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Other 18-20 year olds have higher CL

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Established Contributor

Re: Other 18-20 year olds have higher CL

A high credit line is nice to have, but money in the bank is even better. The goal should be to always have more cash than credit.
Message 51 of 62
Super Contributor

Re: Other 18-20 year olds have higher CL


@tacpoly wrote:
A high credit line is nice to have, but money in the bank is even better. The goal should be to always have more cash than credit.

I agree that money in the bank is better than credit, as money in the bank is an asset.  No argument there.

 

I disagree however that your goal should be to always have more cash than credit.  That sounds great in theory, but it's a very unrealistic goal.  It's extremely common for people to have total credit limits anywhere from 50%-100% of their annual income and there are also tons of people with credit limits higher than the income level.  It would be extremely rare (relatively) to find someone that has their annual salary or greater in cash.

 

The majority of those that have very high credit limits have them to aid in keeping their utilization very low at all times.  There is no reason for these people to have a goal of having more cash than these credit lines.

Message 52 of 62
Valued Contributor

Re: Other 18-20 year olds have higher CL


@BrutalBodyShots wrote:

@tacpoly wrote:
A high credit line is nice to have, but money in the bank is even better. The goal should be to always have more cash than credit.

I agree that money in the bank is better than credit, as money in the bank is an asset.  No argument there.

 

I disagree however that your goal should be to always have more cash than credit.  That sounds great in theory, but it's a very unrealistic goal.  It's extremely common for people to have total credit limits anywhere from 50%-100% of their annual income and there are also tons of people with credit limits higher than the income level.  It would be extremely rare (relatively) to find someone that has their annual salary or greater in cash.

 

The majority of those that have very high credit limits have them to aid in keeping their utilization very low at all times.  There is no reason for these people to have a goal of having more cash than these credit lines.


 

If by cash you meant traditional savings/checking accounts, then the correct word isn't "unrealistic", it's "inefficient." People with money don't park it in a low interest area - they make it work for them. Even those with millions in liquid assets are unlikely to keep more than $100,000 in straight-up cash sitting around in a bank.

 

Though I'm tickled to think my wife and I are extremely rare, I don't think people with liquid assets in excess of their annual salary are as rare as you think, especially those over the age of 50.  Among the 25-35 demographic, I would say it's uncommon to rare as they're still young and building up their wealth, but I would guess that somewhere around 10% of those 35+ have at least one year's salary tucked away and by 50 around 25-30% have many multiples of their salary saved.

 

We tend to have a distorted view of things from a credit forum where many people hoard cards and limits. For the rest of the country, many people have less than half their salary in credit limits, and many people only keep 2-3 cards. If I saw the world through a gamer's forum lens, it would be extremely rare to find people who don't have at least 2 monitors and modded cases too.

Message 53 of 62
Established Contributor

Re: Other 18-20 year olds have higher CL

Here's some fun statistics.

31% of Americans have nothing set aside for retirement. 19% of them are between 55-65.

44% of Americans are asset poor, having less than 3mo of savings.

28% have nothing in savings at all and 21% don't even have a savings acct.

Now start comparing this with the median household income and the current debt crisis facing Americans. Things don't look good.

...and if current trends continue it's only going to get worse.

Message 54 of 62
Moderator Emeritus

Re: Other 18-20 year olds have higher CL


@OpenG wrote:
Here's some fun statistics.

31% of Americans have nothing set aside for retirement. 19% of them are between 55-65.

44% of Americans are asset poor, having less than 3mo of savings.

28% have nothing in savings at all and 21% don't even have a savings acct.

Now start comparing this with the median household income and the current debt crisis facing Americans. Things don't look good.

...and if current trends continue it's only going to get worse.


Can we site sources please? Smiley Happy

 

Stats don't always tell the entire truth: I don't have a savings account (unless you include the secured deposits I've made and the $750 I keep parked at DCU), but I'm not underbanked... as iced posted, I think they suck as far as interest rates go so I just don't use them currently.  Cash in most savings accounts currently is a depreciating asset (inflation rate > savings rate = bleh).

 

Retirement vehicles are not necessarily pensions, IRA's and 401K's; I agree with people in another thread that betting on your home value as being your retirement is a little foolish, but in some cases it's valid (Los Angeles or other major city in California, bought in 1970 at age 25 or whatever, doing just fine now).

 

The problem with not citing sources is it's impossible to know what the criteria was, and therefore hard to guage the accuracy as a result.

 




        
Message 55 of 62
Established Contributor

Re: Other 18-20 year olds have higher CL

Sorry on my mobile...posting links is a pain.
I agree statistics can be misleading with or without citing. Certainly wasn't trying to present "alternative facts".

http://www.nbcnews.com/business/personal-finance/three-10-americans-have-no-savings-says-survey-n379...

https://www.wsws.org/en/articles/2014/02/04/cfed-f04.html

http://money.cnn.com/2014/08/08/retirement/retirement-savings/index.html

There are other sites with the same or similar data if anyone mistrusts the above sources.
Message 56 of 62
Valued Contributor

Re: Other 18-20 year olds have higher CL


@OpenG wrote:
Here's some fun statistics.

31% of Americans have nothing set aside for retirement. 19% of them are between 55-65.

44% of Americans are asset poor, having less than 3mo of savings.

28% have nothing in savings at all and 21% don't even have a savings acct.

Now start comparing this with the median household income and the current debt crisis facing Americans. Things don't look good.

...and if current trends continue it's only going to get worse.


I think I've seen these numbers before and I certainly believe them. What it really points to is the wealth inequality in our country. As of 2013, the top 10% held 76% of the nation's wealth while the bottom 50% held 1%, and it's gotten even worse since then. Source is https://www.cbo.gov/publication/51846, just for you Rev!

 

The takeaway I had from all of this is that there isn't much middle ground left anymore. You're either in the 30% side of the fence with enough wealth to live and retire comfortably or you're in the 60% that's fighting to make it to next month. There's a little sliver in the middle, but it's certainly not the size it was 50 years ago.

Message 57 of 62
Established Contributor

Re: Other 18-20 year olds have higher CL

 

When I say "money in the bank" and "cash" I meant savings in whatever vehicle and account types people deem fit. 

 

Message 58 of 62
Super Contributor

Re: Other 18-20 year olds have higher CL


@iced wrote:

 

If by cash you meant traditional savings/checking accounts, then the correct word isn't "unrealistic", it's "inefficient." People with money don't park it in a low interest area - they make it work for them. Even those with millions in liquid assets are unlikely to keep more than $100,000 in straight-up cash sitting around in a bank.

 

Though I'm tickled to think my wife and I are extremely rare, I don't think people with liquid assets in excess of their annual salary are as rare as you think, especially those over the age of 50.  Among the 25-35 demographic, I would say it's uncommon to rare as they're still young and building up their wealth, but I would guess that somewhere around 10% of those 35+ have at least one year's salary tucked away and by 50 around 25-30% have many multiples of their salary saved.

 

We tend to have a distorted view of things from a credit forum where many people hoard cards and limits. For the rest of the country, many people have less than half their salary in credit limits, and many people only keep 2-3 cards. If I saw the world through a gamer's forum lens, it would be extremely rare to find people who don't have at least 2 monitors and modded cases too.


I said extremely rare relatively, that is, relative to the whole.  You've quantified this number to be 10% for those 35+ years old.  I happen to think it's less, but even if we use your 10% number that is a relatively small portion compared to the other 90%.  And, that's age 35+ (using your numbers) so if you factor in all of those that are of credit age certainly this number is lower as you suggested; I'd happen to think it's in the low single-digits overall, which in my book is extremely rare as I originally stated.

 

 

 

Message 59 of 62
Established Contributor

Re: Other 18-20 year olds have higher CL


iced wrote:


OpenG wrote:
Here's some fun statistics.

31% of Americans have nothing set aside for retirement. 19% of them are between 55-65.

44% of Americans are asset poor, having less than 3mo of savings.

28% have nothing in savings at all and 21% don't even have a savings acct.

Now start comparing this with the median household income and the current debt crisis facing Americans. Things don't look good.

...and if current trends continue it's only going to get worse.


I think I've seen these numbers before and I certainly believe them. What it really points to is the wealth inequality in our country. As of 2013, the top 10% held 76% of the nation's wealth while the bottom 50% held 1%, and it's gotten even worse since then. Source is https://www.cbo.gov/publication/51846, just for you Rev!

 

The takeaway I had from all of this is that there isn't much middle ground left anymore. You're either in the 30% side of the fence with enough wealth to live and retire comfortably or you're in the 60% that's fighting to make it to next month. There's a little sliver in the middle, but it's certainly not the size it was 50 years ago.


+1

Without a strong middle class who is left to put money back in the economy. Certainly not the poor they have none...and the wealthy their kids get that...it's a vacuum.

Sadly I find myself on the wrong side of the wealth gap.

Message 60 of 62
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