Comments on: $100k Workers: Paycheck to Paycheck

By: PMT

PMT — Tue, 20 Jul 2010 13:46:41 +0000

It’s called life style creep. If you don’t manage it you will always spend what you make. That is why things like forced savings and automated finances work. They take the human thought process out of the equation…of course this only works when one actually takes the time to set it up.

By: kman

kman — Sat, 17 Jul 2010 06:21:37 +0000

No sympathy required, but I’m more or less in that boat. I make about $150K in silicon valley, and my wife stays home to take care of our 3 little ones. The good news is, I manage to put away about 25% (max 401K plus 10% to ESPP plan). But after $3000 in rent (never have been able to buy a house here, but maybe that’s for the best), and then family expenses, we basically break even. It bugs me on one hand that I won’t really ever be able to get into a house at this rate, but then again, my kids are happy and healthy, so I can’t complain. And home ownership probably isn’t all it’s cracked up to be at this particular moment in time.
-Kman

By: Denise

Denise — Sat, 17 Jul 2010 02:45:53 +0000

Long-term commitments: yes, that feeds into the sympathy level. I’d be more likely to be sympathetic to someone who wasn’t obviously overburdened with LTCs. Or who was facing them head-on, adjusting to the new reality. Again, though, I’m an Ant. And I find Grasshoppers to be strange creatures.

It definitely requires effort to save. Which is why I love payroll deductions and direct deposit that can be split between two accounts. I save just under 30% of my gross income that way, and I live pretty much paycheck to paycheck on the money that’s deposited into my checking account.

I can save almost 30% without noticeable pain. Because it’s automated. The money is taken out before I see it, before I even know it’s there. No effort, no pain.

But if I had to save 3% out of the money that lands in my checking account? Ouchie. That’s effort. And that’s MY MONEY TO SPEND!

1/10th the amount, but more than 10 times the effort.

…

I may have to bake cookies for the payroll department. They’ve allowed me to put all my effort in up front, and that has helped me save a lot of money. Enough for a bag of chocolate chips, at least.

By: Michael

Michael — Sat, 17 Jul 2010 01:13:21 +0000

To be fair, $100k in California isn’t the same as $100k in Oklahoma, where I am.

Still, to be making that sort of money, and not to be able to save any of it … well, my strong suspicion is that these folks have set themselves up with lots of long-term commitments: expensive cars, McMansions, HELOC payments, and so on. Things that aren’t easy to get out from under when life doesn’t go according to plan.

I’m not a “$100k’er,” but between my Day Job salary and the income provided by this website, I’ll be a lot closer than I ever figured I’d be at my age. Even with a pretax income that’ll be just under 3x the median of my state, and with no debt other than my house, it still requires effort to save. Saving won’t “just happen.”

The natural course for most folks is “What comes in, goes out.”

Applies even to $100k’ers. (And many times, from my experience, the $100k’ers are the worst at fighting the LBYM battle.)

By: Denise

Denise — Fri, 16 Jul 2010 23:38:17 +0000

I’m seeing one potential area for sympathy: if the people who have cut back on (or cut out) savings are also cutting back on discretionary spending, then it’s a bit less eyeroll-worthy. There’s a limit, of course, because if the austerity budget is really *that* tight, then it’s too tight. But for a few months, until they can get the house sold or figure out some other ways to pull in money… I could be sympathetic, because I would likely do something like that.

If they’re reducing savings so they don’t need to curtail spending, though… I’m an Ant. Grasshoppers confuse me.

By: Jane

Jane — Fri, 16 Jul 2010 15:11:17 +0000

Duh. I knew that all along. I wonder how I scrape by on my measly $50,000? I love your musings….