Paycheck-To-Paycheck Nation

[dang1]

Paycheck-To-Paycheck Nation: Why Even Americans With Higher Income Struggle With Bills . https://www.npr.org/2020/12/16/941292021/paycheck-to-paycheck-nation-how-life-in-america-adds-up  survey after survey for years has found that most people in the U.S. live paycheck to paycheck

[Bloop Bloop Reloaded]

More of the usual, wah, middle class earners living paycheque to paycheque because they can't budget or live within their means and have inflated expectations of what life owes them.

I have no idea how some of these middle- and high-earners on $100k a year+ manage to blow all that money. It can't be that every one of them is bankrupt by medical bills, etc.

I couldn't spend that much money if you paid me to...other than, I guess, by buying a supercar or something.

[joe189man]

where i live a $100k salary funds daycare for two young kids and a average house payment and nothing more

you need a partner and their salary for food, utilities, student loans, etc

ETA: not complaining but its easy to blow through the money quickly

[bacchi]

where i live a $100k salary funds daycare for two young kids and a average house payment and nothing more

you need a partner and their salary for food, utilities, student loans, etc

ETA: not complaining but its easy to blow through the money quickly

Eh. When budgets are posted in these articles, there's usually a LOT of waste involved. There are new car/truck payments, large houses, high phone bills with a flagship phone, a boat, etc.

[maisymouser]

where i live a $100k salary funds daycare for two young kids and a average house payment and nothing more

you need a partner and their salary for food, utilities, student loans, etc

ETA: not complaining but its easy to blow through the money quickly

My issue with this thinking is that people have kids in a HCOL area, THEN find out how expensive daycare is, instead of planning ahead. Children should be treated as major investments/expenses, not dissimilar to buying a house you can't afford/maintain*. To be fair, costs of childcare have risen, but not to the extent that people who were (imho) properly planning for kids in the first place should be living check-to-check.

*Yes, it is possible to be prepared financially for kids and then have things hit the fan. There are those that find themselves with kids by accident or without much choice in the matter**. There are situations where divorce, job loss, rising expenses, medical issues**, relocation impacts a HH's financial picture dramatically. But there are certainly people who dive headfirst into having several kids without planning for the long-term. People make intentional choices to spend loads on their children unnecessarily (new clothes that last a month! disposable diapers! brand new toys galore!) even when they are infants. Those are the people I mean to address in this post.

**This should not be the case in a developed country like the US and is shameful.

[slappy]

where i live a $100k salary funds daycare for two young kids and a average house payment and nothing more

you need a partner and their salary for food, utilities, student loans, etc

ETA: not complaining but its easy to blow through the money quickly

My issue with this thinking is that people have kids in a HCOL area, THEN find out how expensive daycare is, instead of planning ahead. Children should be treated as major investments/expenses, not dissimilar to buying a house you can't afford/maintain*. To be fair, costs of childcare have risen, but not to the extent that people who were (imho) properly planning for kids in the first place should be living check-to-check.

*Yes, it is possible to be prepared financially for kids and then have things hit the fan. There are those that find themselves with kids by accident or without much choice in the matter**. There are situations where divorce, job loss, rising expenses, medical issues**, relocation impacts a HH's financial picture dramatically. But there are certainly people who dive headfirst into having several kids without planning for the long-term. People make intentional choices to spend loads on their children unnecessarily (new clothes that last a month! disposable diapers! brand new toys galore!) even when they are infants. Those are the people I mean to address in this post.

**This should not be the case in a developed country like the US and is shameful.

Yes, I have this first. I know a couple of women who tried for a year+ to get pregnant, and then were shocked at the cost of daycare. Apparently during the during the year+ of planning or the first six months of pregnancy, they never considered the cost of child care.

[slappy]

From the article: "A house. Two cars. A kid in college. Debi and Nick Lemieur had all the markers of a middle class life. But they both remember one purchase — Nick's $600 bass amplifier — that prompted one of the biggest fights in their four decades of marriage.

"He didn't tell me he hid it in the trunk of the car, and I found it," Debi says, laughing, 14 years later. "To me it was like, oh my God, how much will this screw with our budget?"

An unexpected bill like that is what separates millions of Americans from financial disaster."

Buying a $600 bass amplifier is an unexpected bill????

[EricEng]

where i live a $100k salary funds daycare for two young kids and a average house payment and nothing more

you need a partner and their salary for food, utilities, student loans, etc

ETA: not complaining but its easy to blow through the money quickly

Ok, I'll bite.  How much is the house payment and daycare costing there to eat through $70-80k (after taxes)?  With mortgage rates so insanely low atm, you must be talking about $1mill+ housing.

I also get annoyed that people treat daycare like a long long expense.  It is fixed time span because they age out to public school, so you can determine a total cost or even plan ahead for it.  For most people it's 3-5 years expense.  You can (try at least to) also plan ahead by having all your kids close together and having one spouse stay home (our plan in action atm) instead of spacing them 3-5 years apart like many seem to.  That way they overlap while going through that 0-5 year old span and you get more benefit from a stay at home parent.

As for the article, the budgets they show are crazy.  A mother+2 teens who has ~$1000/month utility bills that doesn't include car or housing??  $800+/month for food for three people?  At her income the teens should be getting free breakfast and lunch at school.  The budgets just get more insane as you go along in the article.  There is so much fat that could be cut in all of them.

[researcher1]

where i live a $100k salary funds daycare for two young kids and a average house payment and nothing more

you need a partner and their salary for food, utilities, student loans, etc

Where do you live???
You can't compare a $100K salary in a HCOL area, where expenses and median salaries are much higher.

The vast majority of the country is able to live quite comfortably on a $100K household income.

[Luck12]

The headline overstates things for high income people though.  Only 16% (granted still too high) making 100-200K struggle with basic expenses (although I bet most could cover them at least temporarily with 401K, IRA, etc) compared to 63% making less than 25K and 47% making 25K-49K.   Clearly it matters a lot how much you make.  And lest people think this is some new phenomenon, I assure you it is not since these #'s don't seem far off from what I remember from 20+ years ago. 

[slappy]

where i live a $100k salary funds daycare for two young kids and a average house payment and nothing more

you need a partner and their salary for food, utilities, student loans, etc

ETA: not complaining but its easy to blow through the money quickly

Ok, I'll bite.  How much is the house payment and daycare costing there to eat through $70-80k (after taxes)?  With mortgage rates so insanely low atm, you must be talking about $1mill+ housing.

I also get annoyed that people treat daycare like a long long expense.  It is fixed time span because they age out to public school, so you can determine a total cost or even plan ahead for it.  For most people it's 3-5 years expense.  You can (try at least to) also plan ahead by having all your kids close together and having one spouse stay home (our plan in action atm) instead of spacing them 3-5 years apart like many seem to.  That way they overlap while going through that 0-5 year old span and you get more benefit from a stay at home parent.

As for the article, the budgets they show are crazy.  A mother+2 teens who has ~$1000/month utility bills that doesn't include car or housing??  $800+/month for food for three people?  At her income the teens should be getting free breakfast and lunch at school.  The budgets just get more insane as you go along in the article.  There is so much fat that could be cut in all of them.

I agree the budgets in the article don't make a ton of sense. Particularly the one about the couple who was barely making it work before the pandemic, but now that they have increased income and their loan payments are deferred, they decided to get a dog. So what happens when the increased income goes away (I assume it's pandemic related, like the increased unemployment) and the loan payments come back? Besides increased expenses for the dog, now they have limited their living options because a lot of rentals don't want dogs.

On the child care thing, I have actually heard people space them that way on purpose, so they don't have two in daycare for extended periods of time. Also, don't forget that after care still costs money, just not as much. Most people will need after care for several years after the "daycare" expenses are gone.

The other thing I've seen is people leaving work to be a stay at home parent, because "daycare is more than my salary". Which  may be true for multiple kids, but for one kid, it's rarely the case. I've heard people say they can't afford $10k a year in daycare, so they are going to be a stay at home parent. They were barely making it with their salary of $40k, but someone quitting a $40k job to save $10k makes sense.

[bacchi]

I agree the budgets in the article don't make a ton of sense. Particularly the one about the couple who was barely making it work before the pandemic, but now that they have increased income and their loan payments are deferred, they decided to get a dog.

And increased their food spending by $500 when they were both un/underemployed and at home a lot.

[mozar]

Another clickbait article that emphasizes personal responsibility and glosses over systemic issues like the doubling of the cost of education, the increase cost of housing due to lack of construction, and privatized healthcare. It's really hard to get out of a debt cycle when the budget is already tight. It's also ridiculous that the highly educated woman could only get an adjunct job making 30k a year. She did the right thing by getting more education and she suffered for it.

I also get annoyed that people treat daycare like a long long expense. 

More and more people are realizing the cost of childcare and deciding not to have children, to the point where the population is declining in most of the world. So I hope people who complain about people not planning for childcare are pleased in the future when there is no one to pay for social security.
This issue is solved by subsidizing the cost of childcare, not by pointing fingers at a few oblivious adults.

[Paper Chaser]

So let me get this straight, the couple in Austin both lost their jobs during the pandemic and went on to increase their spending by over $2k/month?! If you're an author trying to make a case that times are only getting harder, there have got to be more sympathetic cases out there. They got a puppy, financed a bicycle, and were able to defer loan payments on old debt, and they're still spending more than they were pre-COVID?

"Bills are a prominent expense for the two — rent and utilities are pricey in places like Austin. The couple defray the cost by living with a roommate. They have also spent more during the pandemic, thanks in part to the boosted jobless benefits.

A new floppy-eared responsibility entered their life: a long-coat Dalmatian puppy named Libby, both the keeper of household sanity and agent of adorable chaos. Homebound life called for splurges at GameStop, Nintendo and Google for video games and streaming. Andrew paid off a TV he'd been financing and began a new plan for a bicycle that gets him out of the house."

[Paper Chaser]

Another clickbait article that emphasizes personal responsibility and glosses over systemic issues like the doubling of the cost of education, the increase cost of housing due to lack of construction, and privatized healthcare. It's really hard to get out of a debt cycle when the budget is already tight. It's also ridiculous that the highly educated woman could only get an adjunct job making 30k a year. She did the right thing by getting more education and she suffered for it.

It's fine to realize that there are widespread, large scale issues that impact financial security for more and more people, while at the same time understanding that most people are incredibly irresponsible with their own financial choices.

The woman with the education (presumably) spent a lot to obtain two masters degrees in Latin and Greek. Those aren't fields in high demand. How many jobs become available with those degrees, and what do they pay? The answer to both is "not a lot". The odds of a masters in Latin or Greek ever being financially justifiable are about nil. You have to know that when you sign up. I can totally sympathize with most medical debt, but they still have a car payment, they still have pet insurance for several pets, and they're still donating to charity so they could certainly make more cuts and be in a better position.

Everybody in that article has made poor choices that have put them in their current position. They might not be financially secure with better, more responsible decision making, but they would certainly be better off than they currently are.

[SunnyDays]

Unless you live in an insanely HCOL area (and really, do you HAVE to live there?), the problem boils down to ridiculous expectations.  I've said it before in other posts, but it bears repeating:  today's middle class expect to live yesteryear's wealthy lifestyle.  Fancy dinners out on the regular, cruises, international travel, spas, megamansions, etc.  It's just not realistic or even possible for most.  So into debt they go.  Like some singer said, "If it makes you happy, why the hell are you so sad?"

[mm1970]

Unless you live in an insanely HCOL area (and really, do you HAVE to live there?), the problem boils down to ridiculous expectations.  I've said it before in other posts, but it bears repeating:  today's middle class expect to live yesteryear's wealthy lifestyle.  Fancy dinners out on the regular, cruises, international travel, spas, megamansions, etc.  It's just not realistic or even possible for most.  So into debt they go.  Like some singer said, "If it makes you happy, why the hell are you so sad?"

This is part of it.  My officemate is sort of like this.  He's upset that he's not living the life he grew up with, and his wife isn't exactly thrilled either.  But: housing is more expensive here than when he grew up.  He expects to have two new cars (one a truck).  His wife wants to make sure both children are in daycare because "I'm not a stay at home mom" - however, she's a private nurse who works strange shifts.  Their travel (pre-COVID) was all over the world.

I see that a lot with people of that age (30s, early 40s).  Destination trips for bachelor and bachelorette parties.  Lots of eating out.  And childcare...childcare is expensive here.  Good quality childcare, you want your childcare givers to be able to afford to live here too.

But SOOO many people want a nanny instead of a childcare location - but they want the nanny to cook and clean, have a car, and get paid $15 an hour, and only work 3 hours a day, 3 days a week.  (The cleaning ladies make $20 a hour).  Also: they want to pay them under the table.

I cannot even tell you the number of families on our local nanny/childcare board who want a $15/hour nanny for Monday 1-3, Tuesday/Thursday 7:30 am to 9:30 am, and Weds from 2 to 4 pm. 

Likewise, those who are using at home childcare want half days, or only 3 days a week.  There's a shortage of childcare for infants, and if a childcare provider takes on an infant for 3 days a week, then they have to work hard to fill those other two days.

More and more people are realizing the cost of childcare and deciding not to have children, to the point where the population is declining in most of the world. So I hope people who complain about people not planning for childcare are pleased in the future when there is no one to pay for social security.
This issue is solved by subsidizing the cost of childcare, not by pointing fingers at a few oblivious adults.

Yep

On the child care thing, I have actually heard people space them that way on purpose, so they don't have two in daycare for extended periods of time. Also, don't forget that after care still costs money, just not as much. Most people will need after care for several years after the "daycare" expenses are gone.

Our kids are 6 years apart (though we were aiming for 4).  After school care and summer camps are still not free though.

[dougules]

Unless you live in an insanely HCOL area (and really, do you HAVE to live there?), the problem boils down to ridiculous expectations.  I've said it before in other posts, but it bears repeating:  today's middle class expect to live yesteryear's wealthy lifestyle.  Fancy dinners out on the regular, cruises, international travel, spas, megamansions, etc.  It's just not realistic or even possible for most.  So into debt they go.  Like some singer said, "If it makes you happy, why the hell are you so sad?"

Yes, but if the problem of ridiculous expectations is so prevelent, is it due personal failings or systemic issues?  There's a lot easier access to credit now, and some of it borders on predatory lending.  There's not very good financial education in schools if any at all.  Maybe there never has been, but personal finance is a lot more complicated than it was a few generations ago.  Then if you live in a society where a certain spending level is an expectation, it's not trivial for someone to directly defy those expectations.  If it's a systemic issue, just blaming people for their personal failings won't fix what is a real problem one way or another. 

[EricEng]

I also get annoyed that people treat daycare like a long long expense. 

More and more people are realizing the cost of childcare and deciding not to have children, to the point where the population is declining in most of the world. So I hope people who complain about people not planning for childcare are pleased in the future when there is no one to pay for social security.
This issue is solved by subsidizing the cost of childcare, not by pointing fingers at a few oblivious adults.

Birthrates are declining even in countries with heavily subsidized or free childcare.  The cost of daycare is neither primary nor sole cause of birth rate decline, factor sure, but that is a huge issue with many larger factors at play that is outside scope of this discussion.

Those who argue planning for childcare costs would tend to also be the ones to plan on not having much if any social security, so I don't think it would bother them much.  Children cost money, anticipating that cost is part of being a good parent.  It is a fixed, limited scope expense that everyone will have to tackle, kind of like needing a car to get to work (for non bikers).

[SunnyDays]

Unless you live in an insanely HCOL area (and really, do you HAVE to live there?), the problem boils down to ridiculous expectations.  I've said it before in other posts, but it bears repeating:  today's middle class expect to live yesteryear's wealthy lifestyle.  Fancy dinners out on the regular, cruises, international travel, spas, megamansions, etc.  It's just not realistic or even possible for most.  So into debt they go.  Like some singer said, "If it makes you happy, why the hell are you so sad?"

Yes, but if the problem of ridiculous expectations is so prevelent, is it due personal failings or systemic issues?  There's a lot easier access to credit now, and some of it borders on predatory lending.  There's not very good financial education in schools if any at all.  Maybe there never has been, but personal finance is a lot more complicated than it was a few generations ago.  Then if you live in a society where a certain spending level is an expectation, it's not trivial for someone to directly defy those expectations.  If it's a systemic issue, just blaming people for their personal failings won't fix what is a real problem one way or another. 

I’m very big on personal responsibility in all life areas.  I agree that credit is way too available with limits that are too high.  In the past, you got credit from individual store owners, so it was a personal relationship with smaller limits and some embarrassment at needing it.  Or there was layaway.  Most people probably don’t remember that.  Now it’s a faceless corporation.  And “everyone is doing it.”  But I don’t believe it’s predatory.  No one comes to your door and pressures you into taking on debt.  People agree to outrageous terms (29%!) because they want what they want right now without having to save for it. They can’t defer gratification even when it’s ruining their lives.  Peer pressure is a thing, but somehow this forum is full of people who resist it.  But most people don’t want to do hard things, so they end up in financial trouble and can’t see that that is harder than the preventative discipline would have been.

[Luck12]

I’m very big on personal responsibility in all life areas.  I agree that credit is way too available with limits that are too high.  In the past, you got credit from individual store owners, so it was a personal relationship with smaller limits and some embarrassment at needing it.  Or there was layaway.  Most people probably don’t remember that.  Now it’s a faceless corporation.  And “everyone is doing it.”  But I don’t believe it’s predatory.  No one comes to your door and pressures you into taking on debt.  People agree to outrageous terms (29%!) because they want what they want right now without having to save for it. They can’t defer gratification even when it’s ruining their lives.  Peer pressure is a thing, but somehow this forum is full of people who resist it.  But most people don’t want to do hard things, so they end up in financial trouble and can’t see that that is harder than the preventative discipline would have been.

It's a lot more nuanced than just "personal responsibility, stupid".  The personal savings rate is not more than a few % points different from a generation ago and in some cases actually higher depending on specific year comparisons and this is despite much higher inflation adjusted med, housing, and college costs.     

[WhiteTrashCash]

I was personally stunned when I found out that people in my middle class neighborhood hired people to clean their houses and do their yard work. And then they complained about the taxes they had to pay. If they did their own housework and yard work, they’d have more than enough money to pay their taxes. They should probably skip the cruises too and instead invest for retirement.

[Fomerly known as something]

The headline overstates things for high income people though.  Only 16% (granted still too high) making 100-200K struggle with basic expenses (although I bet most could cover them at least temporarily with 401K, IRA, etc) compared to 63% making less than 25K and 47% making 25K-49K.   Clearly it matters a lot how much you make.  And lest people think this is some new phenomenon, I assure you it is not since these #'s don't seem far off from what I remember from 20+ years ago.

Totally, one of my coworkers “lives” pay check to pay check.  He is a 401k millionaire and always maxes it out.  He just chooses to spend “everything” else.  He’s fine.

[John Galt incarnate!]

I’m very big on personal responsibility in all life areas.  I agree that credit is way too available with limits that are too high.  In the past, you got credit from individual store owners, so it was a personal relationship with smaller limits and some embarrassment at needing it.  Or there was layaway.  Most people probably don’t remember that.  Now it’s a faceless corporation.  And “everyone is doing it.”  But I don’t believe it’s predatory.  No one comes to your door and pressures you into taking on debt. People agree to outrageous terms (29%!) because they want what they want right now without having to save for it. They can’t defer gratification even when it’s ruining their lives.  Peer pressure is a thing, but somehow this forum is full of people who resist it.  But most people don’t want to do hard things, so they end up in financial trouble and can’t see that that is harder than the preventative discipline would have been.

I agree.

Volitional obligors (no coercion or duress) are not prey.

[CodingHare]

Eh, I feel like any system that has a 30% failure rate (since 30% of the country is living paycheck to paycheck) has some sort of structural issue.  Any plan that amounts to "people will figure it out and become more responsible" is just unrealistic.

Maybe the answer is lower the amount of easy credit available so people don't get trapped into buying small things they can't afford.  Maybe it's requiring student loan lenders to not finance degrees with a lower than some threshold expected earnings.  Maybe it's expanding social security since we can't trust people to actually save money for retirement voluntarily.

I'm also curious, if 30% of US citizens are paycheck to paycheck, how does that compare to similarly developed countries?  Are one in three South Korean's living paycheck to paycheck?  How about Germans?

[joe189man]

where i live a $100k salary funds daycare for two young kids and a average house payment and nothing more

you need a partner and their salary for food, utilities, student loans, etc

ETA: not complaining but its easy to blow through the money quickly

Ok, I'll bite.  How much is the house payment and daycare costing there to eat through $70-80k (after taxes)?  With mortgage rates so insanely low atm, you must be talking about $1mill+ housing.

i should caveat that the salary i was using for the above is probably closer to $90k +/- in my example (i forgot we max our our 401ks)
Mortgage (30yr @3.625% on ~$410k loan) + escrows of around $2400 (~$1900 and $500 respectively) and around $650 a week for day care for 2 kids for an average of ~$2800 a month

daycare isnt a forever cost, especially once school starts, but with two working parents after school care will be required, granted for much less

[joe189man]

where i live a $100k salary funds daycare for two young kids and a average house payment and nothing more

you need a partner and their salary for food, utilities, student loans, etc

Where do you live???
You can't compare a $100K salary in a HCOL area, where expenses and median salaries are much higher.

The vast majority of the country is able to live quite comfortably on a $100K household income.

a top 20 metro area out west,

i agree with your statements

[SwordGuy]

The fastest way to remove the most people from the paycheck-to-paycheck list would be to insist on a minimum wage that covered a decent living.   Most of the working poor live paycheck to paycheck because they are paid poverty wages, not a decent living.

As for the middle class income folks who are just morons with their money, well, I don't lose much sleep over them.   Glad to help them make better choices but they chose to be foolish with their money.

[AccidentialMustache]

I'd expect a growth in paycheck-to-paycheck living given that wages haven't kept pace with productivity since what, the 70s/80s? The rich get richer, everyone else gets in debt to try to keep up with their perceived spot on the ladder of wealth.

From a certain point of view, in the same field as my dad, 30 years later, I'm only on par after inflation. Roughly 2x from 1990 dollars to 2020 dollars and that's probably about our absolute salary ratio. Similar COL for both of us, so you can ignore any of that factoring in.

Meanwhile, the richest went from 17m to 170m (okay that was 2019 before bezos lost a bunch to his wife). And my dollars are from software where demand, salaries, and perks are "amazing" relative to a lot of the rest of the economy.

So on one hand, making 200k and being broke? You're an idiot. On the other hand, the last 30 years have set you up to fail, so increasing failure should be the expected outcome.

[Jack0Life]

The fastest way to remove the most people from the paycheck-to-paycheck list would be to insist on a minimum wage that covered a decent living.   Most of the working poor live paycheck to paycheck because they are paid poverty wages, not a decent living.

As for the middle class income folks who are just morons with their money, well, I don't lose much sleep over them.   Glad to help them make better choices but they chose to be foolish with their money.

I totally disagree on this one. Setting an arbitrary minimal wage isn't going to magically improve the lower Americans from living paycheck to paycheck.
American is the easiest country to get ahead if you set your mind to it.
Perfect example was when I ran a fast food franchise and I see people come and go working that menial job barely making above minimum wage. I always tell my employees this doesn't have to be the dead-end job people making it out to be. Put a bit of effort and you can easily move up and get yourself off the minimal wage train. Most don't listen and they jump from one "dead end" job to another. Or they are too busy having kids where they can't afford one and therefore stuck in that rut for the rest of their life.
In contrast, in the same fast food company, I've seen a foreign girl who spoke zero English but she put in the effort to learn about the business and improved her English. She was able to run her own store in less than 2 years. This girl is probably making $60K+ now.

[EricEng]

Mortgage (30yr @3.625% on ~$410k loan) + escrows of around $2400 (~$1900 and $500 respectively) and around $650 a week for day care for 2 kids for an average of ~$2800 a month

Time to get on the refinancing train.  You are a full percent too high!  Escrow i don't usually count as true mortgage since it covers property tax and insurance. 

Still what you described should only add up to about $65k a year. I'm guessing your combined income is causing taxes to take a bigger bite than the 22% i was estimating. Housing+ insurance + prop tax + daycare + max 401k with some leftover isn't bad either.

[Bloop Bloop Reloaded]

I'd expect a growth in paycheck-to-paycheck living given that wages haven't kept pace with productivity since what, the 70s/80s? The rich get richer, everyone else gets in debt to try to keep up with their perceived spot on the ladder of wealth.

From a certain point of view, in the same field as my dad, 30 years later, I'm only on par after inflation. Roughly 2x from 1990 dollars to 2020 dollars and that's probably about our absolute salary ratio. Similar COL for both of us, so you can ignore any of that factoring in.

Meanwhile, the richest went from 17m to 170m (okay that was 2019 before bezos lost a bunch to his wife). And my dollars are from software where demand, salaries, and perks are "amazing" relative to a lot of the rest of the economy.

So on one hand, making 200k and being broke? You're an idiot. On the other hand, the last 30 years have set you up to fail, so increasing failure should be the expected outcome.

It's wrong to calculate your spending on others' perceived (or even actual) spending. The two should have no connection.

If you separate your ego from your earnings, and your ego from your spending, and your earnings from your spending, you will be a lot happier.

If you can't do all three, start with any particular one of them.

I'm not going to excuse people's financial/emotional unintelligence here. There are plenty of Americans who are nowhere near the bread line who have terrible financial intelligence.

[marty998]

The fastest way to remove the most people from the paycheck-to-paycheck list would be to insist on a minimum wage that covered a decent living.   Most of the working poor live paycheck to paycheck because they are paid poverty wages, not a decent living.

As for the middle class income folks who are just morons with their money, well, I don't lose much sleep over them.   Glad to help them make better choices but they chose to be foolish with their money.

I totally disagree on this one. Setting an arbitrary minimal wage isn't going to magically improve the lower Americans from living paycheck to paycheck.
American is the easiest country to get ahead if you set your mind to it.
Perfect example was when I ran a fast food franchise and I see people come and go working that menial job barely making above minimum wage. I always tell my employees this doesn't have to be the dead-end job people making it out to be. Put a bit of effort and you can easily move up and get yourself off the minimal wage train. Most don't listen and they jump from one "dead end" job to another. Or they are too busy having kids where they can't afford one and therefore stuck in that rut for the rest of their life.
In contrast, in the same fast food company, I've seen a foreign girl who spoke zero English but she put in the effort to learn about the business and improved her English. She was able to run her own store in less than 2 years. This girl is probably making $60K+ now.

I largely agree, and I'm not going to argue the point very hard here however...

I used to hold a pretty hardline view that people who can't afford a kid probably shouldn't have one. But there's a nuance here that a lot can happen and change to people's financial circumstances in 18 years, and for some people parenthood is the kick in the arse needed to get their own life in order.

Besides, it's a tough argument to sustain that poor people should be denied basic biological functions on account of being poor.

Notwithstanding that, we all know there is a cohort of people who absolutely do not have the ability or sense to be parents. Perhaps I'm just getting soft in my views.

[slappy]

The fastest way to remove the most people from the paycheck-to-paycheck list would be to insist on a minimum wage that covered a decent living.   Most of the working poor live paycheck to paycheck because they are paid poverty wages, not a decent living.

As for the middle class income folks who are just morons with their money, well, I don't lose much sleep over them.   Glad to help them make better choices but they chose to be foolish with their money.

Define decent living.

[CodingHare]

Besides, it's a tough argument to sustain that poor people should be denied basic biological functions on account of being poor.

Totally agree, not to mention your biological clock does not give a damn about how much money is in your bank account.  Iif you're pushing 30 and you want kids, you might not be able to wait another 5 years to get that management job at Flapjack Chain (that they bring in a manager from another chain to manage instead of promoting from within.)

I think a large problem is Americans have gotten used to a postwar economic boom that lasted a generation, and never corrected for that being unsustainable growth in the long term.  So we are left with this myth that all you have to do is show up to a job (any job) and you will eventually be able to buy a house with a picket fence and 1.5 kids and a dog.  Combine with easy access to credit so your entire peer group appears to be realizing this dream, and you get what we have now.  And of course, our entire economy is based on consumer spending.

Where is the drum of financial responsibility beaten?  Not in schools, struggling to get funding to teach basic math.  Not in homes with financially illiterate parents. Not in colleges, enticing kids to take on loans without income.  Not in the workforce-not their job to care.  Pretty much only those who figure it out organically or who have good money skills passed down to them by engaged parents.  Even then some kids have no ability to absorb those lessons.

It's wrong to calculate your spending on others' perceived (or even actual) spending. The two should have no connection.

Policy based on how people should act instead of how they actually act rarely succeeds.

[American GenX]

There's no excuse for it for most people.

I used to earn less than $20K/yr (not adjusted for inflation) and still didn't live paycheck to paycheck.  I still paid off my house early.

I also totally disagree with arbitrary minimum wages.

[jinga nation]

Many don't know how to:
1. set a budget
2. stick to budget
3. don't let wants sneak into budget, a budget is for needs only.

Minimum wage will not solve the problem if this list of 3 can't be implemented or followed.

I've worked retail, started at minimum wage, and worked my way thru undergrad and grad education, living within means, in this century. It can be done.

[bbqbonelesswing]

Why is eating out considered an every day thing these days? When I was growing up, we didn't eat out every day. Maybe pizza or Chinese on Fridays, or a restaurant on special occasions. Looking at one example from the article, Rhonda Alvarez’s budget, she is spending $814 on food every month between groceries and eating out.

"You're trying to be careful and then you're like, this sucks," she says. "I make decent money now, and I shouldn't have to live paycheck to paycheck."

Yeah, it doesn't sound like they were being too careful. Especially when the budget has an "Other" category of nearly $300. I have a hard time blaming society for someone's budgeting problems when they're living a life of luxury financed by debt. It's fully within their power to bring this budget under control.

[Michael in ABQ]

The fastest way to remove the most people from the paycheck-to-paycheck list would be to insist on a minimum wage that covered a decent living.   Most of the working poor live paycheck to paycheck because they are paid poverty wages, not a decent living.

Cutting off the bottom few rungs of the ladder may help those who can stay on, it doesn't help those who just lost their foot on the ladder.

For someone making $10 going to $15 it's great. On the other hand it will create a permanent unemployed underclass who are relegated to government handouts, charity, and under the table to criminal income sources. It will also accelerate the elimination of lower-paying jobs for automation. At $10/hour an employee may make more sense than a machine. At $15-20, that calculus changes and now that job is gone forever.

Who's going to pay a high schools student $15/hour when they can get someone in their 20s with demonstrated experience? Good luck for that young worker even trying to get their foot in the door to gain experience. Finally, if you start arbitrarily raising wages it will mean inflation which will just restart the cycle of the lowest paid workers not able to afford a "decent living".

[jinga nation]

Why is eating considered an every day thing these days? When I was growing up, we didn't eat out every day. Maybe pizza or Chinese on Fridays, or a restaurant on special occasions. Looking at one example from the article, Rhonda Alvarez’s budget, she is spending $814 on food every month between groceries and eating out.

"You're trying to be careful and then you're like, this sucks," she says. "I make decent money now, and I shouldn't have to live paycheck to paycheck."

Yeah, it doesn't sound like they were being too careful. Especially when the budget has an "Other" category of nearly $300. I have a hard time blaming society for someone's budgeting problems when they're living a life of luxury financed by debt. It's fully within their power to bring this budget under control.

+1. Restaurant was for someone's birthday or occassion, rarely more that once a month. Soda was something special when having a party at home, didn't stock it in the house. Snacks were fruit (fresh/dried), nuts, or homemade cookies/crackers, homemade juice. None of this ultra-processed packaged nonsense.
Just glad my wife and I are raising our kids the "old way".

[Phenix]

The fastest way to remove the most people from the paycheck-to-paycheck list would be to insist on a minimum wage that covered a decent living.   Most of the working poor live paycheck to paycheck because they are paid poverty wages, not a decent living.

As for the middle class income folks who are just morons with their money, well, I don't lose much sleep over them.   Glad to help them make better choices but they chose to be foolish with their money.

https://www.mrmoneymustache.com/2011/09/26/reader-case-study-minimum-wage-with-a-baby-on-the-way/

[joe189man]

Mortgage (30yr @3.625% on ~$410k loan) + escrows of around $2400 (~$1900 and $500 respectively) and around $650 a week for day care for 2 kids for an average of ~$2800 a month

Time to get on the refinancing train.  You are a full percent too high!  Escrow i don't usually count as true mortgage since it covers property tax and insurance. 

Still what you described should only add up to about $65k a year. I'm guessing your combined income is causing taxes to take a bigger bite than the 22% i was estimating. Housing+ insurance + prop tax + daycare + max 401k with some leftover isn't bad either.

we are in the process of a refi now

you can exclude anything you want in a mortgage calculation, but escrow is still a real cost in the budget,

2400+2800=$5200 in after tax costs per month

apply taxes of 22% -> $5200/(1-.22) = $6,666.66 per month in pre tax salary

on an annual basis -> $6,666 per month * 12 months = $80k +19,500 to max a 401k and you are at $99.5K

i just looked up the average home price in our metro area and its north of $600k now, so really we are below average in our home

is this really paycheck to paycheck, no -> we have another salary and are maxing both 401ks, once the kids are in school we should get a $1-2k a month raise after paying for after school care

i guess i was trying to illustrate how easy it is eat up even a "large" salary in our world today

[Michael in ABQ]

Why is eating considered an every day thing these days? When I was growing up, we didn't eat out every day. Maybe pizza or Chinese on Fridays, or a restaurant on special occasions. Looking at one example from the article, Rhonda Alvarez’s budget, she is spending $814 on food every month between groceries and eating out.

"You're trying to be careful and then you're like, this sucks," she says. "I make decent money now, and I shouldn't have to live paycheck to paycheck."

Yeah, it doesn't sound like they were being too careful. Especially when the budget has an "Other" category of nearly $300. I have a hard time blaming society for someone's budgeting problems when they're living a life of luxury financed by debt. It's fully within their power to bring this budget under control.

I noticed her spending for food went from $814 pre-pandemic to $307 after she lost her job. I'm guessing that $500 difference was almost entirely eating out. She had a ~$400/month deficit before, just cutting out restaurants would have solved that and allowed her to build up some savings.

Eating out is a luxury. You're paying roughly 3x more because you're including the labor and overhead in there. It's pretty easy to turn a $400 grocery budget into $1,200 in restaurant spending. We were driving around the other day and with all indoor dining closed the drive-thru lines at almost every fast food restaurant were 10-20 vehicles long. It just boggles my mind. For us I feel bad if we have more than 1 or 2 meals from a restaurant in a month, and that's usually ordering a couple of pizzas for pickup or going to Chick-fil-A. Granted with 8 people to feed even that ends up costing $40-50.

[terran]

On the other hand it will create a permanent unemployed underclass who are relegated to government handouts, charity, and under the table to criminal income sources.

I would suggest that we already have a permanent underemployed underclass who are relegated to government handouts, charity, and under the table to criminal income sources.

https://www.washingtonpost.com/business/2020/11/18/food-stamps-medicaid-mcdonalds-walmart-bernie-sanders/

The taxpayer is subsidizing low wage workers one way or another, so maybe not such a bad thing to try making companies pay a wage that gets people off benefits and see what happens.

[chemistk]

Besides, it's a tough argument to sustain that poor people should be denied basic biological functions on account of being poor.

Totally agree, not to mention your biological clock does not give a damn about how much money is in your bank account.  Iif you're pushing 30 and you want kids, you might not be able to wait another 5 years to get that management job at Flapjack Chain (that they bring in a manager from another chain to manage instead of promoting from within.)

I think a large problem is Americans have gotten used to a postwar economic boom that lasted a generation, and never corrected for that being unsustainable growth in the long term.  So we are left with this myth that all you have to do is show up to a job (any job) and you will eventually be able to buy a house with a picket fence and 1.5 kids and a dog.  Combine with easy access to credit so your entire peer group appears to be realizing this dream, and you get what we have now.  And of course, our entire economy is based on consumer spending.

Where is the drum of financial responsibility beaten?  Not in schools, struggling to get funding to teach basic math.  Not in homes with financially illiterate parents. Not in colleges, enticing kids to take on loans without income.  Not in the workforce-not their job to care.  Pretty much only those who figure it out organically or who have good money skills passed down to them by engaged parents.  Even then some kids have no ability to absorb those lessons.

It's wrong to calculate your spending on others' perceived (or even actual) spending. The two should have no connection.

Policy based on how people should act instead of how they actually act rarely succeeds.

So much the bolded part.

I personally know people who still believe that they are entitled to the same prosperity that their parents/grandparents experienced in the fluke decades after WW2. They were taught, from a young age, to expect that because they are Americans they are entitled to have a comfortable lifestyle for 40 hours or less of labor per week. My wife grew up in SW PA/NE WV - this is the perfect environment to witness this firsthand. Coal/Natural Gas, and manufacturing jobs are always spoken about as though they are "the family business". "We're coal people" is a phrase I've heard plenty of times and the implication is that because coal/natural gas/manufacturing brought their families prosperity 70 years ago, they are entitled to the same.

[bbqbonelesswing]

Why is eating considered an every day thing these days? When I was growing up, we didn't eat out every day. Maybe pizza or Chinese on Fridays, or a restaurant on special occasions. Looking at one example from the article, Rhonda Alvarez’s budget, she is spending $814 on food every month between groceries and eating out.

"You're trying to be careful and then you're like, this sucks," she says. "I make decent money now, and I shouldn't have to live paycheck to paycheck."

Yeah, it doesn't sound like they were being too careful. Especially when the budget has an "Other" category of nearly $300. I have a hard time blaming society for someone's budgeting problems when they're living a life of luxury financed by debt. It's fully within their power to bring this budget under control.

I noticed her spending for food went from $814 pre-pandemic to $307 after she lost her job. I'm guessing that $500 difference was almost entirely eating out. She had a ~$400/month deficit before, just cutting out restaurants would have solved that and allowed her to build up some savings.

Eating out is a luxury. You're paying roughly 3x more because you're including the labor and overhead in there. It's pretty easy to turn a $400 grocery budget into $1,200 in restaurant spending. We were driving around the other day and with all indoor dining closed the drive-thru lines at almost every fast food restaurant were 10-20 vehicles long. It just boggles my mind. For us I feel bad if we have more than 1 or 2 meals from a restaurant in a month, and that's usually ordering a couple of pizzas for pickup or going to Chick-fil-A. Granted with 8 people to feed even that ends up costing $40-50.

Yep! Judging by the before/after numbers, she could have turned that deficit into some savings by focusing on food alone.

[Cranky]

It doesn’t matter how much financial literacy you teach - our whole economy is built on consumption.We’ve just seen that everything falls apart if restaurants are closed for a couple of months.

If people actually live within their means it will certainly be better for them but problematic for the rest of the system.

[mathlete]

It doesn’t matter how much financial literacy you teach - our whole economy is built on consumption.We’ve just seen that everything falls apart if restaurants are closed for a couple of months.

If people actually live within their means it will certainly be better for them but problematic for the rest of the system.

To me, this just reveals how bifurcated our economy is. The US stock market is up 17% year to date. Think of how crazy that sounds. But it makes sense. If you're a A credit megacorp who has just been granted access to super low interest borrowing thanks to the Fed, then you're good. 18 months of wonky earnings doesn't change your long term valuation. You can shift your office staff to WFH. You can get waivers for the rest. Most importantly, you've got finance guys whose job is specifically to figure stuff like this out. You've got IT coordinating WFH. You've got HR working with local governments to bring people back to work who cannot WFH while still abiding by guidelines.

If you're a local restaurant owner, you have to navigate what the PPP is by yourself. Your employees cannot work remote, so you have to lay them off. And even a few months is enough to burn through your capital. And if you want to buoy yourself with debt, you may very likely be attaching that debt to your own name. Or something closer to your own name than when CEOs borrow.

On the individual level, if you're a white collar worker with a good health plan, you may never think about healthcare costs. But if you're among the ten percent who does not have insurance, healthcare costs will ruin you. You cannot pay for cancer treatment from a rainy day fund.

Poverty is not a moral judgement on how individuals live their lives as much as it is a judgement on how we've decided to organize our economy. Everyone has a lazy nephew they can point to and say, "He's poor because he's lazy and spends money on dumb things." That's true, but this is not the reason why a pandemic crippled the (non-publicly traded) economy and it's not the reason why tens of millions of people are subject to the risk of total financial ruin from hospital bills.

edited to add, Cranky I'm not saying you were saying that poverty is a moral judgement. That's not what I took away from your post. I just used your thoughts to springboard into some thoughts of my own.

[researcher1]

The fastest way to remove the most people from the paycheck-to-paycheck list would be to insist on a minimum wage that covered a decent living.   Most of the working poor live paycheck to paycheck because they are paid poverty wages, not a decent living.

This minimum wage argument makes absolutely no sense!

Being a cashier at McDonalds, or a dishwasher at Applebee's, are NOT careers that should provide a living wage.
Why are we expecting these types of menial, no-skill jobs to provide a "decent living"?

It would be great if every grocery-bagger in the country could make $50K/year, but it ain't happening.
Either the grocery store goes out of business, a gallon of milk would cost $15, or the bagger job is eliminated (replaced with self-checkout).

[Tigerpine]

I think a large contributor is the slow lifestyle creep that society as a whole has experienced.  All the the following things, good, bad, or indifferent, come at a cost that past generations didn't have to pay.  This list goes back a ways, but it shows how these things build over time.

Video games
Cable TV
Internet
Practically every family owning a midsize/large pet (when I was a kid, people with cats/dogs were in the minority)
Specialty coffee
Cell phones
Snack food
Highly processed food
Eating out on a regular basis
Intercontinental travel/vacations
Mobile phones
Gender reveal parties
"Disposable" clothing
ATM fees
So much disposable decor for various holidays.  Disposable is the key word
Computer
TV
VCR/DVD/Blu-Ray/etc.
Branded merchandise (for example "Star Wars" shoes.  Yeah, I know someone who has them)