I agree, he has $49,200 a year, $4,100/month to live on. That’s more that many people make as gross pay.
I think the semantic issue here is how to define ‘paycheck to paycheck’. You seem to be defining it as people who couldn’t possibly do otherwise, IOW very poor people. I’m defining it literally, including the tens of millions of households who live ‘paycheck to paycheck’ because they don’t save anything, but could. That’s who the personal fin advice is directed toward, and it’s not a weird exception but a huge number of households. People who do live ‘paycheck to paycheck’, but who could change that with better financial management.
No two situations are exactly the same, but in any given area (cost of living) there’s somebody living ‘paycheck to paycheck’ with a family of 5 on $40k, and there’s somebody in town also living ‘paycheck to paycheck’ with a family of 5 on $60k. The $60k people could save a significant amount if they lived like the $40k people. That’s arithmetic not politics. And even if anyone is going to say it’s ‘unfair’ to expect median income people (the US median household is ~$60k though the median household is smaller than 5) to save anything, there are $80k, $100k, you name it people not even living ‘paycheck to paycheck’, but gradually submerging in debt.
Yup. Maybe if the guy has 100k+ in student loans and lives in a very high cost of living area, he may be struggling. But for 4k a month in after tax income for a single person with no kids (and I assume no expensive medical problems) that is a very good income.
Nope, I wasn’t defining “paycheck to paycheck” at all - I was only ever explaining how it is possible for some families to survive without a budget. That’s a completely separate issue from living paycheck to paycheck. It’s entirely possible to live paycheck to paycheck even with a budget * and it’s possible to not live paycheck to paycheck without one.
*as far as I am concerned, if your budget allocates a tiny amount to savings (like ten bucks a month), that’s still paycheck to paycheck.
My calculations are a bit lower. $82,000 is too high to deduct any of the student loans, so that is a the single standard deduction of $12,000, for taxable income of $70,000. That’s the 25% tax bracket, so total income taxes of about $13,200. Go back and combine that with the 40% going to student loans, and we’re down to a total monthly take home of about $3000. Maybe it’s more, is that 40% of the full $82,000, or the post tax amount?
So, my rough estimate is a post tax and student loan take home of $3000-3500/month. Deduct from that state taxes, health insurance, retirement contributions, and maybe some other stuff. So, a let’s say a take home of $3000/month.
That seems like a reasonable amount for a single person to get by on, even if half of it is going towards rent. But then add a car payment, utilities, phone, internet, groceries, and it’s pretty easy to get down to only a few hundred left over. To me, that doesn’t seem to bad, but I don’t have a pack and a half a day habit, I don’t hit Starbucks every morning, I don’t eat lunch out five days per week. Yes, I’m being judgy, but I can totally see somebody living pay check to pay check on that income.
doreen, I’m pretty sure everyone else gets it. I wouldn’t worry if one person can’t.
I don’t think the 40% is the student loan payments- based on the following sentence, I think the 40% is for SS, Federal and State tax withholdings or possibly the total for all payroll deductions ( which could include health insurance and I suppose possibly student loan payments)
$82K a year, he’s living paycheck to paycheck, and it’s Trump’s fault. Ooooookay then…
Regards,
Shodam
Yes, what people call payday loans are crap. But I hope it was just an error in terminology. The various federal employee credit unions are offering reasonable rate personal loans to get people through.
Examples:
AgFed FCU (Dept of Agriculture and others)
Navy Federal (0% loans available for federal employees)
Northwest FCU (CIA credit union)
That makes a lot of sense. Though I googled a random example, and a lawyer making the mean income for recent graduates ($75,000), who also took out the mean loan for law school ($120,000) is paying about 35% of their discretionary income to service their student debt. That does not include any undergraduate debt. So it does seem that a person with that income range could be paying 40% towards their student debt.
That just seems crazy. Starting a career already under the equivalent of a mortgage, but still having to pay for housing after that. No wonder it is so hard for so many people to accumulate any wealth.
Yeah, if somebody is taking home $49,000, even if they have a $2,500/month rent, and they are still living pay check to pay check, then they need some financial advising. Initially, figure out where exactly the money is going.
40% of gross for student loan payments doesn’t make sense. 40% of $82,000 is $32,800/year. Assuming a 10 year loan, that’s $320,000 owed. That’s one hefty student loan for someone earning $82,000 annually after 8 years.
Off the top of my head, the scenerio I’m picturing is that he didn’t pay, or paid the minimum on his loan, say $150,000 (which to me is still high) and is now trying to play catch up by paying $32,000 / year.
If a person in the example from the table, (earns $70K owes $120K) is actually paying 40% of his gross income ( that table says 35% of discretionary income- it’s not the same ) towards student loans , he needs advice alright. Because according to all the information next to and above that table, that person would be eligible for income-based repayment and according to the table could pay $439 a month rather than $1540 for the $120K loans.
- Discretionary income is income exceeding 150% of the poverty line
I get so tired of people telling me I’m at fault for being constantly strapped for money. That I’m ‘doing it wrong’. I’m making more at my current job than I ever have before. I claimed bankruptcy last year and I’m clear of any credit card bills. But I’m still struggling to make ends meet. Why? Because it seems like every time something good happens for me, something shitty happens not long after.
Clear out credit card bills via bankruptcy? Life’s no easier. Turns out I was barely making ends meet cause I was using the ‘extra’ credit I paid off each month to pay the other bills I couldn’t pay because I had to make a credit card payment. So getting rid of those credit cards only cut out the middle man between me and my normal bills. If that makes sense.
I try to put $100 in savings every month. Sometimes I manage it, sometimes I don’t. But inevitably when I get a bit of a savings up, shit happens. I had about $300 saved up just recently. Car battery died. Ok great, well I still have some left. Oh wait, doctor wants to run some tests which I have to pay 20% of. So there goes the last of my savings and then some.
I get a raise at work. It increases my income like $20 a paycheck. Just so happens it’s time to renew my income based repayment for my student loans. Oh hey, I’m now over whatever imaginary income line they have. Now they want $50 a month payments. So much for a raise.
It’s like, I can’t do anything better than I’m already doing. I’m a single mom, who gets no child support and relies on my family for everything that might go wrong. I’m making it, but barely. I can not do ANYTHING ‘better’ than I am already. And yes, I know how to budget. You don’t think I’m not doing that already? If I weren’t, I wouldn’t even be as ‘well off’ as I am now. So to hear people go on about how it’s as simple as making a budget, it’s really insulting. People don’t live paycheck to paycheck because they want to. No one WANTS to. But life is shit if you’re not born to the right parents in the right place. Yeah, some people can get out of it, but that doesn’t mean the people who didn’t are any less competent at life.
Should be: “…paid the minimum on his loan [which was], say $150,000…”
Not always, but often enough in my personal experience to be a significant trend in my view, healthy young adults that have money trouble are in the situation they are in, at least in part, due to their own poor life choices.
So… how do you know to look? Like, how do you know that your financial planning is bad?
Yeah, the knowledge is all out there. If you want to look for it, you might find something (of questionable value, which you are fundamentally incapable of evaluating). But how do you even know to look? If your parents never taught you about this stuff, where are you going to pick it up? How are you going to understand how important it is?
(Never mind that, as that Vice article points out, most of this stuff is quite thoroughly worthless for low-income people.)
It’s not just “I don’t know X”. It’s also that “I don’t know that I don’t know X”. And that’s a pretty big deal.
Bah humbug.
Care to list some of those positions that you’d like to see eliminated? Like, not “hypothetical jobs”, actual working positions? Where’s the waste you want to see go?
Hell, I’m raising 5 kids on my own right now, and would be living high on the hog if I made that much.
Everyone who’s ever lived has made a ‘poor life choice’. It’s part of growing as a person. But you know what? Someone who’s born into privilege is going to be less affected by those choices than someone who wasn’t. As much as some people want to throw the blame on those of us struggling to just make ends meet, many of us were put in a shitty situation before we even had the ability to make those choices. Again, some people are able to pull themselves out of it, but you can’t look down on those who weren’t able to. Especially not knowing their circumstances.
Thinking about the OP’s post. It seems he/she purposely misstated or exaggerated his/her son’s situation to take a dig a Trump. As I and others have pointed out, the numbers don’t work out to his/her son “living paycheck to paycheck” because of the new administration.\
Edit: I’m not a Trump supporter in any way. I just don’t like posters that (apparently) misstate/exaggerate facts to make support their views.