US savings rate drops to lowest since 2007

[TheAnonOne]

https://finance.yahoo.com/news/u-consumer-spending-rises-savings-134046394.html

Even though wages have been finally creeping up (slowly) and taxes are getting cut people are outspending BOTH of those and dipping into their savings.

(Not a call for anything majorly bad, just WHAT ARE PEOPLE THINKING!)

[MgoSam]

Yeah that's the thing that scares me about people. I wish more people would save money but of course they aren't going to. I wish people wouldn't use payday loan services but they will.

I used to think that the reason that people act this way is because they don't know better and as a result the government should put laws and regulations in place to ensure that honest people don't get ripped off, but I just don't see that any more. People stay poor in part due to their own choices. I absolutely hate saying that as there are a ton of things out of all of ours hands, for instance I have a habit of saving because it was instilled into me as a youth...I can imagine an impoverished family not being able to teach the same lesson to their son, which can impact his life.

[honeybbq]

2.4%???

[dougules]

We have a culture that's socially engineered for max consumption.  There wouldn't be ads everywhere if they didn't work.

[FireLane]

I always get a little shock when I read something like this and I'm reminded of how abnormal we Mustachians are (statistically speaking).

I would regard a 10% savings rate as frighteningly low. But for most of America, it's preposterously high.

[JLee]

https://finance.yahoo.com/news/u-consumer-spending-rises-savings-134046394.html

Even though wages have been finally creeping up (slowly) and taxes are getting cut people are outspending BOTH of those and dipping into their savings.

(Not a call for anything majorly bad, just WHAT ARE PEOPLE THINKING!)

Tax cuts aren't relevant yet, as withholding changes are just barely taking effect. Still though, 2.4%...damn!

[NoraLenderbee]

Does the savings rate cited in this article include retirement savings? Some previous similar reports did not count them. I would dig a little deeper before assuming that the 2.4% number is meaningful.

[ginjaninja]

I don't know why there isn't a class to show how much a loan actually costs, how to pay taxes, how to budget, or just general personal finance that they teach in high school.  You could even make it into a math class!  I feel like we need this so badly but finances are too taboo to talk about.....

[TheGrimSqueaker]

I don't know why there isn't a class to show how much a loan actually costs, how to pay taxes, how to budget, or just general personal finance that they teach in high school.  You could even make it into a math class!  I feel like we need this so badly but finances are too taboo to talk about.....

In the Albuquerque school district there is, but they save it for last and offer it in 12th grade, long after most of the kids who really need it have dropped out.

[simonsez]

The worse it is overall, the better the credit card rewards on no annual fee credit cards will be.

[dougules]

I don't know why there isn't a class to show how much a loan actually costs, how to pay taxes, how to budget, or just general personal finance that they teach in high school.  You could even make it into a math class!  I feel like we need this so badly but finances are too taboo to talk about.....

Yes, how is it that 18th century English literature is still important but personal finance isn't?  It should be one of the most basic classes in high school.   

[slugline]

What I see is an American obsession with growth, growth, growth in the GDP -- regardless of whether we're creating enduring wealth or anything of sustainable value, really.

[daverobev]

There was a piece on the CBC the other day, about how there is a large chunk of society that has never seen inflation. That's something worth thinking about. Debt is cheap at the moment, and saving (not investing) is really not that great (I get that interest rate - inflation rate = true rate, but still).

What I find scary is people just... shrugging/laughing off the idea of even 6-7% mortgages (of course you in the US have mortgage rates fixed for the life of the mortgage, but still).

[Nancy]

I don't know why there isn't a class to show how much a loan actually costs, how to pay taxes, how to budget, or just general personal finance that they teach in high school.  You could even make it into a math class!  I feel like we need this so badly but finances are too taboo to talk about.....

Yes, how is it that 18th century English literature is still important but personal finance isn't?  It should be one of the most basic classes in high school.   

I first learned about FIRE through reading 18th century English lit in high school. While most of my friends were swooning over Darcy, I couldn't stop thinking about his income of £10,000 per year despite not working (he was of the landed gentry). I immediately went to the library and checked out books on investing.

[GuitarStv]

I don't know why there isn't a class to show how much a loan actually costs, how to pay taxes, how to budget, or just general personal finance that they teach in high school.  You could even make it into a math class!  I feel like we need this so badly but finances are too taboo to talk about.....

Yes, how is it that 18th century English literature is still important but personal finance isn't?  It should be one of the most basic classes in high school.   

I first learned about FIRE through reading 18th century English lit in high school. While most of my friends were swooning over Darcy, I couldn't stop thinking about his income of £10,000 per year despite not working (he was of the landed gentry). I immediately went to the library and checked out books on investing.

Sure, and I saved up my 2$ per week allowance for two and a bit years to buy a nintendo . . . which taught me a ton about finance, budgeting and delayed gratification.  Despite that incredible utility (not to mention the later developed thumb dexterity and strength), I'm not sure that Nintendo should be taught as a topic in school.  :P

[Abe]

We read Harry Potter in English class in high school. Way better than learning about anything useful in life. I hid "A Millionaire Next Door" in my book and read that instead.

Anyway - yeah it's impossible to save and we're all eating cat food in the year 2050. Luckily cat food will be engineered to provide optimal nutrition to elderly humans. Everyone wins!

[ixtap]

Savings are down, debt is up, but is there a measure of personal debt ceilings? I am curious to know how close to maxed out these debt carriers are.

[Capt j-rod]

Sadly this will create more opportunities for those of us that are saving. "sell when everyone is buying, and buy when everyone is selling". Ultimately this will blow up. Higher gas prices, higher interest on flex rate mortgages, and a dip in the work load will put us in a tail spin. Pay check to paycheck when times are good gets me more houses and more renters. I hate to prey on stupidity but when in Rome...

[Just Joe]

Savings are down, debt is up, but is there a measure of personal debt ceilings? I am curious to know how close to maxed out these debt carriers are.

A quick Google search reveals a plethora of articles about ways to increase one's debt ceiling...

[ixtap]

Savings are down, debt is up, but is there a measure of personal debt ceilings? I am curious to know how close to maxed out these debt carriers are.

A quick Google search reveals a plethora of articles about ways to increase one's debt ceiling...

Of course, but I was curious about how close the average is to truly maxed out, both at their current credit level and as an absolute, if there is one.

[dougules]

Sadly this will create more opportunities for those of us that are saving. "sell when everyone is buying, and buy when everyone is selling". Ultimately this will blow up. Higher gas prices, higher interest on flex rate mortgages, and a dip in the work load will put us in a tail spin. Pay check to paycheck when times are good gets me more houses and more renters. I hate to prey on stupidity but when in Rome...

I don't think it's a good thing for anybody at least not in the long run.  When it does eventually blow up it will take the economy with it just like it did a decade ago.  When the economy goes down, investors suffer, too. 

[Capt j-rod]

In 2008 many lost their home and their credit... Where did they live? Rentals. Now that times are good, many don't want the hassle, or to be tied to one location that is part of home ownership. Where do they live? Rentals. When the market tanks and the sky is falling I can drive by my property and it is still there making the same returns. YES it is a pain in the ass and a lot of work. But to me I like investing in something that I have more control over the outcomes and the rules. FWIW, I carry 1 mortgage on 1 of my 6 properties. I can rent them for 1/2 of what I do currently and still make money. Changes = opportunity. Some good, some bad. No one including myself wants a bad economy. When the property values drop, so does my net worth. Just like the stocks, when the market tanks a mustache invests more. When the housing market tanks, I buy more. It's just business.

[facepalm]

I don't know why there isn't a class to show how much a loan actually costs, how to pay taxes, how to budget, or just general personal finance that they teach in high school.  You could even make it into a math class!  I feel like we need this so badly but finances are too taboo to talk about.....

Yes, how is it that 18th century English literature is still important but personal finance isn't?  It should be one of the most basic classes in high school.   

It used to be.

I played the stock market game (you get $1,000 of fake money and get to pick stocks) in middle school. I also took home ec in high school, so in addition to learning how to make crepes we also learned basic budgeting and how to balance a checkbook. But with NCLB and budget cuts, those types of classes fell by the wayside.

However, the Common Core (CCSS) does actually have a personal finance/economics component which all 50 states have signed up for. Half the states require HS economics.  So things are looking up.

I actually have hope for the current crop winding their way through the system. They are far less materialistic than their parents, more cynical, and are "on" to advertisers. 

[Nancy]

Sure, and I saved up my 2$ per week allowance for two and a bit years to buy a nintendo . . . which taught me a ton about finance, budgeting and delayed gratification.  Despite that incredible utility (not to mention the later developed thumb dexterity and strength), I'm not sure that Nintendo should be taught as a topic in school.  :P

Completely agree! We should be focusing on the real classics like the Magnavox Odyssey. Pretty sure Homer wrote a longish poem about that one.

Also, let's travel back some 30 years and give your young self a high five. Well done, sir [human, robot, other]!

[partgypsy]

Since the last year and a half, my savings rate is the lowest it's been. I'm only saving 6%, plus 5% matching. Replaced the roof for 15K in 2015. Have a kid in expensive private school (this is the last year, can't afford) husband left in 2016 so since then been responsible for the mortgage and all recurring bills. I needed to get a car after hubby left, hello car loan. The AC broke 4 years ago (been living without central air); this winter the furnace did as well, so both were replaced to the tune of 5200. Oh yeah in June computer got fried by a lightning bolt another $700 cost. Until debts are paid off no plans to increase retirement savings. I've never seen myself as normal or average, but in this situation (increased spending and debt, lowered savings), I'm fitting in with the rest of the US!