27 ms·

Living paycheck to paycheck is disturbingly common

325 points by petethomas 8y ago

tjr225 8y ago
"They work in big cities and rural towns. They’ve tried to save — but rent, child care, student loans and medical bills get in the way." Yikes. I'm not exactly living paycheck to paycheck, but I can relate to this. It's really funny - my wife and I make quite a bit of money - whatever twisted form of capitalism we currently live in has been designed in such a way to extract most of it away from us. One begins to wonder what the point of going to work and earning money is other than to line the pockets of corporations that have effectively taken ownership of our government.
- 0xcde4c3db 8y ago
  > It's really funny - my wife and I make quite a bit of money - whatever twisted form of capitalism we currently live in has been designed in such a way to extract most of it away from us. I think it's evolved, not designed. A (arguably the) key element of capitalism is that a dollar extracted from an individual transaction is a dollar that can buy capital to scale up the extraction. That means exponential (actually logistic, I suppose) growth scaling with how much an entity can extract.
- sct202 8y ago
  It's pretty understandable, imo. My income would not scale upwards very much if I moved from Chicago to somewhere higher cost like NYC, DC, or SF, and if I were to go to those places a lot of my current extra income would be wiped out.
- derekp7 8y ago
  You bring up a good point, that even people who make decent money still can't get ahead much more than those making close to minimum wage. Why is this? My theory, is that life is full of stress, and throwing money at problems can make some causes of stress diminish. Whereas a minimum wage worker will shovel his own driveway, a higher paid office worker may typically have a snow plow contractor on retainer (for them it is worth the trade off, especially with long office hours). Same story with vehicle or home repairs. Which is why you don't really feel stress free until your income exceeds the threshold to handle most stress items with money instead of your own labor.
  - supertrope 8y ago
    There's nothing inherently better about any specific trade-off between time and money. Not buying a car and riding the bus saves hundreds of dollars per month but costs hours a day. Eating out saves the effort of cooking and washing dishes. Hiring a maid might be used out of laziness or to eek out more family time. I have to remind myself to try to focus on what really makes my life better. Usually that involves estimating time+money+intangible factors. And if it will still be useful in a year.
  - zanny 8y ago
    This depends on your definition of "decent money". If we wanted a legitimate middle class, the textbook definition of one, the per-capita incomes in such a class would need to average around 100k for the whole US. Then you would make enough to invest enough to be making an appreciable amount of your money from investments and thus be "middle" class. The average income is still a bit more than a third that, so the average is still decidedly a member of the working poor. Money doesn't stop buying happiness until... coincidentally... you start making about enough money to be middle class. I'm not surprised at all that those below that threshold are buying happiness at the expense of future stability or prosperity.
    - refurb 8y ago
      Do tell, what is the textbook definition of middle class? I always assumed it was th middle of the income distribution.
      - zanny 8y ago
        The preamble of the wikipedia article on middle class espouses why its such a loaded term: https://en.wikipedia.org/wiki/Middle_class https://en.wikipedia.org/wiki/Middle_class I'm using the academic definition, where if the upper class earns their wealth through investments and the lower class through labor, the middle is a mix of the two. Humorously even the wikipedia article mentions how the middle class in the US is framed as a political tool of manipulation...
  - 8y ago
- wccrawford 8y ago
  It's human psychology. Below a certain level, your mind will simply talk itself into spending your available money to make you happy. You don't need that car. A car half the price would have been plenty good enough. But you did it anyhow. You don't need fancy breakfast cereal that costs twice what the generic stuff at Aldi costs. You don't need all those electronics and toys. You don't need to eat out that much. If you made less money, you'd do less of the above right until you simply couldn't afford any of it. And you'd continue to be about as happy as with all that money, assuming you were still paying for the necessities. I'm not trying to convince you to give up those fancy drinks. I'm just explaining that you could choose to live more frugally without almost no repercussions, but you won't.
  - ip26 8y ago
    The "funny" part I think would be how rent, child care, student loans and medical bills tend to scale in cost to your locale, so despite your well paid job, your cost of living has gone up to match. It might be expected & natural for that to happen, but it's still kind of... "funny" if you look at it from a certain angle.
    - supertrope 8y ago
      Child care, education, and medical are labor intensive. It's not like making widgets in a factory that can double in per worker productivity every two years. Industries that don't mechanize like a string quartet playing Mozart still command higher wages over time because they need to afford their bills too. Real estate is limited by the supply of desirable land. Location, location, location. I'm fairly sure that student loans do not scale with locale. That payment is the same no matter where you move to after graduation but it's easier to earn it in a high cost of living (unless housing costs are so high that your free cash flow is less).
  - wutbrodo 8y ago
    I decided in college that a 40 hr workweek wasn't the optimal amount for me. I've since learned that for white-collar jobs, employers really really want full-time employees[1]. My way around this was: consume as if I made ~half as much and take extended sabbaticals. The final piece in the puzzle was ACA exchanges, as I can now get stable (though expensive and high-deductible) health insurance while unemployed. This obviously isn't a binary, but I've been consistently fascinated with the inability of the people I know (generally middle- to upper-middle class) to shift their consumption downwards to meet a goal. Not everyone wants as much leisure time as I do, but I know tons of people with all sorts of reasons they'd like to save more, and every one of them consumes more while making less than me (when I'm working). I used to think the issue was that I grew up without a lot of disposable income, but now I know people with similar backgrounds whose floor on consumption rises in lockstep with their income. That is to say, I don't disagree with your analysis here, but for God's sake _why_ do people do it? [1] Contracting is obviously possible, but it often constrains the type of work you can do.
- throwaway4926 8y ago
  This rhetoric has been known for longer than either of us has been alive, yet the more things change, the more they stay the same.
- deleted 8y ago
  [deleted]
- AnimalMuppet 8y ago
  The problem is not a "twisted form of capitalism". The problem is us. In the 1950s, a family could live on one blue-collar salary. You could probably live on a single blue-collar salary today, too - but you'd live like people did in the 1950s. You would eat out very rarely. You wouldn't have college debt because you wouldn't have a college degree. You'd only have one car. You'd have only one TV for the whole house. The kids would not have huge numbers of toys, and nobody would have huge amounts of clothes. The problem is, nobody wants to live like that today. As soon as we have more income, we "need" more - more clothes, more toys, a better car, a nicer house in a better neighborhood. As we get more income, our "needs" change, driving our expenses to almost exactly match out income. This is especially true when you have kids. If you can afford it, you're tempted to give your kids those ski lessons... that summer camp... that vacation to Disneyland... a car when they turn 16. It feels heartless to say no when you could say yes. But if you say yes to all of it, you'll spend as much as you can afford (and maybe a bit more besides), because there's always something more you could give your kids. Note well: This is not a criticism of those with low incomes who are struggling to make it. It's a criticism of those of us with fairly high incomes who still struggle to make it.
  - uuwp 8y ago
    I actually think capitalism is the problem. It's the best form we know to organize a society, but it has the serious problem when money tend to stick or gravitate towards bigger chunks of money. I'm making well over 300k and can afford a decent house that I'd have to pay off my entire life. What if I had 30M and was too lazy to start a business? I would just buy 30-40 nice houses in my area and would rent them. 10 years later I would have 60M in assets plus whatever rent I've been paid. Where did those 30M come from? Did I do anything useful to the society? No. I have done nothing useful. It's just the dynamics of capitalism where another 30M sticked to my original 30M by the mere fact of their existence. If I was seriously rich, I could lobby zoning laws to benefit from monopoly and drive my wealth even higher, while giving nothing back to the society.
    - Aeolun 8y ago
      If you make 300k you need to either be fairly old, or buy a ridiculously expensive place to pay it off for the rest of your life.
deleted 8y ago
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anoncoward111 8y ago
Not even 200 years ago, most people exchanged labor for food. Currency was not used, as you most likely lived on the farm you worked for. There was no form of advancement to be seen, but also no rent, student loans, medical bills, child care etc. There was also no Whole Foods or freedom of speech. But how much farther have we really come in 2018? We have more things, but if you stop working, you will starve or go ill just as quickly as an Irish laborer in 1850.
- bilbo0s 8y ago
  Not saying this would make it any "better" in the essentials, but I mean, we are at least a little more entertained while we're here. That's something at least.
  - anoncoward111 8y ago
    100% agree!!! I spend countless hours on my phone entertaining myself on hundreds of sites at near zero cost. I don't know how our ancestors did it, playing with mud and rocks XD
- elif 8y ago
  Definitely true in america. In countries such as the netherlands, if you lose your job, you get up to 38 months of 70% salary, rent benefits, child care benefits, and of course your illness will still be treated.
  - simonh 8y ago
    Brit, but basically the same here. The country loses out when people fall into debt and become unproductive for economic or health reasons. Failing to safeguard the productivity of your economy and citizenry in this way isn’t capitalist, or conservative particularly. It’s on a different axis, that particularly in the USA has become associated with the political right. That’s not inevitable or necessary though.
  - Entalpi 8y ago
    Bringing previously hard working people back into work is hugely benefitial to society.
jumbopapa 8y ago
> certified car seat installer I think I found your issue.
- plants 8y ago
  > she and her software engineer husband
- vailprogrammer 8y ago
  Is everyone just supposed to be as smart as us programmers? Is it peoples' own fault if they're stupid? Do they deserve no sympathy or humanity? Right now I make $13/hr in an expensive city. I'm working to find a software job, but the people I work with... they don't have anything else. They're just happy to hold down a steady job. How do you suggest these people magically gain the intelligence and/or self-control/self-discipline and free time and knowledge of a solid path to improve their situation? Because they sure as shit can't afford to go to nursing school, but do they even know what to type into google to start teaching themselves marketable skills? I feel bad for people like you who lack empathy to such a degree. Just literally disconnected from such a large portion of humanity.
  - nickthemagicman 8y ago
    It seems to me that republicans are perfectly fine with others suffering, and misery as long as it doesn't affect them. Disguised Social Darwinism. The problem is most are unaware that their success is 99% luck of being born in certain circumstances.
    - vailprogrammer 8y ago
      "Honey, those people are lazy, so they deserve to be poor!" Dear lord. Go work in some shitty jobs full of poor people, and count how many work hard versus how many are lazy. Those 1%ers would be shocked at what they saw. But of course, how could they ever see the help as humans deserving of a decent, not-always-financially-scared life?
perfmode 8y ago
Don’t discount the weight of emotional trauma and the self-sabotaging habits it has the potential to engender. Most people are slaves to their limbic systems. Most people don’t have self-education or resources to seek the help they need to fix these underlying problems. Society does them no favors. Media and advertising are designed to promote consumption. And not even healthy consumption. The idea that we are black boxes with private worlds and perfect agency is being eroded by the empirical evidence that, at scale, we are ultimately manipulable. I know because I wrestle with this constantly. My higher self knows what’s right and how I should spend my time and money. On a daily and minutely basis, my lower self vyes for control and often succeeds in taking the wheel. And I have to catch myself and recognize when my long term efforts are being subverted automatically and mechanistically. I know that, over the years, my unaddressed early childhood traumas have compounded into deeply-ingrained habits of self-medicating. It’s a constant struggle. I am not surprised that there are huge numbers of people who struggle similarly and are not as successful as I am at managing this internal conflict. edit: why is this article now flagged? :(
- spidey1 8y ago
  How do you manage this conflict? I think a lot of us suffer from this at different scales. I've always found it difficult to work on things that will pay off in the future, even if I plan something I just don't seem to be able to carry through a long term project to the end unless I'm in an environment where there's accountability such as deadlines on projects at work. I'm very prone to instant gratification, which is why I can easily lose most of my spare time in video games, netflix, youtube etc.
  - deleted 8y ago
    [deleted]
  - throwaway914472 8y ago
    You may want to look into how to use hardware to implement a sort of Ulysses pact - depending on the nature of the behavior(s) that you want to control, a time-locking safe can work wonders.
  - 8y ago
scarface74 8y ago
If I took a job at a unprofitable startup that was VC backed, I would understand the risks and ask for the appropriate compensation and have a larger cushion than normal. On the other hand, the only reason for working at a government job is short term stability - you “know” the federal government has access to capital to pay you and the long term stability of pensions, lifetime healthcare etc. But now, on the federal level, you have a president who is shutting down the government over a $5 billion dollar “wall” that everyone in the know is saying won’t be effective - including John Kelley. On the state level, pensions are in danger because of politics, the voters, and the unions. On the bright(?) side, at least it seems like banks and credit unions are willing to work with people who are affected by the shutdown. I’m sure they wouldn’t be willing to work with someone who couldn’t make a payment because a startup couldn’t achieve “product market fit”.
- golemiprague 8y ago
  Funny how the Washington posts wakes up to this situation when Trump shut up the government. Maybe if they tried to look into this issue before Trump was elected it would improve the situation and prevent Trump from being elected which is strongly connected to the insecurities of American workers. A "wall" does work very well in many places, it depends on the type of said wall and how it is doing its job, it could be a smart fence, it could be some other barrier, semantics is not the issue but the impact of illegal immigration on the US and on job related issues. But I don't expect a serious discussion on that by a propaganda machine owned by Bezos, the same person who is partially responsible to a lot of the problems in the modern economy.
cagenut 8y ago
the trifecta of: student loan debt + mortgage debt + employer based health insurance, is clearly just a bundled and packaged form of indentured servitude.
- todipa 8y ago
  In financial planning, we call that life-time debt.
- andrepd 8y ago
  Like the old saying goes, "feudalism with extra steps".
- simonh 8y ago
  The first and last yes absolutely, though aim a conservative Brit and how Americans reconcile themselves to your health insurance (or lack of it) system really baffles me. Mortgages aren’t as clear cut. Our mortgages have been the backbone of my family’s current financial security. After all the idea is at the end you own your house. Interest only mortgages not so much of course and it requires that the house ends up being worth the cost, but I’m talking about the general case.
  - digianarchist 8y ago
    Student loan debt is also not nearly as burdensome for the borrower in the UK has in the United States. The UK basically operates a graduate tax system [1]. [1] - http://www.bbc.co.uk/newsbeat/article/28418590/understanding-student-loans-how-exactly-do-they-work http://www.bbc.co.uk/newsbeat/article/28418590/understanding...
  - cagenut 8y ago
    everything about the mortgage market creating the single family detached housing market is terrible. putting aside the environmental side of it (which is HUGE) the simple truth is the math only reaaaly works on an inter-generational scale. just because some upper-quintile of families have made it work doesn't make it not indentured servitude.
esotericn 8y ago
I'd like to read more about the history of the people in the article. The biggest issue as far as I can tell is that it's easy to 'lose' at any stage. You can make a ton of decisions starting from about age 15-20 that influence your degrees of freedom at age 40 (in the article there's a family of 3 that seemingly have little savings, for example). If you were born to a non wealthy household, the reality is that you simply don't get to go through life not focusing on money. Your income, investments, and career have to be at the forefront of your mind, always. And even then there's a ton of chance involved.
- todipa 8y ago
  I agree with this and that is why we are focusing on funding our child's 529 account to the max without endangering our retirement.
  - deleted 8y ago
    [deleted]
- 49531 8y ago
  > Your income, investments, and career have to be at the forefront of your mind, always. And even then there's a ton of chance involved. This is true and it's immensely disheartening that we live in a world where this is true.
- DonnyV 8y ago
  ^^^ This 110%. I grew up in a poor family. Had friends that were well off and didn't have to think much about the future. I noticed early on that I just didn't have that luxury. Fortunately I was aware enough at an early age that every decision I make has to be a good one. I can't afford any failures. I don't think thats a good a way to become an adult or raise a society. By 25 I was at a good place but not without issues. I was having multiple anxiety attacks and all kinds of health issues. I made it out but with scars. There has to be a better way.
  - heavenlyblue 8y ago
spoonie 8y ago
I think housing costs are a big part of this. Things are almost perfectly stacked in favour of current property owners: oppose any new housing development near you which keeps land prices and rents high, while those wanting to buy or rent can’t or don’t vote and can’t as easily encourage more building as current owners can discourage it. And it’s so simple (not easy, but simple) too: build more to reduce housing costs which is effectively a raise for most people. We’d need to stop treating housing as a primary investment vehicle though.
- crankylinuxuser 8y ago
  There is no one part here. It's what many of us (with little power) have been saying for quite some time. 1. Minimum wage and poverty level are not increasing in relation to the power of the dollar. (1) (2) 2. Welfare of all sorts have been cut since the '80s with Reagan's attack on a felony fraudster [Welfare Queen] (3) (4) 3. Zoning regulations actively kill and impede lower rents and booming cities. (5) (6) 4. Employer-linked medicine harms and kills people, via lack of medicine and through monetary lack of means. (7) (8) (9) 5. The citizens have been sold a bill of bad goods with the "Debt Sentence" of educational debt. (10) (11) The problems are numerous, and these cards have been stacked against us. Any one of these could topple, and take out multiple areas/people/economies. And just like the Great Depression, not even the banks getting together will be able to save us. Many of these are laws that would have to be changed at the local/state/federal level, which I do not see happening in 20 years. ---------------------------------- (1) https://www.businessinsider.com/how-much-higher-the-federal-minimum-wage-should-be-2017-12 https://www.businessinsider.com/how-much-higher-the-federal-... (2) https://talkpoverty.org/2016/09/13/poverty-rate-just-dropped-way-measure-poverty-wrong/ https://talkpoverty.org/2016/09/13/poverty-rate-just-dropped... (3) https://www.newsweek.com/trump-plans-slash-welfare-spending-will-hurt-millions-poor-people-us-771204 https://www.newsweek.com/trump-plans-slash-welfare-spending-... (4) https://timeline.com/reagan-trump-healthcare-cuts-8cf64aa242eb https://timeline.com/reagan-trump-healthcare-cuts-8cf64aa242... (5) https://www.strongtowns.org/journal/2018/7/3/how-zoning-is-holding-your-neighborhood-back https://www.strongtowns.org/journal/2018/7/3/how-zoning-is-h... (6) https://www.forbes.com/sites/scottbeyer/2016/05/25/modern-zoning-would-have-killed-off-americas-dense-cities/#1e2d86d99005 https://www.forbes.com/sites/scottbeyer/2016/05/25/modern-zo... (7) https://www.marketplace.org/2017/06/28/health-care/how-did-we-end-health-insurance-being-tied-our-jobs https://www.marketplace.org/2017/06/28/health-care/how-did-w... (8) https://www.beckershospitalreview.com/quality/poor-healthcare-kills-8-million-people-a-year.html https://www.beckershospitalreview.com/quality/poor-healthcar... (9) https://www.fool.com/retirement/2017/05/01/this-is-the-no-1-reason-americans-file-for-bankrup.aspx https://www.fool.com/retirement/2017/05/01/this-is-the-no-1-... (10) https://www.forbes.com/sites/niallmccarthy/2018/08/27/how-u-s-education-has-become-a-debt-sentence-infographic/#37c10a1f4900 https://www.forbes.com/sites/niallmccarthy/2018/08/27/how-u-... (11) https://www.nolo.com/legal-encyclopedia/student-loan-debt-bankruptcy.html https://www.nolo.com/legal-encyclopedia/student-loan-debt-ba...
fromthestart 8y ago
From the executive summary of the Federal Reserve report linked in the article: >When asked about their finances, 74 percent of adults said they were either doing okay or living comfortably in 2017—over 10 percentage points more than in the first survey in 2013. >Individuals of all education levels have shared in the improvement over the past five years, though the more educated still report greater well-being than those less educated. >Three in five urban residents describe the economy in their local community as good or excellent ver- sus two in five rural residents who offer this posi- tive of an assessment of local conditions. Etc. Far less bleak when one focuses on the whole picture. But don't let that stop wapo et al. from implicating Trump while trotting out predictable sob stories about people who spent half their lives pursuing 3 uneconomical degrees, had 3 more kids than they could afford, in cities with some of the highest costs of living in the world, and now complain that they're living paycheck to paycheck. I'm getting really tired of the agenda based fear mongering by wapo, huffpo, and the like. Trust in media is rightly at an all time low[1]. 1.https://medium.com/trust-media-and-democracy/10-reasons-why-americans-dont-trust-the-media-d0630c125b9e https://medium.com/trust-media-and-democracy/10-reasons-why-...
- Larrikin 8y ago
  All of those statistics appear to be feeling based and not actually grounded in any meaningful numbers.
- vailprogrammer 8y ago
  > sob stories about people who spent half their lives pursuing 3 uneconomical degrees, had 3 more kids than they could afford, in cities with some of the highest costs of living in the world, and now complain that they're living paycheck to paycheck. So the person who .... - never attended any sort of college, but did graduate high school - is single and childless, in fact have no family at all as their parents died poor and young - is living paycheck to paycheck, whether in a city or rural area ...just doesn't exist? And if they do exist, please enlighten me on what steps they should take to correct their situation? Just curious, but are your parents college educated?
  - 8y ago
SmirkingRevenge 8y ago
As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education. I'd like to think that would make things at least marginally better. Another thing I'd love to see, would be for banks to fundamentally reorient themselves to be their customer's advocates/financial guardians, instead of being yet another party encouraging people to borrow more than they ought to. Wishful thinking, I know. My bank knows how much I make, it knows how often I get paid, it knows how much I spend and on what - they have all the info they need to develop a plan to ensure my financial security and advise me where I can do better. Why don't they and why isn't it a standard part of opening account(s)? I'd love to see more innovation around encouraging proper saving habits and budgeting, like what simple.com is doing - but it needs to go even farther than what they currently have, IMHO.
- 49531 8y ago
  You'll never have banks working in consumers self interest as long as they are profit driven organizations. Public banks tend to work better for actual sensible banking.
  - zeroonetwothree 8y ago
    Banks don't want you to spend money. They want you to have as much in your account as possible. So it would be in their interest to encourage saving.
    - closeparen 8y ago
      Pretty sure they want you to pay as much interest and generate as many interchange fees as possible.
      - imtringued 8y ago
        This. One of my friends got a call from his bank trying to get him to sign up for a car loan because he had 30k € in his bank account and should "splurge" a little.
cabaalis 8y ago
Real estate is the way I broke this cycle. It was not a short term fix, it took 10 years. Living in and ultimately selling my condo and moving to an apartment netted me enough equity to pay off all my debts. One year later, I've just finishing building a home, and have a 5-month emergency fund, and laugh at the idea of buying anything else at all on credit. A mortgage and nothing else. I'd never have been able to do that paying all the monthly minimums on the debt I accrued in my 20s. It was money in, money out--money that was already spoken for.
- Aeolun 8y ago
  That’s entirely predicated on prices for real estate constantly rising, which is exactly what got us in this fix in the first place.
ckdarby 8y ago
People rarely give the full picture of their situation in these articles. What an amazing time we live in where with just a name you can track down people's LinkedIn, their general location, etc. The couple in the article have just made financial decisions that are simply put, shitty. I assumed both pairs didn't have anything sorted out until they were 30 and outside of extreme medical debt, gambling debt, etc couldn't find out how they're living pay to pay without sheer irresponsibility. They're living in a place they can't afford. They need to get rid of their second car or work with the flexible schedule the SO has to drive him to work. Lani needs to pick up another gig, she explains the work isn't consist, great, Uber the hours you're missing. These articles remind me that we are our greatest enemy, not the situations we're put in but how we function in those situations.
- metabagel 8y ago
  "I assumed both pairs didn't have anything sorted out until they were 30" I think it's the norm for people not to make much money in their 20s, particularly in southern California.
  - lotsofpulp 8y ago
    There is plenty of opportunity to make money in 20s though, so I can only blame a lack of research (assuming one knows how to read English and has access to the internet). If you’re smart, you can go the MD or STEM route and end up in tech or finance, or if you can get into a target law school that feed into well paying NYC/SF firms. If you can’t do that, then electricians, plumbers, and mechanics make a decent amount starting very young. If you give up your 20s in SoCal, you better be doing something to hit the ground running fast with $150k+ pay. However, if you sacrifice your 20s obtaining skills no one wants to pay for, then yes, you will not make much in your 20s.
    - metabagel 8y ago
      "If you’re smart, you can go the MD or STEM route and end up in tech or finance" These typically entail large student loans, which make it difficult to save much in one's 20s. "If you can’t do that, then electricians, plumbers, and mechanics make a decent amount starting very young." These are good options, but realistically there are only so many of these jobs to go around. They also require vocational training, which costs money, or the good fortune to obtain an apprenticeship. "If you give up your 20s in SoCal, you better be doing something to hit the ground running fast with $150k+ " Most people will never achieve that salary in their lifetime (speaking in real terms).
wonderwonder 8y ago
Its much harder (not impossible) to attain wealth if you don't come from at least an upper middle class background. Having a safety blanket (family) that can support you if you fail allows you to take greater risks in the pursuit of greater income, including starting a business. If you fail, worst case you end up in your childhood bedroom as opposed to on the the street. If your parents are able to pay for your college tuition, you are provided with a much stronger launch pad. Many (most?) people are not taught financial responsibility and how to budget or run a household in school or at home, I believe that it is this lack of knowledge that really inflicts long term harm and feel that it should be required in both high school and college. My parents never knew how to manage money and so I never learned. I am taking the time to educate my self now, but you never even know you are missing out until life hits you in the face one day. The greatest indicator of where you will end up financially continues to be where you started from.
- nunez 8y ago
  > If your parents are able to pay for your college tuition, you are provided with a much stronger launch pad. Ain't that the truth. I've spent 10 years at ~$1300/month paying my student loans down. I'm two years from done, but that would have been half a mortgage paid off! To be fair, though, I knew squat about personal finance coming out of college, so I probably would've burned the money some other way.
  - ohithereyou 8y ago
    Quick back of the envelope calculation ($1300/month * 12 months/year * 12 years = $187,200) shows part of the problem - either college should not be necessary (we need a programmer's guild) or the cost of college is way too high.
    - wonderwonder 8y ago
      I agree its way to high, at least programmers can hope for a well paying job eventually though. Imagine teachers or something similar. They get a degree to do something that society has a hard time going without (going to work is hard if I have no one to watch my kids) and then get a low salary and are told that they are being greedy and disruptive for going on strike to get raises. We are also told from a young age that going to college is a requirement for getting a good job, perpetuating the cycle. Higher education has a great PR department.
Spooky23 8y ago
There is a way out. Use cash. My wife and I struggled with this, we do well and found our expenses increasing with our income. Our solution was to take a small windfall (tax refund) to bootstrap two months of basic expenses, and dump money from direct deposit into a specific account. We did that to get current. That eliminated many dopey expenses (Starbucks, shiny things in the grocery, etc). It’s harder to spend money when it’s in your hands. I have a no debit card policy, so we setup a dedicated credit card for things like gas that cash is onerous for.
- diminoten 8y ago
  This just sounds penny wise, pound foolish. Starbucks isn't breaking the bank, something larger is. And your credit card policy hurts your family, to the tune of thousands of dollars every year.
  - war1025 8y ago
    Starbucks might not be breaking the bank, but it and the 10 other "not breaking the bank" habits all added together very well could be. Also in order to same "thousands" every year, you either need to be spending a significant amount of money, or be carrying a significant amount of debt. Neither are strictly necessary. Avoiding it is a good plan for a lot of people.
    - diminoten 8y ago
      The logic you just gave is the classic penny wise logic, but the reality is you can have as much Starbucks as you want if you stop buying more house or car or education than you actually need. Fucking up big decisions is how Starbucks matters, and one of those fuck ups is to refuse to learn how to use a credit card. People like to pretend constant denial of small pleasure is what makes a difference because martyrdom feels righteous, but the reality is it's a huge waste of energy, dollar-per-effort wise. It's not the smart way to live a thrifty life.
      - war1025 8y ago
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Kinnard 8y ago
Whoever flagged this: why did you flag??
- dang 8y ago
  Please don't do this here. It's off topic and never leads to interesting discussion. It's also against the site guidelines, in spirit if not in letter: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html.
TimTheTinker 8y ago
https://outline.com/duWzgx https://outline.com/duWzgx
learnstats2 8y ago
Living paycheck-to-paycheck can be representative of good choices being made (and I'd guess it is, in most cases). Most people can't afford everything they optimally need while minimising their risk, and so have to manage this by optimising as much as they are able within their paycheck. People with limited resources are going to hit a barrier somewhere, and spending your income is often going to be the least bad barrier to hit.
- ianleeclark 8y ago
  > Most people can't afford everything they optimally need while minimising their risk, and so have to manage this by optimising as much as they are able within their paycheck. Not being able to afford basic necessities-in the most wealthy nation in the world-indicates something being broken.
  - cpwright 8y ago
    I think the point is that living paycheck isn't indicative of not being able to afford basic necessities. It is the desire to spend most of your income on more than what are actually basic necessities.
    - ianleeclark 8y ago
      No, that's absurd, and with the trend of depressed wages and increases in rent over the past few decades, workers wages are increasingly being stretched thin. Moreover, I was responding to OP, specifically the conclusion I quoted and these two statements: > Living paycheck-to-paycheck can be representative of good choices being made (and I'd guess it is, in most cases). and > Most people can't afford everything they optimally need while minimising their risk,
    - supertrope 8y ago
      There are many shades of gray between a new Escalade and living on rice and beans to due to medical debt.
  - supertrope 8y ago
Jerry2 8y ago
Check out this graph "The erosion of the minimum wage" from The Washington Post as well: https://pbs.twimg.com/media/DvbrUVCVsAM25XX.jpg https://pbs.twimg.com/media/DvbrUVCVsAM25XX.jpg You need to do 47 hours of minimum wage work today to get the same amount of purchasing power as 40 hours of work in 2009.
- sethammons 8y ago
  That's interesting. Related to the erosion of minimum wage, my brother's mom, when she was around late teens or early twenties (so, around 40 years ago), was able to rent a beach view place in Newport CA with her friend. They both worked part time at Burger King. There is no way that could happen today
huffmsa 8y ago
A college economics professor would say that this is behavior at the optimal consumer utility boundary.
zeta0134 8y ago
One of the simplest and most effective things I did recently was to split my bank account into two checking accounts, and one savings account. I carry two debit cards with me that are visually distinct. One is for day to day purchases, and the other is meant for bills and the occasional unusual expense, like maybe tools for a surprise home repair. Each time I get paid (every two weeks) I have my employer deposit the sum into the bills account, and I've set up a recurring transfer on the same day into the spending account. I essentially pay myself a portion of my paycheck. I allow myself to swipe my spending card for just about anything: gas, eating out, games, clothing, etc. But if I decide to use my bills card, that's a conscious choice. I know, right there in the moment, that I'm breaking my own rule. It's kinda shocking how effective this was. Once I had enough of a mental barrier to make me aware of my spending habits, I suddenly felt like I was in control. Once I had a significant buffer built up in bills, and could start reliably skimming the extra into savings, all the financial stress also started to melt away. "It's okay. I've got a bit of a buffer if stuff goes wrong. I can do this."
- holtalanm 8y ago
  we have a similar system in our household. Each month, my wife and I essentially give ourselves an "allowance" that goes into our own accounts (our main account is joint). Then we put a budgeted amount into savings from the main account. Almost everything in the main account at that point is budgeted for planned expenses. Once our allowance amount is gone, we just wait until the next month. So far, it has helped us immensely in keeping our spending low. We still have the occasional lapse where we end up spending too munch every once in a while, but all in all, it has been a net positive since we started this. I'll give all the credit to my wife, who thought of it. I'm pretty horrible with money, myself.
- Johnny555 8y ago
  Carrying a debit card (at least by the american definition of "debit card", other countries may have more sane CC security) is a risk in itself -- if you lose the card (or just the number), then your bank account can be wiped out before you can stop it, then you'll start bouncing checks. And since you have a card for each account, they can wipe out your savings too, making it harder to replenish your checking account. You'll most likley get the money back, eventually. I carry only an ATM card (PIN required), no debit card that debits directly from my bank account. (note that this isn't just a hypothetical vulnerability, my company had to give a paycheck advance to an intern who lost her debit card in a bar, had her account wiped out and couldn't get money back from her bank in time to make rent)
apo 8y ago
National data on the paycheck-to-paycheck experience is flimsy, but a recent report from the Federal Reserve spotlights the prevalence of extra-tight budgets: Four in 10 adults say they couldn’t produce $400 in an emergency without sliding into debt or selling something, according to the 2017 figures. This quote links to a report from the Federal Reserve, which contains this gem: When asked about their finances, 74 percent of adults said they were either doing okay or living comfortably in 2017—over 10 percentage points more than in the first survey in 2013. https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf https://www.federalreserve.gov/publications/files/2017-repor... In other words, the survey finds tat 4/10 people can't cough up $400, yet 3/4 say things are fine for them personally. Later in the report: To assess actual financial literacy, respondents are asked five basic questions about finances (table 34). The most missed question (42% of responded answered correctly): Considering a long time period (for example, 10 or 20 years), which asset described below normally gives the highest returns [Stocks, Bonds, Savings accounts, Precious metals] [Correct answer is Stocks] I suspect that the view of things being fine financially may be a case of ignorance is bliss.
- demarq 8y ago
  Also just not having a plan. I can usually tell how I'm doing by looking at my financial goals and comparing them to what my numbers are. Goals force you to think beyond paying for your cable subscription!
RickJWagner 8y ago
We are mostly tech people here, right? Given that, I have a suggestion. We should all be smart, compensated well, etc. If you worry about things like this, study what's been said by Warren Buffet, Jack Bogle, and Ray Dalio. These guys have won the game and explain clearly how anyone (yes anyone) can slowly accumulate wealth. It really does work. The site Bogleheads.org is full of helpful ideas and people that will guide anyone that asks nicely. This problem cannot be solved by politics, but rather by education. Happy (and prosperous) 2019 to all!
- deleted 8y ago
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- supertrope 8y ago
  That's a few steps beyond someone who spends down their checking account each pay period (or runs deficits at times). You have to have something to invest first. Budgeting and/or landing a better job probably would come first.
- shmerl 8y ago
  > It really does work. Not really, if housing costs are crazy. And I'm talking about rent, not even buying.
sys_64738 8y ago
Show us your incoming wage and outgoings then we can discuss whether you are living paycheck to paycheck. Living paycheck to paycheck means your needs are not being met rather than your wants. Cable (free OTA), eating out at all (pack sandwiches), heat (wear more clothing), etc, are all things which need to be cut if you think your outgoings are greater than income.
- in_cahoots 8y ago
  In many parts of the country, cutting heat is impossible. Disregarding the fact that it’s nearly impossible to find enough clothing to stay warm long-term when the temperature drops below 20 degrees Fahrenheit or so, pipes will start to burst when the indoor temperature falls below freezing as well.
  - zozbot123 8y ago
    Look, if you're in that sort of climate, just build a rig and start mining coin, and you'll get paid for heating your place! Can't beat that.
  - aparks517 8y ago
    Sure, you can’t just turn it off where I live. But reducing the temperature somewhat can have a larger than expected impact on heating cost, especially in homes with poor thermal resistance. Personally, I’d cut the cable TV first (and did).
- diminoten 8y ago
  That is not what "living paycheck to paycheck" means. It merely means having insufficient savings to continue to pay bills should a paycheck not arrive each pay period.
tombert 8y ago
2016 was probably the worst year of my life, and not for just political reasons. I had gotten to a point where I had been living paycheck-to-paycheck for about two years, and the company I worked for went bankrupt due to the CEO running away with all of the money that was supposed to be used for our paychecks (yes, really), leaving me jobless and broke. I wasn't good at saving money, and I got debt collectors coming for back credit card debt, and a lawsuit from my landlord because I wasn't able to pay the rent, all culminating with me bursting into tears at the airport because I realized I didn't have enough credit left on any of my cards to pay for the hotel pre-bill for the interview I was flying to at Amazon. Fortunately I was able to find another job, and my wife and I set some ground rules about saving money and paying off debts, and since then I've been able to save enough money to have a down payment on a house, and even though I still use credit cards, I treat them like glorified debit cards, and rarely keep the balance higher than $200. ===== It's easy to get into an unmanageable cycle of debt when you live paycheck to paycheck; fortunately this happened early enough in my life to where I was able to learn my lessons early enough to keep a buffer of money in case the worst happens. I feel bad for people when this stuff happens, since I wouldn't wish that level of depression on anyone.
throwaway10711 8y ago
> “My husband is a Park Ranger in the Great Smoky Mountains National Park, and he had to sign his furlough papers,” one woman tweeted. ”We have a 4 yr. old and a 4-month-old, and we don’t know when his next check will come. Mortgage is due, Christmas 2 days away.” Unpopular opinion. It's _really_ hard for me to feel bad for families that have or are expecting kids without consulting their financials first. I believe that one shouldn't have kids if they can't afford them or have more kids than they can afford, but saying this out loud is an easy way to make enemies.
- extra88 8y ago
  I vaguely agree with that sentiment but I don't understand why you chose to bring it up in connection to a government employee not getting paid because of the government shutdown.
  - bitxbitxbitcoin 8y ago
    Unfortunately, it's because government shutdowns (not being paid on time for a period of a week to two weeks to maybe three weeks this time) are a regular occurrence that absolutely can and should be planned for by any potentially affected government employee.
    - Aeolun 8y ago
      How is this even legal? I don’t think this happens in any other liberal democracy.
  - amf12 8y ago
    Yeah bad example. A better example would have been this: > Sol Smith, chair of liberal arts at a Southern California college, said he landed his job after earning three degrees. But with four daughters and mounting health care costs, he said, saving just isn’t possible. Why do people have 3+ kids without thinking about their financial situation?
- buro9 8y ago
  > Unpopular opinion Because children aren't just for the wealthy
fruktstav 8y ago
Paychecks? What’s that?
sputr 8y ago
Most comments in this thread are about learning to budget/control finances. I would just like to point out what I call "The IT bubble". We all make money here. Most of us make good money. Our social circles are filled with people making money. Most people do not have this privilege. Below a certain threshold there is no such thing as budgeting/finances. It's just survival. You're not gonna budget because you can't save enough to do anything real with it, so you use it to make your life just a little easier. In my country (Slovenia, aka. EU member country) over 70% of people make less than the "average pay" and most of those make minimal pay. At least here the problem isn't financial illiteracy. The problem is that they (a) make way too little to live off and (b) worker protections have eroded past any sane point.
- taurath 8y ago
  If it takes 80% of your income to live at a base level of hierarchy of needs, you need roughly doubled income to be able to actually save money, and have it not be wasted away on this or that random emergency, which is going to be more frequent.
  - dan-robertson 8y ago
    So you need to spend at most 40% of your income on food, shelter, etc before you can save anything because you need to spend the 60% on what, occasional emergencies? What do people do when they don’t have that 60% spare? Or is the key that you write “actually save money” and by that you mean saving some significant amount of money? How much do you think that is?
    - lxmorj 8y ago
      I think he means 'save towards intentional use' versus 'save to soften the blows of random hardships, but never really get ahead'.
    - taurath 8y ago
      Keep in mind that that 40% is at a level where you still have to take the bus everywhere, live with roommates in a bad part of town, and not eat healthy. The middle class always spends and can save, being poor means you can’t.
chibg10 8y ago
There is astonishingly little actual data in this article. The only non-anecdotal justification of the headline is from a study that received its own article when it was originally published quite a while ago. Makes me wonder why WaPo decided this article needed to be published.
lr4444lr 8y ago
Something has been seriously wrong with the U.S. savings rate over the last 3-4 decades: https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT You would see by the graph that maybe we started to learn something after the 2008 meltdown, but nope - trend reverses again in 2012 or so.
artfulcat 8y ago
We can address huge swathes of this by linking immigration law with unemployment numbers. That way companies are not allowed to simply demand unrealistic exorbitant qualifications for open positions and they would be more willing to increase wages and considering hiring and training people in deficient areas.
NightlyDev 8y ago
Living paycheck to paycheck is common most places in the world. It's definetly a choice a lot of people make.
melissarblevins 8y ago
For the majority of Americans the simple fix is to spend less than you make and stop acquiring debt to impress people you don’t like. Cost of living and wages, of course, are factors to consider, but relocation to a more affordable area is an option for many. It’s a matter of going through with it.
- war1025 8y ago
  I credit watching Fight Club at an influential point in my life for teaching me this lesson. "We work jobs we hate to buy shit we don't need"
- Aeolun 8y ago
  Not all of us want to leave the place we grew up in and all our friends behind just because a bunch of juppies have decided to move in.
buttholesurfer 8y ago
I was getting paid 150k a year and living paycheck to paycheck... Depression, debt and "education" can really blind you. Add in a gf/wife who can't budget for anything, sick family members and some bad luck...
adjkant 8y ago
Related required reading: https://thecorrespondent.com/4664/why-do-the-poor-make-such-poor-decisions/179307480-39a74caf https://thecorrespondent.com/4664/why-do-the-poor-make-such-... Before judging at the title, read the summary: Our efforts to combat poverty are often based on a misconception: that the poor must pull themselves up out of the mire. But a revolutionary new theory looks at the cognitive effects of living in poverty. What does that relentless struggle to make ends meet do to people?
known 8y ago
I think UBI that promotes self-actualization in https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs is the solution
BuckRogers 8y ago
I spent most of my life trying to be sure I didn't end up that way. It's a choice. It's not easy if you had no parental help, guidance or financial backing. But that was me. I have done it, mostly through sheer personality (persistence) and just-enough IQ points to put ideas into action. Some people would say it's because of the color of my skin, which I assure you no one gave a damn about when I've been interviewing nonstop for 6 months straight, 3-4 times a week (roughly half of those a 30minute-1hour commute across the city on public transportation), and getting some rather rude rejections. Many people wouldn't even do it, unless it was on a platter for them. They accept less, what's easy. I've seen poor people, the middle class and wealthy alike end up living check to check. As my Depression-era grandmother always said, it's not what you earn, it's what you save. There's many ways to do that. You can work more, find a way to earn more while you do work, or spend less. I do all three to ensure I remain in the middle class, with a growing savings account. Most people have fanciful dreams they never achieve, shooting a little high for their talents. My most important career goal has been to not make Walmart greeter my retirement plan. I'm doing everything I can. Tomorrow morning in effort to prevent that, I'm maxing out my yearly contribution to my Roth IRA, which I opened up alongside my 401K/rollover traditional IRA. So what was I doing before I saw this story show up on my Firefox Livemarks? Working on a SQL query, while my wife is out eating burgers with her mom. It requires dedication to stay afloat. I know there's a lot of people here just like me. While I started on a Commodore128 and it's my passion (I know of many ways to make money, much easier), many people in this field found it because they simply wanted to improve their lives, which I admire. There's also some that didn't really earn their positions, carefully crafted and placed by their loving parents, and will have a lot of issue with my story, not fully understanding that it has been done and can be done from the bottom. Most of us are dealt a mediocre hand. I remain steadfast in that living paycheck to paycheck is ultimately a choice. A poor one at that.
cheez 8y ago
In all of these, nowhere does it state the biggest expense: taxes.
Zelmor 8y ago
Now I'm talking from an Eastern European perspective, but this writing is pretty one-sided with people working in (liberal) arts fields with 4 kids. HVAC repair folks, plumbers, electrical repairmen have as much an income as a software developer here. So go get a blue collar job, if your libarts degree isn't paying for it. Welding pays well, sure it's dirty, sure it's hard, but there is zero competition in these fields.
xtrimsky1234 8y ago
I'm surprised I haven't seen anyone mentioning Dave Ramsey. His podcasts, his youtube videos. If you are living paycheck to paycheck, he is a great resource. It's very easy to fall into the consumerism trap in the US. Plenty of people have iPhone, iPads, Macbooks, seem to travel a lot, student debt, car loans, go to concerts go eat out daily, etc... If you make 100k, or 200k or 300k, you feel you are "rich", you don't need a budget, you don't need to keep track of every dollar, you don't need a plan, a 2% car loan interest is fine, the S&P500 gives you a return of 10% anyways... But Dave Ramsey stirs people in the right direction. At first you will probably curse him because he goes head on against simple math. But his teachings are great, they push you into making actual progress and not postponing efforts. I think someone making 60k and following what he teachers can easily become a millionaire.
hi41 8y ago
I am in my forties and barely know the basics of finance. I have a checking account that gets deposited with my salary and pay my bills. Does someone know of resources that have sound financial advice. Few years back I had to borrow money to pay rent.

325 points by petethomas 8y ago

"They work in big cities and rural towns. They’ve tried to save — but rent, child care, student loans and medical bills get in the way." Yikes. I'm not exactly living paycheck to paycheck, but I can relate to this. It's really funny - my wife and I make quite a bit of money - whatever twisted form of capitalism we currently live in has been designed in such a way to extract most of it away from us. One begins to wonder what the point of going to work and earning money is other than to line the pockets of corporations that have effectively taken ownership of our government.

0xcde4c3db 8y ago
> It's really funny - my wife and I make quite a bit of money - whatever twisted form of capitalism we currently live in has been designed in such a way to extract most of it away from us. I think it's evolved, not designed. A (arguably the) key element of capitalism is that a dollar extracted from an individual transaction is a dollar that can buy capital to scale up the extraction. That means exponential (actually logistic, I suppose) growth scaling with how much an entity can extract.
sct202 8y ago
It's pretty understandable, imo. My income would not scale upwards very much if I moved from Chicago to somewhere higher cost like NYC, DC, or SF, and if I were to go to those places a lot of my current extra income would be wiped out.
derekp7 8y ago
You bring up a good point, that even people who make decent money still can't get ahead much more than those making close to minimum wage. Why is this? My theory, is that life is full of stress, and throwing money at problems can make some causes of stress diminish. Whereas a minimum wage worker will shovel his own driveway, a higher paid office worker may typically have a snow plow contractor on retainer (for them it is worth the trade off, especially with long office hours). Same story with vehicle or home repairs. Which is why you don't really feel stress free until your income exceeds the threshold to handle most stress items with money instead of your own labor.
- supertrope 8y ago
  There's nothing inherently better about any specific trade-off between time and money. Not buying a car and riding the bus saves hundreds of dollars per month but costs hours a day. Eating out saves the effort of cooking and washing dishes. Hiring a maid might be used out of laziness or to eek out more family time. I have to remind myself to try to focus on what really makes my life better. Usually that involves estimating time+money+intangible factors. And if it will still be useful in a year.
- zanny 8y ago
  This depends on your definition of "decent money". If we wanted a legitimate middle class, the textbook definition of one, the per-capita incomes in such a class would need to average around 100k for the whole US. Then you would make enough to invest enough to be making an appreciable amount of your money from investments and thus be "middle" class. The average income is still a bit more than a third that, so the average is still decidedly a member of the working poor. Money doesn't stop buying happiness until... coincidentally... you start making about enough money to be middle class. I'm not surprised at all that those below that threshold are buying happiness at the expense of future stability or prosperity.
  - refurb 8y ago
    Do tell, what is the textbook definition of middle class? I always assumed it was th middle of the income distribution.
    - zanny 8y ago
      The preamble of the wikipedia article on middle class espouses why its such a loaded term: https://en.wikipedia.org/wiki/Middle_class https://en.wikipedia.org/wiki/Middle_class I'm using the academic definition, where if the upper class earns their wealth through investments and the lower class through labor, the middle is a mix of the two. Humorously even the wikipedia article mentions how the middle class in the US is framed as a political tool of manipulation...
- 8y ago
wccrawford 8y ago
It's human psychology. Below a certain level, your mind will simply talk itself into spending your available money to make you happy. You don't need that car. A car half the price would have been plenty good enough. But you did it anyhow. You don't need fancy breakfast cereal that costs twice what the generic stuff at Aldi costs. You don't need all those electronics and toys. You don't need to eat out that much. If you made less money, you'd do less of the above right until you simply couldn't afford any of it. And you'd continue to be about as happy as with all that money, assuming you were still paying for the necessities. I'm not trying to convince you to give up those fancy drinks. I'm just explaining that you could choose to live more frugally without almost no repercussions, but you won't.
- ip26 8y ago
  The "funny" part I think would be how rent, child care, student loans and medical bills tend to scale in cost to your locale, so despite your well paid job, your cost of living has gone up to match. It might be expected & natural for that to happen, but it's still kind of... "funny" if you look at it from a certain angle.
  - supertrope 8y ago
    Child care, education, and medical are labor intensive. It's not like making widgets in a factory that can double in per worker productivity every two years. Industries that don't mechanize like a string quartet playing Mozart still command higher wages over time because they need to afford their bills too. Real estate is limited by the supply of desirable land. Location, location, location. I'm fairly sure that student loans do not scale with locale. That payment is the same no matter where you move to after graduation but it's easier to earn it in a high cost of living (unless housing costs are so high that your free cash flow is less).
- wutbrodo 8y ago
  I decided in college that a 40 hr workweek wasn't the optimal amount for me. I've since learned that for white-collar jobs, employers really really want full-time employees[1]. My way around this was: consume as if I made ~half as much and take extended sabbaticals. The final piece in the puzzle was ACA exchanges, as I can now get stable (though expensive and high-deductible) health insurance while unemployed. This obviously isn't a binary, but I've been consistently fascinated with the inability of the people I know (generally middle- to upper-middle class) to shift their consumption downwards to meet a goal. Not everyone wants as much leisure time as I do, but I know tons of people with all sorts of reasons they'd like to save more, and every one of them consumes more while making less than me (when I'm working). I used to think the issue was that I grew up without a lot of disposable income, but now I know people with similar backgrounds whose floor on consumption rises in lockstep with their income. That is to say, I don't disagree with your analysis here, but for God's sake _why_ do people do it? [1] Contracting is obviously possible, but it often constrains the type of work you can do.
throwaway4926 8y ago
This rhetoric has been known for longer than either of us has been alive, yet the more things change, the more they stay the same.
deleted 8y ago
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AnimalMuppet 8y ago
The problem is not a "twisted form of capitalism". The problem is us. In the 1950s, a family could live on one blue-collar salary. You could probably live on a single blue-collar salary today, too - but you'd live like people did in the 1950s. You would eat out very rarely. You wouldn't have college debt because you wouldn't have a college degree. You'd only have one car. You'd have only one TV for the whole house. The kids would not have huge numbers of toys, and nobody would have huge amounts of clothes. The problem is, nobody wants to live like that today. As soon as we have more income, we "need" more - more clothes, more toys, a better car, a nicer house in a better neighborhood. As we get more income, our "needs" change, driving our expenses to almost exactly match out income. This is especially true when you have kids. If you can afford it, you're tempted to give your kids those ski lessons... that summer camp... that vacation to Disneyland... a car when they turn 16. It feels heartless to say no when you could say yes. But if you say yes to all of it, you'll spend as much as you can afford (and maybe a bit more besides), because there's always something more you could give your kids. Note well: This is not a criticism of those with low incomes who are struggling to make it. It's a criticism of those of us with fairly high incomes who still struggle to make it.
- uuwp 8y ago
  I actually think capitalism is the problem. It's the best form we know to organize a society, but it has the serious problem when money tend to stick or gravitate towards bigger chunks of money. I'm making well over 300k and can afford a decent house that I'd have to pay off my entire life. What if I had 30M and was too lazy to start a business? I would just buy 30-40 nice houses in my area and would rent them. 10 years later I would have 60M in assets plus whatever rent I've been paid. Where did those 30M come from? Did I do anything useful to the society? No. I have done nothing useful. It's just the dynamics of capitalism where another 30M sticked to my original 30M by the mere fact of their existence. If I was seriously rich, I could lobby zoning laws to benefit from monopoly and drive my wealth even higher, while giving nothing back to the society.
  - Aeolun 8y ago
    If you make 300k you need to either be fairly old, or buy a ridiculously expensive place to pay it off for the rest of your life.

deleted 8y ago

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anoncoward111 8y ago

Not even 200 years ago, most people exchanged labor for food. Currency was not used, as you most likely lived on the farm you worked for. There was no form of advancement to be seen, but also no rent, student loans, medical bills, child care etc. There was also no Whole Foods or freedom of speech. But how much farther have we really come in 2018? We have more things, but if you stop working, you will starve or go ill just as quickly as an Irish laborer in 1850.

bilbo0s 8y ago
Not saying this would make it any "better" in the essentials, but I mean, we are at least a little more entertained while we're here. That's something at least.
- anoncoward111 8y ago
  100% agree!!! I spend countless hours on my phone entertaining myself on hundreds of sites at near zero cost. I don't know how our ancestors did it, playing with mud and rocks XD
elif 8y ago
Definitely true in america. In countries such as the netherlands, if you lose your job, you get up to 38 months of 70% salary, rent benefits, child care benefits, and of course your illness will still be treated.
- simonh 8y ago
  Brit, but basically the same here. The country loses out when people fall into debt and become unproductive for economic or health reasons. Failing to safeguard the productivity of your economy and citizenry in this way isn’t capitalist, or conservative particularly. It’s on a different axis, that particularly in the USA has become associated with the political right. That’s not inevitable or necessary though.
- Entalpi 8y ago
  Bringing previously hard working people back into work is hugely benefitial to society.

jumbopapa 8y ago

> certified car seat installer I think I found your issue.

plants 8y ago
> she and her software engineer husband
vailprogrammer 8y ago
Is everyone just supposed to be as smart as us programmers? Is it peoples' own fault if they're stupid? Do they deserve no sympathy or humanity? Right now I make $13/hr in an expensive city. I'm working to find a software job, but the people I work with... they don't have anything else. They're just happy to hold down a steady job. How do you suggest these people magically gain the intelligence and/or self-control/self-discipline and free time and knowledge of a solid path to improve their situation? Because they sure as shit can't afford to go to nursing school, but do they even know what to type into google to start teaching themselves marketable skills? I feel bad for people like you who lack empathy to such a degree. Just literally disconnected from such a large portion of humanity.
- nickthemagicman 8y ago
  It seems to me that republicans are perfectly fine with others suffering, and misery as long as it doesn't affect them. Disguised Social Darwinism. The problem is most are unaware that their success is 99% luck of being born in certain circumstances.
  - vailprogrammer 8y ago
    "Honey, those people are lazy, so they deserve to be poor!" Dear lord. Go work in some shitty jobs full of poor people, and count how many work hard versus how many are lazy. Those 1%ers would be shocked at what they saw. But of course, how could they ever see the help as humans deserving of a decent, not-always-financially-scared life?

perfmode 8y ago

Don’t discount the weight of emotional trauma and the self-sabotaging habits it has the potential to engender. Most people are slaves to their limbic systems. Most people don’t have self-education or resources to seek the help they need to fix these underlying problems. Society does them no favors. Media and advertising are designed to promote consumption. And not even healthy consumption. The idea that we are black boxes with private worlds and perfect agency is being eroded by the empirical evidence that, at scale, we are ultimately manipulable. I know because I wrestle with this constantly. My higher self knows what’s right and how I should spend my time and money. On a daily and minutely basis, my lower self vyes for control and often succeeds in taking the wheel. And I have to catch myself and recognize when my long term efforts are being subverted automatically and mechanistically. I know that, over the years, my unaddressed early childhood traumas have compounded into deeply-ingrained habits of self-medicating. It’s a constant struggle. I am not surprised that there are huge numbers of people who struggle similarly and are not as successful as I am at managing this internal conflict. edit: why is this article now flagged? :(

spidey1 8y ago
How do you manage this conflict? I think a lot of us suffer from this at different scales. I've always found it difficult to work on things that will pay off in the future, even if I plan something I just don't seem to be able to carry through a long term project to the end unless I'm in an environment where there's accountability such as deadlines on projects at work. I'm very prone to instant gratification, which is why I can easily lose most of my spare time in video games, netflix, youtube etc.
- deleted 8y ago
  [deleted]
- throwaway914472 8y ago
  You may want to look into how to use hardware to implement a sort of Ulysses pact - depending on the nature of the behavior(s) that you want to control, a time-locking safe can work wonders.
- 8y ago

scarface74 8y ago

If I took a job at a unprofitable startup that was VC backed, I would understand the risks and ask for the appropriate compensation and have a larger cushion than normal. On the other hand, the only reason for working at a government job is short term stability - you “know” the federal government has access to capital to pay you and the long term stability of pensions, lifetime healthcare etc. But now, on the federal level, you have a president who is shutting down the government over a $5 billion dollar “wall” that everyone in the know is saying won’t be effective - including John Kelley. On the state level, pensions are in danger because of politics, the voters, and the unions. On the bright(?) side, at least it seems like banks and credit unions are willing to work with people who are affected by the shutdown. I’m sure they wouldn’t be willing to work with someone who couldn’t make a payment because a startup couldn’t achieve “product market fit”.

golemiprague 8y ago
Funny how the Washington posts wakes up to this situation when Trump shut up the government. Maybe if they tried to look into this issue before Trump was elected it would improve the situation and prevent Trump from being elected which is strongly connected to the insecurities of American workers. A "wall" does work very well in many places, it depends on the type of said wall and how it is doing its job, it could be a smart fence, it could be some other barrier, semantics is not the issue but the impact of illegal immigration on the US and on job related issues. But I don't expect a serious discussion on that by a propaganda machine owned by Bezos, the same person who is partially responsible to a lot of the problems in the modern economy.

cagenut 8y ago

the trifecta of: student loan debt + mortgage debt + employer based health insurance, is clearly just a bundled and packaged form of indentured servitude.

todipa 8y ago
In financial planning, we call that life-time debt.
andrepd 8y ago
Like the old saying goes, "feudalism with extra steps".
simonh 8y ago
The first and last yes absolutely, though aim a conservative Brit and how Americans reconcile themselves to your health insurance (or lack of it) system really baffles me. Mortgages aren’t as clear cut. Our mortgages have been the backbone of my family’s current financial security. After all the idea is at the end you own your house. Interest only mortgages not so much of course and it requires that the house ends up being worth the cost, but I’m talking about the general case.
- digianarchist 8y ago
  Student loan debt is also not nearly as burdensome for the borrower in the UK has in the United States. The UK basically operates a graduate tax system [1]. [1] - http://www.bbc.co.uk/newsbeat/article/28418590/understanding-student-loans-how-exactly-do-they-work http://www.bbc.co.uk/newsbeat/article/28418590/understanding...
- cagenut 8y ago
  everything about the mortgage market creating the single family detached housing market is terrible. putting aside the environmental side of it (which is HUGE) the simple truth is the math only reaaaly works on an inter-generational scale. just because some upper-quintile of families have made it work doesn't make it not indentured servitude.

esotericn 8y ago

I'd like to read more about the history of the people in the article. The biggest issue as far as I can tell is that it's easy to 'lose' at any stage. You can make a ton of decisions starting from about age 15-20 that influence your degrees of freedom at age 40 (in the article there's a family of 3 that seemingly have little savings, for example). If you were born to a non wealthy household, the reality is that you simply don't get to go through life not focusing on money. Your income, investments, and career have to be at the forefront of your mind, always. And even then there's a ton of chance involved.

todipa 8y ago
I agree with this and that is why we are focusing on funding our child's 529 account to the max without endangering our retirement.
- deleted 8y ago
  [deleted]
49531 8y ago
> Your income, investments, and career have to be at the forefront of your mind, always. And even then there's a ton of chance involved. This is true and it's immensely disheartening that we live in a world where this is true.
DonnyV 8y ago
^^^ This 110%. I grew up in a poor family. Had friends that were well off and didn't have to think much about the future. I noticed early on that I just didn't have that luxury. Fortunately I was aware enough at an early age that every decision I make has to be a good one. I can't afford any failures. I don't think thats a good a way to become an adult or raise a society. By 25 I was at a good place but not without issues. I was having multiple anxiety attacks and all kinds of health issues. I made it out but with scars. There has to be a better way.
- heavenlyblue 8y ago

spoonie 8y ago

I think housing costs are a big part of this. Things are almost perfectly stacked in favour of current property owners: oppose any new housing development near you which keeps land prices and rents high, while those wanting to buy or rent can’t or don’t vote and can’t as easily encourage more building as current owners can discourage it. And it’s so simple (not easy, but simple) too: build more to reduce housing costs which is effectively a raise for most people. We’d need to stop treating housing as a primary investment vehicle though.

crankylinuxuser 8y ago
There is no one part here. It's what many of us (with little power) have been saying for quite some time. 1. Minimum wage and poverty level are not increasing in relation to the power of the dollar. (1) (2) 2. Welfare of all sorts have been cut since the '80s with Reagan's attack on a felony fraudster [Welfare Queen] (3) (4) 3. Zoning regulations actively kill and impede lower rents and booming cities. (5) (6) 4. Employer-linked medicine harms and kills people, via lack of medicine and through monetary lack of means. (7) (8) (9) 5. The citizens have been sold a bill of bad goods with the "Debt Sentence" of educational debt. (10) (11) The problems are numerous, and these cards have been stacked against us. Any one of these could topple, and take out multiple areas/people/economies. And just like the Great Depression, not even the banks getting together will be able to save us. Many of these are laws that would have to be changed at the local/state/federal level, which I do not see happening in 20 years. ---------------------------------- (1) https://www.businessinsider.com/how-much-higher-the-federal-minimum-wage-should-be-2017-12 https://www.businessinsider.com/how-much-higher-the-federal-... (2) https://talkpoverty.org/2016/09/13/poverty-rate-just-dropped-way-measure-poverty-wrong/ https://talkpoverty.org/2016/09/13/poverty-rate-just-dropped... (3) https://www.newsweek.com/trump-plans-slash-welfare-spending-will-hurt-millions-poor-people-us-771204 https://www.newsweek.com/trump-plans-slash-welfare-spending-... (4) https://timeline.com/reagan-trump-healthcare-cuts-8cf64aa242eb https://timeline.com/reagan-trump-healthcare-cuts-8cf64aa242... (5) https://www.strongtowns.org/journal/2018/7/3/how-zoning-is-holding-your-neighborhood-back https://www.strongtowns.org/journal/2018/7/3/how-zoning-is-h... (6) https://www.forbes.com/sites/scottbeyer/2016/05/25/modern-zoning-would-have-killed-off-americas-dense-cities/#1e2d86d99005 https://www.forbes.com/sites/scottbeyer/2016/05/25/modern-zo... (7) https://www.marketplace.org/2017/06/28/health-care/how-did-we-end-health-insurance-being-tied-our-jobs https://www.marketplace.org/2017/06/28/health-care/how-did-w... (8) https://www.beckershospitalreview.com/quality/poor-healthcare-kills-8-million-people-a-year.html https://www.beckershospitalreview.com/quality/poor-healthcar... (9) https://www.fool.com/retirement/2017/05/01/this-is-the-no-1-reason-americans-file-for-bankrup.aspx https://www.fool.com/retirement/2017/05/01/this-is-the-no-1-... (10) https://www.forbes.com/sites/niallmccarthy/2018/08/27/how-u-s-education-has-become-a-debt-sentence-infographic/#37c10a1f4900 https://www.forbes.com/sites/niallmccarthy/2018/08/27/how-u-... (11) https://www.nolo.com/legal-encyclopedia/student-loan-debt-bankruptcy.html https://www.nolo.com/legal-encyclopedia/student-loan-debt-ba...

fromthestart 8y ago

From the executive summary of the Federal Reserve report linked in the article: >When asked about their finances, 74 percent of adults said they were either doing okay or living comfortably in 2017—over 10 percentage points more than in the first survey in 2013. >Individuals of all education levels have shared in the improvement over the past five years, though the more educated still report greater well-being than those less educated. >Three in five urban residents describe the economy in their local community as good or excellent ver- sus two in five rural residents who offer this posi- tive of an assessment of local conditions. Etc. Far less bleak when one focuses on the whole picture. But don't let that stop wapo et al. from implicating Trump while trotting out predictable sob stories about people who spent half their lives pursuing 3 uneconomical degrees, had 3 more kids than they could afford, in cities with some of the highest costs of living in the world, and now complain that they're living paycheck to paycheck. I'm getting really tired of the agenda based fear mongering by wapo, huffpo, and the like. Trust in media is rightly at an all time low[1]. 1.https://medium.com/trust-media-and-democracy/10-reasons-why-americans-dont-trust-the-media-d0630c125b9e https://medium.com/trust-media-and-democracy/10-reasons-why-...

Larrikin 8y ago
All of those statistics appear to be feeling based and not actually grounded in any meaningful numbers.
vailprogrammer 8y ago
> sob stories about people who spent half their lives pursuing 3 uneconomical degrees, had 3 more kids than they could afford, in cities with some of the highest costs of living in the world, and now complain that they're living paycheck to paycheck. So the person who .... - never attended any sort of college, but did graduate high school - is single and childless, in fact have no family at all as their parents died poor and young - is living paycheck to paycheck, whether in a city or rural area ...just doesn't exist? And if they do exist, please enlighten me on what steps they should take to correct their situation? Just curious, but are your parents college educated?
- 8y ago

SmirkingRevenge 8y ago

As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education. I'd like to think that would make things at least marginally better. Another thing I'd love to see, would be for banks to fundamentally reorient themselves to be their customer's advocates/financial guardians, instead of being yet another party encouraging people to borrow more than they ought to. Wishful thinking, I know. My bank knows how much I make, it knows how often I get paid, it knows how much I spend and on what - they have all the info they need to develop a plan to ensure my financial security and advise me where I can do better. Why don't they and why isn't it a standard part of opening account(s)? I'd love to see more innovation around encouraging proper saving habits and budgeting, like what simple.com is doing - but it needs to go even farther than what they currently have, IMHO.

49531 8y ago
You'll never have banks working in consumers self interest as long as they are profit driven organizations. Public banks tend to work better for actual sensible banking.
- zeroonetwothree 8y ago
  Banks don't want you to spend money. They want you to have as much in your account as possible. So it would be in their interest to encourage saving.
  - closeparen 8y ago
    Pretty sure they want you to pay as much interest and generate as many interchange fees as possible.
    - imtringued 8y ago
      This. One of my friends got a call from his bank trying to get him to sign up for a car loan because he had 30k € in his bank account and should "splurge" a little.

cabaalis 8y ago

Real estate is the way I broke this cycle. It was not a short term fix, it took 10 years. Living in and ultimately selling my condo and moving to an apartment netted me enough equity to pay off all my debts. One year later, I've just finishing building a home, and have a 5-month emergency fund, and laugh at the idea of buying anything else at all on credit. A mortgage and nothing else. I'd never have been able to do that paying all the monthly minimums on the debt I accrued in my 20s. It was money in, money out--money that was already spoken for.

Aeolun 8y ago
That’s entirely predicated on prices for real estate constantly rising, which is exactly what got us in this fix in the first place.

ckdarby 8y ago

People rarely give the full picture of their situation in these articles. What an amazing time we live in where with just a name you can track down people's LinkedIn, their general location, etc. The couple in the article have just made financial decisions that are simply put, shitty. I assumed both pairs didn't have anything sorted out until they were 30 and outside of extreme medical debt, gambling debt, etc couldn't find out how they're living pay to pay without sheer irresponsibility. They're living in a place they can't afford. They need to get rid of their second car or work with the flexible schedule the SO has to drive him to work. Lani needs to pick up another gig, she explains the work isn't consist, great, Uber the hours you're missing. These articles remind me that we are our greatest enemy, not the situations we're put in but how we function in those situations.

metabagel 8y ago
"I assumed both pairs didn't have anything sorted out until they were 30" I think it's the norm for people not to make much money in their 20s, particularly in southern California.
- lotsofpulp 8y ago
  There is plenty of opportunity to make money in 20s though, so I can only blame a lack of research (assuming one knows how to read English and has access to the internet). If you’re smart, you can go the MD or STEM route and end up in tech or finance, or if you can get into a target law school that feed into well paying NYC/SF firms. If you can’t do that, then electricians, plumbers, and mechanics make a decent amount starting very young. If you give up your 20s in SoCal, you better be doing something to hit the ground running fast with $150k+ pay. However, if you sacrifice your 20s obtaining skills no one wants to pay for, then yes, you will not make much in your 20s.
  - metabagel 8y ago
    "If you’re smart, you can go the MD or STEM route and end up in tech or finance" These typically entail large student loans, which make it difficult to save much in one's 20s. "If you can’t do that, then electricians, plumbers, and mechanics make a decent amount starting very young." These are good options, but realistically there are only so many of these jobs to go around. They also require vocational training, which costs money, or the good fortune to obtain an apprenticeship. "If you give up your 20s in SoCal, you better be doing something to hit the ground running fast with $150k+ " Most people will never achieve that salary in their lifetime (speaking in real terms).

wonderwonder 8y ago

Its much harder (not impossible) to attain wealth if you don't come from at least an upper middle class background. Having a safety blanket (family) that can support you if you fail allows you to take greater risks in the pursuit of greater income, including starting a business. If you fail, worst case you end up in your childhood bedroom as opposed to on the the street. If your parents are able to pay for your college tuition, you are provided with a much stronger launch pad. Many (most?) people are not taught financial responsibility and how to budget or run a household in school or at home, I believe that it is this lack of knowledge that really inflicts long term harm and feel that it should be required in both high school and college. My parents never knew how to manage money and so I never learned. I am taking the time to educate my self now, but you never even know you are missing out until life hits you in the face one day. The greatest indicator of where you will end up financially continues to be where you started from.

nunez 8y ago
> If your parents are able to pay for your college tuition, you are provided with a much stronger launch pad. Ain't that the truth. I've spent 10 years at ~$1300/month paying my student loans down. I'm two years from done, but that would have been half a mortgage paid off! To be fair, though, I knew squat about personal finance coming out of college, so I probably would've burned the money some other way.
- ohithereyou 8y ago
  Quick back of the envelope calculation ($1300/month * 12 months/year * 12 years = $187,200) shows part of the problem - either college should not be necessary (we need a programmer's guild) or the cost of college is way too high.
  - wonderwonder 8y ago
    I agree its way to high, at least programmers can hope for a well paying job eventually though. Imagine teachers or something similar. They get a degree to do something that society has a hard time going without (going to work is hard if I have no one to watch my kids) and then get a low salary and are told that they are being greedy and disruptive for going on strike to get raises. We are also told from a young age that going to college is a requirement for getting a good job, perpetuating the cycle. Higher education has a great PR department.

Spooky23 8y ago

There is a way out. Use cash. My wife and I struggled with this, we do well and found our expenses increasing with our income. Our solution was to take a small windfall (tax refund) to bootstrap two months of basic expenses, and dump money from direct deposit into a specific account. We did that to get current. That eliminated many dopey expenses (Starbucks, shiny things in the grocery, etc). It’s harder to spend money when it’s in your hands. I have a no debit card policy, so we setup a dedicated credit card for things like gas that cash is onerous for.

diminoten 8y ago
This just sounds penny wise, pound foolish. Starbucks isn't breaking the bank, something larger is. And your credit card policy hurts your family, to the tune of thousands of dollars every year.
- war1025 8y ago
  Starbucks might not be breaking the bank, but it and the 10 other "not breaking the bank" habits all added together very well could be. Also in order to same "thousands" every year, you either need to be spending a significant amount of money, or be carrying a significant amount of debt. Neither are strictly necessary. Avoiding it is a good plan for a lot of people.
  - diminoten 8y ago
    The logic you just gave is the classic penny wise logic, but the reality is you can have as much Starbucks as you want if you stop buying more house or car or education than you actually need. Fucking up big decisions is how Starbucks matters, and one of those fuck ups is to refuse to learn how to use a credit card. People like to pretend constant denial of small pleasure is what makes a difference because martyrdom feels righteous, but the reality is it's a huge waste of energy, dollar-per-effort wise. It's not the smart way to live a thrifty life.
    - war1025 8y ago

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Kinnard 8y ago

Whoever flagged this: why did you flag??

dang 8y ago
Please don't do this here. It's off topic and never leads to interesting discussion. It's also against the site guidelines, in spirit if not in letter: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html.

TimTheTinker 8y ago

https://outline.com/duWzgx https://outline.com/duWzgx

learnstats2 8y ago

Living paycheck-to-paycheck can be representative of good choices being made (and I'd guess it is, in most cases). Most people can't afford everything they optimally need while minimising their risk, and so have to manage this by optimising as much as they are able within their paycheck. People with limited resources are going to hit a barrier somewhere, and spending your income is often going to be the least bad barrier to hit.

ianleeclark 8y ago
> Most people can't afford everything they optimally need while minimising their risk, and so have to manage this by optimising as much as they are able within their paycheck. Not being able to afford basic necessities-in the most wealthy nation in the world-indicates something being broken.
- cpwright 8y ago
  I think the point is that living paycheck isn't indicative of not being able to afford basic necessities. It is the desire to spend most of your income on more than what are actually basic necessities.
  - ianleeclark 8y ago
    No, that's absurd, and with the trend of depressed wages and increases in rent over the past few decades, workers wages are increasingly being stretched thin. Moreover, I was responding to OP, specifically the conclusion I quoted and these two statements: > Living paycheck-to-paycheck can be representative of good choices being made (and I'd guess it is, in most cases). and > Most people can't afford everything they optimally need while minimising their risk,
  - supertrope 8y ago
    There are many shades of gray between a new Escalade and living on rice and beans to due to medical debt.
- supertrope 8y ago

Jerry2 8y ago

Check out this graph "The erosion of the minimum wage" from The Washington Post as well: https://pbs.twimg.com/media/DvbrUVCVsAM25XX.jpg https://pbs.twimg.com/media/DvbrUVCVsAM25XX.jpg You need to do 47 hours of minimum wage work today to get the same amount of purchasing power as 40 hours of work in 2009.

sethammons 8y ago
That's interesting. Related to the erosion of minimum wage, my brother's mom, when she was around late teens or early twenties (so, around 40 years ago), was able to rent a beach view place in Newport CA with her friend. They both worked part time at Burger King. There is no way that could happen today

huffmsa 8y ago

A college economics professor would say that this is behavior at the optimal consumer utility boundary.

zeta0134 8y ago

One of the simplest and most effective things I did recently was to split my bank account into two checking accounts, and one savings account. I carry two debit cards with me that are visually distinct. One is for day to day purchases, and the other is meant for bills and the occasional unusual expense, like maybe tools for a surprise home repair. Each time I get paid (every two weeks) I have my employer deposit the sum into the bills account, and I've set up a recurring transfer on the same day into the spending account. I essentially pay myself a portion of my paycheck. I allow myself to swipe my spending card for just about anything: gas, eating out, games, clothing, etc. But if I decide to use my bills card, that's a conscious choice. I know, right there in the moment, that I'm breaking my own rule. It's kinda shocking how effective this was. Once I had enough of a mental barrier to make me aware of my spending habits, I suddenly felt like I was in control. Once I had a significant buffer built up in bills, and could start reliably skimming the extra into savings, all the financial stress also started to melt away. "It's okay. I've got a bit of a buffer if stuff goes wrong. I can do this."

holtalanm 8y ago
we have a similar system in our household. Each month, my wife and I essentially give ourselves an "allowance" that goes into our own accounts (our main account is joint). Then we put a budgeted amount into savings from the main account. Almost everything in the main account at that point is budgeted for planned expenses. Once our allowance amount is gone, we just wait until the next month. So far, it has helped us immensely in keeping our spending low. We still have the occasional lapse where we end up spending too munch every once in a while, but all in all, it has been a net positive since we started this. I'll give all the credit to my wife, who thought of it. I'm pretty horrible with money, myself.
Johnny555 8y ago
Carrying a debit card (at least by the american definition of "debit card", other countries may have more sane CC security) is a risk in itself -- if you lose the card (or just the number), then your bank account can be wiped out before you can stop it, then you'll start bouncing checks. And since you have a card for each account, they can wipe out your savings too, making it harder to replenish your checking account. You'll most likley get the money back, eventually. I carry only an ATM card (PIN required), no debit card that debits directly from my bank account. (note that this isn't just a hypothetical vulnerability, my company had to give a paycheck advance to an intern who lost her debit card in a bar, had her account wiped out and couldn't get money back from her bank in time to make rent)

apo 8y ago

National data on the paycheck-to-paycheck experience is flimsy, but a recent report from the Federal Reserve spotlights the prevalence of extra-tight budgets: Four in 10 adults say they couldn’t produce $400 in an emergency without sliding into debt or selling something, according to the 2017 figures. This quote links to a report from the Federal Reserve, which contains this gem: When asked about their finances, 74 percent of adults said they were either doing okay or living comfortably in 2017—over 10 percentage points more than in the first survey in 2013. https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf https://www.federalreserve.gov/publications/files/2017-repor... In other words, the survey finds tat 4/10 people can't cough up $400, yet 3/4 say things are fine for them personally. Later in the report: To assess actual financial literacy, respondents are asked five basic questions about finances (table 34). The most missed question (42% of responded answered correctly): Considering a long time period (for example, 10 or 20 years), which asset described below normally gives the highest returns [Stocks, Bonds, Savings accounts, Precious metals] [Correct answer is Stocks] I suspect that the view of things being fine financially may be a case of ignorance is bliss.

demarq 8y ago
Also just not having a plan. I can usually tell how I'm doing by looking at my financial goals and comparing them to what my numbers are. Goals force you to think beyond paying for your cable subscription!

RickJWagner 8y ago

We are mostly tech people here, right? Given that, I have a suggestion. We should all be smart, compensated well, etc. If you worry about things like this, study what's been said by Warren Buffet, Jack Bogle, and Ray Dalio. These guys have won the game and explain clearly how anyone (yes anyone) can slowly accumulate wealth. It really does work. The site Bogleheads.org is full of helpful ideas and people that will guide anyone that asks nicely. This problem cannot be solved by politics, but rather by education. Happy (and prosperous) 2019 to all!

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supertrope 8y ago
That's a few steps beyond someone who spends down their checking account each pay period (or runs deficits at times). You have to have something to invest first. Budgeting and/or landing a better job probably would come first.
shmerl 8y ago
> It really does work. Not really, if housing costs are crazy. And I'm talking about rent, not even buying.

sys_64738 8y ago

Show us your incoming wage and outgoings then we can discuss whether you are living paycheck to paycheck. Living paycheck to paycheck means your needs are not being met rather than your wants. Cable (free OTA), eating out at all (pack sandwiches), heat (wear more clothing), etc, are all things which need to be cut if you think your outgoings are greater than income.

in_cahoots 8y ago
In many parts of the country, cutting heat is impossible. Disregarding the fact that it’s nearly impossible to find enough clothing to stay warm long-term when the temperature drops below 20 degrees Fahrenheit or so, pipes will start to burst when the indoor temperature falls below freezing as well.
- zozbot123 8y ago
  Look, if you're in that sort of climate, just build a rig and start mining coin, and you'll get paid for heating your place! Can't beat that.
- aparks517 8y ago
  Sure, you can’t just turn it off where I live. But reducing the temperature somewhat can have a larger than expected impact on heating cost, especially in homes with poor thermal resistance. Personally, I’d cut the cable TV first (and did).
diminoten 8y ago
That is not what "living paycheck to paycheck" means. It merely means having insufficient savings to continue to pay bills should a paycheck not arrive each pay period.

tombert 8y ago

2016 was probably the worst year of my life, and not for just political reasons. I had gotten to a point where I had been living paycheck-to-paycheck for about two years, and the company I worked for went bankrupt due to the CEO running away with all of the money that was supposed to be used for our paychecks (yes, really), leaving me jobless and broke. I wasn't good at saving money, and I got debt collectors coming for back credit card debt, and a lawsuit from my landlord because I wasn't able to pay the rent, all culminating with me bursting into tears at the airport because I realized I didn't have enough credit left on any of my cards to pay for the hotel pre-bill for the interview I was flying to at Amazon. Fortunately I was able to find another job, and my wife and I set some ground rules about saving money and paying off debts, and since then I've been able to save enough money to have a down payment on a house, and even though I still use credit cards, I treat them like glorified debit cards, and rarely keep the balance higher than $200. ===== It's easy to get into an unmanageable cycle of debt when you live paycheck to paycheck; fortunately this happened early enough in my life to where I was able to learn my lessons early enough to keep a buffer of money in case the worst happens. I feel bad for people when this stuff happens, since I wouldn't wish that level of depression on anyone.

throwaway10711 8y ago

> “My husband is a Park Ranger in the Great Smoky Mountains National Park, and he had to sign his furlough papers,” one woman tweeted. ”We have a 4 yr. old and a 4-month-old, and we don’t know when his next check will come. Mortgage is due, Christmas 2 days away.” Unpopular opinion. It's _really_ hard for me to feel bad for families that have or are expecting kids without consulting their financials first. I believe that one shouldn't have kids if they can't afford them or have more kids than they can afford, but saying this out loud is an easy way to make enemies.

extra88 8y ago
I vaguely agree with that sentiment but I don't understand why you chose to bring it up in connection to a government employee not getting paid because of the government shutdown.
- bitxbitxbitcoin 8y ago
  Unfortunately, it's because government shutdowns (not being paid on time for a period of a week to two weeks to maybe three weeks this time) are a regular occurrence that absolutely can and should be planned for by any potentially affected government employee.
  - Aeolun 8y ago
    How is this even legal? I don’t think this happens in any other liberal democracy.
- amf12 8y ago
  Yeah bad example. A better example would have been this: > Sol Smith, chair of liberal arts at a Southern California college, said he landed his job after earning three degrees. But with four daughters and mounting health care costs, he said, saving just isn’t possible. Why do people have 3+ kids without thinking about their financial situation?
buro9 8y ago
> Unpopular opinion Because children aren't just for the wealthy

fruktstav 8y ago

Paychecks? What’s that?

sputr 8y ago

Most comments in this thread are about learning to budget/control finances. I would just like to point out what I call "The IT bubble". We all make money here. Most of us make good money. Our social circles are filled with people making money. Most people do not have this privilege. Below a certain threshold there is no such thing as budgeting/finances. It's just survival. You're not gonna budget because you can't save enough to do anything real with it, so you use it to make your life just a little easier. In my country (Slovenia, aka. EU member country) over 70% of people make less than the "average pay" and most of those make minimal pay. At least here the problem isn't financial illiteracy. The problem is that they (a) make way too little to live off and (b) worker protections have eroded past any sane point.

taurath 8y ago
If it takes 80% of your income to live at a base level of hierarchy of needs, you need roughly doubled income to be able to actually save money, and have it not be wasted away on this or that random emergency, which is going to be more frequent.
- dan-robertson 8y ago
  So you need to spend at most 40% of your income on food, shelter, etc before you can save anything because you need to spend the 60% on what, occasional emergencies? What do people do when they don’t have that 60% spare? Or is the key that you write “actually save money” and by that you mean saving some significant amount of money? How much do you think that is?
  - lxmorj 8y ago
    I think he means 'save towards intentional use' versus 'save to soften the blows of random hardships, but never really get ahead'.
  - taurath 8y ago
    Keep in mind that that 40% is at a level where you still have to take the bus everywhere, live with roommates in a bad part of town, and not eat healthy. The middle class always spends and can save, being poor means you can’t.

chibg10 8y ago

There is astonishingly little actual data in this article. The only non-anecdotal justification of the headline is from a study that received its own article when it was originally published quite a while ago. Makes me wonder why WaPo decided this article needed to be published.

lr4444lr 8y ago

Something has been seriously wrong with the U.S. savings rate over the last 3-4 decades: https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT You would see by the graph that maybe we started to learn something after the 2008 meltdown, but nope - trend reverses again in 2012 or so.

artfulcat 8y ago

We can address huge swathes of this by linking immigration law with unemployment numbers. That way companies are not allowed to simply demand unrealistic exorbitant qualifications for open positions and they would be more willing to increase wages and considering hiring and training people in deficient areas.

NightlyDev 8y ago

Living paycheck to paycheck is common most places in the world. It's definetly a choice a lot of people make.

melissarblevins 8y ago

For the majority of Americans the simple fix is to spend less than you make and stop acquiring debt to impress people you don’t like. Cost of living and wages, of course, are factors to consider, but relocation to a more affordable area is an option for many. It’s a matter of going through with it.

war1025 8y ago
I credit watching Fight Club at an influential point in my life for teaching me this lesson. "We work jobs we hate to buy shit we don't need"
Aeolun 8y ago
Not all of us want to leave the place we grew up in and all our friends behind just because a bunch of juppies have decided to move in.

buttholesurfer 8y ago

I was getting paid 150k a year and living paycheck to paycheck... Depression, debt and "education" can really blind you. Add in a gf/wife who can't budget for anything, sick family members and some bad luck...

adjkant 8y ago

Related required reading: https://thecorrespondent.com/4664/why-do-the-poor-make-such-poor-decisions/179307480-39a74caf https://thecorrespondent.com/4664/why-do-the-poor-make-such-... Before judging at the title, read the summary: Our efforts to combat poverty are often based on a misconception: that the poor must pull themselves up out of the mire. But a revolutionary new theory looks at the cognitive effects of living in poverty. What does that relentless struggle to make ends meet do to people?

known 8y ago

I think UBI that promotes self-actualization in https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs is the solution

BuckRogers 8y ago

I spent most of my life trying to be sure I didn't end up that way. It's a choice. It's not easy if you had no parental help, guidance or financial backing. But that was me. I have done it, mostly through sheer personality (persistence) and just-enough IQ points to put ideas into action. Some people would say it's because of the color of my skin, which I assure you no one gave a damn about when I've been interviewing nonstop for 6 months straight, 3-4 times a week (roughly half of those a 30minute-1hour commute across the city on public transportation), and getting some rather rude rejections. Many people wouldn't even do it, unless it was on a platter for them. They accept less, what's easy. I've seen poor people, the middle class and wealthy alike end up living check to check. As my Depression-era grandmother always said, it's not what you earn, it's what you save. There's many ways to do that. You can work more, find a way to earn more while you do work, or spend less. I do all three to ensure I remain in the middle class, with a growing savings account. Most people have fanciful dreams they never achieve, shooting a little high for their talents. My most important career goal has been to not make Walmart greeter my retirement plan. I'm doing everything I can. Tomorrow morning in effort to prevent that, I'm maxing out my yearly contribution to my Roth IRA, which I opened up alongside my 401K/rollover traditional IRA. So what was I doing before I saw this story show up on my Firefox Livemarks? Working on a SQL query, while my wife is out eating burgers with her mom. It requires dedication to stay afloat. I know there's a lot of people here just like me. While I started on a Commodore128 and it's my passion (I know of many ways to make money, much easier), many people in this field found it because they simply wanted to improve their lives, which I admire. There's also some that didn't really earn their positions, carefully crafted and placed by their loving parents, and will have a lot of issue with my story, not fully understanding that it has been done and can be done from the bottom. Most of us are dealt a mediocre hand. I remain steadfast in that living paycheck to paycheck is ultimately a choice. A poor one at that.

cheez 8y ago

In all of these, nowhere does it state the biggest expense: taxes.

Zelmor 8y ago

Now I'm talking from an Eastern European perspective, but this writing is pretty one-sided with people working in (liberal) arts fields with 4 kids. HVAC repair folks, plumbers, electrical repairmen have as much an income as a software developer here. So go get a blue collar job, if your libarts degree isn't paying for it. Welding pays well, sure it's dirty, sure it's hard, but there is zero competition in these fields.

xtrimsky1234 8y ago

I'm surprised I haven't seen anyone mentioning Dave Ramsey. His podcasts, his youtube videos. If you are living paycheck to paycheck, he is a great resource. It's very easy to fall into the consumerism trap in the US. Plenty of people have iPhone, iPads, Macbooks, seem to travel a lot, student debt, car loans, go to concerts go eat out daily, etc... If you make 100k, or 200k or 300k, you feel you are "rich", you don't need a budget, you don't need to keep track of every dollar, you don't need a plan, a 2% car loan interest is fine, the S&P500 gives you a return of 10% anyways... But Dave Ramsey stirs people in the right direction. At first you will probably curse him because he goes head on against simple math. But his teachings are great, they push you into making actual progress and not postponing efforts. I think someone making 60k and following what he teachers can easily become a millionaire.

hi41 8y ago

I am in my forties and barely know the basics of finance. I have a checking account that gets deposited with my salary and pay my bills. Does someone know of resources that have sound financial advice. Few years back I had to borrow money to pay rent.