A premise - working poor

[MonkeyMama]

I think there are just so many variables as mentioned.

Frugal "outside the box" thinkers will get much farther on less.

We lived a very comfortable lifestyle on less when we initially had kids. But we saved 75% - 90% of our incomes before we bought a home, and probably saved 50% until we had kids. Gave us a tremendous start. & this wasn't for more than 2-3 years post college. Bought a home at 23 and had kids at 25. Dh lived with parents through college (so he saved a ton). I didn't. But used to living on a shoestring I saved a ton easily, out of college.

Anyway, living in an area with expensive rents, we were able to put a chunk down on a really nice home and have a smaller mortgage than anything we could rent as a family. As homeowners we get tax breaks so we pay far less taxes than in your example. BUT your numbers are probably fair for renters. (BTW we owned a condo. A house was impossible - to rent or to own. We moved to afford a house).

Life insurance - buy when you are young and healthy (20s). We pay that much for 5 times the coverage.

Cars - We save $100/month to buy two $10k cars for cash, every 15 years. We drove old clunkers that cost nothing for a LONG time. They were extremely safe and reliable.

I think that's the thing that bugs me where we live because the housing bubble was big and robust. We bought early with a lot of cash down. We can afford far more than people trying to rent or buy in 2005. People often assume we make 2-3 times the income IRL because we have a nice home. But it lacks the context. Plenty of people who bought before us can live very comfortable lifestyles on much less because they don't have the same mortgages as those who are buying now. So housing becomes a pretty big variable. Buy a decent starter home in 1998 for $100k or 2005 for $500k. It makes a huge difference. If we were a few years older, I don't think we'd have a house payment, honestly.

[wincrasher]

Good points, Mama.

I know lots of people that bought beautiful homes. But no furniture. Slaves to the mortgage.

I think most people starting out these days - buying is out of the question on what they can earn, or can save. So they rent. It may be a smart move in the current market, at least until it bottoms.

When I started working, in the late 80's, I thought that if I could make $50k a year, the future would be so bright, I'd have to wear shades!

[mommyof4]

Great input from all.

I was thinking my numbers were too low.

I don't think you'd get much of a rental house for $800 a month that would be in a decent neighborhood. A one bedroom apt in my area goes for $1100.

.

Wow. You could have a lot of house in our area for 800 a month (rural midwest). And our family of 6 eats for less than 400/month (closer to 300), with chickens and gardens supplementing the diet.

[GREENBACK]

What about emergencies? The perfect scenario is that what you've laid out goes on forever and nothing serious occurs. With two kids and cars and any other property, that doesn't happen. They've burned up their savings so if a car needs a new transmission what do they do? That's a relatively small emergency, What about a major medical emergency.

[wincrasher]

They are saving 10%. So that would have to cover emergencies and discretionary. Some have thought that too much....others not enough.

[GREENBACK]

Ok but emergencies don't happen on a convienent schedule. What about the emergency that occurs one week into your new life before you've set up your ef. I'm just playing devil's advocate btw.

[wincrasher]

Understood.

I think we just have to assume they'd be ok for a month or two. Then again, he could knock her up in that time since they don't have money to go out for much entertainment.

Precarious, ain't it?

[snafu]

If I were that mom, I'd crave doing something to generate income. My advantage is that I write/teach on-line college courses. However, I could offer home care to another child whose age meshes with my DKs. I have been considering setting up a simple catering service, preparing home cooked, heat&eat dinners for working couples/families nearby. Currently my neighbor and I trade off meals because some family favorites require so many ingredients we end up far too much.

Monday I made Olive Garden type Pasta Fagioli soup with 15 ingredients & can't be made small enough for just 2 adults, 2 DKS

[disneysteve]

Currently my neighbor and I trade off meals because some family favorites require so many ingredients we end up far too much.

Monday I made Olive Garden type Pasta Fagioli soup with 15 ingredients & can't be made small enough for just 2 adults, 2 DKS

That's why God invented the freezer.

Whenever I make soup, I make triple the recipe. Then I portion it off into single-serve containers and load up the freezer.

[Seeker]

In New York your premise of 50k would be poverty level.

NCCP | Measuring Income and Poverty in the United States (from the section titled: How much does it really take to make ends meet?"

Across the country, families on average need an income of about twice the official poverty level, or roughly $40,000 for a family of four, to meet basic needs. In a high-cost city like New York, the figure is over $50,000, whereas in rural areas, the figure is in the low $30,000s.

The above is just talking "basic needs"; not a middle class life.

I cannot fill out your above, because frankly I wanted to forget the details of the struggle. I can tell you that in the year 2006, I was earning 40k and DH was earning 20K, and we alone (no kids) were finding it very difficult to come up with 3k property taxes and manage day-to-day expenses and past debts.



Now with a combined income of $120k we don't have an issue... but we're used to much less.

[wincrasher]

Thanks Seeker.

Core to the premise is no debt, other than the car loan. They also don't own their home so tax payments are not an issue for them.

They aren't living large, but also not eating dog food.

[Seeker]

Thanks Seeker.

Core to the premise is no debt, other than the car loan. They also don't own their home so tax payments are not an issue for them.

They aren't living large, but also not eating dog food.

Sorry wincrasher, but the fact remains that in this day and age, this hypothetical family of four would be considered living at Poverty Level if they happen to be residing in New York with a sole income of $50k.

Poverty level is by it's very definition, maybe, one step up from "eating dog food." Think BASIC human needs. Think about two or three families living in a one-room apartment. Think about children running rampant. Think about no health care and no child care.

The numbers you portray ARE poverty levels for many citiies in the US in today's terms. It may be different for the country areas.... but cities are where the majority of jobs are.

At poverty level, these people could not get any loan. They would not quality.

What becomes even more unsufferable, is the huge question.... one today becoming a whole lot more prevalent.... what happens if this one-income earning family, suddenly lost all income?

Middle class assumes more than a day-to-day living. Saving with a 50k income for a family of four? Do you really believe this is possible today?

IMO this would not be possible in any city in California... definitely not with a moderate lifestyle as you describe.

I'm thinking about the 70's when I was a teenager and my Dad earned maybe 35K and had a 40K mortgage, and three kids. We were middle class --- but there are no buildings fit for humanity at 40K TODAY. It was ok then, but today, he alone could not have supported anyone via rent nor mortgage. If he did not buy their home then, they'd have absolutely nothing today.

Your hypotehical family of four will be in poverty if not already! They could not sustain themselves with that limited an income and growing children. No way!

[wincrasher]

Seeker,

I agree with you. This does not apply in HCOLAs.

Everyone has a different definition of poverty. I was feeling poor making over $100k a year because I had so much debt and felt I had few choices. Still had a home, food, clothing, car, etc., but I felt I was 1 paycheck away from being out in the street.

[PrincessPerky]

I have to disagree Seeker...because I live in a (Medium COL area, and we make <50K (husband does, I do not get paid for anything)

We do not eat dog food nor the next best thing, We eat healthy whole wheat tons of frozen or fresh veggies/fruit, we own a home (well we will in 20 years of payments) I have cable internet, and a decent car, I donate to charity, and my kids are healthy happy stimulated and educated.

I see no reason why my life would be called poverty. I know I have a safe place to call home, I know where my next meal will come from, and lead a full and active life.

We have no CC, and we do have savings, no not as pretty as yours, but quite nice thank you very much. We have health insurance, life insurance, car insurance, cell phones, and I could afford the newspaper if I wanted it. (I don't)

Oh and my real family is a bit bigger than your hypothetical one.

We are not in poverty regardless of what the govt would like to tell us. We can sustain ourselves on this 'perfectly adequate income' and with growing children. Yes way.

One more thing, you folk want to see poverty, check out a third world country.....or at the very least a local homeless shelter. Food shelter, and safety, these are necessities, cable TV and such are not.

Oh yeah, and there are buildings fit for humanity in PA for 40K, maybe not in CA, I never looked there, but CA is not the country, it is just one state out of 50.

[Goldy1]

yea well with property values going down the tubes, people dont' have to go house poor to get a nice place.
There are too many misc. items ie. sports team fees, bowling nights, eating out, clothing, entertainment.
life shouldn't be just work, sleep, eat.