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Hand-to-mouth living from a credit card company perspective
- Zenst 13y agoMany people who live payday to payday will be the types of people who if they had there pay doubled would adjust into the same payday to payday model. In general these will be young people who are out to enjoy life and whilst many adapt a more moderate balance lifestyle, there are always some who carry on. Certainly with the lack of incentives for savers, this certainly does not help motivate people and why should it. What I would be interested in is a graph of fiscal behavour done per age groups and fiscal income. Also if they are single or married or have children. Then I believe you would see a more measurable trend. Though it is worth bearing in mind credit card companies prefer people who live like this as they make them more money than not and with that is it a testiment to how well credit card marketing is actioned I do wonder.
- potatolicious 13y ago> "Many people who live payday to payday will be the types of people who if they had there pay doubled would adjust into the same payday to payday model." This is an audacious enough claim that citation is needed. It also smells a little like fundamental attribution error (i.e., assigning behavior because is is the nature of the individual, rather than situational).
- grecy 13y ago> "In general these will be young people who are out to enjoy life" I feel the same way about the above statement. My gut says there are tens of millions of middle age families living hand to mouth, struggling.
- smegel 13y agoStruggling with iPads
- sliverstorm 13y agoI keep trying to deny this, but I keep seeing it before my own eyes. It's hard to take people seriously when they tell me about how hard up they are financially, when I know they have iPads and iPhones, and so on and so forth. Anecdotes are not data, of course, but I am gradually becoming more and more convinced.
- mfringel 13y agoAll you can tell by someone owning a consumer device is that ''at some point'', they had the money to pay for it. They may not have the money anymore, and it may not make sense to sell all of their high-depreciation items at large losses when they can have the satisfaction of continuing to use the device.
- thwarted 13y agoExcept you can buy most, if not all, consumer devices on credit, and they may still be paying for them. They may never have had the money "at some point".
- vacri 13y agoiPads aren't that ubiquitous.
- tptacek 13y agoYou mean to tell me that people struggling to live hand to mouth are also making mistakes? Ridiculous.
- bluedino 13y agoI think most everyone knows people who have exhibited that behavior.
- deleted 13y ago[deleted]
- kyllo 13y agoConsidering that the top 1% earners captured 121% of all income gains during 2009-2011 (yes, 121%, that means the other 99% of people's income went down)[1] it's also possible that many of these people used to be able to save money every month and not live hand-to-mouth before the recession and the sorry-excuse-for-a-recovery, but that their declining real incomes have squeezed their savings margins down to nothing. [1] http://www.huffingtonpost.com/2013/02/12/top-one-percent-income-gains_n_2670455.html http://www.huffingtonpost.com/2013/02/12/top-one-percent-inc...
- deleted 13y ago[deleted]
- fennecfoxen 13y agoYour statistic is shockingly meaningless. 2009 was the bottom of a recession and a stock market crash. By 2011 it recovered. If you look at an equivalent measure from 2007-2009, you'd see a negative number. The top 1% of earners make most of their money due to the stock market and related activity by design, because if you're a shareholder in Coca-Cola, you want a CEO who actually cares about making Coca-Cola profitable over the long term, rather than someone who would collect a pretty salary for a few years and then retire to a life of leisure. You do that with equity compensation, stock options that vest over time - and, since satisfaction with money is logarithmic, you're going to need a lot of them. Now, the overall level of justice achieved by this current system (or lack thereof) is in fact a valid topic of discussion, though largely outside the scope of the post I make here. By contrast, this cherry-picked number you present INTELLECTUALLY DISHONEST. I call on you to be ashamed of yourself. Unprincipled yellow journalism of this nature is bad enough in the wild, but HERE of all places we ought to value REAL information and understanding, not rhetoric and obfuscation. (Alternatively, please abandon Engineering and seek employment in the scummiest Marketing department you can find.)
- kyllo 13y agoOh, quit your hyperventilating. If you have a problem with this statistic, direct your concerns to Dr. Emmanuel Saez, Professor of Economics at UC Berkeley. A PDF of the cited study is linked in the Huffington Post article I linked to, and his CV and contact info are on his faculty page at http://elsa.berkeley.edu/~saez/ http://elsa.berkeley.edu/~saez/
- dragonwriter 13y ago> Many people who live payday to payday will be the types of people who if they had there pay doubled would adjust into the same payday to payday model. Yes, the less surplus income people have, the greater is their marginal propensity to spend. > Certainly with the lack of incentives for savers The US tax system has such extreme incentives for saving and investment as opposed to spending that any statement that starts this way is worth nothing but a laugh.
- Retric 13y agoThere is a significant amount of government assistance that only kicks in when you run out of savings. So while not part of the tax code the disincentives are there.
- blaines 13y ago> There is a significant amount of government assistance that only kicks in when you run out of savings. Can you elaborate?
- j7 13y agoExamples: Resource limit for SNAP: http://www.dpw.state.pa.us/foradults/supplementalnutritionassistanceprogram/ http://www.dpw.state.pa.us/foradults/supplementalnutritionas... -- translation: "Have less savings, get SNAP". Patient Assistance Programs at hospitals: http://abcnews.go.com/blogs/health/2013/03/28/real-money-hidden-money-at-your-hospital/ http://abcnews.go.com/blogs/health/2013/03/28/real-money-hid... -- translation: the government says your hospital has to "give back to the community" by not making you pay your bill if you say you can't.
- mynewwork 13y agoMost of the incentives require you to have at least a moderate financial surplus to really take advantage of. IRA, 401k and the lower tax rate on long-term capital gains come to mind for saving incentives. Double taxation on dividends (taxed as profit by corporation & again as individual income) is a disincentive. Mortgage interest tax deductions are sort of a grey area, they encourage people to take on larger debt loads and since everyone needs a place to live, rising home prices don't really help anyone except banks & real estate agents (your "profit" from your home going up is meaningless because the next place you live is more expensive too). Saving for your children's college costs is penalized due to decreased eligibility for scholarships, grants and low-cost loans. People with very little extra money to save likely can't take the risks or costs associated with equities investment anyway, so really they only get exposure to interest rates in savings accounts and CDs, which are being kept artificially low. If you only can save <$1,000 per year, you likely care a lot more about the interest rate on savings accounts than you do about how 401k matching is taxed.
- coldtea 13y ago>Many people who live payday to payday will be the types of people who if they had there pay doubled would adjust into the same payday to payday model. Yes, only in the first case they buy mostly essentials and they are fucked if they have some emergency, where in the second they buy more stuff, can take of their children more, and can use some of their paycheck (or the next one) if a need arises. I don't care much for the morally scathing undertone of the comment. >In general these will be young people who are out to enjoy life and whilst many adapt a more moderate balance lifestyle, there are always some who carry on. Spoken like a middle or upper class person who has never come in contact with the large swaths of poor people out there before, or if he ever had, has long forgot all about it. The US is like a third world country job-wise and living conditions wise in many places. I've been to all, from Mississippi to South Dakota to Georgia and Alabama to Idaho -- and I've seen and spoken to people in similar situations all over, from NY to Seattle. Living from paycheck to paycheck is not about some ...hipsters ("young people out to enjoy life"). It's about the declining middle class and the new masses of poor. Including millions upon millions of blacks and latinos.
- deleted 13y ago[deleted]
- tnorthcutt 13y ago*lack of incentives for savers" Do you mean aside from the inherent motivation of being able to weather the small financial storms of life and generally being able to build wealth and have significantly more options available to you in many parts of your life?
- Zenst 13y agoLack of incentives from a interest rate and it will be safe in the bank feeling being found to be not so safe. In the past when we had consumers having too much debt interest rates would slowly rise, nowadays they do there damdest to keep them low to avoid hurting those with large debts. Bottom line is the fiscal appraoch being taken by goverments favours those in debt compared to those who save. Heck even been talks of having negative interest rates in some countries, that is just down right crazy too me. This with banks basicly being allowed to rob customer accounts via varous means and the protection offered being limited - the publics trust in banks has been eaten away. 10 years ago if somebody kept money under there matress, they would be laughed at and called old minded, nowadays they would not be laughed at as much and in some countries they would be utterly envied for there wisdom. That is what I meant about lack of incentives for savers, hope that clears that up.
- ams6110 13y agoMost people that spend their full salary do never put more than 20$ of gas at a time. At the end, they spend around the same amount than others, but they seem to prefer to go the gas station many times instead of just filling up the tank. When gas prices are volatile this actually makes sense. It's the same principle as "dollar cost averaging" when you buy stocks. Purchase a fixed dollar amount, and you end up buying more when the price is low, and less when the price is high, which is what you want to do. Therefore when I buy gas I stop at $25 unless I have a coupon or I'm somwhere that prices are significantly lower than where i normally buy (prices vary by $0.50--$0.75/gal within a 50 mile radius).
- bsims 13y agoThis is a fair point, but more often than not people living paycheck to paycheck aren't as familiar with dollar cost averaging and are probably just buying in $20 amounts because that's how much cash they have at that time. The OP also said it was based on 5+ years worth of data which probably means it is less about gas price fluctuations and more about buying habits.
- uvince 13y agoI apologize for being dense, but what data exactly is the OP crunching here?
- jonnathanson 13y agoPaycheck timing is nothing new in the retail business, and it's used by virtually all of the big retailers to roll out promotions, product refreshes, new lines, etc. Traditionally speaking, paycheck timing was used by retailers catering to low-income segments -- especially those on food stamps, and those who buy groceries on extremely predictable cycles (by necessity). But what's interesting, not to mention troubling, is that this trend is proliferating up the socioeconomic ladder. It's been going on for awhile now, dating back to before the 2007/8 crash, though certainly made a lot worse ever since that downturn.
- rgbrenner 13y agowalmart talks about this occasionally.. here's an article on the "food stamp rush" at walmart: http://www.businessweek.com/magazine/food-stamp-rush-hour-12222011.html http://www.businessweek.com/magazine/food-stamp-rush-hour-12...
- r00fus 13y agoCan you give me an example other than say, post Apr 15th sales/promotions to get tax rebate money?
- jonnathanson 13y agoRetailers segment their customers' trips to the store in much the same way a tech company segments use cases. So-called "stock-up trips," typically conducted after the first payday of each month, are when customers go to the stores to -- as the name implies -- stock up on groceries and supplies for the coming two weeks. "Fill-in" trips are ad hoc trips to grab specific items or meet needs that have emerged since the stock-up trip. A second stock-up trip typically happens around the second payday of the month. And so forth. Shopping behavior -- particularly shopping behavior among segments of the population living paycheck to paycheck -- follows very predictable patterns like these, often by necessity. Now, let's put this into practice. I'm managing a regional grocery chain. Let's say it's Kroger in the Midwest. I want to win customers' share of wallet on the payday stock-up trip, so they'll go to my store instead of a competitor's (let's call that competitor Meijer). I'll time my sale accordingly on key items (often these are "price indicator" items that signal price superiority over other competitors in the area). Meijer will be timing its sale the same way, and so a lot of game theory and competitive intel will come into play here. But this is why grocery items and household necessities are cheaper at these big chains two weeks out of the month.