How many Americans are really living Paycheck to Paycheck?

[pjigar]

Is that true?

I think so but I was mistaken about the part where I said insurance should shield you from such catastrophe. May be the numbers will improve post-ACA.
https://www.investopedia.com/financial-edge/0310/top-5-reasons-people-go-bankrupt.aspx

 

[Senator]

I think so but I was mistaken about the part where I said insurance should shield you from such catastrophe. May be the numbers will improve post-ACA.
https://www.investopedia.com/financial-edge/0310/top-5-reasons-people-go-bankrupt.aspx

According to CNBC, there are 234% of people filing bankruptcy. About 170% of people do not do it for medical reasons.

A new study from academic researchers found that 66.5 percent of all bankruptcies were tied to medical issues —either because of high costs for care or time out of work. An estimated 530,000 families turn to bankruptcy each year because of medical issues and bills, the research found.

Other reasons include unaffordable mortgages or foreclosure, at 45 percent; followed by spending or living beyond one’s means, 44.4 percent; providing help to friends or relatives, 28.4 percent; student loans, 25.4 percent; or divorce or separation, 24.4 percent.

https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html

 

[pjigar]

The fact is there are LBYM folks at every income level, and paycheck to paycheck folks at every income level.

+1. It's a habit that you are either taught or have learned on your own. My dad always taught me to save 10% of my earnings. So I started with that number. But I realized that 10% would mean I work till FRA so I kept ratcheting the number to now 60%. Of course income has grown significantly over the years so it is easy to save over 60% but most of the people in my train have managed to inflate their lifestyle all along to still live paycheck to paycheck. Now I teach my kids to save 50% of their income if they want to be FI early.

And I am not discounting folks who have had experienced catastrophic event but my point is: For most people, to live (or rather not) from paycheck to paycheck is a choice.

 

[joeea]

Somehow they are not a choice? From my perspective, they are as much of a choice as buying a dog.

Of course children are a choice.

It was the ridiculous "and by definition the medical bills associated with them" that is cringe-worthy.

Most of life is a choice. That doesn't mean everything bad that happens in life is a choice as well.

I'm certain you know better.

 

[RetiredGypsy]

According to CNBC, there are 234% of people filing bankruptcy. About 170% of people do not do it for medical reasons.

Seems like they're quoting from another study done by the people who helped with the initial studies back in the earlier 2000s with Elizabeth Warren. Also part of the PNHP. Surprisingly in 10+ years their numbers haven't changed much.

Here's a study from the New England Journal of Medicine calling those numbers into question.

 

[Mdlerth]

Major Tom Baden-Powell

Talking of which, I was just thinking about my camper van the other day. I live in the SF East Bay which, obviously, is something of an earthquake zone. We're expected to have our kits of emergency supplies ready, "just in case". When I lived in Los Angeles, I had a plastic crate in the closet, with bottles of water, a radio, some batteries, and some other emergency supplies. I also had at least one 5 gallon jug of water at all times. Since moving to the Bay Area 10 years ago, I have not kept an emergency kit. Then it occurred to me - my camper van has a 23 gallon fresh water tank, which I keep sanitized and full (or close to) at all times. The propane tank is also close to full, and there are cooking supplies and canned food in there. I guess my little camper van counts as it's own "emergency go-kit"!

+1
Bug-out bag level: Like a Boss

 

[scrabbler1]

Back in 2001, when I first switched from working FT to PT, I did not receive a paycheck that first pay period because I switched from being paid at the end of each 2-week cycle (straight salary) to being paid on a 2-week lag basis because I was now being paid on an hourly basis. This would be made up at a later time, when I was no longer with the company (or if I returned to FT work, which was NEVER going t happen LOL!).


I was never warned about this beforehand by my boss (who may not have even realized that was going to happen), so I was basically blindsided by seeing no direct deposit going into my bank account, nor was there any paystub coming to me.


When I asked my boss about what seemed like an error, she then realized what happened and apologized for not warning me beforehand. It wasn't a big deal to me, as it wasn't like I living PC to PC and all of my bills would go unpaid or checks would bounce. (This did happen mid-month which was somewhat helpful, as I had no bills due for a few weeks anyway). My boss was rather surprised at my "meh" attitude about the mix-up and its negligible impact on my finances.


I accepted her apology and thanked her for her explanation and went back to work. Seven years later, it was nice to get an extra paycheck after I ERed.

 

[11522914]

I think some on this forum have a hard time accepting that others don't always agree with their views. I see nothing that says Senator doesn't have empathy for someone such as your friend, just that he doesn't think that is the driver for the MAJORITY of people in the PtP situation.

That doesn't make him a bad person, just as your opinion doesn't make you the virtuous person. It just means there are different thoughts from each person.

+1

 

[pacergal]

The Forbes article states "More than 1 in 4 workers do not set aside any savings each month", so I am assuming that's at least 25% but not more than 50%? Which means at least half of workers do put money into savings, but still consider themselves living PC to PC?

That is how I classified DH and I early in our careers. After all household bills, including childcare, were paid, we had very little to get us to the next paycheck. However, before that PC hit the checking account, 6% went to pension w/ match, 10-15% went to DEF COMP.
It sure FELT like living PC to PC, in reality, we were saving at the same time.

 

[NW-Bound]

We don't need to feel sorry for NW-Bound. He's doing just fine. Besides - he has that wonderful class B motorhome to escape in if everything goes south!

It's a class C, which is roomier. And I can tow a car behind to run errands.

I have been debating downsizing to a class B, but it has to be a larger one with dually rear wheels, and also with towing capacity. A new one is pricey at a low six-figure price, and used ones are not cheap either.

Talking of which, I was just thinking about my camper van the other day. I live in the SF East Bay which, obviously, is something of an earthquake zone. We're expected to have our kits of emergency supplies ready, "just in case". When I lived in Los Angeles, I had a plastic crate in the closet, with bottles of water, a radio, some batteries, and some other emergency supplies. I also had at least one 5 gallon jug of water at all times. Since moving to the Bay Area 10 years ago, I have not kept an emergency kit. Then it occurred to me - my camper van has a 23 gallon fresh water tank, which I keep sanitized and full (or close to) at all times. The propane tank is also close to full, and there are cooking supplies and canned food in there. I guess my little camper van counts as it's own "emergency go-kit"!

I do need to get a Berkey filter though. Not sure I'd want to drink water straight from the freshwater system in the RV. Many do though.

I do not keep water in my motorhome when it is parked, and wonder how long the water will keep. I would over-chlorinate it to be safe.

Before taking the motorhome on a trip, I sanitize the tank with bleach, and flush it. I use a cheap Brita filter during the trip for drinking water, even though I fill the tank with potable water.

 

[Music Lover]

How about explore a good way to go paycheck to paycheck?

I used to work for the government and we had a generous pension plan. Several people I know lived cheque to cheque until the day they retired. Most of them had paid off their mortgage or downsized just before retirement....that's helpful but not a requirement.

After they retired and began drawing their pension they were living just as comfortable as when they were working.

 

[ponyboy]

A lot of people in this country are poor...not by choice. A lot were dealt terrible hands in life. I live in a depressed area where a LOT of people are poor. Jobs are scarce. Low pay.

Yes, I do have friends who live above their means, no question there. They suck with money. They're not the ones im talking about. I couldnt care less if those people (my friends) have mountains of debt their entire lives. The people I feel for are those who are poor, and are trying to get by. Its sad.

 

[marko]

I used to work for the government and we had a generous pension plan. Several people I know lived cheque to cheque until the day they retired. Most of them had paid off their mortgage or downsized just before retirement....that's helpful but not a requirement.

+1
As they said on Princess Bride: "I don't think that word means what you think it means".

Paycheck to paycheck might be the wrong term. It implies people living on the financial edge but then again it could just be people who are getting by very nicely, saving money, staying out of debt and living conservatively.

 

[aaronc879]

+1
As they said on Princess Bride: "I don't think that word means what you think it means".

Paycheck to paycheck might be the wrong term. It implies people living on the financial edge but then again it could just be people who are getting by very nicely, saving money, staying out of debt and living conservatively.

I guess "living paycheck to paycheck" has different meanings to different people. To me it means if I miss a paycheck I can't pay my normal bills. If I have savings to cover a temporary job loss then i'm not living paycheck to paycheck. Majority of people I know seem to fall into my definition where they would have to put there food and gas on a credit card or not pay rent if they missed a paycheck.

 

[HI Bill]

A lot of people in this country are poor...not by choice. A lot were dealt terrible hands in life. I live in a depressed area where a LOT of people are poor. Jobs are scarce. Low pay.

I lived in a poor county in CA, where jobs were scarce, and good-paying jobs were mostly in the medical profession, or public servant jobs. I got out, moved to one big city, then another. I realize that not everyone has the physical/mental ability to deal with their lot in life. But many could do better by moving out of depressed areas. I do realize this takes some effort, but in America, bus tickets are not insurmountable costs for most.

 

[RobbieB]

I can tell you true that moving out of Detroit in 79 was a real good thing to do.

 

[Senator]

A lot of people in this country are poor...not by choice. A lot were dealt terrible hands in life. I live in a depressed area where a LOT of people are poor. Jobs are scarce. Low pay.

Yes, I do have friends who live above their means, no question there. They suck with money. They're not the ones im talking about. I couldn't care less if those people (my friends) have mountains of debt their entire lives. The people I feel for are those who are poor, and are trying to get by. Its sad.

My guess is that the same percentage of people live paycheck to paycheck in most counties. Even in 'poor' counties, there are 'rich' people.

My guess is that most people that are just trying to get by make bad choices or through no fault of their own have a lower aptitude.

 

[Major Tom]

I understood his humor, and that prompted my tongue in cheek response...

Aaah, makes perfect sense. I should have known.

+1
Bug-out bag level: Like a Boss

Yes - a class B is the ultimate bug-out bag. It never occurred to me until very recently!

It's a class C, which is roomier. And I can tow a car behind to run errands.

I have been debating downsizing to a class B, but it has to be a larger one with dually rear wheels, and also with towing capacity. A new one is pricey at a low six-figure price, and used ones are not cheap either.



I do not keep water in my motorhome when it is parked, and wonder how long the water will keep. I would over-chlorinate it to be safe.

Before taking the motorhome on a trip, I sanitize the tank with bleach, and flush it. I use a cheap Brita filter during the trip for drinking water, even though I fill the tank with potable water.

My long-term plan is to get a Berkey filter. Brita filters don't filter for very many substances. I think their main purpose is to make city water, which is usually already safe to drink, taste nicer. Berkeys filter very effectively for a large number of substances, including algae. A Berkey can take stagnant pond or stream water, and render it safe to drink. I think you could be confident with a high degree of certainty, that a Berkey was making the water from your RV freshwater tank safe to drink - even if it had been sitting in there for a while.

I like my little class B, but have to admit that it is little. I'd love the greater amount of space that a class C would afford but then, I do like the ability of my van to fit into a regular parking space. One thing I don't like is the gas mileage. I get about 10mpg highway, and 5 around town, averaging about 7-8mpg overall. Ouch!

 

[nancyfrank232]

I’m skeptical of these kinds of “studies”

They never show their work or make their white paper accessible to examine their methodology and statistical methods, and it’s always backed by a financial institution that benefits from “managing your retirement”

Where are the unwashed hordes of homeless seniors wandering the streets, who lived paycheck to paycheck and now have no pay and live off social assistance?

I don’t buy it

Paid fear advertising. For ad revenue

 

[armor99]

I must admit, I do find it interesting how often this topic seems to come up on the forum. The question of poor choices in life vs. bad luck. To be honest, I think it is more a rorschach test than anything else.
People with a more positive optimistic outlook on life would say that it is more important in what you choose to do in life that determines the outcome. While more pessimistic people will make the claim that the deck can be stacked against you so greatly at birth, that you will never be able to overcome that.
I tend to be an optimist I suppose. I like to think that I had a lot to do with my successes/failures in life. And I own them, both the good and bad. But I have only had my own life experience. None of us will ever know what it is like to think differently than we do...

 

[Teacher Terry]

I have always been a optimistic but being a social worker gave me real life experience.

 

[Gumby]

I must admit, I do find it interesting how often this topic seems to come up on the forum. The question of poor choices in life vs. bad luck. To be honest, I think it is more a rorschach test than anything else.
People with a more positive optimistic outlook on life would say that it is more important in what you choose to do in life that determines the outcome. While more pessimistic people will make the claim that the deck can be stacked against you so greatly at birth, that you will never be able to overcome that.
I tend to be an optimist I suppose. I like to think that I had a lot to do with my successes/failures in life. And I own them, both the good and bad. But I have only had my own life experience. None of us will ever know what it is like to think differently than we do...

Not sure whether it is optimist versus pessimist, but whether you have an internal locus of control (life is something you do) or an external locus of control (life is something that happens to you).

 

[Music Lover]

I've told this story before...a good friend of mine built too much house when he was 45 and could barely make the payments. He had no hope at all of paying it off before he died and he couldn't retire and still make the payments.

He was unhappy and stressed but after being under water for 10 years he got lucky and sold it for more than he was worth, paid off his debt, and moved into an apartment. But just 6 months later he retired early taking a penalty and then leased a $60k car. The car lease and his rent eat up 80% of his reduced monthly pension. Now he's living cheque to cheque again...

 

[Teacher Terry]

Music, your friend is a moron. Obviously he learned nothing. I believe in a combination of internal and external locust of control.

 

[Music Lover]

I had to look up "locus of control".

Looking back to when he was considering building a house I recall that myself and many of his friends recommended that he not do it...he was 45 and single with a modest income and would be looking at long term mortgage. But he also wanted to retire at 55 and that would be on a reduced income and likely impossible with a hefty mortgage. In spite of being intelligent enough to understand the numbers he built anyway thinking that it would just magically work out.