63% Now Live Paycheck to Paycheck

[ETexBasscat]

https://www.cnbc.com/amp/2022/12/15/...-paycheck.html

Welcome to the debt slaves of America. Thanks transitory inflation Fed.

[boneil]

Is that bad?

[boneil]

2019: 78% https://www.forbes.com/sites/zackfri...h=4b786d114f10
2018: 80% https://www.theguardian.com/commenti...k-robert-reich
2012: 67% https://www.reuters.com/article/us-u...88I1BE20120919
2016: 76% https://www.entrepreneur.com/busines...g-about/270899

paycheck to paycheck stats makes for good clickbait and good talking points. In the last 50 years, are more years above the 50% level or below? I don't know.

So is it bad? I don't think so. For the individual household, yeah, it's tough. I lived, as well many of us, lived paycheck to paycheck. But what happens when you start living above that threshold? You save. Is saving good for the economy? And when the household earns enough money, maybe a person stops working. Is that good for the economy?

[NitroZ7]

I wish they would stop using six figure and 1 million dollars as benchmarks. It was useful in the 1980's but it needs to change 40 years later due to inflation. If you made $100,000 a year in 1980 it would be equivalent to making $361,299.76 today. I don't think most of the people pulling in that kind of income now are living paycheck to paycheck but we keep using six figures. There is a big difference between making $100,000.00 a year and $300,000.00 a year and those who are millionaires with 1 million and those who are millionaires with $5,000,000.00. A teacher and police officer probably bring in six figures a year and I can understand why they might be living paycheck to paycheck.

[ETexBasscat]

To me, a healthy economy should see no more than 25% living paycheck to paycheck. Just goes to show how everything is distorted and people are up to their eyeballs in debt.

[boneil]

To me, a healthy economy should see no more than 25% living paycheck to paycheck. Just goes to show how everything is distorted and people are up to their eyeballs in debt.

When has that ever happened?

[NitroZ7]

To me, a healthy economy should see no more than 25% living paycheck to paycheck. Just goes to show how everything is distorted and people are up to their eyeballs in debt.

Unfortunately it seems the entire economy is built on credit cycles. When rates are low, people spend, assets go up and earnings increase. It is like a pull forward. And then it collapses and starts over again. We cannot control how people spend money or save but making money cost something and rewarding savings with higher returns would be a good incentive.

[ETexBasscat]

When has that ever happened?

Probably never which in lies the problem!

[ETexBasscat]

Unfortunately it seems the entire economy is built on credit cycles. When rates are low, people spend, assets go up and earnings increase. It is like a pull forward. And then it collapses and starts over again. We cannot control how people spend money or save but making money cost something and rewarding savings with higher returns would be a good incentive.

I fully agree that savers should be rewarded and not left behind like they have been since 2008. This has been a brutal time for fiscally responsible people looking for a safe return while watching rampant speculation destroy their purchasing power.

[kmanbear]

I wish they would stop using six figure and 1 million dollars as benchmarks. It was useful in the 1980's but it needs to change 40 years later due to inflation. If you made $100,000 a year in 1980 it would be equivalent to making $361,299.76 today. I don't think most of the people pulling in that kind of income now are living paycheck to paycheck but we keep using six figures. There is a big difference between making $100,000.00 a year and $300,000.00 a year and those who are millionaires with 1 million and those who are millionaires with $5,000,000.00. A teacher and police officer probably bring in six figures a year and I can understand why they might be living paycheck to paycheck.

this is from MarketWatch website. I had read something similar in (I think) WSJ.

“Making bank doesn’t mean you have loot saved in the bank. Roughly 45% of those making more than $100,000 say they live paycheck to paycheck; 47% of those making between $150,000 and $200,000-a-year; and 28% of those making over $200,000, a new report from PYMNTS.com found. What’s more, a 2022 survey from LendingClub revealed that 30% of those earning $250,000 or more live paycheck to paycheck. And that’s too bad, as many savings accounts are now paying more than they have in a decade”

I believe the original article I read said, even up to 400K household income about 1 in 4 live paycheck to paycheck. I agree with Boneil, Not sure it’s 100% a bad thing. Peoples spending fuels the economy. If they all became savers, I would think we would have major economic problems.

also, top 2-3% of US households earn over $200,000 / year (depends on what year you get data from). I agree with Nitro that 100K ain’t what it use to be, but there are only a handful of households that make over 200K/year. Median household income in the US in 2021 was about $71,000. If someone can’t save and invest money making double the medium income, I don’t think more money will ever change them.

I definitely don’t have any answers, just more questions, but I really enjoyed reading this discussion. Merry Christmas to everyone.

[TampaJim]

I fully agree that savers should be rewarded and not left behind like they have been since 2008. This has been a brutal time for fiscally responsible people looking for a safe return while watching rampant speculation destroy their purchasing power.

Super savers were victimized to push market returns. And we won't forget either.

[NitroZ7]

I think most of the high income earners making over $250,000 a year living paycheck to paycheck are salary workers that have a false sense of security about their future earnings. These people would account for a large percentage of those living paycheck to paychecks. The other group are likely small business owners who are likely much more fiscally responsible with their personal finances. Successful small business owners tend to adopt the fiscal habits from their business to their personal finance and they rend to look longer term and plan for tough times. I am not sure if it was the Millionaire Next Door or another program I was watching but it said the highest proportion of millionaires are those who own a small business.

[kmanbear]

I think most of the high income earners making over $250,000 a year living paycheck to paycheck are salary workers that have a false sense of security about their future earnings. These people would account for a large percentage of those living paycheck to paychecks. The other group are likely small business owners who are likely much more fiscally responsible with their personal finances. Successful small business owners tend to adopt the fiscal habits from their business to their personal finance and they rend to look longer term and plan for tough times. I am not sure if it was the Millionaire Next Door or another program I was watching but it said the highest proportion of millionaires are those who own a small business.

i agree 100% Nitro! I was given a copy of millionaire next door and Rich Dad Poor Dad, in my early 20s. The books, totally changed my way of thinking. I’ve given out at least 10 copy’s in the past 30 years.

once again really enjoy this thread

[kmanbear]

Super savers were victimized to push market returns. And we won't forget either.

really enjoy your posts TampaJim!

As you know, saving money almost never made anyone wealthy. It’s saving, then investing (making your money work for you while you sleep) that builds wealth. People that expect something exceptional for putting money in “safe” investments is the basis for half the good cons out there.

[TampaJim]

As you know, saving money almost never made anyone wealthy. It’s saving, then investing (making your money work for you while you sleep) that builds wealth. People that expect something exceptional for putting money in “safe” investments is the basis for half the good cons out there.

I'm a bad example. My strategy has always been high saving, low risk, wide diversification.
Cash is part of the composition, along with domestic & international investments, RE, etc.
For me, it's always been about stability. Homelessness sucks, hunger as well. Save & sleep.

Never gonna convince me it's OK for the government to shove market positions on people.
It actually should be possible, and beneficial, to simply save and not spend. No doubt on it.
Of course, that's not conducive to fueling a consumer based economy. Thus discouraged.

[kmanbear]

Respectfully. Japan tried that and it didn’t work out great for them. Declining population was working against them also. I definitely don’t have the answers, just lots more questions

merry Christmas

[ETexBasscat]

Getting and staying out of debt, saving as much as you can and living below your means is the foundation for ordinary people to build wealth. Not everyone needs a seven figure bank account to be considered wealthy. Of course wise investments help build wealth faster, but can also take that away during market corrections.. Safe investments like fixed income CDs and high interest savings need to be a large portion also now that these are paying a decent interest.

[boneil]

Put me in the safe investments camp when you're in or near retirement. Outside of that, I'm putting money in stocks. And during bear markets like now, I'm putting everything I can into stocks.

[NitroZ7]

Put me in the safe investments camp when you're in or near retirement. Outside of that, I'm putting money in stocks. And during bear markets like now, I'm putting everything I can into stocks.

I am getting close to retirement but will still be owning quite a bit of equities (currently 65/35 and may go 70/30 if we get some good buying opportunities). I'm still going to try for total returns and income, with most of the emphasis on income. I love those high quality dividend stocks that yield 2-4% and grow their dividends each year. I see many retirees dumping stuff into crazy paying dividend stocks and closed end funds and then they get burned when the price drops and the dividends/distributions get cut. I think it is going to be a tough 10 years in the market if rates are going to stay higher for longer but at least the fixed income portion will help spinoff some income. I guess there is never a perfect time to retire unless you have a crystal ball.

[apenland01]

Put me in the safe investments camp when you're in or near retirement. Outside of that, I'm putting money in stocks. And during bear markets like now, I'm putting everything I can into stocks.

100% of my 401k contributions and company match have been going into stocks since October and will continue for the foreseeable future. I still have the existing balance in Pimco Total Return, but all new contributions are stock funds...