I am constantly amazed at the number of people that I encounter through the course of my business that have excellent income and yet have no ready cash. Nada, zilch, zippo saved for a "rainy day" or as a safety net.
And don't even think about the possibility of putting money down on a house. After all, why would you want to hedge your investment by inserting a little "wiggle room" right from the get-go.
I can't imagine how this is possible. Saving money isn't just an option for the wealthy, it is a even more of a necessity for those that have modest incomes to add a layer of protection from unforeseen expenses and to have on hand as an available amount of ready capital for investing in the future.
It seems strange to me that most people would prefer having granite countertops or stainless steel appliances than having a month or two of income in savings. It's also funny when I hear the mandatory lists of all of the things that people cannot "live without," and yet the notion of a ready cash reserve doesn't even enter into their thought process.
And why would people not think that way? Is it because they have an "out" in the event of a financial setback? Doesn't the responsibility for their survival actually fall upon some other entity?
After all, the government is here to bail us out. Let them figure it out.
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All content, including text, original art, photographs and images, is the exclusive property of Coweta Fayette Real Estate, Inc., and may not be used without the expressed written permission of Coweta Fayette Real Estate Better Homes and Gardens Metro Brokers, Newnan Georgia. All information is believed to be accurate but is not warranted, Copyright 2003-2009. Richard Weisser REOS, E-Pro. licensed Auctioneer. 770-827-6225.
Learn more about Coweta County and Fayette County Georgia Real Estate, and to search the entire Georgia MLS for free with no registration required. Visit CowetaFayetteRealEstate.com! Photos of the Great Smoky Mountains National Park. North Georgia Photos.
Right on the mark Richie,
I couldn't have said it bettter
Not only do I have an emergency fund for my personal finances, but I continue to add to my business emergency fund as well. I read an article that stated that most folks could not produce $3k in cash without borrowing it! Scary thought...
Here is a sobering reality. My mother has Alzheimer's and the cost of her stay in the nursing home here in Northern Virginia is close to $100,000 a year! Fortuntately my father invested well and I have been able to pay her bills through her trust. How many of us are going to be able to handle this type of expense in our own future?
Brother Jim...
Thanks for jumping in ... I'm in a weird mood today! I hope that all is wee in PGH. lol
Michael...
I have a lot of people that can't bid on a HUD home because they don't have a thousand dollars for the earnest money. Can you say "recipe for disaster?" Thanks.
Cindy...
They are two concerned with getter bigger tires for the Hummer than to save for their basic needs. It's a sad reality. THX
So true Richard! The "Keep up with the Jones" attitude has caused most people to forget about planning for the future because if the going gets tough someone will give me handouts because its "owed" to me!
I remember you wrote something similar awhile back about squirreling away something for a rainy day. Before I entered Real Estate, I was in construction for many years. I made very good money but some years only worked 9-10 months and after a couple of these years learned to save for the lean times. Again you've made some excellent points about a necessity in our business! Hope you are doing well and it looks like you are!
PS I came back to add that we have 1 in college and another who will be there after next year soooo... I will probably be broke for quite awhile?!?! Goes along with Laura's comment below!
I do think that the cost of raising children today and just the plain cost of living (gas,food) makes it impossible for the middle class to save much at all.
There is an excerise That is easy to follow imagine all your savings and expenses. Then imagine you lose your income. For every 10k in income you need to cover your expenses give yourself 1 month to find a job . So if you want a 50k income it could take as long as 5 months to get a job paying this, Do you have enough savings to go 5 months. If not then you are living on the edge
Dan...
That seems to be the case! They have not been taught to fend for themselves. Thanks.
Russell...
I have some thoughts on that that may surprise you, but I have another post brewing in my mind right now. Thanks.
Laura...
I am seriously thinking about writing a book on the subject. I think the problem is in mindset, if you consider savings as an "obligation" and not an option, you would see different results. Thanks for the thoughtful comment.
I too have found that to be amazing. Also when I hear on the news we need people to spend to save the economy. Wow!
Richard, one of the major culprits is credit cards. Before you had to save up to buy something. Now you just hand over the credit card. Why save when you can have instant gratification. What most people don't realize is if you max out a credit card and just make the minimum payment, it will take 30 years to pay off the debt. What really surprises me are the number of people who don't have any type of retirement program. What's going to happen to them when they reach retirement age.
We need to sock money away for a later day. We will need more money as we get older in life. I am witnessing it with my inlaws at the present time.
add a layer of protection from unforeseen expenses . . .
We have so many un-necessities that whittle away at what we could be saving, and with credit cards we can buy with no money down!
Charlie...
Excellent point ... I an very conservative, and think that you should be able to live normally for at least two years without income. Of course, I went through half of that last year! THX
Mark...
Spend what??? lol I don't know where anyone expects the money to come from except the government printing presses.
Michael...
I know that I have been forced to use them more than I like, and it's so easy to fall into the "minimum payment" trap. Thanks for making an excellent point.
I have heard people tell me, I am not saving because there is no return. That isn't always the point of saving.
It is good to have government but the population does need to take care of it self or we will move to a more socialized form of government and the ability to accumulate wealth will be severely hampered.
Harry...
Or for a down payment now! Thanks for the comment.
Sara...
We have become a society of "I want it now!" Thx
Bill...
I agree. What kind of return is there for losing you house? Thanks, as always!
Saving is a disciplined habit. Living within your means is a disciplined habit. Allowing yourself to be subject to fads requires only a credit card.
Richard, Some of us have the mentality of have it now, pay for it later. I've been guilty of that but now paying off credit cards and putting a little away for later.
A month or two of income in savings?? That won't cut it these days. More like you need 10-12 months. Anything less is foolish!!
Good points Richard. But the important thing to remember is that I believe it's your birhtday today!! Happy Birthday!!! xxoo
Richard - I love the prospect who enters saying I will only pay X and I must have A, B, C, etc. The criteria often is outside of their price range by 25% or more. I then get it's a buyer's market comment. Well, it is... but homes in my area are selling at 95% of list with an increase in median prices in 2008 and in 2009. They rarely like my suggestion that they either need to change the location, requirements, or their price range because they won't find what they are looking for in my area anyway. As to savings, I would love to see a study on the impact of government policies on savings. If citizens believe that the government is obligated to bail them out (whether because of natural disaster or because of financial disaster), then what is the motivation to save. I am not one to subscribe to the belief that the governement is my savior, will protect me and will provide for my retirement so savings - even when painful - is a payment that I make every month just like any other bill.
Loved it! I'm a big fan of the self sufficient back up plan. My Grand father use to always say, "I would rather have people think I'm poor and not be, than have them think I'm rich and not be"....We need that kind of wisdom again.
I notice this too and then the other extreme - no savings, credit card debt too, and yet they qualify.