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Living paycheck to paycheck is disturbingly common (washingtonpost.com)
325 points by petethomas 3 months ago | hide | past | web | favorite | 362 comments

Don’t discount the weight of emotional trauma and the self-sabotaging habits it has the potential to engender.

Most people are slaves to their limbic systems.

Most people don’t have self-education or resources to seek the help they need to fix these underlying problems.

Society does them no favors. Media and advertising are designed to promote consumption. And not even healthy consumption.

The idea that we are black boxes with private worlds and perfect agency is being eroded by the empirical evidence that, at scale, we are ultimately manipulable.

I know because I wrestle with this constantly. My higher self knows what’s right and how I should spend my time and money. On a daily and minutely basis, my lower self vyes for control and often succeeds in taking the wheel. And I have to catch myself and recognize when my long term efforts are being subverted automatically and mechanistically.

I know that, over the years, my unaddressed early childhood traumas have compounded into deeply-ingrained habits of self-medicating.

It’s a constant struggle.

I am not surprised that there are huge numbers of people who struggle similarly and are not as successful as I am at managing this internal conflict.

edit: why is this article now flagged? :(

I think the very fact that people in wildly different circumstances are living paycheck to paycheck is a huge flag that this isn't as simple a problem as "they don't get paid enough".

Income and expenses are intricately linked by psychology. It's almost irrelevant what your paycheck is, if you're prone to this problem then somehow expenses will always rise to meet it.

If expenses weren't actually determined by paycheck, the number of people living paycheck to paycheck would be a really small number. Everyone else would either be building a surplus each month or going further into debt.

I think a lot of people misunderstand. Before I had a nice tech job, I literally could not afford to do my dental work or take care of my car. So later on, when I started, it costed a lot more. And I spent it, because it's important.

Same can be said about many expenses. When you don't have the money, you make it work even if you can't. When you do, you gotta balance it out again. Saving your money isn't as important as saving your life. Saving your automobile might be cheaper than having to buy another later. Etc, etc.

So, just because this problem exists among a wide range of paychecks doesn't mean shit really, because paychecks scale with rent and people are suffering to make the rent as it is. I would argue for most people, the trouble isn't their attitude. It's that wages ultimately grow far, far slower than living expenses and inflation, and cuts have been made to essential expenses at the cost of degraded quality of life.

A lot of people harp on others for buying frivolously but frankly an iPhone every year would be a drop in the bucket compared to my medical expenses, maintenance and gas for my car, etc. My monthly rent is more than three iPhone XS Maxes and it's literally within a couple hundred of the cheapest thing I could find in a 20 mile radius. Don't get me wrong, it's great and I'm not complaining, but it still puts things into perspective.

Maybe I'm crazy, but I think everything that needs to be said is already covered by graphing minimum wage vs inflation. That's a lot of folks real realities today.

Asset inflation is busy destroying society.

That's because all the surplus goes into rents. If your job depends on you living in a big city, then you need to pay a fortune to get a tiny fraction of the quality of life that your parents had and that you had as a child growing up.

A lot of corporate jobs these days force people to live like rats in big cities.

A lot of corporate jobs these days force people to live like rats in big cities.

This is a problem with zoning: https://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B..., not with "corporate jobs." If we fix zoning, costs will go down. Los Angeles is instructive. In 1960, it was zoned for 10 million people: https://la.curbed.com/2015/4/8/9972362/everything-wrong-with.... Today, it is zoned for 4.3 million. Has our technology gotten worse since 1960? Have we forgotten how to build multi-story structures?

No: we've just made it illegal to build enough housing.

Seattle is also instructive. About two-thirds of the city is zoned for single-family housing only: https://www.theurbanist.org/2017/10/23/the-path-to-eliminate.... Allow missing middle housing, and prices will stabilize: http://missingmiddlehousing.com.

I'm curious, do you know if this would this be the same case for London?

I recently started working in central London and need to move closer soon; when I check the rent prices every time they just make me want to cry even though I've got a decent tech salary.

+1 Very good comment. You may like to read some Henry George: https://en.wikipedia.org/wiki/Henry_George

I'm already familiar with Georgism. I think it's more relevant now than it ever was.

This is exactly the problem. It all comes down to what is more rewarding to you - buying or financial security. Much of the buying in today’s world seems to be driven by the desire to portray status and success to peers. What’s particularly unfortunate about those who fall into this trap is the fact that they’re essentially giving what little real wealth they possess to people who actually have real wealth (business owners) in exchange for an image of wealth. They’re trading the real thing for an illusion.

I suspect a lot of people feel that part of their conspicuous consumption is part of the effort to earn more. You have to wear the right clothes, look the right way, have the right tech - or at a higher income bracket, be part of the right clubs, in order to socialise with the people who will pay you. So the two are sort of linked I suspect.

I'm pretty sure that this is actually a thing; Like once you step outside of the technical field; most everyone else really needs to "dress for the job they want" in the form of, for example, having a class-appropriate car.

I think this is one of the biggest bonuses you get as a technical person; you can live with roommates and drive a beater car, if you want, and it's not a problem when getting quarter-million dollar a year jobs.

A long time ago, I had a roommate who was trying to make it as a realtor. He though his (actually quite nice) not exactly new honda accord was a big handicap for him. I mean, I don't know if it was or not; I know little about the selling side of real-estate, but I can tell you that most people who do sales or management feel that their symbols of wealth are really important to their job and their income.

I can believe this. Realtors, on a %-based fee, have to show their clients how much they’re making (for other clients). If a realtor turns up in a Mercedes, they’re basically saying: “I’m a good salesman/woman”.

Devs in SF display status in other ways. HN karma? Exits? Economists call those “hard to fake” status displays.

lol. I'm pretty sure that on the scale of status displays... hn carma rates pretty low.

No, developers display status more directly, by pointing at a thing and saying "I did that" - or on a lower level, simply displaying intelligence and domain specific problem solving ability.

Better: not being paid enough is a sufficient condition, but it is not required.

Of course rich people can have such problem, but if you think low wages and the lack of universal health care and free education is not the main issue you are lying to yourself.

I'm not sure lack of healthcare and low wages _is_ the main issue[1]. As the parent comment points out, it seems like that would lead to a pretty different pattern of this phenomenon. It seems to me that there's a couple broad categories that can lead to paycheck-to-paycheck living:

1) Poverty, at the level where spending on a reasonable floor of basics (food, shelter, education, leisure) leaves little for savings. This is a resource constraint, and even a perfectly optimally-run household would end up living paycheck-to-paycheck.

2) Severe exogenous financial shocks that exceed whatever buffer you were able to build, and an inability to adjust consumption downwards due to sticky commitments or psychological reasons. For lower-middle and middle-class households, this is possible simply due to bad luck; one thing the US economy is pretty bad at is providing a solid way to derisk tail risks, the obvious example being healthcare. This is naturally less common the more severe the shock, and irresponsible financial management can be a contributor in some of these cases (ie not saving an emergency fund, etc).

3) Consumption rising to meet one's income. The resource constraint is irrelevant here, as above the poverty level, this is primarily about hedonism and jockeying for status. The big caveat here is that people tend to short-circuit cost-benefit analyses when it comes to their kids: neighborhood safety and public school quality can lead to people substantially (and understandably) overextending themselves wrt housing costs. I'd caution against leaning too blindly on this mitigating factor though, as there are lots of differences between living modestly in a good school district and living generally beyond your means.

There's a degree of freedom around consumption that's likely a lot more significant than your comment assumes; this seems to follow directly from the fact that someone living beyond their means at percentile X would substantially improve their financial security if they spent as much as percentile X-10 (or whatever). For all but the lowest percentiles, this is completely feasible, and yet these low-savings studies consistently find a much larger swathe of people in these categories.

The model that makes the most sense to me is that, excluding the lowest quintile, the habit of clamping consumption to income is one of the biggest factors in our low savings. As mentioned above, the US systemically tends to put a lot more risk on the individual than a lot of societies do; you can be better off if you manage this responsibly (and aren't in the lowest income brackets), but financial illiteracy is IME rampant, even among generally well-educated people.

[1] Lack of access to quality education likely is, but through the mechanism of low numeracy/personal finance skills/critical thinking skills.

> at percentile X would substantially improve their financial security if they spent as much as percentile X-10

This is spot-on.

It's worked for me -- I didn't have a solid handle on my finances when I moved out of my parents' place, so I lowballed and found a place I knew I could afford even with a pretty pessimistic view of financial discipline.

Nine years later I'm living in the same place, and I've gotten a raise every year, so I'm making quite a bit more than I was back then. Driving an even more economical car. Eating better -- buying groceries instead of eating out all the time.

I could fritter it away, let my ISP bleed me dry with a $162 cable+internet+whatever+modem plan when the $30 plan works just fine and I bought my own modem. I could shovel $95/mo to Verizon, but I'm on Ting and I use wifi whenever possible, and my bill averages $26 and I own the phone.

I could send $8/mo to Hulu and $15/mo to HBO and $11/mo to Netflix and $13/mo to Amazon and $10/mo to Spotify and $10/mo to Pandora and.... how many more are there?! But I don't feel like my life would be improved by having all those. (I do Spotify, but none of the others. In the event that I feel like rubbing my nose in a pile of TV, there's this thing called broadcast.)

I feel like there's a never-ending stream of these things, with their pundits on the morning show and Weekend Edition making you feel like you're missing out on life if you don't watch at least one show on every such service. And Disney+ is coming...

To me, it's that incremental monthly spending that inexorably, insidiously, increasingly, gobbles up every spare dollar the middle class can scrape together. I've been literally counseling my friends on how to talk their cable providers into a lower rate.

Many of them didn't know that was possible.

Cancel your shit, people.

I read this sanctimonious nonsense in every thread on spending and saving.

The only point you missed was saying that you only spend $5 a day on food.

Tell me this dear sir or madam...

1) How many kids do you have?

2) How much did you spend on healthcare in the last 5 years?

Financial shocks exceeding savings coupled with a system which requires drawing on high APY credit in order to absorb those shocks I think is a more likely culprit.

Just one event like that can have a family struggling to stay afloat and carrying thousands per year in interest payments on top of everything else.

> Financial shocks exceeding savings

The point that person is making is, if a person who makes more than the minimum wage is to reduce spending to 90% of the current spending they would be better able to absorb these unforeseen financial shocks.

> How many kids do you have?

This is another thing I notice (outside and in the article too). A lot of people who live paycheck to paycheck have 3 or more kids. Naturally more kids increase costs. Now I am by no means saying people shouldn't have more kids, but that number should depend on their financial situation too.

All of those corners you've so frugally cut can be drowned out by the difference between a 3% raise in rent and a 10-15% in rent, or a uncovered medical expense, or a child you're not prepared to have, so I really doubt too many Netflix-esque subscriptions is really the reason why so many seemly middle class income people are living paycheck to paycheck.

Mmm... I'm subscribed to Netflix, to kurzgesagt on Patreon and to duchinese and wordswing on the app store just because I support them. It's 50$/month and I think that's a fine amount to spend if you have the money in order to encourage more of these things.

"2) Severe exogenous financial shocks "

Like huge medical bills?

Yup, that's the exact example I use a sentence or two later, and I'd imagine one of the more common shocks.

Totally. Health care and education can be preventative.

Yes, just as we can subsidize human and societal needs with the tax code, we can do it directly. Food, healthcare, post highschool education...

> I think the very fact that people in wildly different circumstances are living paycheck to paycheck is a huge flag that this isn't as simple a problem as "they don't get paid enough".

This was a big reason that drove our move out of NYC. No matter how much you made, unless you were a billionaire (good luck with that), you were on a treadmill. Nothing you had would be enough. You could spend yourself broke trying to fit in, even if you make a lot of money.

Dallas, where we currently live, has this too, but it's a much bigger city, so you have to want to find those hotspots.

Dallas, while the wages are quite high, also has a lot lower cost of living. And the average person is nicer, too.

> I think the very fact that people in wildly different circumstances are living paycheck to paycheck is a huge flag that this isn't as simple a problem as "they don't get paid enough".

so, certainly, that's not all of it. we all have the wealthy friend who lives paycheque to paycheque.

But... let me tell you, saving money is a whole lot easier when you make 10x the minimum to support yourself in the area than it is when you make 1x the minimum to support yourself in the area.

Huge difference between living paycheck to paycheck because you struggle to afford basic necessities and living paycheck to paycheck because you took out too large of a mortgage. In one case you have an asset to sell if needed.

The majority of people who are living paycheck to paycheck don't have enough assets to cover debts.

Furthermore, paycheck to paycheck living outside of poverty and disability is rarely the result of a one time mistake, it's usually due to an inability to budget and save day-to-day. Which is the reason they end up with more debts than assets.

Not to mention people who can't afford their house can often not afford to take care of their house, which reduces its value.

Upkeep’s a killer. I kept having people tell me to buy in my 20’s, and I couldn’t fathom their logic. I could rent a 4 bedroom house for less than a mortgaged, let alone alone a mortgage plus upkeep. I kept doig the math, and I’d have to tie up a huge chunk of capital, and hope the house appreciated faster than upkeep costs, and that I didn’t piss away all gains again in realtor fees when I next needed to move. But really it’s the upkeep everyone kept ignoring in these conversations. $300/mo in my region is pretty standard, and no one would acknowledge how big this cost really was.

Rents finally started to skyrocket where I live, so buying finally made sense for us to try to lock in our housing exoense. But even then, the upkeep occassionally makes me wonder if I did the math right. Like can I put off buying a new roof another year? Or will that eat up my maintanence budget for the next couple years?

I know it’s a terrible answer but buy a newly constructed house. That’s all I’ve bought and the maintenance on them is close to nothing. Plus the house will be a lot more energy efficient and save even more money. Just stay away from an hoa or condo.

The premium on new construction is around 20% vs existing structures, so you arent saving any money, just paying up front (and financing it to boot).

Plus many people want to live in an already established neighborhood.

I’m not so sure about that. My brand new house in the Portland metro was cheaper than comparable older houses. I do get screwed a bit on taxes but they’re still lower than they were at my house in California for the same price. Overall I’m saving money. Going on three years and the only expense I’ve had in upkeep is air filters.

Also both new homes I’ve bought were in existing neighborhoods. Not all new homes are in new developments. I’m fact, I would avoid those like the plague. HOA hell + possible mello roos if in California.

You can be as "not sure" as you want, data doesn't lie


Portland happens to be among the metros with the smallest new house premium at 14%. Thats still $28,000 premium on a 200,0000 house.

Sure "not all new homes" are in new developments, but the vast majority of them are. Most neighborhoods simply don't have empty lots to build on, they don't exist, any new homes are teardowns.

I’m guessing trulia is looking as asking price because that’s definitely off based on actual experience shopping around. Because of property tax being much lower, older homes can ask a lot more. Sure new developments here are asking 600k+ for a tiny condo but they’ve all been reducing prices. In my part of town my house was more than 50k lower than an almost identical copy of my house down the street that’s been here for 10 years.

Besides, I never said all new homes were cheaper so I’m not sure why you’re even trying to argue it. Shop around and you’ll find a deal.

Agree in theory, but quite often that asset is not sellable as its underwater. End result is a foreclosure and/or bankruptcy. If the underlying behavior is not changed then people can spiral into further debt that they cant get out of as they already spent their once every seven year BK ticket. If people don't know how to budget you get trapped.

But yes I do fully agree, I would much rather be broke with a large income than a low one.

Often that debt is spread out on 5 different credit cards and there is no asset to sell other than shoes (a favorite of both genders) or lifestyle "influence".

The trouble is, in America the bigger mortgage often comes with a better school district.

> The trouble is, in America the bigger mortgage often comes with a better school district.

That's because our metric for school and school district quality largely is a measure of effects of socioeconomic status of the students, not anything the schools actually produce. So, yes, the schools in areas that have a higher buy-in cost have better marks, because they have on-average students better set-up for success.

That doesn't mean the students in that district, if individually moved to a different district, would do worse, it just means that the students who would do worse independent of district are lesd likely to have parents that can afford to live in the “better” district.

It is actually more due to the students who are not there. Yes it is true that the actual teaching is little better between districts, but the number of disruptive students that prevent any learning is vastly less in the expensive districts.

If you have the ability to kick out any student who is disruptive you can turn any school in any area into a high quality school.

This is then compounded by giving more money to the successful schools and less to the failing schools. This seems paradoxical as most students are zoned for a school and don't get to elect to transfer to a better one. So they are stuck in a bad school that is going to get worse due to reduced funding for failing. So kids who's parents can afford to send them to a good school district are rewarded driving home that generally where you start socio-economically is where you end up.

> the number of disruptive students that prevent any learning is vastly less.

The evidence doesn't really support that, though; students in a “bad” district don't have worse performance than students with similar background in a “better” district (whether because of distraction or any other reason), “better” districts just have more students with backgrounds which are correlated with educational success, of which the strongest factor is parental education.

The OECD report (this one: http://www.oecd.org/education/school/programmeforinternation...) would like you to believe that student background does not determine student performance. They do find a correlation, but it varies substantially between countries, suggesting that other factors are at play.

According to that report the important factors are student and teacher discipline and school atmosphere, and on can easily understand why all of these might be better in an affluent suburb.

In my city, there are 5 high schools in different parts of the city. There is a huge difference between the rankings of 2 schools compared to the remaining three. Funding and teacher pool are pretty much the same source. The main difference is the students and their families. The parents in those areas are well educated and have high income. If anything the best performing schools looks like a dump compared to the 3 lower performing ones. I'd say student background plays a huge part on their performance.

> They do find a correlation, but it varies substantially between countries, suggesting that other factors are at play.

Sure, but we’re talking about what explains variation between school districts in the same state in the US, not variation among OECD countries. I'm not saying that education policy and practice can't have a difference and doesn't globally, I'm saying there is virtually no evidence that the difference within districts that people in the US might be choosing between is driven by much of anything beyond background.

I believe nothing when it come to data on educational outcomes as it has all been totally corrupted by politics.

Do you think smart people would bother to spend a fortune on education (either directly via private schooling or indirectly by housing) if the school didn't matter? Follow the money, not the rhetoric.

More directly I have spent sometime helping out in different schools and I have seen with my own eyes the consequences of a single disruptive child on the learning environment - all the teachers time is sucked out dealing with this one student. I can't imagine trying to teach in a classroom with 3 or 4 disruptive students.

> Do you think smart people would bother to spend a fortune on education (either directly via private schooling or indirectly by housing) if the school didn't matter?

Yes, because smart and well informed are not the same thing, and even smart people who have access to systematic information are not immune to dismissing that information due to cognitive biases, particularly confirmation bias.

Quality of school district is also a well worn socially acceptable cover for avoiding proximity to those disliked for reasons of race or class, and smart people can still be racist and/or classist, and are more, not less, likely to seek socially acceptable cover for that.

I don’t seen anyone mentioning all the learning that takes place at the home. Rich parents likely have more time to spend helping their kids do homework or the money to hire a tutor.

Maybe more people should rent.

>and living paycheck to paycheck because you took out too large of a mortgage. In one case you have an asset to sell if needed.

Did a lot of people wrongly (as it turned out) think that in the 2008 Great Recession?

A lot of people were manipulated and lied to by professionals with a profit motive.

The average person is not a mortgage/real estate expert. They trusted professionals who misled them because of the profit motive. (For an example look into the reasons for the 2008 housing crash)

The average person might not be an expert, but they should know what their monthly payment is versus their take home pay.

Even knowing this plenty of people put themselves in precarious financial situations when buying a home.

I assume it's just rent seeking, services which are allowed by governments to increase regardless of utility because that's what people will pay.

People will pay more for the basic needs until they can't any more. Mostly with housing.

I don't know how to fix it, but I guess it would be enormous taxes on land owned but used by somebody else and selling land to someone else. Basically making real estate and finance only viable as charitable institutions (or something at least significantly in that direction). More or less impossible, but that's life.

Which is why without tight controls on lending/debt Universal Basic Income will just lead to similarly desperate outcomes subsidized by the state.

I think you misunderstand the "Basic" term in UBI. But if you truly think markets can't provide affordable basic living accommodations to everyone, then we should we not be discussing some non-market solutions for distribution of resources?

It's not that there isn't a way to provide housing to homeless and working poor, it's just that it requires regulation. When a parking space costs more than a person can afford in rent... it's unlikely that housing will either.. they'll have to find another location.

The market based solution is already present in city streets today with mentally ill, drug addicted, and others (under employed) living in tents and cardboard (or their illegally parked vehicles).

Once their UBI payday loans are properly directly deposited to a bank to repay last week's debt, they can once again return there. The idea that the most downtrodden will be better with their finances than 80% of the rest of the population is laughable.

I think the bigger issue than lending is that if it's not funded with a land value tax then all the increase in income will be eaten up in rent.

The opposite is the case. High rent is a localized problem (mostly found in relatively dense cities) and UBI would go a lot farther in a low-cost-of-living area where rents are low as well. So, people who have no use for living in the city (not hyper-productive or anything) would gradually opt to spread out and rents would fall.

High rent is localised? The whole of the UK has high rent AFAICT, our very poor city has high rent.

Rental means paying the costs of property plus paying profit to someone who is already well off enough to front some capital (or at least to get a mortgage) plus paying profits for the bank ... how could renting ever be reasonable priced in a system that requires those without capital to pay those with capital just because those with money already have enough money.

After the price crash in 2008 we lost 40% on our 1 bed flat. Couldn’t afford to sell after a relocation (£60k negative equity after 1 year) so had to rent it out while we rented in a different city.

We just about made a profit on the flat - about £10 a week, but we didn’t have any times of no tenant, or any unexpected major bills.

Eventually price recovered enough that we could afford to sell (below what we paid, even ignoring inflation).

Not all landlords are raking it in.

> how could renting ever be reasonable priced in a system that requires those without capital to pay those with capital just because those with money already have enough money.

landlords aren't guaranteed to make money. it's true that monthly rent is almost always higher than the monthly mortgage payment on that property, but the landlord can only profit if, in the long run, the difference between the rent and the mortgage is greater than the overall cost of maintenance and possible devaluation of the property.

personally, I could afford to put a down payment on a mortgage if I really wanted a house where I live, but for now I am happy to pay extra for the ability to relocate at the end of the lease and to avoid the risk of actually owning a house.

Economically, the "cost of property" is a kind of rent (okay, mostly rent - you can subtract the actual cost of physically building the structure. But most of what you're paying is the pure rent of land.) It is this rent that decreases when the demand for being in a particular place falls.

Yes, but then you have to regulate the spending of UBI on basic needs rather than debt service for payday cash.

That's exactly the problem. It would encourage unsustainable sprawl to a massive degree.

Unsustainable sprawl is a side-effect of high rents. When rent is low, people tend to cluster naturally in order to minimize their costs (and hence, the burden they exert on the surrounding environment) because they can afford to - you see this happening even (perhaps especially) in tiny rural villages and towns, not just in the wealthiest cities.

Yes that is exactly what I am saying. UBI would raise rents and therefore encourage sprawl.

UBI was only a small-ish step to a moneyless post-scarcity economy.

When rent is taken care of (cause there isn't rent), along with food, water, electricity, communication and more, what is there to 'buy'?

There definitely are a huge number of things that will arise to be on the top 50 desired list. However, if everybody has a respectable existence -- rent/mortgage, food, utilities being covered -- then these other things will be truly and for the first time optional and non-crucial. Which I think will be a big win for the mental health of the population.

I wager that a limitless supply of "other things to buy" will spring up, just as it already has today.

Clothes, cars, boats, planes, watches, electronics, vacations, fancy meals, you name it...

There are people who spend thousands of dollars on Candy Crush. There will always be something more.

Also, I have to point out, if you had made that list a hundred years ago, electricity wouldn't have been on it. Luxuries have a way of becoming necessities.

If there wasn't a need to buy rent, food, transportation, electrity, and communication I wonder if Candy Crush would have micro transactions.

I would say yes, because the developers would find something equally inane to spend money on.

Perhaps a more relevant example: Look at the bottled water industry. Even if all our creature comforts are provided for free, someone will pay for a "premium" version.

UBI is an attempt to save capitalism from itself. That's why you see 1%ers like Elon musk advocate for it.

Capitalism has always needed protection from eating itself, market economies suck, but there are few better workable options. UBI is just the next logical extension of the welfare state.

> If expenses weren't actually determined by paycheck, the number of people living paycheck to paycheck would be a really small number. Everyone else would either be building a surplus each month or going further into debt.

These people are going further into debt. It's just that this debt is usually not in the form of cash.

Need an oil change? Well, I can put that off for a while. Need to go to the doctor? Well, I can put that off for a while. Need to renew my license? Well, I probably won't get pulled over for it this month. It's amazing what necessities you can postpone, if you're willing to take on personal technical debt, in the form of risk.

This is how people at the lower end live "paycheck to paycheck". It's not just that they're dumb and spend every penny as soon as they get it. It's that they bend as many of the rules as they can, in order to maximize the cash they have on hand for the rules that can't be bent.

Except when it is. Generalities aren't helpful to the single parent working retail. Expenses aren't always optional.

Don't forget the guilt when kids are involved.

In the vast majority of cases having a child is optional.

This perfectly illustrates the problem the GP brings up. People have no concept of what agency is.

Oh for God's sake. Have a child, get dumped/divorced, now you're a single parent. Parents are supposed to be omniscient? God already has a job (and parenting didn't work out so good then either)

Or your partner has a fatal disease or accident.

Ideally this case would be insured; you'd also be eligible for Social Security survivors benefits.

Survivor benefits cap out at 75% of the worker's benefits. That itself caps out to $2675. So a spouse with kids would get at most $2006/month. Not horrible, but a parent with two kids would just be over the poverty level. And realistically, most people at that age would have small accrued benefits.

$2000/month is more than a lot of people in the US make working full time.

I would argue $2000/month is a very significant benefit to a survivor. It’s also inflation adjusted.

For a single person, sure. A single parent with 2 kids? Very scary.


Everyone should breed. That’s evolution.

That's an asinine statement.

We aren't bacteria. We don't have to behave like bacteria, irregardless of one's relationship to authoritarianism or social conformity.

And we should not forgive, let alone celebrate, people who do behave like bacteria.

It's not a nuanced statement, but it certainly isn't asinine. It's just the minimum positive effect you can have on the future -- the lowest bar, if you will.

You could, with similar effect, make the same statements about bacteria in response to "People should live" or "People should thrive".

In the context more than 75% of black children, and more than half of hispanic children being born out of wedlock, and comparable statistics for all poverty stricken population groups, calling it "the minimum positive effect you can have on the future" is a really an asinine statement. It's not a positive effect.


If you could tell someone with a single parent that they, for that reason, cannot have a positive effect on the future, then I don't think there is any basis for agreement between us on the topic.

That would actually be the opposite of evolution

There are powerful and influential institutions in the United States which limit access to birth control, sex education, and access to abortion.

This is an extremely important point.

Everyone deals with these kinds of intrapersonal conflicts and issues on a different breadth and scale, one way or another. It's this coupled with economic distress or anxiety, in addition to a massive income and wealth inequality, that produces the kind of conditions and struggle that people and families go through, like those described in this short article.

Sure, there are varying degrees of this issue. You have costs of living which vary depending on location, wages and salaries which vary by location as well as the occupation itself.

Despite this, it's still a grave mistake to simply pass many of this off as "they should get a better-paying job" or "they are living beyond their means" as some of the comments on the WaPo article itself suggests.

For the former, anyone who uses such an argument has in some form or fashion accepted the belief that some jobs should not pay a livable wage. It does not make any sense that anyone working a wage job full-time is still financially in poverty. This has nothing to do with the individual, but instead has everything to do with economic policy. That is not to say that, for example, fast food workers should not make as much as teachers. OK, then pay the teachers more. The bottom line is that no one who works a full-time job should be in poverty.

For the latter argument, this is mostly part of an ongoing cultural trend of laying all responsibility on the individual, regardless of systemic variables. The idea that in such an unequal society, where people exist who literally make more in a single day than others in an entire lifetime, we should instead scrutinize the people struggling economically, is just plain disingenuous.

The economy is broken and getting worse. More and more people are realizing it.

Many people are very easily falling for the schadenfreude approach to others. It's not helping at all when a teacher who works two jobs gets bashed by their neighbours for not working hard enough.

Somehow, along the way, many people lost all compassion. I am really not sure what do they have to gain from being a-holes to genuinely struggling people. (Not everybody wants to change profession at 40-50 and they should not be forced to.)

As you said, nobody who is working full-time should be below the poverty line. Nobody.

While I appreciate where you are coming from, I disagree. No one should live in poverty, job or not.

But it does show how far we are from getting there when people can't even agree that people with jobs shouldn't be living in poverty.

To clarify, I do agree with this as well. My word choice was just to keep within the context of the thread here, although it might have been a good idea to explicitly state this also.

> For the former, anyone who uses such an argument has in some form or fashion accepted the belief that some jobs should not pay a livable wage...

What's a "livable wage"? The whole point of assessing whether people are "living beyond their means" is precisely to figure out if they're keeping their expenses within that 'livable wage' threshold. I think you'll find that most people with money-related issues ("poverty" in this context should be reserved for actual, true deprivation, which is vanishingly rare in the US! Social exclusion/marginalization is real, but it's a very different problem, with different ways of addressing it) are in fact not doing enough to keep their expenses in check.

Vanishingly rare... 12.3%?


If 12% of your people are living in poverty as defined by your government then there may be something systematically wrong.

How do you manage this conflict?

I think a lot of us suffer from this at different scales. I've always found it difficult to work on things that will pay off in the future, even if I plan something I just don't seem to be able to carry through a long term project to the end unless I'm in an environment where there's accountability such as deadlines on projects at work.

I'm very prone to instant gratification, which is why I can easily lose most of my spare time in video games, netflix, youtube etc.

The way I "managed" it long-term was by creating a spreadsheet of all of the things I really want (like, spent years wanting) and their costs, adding them up, buffering it a little and saying "that's my target number, and I'm sticking to it." Last time I did this, I calculated that $5M is my number. This would generate about $200k/year with 4% return and withdrawal rate. Everything I do in my career is centered around getting to this number before I'm 45, so that I can decide whether I want to retire or not then. (I probably won't, but life isn't static.)

The way I manage it in the short-term is the two-week test. If I want a thing, and that thing is >10% of my remaining disposable income (which I budget every two weeks), I tell myself "if I still want this in two weeks, I will buy it or start saving for it then."

Example: I really wanted the custom truly-wireless IEMs that Bragi makes. However, they are $599; not a cheap purchase at about 50% my two-week disposable. Instead of buying them outright (I could, but that would affect disposable income for going out and stuff), I sat on it for several months while I tried other headphones. The urge to get them didn't go away, so I got them. What would have been an impulse purchase became a planned and extremely-worthwhile purchase.

My self-control isn't bulletproof, however. Our five-year old vacuum stopped working the other day. I tried repairing it several times, all to no avail. I got tired of having dirty carpet (our apartment is all carpet except for wet areas), so I went to Best Buy and got a new one. While I was there, I saw a Bissell Carpet Cleaner that looked really useful, as our carpets haven't been cleaned since we moved in three years ago. Both combined were about $500, but I impulse-bought it because dirty flooring drives me nuts. While I'm really happy with this purchase (there are few things more satisfying than seeing all of the gunk in your carpet vacuumed up), it was definitely impulsive, and my more responsible self should have waited on it.

Aren’t those carpet cleaner rentals only $30 for 24-hours and at most home centers and grocers? I get wanting to have clean carpets, but I’d much rather rent and not have to deal with storing the thing, let alone buying it.

This machine works better than carpet cleaner rentals, can be used whenever I want (I used it this morning to quickly pick up cat vomit residue :( ) and I can install a tool that allows it to work on bare floors

I haven't solved this for video games, youtube, etc. I'd be interested in a solution!

For disposable income purchases, we budgeted out income, necessary expenses, savings, travel, etc., everything that requires long-term planning. The surplus (a fairly small portion) we then divided out into a per-person, per-day allowance.

I use a simple Google Form to record discretionary purchases, tracking the results in a Sheet, to account for whether this discretionary budget has a positive balance.

This has the nice effect of translating dollar values into time values, and giving a reference point for trading off the relative hedonic value of small frequent purchases vs. large infrequent purchases.

You may want to look into how to use hardware to implement a sort of Ulysses pact - depending on the nature of the behavior(s) that you want to control, a time-locking safe can work wonders.

While there are many people who do make non-optimal choices, the increasing rate of this, IMHO points to systemic economic fairness issues much more than systemic self-sabotage.

It is an interesting argument to blame people for their own problems that are largely structural and as the article indicates, effect a large swath of society. It's the same argument for blaming the homeless who say own an iPhone.

The problem is it's both structural and personal decisions though.

If you’ve recently become homeless, it’s very likely you still have an iPhone (and you better hold onto it).

The efficient decision would be to swap out into an Android phone of similar vintage and sell the iPhone. You’ll come out positive because iPhones hold value better.

Um, no. iPhones hold value for multiple reasons. One of which is they last longer.

>This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness

iPhones last five years until they go out of support and can no longer install or update most apps. An Android phone will last at least as much on OTA upgrades and OS support alone, and many of them can be made to last far longer once the OTA upgrades are up, by taking the time to unlock them and install the latest Android version they will run.

Maybe, but a homeless person may not have time for all that fiddling around

A homeless person has more time for that. Their time value is lower and so the gain they get from the difference in price between the Android and the iPhone is huge.

They don't care about security updates and all that shit. They don't care about new features. Just not an efficient use of money.

I have an iPad Pro and a MacBook Pro. I only just switched from an iPhone this year. I'm not anti-Apple. But the idea that low-wealth individuals should buy anything but an older Android is ridiculous. I can still use a Nexus 4. It still works.

Yep.. buying the iPhone is the better economic decision if you need a smart phone.

Why had you better hold onto it? Why not sell it and purchase a less-expensive phone and use the profit to improve your situation?

In my case, the systemic root cause was a lack of opportunity stemming from immigration status.

Both perspectives need to coexist. Yes, human beings are partially products of their environment. But that environment includes the moral disapproval of others, and people do respond to internalized moral sentiments. Those moral sentiments can be undermined by too many excuses accepted or made on their behalf.

Some people are naturally more conscientious than others. Their moral burden is lighter. Life is unfair like that, but the answer isn’t to exonerate the rest of us from moral responsibility for managing our own affairs. On the contrary, those moral sentiments are most important for those who struggle with self-discipline.

Which is not to say that it’s wrong to try to organize society to give people a better chance at succeeding in their moral struggles. But at the end of it all, every man must carry his own cross.

This is very similar to the Allegory of the Chariot [0] from Plato's Phaedrus (370 BC) [1]. The Greeks were sometimes a keen bunch and Plato was one of the few of them that survived to the modern day. In this allegory, the person (really only males back then) had a soul divided into 3 parts: The charioteer, a base and somewhat evil pegasus, and a noble and good pegasus, with each of the pegasuses harnessed to the chariot. In life, the goal was to rise above the clouds to view heaven (more strictly, the 'forms' of Beauty, Reason, etc). The charioteer had to guide the base and the noble pegasuses and keep them from attacking each other, rioting, and generally distracting from the goal of reaching heaven.

In the allegory, the charioteer is the reasoning part of a person, the base pegasus was the 'appetites'/greed/hedonistic and the more 'limbic' parts of the person, the noble pegasus was the thumos of the person. Thumos is a very different mental model for us moderns, but was common for the ancient greeks. Think of it as 'spiritedness', but the word as used by Plato had elements of victory/political/hotheadedness/manliness baked into it [2]. The pegasuses weren't just 'good vs. evil', as even the thumos pegasus could get out of hand for the 'reasoning' charioteer, and the base pegasus was needed to tell the person to eat, to have intercourse, to react to danger, etc.

I point this out to give the parent commentor another mental model to help process things in life. We're MUCH more than just the 'higher' and 'lower' parts of ourselves. Plato thought of himself as a tripartite soul, and in typical Plato fashion, totally forgets about things like humor that can't be included in his Chariot Allegory. I'd encourage others to look into other traditions and philosophies to see of any other mental models work for them. 'Eudamonia'[3] is something we all should reach for; not every mental tool is one-size-fits-all.

[0] https://www.artofmanliness.com/articles/what-is-a-man-the-al...

[1] https://en.wikipedia.org/wiki/Phaedrus_(dialogue)

[2] https://www.artofmanliness.com/articles/got-thumos/

[3] https://en.wikipedia.org/wiki/Eudaimonia

>Most people are slaves to their limbic systems.

Excuse me, but would you mind not repeating this meme in the future? The "limbic system" is actually at the core of human consciousness and cognition, and at the core of what "reasoning" really is. The story of the brain as having a "rational human part" and an "emotional animal part" is a myth and a canard.

If you could rephrase or reconsider, you'd have the thanks of everyone in the neuroscience lab where I work ;-).

We all understood what he meant. But if you can provide a superior alternative conveying the same meaning succinctly, please do.

It would be more accurate to describe it with words less scientifically specific than "limbic system," because what everyone is talking about is a partition of motivations, not a partition of individual nerve cells. You could just call it the "flesh" and the "spirit," those are the Bible's terms. People have known that there is a tension between what they want to do and what they actually do for a long time.

Wow thank you for this deeply personal comment

That really echoes with me. Great that you are making improvement.

Thanks for sharing these thoughts. I appreciate you.

Most comments in this thread are about learning to budget/control finances.

I would just like to point out what I call "The IT bubble". We all make money here. Most of us make good money. Our social circles are filled with people making money.

Most people do not have this privilege. Below a certain threshold there is no such thing as budgeting/finances. It's just survival. You're not gonna budget because you can't save enough to do anything real with it, so you use it to make your life just a little easier. In my country (Slovenia, aka. EU member country) over 70% of people make less than the "average pay" and most of those make minimal pay.

At least here the problem isn't financial illiteracy. The problem is that they (a) make way too little to live off and (b) worker protections have eroded past any sane point.

> At least here the problem isn't financial illiteracy. The problem is that they (a) make way too little to live off and (b) worker protections have eroded past any sane point.

This is the crux of the reality that many face, yet is often ignored by pundits.

Raving about budgeting is missing the point: you can't budget what isn't there in the first place.

When there is something left over to budget, saving $20-$50 a month isn't going help with the problems of "a dollar is worth less every year and wages haven't kept up with inflation or cost of living in decades" and "if someone in my family gets sick or injured, we will likely take on debt that will bankrupt us".

I agree that it won’t help with that but perhaps that isn’t the point. Saving $20-$50 per month can help with situations along the lines of “some uncommon thing has gone wrong and you need $400 to fix it,” for example a car malfunction (because transport is required to get to work, this is urgent)

Yes, it can help with small expenses. However, each year that passes those expenses become more expensive while take home compensation stays at fixed dollar amount that isn't adjusted for inflation.

For example, medical expenses can, and do, bankrupt people. No amount of saving $20 each month will pay off many medical bills. It's the reason that medical expenses are the top cause of bankruptcy, followed by job loss.

The problem is that budgeting is portrayed as a panacea to poverty or an altar on which the poor are chastised for their suffering.

If it takes 80% of your income to live at a base level of hierarchy of needs, you need roughly doubled income to be able to actually save money, and have it not be wasted away on this or that random emergency, which is going to be more frequent.

So you need to spend at most 40% of your income on food, shelter, etc before you can save anything because you need to spend the 60% on what, occasional emergencies? What do people do when they don’t have that 60% spare? Or is the key that you write “actually save money” and by that you mean saving some significant amount of money? How much do you think that is?

I think he means 'save towards intentional use' versus 'save to soften the blows of random hardships, but never really get ahead'.

Keep in mind that that 40% is at a level where you still have to take the bus everywhere, live with roommates in a bad part of town, and not eat healthy. The middle class always spends and can save, being poor means you can’t.

Most of us didn't wind up in IT by random accident though: the prudent behavior of our parents fostered an appreciation of a value system that ultimately leads to life comfort, including the discipline to forego short-term pleasure in order to obtain it. These are educable elements that COULD be instilled in schools if teachers weren't hamstrung by administrators, politicians, and parents allowed to second guess their every move.

Unfortunately "just learn to code" which is what I understand your argument boils down to is, in my experience, false. I've mentored many young adults who mostly had zero IT experience and were looking to break into the field to do exactly what you're suggesting. A lot of them succeeded. But a lot of them didn't. And not just because they "were not good/smart/hardworking enough", but because they were people whose personality was incompatible with IT.

IT isn't for everyone nor should it be. What would the world look like if everyone worked in IT? Well our paychecks would be a lot lower for one.

Yes, I feel like I've had to make a lot of sacrifices to get where I am at, some of which I regret.

If you keep pulling your bootstraps so hard you may break your legs

As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education. I'd like to think that would make things at least marginally better.

Another thing I'd love to see, would be for banks to fundamentally reorient themselves to be their customer's advocates/financial guardians, instead of being yet another party encouraging people to borrow more than they ought to. Wishful thinking, I know. My bank knows how much I make, it knows how often I get paid, it knows how much I spend and on what - they have all the info they need to develop a plan to ensure my financial security and advise me where I can do better. Why don't they and why isn't it a standard part of opening account(s)? I'd love to see more innovation around encouraging proper saving habits and budgeting, like what simple.com is doing - but it needs to go even farther than what they currently have, IMHO.

Another change, but one much harder to manage is that many of the products people buy today have no value left after 2-4 years and some both have no value after 2-4 years and do things degrading their performance forcing you to again purchase an expensive item that does nothing to build wealth. Vehicles, electronics, home appliances all sit at something like a max of 8-11 years of use and loose 30-50% of their value as soon as purchased. Now that we are making smart everything's I can see the life of home appliances dropping. Some of this is intentional. Some necessity. I have a refrigerator from the 70's that works great, but I know I could reduce my power bill by getting a more modern one, however I am worried that upgrading will land me with something more likely to fail. certainly not something that will run 50 years with no issues.

Things were repairable in the past because they were both mechanically simple and far more expensive up front. If you want, you can live as people did in the 50s and spend $2,000 for an automatic dishwasher, $3,000 for a washer/dryer combo, and $4,000 for a refrigerator. If you spend that much today, you will get something that will last you decades.

But you probably won't. Instead, you'll go for something that is a third of the price, and it'll last you about 10 years.

In particular: cars are far more reliable and efficient than they were even 10 or 20 years ago.

Old home appliances are basically free. If you don't care too much for recency and efficiency, you can just pick one up from a neighbor here. For example, the city website where you can register to get large trash items taken away links to a platform where people post what they want to give away. It's full of old furniture and appliances, and only costs you some time and transport method.

I'm surprised sometimes, really, at what a wealth of stuff is around us, and how quickly these things switch between being coveted sinks of money and 'just take it off my hands, free'.

There's a bunch of videos on YouTube of how to repair washing machines, clothes dryers and dishwashers (repairing refrigerators usually needs special tools & training).

A good example is the cast aluminum bracket supporting the drum in modern front-loading washers. It commonly corrodes and breaks, and is often the reason why the machines get replaced. It's about a $120 part that will give your $1500 washer another 3 years of life -- as long as you're willing to put some free labor in.


Long live youtube academy!

The average age of American cars on the road today is over 11 years. That means they’re generally lasting twice that long.

A few decades ago, it was a remarkable achievement to get a car to 100,000 miles. Now, if a car falls apart that quickly, you probably swear off the entire brand for making unacceptably shoddy products.

I’m sure there are examples of the phenomenon, but cars aren’t it.

> I have a refrigerator from the 70's that works great

That refrigerator had a real cost (adjusted for inflation) that's just as high as "heavy-duty", "pro" units that you can buy today and that will last you just as long (adjusting for survival bias)

That old refrigerator likely eats a ton of power and will kill the atmosphere if it breaks open too.

Buying used is the best thing ever. TBH craigslist is full of deals, although it sometimes takes a while. I found some parts to fix my gaming PC being sold for fractions of what they were going for on ebay, etc. Let someone else take the depreciation hit.

> Another thing I'd love to see, would be for banks to fundamentally reorient themselves to be their customer's advocates/financial guardians, instead of being yet another party encouraging people to borrow more than they ought to.

The largest bank in Norway has introduced some tools to help people make sense of their financial situation, and to help them save up money.

First and foremost is a budgeting tool, where they show you where money came from and where it went for each month. It has a lot of preset filters for labeling your transactions, and you can add your own. Top level view is "salary, rent, food" and similar, and then you can drill down a few levels. I found it gave a nice overview and allowed me to quickly pinpoint some small but frequent silly expenses I could cut down on.

They've also introduced a "saving game" of sorts, where you can set your own saving goal, like $2000 for summer vacation or whatever, and whenever you use your debit card they'll transfer a configured percentage of whatever you're purchasing into your savings account. So for example if I buy a coffee for $3, they add $0.3 to my savings account, deducting $3.3 from my main account. They've made some easy way to keep track of your goal etc.

They also added a special savings account where you get much higher rate than a regular savings account, with the twist that you can only deposit money into it using a monthly auto transfer (maybe also the above "game", can't recall).

The budget tool I found nice, the saving tools I don't really need, but I see how it could be helpful to some to make it easier to save.

Of course the above won't work miracles if the income simply won't cover required expenses...

So, when you log into the Bank of America website, you want to be greeted every time with things like the following?

"Dude, maybe you should sell this car that you're paying $450 per month for and get a $7000 used car."

"Did you know that between starbucks and happy hour you spend an average of $120 per week, and that amounts to 10% of your take-home pay?"

"You currently spend $2500 per month on rent. If you downsize from 2 bedrooms to 1, you can save $X over the next 3 years."

Haha. Well, that would be marginally better than being greeted by:

Looks like you don't any savings. How about a new line of credit or a personal loan? The interest rates are microscopic!

(Literally, the rates are printed in microscopic text. Speaking of which... How about taking out a personal loan, to cover the cost of a shiny new microscope? Click here to get started!)

An automated fiduciary would be a huge boon, the robotic equivalent of a piggy bank. But it should be client side; it's role is to screen you from from being exploited by those who you do business with, including your bank.

>But it should be client side

This too will be co-opted by the greedy who look to profit in the short term, even if just to profit in the app. The boom bust cycle just shows up too many times in history not to be caused by a failure in the human psyche.

Banks actually do offer this service, though it's not front-and-center as you joked. Simple Bank was built around this premise. Chase Bank has an Insights feature that tells you how you're spending your money and offers recommendations.

Trim App is meant to be something like this but so far it on,y does something about recurring subs, I think.

I would absolutely love this!!!

> As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education. I'd like to think that would make things at least marginally better.

I agree, though I fear that this would only affect people that care enough. It's hard enough to incentivize students to get their work in on time, let alone learn how to balance a budget. Also, our society links spending money with personal self-image. (Buy this Lexus so that your kids love you. Buy this Armani cologne so that you can have weird sex with hot models in anonymous oceans. Etc.) Separating the two would require much more than personal finance classes.

> Another thing I'd love to see, would be for banks to fundamentally reorient themselves to be their customer's advocates/financial guardians, instead of being yet another party encouraging people to borrow more than they ought to.

Banks offer this service if your balances are high enough. Chase Private Client (and/or Sapphire Banking; not sure if they are the same now) assign you a personal banker that can help you maintain and improve your financial health, for example. JP Morgan Private Bank assigns you an entire (shared) team for this purpose; they can even act as middlemen to authorize purchases for you if the amounts are high enough. The former (CPC) requires a minimum balance of $75,000; the latter requires $1-10M (they don't publish their minimum requirements for this).

It sucks that you have to be financially stable for banks to help you, but it would be unprofitable for banks to offer this service to everyone with an account (have you ever waited for a teller during peak hours?). Banks are starting to use "machine-learning" based platforms to provide generalized advice platforms, though, so that people can have some resources to help them achieve financial well-being. Nowhere near enough, but it's something.

You'll never have banks working in consumers self interest as long as they are profit driven organizations. Public banks tend to work better for actual sensible banking.

The government wants money to flow, to drive the economic growth and job creation that gets it reelected. It's the last thing that's going to encourage low-consumption/high-savings lifestyles.

Unless you pay upfront for the service rather than having a free bank account.

If your economical model is to take advantage of people going overdraft you can be certain the bank won't try to help clients. If the bank can make more money by having clients with more money that would probably work better, now I'm not sure how that would scale.

Banks does make a lot of money if the customer spends his money or stores his money using the services of the bank.

Except didn't they charge the same ridiculous fees even when the accounts were not free?

Banks don't want you to spend money. They want you to have as much in your account as possible. So it would be in their interest to encourage saving.

Pretty sure they want you to pay as much interest and generate as many interchange fees as possible.

This. One of my friends got a call from his bank trying to get him to sign up for a car loan because he had 30k € in his bank account and should "splurge" a little.

> As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education.

It's not limited to personal finance, although that's part of it). Our education system does a terrible job of teaching folks about what makes our society tick (social sciences are essentially ignored) and how people should strive to act in order to best cope with it (basically, adopt middle-class values to the best of your ability. Don't eat that marshmallow!), while wasting untold amounts of time and effort on ridiculous bells-and-whistles that nobody will ever have any use or even appreciation for (like, what did author X really mean when they used that particular simile at page <n> of work Y?) Keep it simple, FFS!

I like it. How would the bank make its money? The standard exploitative practices of other banks, just with smaller fees ($5 overdraft fee instead of $37?, or lower interest rate spreads?) or just charge $50 a year, and do away with those fees? Would that lead to too many people taking advantage of it?

To be honest, I don't know what the business model would be, but it seems like it should be in the banks long-term best interest to create rich, prosperous people with invest-able funds. They are literally in a position to create their own wealthy customer base.

What would it actually do for a big bank, if it were the exception rather than the rule, that their low/middle-class account holders had enough savings to cover several months of expenses and small/medium emergencies without relying on credit, had a reasonable portfolio of retirement investments, and on their way to being in a financial position to get involved with other kinds of investments, eventually?

The banks could automate all the best practices of personal finance for most their account holders, to make all of the above happen for their average customer. Software is cool like that.

- They could divert a percentage of all deposits to emergency funds by default.

- They could set aside money for expenses, based on your cash-flow history by default.

- They could set aside spending money, also based on your cash-flow history by default.

- They could manage a persons credit debt (think pay minimums while savings/cushion is built, then use the extra cash flow from savings goals into debt payments).

- If the customer dip into savings because your car broke down or something - starting filling up the emergency fund again.

- If credit debt is paid up, savings goals are hit, they could start automatically put portions of savings into low risk long term investments (IRA's etc).

(Simple.com does some of the above kind-of but its a manual process - but quite nice compared to what 21st century online banking has been, so far)

And I'm sure there's much much more - and for the people who do really well, then they can funnel those people into more customized investment approaches. Are market forces so screwy, that all this would actually be bad for the banks bottom line, in the long run?

Banks make a lot of money (averaging a bit over 12¢ per dollar lent) on credit cards. It would likely be overall disadvantageous for them to pull people out of credit card debt, out of debt in general, and to eliminate overdraft situations.

Credit card companies make a ton of money on credit cards. Consumer banks are different, and not all banks offer credit cards.

Well, that is unless the credit card bubble pops. Think there is a few trillion tied up in that.

No one is mentioning the insane debt levels we are currently holding in this country at every level in this thread.

> To be honest, I don't know what the business model would be, but it seems like it should be in the banks long-term best interest to create rich, prosperous people with invest-able funds. They are literally in a position to create their own wealthy customer base.

You're right! It's absolutely in the best interest of a bank to help create a prosperous, happy, long-term customer with investable funds.

Of course, this seems like it would only apply to banks that manage investments effectively - which is the bigger ones. And they'd have to do so at least as well as specialist investment management funds, otherwise anyone who this bank helps become wealthy will invest with someone else. And they'd have to be able to successfully help people become wealthy at scale, instead of making it marginally easy for people to keep their heads above water.

Also, it might be worth considering that many people are at least somewhat uncomfortable with the idea of a robot managing all their finances for them. I use a bunch of automation to do a lot of the stuff you've mentioned, but it's all stuff I set up myself for the control that gives me.

Being as good at low-cost effective investing as Vanguard while convincing people to be happy with robots managing all their money and making people wealthy over time seems like it could be a tall order.

> Are market forces so screwy, that all this would actually be bad for the banks bottom line, in the long run?

Depends. How much are you willing to pay, each and every month, for this set of features? So far you seem to want it for free, with the idea that it could become profitable for this bank's investment arm three or four decades down the road. That's a rather long timescale to gamble on and a fairly substantial set of costs against a known successful business model.

Again, you're completely right! It's so painfully obviously in the interests of banks to encourage their customers to be happy, wealthy, long-term customers that it's very odd that they don't seem interested in investing in it. Are they just all collectively oblivious? Or could there maybe be something else worth considering?

>Are they just all collectively oblivious?

The market cant see past the next quarter. Long term thinking requires visionaries that can sell the idea, without them you get 3÷ growth at any cost (including signing up customers for services they didn't ask for, Wells Fargo). Banks are late up with Too Big To Fail these days to care about the long term.

Banks already do that. Don't they? At least that is the norm in Norway.

Financial advisors are required to get an overview of my finances, financial competence, what goals I have and what my risk tolerance is. Customers also should have time to think about decisions.

Banks financial advisors are basically salespeople for their own services, but that's well known and the service is free.

Its much harder (not impossible) to attain wealth if you don't come from at least an upper middle class background. Having a safety blanket (family) that can support you if you fail allows you to take greater risks in the pursuit of greater income, including starting a business. If you fail, worst case you end up in your childhood bedroom as opposed to on the the street. If your parents are able to pay for your college tuition, you are provided with a much stronger launch pad.

Many (most?) people are not taught financial responsibility and how to budget or run a household in school or at home, I believe that it is this lack of knowledge that really inflicts long term harm and feel that it should be required in both high school and college. My parents never knew how to manage money and so I never learned. I am taking the time to educate my self now, but you never even know you are missing out until life hits you in the face one day.

The greatest indicator of where you will end up financially continues to be where you started from.

> If your parents are able to pay for your college tuition, you are provided with a much stronger launch pad.

Ain't that the truth. I've spent 10 years at ~$1300/month paying my student loans down. I'm two years from done, but that would have been half a mortgage paid off! To be fair, though, I knew squat about personal finance coming out of college, so I probably would've burned the money some other way.

Quick back of the envelope calculation ($1300/month * 12 months/year * 12 years = $187,200) shows part of the problem - either college should not be necessary (we need a programmer's guild) or the cost of college is way too high.

I agree its way to high, at least programmers can hope for a well paying job eventually though. Imagine teachers or something similar. They get a degree to do something that society has a hard time going without (going to work is hard if I have no one to watch my kids) and then get a low salary and are told that they are being greedy and disruptive for going on strike to get raises.

We are also told from a young age that going to college is a requirement for getting a good job, perpetuating the cycle. Higher education has a great PR department.

This is unsustainable for older people. By the time someone in their 50s, who has lost their job, finishes their degree and repays their student loans they'll have reached retirement age and barely broke even. If in those 12 years anything unforeseen happens (lose your job, job doesnt pay as well as expected, etc) they'll have to retire with debt and be forced to work until they die just to pay off the student loan.

guild ? you know that historically they where set up to restrict access

And keep up standards. I personally enjoy the idea of having apprentice, journeyman and master programmers.

All good if your Dad is a Guild Member not so much if your an immigrant for example.

But you could GET to upper middle class though, and then your children or their children might have a shot at wealth from that higher starting point. Seeing the next generation do better is an amazing incentive.

I fully agree, and this is coming from someone from the right-wing who believed in the myth of “equal opportunity”. Opportunities are unequal, however, I would claim that’s natural. A working class repairman in his mind may dream of wealth as owning a home with a boat; he may capitalize on the opportunity for bringing to market a unique tool to his trade which an otherwise white collar society would never conceive of, with these material goals as motivation. And his labor conditioning may give him an edge in bringing the product to market because he “executes” every day with his work.

After all, most businesses are started in middle age by those who likely have built up the resources (including financial acumen) and network to capitalize. It’s fallacious to continue to pigeon-hole affluence as only coming from trading on information asymmetries from higher education.

National data on the paycheck-to-paycheck experience is flimsy, but a recent report from the Federal Reserve spotlights the prevalence of extra-tight budgets: Four in 10 adults say they couldn’t produce $400 in an emergency without sliding into debt or selling something, according to the 2017 figures.

This quote links to a report from the Federal Reserve, which contains this gem:

When asked about their finances, 74 percent of adults said they were either doing okay or living comfortably in 2017—over 10 percentage points more than in the first survey in 2013.


In other words, the survey finds tat 4/10 people can't cough up $400, yet 3/4 say things are fine for them personally.

Later in the report:

To assess actual financial literacy, respondents are asked five basic questions about finances (table 34).

The most missed question (42% of responded answered correctly):

Considering a long time period (for example, 10 or 20 years), which asset described below normally gives the highest returns [Stocks, Bonds, Savings accounts, Precious metals] [Correct answer is Stocks]

I suspect that the view of things being fine financially may be a case of ignorance is bliss.

Also just not having a plan. I can usually tell how I'm doing by looking at my financial goals and comparing them to what my numbers are.

Goals force you to think beyond paying for your cable subscription!

I'd like to read more about the history of the people in the article.

The biggest issue as far as I can tell is that it's easy to 'lose' at any stage. You can make a ton of decisions starting from about age 15-20 that influence your degrees of freedom at age 40 (in the article there's a family of 3 that seemingly have little savings, for example).

If you were born to a non wealthy household, the reality is that you simply don't get to go through life not focusing on money. Your income, investments, and career have to be at the forefront of your mind, always. And even then there's a ton of chance involved.

^^^ This 110%. I grew up in a poor family. Had friends that were well off and didn't have to think much about the future. I noticed early on that I just didn't have that luxury. Fortunately I was aware enough at an early age that every decision I make has to be a good one. I can't afford any failures. I don't think thats a good a way to become an adult or raise a society. By 25 I was at a good place but not without issues. I was having multiple anxiety attacks and all kinds of health issues. I made it out but with scars.

There has to be a better way.

I'm 27.

You know, it's funny - most of my friends who were "well enough" are the same ones who'd blame people for not working enough thus not being "successful". Modern conservatives, if you like.

Nah, I am well enough because I was intelligent enough to see beyond the horizon of my abilities back then (you could also say I was idealistic enough to be reckless and believe in that distant future).

Most of the poor people of my background never had that chance, to see beyond that horizon. They gave up earlier than they should have - but can you blame them?

Because as I've already said in my first paragraph those who are "well enough" in the first place, today are as blind to their privilege as much the poor are blind to what they could have if they worked enough.

I am in a good place now. Probably even better than those who were "well enough", but the price for that is the realisation of how lucky I am and how much I wish the world wasn't this way.

> Your income, investments, and career have to be at the forefront of your mind, always. And even then there's a ton of chance involved.

This is true and it's immensely disheartening that we live in a world where this is true.

I agree with this and that is why we are focusing on funding our child's 529 account to the max without endangering our retirement.

One effectively has to be a hero in terms of self-regulation, long term planning, and hustle. And never get hit with family crisis, disability, local economic depression, etc.

One of the simplest and most effective things I did recently was to split my bank account into two checking accounts, and one savings account. I carry two debit cards with me that are visually distinct. One is for day to day purchases, and the other is meant for bills and the occasional unusual expense, like maybe tools for a surprise home repair.

Each time I get paid (every two weeks) I have my employer deposit the sum into the bills account, and I've set up a recurring transfer on the same day into the spending account. I essentially pay myself a portion of my paycheck. I allow myself to swipe my spending card for just about anything: gas, eating out, games, clothing, etc. But if I decide to use my bills card, that's a conscious choice. I know, right there in the moment, that I'm breaking my own rule.

It's kinda shocking how effective this was. Once I had enough of a mental barrier to make me aware of my spending habits, I suddenly felt like I was in control. Once I had a significant buffer built up in bills, and could start reliably skimming the extra into savings, all the financial stress also started to melt away. "It's okay. I've got a bit of a buffer if stuff goes wrong. I can do this."

Carrying a debit card (at least by the american definition of "debit card", other countries may have more sane CC security) is a risk in itself -- if you lose the card (or just the number), then your bank account can be wiped out before you can stop it, then you'll start bouncing checks.

And since you have a card for each account, they can wipe out your savings too, making it harder to replenish your checking account.

You'll most likley get the money back, eventually.

I carry only an ATM card (PIN required), no debit card that debits directly from my bank account.

(note that this isn't just a hypothetical vulnerability, my company had to give a paycheck advance to an intern who lost her debit card in a bar, had her account wiped out and couldn't get money back from her bank in time to make rent)

These are perfectly valid risks, and I'm not sure why you're getting downvoted! Good considerations all around. I mitigate a large portion of this by having the bulk of my funds in savings at any given time, more than enough to cover what would be in bills / spending in case of an emergency like this. I do not carry a card that can pull from savings with a card swipe, so a card thief would at the very least need to coerce the PIN out of me under duress, after which I would hopefully manage to contact my bank before they did too much damage.

Of course, a better mitigation would probably be to set up two-factor on the card. Chip and PIN is supposed to protect against this, but in my experience so far, merchants that don't support it get away with a "credit" swipe and a signature, mitigating the security benefits of requiring the pin in debit mode. This is a good critique of the system I've set up, and I'll do some research and see if I can lock it down to deal with these risks properly.

Presumably, neither debit card is linked to the savings account.

And the whole point of that split is that there is no large amount of money in either checking account at any given point. If someone takes zeta0134's "fun budget" for a two weeks, it shouldn't be any more of a ding than a extravagant night out.

Debit cards are quite secure, at least here, but we're many years ahead of the US when it comes to credit/debit cards.

The magnetic strip is never used(haven't been used the last 10 years, at least), a PIN is always required at PoS and for many issuers an electronic multistep authentication process is required to order anything online with the card.

And if something still where to go wrong then you'll get your money back.

And if something still where to go wrong then you'll get your money back.

Well... most of the time, unless the bank claims it was your fault because chip-and-pin is infallible... then you have to fight the bank for your money.


Interesting. Had atm fraud in brazil from my canadian chip and pin card. No issue getting the money back.

we have a similar system in our household. Each month, my wife and I essentially give ourselves an "allowance" that goes into our own accounts (our main account is joint). Then we put a budgeted amount into savings from the main account. Almost everything in the main account at that point is budgeted for planned expenses. Once our allowance amount is gone, we just wait until the next month.

So far, it has helped us immensely in keeping our spending low. We still have the occasional lapse where we end up spending too munch every once in a while, but all in all, it has been a net positive since we started this. I'll give all the credit to my wife, who thought of it. I'm pretty horrible with money, myself.

By not making use of credit cards, you're losing out on thousands of dollars every year.

Several hundred? Yes. “Thousands”? Not very likely for most people to be plural thousands per year.

Hundreds in ~2% cash back yes, but thousands by not building a strong credit score. All your major financial purchases will cost more if you're not using 1 or multiple credit cards.

I don’t know. This appears to only be true (if at all) in a select few countries.

Most people don't come to HN.

More importantly, you're losing out on a bunch of protections that you can't get with a debit card alone (price protection, various warranties, chargeback, etc).

People rarely give the full picture of their situation in these articles.

What an amazing time we live in where with just a name you can track down people's LinkedIn, their general location, etc.

The couple in the article have just made financial decisions that are simply put, shitty.

I assumed both pairs didn't have anything sorted out until they were 30 and outside of extreme medical debt, gambling debt, etc couldn't find out how they're living pay to pay without sheer irresponsibility.

They're living in a place they can't afford. They need to get rid of their second car or work with the flexible schedule the SO has to drive him to work.

Lani needs to pick up another gig, she explains the work isn't consist, great, Uber the hours you're missing.

These articles remind me that we are our greatest enemy, not the situations we're put in but how we function in those situations.

"I assumed both pairs didn't have anything sorted out until they were 30"

I think it's the norm for people not to make much money in their 20s, particularly in southern California.

There is plenty of opportunity to make money in 20s though, so I can only blame a lack of research (assuming one knows how to read English and has access to the internet).

If you’re smart, you can go the MD or STEM route and end up in tech or finance, or if you can get into a target law school that feed into well paying NYC/SF firms. If you can’t do that, then electricians, plumbers, and mechanics make a decent amount starting very young. If you give up your 20s in SoCal, you better be doing something to hit the ground running fast with $150k+ pay.

However, if you sacrifice your 20s obtaining skills no one wants to pay for, then yes, you will not make much in your 20s.

"If you’re smart, you can go the MD or STEM route and end up in tech or finance"

These typically entail large student loans, which make it difficult to save much in one's 20s.

"If you can’t do that, then electricians, plumbers, and mechanics make a decent amount starting very young."

These are good options, but realistically there are only so many of these jobs to go around. They also require vocational training, which costs money, or the good fortune to obtain an apprenticeship.

"If you give up your 20s in SoCal, you better be doing something to hit the ground running fast with $150k+ "

Most people will never achieve that salary in their lifetime (speaking in real terms).

That’s my point, if you’re giving up your earnings in your 20s, you better end up an MD, or FAANG, or a high paying finance/law firms. If that isn’t your trajectory, and you don’t have a trust fund, then you should expect a tough cash flow situation, especially if you’re accumulating debt, and giving up $50k+ per year for 8 years.

Unfortunately, I don’t know the situation the trades are in from firsthand experience, but from the contractors I hire, they are constantly jacking up prices due to lack of licensed workers, so even if it’s not sufficient pay to entice enough people to do the job at this moment, I would say the future looks good for them.

If that’s not doable, then unfortunately SoCal, and CA in general, probably isn’t an economical place to live in the long term. Just like living in Manhattan or London or SF is a luxury, so is a desirable location like CA.

Edit: I’m not saying this is ideal, but that is the advice I would give to someone at the start of their life deciding on whether or not to live in SoCal, even if they grew up there. Perhaps the situation will reverse once all the people who are willing to suffer through the living conditions that lower paid positions offer, but I don’t see the situation bettering itself before that happens and the supply curve for labor shifts enough to force living wages.

You're probably talking about LA when referencing socal, but San Diego is reasonably affordable if you live in the right places (aka not downtown/la Jolla).

To play devil's advocate, law suffered a supply/demand shift ten years ago. There's a steep drop off in career prospects below the top 14. The same thing will happen to TE if it becomes more popular (there's a lot of lower paying science and math jobs). The same would have happened to physicians without the residency bottleneck on supply.

I think housing costs are a big part of this. Things are almost perfectly stacked in favour of current property owners: oppose any new housing development near you which keeps land prices and rents high, while those wanting to buy or rent can’t or don’t vote and can’t as easily encourage more building as current owners can discourage it.

And it’s so simple (not easy, but simple) too: build more to reduce housing costs which is effectively a raise for most people. We’d need to stop treating housing as a primary investment vehicle though.

How many places does this really affect? I see people in California complaining about it constantly. It is certainly not a problem where I live.

Take a look at the NAR's housing affordability index[1]. Basically 100 means the median family income is exactly enough to quality for a mortgage on the median home price, higher is better. If you look at the HAI by metro area there are a very small number of places where the index is below 100, and almost all of them are in CA. The vast majority of cities seem to have reasonably affordable housing.

[1] https://www.nar.realtor/research-and-statistics/housing-stat...

Is qualifying for a mortgage on a house really the same thing as affording it though?

Considering that the usual qualification for getting a mortgage is that payments can't exceed ~30% of your income, yes. They are at least not too far off from each other or tons of people would be defaulting.

Not sure why you're being downvoted, maybe its some SF NIMBYers? Anyways, your second sentence brings me an interesting idea. What if someone built a website with links to easily email local representatives (kind of like the Craigslist webmail links, maybe also with a message body filled in), so that people could quickly and easily send in complaints about housing/zoning restrictions? This idea partially inspired by the Airnoise button: https://news.ycombinator.com/item?id=18792029

There is no one part here. It's what many of us (with little power) have been saying for quite some time.

1. Minimum wage and poverty level are not increasing in relation to the power of the dollar. (1) (2)

2. Welfare of all sorts have been cut since the '80s with Reagan's attack on a felony fraudster [Welfare Queen] (3) (4)

3. Zoning regulations actively kill and impede lower rents and booming cities. (5) (6)

4. Employer-linked medicine harms and kills people, via lack of medicine and through monetary lack of means. (7) (8) (9)

5. The citizens have been sold a bill of bad goods with the "Debt Sentence" of educational debt. (10) (11)

The problems are numerous, and these cards have been stacked against us. Any one of these could topple, and take out multiple areas/people/economies. And just like the Great Depression, not even the banks getting together will be able to save us. Many of these are laws that would have to be changed at the local/state/federal level, which I do not see happening in 20 years.


(1) https://www.businessinsider.com/how-much-higher-the-federal-...

(2) https://talkpoverty.org/2016/09/13/poverty-rate-just-dropped...

(3) https://www.newsweek.com/trump-plans-slash-welfare-spending-...

(4) https://timeline.com/reagan-trump-healthcare-cuts-8cf64aa242...

(5) https://www.strongtowns.org/journal/2018/7/3/how-zoning-is-h...

(6) https://www.forbes.com/sites/scottbeyer/2016/05/25/modern-zo...

(7) https://www.marketplace.org/2017/06/28/health-care/how-did-w...

(8) https://www.beckershospitalreview.com/quality/poor-healthcar...

(9) https://www.fool.com/retirement/2017/05/01/this-is-the-no-1-...

(10) https://www.forbes.com/sites/niallmccarthy/2018/08/27/how-u-...

(11) https://www.nolo.com/legal-encyclopedia/student-loan-debt-ba...

Minneapolis seems like they might be getting a start on the zoning issues, they’ve removed all single-family zoning from the city!

Check out this graph "The erosion of the minimum wage" from The Washington Post as well:


You need to do 47 hours of minimum wage work today to get the same amount of purchasing power as 40 hours of work in 2009.

That's interesting. Related to the erosion of minimum wage, my brother's mom, when she was around late teens or early twenties (so, around 40 years ago), was able to rent a beach view place in Newport CA with her friend. They both worked part time at Burger King. There is no way that could happen today

2016 was probably the worst year of my life, and not for just political reasons.

I had gotten to a point where I had been living paycheck-to-paycheck for about two years, and the company I worked for went bankrupt due to the CEO running away with all of the money that was supposed to be used for our paychecks (yes, really), leaving me jobless and broke.

I wasn't good at saving money, and I got debt collectors coming for back credit card debt, and a lawsuit from my landlord because I wasn't able to pay the rent, all culminating with me bursting into tears at the airport because I realized I didn't have enough credit left on any of my cards to pay for the hotel pre-bill for the interview I was flying to at Amazon.

Fortunately I was able to find another job, and my wife and I set some ground rules about saving money and paying off debts, and since then I've been able to save enough money to have a down payment on a house, and even though I still use credit cards, I treat them like glorified debit cards, and rarely keep the balance higher than $200.


It's easy to get into an unmanageable cycle of debt when you live paycheck to paycheck; fortunately this happened early enough in my life to where I was able to learn my lessons early enough to keep a buffer of money in case the worst happens. I feel bad for people when this stuff happens, since I wouldn't wish that level of depression on anyone.

If I took a job at a unprofitable startup that was VC backed, I would understand the risks and ask for the appropriate compensation and have a larger cushion than normal. On the other hand, the only reason for working at a government job is short term stability - you “know” the federal government has access to capital to pay you and the long term stability of pensions, lifetime healthcare etc.

But now, on the federal level, you have a president who is shutting down the government over a $5 billion dollar “wall” that everyone in the know is saying won’t be effective - including John Kelley. On the state level, pensions are in danger because of politics, the voters, and the unions.

On the bright(?) side, at least it seems like banks and credit unions are willing to work with people who are affected by the shutdown. I’m sure they wouldn’t be willing to work with someone who couldn’t make a payment because a startup couldn’t achieve “product market fit”.

"They work in big cities and rural towns. They’ve tried to save — but rent, child care, student loans and medical bills get in the way."

Yikes. I'm not exactly living paycheck to paycheck, but I can relate to this.

It's really funny - my wife and I make quite a bit of money - whatever twisted form of capitalism we currently live in has been designed in such a way to extract most of it away from us. One begins to wonder what the point of going to work and earning money is other than to line the pockets of corporations that have effectively taken ownership of our government.

It's human psychology. Below a certain level, your mind will simply talk itself into spending your available money to make you happy.

You don't need that car. A car half the price would have been plenty good enough. But you did it anyhow.

You don't need fancy breakfast cereal that costs twice what the generic stuff at Aldi costs.

You don't need all those electronics and toys. You don't need to eat out that much.

If you made less money, you'd do less of the above right until you simply couldn't afford any of it.

And you'd continue to be about as happy as with all that money, assuming you were still paying for the necessities.

I'm not trying to convince you to give up those fancy drinks. I'm just explaining that you could choose to live more frugally without almost no repercussions, but you won't.

I decided in college that a 40 hr workweek wasn't the optimal amount for me. I've since learned that for white-collar jobs, employers really really want full-time employees[1]. My way around this was: consume as if I made ~half as much and take extended sabbaticals. The final piece in the puzzle was ACA exchanges, as I can now get stable (though expensive and high-deductible) health insurance while unemployed.

This obviously isn't a binary, but I've been consistently fascinated with the inability of the people I know (generally middle- to upper-middle class) to shift their consumption downwards to meet a goal. Not everyone wants as much leisure time as I do, but I know tons of people with all sorts of reasons they'd like to save more, and every one of them consumes more while making less than me (when I'm working). I used to think the issue was that I grew up without a lot of disposable income, but now I know people with similar backgrounds whose floor on consumption rises in lockstep with their income.

That is to say, I don't disagree with your analysis here, but for God's sake _why_ do people do it?

[1] Contracting is obviously possible, but it often constrains the type of work you can do.

Because there is a lot of things I would like to buy now that I have no money for?

My ideal doesn’t change when my income rises, I’m just finally able to pay for the things I’ve wanted all along.

At least, that was true before. I guess I’m finally at a level where something remains for saving.

Well, obviously. If what you want to spend your marginal income on is more consumption, that's completely reasonable. There's no accounting for preferences. That's not what I, the article, or anyone else in this thread is talking about though.

Note that I'm also talking about a _floor_, not about discretionary income. What you consider "must-have basics" is different from what I would consider to be so, which is different from what a billionaire or a villager below the global poverty line would. To some degree this is normal, but the degree to which it gets in the way of the other goals of the people I'm talking about, I don't understand it.

I'm specifically talking about the many, _many_ friends of mine who have goals other than immediate consumption, and for whom immediate consumption is preventing those goals even when those other goals are higher-priority. Yes, I know revealed preferences are a thing, but in extremis the concept relies on a completely unrealistic Homo Economicus model of people. Hyperbolic discounting, innumeracy, an innate desire to keep up with the Joneses even when you disavow any such desire: these are all surely contributors, but I guess I'm surprised at the degree to which their sum skews consumption behavior.

The "funny" part I think would be how rent, child care, student loans and medical bills tend to scale in cost to your locale, so despite your well paid job, your cost of living has gone up to match. It might be expected & natural for that to happen, but it's still kind of... "funny" if you look at it from a certain angle.

Child care, education, and medical are labor intensive. It's not like making widgets in a factory that can double in per worker productivity every two years. Industries that don't mechanize like a string quartet playing Mozart still command higher wages over time because they need to afford their bills too.

Real estate is limited by the supply of desirable land. Location, location, location.

I'm fairly sure that student loans do not scale with locale. That payment is the same no matter where you move to after graduation but it's easier to earn it in a high cost of living (unless housing costs are so high that your free cash flow is less).

There are a lot of assumptions about my decisions and my lifestyle in response to my original post. I am not angry at my situation, rather, I worry about my younger brother, and all of the other people out there who have yet to get as lucky as I have.

I must not be human.

Aldi and Liddle's cheap food is I would say a false economy.

I would like to know more, can you elaborate?

They are a snob. There’s loads of good quality food in Aldi or Lidl. Plenty of crap too. Don’t buy the crap.

Not really you recall the adulterated meat scandal we had in the UK - and try tasting cheap orange juice vs the better quality stuff.

I did not deny there was plenty of crap. Do they have more than one brand of orange juice though? Is one of them good? Do they sell at least some quality products? It’s been a long time since I was last in an Aldi or Lidl but the answer to the second at least was yes. Their bread was great and they had tons of quite good Italian ham, cheese and preserved and condiments that were just not previously available at those price points.

You bring up a good point, that even people who make decent money still can't get ahead much more than those making close to minimum wage. Why is this?

My theory, is that life is full of stress, and throwing money at problems can make some causes of stress diminish. Whereas a minimum wage worker will shovel his own driveway, a higher paid office worker may typically have a snow plow contractor on retainer (for them it is worth the trade off, especially with long office hours). Same story with vehicle or home repairs. Which is why you don't really feel stress free until your income exceeds the threshold to handle most stress items with money instead of your own labor.

This depends on your definition of "decent money".

If we wanted a legitimate middle class, the textbook definition of one, the per-capita incomes in such a class would need to average around 100k for the whole US. Then you would make enough to invest enough to be making an appreciable amount of your money from investments and thus be "middle" class.

The average income is still a bit more than a third that, so the average is still decidedly a member of the working poor.

Money doesn't stop buying happiness until... coincidentally... you start making about enough money to be middle class. I'm not surprised at all that those below that threshold are buying happiness at the expense of future stability or prosperity.

Do tell, what is the textbook definition of middle class?

I always assumed it was th middle of the income distribution.

The preamble of the wikipedia article on middle class espouses why its such a loaded term:


I'm using the academic definition, where if the upper class earns their wealth through investments and the lower class through labor, the middle is a mix of the two.

Humorously even the wikipedia article mentions how the middle class in the US is framed as a political tool of manipulation...

I think a lot of my stress comes from the fact that, while I wouldn't have done anything differently, I had to put myself in the hole 60k or so to come out of the economic tar sands of being from nowhere, and doing some really dumb shit as a kid.

I think that people should both be free to make childish mistakes and still succeed(without putting themselves in the hole) and i also fear for a medical emergency that tosses me back in the hole outside of my own fault.

My only point is that I think healthcare and higher education are necessary to exist in the modern world, therefor they are a right, and our government - and tax payers - should provide these things to everyone.

There's nothing inherently better about any specific trade-off between time and money.

Not buying a car and riding the bus saves hundreds of dollars per month but costs hours a day. Eating out saves the effort of cooking and washing dishes. Hiring a maid might be used out of laziness or to eek out more family time.

I have to remind myself to try to focus on what really makes my life better. Usually that involves estimating time+money+intangible factors. And if it will still be useful in a year.

The problem is not a "twisted form of capitalism". The problem is us. In the 1950s, a family could live on one blue-collar salary. You could probably live on a single blue-collar salary today, too - but you'd live like people did in the 1950s. You would eat out very rarely. You wouldn't have college debt because you wouldn't have a college degree. You'd only have one car. You'd have only one TV for the whole house. The kids would not have huge numbers of toys, and nobody would have huge amounts of clothes.

The problem is, nobody wants to live like that today. As soon as we have more income, we "need" more - more clothes, more toys, a better car, a nicer house in a better neighborhood. As we get more income, our "needs" change, driving our expenses to almost exactly match out income.

This is especially true when you have kids. If you can afford it, you're tempted to give your kids those ski lessons... that summer camp... that vacation to Disneyland... a car when they turn 16. It feels heartless to say no when you could say yes. But if you say yes to all of it, you'll spend as much as you can afford (and maybe a bit more besides), because there's always something more you could give your kids.

Note well: This is not a criticism of those with low incomes who are struggling to make it. It's a criticism of those of us with fairly high incomes who still struggle to make it.

That is a significant factor. Houses are bigger than ever for less kids. The kids not sharing a bedroom each has a cellphone faster than a 1950 supercomputer. People take flights yearly.

For a few things a 1950 standard of living is literally illegal. Medical care - no NICUs. Seat belts, leaded gasoline, crumple zones.

I actually think capitalism is the problem. It's the best form we know to organize a society, but it has the serious problem when money tend to stick or gravitate towards bigger chunks of money. I'm making well over 300k and can afford a decent house that I'd have to pay off my entire life. What if I had 30M and was too lazy to start a business? I would just buy 30-40 nice houses in my area and would rent them. 10 years later I would have 60M in assets plus whatever rent I've been paid. Where did those 30M come from? Did I do anything useful to the society? No. I have done nothing useful. It's just the dynamics of capitalism where another 30M sticked to my original 30M by the mere fact of their existence. If I was seriously rich, I could lobby zoning laws to benefit from monopoly and drive my wealth even higher, while giving nothing back to the society.

If you spent 30M and bought 30-40 houses to rent out, you would be contributing to society by risking your capital to provide housing for renters.

There is no certainty that you’d double your money in 10 years.

You aren't contributing to society if you charge more for rent than mortgage and maintenance, you are a parasite.

Why? If Apple charges more than the cost to manufacture a iPhone, are they a parasite?

If not, what’s the difference? The are both offering a good.

If you make 300k you need to either be fairly old, or buy a ridiculously expensive place to pay it off for the rest of your life.

Or be buying in a ridiculously expensive place - NYC or the Bay Area.

Given what I can buy myself, that would mean buying a 3M house. Even in the bay or NYC that’s a fairly expensive place.

the 1950s in the US were a unique blip in all of modern history.

at no other time before or since did a working class population have it so good.

Having most of the Western world destroyed except for your own country certainly helped.

It was a time when the U.S. kept the worlds manufacturing jobs warm before they were outsourced to these rebuilt places.

It's pretty understandable, imo. My income would not scale upwards very much if I moved from Chicago to somewhere higher cost like NYC, DC, or SF, and if I were to go to those places a lot of my current extra income would be wiped out.

This rhetoric has been known for longer than either of us has been alive, yet the more things change, the more they stay the same.

> It's really funny - my wife and I make quite a bit of money - whatever twisted form of capitalism we currently live in has been designed in such a way to extract most of it away from us.

I think it's evolved, not designed. A (arguably the) key element of capitalism is that a dollar extracted from an individual transaction is a dollar that can buy capital to scale up the extraction. That means exponential (actually logistic, I suppose) growth scaling with how much an entity can extract.

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