

Barring that kind of problem, my idea with that was that I can then also save about 20% of my income for a year, so that I will have a year's worth of mortgage payments, utilities, and food saved up. That way, if I lost my job or decided to walk away from it before it kills me, I'll have a place to live and food money.

If I still have my current job after I've got a year's worth of payments socked away, my plan is to first double, then triple the mortgage payments. I will pay the place off early and take a job that's less stressful, and finally get my life back. I don't want a McMansion. I want to live.

[leftchick]

21. Spendthrift nation

http://news.yahoo.com/s/csm/20050803/ts_csm/asavings;_


NEW YORK - Americans have stopped saving for a rainy day.
Instead, they are living paycheck to paycheck, depending on credit cards to get them through emergencies, and hoping that the rising value of their homes will give them a retirement nest egg.

This personal economic chasm is showing up in the national savings rate, which has been declining for years. Tuesday, the Commerce Department reported that the personal savings rate fell to zero in June, the lowest since a one-month buying binge in the aftermath of the 9/11 attacks. The United States is on track to record a savings rate for the year below 1 percent, which would be the lowest since the depths of the Great Depression, when the rate turned negative.

The nation's paucity of savings is raising alarms from the Federal Reserve to consumer watchdogs who worry that the nation is counting on foreign savings to maintain a spendthrift lifestyle. Some groups are cranking up advertising campaigns to try to remind Americans that they don't need to participate in every sale.

And there are now high-level suggestions that the tax system needs to be changed to encourage savings instead of spending.

"In two generations it seems that we've lost the culture and habit of savings," says Nancy Register, of the Consumer Federation of America. "There's so much marketing pressure to spend and buy and have instant gratification. And if you can't buy it now, put it on your credit card."

[livetohike]

22. I blame Bush

he is the one that encourages spending. Remember his advice after 9/11 for everyone to go shopping :eyes:

[catmandu57]

23. I wanted to open a savings account

but the rate on a savings account was 0.90, hell I'd almost have to pay the bank, so I'll just keep stuffing the mattress.

[pitohui]

26. 3.15 % interest rate on savings

ing direct has a good savings account program w. fdic protection and a competitive interest rate

excellent for short-term savings, avoids having to tie up the money in a 3 mo. or 6 mo. CD

[SteppingRazor]

24. Nationalize the credit card industry...

Then forgive the debt of the poorest 33% of the nation :)

[redqueen]

36. I like the way you think.

:hi:

[SteppingRazor]

25. But seriously folks...

Calls for socialization of credit cards aside, how the hell do you expect my generation (the under 30 crowd) to save when real wages have remained stagnant for decades while prices have continued to rise? It is IMPOSSIBLE in this day and age to buy a house and support a family on one income, and extremely difficult on two. So don't blame us for having "no discipline." You try, and you try, and you try, and you just can't seem to save a damn penny.

[pitohui]

29. this is the core problem

the issue is wages

we have too much downward pressure on wages, such as tolerance of illegal immigration, the collapse of the influence of the unions, too many people chasing too few good jobs

people aren't willing to support strong medicine to support wages, such as a hike in minimum wage, strong penalties for hiring illegal immigrants, stronger border enforcement, strong penalties for outsourcing, an end to prison work for pennies on the dollar, and so on

[endarkenment]

72. illegal immigrants are not stealing good jobs at high pay.

They are performing the functions that they have always performed: they are picking the crops, cleaning the homes, caring for the kids, and generally doing all the work that their predecessors won't do.

The downward pressure on wages is primarily a consequence of globalization, not immigration legal or otherwise.

[pitohui]

75. sure they are

i remember when lawn care was a skill performed by, in some cases, well-compensated japanese gardeners w. great knowledge of landscaping and horticulture

who does the work and at what price now, sure, you don't get any knowledge, but hey at least it's cheaper

construction was a good job for high pay

now construction crews in my area are illegals from mexico and guatemala getting a fraction of the pay

no use denying that skilled, high-paying jobs have disappeared because of illegal immigration, i just named 2 examples off the top of my head that we all encounter every day!

[LisaM]

39. You don't have to buy a house

owning a house is a privilege. It's not a right.

[tjdee]

60. Back in the 50s, men were buying houses for their families....

and their wives didn't work. Today, that scenario is nearly impossible.

[mccoyn]

82. This has always puzzeled me.

Americans are spending twice the work hours (per capita) and getting the same thing in return. I don't think we are twice as wealthy as the we were in the 50s.

This observeration really makes me question whether a free market is capable of finding an optimal distribution of work and goods.

[Dora]

69. No, but

We should be able to have the choice to buy a house, and not have that choice be dependent upon whether we earn more than $50,000 a year.

[hatrack]

47. Especially when Rick Sphinctorum tells us women shouldn't work

What freaking wife-beating, adulterer-stoning culture is he pretending to represent?

[sendero]

59. I hate to be a wet blanket..

.... but I don't agree.

The key to financial security (a chance for it at least) is to spend less than you make.

Americans by and large are simply unwilling to do it. Sure, if you have 3 kids and make $7 an hour - you are not going to be able to save a dime. But it can be done, I did it making jack shit wages when I was starting out. Americans just feel entitled to a nice car, a nice house, nice everything.

Most Americans simply want more in material possessions than their income will support. I work in a business that shows me this day after day - people trying to buy $10K cars when they should be buying $3K cars. The problem of savings is not just with people making $20K a year, it is everywhere. We live in a culture of debt, and most Americans seem to like working every day to pay for shit they've already got.

That's stupid, and it, along with short-sighted economic policies of our government, is ruining the country.

[shrike]

66. No offense, but how long has it been since you "first started out?"

I hear what you're saying -- in the 70s and maybe early 80s it was quite possible for people with low wages to get ahead if they were careful.

But plenty of people who make $7 an hour are now living in communities where rent is $800 a month, or higher. Add to that the fact that many low-paying jobs no longer offer health insurance. So, the low-wage earner must either buy health insurance (good luck) or pay out-of-pocket.

Finally, most cities do not offer their residents public transportation. And even those who drive an old junker must pony up for high gas prices. And higher food prices, especially for the nutritional stuff.

I hear a lot of Right-wingers complain about poor people who nonetheless have cable. Well, even the thrifty soul who gets rid of cable won't be doing him or herself much good. Granted, it will give you a few more bucks for food or gas, which is important. But it won't get you a nicer place to live or health insurance. I can see why some folks would rather spend their money on cable channels so they can at least escape from their lives for a few hours a day.

I am financially comfortable (though not wealthy) at this point in my life, but I have been poor and it is not fun. Meanwhile, wages have not gone up and the price of everything else has. There are plenty of people who make very bad choices. But once you get in that hole, it's very difficult to get out. Trust me, I've been there. And I had help, plus some advantages given to me because I happened to have a middle-class background.

[sendero]

67. My point is simpler than that..

... yes, I did "come of age" in the 80s. It was easier then.

But this is not just a problem with people making $20K or $30K a year. This is a problem with folks making 40, 50, $60K +. They are not saving any money. Every dime they make, they spend.

They borrow for everything they own, car, entertainment, clothes, restaurants. They look at their expenditures in terms of "can I make the payment", not in terms of "am I getting value for my money, interest considered" or in terms of "if I save up and pay cash for this, it will cost a lot less". They lease their cars being easily sold on the myth that it is a good long-term deal for them to.

I understand some folks have medical expenses or other factors that make it impossible to save. But mostly, it is pure inability to delay gratification, one of the basic building blocks of "emotional intelligence", which Americans just lack in droves.

[shrike]

77. While I can't argue with that

There is a world of difference between the guy working two jobs paying $7 an hour and the guy earning $50K a year who just can't stop buying stuff. Two separate issues, I think.

[sendero]

80. On that..

... I agree totally. And no doubt - there are a lot more of those $7 an hour folks than there used to be :(

[FreeStateDemocrat]

85. Use to be start at bottom & workup now most dead end jobs w/o hope.

[pitohui]

70. where do you find $3K cars?

routine maintenance is $500 these days, a set of new tires $300

in reality a $3K car and a $10K car cost the same

[sendero]

83. I'm in the car business..

... and I have to disagree with you completely.

When you buy a 3K car (and I sell them all the time), the depreciation is already pretty much gone. When you buy a 10K car, the first year you own it it depreciates 2-3K.

Even with maintenance, there is no comparison total cost wise.

My daily driver is a car I bought for $2500. I've put a thermostat and and set of tires on it in the year+ I've had it.

People like to make excuses to get a nicer car. Like folks who lease and actually buy into the idea that they are doing the economically savvy thing. No, if you are leasing, you are paying rent. Just like a house, it is better to buy than to rent.

[zipplewrath]

79. No, but it's hard

It requires a bunch of decisions that aren't gonna be fun.

1) Ya gotta work where you income makes it appropriate. I mean GEOGRAPHICALLY as in a particular part of the country.

2) You have to avoid debt like the plague. Unfortunately, folks are coming out of college with loans that look like mortages.

3) You have to lower expectations for a long time. No broadband,
no cell phone, no extensive cable tv package with premium services, none of the fun stuff until you've got some savings and you can pay cash.

4) Gotta cook and buy food in bulk. No buying prepared meals or "just open and serve" kinda stuff.

It can take a good 5 years before you're feeling like you're getting ahead at all, and all manner of things can set you back bad. Rising wages would help ALOT.

[wrlwnd]

31. No incentive

Just as good keeping it under the mattress. Heck after bank fees might actually be better keeping it under the mattress.

[pitohui]

41. what bank fees?

these days banks pay you to open new accts

i've received hundreds in dollars over the past few years as bonuses for opening savings and checking accts


we've left the old clock radio way behind

[jbnow]

52. I don't know where you are or

how much you deposit but around here without a minimum balance of 1 or 2 thousand there are often fees for a checking or savings account. There are some exceptions...some banks make it free if you have direct deposit, some let minors have a free account if there parents have a good enough account. Some don't.

I learned this when I tried to help some clients set up savings accounts. They were too poor to have free accounts, let alone get any interest! The ones we found were too far away for people who took the bus to easily get too.

[pitohui]

71. a well-off neighborhood in the southeast

free checking acct offers all over the place, minimum to open the acct $100, i've received bonuses as high as $75

if you can be paid by direct deposit, you should definitely hold out for a bonus of at least $50 to open a new acct w. $100 min. balance

some of these are chains, i was unaware the offers unavailable in poorer 'hoods

it costs too much to be poor in more ways than one, i guess

[Megahurtz]

87. Might even be safer too,

that way you can just take it and run when the shit hits the fan.

[Lorien]

34. No savings here: medical bills wiped me out

I had $80,000 in the bank at age 30, when Clinton was President.

A few life threating medical conditions and the Bush economy later, and that now stands at -$14,000. x(

[midnight armadillo]

35. I save 12.5%

If you cound the credit card money I'm paying out (will be paid off, end of '06. Oy vey.) my savings rate is 28%, not bad, eh?

edit: oops, forgot 3% a month into a 401k, plus company kicks in 5-7% of salary at year's end into that too.

[Historic NY]

43. I'm a saver......I will not spend unless I have the money to back it up.

I own my home free & clear probably worth 300k, a revolving home equity of a modest 30k that I use to do things around the house or to pay of my vehicle. I owe about 11k on the loan which I used to build a new 2 car garage. I will have an expense of about 25k to pay off an estate debt. I just got my first pension check today and after taxes, excluding SS, medicare, etc. I only loss 2oo dollars of my former take home salary. Workmans Comp owes me 425 per week so eventually in the end I should have a net gain on my disability pension. I find it more comforting to know that I have some savings to tap, if only we got some decent interest I'd be happy.

[progressivebydesign]

45. Not sure how they figure that. I know plenty of people with actual savings

Do the ones in debt cancel them out? Because I know a lot of people with nice savings... or perhaps more and more people have their money invested, rather than sitting earning crappy interest rates in savings accounts.

I mean.. who really gives a fuck? Obviously Americans are more interested in Bo from American Idol breaking his foot.. and whether Jennifer Aniston knew about Brad and Angelina. The fact that jobs are going to India and China, and that companies are cutting more people every day to the tune of thousands per month, means nothing to them, apparently, as they keep electing these corporate crooks into office cuz.. who knows. They're stupid basically.

[zara]

46. Americans stock up to save more!

A great cartoon I saw.
To ladies in a department store:
Caption "Who says Americans don't save! I purchased four and saved an additional 35%" or something like that.
How true.

[olddad56]

53. What if it turns out that the wise people are the ones....

who are taking money out of their homes for swimming pools and SUV's and remodels. The housing bubble may never burst, the money bubble could easily break first. If the money bubble Bursts, the dollar becomes more and more worthless.Maybe three years from now, that new car will cost three times as many worthless US dollars. Maybe the smart people are the one's who are up to their eye balls in debt and will be servicing their debt with extremely cheap dollars. It could happen. In fact it is already happening. How many of todays dollars does it cost to fill your gas tank? The value of the dollar has declined over 30% since 2002.

[pitohui]

73. yes it happened in the late 70s also

during inflationary periods you must spend $$$ before they lose value

people investing in their homes are not stupid

[zara]

86. smart posts--but the mania contributes to the inflation, no?

Its a societal madness. Consumerism run rampant.

[Daphne08]

50. Oh, I thought the tax cuts were supposed to help our economy!

Save? Who the frick can save any EXTRA money these days? We pay our own damn health insurance which is so high it eats up almost everything. Our car insurance takes the rest, and we rarely dine out or spend money for anything except necessities.

We used to be able to save. :grr:

[olddad56]

51. The tax cuts have helped, they have helped the rich get richer.....

exactly as Al Gore pointed out in the debates with Bush prior to the 2000 election. Bushed just smirked and called Al's response, 'fuzzy math', Well, things are defintely getting 'fuzzy' for the people in the middle and at the bottom.

[UncleSepp]

58. Less in savings, less money to loan

If I understand it correctly, that's why this is a problem. If people would put their money into savings, the banks would have more resources available for loans. I know it affects the money supply, too, but I'm too foggy-headed at the moment to work it all out.

[loftycity]

61. The Federal Reserve is a private bank it is not part of the US Government

Private banks and investors control the Fed. They control the flow of money and what it is going to cost the American people. The government has no control over the Fed.

All of our problems stem from this.

http://www.themoneymasters.com/presiden.htm

Despite these warnings, Woodrow Wilson signed the 1913 Federal Reserve Act. A few years later he wrote: I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men. -Woodrow Wilson
:think:

[mbperrin]

62. Hey, what's the problem? I'll

just go borrow $100,000 and stick it in the bank.

NOW I'm a saver!! :crazy:

Actually, you would be crazy to save in the actual runaway inflation we have now.

1 year ago - gallon of mile $2.89; yesterday $4.75
1 year ago - 7/16" osb plywood $6.99, last week $13.99
1 year ago - electricity 8 cents per kwh; yesterday 10 cents
1 year ago - gasoline $1.38, today $2.29
1 year ago - property taxes $300 per month; this year, $410 per month
1 year ago - New York strip steak and trimmings $10.99, last week $15.99

Now the Fed can take their hokey numbers and shove them. You'd be a fool to put money up which depreciates at 30-50% per year, which is what it feels like from here, and must feel like to others, since they have quite rationally stopped saving..

[pitohui]

74. of course people are not stupid

i'm still bitter about the run-up in price of OSB, they say it's because it went to iraq, supply and demand, i dunno, but the cost of building a replacement home is now through the roof, so of course homes should be valued at higher prices

$$$ loses value sitting in the bank, better to buy a large property and have a tangible asset to fall back on or borrow against in case of emergency

i see people w/out property complaining that people w/ property are idiots sure to lose their rear ends in the supposed bubble, smells like sour grapes to me

no bubble in texas, louisiana, arkansas, i'm guessing much of the midwest

no new coastline being invented in new york, new jersey, california, florida either, so i'd be suspicious of bubble claims for those areas, despite high prices

i am no real estate broker but i strongly encourage young people to take on debt if they must to secure a home and an education, some debt is good and will save your rear end in later life

[Seabiscuit]

63. During the next decade there will be a record number of bankruptcies,

as those who keep borrowing against their home equity go deeper and deeper into debt and then hit a wall - they effectively exhaust their home equity and begin defaulting on credit loans. They lose their homes, go belly up, and land flat on their asses on the streets.

What's to blame? Super liberal lending policies that take advantage of consumer ignorance + consumer ignorance coupled with greed and profligacy, i.e. people who just can't control their spending beyond their means on a regular basis.

[Rex]

64. This is what happens when corporations take over the government

and run unchecked into a consumer herd. Usually they just kill one or two consumer sheep, but unregulated capitalism will put us all into the slaughterhouse. Get ready to going back to the Jungle days.

And what is CNN going on about? Steriods and baseball. A lost kitty. Viagra. Martha's monitoring device.