1y ago

'An economic divide that is widening': Almost one third of Americans earning $150,000 a year or more say they're living paycheck to paycheck and many rely on credit cards to close the gap

finance.yahoo.com 'An economic divide that is widening': Almost one third of Americans earning $150,000 a year or more say they're living paycheck to paycheck and many rely on credit cards to close the gap

Some say they won’t be able to pay off their credit cards by the end of the year.

'An economic divide that is widening': Almost one third of Americans earning $150,000 a year or more say they're living paycheck to paycheck and many rely on credit cards to close the gap

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The only way I could reasonably see that is if those people bought houses when rates went up. I live in a high cost of living area and $150k would not be living paycheck to paycheck for my family (wife, 2 kids, and a dog). I guess I also don't have expensive tastes.
- Define high cost living area. Wife with 2 kids and a pet, I assume you're going to need at least a 3 bedroom condo for a modest living arrangement.
  Where I live, southern California, the average cost for a 3br condo is $4k per month. Mortgages at this time would be way more (standard 20% down).
  Someone else estimated 150k is around 8.7k a month after taxes. So that's already almost half your income just for a roof over your head.
  Include the expense of kids, student loans, car loans, health insurance, etc. Yeah, paycheck to paycheck isn't unrealistic.
  Not everyone was lucky enough to be in the financial place in their life to buy a house 5 years ago.
  
  I'm gonna go ahead and tell you, that's a bit high for after tax.
  I make 172/year and after tax and benefits and what not in South Carolina, I'm at 8.6 a month, which is less than the 150 estimate. So in an average tax state and making 20k less? Might be more like 7.5-8.
  Edit: granted of course, 401k contribution can change things a bunch
  
  Fair enough. I'm sure there's a calculator to make it easy per state. But yeah, take home is deceptive, because typically someone making that kind of income is going to have health insurance contributions, retirement contributions, social security (not technically income tax, but fair enough to deduct IMO) taken directly out of their paycheck.
  Without doing the estimates myself, either of your claims sound plausible, and even taking 8.7k as a generous estimate, it doesn't look good.
  
  and even taking 8.7k as a generous estimate, it doesn't look good.
  Big facts. Worker wages need to be adjusted for the last ${years since Reagan took office and initially screwed everything up for the common American} and then we should be okay.
  
  My family is very similar. We aren't quite paycheck to paycheck, but things feel a lot tighter than they did before - we make 190 ish combined, which ends up being about 9k a month. We have one paid off car.
  Mortgage - $2500 Utilities - $800 (electric, water, plain Internet and mnvo cell phone plan) Daughter's school - $1200/mo (obv this is a "non essential", but it's pretty cheap for a year round private school) Prescriptions - $1200/mo with insurance (although this usually comes in a single lump in January. Insurance also refuses to cover a few essentials which we pay out of pocket for, about $100/mo) Student loans - $800/mo
  Which leaves us with around $2500/mo for entertainment, car/house repair (it's 40 years old and needs new things like a roof or hot water heater from time to time), groceries, any vacations, etc. My wife and I both have chronic conditions which are exhausting to deal with so we get house cleaning for $300/mo as well.
  We are doing fine, but it seems like an exhausting cycle to try and build savings, and if we ever had to buy another car I don't know how we would swing an extra $500 payment every month, with what it seems vehicles cost these days.
  All this to say, while we are ok, I have no idea how families making under 100k get by.
  
  Most people are not paying $1200/month for childcare or $300/month for a maid. They also probably put a lot less toward retirement.
  That said, good on you for recognizing that the average household is struggling.
  
  Sure, for school age kids like my daughter that is true, but I will push back that toddler and infant childcare is, on average, extremely expensive.
  If you don't have a grandparent or other relative to watch your kid, in a state like North Carolina you will be forking out around $800-900 a month per kid on average.
  Which is why publicly funded options for preschool would be life-changing for so many people, especially single mothers and fathers.
  
  I live in Seattle. Like I said, I can see this being true for people who got a mortgage at 5+%. But I don't think a third of people got houses at that rate so it would likely be closer $3k. Here the average 3br is around $3k/month.
  But you missed one large part of the headline. It's people making $150k or more. So that includes a ton of people that make more than that. And also a ton of people not in SoCal or other HCOL areas.
- To be fair, I live in a low cost of living area and having purchased a house this past January, if I dropped to 130k I might be paycheck to paycheck after a while. Which, granted is lower than the survey.
  This being said, my mortgage payment is only $50 more than what my rent was about to increase to, because landlords are the devil.
  I also didn't get a big house, it was well under the national average for cost and size, very much a "starter house". But still over 300k, because housing is a nightmare.
- I'm somehow sure that plenty of people were still buying houses when rates went up. Once again, people blaming choices and circumstances. It feels eerily similar to how people judge the homeless and talk about their "bad choices."

274 comments