4 in 10 Americans live paycheck to paycheck

[Nemo2]

We had to climb mountains and start fires.

Fire? You had fire?!! Luxury!

 

[aja8888]

Fire? You had fire?!! Luxury!

Fire? Luxury?

When I grew up and wanted to talk to my cousin 200 miles away, I had to run the whole distance and cross two rivers each way. And, I had to carry my younger sister on my back the whole time!

 

[travelover]

We had to use cans linked by a string.

Our can had multiple strings - it was a party line can.

 

[MissMolly]

Fire? Luxury?

When I grew up and wanted to talk to my cousin 200 miles away, I had to run the whole distance and cross two rivers each way. And, I had to carry my younger sister on my back the whole time!

You had legs?!?! Lucky!

 

[aja8888]

You had legs?!?! Lucky!

Yes, I had legs, but no shoes. My sister had neither!

 

[kgtest]

The motion was defeated. All I could think was “math is hard”[emoji849]

Right. It's amazing how many people either fail to properly do the math, even something as simple as adding and subtracting, or they don't want to even bother spending the time to do it...because, well, you nailed it!


I keep preaching to my Sister how to look at things as a percentage, as a piece of a pie. Just getting her (An educated 42 yr old women with a Masters) to want to even calculate a percentage is daunting... (and she really enjoys eating pies).



but she can write down her balances using fifteen different colored markers...which is a start.

 

[ychuck46]

But hasn't it always been this way, the savers vs non-savers?
Is this the article where the one woman is an art administrator and has a part time job plus can't pay her student loan? She's got a Master degree, loves her job and can't pay her bills. I have a hard time making sense out of this.
Yes, I know that some people have lower paying jobs, medical issues, that prevent them from saving but most of the people don't spend their money wisely.

The media loves to trot out the people who are suffering due to medical bills or what not. But in reality they are the minority in the case of non-savers. The vast majority have never separated wants from needs, followed their hearts and not their wallets in school, or are chronic underachievers at work. Your point is spot on.

 

[rk911]

Good first post.

that's a Dave Ramsey line.

we retired early at 55 not owing a peny to anyone for anything. we wised up early in our married life that we could live quite well below our means.

- we had been planning a delayed honeymoon trip but when i looked at the K-Mart credit card statement i nearly gagged! $1000! on a K-Mart credit card!! we were obviously out of control. we paid that off, delayed the honeymoon trip and started a budget including a series of sinking funds for various long term expenses such as vacations, out of pocket medical and so on.

- started paying cash for cars (via a sinking fund) roughly every 6-8 years (2-cars in the family as we both worked so each car was kept for 12-16 years after accumulating well in excess of 150,000-miles)

- my parents and grandparents always said that a 5% savings account was good enough so i never thought twice about investing. thank God for my bro-in-law who convinced my wife to open a mutual fund account. i knew nothing about it and was surprised and a bit nervous when that first statement arrived. but i soon embraced the idea and we were off to the races...figuratively speaking, of course. and we continued to invest over a 30-yr period in both taxable and tax deferred accounts.

best advice gave my nephew and to anyone who asked...eliminate debt, live beneath your means and save and invest in good growth mutual funds. we learned the hard way but thank goodness we learned early. this stuff should really be taught in middle or high school.

 

[nafddur1]

I can see how many couldn't come up with 400 bucks. I know some young couples that got married and have good jobs but pay isn't very good.

Isn't that an oxymoron? Wouldn't a `good job' have `good pay' by definition?

 

[Nemo2]

Isn't that an oxymoron? Wouldn't a `good job' have `good pay' by definition?

Supposedly...Mother Teresa took no salary.

 

[ERD50]

....
best advice gave my nephew and to anyone who asked...eliminate debt, live beneath your means and save and invest in good growth mutual funds. we learned the hard way but thank goodness we learned early. this stuff should really be taught in middle or high school.

Good advice, except I'd adjust that a bit and say "eliminate bad debt".

Not all debt is equal, it should not be looked at as such.

-ERD50

 

[NW-Bound]

Isn't that an oxymoron? Wouldn't a `good job' have `good pay' by definition?

Supposedly...Mother Teresa took no salary.

Not too many would want to take Mother Teresa's job.

But many "bad jobs" have "good pay". These are the jobs people take ER from.

 

[Music Lover]

Some people just have a personality/mindset that just won't allow them to save or make smart financial decisions. An example:

One of my good friends built too expensive of a house at age 45. After 8 years with a mortgage that he would never have paid off in his lifetime (single with modest income), 8 years of being broke every day and living cheque to cheque, he finally sold and moved to an apartment. He was finally above water and actually had $100k in savings for the first time in his life as he sold the house for a good price.

But, instead of a decent apartment, he got one that cost 40% more. Then he left his govt. job before reaching the minimum number of years to avoid penalty and took a huge hit on his pension. That wasn't enough. He then sold a 6-year old car with low mileage and put $20k down on a LEASED Jaguar. Rent and the lease eat up more than 80% of his monthly pension, so he's dipping into his savings every month. To top it off, the residual value of the Jaguar is $27k.

He finally had his head above water for the first time in almost a decade, but immediately did everything possible to ruin that. He will likely deplete half of his savings in just a few years.

 

[rk911]

Good advice, except I'd adjust that a bit and say "eliminate bad debt".

Not all debt is equal, it should not be looked at as such.

-ERD50

apart from a reasonable motprtgage (15 yrs fixed, 20-30% down with total monthly PITI no more than 40-50% of take home pay) there is no "good debt". so apart from that i completely agree.

 

[WWDog]

So true.
Many of these same people who cannot make it a couple of days without pay, are walking around with an I-phone and a $70/month unlimited plan, and their spouse has one too.

I grew up without a cell phone, and made it, along with all my friends. It would be the first thing I'd drop if I couldn't save money. It is a luxury.

I got my first flip cell phone last year. The only reason I got it is because it used to belong to my wife. For father's day I bought her a smart phone as she wanted one for a while and there were some really good sales. I rarely use it. Only to pick the wife up from the grocery store when it is raining or to communicate with my wife when we are separated. I threw away a pager and my watch when I retired. That was a wonderful day. My life is much better without these "essential" annoyances.

 

[Voyager39]

Sometimes I wonder how our US economy can be declared to be "healthy" by so many economists, and even "firing on all cylinders" when I read articles like this.

"4 in 10 adults say they couldn't produce $400 in an emergency without sliding into debt"

‘I see no way out’: Living paycheck to paycheck is disturbingly common
_______________________________________________________________

I want to address the issue of how the economists can say the economy's healthy under these circumstances. First, I think they tend to look at overall national wealth rather than the distribution of wealth.

Second, consumer financial data is a sub-specialty of economics, and gathering the relevant data requires quite a bit of time and work. I've read surveys of consumer data (I think it was EBRI that prepared it). Those surveys are only released once every few years. In contrast, the more simplistic summaries of national economic performance: stock market prices, corporate earnings, unemployment rate, inflation rate, etc . . . , can be gathered on a weekly (or daily) basis.

There are a few economists who express concerns about matters like this. But, my impression is that most economists work for institutions that are more interested in aggregate national data, rather than the financial status of the average worker. It is, moreover, an open question as to whether corporate advertisers would really want anyone encouraging the average worker to spend less. Worker spending (whether wise or not) powers earnings.

 

[Pellice]

I want to address the issue of how the economists can say the economy's healthy under these circumstances. First, I think they tend to look at overall national wealth rather than the distribution of wealth.

Thanks, Voyager39 (and originally RAE), for this good post. It probably deserves its own thread. I think "the economy" is much too loosely equated with "the economic health of the majority of citizens." I think this leads to all sorts of problems. We at least need another set of metrics - ones that measure the economic situation of citizens - to also look at before making policy decisions.

The Washington Post just ran an article that I have trouble thinking about, I think because I am myself mixing up "the stock market" with "the economy" and with "the economic health of the majority of citizens. I need to find a way of keeping them straight in my head!

https://www.washingtonpost.com/busi...t-donald-trump-is-not-one-of-them/2019/01/04/

 

[goingoodsofar]

I know people who simply can't save because they do not have a priority to do so. I've seen them time after time, year after year fail to save a measly $10 a week yet have the newest phone, biggest TV, etc. I think for many it is just a lifestyle they have let themselves become accustomed to. When they do get some unexpected cash they can't wait to spend it. Mind you, I'm not criticizing these folks...they have just never learned how to prepare for the unexpected.



Our family habit has always been to think about tomorrow. For others I think they have a hard time getting past thinking about the now. Naturally there are some instances where the extreme unexpected is simply devastating (The California fires come to mind). For many of these non forward thinking people you will see they are merely repeating the lessons they learned from the family they grew up in.

 

[Amethyst]

I'd say "That's unbelievable," except that some people do things you wouldn't believe.

Actually, I empathize with people who want to live above their means. As with skydiving, it's the thought of actually going out and doing it that has always stopped me.

Some people just have a personality/mindset that just won't allow them to save or make smart financial decisions. An example:

One of my good friends built too expensive of a house at age 45. After 8 years with a mortgage that he would never have paid off in his lifetime (single with modest income), 8 years of being broke every day and living cheque to cheque, he finally sold and moved to an apartment. He was finally above water and actually had $100k in savings for the first time in his life as he sold the house for a good price.

But, instead of a decent apartment, he got one that cost 40% more. Then he left his govt. job before reaching the minimum number of years to avoid penalty and took a huge hit on his pension. That wasn't enough. He then sold a 6-year old car with low mileage and put $20k down on a LEASED Jaguar. Rent and the lease eat up more than 80% of his monthly pension, so he's dipping into his savings every month. To top it off, the residual value of the Jaguar is $27k.

He finally had his head above water for the first time in almost a decade, but immediately did everything possible to ruin that. He will likely deplete half of his savings in just a few years.

 

[ERD50]

apart from a reasonable motprtgage (15 yrs fixed, 20-30% down with total monthly PITI no more than 40-50% of take home pay) there is no "good debt". so apart from that i completely agree.

Some people consider credit card charges to be 'debt', even when paid before the due date with no fees or interest.

Technically, I guess they are correct. But I only consider it debt if you let it go beyond the grace period.


But yes, for most people a decent mortgage is probably the only 'good debt' they will have. Sometimes you can get 0% or low % financing on a car, etc. That would also count as 'good debt' in my book.

DD was able to get something like a $500 recent graduate credit on her new car if she took out a loan at some not-so-great rate. I told her do it, take the $500, pay the loan off in full the first month. That was 'good debt' for one month.

-ERD50

 

[scrabbler1]

I got my first flip cell phone last year. The only reason I got it is because it used to belong to my wife. For father's day I bought her a smart phone as she wanted one for a while and there were some really good sales. I rarely use it. Only to pick the wife up from the grocery store when it is raining or to communicate with my wife when we are separated. I threw away a pager and my watch when I retired. That was a wonderful day. My life is much better without these "essential" annoyances.

I got my first cell phone 4 years ago. It's a simple flip phone, a pay-per-minute plan. I spend $4-$5 per month on it by buying a block of minutes and/or contract time once every 9-12 months. I rarely use it, and 90% of its activity is from junk and robocallers. I simply open the phone an inch and let it close, as I have no desire to burn my own minutes listening to that crappola. Sending texts is a little cumbersome, but those I do rarely, too. It has proven to be handy at times, especially when communicating with my ladyfriend.

 

[Amethyst]

Yes, it is hard to keep the mathematical, sociological, and psychological aspects straight, since they are interrelated.

I've always thought that most people say "the economy" when they really mean "how my friends and I are doing at the moment."

I think "the economy" is much too loosely equated with "the economic health of the majority of citizens." I think this leads to all sorts of problems. We at least need another set of metrics - ones that measure the economic situation of citizens - to also look at before making policy decisions.

The Washington Post just ran an article that I have trouble thinking about, I think because I am myself mixing up "the stock market" with "the economy" and with "the economic health of the majority of citizens. I need to find a way of keeping them straight in my head!

 

[Rianne]

When there is no interest, I consider it an expense, not a debt. When there's suspect financing, like the interest is figured in somehow, that you don't notice it, that's what irks me.

For instance, we had HVAC upgrade, furnace/AC, insulation, the process where they see where energy is escaping through windows & roof etc. The cost without financing was approx $8000 (we got the subsidies offered for energy upgrades in our area). Without the subsidies cost $16,000. After thinking we'd just pay in full the $8000, HVAC company came in with Wells Fargo offer, 0% financing for 60 months. $131.34/month for 60 months.

We knew the actual cost ahead of time, before the WF offer, so there was no finance finagling going on. This to me is an expense, not debt, in the sense I'm not paying a fee (interest) for the loan.

 

[Nemo2]

Some people consider credit card charges to be 'debt', even when paid before the due date with no fees or interest.

Technically, I guess they are correct. But I only consider it debt if you let it go beyond the grace period.

Since we pay off our C.C.s in full on the day the statement is issued, we don't even consider what the interest charges might possibly be.

 

[marko]

Sometimes I wonder how our US economy can be declared to be "healthy" by so many economists, and even "firing on all cylinders" when I read articles like this.

"4 in 10 adults say they couldn't produce $400 in an emergency without sliding into debt"

Maybe because 4 out of 10 adults are overspending.