One Emergency Away From Trouble

August 11, 2016

. . . Emergency savings should be your top priority.

"Most Americans Are One Paycheck Away From the Street." This article appeared in the Wall Street Journal on Wednesday. The article discussed statistics that should be disturbing to all of us. According to a new survey of 1,000 adults by the personal finance website,, approximately 62 percent of Americans have no emergency savings for things such as an emergency room visit or a car repair.

Consider the current Obamacare situation, insurance coverages that don't cover emergency room visits, and high insurance deductibles. More and more Americans are likely to face the need to write out a thousand dollar check for an emergency room visit or other emergency spending needs.  Healthcare Costs Up Many will go into debt in these situations - perhaps even debt that becomes unsustainable. Most of the Americans surveyed said they would simply raise the money they need by reducing spending elsewhere. Some said that they would borrow from a family member or friends. Twelve percent said they would use credit cards. None of those "solutions" sound very good . . . and we should be concerned.

Although I talk daily about investment strategies and investing, I have also stated that emergency savings should be everyone's number one priority. There is a big difference between savings and investing. Savings is something in the bank and readily available, funds we can withdraw any time to keep us from going into debt over a failed transmission in our car.

In 2014, the Federal Reserve surveyed more than 4,000 adults and learned that savings are depleted for many households after the recession. Here is the bigger problem that their report does not address: Why, since 2008, have those savings not been replenished? Simple answer: because of the attack on the middle class and middle-class wages that  have gone nowhere (when we factor in inflation). Another failed government policy. The Federal Reserve again creating a situation that prevents more Americans from spending in an economy that depends on their spending.

I have been receiving this question for several months now: "If gas prices continue to go lower and lower, why isn't the average American better off than they were with higher gas prices?" The answer? They are redirecting those funds to other household expenses and, I hope, even to savings, keeping them from spending that discretionary income and bolstering the economy. Another dismal situation created by the Federal Reserve and the government.

I don't point all this out to disturb us any more than we already are. However, I want to encourage all of you that we need to provide a level of protection for our families. This starts first with savings. If you have no savings, please don't spend $85 a year to partner with me on the website. I appreciate the support for the ministry, and we are hoping that this continues so the ministry does not go away.  Keep Saving However, the $85 would be better spent in a savings account. Put it away and save it, and continue to save regularly. Don't think about investing as a source of something that will get you out of the hole. This has never happened and it is far too risky to take those chances. The only things that will help get you out of the hole are higher wages (obviously), lower expenses, and a good solid savings account in case of an emergency. These things, after your giving need to be a priority before you start thinking about investing.

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