Comments on: Americans Aren’t Saving, Little Splurges Add Up http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/ A premiere personal finance blog, established 2003. Within, Flexo discusses his own experiences with money, and he and other authors comment on a wide range of personal finance topics. Sat, 21 Nov 2009 16:42:00 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Foobarista http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81524 Foobarista Fri, 02 Feb 2007 07:35:52 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81524 But millions of Americans _do_ have access, and the amounts that can be set aside are far higher than they were even a few years ago. After all, you've got 401Ks, IRAs, flexible spending accounts, kid college accounts, etc; it's quite easy for a couple to save tens of thousands of dollars in a year and still have a "negative personal savings rate". Given that the personal savings rates have dropped at the same time that the maximums on 401Ks and IRAs have gone up, one wonders if there's a correlation. After seeing one of these articles in early 2006, I calculated our own personal savings rate for 2005; it was barely positive since we'd bought a car. But we saved $45K in various tax-sheltered savings vehicles that year. But millions of Americans _do_ have access, and the amounts that can be set aside are far higher than they were even a few years ago. After all, you’ve got 401Ks, IRAs, flexible spending accounts, kid college accounts, etc; it’s quite easy for a couple to save tens of thousands of dollars in a year and still have a “negative personal savings rate”. Given that the personal savings rates have dropped at the same time that the maximums on 401Ks and IRAs have gone up, one wonders if there’s a correlation.

After seeing one of these articles in early 2006, I calculated our own personal savings rate for 2005; it was barely positive since we’d bought a car. But we saved $45K in various tax-sheltered savings vehicles that year.

]]> By: Flexo http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81519 Flexo Fri, 02 Feb 2007 06:36:58 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81519 Foobarista: considering millions of Americans do not have access to a 401k and don't contribute to a traditional IRA, the fact that pre-tax savings mechanisms are not included in these particular statistics doesn't much change the fact that savings are low. But you're right in that in order to understand any study you have to be aware of all the nuances. worm: the splurge features in technology very quickly become required... I remember when 512MB was a splurge... I remember when a hard disk drive was a splurge. Hell, I remember when a computer was a splurge. And many people older than I am can go farther with this memory experiment. :-) Foobarista: considering millions of Americans do not have access to a 401k and don’t contribute to a traditional IRA, the fact that pre-tax savings mechanisms are not included in these particular statistics doesn’t much change the fact that savings are low. But you’re right in that in order to understand any study you have to be aware of all the nuances.

worm: the splurge features in technology very quickly become required… I remember when 512MB was a splurge… I remember when a hard disk drive was a splurge. Hell, I remember when a computer was a splurge. And many people older than I am can go farther with this memory experiment. :-)

]]> By: wormbuff http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81501 wormbuff Fri, 02 Feb 2007 02:11:25 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81501 One more thing to remember is that the price-per-feature doesn't stay constant, especially over 10 years. Anyone remember the premium for getting a computer with 512MB of RAM? Very specialized example here, but it's part of the reason why "splurge features" are taken advantage of. One more thing to remember is that the price-per-feature doesn’t stay constant, especially over 10 years. Anyone remember the premium for getting a computer with 512MB of RAM? Very specialized example here, but it’s part of the reason why “splurge features” are taken advantage of.

]]> By: Foobarista http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81500 Foobarista Fri, 02 Feb 2007 01:20:27 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81500 One thing that has to be remembered is the "personal savings rate" does not include 401K or Traditional IRA contributions (Roth IRAs _do_ count since these contributions are done with after-tax income). The "personal savings rate" is calculated as the amount saved out of "disposable income", which is computed using after-tax income. It also doesn't count things like mortgage principal paydown, etc. I agree that people don't save enough, but one must be careful when interpreting statistics. One thing that has to be remembered is the “personal savings rate” does not include 401K or Traditional IRA contributions (Roth IRAs _do_ count since these contributions are done with after-tax income). The “personal savings rate” is calculated as the amount saved out of “disposable income”, which is computed using after-tax income. It also doesn’t count things like mortgage principal paydown, etc.

I agree that people don’t save enough, but one must be careful when interpreting statistics.

]]> By: Nagel http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81498 Nagel Fri, 02 Feb 2007 00:59:58 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81498 Americans have negative savings rate--I did not think you could get worse than 0. Americans have negative savings rate–I did not think you could get worse than 0.

]]> By: Leo Babauta http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81489 Leo Babauta Thu, 01 Feb 2007 23:23:26 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81489 Good post. The problems are credit card spending, a society geared towards overspending, and the lack of good financial habits. Good post. The problems are credit card spending, a society geared towards overspending, and the lack of good financial habits.

]]> By: Marcus http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81474 Marcus Thu, 01 Feb 2007 21:32:52 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81474 The ones that come to mind are the ones I've gotten because I have kids: a.cell phone, so I can be reached at all times b. burglar alarm ($35/mo.) so that I know the family is safe when I travel c. newer and safer car I don't *need* any of those things but would not want to do without them, either. Curiously - I don't include broadband as one of them. I get so much info. that I NEED from the Net that to NOT have it would cost me more in productivity than I spend for it. The ones that come to mind are the ones I’ve gotten because I have kids:

a.cell phone, so I can be reached at all times
b. burglar alarm ($35/mo.) so that I know the family is safe when I travel
c. newer and safer car

I don’t *need* any of those things but would not want to do without them, either.

Curiously – I don’t include broadband as one of them. I get so much info. that I NEED from the Net that to NOT have it would cost me more in productivity than I spend for it.

]]> By: klerg http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81466 klerg Thu, 01 Feb 2007 20:22:40 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81466 A cell phone... A cell phone…

]]> By: moneysmartlife http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81457 moneysmartlife Thu, 01 Feb 2007 18:52:12 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81457 Ditto on broadband. How else could we read all of the wonderful content on this site :) Ditto on broadband. How else could we read all of the wonderful content on this site :)

]]> By: James http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81456 James Thu, 01 Feb 2007 18:14:36 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81456 I don't have air conditioning in my car. I've never purchased a microwave, but I have one. I've had a cell phone instead of a land line for about 18 months. I've had a computer since I was 5 years old (almost 23 now). My work requires the computer. I could get away with dialup instead of broadband, but I don't wanna. I suppose I could just eat beans and rice, but I don't wanna. I splurge for tasty food (that I prepare. I rarely eat out). :P I bought a handgun this past summer. That's about it. I don’t have air conditioning in my car. I’ve never purchased a microwave, but I have one. I’ve had a cell phone instead of a land line for about 18 months. I’ve had a computer since I was 5 years old (almost 23 now). My work requires the computer. I could get away with dialup instead of broadband, but I don’t wanna. I suppose I could just eat beans and rice, but I don’t wanna. I splurge for tasty food (that I prepare. I rarely eat out). :P
I bought a handgun this past summer. That’s about it.

]]> By: mapgirl http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81454 mapgirl Thu, 01 Feb 2007 17:56:31 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81454 Broadband. My car. (Due to a job in the suburbs while 10 years ago I lived in the city and the car I used belonged to my roommates.) But I also make nearly triple what I made back then. Broadband. My car. (Due to a job in the suburbs while 10 years ago I lived in the city and the car I used belonged to my roommates.) But I also make nearly triple what I made back then.

]]> By: Daisy http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81446 Daisy Thu, 01 Feb 2007 16:59:49 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81446 I don't know about anyone else, but so much of my work is done online, I couldn't function very well without high-speed internet. I don’t know about anyone else, but so much of my work is done online, I couldn’t function very well without high-speed internet.

]]> By: Cujo http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81445 Cujo Thu, 01 Feb 2007 16:56:27 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81445 Many things almost make it, but one thing is absolutely a necessity since a decade ago: Broadband. Many things almost make it, but one thing is absolutely a necessity since a decade ago: Broadband.

]]> By: MoneyFwd http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81441 MoneyFwd Thu, 01 Feb 2007 16:40:55 +0000 http://www.consumerismcommentary.com/2007/02/01/americans-arent-saving-little-splurges-add-up/#comment-81441 I think it's funny that self-described savers have ended up in the "spend mor than you can afford" category. I think it’s funny that self-described savers have ended up in the “spend mor than you can afford” category.

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