We Tracked Every Dollar 235 US Households Spent for a Year, and Found Widespread Financial Vulnerability (hbr.org) 399
Income inequality in the United States is growing, but the most common economic statistics hide a significant portion of Americans' financial instability by drawing on annual aggregates of income and spending. An article on the Harvard Business Review adds: Annual numbers can hide fluctuations that determine whether families have trouble paying bills or making important investments at a given moment. The lack of access to stable, predictable cash flows is the hard-to-see source of much of today's economic insecurity. We came to understand this after analyzing the U.S. Financial Diaries (USFD), an unprecedented study to collect detailed cash flow data for U.S. households. From 2012 to 2014 we set up research sites in 10 communities across the country. The USFD research team engaged 235 households that were willing to let us track their financial lives for a full year. We tried to record every single dollar the households earned, spent, saved, borrowed, and shared with others. [...] Our first big finding was that the households' incomes were highly unstable, even for those with full-time workers. We counted spikes and dips in earning, defined as months in which a household's income was either 25% more or 25% less than the average. It turned out that households experienced an average of five months per year with either a spike or dip. In other words, incomes were far from average almost half of the time. Income volatility was more extreme for poorer families, but middle class families felt it too.
Cool Story, Bro (Score:2, Insightful)
Re:Cool Story, Bro (Score:5, Insightful)
Because they expect a big discussion between people saying it's your own fault if your poor, and other people saying it's somebody else's fault. This results in lots of ad views.
Re:Cool Story, Bro (Score:5, Interesting)
Ironic that this article is in the Harvard Business Review! The Harvard Business School has been source of much of the business policy of the last several decades that pushed risk on workers and away from corporations. Who could have guessed that squeezing worker pay and social safety nets would result in increased economic instability for them!
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People have financial challenges. Why is that a story at all?
Because agendas need to be pushed on people (to wield power over others), and in order to push an agenda, you need to propose a fantasy world where people don't have financial challenges.
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Is it newsworthy if the number of people having financial challenges is going up? Is it newsworthy if the challenges are worse than they were 2 decades ago?
Or maybe its only newsworthy when we can pin those challenges on H1-B visa holders?
Re:Cool Story, Bro (Score:4, Insightful)
Re:Cool Story, Bro (Score:4, Interesting)
The site ownership may fall into a different camp, and really they're the ones controlling what stories are put up. I don't think the community really would have wanted this.
After a couple of decades of doing income... (Score:5, Insightful)
tax returns on the side for friends since I like seeing what people make, I've noticed it's more about throwing money away on stupid stuff rather than lack of money that's the problem. At my company, all of the developers make $140k or more a year, and they constantly whine about having no money. No one in the office goes out to lunch any longer because they can't afford to eat. Working through lunch is depressing. You should get out of the office and talk to people. My office mate just wasted $12k on an expensive stove, and he doesn't even cook. My boss spent $130k on a BMW and has since asked to borrow money since he's about $100 short each month. He makes over $200k!
People are financially vulnerable because they make the decision to be. Personally, I save just over 60% of my income and have since two years after college when I finally learned throwing money in the trash on things like expensive speakers, car models that depreciate badly, expensive home remodels, etc. just aren't worth what they cost.
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If you don't decide UP FRONT how much is "enough" then it just becomes a horizon line. No matter how much you have, it's never enough.
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this
i see people leasing luxury cars, buying expensive crap, eating lunch out every day, eating breakfast out daily, $5 coffee in the morning, it goes on.
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It's all about balance.
I don't make 6 digits, or even close, but I bought a house I could afford, and plowed every penny I had in to it until it was paid off. I've never had any debt beyond that mortgage, and I paid it off in 8 years. Since that time I put all my money in to RRSPs and TFSAs (Canadian tax sheltered investments) until I maxed those out. and then I saved some more...
Then I stopped and had a bit of a life altering realization. Without debt from the mortgage (or anything else), and with my relat
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This is an interesting observation, but I think it's about a very different set of people than the article is discussing.
Families making $60K are in a really, really different boat than just about anyone with an engineering job, especially younger folks with fewer demands on their household income. In fact even many families with incomes over $125K (once considered a rather high income) can be very strapped once you account for the cost of homeownership, college, aging, supporting other family members, etc
Re:After a couple of decades of doing income... (Score:5, Insightful)
We survived the last real estate crash by investing sensibly, not getting too greedy, and ensuring that we had a stable position. Just like with your own personal finances, there are very simple time tested rules for avoiding trouble. Some people just want an excuse to not be responsible for themselves.
Now as far as stocks go... if you are worried about a "market crash" then you simply aren't playing the long game.
The funny thing about being responsible is that eventually you end up with much more disposable income and a more secure financial position than your idiot friends that "just had fun".
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One question I do have on the study though is if they accounted for bi-weekly paychecks, which can skew things substantially relative to monthly data.
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Not all leverage is created equal. I would argue that having a mortgage (especially a fixed-rate one) is a lot safer than investing on margin since mortgages aren't subject to margin calls.
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So the lesson is... Never save anything because your savings might lose value? That seems like terrible advice.
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On the contrary, crashes are even better because your dollars buy more shares than they did before. All you have to do is not be the sort of utter moron who panics and sells everything at a loss. Ideally, you simply ignore the market and your portfolio completely and let your automatically-scheduled investing continue doing its thing, same as in a bull market.
(This is predicated on having a diversified portfolio such as a three fund portfolio [bogleheads.org], of course. Gamblin
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Saving 60% is great, until the market crashes. Sometimes, crashes are intentionally designed by computer investors to take your money. Even if you invest it in real assets, like real estate, those markets crash too. Ultimately, you lose your money and never get to enjoy it. One day you very well may look at your loser friends that have long spent on useless crap and they will look like geniuses. They won't have any money either, but at least they enjoyed it when they had it.
I've been investing since last century, through both recent market crashes. This is BS. Just don't get clever. The standard financial advice most advisors give out is: invest in broad index funds (the easy choice is an S&P 500 fund, there are many very cheap ones to choose from). Keep some percentage in a short-term bond fun(the old line is "keep you age as a % in bonds" but I don't know if that's still good advice), and rebalance maybe once a year in the summer.
You only get screwed by a market cras
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No, it's because Seattle doesn't often get sustained temperatures low enough for it to be an issue. The pipes burst because the water in them expands when it freezes.
Budget for swingers... (Score:2)
The less predictable your cash flow is... (Score:5, Interesting)
The less predictable your cash flow is, the more you need to save. You can only ever rely upon the fraction of your cash flow that is reliable (which is so obviously true that it's actually a tautology).
That means the fixed expenses + minimum variable expenses in your budget should always be less than the minimum you might get paid in a month, excluding things like bonuses, commissions, or overtime.
Moreover -- and I realize that people would consider this extreme -- if you can get your bare-bones budget down below the amount of income you'd get from unemployment if you lost your job, that would be even better. For example, in my state unemployment pays the about same as full-time minimum wage and my household has two working adults, so double-unemployment would net about $2,400/month and that's the number I budget around.
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Time to find a cheaper apartment, or better yet, buy with a fixed-rate mortgage so that you're at least somewhat insulated from inflation.
(Of course, in theory the unemployment benefit amount should have increased over time at the same rate as the rent, but that's a rant for a different day.)
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Time to find a cheaper apartment, or better yet, buy with a fixed-rate mortgage so that you're at least somewhat insulated from inflation.
Not an easy thing to do in Silicon Valley. My rent-controlled apartment have kept the rent increases in check for nearly 12 years, but the current corporate owner is very aggressive about nickel-and-diming everyone for everything. Repainting the exterior walls, redoing the landscaping and charging "luxury" rents for a 50-year-old apartment complex is no longer a winning formula.
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Last year I made a grand total of $5875 on paper, but my corporation brought in over $60,000.
Assuming that your corporation files a separate tax return (I'm not familiar with Canadian corporate law), you could have paid yourself a salary to prove you worked for someone else without jumping through the self-employment hoops.
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Realistically, if they get sick the costs can easily be higher than most people could ever hope to save.
And when they have kids, it's hard to tell them that they should save that money instead of sending Timmy on the school trip to the museum, because when faced with theoretical future disaster and immediate familial need human nature isn't going to favour long term planning.
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And when they have kids, it's hard to tell them that they should save that money instead of sending Timmy on the school trip to the museum
Save up the money before getting kids.
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Unfortunately biology makes that hard for many people, even assuming they earn enough to ever save that much. They could just not have kids, but again biology makes that difficult and a risk most people are willing to take.
Basically, I think this is an unrealistic solution.
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Oh puleeeze. A museum school trip isn't going to be diddly. It may be ONE trip to Starbucks or the fast food establishment of your choice. When I got the free lunch, we were able to afford the school field trips.
Getting REALLY sick is a matter of covering your insurance cap for the year. That cap is on the order of an expensive house or car repair. If you can't manage to get sick, you can't manage to maintain your possessions either.
Even the working poor can manage this. What's your excuse?
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Maybe for your insurance it is. For mine, the annual out of pocket maximum is $10k (for the family, or $5k/person). $10k would be a big blow to someone on minimum wage.
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My cap is a few hundred, and the premium is 150/month (p/p). But then I don't live in the US.
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No it isn't. I'll do it right now:
Hey dumbass parents, get your financial shit together before spending money to send Timmy on that school trip! Seeing the museum is way less important for Timmy's well-being than not becoming homeless because the house got foreclosed on, or not having his parents divorce because of financial stress, or not relying entirely on the school
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Water is wet (Score:3)
A lot of people that are good with their money play their cards close to their chests, they do not necessarily discuss or share their financial information with others regardless of how innocent the request seems. This would probably skew results of a long-term survey toward those who don't have as much problem with others knowing their finances, which would more likely be those who aren't so good with money.
Second, who finds this to be a surprise? There are lots and lots of jobs where monthly income varies, and while a lot of those jobs tend toward labor, there are still plenty of other jobs that would see varying compensation due to things like commissions. Sales jobs can be very high paying one month and almost without compensation the next. Same for many skilled trades, if there's no work then there's no money.
I would not be surprised to learn that the cushy, regular-income jobs that most people think of are almost the exception, not the rule. Even IT is not immune to this; those who work as consultants may be paid for jobs that run for a few months and then end, or might be paid per billable-hour billed to their regular rotation of customers. That could mean income vastly varies from month to month depending on if anyone needs outside services or not.
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How maddening is it to advise your client that they are blatantly in the wrong, the law is not on their side, and that they should settle; to tell them that moving forward will result in nothing but frustration and lost productivity and money; and then they insist on going forward. And refuse to pay when they lose.
I think I would've insisted in essentially an up-front deposit that covered so many hours, and that if somehow they managed to avoid using all of those hours, they would receive the unused portion back.
How much time does a meritless case take to pursue? On the one hand I could see it being short, since there's only so much one can do with both precedent and with ethics against the client's position, but on the other hand I could see it taking even more time if the attorney digs and digs and digs for any sc
wrong conclusion (Score:2)
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I'm not sure income variance is ever good, uncertainty leading to bad decisions.
Which can be perfectly rational. There are perfectly rational reasons for a lot of behaviors that look stupid from the outside.
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Which generation is that? It's been going on longer than I've been alive, and I'm old. Drive by any apartment complex and count the brand new cars.
If they ever got any 'free money', they would immediately commit themselves to 150% of UBI in payments for new disposable junk. If they were just going to be paying it back at the end of the year in taxes, than 200%.
Something I've been trying to get a friend of mine (Score:5, Insightful)
It reminds me of all these stories after the crash of folks who paid off debt by living frugal. The stories always glossed over the $100k+ salaries. It's a lot easier to be frugal when you make that much. It's the difference between a new car and paying rent...
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But fact is we make about 20% less than the boomers did. That's why we're struggling.
What is this number? 20% relative to what.
The world was different back then. Some things were cheaper (like housing in dense areas), some things were more expensive (like electronics).
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Exactly. The basics where cheaper, much cheaper. Luxury was more expensive, but it was not expected. Nowadays, internet, smartphone etc is all expected.
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to understand is you can't budget what you don't have. I see this a lot, where people are struggling and convince themselves if they could just budget the numbers a bit better it'd all work out
A budget should not be like a diet - it's not a plan. If you try to make it a plan, what always happens is you plan to lean, and eventually binge.
A proper budget is a spending journal that you review as a family. This is amazingly powerful: at the start of the process, list the things you think you spend money on in order of importance to you (no consulting for couples, each list independently). After a couple of months, list what you spend money on in order of how much. It's very rare for the lists to
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it's the same price upfront or over 2 years. no sense in using a credit card to buy it upfront. when apple/att start giving me discounts on the pay cash price, i'll pay cash. for now the best they do is BOGO deals a few times a year which i'm going to take advantage of next cycle
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Of course his point flew right over your head and that's really the point here.
The three golden rules of borrowing (Score:3)
1. Never, EVER borrow to pay off borrowing. That's a fiscal death spiral. If you can't pay it back, better to tell them and then take the hit. Maybe they'll settle for less than you owe.
2. Never borrow to pay for a sunk cost. Only borrow for something that increases in value over time.
3. Build up a cash hedge over time so you can borrow from yourself.
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You just outlined the true cause of "income inequality."
People who follow your rules do well, those who don't, end up on welfare.
It's that simple.
Re:The three golden rules of borrowing (Score:5, Insightful)
People who follow your rules do well
unless they get sick.
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>> People who follow your rules do well
> unless they get sick.
You mean like ME?
Bullshit.
Insurance paid the bulk of my "sick" costs.
Actual paid costs were far below billed costs.
What I have paid has come out of savings specifically designated for medical expenses.
Having that to save was the result of not living life to my credit limit.
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And? Society should be optimized only for the sick at the expense of -- and with no regard for -- the healthy?
Re:The three golden rules of borrowing (Score:5, Insightful)
You just outlined the true cause of "income inequality."
People who follow your rules do well, those who don't, end up on welfare.
It's that simple.
No it's not... People run into lots of unfortunate circumstances... Mental health, disability, bad luck, substance addiction, lack of gainful employment...
These rules are sound, but if "sunk cost" is food, I can't fault a parent for borrowing to cover it.
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If you follow those rules, it's a lot easier to save up 6 months expenses as a cushion. Sick or laid off, you can weather it. Sure, you might be particularly unlucky and have multiple big events hit you at once, can't handle that, but being prepared for 99% of stuff is doing pretty well!
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I beg to differ.
1) If you can borrow at a lower interest rate than your current interest rate, then borrowing to pay off borrowing winds up saving you a lot of money. It is the wisest thing you can do, when the option is available.
2) If the interest rate you can get is less than the interest rate you can MAKE on that chunk of money (when properly invested) then you should borrow the money. For example, when you need to buy a car for, say, 20,000, and you have that money...you could either:
a) just pay up,
Re:The three golden rules of borrowing (Score:4, Insightful)
Exceptions to all of these.
1) Credit aggregators can change 21% interest debt to 6% interest debt. That is a better move than defaulting or bankruptcy in many cases.
2) Food and rent for housing are unavoidable fixed costs and you need both to live, regardless if you have cash now to pay for them.
3) Only people who have never been poor utter such classist nonsense.
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Those "rules" are bogus. Things are never so black and white in real life.
1. If you can trade a high interest rate for a low one, do it.
2. People borrow money for cars all the time and it can be a reasonable decision. Borrowing money over 8 years to buy a car is crazy, but a 4-year loan? Also, imagine that you have the choice to pay off a student loan or a car loan, which do you choose? It may also make sense to borrow money to keep your cash hedge intact.
3. I agree.
Fundamentally, though, the bottom line is
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So you buy cars with cash?
I certainly do. Borrowing money for a car is one of the worst financial decisions you can make. Even borrowing on a 0% car loan is just a bad habit, best avoided.
Really, there are only 2 times when it makes sense to borrow money for a car.
* It's a "work truck" or other vehicle owned by your small business and its a business loan.
* You just got your first real job out of college, and your current junker isn't reliable enough for daily commuting, so that job is at risk.
Personally, I just pay cash, and never
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Usually spend as much on parts as on the car.
But then the car is like I want it. Helps to keep a backup, but 'nice cars' * are incredibly cheap these days. As long as you don't live in rust country.
Think what cars are about 20 years old today. Badly in need of refresh, but that's pretty much known, OBD2 right at 20. So: Suspension (stiff), brakes (bigger, e.g. factory cobra/crown vic for Mustang, not $5000 yuppy 'brake kit'), motor (make thump, 'big stick', 'medium stick' anyhow, not 'fart can'), motor
Focus on spending, not income (Score:3)
Understanding the differences in income is useful. But what's really important is spending.
Whether a person makes 15K or 150K a year, if you spend more than you bring in, you're sunk.
People who never have enough money typically have no idea where they spent it. When you sit down with them and analyze where "every dollar went," people tend to be completely shocked at some of the silly things they spent it for.
The #1 difference between a person who is well off and one who is not, is not income. It's spending habits.
Hm.. (Score:5, Insightful)
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Companies are a shell, a paper construct created to allow people to work together; hopefully more efficiently than they would working alone. The laborer employee is able to concentrate on working without having to waste time on stuff outside his field of expertise, like how to calculate payroll taxes and send the payment electronically to the IRS every month. The manager employee directs the output of the workers s
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How come people say that we need companies to make a profit so that they are encouraged to grow and do things, and that without the profit there is a lack of motivation to enter that endeavor. Yet when the common worker has raises and bonuses taken away, and is negotiated down to the minimum rate, they are expected to work their hardest or they are considered lazy.
Total income in the US is about equal to GDP. Total value of all publicly traded companies in the US is about equal to GDP. Total earnings (profits) of all those companies is currently about 4% of their value, though sometimes it reaches 10%.
80% labor, 20% capital seems like a reasonable arrangement to me. It's usually less than that for the owners in the US, except for the rare successful small business.
And most CEOs and small business owners work very long hours - it's not like they get to be lazy eith
I find myself curious... (Score:5, Interesting)
My wife gets paid every two weeks, so two months of every year she gets three paychecks instead of the usual two. So a 50% uptick in income two months of every year.
A weekly paycheck means that four months of the year you'll get five checks instead of four. Note that that frequency conveniently maps to a 25% uptick in income four months of every year without any instability at all.
Not going to bother running even preliminary numbers for a household with two jobs, one paid weekly, one biweekly, but I expect that most of the income instability they saw could be accounted for that way.
Caveat: I'm not trying to imply that all the income instability was illusory, but it's certainly possible that a good chunk of it was an illusion produced by monthly spending and weekly/biweekly income....
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I'm salary, I get the same amount every paycheck regardless if I work an extra 10 hours one week. My brother-in-law owns a lawn care company, 3 months out of the year his employees are technically unemployed since they are hourly. I'd say most hourly workers in the country will have varied income.
What most people don't seem to get (Score:5, Insightful)
What this means is that unless you're racking up debt (loans, credit cards), you have to live within your means. The average rate of money coming in (income) has to equal the average rate of money going out (expenses). And (this is the crucial part) that requirement is the same whether you have zero savings or a million dollars saved. In other words, the person with a million dollars saved up has to live by the same constraints as someone living paycheck to paycheck. This realization struck me when I was counseling a co-worker who was having financial difficulty, and when we went over the numbers I realized she made just as much money as I did. Except instead of saving 20% of it like I was (both for retirement and as a buffer against unforeseen expenses or loss of income), she was blowing it all on toys and going out.
If you're living paycheck-to-paycheck and aren't accumulating debt, you''re already following the first rule of personal finance management - limit your spending to equal your income. All you have to do is lower your expenses slightly and you'll start accumulating savings. That savings will act as a buffer, evening out the dips and spikes TFA describes so that they don't turn into a financial emergency.
The person with a large savings account isn't necessarily better off than you because they make more money than you. They're better off because having a savings buffer frees them from having to waste time (and pulling their hair out) dealing with spot shortfalls in income or spikes in expenses. Instead of having to pay the electric bill at the last minute because you haven't gotten paid yet, you can just pay it whenever. It all adds up to exactly the same amount of income and expenses at the end of the year regardless of which way you do it. Just the paycheck-to-paycheck way is a lot more frenetic and nerve-wracking, while with a savings buffer you can just pay it, and go on doing things you enjoy instead of worrying. The savings way may even be cheaper as you won't be hit by late fees and penalties.
I realize many of you already know this. But in my experience talking with friends and co-workers, the majority of them live the paycheck-to-paycheck way. Many of them don't even track their spending - they deposit their paycheck, then spend money until the ATM tells them they have none left. This country really needs to make basic finance management a required course in high school. If you do use the ATM method, open up a free savings account. After depositing your paycheck, take, say, 5% of the amout you just deposited and transfer it into the savings account. Over time, gradually increase the percentage to 10%, 15%, and hopefully 20%. Make ATM withdrawls only from the checking account. If an emergency occurs, you can transfer some money from savings to checking to tide you over. No, your friends asking you to go to a concert with them does not constitute an emergency. But if an item you were saving up to buy next month goes on sale this month, then yes you can tap into your savings to get it now. Just be sure that you "pay back" any money you "borrowed" from yourself for the item on sale or for the emergency, by increasing the percentage you put into the savings account until you've caught back up to where it would've been without the "loan" to yourself.
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This country really needs to make basic finance management a required course in high school
That's the easy part. The hard part is actually doing it.
Don't worry! No inflation! (Score:2)
Need to Go Deeper (Score:3)
Re: How does this relate to Windows 10? (Score:5, Funny)
The part were they track everything you do.
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Paying for a Win10 license will cause a period of financial vulnerability all by itself.
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I can understand a poorer household having variable income if working hourly, but I don't understand fluctuations of that size on a household with a real job, that gets paid salary....?
The summary just says full time, not salaried. You could be a full-time hourly worker, which could lead to reduced monthly income if enough days are missed from work.
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Major dip every year in December. Xmas shopping, annual fees on certain accounts. Secondary dip in june - bi-annual insurance bill.
Tertiary dips in odd months as various home or health maintenance services have to be paid for.
Random dips - the fridge or water heater dies, cat gets run over and rushed to vet. Bart needs a ton of expensive sports equipment. Little Maggie catches pneumonia (or did you really think that US insurance plans keep you from having to hit your wallet even when they'll - eventually (h
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There are lots of "real job"s that pay a wage and not a salary and that have bursts of overtime.
There are lots of jobs that pay and a salary and have bonuses. There are lots of real jobs with a commission component.
Lots of people pay too much in withholding taxes so there's a month with an increase in "income" when they get their tax refund if they just counted money arriving in the bank account.
Re:News for nerds huh? (Score:5, Informative)
Very few people bother to account for this stuff despite the fact that there are no secrets here. Americans are encouraged to spend like there's no tomorrow and many of them do just that. They refuse to save. They push themselves so they have no margins and then inevitably they have problems. This even goes for people who make six figures in flyover states.
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Americans are encouraged to spend like there's no tomorrow and many of them do just that.
More than almost any other country, America taxes income far more than consumption, encouraging people to be less productive and spend more. In the years before the 2007 financial crisis, the federal government set out to "help" poor people, not by helping them earn more, not by helping them save more, but by helping them to borrow more.
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True, all state and federal taxes should only apply to wealth in excess of the per capita domestic median. Producing is good for the national economy, spending is good for the national economy, building and hoarding excess wealth is not and 60% of our national economic output goes into that bucket.
Taxing consumption alone is a big free pass for wealth hoarders. Show me anyone in the top 0.1% by wealth and I'll show you some
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Manufacturing is typically steady work. On the other hand, skilled trades can have peak and low seasons depending on the trade and your location.
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On the other hand, skilled trades can have peak and low seasons depending on the trade and your location.
When my brother started his landscaping design business, he always thought the summers would be his busiest times. Most years he had no work in the summer, but he was quite busy for the rest of the year. Took him a few years to adjust to that.
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The US's bi-weekly pay cycle was one of the things that surprised me most when I first moved here. In Europe, monthly pay cycles are the norm, meaning that you can neatly line up getting paid on the 1st, rent coming out on the 2nd, and bills getting paid on the 3rd, rather than constantly juggling "which pay packet does rent/mortgage need to come out of this time?"
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If the distribution of paychecks vs expenses is a problem, you're not saving enough. Put a few months worth of paychecks in a savings account, and you don't need to juggle after that.
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I mean sure - for me, that's fine. For the average American, the idea of "putting a few months worth of pay checks into savings" is just ludicrous. It would take them several years to be able to save that much, since everything has to be spent on the basic necessities of food, shelter, clothes and bills.
Re:News for nerds huh? (Score:4, Interesting)
This is exactly it I'm sure. Even as a salaried employee I see quite a bit of variability.
As a ploy to pay me less, my employer moved a large portion of my regular pay to a "performance bonus" that is payed out once a year, contingent on the company meeting specific metrics (which it conveniently never does, no matter how successful).
That bonus is a big spike once a year that roughly triples one of my paycheques (though the official math says it should more than quadruple it)
Additionally, in my country, employment insurance, and the government pension plan are deducted from paycheques, but have a cap that I hit about 3/4 of the way through the year, after the cap is reached, my paycheque goes up by the amount of the deductions (roughly 15-20% increase)
I'm not sure how they calculated the twice yearly 3 paycheque months, but most people are paid bi-weekly, rather than monthly, so that adds variability to each month as well.
Now all of that is just for a salaried employee. They quoted "full time", not "salary", a full time hourly employee is likely to have overtime pay that varies by a large margin depending on various factors. There are also specific industries that have different variabilities (for example teachers often don't get paycheques during the summer break, but the pay they would have gotten then is spread out over the rest of the year instead. Nurses, police, and paramedics are often paid shift premiums for night time or weekend shifts, and don't work the same number of those on any given paycheue, sales people often get a commission on top of their base pay, serving staff, hair stylists, and taxi drivers often have tips). Additionally some companies don't pay vacation time, but instead top up the rest of the paycheques by an equivalent amount and then give the vacation time as unpaid.
There are all sorts of ways that full time employees end up with variable salaries.
"We Tracked" Who Did? Slashdot? (Score:2)
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actually no. This is a slashvertisment plain and simple.
I really tried to read the article because I can relate to the premise in the article, but really the article is a infomercial to purchase the book about the study.
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Some of us do have girlfriends and even wives that somehow put up with us. I think that the big paychecks from our tech jobs help with that.
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I'm pretty sure that a three-paycheck month would tend to be about (3/2) - 1 = 50% higher pay than a two-paycheck month, give or take things like health insurance that don't get deducted from the "extra" paycheck. Since that applies to two out of twelve months (1/6), the other ten months are (1/6) * 50% = 8.3% below average just because of that.
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Most people also get a week or two of vacation around the winter holidays, but it's rare for it to be a paid vacation.
Really? That doesn't fit my definition of a vacation. At every job I've held I've been paid for any days that I was prohibited from working due to company holiday policy. I'd be pissed as hell if I was forced to take unpaid time off. Where are you working that you're being forced to take unpaid holidays?
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I was a contractor for an auto company for around a decade. They have lots of company holidays that my contracting firm (auto companies don't deal with independent contractors) didn't. Unpaid forced vacation.
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Depends on the company. Around here there are 2 ways to handle vacation, one is to pay you normally while you are on vacation, but the other way is that all your other paychues are topped up by a certain percentage to be equivalent, and then you take the time off "unpaid" (it was actually paid, just not during the time you're off)
Both are perfectly legal, and the end dollar result is the same, but for people who aren't good at budgeting they can have very different effects on their lives.
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That tripe? I know people much poorer than you that blow their money in stupid ways and go out of their way to make the worst financial decisions possible. Oddly enough they even manage to deal with the odd hiccup too. They aren't nearly so much in need of your pity than you might think.
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Out of how many people the sample is taken out of doesn't matter.
What matters is the sample size relative to the effect, and proper selection.
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