Emergency fund

[Crasher]

How times change over the years. We married in 1962 with less than $50 cash between us and another $200 from wedding gifts. Two years later we had our second child and had a annual income of $3400. Living in the country with a large garden and a wife that stayed home to care for our family and can the harvest is what saved us. We didn't know we were poor. All of our farming friends were in the same boat. Our entertainment was to get together with friends every other Saturday at one of our homes with all the kids for a potluck party. We didn't need a big boat, ATVs, flashy car, or any other toys that is common today. As I look back on it all, life was simple and those were the best of times. We took time to appreciate all of the important blessings, our family, our health and our friends. Our kids remember those times and appreciate all that we had. Maybe one of the benefits to come from our current crisis is that families will discover the same thing we had and renew the cycle.

[ransil]

Originally Posted by Charming

Perhaps if those folks putting the rolls of toilet paper on the shelf and the ground beef in the case received a living wage, health care benefits, etc. they would have more than two nickels to rub together.

perhaps if they learned a skill that would pay a living wage they could get a job paying it.

[grindstone01]

Originally Posted by Charming

Perhaps if those folks putting the rolls of toilet paper on the shelf and the ground beef in the case received a living wage, health care benefits, etc. they would have more than two nickels to rub together.

Those jobs were not meant to be career jobs. Everybody in this country has the option to better themselves and move to higher paid jobs if they invest into learning a skill. We all have the potential to be financially independent, however most people choose not to even try.

[RVPioneer]

Originally Posted by Charming

Perhaps if those folks putting the rolls of toilet paper on the shelf and the ground beef in the case received a living wage, health care benefits, etc. they would have more than two nickels to rub together.

Perhaps. But if they become 6-figure income earners, like all my currently unemployed coworkers, they’ll just buy more expensive homes and cars, take out a home equity loan for an addition and a pool, go on expensive vacations, eat at high end restaurants, send their kids to private schools even though they moved to a neighborhood in the suburbs with good schools, blah, blah, blah.

Same spending habits, just bigger numbers.

Few of them were prepared for something like this. They were all raiding the shelves at Whole Foods and wondering where they were going to get a Mocha Latte.

[Crasher]

Originally Posted by RVPioneer

Perhaps. But if they become 6-figure income earners, like all my currently unemployed coworkers, they’ll just buy more expensive homes and cars, take out a home equity loan for an addition and a pool, go on expensive vacations, eat at high end restaurants, send their kids to private schools even though they moved to a neighborhood in the suburbs with good schools, blah, blah, blah.

Same spending habits, just bigger numbers.

Few of them were prepared for something like this. They were all raiding the shelves at Whole Foods and wondering where they were going to get a Mocha Latte.

That is a major problem in this country. It starts with the Government spending more that they take in. The debt just keeps growing with no plan to reduce it. They get re elected by promising more something for nothing programs. They are good at kicking the can down the road for the next generation to pay it. How many would be elected they cut spending by 15% eliminating give away programs?? Today many people are the same. They don't care what their new toy cost. All they want to know is can they make the monthly payment. If they made another $10,000, they wouldn't pay off their debt, but would just take on another payment for some depreciating toy. Maybe a full blown depression and starting over is the only event to wake them up. With 30 million people out of work, we might be on our way.

[Old-Biscuit]

There was an old commercial that showed a guy out mowing his big front lawn with a huge 2 story house in background, 2 luxury cars in driveway with pregant wife and 2 kids on big front porch watching him.
Question is asked........."Sir how do you do it?"
Answer----"I am in HOCK up to my ears!"

That is the American Way..............

Fortunately my Mom taught us kids to 'pay ourselves' each month --- just like a regular bill
I heeded her advice..........and was able to retire at 50 yrs old
My sister/brother (9 & 10 yrs older) are still having to go to work and are in HOCK up to their ears.
Some folks learn......manage their monies unfortunately MOST do NOT!


After economy gears back up those folks will be deeper in debt and will have learned nothing.

I agree with other posters that 'entry level/low pay jobs' were not intended as a career.........they are there so folks can enter job market, learn job skills/responsibilities and then move up.
Unfortunately majority STAY in entry level jobs, do NOT better themselves and then complain about the job.
Life is tough.......

[twogypsies]

People should try to have a savings equal to six months of living expenses. They would be right on target right now during this pandemic. Don't buy what you can't afford. It can be done. Really. Yes, it could take a while to achieve this and hopefully no emergency before but then you'll be ready. It would also be difficult not to reach into that pot for extra cash on frivolous things but that's what you have to do.

[kcdogger]

Originally Posted by twogypsies

People should try to have a savings equal to six months of living expenses. They would be right on target right now during this pandemic. Don't buy what you can't afford. It can be done. Really. Yes, it could take a while to achieve this and hopefully no emergency before but then you'll be ready. It would also be difficult not to reach into that pot for extra cash on frivolous things but that's what you have to do.

That six months of savings would only leave me about 12 months short. I own a seasonal RV Park and am almost certainly going to lose nearly 80% of my normal revenues. Being seasonal, I got my last meaningful revenues last September. the national park my business relies on for all of it's business is now tentatively scheduling a partial reopening on June 16th. Normally my park is open from May 1 thru September 30, so nearly 1/3 of the season is completely lost. It is also nearly certain that only a small fraction of the normal tourist traffic is going to occur this year. So now my savings have to fund both my personal expenses and the recurring business expenses until May of 2021 at the earliest. Even then there is little guarantee thing will return to normal. For business owners in situations like mine this is much greater financial drain than a simple "emergency fund" type event. If I choose to continue to stay in business it is going to require I spend deeply into my retirement and investment accounts, something I am not sure will be in my best interests.
My actual point is people can preach financial responsibility and saving all they want, but there is always the possibility that an event might occur that will outstrip even the most responsible saver. Sitting atop a high horse preaching how those beneath you are just not doing things correctly is just setting yourself up for an even greater fall.

[Crasher]

Originally Posted by kcdogger

That six months of savings would only leave me about 12 months short. I own a seasonal RV Park and am almost certainly going to lose nearly 80% of my normal revenues. Being seasonal, I got my last meaningful revenues last September. the national park my business relies on for all of it's business is now tentatively scheduling a partial reopening on June 16th. Normally my park is open from May 1 thru September 30, so nearly 1/3 of the season is completely lost. It is also nearly certain that only a small fraction of the normal tourist traffic is going to occur this year. So now my savings have to fund both my personal expenses and the recurring business expenses until May of 2021 at the earliest. Even then there is little guarantee thing will return to normal. For business owners in situations like mine this is much greater financial drain than a simple "emergency fund" type event. If I choose to continue to stay in business it is going to require I spend deeply into my retirement and investment accounts, something I am not sure will be in my best interests.
My actual point is people can preach financial responsibility and saving all they want, but there is always the possibility that an event might occur that will outstrip even the most responsible saver. Sitting atop a high horse preaching how those beneath you are just not doing things correctly is just setting yourself up for an even greater fall.

I didn't mean to appear sitting a high horse, but I know from experience that it works. Not too long ago, our business took a hit when an early freeze devastated the farming community along with many Ag related businesses, including ours which is also seasonal. For the first time in 25 years, we took a hefty six figure loss, but because I practiced what I preached we were debt free at the time with a reserve. We used our business equity to borrow enough to continue to pay our employees and keep the lights on. Bad things happen to good people. Much of the time through no fault of the individual. However, long term planning and keeping debt at a minimum can help any business or individual weather the storm. Not all will survive, but those that planned well have a much better chance. I'm sorry for your dilemma. You are forced to make tough choices. I wish you all the best.

[kcdogger]

Originally Posted by Crasher

I didn't mean to appear sitting a high horse, but I know from experience that it works. Not too long ago, our business took a hit when an early freeze devastated the farming community along with many Ag related businesses, including ours which is also seasonal. For the first time in 25 years, we took a hefty six figure loss, but because I practiced what I preached we were debt free at the time with a reserve. We used our business equity to borrow enough to continue to pay our employees and keep the lights on. Bad things happen to good people. Much of the time through no fault of the individual. However, long term planning and keeping debt at a minimum can help any business or individual weather the storm. Not all will survive, but those that planned well have a much better chance. I'm sorry for your dilemma. You are forced to make tough choices. I wish you all the best.

The losses you faced from a weather event have long been known in farming. Planning for bad weather has always been part of agribusiness. It is virtually an expectation that at some point in time weather will devastate a farming community on the local level.
I planned for unexpected events as well. I have plans in place should a forest fire temporarily impact business. I have weathered high fuel prices. For catastrophic events I faithfully pay a hefty premium for business interruption insurance. However, that insurance is not paying claiming a pandemic is not a covered incident and the pandemic has not specifically caused our business to close even though any potential customer is advised not to travel to our location by both the local and national governments. It is similar to telling a waterpark they are not covered during a drought when the local government will not allow them to have any water and the insurer takes the position the waterpark didn't actually have to close, they could still let people in to frolic in the empty pools. I don't fault the insurer for protecting it's business, they never could have anticipated a nationwide shutdown and I know they have no ability to actually pay claims on such a nationwide scale. Insurance has always been predicated on the fact that all claims would be local. That is why they have written exclusions for wars.
Furthermore, the shutdown has introduced a significant variable into the value of many businesses. Equity that we had in the business in 2019 is likely gone forever. A nationwide shutdown of travel and businesses has never occurred. The valuation of many businesses will fall dramatically. Banks will now have to consider the possibility another nationwide shutdown will occur, meaning they will require greater equity and probably higher rates when considering a loan to purchase a park. Before this crisis I could easily put a fair valuation on an RV Park. Today, I actually have no idea. I know I wouldn't consider paying today what I felt was an attractive price six months ago. For me, it would take an amount about 50% of the previous valuation before I would even start to think about it. Anyone going into business over the next several years will have the knowledge that someone coughing in NYC can cause businesses across the country to close for months on end. What appeared to be a bulletproof income stream in December is now seen as wishful thinking. For many business owners, the equity they thought they had and could borrow against to ride out this crisis is gone.
For me, it is game over. I am going to sell as soon as possible, almost assuredly to a buyer who will convert the land to other use, most likely 2nd home residences. I am going to take a multiple 7 figure hit as opposed to what the park was worth 6 months ago, but the bleeding will stop. I can't keep throwing money at a business where the valuation may never recover. The ripple effect through the community will be large, but that cannot be my concern. The restaurants, fuel stations, grocery store, and tourist oriented businesses that relied on 1000s of guests from my park annually to patronize their businesses will find those guests are gone for good. The state is going to lose 10s of thousands of dollars in lodging and resort taxes. I sure hope the politicians and scientists and talking heads on TV think it was worth it.
(and the only justification are "models" claiming that all these actions "save lives". However, even the statisticians are telling us the models are only as good as the data used and that data is changing all the time. Currently, the health experts are finding that covid is much more widespread than thought, making the death rate much lower, so those early models predicting millions of US deaths vastly overestimated even the worst case. Plus we are finding that other countries that have taken much different approaches have seen virtually the same results on a per capita basis as the US, perhaps indicating all the shutdowns and closures have had little actual impact on the disease's progression meaning they may not have actually saved lives)

[Freqz]

I tell my guys out in the oilfield to make hay while the sun shines and put plenty away in the barn for winter.

Well buddy, for us out in the oil patch, winter is here.

[Ramblingpair]

Finance will never be taught in middle school or high school! That decision is made by the government. Imagine if people actually understood finance! Then they would understand taxes. [Moderator Edit] This country would never explain finance to everyone! JMO!

[dbircky]

Originally Posted by kcdogger

The losses you faced from a weather event have long been known in farming. Planning for bad weather has always been part of agribusiness. It is virtually an expectation that at some point in time weather will devastate a farming community on the local level.
I planned for unexpected events as well. I have plans in place should a forest fire temporarily impact business. I have weathered high fuel prices. For catastrophic events I faithfully pay a hefty premium for business interruption insurance. However, that insurance is not paying claiming a pandemic is not a covered incident and the pandemic has not specifically caused our business to close even though any potential customer is advised not to travel to our location by both the local and national governments. It is similar to telling a waterpark they are not covered during a drought when the local government will not allow them to have any water and the insurer takes the position the waterpark didn't actually have to close, they could still let people in to frolic in the empty pools. I don't fault the insurer for protecting it's business, they never could have anticipated a nationwide shutdown and I know they have no ability to actually pay claims on such a nationwide scale. Insurance has always been predicated on the fact that all claims would be local. That is why they have written exclusions for wars.
Furthermore, the shutdown has introduced a significant variable into the value of many businesses. Equity that we had in the business in 2019 is likely gone forever. A nationwide shutdown of travel and businesses has never occurred. The valuation of many businesses will fall dramatically. Banks will now have to consider the possibility another nationwide shutdown will occur, meaning they will require greater equity and probably higher rates when considering a loan to purchase a park. Before this crisis I could easily put a fair valuation on an RV Park. Today, I actually have no idea. I know I wouldn't consider paying today what I felt was an attractive price six months ago. For me, it would take an amount about 50% of the previous valuation before I would even start to think about it. Anyone going into business over the next several years will have the knowledge that someone coughing in NYC can cause businesses across the country to close for months on end. What appeared to be a bulletproof income stream in December is now seen as wishful thinking. For many business owners, the equity they thought they had and could borrow against to ride out this crisis is gone.
For me, it is game over. I am going to sell as soon as possible, almost assuredly to a buyer who will convert the land to other use, most likely 2nd home residences. I am going to take a multiple 7 figure hit as opposed to what the park was worth 6 months ago, but the bleeding will stop. I can't keep throwing money at a business where the valuation may never recover. The ripple effect through the community will be large, but that cannot be my concern. The restaurants, fuel stations, grocery store, and tourist oriented businesses that relied on 1000s of guests from my park annually to patronize their businesses will find those guests are gone for good. The state is going to lose 10s of thousands of dollars in lodging and resort taxes. I sure hope the politicians and scientists and talking heads on TV think it was worth it.
(and the only justification are "models" claiming that all these actions "save lives". However, even the statisticians are telling us the models are only as good as the data used and that data is changing all the time. Currently, the health experts are finding that covid is much more widespread than thought, making the death rate much lower, so those early models predicting millions of US deaths vastly overestimated even the worst case. Plus we are finding that other countries that have taken much different approaches have seen virtually the same results on a per capita basis as the US, perhaps indicating all the shutdowns and closures have had little actual impact on the disease's progression meaning they may not have actually saved lives)

thumbs up Someone who is collecting a pension, Social Security, or (currently)a paycheck have a hard time understanding the depth of this economic disaster. You have many people in entry level jobs, who are just starting our, without a job now. They haven't worked long enough to have built substantial savings. Here in Ohio the governor is now talking about reducing state funding for schools to make up the deficit in tax revenue. Where do you think the schools will turn for that lost revenue? Would any of the protected one be willing to take a 50% cut in Social Security until this debt is paid off. YOu know, "we're all in this together". 50%f of the tax revenue comes from small businesses, that revenue is gone. Tax revenue was down 11% in March with only a bit over a week of shut down. April's numbers won't be in until the middle of next week. Income tax receipts will be down over 8% for the year. Yes, that includes Social Security and Medicare tax receipts. New Vehicle sales are down The seasonally adjusted annualized sales rate is expected to tumble to 7.5 million to 7.7 million, according to forecasts. That would be the lowest sales pace in more than 40 years — it hit 8.8 million in December 1981. That is 10,000,000 fewer cars than in 2019. We are now at 30,000,000 new unemployed, and still going up.

They burned the village, and the spider is still there.

[777 Driver]

Originally Posted by laj

I’ll bet less than 1% will pick up what your puttin down. My parents taught me the same thing. 10% of your gross went into savings, groceries, fuel, everything until you had one yrs. food supply at all times. They both lived through the depression, it was a way of life, not an option. You live on what you make, not what you wish you did.

Hi laj,

So, that's where the 1%er's come from?

A couple of lessons that my father taught me have been good for me:

1> Spend less than you make.

2> Don't have a champagne appetite when you have a beer budget.

Take care,
Stu

P.S. I wouldn't be surprised to learn that there are more multi-millionaires driving 12 year old minivans with 100K+ miles than there are driving Lamborghinis.