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

[jeffrey]

If you are counting the days until the next payday comes around, you’re not alone. And we're not talking Jane and Joe Six Pack here.

Some 21 percent of those with salaries of $100,000 or more say they are living paycheck to paycheck, according to a recent survey conducted by CareerBuilder.com.

While experts are quick to acknowledge that high gasoline prices, the slumping housing market and a generally weak economy are weighing on consumers' finances, they also agree that the general difficulty in making ends meet is also the result of persistently bad spending and saving habits that are now catching up with the spendthrift American...

Living Paycheck to Paycheck On $100,000 - Personal Finance * US * News * Story - CNBC.com

[jIM_Ohio]

21% does not seem high, and what exactly one family considers pay check to pay check and another family does is two different things.

My EF is nearly zero- does that mean I am living paycheck to paycheck?

[sweeps]

Jim, I thought you were going to say 82% of statistics are useless.

[jIM_Ohio]

It's 86.2% to be exact.

[disneysteve]

Originally Posted by jIM_Ohio

what exactly one family considers pay check to pay check and another family does is two different things.

True. We've discussed that here before. Some people don't count what is going into their 401k, for example. So if you are putting 15% of your gross income into your 401k and spending 100% of your take-home, some would call that living paycheck to paycheck. I would not.

However, I think it is important to point out that more money doesn't solve poor money management problems.

[momof1in150]

$100K in a rural area is different then $100K in a city or expensive suburb. We make over $100K but live in a very expensive area where most houses (that aren't a cottage or bungalow at 700 sq ft) cost well over $400K so you have to make over $100K to afford them.

[disneysteve]

Originally Posted by momof1in150

$100K in a rural area is different then $100K in a city or expensive suburb. We make over $100K but live in a very expensive area where most houses (that aren't a cottage or bungalow at 700 sq ft) cost well over $400K so you have to make over $100K to afford them.

Someone who makes 100K probably shouldn't be buying a home that costs well over 400K. The problem is lots of people do. That's why some of them are living paycheck to paycheck. They are living lifestyles that they can't afford.

[LivingAlmostLarge]

I agree I feel like I'm living paycheck to paycheck. Honestly the money is gone before I see it in my grubby hands. So I feel the same as before! Except before I had no savings.

And we're NOT in a position to handle major unexpected medical bills or disability, etc. At least not long term.

[tripods68]

We have friends that make well over $100K a year; some over $200K, yet many of them are just getting by. SOme of them own several homes that bought during "haydays", but now housing value capitulated greatly. They are stuck while making two mortgage payments; don't collect enough rent to cover 2nd mortgage and continue to flash $$ in the toilet. They don't want to get out and ruin their credit, when most are simple handing their keys to the bank. On the other hand, we have friends in San Jose and throughout the Bay Area making so much more but are renters only because of HIGH COLA.

[ThriftoRama]

It's easier than you think to live paycheck to paycheck making $100k. First, taxes take a huge chunk out of that. And then throw in health insurance, 401k, and you might be left with like $50-60 k, or maybe a little over $4,000 a month. If you have kids and a mortgage, it can go quick.

[MiikeB]

If you have kids and a mortgage (tax benefits) and you are seeing half or 40% of your check go to taxes something is wrong.

[sweeps]

Originally Posted by MiikeB

If you have kids and a mortgage (tax benefits) and you are seeing half or 40% of your check go to taxes something is wrong.

Federal income taxes, yes. But what about state income taxes, sales taxes, property taxes, taxes on utilities and communications, highway tolls, etc., etc.

[noppenbd]

Originally Posted by ThriftoRama

It's easier than you think to live paycheck to paycheck making $100k. First, taxes take a huge chunk out of that. And then throw in health insurance, 401k, and you might be left with like $50-60 k, or maybe a little over $4,000 a month. If you have kids and a mortgage, it can go quick.

We make around $120K gross and live in a fairly high tax state (MD). Married filing jointly with one child, and we pay about $9K in federal tax, $5500 in state and local, $8500 in Medicare and SS. That adds up to $23K in tax income and payroll tax (19%). Health/dental/vision is about $5K a year. I would not add in the 401k since that is going towards savings. A family making $100K (20K less than us) would likely have lower taxes, but even at what we pay they would still be bringing home $72K or so, nowhere near $50-60K. It is misleading to add in the 401k with taxes, since that is going towards saving. Someone who saves $12-22K a year I would hardly consider living "paycheck to paycheck" even if their checking balance goes to zero the day before they get paid.

[disneysteve]

Originally Posted by sweeps

Federal income taxes, yes. But what about state income taxes, sales taxes, property taxes, taxes on utilities and communications, highway tolls, etc., etc.

True. Just our property taxes alone are nearly 6% of our income. They have more than doubled since we bought our house in 1994.

BTW, I wouldn't count highway tolls as a tax.

[sweeps]

Originally Posted by disneysteve

BTW, I wouldn't count highway tolls as a tax.

Then what is it?

[disneysteve]

Originally Posted by sweeps

Then what is it?

A fee for the service and convenience provided.

At least in this part of the country, I usually have a choice between a toll road and a non-toll road when traveling. The toll road is generally the faster, limited access option. The free road is often the commercial route with intersections, traffic lights and a lower speed limit. If I want the speed and convenience of the toll road, I pay for it. If not, I take the free road. Sometimes the free road is just as fast, like taking 295 instead of the NJ Turnpike here in NJ.

I just never really thought of a highway toll as a tax. I suppose it is in a way since it is going to a governement entity.

[sweeps]

So -- for the sake of being argumentative -- Is a property tax not really a tax because I can avoid it by renting an apartment instead of buying a house?

[disneysteve]

Originally Posted by sweeps

So -- for the sake of being argumentative -- Is a property tax not really a tax because I can avoid it by renting an apartment instead of buying a house?

Nope. You are still paying that tax, just indirectly. You pay your rent. Your landlord uses part of that money to pay the property taxes on the building.

I think of a highway toll more like a movie ticket. If I want to see the movie, I need to buy a ticket. If I want to travel on a particular road, I need to pay the toll.

Interesting point, though. As I said, I have never thought of a highway toll as being a tax.

What happens if a toll road gets privatized? Let's say I decide to take a drive on the Citibank highway? Would the toll still be a tax if it was now going to a private enterprise instead of a government entity?

[tripods68]

Getting back to the original survey. No one really has DEFINE what's living paycheck to paycheck means? Is it after people made pretax contributions towards 401k or 457. The article did not get into much details at all. One can only suspect that the 21% identified on the survey that were living "paycheck to paycheck" aren't contributing to any retirement accounts at all both on a pretax and after-tax basis.

[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.