63% of Americans Can't Afford $500 Car Repair

63% of Americans Can't Afford $500 Car Repair
or $1,000 Emergency Room Visit
Consumers Most Likely to Cut Back on Restaurant Meals When Money Gets Tight

Jan 06, 2016, 09:05 ET from Bankrate, Inc.


Americans need to get into the habit of saving  

NEW YORK, Jan. 6, 2016 /PRNewswire/ -- Almost two in three Americans don't have enough savings to pay for a $500 car repair or a $1,000 emergency room bill, according to a new Bankrate.com (NYSE: RATE) report. Click here for more information:

http://www.bankrate.com/finance/consumer-index/money-pulse-1215.aspx

Only 37% of U.S. adults have enough savings to pay for these unexpected expenses. 23% would reduce their spending on other things to make ends meet, 15% would use credit cards and another 15% would borrow from family or friends.

Americans are most likely to part with restaurant meals when money gets tight: 58% are very or somewhat likely to cut back this year in order to save money. They would have a much harder time reducing their spending on alcohol (just 35% are very or somewhat likely to trim their spending in this area, the lowest of the five choices that were offered).

46% are very/somewhat likely to decrease their cable/satellite TV expenses, 41% plan to spend less on coffee and 39% are aiming for lower cell phone costs.

"More than four in 10 Americans either experienced a major unexpected expense over the past 12 months or had an immediate family member who did," according to Sheyna Steiner, Bankrate.com's senior investing analyst. "This proves that an emergency savings cushion is more than just a personal finance cliché, yet most Americans are ill-prepared for life's inevitable curveballs."

While savings predictably increase with income and education, even 46% of the highest-income households ($75,000+ per year) and 52% of college graduates lack enough savings to cover a $500 car repair or $1,000 emergency room visit.

Princeton Survey Research Associates International obtained telephone interviews with a nationally representative sample of 1,000 adults living in the continental United States. Interviews were conducted by landline (500) and cell phone (500, including 269 without a landline phone) in English and Spanish by Princeton Data Source from December 17-20, 2015. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error for the complete set of weighted data is plus or minus 3.8 percentage points.

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The incredible shrinking middle class: Half the country is either living in poverty or damn near close to it

New reports indicate two thirds of Americans can no longer afford to fix their cars. Our Congress should be ashamed

Paul Buchheit, AlterNet

Topics: 1 percent, AlterNet, American Exceptionalism, Middle Class, Poverty

This article originally appeared on AlterNet.

Recent reports have documented the growing rates of impoverishment in the U.S., and new information surfacing in the past 12 months shows that the trend is continuing, and probably worsening.

Congress should be filled with guilt — and shame — for failing to deal with the enormous wealth disparities that are turning our country into the equivalent of a 3rd-world nation.

Half of Americans Make Less than a Living Wage
According to the Social Security Administration, over half of Americans make less than $30,000 per year.

That’s less than an appropriate average living wage of $16.87 per hour, as calculated by Alliance for a Just Society (AJS), and it’s not enough — even with two full-time workers — to attain an “adequate but modest living standard” for a family of four, which at the median is over $60,000, according to the Economic Policy Institute.

AJS also found that there are 7 job seekers for every job opening that pays enough ($15/hr) for a single adult to make ends meet.

Half of Americans Have No Savings 

A study by Go Banking Rates reveals that nearly 50 percent of Americans have no savings. Over 70 percent of us have less than $1,000. Pew Research supports this finding with survey results that show nearly half of American households spending more than they earn. The lack of savings is particularly evident with young adults, who went from a five-percent savings rate before the recession to a negative savings rate today.

Emmanuel Saez and Gabriel Zucman summarize: “Since the bottom half of the distribution always owns close to zero wealth on net, the bottom 90% wealth share is the same as the share of wealth owned by top 50-90% families.”

Nearly Two-Thirds of Americans Can’t Afford to Fix Their Cars 

The Wall Street Journal reported on a Bankrate study, which found 62 percent of Americans without the available funds for a $500 brake job. A Federal Reserve survey found that nearly half of respondents could not cover a $400 emergency expense.

 

It’s continually getting worse, even at upper-middle-class levels. The Wall Street Journal recently reported on a JP Morgan study’s conclusion that “the bottom 80% of households by income lack sufficient savings to cover the type of volatility observed in income and spending.”

Pew Research shows the dramatic shrinking of the middle class, defined as “adults whose annual household income is two-thirds to double the national median, about $42,000 to $126,000 annually in 2014 dollars.”

Market watchers rave about ‘strong’ and even ‘blockbuster’ job reports. But any upbeat news about the unemployment rate should be balanced against the fact that nine of the ten fastest growing occupations don’t require a college degree. Jobs gained since the recession are paying 23 percent less than jobs lost. Low-wage jobs (under $14 per hour) made up just 1/5 of the jobs lost to the recession, but accounted for nearly 3/5 of the jobs regained in the first three years of the recovery.
Furthermore, the official 5% unemployment rate is nearly 10% when short-term discouraged workers are included, and 23% when long-term discouraged workers are included. People are falling fast from the ranks of middle-class living. Between 2007 and 2013 median wealth dropped a shocking 40 percent, leaving the poorest half with debt-driven negative wealth.

Members of Congress, comfortably nestled in bed with millionaire friends and corporate lobbyists, are in denial about the true state of the American middle class. The once-vibrant middle of America has dropped to lower-middle, and it is still falling.