11 replies to this topic

[Rogerdodger]

I hope this generation doesn't see another "Great Depression".
Maybe the governments have figured how to print their way out of problems.
But almost everyone I know is like the TV commercial where the guy has everything.

But how does he do it?

"I'm in debt up to my eyeballs!" he replies.

Maybe we can all sell our houses to each other and get out of debt?
Or maybe the Sheriff will help us sell it!!!

2006 personal savings drop to 74-yr. low
By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON (AP) -- People once again spent everything they made and then some last year, pushing the personal savings rate to the lowest level since the Great Depression more than seven decades ago.

The Commerce Department reported Thursday that the savings rate for all of 2006 was a negative 1 percent, meaning that not only did people spend all the money they earned but they also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than a negative 0.4 percent in 2005 and was the poorest showing since a negative 1.5 percent savings rate in 1933 during the Great Depression.
The savings rate has been negative for an entire year only four times in history - in 2005 and 2006 and in 1933 and 1932. However, the reasons for the decline in the savings rate were vastly different during the two periods.

During the Great Depression when one-fourth of the labor force was without a job, people dipped into savings in an effort to meet the basic necessities of shelter and clothing.

Whatever the reason for the low savings, economists warn that it the phenomenon exists at a particularly bad time with 78 million baby boomers approaching retirement age. Instead of building up savings to use during retirement, baby boomers are continuing to spend all their earnings.

Edited by Rogerdodger, 01 February 2007 - 11:08 AM.

[OEXCHAOS]

Trim Tabs, has this running a bit differently, I think. They have the savings rate up--though I can't seem to find the reference. Also incomes up strongly, too.

Here's what they said:

Based on data from the Daily Treasury Statement, the wages of the 135+ million U.S. workers on payrolls jumped 8.1% year-over-year during the first nineteen business days of January (Tuesday, January 2 through Monday, January 29) and 6.6% year-over-year during the past seven business days (Friday, January 19 through Monday, January 29). For comparison, growth averaged 7.0% year-over-year during all of 2006, so the U.S. economy is continuing to expand at a brisk pace. In addition, “Other than withheld” taxes--paid mainly on self-employment income and small business partnership income--soared 18.0% year-over-year during the first nineteen business days of 2007.

[esther231]

If they don't include 401K savings or IRA savings rates, I think it's meaningless. People are saving but no longer in the traditional ways. We sweep every cent into 401Ks or IRAs so we don't have to pay taxes on it.

[Rogerdodger]

Mark, I hope you are right.
I wonder if that 8% increase will pay the 18%+ interest on those cards?

What I see goes along with the AP article.
How many young "kids" do you see driving a new SUV or sports car with 100K in school loans?
I know lots of 'em. They all are living large.
Look in the fast food parking lot and you will see their new Mustang parked outside while they are inside flipping burgers.

As they say in Texas: They are all hat and no cattle.


There is a guy, Dave Ramsey, who travels around the country telling people how to get out of debt.
His shows usually are sell outs.
He does not take credit cards.
He has some very practical ideas. "Baby Steps" as he calls them.

He's a bit like AA for debtors.

Edited by Rogerdodger, 01 February 2007 - 11:57 AM.

[dcengr]

What's good for the government is good for the people My thinking is.. if the government is in debt, and wants to pay it off... I should go into debt so they can't ask me for $

[Rogerdodger]

Esther,

The savings rate is computed by taking the amount of personal income left after taxes are paid, an amount known as disposable income and subtracting the amount of spending. Since the figure has dipped into negative territory, it means consumers are spending all of disposable income and then some.

I don't know if the IRA's & 401-Ks are part of the equation.

A friend I know who works for the US Postal could retire now but his federal retirement, which is better than the Social security will not provide him enought to live on.
He has no home equity and is maxed out on credit cards.
He says that old age got here sooner than he had planned on.
His wife is an RN and makes good money but has very little in a 401-K.

PS: But they have everything.

Edited by Rogerdodger, 01 February 2007 - 11:41 AM.

[traderpaul]

Watched a TV show.....70% of the population living from paycheck to paycheck.....Savings.....What savings?

[qqqqtrdr]

Watched a TV show.....70% of the population living from paycheck to paycheck.....Savings.....What savings?

Not me. I lost my job at the end of October, and have no paycheque to live off of. Although $1400 a month from unemployment doesn't really pay the bills. Hopefully, I'll be back to living from paycheque to paycheque soon....

Barry

[OEXCHAOS]

On the flip side, or maybe just an encouraging sign, I have a friend who as an engineer has been laid-off 4 times in the past 6 years. Each time, he was idled for 1-3 months, and then got a job at a nice increase in pay. His current job just raised him significantly...they appear to understand his value. The point is that we appear to have a pretty fluid job market. Of course, this guy is prudent and competent and had 6 months of savings always on hand, which gives one a bit of confidence when one goes into an interview. Anyway, best of luck, qqqqtrdr. I expect you'll be a wage slave again soon! Mark

[qqqqtrdr]

On the flip side, or maybe just an encouraging sign, I have a friend who as an engineer has been laid-off 4 times in the past 6 years. Each time, he was idled for 1-3 months, and then got a job at a nice increase in pay. His current job just raised him significantly...they appear to understand his value.

The point is that we appear to have a pretty fluid job market. Of course, this guy is prudent and competent and had 6 months of savings always on hand, which gives one a bit of confidence when one goes into an interview.

Anyway, best of luck, qqqqtrdr. I expect you'll be a wage slave again soon!

Mark

Thanks Mark: Hiring activity is picking up. I hope to be on somewhere in the next couple of weeks.

Barry