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We Tracked Every Dollar 235 US Households Spent for a Year, and Found Widespread Financial Vulnerability (hbr.org)
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.
But why is it on Slashdot?
Now, if you'll excuse me, I have backups to corrupt.
The part were they track everything you do.
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....?
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
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.
I get paid twice a month (not twice a week). My paycheck period can vary from nine to 12 days, depending on the calendar layout. My monthly budget is set for two 10-day periods. If my paycheck has an extra day or two, the money goes into savings. If my paycheck was short a day, the money comes out of short-term savings.
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.
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
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.
Do not look into laser with remaining eye.
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.
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
fair point if that's not accounted for in their calculations, but if those 2 months are high enough to be 25+% above their average income, what about the 3 months (on average) where they are 25+% below their average income? There's more to it than just 2 months of extra paycheck, assuming the extra paycheck is even driving the study's results in the first place.
When all of your wishes have been granted, many of your dreams will be destroyed - Marilyn Manson
There is no rhyme nor reason to the headline, presumably just cut and pasted from the original article (likely on a site where the "we" made sense). The first sense after the headline is incomprehensible. Forget the fact the whole thing has nothing to do with the theme of the site. Everyday, it's a drip-drip-drip into complete irrelevance, like a slow-motion train wreck...
Income variance is good because it encourages people to live in a smaller house, have less recurring expenses, and then it sometimes feels like "yay, I have more money." Well, that is, if they're not an idiot. Then they'd probably just overspend based on the high number and go into debt.
I presume a calculator or spreadsheet was involved at some point. Maybe even pencil and paper for retro hand calculations.
No kidding. Seriously though, the more interesting thing to find is WHY families don't do budgets. Because families barely make enough to pay for basic needs. The +/- $30 they could be saving after their basic needs doesn't amount to any real value. Stock market will just crash and take it all anyway. Might as well enjoy it while they have it.
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. I'm seeing apps that say they'll do it. But fact is we make about 20% less than the boomers did. That's why we're struggling.
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...
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Not the best sample size to draw real conclusions.
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.
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.
"We receive as friendly that which agrees with, we resist with dislike that which opposes us" - Faraday
Easy. Things like property taxes. My school tax is $2500 in October, my property tax is $3000 in February. Every year they become due. If I don't save up enough, in order to pay, I've got to cut back in those months. Christmas - an extra $500 for gifts to kids, friends, family. Medical bills - even with insurance, a $500 bill here and there.. Dentists - extra money not accounted for... Car tire gets a flat, Gas and electric bills are $200 in the winter, $50 in the summer. There are fluctuations all over the place.
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.
A Pirate and a Puritan look the same on a balance sheet.
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.
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.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
Manufacturing is typically steady work. On the other hand, skilled trades can have peak and low seasons depending on the trade and your location.
A Pirate and a Puritan look the same on a balance sheet.
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?
He's getting rather old, but he's a good mouse.
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).
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
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.
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
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.
A Pirate and a Puritan look the same on a balance sheet.
Of course his point flew right over your head and that's really the point here.
A Pirate and a Puritan look the same on a balance sheet.
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....
"I do not agree with what you say, but I will defend to the death your right to say it"
Is that income is a rate. Savings is an amount. More precisely, your savings (or checking) account balance is simply the integral of your income minus your expenses. (Or if you prefer, (income - expenses) is the first derivative of your account balance.)
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.
2 of the spikes are likely 3 paycheck months.
then maybe 1 for taxes, and maybe a bonus.
note: I didn't read the article, but that's 4 spikes that I'd expect are not so uncommon right there.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
Poor people hate money. When they get a little extra money they have to get rid of it as soon as possible. I see this at work all the time. Sometimes we get a $500 bonus for a job we completed. The guys that are constantly broke will waste every dollar of that money in two or three days. They simply can not stand to have any money.
Those are expenses, not income.
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
Tax Refund, and a Bonus.
And a 3rd pay period is pretty much exactly 50%
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
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.
Ah yes... The tax on foolishness, usually sold by saying it will support education.... Only the government can get away with that kind of logic...
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
Exactly. The basics where cheaper, much cheaper. Luxury was more expensive, but it was not expected. Nowadays, internet, smartphone etc is all expected.
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.
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?"
Wages are stagnant, but we have no inflation, so no worries! Oh yeah, groceries have really gone up in price, but they don't count! Gas is lower than it was four years ago, but that was a historical high, and the current price is still high, but not record high, so that's ok!
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.
$2500 in October = $210/month savings account
$3000 in February = $250 in another savings account
$100/month emergency fund
Budget
Look at the optimist over here talkin' like there will be a tomorrow.
the growth in cynicism and rebellion has not been without cause
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 align.
When you see that your spending a lot on shit you don't actually value, and really conserving on the thing you like the most, life gets better. Sometimes couples will discover that they each are prioritizing something because they though the other one liked it, but neither actually does.
Anyhow, that's the point of a budget - discover where you're spending a lot on stuff you don't care about, and where stuff you really like is actually quite cheap.
Socialism: a lie told by totalitarians and believed by fools.
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.
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.
Most people figured out that they have an "extra" paycheck, spend it on all kinds of foolishness and then wonder why their finances are out of whack.
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.
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.
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 scrap of caselaw that could weigh in the client's favor.
Do not look into laser with remaining eye.
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.
Paying for a Win10 license will cause a period of financial vulnerability all by itself.
"When information is power, privacy is freedom" - Jah-Wren Ryel
I guess I spoke too quickly - I've seen a similar situation. We were contractors working on LANL property. When the LANL employees got holidays that we didn't, our employees were unable to work and burned vacation hours for the day. They weren't "prohibited from working due to company holiday policy", but they were prohibited from working due to another company's policy. I'd still be upset if it was my company declaring the holiday and not paying me for it, but for I guess it's different for hourly employees whose employers close for the day. Apparently I'm spoiled. I have worked hourly jobs that provided paid vacation days, the exception being a convenience store that never closed. I also worked as a calc tutor for a university center that wouldn't pay hours on holidays, but I wouldn't really classify that as a "real job". Still not sure I agree with GP's assertion that paid winter holidays are "rare", although week-long stretches probably are. I got Dec 22 & 25 this year. Personally, I wouldn't call forced unpaid time off "vacation".
He's getting rather old, but he's a good mouse.
Yeah, that's the obvious one. If two income earners are on different pay schedules, that could easily be 4 months per year. Throw in maybe an annual bonus, and you've got 5 spikes explained pretty easily. Now dips, I don't know.
The Quirkz Handbook of Self-Improvement for People Who Are Already Pretty Okay
Oh yes, woe is you.... You've been mistreated and it's NEVER been this bad before...
Come on, everybody wants to make more money (well, almost everybody) and there is always someone who makes more than you.... I've learned that the trick to being comfortable is to live within your means. If you find yourself not able to make ends meet, you have gone beyond your means. If you find your debt load is increasing faster than your ability to service it, you are spending too much. Most don't want to admit it, but the temptation to over spend is hard to resist, but it is easy to recognize when it's happening. If you cannot stop spending when it's obvious you should, you are killing your future..
Ideally one should not be in debt for anything but *real* property and NEVER should you owe more than what the property is worth if you can help it. No credit cards that are not paid off monthly, no upside down car loans, no unsecured loans of any kind. Plus, one should always have 3-6 months of salary in reserve. One should also be putting a significant percentage into savings (retirement and investments).
Don't think this is possible at your pay? Unless you are literally making minimum wage (and few of us actually are) the Ideal situation I'm describing IS possible. The issue usually is that younger adults somehow think that they need to live at the same standard of living as Mom and Dad, with all the things they had. I've seen many young adults fall victim to the "buy now and pay later" "You can have it now!" before they have enough experience to earn enough money to actually pay for that luxury stuff. They dig a hole of debt and keep shoveling faster and faster only to realize that they can no longer get the dirt out of the hole because it's too deep.
Earn your way up, don't spend money you don't have on stuff you can live without. DON'T go into debt but DO save. I know it isn't easy to overcome the temptation to just spend, but if you do, you will have a better life with less stress and financial mess. In the end, it's not who dies with the most toys, but how well you have lived. Living well includes living within your means.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
The authors of TFA did something. Learn. To. Copyedit.
For starters, a regular Mon-Fri job has as few as 20 and as many as 23 work days in a month, with an average of about 21.7 days per month. So February would represent almost an 8% dip, even with nothing else going on.
Then, if you get paid time-and-a-half for overtime, average 5 hours OT a week, but overtime varies from 0 hours to 10 hours per week, a month without overtime would be a 15% dip from average.
Then, especially for lower paying jobs, there's unpaid time off, varying work schedules, etc.
Still hard to see that happening 5 months a year .
It's not missing work that causes the dips, it's the uncertainty of overtime pay that causes the issues. There's a pretty common problem among non-exempt hourly employees where they plan their finances around the assumption of having the overtime pay because the company aims for 50 hours a week per employee. They don't plan under the assumption that they will can get 40 hours a week. If you get knocked from 50 to 40 hours a week then your pay checks at 40 hours are about 70% of the size of your paycheck at 50 hours.
"Lack of speed can be overcome. In the worst case by patience." --Znork
I refuse to work on salary that's just a way for a company to get an indentured servant... my pay fluctuates I work 40 hours a week a few months of the year 8AM to 5PM Monday through Friday but work overtime most of the year and average around 45 hours a week. $50k a year is roughly $24/hr at 40 hours a week but if you average around 45 hours a week that's a difference of about $9k/yr.
err, sorry to break it to you. But you seem to be confusing expenses with income. The survey found income spiked or dipped by more than 25% from mean.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
The answer is pretty simple. It's overtime and these individuals consider the overtime hours as normal pay because the business normally operates on 50 hour weeks and drops to 40 hour weeks when work slows.
Let's say you work 4 weeks at 50 hours (effective 55 for pay) and 4 weeks for 40 hours (effective 40 for pay). Your average pay is going to be equivalent to 47.5 hours of pay. The month you work over time you're at 115% of average.
The financial insecurity comes from families budgeting around the "normal" 50hr work week instead of the 40hr work week or even just the average hours per week.
"Lack of speed can be overcome. In the worst case by patience." --Znork
Increases would be the classic 3 pay periods (some months), also bonuses (performance, commission, etc...) Dips would be additional deductions are taken out, performance penalties, etc... and other variances..
In short, there are always dips.. we (from a budget stance) tend to average it out.. but there are months that are boons and some that are banes.. and the point of the article is a 25% negative swing, when you are the bottom is VERY painful... and can exacerbate the problem.. (money drops, you need additional money to pay home expenses, you take out short term loans to address it.. at higher than average rates.. this, in turn causes more burden.. and lowers the average number even more.
God made the Idiot for practice, and then He made the School Board -- Mark Twain Look for http://Thebar.steelbeachca
I'm not totally against going to lunch with co-workers, I do so occasionally.
However going out to eat every day is a huge expense over time compared to eating leftovers.
A financially prudent person can easily save a ton by simply not going out to eat very often...
Another strong factor is that I am a consultant paid by the hour, so taking an hour and a half off for lunch is like going to a fine french restaurant even if we are just going to Good Times (for those not in the U.S, the times are not as good there as the name may imply. It's basically McDonalds with better fries [chips]).
It does sound like your co-workers are not avoiding eating out by choice though, which is sad and disturbing.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
If you get 26 paychecks a year, sometimes 27, you will see two or three months where your income is +50% of what it normally is. If you have two incomes on a Biweekly payroll, you could see up to five months in a year with such a spike, or depending on how you look at it, 7 months with a dip.
Also, bonuses, commissions, and other incentive pay often cause big fluctuations in earnings even though the DC component is not just sufficient but also prevalent.
Ebbs and flows sounds a lot like stock market manipulation. And households nowadays follows the market volatility (VIX).
Considering markets are manipulated, push the people to the markets and you've now got indirect control by following the ebbs and flows.
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.
I know people much poorer than you that blow their money in stupid ways
This is completely anecdotal, but shortly after Hurricane Katrina hit and people started getting their FEMA money, the jewelry shops here in Louisiana were bombarded with orders for gold teeth.
People on this site seem to be under the delusion that only rich 1%'s do this. They just can't grasp that someone at the bottom 1% can be just as greedy as Mr. Burns.
If you post as Anonymous Coward, don't expect a reply.
Instability of income and expenses aren't problems in and of themselves. Think of CEOs who get irregular (but giant) paydays from things like exercising stock options, or highly successful trial lawyers who win a big contingency case. There is only an issue if insufficient savings cause a mismatch between the timing of income and expense, or there is insufficient access to cost-effective credit to smooth the mismatch through borrowing. The linked article mentions that the study did look at how to resolve those issues, but the linked material doesn't really provide any meaningful discussion.
I like telling sports guys, the ones who can rattle off who got the most hits in the 1912 World Series without blinking an eye, what complete nerds they are. Same with car dudes.
Congrats! Most people see being salaried as being more secure within the company, but you're absolutely right it just means they get to work you for more hours with less compensation. Unless you're getting stock or some other kind of compensation not available to the hourly workers that overtime pay wouldn't match.
In fairness, borrowing more to spend, ie floating credit, does more to get the economy moving than saving that money. The government's goal was to spur the economy, and it worked.
Too much saving can have serious effects on your economy, which means less job growth and high unemployment. Although I do believe most Americans simply can't afford to save.
That definition has some problems, it would include people who are just culture fans (a serious problem now that geek/nerd culture is mainstream and adopted by many muggles)
For Nerds:
1. An obsessive interest in a complex topic involving STEM or any topic through a STEM lens.
2. No GF
3. High intelligence
4. Lack of social skills relative to Geeks
5. Ability to memorize and apply complex information and procedures.
6. Thorough and analytical relative to geeks.
7. Tend to value formal education
8. Read and research the best instructions on everything they touch.
For Geeks the list becomes:
1. An obsessive interest in a narrow topic of the moment
2. High Intelligence
3. Highly Creative relative to geeks
4. Ability to look up, adapt, and apply or throw away complex information and procedures.
5. Like taking things apart.
6. Put not bias on education type but will have engaged in endless self study.
7. Figure out everything they can about something independent of what anyone else says or instructions.
Everyone else is some kind of muggle. The trickiest muggles are what I call decoys, because geek/nerd culture has become mainstream these people have obsessed over it and infiltrated geek and nerd culture. But they won't have lab gear for making jello shots, they won't have a standard rack loaded with gear in their home, they'll love microsoft/apple gear. The upside to all this is that this mainstream decoy culture is more accepting of geeks/nerds than previous incarnations of mainstream culture and gives them more superficial common interests with females which they consider important in early stages of assessing compatibility.
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 (hopefully) - pay for it?
Some of these can be factored in and budgeted by those rare people who have their financial act together. Some come out of the blue. No such thing as an "average" month's expenses, just averaging expenses over the months and hoping that you don't get that back-breaking surprise.
"3. Highly Creative relative to geeks"
3. Relative to nerds. I know what drove you nerds crazy.
Property tax is an expense, not an income. The study and the OP is specifically referring to income variablility.
"More than almost any other country, America taxes income far more than consumption"
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 someone who costs more and contributes less than a homeless man who just doesn't want to work and exploits every welfare program we have with deliberate fraud.
A job with overtime can spike that much for a period of months and then dip when the busy time passes. Months also are not four weeks long. Being paid bi-weekly instead of twice a month can result in periodic changes in income. Getting paid twice a month in turn would mean getting paid only twice in a five week month.
Tax return season and bonus time can result in spikes. Selling an investment is another example.
Most people outside the top 0.1% spend most of what they make so a prolonged spike means feeling comfortable to trim margins which are no longer there when that spike goes away.
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.
Just knowing where the money is going can help a lot because you then will have that in mind whenever you're spending money. Years ago I analyzed my spending for the previous 6 months and realized I was eating a significant chunk of my paycheck by going out for lunch everyday. So I started packing leftovers for lunch 4/5 days a week and started saving $200 a month on that alone. I was still spending money for food to eat but the cost for food you prepare yourself is a small fraction of what you pay for even cheap food from a chain restaurant.
Who "encourages" these hapless Americans? And why do these Americans listen rather than choosing more responsible behaviors?
I think you're mixing expenses and income. There are absolutely intermittent annual expenses, and they'll definitely make a mess of cashflow or savings, but none of those would affect how much is coming in, which I think is what this is talking about.
The Quirkz Handbook of Self-Improvement for People Who Are Already Pretty Okay
exactly. the study indicates a typical subject has 5 non-average months. If 2 months are above-average due to extra paycheques and the regular months aren't skewed lower by those 2 months, then some other factor(s) affects average salary (for better or worse) even more significantly than an "extra" paycheque. that's two of the points they're trying to make: people have hard time budgeting for these variances and those most affected tend to be double-whammied by having fewest options/resources to compensate
When all of your wishes have been granted, many of your dreams will be destroyed - Marilyn Manson
What I don't understand is where people even find the time to buy things. Accounting for traffic, a trip to Walmart is 40 minutes minimum. It's time that could be spent working, cooking or sleeping.
I like telling sports guys, the ones who can rattle off who got the most hits in the 1912 World Series without blinking an eye, what complete nerds they are. Same with car dudes.
Nope. Girls find these guys attractive, so they don't qualify.
Those examples are spikes in expenditures though, not dips in spending. None of those explain why cash in would be below average,
Marketers, mostly. Also, sadly, their peers. The market system in the US relies on people spending quickly. There is advertising everywhere, and cultural norms drive people to 'keep up with the Joneses'. Problematically, people in the bottom of the socio-economic spectrum do not learn good money habits in their youth because their parents do not have good habits. People tend to repeat behaviors they see modeled. You would not believe some of the stupid money pronouncements I have heard from poor people (I am poor myself, and grew up poorer). They just don't know any better. I believe this is a big source of the tendency fro the poor to get poorer while the rich get richer.
There better be a tomorrow, I can only get so much out of this ATM in one day!
-- I have a private email server in my basement.
Too bad schools are also useless beyond learning to read. They could teach some money management or really anything. But it's easier not to, so it doesn't happen.
Ya know Bill, the tax rate has never caused me to be less productive. Spend more, maybe once. It was on a house when we found ourselves paying $48k in Federal taxes and that was so we could have some deduction. Fortunately (this was in the dotcom boom in Seattle, no, the first one.) we had a shitload of savings since our rent was only $600/mo for a townhouse. Bought a home (30% down, fixed rate) in the same neighborhood for $212k and sold it 5 years later for $375k. Then bought a fixer on the rez overlooking the sound for $55k with a 30 year lease at $560/mo (6 years prepaid with the home.) I'll have to move when I'm 67 but by then I'll be tired of 2300 sqft and looking for something without a big yard.
But I agree, I saw a lot of folks not understand why the adjustable rate mortgage payments went through the roof and they had to sell underwater or get foreclosed. Don't people read and re-read before signing a six figure document?
-- I have a private email server in my basement.
I believe this is a big source of the tendency fro the poor to get poorer while the rich get richer.
A source, for sure, but the system is rigged against them. They don't have access to emergency money without agreeing to very bad terms, or very bad terms for just about anything that involves credit.
As the wise man Jesus said, "The poor will always be with us." But that doesn't mean we need to monetize them. (Looking at you check cashing joints and used car dealers.)
-- I have a private email server in my basement.
Amazon for the win!
(Now I just need to order the box crusher from Amazon for all this cardboard in my house. FFS, I bought a queen size bed and mattress and had it delivered. My mail man hates me.)
-- I have a private email server in my basement.
they'll love microsoft/apple gear.
I actually love my Microsoft Sculpt keyboard. The iPhone7 that the company gave me is nice too, but I don't love it.
Side bitch on keyboards: Fuck you Dell. I grabbed a stock Dell keyboard (total crap) from the stockroom to setup dhcpd on a FreeBSD box for our wifi network for testing. The son of a bitch fucking lame assed Dell keyboard did not have a scroll lock key! I couldn't scroll back on the console to see what error dhcpd was kicking out. I had to tail -n50 /var/log/messages | less to see the issue. (typo in dhcpd.conf)
And no, I don't have a standard rack in this house, the last one, yes, but not this one. I have a "refreshed" HP Z820 workstation with 32 cores, 72GB RAM, and 4x5TB drives in RAID running ESXi VMware. That's how you do a rack these days.
Anyway, there are a lot of fake geeks out there. The price of our fame and earning potential. As long as they keep buying the drinks.
-- I have a private email server in my basement.
I'm doing better than most of them (not by much).
We're all good and screwed except a few rich asshats. The last gen didn't "Earn their way up". They had massive socialist programs. College, welfare, higher minimum wage, etc. There's a name for what they're doing: Pulling the ladder up behind you
And did you even read my post? The problem is you can't save what you don't have. Shit happens and it takes money to put out fires.
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True. I think of cash flow in both directions, myself.
On the income side, poorer households are more likely to see frequent job shifts, add a temporary second (or third) job, pick up overtime pay or be docked (you've probably got fewer options when you unexpectedly have to take care of a sick family member as an example).
Middle-class people are more likely to hold longer-term and salaried jobs, but there are still bonuses and windfalls. I knew a company where quarterly profit-sharing checks were a significant (and not totally predictable) part of many people's incomes. Dividend checks may count as "found" cash, and rebates coming out of class-action suits on everything from overcharges at the Apple store to washing-machine recalls. Medical overcharges refunded when insurance kicks in or billing mistakes were corrected. The rebate from buying a major appliance might not seem like "real" income, but it's usually far enough away in time that the pre-rebate price had to be factored into the budget (and you don't always actually get the rebate).
Even a bi-weekly paycheck in a month with 5 weeks can be manna from Heaven.
This is easily dealt with if you can budget to live off of the 2 check/month amounts. Then, when you get 3 checks, put the extra check aside...invest them somewhere.
Just another day in Paradise
The US taxes income more than consumption because income is distributed more "inequally" than consumption. It's part of what makes US taxes the most progressive in the world. Are progressive income taxes a bad thing now?
Somebody tried to explain credit-points in the US to me once. Not sure I got it. What I understood was that the more credit you have, the better it was to get more credit. That till you can get any credit anymore.
In Belgium this works differently. Every credit and loan is mentioned at the National Bank of Belgium (NBB) and every creditor has to look there. It will mention the amount of the loan and the maximum to be paid back amount.
So if you have a loan where you will pay 500EUR, the credit company or bank will see that. If you have a card where, IF you used it completely will pay 200EUR minimal per month, you will see that, regardless of the amount that is actually used.
So if you want a credit card or a loan or similar, they will do the following:
1) Ask for your ID and they will verify that the ID is not stolen (Data is public available to check if the ID is stolen or not. ID is obligatory for people older than 12)
2) Ask for your last few payslips. 2-3 last months is standard. Payments are done per month in Belgium for most.
3) Verify what you have at the National Bank.
4) Take your income, deduct the amount from the bak, what you pay in rent (if any) some extra cost for living and see if it is still possible to give a credit and for how much.
If they give a credit to people who should not get one, the credit company is on its own and it often happens that they do not get any money back. They can ask, but have no legal way to push people to pay.
If people are not paying one loan, they will get on the blacklist. No other credit then, regardless of how much money you earn or have.
So in a way, the credit companies already to a basic check on your income and expenses and will not over credit, because they will pay if they do.
So the more credit you have, the less likely it will be possible to get a credit.
Don't fight for your country, if your country does not fight for you.
If you have months with a higher income due to "extra" paycheck that raises your average monthly income to higher than your normal monthly income, making every month below. A month with a tax return or money from any other source like a bonus does the same again. For those who get paid twice a month rather than bi-weekly there can huge dips because of five week months although this side is more income vs expenses.
But there are plenty of things. Now that everyone has $5000 deductibles for their poor insurance there is often an up front heavy loading period to top off an HSA.
Also, in tech most "employees" are no longer exempt unless they are programmers or actual managers with direct reports. Meaning salary is salary + overtime. Because of this most tech "employees" are now contractors who get paid hourly and get no paid time off. This cases huge dips in income when life events happen and vacation is taken.
In tech most people have to work on contract now. No paid time off and you don't really make more.
The lack of access to stable, predictable cash flows is the hard-to-see source of much of today's economic insecurity.
So Economic Insecurity is Positively Correlated to Economic Insecurity?
Troll is not a replacement for I disagree.
I've never been offered stock but I still get bonuses for coming in on budget or ahead of deadlines. I've been offered salary positions before, I just counter with the equivalent hourly and they have never said no.
"Real job", hmmm, biased much?
Certainly true.
If only the majority of people had more disposable income instead of that money being funneled primarily to people who couldn't spend all of the money they make if they tried, can you imagine just how well the economy would run?
"In America, first you get the sugar, then you get the power, then you get the women..." -H. Simpson
"No one "loves" Microsoft anything. It's just what they use at work so it's all they know."
There are certainly people who profess a love of MS solutions but I could see an argument that the reason they do so is because it's what they know and they are afraid to be the n00b to learn something different and better and/or are trying to mask their failure to figure out something with a steeper learning curve.
Other fair exceptions to my lists are people who switched to MacOS as a desktop solution when Apple slapped their GUI on top of BSD because it gave them a solid unix system with a polished interface with a broader support for consumer peripherals/games/etc. While I disagree with that call it was a fair and logical viewpoint that had a certain level of merit but also arguably isn't actually loving Apple. Similarly a decision to run windows on your desktop because it has the best marketshare, can easily make use of network file/print resources, and you are too busy hacking things that are actually a challenge to smack your head against the same sort of Linux on the desktop type issues you matched wits with years ago isn't actually loving MS. Also Microsoft hardware and PC games are really a different beast from everything else MS.
But there are a few nerds/geeks who love windows/apple. As long as windows is the market leader I could see some nerds never moving on. Geeks might start there because it is what is nearby but their adventures are going to start moving them into other spaces... I mean seriously, how long can any geek in modern times go before doing something with a raspberry pi.
Geeks and nerds people who have a driving and obsessive love of accumulating knowledge and learning as an innate personality feature. They also have the capacity to do so but it could be argued that anyone who developed such a love would develop that capacity. Geeks are experience oriented learners and nerds are study oriented learners.
There is of course a certain amount of crossover. Given a course a widget with a presentation and labs both would learn base information from the presentation but the nerd would likely get more and take notes while the geek would retain the slide-deck somewhere for the links to reference docs. Then the lab portion the nerd would be focused on reinforcing memory through repetition with the assumption that the material should tell them everything they need to know assuming they take all classes. A geek might start with a lab scenario, maybe even do it, and then hypothesis everything he/she can from the information and test those hypothesis in a scientific method like approach with variations and self-invented labs.
Learning more and more about the world lends itself to appreciating science-fiction and fantasy and all the culture that has popped up around that but there are definitely geeks and nerds that have evolved immersed in a different sort of environment, perhaps surrounded by dude-bros that have more dude-bro like culture and mannerisms. Both geeks and nerds almost universally have characteristics somewhere on the autism scale so they are largely emulating culture and mannerisms in an attempt to best camouflage themselves and hide among those around them. Persisted long enough some of that might be even actually become part of who they are.
If you find a group of people who are obsessed with ghostbusters for instance, secretly under the hood you might discover it isn't really about ghostbusters but about other people flying a flag proclaiming openly that they too are weird so there is no judgement here... ghostbusters is just the rallying cry and something to talk about for people who can't do small talk and maybe even do fun stuff for kids while being weird together. Nothing is more isolating and makes you feel more weird than being intelligent, loving learning, and seeing what everyone else finds interesting to be boring and simplistic while there is a world full of interesting things and when you spot them and point them out everyone's eyes glaze over. Do you need to be a geek/nerd to be a ghostbuster? Of course not and geeks/nerds are the last people who are going to reject someone because they are different than them but the recent popularity of geek culture has lead to more and more people who aren't geeks/nerds to come because they doing these things is no longer considered so weird and it becomes less and less true that you can look at an unpaid adult wearing a ghostbuster costume and assume it is a fellow geek/nerd.
If they're much poorer, they may be in a position where savings are going to be wiped out somehow, so it may make sense to spend it while they have it, as long as they can manage to deal with the odd hiccup.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
To put a geek spin on this, it's like making sure to profile before optimizing software.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
Does community college have a tuition bubble too? If not, I was under the impression that the path was like this (source:
1. Get a job that needs a high school diploma.
2. Use that to put yourself through a 2-year community college.
3. Get a job that needs 2 years of college.
4. Use that and your transferred community college credits at an in-state college and finish your degree.
If your employer figures on a 40-hour work week, salary works very well. It leaves you open to exploitation, but if you don't actually get exploited that's not a big deal. I make lots of commitments that could blow up on me if things went really bad.
"When you have eliminated the unacceptable, whatever is left, however improbable, must be the truthiness" - Holmes
This article would be great if they actually included data from the study (which is why I clicked on the link). While interesting, the content was totally shallow and represents a missed opportunity. Boo.
Buck Herzog. It's a bit of a trick question, as Herzog played for the losing Giants, not for the winning Red Sox. A reasonable guess would be Tris Speaker, and he did tie for the Red Sox lead with 9, but in addition to Herzog, Chief Meyers and Red Murray also had more hits than Speaker, both having 10.
The dips were in earnings, not in expenses. It's obvious to everyone how there could be dips or spikes in expenses.
Nerd!