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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

#131

Post by giantg2 »

ChuckNorris89 wrote: post #126
legitster wrote: post #120

Earlier quoted context omitted.

Sure, but it's a different conversation about how wasteful American medical expenditures are. I've been on state Medicaid in the US. I've also been on a single payer in Europe. People really have no point of comparison on how much more luxurious Medicaid is. You are still visiting the oil-sheik mansion, but with no out of pocket and no limitations on how much or often. Hospital will still shake you down for all your…

>I've been on state Medicaid in the US. I've also been on a single payer in Europe. People really have no point of comparison on how much more luxurious Medicaid is. I don't doubt it. In the US, doctors and hospitals are incentivized to treat you like a cash cow and to do as many tests or procedures as possible, even unnecessary ones, knowing that your insurance company or the government will foot the bill no questio…

"treat you like a cash cow and to do as many tests or procedures as possible, even unnecessary ones, knowing that your insurance company or the government will foot the bill no questions asked."

One slight addition. They might be medically unnecessary, but have become legally necessary in some cases. Either because medical protocol has adapted to try to charge more, or because if you don't you might get sued because "Every other doctor would have run that test", etc.

But it is still very much about the money. When I got my wisdom teeth extracted, I had to go in for a 10 minute consult with xray on one day, then go in on a second day (even though it could be done on a single day). Why? Because insurance will not pay for a consultation if it happens on the same day as the extraction.

As for the government footing the bill in the US. Some procedures are deprioritized by hosptials of the patient is on Medicaid. The Medicaid reimbursement rate is generally lower than that of other insurance, so they prioritize the people/insurance that pay more.

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

#132

Post by Hermitian909 »

dogman144 wrote: post #45
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…

Have you lived in NYC or SF? Yes, it's doable for nearly everyone to stash some amount of money away, sub-$1k or whatever. However, if you're in the zone b/t $100k/yr and say $250k/yr, it's entirely possible to have your act together financially, and not be able to save a relevant amount due to the cost of basically existing, responsible student loans and a simple social life. The amount of money you're able to save…

This doesn't quite jive with my experience living in SF. I have an older but comfortable apartment close to BART and an active social life (had lol). Pre-pandemic my CoL was ~40k. I'm fortunate to be on the higher end of dev salaries so I don't need to spend this little but living a life I enjoy this is just how much I end up spending.

I have friends and colleagues whose experience matches yours, some have come to me for help with their finances. I've found it fairly easy to slash 30-40k/yr from their budgets by simply forcing them to think about which things they're spending money on actually add happiness or utility to their life.

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

#133

Post by s1artibartfast »

amrocha wrote: post #128
s1artibartfast wrote: post #70

Earlier quoted context omitted.

Taxes are also a big factor. Depending on your location, you could see 35-40% of that 100k disappear in taxes, and anther 40% for hosing in high cost of living areas and you are looking at 20k per year residual location.

Nowhere in the US has a marginal tax rate of 40% let alone actual rate at 100K. I'm also very suspicious that it would cost 40K per year to rent a reasonable place for 1 or 2 people anywhere in the US except maybe SF

I pay 35% actual rate between California and Federal taxes. IF I were self employed OSADI tax would add another 6.2%.

......

EXAMPLE: 120k income breakdown:

Federal actual rate 16.5% (24% marginal)

CA State actual rate 6.4% (9.3% marginal)

Medicare rate 2.9%

OSDI rate 12.4 %

CA SDI rate 1.0%

= 39% right there

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

#134

Post by marcusverus »

yladiz wrote: post #52
zamfi wrote: post #43

This 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.

The idea that most American households are perched precariously on the edge of financial ruin is a favorite trope of politicians, but it is pure fiction. Just look at consumer household data since the COVID crash in Q2 2021. If folks were on the edge of bankruptcy, the 2020 crash (which sent unemployment through the roof--briefly into the teens!) should have wreaked havoc, right? What should have happened to credit card debt? It should have skyrocketed, right?

Instead, as of Q2 2021 (a year after unemployment peaked), consumer credit card debt was DOWN by $106 billion and Home Equity debt was down $64 billion. Over the same period, Auto Loan debt went up by $70 billion, and mortgage debt went up by 730 billion!

In other words, during the worst economic crisis in a decade, Americans were paying off debt and buying cars and houses! Does this sound like the behavior of people who are struggling to make ends meet?

[0]https://www.cnbc.com/2021/08/03/household-debt-jumps-by-the-... [1]https://fred.stlouisfed.org/series/UNRATE

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

#135

Post by ska »

chadash wrote: post #79
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…

The hand waving of 43.5 to 30k is probably being unrealistically conservative. Probably closer to 20 than 30.

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

#137

Post by bradlys »

marcusverus wrote: post #134
yladiz wrote: post #52

Earlier quoted context omitted.

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.

The idea that most American households are perched precariously on the edge of financial ruin is a favorite trope of politicians, but it is pure fiction. Just look at consumer household data since the COVID crash in Q2 2021. If folks were on the edge of bankruptcy, the 2020 crash (which sent unemployment through the roof--briefly into the teens! ) should have wreaked havoc, right? What should have happened to credit…

Wouldn’t debt going down generally mean people were unable to leverage more debt?

In that instance of home equity debt going down - wouldn’t it mean that the mortgages were being paid off faster than they were being made? (In absolute dollar sense) To me - that sounds like people stopped getting mortgages… Which is an affordability crisis.

Same with credit card debt.

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

#138

Post by s1artibartfast »

amrocha wrote: post #128
s1artibartfast wrote: post #70

Earlier quoted context omitted.

Taxes are also a big factor. Depending on your location, you could see 35-40% of that 100k disappear in taxes, and anther 40% for hosing in high cost of living areas and you are looking at 20k per year residual location.

Nowhere in the US has a marginal tax rate of 40% let alone actual rate at 100K. I'm also very suspicious that it would cost 40K per year to rent a reasonable place for 1 or 2 people anywhere in the US except maybe SF

>Nowhere in the US has a marginal tax rate of 40% let alone actual rate at 100K.

PS the highest marginal tax rate in the US is 50.3%.

Federal rate of 37% and California rate of 13.3%.

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

#139

Post by RickJWagner »

LiquidPolymer wrote: post #88

I’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 subst…

You're doing it the right way.

Find others on the right path (and some good ideas) at Bogleheads.org

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

#140

Post by mogadsheu »

giantg2 wrote: post #8
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?

"Ivy League business school grads" Is it possible they have to wait due to larger than average student loans (although many do come from wealth), or that the high paying jobs they seek are in HCOL areas?

I think you’re accurate about both.
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