Nearly Half of Americans Are ‘Financially Fragile’

[steve2470]

http://blogs.wsj.com/economics/2011/05/23/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.

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.”

[Mimosa]

1. Definitely 'financially fragile' here.

Physically, too.

[JVS]

2. $2,000? No problem, we'll have it for you in the morning!

[reggie the dog]

6. no, i dont want any of your filthy stolen money, be gone, and

don't come back, until youve REDEEMED YOURSELVES!

[JVS]

8. I always wondered what Jake was planning to do to have $5,000 the next day.

Given the manner in which they ended up paying the taxes, it doesn't seem like the penguin had much say over what happened at the Cook country assessor's office.

[SoDesuKa]

3. Republicans Offer Tax Relief

Tax relief is held out to be the one size fits all solution to what ails America. This is the message they are selling to the American people. Tax increases are not on the table, say Republican leaders Mitch McConnell and John Boehner.

These guys have their heads up their ass. People are in real trouble and the last thing they need are politicians to sell them on the Laffer Curve. Republicans are so out of it they won't recognize themselves after 2012.

[Tunkamerica]

4. that's pretty bad

I make 13/hr and could handle that. I save instead of spend though.

[ejpoeta]

5. we are financially fragile here. $2000 would be a tough one. but not as bad as it once was for us.

and i am lucky that my huaband can fix cars, so he could replace a transmission if needed, but we would still have to buy that part. we've been there in the past and always seemed to find a way. as for a medical bill. we always say we are doing ok as long as no one gets sick. a lot of people are doing ok as long as no one gets sick. and the saddest part is, that is people WITH insurance. I can only hope that nothing bad happens. At least (for now) we have insurance. It's state insurance, but it's insurance nonetheless. And we would have gladly paid into it what we would have been paying for the crappy insurance through bob's work.

I laugh when people mention savings. That is hilarious! We barely have enough to pay our bills. Savings. ha. I kiddingly refer to our pop bottle collection piling up as our savings account. It's not really that large, but it is there. Bob used to have some junk cars out back. may still have one out there that he had taken the parts off of to fix our vehicles. He would take them in when we needed the money to fix something that was broken. He'd take tax return money and squirrel it away in the safe and save it for a rainy day too. None of that would have been enough for that kind of a set back. $2000 was more than we would have been prepared for.

Currently, I guess we could come up with that if we had to. We own our house and could take a loan against it if we had to. But we have no plans on using it as a bank. We also have credit sitting in our safe that is there only for emergencies and to help our credit. But it would have to be some emergency for that one. I guess if it were a medical emergency we would tap whatever resources we had to. But it is enough to give a person nightmares thinking about the possibility of that one ruinous unforeseen problem waiting down the road for us.

[whathappened]

9. right on ej

thats how were playing it for now , cheap

[reggie the dog]

7. hell even by selling pot i would have a hard time

coming up with that much money fast.