Paycheck to paycheck: I just don't get it

[disneysteve]

We are short staffed today so one employee asked me if it was still okay for her to run out at lunch to cash her paycheck. If not, she wouldn't be able to cash it until Monday. I let her go, of course, but can't help wondering how someone gets themselves into a situation where they couldn't last the weekend without cashing their check. And this particular person is single and still lives at home with her parents rent-free and they pay a lot of her expenses. So there is simply no excuse (at least no good excuse) why she is living paycheck to paycheck. I know the reason - she lives beyond her means and makes zero effort to manage her personal finances. Her parents provide her housing and food. Her boyfriend pays for her cell phone. Still, she couldn't survive for 3 days without her paycheck. I just don't get why anyone would choose to live that way.

[Ima saver]

All of our employees have always been like that. They get off early on Fridays so they can go straight to the bank. Most of them have neither checking or savings accounts. We have one guy who still lives at home with his dad, who pays all the bills. This guy is over 50, sadly!

[KTP]

I have always thought that investing in one of those payday loan places would be really really smart, but I never could bring myself to take part in preying on thest type of people. I do hold some Phillip Morris stock though, so I am not completely innocent.

[littleroc02us]

One word, "Discpline". That is something you can develop, but requires sacrifice and a good budgeting strategy. I've been there and don't ever want to go back. Just like Warren Buffet says, "I sleep well at night, because I have 20 million in liquid cash in a bank account that is earning nothing for emergencies."

[bjl584]

You should have told her no and watched her squirm for a bit before finally giving in and allowing her to go to the bank.

I have a friend much like this. He does have his own place, but he still lives paycheck to paycheck. He has no savings and no checking. He gets paid, he spends all his money in a few days, then he is broke again till the next payday. It's sad, but it's his own fault.

[Hector]

Its getting better. Spending/income ratio was 1.25. Last time when I checked, it improved to 1.22.

[buildmybudget]

But this is the American way: spend now, think later. I imagine you aren't really surprised...it's just a stark reminder of how many people operate. It makes me wonder, would your business pay for some sort of basic personal finance class for your employees?

[ea1776]

My parents didn't teach me much about money (well my mom actually has major shopping/spending issues, so they taught me stuff, just nothing good :-) For example, she'd say things like "You'll always need a credit card for emergencies or for Christmas." ). So I was like your co-worker coming out of high school and even really through college (except at least I lived with roommates and not with my parents!). Luckily, I went into an industry that pays well and I'm also happy to have directed my attention towards the importance of investing/saving and not using debt (I'm not really sure how that happened, but I'm so happy it did).

I have a bit of an obsessive personality, when I direct my attention towards something, I just learn as much as I can about it. Sometimes these are positive things (investing/saving, nutrition/working out, writing letters to people), and sometimes they are time sucks (albeit fun time sucks), like fantasy football or previously video games (i.e. crack cocaine for kids).

I guess my point is, maybe she's never turned her attention towards the fact that she is a free-loading money vacuum (and therefore has apparently never done anything about it)? If she suffers a major hardship and/or her parents gave her the boot, she'd probably learn the hard way. For many, that may be the only way.

[Joan.of.the.Arch]

Originally Posted by littleroc02us

... Warren Buffet says, "I sleep well at night, because I have 20 million in liquid cash in a bank account that is earning nothing for emergencies."

Good lord. Personally, I sleep well at night not having any reason to need $20,000,000 in a bank account for emergencies. What kind of emergency requires that kind of money? Need a new bilge pump for the low spot on your large, private, Caribbean island after a hurricane, or somethin'?

As for the paycheck to paycheck living-- Maybe it is immaturity? Self-centeredness? Princess syndrome? No grounding in reality? Comfort in life-long mooching? Never having had to deal with consequences of self-sabotaging behavior? Unremediated ignorance? Basal stupidity? Enjoyment of fawning social circle (family, boyfriend) who love catering to her apparent helplessness which they (and perhaps she) perceive as a sign of her goddess-like hyperfemininity? No self-respect? Complete training to be maximal consumer of all things retail? Obsession with shopping? Obsession with having new, new, new? Desire to be judged by what she has bought?...I don't know.

[ea1776]

oh and it sounds like she needs direct deposit.

[ActYourWage]

Originally Posted by ea1776

oh and it sounds like she needs direct deposit.

I was wandering that myself. However, the last place I worked, there were A LOT of people that didn't have bank accounts to direct deposit. I don't think they trusted them or were not willing to adapt to change.

[maat55]

Using myself as an example, I guess people are not very open to change until they have a major episode.

I was clicking along with debt living payday to payday thinking I was living the good life. I was one to not like being more in debt than my assets, so I was looking at my IRA and home equity as a buffer. I had no emergency savings(my IRA was my EF) and was reliant upon each pay period to pay the bills.

Then, one day I was turned down for a car loan. It angered me due to I was sure I was able to pay the note. About this time I had started listening to Dave Ramsey, and I became more acceptant to his advice. My anger at the bank led me to re-prioritze my finances.

This same thing happens with drug and alcohol addicts, they reach a bottom and gain a new mentality and determination to change.

The whole fabric of this country is out of wack in comparison to its origination. Society is more prone to consume than to save, it is a shame.

[Snodog]

Some can delay gratification and some can't. Society needs both so I wouldn't necessarily say one is wrong and one is right. Check out the marshmallow tests.

[jasedona]

I personally feel there needs to be greater emphasis of personal finance basics at the college level. I went to UCLA, and that was the best class I ever took. The demand is there too... for a 20 person class, there was a waiting list of over 100.

[asmom]

Steve, discounting that particcular employee, you do understand that not everyone chooses to live that way, right?

[Snodog]

Originally Posted by asmom

Steve, discounting that particcular employee, you do understand that not everyone chooses to live that way, right?

Very good point. For some the concept of saving money is just not a viable option. There are some lower limits of income where meeting basic needs trumphs everything.

[Scanner]

Eh, I don't worry about it too much.

Saving/Investing and Spending/Borrowing are flip sides of the same coin.

The truth is we need people like your employee to make our economy run.

[Scanner]

Another judgmental call may be,

"I don't get you Scanner. . .why won't you ever just get a job" I don't get self-employed people and the mindset."

And it's true - we are a weird lot.

We are the ones who rise and fall with the economy. We are the ones who hire, take risk, reward, and losses. We are the ones who borrow, so a bank can take your savings and turn around and lend your money to me. We are the ones who lay off workers too. We also don't assimilate well into corporate America. On one hand, you'll never find a better worker than a person who's been self-employed for years - hard working and no sense of entitlement.

But that self-starting nature of them has them often making calls that Presidents and CEO's and Vice-Prez's don't like down in middle management. In other words, we would run a department like a small business. In the end, we'd just end up being fired for not conforming.

Just illustrating there are all types of people in our economy and we need them all.

[disneysteve]

Originally Posted by ea1776

oh and it sounds like she needs direct deposit.

We don't have direct deposit. I wish we did because sometimes I don't get my paycheck deposited for a week or more after I receive it.

Originally Posted by asmom

Steve, discounting that particcular employee, you do understand that not everyone chooses to live that way, right?

Absolutely! I listen to the Dave Ramsey podcast every day and there are so many calls from people with take home pay of $2,000/month or less. I realize most of them live in low COL areas but no amtter what, it is a challenge to support a family on that kind of money.

A great many people who live paycheck to paycheck, though, definitely do so out of choice - not a conscious choice of course. They just spend their money in such a way that it is no wonder that they don't have any savings.

[MonkeyMama]

Originally Posted by disneysteve

A great many people who live paycheck to paycheck, though, definitely do so out of choice - not a conscious choice of course. They just spend their money in such a way that it is no wonder that they don't have any savings.

Agreed!

I don't even think it has so much to do with money or lack thereof. It often just comes to planning and organization.

I can say, "I don't get it" on any level either, and many people would just say, "You don't understand." But it's really, no, I don't get it. We don't have direct deposit either. I organize all my bills/finances so I don't have to run to the bank on payday. A little organization can go a long way. But, I suppose most of the people I know who live paycheck to paycheck make six figures. Nope, I don't understand it - and it's pretty sad.