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Despite rising wages, 61% of Americans are still living paycheck to paycheck

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Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck

#71

Post by bdcravens »

runako wrote: post #60
barbazoo wrote: post #5

> Even among those earning six figures, 42% said they were living paycheck to paycheck, the survey of more than 3,000 adults found. I know there are areas with extremely HCOL, inflation, housing crisis... However, sometimes I do wonder though what some people's budgets are like that they are literally unable to save any money (paycheck to paycheck) making >$100k. Do we know what part lack of financial literacy or sim…

This is easy, assuming an average American family size: - $8,333 gross ($100k) - call taxes 25% (this is aggressive) leaves $6,667 - housing expense of $2k leaves $4,667 - minus 2 auto expenses (used car average payment is $465) brings us to ~$3,400 - childcare (which: is not free even when your kids are in school) of $1,500 yields $1,900 - frugally feeds the family on $1,000 per month - $900 remaining for everything…

A large part of what's left over probably goes to service consumer debt, as the average American carries about $6k in credit card debt. Paying for yesterday's stuff makes it hard to save for tomorrow.

Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck

#72

Post by [deleted] »

barbazoo wrote: post #5

> Even among those earning six figures, 42% said they were living paycheck to paycheck, the survey of more than 3,000 adults found. I know there are areas with extremely HCOL, inflation, housing crisis... However, sometimes I do wonder though what some people's budgets are like that they are literally unable to save any money (paycheck to paycheck) making >$100k. Do we know what part lack of financial literacy or sim…

[deleted]

Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck

#73

Post by siddarthd2919 »

subsubzero wrote: post #62
barbazoo wrote: post #5

> Even among those earning six figures, 42% said they were living paycheck to paycheck, the survey of more than 3,000 adults found. I know there are areas with extremely HCOL, inflation, housing crisis... However, sometimes I do wonder though what some people's budgets are like that they are literally unable to save any money (paycheck to paycheck) making >$100k. Do we know what part lack of financial literacy or sim…

With the rise of social media, people feel the need to flaunt things(cars, houses, vacations, jewelry, you name it). Both me and my Wife are making extremely good tech money, shes a director and I am senior+ engineer. And I feel like everyone is living a lifestyle even we cannot afford. We drive Japanese cars (mid level) a few years old. Bought a very sensible house with a payment that if something happened to one of…

We are in a similar situation and I have come to the conclusion, there is a money tree giving people free money that I am not aware of :)

Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck

#74

Post by ketzo »

pinephoneguy wrote: post #64
e4e78a06 wrote: post #33

Earlier quoted context omitted.

People feel like they _have_ to live in NYC/SF/LA when they make peanuts. If those people moved to the Midwest they'd have much lower CoL and probably still around the same pay. Amazon pays $15/h wherever you are.

Quoted post unavailable.

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Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck

#75

Post by asdff »

e4e78a06 wrote: post #33
mogadsheu wrote: post #2

The cost of housing combined with manufacturing outsourcing has basically crippled the American working/middle class since the early 2000s. Then add inflation. When Ivy League business school grads are having to save until their 40s to buy homes, what does that imply for the rest of the country?

People feel like they _have_ to live in NYC/SF/LA when they make peanuts. If those people moved to the Midwest they'd have much lower CoL and probably still around the same pay. Amazon pays $15/h wherever you are.

It's expensive to uproot which is why the working poor are often trapped in high cost of living areas. OTOH the midwest has had a huge problem for years of 'brain drain,' and that's because there are just fewer highly compensated jobs than what you'd expect in the midwest, and among these salaries are appreciably lower. People don't receive degrees at midwestern schools then move to NYC, SF, LA, wherever else without a job offer lined up, and if they take that offer its because its better than what midwestern companies who are even more active in recruiting of midwestern grads were offering them.

Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck

#76

Post by sjg007 »

barbazoo wrote: post #5

> Even among those earning six figures, 42% said they were living paycheck to paycheck, the survey of more than 3,000 adults found. I know there are areas with extremely HCOL, inflation, housing crisis... However, sometimes I do wonder though what some people's budgets are like that they are literally unable to save any money (paycheck to paycheck) making >$100k. Do we know what part lack of financial literacy or sim…

Just to put things into perspective for you: a family of 4 making up to $140k qualifies for affordable housing in San Mateo County.

That's about $7.7k a month after tax.

Now factor in some variable combination of:

1. Rent (3-4k for a 2bdrm or larger) 2. Student Loans 3. Debt 4. Childcare (daycare) ($2-3k) 5. Health care

This excludes 401k contributions, saving for a financial buffer, any type of car or commuting expense.

Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck

#77

Post by kbelder »

ProAm wrote: post #30
barbazoo wrote: post #5

> Even among those earning six figures, 42% said they were living paycheck to paycheck, the survey of more than 3,000 adults found. I know there are areas with extremely HCOL, inflation, housing crisis... However, sometimes I do wonder though what some people's budgets are like that they are literally unable to save any money (paycheck to paycheck) making >$100k. Do we know what part lack of financial literacy or sim…

People I know who are earning 6 figures state three things: 1) student loans, 2) housing and 3) health care. (most of these people are single income, dual income house holds can afford a 3000k mortgage or rent easily if its divided) ...a dark horse has recently entered the race and that being inflation which will pressure everything else.

Do you mean a $3,000 per month mortgage, a $3,000,000 total mortgage, or something else there?

Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck

#79

Post by chadash »

barbazoo wrote: post #5

> Even among those earning six figures, 42% said they were living paycheck to paycheck, the survey of more than 3,000 adults found. I know there are areas with extremely HCOL, inflation, housing crisis... However, sometimes I do wonder though what some people's budgets are like that they are literally unable to save any money (paycheck to paycheck) making >$100k. Do we know what part lack of financial literacy or sim…

A lot of people on HN don't have families, so let me illustrate some costs. Let's say you are a married couple with 2 young kids and you make a combined $150,000k and you live in Boston.

Federal tax: ~26k State tax: ~7.5k Work covers 20% of health insurance premium, leaving you with 20%: ~4k

OK, now we are at $112,500 take home pay.

2 BR apartment accessible to public transit in Boston and in a safe neighborhood, let's say $3000/month + $250 utilities = 39,000. (you are probably not getting a particularly lavish apartment at this price point).

Now you have $73,500 left.

Daycare for two kids from 8 - 5:30: $15k x 2 = 30k

$43,500 left.

Throw in a reasonable life insurance policy, car + insurance payments for a modest car (kind of necessary if you live in Boston and have kids, unless you spend more to live in the kind of neighborhood where you don't need a car), modest medical and dental care out of pocket costs, basic kids clothing, basic clothing for you, diapers, and groceries and you are already eating pretty substantially into what you have left.

Pretty much everything above is stuff that you need to spend in order to live reasonably comfortably (by US standards). Let's say after all of that you have 30k left.

So you have 30k that you can spend on quality of life improvements, entertainment, travel, etc. You can hopefully save some of the money too, but if you are hoping to save towards a down payment on a house in the boston area, you're really not going to be living a lavish lifestyle on that kind of money either.

Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck

#80

Post by sdoering »

subsubzero wrote: post #62
barbazoo wrote: post #5

> Even among those earning six figures, 42% said they were living paycheck to paycheck, the survey of more than 3,000 adults found. I know there are areas with extremely HCOL, inflation, housing crisis... However, sometimes I do wonder though what some people's budgets are like that they are literally unable to save any money (paycheck to paycheck) making >$100k. Do we know what part lack of financial literacy or sim…

With the rise of social media, people feel the need to flaunt things(cars, houses, vacations, jewelry, you name it). Both me and my Wife are making extremely good tech money, shes a director and I am senior+ engineer. And I feel like everyone is living a lifestyle even we cannot afford. We drive Japanese cars (mid level) a few years old. Bought a very sensible house with a payment that if something happened to one of…

I can relate. I mean I am in Germany. Living and working here. Last year with my job and freelance on the side I did absolutely not make 6 figures.

We have our house we bought 12 years ago and renovated for 8 years. My SO left her job 3 years ago to study again and in essence doesn't make money. So for the time being it is me. But we value great local organic food and produce and that next to our mortgage is by far the biggest part of our spending. We still put money on the side, but maybe because while we like to spend money (even just for fun) we don't overindulge.

Maybe because we are not as social so that we do not compare and because our values are not in line with spending money to be walking advertisement carriers.

Not sure but when I hear of people in the US with 250k+ living paycheck to paycheck I wonder how that is possible. On the other hand I know people where both make 125 - 150k in Germany and also are living paycheck to paycheck.

So maybe I just can't imagine how this works because living in such a way is something too far from my experience.

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