Consumerism Commentary - Latest Comments in Americans Aren’t Saving, Little Splurges Add Up

Re: Americans Aren’t Saving, Little Splurges Add Up

Foobarista — Fri, 02 Feb 2007 02:35:52 -0000

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.

Re: Americans Aren’t Saving, Little Splurges Add Up

Harlan Landes — Fri, 02 Feb 2007 01:36:58 -0000

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. :-)

Re: Americans Aren’t Saving, Little Splurges Add Up

wormbuff — Thu, 01 Feb 2007 21:11:25 -0000

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.

Re: Americans Aren’t Saving, Little Splurges Add Up

Foobarista — Thu, 01 Feb 2007 20:20:27 -0000

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.

Re: Americans Aren’t Saving, Little Splurges Add Up

Nagel — Thu, 01 Feb 2007 19:59:58 -0000

Americans have negative savings rate--I did not think you could get worse than 0.

Re: Americans Aren’t Saving, Little Splurges Add Up

Leo Babauta — Thu, 01 Feb 2007 18:23:26 -0000

Good post. The problems are credit card spending, a society geared towards overspending, and the lack of good financial habits.

Re: Americans Aren’t Saving, Little Splurges Add Up

Marcus — Thu, 01 Feb 2007 16:32:52 -0000

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.

Re: Americans Aren’t Saving, Little Splurges Add Up

klerg — Thu, 01 Feb 2007 15:22:40 -0000

A cell phone...

Re: Americans Aren’t Saving, Little Splurges Add Up

moneysmartlife — Thu, 01 Feb 2007 13:52:12 -0000

Ditto on broadband. How else could we read all of the wonderful content on this site :)

Re: Americans Aren’t Saving, Little Splurges Add Up

James — Thu, 01 Feb 2007 13:14:36 -0000

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.

Re: Americans Aren’t Saving, Little Splurges Add Up

mapgirl — Thu, 01 Feb 2007 12:56:31 -0000

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.

Re: Americans Aren’t Saving, Little Splurges Add Up

Daisy — Thu, 01 Feb 2007 11:59:49 -0000

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.

Re: Americans Aren’t Saving, Little Splurges Add Up

Cujo — Thu, 01 Feb 2007 11:56:27 -0000

Many things almost make it, but one thing is absolutely a necessity since a decade ago: Broadband.

Re: Americans Aren’t Saving, Little Splurges Add Up

MoneyFwd — Thu, 01 Feb 2007 11:40:55 -0000

I think it's funny that self-described savers have ended up in the "spend mor than you can afford" category.