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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
#82Earlier quoted context omitted.
I'm the only one from my immediate family that 'escaped' the poverty so about half of my gross income goes for healthcare and living expenses for my parents and sometimes siblings depending. I won't be taking questions or entertaining discussions about the appropriateness of this arrangement. But it's not that rare and it's why I don't meaningfully save.
I don't see a problem with this... I can't imagine not taking care of your family.
Considering that per adult only about 10% of US households earn more than $100k, there's a lot of people who support their families.
I literally fully pay for everything for my mother, she's a breast cancer survivor - that's a lot of $$$ for a household of mid 6 figure income.
Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck
#83> 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…
- That entire $900 for "everything else" ends up all going to your monthly employee contribution to have a family health insurance plan through your employer. Luckily they're only making you pay about a third of the premium.
[EDIT] For anyone from outside the US who's getting a bit lost in all this US-centric budgeting, the TL;DR (and trend which you may have noticed in all this) is that it's insanely expensive to have kids in the US. The main reasons are healthcare costs (including insurance), housing, and childcare. Costs can easily approach $100,000 to take one kid from conception to age 5, with no extravagant spending, and no major health problems.
Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck
#84Earlier quoted context omitted.
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.
The hypothetical family I described above would easily end up with $6k of credit card debt after a few years on that budget, simply because $900/mo is not enough to cover all the remaining expenses and therefore they will need to tap a loan at some point. A single auto wreck, temporary job loss, physician visit, etc. can create long-term financial problems for this family because they don't have an extra $3k or whatever to cover a short-term expense.
(I take an agnostic point of view on the debt itself. The alternatives to not having some kind of financial cushion -- even burdensome consumer debt -- are often worse. Think: "can't get to work because the car is dead and I don't have an extra $750 so now I lose my job and then my housing" as the realistic alternative. The real problem is compensation has not paced inflation for 2 generations, and that the $100k family should be earning much more for the same jobs.)
Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck
#85> 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…
In most of the (US) country 100k looks pretty good to amazing for 1 person, but just kinda ok manageable for say a family of 4.
Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck
#86> 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…
I totally agree with others that costs for childcare and healthcare can easily eat into even large incomes. And for anyone who is making less than six figures and has a family, yes, you have to manage your finances pretty carefully. However, for many other people, I think a huge part of the problem is consumerism coupled with borrowing. If you are able to be content with what you have or even to downsize, it is much…
> However, for many other people, I think a huge part of the problem is consumerism coupled with borrowing.
I think this is a large part of the problem as well. I see so many people taking out large and lengthy auto loans on a new car as soon as they graduate college.
Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck
#87This measure strikes me as less informative than a measure of how much of Americans' spending is discretionary (i.e., not on "essentials" like rent, food, utilities, internet, transportation, clothing, etc.). One tricky piece, of course, is that "food", "transportation", "clothing" can include both discretionary and non-discretionary spending. (As in, you need to eat, but you don't need to get takeout every day.) Giv…
Paycheck to paycheck generally means that there is little money left for “discretionary” spending, and even assuming there is a large percentage of people who spend when they shouldn’t, 61% is staggering and can’t be explained by that reductive argument alone. Assuming it is correct, to be that high indicates more systemic issues in the system.
My point is that people's non-discretionary spending can grow to meet income, rendering "paycheck to paycheck" kind of meaningless.
The family of 4 making $150k and spending not-cheapest-option $40k on childcare and not-cheapest-option $40k on groceries from Whole Foods (or wherever), while paying $30k annually in not-cheapest-option rent, may also believe they have no discretionary income. But that doesn't mean the same thing.
Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck
#88I’m a relative newcomer to a comfortable, middle class life in the U.S. One of my biggest terrors is falling back into poverty. However, most of my friends and colleagues are all too happy to live beyond their means.
People I know who have large, immaculately well cared for homes with gardeners and German cars in the driveway live paycheck to paycheck. One realtor I know never sets aside enough money to pay her substantial tax bill (she is on payment plans to the IRS). From the outside they appear wealthy, but they are nearly always broke. The same realtor will happily pay $2000 for a pair of jeans.
I don’t get it. I make a great living. I paid off my house and drive a 2004 Outback. My retirement is looking good. This alleviates my fear of slipping into poverty. I guess I just don’t care about the window dressings of wealth that are so important for some people.
Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck
#89The 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.
The problem is that, if everyone took your advice, who would pick up the garbage and make the lattes?
The other problem is that if you want to "better your life" and stop working at Amazon for $15/hr, historically you had to go somewhere where those better jobs are (often NYC/SF/LA, depending on industry). Maybe with remote work becoming more common this will change, but telling people to live in low CoL areas unless they're already making a good income puts a serious damper on social mobility.
Re: Despite rising wages, 61% of Americans are still living paycheck to paycheck
#90Earlier quoted context omitted.
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?
$3,000 a month mortgage. Just the fact that an insane mortgage is affordable for a dual income house hold so much easier than a single.