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How many of you live paycheck to paycheck?

K

Kendo

macrumors 68020
Original poster
Apr 4, 2011
2,373
978
Just as the title suggests, how many of you live paycheck to paycheck? Do you have enough in an emergency fund in case you are unemployed for 6 months?

I'm starting to hit the age where I am becoming a lot more conscious of my spending and saving habits and want to start becoming more proactive towards my future.

Does anyone have any good tips in regards to savings? I don't mean something simple like "don't buy things you can't afford" but more along the lines of what to do when you save up enough in an emergency fund, what to do with the surplus money. Throw it in a Roth IRA? Put more into 401k?
 
Right now I have my savings account set up to automatically transfer part of each paycheque. It's a good, simple way to save money without even thinking about it. I'd like to do something more useful than a savings account with it, but right now having quick access to the money is important, since I'm not actually making all that much to begin with.
 
if i were you, based on the limited info you have provided, i would:

1. max employer match % with 401k
2. 6 month emergency fund
3. max roth IRA (if you can) ... with VFIFX (depending on age, you may want a 2055 or 2060 if they exist now)

personally, i had a ton of student loans (graduated in 2007) and after setting up emergency fund, i've been paying 2k USD/mo back and they're almost gone.

so, i don't live paycheck-to-paycheck but i'm still not at zero debt, which would be nice before hitting 35.
 
Check out a program by Dave Ramsey called financial piece university. It's really good. Also a great place to start is read the total money makeover. He has a podcast as well which is in the top 10 in the business category. Check it out. It really the most common sence stuff I heard. Another great book is called Rich Dad Poor Dad by Robert kiyosaki.
 
Pretty much. Four person house on one income, yeah no six month fund. I have plenty in my 401k that would get me by if worse came to worse. Hopefully my wife will land a full time gig soon and well be fine.
 
Ca$hflow said:
Check out a program by Dave Ramsey called financial piece university. It's really good. Also a great place to start is read the total money makeover. He has a podcast as well. Check it out. It really the most common sence stuff I heard.
Click to expand...

I like his concept, however, he does go seem to go over-the-top and really beat his message into the listener. I also think his stuff makes sense on a larger scale, which he doesn't discuss.

I think if you live in a metro area and can use public transportation to/from work and you limit yourself to 25% of net salary to rental, you can easily save enough to buy stuff with cash, cars/appliances/weddings/etc...
 
boomhower said:
Pretty much. Four person house on one income, yeah no six month fund. I have plenty in my 401k that would get me by if worse came to worse. Hopefully my wife will land a full time gig soon and well be fine.
Click to expand...

401k is not to be used as an emergency fund or you will get your head taken off by taxes. 10% penalty plus your tax rate of approx 30%. Would you borrow money at 40% interest? it doesn't matter how many people in a house hold. A emergency fund can be still had. Spend less then you earn.

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acidfast7 said:
I like his concept, however, he does go seem to go over-the-top and really beat his message into the listener. I also think his stuff makes sense on a larger scale, which he doesn't discuss.

I think if you live in a metro area and can use public transportation to/from work and you limit yourself to 25% of net salary to rental, you can easily save enough to buy stuff with cash, cars/appliances/weddings/etc...
Click to expand...

I follow his program to a T and I have 2 vehicles, 25% towards mortgage and my wife stays home with the kids. It is so doable. It's tough at first but so is working out.
 
Demosthenes X said:
Right now I have my savings account set up to automatically transfer part of each paycheque. It's a good, simple way to save money without even thinking about it.
Click to expand...

I've done that for years. The first thing I did with my savings was pay cash for a new car. Not paying the interest on a loan does wonders for your bank account. Once you buy that car, you still make a monthly car payment to yourself, but it can be less than an actual payment would be if you plan to keep your car awhile. Then you can use the rest of the money you were already saving to invest.
 
Need more info to give you better advice. Do you work staff or freelance? Live at home with parents or own/rent? Have loans to pay, etc. etc. Personally, I have always lived pay check to pay check while saving up for retirement with a company matched 401k and a pension. The more we make, the more our expenses go up. Apartment at first was cheaper, then we got a house, then we had kids, then we added on to house, then we had financial setback, then we got back on track, etc etc.... Still after we pay our bills (401k included) there is nothing left until next paycheck.
 
Demosthenes X said:
Right now I have my savings account set up to automatically transfer part of each paycheque. It's a good, simple way to save money without even thinking about it. I'd like to do something more useful than a savings account with it, but right now having quick access to the money is important, since I'm not actually making all that much to begin with.
Click to expand...

I second this. Automatic paycheck deduction into your savings. For emergencies $5k is a good amount, $10k is better. This way when major items break, like a washing machine or your car, you are not stressed out and not putting it on a credit card.

Regarding another post, robbing your 401K is not a good plan to deal with the unexpected. You'd be better leaving that money alone, and avoiding the penalties for early withdrawal. Plus there is a significant penalty to the long term effect of compounding.

I would describe myself as living paycheck to paycheck in that, after the mortgage, the 401k contribution, the car loan, etc is paid, I spend (or I should say my wife spends) what is left in my paycheck. Granted this is not what the OP ment...
 
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Not paycheck to paycheck.. because I don't get paychecks. But I do live pretty much week to week on my tips. If I have a slow week in the restaurant, its not a good week :(

I've been saving $400 a month though with automatic transfers... $200 for "savings" and $200 towards a new car.
 
i actually spent yesterday evening trying to set up a budget for emergencies as well. i realized if i was really living within my means, i would have a lot less things, and go out a lot less. it really sucks doing it after not reviewing my personal finance for so long.
 
I pretty much live paycheck to paycheck.

I do sock away 10% of my salary into a 401k plan, but don't have nearly what I should have in it.

No cash set aside for contingencies, though I do have well over 10k stashed away in the form of material assists (guitars, guns, some art) that I could sell if need be for the price I paid if not more.

ugh..I really need to get my act together financially.
 
I do indeed. Rarely have anything left from the previous one when the next comes around. I always try to save at least $40 from each one, but usually all of it ends up going to something. Hours have been cut recently due to new management and a ton of new hires, but really hoping to thin the ranks soon. It sucks always worrying about a possible car repair or hospital bill, not to mention whether or not you can cover your gas and food bills. :(
 
I do. Putting myself through school working full time with a wife working two part time jobs. Barely covers all the bills. Savings? What is that?
I've got debt out the ass. At least I'm getting an engineering degree out of this.
 
RedReplicant said:
I do. Putting myself through school working full time with a wife working two part time jobs. Barely covers all the bills. Savings? What is that?
I've got debt out the ass. At least I'm getting an engineering degree out of this.
Click to expand...

Been through same thing. You will get there man. Hard work pays off.
 
I used too when I was barely above minimum page. Now that I don't work I don't live pay cheque to paycheque.
 
I agree with the Dave Ramsey thing. I listen to him everyday, he lives 30 minutes from me. He is super intelligent. The only problem I have with him is, he wants to sell everything and save which is not possible for everyone. For example, there was this couple who was in debt like 15k and Dave wanted the couple to sell one of their cars, which was worth like 12k. The problem with this is what are they going to do about the second car and getting to work. They lived in Nashville, and around here we don't have transit. He basically wants you to sell everything of value and save every dime which is possible for some but not all. If you do decide to listen, listen on Friday. They do all of the debt free stories and it will really get you motivated.
 
living paycheck to paycheck means you can't really save much. if you have money to save you are not living paycheck to paycheck. I work for myself and I never know how much I will make. some weeks I only make a hundred or so some weeks I make a grand I made a grand in one day once. when I have a good week I try to get some in an emergency fund. but most of the time I do good to pay the bills and have a little bit do have a little fun.
 
I can save a bit, but not as much as I used to be able to. So it's no extra spending for me. :( It really isn't a nice feeling. I do have some savings tucked away however - and each year I plan to push that up as much as possible.

Through the summer break, I might have to spend the day at the local pool to keep cool. I won't be able to afford to run air-con, not at the $1000 per three month bills the electricity providers here think we can all afford easily.
 
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