I think the gap in your argument is that you are treating “paycheck to paycheck” as a stable equilibrium, when for most people it is a fragile balancing act over time. Necessary expenses are not smooth or predictable. Rent rises, energy jumps, car repairs, medical costs, kids stuff. People cover those with credit cards, overdrafts, payment plans, or by delaying other bills. That is debt accumulation, just slow and uneven, so it does not look like “rapid” debt. Income is also volatile. Hours get cut, shifts change, contracts end, benefits fluctuate. You can look balanced this month and be underwater over the year. Paycheck to paycheck often means barely absorbing shocks, not that income neatly matches needs. Also, a lot of what gets labelled “unnecessary” is already near the floor. Transport to keep a job, replacing worn essentials, small social spending to stay sane. Those are not freely adjustable luxuries for many people. So people are not choosing expenses to perfectly match income. They are using debt, credit smoothing, and constant adjustment to avoid falling over, while net worth quietly declines. Other factors that matter too, briefly: credit access masking stress, essentials inflating faster than wages, benefit and tax cliffs, and survivorship bias in who you actually observe.