Don’t have savings? Quit making excuses
I'm back, and I sound just like your mom: Save that damned emergency fund, already.
This week (Feb. 24-March 1) is America Saves Week. And not a moment too soon: As a nation, we're losing ground. An ASW survey shows that just 51 percent of us have a savings plan with specific goals; four years ago that number was 55 percent. (Still too low, IMHO.) Just 40 percent of us have budgets that allow for savings at all, compared with 46 percent in 2010.
The ASW report notes several reasons (stop me if these sound familiar): relatively high unemployment and underemployment rates, stagnant wages and the struggle to pay off homes. (Hint: In the past four years, the number of homeowners who expected to pay off mortgages before retirement dropped 10 percent.)
So yes, I know it can be hard to save. Boy, do I know. (More on that later.) This is especially true if you're living paycheck to paycheck or, worse, from unemployment check to unemployment check. But in most cases saving is possible.
I didn't say “easy” or “fun.” I said possible. Take a look at “Stealth savings: Sneaky ways to fatten your account.” Go ahead. I'll wait.
You'll notice I wrote that one as well. Saving is one of my personal drumbeats. I implore everyone I know (and plenty I don't know — thanks, WordPress!) to carve even a dollar a week out of their budgets and into emergency funds.
Preparing for the inevitable
Why? Because emergencies happen, dammit. If you think you're having trouble making ends meet now, wait until that bald-as-an-inner-tube tire finally blows out and you don't have a dime.
Then you might face some fairly lousy choices:
- Putting the fix on a credit card. If you're living hand-to-mouth now, how long do you think it'll take to pay that off?
- Taking out a payday loan. Don't. Just don't!
- Not going to work because you can't get there. Good idea!
Maybe you're lucky enough to have a relative or friend who will lend you money in case of an emergency. At least that way you won't have to pay interest. But the fact is, you now owe someone and have no clear plan how you'll pay it back.
If you'd saved that damned EF you could borrow it from yourself, and pay yourself back. Maybe even with interest.
Things may not always go your way
Understand: I am not berating those of you who really can't save anything due to desperate times. You know who you are.
And those of you who merely think you can't save? You may not know who you are. But I do.
You're the ones who gripe about being “broke” while eating chicken wings at a sports bar. The folks who spend a ton on concerts, sporting events, movies or other recreation without considering future needs. The men and women who treat shopping as an avocation, often dressing it up (so to speak) as “investing” in business wear.
People who eat lunch out every single day and/or refuse to learn to cook their own dinners. People who cook but who buy whatever looks good and include 12-packs of beer or soda with every grocery order. (Full disclosure: I drink Diet Coke. I also have an emergency fund.)
Women who get mani-pedis on a regular schedule. Men who insist on picking up the tab for every date. Families who sign up for satellite TVs and give their kids cell phones even though they can't pay their bills.
You get the picture. People who want what they want when they want it. People who think that they'll always have the world by the ass. People who think the books are balanced as long as they can keep the lights on, make minimum payments on their cards and look really FABulous for those feverish Saturday nights.
Wake up and smell reality
Have any of you thought about what will happen if you suddenly need a chunk of cash and don't have it? Nope, I didn't think so.
Hope the memory of those shiny nails or your team's surprise win can tide you over during your scramble to meet the unexpected obligation. Had you skipped even a few of those extras each month you'd have the money sitting in the bank, all liquid and useful.
All the interest you're paying on those cards? That's money you can no longer put to work for more useful things, such as an eventual home of your own or planning for retirement.
And heaven forbid that you lose your job. According to a 2013 study from Bankrate.com, here's how we stack up in terms of preparedness:
- Fewer than one in four have at least a six-month EF
- Half of us have less than a three-month EF
- The rest have no savings at all
If you're already living pretty close to the bone, that Saturday matinee or the weekly six-pack of craft beer might be your only luxury. I get it. It's so nice to have even a small indulgence now and then.
But you know what else is nice? Solvency. Peace of mind. A good night's sleep. Hard to have those things when you're busy robbing Peter to pay Paul (while dodging your ol' friend Overdue Bill).
Put another way: A friend of mine never answers her phone before 9 p.m., because it might be a collections agency. Some fun, huh?
Why, yes, I do have the moral high ground!
Years ago I was a single mom in a big city, employed on a “permanent part-time” basis (30 to 35 hours per week — that way they didn't have to pay full benefits). I didn't receive child support, food stamps or rent assistance. We got by, barely, but without much wiggle room.
Yet I automated a weekly withdrawal through our employee credit union and then learned to live on what was left. It was a grown-up kind of thing. You should try it.
Some of my survival tactics were extreme, especially the hand-washing of all our laundry (even the cloth diapers). But most of the ways I trimmed expenses remain timeless:
Picking up extra work. I babysat, proofread for a friend's alternative newspaper, stuffed envelopes for another friend's small business and, when times were really tight, sold my blood for $6 a pint (and the cheap bastards at the for-profit blood center didn't even give you as much as a saltine afterward — leave your liquid and hit the road, willya?).
Cooking at home: We ate a lot of homemade bean soup, spaghetti, chili and eggs, plus the cheapest fruits and veg from Philly's numerous produce stands. Once a week or so I'd buy a single chicken leg quarter from a nearby market. The guy behind the counter used to kid me: “Come on, live it up — buy two!” He would never know how I hoarded change just to be able to buy one. (It was for the baby, incidentally. However, I did use a piece of bread to wipe the fat from the baking pan for myself.)
Using coupons: Although this was back in the late 1970s, both a supermarket and a regional drugstore doubled coupons, which meant I paid little or nothing for toiletries and certain foodstuffs. This was also the heyday of manufacturer refunds; I actually subscribed to a refund newsletter because it paid for itself almost immediately, and those $1 and $2 checks were a huge help.
Eschewing brand loyalty: Generic apple juice (which I diluted with water) for the baby. Store-brand pasta because it was 20 percent cheaper than Ronzoni. Whatever toothpaste matched my coupon.
Selling stuff. In my case that was blood (see above) and books — I worked at a newspaper and the book editor, who felt sorry for me, loaded me up with paperbacks. Every so often I'd take them to a used-books emporium that paid me a dime apiece.
Knowing that I had savings was a great comfort because I felt that I was getting ahead (however slowly) despite whatever life threw at me. My small EF was a godsend when my baby needed an expensive (to me) medicine, or when the price of even a thrift-shop toddler snowsuit torpedoed my weekly budget.
I hope you never have to hand-wash diapers or sell your blood. But I do hope you'll make it your business to automate some savings for yourself. If there's one thing that's certain in life, it's that life is utterly uncertain.
So get real, get smart and save that damned EF. The future you will be glad you did. Your credit card company will probably mope, though.