Paycheck to Paycheck

[Akivah]

It simply is not possible for everyone because not everyone is in a position to succeed, which can be attributed to various factors as has been mentioned. In a free-market economy there will be winners but there also will be losers.

Ok, we can agree that it isn't possible for everyone, there are always exceptions. But do you believe it is possible for any persons?

 

[bobhikes]

This is a new scenario from your original post. So now you're talking about how to purchase a house? Sure, accumulating savings is the way to get a down payment. But too many people purchase more house than they can afford. A general rule for affordability is a buyer’s mortgage, taxes and insurance combined should not exceed 25 to 28 percent of his or her monthly income.

No I'm talking about the price of schooling and the debt of college loans. Unless you have rich parents or get a scholarship you are going to be in debt for a minimum of 20,000 to a state of local school to upwards of 200,000 dollars. I live in NJ the average 1 bedroom apartment in a cheap area goes for 600, with a 1.5 months security. Thats 3300 eaten up just for rent, not including car, insurance, food, utilities and you are still paying for college.

 

[Akivah]

This highlights the most important part: What matters the most is not how much you save ( as long as you don't go into debt ), it is how much you earn.

Well my thread is about paycheck to paycheck, it wasn't concerning the size of the paycheck. However, the math still works and the person that earns more can afford more house.

 

[Akivah]

No I'm talking about the price of schooling and the debt of college loans. Unless you have rich parents or get a scholarship you are going to be in debt for a minimum of 20,000 to a state of local school to upwards of 200,000 dollars. I live in NJ the average 1 bedroom apartment in a cheap area goes for 600, with a 1.5 months security. Thats 3300 eaten up just for rent, not including car, insurance, food, utilities and you are still paying for college.

Yes, one's living location has a big effect on their finances.

College loans are another subject, but they still have to be affordable. Too many people are graduating with junk degrees. Plus, the higher priced schools normally aren't worth it. The research shows that getting a marketable degree from a low priced college is nearly as good for your economic stability as getting a degree from a high priced school.

On a side note, your math doesn't work for the rent. 600 + (600 x 1.5) equals 1500, not 3300.

 

[Koldo]

Well my thread is about paycheck to paycheck, it wasn't concerning the size of the paycheck. However, the math still works and the person that earns more can afford more house.

True enough. However, if one doesn't earn much they can't afford to obey your general rule in the first place.

 

[suncowiam]

I don't see how who's fault it is, matters. It's the purpose of the government to serve the well-being of the people that established it to govern them. And it's the purpose of the commercial system to serve the well-being of the people engaged in it. The "guilt" or "innocence" of the people is not the issue. The issue is the true purpose and functionality of the systems we employ to further our individual and collective well-being.

Wouldn't you agree?

And our current system of government has become totally corrupted by an economic system that has encouraged and rewarded a few very clever, greedy, people by enabling them to amass huge piles of wealth, and who are using that wealth to 'rig the system' to garner even more. And these people will never get enough, so they will not stop this greed and corruption even when it destroys their own country and their world.

We are insane to allow them to continue. And yet we are doing exactly that. Meanwhile, your concern is assessing the personal irresponsibility of the poor and the sick? How does this make any sense?

There's really no point in continuing our discussion. You're set on your ways. So am I. Keep in mind, that i never stated that government should have no involvement. My position is balanced, in that both the government and the individual has reasonable amounts of responsibility for the success of that individual. The government should help with the root of the issues but at some point, the individual has to be able to lead their own life with no further contributions from outsiders.

If you feel the individual has absolutely no responsibility in their own success, then so be it...

If you feel that it's all on the government, then so be it.

Personally, I stopped relying on the government a long time ago and I feel that mindset has helped me to be independent and self-sufficient. But that's just me.

 

[Akivah]

True enough. However, if one doesn't earn much they can't afford to obey your general rule in the first place.

Sure they can, they will just have delayed gratification as they accumulate the funds to afford the house that they want.

 

[metis]

Ok, we can agree that it isn't possible for everyone. But do you believe it is possible for any persons?

No, if I read your question correctly.

Not everyone is in a position to "make it", which is especially acute during tough economic times. Matter of fact, even though our unemployment rate is officially 4.1%, the reality is that we almost at full employment. This is how the free-market works.

For example, take the mental and physically handicapped. Take the kids just coming out of school. Take those who live in very poor areas whereas they can't sell their houses, such as what we saw happening in Appalachia decades ago. Or the collapse of some of our largest cities, like Detroit, which I live near.

As our resources diminish and the population grows over the upcoming decades, it will be increasingly more difficult for many Americans to find the jobs to make ends meet, and this pattern has very ancient roots with the collapse of empires and super-powers. History tells us that it will happen to us, and this will put tremendous pressure on us to make the necessary adjustments-- but it ain't gonna be easy, let me tell ya.

 

[bobhikes]

Yes, one's living location has a big effect on their finances.

College loans are another subject, but they still have to be affordable. Too many people are graduating with junk degrees. Plus, the higher priced schools normally aren't worth it. The research shows that getting a marketable degree from a low priced college is nearly as good for your economic stability as getting a degree from a high priced school.

On a side note, your math doesn't work for the rent. 600 + (600 x 1.5) equals 1500, not 3300.

That includes the 3 months emergency cash your supposed to have, which is actually higher with the other expenses.

 

[Koldo]

Sure they can, they will just have delayed gratification as they accumulate the funds to afford the house that they want.

Where are you suggesting them to live in the meantime ?

 

[Akivah]

No, if I read your question correctly.

Not everyone is in a position to "make it", which is especially acute during tough economic times. Matter of fact, even though our unemployment rate is officially 4.1%, the reality is that we almost at full employment. This is how the free-market works.

OK, we might be talking past each other. You keep talking about those that aren't able to do it. But do you believe that other people can do it?

For example, take the mental and physically handicapped. Take the kids just coming out of school. Take those who live in very poor areas whereas they can't sell their houses, such as what we saw happening in Appalachia decades ago. Or the collapse of some of our largest cities, like Detroit, which I live near.

OK, the physically and mentally handicapped have additional challenges. But these aren't insurmountable issues. Some handicapped individuals have been very successful. Here's a whole website of them.
Famous People with Disabilities

Newly graduated is a temporary condition, not a permanent burden. Obviously the newly graduated are just starting their careers. The point is that they can become fiscally responsible and start accumulating wealth if they choose to.

And not being able to sell your house is another temporary condition. To be sure, it is a large financial blow. But it is possible for people to start over again.

As our resources diminish and the population grows over the upcoming decades, it will be increasingly more difficult for many Americans to find the jobs to make ends meet, and this pattern has very ancient roots with the collapse of empires and super-powers. History tells us that it will happen to us, and this will put tremendous pressure on us to make the necessary adjustments-- but it ain't gonna be easy, let me tell ya.

If the ends don't meet, that can be worked on. I never said it would be easy, it takes work, planning, and sacrifice.

Every day I hear stories of people that had the worst circumstances, but after years of working and tracking every dollar, they have attained economic stability. It is possible for most people.

 

[Akivah]

Where are you suggesting them to live in the meantime ?

I believe your scenario said their parent's home.

For everyone else, they can rent the most affordable place they can find, even if they incur a longer commute. And commit to a plan and action to save their money, so they can purchase an affordable home in the future.

 

[metis]

OK, we might be talking past each other. You keep talking about those that aren't able to do it. But do you believe that other people can do it?

Generally speaking, yes.

Some handicapped individuals have been very successful. Here's a whole website of them.
Famous People with Disabilities

But the cards are more stacked against them, and in a competitive economy that puts them at a disadvantage. And don't forget, it's mostly about competition in a society like ours that's the main driving force.

Newly graduated is a temporary condition, not a permanent burden.

Under most circumstances, yes, but "most circumstances" are always to be had. Again, you and I are only one accident away from a life-changing experience that could be disastrous, heaven forbid.

And not being able to sell your house is another temporary condition. To be sure, it is a large financial blow. But it is possible for people to start over again.

Possible but difficult, and not all will manage it well. This is why we have things like unemployment compensation, Medicare, Medicaid, Social Security, etc. We formed these out of necessity, not convenience.

If the ends don't meet, that can be worked on. I never said it would be easy, it takes work, planning, and sacrifice.

Agreed, but not everything always works out the way we may plan and try and prepare for it.

Every day I hear stories of people that had the worst circumstances, but after years of working and tracking every dollar, they have attained economic stability. It is possible for most people.

Yes, but I have also seen many people crash & burn, which is part & parcel in a free-market economy.

As for me, I much prefer to have what my cousins have in Sweden when it comes to these matters.

 

[ADigitalArtist]

Ok, we can agree that it isn't possible for everyone, there are always exceptions. But do you believe it is possible for any persons?

I think all of us can agree budgeting and money management can benefit many. But the argument here is that there's a tendency to believe poverty happens as a result of active decision making far more than it does. With huge numbers in those studies pointing towards a reason outside of one's control, the elephant in the room is this:

America has a ******* ****** *** healthcare system. Crushing debt and inability to crawl out from it due to health problems is a reality for far more people than those with the infrstructure to support them.

 

[metis]

America has a ******* ****** *** healthcare system. Crushing debt and inability to crawl out from it due to health problems is a reality for far more people than those with the infrstructure to support them.

And it's gonna get worse as the elimination of the mandate and passage of the tax cuts will drive up medical expenses for millions of families and leave millions more without any medical insurance whatsoever. In the Psalms, it says that nations will be judged on how they treat the poor, so ...

 

[Koldo]

I believe your scenario said their parent's home.

For everyone else, they can rent the most affordable place they can find, even if they incur a longer commute. And commit to a plan and action to save their money, so they can purchase an affordable home in the future.

I haven't mentioned there being a 'parent's home' available.
What if you can't save much money considering you are paying the rent ?

 

[Revoltingest]

That's only true in rare circumstances if your interest payment puts you into a much higher tax bracket.

Brackets don't work that way.
They only affect marginal income (ignoring a bizarre wrinkle for a few in Trump's tax reform).
Marginal income is that which is above the bracket's lower limit.
If interest is taxed, then this lowers the after tax rate of return on interest.

Normally, one makes more interest income the higher the interest rate is.
after tax interest income = interest earned x (1-tax rate)

But adjusting for inflation, one loses ground because tomorrow's dollars are
worth less than today's. Whatever one earns on interest income after taxes,
it's always been less than inflation (on average), thus one loses buying power.

 

[It Aint Necessarily So]

Minor point....
Low bank interest rates on deposits isn't a problem at all....it's good.
Consider.....
Interest rates are always adjusted for inflation, because banks need to earn enuf to cover
profit plus currency devaluation (due to inflation). Bank competition means that higher
rates only exist with higher inflation. (Btw, the economic payout [interest rate minus inflation
rate] is typically negative.) But we pay income tax on interest earned, so when interest
rates are higher, the net-after-tax economic payout is even lower.

OK. Thanks for that.

I get a pre-tax 9% return on (foreign) government insured investments. I give 16% of that back in taxes - net interest about 7.5%

Inflation here was 6% last year, which was unusually high. Most years, it's closer to 4% with interest rates at about 8%.

I have to see that as better than what we get for what we have remaining in US banks. That money does nothing, but my wife like to have some there anyway.

 

[Revoltingest]

OK. Thanks for that.

I get a pre-tax 9% return on (foreign) government insured investments. I give 16% of that back in taxes - net interest about 7.5%

Inflation here was 6% last year, which was unusually high. Most years, it's closer to 4% with interest rates at about 8%.

I have to see that as better than what we get for what we have remaining in US banks. That money does nothing, but my wife like to have some there anyway.

You're sure doing a lot better than using US banks!
But yes, we should have a little cash on hand.
"Little" will vary from person to person.

I have one of these, which I'm planning to keep cash in.....

It's a Corliss "cannonball" safe, which weighs abou t12,000#.
It has 2 time locks, & is extremely nitroglycerine resistant.

 

[siti]

It's better than living paycheck to paycheck and having growing debt, but it's not as good as having savings or equity in real estate or a business.

Its ok until the paychecks stop and there is no safety cushion. And if one is facing retirement, and it comes quicker than you think, then what?

One is facing retirement - possibly as early as 7 months and a few days from now - possibly another ten years or later. One has already experienced the paychecks stopping when one was made redundant 20 years ago. One lost one's house and one's savings. The bank basically kept all the money I had in it - and what little 'equity' existed at that point was kindly donated to lawyers etc. for writing the most expensive and incomprehensible letters in the world. So much for savings.

One started over with a different mind set - they can't take what you don't have and they can't take what they don't have access to...

We built our son's 3 bedroom house ourselves paycheck to paycheck (starting from leveling the site and digging the foundations on evenings and weekends, then a stack of 4x2s or a few bags of cement each paycheck...and so on until it was finished)...and they live paycheck to paycheck, and completely debt free already (at the age of 31!) - I am encouraging them to do the same for their kids and wishing that I had done it like that from the start - I wouldn't need to wait for retirement if I had - I could just work when I felt like it by now. I would still work because there is still so much to do and so many people who need stuff...but working for that is far more satisfying than working to keep the bank afloat in the mistaken conviction that one is doing it for oneself and one's family. But that's just one's opinion I suppose.