Since 2013, the Federal Reserve Board has conducted a survey to “monitor the financial and economic status of American consumers.” Most of the data in the latest survey, frankly, are less than earth-shattering: 49 percent of part-time workers would prefer to work more hours at their current wage; 29 percent of Americans expect to earn a higher income in the coming year; 43 percent of homeowners who have owned their home for at least a year believe its value has increased. But the answer to one question was astonishing. The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?
Well, I knew. I knew because I am in that 47 percent.The article is quite excruciating to read, especially for folks who cringe at bad financial decisions. Here was one of the author's that I was surprised to read:
We have no retirement savings, because we emptied a small 401(k) to pay for our younger daughter’s wedding.Assuming this is true and there is no other context to this statement, this appears to me to be a profound error in judgment. Don't let this happen to you, dear reader. Emptying out your 401(k) for a party (no matter how important the party) is not a wise decision.