One-Third of Americans Making $250,000 Live Paycheck-to-Paycheck, Survey Finds

SECond2noneAgs

8:18a, 6/2/22

https://www.bloomberg.com/news/articles/2022-06-01/a-third-of-americans-making-250-000-say-costs-eat-entire-salary

Quote:
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.

Some 36% of households taking in nearly four times the median US salary devote nearly all of their income to household expenses, according to a survey by industry publication Pymnts.com and LendingClub Corp.

It's particularly true among millennials, who are now in their mid-20s to early 40s: More than half of top earners in that generation report having little left at the end of the month.

Ranger222

8:27a, 6/2/22

Someone give me $250K/year and I'll tell you if its true

texagbeliever

8:30a, 6/2/22

In reply to SECond2noneAgs

I wonder if they broke it out by living in NYC, LA, San Fran, Denver and not how those percentages would change.

wangus12

8:35a, 6/2/22

That's ridiculous, but not surprising. My generation seems to thrive of being able to show how much they're worth on social media so they buy all the latest things and trends.

SECond2noneAgs

8:42a, 6/2/22

Another part I found interesting from the article:

Quote:
A separate survey released by the Federal Reserve last week found an overall improvement in the financial well-being of households since the pandemic, bolstered by stimulus aid and surging prices in assets like houses and stocks.

About 78% of Americans said they were doing okay financially or living comfortably -- the highest share since the Fed began running the annual survey in 2013.

Still, one in nine respondents said that they wouldn't be able to cover a $400 emergency expense by any means, including credit cards, borrowing from family or friends or by selling an asset.

The Collective

8:48a, 6/2/22

A majority of people just constantly ratchet up their lifestyle - so dumb

jtraggie99

8:53a, 6/2/22

In reply to The Collective

The Collective said:
A majority of people just constantly ratchet up their lifestyle - so dumb

Exactly. The article seems like it is trying to insinuate that it's largely due to inflation, but if you're making that kind of money and still living paycheck to paycheck, it's because you are buying stuff you don't need and can't actually afford. There are many, many people who make significantly less and still manage to save money and NOT live paycheck to paycheck...

It's like my dad always told us growing up, no matter how much money you make, you can always find ways to spend it all if you choose to do so...

ac04

8:55a, 6/2/22

a wise man once taught me that mo money often leads to mo problems.

BlackGoldAg2011

8:58a, 6/2/22

In reply to wangus12

wangus12 said:
That's ridiculous, but not surprising. My generation seems to thrive of being able to show how much they're worth on social media so they buy all the latest things and trends.

agreed. I occasionally find myself looking around and wondering why I can sometimes feel poor compared to my "peers" but then I drop my net worth into any one of the comparison calculators and realize I'm in the top 3-5% of millennials and it all makes more sense. I only feel poorer because unless you have my bank and brokerage login most of my assets aren't visible and especially not on social media. It seems that unlike my peers, I don't put nearly as much of my income into depreciating/disposable "assets". I also rarely upgrade. My truck is 10 years old this year with probably another 5-10 in it, and I get a new phone roughly every 6ish/when the old one stops working.

BlackGoldAg2011

9:02a, 6/2/22

In reply to jtraggie99

jtraggie99 said:
The Collective said:
A majority of people just constantly ratchet up their lifestyle - so dumb
Exactly. The article seems like it is trying to insinuate that it's largely due to inflation, but if you're making that kind of money and still living paycheck to paycheck, it's because you are buying stuff you don't need and can't actually afford. There are many, many people who make significantly less and still manage to save money and NOT live paycheck to paycheck...

It's like my dad always told us growing up, no matter how much money you make, you can always find ways to spend it all if you choose to do so...

it's like Kevin spacey's character at the end of Margin call, where as the an executive of a major financial firm, at the end he stays on because "he needs the money". The more time i've spent near the people working in the executive roles, the more I can see how true to life that fictional example was.

Spoony Love

9:06a, 6/2/22

In reply to SECond2noneAgs

SECond2noneAgs said:
Another part I found interesting from the article:

Quote:
A separate survey released by the Federal Reserve last week found an overall improvement in the financial well-being of households since the pandemic, bolstered by stimulus aid and surging prices in assets like houses and stocks.

About 78% of Americans said they were doing okay financially or living comfortably -- the highest share since the Fed began running the annual survey in 2013.

Still, one in nine respondents said that they wouldn't be able to cover a $400 emergency expense by any means, including credit cards, borrowing from family or friends or by selling an asset.

This is the metric that will lead to a violently quick unraveling of economic security for most people. Not being able to cover that level of emergency will lead to higher credit balances, more financing, etc. Putting them even further back. That $400 emergency is about to be $800. The unraveling won't be slow this time, with assets needing to be sold at a loss to cover other expenses, there are no assets to be sold by these citizens. They are living an income statement lifestyle and neglecting the balance sheet.

LMCane

9:12a, 6/2/22

In reply to Ranger222

Ranger222 said:
Someone give me $250K/year and I'll tell you if its true

it doesn't matter the actual salary one has-

a person with a $55K salary can save and end up a millionaire by age 65.

a person with a $220K salary can spend everything and end up with little by age 65.

it's the person- not the salary.

most americans have no patience to defer gratification and plan for a year in the future- much less 30 years in the future.

I'm living paycheck to paycheck now only because I bought a new house in 2020 and have pumped all my cash into BTC, ETH and 95% of it into the stock market in the last 3 months.

but at the same time I am on pace to retire a millionaire by age 57. (6 years)

GE

9:40a, 6/2/22

In reply to LMCane

LMCane said:
Ranger222 said:
Someone give me $250K/year and I'll tell you if its true
it doesn't matter the actual salary one has-

a person with a $55K salary can save and end up a millionaire by age 65.

a person with a $220K salary can spend everything and end up with little by age 65.

it's the person- not the salary.

most americans have no patience to defer gratification and plan for a year in the future- much less 30 years in the future.

I'm living paycheck to paycheck now only because I bought a new house in 2020 and have pumped all my cash into BTC, ETH and 95% of it into the stock market in the last 3 months.

but at the same time I am on pace to retire a millionaire by age 57. (6 years)

I'm having a tough time computing living paycheck to paycheck while also being on track to retire at age 57 in 6 years. I always think about living paycheck to paycheck as spending all your money from this paycheck on expenses with nothing leftover to save or invest

Ogre09

9:45a, 6/2/22

What does living paycheck to paycheck mean? I kind of get the idea, but how do you define it? I guess I don't spend every dollar I get in each paycheck, but I use every dollar of it, including moving some to savings and investment. And some pay periods I spend more than I made if I have a large purchase or vacation or something.

Spoony Love

9:55a, 6/2/22

In reply to Ogre09

It traditionally means you aren't putting anything back for a rainy day/emergency/retirement.

I know several people who make close to what my wife and I make (an NP wife, CPA husband) and live like the Jones'. But they have nothing to show for it when things are put on paper. No assets except rapidly depreciating items.

They live paycheck-to-paycheck. While I might portion out every paycheck we get, some of it goes to a savings, some to retirement. Get excited about saving your money, it's fun to watch it grow.

TecRecAg

10:41a, 6/2/22

My checking account never grows, so I guess you could say that's paycheck to paycheck..

However, my other accounts grow monthly. Guess it just depends on how you look at it.

GE

10:52a, 6/2/22

In reply to TecRecAg

TecRecAg said:
My checking account never grows, so I guess you could say that's paycheck to paycheck..

However, my other accounts grow monthly. Guess it just depends on how you look at it.

That's not paycheck to paycheck at least as it is commonly understood.

Living paycheck to paycheck has no meaning if it encompasses both people who save significant amounts and people who save nothing. It would in that case have a completely neutral connotation and only serve to identify people who grow their checking accounts each month, which is a silly category to track.

Jet Black

10:54a, 6/2/22

That's what happens when you buy a house you can't afford and have multiple kids you can't afford. I assume most of these folks would have to sell asap if they lost a job.

htxag09

10:56a, 6/2/22

In reply to TecRecAg

TecRecAg said:
My checking account never grows, so I guess you could say that's paycheck to paycheck..

However, my other accounts grow monthly. Guess it just depends on how you look at it.

That's not living paycheck to paycheck.

If you were unemployed for a year would you be able to cutback, maybe pull from some savings accounts, and be fine? Or would you have to sell your house, move into an apartment, etc.?

What's crazy to me, and kind of telling about this op, is that we bought our house almost 11 years ago. In that time, I don't know any of my friends or peers that have been in their house that long, most are in their 2nd or 3rd house in that time. Hell, my sister is about to move into her 4th house since we've been in ours. You can keep claiming you're rolling over equity, but that mortgage is still going to increase.

My parents have had 3 homes for the entirety of their adult lives. So 3 homes over 40+ years. Their first home was a starter home with 3 bedrooms. After having their 4th kid they got a larger home. They lived in that one until all of us were out of high school, then upgraded to a nicer home on the water.

My wife and I splurge on some things like vacation and cars, but our mortgage is also less than 10% of our monthly income.....

XXXVII

10:59a, 6/2/22

My wife and I make well over $250k combined. I max out my 401k to save for retirement and reduce our current tax burden. I also pay $500 extra on our mortgage each month. Before 2022 we could save $5000 per month by living below our means. This year it is getting difficult to save more than $2000 each month without making additional sacrifices.

DeSantis 2024

FJB, FJB, FJB, etc

jtraggie99

11:03a, 6/2/22

In reply to TecRecAg

Like others have said, living paycheck to paycheck typically means you are dependent on that next paycheck to pay your monthly expenses. It means you have little to no savings that you can access, if you were to not get that paycheck, and you would not be able to pay your bills (or not very easily).

GE

11:07a, 6/2/22

In reply to XXXVII

XXXVII said:
My wife and I make well over $250k combined. I max out my 401k to save for retirement and reduce our current tax burden. I also pay $500 extra on our mortgage each month. Before 2022 we could save $5000 per month by living below our means. This year it is getting difficult to save more than $2000 each month without making additional sacrifices.

Given where interest and inflation rates are going, consider diverting your $500 extra mortgage payment to I-bonds if you haven't already reached the limit on those.

ac04

11:09a, 6/2/22

In reply to GE

GE said:
XXXVII said:
My wife and I make well over $250k combined. I max out my 401k to save for retirement and reduce our current tax burden. I also pay $500 extra on our mortgage each month. Before 2022 we could save $5000 per month by living below our means. This year it is getting difficult to save more than $2000 each month without making additional sacrifices.

Given where interest and inflation rates are going, consider diverting your $500 extra mortgage payment to I-bonds if you haven't already reached the limit on those.

agree with turning off the extra $500 to mortgage for now. long-term fixed low interest rate debt is an asset in inflationary conditions.

Quinn

11:14a, 6/2/22

In reply to XXXVII

XXXVII said:
My wife and I make well over $250k combined. I max out my 401k to save for retirement and reduce our current tax burden. I also pay $500 extra on our mortgage each month. Before 2022 we could save $5000 per month by living below our means. This year it is getting difficult to save more than $2000 each month without making additional sacrifices.

Your normal monthly expenses have increased $3000? I know that inflation is high, but that doesn't seem right.

Diggity

11:34a, 6/2/22

In reply to Quinn

coke habit

Definitely Not A Cop

11:38a, 6/2/22

How many of those people live on the east or west coast?

LMCane

12:02p, 6/2/22

In reply to GE

GE said:
LMCane said:
Ranger222 said:
Someone give me $250K/year and I'll tell you if its true
it doesn't matter the actual salary one has-

a person with a $55K salary can save and end up a millionaire by age 65.

a person with a $220K salary can spend everything and end up with little by age 65.

it's the person- not the salary.

most americans have no patience to defer gratification and plan for a year in the future- much less 30 years in the future.

I'm living paycheck to paycheck now only because I bought a new house in 2020 and have pumped all my cash into BTC, ETH and 95% of it into the stock market in the last 3 months.

but at the same time I am on pace to retire a millionaire by age 57. (6 years)
I'm having a tough time computing living paycheck to paycheck while also being on track to retire at age 57 in 6 years. I always think about living paycheck to paycheck as spending all your money from this paycheck on expenses with nothing leftover to save or invest

that is the quibble I have with these sensationalist articles.

what EXACTLY is "living paycheck to paycheck"?

are they stating that 35% of the working public have ZERO SAVINGS?

or are they saying that 35% of the working public has ZERO CASH?

I have always had a cash buffer of about 6 months over the last 25 years of working as an attorney- until the last 4 months when I bought a house (downpayment and closing costs) in Sept 2020 and then spent the rest of my cash pumping into my Fidelity Brokerage and coinbase accounts.

so I have $700K in savings/401K/personal brokerage/crypto (not including half million dollar house) but only a few hundred dollars in cash

RockOn

12:04p, 6/2/22

South Platte

12:07p, 6/2/22

I feel like I'm the only one of my friends/acquaintances that isn't living in a $500,000+ house. I can't believe the number of people in their 30's living in homes pushing toward $1m. Maybe family money?

ChoppinDs40

12:08p, 6/2/22

In reply to Definitely Not A Cop

Definitely Not A Cop said:
How many of those people live on the east or west coast?

lots, it's mainstream media, lol.

the example they give is a person living in California that had a $1.2mm home 4 years ago that now costs $1.7mm.... a $1.7mm mortgage costs $10k/month "so it's easy to see how they can live paycheck to paycheck"

frankly, most of us here are in somewhat of an echo chamber/bubble when it comes to this topic.

There are very few places in America where you can make what salaries are demanding now in the Austin/DFW/Houston areas and also live in a house you bought for $200k 10 years ago that's now worth $500k.

It's why housing here has gone absolutely bonkers. Housing is usually people's largest expense and there was (used to be "is") significant arbitrage in Texas.. (and North Carolina, previously Denver, Florida, Phoenix, Vegas, etc.).

$250k isn't very much in a lot of places in America if you want to live anywhere close to the standard as many of us middle-upper middle class Ags.

Have a good friend who's an aero engineer about to move to socal for a job... a bungalow 1/2 the size of what he's living in now will cost over $1mm. He lives in a townhouse in the city that cost him $350k ~2.5 years ago.

For the first time in 14-15 years... the economy has flipped and caught people with their pants down. Wages were continually increasing, real estate at a normal clip, inflation under control, ultra low interest rates and cheap living in a lot of America... so people did what everyone else did.. lever up - cheap debt and the gravy train keeps going.

Everyone wants to say "I told you so" but what's happened to the economy in a mere 14 months is absolutely brutal and uncalled for and a gdamn shame since it's being driven by political agendas.

XXXVII

12:14p, 6/2/22

In reply to GE

GE said:
XXXVII said:
My wife and I make well over $250k combined. I max out my 401k to save for retirement and reduce our current tax burden. I also pay $500 extra on our mortgage each month. Before 2022 we could save $5000 per month by living below our means. This year it is getting difficult to save more than $2000 each month without making additional sacrifices.

Given where interest and inflation rates are going, consider diverting your $500 extra mortgage payment to I-bonds if you haven't already reached the limit on those.

Does that lock up my money for at least 5 years if I don't want to lose the interest?

DeSantis 2024

FJB, FJB, FJB, etc

XXXVII

12:18p, 6/2/22

In reply to Quinn

Quinn said:
XXXVII said:
My wife and I make well over $250k combined. I max out my 401k to save for retirement and reduce our current tax burden. I also pay $500 extra on our mortgage each month. Before 2022 we could save $5000 per month by living below our means. This year it is getting difficult to save more than $2000 each month without making additional sacrifices.

Your normal monthly expenses have increased $3000? I know that inflation is high, but that doesn't seem right.

Just a ballpark number, could be a little less. We got very busy with kids and our jobs, and I think we got into a habit of using doordash/uber eats too much. Now we need to cut that back drastically.

DeSantis 2024

FJB, FJB, FJB, etc

TexAg2001

1:13p, 6/2/22

In reply to South Platte

South Platte said:
I feel like I'm the only one of my friends/acquaintances that isn't living in a $500,000+ house. I can't believe the number of people in their 30's living in homes pushing toward $1m. Maybe family money?

I'm betting there's a low chance it is family money and it's more like they are living above their means. They may fall into the % of people the article is talking about.

I think people fall into the trap of purchasing a home for the max amount they are approved for and not thinking about how much they want to save or devote to other things.

YouBet

1:18p, 6/2/22

In reply to LMCane

LMCane said:
GE said:
LMCane said:

but at the same time I am on pace to retire a millionaire by age 57. (6 years)

so I have $700K in savings/401K/personal brokerage/crypto (not including half million dollar house) but only a few hundred dollars in cash

I hate to tell you this but you aren't retiring in 6 years if you only have $700K right now and expect to live to the normal statistical age or beyond it.

Only way you pull that off is if you are single and you plan on living in a box eating ramen every meal, or crypto skyrockets to lotto levels.

htxag09

1:25p, 6/2/22

In reply to TexAg2001

TexAg2001 said:
South Platte said:
I feel like I'm the only one of my friends/acquaintances that isn't living in a $500,000+ house. I can't believe the number of people in their 30's living in homes pushing toward $1m. Maybe family money?
I'm betting there's a low chance it is family money and it's more like they are living above their means. They may fall into the % of people the article is talking about.

I think people fall into the trap of purchasing a home for the max amount they are approved for and not thinking about how much they want to save or devote to other things.

Who needs to save when you have $1mm of equity in your house?!?!