To an extent, you are at increasing risk of ruining your life, if you lose your job and you are unable to make money in any other reasonable way, such as through a web-site, or through consulting.
And if you don't have savings you can be completely screwed basically.
A lot of people in this country have gone from: high-paying job, lots of credit card debt, living lavishly, to poorer paying job, living frugally, low debt / savings.
If you don't owe anyone money, and have a low burn-rate, and can live frugally, this gives you substantially more options in terms of taking a lower-paying job and making it work, or striking out on a start-up which may limp along for a couple of years.
And if you don't have savings you can be completely screwed basically.
I really, really don't understand people who don't have savings. I would adjust my lifestyle down until I could save money, no matter how far down I had to go. I'd share a two bedroom apartment with three other people, get rid of my mobile, forgo cable, heat, new clothes... whatever I had to do.
Shit happens. You need to have some cash to deal with it.
Well, but all that needs to happen to be caught without savings is for shit to happen twice in close succession, with the first problem depleting your savings. If you have a major medical or other expense, and then you lose your job less than a year later... Well, there you are.
That's true even if you are in a position to save. There are those who are not: sometimes you can't reduce your expenses as your income drops. This is especially true if you have children.
So really, you don't understand people who don't have savings... assuming they have, up to now, had relatively problem-free and low-commitment lives.
I'd share a two bedroom apartment with three other people
Yes, but would your wife and two teenage children? People who usually get caught in such traps usually aren't twenty somethings who can get by on nothing.
There's something different about us. We're smart. It really is an exceptional trait. If you're anything like me, you may well mute commercials, or just not watch TV at all. That and a baseline of saving 15% of your income. I did that for years, allowing me to survive a jolly long unemployed patch.
In general, too many people have crappy jobs, a long stressful commute, 8 hours in a cube, a poor diet, and debt up to their eyeballs, because everyone on TV has an SUV, so they need to have one too. And with little time, they have to eat out a lot, or eat processed foods. That's a huge stressor.
Lifestyle is expensive and easily eats up the $120,000 income of a couple working a job each, if you aren't careful. And if they spend it as it comes in, just getting by really, then there's no savings for when they hit that rough patch.
And if you don't have savings you can be completely screwed basically.
A lot of people in this country have gone from: high-paying job, lots of credit card debt, living lavishly, to poorer paying job, living frugally, low debt / savings.
If you don't owe anyone money, and have a low burn-rate, and can live frugally, this gives you substantially more options in terms of taking a lower-paying job and making it work, or striking out on a start-up which may limp along for a couple of years.