Comment by wholinator2 | Hacker News Reader

Comment by wholinator2 | Hacker News Reader

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That's very good for you, you should count yourself lucky. But i think we should trust people when they tell us how they feel. Do you live paycheck to paycheck? Are you aware that a majority oh Americans (55-69%) do, defined as struggling to save or invest anything past the monthly expenses?

I'm a late 20s man who made it into tech, I'm doing great! My friend who got into tech might kind of hate their corporate job lives but they're monetarily at least able to pay their student loans after 5 years of working. A few kids were able to start construction/lawn businesses, i don't know the details but they appear to be doing well. Every single other person that i know, who's finances I'm aware of directly, or indirectly (social media posts, etc. ) is having a hard time right now. I can count on one hand the number of people who feel good about the current US economy that i know, i speak and have spoken to dozens of people about this.

Literally only the comp sci graduates are having a good time right now, and even that's starting to tighten. Jobs are getting more scarce, people have to take pay cuts to be able to actually have a life again, etc. You could say I'm doing well right now and then i could say that must mean everyone is doing well and the whole thing is propaganda. But there's a lot more than just successful people out here, we're on HN anyways, that says a lot about our socioeconomic status and friend groups.

> Are you aware that a majority oh Americans (55-69%) do, defined as struggling to save or invest anything past the monthly expenses?

How can that be? Only ~30-35% of Americans rent a home, which means that ~65-70% of Americans either own a home or are freeloading (e.g. living with parents). Only ~3% of homes are considered to be underwater, which means virtually all those who own a home have been able to save over and above their monthly expenses.

So, especially on the high end, if 69% of Americans are unable to save, while virtually all homeowners have been able to save, and even if we assume all renters cannot afford to save, that suggests 34% of Americans are freeloaders. It seems highly unlikely that all renters are unable to save (what about the tech people who rent?), but whatever.

How do we resolve that? The freeloader figure is in the ballpark of what the data suggests if you are counting all the way down to babies. Is that what you've done here? But nobody would ever think that a baby should have an income that allows them to save, so you're kind of being disingenuous if that is the case. I find it hard to believe you would state this figure including children.

Or is it that you mean 55-69% of Americans do not have money in a savings account – as in a specific type of bank account? I have seen reports like that before so maybe that's where you got the idea? If that's what you mean, it is quite believable that the majority do not keep money parked in a savings account. The interest rates in such accounts are rarely compelling, so why would they?

Being underwater on a mortgage and not being able to save aren't the same.

A mortgage that is underwater means the value of the home is less than the loan balance. That can happen for any number of reasons.

It doesn't mean anything about your ability to save money. If you make $5k a month and spend $5k on expenses, you can make all your mortgage payments (whether or not that mortgage is underwater) but still not save.

When outlets report savings of Americans they don't typically mean just in savings accounts.

> A mortgage that is underwater means the value of the home is less than the loan balance.

Indeed. Which means that when a home is not underwater, the owner has savings (or is breaking even, of course, but that is as equally unlikely and is for all intents and purposes considered to be the same as underwater).

> If you make $5k a month and spend $5k on expenses, you can make all your mortgage payments (whether or not that mortgage is underwater) but still not save.

Interest-only loans account for only 1-2% of mortgages. Outside of that small group, and the small group underwater (which very well may be the same group), if you are paying a mortgage, a portion of that is a portion you are saving. Mathematically, that has to be true. There is no way around it.

> When outlets report savings of Americans they don't typically mean just in savings accounts.

So, then, again the numbers don't add up unless we're counting children. Why would you count babies in those not able to save? Is a newborn not making enough money to be able to save a problem or somehow notable?

> Which means that when a home is not underwater, the owner has savings (or breaking even, of course, but that is as equally unlikely and is for all intents and purposes considered to be the same as underwater).

What? It doesn't mean this at all. You can have savings and still be underwater. If you have a 3.5% for your mortgage, but the market crashes after you bought at the peak, you can be underwater because your house lost value. And it would be foolish to pay down the loan rather than get a better rate for your savings.

Underwater mortgages are totally orthogonal concepts to savings.

> if you are paying a mortgage, a portion of that is a portion you are saving

I think I see your confusion. Yes, money saved into a home is an asset that you are building over time. However it's a non liquid asset, it's difficult to turn back into cash for, e.g., a surprise medical bill.

Repayment of a loan meets the strict mathematical definition of "savings" however it is typically excluded (as are, e.g., investments). For instance, the U.S. calculation of GDP does not consider repayment to be saving.

Savings are typically held in checking accounts, savings accounts, CDs, and money market accounts. Some people take a portion of their savings and invest them in higher risk items like stocks and bonds, but those are investments.

It's important to decouple the concepts of net worth (or even just worth) from the concept of "savings" because you can be taking actions that increase net worth (e.g. paying a mortgage) that don't increase one's savings. (Though, eventually, if you sell the home you could put any proceeds into savings.)

> You can have savings and still be underwater.

You wouldn't have savings in the house, but it is possible you have savings elsewhere, sure. However, if you are not underwater (or breaking even), you do have savings in the house, which is what the context speaks to specifically.

> Yes, money saved into a home is an asset that you are building over time. However it's a non liquid asset

There is nothing about savings that implies they must be liquid. If you are saving for a near-term purchase then savings for all practical purposes need be liquid, sure, but if you are young and saving for retirement liquidity is not of terrible importance. You have many decades in front of you to convert it into something else.

> Savings are typically held in checking accounts, savings accounts, CDs, and money market accounts.

Okay, but then we're again back to people not having savings because the returns have generally been poor, even basically non-existent in many cases, for a long, long time. Why would most people have savings in that kind of environment? The market has greatly incentivized surpluses to look elsewhere – especially towards real estate, where returns have been tremendous.

> It's important to decouple the concepts of net worth (or even just worth) from the concept of "savings"

That's for the earlier commenter to decide. It is not on us to prescribe their usage of a term. However, insofar as our discussion goes, it there is no such importance as we have already looked at both angles. No matter which direction you choose to go, the math doesn't add up with the presentation.

> There is nothing about savings that implies they must be liquid.

Here are several examples that disagree. Yes, in a strict Keynesian economic sense it is saving but saving is different from savings, despite the similarity in the two words. (Yes, you are right, this is confusing.)

Examples defining "savings" in personal finance:

https://www.investopedia.com/terms/s/savings.asp

"Savings is essentially cash"

https://www.britannica.com/money/saving

"Saving may take the form of increases in bank deposits, purchases of securities, or increased cash holdings."

https://en.m.wikipedia.org/wiki/Saving

"In terms of personal finance, saving generally specifies low-risk preservation of money, as in a deposit account, versus investment, wherein risk is a lot higher."

> Here are several examples that disagree.

Disagree with what? I fail to see the difference from definition two.

It does not match definition one, of course, but that had to exist in an effort to be fair to the original commenter. It is not like you are going to go in like a horribly confused idiot and randomly redefine tillage or something. If the OP is using savings in the sense of the positive net value of a home, rationally one will be accommodating to that.

But it doesn't really matter what definition you choose. The math doesn't add up to what was presented under any definition.

The original poster is correct, the majority of Americans live paycheck to paycheck. With no savings (in the personal finance sense).

Example: https://www.forbes.com/advisor/banking/living-paycheck-to-pa...

What's challenging for you about these numbers? Your original response included mortgages in saving, which is atypical. If you exclude mortgages, which is typical, do the numbers make more sense?

> It is not like you are going to go in like a horribly confused idiot and randomly redefine tillage or something.

Try to remain on topic and avoid ad hominem, please.

> The original poster is correct

Seemingly not, else we'd have seen the math already. Also,

1. Not having savings (in the personal finance sense) does not mean one is living paycheque to paycheque.

2. The article you link to defines living paycheck to paycheck as a scenario where the family income does not cover expenses. Principal repayment is not an expense. Outside of the 1-2% with interest-only mortgages, anyone who is paying a mortgage cannot be living paycheck to paycheck under the definition you have given. They must have surpluses over and above expenses in order to do so.

Again, the math does seem to work in that sense if you include children. But is there some reason we should be aware of newborns not making enough money to save?

> Try to remain on topic and avoid ad hominem, please.

1. It is on-topic. It explains why multiple definitions are present.

2. Ad homiem implies being directed at a person. The statement is not directed at a person.

> Principal repayment is not an expense.

In the links I posted several comments above, you'll find that it is considered an expense for the purposes of personal savings.

I don't disagree with your definition, btw, it's just not the common one.

What are you referring to specifically? I only noticed one bit that suggested that a loan payment is an expense, but:

1. It does not make clear what the payment is. If it is only to pay the interest portion of the loan, there is little question that it is an expense. That would be outside of the topic of principal repayment, though.

2. If we assume there is a principal portion included in the payment, it is said only with respect to student loans. The product of a student loan retains no value – literally worthless the moment you drive it off the lot. As such, it is not unreasonable to consider the principal an expense. There truly is nothing left. A house, not so much. Unless the house has lost value (an atypical situation), you didn't give up anything.

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