Happy Fun Statistics
When it comes to money, it's quite interesting to be nosey. The previous version of this page, called "Happy Fun Statistics," will attest to that.
Really, who doesn't want to know how well (or poorly) everyone else is doing? Comparison, after all, can be educational.
If you care about savings, it also can be depressing.
That's because governments, advertising firms, and retailers the world over have successfully convinced people that saving money is a fool's errand. Having it all, and acquiring it as soon as possible, is far more important, they tell us.
Want a new car? No problem — borrow for it TODAY. Loan rates are low! Get 'em while they last!
Need to send your young one to college? No problem — borrow for it. Tens of thousands of dollars of debt are just waiting to spur little Jimmy Joe's "higher education," with only a few signatures required! Student loans are widely available, regardless of life plan or prospective income!
That new 80-inch RetinaBlaster TV caught your fancy? Well, guess what? Zero-percent financing is available! That new flat-screen can be talking up half your apartment living room TODAY!
Now, we didn't get here overnight. Years and years of consumer-centric media stimulation, easy-money federal policies, and advertising-agency know-how have absolutely soaked us in this mentality. Add to that the fact that those generations who survived truly difficult times (like the Great Depression) are largely slipping away now, their experiences and knowledge disappearing with them. All together, you have the recipe for one calamitous financial shake-up ... whenever the rug finally gets yanked.
Rug-Yanking at the Household Level
Rug-yanking isn't just for macro-level economies (hello, Greece and Spain!), though that gets most of the media attention. No, rugs get yanked out from under average folks, every day, in thousands of households around you.
When you have no savings, a major car repair can be devastating. When you were counting on 15% per year home-value increases to fund your retirement, a housing-price collapse means you're well and truly sunk. (And pretty damn stupid, I don't mind saying.)
So, if you're wondering just how your neighbors are faring in the battle against life's financial time-bombs, well, take a look:
Savings and Cash Flow Issues
Have you got a solid Emergency Fund? Most of your neighbors don't, apparently. One unexpected bill or expense means "more debt" on the horizon ...if they're not already maxed out:
- CreditDonkey's 2012 savings survey found that 41 percent of respondents had $500 or less in readily-available savings. The survey polled 1,100 people, including dual-income earners.
- A mid-2012 survey by Bankrate found that 28 percent of us have no savings for emergencies. Roughly 20 percent of us have enough cash saved to cover three months' expenses or less, and 42 percent responded that they had more than three months' cash saved up.
- As I discussed in "Nope, No Savings Here," a 2011 study conducted by the Certified Planner Board of Standards (among others) found that 1 in 3 Americans could not make more than one month's mortgage payment if they were to lose a job. Sixty-one percent reported that they would not be able to make mortgage payments for more than five months.
- CareerBuilder's 2011 annual financial survey reported that 42 percent of Americans live paycheck-to-paycheck. Among six-figure earners, 14 percent said they lived paycheck-to-paycheck. Another late-2011 survey by Markco Media found similar results, with 34 percent responding that they did not have enough monthly income to even meet expenses.
- A 2011 survey conducted by the National Foundation for Credit Counseling found that 64 percent of respondents did not have enough cash available to handle an unexpected $1,000 expense.
- In late 2012, Harris Interactive published a survey which reported that 74 percent of Americans worry about having enough money for retirement. Almost half (47 percent) of those polled said they live paycheck-to-paycheck, and are unable to save at all.
Net Worth and Financial Standing
Measures of cash savings don't tell us everything. Folks also rely on financial investments (like stocks and bonds) and physical assets (like homes and associated home values) to provide financial backing for emergencies, retirement, and all the rest. The associated rising and falling values of these items, as well as the amounts of debt and liabilities held by households, are what comprise net worth.
Surveys in this area don't paint a particularly bright picture, either:
- According to the 2012 CFED Scorecard, roughly 27 percent of Americans live in asset poverty. ("Asset poverty" is defined as households without the assets (savings, home equity, investments, etc.) to withstand a three-month absence of income.)
- The 2010 Federal Reserve Survey of Consumer Finances (.pdf) found that the financial turmoil from 2007 to 2010 had a tremendous impact on Americans' net worth. During this period, median net worth fell 38.8 percent. Median net worth in 2007 was $126,400; by 2010, it had dropped to $77,300. (2010 dollars).
- In June 2012, the U.S. Census Bureau reported that Americans' median household net worth had declined from $102,844 in 2005, to $66,740 in 2010 (in constant 2010 dollars). Minus home equity, median household net worth in 2010 was only $15,000.
Credit Cards and Other Debt
And then there's debt — the big "D" word that makes the world go 'round.
- According to the Fed's 2010 Survey of Consumer Finances (.pdf), page 61, 39.4 percent of U.S. families carry credit-card balances. The U.S. Census Bureau QuickFacts show 114,235,996 households as of 2010. Given the Federal Reserve's G19 total revolving debt figure of $857.4 billion (Dec. 2010), we can estimate the average revolving debt per household to be $19,050 as of that same year. Also, in 2010, 32.7 percent of families held four or more credit cards.
- Financial site NerdWallet estimates the average amount of household credit-card debt to be $14,478, as of 2012.
- According to the Fed's 2010 Survey of Consumer Finances (.pdf), roughly 74.9 percent of American families carry some type of debt (mortgage, other installment loans, revolving debt, etc.). Installment debt (student loans, auto loans, etc.) was found in 46.3 percent of households.
- In a report available to subscribers only, Consumer Reports released 2011 data in which the median debt level on credit cards (among those carrying balances) was $3,414. Fourteen percent of respondents said they would be unable to meet financial challenges without credit cards. Twenty-two percent of people carrying balances owed $10,000 or more.