Paycheck to Paycheck

Some extimates say 60% of Americans are living Paycheck to Paycheck.  It doesn't matter if they have $20,000 a year or $20,000 a month to live on.

The reason many people are living paycheck to paycheck is they cannot stand to have a dollar in their pocket that is unspent. As an example in the grocery store she (my ex wife) had to have the most expensive cute little bottle of olive oil.  Was it better?  Well if it was more expensive it must be better.  As long as there was $3.89 in her bank account she had to spend down to the last ten cents.  When going shopping she knew, to the penny, how much was in her account so she could spend it all.

It is Monday and she gets paid on Friday. With $38 in her account she orders takeout Pizza for $32 and gives a $5 tip.  On Tuesday she discovers she is out of gas and needs to borrow another $20 for gas to get to work just like last month. It is the continuous little decisions that keep paycheck to paycheckers without cash.

I worked with a friend at Albertsons who he and his wife were paycheck-to-paycheckers.  She ran the checkbook.  They both made ok money but before payday their account was always empty.  

We got a significant raise.  I talked him into a direct deposit savings account.  A couple of years later they were trying to close on a house and ended up $2,500 short.  He told his wife about his account which by then had $4,000 in it.  They closed on the house and then they spent the $1,500 on furniture for the new house.  

They turned right back into Paycheck-to-Paycheckers.

For many people  setting up an auto transfer into a savings account or to an account at a different credit union can help build a cash buffer.  If the other account is not easy to access that can help.