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Escaping From The Lower Class

Escaping from the lower class

Earlier this week, Prosper Marketplace sent me their latest Financial Wellness Study. They surveyed 1,000 Americans with decision-making power in their finances to see how their households are doing. The result of the study is a little depressing because most American families are struggling with their finances. We are doing pretty well financially, but it hasn’t always been that way. Let’s take a look at some data from Prosper and then I’ll share how my family escaped from the lower class.

Financial Wellness Study

financial wellness study

This first graph doesn’t bode well for the study. Nearly 60% of those surveyed don’t feel like they have enough money to enjoy life. Even worse, almost half are living paycheck to paycheck which is not a good situation to be in. You can’t save for the future and any financial emergency will be a huge setback.

This is where the first graph was leading up to. More than half surveyed
are not confident in their ability to cope with a sudden financial shock, such as the car breaking down. A lot of people are living paycheck to paycheck and it’s not just the lower class. Many middle class families smooth out their finances with credit cards and ended up building long term debt.

Credit card debt is the most common type of debt. Sixty percent of all Americans have credit card debt. A lot of people don’t pay off their cards in full every month and they are paying very high interest rate on those debts. This is where the Prosper P2P lending marketplace comes in. If you can get a lower rate from Prosper, then it might make sense to consolidate the high interest credit card debts into one loan. Of course, you’d need to learn to live within your budget first. If you are an investor, you can lend to borrowers directly on Prosper and enjoy a decent ROI. I read that consolidating loans perform quite well on the P2P lending platform (less defaults).

Lower and Middle classes are struggling

Many surveys have shown that the lower* and middle class are struggling in the US. Lower class families just are not making enough income to break out of poverty. Middle income Americans also have fallen further behind in the 21st century. The median income in middle class households decreased 4% from 2000 to 2014. More and more of the U.S. aggregate income is going to the upper class households according to the Pew research. The middle class has been steadily shrinking for more than four decades and income inequality will cause a lot of problems in the future. Many economists believe income inequality will slow economic growth and cause a big financial crisis at some point. Things are going to get tougher for most of us, but the lower class will feel it the most.

*According to Wiki, approximately 25% of US households are in the lower class. The middle class constitutes anywhere from 25% to 66% of households.

Escape from the lower class

I consider us middle class, but our journey was by no mean a smooth one. My dad was orphaned when he was 5 and he didn’t have much family support when he was growing up. He made it to college and paid for it by working. His degree was in education, but he never became a teacher. He worked in variety of jobs and self employment fits him best. His businesses were up and down, but he liked being an entrepreneur. My mom’s family was better off and they paid for her college education. She worked at a bank for a couple of years and then taught at a university for about 10 years or so. When I was 12, my dad’s electronic retail business failed hard and we immigrated to the US to start over. We were middle class in Thailand.

We moved to the US with just 3 suitcases and my parent worked any job they could. It wasn’t even paycheck to paycheck because the minimum wage jobs they worked were not very stable. My dad worked a few midnight shifts at a gas station in Hollywood, delivered pizza, and had a few other smalltime gigs. We certainly could not absorb any financial shock at that point in our lives. After several years, my parent purchased a small Thai restaurant. I think they put down $5,000 and paid another $5,000 in installments. The restaurant was a lucky opportunity for us and we capitalized on it. Our fortune turned around because we could then work for ourselves. The work was still minimum wage level work, but the profit from the business eclipsed their previous jobs. They were able to help pay for college for 3 kids and we made good progress toward the middle class right out of school.

Increase your income

You will never break out of the lower class if you stay in a minimum wage job. No matter how hard you work, you won’t make enough money. When an emergency arises, your finances will spiral downward. The only way out is to increase your income. Here are two ways to do it.

  • Become your own boss – My parents escaped from poverty by becoming their own boss. If you can leverage what you know and start your own business, then you will have a good chance to increase your income. On the other hand, many businesses fail and you might have to start over many times like my dad did.
  • Education – The other way is to gain new marketable skills through education. There are many jobs that pay well above minimum wage that do not require a college degree. Electricians are paid well and it doesn’t take that long to get a license. Electrician apprentices are paid higher than minimum wage and in 4 years, they will earn much more. A college education is a good way to go too, but make sure you study a field that’s in demand and pays well. A liberal arts degree is for the rich kids.

These are the only ways to escape poverty that I know of. If you’ve done it a different way, I would love to hear it. I guess you could marry up or win the lottery. I don’t know how realistic that is, though.

Avoid pitfalls

It’s equally important to avoid pitfalls because any little problem becomes a huge deal when you don’t have much savings. Middle and upper class people have problems too, but money can smooth out their lives. If you’re in the lower class, you don’t have the financial security to deal with problems. That’s why it’s best to avoid these things below:

  • drugs, tobacco, alcohol, and other addictions
  • gambling
  • fast food and junk food because they will deteriorate your health
  • having a baby when you’re not ready
  • infidelity/divorce
  • credit card debt
  • trouble with the law
  • watching too much TV when the time can be used much more productively
  • spending more than you earn

Actually ‘avoid’ might not be the right word here. We’re not monks. How about just minimizing these problem areas as much as possible? Unfortunately, I think these pitfalls are all too common.

Upward Mobility

My parent escaped from the lower class and gave us a huge head start in life. I graduated from college with no debt and was able to save and invest right away. Life would have been much more difficult if my parents were still not making much money by the time I graduated high school. Upward mobility is much more doable if you think long term. It might take 2 or more generations to escape from the lower class. If you can’t raise your income, you need to make sure your children are set on a better path through education.

Why do you think it is so difficult to break out of the lower class? Do you have firsthand experience or know anyone who is stuck living paycheck to paycheck?

Next time, we will look at what it means to be middle class and how to keep moving upward. Follow up – Avoiding the Middle Class Squeeze.

Image by usda.gov

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.

Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.

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{ 52 comments… add one }
  • shane mcquillan February 23, 2016, 10:58 pm

    it is essential to build a buffere to allow for any financial shock, once you have built your buffere, you continue to build until you have enough funds to invest in a small business or to better your education. This will lift you from the lowest rungs of society

  • No Nonsense Landlord February 22, 2016, 5:21 am

    I grew up in a lower income household, and now would be considered somewhat upper 10%. Maybe upper 5%.

    It is possible. Here in the USA anyone can be a millionaire of they work hard enough and have the drive to succeed.

  • Marco February 21, 2016, 10:30 am

    From my experience, it appears that most people who are “stuck” in the “middle-class” are people who grew up in that socio-economic environment and for, some reason and another, stayed there. I grew up in the Bay Area, where most people around me were upper-middle and upper class. For the past couple years, I’ve been living in a middle to lower class neighborhood. Most people who are struggling, view their financial situation from a victim mentality, blaming the rich, the government , the system and whatever else they can find. I’ve met some people in the middle and lower class, who are positive, enjoy working and see a bright future ahead. These people are the ones who inspire me.

    • retirebyforty February 22, 2016, 10:18 am

      I agree. You have to be positive and look to the future. Complaining won’t improve your situation.

  • James February 20, 2016, 4:34 pm

    It’s great you were able to achieve your financial goals by 40, but do you plan to stay retired, work part time only for the rest of your life, or find another full time career? It seems wasteful of any talent and potential for someone to call it completely quits at 40 and spend the next 30 to 40 years staying retired or just working part time.

    • retirebyforty February 22, 2016, 10:16 am

      I was never very talented in engineering. I’m making a bigger difference in more people’s lives with this site than I ever did as an engineer. I’m not sure about the future. I prefer to work part time, but I might go full time if I see a really good opportunity. Cheers.

  • Mysticaltyger February 20, 2016, 1:43 pm

    I liked your bullet points about stuff one needs to avoid. I think the biggest thing that sinks people, which you touched on, is having kids out of wedlock. 40% of kids in America today are born to unmarried parents, and this is just a disaster–and not just financially. No wonder the middle class is shrinking! I don’t disagree about government policies and big business/globalization working against the middle class, but Americans have to stop being their own worst enemies. I never see this issue talked about much in PF blogs. I guess that’s probably because PF bloggers and their readers already know this is a disaster, but I do think we need to shine a bright light on this issue.

    • retirebyforty February 22, 2016, 10:14 am

      I can’t imagine having kids when I was a teenager or even in my early 20s. We were not ready and it would derail our whole lives. Globalization is a complicated subject. It’s good that more people are going into the middle class overall, but it’s going to be painful for the US. What do you think about the follow up article on the middle class?

  • Anthony February 20, 2016, 7:38 am

    Dear Mr. RB40,
    I agree, an amazing story. There is a big difference, however, in the work ethic of your upbringing than many today. Your parents worked to make sure you would have a better life (btw, mine did too), in which they sacrificed their wants for their children.

    We have a hard time in our society to determine a “want” from a “need.” Credit card debt is higher than ever, with many people spending on items that aren’t needed. Children are going to college in majors with no plans of what they will need in the future. Even in the “poor-ish” community that I live in (over 1/2 of the people are below the poverty line), the amount of junk/clutter at various yard sales is amazing – which is being sold for pennies on the dollar in which it was bought.

    I have been able to live off less than $20,000 a year net, making a house payment. I do, however, have an insurance program. I have some nice things, but not near as much as co-workers. Oh course, Im jealous, but I dont have the debt, or the clutter that comes with these “wants.”

    Be proud of your simple upbringing. Pass it on to your son. Teach him that life is about experiences, not things. Show him through example what you mean.

    Keep up the good work,

  • Ray February 19, 2016, 11:37 pm

    Yes being an immigrant or being from an immigrant family really helps. My grandparents from my Dad’s side came to the USA from a poor area in China and started with nothing. They did ok overall with hard work and by saving money. My Dad was always very thrifty, always liked to save money and didn’t like to spend much at all. I was born here but still picked up some of his and my Mom’s thrifty ways. Families that have lived in the USA for several generations have no other reference for different standards of living so they usually don’t save much money.

    There needs to be more financial education in high school and college. This will help young people make better financial decisions.

  • Gwen February 19, 2016, 7:02 pm

    I grew up really poor. My parents divorced when I was 2 and that left my mom to raise 3 girls by herself. We lived in government housing, were on food stamps, the whole nine yards. The only reason I escaped was my mom got remarried. We moved to a big house in a town with one of the best schools. I had the luxury of being able to participate in extra curricular activities like girl scouts and swimming, which we hadn’t been able to afford before. I worked hard in high school and got a full ride scholarship to college. Now, I’m comfortably middle class and absolutely petrified of being poor. I hated not having enough to eat and not being able to afford new shoes and i never want to be in that position again.

    • retirebyforty February 19, 2016, 9:18 pm

      Divorce is tough for everyone. I’m glad your family found a way out. Great job with your education. I don’t think you’ll ever be poor again. You know how to work hard and avoid problems now. Good luck!

  • Tyler February 19, 2016, 5:50 pm

    I don’t think I’m out of the paycheck to paycheck life yet but I’m getting close. I actually have gotten ahead enough to where we aren’t struggling for a week before the paycheck and everything goes smoothly we have even started putting money aside in savings. Today I had a minor car problem that costs 200 and didn’t even blink when spending the money where only 6 months ago that would have ruined my monthly budget.

    Driving for lyft and selling on amazon are two major factors to this so I have done something to get here. Also cut costs a lot.

    • retirebyforty February 19, 2016, 9:15 pm

      That’s great to hear. Keep it up. I think selling on Amazon is a great way to start your own business. I’m thinking about trying that at some point. Good luck!

  • nicoleandmaggie February 19, 2016, 2:48 pm

    The book, “Scarcity” talks about how the very fact of scarcity makes it more difficult to do things that will increase wealth because it changes your mindset (like Abigail notes with her DH). It’s not that all poor people are spendthrifts or all rich people are savers, but that not having security causes people to behave in riskier ways or to have less willpower.

    • retirebyforty February 19, 2016, 9:14 pm

      Sounds like a good book. It would be useful for poor people who are looking to improve their finance.

      • nicoleandmaggie February 20, 2016, 5:02 pm

        Well, no. It’s more useful for entitled jerks who think it is poor people’s fault for being poor.

  • Abigail @ipickuppennies February 19, 2016, 1:26 pm

    The most obvious issue is the lack of opportunities for class mobility. That’s the biggest obstacle.

    That said, another issue can be the mindset. My husband grew up in an area where no one ever had enough. They’d barely get by, so they figured they might as well enjoy what they did have while they still had it. Which of course makes a self-fulfilling prophecy.

    • retirebyforty February 19, 2016, 9:11 pm

      We were poor like that just temporarily. My parent knew that life could be improved if they save up. I guess they had some advantages being in the middle class previously.

  • ER2019 February 19, 2016, 1:25 pm

    I always wonder if the true middle class still exists in this country. The middle class has been squeezed by our government and financial institutions. I believe that many people (if not all) are aware of those fundamental things to follow but just cannot execute right due to the emotional unintelligence. I am glad that I had paid off my mortgage and auto loans many years ago. Debt-free lifestyle is always great. Now I am planning for my early retirement and hope that it would happen within a few years.

    • retirebyforty February 19, 2016, 9:09 pm

      I did some preliminary research for the middle class post next week and the middle class is shrinking. It’s getting harder to be middle class in the US. Debt free is the way to go. Good luck with your early retirement.

    • Mysticaltyger February 20, 2016, 1:34 pm

      I agree with you about emotional intelligence (or lack thereof). But the thing is, it is possible to improve one’s emotional intelligence. But like any type of improvement, you have to move outside your comfort zone–and a lot of people don’t really want to do that. They just want to complain.

  • PhysicianOnFIRE February 19, 2016, 11:30 am

    I try not to think of anyone as “lower class” but I recognize that we’re talking about low-income in this post. OK, I sometimes think of Kanye as being lower class, but that has nothing to do with income 🙂

    Education, entrepreneurship, and mostly clean living are good ways to rise up to the ranks of middle or upper class. I would add that having an understanding and mindset that you control your destiny and can choose to make a better life for yourself goes a long way. If you don’t think you can change your situation, you won’t.

    • retirebyforty February 19, 2016, 9:07 pm

      Right, I meant low income. I think the mindset might be the key difference between immigrants and native poor. Immigrants are driven to improve their lives. They wouldn’t come to the US if they weren’t driven.

      • PhysicianOnFIRE February 20, 2016, 7:00 pm

        Indeed. I recall reading in “The Millionaire Next Door” that immigrants make up a significant percentage of new millionaires in America.

  • Matt Mason February 19, 2016, 11:27 am

    Yes, immigrants are essential to the American experience and I find their work ethic very inspirational. I see it all the time here in Los Angeles. The natives are the ones that complain about most things, while the immigrants just get it done. Sounds like your family may have started off in Thai Town (East Hollywood) in the US.

    • retirebyforty February 19, 2016, 9:05 pm

      Immigrants come here to seek a better life and they are willing to work hard for it. Actually, we started off in the Valley. My aunt lived there in the 80s.

  • Stockbeard February 19, 2016, 10:07 am

    Joe, I’d love to know why your parents decided to move to the US after your dad’s business failure in Thailand. Did they feel they would have a better chance there? It sounds tough to leave everything behind, just to end up in a foreign country, doing pizza delivery and working at a gas station. I’d love to know more, if you don’t mind too much giving details about your family. I think immigrants’ stories are always extremely powerful. Some people (in particular in Europe and the US) always want to see immigrants as lazy people who just came to the “land of the free” to collect some free government help, but the truth is often very different from that. Most of the immigrants I know (in any country) are hustling harder than the average, and/or highly qualified professionals.

    • retirebyforty February 19, 2016, 11:05 am

      Actually, he took out some loans and owed the bank a lot of money so it was better to just start off fresh. He was always looking for a new opportunity. My dad doesn’t mind starting over. He never looks back, just ahead. I think it was much more difficult for my mom. She was a professor at a private university and coming over to work in a minimum wage job was discouraging. I don’t know if I could have handle that.
      I think immigrants are essential. Immigrants are looking to improve their lives and they will work hard for it. I don’t know any immigrants whose purpose is to collect free handouts.

      • Mat.Erial February 19, 2016, 11:31 am

        Crazy how many wealthy people have gone bankrupt before, its like a rights of passage before you make it.

      • Pennypincher February 22, 2016, 4:41 am

        As Americans, we should welcome and somehow support immigrants coming to the states. They are here for the same reasons we are, and why are ancestors came here. I would take a new family to this country in my home if I could. I know a lot of church’s support them.
        We should all say “Welcome. What can I do for you to make your start here easier?”

  • Tracy @ Financial Nirvana Mama February 19, 2016, 8:16 am

    Growing up in low income class and bad side of the city taught me alot of things about money – that it doesn’t matter that much. Despite making ‘low wages’ it’s still enough to pay off your house, support three kids, grandma and retire early (my parents retired around their fifties). I see that all the time with my relatives even on a single income living in one of the most expensive cities in Canada.
    Similar to your list Joe, here are critical reasons why they succeeded and retired ok:
    – NO debt whatsoever
    – Had support from family (ex: no day care costs)
    – Spending only on what is important
    – No addictions
    – Very responsible with money (including not supporting other people’s addictions)
    – Did not pay for all 3 kids educations completely
    AND very rare family vacations

    I really really admire all of my relatives and family who accomplished this!

    • retirebyforty February 19, 2016, 10:57 am

      Family support is essential. My dad didn’t have family support and he kept getting into trouble financially. He had some other problems too. Thanks for sharing. I love your list.

  • Kimberly February 19, 2016, 8:03 am

    What’s wrong with being lower class? Sometimes less money is less stress. Just last year I was working a full time job making 70k a year, now I make 30k a year. It required a lifestyle change that focused less on consumption and more on relationships and experiences. I am so much more happier now. I grow food, I read books from the library and rent DVDs there. I hike and host potlucks. And everything is good.

    • retirebyforty February 19, 2016, 10:55 am

      Being in the lower class is just more stressful for most people. I had a lifestyle change too and I prepared for it by saving and investing for many years. I wouldn’t be able to quit working full time if we didn’t have enough savings. It’s great that you enjoy life more now, but can you deal with a financial shock like a medical emergency? If you have financial security, I don’t think you’re in the lower class even if you don’t make much income.

    • Mysticaltyger February 20, 2016, 1:26 pm

      The problem is 30K for a single person really isn’t lower class. I know it may seem that way for those who go from a 70K income, but 30K is a livable income for single folks in most parts of the U.S. assuming they don’t have significant debt or health problems. The other thing about social class is it isn’t just about income. Middle Class is also a mindset that has a general emphasis on deferred gratification. Middle class folks tend to have healthier lifestyle habits which protects them from major crises even if their income is at the lower end of the middle class range (i.e. they avoid most of the stuff pointed out in the bullet points listed above) .

  • Linda February 19, 2016, 6:24 am

    I’m surprised at how many people say they pay off their credit cards every month. I didn’t think it would be that high.
    I definitely grew up lower class. We grew up on a farm, and when I was in my teens I remember overhearing my mom say how they only earned $20,000 for that year. I was shocked. There were five kids in the house! My mom always had a huge garden every summer, so that really helped. Looking back, I really admire my parents for taking care of us so well on so little money!

    • retirebyforty February 19, 2016, 10:51 am

      Thanks for sharing. It’s great that your mom raised 5 kids with such a small income. Are you better off now?

  • JP February 19, 2016, 6:15 am

    And you were lucky you landed a job with a multi-national with a very large salary. I find it interesting that so many foreigners (like myself) do well; yet so many Americans struggle.

    Also, it has been shown, that social mobility is not as good in the US as the local cheerleaders want us to believe (this applies to education and healthcare too).


    • retirebyforty February 19, 2016, 10:50 am

      I was very lucky. It’s much more difficult now for young people, but I think the right degree goes a long way. I read that social mobility is getting more difficult too. The upper class is sucking up all the income. I wonder if immigrants are more determined to get ahead. If you grow up poor in the US, then it’s just easier to keep at it. Immigrants seem more driven.

  • Justin February 19, 2016, 6:07 am

    My wife has her own rags to riches story. A war refugee who arrived to the US penniless with literally the clothes on her back at age 7. No English, no real education. Her and her family depended on charity to get a start in the US. Dad was a carpenter (thankfully a skill that translates from a foreign language). Mom assembled electronics for minimum wage.

    Fast forward a couple decades, and mom and dad still can’t speak much English but they paid off their house and draw social security and live okay (way better than what life would be like back in Cambodia!). Medicare gets the job done and he’s received a couple of life saving and quality of life medical procedures in the past couple years.

    My wife did well in school, went to a state university, found a job, worked her way up and just joined me in early retirement in her 30’s with a seven figure portfolio. The American Dream is still alive and well.

    I love those bullets you say to avoid:

    drugs, tobacco, alcohol, and other addictions
    fast food and junk food because they will deteriorate your health
    having a baby when you’re not ready
    credit card debt
    trouble with the law
    watching too much TV when the time can be used much more productively
    spending more than you earn

    I hope you don’t get flak for being elitist, because those are seriously good common sense tips. You don’t have to follow all of them in monk-like devotion, but it’s a good guide for living a good life that will get you to middle class status!

    • retirebyforty February 19, 2016, 10:46 am

      I love her story. They did extremely well in just a few decades.
      I might get some flak if this post go viral, but I think most regular readers have a similar view. 🙂

  • Christine @ The (mostly) Simple Life February 19, 2016, 6:05 am

    We feel like we are kind of stuck in the upper-lower class if that makes sense. We make just enough to not qualify for assistance, but I see friends who do qualify for assistance that seem to be better off than us. But we’re improving slowing but surely! When we first got married we were below the poverty level. Thankfully, our parents were both good with money and set good examples for us. We have scrimped and saved to have an emergency fund. This year is an exciting year because my husband will finally finish school(paid in cash) and have his degree in web development and I’m working on some entrepreneurial projects, so we’ll be in the middle class some day 🙂 We don’t believe that we are stuck where we’re at, but it’s definitely hard work to get to a better place.

    • Sam @ Financial Samurai February 19, 2016, 6:35 am

      That is one of the most interesting kinks in the system. I remember growing up and having my family make enough to NOT get any assistance of financial education, which made us poorer than those just below he cut off.


    • beth February 19, 2016, 6:48 am

      I consider myself lower middle class which must be pretty close to your upper lower class. I will gross $52k this year and, as a single person who lives frugally, that income keeps me above lower class but I could easily drop to lower class if I was unable to work.

      If I can get rid of my $29k in debt (should take about 4 years) I will then consider myself middle class and it would be hard to shake me from that position. Being debt free is true freedom.

    • retirebyforty February 19, 2016, 10:42 am

      Congratulation to your husband on getting his degree! It’s tough when you’re older. I’m sure you will make it because you’re working hard to improve your finance. I’m sure once your income improved, you will be in a much better position.

  • Mike Drak February 19, 2016, 5:55 am

    I think we are setting up our kids for failure right out of the gate. We are so busy trying to provide for our families trying to get ahead that our jobs consume us and as a result we do not spend the time to teach our kids the importance of saving. With all the advertising that they are exposed to I’m not surprised that many of them end up in trouble. Proper financial guidance at an early age is the answer but for some reason we are not doing a very good job in this area at the school level.

    • retirebyforty February 19, 2016, 10:40 am

      I agree with you. It seems people have no personal finance skill at all. At least my parent taught me how to save and encouraged me to invest. I’ll try my best to educate our son before he goes off on his own.

  • Pennypincher February 19, 2016, 5:42 am

    Before the big crash in 2008, the govt. said several times, that about half of Americans were one paycheck away from financial disaster. I think it may still be true today.
    The Wall Street Journal did a story on how all over the world, people were simply not spending money. Interesting article.
    One thing you could have listed after infidelity was-infidelity/divorce. Very, very expensive and usually financially devastating, especially for the wife and children.
    I too know a few people who are in serious financial dilemmas. How can they get to that desperate point? Reckless, thoughtless lifestyles perhaps. Living on the edge.
    Your own story was very interesting, Joe. I think it reflects what many people did moving to the states for a better life. Thanks for sharing.

    • retirebyforty February 19, 2016, 10:38 am

      The election this year really brings this issue to the forefront. A huge percentage of Americans are having trouble financially and they can’t get ahead. Living paycheck to paycheck isn’t sustainable in the long run. You will run into some problem sooner or later and it will spiral downward. I’ll update the infidelity bullet. I was thinking about divorce as a result of that, but didn’t put it down. A divorce can set both people back a lot.

  • kammi February 19, 2016, 1:38 am

    I do know of several people living pay check to pay check. I’ve been thinking about this lately, and I think that in some ways, it’s very comfortable to live that way. Everyone goes through some pretty terrible financial times from time to time, but if you want to move up financially, it is pretty painful in some ways, because you have to make a distinct, deliberate choice. What makes it worse is that this country in general doesn’t currently have a culture of saving. I think in some ways, you have an advantage as an immigrant (or, your dad did) because he knew he could live on less.
    It’s definitely a different reality when you come from a place (like I did) where ‘fast food’ is essentially a small business owner who cooks everything himself/herself and has assistance from some other people (typically family), or everyone in general eats at home, versus fast food chains EVERYWHERE. The eating out thing is HUGE; it’s so so convenient to eat out. I’ve noticed the people who talk about living pay check to pay check often eat out all the time…they have breakfast at (insert fast food chain), then it’s lunch there, and so on… It DRAINS your account, though; it doesn’t matter what economic level you are at; all the wealthy people I knew growing up didn’t even eat out; typically they would have people who would come in and cook for them, so they didn’t typically ‘eat out’. Essentially they were eating at home, but having someone do that work for them. So they were still saving money. I think you really have to want to improve your situation; it’s easy to just zone out and follow along and before you know it, 50 years have passed, you have nothing saved, unpaid credit card bills, etc. But you have to give it all you’ve got and certainly try with all your might to get out of that debt circle.
    I have no debt and am always studying/ learning and I’ve found that being around ambitious people who are in a good economic situation also tends to pull you in that direction…”birds of a feather”..pretty much.

    • retirebyforty February 19, 2016, 10:36 am

      I think you’re right. It’s just easier to keep doing what you know even if that’s not good for the long term. There are just so many obstacles to going back to school or trying to learn a new vocation.
      Eating out all the time is bad for your health and your pocket book. That’s interesting about the wealthy people having helpers. Thank you for your thoughtful comment.

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