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October 23, 2009


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I do pretty well for myself and I'm not living paycheck to paycheck, but money id def. tight. I live and work in the metro DC area do salary wise do very well. I am a 31 year old programmer and do a little over $50/hr with CRAZY benefits. I know you said you dont know how people live paycheck to paycheck, but I know PLENTLY. This area is really expensive as the cable alone is over $120/month, nevermind groceries, telephone, heating, etc, etc. It all adds up.

In any case, I was wondering what do you or other readers suggest people like us, who live in really expensive areas, to cut costs and save more


In the case of those making over $100K living paycheck-to-paycheck, I think it’s a simple matter of keeping up with the Jonses. I live in DC, a fairly expensive city, and I regularly hear people say it’s hard to get by on 100K. Nonsense. While my wife is in grad school, I’m the sole provider making a little more than half that, and yet I have still socked away 10 months of living expenses and have created a tidy little brokerage account. In short, yes, it is difficult to live on less than 100k if you feel it necessary to be ensconced in Burberry and J.Crew whilst driving in your leased Bimmer to the latest Haute Cuisine joint to drop $350 a plate.

I have discontinued my IRA monthly contributions because of the uncertainty factor. Nobody knows what the obama administration will do to negate the benefits of saving in order to support its wealth redistribution policy.

@Drhilarius what do you do to get by? I'm also a DC native (seems to be a lot of DC people here) and have tried cutting non-essential items, but even so find it hard to sock away a lot into savings. Any tips?

We became a paycheck-to-paycheck household when we had children. The increase costs of chilc care put us in a tight spot. We knew this would happen, but we thought that having children and raising a family was worth it. Now we are in a tight spot by choice until the kids start school and the child care costs go away. Until then we just pray for no disasters!

On the other hand, I think the journey to paycheck-to-paycheck started when I was in college, living on student loans, never worrying about how they would be paid back. Then I got married, bought a house, and had kids (you know, all of the things you are supposed to Well, along with all of these things came more debt and monthly payments, then the kids pushed us over the top.

Finally, we are now in a position where the slightest unexpected expense puts us over the top, and we getting into more debt quickly, we have cut and cut expenses, but we are still in a tight spot.

@D: A Fellow Washingtonian! Indeed, this town is expensive, but there are ways to mitigate it. Use metro and public transit, shop at Costco or BJ's, cook meals in, lose the cable for a Netflix subscription. Most importantly, don't try to impress the neighbors, cause odds are they're broke and in hock.

I make over 100k and live paycheck to paycheck because of student loans and a poor decision to buy a flashy car. Rent is also a HUGE factor in the DC area. Nearly 25% of our combined take home pay.

@Lost: My key tips are shop wholesale, eat in, get a cheap place to live, and use metro (my wife and I rarely drive). Oh yeah, and bundle up in the Winter and Consider being a "seasonal nudist" in the summer (in your place of course).

As far as entertainment, DC is full of free stuff to do.

I don't mean to suggest my savings happened over night, but, as FMF suggests, over time with dribs and drabs.

@Drhilarius Thanks for the tips. I do ALL that. I learned a LONG time ago not to try and keep up with them! Do you do anything special when you go shopping, like cutting coupons or go on special days? For me, the biggest expense was the entertainment, cable and food. I've started going to a new market that open up around me that is a lot cheaper than your traditional stores, cut the cable to the lowest grade and have really stopped going out. It really hurts sometimes though as I LOVE going out and being social. The only problem is that most of the time it was to a bar and would drop $100/night easily. I've been trying to find some activities that are both fun and free. Any insight?

@Drhilarius: We use cable and Netflix to fill in the evening hours during the work week. We live outside of Houston, TX, don't have kids, have about 4 hours every evening before bed after getting home, and are 30-45 minutes away from our friends (so usually hanging out during the week seems travel heavy for 2-3 hours of talking time). Sometimes we substitute tv for boardgames or reading, but what do you do instead of tv and Netflix?

This question is actually for anybody. What do you do for the few hours in the evening other than tv or movie watching? And I'm asking this in a non-dirty way...

Not surprising statistics. The USA is not a culture of saving. Instead, we are a culture of consumption.

@Crystal my fiance and I sometimes go for walks, grocery shop together or plan out activities for the weekend. Most of the time though we're consumed by the big glowing box. I would like to change this, but like you, we are 30-40min from our friends.

@Crystal: I would die w/o Netflix! Instead of cable we use OTA broadcasts. Also, we recently purchased a Roku player for our netflix account, which allows us to stream movies on demand right to our tv (this requires broadband, which I don't mind splurging on). But I think you have the right idea, Boradgames bring the family together, and reading is just a good thing to do.

@D: I shop at a local wholesale club about every 2 weeks. That was a HUGE savings. What I spent at the regualr grocery store for 1 week of groceries, I now get 2. Even if you don't want to get food from a wholesale club, I strongly suggest buying cleaning suplies and toiletries, as you will seemingly never run out.

Going out killed me too (A cheap beer in this town is about $3). Of course, simply not drinking, or drinking soda and maybe 1 cocktail, makes for a slightly more affordable night. During the summer we have screen on the green (free movies on the mall). Many embassies host free open houses (some w/ free booze). Honestly, your best resource is City Paper, which is chock full of free stuff to do.

I don't believe in these statistics, which is the topic of my post at FS today "6 Figure Incomes & Unemployment - Engaging The Community". I provided a shout out to you too FMF!

These statics are great, but it never pertains to us. We always like to say this and that about others, but we are ourselves!

I think the US consumer is in much much better shape than all the negative stuff that comes out. Why? Because we are the US consumer, and we're all fine.

I bet by the end of this comment thread, you'll see tons of people saying they are doing alright and making good money!

Financial Samurai

Re: Living in the DC area. I read the Wa-Po article "The Great Zucchini" a few years ago profiling an entertainer easily making six-figures part-time performing at children's parties(!), and the beginning of that piece was a real eye-opener into how much people are willing to spend just to maintain their image. These people are willing to shell out beaucoup $$$ under the pretense of entertaining their own and their friends' children, when their real motivation is maintain the status quo and pretend that it's all so easily affordable when one is so successful and accomplished.

The entire piece is really a wonderful profile of a man who is not quite grown up in many ways and wrestles with personal demons, and it's fully worth the 20 minutes or so to read it all. However, I think most of the readers here would certainly appreciate just the first few paragraphs at the least, as they are fully relevant to the FMF article:

I'm in a LCOL area. My time of living paycheck to paycheck was when my husband was in the last few months of his life. Medical costs had eaten up all of our savings and available credit. It was a scary place to be.

After W's death (and his medical conditions meant that there was minimal life insurance), it took me a couple of years to get everything paid off and the lifestyle downsized to the point where I was in the black and saving. Counting retirement (but not the company match on the 401k), I save about 30% of my gross now.

As far as what to do instead of going out. I have an endless list of movies to watch, books to read, house and hobby projects, activities at my church, volunteer opportunities. My issue is not hours to fill, but hours that are TOO full LOL>

Crystal & D,
Visit your local library, an amazing place to learn about what you can do.
Visit utube to find how to sites for musical lessons.
You do not need to become Great learn enough to please urself.
Take ur spouse/kids for walks (it is an exercise) good for communication, health and mind well being.
Learn some thing like TiChi, yoga, cycling.
Volunteer some how. Great way to expand ur network if a layoff visits.
Write a budget and see if u can do it!

Living paycheck to paycheck is very irresponsible behavior and even more so when you have children that are totally dependent upon you. Don't you realize that the slightest unforseen problem that you encounter can soon turn into a disaster.

I have a son-in-law that is an attorney specializing in evictions - he has 3 attorneys working for him and they process hundreds every month. Landlords don't have a scrap of sympathy for you when you miss a rent payment and you can end up getting evicted by the sheriff fairly fast - then where do you go - back to Mommy & Daddy?

My wife and I emigrated to the USA from the UK in 1956 and got off the boat with $400 between us, the promise of a job, and not knowing a single person in the whole country. We found a cheap apartment, bought a mattress, box spring, and some wooden screw-in legs for $50 (that was our bed), then we were given two free orange crates at a grocery story, my wife made slip covers for them and they were our two nightstands. A cheap dinette set and we could exist. I joined a carpool to get to work and my wife used local buses to find a job and also to get to work. We scrimped and saved to a degree that none of the above writers have obviously ever done.

A year later with a loan from my credit union we bought a used '55 Chevy - that made life a lot more enjoyable. I remember sending a photo of that used Chevy back to my parents to show them that we had made it! We have lived well within our means ever since. When we would sit down to figure out our expenses for the month and pay our bills, the very first check that we LOVED to write was to pay ourself by writing a check to go into our savings.

Fifty three years later, here we are having raised three children, all doing very well, two have a net worth of over $2M, the third is getting close to $1M. We retired 17 years ago, have a bunch of grandchildren, have travelled to many countries all over the world including trekking in Nepal, I had a satisfying career as an aerospace engineer, my wife worked as a teacher's aide, we have a lovely home, a condo at the beach, each drive a Mercedes, purchased used of course, have zero debt of course, and are incredibly happy (and wealthy). We are proof that it can be done through hard work, living within your means, being frugal, and saving hard. Once your savings reach a critical mass, they become an invisible slave that keeps working for you night and day, seven days/week generating income. Our (tax exempt and tax deferred) income today is between three and four times what our gross income was when we retired, yet my wife knits, I grow many of our own vegetables, do all of my own garden maintenance, wash my own cars, and can generally fix most things that need fixing because living frugally becomes a habit.

We are far from being unique, our experience has been repeated over and over, here in Northern California, by the Vietnamese boat people, Korean refugees, and the latest influx of hi-tech engineers from India.

Financial Samuri - good point. I think the difficulty in reading any of these surveys is there seems to no hard objective figures. Articles have titles like "80% not saving enough for retirement" and then you later read that 80% of the people responded yes to the question "Should you be saving more for retirement?", which is a pretty worthless stat (my neighbor thinks he's not saving enough and the guy is a freaking miser with a huge bank account).

What does "living paycheck to paycheck" mean to those asked? 61% said they were, but 64% also said they were saving for retirement and 84% said they were putting aside money.

Seems to me someone who already has a large emergency fund, maxes out their 401K and IRAs and still has another $50 left over each month still counts as one of the tragic "paycheck to paycheck" people in this survey.

I'm not saying it is or is not as dire as this article tries to make it out to be, I'm just saying the "data" they (and most articles) give is worthless in determining that.

@Old Limey I believe you might be jumping to a conclusion when you say "...We scrimped and saved to a degree that none of the above writers have obviously ever done...". I am one of those writers and I have done a great job securing my future. I have a great job, no student loans with a masters degree and save over 40% of my pay into our retirement accounts. With that being said, some people here are looking for other ways to entertain themselves as these areas are very expensive when trying to 'live for the future', as my fiance says.

Please be more careful about who you address and how you address them. Some may take offense as you lecture and look down on them.

BTW congrats on a job well done and living the American Dream.

@Strick & Financial Samuri Very good points! Living paycheck to paycheck does not means maxing 401K's and IRA's and only having $50 left over after paying 'lifes' expenses


I don't know your budget, the DC area, or your values. However, I can give you some generic advice. Determine what your values are? What do you really enjoy, above all else? Spending time with family? Reading? Food?

Find one or two of these values and work on them. Then cut everything else to the bone.

So, let's say you really like to read. That's fine. Take advantage of this. Find ways to reduce your spending. For instance, try the library. Try PaperBackSwap. Try visiting garage sales. But most importantly, don't become *too* frugal in this one area. Do make sure to get your books and read all you want. Why? Because this is what you value the most.

Unless TV is really one of your values, you don't need cable. At all. You don't need to spend lots of money on NetFlix or Blockbuster or buying DVDs and large screen TVs. Buy books, because that's what you value (in this hypothetical situation).

Then save as much money as you can. Even if it's just a few dollars, make sure to put that in savings. Get 3 months of savings for an emergency fund.

At this point you can create goals. So let's say that you do want a flashy car. Nothing wrong with this, if it's what you really value. Start saving for this goal. If you can save $200 a month towards this car, do it. Maybe in 3 or 4 years you'll be able to get it. Sure it's a long time, but you're working towards things you value.

Anyway, that's the most important thing. Find what you value and focus on those things. Cut everything else to the bone.

Out of my tight knit group of friends, who all make more than 100k a year, half of us are living paycheck to paycheck and half are not. The one who makes the most in the group (160k) is the most broke...but they are constantly trying to keep up with the jones'. (He is a doctor so I think there is a lot of pressure for him to keep up a swanky lifestyle.) I am in sales and my husband is a firefighter/paramedic. Between the two of us we bring home 120k. However, we live in a townhouse and are very frugal. I find if we were in a bad place we *could* live on half if we needed too.

Good advise, thank you. I wish I like reading though :) I'm more of a 'putterer' kind of person. I like to fix stuff up. My parents used to go 'trash picking' every Sunday night (for Monday's trash) and come home with old furniture or something home decor related. My dad used to sand it all down, refinish it and now their historic house (build in 1700's) has the furniture to match it all refinished by my fathers hands. I grew up with it and really enjoy it. When I first bought my place, I used to fix it up all the time. Now with the market dropping out and its value sinking (might be able to break even now) I've lost interest in fixing it up anymore.

Long winded way of saying thanks for the post :)

I think D was just trying to get some cheap entertainment ideas like me...according to his/her other post he/she seems to be hitting all goals financially (40% into retirement accounts).

Anyway, I value books and tv equally and completely agree that the library is AWESOME! The librarians at the one near my house giggle as I leave every time with two large bags of books and a huge smile! PaperBackSwap sounds interesting, but you have to pay for shipping, right? Might be something to look into for the books that I have to wait for at the library...

Here's how we DON'T go paycheck to paycheck: We buy cars, pay for them and keep them for a long time. We paid off our mortgage, instead of taking the equity out of our home and blowing it like so many people seem to have done. We still don't have a big screen TV. The old 34" tube TV still plays fine. We didn't have kids that we could not afford to raise. We pay our credit cards off in full each month. We don't live in a McMansion. We actually bought an affordable home many years ago. We pay ourselves first each month. We have dinner at home. We take a lunch to work. We don't buy $5.00 cups of coffee.

Most households would do just fine if they adopted some or all of the strategies listed above.

@D: If you enjoy tinkering, that's great, because you could probably spin your hobby into a little extra money as well. For example, you could do handy work, or perhaps buy and restore second hand furniture.

@D: A lot of furniture and appliances are listed cheap or free on Craigslist. :)

@Drhilarius, Crystal Thanks for the ideas! My fiance moved in with me and I now have a lot less space (not complaining - just explaining) and thus do not have any room for the extra furniture. I'm sure once we buy our new place I'll pick it back up though :)

I live in the expensive SF Bay Area and I do not live paycheck to paycheck. I make 50K per year (and have great benefits). This is how I do it:

--I'm single
--I drive a 13 year old economy car and have always lived reasonaby close to work
--I live in a studio apartment
--I don't have cable or a TV. I watch movies & TV online/on my computer. Movies are borrowed from the library.
--I eat out at moderately priced places several times a week, but otherwise buy groceries & try to get them on sale.

I just don't get how people can't save money. I can see if you're unemployed, etc. But I see plenty of people who earn what I do and who save very little. I just don't get it. I think you have to train yourself go against the norm though. That is not difficult for me.

@ FMF----A really good book that touches on both career and savings issues and what people do to get out of "paycheck to paycheck" mode is "The Difference" by Jean Chatzky. It is the best book on money/career issues I've read. She's way better than Suze Orman.


I couldn't have had the life that I have had without total cooperation from my wife. When our two girls were little she used to make their dresses, she also does wonders in the kitchen. In fact one of her stories is about her days as a teacher's aide in a pre-school that was subsidized by the state for welfare mothers that were supposedly trying to better themselves and get off of welfare by taking classes or learning job skills. Her teacher came up with the idea of showing welfare mothers how to make very tasty, healthy, and nutritious meals from scratch by buying the things that were 'on special' or 'great deals' at the supermarket. The bottom line was that these mothers weren't interested, they preferred to take their kids to a fast food restaurant instead of learning how to cook. Some of them unfortunately were very content to make welfare, food stamps, subsidized housing, free healthcare etc. a way of life. Some even said to her, "What's the incentive to take classes, learn job skills, and earn money, then I would just lose all the free benefits I'm getting. They were also incentivized to have more children.

It's pretty amazing to me how little it costs to make nutritious meals if you are short of money. You just search for the best values such as chicken, turkey, fruits, vegetables etc. in season and forget about processed foods and expensive steaks & fish. I would put our home made soups up against any of the canned varieties. I am also amazed how much some people spend per year on bottled water. Our tap water is excellent where we live but I am able to afford a Reverse Osmosis system under the sink that removes about 99.8% of all the dissolved solids, including chlorine, essential for making our tea. Then there's Starbucks, of course, that can be an expensive addiction. If you like wine, as we do, and have a Trader Joe's in your area, try "Two Buck Chuck, i.e. Charles Shaw" - it's a great buy for $1.99/bottle.

I am in deep in the debt repayment part of my financial plan so I guess it could be said that I live paycheck to paycheck by default. But since about $1100 of my $6000 monthly income goes to paying off debts, I know that in the near future, when I have paid everything off, I will have the extra $1100 a month free and clear. That is almost equivalent to another paycheck! :)

I 100% agree. Although seeing some of my friends buying the McMansions really made me want to do it as well I fought it. As much as I agree with you I am a gadget guy and have to have the TV's (small rooms and big tv would take up too much room).

My favorite quote is "... We didn't have kids that we could not afford to raise ...". I can't tell you how great of a statement that is. I am sooo ready to start my family, but it's taken me many many years of saving to feel this way. The best two pieces of advise I ever got was from my sister who said:

1. A marriage is not easy, you have build a solid foundation a marriage, only then can you support the weight of having children.
2. You need at least $50K saved away for a child before you think about having one.

I am know seeing why with some old friends going through divorces because they werent ready for marriage and the kids. Kudos to you RF, smart man / woman!

@D No prob. Good luck with your new living situation!

From personal experience: Clothes on the floor, not a big deal. Dishes being left in the office (man cave) for 2 months, that's a bigger deal. LOL

@Old Limey
I LOVE 2 buck chuck!!!! My dad used to tell me stories about how he and my mom would drink it growing up...

As far as the welfare is concerned, I believe your touching upon a very 'touchy' subject. I personally dont agree with the social program and believe a program like WORKfare is a better option. Your story is a perfect example.

One other tip that is a good one in our area is - Buy your fruits and vegetables where the new immigrants buy theirs. We have a small store, the kind where lots of the fruit & vegetables are displayed outside - it's amazing how much cheaper things are than at the supermarket and the quality has been excellent. This may not apply in states they don't produce their own fruits & vegetables but where we live the large producers are only a couple of hour's drive away.

@Old Limey

I make mention above about a new market I go to. I found an asian (Korean, I believe) market near me that has great deals on fish and produce. Over 50% cheaper than the traditional supermarkets. I used to pay $1.22 for a green pepper at my local supermarket and now pay .40 - .50 for the same pepper AND it lasts longer!

Thanks Strict & D. Glad to see someone agrees with where I'm coming from.

For the record, I DO live pay check to pay check using my "Going Broke To Win Big" method where I flush all my money out to my investment bank, and debt bank to maximize returns and minimize expenses.

I think I have literally earned/saved over $10,000/yr due to this method.

Living paycheck to paycheck is freaking awesome! I know EXACTLY how much I can spend b/c I live on razor thin cash flow. Keeps me disciplined, and over time, it builds great wealth.

Financial Samurai

@Old Limey
In Houston, you are best off to buy your fruits and veggies FROM the immigrants. Great quality and low prices.

Mysticaltyger --

I like that book too. I have some upcoming posts on it. Stay tuned.


Sounds like you're well on your way. The future will be very nice to you!!! $1100 is a good sum to be socking away

My wife's story about welfare mothers would definitely not be politically correct if I had mentioned ethnicities but I purposely avoided that. I could also discuss two visits to San Quentin prison that my company's management association organized back in the 70's, that was also a big eye opener to us for similar reasons

I also remember having to take affirmative action classes at work after the civil rights legislation was enacted and we were instructed how to deal with women in the workplace as well as minorities. For some reason when I raised the question about whether I was also considered a minority because I was born in England it just got a lot of laughter - I don't know why because I was the only "limey" in our division of 300 engineers.

I wouldn't be suprised if a lot of these paycheck to paycheck people are actually living off their future paycheck.

Mainly buying stuff on credit card without having the money until the bill is due the next month. I lived like that for 3 years. Only in June when mvelopes forced me to catch up did I change. Now I just live current paycheck to paycheck which is much improved!

Another tip for saving 2% on almost all of your expenses is this :--
This method takes discipline and may not be suitable for everyone.
I hardly ever use cash these days. I put everything I possibly can on one of my credit cards.

I have a Costco/Amex card that gives 3% cash rewards for gasoline and restaurant meals, 2% for Travel expenses, and 1% for everything else.
I have a Fidelity Investments/Amex card that gives a 2% cash reward on everything.
I use that for utility bills, eBay purchases, and store purchases.
I have a Fidelity Investments/MasterCard that gives 1.5% cash rewards for merchants that don't accept Amex.

It's surprising how the rewards add up.

@Old Limey

To me, welfare is the #1 reason people say "the rich are getting richer and the poor are getting poorer". That social program has failed to do anything for the people. Yes, it may support them to the point where they can feed themselves and their children (to an extent), but it has done nothing to show them how they can raise above the poverty line. They are content with getting "free money" for doing nothing. Their kids see this and the cycle begins all over again.

FMF, you should really do something on this as it is an interesting topic and many people would have a lot to say about it. Like I said above, I am in favor of a more 'give to society' approach like workfare. I think this was suggested a while time ago (early '70's), but did not catch on because many called the program racist. To me affirmative action is more racist, well socio-economicist, than workfare. If a person deserves the job they deserve the job, they shouldnt get the job because they fill some quota that the company has to meet.

Anyways, I'll step off my milk box and let the flaming begin...

Another good way to earn money is to switch to online banks. All of my online banks, from checking to savings, pay me to keep money there.

What’s more, those living paycheck-to-paycheck that chronically overdraft have some benefits (they should, over course, first learn how to use a check register). Two of my checking account offer overdraft lines of credit, thus one only pays a small percentage in interest for overdrafts. Not getting hit for $35 per overdraft is a good way to stay out of the death spiral of bank debt.

Also, for those who insist on not using a register, both of my banks keep pending transactions posted until they clear and post transactions virtually in realtime, so the online banking center is a very accurate picture of your account (you, of course, have to keep track of checks and auto-debits). Also, all of my ATM fees are refunded.

All of these little things can = huge savings over time.

My BJ's card gives me "BJ bucks". With the way my fiance and I shop, I get about $20/month which isnt so bad. We usually drop about $300 each time (maybe once a month or month and a half) so 280 for the big stuff isnt so bad in my book.

I also put all my extra cash into vanguard funds that make about 3% plus the rise and fall of the S&P. So lately they've been great :)

"Landlords don't have a scrap of sympathy for you when you miss a rent payment"

As a landlord myself I would say that I might have sympathy for people who can't pay rent depending on the circumstances. But I do not run a charity and do not have a budget to provide them free housing.

D, "I am in favor of a more 'give to society' approach like workfare"

Are you aware they already reformed welfare significantly in 1996 adding time limits to welfare and a work requirement?


I am aware of the program in general, so I can not quote specifics nor dates in which it has been amended. I do know, however, that there are many loop holes that allow individuals to have their benefits extended while not working. IE: creating aliases and having each one collect the benefit or claiming children that do not exist or adding more dependents on the forms and collecting for them. Also, after a certain amount of time, I know that you can reapply for benefits again once a certain time has lapsed. I know of a case where a woman created 4 aliases and would rotate around which one was collecting which provided her with a steady stream of income.

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