Been there, done that:
Living paycheck to paycheck? Join the growing club.
A survey of 7,192 workers released Wednesday by online job-search Web site CareerBuilder.com shows 47 percent of working Americans claim they always or usually live paycheck to paycheck just to make ends meet. This marks a jump from 43 percent in 2007.
The "paycheck to paycheck" people are, like the poor, not the same this week as last week. People move in and out of all categories -- that's what it means to live in a dynamic (i.e. free) economy. I'm in a unique (for me) position right now -- both my house and car are paid off, so I can put a little money aside before the next crisis hits. I'm still one paycheck ahead of disaster -- there goes the job, the benefits, etc. -- but that puts me a little ahead of all my ancestors who were just one turn around the next wilderness corner from sudden death.
Comments
What is the root cause behind this? Is it that peole are spending too much on fast food, games, video, electronics, etc? When we look at the standard of living we find that it is a measure of how much we can afford or how much things have fallen in price. The first washer and dryers were expensive, but today they are far cheaper not only in dollar by inflationary dollars. The same is true of TV's. What do people do with the cost savings on items? Do they spend it on new items that make life more enjoyable? If they do not spend the savings, then new products would stop coming to the market and new jobs would not be created.
Therefore, we need to continue to spend but we must also save. In my opnion, one should save about 16% of wages. This will provide a secure retirement and a cushion to reduce debt, devaluation of the dollar, improve the velocity of money through the economy and an overall much stronger economy, The problem is that as taxes have increased, the first thing to go is savings.
There is one tax in particular that has risen so fast in the past thirtyfive years, that it is the number one reason for the falling savings rate. This in turn is why 47% of those who responded said they live paycheck to paycheck.
How would this change if workers were able to save the 10.6% SS-OASI tax paid by the employer and employee? Would the savings rate go up, debt down, velocity of money increase, reducing debt terms and improving the economy?
Obama proposes to increase the SS base from $102,000 to $250,000. This change does nothing to save social security, but prolongs the misery for a few more years. McCain's says he does not want future generations to get less SS. I hate to say it, but future generations that will see less SS benefits began being born after 1938.
The maximum FICA tax in 1937 was $30, today it is $7,803 each for the employer and employee.