Moderator Note
You should make another thread. Feel free to link back to this discussion for reference.
It is almost never true that a new car is a better financial choice than a used car.
New cars generally require some sort of downpayment and your $225/mo and robust insurance. If it’s a lease, you get nothing back at the end.
A beater can be had for practically the cost of the downpayment alone. At a minimum you save the monthly payment and higher insurance costs, every single month for the life of the car. A paycheck to paycheck person can plan for and SAVE the $225/mo + insurance each month, pay for the occasional repair, and still have significant money left over.
AngelSoft, one thing I would like to point out is that your financial situation IS improving. It may not seem so day to day, but by avoiding credit to pay bills, you are no longer paying fees to the credit card, and aren’t racking up more debt to pay your bills. You are no longer letting the middle man create a financial problem big enough to require bankruptcy.
Paying more on your student loan? While that doesn’t seem to help you day to day, those debts are not going away unless you pay them. Having a little extra money to pay them down improves your financial situation, even if it isn’t easier to make ends meet.
Oh, it’s out there. This guy makes a good living teaching people good spending habits (budgeting being a prime consideration) and advocates carrying no debt at all. A feature on his radio broadcasts is having people (couples usually) come on and testify how they pulled themselves out of debt – sometimes to the tune of hundreds of thousands on top of a mortgage – and are now debt free with all that interest now going towards retirement/kids’ college/etc.
Thing is, while the callers certainly racked up more debt than I ever did, I have yet to hear of any of them having less than 25% more than I took home and virtually all of them are at least double, if not way, way more. Much easier to stop shoveling that debt hole deeper if that’s your circumstance.
A few years ago here in Arizona, the usury laws were loosened and payday loan stores popped up like toadstools. Nine months later the new law was rescinded and most of them converted into title lonas instead.
A fairly regular feature of many of those people calling in is that they substantially increased their income during their get-our-of-debt journey (nod to monstro). They take extra shifts, or find additional part time work on nights / weekends, work hard to earn a raise, etc.
You’re right, I misread what you said originally.
And I agree almost anything is possible for a particular individual. For a single adult household making decent money (the original example was a single person supposedly living ‘paycheck to paycheck’ on $82k/yr) a reasonable general tendency toward frugality and away from excess is probably going to avoid ‘p to p’ without any elaborate planning or recording. If the person really lacks self control, which is a real factor in this, it’s not just the unfairness of the world, then it might not help that much to write things down.
When there’s more than one adult decision maker that might be one factor increasing the value of an agreed written plan (but not when one person wants to plan and record all spending and the other really doesn’t :)). As would be a tougher financial situation, but not so tough that it’s truly hand to mouth.
A lot of people with nothing saved or net in debt don’t have to be. I’m dismayed when discussions like this (not your statements) go off on a tangent of how unfair everything is. Nobody said everything’s fair, but lots of people really do screw themselves with their own overspending. That is so obvious to me, and with most of my personal observation being of people who are not low income statistically.
I’m…not sure what you think you proved with this? If it was indeed directed at me. Because I just looked and it’s nothing terrible. Looking just at that you could conclude I had a shitty husband for a bit, I have depression and I had a period where I was having a hard time getting a job. Even if there was something ‘damning’ there, so what? As much as you (anyone really) might feel justified in judging people based on threads they posted on a message board, the truth is you don’t know them. You don’t know every facet of their life that impacts the decisions they make.
I’m in no way claiming that none of my current situation is my own fault. I know there are points where I could have made better decisions. Looking back on things gives you a lot clearer look on whether a decision was good or bad. But even making a good decision doesn’t always mean a good impact on your life in every way. Mentally, emotionally, it was a good decision for me to get divorced. Financially, it wasn’t.
Basically what I’m getting at is no one’s perfect. No one makes the ‘right’ decision every time. But people are impacted differently by those decisions based on so many factors, some in their control and some out of it. You can’t just go around telling yourself they’re in that position because they’re bad at life. In the end, I know I am doing the best I can with what I have. And what some anonymous, online stranger thinks of me doesn’t change that.
Let me guess. You think the Sun also revolves around you too. I know this isn’t the Pit and all, but this post and the payday loan one are making me want to finish the bottle of wine in my fridge right now.
From here:
Our society is like a Jenga tower. There are only so many blocks you can yank out before it becomes too wobbly to stand. Small govt conservatives imagine we live in some fantasy world where the effects of ham fistedly cutting off government services don’t adversely impact the two things they claim they care about—namely, the economy and national defense—but this thinking is beyond stupid. Just consider all the restaurants, food trucks, and convenience stores in DC that are fucked right now because all their regular customers are at home. There will be no recovery of lost wages for them, or their suppliers. Think about all the potential cyberattacks that furloughed IT departments (mostly contractors) can do nothing about right now.
Your son isn’t poor, he just lives way beyond his means. There’s a difference.
And yet, lawyers often end up doing pretty well for themselves.
The people who really struggle to accumulate wealth due to student loans are the ones who either don’t finish, leaving them with tens of thousands of dollars of debt but no bachelor’s degree, or those who pursue degrees that don’t relate to well-paid employment.
Don’t shed too many tears for those poor law-school graduates. Yeah, they’ve got a high debt to income ratio for a while, but they have lots of potentially high-income years ahead of them.
Often and potentially being the key words here. I’ve known a couple of hand-to-mouth lawyers here in the SF Bay Area where expenses are high and income isn’t necessarily commensurate. It will usually be a pretty decent income( the bottom 10% of lawyers average ~54k/year, the bottom 25% ~75k/year ), but it isn’t always a huge one. Add in a non-working spouse and a couple of kids and you can actually struggle.
Not that all or even most will. But we should avoid the trap of automatically thinking lawyer=well to do.
*ETA: I also knew one underemployed shit lawyer who went bankrupt in part due to uninsured health issues. But then he was a shit lawyer who I believe ended up disbarred.
And they often don’t. I’m poking around the ABA website. While the typical lawyer isn’t a failure, some 12% of graduates who attempted it haven’t passed the bar two years on (plus 3% who didn’t take it). And those who pass can still see their careers crater. Underemployed lawyers were a common trope after the last recession, although I’m curious to know how much of that was big numbers vs media annecdotes.
If you’re not the brightest and hardest-working, taking out big loans to cover the tuition for a low-caliber program you just barely got into is a higher-risk endeavor.
I agree that a law degree is not a magic talisman of success, and that lots of debt isn’t helpful.
But comparing the average starting salary for a lawyer to their debt load is the wrong way to analyze that. Lawyers don’t take on $100k+ of debt to make the average starting salary for an associate. They take it on for the chance to make the average partner income 20 years in. Some of them will not make it due to bad luck. Some of them will not make it because they’re not very good lawyers. Some of them will not make it for other reasons. But lots will.
And while it is a risk, it’s not a crazy risk, and it’s far from the worst education investment risk out there.
I know lots of people living paycheck to paycheck and I have known them for years. They have a completely different mentality than me and most people who are not living paycheck to paycheck do and a noticeably different world view. Their world view seems to place little value on doing anything to improve their situation, take any advise from people who are not living paycheck to paycheck etc.
The thing is, working where I do, we all have the exact same money making opportunities. Some take advantage of it and others do not. There really are personality and attitude differences at play.
I’m not saying there should be no sympathy for the poor, but to deny that personal choices are not a factor in this equation does not seem accurate either and just continues to create political polarization with each side parading their half truths as whole truths.
When you say that you are stuff like you are judging based on a snapshot in time it seems to me like the type of thing people with minimal interaction with blue collar and lower socioeconomic classes says that is simply dismissive of the observations of the people who actually interact with a much broader range of people than many of the upper middle class people do.
Your analogies are not even very applicable to the situations I see either. For one, lots of people where I live have perfectly good healthcare and two most would not even have cars in the first place. At least where I am it is never emergency situations causing problems. I have literally met one frugal person older than 30 living paycheck to paycheck and that was because he is an immigrant without full citizenship who is supporting his mother. He is no longer paycheck to paycheck since he changed jobs to where I work. He is getting paid less hourly than most of the people there but because he actually takes advantage of the available overtime and also budgets he is starting to save a lot of money and is still supporting his mother and has a credit score over 800 while the same people I’ve been working with for years are still paycheck to paycheck and it’s hard to figure out how its even possible.
The link was useful to give some real numbers, but I agree one problem is the correlation of law school cost to salary. A more expensive law school isn’t a gtee of a higher paying legal job, but it correlates to a significant extent.
The more basic issue in trying to justify ‘40% goes to student loans’ (which I don’t think the OP even actually said) is that that article gives the % of disposable income that would go to student loans if the person didn’t apply for the federal program REPAYE which limits it to the numbers in the right most column of the table. If you get that kind of relief, the debt sticks around longer (unless you further apply for the programs which forgive it in return for taking a public service job), but the amount is then limited to 10% of discretionary income.
Put that with the likely tax bite on $82k (I ran real numbers for NJ, no itemized deductions, and that was around 25%) and the $82k/yr single person needs to ‘get by’ on $53k actual spending, which if you can’t, single, you just don’t have self control and or you have some sense of entitlement that says the world owes you not having to have a roommate, brown bagging lunch, etc. Some people said $2,500 rent. Why in the world would anyone pay that much, even in NY, if they were having money trouble? Get a roommate, spend $1k, young guys with good jobs in Manhattan are renting from us at around that, very short commute. Once the debt is cleared away and you’re maxing 401k, IRA and maybe a little savings one top, get a nice place for yourself ($2.5k/mo is still above minimal nice place for one person within subway/PATH commuting distance to Manhattan, though of course you can spend way more, and we don’t even know this person lives in NY, they might live in rural Ohio).
This is a rather extreme example, of it being ridiculous for a person to complain (or someone complain on their behalf) how hard it is to ‘make ends meet’ (~37% higher than the household median income in a rich country and only one person household). But in general I agree with Mr. Nylock, it’s a half truth to just talk about how hard it is even for people considerably down the scale from this. Just like it’s a half truth to just talk about the need for those people to take control of their own lives without recognizing that it’s hard. There are both those elements. But above the median, or as far above even in a HCOL as $82k single, there’s virtually no excuse for not making your income v spending work, it takes some really unusual situation to be otherwise. But that’s a lot of the people living ‘paycheck to paycheck’, from somewhere not far below median to even way above it. It shouldn’t be assumed that it just means poor people.
+1
No matter what your income, if you are living a lifestyle above your means, then you will likely be living paycheck to paycheck. Many people do not have the will power to live within their means, such as forgoing the latest smart phone and associated contracts; new or newer car or truck; big flatscreen TV’s; latest tablet; most recent style shoes; trips etc. instead of contributing to their 401k, savings retirement plans, kids college funds, general savings, etc.
One thing I think some people are ignoring is that a lot of people don’t qualify for REPAYE because they don’t have the right type of loans.
Take me for example. I graduated with a chemical engineering degree from Purdue in 2011, which I attended out of state. I had intended to get in state tuition but was denied because I had not emancipated myself legally from my parents, who were still living in Kansas. As a result, the extensive financial plans I made for myself at 18, with little real understanding of how much money it really was, ended up stuck paying for four years of college at out of state prices instead of two.
I also did not qualify for work study or any grants. My parents made too much money, even though they couldn’t support me due to their own debt problems. (As an aside, my mom lost her job and they declared bankruptcy while I was in college, but it made no difference.) I busted my butt for meager scholarships and worked many jobs all through college. Despite my best efforts, however, I graduated with just north of $100k in loan debt.
Those loans were NOT all federal loans. No, the majority of them were private loans with terrible terms. My two worst loans, taken my junior and senior years, when I felt I had no choice but to take what was offered lest I end up without an education to back the loans I had already taken, had high interest rates, 8% and 11% when originated, and variable.
Then I made a really terrible personal decision financially and married a man who was also carrying student loan debt.
In 2017, we were living pretty close to paycheck to paycheck. We couldn’t really rack up much in the way of savings without having it spent again. A lot of this really is poor spending habits that I fully own. I am impulsive when I’m tired and eat out way to much. But the bulk of my spending was seriously paying back my student loans. At their worst, my payments for just my loans were $1500 a month or more. My debt to income ratio (again, I made bad choices on some things, but student loans were the biggest) was 0.49. With rent and utilities, daycare for my daughter, we were REALLY strapped.
So, yes, I shouldn’t have had so many lattes or ordered pizza as often as I did. You calculus changes though when it really feels like it doesn’t make a difference. I still have to pay Sallie Mae almost half my paycheck a month, so what difference does it make if I eat my stress with a little pizza now and then.
Now, things are changing. My husband got raise and I was, finally, able to refinance my private loans into something that was actually reasonable. We are finally able to put real money away, even in our 401k, HSA and regular savings. Its surreal how much stress it has relieved. Hopefully, I can change my mindset and think long term in more than just the “easy” ways (taking out of my paycheck before I see it). Hopefully, I can change my husband’s mindset too.
In conclusion, I think it is condescending to offer advice where it is not asked, especially financial advice. I also think it is harmful to talk about this very complex topic in a very broad-strokes, black and white manner. It has be complex because everyone has their own earning and spending problems based on their location, upbringing, culture, education, etc.
Useful info in first part. On final statement I’d completely agree if it was in real life, asking and prying about other people’s financial situation. However if somebody is offering up a complaint about it isn’t ‘fair and right’ they can’t ‘make ends meet’ on the internet, it’s fair game, IMO.
Likewise some broad strokes fit a lot of cases. Americans (and probably other countries, but definitely here in the US) people who just can’t get a grip on their susceptibility to runaway consumerism that they can’t afford is a mega problem. If particular people read that and get offended, they should just ease their minds by assuming it doesn’t apply to their special case, or just not read it. 
Read today about the impact of the government shut down on federal employees and contractors, Of course the most hard hit examples are being used by the media to cause people to assume that this is the case for all 800,000 federal employees.
One example of a contractor in Kansas City complaining, that she will not likely be able to take her Florida vacation this summer if the shut down continues. The same contractor set up a GoFundMe account to help make ends meet. What? Really? You can’t make it even two weeks? How quickly we forget the nearly 10 million people that lost their jobs in 2007-2009.
My sister’s BFF got a law degree, and then found out that she really didn’t enjoy the practice of law. She worked long enough to get those loans paid off, and then got a job doing something else and I don’t think she’s even licensed any more.