21% of those making over $100k are living paycheck to paycheck

[disneysteve]

Originally Posted by sweeps

Paycheck to paycheck: Could you pay all your expenses next month if your income suddenly stopped.

To me, it means that you are spending everything that you earn at the time that you earn it. In other words, you are not saving any of your income. Forget paying all of next month's expenses. Many people living paycheck to paycheck couldn't pay Saturday's expenses if they didn't get their check on Friday.

My wife used to work with folks who would rush out at lunchtime on payday to cash their checks so that they had money to buy lunch that day. That's paycheck to paycheck.

[tripods68]

Originally Posted by sweeps

Paycheck to paycheck: Could you pay all your expenses next month if your income suddenly stopped.

Note that if your paycheck suddenly stopped, you would not be making your monthly 401k contribution anyway, so no, that does not count.

Agreed on pretax. ON the after tax basis, they have not put away sufficient emergency funds in case paycheck suddenly stopped. Would this qualify living paycheck to paycheck?

[sweeps]

Yes I would agree. Steve is giving the worst case scenario -- the household is already in the hole and they need the next paycheck just to pay for the last pay period.

But I think it also includes households that need the next paycheck to pay for the upcoming pay period (without taking on debt).

[disneysteve]

My mother-in-law works for a small business that has grown considerably over the years and isn't so small anymore. When they first started, employees were paid weekly. For some time now, the boss has wanted to switch to paying every other week to cut down on payroll processing costs. Every time he suggests that, a bunch of employees complain. Why? That would mean that there would be one week when they didn't get a paycheck during the transition period. They can't afford to wait an extra week for the paycheck that would cover two week's of income. It isn't just one person complaining either, it is a bunch of them. A whole group of gainfully employed adults who could not make it through one week without a paycheck. Rather sad, I think.

[maat55]

Originally Posted by disneysteve

To me, it means that you are spending everything that you earn at the time that you earn it. In other words, you are not saving any of your income. Forget paying all of next month's expenses. Many people living paycheck to paycheck couldn't pay Saturday's expenses if they didn't get their check on Friday.

My wife used to work with folks who would rush out at lunchtime on payday to cash their checks so that they had money to buy lunch that day. That's paycheck to paycheck.

I think you are living check to check even if you are investing in your 401k. I consider 401k's and IRA's untouchable moneys. IMO, not living check to check means having an EF separate from investments.

[tripods68]

matt55

I would agree with you that 401k should be untouchable.

After tax contributions on the other hand wouldn't be one in my book since ROTH or IRA is considered optional in nature, except self employed. Anyone can participate with specific dollar amount or choose not to fund it. The fact that the law allows anyone to access their ROTH or IRA prior to age 59 1/2 is not enough.

[maat55]

Originally Posted by tripods68

matt55

I would agree with you that 401k should be untouchable.

After tax contributions on the other hand wouldn't be one in my book since ROTH or IRA is considered optional in nature, except self employed. Anyone can participate with specific dollar amount or choose not to fund it. The fact that the law allows anyone to access their ROTH or IRA prior to age 59 1/2 is not enough.

Roth's might be my one exception, but to use it for an EF is lazy, IMO. You can say you are not living check to check with a roth, but I would much rather pull 1 or 2k out of a high yield savings than my roth. I consider trad. IRA's as a 401k.

[MonkeyMama]

Originally Posted by maat55

Roth's might be my one exception, but to use it for an EF is lazy, IMO. You can say you are not living check to check with a roth, but I would much rather pull 1 or 2k out of a high yield savings than my roth. I consider trad. IRA's as a 401k.

Lazy or wise.

Depends on the circumstances.

[tripods68]

No offense Matt. That’s such an elitist comment or anyone can say to OP for failing to save sufficient EF. Perhaps they may have lost their jobs multiple times throughout their working career, filed bankruptcy, few divorces, child supports, and paying the high cost medical bills. Those are real factors to consider before you can flatly say, they are lazy. Perhaps they may also view ROTH as part of EF for tax benefit purposes if they never use it (two for the price of one). Perhaps they just couldn’t earned enough money to sock away extra fund besides ROTH. We just don't know. It’s unfortunate but I wouldn’t call them lazy.

Although, I agree with you about that OP should build their EF first and foremost before accessing ROTH.

[maat55]

Originally Posted by tripods68

No offense Matt. That’s such an elitist comment or anyone can say to OP for failing to save sufficient EF. Perhaps they may have lost their jobs multiple times throughout their working career, filed bankruptcy, few divorces, child supports, and paying the high cost medical bills. Those are real factors to consider before you can flatly say, they are lazy. Perhaps they may also view ROTH as part of EF for tax benefit purposes if they never use it (two for the price of one). Perhaps they just couldn’t earned enough money to sock away extra fund besides ROTH. We just don't know. It’s unfortunate but I wouldn’t call them lazy.

Although, I agree with you about that OP should build their EF first and foremost before accessing ROTH.

Not trying to sound elitist. I just look at investing in a roth before saving an EF, bypassing the process. I understand there are many situations that can cause you to have a roth and no EF. I remember being chasted a little here, early for the same idea. When i said lazy, It was a generallization, there is no OP here.

[tripods68]

Originally Posted by maat55

When i said lazy, It was a generallization, there is no OP here.

I understand Matt. In fact, I was the other person that defended you that you are not crazy when you got chastised last time. But you can't make a generalization or stereotype other group of people when you have not walked their shoes. You come off like jerk to some not that I care one way or the other. I'm just pointing out the obvious.

Peace!

[maat55]

Originally Posted by tripods68

I understand Matt. In fact, I was the other person that defended you that you are not crazy when you got chastised last time. But you can't make a generalization or stereotype other group of people when you have not walked their shoes. You come off like jerk to some not that I care one way or the other. I'm just pointing out the obvious.

Peace!

Allow me to use a better word, impatient. When I was building my EF, I wanted real bad to start my Roth, but I went ahead and finished my EF. Today, had I skipped ahead and funded the Roth, I would have lost a good chunk of money.

I'm working on choosing better words, I'll get it down sooner or later. I should clear up something. A few times now I've been called Matt. My name is Mark, maat is initials for my families first names, mark, ashley, alayna & teresa. But I kinda like the name matt.

[disneysteve]

Originally Posted by maat55

I should clear up something. A few times now I've been called Matt. My name is Mark, maat is initials for my families first names, mark, ashley, alayna & teresa. But I kinda like the name matt.

Thanks for posting this. I've wondered about that. I figured it wasn't Matt, since it wasn't spelled that way.

[tripods68]

Originally Posted by maat55

I'm working on choosing better words, I'll get it down sooner or later. I should clear up something. A few times now I've been called Matt. My name is Mark, maat is initials for my families first names, mark, ashley, alayna & teresa. But I kinda like the name matt.

I think I'll stick calling you matt

[maat55]

Originally Posted by tripods68

I think I'll stick calling you matt

No problem, camera stand.

[tripods68]

Originally Posted by maat55

Allow me to use a better word, impatient. When I was building my EF, I wanted real bad to start my Roth, but I went ahead and finished my EF. Today, had I skipped ahead and funded the Roth, I would have lost a good chunk of money.

I'm working on choosing better words, I'll get it down sooner or later. I should clear up something. A few times now I've been called Matt. My name is Mark, maat is initials for my families first names, mark, ashley, alayna & teresa. But I kinda like the name matt.

We have not fully fund our EF only 2 months worth so far without SDI. Our goal is $36K EF (6 months) we got $12K saved so far. But we will continue building it after christmas. In any event, both of us have short term disability insurance to cover 55% of our monthly expenses which stretches our EF to 9-10 months. That's still better than most.

[maat55]

Originally Posted by tripods68

We have not fully fund our EF only 2 months worth so far without SDI. Our goal is $36K EF (6 months) we got $12K saved so far. But we will continue building it after christmas. In any event, both of us have short term disability insurance to cover 55% of our monthly expenses which stretches our EF to 9-10 months. That's still better than most.

Are you basing your EF on expenses or income? 6k is a lot of expenses. I have my survival expenses to 2k a month. We have reached our 12k EF that covers 6 months for us. 36k will be an outstanding EF.

[tripods68]

Our mandatory expenses which include our mortgage, 2nd, car loan, personal loan, utilities, gas, food, car insurance, cable/internet, cell phones and few small items are actually $4K a month. That's gives us 3 months EF instead of 2.

I only say that because it seems to be the "norm" this day. At the end of every month we spend closer to $6K to fund our various accounts like ROTH, IRA, MMA-EF, regular savings/checking account, 529, vacation and x-mas fund. Plus its comforting to know that we have $36K of EF at our own disposal anytime any-day. That's a good thing.

[maat55]

Originally Posted by tripods68

Our mandatory expenses which include our mortgage, 2nd, car loan, personal loan, utilities, gas, food, car insurance, cable/internet, cell phones and few small items are actually $4K a month. That's gives us 3 months EF instead of 2.

I only say that because it seems to be the "norm" this day. At the end of every month we spend closer to $6K to fund our various accounts like ROTH, IRA, MMA-EF, regular savings/checking account, 529, vacation and x-mas fund. Plus its comforting to know that we have $36K of EF at our own disposal anytime any-day. That's a good thing.

My expenses don't include investing. We would continue to invest unless my business completely failed. If I were without income, hers would slow the drain of our EF. If either of us were to be without income, we would probably hold the investment money in savings until the income was restored. I guess it would depend on how the market is doing.

[disneysteve]

Originally Posted by maat55

Are you basing your EF on expenses or income? 6k is a lot of expenses. I have my survival expenses to 2k a month.

That's really a very individual issue. There's no way we could get our expenses down to 2K/month. I'm at work so I don't have my budget in front of me, but just off the top of my head, I've listed $3,000 in expenses and that doesn't include food, gas, car maintenance or registration, health insurance or several other things that would need to be paid. So we're probably at $4,000 or so, more than double yours. That isn't good or bad - just different.