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One-Third of Americans Making $250k Live Paycheck-to-Paycheck
- runnr_az 4y agoI make a pretty good living, know more or less what I can reasonably afford. I always assume the people driving fancy cars here in Scottsdale are mostly deeply in debt. As an aside though, the gen-x erasure continues here, comparing only millennials with boomers.
- giarc 4y agoI tell myself those people are in debt mostly for self preservation. My household income is great, but my wife drives a 2012 minivan and I drive a 2007 station wagon. I could not imagine spending $1000 or more a month on a new vehicle.
- vorpalhex 4y agoPut aside money every month now as a "car payment" and buy your next car in cash. Save yourself the interest and still have a plan if a vehicle gets lost.
- linuxftw 4y agoFor many people, a nice vehicle is 'the thing' they've always wanted. Many people I know seem to spend as much as they can afford on a vehicle, it's part of the personality somehow. On the one hand, I can't really identify on spending so much money on something with so little utility. On the other hand, why are we making all this money if not to spend it on the things we desire? Before the world shut down, I was spending between $5-$10k per year on travel, but I have no vehicle payments and that represents (a good bit) less than 10% of my annual income. The problems really on start when you want to do both. If you need to have a new vehicle and travel, and whatever else, you're going to over extend.
- bombcar 4y agoA brand new Sienna will run you $600 a month or so on a good loan, with down-payment. And it'll get 32 MPG whilst doing it. It could be worth taking a look.
- sleepdreamy 4y agoI drive a 2019 CRV, 369 a month. It's really do-able if you have good credit and a downpayment. There is no need to spend 500+ on a vehicle a month. I could spend 1000/m on a car but that would be stupid for my salary range.
- fartcannon 4y agoBaby boomers and their kids, and soon their grandkids.
- ericmay 4y ago> As an aside though, the gen-x erasure continues here, comparing only millennials with boomers. Oh interesting. I hadn't picked up on that and I'll have to keep an eye out. From the article (sort of related): > Living paycheck-to-paycheck doesn’t necessarily mean hardship, and LendingClub makes the distinction between those can pay their bills easily and those who can’t. Only a fraction of high earners -- roughly one in ten -- reported issues covering all their household expenses in April, according to the survey. I don't understand this/not enough information. > To finance their lifestyles, higher-income households are more likely to put expenses on credit cards -- but also more likely to be able to pay off their balance in full. If they're anything like me, they do this because not doing it is a 1% - 4% increase in cost. Apple Card, for example, offers 2% cash back if you use Apple Pay. I do this (among using other cards) and pay off my balance in full each month. We have a monthly budget spreadsheet where we log expenses so it doesn't matter what method we use for payment, except that we get 2% cash back (among other things like fraud protection - not my money) which we sort of "don't account for" so that we have some extra savings that doesn't feel like savings. I feel like this article has a catchy headline, but ultimately they're trying to string together lots of pieces in some sort of frankenstein article.
- kevinventullo 4y agoYeah, if someone is paying off their credit card in full every single month, I think it’s inaccurate to say they’re financing anything. They’re doing it for the points.
- 0xfeba 4y ago> If they're anything like me, they do this because not doing it is a 1% - 4% increase in cost. Yep, I have 3% cash back so I put every bill I can on my credit card, even if there's a fixed fee (usually $2-3) on it. I earn about $30-60/month that goes straight to savings.
- stnmtn 4y agoIf you don't mind my asking, where have you found a card that offers flat 3% cash back?
- ramesh31 4y agoYeah, whenever I see young people driving brand new BMWs my first thought is always "I know that I make more money than you, and I could never afford that car". I truly do not understand who can actually afford a $1k car payment who isn't a millionaire.
- fullstop 4y agoIf your mortgage is paid off it's definitely possible. I wouldn't waste that kind of money on a car, but a lot of things change when your housing costs drop drastically.
- driverdan 4y agoMost software engineers can afford $1k/m and still save plenty of money for retirement. The key is not living in a HCOL area and reducing your other spending.
- linuxftw 4y agoThis is referred to as 'daddy's money.' A large portion of the youth today are living off of their parent's income or existing wealth. Their parents might not pay for their car, per se, but they're likely footing the majority of their other expenses such as paying for their apartment or condo, paying their tuition, giving them regular allowances, etc.
- jdhn 4y ago>Living paycheck-to-paycheck doesn’t necessarily mean hardship I must have a different definition of hardship then. That's WAY too close to the knife's edge for my liking, but different strokes for different folks.
- noirbot 4y agoI guess the question is how much of that stuff could they cut back if they needed to. There's a lot of expenses in my life I could easily cut back if I lost my job or had some other expense come up. If part of your paycheck-to-paycheck is subscriptions to food services, or memberships at fancy gyms or a cleaning service or such you could probably free up a lot of money if you needed to.
- bombcar 4y agoThis is a really good point to keep in mind when looking at your expenses/budget - what things are mandatory, which can be changed with little effort, which can be changed with major effort, and which are entirely optional.
- mjhay 4y agoIt doesn't mean hardship, but it's an express train to hardship the minute something crashes down.
- VerminOctopus1 4y agoAh yes the hardship of fine dining, luxury vehicles, and McMansion mortgages. More seriously, I take issue with the definition of “paycheck-to-paycheck”, they at least thankfully split the groups into those who struggle to pay their bills (a small minority) and those that don’t. I don’t know how you can claim to live check to check (“on the knife’s edge”) while also claiming to easily pay your bills every month. Just because you’re able to allocate all of your money doesn’t mean you’re living check to check.
- foobiekr 4y agoThey have the cash flow to avoid catastrophe.
- tekla 4y agoAlt title: Americans have no money after spending it all on luxury goods
- bushbaba 4y agoOr on housing.
- nwsm 4y agoAmericans surely spend a very disproportionate amount of income on housing, transportation, and healthcare compared to the rest of the world.
- MomoXenosaga 4y agoI disagree. Your houses are dirt cheap (outside of NYC and SF I suppose) and gas is basically given away.
- ethanbond 4y agoThe people making $250k outside of the ultra-expensive metropolises are probably not generally in the 1/3 here in the title.
- nwsm 4y agoMy perception is that in much of the rest of the world, it's more common to live with one's family or other more communal housing situations for longer. In the US there is a slight stigma about not having "moved out" that starts at 18 years old.
- rootusrootus 4y agoSurely there is data that could answer that. Health care I could see. Transportation? We don't have nearly the tax rate on fuel that, say, European countries typically do. Housing seems pretty expensive everywhere, I'm not at all sure it's disproportionately so in the US.
- deleted 4y ago[deleted]
- leobg 4y agoI don’t live in the US. But I’m wondering: Is that a function of inflation, or is it a function of overspending? (Or, third option, a function of high paying jobs beyond geographically clustered in cities where living expenses are especially high.)
- jghn 4y agoYes.
- duxup 4y agoI gotta think overspending. While housing is absurdly expensive depending on where you live that doesn't mean that at 250k you can't live within your means / have to be living paycheck to paycheck. I suspect they don't want to make the compromises required (commuting and so on) to spend less. It might not be easy to live cheaper in expensive areas, but at 250k it should be possible. As the article notes the majority of these people are still paying their bills "easily".
- leobg 4y agoTrue. I cannot comprehend how people can spend $8 on a cup of coffee. To me, that isn’t even a question of whether one can afford it. It’s a question of sanity. I can make a great cup of coffee myself for mere cents. And if a business that specializes in selling hundreds of cups of coffee a day does it orders of magnitude worse than I can at home, I would feel foolish patronizing them. That makes me almost feel insulted. Same with clothing, btw.
- empthought 4y agoOverspending causes inflation, so...
- johndfsgdgdfg 4y agoI am an immigrant in NA. It's an extremely materialistic culture. Before coming to NA I've heard the phrase 'NA is a culture of excess'. After living here for few years I've realized what the culture of excess means. Exercising restraint is not in DNA of NA culture. The whole culture is just me-me-me and what more I can consume.
- jghn 4y agoAnyone can live paycheck to paycheck if they let lifestyle creep get past their income. Looking at the difference in my income now vs 10 years ago and the difference in my savings rate, the savings is less than it should be in comparison. Inflation is part of it, sure. But it's a lot more that my lifestyle has changed. I choose to have a nicer place vs back then while living in a HCOL area, a nicer car. There are purchases I make without a second thought that would have been a big deal back then. And I make a conscious effort to monitor lifestyle creep. Plenty of people don't think about it at all and go all in.
- onlyrealcuzzo 4y agoThe second my mom gets a dollar - she has the most insatiable desire in the world to spend ten. There are spenders and savers. No amount of money changes that.
- dr_dshiv 4y agoPart of the point of making more money is to not think about cost. And then you learn how endless our desires are.
- Someone1234 4y ago> There are spenders and savers. This seems a little reductive, like nobody has any agency nor are there any shades of gray, you're either black or white, true or false, spend or save. I'd argue people prioritize different things and a lot of the reasons they prioritize those things has to do with their upbringing or personal history. I'm sure, in general, people should save more. Just feels like everyone is quick to jump on others for making different choices without understanding the context of those choices. It is the whole "Should people on food stamps buy a birthday cake?" question again, and every time that comes up all hell breaks loose.
- f38zf5vdt 4y agoMany people have poor impulse control around certain decisions and are unable to control themselves despite wishing otherwise. The percentage of overweight and obese individuals in the world is a good indication of this. Unless you feel obesity is their priority.
- notyourday 4y agoOne word: rents. My rent is going up by 40% next year. I will have to take it because comparable places will be at least just as much, probably move and it will cost me a couple of grand to move.
- almost_usual 4y agoAmericans like to pretend they’re rich when they’re not.
- neogodless 4y agoAll of us, exactly. There is no reason to use nuance on the internet when talking about a large group of heterogeneous people. Did you know there's maybe 600 million people in North America and over 400 million in South America? Ah but you just meant all of those United States suckers?! 320 million. All of them "like to pretend they're rich when they're not." And everyone on Hacker News uses broad sweeping statements to refer to a fractional subdivision of a much larger group.
- linuxftw 4y agoEveryone knows "Americans" refers exclusively to the people in the USA. True, two continents also happened to have the name "America" in them, but their relation doesn't matter. As you can see here [1], America is the short form of USA. 1: https://en.wikipedia.org/wiki/America_(disambiguation) https://en.wikipedia.org/wiki/America_(disambiguation)
- neogodless 4y agoRight, I inferred they meant "Americans" (from the United States), which I included in my comment. 320 million (which I included in my comment.) Are you refuting my sarcastic rebuttal? Is the original comment accurate, that all citizens of United States share that same behavior?
- linuxftw 4y agoHow much of a population has to meet a criteria for a generalization to become acceptable? I would say 2/3 is a nice measure. For sure, 2/3s of Americans live far beyond their means. I also think that the word "average" is implied when talking about large groups, by default. "The Average American lives beyond their means" to most people has the same meaning as "Americans live beyond their means."
- crhulls 4y agoI wonder how many people here on hacker news live paycheck to paycheck? I make significantly more than 250k and spend all of it (single income family of four) and my savings are my equity.
- pionar 4y agoI mean, I lived paycheck to paycheck last month after some unexpected large bills (May was a hell of a month!) but that was only because I didn't want to raid savings. I don't have sympathy for folks making as much as we do who are "broke" or up to their ears in debt. If they're fortunate and privileged enough to get to our positions, they only brought it on themselves.
- zionic 4y ago>or up to their ears in debt See this depends. If the following are true: 1) The interest rate on your debt is below inflation 2) The cost to service the debt is a sufficiently low percentage of your monthly take home Then taking a loan is often MUCH smarter than buying it cash, because your cash can earn interest in excess of the loan interest in most scenarios. I know people with ten houses on 30-year 2.5% notes. They could pay them all off tomorrow but it wouldn't make sense financially.
- ivanche 4y agoLeverage is excellent in good times but horrible in bad ones. As they say, after an ebb you see who was swimming naked.
- bombcar 4y agoThe risk that you may lose your job has to be considered in the equation, taking into account how "rare" your situation is (if you're work-from-home at $250k, will you be able to find that again, or will you have to move to get a similar income?) and how much savings you have. Remember, when you take a loan you have extremely large banks on the other side of your "great idea" so either they're incredibly stupid, or they can take into account more factors.
- empthought 4y agoI know this is the article title but it's highly deceptive on the part of the site. "One-Third of Americans Making $250k Say They Live Paycheck-to-Paycheck" is more accurate.
- workingon 4y agoI technically live paycheck to paycheck after deductions, but I have a fairly high percentage (20%) going into 401k/Roth type stuff (before taxes income of ~80k). I bet these people are saving a lot for retirement as well.
- omginternets 4y agoI have often remarked that it is common for Americans to live beyond their means at all SES levels. Years ago, an acquaintance of mine got a promotion that brought his annual salary from $22k to $35k. I remember those numbers like it was yesterday. He celebrated by buying a mustang. Years later, a collegue's wife got a huge promotion, such that their household income was in the neighborhood of $500k per year. They celebrated by buying a new house in a swanky neighborhood, and a boat. When I asked him about this, he replied that the house was (unsurprisingly) mortgaged and the boat was financed over a number of years. A couple of years later, he confessed that he was up to his ears in debt and that his home life was a disaster as a result. It was then and there that I decided that being rich wasn't so much about having a lot of money as not having to worry about money.
- danielvaughn 4y agoAt the time I got my first job in tech, I was working 2 jobs to clear $29K/year. My salary as a junior dev was $76K/year. My next role was $105K/year, then $120K/year, then $135K/year, then $150K/year. At each level, my lifestyle adjusted to my income, and it did so completely subconsciously. It felt invisible; I can't think back to a particular time where I was like "I am going to spend more money because I can". It just happened. I've always felt guilty about it, because I know that I'd be in a much more secure position if I had been more conscientious about how I managed my finances.
- omginternets 4y agoI suppose it’s somewhat natural for this to happen at the lower end of the pay-scale, because one stops actively restricting one’s expenses. But I’m curious, what form did the creep take from 135-150? Are you still living paycheck to paycheck?
- danielvaughn 4y agoI didn't adjust my lifestyle very much, though the extra income allowed me the opportunity to make some larger purchases that I wouldn't have otherwise made. An iPad Pro, a nice standing desk, a herman miller chair, etc. After around the $120 mark, I don't think I was living paycheck to paycheck. But I was not nearly as frugal as I should have been.
- gjvc 4y ago"if your outgoing exceeds your income then your upkeep will be your downfall"
- AnIdiotOnTheNet 4y agoFascinating, since that's several times what I make and I have so much money that I never worry about it. I have difficulty conceiving of an emergency expense large enough to drain my bank account, let alone other places I keep my money. The only reason I'd ever want more is if it were enough that I could stop working. As much as I think it is obvious that rent and housing costs are completely insane right now, I'm not sure that (and inflation as the article suggests) is sufficient to explain why so many (apparently millennial) people making nearly four times the national median income are in this situation. In some ways maybe I'm lucky I grew up in a barely-lower-middle-class family as it kept my lifestyle expectations low.
- bombcar 4y agoThe vast majority of those large salaries go to taxes and housing costs, the first is mainly avoided by not having a large salary and the second can be avoided by location. Once you're willing to gasp live somewhere where houses don't cost $1.7 million, things suddenly start to work out.
- bradlys 4y agoProblem is that often gasp the high compensation doesn’t follow to BFE!
- AnIdiotOnTheNet 4y agoIf you're living paycheck to paycheck on "high compensation", then what f'ing good is it anyway? I'm out here in south central Wisconsin making a poverty wage by the standard of SV-types and I own my own home with a couple retirement accounts, some investments, and significant savings. I don't even have a fancy bachelor's degree, just 3 associates.
- bradlys 4y agoBecause most people don't want to live in the middle of nowhere. Especially if you have an Ivy League degree, come from an upper class household, and like to be surrounded by similar. SV isn't full of the same type of people that you'd find in software in BFE. It's a different class of people entirely. It's more similar to doctors, lawyers, and IBs.
- nerdjon 4y agoI would say I am close to paycheck to paycheck. I have a savings but it is more an emergency fund and I am unable to currently grow it. I also make a very good salary. Enough that I feel like shit complaining knowing that many will never even be close. Now I could sit down and say, ok I will go out less, cut Netflix, some games, etc. but in reality that stuff will add up to at most maybe $300 a month if I am very aggressive. My key issues are rent (which went up $500 a month this year) and the $1500 I am paying towards medical debt. And that is paying the minimum. Then student loans which I stupidly put off these last couple years. I also currently live alone. I am planning on moving in with my partner later this year but that is only going to help so much. The reality is my options are slim. Maybe I could get a roommate but I shouldn’t have too making as much as I do and at the point in my life I am at. I am very fearful for an emergency, job loss, etc. But people tell me I should be more frugal or I buy too much. When the vast majority of my money is spoken for for the next 5 years (debt) and rent. Before I even make that money.
- thebean11 4y agoPutting off student loans that aren't charging interested in a time of high inflation is smart not stupid
- jcadam 4y agoNot to mention politicians teasing loan "forgiveness" makes me afraid to make payments for fear of being a sucker when the debt is wiped away in the name of buying votes.
- nerdjon 4y agoI disagree, had I continued to pay the loans all of that money would have gone to principal instead of a good chunk going to interest. So I could have made some good progress on the loans themselves. I know they are talking about forgiveness, but the numbers I see thrown around are about 10k of forgiveness and for people making less than 100k
- thebean11 4y ago
- SilasX 4y agoAm I missing something? The article repeatedly mentions that it's a LendingClub/pymnts.com study, but I don't see the actual citation or link[2] so I can review it myself and drill down exactly what "living paycheck-to-paycheck" means. It makes a huge difference whether we're talking "all disposable income goes to hard-to-exit obligations" like mortgages and credit card minimums, vs "they happen to spend it all on consumption but could reduce it with no problem", and I'd like to know which they mean. From googling the study sponsors and terms I found this press release[1], which might be what they mean (though it's from three weeks ago). The article also links a Federal Reserve study [3], ostensibly as support, but it says 78% are doing okay (sampled over all income levels) or better with 1 in 9 unable to come up with an emergency $400 by any means, though with no connection to the result about $250k income households. The closest thing that study has is a result saying that 5% of adults with incomes over $100k can't fully pay the month's bills (p. 43 by the pdf numbering). [1] https://www.pymnts.com/consumer-finance/2022/paycheck-to-paycheck-has-now-become-the-predominant-way-of-life-in-america/ https://www.pymnts.com/consumer-finance/2022/paycheck-to-pay... EDIT: Looks like this is the one, which references a $250k figure: https://www.pymnts.com/consumer-finance/2022/report-36-of-consumers-earning-250k-now-live-paycheck-to-paycheck/ https://www.pymnts.com/consumer-finance/2022/report-36-of-co... [2] The link anchored to "Lendingclub.com" just goes to a generic company profile page. [3] https://www.federalreserve.gov/publications/files/2021-report-economic-well-being-us-households-202205.pdf https://www.federalreserve.gov/publications/files/2021-repor...
- __derek__ 4y agoI'm skeptical of provocative labels like this, and the article demonstrates why: > Living paycheck-to-paycheck doesn’t necessarily mean hardship, and LendingClub makes the distinction between those can pay their bills easily and those who can’t. Only a fraction of high earners -- roughly one in ten -- reported issues covering all their household expenses in April, according to the survey. Without spending breakdowns, this article isn't informative. Of those in the one-third, how much of their budgets is non-discretionary? How are they classifying expenses like retirement contributions?
- giantg2 4y ago"More than a third of Americans earning at least $250,000 annually say they are living paycheck to paycheck, underscoring how inflation is taking a bigger bite out of Americans’ budgets at all ends of the pay spectrum." Um... no. It underscores how some people live at or beyond their means regardless of having high income.
- deleted 4y ago[deleted]
- credit_guy 4y agoIt could be that some (maybe the majority) of these people are asset-rich but cashflow poor. They are not necessarily leaving beyond their means, their net worth may be millions. But the net worth is locked in the value of their home, which is not a liquid asset. They have to pay their mortgage, and high food and gas prices make the day-to-day cashflow calculus a bit complex, but that doesn't mean they are anywhere close to being broke.
- bigbacaloa 4y agoHow is someone making 250k in income cash flow poor unless they have overcomitted with respect to expenses?
- credit_guy 4y agoIt was not over-commitment when they committed (when they took the mortgage).
- s1artibartfast 4y ago90% of US mortgages are fixed rate, so inflation shouldn't increase the mortgage. IF anything, Inflation decreases the cost of the mortgage for those who own homes because they are a fixed dollar amount.
- 4y ago
- ivanche 4y ago"More than half of top earners in that generation report having little left at the end of the month." That’s no surprise at all. I also have almost nothing left at the end of the month. At the beginning of the month, however, they should have plenty of money left and should save/invest then.
- mihaic 4y agoSeems a bit unavoidable when you have the most efficient society even in creating artificial desires and enabling them through easy loans. Combined with literally rent-seeking and the expectation that real-estate with always increase in value, seem to be a perfect recipe for longterm misery.
- lapcat 4y agoI love how the article's chart shows Millennial and Boomer, once again erasing the existence Generation X.
- racl101 4y agoIf there's one cohort that has gotten the shaft is Gen X. Millennials conflate them with boomers and, quite often, blame them along with Boomers. Yet, very few of Gen Xers got all the perks of being a boomer such as a affordable education and housing on one income. Especially the ones born in the early late '70s. And, too old to get to enjoy conveniences that millennials got that made childhood fun like Saturday morning cartoons or Nintendo (remember that gaming used to be mainly for kids. It wasn't until late '90s that gaming was targeted at young adults) Pure fucking middle child syndrome. But they made some kick ass music in the '90s.
- pavlov 4y agoIf you're paying down a $1.7 million mortgage like mentioned in the article, it may feel like you have nothing left at the end of the month, but a lot of that money goes into an asset that is almost guaranteed to appreciate over the 30-year period. So clearly these home-owning Americans making $250k/year are not actually living paycheck-to-paycheck in the usual meaning, since they're going to be multimillionaires in a few decades. Maybe the main problem here is that too much of their net worth is tied into a single asset.
- roflyear 4y agoIt really depends. Higher cost homes are tricky. Often hard to sell. Often they do not appreciate as much as your average home. I would say $1.7m is probably on the edge of this category tho.
- ivanche 4y agoI agree. All tied into a single, non-cash-flow generating asset is risky, to say the least. And it will really be an asset only when they sell it. Until then, they only pour more and more money into a bottomless pit that a house is. EDIT: for $250,000/year income, the most expensive house one can afford is $750,000. Their $1.7 million house is way above their means.
- pessimizer 4y agoIt's not only strange that these sort of stories are coming back after being so brutally mocked a few years ago, but again the examples have a large part of their huge monthly nut going into their savings, retirement accounts, and assets (mortgages.)
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- ptero 4y agoThe article is clickbaity and somewhat self-contradictory. For example: > To finance their lifestyles, higher-income households are more likely to put expenses on credit cards -- but also more likely to be able to pay off their balance in full. This means using cards as a convenience or optimizing for cashback (miles, status, ...) and not "to finance their lifestyles". On the subject -- I am constantly surprised by the "you must buy as much house as you can afford, and then some" mentality in the US (I did not grow up here). I know several families, with 2 good professional incomes who loaded up on expensive housing to an extent that if either of them gets a noticeable pay cut they will be screwed. While there is still cheaper, smaller houses in the same town with the same school that they can handle on a single income (and invest or travel on the second; or just take it easy). So I am not particularly surprised that a high income family can dig themselves a financial hole. My 2c.
- renewiltord 4y agoIt's the logical play. A 5x leveraged investment that is constrained by politics to move upwards? Stupid move not to play.
- ptero 4y agoThe problem with leveraged investments is that if it goes down you can get wiped out. If you have $100 and buy one share at $100, which goes to $50, then to $150 you end up with a $50 profit. Buy 2 shares at 2x leverage instead and you can, after a margin call, end up with $0. The house also brings in the need to pay taxes and do repairs. And if one is constrained financially they are tempted to defer necessary repairs or go the DIY path without the right skills, which is often disastrous.
- renewiltord 4y agoRight, but that's a problem for my BTC-USDT perpetuals. For housing, political force can be brought to bear. After all, you don't get margin called on a house. It's a non-recourse loan usually. So if you can't pay, you walk away and the bank forecloses. And usually, you can pay, it's just a question of it being worth it. And it's worth it because you can force politicians to make it worth it by taxing society to backstop your property value.
- unboxingelf 4y agoComing from very humble beginnings, I default to living frugally and below my means. No credit card debt, no car loan, and a low principal, low rate mortgage on a fixer upper home. Each month I pay the mortgage and credit card in full, max out ESPP, and make sure I hit the 401k max annually. I still come out ahead and typically use that cash to fund home improvements. Last month I paid for a new fridge in cash. It can be quite frustrating to watch folks who bring home much less live so much larger. I think it comes down to feeling that they’re being irresponsible. Perhaps growing up poor teaches you a thing or two.
- tnel77 4y agoI remember watching my mom ration her insulin as a kid. As an adult making solid money, I still try to be generally frugal and it’s frustrating to see people that (statistically) make far less than me driving much nicer cars and wearing nicer clothes. Possessions won’t make you happy, but it would be kind of cool to drive a nicer car. I just can’t swallow the payments for a fully loaded Jeep or truck. I guess I’ll stick to playing with the “build your model” tools on the various car company’s websites haha.
- throwaway5959 4y agoHere’s a thought, stop focusing on what other people do and mind your own financial business.
- unboxingelf 4y agoOn the contrary, observing what other people do is a primary way to learn. Considering the utter lack of financial education many receive from school or parents, it’s a quite an important signal. But something tells me you’re not interested in constructive dialogue.
- tnel77 4y agoI’m not living paycheck-to-paycheck, but it’s easy to see how that can still happen. Even in a relatively low COL area (comparing a town like Huntsville or Fort Worth to Seattle or San Fran), it’s easy to plow through a bunch of money between your mortgage, car lease, student debt, sending kids to daycare, and saving for retirement. I know you don’t have to have a new car and you can always try to get a smaller house, but that money goes pretty quickly if you aren’t careful.
- fallingfrog 4y agoI make 95k and I have more money than I know what to do with. I have enough cash to live on for months. I'm in the green 2k per month even after taxes, mortgage and student loans. I don't know how you end up in a paycheck to paycheck situation making this much money. I guess it wasn't brains that got them there.. I mean: I have a dishwasher that you have to plug into the sink with a hose. My car is a rusty subcompact and has 120k miles on it. My countertops are plastic. Do I care? No. Not even a little. Why would you? My friends are all a bunch of hippies anyway, they wouldn't care if I had rock countertops either. When the bearing or the liners on my dryer die, I replace them myself. When am I going to buy a nice new dryer? Never, hopefully. And why spend money on a car? You're going to sit in traffic in it for 20 minutes a day. Who cares? I just don't understand the way that some people think. The only thing I would change, if I could, is that I would like to work fewer hours at the same hourly rate, so I could spend more time climbing mountains and playing board games with friends. I like my freedom and I like my friends. But having rock countertops would make no difference in my life whatsoever. And it really doesn't for you, dear reader, either, no matter what the glossy ads say. It won't improve your life.
- AnIdiotOnTheNet 4y ago> I don't know how you end up in a paycheck to paycheck situation making this much money. I guess it wasn't brains that got them there. I'm inclined to agree. I make even less than you do and for the most part money just sits in my bank account until the number is uncomfortably high and I move it to the savings account. They can come up with all sorts of explanations about HCOL areas and what not, but there are simple solutions to those problems, like "don't live there".
- throw123123123 4y agoI think cash-wise i would fall in this bucket. Of course i have plenty of savings, but most of my income is spent away. One issue when talking about incomes is that its not properly adjusted for COL and taxes. A 250k salary in the bay area is about 12k a month in hand. Im a head of family - I support my wife and my kid with this income. Rent is 5k, and pre-school is another 2.5k. Between unnegotiables like phone lines, food, internet, electricity etc etc the reminder to be stingy about is not a lot. I used to live in this area with 100k and still save, but as a single person living in a dump and eating in the office every day.
- bigbacaloa 4y agoCue San Francisco residents who make half a million a year complaining that they are really poor because of out of control housing prices.
- 3qz 4y ago$250k is not a lot of money in most of these places live. In Canada it’s not even enough to buy a house in 2/3 of our major cities. What’s it like in NYC or the Bay Area? I can’t blame them for spending so much when that’s what it takes to have a lower middle class lifestyle.
- jcadam 4y ago$250k ain't what it used to be. And salaries aren't keeping up with inflation. All the wage inflation is happening at the bottom of the pyramid. Nobody is having trouble hiring software engineers.
- denimnerd42 4y agowhat does live paycheck to paycheck even mean. all of my retirement investing, mortgage, and bills are automatically withdrawn monthly. we make something like that amount jointly but at the end of the month there's very little cash leftover. we don't buy luxury items and we don't have nice cars.
- m0llusk 4y agoIt might be interesting to investigate the larger dynamic context of this situation. Of Americans making $250k how many recently made more than that and have been forced to downsize?
- neogodless 4y agohttps://www.cnbc.com/2017/10/09/budget-breakdown-of-a-couple-making-200000.html https://www.cnbc.com/2017/10/09/budget-breakdown-of-a-couple... Making $200k, maxing out 401k ($18k) But $700k home, child care, vacations, car, somehow $400/month on gas! "Children's lessons" $400+/month https://www.financialsamurai.com/scraping-by-on-500000-a-year-high-income-earners-struggling/ https://www.financialsamurai.com/scraping-by-on-500000-a-yea... $500k / year and max out 401k but... whoa. 40% taxes and huge student loans don't help but $1.5m home, expensive vacations and cars, etc.
- bnycum 4y agoI live somewhere much lower cost of living than San Francisco, but $400 in gas doesn't seem outrageous. I spent ~$90 on gas in May on my Honda Accord alone and I work from home, plus gas is under $4/gal here. That's not counting whatever my wife spent on her car who drives a whole lot more than me. Could also see "children's lessons" creeping up that high in places like San Francisco as well. It's easily $120-150/month for us per child per activity which may only cover 2 nights a week. We let our 2 kids pick one thing whether it's tennis, tae-kwon-do, etc. Luckily my kids don't need any extra tutoring either.
- neogodless 4y agoYeah I realized that - my driving habits have decreased wildly since pre-pandemic, so I pay more like $40 every two months... but that particular expense isn't too crazy. (Doesn't take away from the rest of their budget being over-the-top though).
- alexk307 4y agoLifestyle creep is a very real thing, I feel sorry for folks who can't manage their money. If you make $250k a year, and can't save at least a third of it, you should seriously examine your lifestyle choices. No, I'm not talking about Netflix subscriptions, or hobbies, or avocado toast, I'm talking about cars, homes, luxury items, and the debt that comes with them.
- 30944836 4y agoArticle doesn't make it clear what the definition of paycheck-to-paycheck is, so I'm wondering if behind all this is that famous, infuriating "budget" of the $500k earner that still feels poor, somehow: https://i2.wp.com/financialsamurai.com/wp-content/uploads/2015/03/FS-500K-Student-Loan.png https://i2.wp.com/financialsamurai.com/wp-content/uploads/20... This outlay list is so stupid it borders on rage bait. That's the feeling I get from this article.
- nunez 4y agoBeing in this bracket, I can see how easy it can be to live paycheck-to-paycheck at this income in a VHCOL with kids. $1M+ house (and not a fancy house either), $3k/mo on daycare, $800/mo car payment, $1000/mo student loans...it goes quickly. That said, lifestyle inflation is the worst! There are folks making way more than this that are ALSO living check-to-check. As someone said on here, there are spenders, and there are savers! FWIW, the folks that have plenty of money saved up at lower incomes are mostly homebodies and don't do much, which is fine, but that's not how everyone wants to live (myself included). Can't take it with you and all that.
- rdegges 4y agoOne of the things I did early in my career was live as frugally as possible and dump all extra $$$ I could into quickly getting rid of my student loans, car payments, etc. Talking to a lot of peers over the years, I've realized that most people carry around insanely high levels of debt and grow accustomed to spending multiple thousands of dollars per month on debt servicing. It's crazy how much of a difference it can make to get rid of those and free up all that cashflow. Obviously, this isn't doable without an income buffer, but if you are able to cut down expenses for a while and aggressively pay down debt: it was one of the best decisions I made early in life.
- nunez 4y agoI agree! That's what I did to get my student loans paid off. Not as aggressive as you, since my impulse control isn't as good as yours (if it were up to me, I'd eat out daily at around $200-300/week), but I definitely spent much less than I could have. I paid my $200k student loans in ten years and paid off my (consolidated) credit card debt two years after that. I carry revolving credit card debt, but it's almost always paid off by month's end. Feels great!
- Kevin_S 4y agoReally interesting. My wife and I are about to go from ~70k yearly income to ~250k yearly income. I have done a ton of planning for how our lifestyle will change and new expenses (buying a house, having kids). 250k is an insane amount to me, but as I am doing the math for our monthly income and expenses, it does go quickly if you are not careful. Wish there were more resources on navigating this kind of income jump. Anyone know any?
- iancmceachern 4y agoThis is a big indicator of how close we are to another recession. It's a slippery slope, a little downturn and some folks loosing their jobs could turn into a big deal quickly.
- nicolas_t 4y agoI've kept very strict rules since the start of my work life. I save half of my income and try not to spend more than 20% of income on rent (which required living with my partner in a tiny 150 square feet apartment when most of my friends had much better apartments). But that has helped a lot preventing lifestyle creep. I undoubtedly spend more now than I used to since I went from roughly 20k a year to 350k a year but I still keep saving half of my income. It does mean that I live a less luxurious lifestyle than my peers.
- polskibus 4y agoIs this $250k pre or post tax? if pre-tax, what is the disposable income out of that in average US state?
- avrionov 4y agoUsually these numbers are given before tax. The sum after taxes will vary depending on the state and the family size. You can check here [1] for various options. [1] https://www.paycheckcity.com/calculator/salary https://www.paycheckcity.com/calculator/salary
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