Living paycheck to paycheck means being dependent on getting paid in the future to pay off current debt. For example, someone may charge most of their expenses on a credit card every month, get paid at the end of the month, and pay off the credit card. The system works as long as they consistently get paid so that they can in turn send that money to the credit card company.
Living like this is the reality for the majority of Americans. According to recent studies, about 61% of people are in this position. For low-wage earners, it’s even higher, at eight out of 10. Low-wage earners, in the terms of the study, are those who make less than $50,000 annually.
It’s not just those earning a low wage who live paycheck to paycheck. For those who make more than $100,000 annually, four out of 10 are still dependent on getting that next paycheck. They simply have higher expenses to go along with their higher earnings.
What problems can this create?
As noted, people can often make the system work for a time, but it is very fragile. Any unexpected expense may be too much for them to cover.
It also makes job loss or a reduction in wages quite problematic. Someone who is living on such a strict budget may not even be able to afford to take a few weeks to find a new job, let alone spend months looking for a job they actually want. If someone gets laid off, things that previously felt affordable could become insurmountable quite quickly.
It is at times like these that people need to know all the options they have, which may include bankruptcy. It’s wise to get legal guidance to find out more.