Living Paycheck to Paycheck?

[vsjhoc]

Kind of like livin' la vida loca ...

I have never really understood what the phrase "living from paycheck to paycheck" means. Does it mean:

1. By the time you get a paycheck, you have spent all of the last one.

2. If you didn't get the next paycheck, you would have nothing left in the world -- no money in savings -- and would have to incur (more) debt.

3. You don't budget anything for savings because all your money goes to expenses. (Which of course means you haven't been hanging out on this site! )

4. The mortgage is due today, but by bad calendar karma but you don't get paid until tomorrow.

5. Other?

[Ima saver]

I always thought it meant you had no savings, no other way to pay for anything other than your paycheck.

[JanH]

I always thought the phrase meant that you used up every paycheck on living and had nothing to fall back on. That you ran out of money from the last pay when you got the next pay. Sounds real scary....

[boefixepa]

I've always looked at it as all of the things you mentioned combined. You were 'floating' checks, or charging, to make it next pay day. You had no savings to help or fall back on. Bills would NOT get paid if for some reason the 'paycheck' was short or didn't come and bills were paid by when you had the money not always by when they were due. You never had money for repairs, birthdays, vactions, illnesses etc. A job lost was an instant devistation and you always knew how to 'get help' because you were always just a few days away from needing it. This is how I grew up...this was 'normal' to me. Boy have I learned alot!

[tinapbeana]

Originally Posted by vsjhoc

1. By the time you get a paycheck, you have spent all of the last one.
2. If you didn't get the next paycheck, you would have nothing left in the world -- no money in savings -- and would have to incur (more) debt.
3. You don't budget anything for savings because all your money goes to expenses. (Which of course means you haven't been hanging out on this site! )
4. The mortgage is due today, but by bad calendar karma but you don't get paid until tomorrow.
5. Other?

yeah, paycheck to paycheck is all of the above and then some. it's floating checks, maybe hitting a cash advance place or two, taking out a title loan on your car, even changing the number of dependents you claim on your W4 a few months before the holidays so you'll have extra money in your check for Christmas.

paycheck to paycheck is scary, i've worked with folks who were doing all of the above and then some. then they announced our call center was closing, and several of these folks had to find another job and quit (therefore giving up their severance check aka free money), because they wouldn't be able to make it the 3 weeks between their last pay check and their first severance check.

very scary place to be...

[pearlieq]

I always a person was living paycheck to paycheck if they'd be in serious trouble if their next paycheck was delayed or didn't come.

Basically that they had nothing to live on except current income.

[Broken Arrow]

Originally Posted by pearlieq

I always a person was living paycheck to paycheck if they'd be in serious trouble if their next paycheck was delayed or didn't come.

Basically that they had nothing to live on except current income.

Yeah, that's what I thought too.

I am trying very hard not to end up like that though.

[greedy4chips]

I compare living paycheck to paycheck like a person putting just enough gas in their car to get from point A to point B and that is it. If any unforeseen circumstances arise like a traffic jam, detour, etc you won't make it to point B.

I also don't believe living paycheck to paycheck means having everything you own financed, since this means you have mortgaged all future paychecks for a period of time. To me that is even scarier than spending this check just in time to get the next check.

[tinapbeana]

Originally Posted by greedy4chips

I also don't believe living paycheck to paycheck means having everything you own financed, since this means you have mortgaged all future paychecks for a period of time. To me that is even scarier than spending this check just in time to get the next check.

G4C, you're right, paycheck to paycheck doesn't always mean having everything financed. but it is actually quite common. think about it: if you're money is spent every paycheck, where does the money come to buy furniture or a car to get to work? are most 'normal' americans going to wait to save for those purchases?

a lot of folks go the rent-to-own route for furniture, especially now since Rooms To Go makes the concept look very mainstream. when i bought my car last month i heard a woman on the phone talking to her mother that they'd managed to get the monthly payments on a used 2003 tahoe down to about 600 per month. $600 A MONTH FOR A USED CAR?!?!?? DH even supervises someone whose tires and rims were repo'd...

while i think the concept of "paycheck to paycheck" is still the same, i think the reality is a lot different than it was in the past. you can finance just about everything now, and so many folks get caught up in the newest, latest, greatest mantra that they'll do anything to get it.

[Ima saver]

Thank goodness I have never lived paycheck to paycheck. I always saved something first and had a savings account of my own, when I was 12. I walked everywhere I went (stores, movies, school), so it was easy to walk to the bank every week and deposit some money.

[disneysteve]

I agree with everyone. Here's another example.

My mother-in-law works at a small business where they get paid every week. The owner keeps wanting to change to paying every other week, but many of the employees (not my MIL) complain that they would be unable to survive for the one week without a check during the transition period. That's scary, even more so because it isn't just one employee but many of them. These people have absolutely zero savings.

[vsjhoc]

Originally Posted by disneysteve

I agree with everyone. Here's another example.

My mother-in-law works at a small business where they get paid every week. The owner keeps wanting to change to paying every other week, but many of the employees (not my MIL) complain that they would be unable to survive for the one week without a check during the transition period. That's scary, even more so because it isn't just one employee but many of them. These people have absolutely zero savings.

Very scary. Do they understand they would get twice as much when they get the bi-weekly check? I guess that's the problem -- they would spend it all during the first week and not set aside any for the bills and food, etc. in the second week.

[Ima saver]

I read somewhere that the average family is only 3 paychecks away from being homeless. that is an awful thought!

[disneysteve]

Originally Posted by vsjhoc

Very scary. Do they understand they would get twice as much when they get the bi-weekly check? I guess that's the problem -- they would spend it all during the first week and not set aside any for the bills and food, etc. in the second week.

They understand it. The problem is that now they get a check each week. If the company changed, the last weekly check would have to last them 2 weeks until the first biweekly check arrived and they have no way to pay their living expenses during that time.

[disneysteve]

Originally Posted by Ima saver

I read somewhere that the average family is only 3 paychecks away from being homeless. that is an awful thought!

I believe the other stat is that 60% of Americans are living paycheck to paycheck.

[Ima saver]

That is hard to believe. I had better sense than that when I was 13.

[greedy4chips]

Can you imagine the pressure of knowing your expenditures are limited by your paycheck and its frequency? Apparently too many can, because that is their main form of budgeting.

I too went thru the times when money was very tight, but I was also contributing the maximum to my 401k and giving the govt a $9000/yr loan by not having my W4 witholding set properly (for me). I don't think many of those listed by Ima saver and disneysteve fall into that category whereby they have the freedom to allocate their income to different items and still stay current on everything.

[disneysteve]

Originally Posted by greedy4chips

I too went thru the times when money was very tight, but I was also contributing the maximum to my 401k and giving the govt a $9000/yr loan by not having my W4 witholding set properly (for me). I don't think many of those listed by Ima saver and disneysteve fall into that category whereby they have the freedom to allocate their income to different items and still stay current on everything.

I agree. If you are maxing, or even contributing anything, to your 401k and/or you are intentionally having income over-witheld to get a big refund, I wouldn't count that as living paycheck to paycheck.

[Gruntina]

This post is bittersweet for me... I have lived in poverty for a very long time... especially through my childhood years and there were time it was much less than paycheck to paycheck.

I spent more than half of my life that way and when I was finally on my own... I managed to get everything paid but also gone into debts. Now I am at a point where I am just almost completely debt free, have an emergency fund and had more than enough to pay off all unexpected things like car repairs and flea treatments to the house and so on and still pay my bills ahead of time. It amazes me that I somehow got out of this cycle... but the memories of not having any money..... That time my mother always lived paycheck to paycheck and we were always so broke. Mainly because she never had a loan or a credit card. But if you just think about it... if all credit cards were taken away and loans... a lot of us would be living below poverty and would not do well at all at paycheck to paycheck. So some people are actually cheating paycheck to paycheck by using loans or credit cards to fill in the gaps… otherwise they be on the streets.

[disneysteve]

Originally Posted by Gruntina

That time my mother always lived paycheck to paycheck and we were always so broke. Mainly because she never had a loan or a credit card.

Certainly, there are people who are living paycheck to paycheck simply because they don't earn enough to do anything else. They earn barely enough to get by. I certainly have nothing but sympathy for them.

However, if the stats are correct and the majority of Americans are living this way, lots of them earn decent incomes but just manage to spend every penny before the next check comes.