Are you saving for trouble ahead?
By now, you've probably read or heard about the fact that we Americans in 2005 and 2006 have been spending more than we earn. For the first time since the Great Depression, Americans saved at a rate of negative 1 percent in 2006.
In those high-flying days of the housing boom, we were living way beyond our means. Whether we were buying houses we couldn't afford or stuffing those houses with home theater systems and pricey SUVs, some of us spent like the money was never going to run out.
Now with energy prices rising higher and higher, food prices growing, the mortgage crisis going strong and lenders tightening up the ability to borrow money, I can't help but wonder if that abysmal rate of savings is still true. I scoured the Web last night in vain for more current stats, but didn't find any. Quality points go to anyone who can find more current savings figures for me.
I did find this interesting story in the NYT about how unlike consumers, companies have been socking away
money for rainy days down the road. The typical American company, in fact, has saved enough cash on hand to completely pay off all its debt.
That's pretty amazing, don't you think? 'm a worrier (I've told you that before), so I try to keep a small sum of money in the bank for emergencies. It's JIC money. You know, just-in-case the furnace blows, some other issue in my old house goes kerblooey or my car needs unexpected work. Outside of what I put into my 401K, it's the only stash I've got, which makes me a little nervous in these uncertain times.
Should we wise up like these companies and start socking away more of our earnings, too? How many of you out there started curbing your spending in an attempt to save more? Or am I worrying too much?!
(Photo from istockphotography.com)
Categories: Budgeting, Personal finance
Comments
Dan-Like you,i am a worrier. My biggest fear is that i'll never retire,especially with little hope of Social Security being viable in twenty five years when i can retire. People my age (i'm 40) are big on spending and little on saving, and i know many folks in the same boat i'm in.
Posted by: Don | March 5, 2008 6:46 PM
Don, I'm only four years behind you in age. If Social Security is gone for you, it's definitely gone for me. What are you doing for your back-up plan?
Posted by: dan thanh | March 6, 2008 9:18 PM
Dan-I haven't,and that's the scary part,my 401K has $655 in it,and that'll last me a week of retirement.We are truly the spend now,worry later generation and i am a prime example. I'm starting to think lottery tickets so any advice would be much welcomed!
Posted by: Don | March 9, 2008 2:06 AM