Seven in ten Americans don't have a thousands dollars in savings. I keep seeing this figure in various personal finance articles. The way the poll was structured, it makes it hard to tell: did all of these people seriously not have $1000 to their name, or did they just not keep it specifically in a savings account? Either way, it's a question that is definitely worth exploring.
$1000 sounds like a fortune when you're broke and in debt. In an era when prices are what they are, it's actually attainable in a fairly short time period. A time will come when you will keep an extra $1000 in the bottom of your checking account and almost never give it a second thought.
$1000 is important because there is always going to be an "emergency" need for quick cash, and almost all people are going to go $1000 into debt by putting those expenses on their credit cards instead. That means you're paying interest on top of that grand, and over time, it will cost you significantly more.
Money isn't the money you think it is. Meaning, it hits you in several ways.
Your real hourly income. Take what you earn after taxes and other deductions. Then remove anything you spend purely because of that job, such as gas for your commute, bridge tolls, or clothing you wouldn't wear as a retiree. Like, you know, pants. Then divide by the true number of hours dedicated to your job, including your commute and breaks. The first time I did this, my real hourly wage was like $3.75. When you spend a dollar, you're spending a certain amount of life energy, as detailed in the book Your Money or Your Life.
Sales tax. Whatever you bought costs slightly more than you thought, especially if you pay for a disposable shopping bag.
Interest, fines, and fees. Add in the interest on your credit card, any late charges, foreign transaction fees, etc.
The price of your time spent shopping or handling transactions like booking tickets.
Price per square foot of the place you are storing stuff, whether your home or a storage unit.
Cost of fuel or shipping to transport items. Include parking fees and your trash bill for all that packaging.
To summarize, we carry a lot of maintenance expenses for both earning and spending money, and we don't generally connect them to the personal infrastructure of our working or shopping behaviors.
Okay, back to the $1000, a figure I will be repeating over and over again until it becomes a subliminal fixation in your mind.
$1000 can be carved out of daily expenses over a short timeframe, almost instantaneously for some people. Some methods are simple, others are radical and dramatic. $1000 can also be gained by selling items, or earned through a combination of side hustles or a job upgrade. Diving the amount into smaller chunks could mean we're trying to cut $300 from our expenses, sell $300 worth of stuff we don't need as much as we need emergency savings, $300 in income from side gigs, and that leaves just $100 we could try to get from a raise, bonus, promotion, or new and improved day job.
If you are serious about getting your finances in order and you have a storage unit or cable TV, your problem is solved. Get rid of them. That $1000 emergency savings buffer will magically appear within a few months. Ah, but I know nobody engages in that kind of tomfoolery but me. Why other people choose to spend their vacation money on television and a room of stuff they never use is beyond me, but hey. To each his own.
As an alternative, it's also pretty straightforward to cut $300 in utility bills, food, liquor, dining out, beauty treatments, and entertainment for most people. It turns out that people in every quintile of income distribution spend the same percentage of their income on entertainment! (If you're already so broke that you never spend extra money on those things, focus on getting training for a better job. You have internet access or you wouldn't be reading this, so your situation isn't hopeless). You might not be able to cut $300 in one month, but surely you can do it in six.
How do you come up with $300 from selling your stuff? It depends on what you have. Sometimes it can be done in one shot, by selling a game system or a redundant piece of electronics or a large piece of furniture. Many people who are renting a storage unit can get it by selling off everything in the unit, which is a double whammy because it also eliminates that expense. Used books and (possibly) textbooks. Collectibles. Musical instruments that aren't getting played. Fashionable clothes and accessories can go to a consignment shop. Items with the tags still on can sometimes still be returned. Coin jars can be cashed in, and so can gift cards. A lot of our consumer debt tends to come from buying stuff we couldn't really afford, which then fills up our homes. We can reverse this tide by selling some of it off and using the proceeds to build financial security.
How do you earn $300 in side hustles? Get thirty people to pay you ten bucks. Or get ten people to pay you thirty bucks. Or, get one person to pay you $300 or more. It depends on what you know how to do and how useful you are. I used to charge $10 to clean a bathroom when I was a college student, and if I needed ten bucks that bad, I always found a taker. If you have virtually no skills, you can still convince people to pay you small amounts of money for menial tasks like clearing junk or dog poop out of their yard or pet-sitting over the weekend. Once you make yourself available for odd jobs, word will get out, and people will sometimes approach you with offers you wouldn't have thought of. You don't have to do it forever; the goal is just to build up that $1000 savings cushion.
How do you round out that $1000 by earning an extra $100 at your day job? Even a ten-cent raise will achieve this over time. Honestly, though, if you're broke, it's time to think about a real career. What could you put up with doing for several years that would pay considerably better than what you earn now? After I graduated from college, I earned double the money doing what I considered the same type of work. The degree paid for itself in the first year. The more I've been paid, the easier the work has been and the less hard I have felt I had to work. We tend to talk ourselves out of the best ideas, having long lists of reasons why certain things won't work for us. All we need is one thing that WILL work and one reason TO do it.
A sneaky way to get that $1000 in savings together is to avoid ways of generating emergency expenses. For instance, don't get a speeding ticket or a DUI. Don't procrastinate on dental care. Don't put off repairs, especially car repairs or plumbing problems. A lot of crisis situations are the aftereffects of minor annoyances that were left to fester. This tends to happen when we're broke and feeling like we "can't afford" maintenance expenses. We never have time to do it right the first time, and we never have the money either.
Those of us known as "savers" may or may not have $1000 in a "savings account." We may keep it in checking. We may have it in a fireproof safe in the office. We may keep it in a money market account. We may be generating so much passive income from rentals, dividends, royalties, etc that we wouldn't bat an eye over a sudden $1000 expense. We may have many times that amount in our portfolios or retirement accounts. Sadly, though, the majority of us probably don't even realize that most of those savings vehicles exist. Broke we may be, but when we keep telling ourselves the story of broke-ness, it's hard to break free and stop being broke. An extra $1000 is a great place to start.
I've been working with chronic disorganization, squalor, and hoarding for over 20 years. I'm also a marathon runner who was diagnosed with fibromyalgia and thyroid disease 17 years ago.
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