Most Americans can't afford a $1,000 emergency expense

My wife and I both like to save so we try to keep at least 6 months of 1 person's salary in savings. We also have a 2nd checking account that we use for saving for extra things like furniture or electronics. I find using multiple accounts helps you keep in mind exactly how much money you have on hand. While we tend to live below our means we still manage to have decent stuff and we spend more money on the things that matter.

 

A $1,000 would not be a problem for me should the situation arise. Granted, it would have to be taken out of a future house piggy bank, but non the less.

 

Seems like every time we get in the black, something comes out of the blue. Just had to rebuild the trans in my van... 6 weeks after getting it checked out ("perfect condition!") and taking a 2,000 mile trip. Over the years, medical expenses, home and auto repairs, blah, blah.... We do what we can, but it seems to keep getting harder, rather than easier.

 

We could take a $1000 hit pretty easy.

 

I think the idea of this story is that having to come up with $1000 would pose a problem... nothing in the bank, no near-liquid non-retirement assets, less than $1000 of room on credit cards. I don't keep $1000 in the bank, I carry far more debt than most people could handle, but it is all backed by very solid investments. I put most everyday and emergency expenses through my credit card and never carry a balance. I would just run $1000 through on the credit card and pay it off as part of my normal expenses. Worst case, I would have to cash in some of my non-registered investments, but so far I've never had to do that.

The people in this article are really living on the edge, from paycheque to paycheque.

 

It doesn't take much to create a $1,000 emergency. A minor medical procedure, or even some dental work. I've been there and it wasn't fun. Once you get a little money under you belt it becomes hard to part with it for that reason.

 

There's always something. If it isn't $1000, it's $400. I've lived paycheck to paycheck and it adds gray hairs to my head and puts me on edge. That's how I feel during the school year, even though I'm technically living off one really large paycheck for 9 months.

Right now, I could scrounge up $1000. Ask me in a month and we'll see.

 

This thread has just become a reality for me.

Doctor's bills are not cheap when you don't have coverage.

 

if i had to i could. ive done it before by making it by the skin of my teeth and if we had to we would do it again

 

Me too. I just had a $300 vet bill visit for an near to death kitty. Interim treatment is pills at $30 every 45 days, but that's a maintenance and not a cure. The cure would be $1200 radioactive iodine treatment that will also include more pre/post vet bills for bloodwork.

Because I'd just gotten paid and it wasn't the the rent check payday, I could swing the $300 no problem, but it means frugal living the rest of the month.

As much as I love my cat the $1200 will have to wait till either my 3 year bonus or my tax return. I can save incrementally by month but my saving cushion is $300-400/mo. I'm on track to be completely debt free by the time I'm 30 and that is where the majority of my spare funds after going. That means I also don't have cards available for emergencies, because that's how I ended up in this spot in the first place. While the idea of a credit card cushion is nice, in real emergencies things come up harder and faster than you ever thought. It only took me having 1 month where I didn't recover as fast as I thought I would and I missed one payment. Things snowballed and watching that happen, I never want to be there again.

 

Back in my Navy days I had $1000 in the bank any given day, but right now that kind of sudden bill would be painful to say the least. Causes me to think at times when I am working 40 hours/week normally at a decent enough hourly pay.

 

So last month the dealership told me I needed to change my tires due to tread wearout -- my friend checked it and said my tires are pretty bald. That's ~$800 to $1k there. I've been putting it off. Does that count as an "emergency" ? XD

 

I lost my safety net when I had to walk away from the house I could no longer afford. A 10% down payment was close to six months salary for me, at the time, and that's gone. Now I earn even less and live basically paycheck to paycheck. I am forcing myself to take 7% of that into a 401K which does equal more than the $1000, but could access it (with penalty, of course) in the case of a dire emergency.

 

Is it so bad to put it into a 401k? Do you prefer that money liquid?

 

I just had to shell out over 2k for painting and a carpet in a rental property we have.

 

From an interest calculus, it certainly makes sense to pay down your credit card debt now, versus savings; however, if your alternative plan for an emergency is simply more credit card debt, then I don't see how you're ahead. You could start saving now, earning minor interest, or pay it later along with much, much larger interest rates on top. I would make minimum payments on the CC until the $1000 target is reached, and then return to your payment schedule.

Before this year, it definitely would've been tough, but right now I'm sitting at the $2000 mark in savings, I'll be credit card debt free by the end of the month (thank you personal vehicle compensation at $0.50/km!), and will move into investing aggressively into mutual funds in September. I manage to save 10% of my after tax income (moving to saving 5% and investing 5% next month), while 18% of my after tax income goes to paying down my debts: credit card; family car loan; gov. student loan; and student Line of Credit. Success in your personal finances is about recognizing its okay to be wealthy, that you need a plan to get there, and that you have to possess the drive to accomplish it. Anything less is a revolving door of debt.

 

Is that addressed to me? If so, getting at the $1000 without a huge withdrawal penalty would be nice. I'm considerably older than you, the 401K is just about two years old now, so touching those funds is on my never-gonna-happen-no-emergencies-pretty-please list.