Living paycheck to paycheck gets harder

[one...two...tree 2,762]

By ANNE D'INNOCENZIO, AP Business Writer

The calculus of living paycheck to paycheck in America is getting harder. What used to last four days might last half that long now. Pay the gas bill, but skip breakfast. Eat less for lunch so the kids can have a healthy dinner.

Across the nation, Americans are increasingly unable to stretch their dollars to the next payday as they juggle higher rent, food and energy bills. It's starting to affect middle-income working families as well as the poor, and has reached the point of affecting day-to-day calculations of merchants like Wal-Mart Stores Inc., 7-Eleven Inc. and Family Dollar Stores Inc.

Food pantries, which distribute foodstuffs to the needy, are reporting severe shortages and reduced government funding at the very time that they are seeing a surge of new people seeking their help.

While economists debate whether the country is headed for a recession, some say the financial stress is already the worst since the last downturn at the start of this decade.

From Family Dollar to Wal-Mart, merchants have adjusted their product mix and pricing accordingly. Sales data show a marked and more prolonged drop in spending in the days before shoppers get their paychecks, when they buy only the barest essentials before splurging around payday.

"It's pretty pronounced," said Kiley Rawlins, a spokeswoman at Family Dollar. "It seems like to us, customers are running out of food products, paper towels sooner in the month."

Wal-Mart, the world's largest retailer, said the imbalance in spending before and after payday in July was the biggest it has ever seen, though the drop-off wasn't as steep in August.

And 7-Eleven says its grocery sales have jumped 12-13 percent over the past year, compared with only slight increases for non-necessities like gloves and toys. Shoppers can't afford to load up at the supermarket and are going to the most convenient places to buy emergency food items like milk and eggs.

"It even costs more to get the basics like soap and laundry detergent," said Michelle Grassia, who lives with her husband and three teenage children in the Bedford-Stuyvesant section of Brooklyn, N.Y.

Her husband's check from his job at a grocery store used to last four days. "Now, it lasts only two," she said.

To make up the difference, Grassia buys one gallon of milk a week instead of three. She sometimes skips breakfast and lunch to make sure there's enough food for her children. She cooks with a hot plate because gas is too expensive. And she depends more than ever on the bags of free vegetables and powdered milk from a local food pantry.

Grassia's story is neither new nor unique. With the fastest-rising food and energy prices since the 1980s, low-income consumers are stretching their budgets by eating cheap foods like peanut butter and pasta.

Industry analysts and some economists fear the strain will get worse as people are hit with higher home heating bills this winter and mortgage rates go up.

It's bad enough already for 85-year-old Dominica Hoffman.

She gets $1,400 a month in pension and Social Security from her days in the garment industry. After paying $500 in rent on an apartment in Pennsauken, N.J., and shelling out money for food, gas and other expenses, she's broke by the end of the month. She's had to cut fruits and vegetables from her grocery order — and that's even with financial help from her children.

"Everything is up," she said.

Many consumers, particularly those making less than $30,000 a year, are cutting spending on nutritious food like milk and vegetables, and analysts fear they're further skimping on basic medical care and other critical services.

Coupon-clipping just isn't enough.

"The reality of hunger is right here," said the Rev. Melony Samuels, director of The BedStuy Campaign against Hunger, a church-affiliated food pantry in Brooklyn.

The pantry scrambled to feed 5,000 new families over the past 12 months, up almost 70 percent from 3,000 the year before.

"I am shocked to see such numbers," Samuels said, "and I am really concerned that this is just the beginning of what we are going to see."

In the past three months, Samuels has seen more clients in higher-paying jobs — the $35,000 range — line up for food.

The Regional Food Bank of Northeastern New York, which covers 23 counties in New York State, cited a 30 percent rise in visitors in the first nine months of this year, compared with 2006.

Maureen Schnellmann, senior director of food and nutrition programs at the American Red Cross Food Pantry in Boston, reported a 30 percent increase from January through August over last year.

Until a few months ago, Dellria Seales, a home care assistant, was just getting by living with her daughter, a hairdresser, and two grandchildren in a one-bedroom apartment for $750 a month. But a knee injury in January forced her to quit her job, leaving her at the mercy of Samuels' pantry because most of her daughter's $1,200 a month income goes to rent, energy and food costs.

"I need it. Without it, we wouldn't survive," Seales said as she picked up carrots and bananas.

John Vogel, a professor at Dartmouth College's Tuck School of Business, worries that the squeeze will lead to a less nutritious diet and inadequate medical or child care.

In the meantime, rising costs show no signs of abating.

Gas prices hit a record nationwide average of $3.23 per gallon in late May before receding a little, though prices are expected to soar again later this year. Food costs have increased 4.5 percent over the past 12 months, partly because of higher fuel costs. Egg prices were 44 percent higher, while milk was up 21.3 percent over the past 12 months to nearly $4 a gallon, according to the Bureau of Labor Statistics.

The average family of four is spending anywhere from $7 to $10 extra a week — $40 more a month — on groceries alone, compared to a year ago, according to retail consultant Burt Flickinger III.

And while overall wage growth is a solid 4.1 percent over the past 12 months, economists say the increases are mostly for the top earners.

Retailers started noticing the strain in late spring and early summer as they were monitoring the spending around the paycheck cycle.

Wal-Mart and Family Dollar key on the first week of the month, when government checks like Social Security and public assistance generally hit consumers' mailboxes.

7-Eleven, whose customers are more diverse, looks at paycheck cycles in specific markets dominated by a major employer, such as General Motors in Detroit, to discern trends in shopping.

To economize, shoppers are going for less expensive food.

"They're buying more peanut butter and pasta. And they're going for hamburger meat," Flickinger, the retail consultant, said. "They're trying to outsmart the store by looking for deep discounts at the end of the month."

He said the last time he saw this was 2000-2001, when the dot-com bubble burst and the economy went into a recession after massive layoffs.

For now, low-price retailers are readjusting their merchandising and pricing.

Wal-Mart is becoming more aggressive on discounting. It announced Thursday it is expanding price cuts to 15,000 items, ranging from Motts apple juice and Progresso soups to women's fleece tops, heading into the holidays.

Family Dollar, whose food offerings were limited to candy and snacks until two years ago, has expanded its mix of groceries like fruit cups, cereal and such refrigerated items as milk and ice cream while cutting back on shoes. This summer the chain began accepting food stamps.

Food pantries are also getting creative. Samuels said her church, Full Gospel Tabernacle of Faith, just started offering free cooking classes to teach clients who are diabetic or have other health conditions how to prepare vegetables like squash. It's also offering free exercise classes.

"We are trying to make them health conscious," Samuels said. "It's not right to give them just anything. Our mantra is eat well and live well."

___

Associated Press Writers Geoff Mulvihill in Mount Laurel, N.J., and Terry Tang in Phoenix, Ariz., contributed to this report.

http://news.yahoo.com/s/ap/20071020/ap_on_...36AHmhflfRv24cA

[Ban Hammer 14,635]

i've had to cut back pizza to 1-2 times a week now

[one...two...tree 2,762]

i've had to cut back pizza to 1-2 times a week now

The price of pizza has gone up over there? We just had lunch at Costco today - 3 of us ate for under $8. The cheese pizza at Costco is gooey delicious and cheap.

[Kathryn41 3,205]

I find it somewhat worrisome that people feel that shopping for necessities like milk at 7-Eleven stores can be used as an indication for having trouble making ends meet. People who have financial difficulties and buy milk at 7-eleven don't know how to shop wisely. Corner stores charge substantially more for basic products. If you are truly watching what you buy, you don't buy milk, or eggs or any basic grocery item at 7-11 - ever - and you watch out at Daily Dollar stores as well. A lot of items that they sell for a dollar cost 89 cents at the grocery store.

That doesn't mean that there aren't people who are suffering from their pay checks not going as far as they used to, because there are and there are certainly people who are conscientious and wise shoppers who are not finding their money lasting until the end of the month. I just find it sad, though, that people are complaining about their money not lasting and then say they are having to buy only 1 gallon of milk at 7-eleven a month rather than 3 when if they bought their gallon of milk at one of the value grocery stores they could buy a loaf of bread plus the milk for the same price they pay at 7-11. For many of them it seems not that they don't have enough money but that they don't spend it wisely. There is a big difference.

Again, this is not to belittle those who truly are facing hardships because they run out of money between paychecks and who are shopping wisely, or who have unavoidable expenses due to medical needs or other necessities. They do have my sympathy.

[Hilarious Clinton 452]

i've had to cut back pizza to 1-2 times a week now

The price of pizza has gone up over there? We just had lunch at Costco today - 3 of us ate for under $8. The cheese pizza at Costco is gooey delicious and cheap.

I love the Costco.

[Pinocchio Liberal 268]

I off set it by dining and dashing at DENNYS!

[William33 110]

Clearly, average annual salary increases (typically 3%) are not in-step with the annual cost of living escalation (6-7%). No news here.

No wonder why my Wife and I want to move to Indonesia, where expatriates live like kings.

[Alex+R 0]

I find it somewhat worrisome that people feel that shopping for necessities like milk at 7-Eleven stores can be used as an indication for having trouble making ends meet. People who have financial difficulties and buy milk at 7-eleven don't know how to shop wisely. Corner stores charge substantially more for basic products. If you are truly watching what you buy, you don't buy milk, or eggs or any basic grocery item at 7-11 - ever - and you watch out at Daily Dollar stores as well. A lot of items that they sell for a dollar cost 89 cents at the grocery store.

That doesn't mean that there aren't people who are suffering from their pay checks not going as far as they used to, because there are and there are certainly people who are conscientious and wise shoppers who are not finding their money lasting until the end of the month. I just find it sad, though, that people are complaining about their money not lasting and then say they are having to buy only 1 gallon of milk at 7-eleven a month rather than 3 when if they bought their gallon of milk at one of the value grocery stores they could buy a loaf of bread plus the milk for the same price they pay at 7-11. For many of them it seems not that they don't have enough money but that they don't spend it wisely. There is a big difference.

Again, this is not to belittle those who truly are facing hardships because they run out of money between paychecks and who are shopping wisely, or who have unavoidable expenses due to medical needs or other necessities. They do have my sympathy.

Often, people have trouble finding transportation to those other places. Or it's a long way away to carry gallons of milk home if you don't have a car and take public transportation. Probably if you're not eating 2 out of your daily 3 meals to make sure your kids eat, you don't have 2 cars (or probably even 1). I just think there's a lot more to consider. If you're having that much trouble making ends meet, you probably know the cheapest place to shop. I have a very hard time believing there are more than 10 people in the country who can't make ends meet because they're shopping at the wrong stores.

[Widge 0]

I loved the comment on the news the other night something along the lines of ...... inflation was higher than analysts expected but if you took out food and fuel increases it was as expected ..... hmmm excuse me but isn't food and fuel the most important/relevant items to the average man on the street.

Am I the only person horrified to discover how many food handout places there are in this country and how many families depend on them ...... not quite what i expected from the richest country in the world.

[eric&gen 0]

I guess its time to cut back on porn magazines and pizza night lol

[Mr. Big Dog 10,747]

Clearly, average annual salary increases (typically 3%) are not in-step with the annual cost of living escalation (6-7%). No news here.

True. Too many people are worse off year after year. On the other hand, places where people go simply to indulge are still growing handsomely. If people would generally have ever less disposable income year after year, that growth couldn't happen.

[Pinocchio Liberal 268]

I love pessimism so much! WHOA is me,pissin and moanin! where would I be without self pitty?

Edited October 21, 2007 by CarolsMarc

[William33 110]

I love pessimism so much! WHOA is me,pissin and moanin! where would I be without self pitty?

Marc,

Life gets more difficult and exponentially more expensive as we get older; thus people will complain about it.

Try to have a little bit of empathy for others.

Is that too difficult for you?

[MissStacey 1]

It has been a while since I have had a paycheck.

There is a part of me that enjoys not working but I know my husband won't contribute to my Burberry and Louis Vuitton addiction.

[rebeccajo 14]

One of the reasons we decided to sell our suburban home was rising gasoline costs.

I estimate we will save $150 to $200 a month in gasoline costs. That's money we can use elsewhere rather than lining the pockets of the oil barons in Washington.