According to a recent survey by PYMNTS.com and LendingClub, 58 percent of Americans have admitted to living paycheck to paycheck, including more than 30 percent of those making upwards of $250,000. Anuj Nayar, Financial Health Officer at LendingClub joined Cheddar News to break down how inflation is impacting income, how higher-income earners are facing the same issue, and what that figure means about our economy. "The one that really shocked me too is 12 percent of them are just not even making the payments, and a lot of that is due to the fact as you get more income, unfortunately, you have to carry more debt," he said of the $250K-plus earners.

Opening Bell

Why Almost a Third of Americans Making $250K Live Paycheck-to-Paycheck

here to discuss as a news Mayor, Financial Health officer at lending club. Thanks so much for joining us. Tell us more about the main contributors forcing people to live paycheck to paycheck here. Um, and of course this is a concern. But where do you think this trend is initially starting? Does this start with the pandemic? Good morning. Thank you so much for having me. Um, it's a good question. I mean, what you've seen happen over the last 20 years or so is that while waited are increasing just a little bit and we've seen a little bit of a move of that over the last year or so. The pricing of everyday things has shut up the pricing of education, the pricing of housing, the pricing of college medical expenses. They will shut up. And they basically, people's paychecks haven't kept, haven't kept pace. And this is what we're seeing happen right now. I think when you hear the term paycheck to paycheck, most people think it's like a low income american and the reality that we're starting to see now is that it's the predominant way that people are living in the United States is just making ends meet. Yeah. And I think that That is a reason why we need to circle back to that metric. We mentioned over 30% of those earning 250,000 or more say they're living paycheck to paycheck. I know there are a lot of people out there that are on the lower-income side, living this lifestyle and really struggling out there. And they're like if I had $250,000 for my salary I would make that stretch. But the reason we mentioned this is because it says something about our economy, right? So what exactly does it say when we see this subset of this group of high earners living paycheck to paycheck? Yeah, it totally does. And last month was the first time that we've actually broken out of that very, very high metric. Prior to that we looked at only $100,000 plus. When we did the data, it was the actual studied him. A few months ago we did $100,000 plus. Was it was half of Americans owning more than $100,000 were like, well what happens if we break it up further? I honestly thought we were going to see a huge drop off and when it comes into almost a third of americans Who are earning five x. The national median living paycheck to paycheck. It was a shock to the lendingclub team too because we thought we thought it would be a different stat. Speaking to what we say, we say paycheck to paycheck. What do we mean? We actually mean um has paid their bills but has nothing left over at the end of the end of the paycheck period with every two weeks or every month. There is a subset that we look at which of those people who are living paycheck to paycheck and just don't make their all their bills come together? They're struggling to pay their bills? There's kind of two statues should look at The 30% number was the living paycheck to paycheck, which means, you know, you're earning $250,000 a year and you're just making ends meet is kind of nuts. But the one that really shocked me too is This is like 12% of them are just not even making the payments. And a lot of that is due to the fact as you get more income unfortunately have to carry to carry more debt, right? And it's just the fact of life until you reduce certain very, very high income space. People take more debt on as they get as they, as they get more income. And, you know, as you saw from your previous report, they're talking about, you know, mortgages and housing and all those other things. It's like to feed into that environment. I mean, if you're trying to buy a house today versus this time a year ago, Uh it's gonna cost you 67% more than it would have done um this time last year for the same house, right? Because You're paying 6% on your interest rates, You know, the 2%, you were paying just a year ago, really appreciate you making those distinctions and also mentioning debt and lifestyle creep, Of course, being behind a lot of this. So what are some of these higher earners doing to offset their living expenses right now? Is this sustainable? And what do you think? People who are on the lower income side as you mentioned living paycheck to paycheck but maybe not even able to make bills. Um, what can they learn here from the higher earners? Yeah, I mean there's something everybody can do, right? I mean one of the biggest drivers that we're seeing is just think like the massive increase in gas prices. So on average you're paying $5,000 more a year. That's like $200 a month On gas now that it's, you know, average of national, average of necessary, national average of $5 a gallon. But I mean I live in San Francisco, I've seen it as high as eight here, right? I mean that's just, that's just $100 or $20 more your gas tank just right away. That's for many people, that's not a discretionary expense, right? That's what you got to pay something with food prices are going up. Do you need to look at your budget if you look at your budget that you used last year and you're trying to use it for this year, it's not gonna work right? There's some other things you can look at. I know a lot of friends, I started car sharing right? Just like, hey, as opposed to everybody driving to work or school or or an event maybe we can, you know, split the costs and drive and drive together and those, those are some of the things I think a lot of people do. The other thing has been a huge movement to, is people as opposed to buying the brand names for food, is buying the store brands and you're seeing an increasing number of people focused on, excuse me, focus on there, their core expenses and not drive discretionary. I saw this morning you're talking about the bed bath and beyond ceo being replaced. I saw last month target had pretty disastrous earnings numbers because people are pulling back on discretionary expenses. Like do I need this new Kitchenaid mixer? I know I need to get the food, I need to get the other things. But can I make do with some of these other things um, to build up a little bit of a cushion because the one thing you need to do right now is build a cushion if you can, to save some money so that if you get stuck in an emergency, you're not having to rely on a credit card whose interest rate that's just shooting up month by month as they, as they match the february. Yeah, I'm glad that you mentioned kind of the danger of using a credit card during this time, especially as debt was one of the main factors that you said was a problem when people are living paycheck to paycheck. But is there a way that credit cards can be used right now to help people out as well. Oh absolutely, absolutely. I mean I use my credit card almost daily right? I mean it's kind of my primary way to pay for things because it's massively convenient. But if you're not managing to pay it off every month, if you're not managing to a budget, you've basically taken out a personal loan, it's a pretty bad personal loan, but you've taken out a personal loan and right now that cost of that debt is going to increase literally monthly as credit card rates start to catch up to the increased Fed rates that are being announced, the next Fed rate comes I think out in two weeks and everyone is expecting another, You know, three quarters of basis points and .75% increase that leads directly into how much all of your debt costs and so if you're not paying, it off we strongly, suggest you. all the pundits are saying, you strongly suggest like lock in a fixed right now versus letting that credit rate just get out of control and keep going And there's 30 seconds here, I have to ask you what you think about the middle class moving forward, what does it look like if we see fewer jobs out there and also these prices and inflation continuing. Yeah, I mean it's gonna be, it's interesting question like I think what you're seeing right now is the consumer seems in pretty good shape still. Like I was, I was at the airport recently and it's packed. I was at a restaurant, it's packed. But as the stuff continues through and we thought that the, uh, you know, jobs, jobs disappear, what do they say? It's not, I had a great, it's not a white collar recession or a blue collar recession. The recession, because you're seeing it specifically hit areas like san Francisco with a lot of the tech activity. Um, it's gonna feed into how, how people can live every day and that's obviously gonna feed through the what they can spend, unusual hair, Financial health Officer at London Club. Thank you so much for joining us. Really good perspective there.