Want a Steady Income? There’s an App for That

http://www.nytimes.com/2015/05/03/magazine/want-a-steady-income-theres-an-app-for-that.html?emc=edit_tnt_20150429&nlid=66702700&tntemail0=y&_r=0

by known • 11 years ago

114 105 11 years ago

nytimes.com

aresant• 11 years ago

Something that surprised me when I first started hiring employees was how hard it was for people to manage their cash flow, especially at the more limited levels.

We started with a once-a-month paycheck, which my co-founder and I were used to and saved some payroll fees.

This subsequently blew up in our face within a few months as people would spend heavy @ the front end of the month, wouldn't save for things like car repairs / gas / etc, and were out at the end of the month funding living with CCs.

So I applaud this effort for a start-up - I'm excited to see where they take it.

Swizec6• 11 years ago

As somebody who varies between managing cashflow well and not-that-well ... it all depends on how much you make and the steadiness of your income.

For instance, last year I had a string of events where clients were a few months late in paying me. This created a snowball effect that took over a year to fully get rid of. During this time I was always running out of money by the end of the month, and it was always a race of whether my credit card payment[1] would get triggered before the wire transfer for my payment arrived.

Now I have enough saved up for just two months of living.

Suddenly cashflow management isn't a problem at all. If something happens, it happens, I can buffer it all out and money just isn't as big a problem. At least not for the big stuff.

It's a bit like clothes. I can manage my laundry perfectly fine. But if for some reason I don't do laundry on Saturday, I will be out of clean clothes by Tuesday.

[1] it's set up so it gets blocked if I don't pay it off in full every month

peteretep2• 11 years ago

"Rich" people have a real advantage here.

For historic reasons, I have an overdraft facility on one of my checking accounts of $15,000. This means I can time dividend payments from my company optimally for tax, large investments, and so on, without worrying too much about personal liquidity, which saves and makes me money. The interest isn't free, but we're talking "daily latte" sort of expenditure.

sukilot4• 11 years ago

Monthly payroll is illegal in California, for this reason.

Credit cards half one-month grace period, so living on credit cards wouldn't actually be a problem though. Spending more than income would be a problem.

pzxc• 11 years ago

Every one of the 200,000 public employees working for the State of California gets paid once a month, on the 1st.

cornellwright• 11 years ago

IANAL, but monthly payroll is legal in California for salaried exempt employees. For non-exempt it has to be at least bi-monthly.

peteretep2• 11 years ago

    > Monthly payroll is illegal in California, for this reason

Monthly payroll is the usual in the UK. If you switched to weekly, most people wouldn't save enough to make their rent each month, where the trick on monthly income is to just front-load all the big expenses to just after you've been paid.

cperciva• 11 years ago

once-a-month paycheck

I was surprised to learn recently that this isn't legal in BC: Employees here must be paid at least twice a month, with at most 16 days between paychecks.

It always seemed a bit silly to me, but what you describe explains why it's necessary I suppose.

patmcc• 11 years ago

>We started with a once-a-month paycheck, which my co-founder and I were used to and saved some payroll fees.

Just a reminder to any other founders - some jurisdictions may dictate how often you must pay your employees, make sure to check your local laws. My province requires payment at least twice a month. I'm not suggesting aresant was violating any laws here, but once you start to pay people you need to be up on your employment law - there can be serious consequences.

grecy4• 11 years ago

Thinking about money gives her a jolt, “like you’re about to get into a car accident,” she later told me. There’s the $3,700 for massage-school tuition that she still owes on her credit card; the $60 a month for drugs for her anxiety and bipolar disorder, which she might skimp on again

Sentences like that make me sad about the reality of life for tens of millions of working Americans.

I just visited Australia after 9 years in North America, and it's like a slap in the face to realize there are no desperate people there. Almost everybody has enough money for basic essentials, and nobody is crushed with student debt or the fear of not being able to pay medical bills.

It really does feel like another planet when people earning "minimum wage" are doing just fine, are extremely happy, and likely less stressed than the career workers in North America, simply because they earn "enough to live comfortably"

Swizec6• 11 years ago

It really does feel like another planet when people earning "minimum wage" are doing just fine

There's a big difference between getting minimum wage every 5th of the month on the dot, or getting $2k one month, $10k next month, $1k third month and so on.

grecy4• 11 years ago

When getting minimum wage is enough of a baseline to have a great and worry-free life, anything above that is cream.

nilkn2• 11 years ago

The most horrifying thing is that not only do minimum wage jobs in the US barely get you above poverty, but that many people struggle even to get one of these jobs.

I'm willing to wager that many readers here have never looked for a minimum wage job. If you haven't, you may not realize how much competition there can be. It's really shocking. This is especially true in smaller towns, where there are very few jobs that aren't minimum wage. I remember, years ago when I was in high school, my dad was a local business owner in a small town and was connected with all the other business owners. On several occasions, a friend or family member needed a minimum wage job and literally couldn't get one due to scarcity; my dad had to approach the owners of other businesses and put in direct recommendations so someone could get on at, say, a Dairy Queen or a car wash.

Retra• 11 years ago

I've looked for minimum wage jobs. Never worked one: I'm too "over qualified."

Xixi3• 11 years ago

If the job market is really that, a market, then it should not come as a surprise. It's the imbalance between the number the people seeking a kind of job and the number of jobs available that drives the salaries all the way down to minimum wage. Hence the lowest paying of all jobs are the most fiercely fought for.

Now of course there is another side to this equation: the remuneration is capped by the (perceived) value derived from the work done.

grecy4• 11 years ago

The balance of power between employers and employees in the United States is vastly different from anything else I've experienced. It's commonly said that people are lucky to even have a job, and their bosses know it. It's bordering on slavery, and I really, really don't like the feel of it.

In Australia, the exact opposite is true - employers are lucky to have employees (who could, at any moment quit and do perfectly fine on welfare) and so employers know it and are extremely kind and thankful to their employees.

comrh• 11 years ago

Abilify, a medication for bipolar disorder, is $200 with insurance, over $1000 without. What do we expect people to do?

brc3• 11 years ago

Australia is no picnic. The main cities cluster in the top 10 most expensive places to live in the world.

The Australian demographic time bomb is starting to go off, as well. The amount of healthcare and aged care spending is starting to take off like a rocket and this will-inevitably- lead to reductions in eligibility and payments, including what treatments are avialable from the health system.

What Australia does have is a lack of a large poverty stricken underclass, mainly because of the last 50-100 years of the countries history, which includes a lot of prosperity from agriculture and mining so that just about everyone has always had a job and intergenerational poverty has not been able to get a wide hold.

Those things are not guaranteed to last forever. Australia might just look like California in the 1950s right now, with a troubled future ahead.

switch007• 11 years ago

and this will-inevitably- lead to reductions in eligibility and payments, including what treatments are avialable from the health system.

I was in Oz a couple of weeks ago and the government announced they're "reviewing" Medicare. The way they kept stressing that they're working with doctors and it's not a cost-cutting exercise made it painfully obvious they're going to do cost-cutting.

megablast• 11 years ago

The main cities cluster in the top 10 most expensive places to live in the world.

This is mainly because the Aussie dollar was so high for so long, things haven't caught up yet. Pay is a lot higher in Australia as well, with a high minimum wage.

grecy4• 11 years ago

How long have you lived in Australia?

How long have you lived in the US?

I'm not saying Australia is perfect (far from it).. I was pointing out that it's sad and unacceptable to have a society where tens of millions of people are working hard and living below the poverty line, when there are many, many examples to show it doesn't have to be like that (Australia just being one of the many)

tesin• 11 years ago

I'm from Melbourne, living in Boston. There's an entire middle class waiting to explode. There's rampant underemployment, rising credit card debt, and my entire generation has given up on the notion of ever fully owning a home. There's many many reasons why I moved to the U.S.

ndomin• 11 years ago

My understanding of this is you set up a monthly allowance with them and they save your surplus for the months where you don't make as much.

This doesn't seem like solving a problem, rather they are creating an illusion of solving a problem. Essentially they are parenting. Which some people might need. But what a better solution might be is to teach people to create a savings account and budget themselves. And not surprisingly there are plenty of apps that do just that.

cortesoft• 11 years ago

They also will provide interest free loans if the user hasn't yet built up enough savings. So, in that sense, it is also a bit of an insurance program.

bduerst• 11 years ago

Yeah, it seems strikingly similar to payday-advance lines of credit, except with lower interest rates (I assume).

dragonwriter2• 11 years ago

My understanding of this is you set up a monthly allowance with them and they save your surplus for the months where you don't make as much.

No, they calculate what they call an "average" of your income over a period of time (though it is expressly not any of the usual mathematical averages and they don't disclose how they calculate it) and they retain your surplus above that "average" in better months pay you the difference to reach back to your "average" in months that are below.

This doesn't seem like solving a problem, rather they are creating an illusion of solving a problem.

Not always an unsuccessful business model.

reedlaw• 11 years ago

I'm concerned about what Even's actual business model might be. It's hard to imagine that it doesn't involve somehow skimming a portion of the salaries they manage. Even if it's a tiny percentage, it seems like it would be an incredibly difficult tightrope walk to keep the portion "fair" and not veer off into taking advantage of the very people the app is purported to aid.

kamaal2• 11 years ago

>But what a better solution might be is to teach people to create a savings account and budget themselves.

You will be surprised how bad people are at this. In fact this app aims to do what a person must be doing naturally. And don't ever think that this is a problem only with the poor. This is an issue faced by many people. Failure to understand how money loses value(Inflation) and how it multiplies(Investments) lie at the core of why people get into financial issues. Ideally speaking you can get rich if you understand how investments work on long periods of time even on moderate salary. A lot of people do it. Unfortunately such people routinely branded as being miser, or frugal or worse; these days the cool kids call them as 'people who don't enjoy life'.

Every body can benefit from learning how to save and invest. Especially salaried large company folks.

I don't understand why that is so difficult. I'm here in the US for a short term work assignment and getting a checking/savings account was the best experience I've had so far. All I had to do was to walk into a bank with valid identification and they had it done within 30 minutes. And the best part of it, they explained me how checking and savings accounts work. All I do these days is allocate myself a budget at the start of the month and put that in the checking account. That basically now becomes my threshold of spending per month. Plus I see food is really not that expensive in the US if you cook at home. Buy a good pair of shoes, good jeans and you are all set. Though I agree rent rates are atrocious in the Bay Area. But with sharing rooms with a friend I was able to tame that part of expenses too.

It just can't get more easier than this.

Allocate budgets, save the rest. Learn to invest and bootstrap your way out of your problems.

orionblastar2• 11 years ago

The problem is that high schools don't teach people how to live on a budget and save money.

When people file for bankruptcy, they are given a three hour video course on the Internet and have to take a quiz to learn how to budget their money and save for emergencies. This sort of thing needs to be taught in public schools for free as part of the math classes or something that teaches life skills.

The app that 'solves' this problem costs $158 year to be a member, and holds surplus money to give it on bad weeks when they don't earn as much to have enough money to live on.

sukilot4• 11 years ago

Why do you say it isn't solving a problem, and then in your next sentence succinctly state the problem Even solves?

Needing parenting is a problem, just like SV millionaires need restaurants to play parent and cook for them.

hurin• 11 years ago

I like how someone struggling to make it on an unpredictable $700-90 a week turns into an advertisement for an app.

sukilot4• 11 years ago

It's actually the reverse. http://paulgraham.com/submarine.html

didgeoridoo• 11 years ago

Even’s purpose is hardly to change the distribution of wealth in society. It is simply to redistribute one person’s own limited wealth across time. People in Silicon Valley may believe there’s an app for everything. That’s their hammer. But improving the lot of the poor will require other tools, including an old one the valley often wants to wish away: politics.

Sorry, did you read your own article? The whole idea is that by lightening the load of uncertainty, SOME people will be able to pull themselves out of poverty with nearly zero net spending increase. Are we to fault Even for not trying to solve EVERYONE'S problem so neatly?

joshuapants• 11 years ago

Employers increasingly use cutting-edge scheduling tools like Kronos to calculate the profit-maximizing head count for every hour and adjust schedules accordingly, week to week or even day to day, sometimes with scarcely any notice.

Reminds me of this short story: http://marshallbrain.com/manna1.htm

Tossrock• 11 years ago

I find the idea that Kronos is 'cutting-edge' pretty amusing. Last time I had to interact with it, it was still an in-browser java applet with a user experience about on par with sticking your hand in a blender.

bandrami3• 11 years ago

Yeah, their JIT stuff is like 30 years old at this point...

yodsanklai• 11 years ago

Jacobs, in her habitual bright pink lipstick and matching headband, was explaining all this via Skype, from her “little box of a house” in Simi Valley, to Jane Leibrock, 33, who had the more muted look of the fortunate and was sitting in the Oakland headquarters of Even, the start-up where she works. Leibrock — an alumna of Yale; a onetime Beijing resident and Mandarin speaker; a street-fashion blogger; a tweeter of first-world problems (“My personal hell would be having my earbuds pulled out over and over throughout eternity”) — used to study the user experience of privacy settings for Facebook. Now she is a researcher for Even, which proposes, for a fee, to help solve the problem of income volatility.

I'm off topic, but am I the only one to find NY times articles to be abusively long? is it a trend in this type of US publications?

While I find the topic interesting and I would like to know more, the article is just too long, repetitive and boring.

llamataboot• 11 years ago

It's from the Sunday magazine which traditionally has much longer-form articles.

username223• 11 years ago

"Abusively long?" You should try the New Yorker! No, seriously, you should; it would give you a chance to appreciate long-form journalism.

plink• 11 years ago

Spot on. I agree that the example you cited evinces abuse and not interesting, long-form journalism. It's writing ineptitude.

boskonyc• 11 years ago

This is from the magazine, which typically features long-form journalism.

matthewmcg• 11 years ago

This article ran in the Sunday Magazine and not one of the news sections of the paper. Articles in the magazine tend to have a more freewheeling style and are usually longer.

suprgeek• 11 years ago

From their FAQ:

Is Even a lender? No, Even is not a lender and Even does not provide loans.

yet the Article claims that: "....On bad weeks, when users fall short, they still get their salary, thanks to past surpluses or to interest-free credit from Even."

Interest-free Credit == Loan right? What am I missing

sukilot4• 11 years ago

Maybe they take it as an advance against payroll (direct deposit) and explicitly eat the risk of a user losing their job and never repaying a week. So it wouldn't be a debt.

thaumasiotes3• 11 years ago

There's a legal difference between "loan", the legal transaction, and "loan", the economic transaction.

My sister had an internship once at a South American company that bought receivables. In that country (probably Brazil), loans were illegal. A receivable is a promise of payment in the future according to some schedule. So this company would buy receivables at less than full value from companies (or individuals, I guess) who wanted the money immediately. Obviously, that's a loan (technically, it also assigns responsibility for collecting payment to the owner of the receivable). But despite being like a loan in all other ways, it has the key difference of not being illegal.

I suspect something similar is going on here.

idoh• 11 years ago

What your sister did is called factoring: http://en.wikipedia.org/wiki/Factoring_(finance)

It is a thing in the US as well. Retailers and construction companies do it. I was looking into it for apps e.g. advance money against IAPs or ad revenue. It doesn't look like there is demand for it.

URSpider942• 11 years ago

They don't charge interest on their advances. I believe that's what they mean.

alex_young• 11 years ago

This seems like just as bad as payday loans to me.

In 2013, there were 45.3 million people in the US under the poverty line. [1]

The article cited a figure of $3.4B / yr for payments to the payday loan sharks.

This startup charges $3 / week and only services cash flow positive customers. A little math presuming we cover the poor as a group with this 'service':

In [1]: 4530000352 Out[1]: 706680000

That's $706 million / year, or about a fifth of the total amount the sharks charge.

But we shouldn't stop there. The sharks are still necessary, since this company is only covering the predictable expenses, not the extraordinary but common visits to the emergency room, or to get a car fixed, or any number of less predictable expenses.

We still need the loan shark. And this guy is taking 20%.

[1] http://www.census.gov/library/publications/2014/demo/p60-249...

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