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

[disneysteve]

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]

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.

[disneysteve]

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]

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]

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]

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]

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]

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.