not being strapped for cash is possible for pretty much anyone in the lower-middle class and above, and even those in the lower class could get there by stabilizing their finances so they can take some risks to increase their income (i.e. night school, quitting a bad job for a better job, getting CDL and financing a truck, etc).
It’s easy to say “stabilize your finances!” but on a practical level it’s almost impossible to do when there’s no wiggle room. You can’t stabilize any finances if you’re taking out payday loans in order to pay rent every month. It’s not like there’s any money to be put into savings if you’re making $2,000 a month but putting $1,000 toward rent, since most people rather like to eat.
I’m thankful to not be in that situation, personally, but it’s not something you can just wish your way out of. Even your examples require a certain level of financial breathing room that people don’t tend to have when every dollar is spoken for. You can’t finance a truck if your DTI is already high. You can’t take CDL training or night school if you have to work two jobs just to keep food on the table.
I’ve heard plenty of stories about lawyers and doctors having trouble keeping up with debt payments because they got caught trying to keep up with those wealthier than them.
But if you get into that scenario, you can just sell the supercar or downsize your house or whatever. That’s not really an option for people who are living paycheck-to-paycheck.
So I don’t think “strapped for cash” is a good metric for economic class, income is,
I think income divided by local cost-of-living could be, maybe.
At the end of the day, irresponsibility with money is still a problem for sure. And keeping-up-with-the-joneses is probably a problem for some people. I’m not one of them, and none of the people I know are either, but I suppose some people have that issue. In my experience, though, most people who are struggling financially are not in those situations. They’re just trying to keep their heads above water.
You can’t stabilize any finances if you’re taking out payday loans in order to pay rent every month
Oh, I 100% agree. But in many cases, taking payday loans is a symptom of other serious problems in someone’s spending patterns and not necessarily an income problem. Maybe the car payment is too high, or perhaps they’re paying too much for food. Whatever it is, that needs to get fixed to end the need for emergency cash.
If you’re in the lower middle class or higher, there’s no excuse for it IMO. If you’re in the lower class, you’ll need to get creative (government assistance, co-living, etc).
you can just sell the supercar or downsize your house or whatever
You say that, but in many cases, they still end up net worth negative. The problem here isn’t with income, but spending, and you’re not going to sell your way out of a spending problem.
I think income divided by local cost-of-living could be, maybe.
Certainly. Economic classes are very much location-dependent. If you live in NYC or SF, you’d need to adjust the numbers a bit, likewise if you live in rural Mississippi or something. And there are calculators available online to help with that.
most people who are struggling financially are not in those situations
Pretty much everyone will say that though, because people are pretty bad at noticing the excesses in their own spending. If you’re not standing out as being “weird” for spending so little, then you’re probably “keeping up with the Joneses,” because the average American is pretty irresponsible.
This is a pretty broad brush stroke to be sure, and I’m sure there are plenty who are legitimately struggling despite a conscious effort to cut costs. I’m just saying that many, if not most, people who aren’t “financially stable” could make room in their budget to get financially stable, but instead end up throwing a ton of money down the drain due to interest.
It’s easy to say “stabilize your finances!” but on a practical level it’s almost impossible to do when there’s no wiggle room. You can’t stabilize any finances if you’re taking out payday loans in order to pay rent every month. It’s not like there’s any money to be put into savings if you’re making $2,000 a month but putting $1,000 toward rent, since most people rather like to eat.
I’m thankful to not be in that situation, personally, but it’s not something you can just wish your way out of. Even your examples require a certain level of financial breathing room that people don’t tend to have when every dollar is spoken for. You can’t finance a truck if your DTI is already high. You can’t take CDL training or night school if you have to work two jobs just to keep food on the table.
But if you get into that scenario, you can just sell the supercar or downsize your house or whatever. That’s not really an option for people who are living paycheck-to-paycheck.
I think income divided by local cost-of-living could be, maybe.
At the end of the day, irresponsibility with money is still a problem for sure. And keeping-up-with-the-joneses is probably a problem for some people. I’m not one of them, and none of the people I know are either, but I suppose some people have that issue. In my experience, though, most people who are struggling financially are not in those situations. They’re just trying to keep their heads above water.
Oh, I 100% agree. But in many cases, taking payday loans is a symptom of other serious problems in someone’s spending patterns and not necessarily an income problem. Maybe the car payment is too high, or perhaps they’re paying too much for food. Whatever it is, that needs to get fixed to end the need for emergency cash.
If you’re in the lower middle class or higher, there’s no excuse for it IMO. If you’re in the lower class, you’ll need to get creative (government assistance, co-living, etc).
You say that, but in many cases, they still end up net worth negative. The problem here isn’t with income, but spending, and you’re not going to sell your way out of a spending problem.
Certainly. Economic classes are very much location-dependent. If you live in NYC or SF, you’d need to adjust the numbers a bit, likewise if you live in rural Mississippi or something. And there are calculators available online to help with that.
Pretty much everyone will say that though, because people are pretty bad at noticing the excesses in their own spending. If you’re not standing out as being “weird” for spending so little, then you’re probably “keeping up with the Joneses,” because the average American is pretty irresponsible.
This is a pretty broad brush stroke to be sure, and I’m sure there are plenty who are legitimately struggling despite a conscious effort to cut costs. I’m just saying that many, if not most, people who aren’t “financially stable” could make room in their budget to get financially stable, but instead end up throwing a ton of money down the drain due to interest.