On this website, I?ve often challenged the prevailing notion that the economy is booming and everyone is going to retire a millionaire. That happy narrative seems to apply to only a very narrow slice of the population. According to a 2017 CareerBuilder survey, 78% of US workers live paycheck-to-paycheck. What?s more, the survey reported that one in 10 workers making over $100,000 also live paycheck-to-paycheck.
Clearly there?s a disconnect between the predominant media happy talk, and what the average American is experiencing.
In many quarters, people who live paycheck-to-paycheck are blamed for that lifestyle. Sometimes that?s true. But in the majority of cases, it?s the imbalance between incomes and the real cost of living. I think that even extends to people making over $100,000 per year.
Let?s attempt to delve into why people live paycheck-to-paycheck, and how you may be able to get out of that cycle if that describes you.
The Income Dilemma
According to the Federal Reserve, the median household income in the US was $59,036 in 2016. Seeking Alpha reports an almost identical number for January 2018, but doesn?t cite the source. So, let?s go with $59,000.
According to the US Bureau of Labor Statistics, the median weekly wage is $881 as of April, 2018. On an annual basis, that?s $45,812.
Now there?s an important distinction here. That?s the median wage reported by the BLS is for full-time workers. That covers just over 113 million workers. That doesn?t include median wages for the more than 30 million part-time workers as of June, 2018. In other words, nearly a quarter of the workforce isn?t earning anything close to the median annual income.
Add to that the statistical reality that 50% of full-time workers are earning something less than the median wage for full-time workers.
When you add that 50% to the 25% of the population who are employed part-time, plus those who are unemployed, you get a number that comes shockingly close to CareerBuilder?s 78% of workers who live paycheck-to-paycheck.
The Cost of Living Dilemma
It can be difficult to determine what the median household cost of living is. But we can look at four major expenses ? housing, auto expense, income taxes and healthcare ? to find data that easily supports why so many people live paycheck-to-paycheck. These four major expenses are, after all, the categories that virtually determine status in the middle class.
This is an incredibly diverse expense, that will vary based on where you live, how large your home is, whether you own or rent, as well as the number of people in your household. But just for simplicity, let?s look at monthly rents as a rough guideline.
According to the website ABODO the median national monthly rent is $1,252 for a two-bedroom apartment. The two-bedroom number is probably a fairly accurate measure, as something of a halfway between one-bedroom and three or more. After all, not all households are families.
By using $1,252 as a rough measure of median housing costs, we come up with over $15,000 per year for housing. I don?t know if that number includes utilities or not, but let?s keep it simple.
For simplicity sake, we?ll just use numbers put out by AAA. They report the cost to own and operate the average car is just under $8,500 per year. I?ve crunched the numbers on this a few times, and it?s pretty accurate. Assuming the average household owns 1.5 vehicles, we can increase that number by 50%, which comes to $12,750 per year for median auto expense.
This is another number that has wide variations per household. But as a convention, let?s estimate numbers based on the median household income of $59,000.
Let?s start with Social Security tax, or FICA. It?s 7.65% of an employee?s income. If you?re self-employed, it doubles to 15.3%. But let?s go with 7.65%, once again to keep things simple. Applied to the median household income of $59,000, the FICA tax comes to just over $4,500.
Again to keep it simple, let?s just assume the median household pays 10% in income taxes. It?s a combination of both federal and state income taxes. That?s $5,900.
Total income tax bite for a household earning the median income: $10,400 per year.
Healthcare costs are probably the biggest variable in the average household budget. I suspect it?s a major reason why so many people live paycheck-to-paycheck. It?s actually quite difficult to distill how much the typical household spends on health care. For example, health insurance premiums vary in cost from one region to another, but also by the type of coverage you have and the size of your household.
Those who have an employer plan usually enjoy a subsidy paid by the employer, though it almost never covers the entire premium. But those who are on private plans are on the hook for the whole amount. We can only guess what the average household pays just in health insurance alone. A 2017 article from CNBC reported the average monthly premium for individuals was $321, and $833 for families. That was for 2016. Those numbers are certainly higher in 2018.
Looking at the number for families, $833 per month is $10,000 per year. If it?s an employer plan, and the employer?s paying 60%, the family?s paying $4,000.
The same article from CNBC also reported that the average deductible was $4,358 individual plans, and $7,983 for family plans. Now let?s estimate the typical household spends about half that deductible in any given year. That?s nearly $4,000. When added to the employee paid portion of health insurance, at $4,000, the total is $8,000 per year.
Putting the Big 4 Expenses Together
Now that we?ve determined ballpark figures for the four primary household expenses, let?s total them up:
- Housing expense, $15,000
- Auto expense, $12,750
- Income taxes, $10,400
- Healthcare costs, $8,000
- Total: $46,150
Now after subtracting more than $46,000 from the median household income of $59,000, we?re left with just $13,000. That?s what?s left to cover everything else. That includes food, clothing, cell phones, Internet and cable, life insurance premiums, parking tickets and fines, education, and entertainment.
After paying all of those smaller, but still necessary costs, exactly how much is left over for savings?
That easily explains why the vast majority of US workers live paycheck-to-paycheck. We can look at income numbers all day, but until we measure them against real world living expenses, they?re completely meaningless.
So yes, 78% of workers live paycheck-to-paycheck here in the ?richest country in the world?. And contrary to popular belief, it isn?t because of excess spending in most cases.
The High Income Dilemma
On the surface, this seems like a contradiction. After all, anyone making that kind of money should be saving a big chunk on a regular basis.
I generally agree with that position. However, often overlooked is that workers making over $100,000 are concentrated primarily in urban areas. More particularly, they?re most heavily concentrated in the highest cost cites, like New York City, San Francisco, Boston and Washington DC.
But these cities are well known for two things: high incomes, and a very high cost of living.
It?s that second part that smacks a lot of people in the $100,000+ class. The reality is that in the most expensive cities, earning in the low hundreds puts you much closer to the bottom of the economic pack than the top.
I?m sympathetic to this dilemma. The New York suburb I grew up in, which at the time housed mostly working-class families, has undergone a complete price transformation. I was shocked recently to discover the median price of a house in the community is $800,000.
Now if you?re thinking that?s exceptional, it?s not in that particular area. There are scores of cities and towns in the immediate area where prices like that are the norm. Some are even higher. Much higher. (The town next door is $1 million+.)
The point is, someone making in the low hundreds would necessarily struggle to afford to live in that seemingly ordinary town. It?s happening in high cost metropolitan areas across the country. Prices get that high, because more affordable housing is zoned out by local communities. That means if you want to work in the area, and earn the ?high salary?, you have to pay the cost to live there.
And yes, you very well might struggle.
Creating a Strategy to Get off the Paycheck-to-Paycheck Treadmill
It?s fashionable among some to assume this income/cost of living dilemma will eventually be solved with political solutions. I highly doubt it. Given the political paralysis in Washington DC, and the lack of any national consensus, top-down action is highly remote. In fact, it?s even worse than that. It?s the very political actions of the past 20 or 30 years that brought us to the crisis point were at right now.
I make that point to emphasize that we are all on our own ? as usual. The only solutions will come at the individual or local level. There?s no point in wasting time and energy holding out for political solutions that will never come. That strategy has failed miserably thus far. What also seems clear is that the income/expense gap is NOT a temporary phenomenon. It?s been growing at least since the 1980s. We have every reason to believe that it will be the way of the future.
So what can we do to reverse the trend toward living paycheck-to-paycheck in our own worlds?
Gradually begin detaching from the suburban lifestyle
This lifestyle attachment is not only becoming prohibitively expensive, but it?s also creating undue stress as people try to ?keep up? against increasing odds.
The time has come when the bottom 90% need to investigate and consider implementing alternative lifestyles.
This may take the form of shared housing. It may not be a perfectly comfortable arrangement, but since housing is a controlling expense, lowering it is absolutely critical.
Other strategies: buy a house with income potential. That can include a rental unit, capability to take in one or two boarders, or even capacity to run a small business. And whether you decide to buy or rent, make sure the cost is LESS than you can comfortably afford. The less you spend on housing, the more you?ll have available for everything else.
At the extreme, even give serious consideration to going partially off the grid. It?s not possible or practical to go fully off the grid, but anyway you can lower dependence on costly systems will give you more control over your finances.
The noose is pretty tight here in that options are very limited. If you don?t have an employer-sponsored plan, and the plans available on the health insurance exchanges are too expensive, look into part-time jobs with health insurance.
Another option, if you can qualify, are Christian health sharing ministries, like Medi-Share. It?s not health insurance strictly speaking, but it works the same way. The premiums are usually less than half those of traditional health insurance, and it’s considered fully ACA compliant.
There may actually be more options to lower costs here than the other categories. The first is the most obvious ? pay cash for your car. Not only will that eliminate the monthly payment, but it will also ensure you’ll buy a car that you can actually afford.
Also consider either learning to do some basic car repairs on your own, or find a good good backyard mechanic. Believe me, they?re out there, and we?ve use them to save many thousands of dollars over the years. Repairs are a major part of car ownership costs, this is an area where you can save a lot of money.
Here?s a more radical strategy: not owning a car at all. If you live in an urban area, chances are there?s mass transit. In suburban and urban areas, Uber and Lyft go everywhere. And in both situations, you can consider having a good bicycle as a supplement.
A variation on that theme is to drop down to one car per household. For example, my wife and I make do with one car. It?s not always convenient, but we save a lot of money with the arrangement.
There?s not a whole lot of flexibility here, since income taxes are statutory. There are even fewer options since the 2017 tax reform bill essentially eliminated most itemized deductions by increasing the standard deduction.
But one option that is still available is retirement plan contributions. This will not only help you to lower your tax bill, but it would also get you moving on the way toward financial control. Having a growing long-term nest egg is one of the best ways to get off the paycheck-to-paycheck cycle.
And don?t let the ?I?m too old? argument keep you from saving for retirement. No matter how old you are, anything you save retirement is better than nothing.
A more radical strategy on the tax front is to create a side business for at least some of your income. The business will enable you to write off certain expenses, even including the use of some space in your home.
This strategy also has a bonus. The same business you start and operate in your working years can become a valuable income supplement in the retirement years. Also, if you run it as a side business, it may be a valuable source of additional income to dedicate toward saving money.
Putting it All Together ? And Breaking the Cycle of Living Paycheck-to-Paycheck
What we?ve been discussing so far is a twin strategy of reducing your cost of living ? in some cases radically ? and increasing income. But the critical third point is what you do with the additional cash flow.
It must be saved.
Once you create extra room in your budget, you should direct it toward contributions to a retirement plan and into an emergency fund. The emergency fund will insulate you from short-term financial problems, while the retirement plan will provide a measure of protection for the long-term (and get you a tax break).
You may be tempted to spend the extra money on other living expenses. Don?t. If you?ve never been a saver, you?ll need to master breaking the savings barrier. There are various strategies to do this, and you need to pick one and run with it.
Once you do, you?ll get off the paycheck-to-paycheck treadmill, and see your financial situation beginning to improve.
You can?t do anything to help the other 78% of workers who live paycheck-to-paycheck. But by reorganizing your life and your financial situation, you can remove yourself from the group. And that?ll be a definite step forward.
Do you live paycheck-to-paycheck? If so, what do you believe is keeping you there? And if not, how have you gotten off the treadmill?
Hi Kevin. No, I do not live paycheck to paycheck at this point in my life, but I certainly do know what that is like, having lived it for many, many years. It’s a lifestyle I never want to return to, and it took a lot of attitude adjustments to change it. I had to learn to stop caring what others thought, stop keeping up with others whom “I thought” had more than I did, and most of all, stop listening to well-meaning but woefully wrong family. People coming at you from all directions telling you how best to spend your money and live your life while their own is going down the drain. On the plus side, I did work two jobs at once, one full-time, one part-time, and I was able to save a down payment for a nice home and travel some. But that was at a time when there were such things as full-time jobs with full benefits. I think the best thing one can do to change that paycheck-to-paycheck mentality is to have a change in your own mindset, be willing to move away to better areas (which I also did), and listen to your own gut. It’s astounding how much your immediate environment has on your mindset. If everyone around you lives that way, you start to believe it’s normal. Only when you step back, open your eyes, and be willing to see the hard stuff for what it is…that’s when the healing and true ability to live well starts to unfold. Great article, great suggestions for all of us to ponder. Thank you.
Hi Bev – What you did with your own life was what I’m trying to recommend with the article – step out of the box and chart a new course. Too many people are afraid to make needed changes. And as you correctly point out, you become trapped by your circumstances. The advice you get from peers seems somehow right, within the context of the existing situation. But it’s the existing situation that needs to change, and that’s where peer advice is usually counter-productive.
Writer and motivational speaker Robert Ringer once wrote something to the effect of “if you’re boxed in on all sides, then exit through the top”. I learned that early in life, but didn’t start to apply it until much later. As you’ve found, I’ve learned my gut instincts are almost always better than the “conventional wisdom”. If you’re in a trap, you have to do whatever it takes to get out, even if that means reinventing yourself or your circumstances.
It’s even emotionally liberating, which is something people who conform can’t grasp, at least until they break out for a different course. And not to sound arrogant, but I don’t regret a single major change I’ve made in my life. If there is any regret, it’s usually that I didn’t do it sooner.
Isn’t it interesting that, in a country where 78% of people can’t get ahead, they elect a government that is demonstrably focused only on making the richest 1% even richer (at three expense of that same 78%)
That’s been going on for decades Neil, despite the popular mainstream media narrative that all our problems only began in November of 2016. The public is distracted, confused and over-burdened. They’re also given just two choices in elections, and told there is no other alternative. And since both parties are basically two sides to the same coin (statists) other than the public theater of debating over form and words, there is no real alternative. The mainstream media do their part by ignoring possible third parties or third party candidates. But the strong showings of both Trump and Sanders shows Americans are open to a change of direction. But that said, the system is too bloated and bureaucratic to be reformed. That’s why I stress that we’re on our own. Politics is a major component of the distraction at this point, not a solution. Change, if it’s to come, will have to come from the ground up, not from the top down – no matter who’s in the White House or in control of Congress.
Would you say it’s different in Canada?
Great article Kevin. And I totally agree with your argument about the state of the economy. Whether it’s CPI, GDP, employment or any other number, the politicians and media massage those numbers to fit their narrative.
You’re also right about the cost of living for the higher income people. I live just outside of Washington, DC. Our county is the second wealthiest in the country and sits next to the wealthiest. Our cost of living, according to Sperling’s Best Places is 43% higher than the national average. It’s crazy. Housing is a big part of it. Auto insurance is higher. Health insurance is higher, though if you’re with the government or a pseudo agency like my wife, our benefits are fantastic. That’s not the case for most.
We need to get real about what’s going on. People are hurting. And yes, some bring this on themselves with their spending. Your examples show the math for many.
Thanks for the great content. Keep it coming.
Thanks Fred. I’m hoping more people “get it”, meaning what’s REALLY going on, and not the official narratives. The first step in dealing with reality it to know exactly what it is. Most of our media and politicians seem hell-bent on keeping it hidden.
Great article as usual, as it brings up many points, primarily stop trying to keep up with the Jones and don?t blame the government for you? Inability to see that a location determines your daily costs. You can live (on a tight budget) in any of those high SALT states. I like that you compared an average salary ($45,000) to a salary of over $100,000. I have seen housing costs rise in my New York area but the housing units didn?t appear any fancier,but are?valued ?higher.
But no matter where your income level is you need to budget using your net income versus the gross income. Plus we all need to create an effective savings plan of some kind from the get go.
Before I end this comment, I wanted to tell you about how the high earners are complaining in my area with their high value housing. With the new tax plan in place, all those deductions that used to lower their tax liability has been erased but they do get $10,000 off. Being that I never earned enough to have deductions other than head of household plus the dependent deduction until my children became adults, so I payed my full tax liability. Now all these high earners are crying that they have to pay their full tax liability and not be able to reduce it to the mere 15% they have been paying. Which to me sounds like they have be living above their means.
Also if you budget right, you don?t need to kill yourself by overworking. Unfortunately I speak from hindsight but I am passing this application down to my adult children.
Hi Maria Rose – I totally agree with the high income people you’re describing. At least since the end of World War 2 the government has been subsidizing housing, now they’re pulling back and a lot of people are squealing. Of course, the high income people got the biggest subsidy from the tax deduction on mortgage interest and property taxes. It encouraged them to by more expensive houses, because they weren’t paying the full freight. My guess is that the tax changes, which have only gone into effect this year, will seriously hurt the upper end of the market. That may bring prices back down to earth. But if the government reverses course and restores the full deductions, we’ll know exactly where they stand – and where we stand (nowhere!).
Hi Kevin… is the situation any different in Canada? I don’t think so, but I don’t have a good recollection of the years prior to Jean Chretien. Stephen Harper (federal) and Doug Ford (provincial) are the modern conservatives. Doug Ford in particular appears to be a subscriber to the Trump playbook. Many do not approve of Justin Trudeau, but you could expect him to treat you like a human being. I think the Canadian conservatives are encouraged by Trump’s apparent success, and I expect them to become more brazen.
I’m surprised at what you’re saying about Trudeau. According to the US media he’s a borderline hero. I’m not surprised if the conservatives are gaining ground, or if they’re even conservatives at heart. Conservatives today are mostly non-liberals, but not necessarily conservatives. It seems in today’s media parlance, anyone who isn’t left/liberal is conservative, whether or not they are. But some sort of outsider movement does seem to be afoot, but it always stops just short of achieving majority status.
Nice article, but WOW that car expense??? If that is what people spend for 1.5 cars I think they are out of their minds and are a big part of the problem. I am a high earner, but I drive a 10 year old car and my second car is a 1998 Toyota Camry, I bought both used and paid cash for them and I get only liability insurance, far from $12k/yr… Housing is a tough one, unless people want to live like they do in Sweden, in large shared housing units or share houses with friends and family, which is not common in America but it is in other parts of the world, there is not much to do. In many higher cost of living area’s you could not buy a duplex or the such with only $59k of income… The new tax code probably did not affect a family with $59k in income, for even in high income tax states the $24k + $2k per child standard deduction would easily cover the state income tax of $5k , and if you rent there is no interest to write off and even if there was the 4% interest on $300k is only $12k per year. That still leaves $7-$11k to cover whatever else you could think of “writing” off, and if you do not have something to write off you still get the deduction, it is a bonus.. But all that being said there is a wage gap between cost of living and the pay, and it has been going on for decades not since 2017, like the media wants people to believe. When I see jobs advertise for $14/hour and you need a bachelors degree, there is definitely something wrong, maybe more people need to get into the “trades” and rely less on high priced degrees and minimum wage jobs…Just a thought but how many of the pay check to pay check people have student loan debt???? I bet a lot.. As for health care you do not want to hear what I have to say about the mess our health insurance has become. Since March 23, 2010 we only go to the Doctor if we see the bone, thank GOD my kids were over all their childhood illnesses by then, but those broken bones really cost a fortune… I cut my household expenses by not subscribing to pay TV, magazine subscriptions, the gym (I volunteer at our community center and get a free membership because I volunteer), fancy dinners out, daily latte’s and I use tracfone as my cell phone carrier, around $120 per year. In the FIRE community (Financially Independent Retire Early) $59k is considered a lot of money. Keep up the great articles.
Thanks Rick! Yeah, I thought about the student loan fiasco, but left it out because things are already dreary without it. Still, 44 million people are carrying student loans, at an average of well over $30,000 a piece. That would shred what’s left of a budget.
I don’t know if it’s possible to get precise numbers on cost of living since there are so many variables. But that’s why I used ball park numbers, and left out some potentially significant expenses. Not every household has every expense, but I’ll bet it averages out fairly evenly. And yes, those numbers on cars are pretty solid. AAA is the source, and my own analysis supports it.
We’re in a very tough place as a nation, and what’s even scarier is that no one in authority has a clue what to do about it. Consider yourself blessed to be higher income. The “middle class” faces a daily struggle, just to keep the basics. This is so not the country I grew up in, and to imply that the sitting president, whose only been in office for 18 months, is the source of these problems is an insult to our intelligence and a gross over-simplification. Trump is wanting in so many ways, but 51% of the population is feeding on his every flaw. But once he’s out of office, nothing will change for the better. We’ll just keep pretending.
It cracks me up when the opinions turn political. Government is the problem. The federal government has been debasing the currency since we went off the gold standard. Endless wars, QE 1 through 4 and fiscal debt are at nightmare proportions
I think I read somewhere that our money has lost 80 percent of its value since 1980. All the government numbers about inflation, employment are a complete lie.
There is no difference between political parties. Both are to blame for this. Like Kevin said. This just didn’t start two years ago. It makes no difference what puppet is in the white house. None!!!
Government is a complete leach on the backs of its citizen’s. The only reason it exists is that it’s been robbing the people of this country for 50 years. They don’t care. It’s not their money.
So please, let’s open our eyes people.
Sorry, if this is argumentative. I just get tired of the political blaming of one party or another. They are both a joke. They just have different rhetoric but at the core, they are the same.
You’re preaching to the choir with me Tim. I’m very well aware that inflation is the core problem, and the one being ignored because the government’s CPI is a complete fiction that underreports the real rate. It’s why the middle class is being squeezed, but no politician will talk about it.
That 80% devaluation since 1980 is about right. It means everything costs about 5X as much as it did then. Wages have increased less than 3X. But politicians and the media focus on the wage increases, not the price spiral that is the real and bigger story. Since 1970 prices have risen 10X. Houses and cars both cost at least 10X more than they did in 1970. A barrel of oil has risen 30X, silver 15X, gold 35X. That’s not growth, it’s pure inflation, and it’s the reason most people are falling behind.
The real reason for inflation isn’t rising prices (“Arab oil sheiks”, “greedy middlemen”, “evil big business” or any of the usual common man arguments). It’s increasing the money supply to feed government spending and juice the economy. And it’s official policy. Without it, government wouldn’t have godlike powers.
That’s the mechanics of why we’re on our own. Inflation has a perverse incentive for government, to give them more power than they’d otherwise have, and that’s why they won’t give it up as official policy. That leaves us to adapt to the outcome (a steadily rising cost of living) through our own efforts and ingenuity.
Once again, all these problems we face are directly related to these big picture dysfunctions.
I like the comment, common man argument. It’s lazy to blame a president or political party. I hear that from so many people. As soon as I hear that I tune out. There is much more to it than that.
It will interesting to see where it will end. All through history, governments or countries have always collapsed. Once they debase their money it’s basically over. The collapse of the Roman empire started this way. Once they started clipping coins and adding other cheaper metals it started down the road to ruin. Sounds familiar, if you compare a dime from 1960 to one now you can see how much cheap metal has been added and real silver was taken out. I really don’t think a penny has any copper in it at all. It’s a trinket now.
That to me is the most important function there is for a countries leaders. You take care of the money. It’s not theirs. It’s ours.
We the people are too busy, involving ourselves in too many things that are unimportant. Meanwhile, you have a run amok government doing whatever it wants while we argue about same-sex bathrooms.
So that’s what I ask of myself and everybody who lives in this country. Ask yourself why do we live paycheck to paycheck. Why even if you are doing all the right things can you not save. There are way more reasons than who is president.
I’ll openly admit. My lifestyle has gone down. I have never had debt. I own my home outright. I have no loans of any kind. I live on cash. I always have. I had to sell my last home in a great neighborhood because I could no longer afford the taxes. They had ballooned to almost 800 dollars a month. If I wanted to stay out of debt I had to move to a much lower standard of living. Despite the fact that I make more than I ever had in my life. Both my cars are over 10 years old. My insurance goes up every year. I have never filed a claim. My healthcare my homeowner’s insurance all go up every year. I have never filed for any claims. To stay ahead I have to cut out things. No cable TV, cheaper cell phone plans that don’t work really well. We don’t eat out. We started a garden. Every time something just goes up I have to cut something somewhere to stay even.
Debt skews and blinds people to the facts. It gives the illusion that your lifestyle is better. If you lived on cash you would really see how much it actually costs.
Sorry for the long rant. If you can’t tell. I am very passionate about this topic.
Rant away Tim, this is one of those topics that invites it. All you’ve ranted is true. It’s why people can’t get ahead despite making more money than ever. But we’ve entered this bizarre Catch-22, where the government causes all these problems (through inflation) forcing more people to rely on the government. So now we have 51% of the population receiving some sort of government assistance. That’s enough to guarantee “no one knows what’s going on”.
One of the founding fathers, I think it might have been Ben Franklin, said more than 200 years ago, “freedom and democracy in America will last only until the citizenry realize they can vote themselves access to the public treasury”. It started with the New Deal, and here were are 85 years later, with a population largely dependent on government assistance. It’ll get worse until it can’t get any worse.
In the meantime, we have to hatch strategies to deal with the fallout. Perhaps one day we’ll all be on government assistance, which means things probably can actually get worse. Have you noticed the recent chatter about Universal Basic Income (UBI)? It’s all a government response to what we’re talking about here. Some believe UBI will fix these problems, and they will for a very short time. But it will generate rising inflation, then almost certainly a hyper-inflation. After all, the only way to literally give people $12,000 per year is to print it into existence. The total cost of UBI would match the entire current federal budget! We don’t even have enough to cover that with tax revenues now, let alone doubling the budget for UBI.
I really don’t like to think too much about this stuff, and prefer to focus on strategies to work around it. Life in the world has never really been easy, and this is what we’re dealing with in our own time. For my part, I plan to live my life to the fullest, despite the ongoing circus act.
Yes I do too. I just get very frustrated that we the people focus on the wrong things while the things we should be focused on slide by without a notice.
When I hear people screaming about Trump or Obama or whoever figure head of the current era it tells me there not there and they don’t get it at all.
Ok that’s enough for now.
Sorry Tim, I started the political thread. My bad. I will try and avoid that on future posts ?
Please don’t apologize. I respect your opinion. Just like everybody else’s. Please don’t think I was attacking you.
We’re all the same. Just trying to figure it out.
Tim, great rant, about every year you lower your standard of living! We are the same here in the Pacific NW. I make more money now than I ever have and at the same time I live more frugally than I ever have, yet my budget keeps increasing by leaps and bound every year. It is absolutely ridiculous. Property tax increase by $1350 this year alone, (pay for schools, says the state) Health insurance up by $310, all other insurance $145. And I have 2 rental properties on one the taxes went up by $1500 the other $850 and I could not raise the rents, so that is money out of my pocket. It has become pure insanity.
Tim – No need to apologize. I specifically included a short section in the article about why politics won’t solve our problems. Like you, I find it incredibly simplistic when people reduce problems to politics. Mainly, in “one party is corrupt and evil, but my party will save the world”. It’s pure fantasy of the worst kind, and only adds to the problem. Truly involved citizens don’t act as cheerleaders for one politician or another, or one party or the other. They carefully learn the truth about what’s REALLY going on, and hold the leadership accountable. That’s precisely what isn’t happening, while the shouting roars on.
The Bible stresses the centrality of servant-leadership, that the leader serves people, but that’s lost on leadership, and even on the governed. But then again, the Bible is no longer welcome in the public debate, because it’s “too offensive”. The truth usually is.
The main reason that despite trying to keep a budget under control , we?re always struggling because costs keep rising. I keep arguing that we the consumers need to figure out how to effectively get these costs down. Take housing cost, why buy that overpriced house just to say that you live in that location. Right now with the changes in the tax law, it is a buyers market which means the buyer can negotiate the price, so unless you want to really pay that much money that costs can be lowered substantially. Like packing lunches and making your own coffee, we can control our spending habits. Especially if you aren?t on the dole getting government assistance.and any money you spend is your money. I don?t know about anyone else here but I try to not use emotions to buy. All of us need to respond this way. That idea of UBI is only going to create problems not solve problems. I have read articles based on some of the individuals who received the UBI in the test areas and none did anything to get themselves to a better economic situation to not need support.
No one is thinking about where the money comes from when looking at UBI. Plus businesses look at it as a labor savings cost ( why pay fair wages?).
I know you try to encourage people to create meaningful self employment but not everyone can do that version of employment , especially since that work field is also saturated. Not all of us are great bloggers. We also don?t need big employers like Walmart and Amazon to set employment standards I just read today that thinking individually is considered conservative thinking because that person is following the crowd persona. WOW. To understand this look up the YTube video on Alternate Math ?It wil make you both laugh and react.
There?s nothing wrong with wanting to keep our hard earned money and to be able to spend it as we want. But we also should be responsible to take care of our basic needs which may mean minimum luxury buys.
I am going to give another example of poor spending skills. Remember that woman who made herself look like a Cat ? with her expensive plastic surgery. Well she?s has declared bankruptcy because she has run out of money ( over 2.9 billion) left her when her husband died a few years back. She claims that her only income is Social Security ($900 a month). That means that most of her money was never tax liable, and she never had to think to buy. Do I feel sorry for someone like this, No. But stupid people like this whine louder than us hard working individuals who just want enough money to not worry about covering basic needs cost.
How about some article for us to create changes in earning money by getting fair employment rights in place that everyone assumes are there but aren?t.
Unfortunately Maria Rose the most effective way to keep costs down is by opting out of the suburban lifestyle and looking for alternatives. The costs for the things we use as part of that lifestyle have gotten out of control, and promise to get worse. It used to be you could get by by cutting at the edges. Now you have to cut out entire expenses, things once considered normal.
A lot of sites are advocating becoming part of the top 10%, which is definitely a strategy. But not everyone can, and eventually being in the top 10% won’t be enough either. We’re in a tough spot. The UBI thing is an attempt at a simple answer to a much more complicated problem, and it won’t work either – under the assumption it can even be paid for without turning the dollar into waste paper (everyone gets a lot of money that isn’t worth anything).
Don’t know if I could accurately cover fair pay. Unless large numbers of workers will refuse to work at current pay levels, it’s not going to happen. Meanwhile, what’s often forgotten is that small employers face many of the same financial constraints as households. They can’t pay higher wages, otherwise they’ll have to close the doors. Then we have to deal with fewer jobs, pushing wages even lower. But what’s really puzzling is that here we are in a theoretical prolong expansion, and the job market it tight, but still wages don’t increase much. Makes you wonder what will happen when the next recession hits. That’s why we have to adapt now, before it happens.
Awesome article. My understanding is the auto cost is calculated for brand new vehicles, right? We always purchase cars that are least 5 years old, so I wonder how much lower that cost gets with used vehicles.
Hi Taylor – AAA doesn’t say if that’s new cars only or all vehicles. My guess is used are less expensive, as long as they’re bought cheap and you pay cash. Part of the problem with the calculation is while new cars depreciate much more rapidly, older cars typically need more for repairs and maintenance. But other costs, like gas and insurance are roughly the same on both. Either way, car expense is generally higher than we commonly assume, especially since most households have more than one.