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I think FastCompany and Forbes run a variant on this article every year. I guess that it is a way to scare more people into saving more.

For me, the question anyone should ask is this, "If I needed $2,500 right now, could I get my hands on it quickly and reliably?" That number has gone up a bit but it is the 'emergency cash' number of old which would cover "a major car repair", "bailing out of jail", "the entire medical deductible in one payment" etc. It is the equivalent of "If life throws you a curve ball can you catch it or are you going to get knocked on your butt by it." [1]

If you can't answer yes to that question then it is important to recognize that you are operating without safeguards which puts you at risk of cascading financial difficulties. And if you can't answer yes to that question to have to ask things like "am I paying for Netflix? More than a bar budget phone? Do I eat out? Do I eat pre-prepared foods rather than making my own? Am I getting the most use/wear out of the things I buy like clothes, vehicles, etc?" Basically assess each thing you spend money on and look for ways to reduce that expense or eliminate it. As a fun anecdote I talked with a young adult who felt it was too much to ask to give up Netflix/Amazon Prime (for the streaming), I showed them they could buy a DVD player for $35 and check out movies and old television shows for free from the public library. It wasn't something they had opened their mind up to. But once they looked hard at things they found a bunch of stuff that they could change and that helped them get finances into a much better order.

I like the Mr Money Mustache site for ideas on ways to cut down your 'burn rate' as well.

[1] This can also be covered by a credit card, if you don't have any credit card debt, which is to say you have a credit card with a $2,500 credit limit but it (and no other card you have) carry a balance. Basically if you pull the trigger you'll add a monthy expense for the next 'n' months to get back out of the hole you just made.

> 1. $14 / hour? The median household (yes, I know, household, but wait) income is the highest it's been since at least 1985 [1] at $59k/year. So $14 is definitely a bit lower than "normal".

If we take that household income to mean it's two earners, they're each earning $14.75/hr ...

(assuming a standard 2000 work year), which is 40 hrs/wk for 50 weeks

Some households have two earners. Most do not. The average is 1.3 earners per household. https://www.bls.gov/opub/btn/volume-6/use-with-caution-inter...

Right, so that's a median per-worker wage of around $22/hour. But $14/hour is right in the middle of the 2nd and 3rd income quintiles [1], meaning a solid 40% of Americans don't even make that much. It's not a very strong argument unless you're OK with current poverty and lack of retirement ability trends for large swathes of the country.

[1] https://www.taxpolicycenter.org/statistics/household-income-...

Read the title of the article again ;-) Most Americans can retire. And there's this pretty broad movement to rationalize middle class earners failing to save. For those earning under ~25k/year, I agree: it's challenging. Especially if they've got medical problems or other extenuating circumstances to deal with.

Not disagreeing with the article title, just with your assessment of what "normal" means in the context of earnings for Americans. I think we just have different ideas about what segment of the population that term should apply to.

Under 25k/year pre or post tax?

Fixed costs have gotten too high, and these prices are inelastic. I think the only way to fix it is wage inflation across the board.

> I think the only way to fix it is wage inflation across the board.

And to convince people to spending so much.

The new iPhones will be announced next week. How many will buy a $1000 phone yet not have $1000 saved for any kind of emergency?

Yes, exactly.

Also: How do those "FIRE" millenials manage to retire at 30? By living WELL below their means. It's no a lifestyle for everybody, but it demonstrates that money skills can be learned.

$30,000/year 43 years from now will be sub-poverty living. Based on prior inflation, you're looking at $6,600/year

These are inflation-adjusted numbers. https://www.investopedia.com/terms/f/four-percent-rule.asp

As far as the amount to save, I've always figured that about 7.6% will get you the same pre-tax income at retirement assuming net growth of 7% (after 45 years of work -- age 20 - 65) minus FICA (since you don't pay FICA on 401k withdrawals or investment interest income). You can also probably get by with less in retirement, if you have a house paid for by then and don't drive as much. But you will have to pay some amount a month for medicare, so that should be factored back in.

If you assume 5% growth, then you will need to save about 14% of your income. Here, I'm using the average returns of the stock market minus inflation should get you 7%.

>eat anything but rice and beans ...

This reads like a descent into satire.

I prefer Pork and Beans myself. But perhaps people who eat Pork and Beans are supposed to be poor?

The referenced calculator is:

https://saver.oregonsaves.com/home/educational-tools/simple-...

"The assumed investment rate of return before you retire is set at 4%, compounded annually."

The S&P500 has an average rate of real return of 7%, which makes an enormous difference.

> The IRA won’t make anyone rich. A calculator on the site estimates that if you’re 22 years old and making $14 an hour–saving around $120 a month–you could end up with around $230,000 by the time you’re 65

So no room for 2 years of education or a drop year for health issues or layoffs or travel or starting a risky business?

Look, it's just math. Of course there's room for these things. Learning to consume just a little less than you currently do grants you a ton of flexibility.

Just out of curiosity, do you have kids?

It's staggering that this is the top voted comment.

> car loan

most of America doesn't have any way of getting to jobs without one

> eat anything but rice and beans

most people need fundamental nutrients from vegetables just to be able to survive, these vegetables tend to be more expensive than less healthy things

> a >$30 month cell phone bill

internet access gates opportunity in American and for many people their cell phone (which they cannot afford to pay for up front and therefore must lease) and its data plan is there only gateway to the rest of the world

> drink anything but water, have cable tv (or assuming Netflix)

any right to a Gatorade after shooting hoops at your dilapidated public park on a hot day, any right to 30 mins of entertainment after working your mind numbing job that drains of you all life

> You've got obvious improvements you can make to get out of that dilemma.

Why?

Why is the right to a just life gated by the requirement to surrender basic humanity? Who is this we?

A toss off link to a Wikipedia article?

The Census Bureau itself says American household income is the same since 1987 [1] while cost of housing, education and healthcare goes 2x-3x in the last decade alone [2]

How does a world view like this even get formed?

[1] https://img.washingtonpost.com/wp-apps/imrs.php?src=https://...)

[2] http://slatestarcodex.com/2017/02/09/considerations-on-cost-...

This place baffles me sometimes.

> most of America doesn't have any way of getting to jobs without one

Two things:

1. That's patently false. Most trips in vehicles are between 1 and 10 miles in distance. Anyone without serious health problems can do that on a bicycle quite easily.

2. You don't need a car loan to own a car.

> most people need fundamental nutrients from vegetables just to be able to survive, these vegetables tend to be more expensive than less healthy things

My statement was about people who were broke and/or in debt. And it's not a 100% meal plan, but rice and beans is a good cheap staple food. You can add in cheap produce, too. The crux of the point is: if you're in debt and spending more than ~$1 per meal, you've got an easy way to cut costs.

> internet access gates opportunity in American and for many people their cell phone (which they cannot afford to pay for up front and therefore must lease) and its data plan is there only gateway to the rest of the world

Libraries have free internet and computers. And for cell service, using an MVNO, you can spend ~$30 and get 1GB of data, 100 mins of talk time, 100 text messages. (see Ting.com for example)

>any right to a Gatorade after shooting hoops at your dilapidated public park on a hot day, any right to 30 mins of entertainment after working your mind numbing job that drains of you all life

Are you serious? Getting out of debt is infinitely more important than having a Gatorade or watching Netflix. Especially when there are obvious free alternatives. Streaming Netflix hasn't been around a decade, and it's now "surrendering basic humanity" to go without? That's a pretty fragile position to take.

That means a 45 min long trip each day to work. Hopefully you have a shower and clothes change, I'm assuming very fast driving here. Otherwise 2h each averaging "comfortable but fast" 10 mph. (silly units) Good luck trying to actually hold such an average.

Dependents will be a major problem in such a scheme, adding another 2 hours. Unless there is a good bus connection, give it half an hour then. (those are not free but still inexpensive)

Libraries put even more pressure on transportation. It should be cheaper to use a mail order service. Heck, even for bigger groceries.

These are costs all hidden in plain sight. Everything takes a lot of time in the US if your mode of transport is not a car.

Now to own a cheap used car also has costs. And a poor person cannot afford a cheap modern car, used car market is full of landmines and a poorer person cannot afford even one failure in this regard.

> Otherwise 2h each averaging "comfortable but fast" 10 mph. (silly units) Good luck trying to actually hold such an average.

What? I'd bet 99% of the people on a cheap road bike could get to 12-15 mph without even thinking about trying. 10 mph requires a ridiculously low 0.4 W/kg power output. (For reference, walking up stairs requires around 2.5 W/kg.)

This idea that having a car and eating more than beans and water means you’re spending too much comes from those (slightly fanatical) Money Mustache followers. I agree that we should not advocate for a world where we have to sacrifice a middle class lifestyle in order to retire middle class.

If you're broke. If you're in debt, you absolutely should be making some sacrifices to get out of debt. Once you have some money saved, feel free to spend on the luxuries you most desire.

But you mentioned car and internet services, those are not luxuries in this day and age when they are required for work

Car and/or internet aren't required for all work.

I think you're solely being downvoted for "bashing" MMM.

Agreed, MMM followers are die-hard. And I honestly applaud them for that. There's a middle road he also preaches about, realizing his method won't work for most people. Though I'd bet that most people don't get that far in his blog when he begins to talk about that.

I think if we use the big takeaways from what he's saying; we can all gain a little financial independence. Not everyone can get away with what he can in a beautiful town in Colorado. And he realizes that.

They're all saying the same sorts of things: Financial Advisors, Dave Ramsey, MMM et. al. The fact that most people aren't listening to them is the truly alarming part of it: Save, and don't overspend; or you'll be working for the rest of your life.