Living paycheck to paycheck is the way of life: New Harris poll finds that 78 percent of US workers live paycheck to paycheck.
For most Americans, living for payday is the way of life. And many use debt to bridge the gap between money hitting their bank account and the bills that need to be paid. We know since many banks make billions of dollars on people over drafting accounts. A new Harris Poll found that 78 percent of US workers live paycheck to paycheck. Now this news may be shocking to some but in reality, it is no surprise at all. How can this be if the stock market is near a record high, real estate is at record levels, and the headline unemployment rate is near record lows? Well first, most Americans don’t own stocks. Second, the homeownership rate has dropped to near generational lows. You also have nearly 95 million adults that are not part of the labor force so don’t count for employment figures. So this is why the survey results may not be all that surprising. But let us dig into the numbers a bit more.
Where in the world do Americans spend their money? Taking a look at where incomes go each month.
I remember the first budget I put together. It left me feeling depressed and feeling as if I had been punched in the gut. The practice was done largely out of necessity but there was something that jumped out at me. Housing consumes a good portion of net income. For most Americans this is the reality. When we look at spending habits we realize that half of this country is living paycheck to paycheck. A budget is a basic necessity even if you do it just once to understand where your money is flowing. Yet most people spend money as quickly as it comes in like sand flowing through your fingers. I wanted to look at the latest spending breakdown of Americans to see where most of our money is going.
Taking a look at the 95 million Americans not in the labor force: 1 private sector worker is supporting every 2 Americans.
There continues to be an inordinately large number of Americans that are not in the labor force. There are a variety of reasons as to why these Americans are not working. Some are retired and some are disabled. But the reality is we have a massive number of people that need to be supported either by their own funds or government assistance. When you look at our total population, we have roughly 1 private sector worker supporting 2 Americans. In this article I wanted to examine the nature of the 95 million Americans not in the labor force.
The Global Pension Nightmare – Global pension underfunding will be $400 trillion by 2050.
Apparently good things do come to an end. The global pension outlook is looking bad and a large part of this stems from people living longer and simply not saving enough while they work. There are some major problems on how pensions are structured and the US, the wealthiest nation in the world is shifting to a “work until you die” retirement plan. And this is for the richest nation so you can imagine how things look in other countries. Most people continue to ignore these massive problems but it is hard to miss the fact that by 2050 global pension funds will be underfunded by $400 trillion. Does this sound sustainable?
Student loan tsunami on the horizon: Of $847 billion in Direct Loan program, only $535 billion is actually being paid back at the moment.
The amount of student debt continues to grow like a skyscraper reaching for the clouds. There seems to be an unlimited amount of student debt that college students are willing to take. As of today, there is $1.44 trillion in student debt outstanding. But how much of this is being actively serviced? After all, if you take out a mortgage or auto loan you start paying on it right off the bat. You will be surprised at the small amount of student debt that is actually being paid back at the moment. Young Americans that are already cash strapped are going to get even more budget tightening once they graduate and need to pay back the large amounts of loans they have taken on.
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