Home › Forums › Financial Markets/Economics › Budget for fictional couple each making $15/hr.
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CA renter.
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November 22, 2014 at 4:50 PM #21308November 22, 2014 at 8:57 PM #780256
UCGal
ParticipantThey would qualify for subsidized health care if they have 2 kids. (I think subsidies start at 67k for a couple… so 60k for a family would qualify.) Probably qualify for subsidy (premium assistance) as well as cost sharing silver plan. I’m guessing insurance would be about $250 with subsidies.
I’ll take a swag at their budget:
Rent on a 2 bedroom apt – kids can share a room. I have a classmate who’s renting a 2br off of Reynard in Mission hills – she and her roommates pay $900 total.
Utilities – no cable (that’s an extra), ting or other discounted no contract cell phones – $50/month for 2 phones. SDGE bill average $50/month (small apartment, gas heater, no pool, etc.) Landlord pays water.
We’re at $1250 a month.
Food – if you eat a decent amount of beans, rice, lower cost meats (chicken wings/drumsticks vs steak) – you could easily feed a family of 4 on $500/month.
Clothing. You can shop at target, thrift stores, sears… You can probably average about $150/month on clothes. That may be a high estimate – I average about that because I hate shopping.
Savings: Lets assume they put in 5% to a 401k (to get a match). $250/month
We’re at $2150/month out of a $5k budget.
Bus passes for the parents – $72/month * 2. $144 month.
Or if they have cars – lets hope they have paid for beaters – $500/year liability only insurance, $100 month gas. Lets add another $150 towards maintenance/replacement fund… round up – we’ll call it $300/month.
Still have money left to pay taxes. They’ll be in the 15% tax bucket (or lower) Lets call it an effective tax rate of 10%. $500/month
That’s $2950/month out of $5k month for a rental.
If they don’t go to starbucks, eat out, etc… they can save $2k/month towards their home. When they purchase they’ll have 2900 available towards housing.But as owners of a condo – they have mortgage, HOA, probably larger utilities, etc.
I know folks who make it on $60k with a little extra to spare… but they don’t buy large house, don’t have new cars, don’t spend on stuff like new books (vs library), or eat out a lot.
November 22, 2014 at 9:22 PM #780257spdrun
ParticipantSounds about right, though I’d add a few things:
(1) School supplies/trips/etc
(2) Internet (really needed in 2014)
(3) Entertainment/trips, even if local
(4) Unexpected doctor’s visits, checkups, etc
(5) State income taxI’d add $1000/mo to the $2950 number, honestly
Assuming they have savings, they’d have $1950/mo to pay for condo expenses once they buy a condo. So they can likely swing a $250k condo.
$250 tax + $15 insurance + $1100 mortgage + $300? maint = $1665/mo.
November 23, 2014 at 7:07 AM #780263Hobie
ParticipantNice job UCGal. Would sure like this kind of real world analysis and everyday living examples taught to our kids in school.
November 23, 2014 at 7:45 AM #780264Participant[quote=Hobie]Nice job UCGal. Would sure like this kind of real world analysis and everyday living examples taught to our kids in school.[/quote]
I’m actually running a “money” course with my 13 year old, at his request.
I went over saving, trade offs in spending and savings, and compounding.
I think the problem that most people on a board like this have is that they consider “extras” as essentials. I know my eyes have been widened by my classmates at a class I’m taking at City college. The one girls rent is an example. She’s able to take a full load on 3 nights a week of waitressing. Her boyfriend has a part time gig, and they have another roommate. She and her boyfriend share a car. Most of my classmates take the trolley or ride the bus to school. They don’t buy food in the cafeteria – they have refillable water bottles and fruit stashed in their backpacks.
As for school supplies. I saw a huge mindshift when I put my kids in an inner city school vs a more suburban school in the same school district. (Roosevelt middle vs Standley middle). They are not required to provide ANY school supplies at Roosevelt outside of paper and pencils. Not the case at Standley. It’s because some of the kids at Roosevelt couldn’t possibly afford extra supplies.
As for internet – yeah… add $35/month. (That’s what I pay w/time warner after bitching them out. It’s not turbo… just standard… but it works.)
It’s definitely possible to live on less and plenty of people do. But we have to really drill down on what is an essential expense. Cars are often not essential. Rent and/or mortgage in a non-high end neighborhood is much more affordable. And as my classmate showed – there are pockets of affordability in some of the higher end neighborhoods (mission hills overall is not cheap – but there are pockets that are cheap.)
November 23, 2014 at 9:12 AM #780268ParticipantMy kid had a light bulb moment in high school econ class,no less, about compounding interest. Teacher showed how a little saved now turns into a million dollars later. He was stunned how easy this was and has bought into the idea. (Yeah!)
Of course, I showed him the other side on how interest paid behaves in the same way.
More great stuff about living with less. Amazing how you can still be happy. Bit of tough sell with so much keeping up the Joneses pressure.
November 23, 2014 at 2:33 PM #780271Anonymous
Guest[quote=UCGal]Food – if you eat a decent amount of beans, rice, lower cost meats (chicken wings/drumsticks vs steak) – you could easily feed a family of 4 on $500/month.[/quote]
$500/month for four people is a little over $4 per person per day, or about $1.38 average per meal. Possible, but not easy. Even harder when both parents are working full-time jobs. Finding bargains at the grocery store and cooking meals takes time.
A family of four living in a high cost city making $60K per month and saving 40%+ of their gross income would be an impressive display of thrift.
November 23, 2014 at 9:28 PM #780282moneymaker
Participant[quote=UCGal]They would qualify for subsidized health care if they have 2 kids. (I think subsidies start at 67k for a couple… so 60k for a family would qualify.) Probably qualify for subsidy (premium assistance) as well as cost sharing silver plan. I’m guessing insurance would be about $250 with subsidies.
I’ll take a swag at their budget:
Rent on a 2 bedroom apt – kids can share a room. I have a classmate who’s renting a 2br off of Reynard in Mission hills – she and her roommates pay $900 total.
“Utilities – no cable (that’s an extra), ting or other discounted no contract cell phones – $50/month for 2 phones. SDGE bill average $50/month (small apartment, gas heater, no pool, etc.) Landlord pays water.” -$50 per phone?
We’re at $1250 a month.
“Food – if you eat a decent amount of beans, rice, lower cost meats (chicken wings/drumsticks vs steak) – you could easily feed a family of 4 on $500/month.”- I’d say $600
Clothing. You can shop at target, thrift stores, sears… You can probably average about $150/month on clothes. That may be a high estimate – I average about that because I hate shopping.
“Savings: Lets assume they put in 5% to a 401k (to get a match). $250/month”-$300 might be more realistic
We’re at $2150/month out of a $5k budget.
Bus passes for the parents – $72/month * 2. $144 month.
Or if they have cars – lets hope they have paid for beaters – $500/year liability only insurance, $100 month gas. Lets add another $150 towards maintenance/replacement fund… round up – we’ll call it $300/month.
“Still have money left to pay taxes. They’ll be in the 15% tax bucket (or lower) Lets call it an effective tax rate of 10%. $500/month”- Let’s be real and say effective state/fed rate of 24.3%=$1215
That’s $2950/month out of $5k month for a rental.
If they don’t go to starbucks, eat out, etc… they can save $2k/month towards their home. When they purchase they’ll have 2900 available towards housing.But as owners of a condo – they have mortgage, HOA, probably larger utilities, etc.
I know folks who make it on $60k with a little extra to spare… but they don’t buy large house, don’t have new cars, don’t spend on stuff like new books (vs library), or eat out a lot.[/quote]
What about child care, diapers,over the counter medicine? Heaven forbid they have to hire someone to fix something or get a traffic ticket turning on a red light without coming to a full stop.November 23, 2014 at 11:11 PM #780283an
Participant[quote=harvey][quote=UCGal]Food – if you eat a decent amount of beans, rice, lower cost meats (chicken wings/drumsticks vs steak) – you could easily feed a family of 4 on $500/month.[/quote]
$500/month for four people is a little over $4 per person per day, or about $1.38 average per meal. Possible, but not easy. Even harder when both parents are working full-time jobs. Finding bargains at the grocery store and cooking meals takes time.
A family of four living in a high cost city making $60K per month and saving 40%+ of their gross income would be an impressive display of thrift.[/quote]It really not that hard. We not pinching pennies by a long shot. Yet, our family of 4 spend between $400-600/month on grocery. If we really must pinch pennies, I’m confident we can easily cut that spending down to $200-400/month, just base on the food that we currently eat and compare to the food I used to eat when I was little.
There have been many threads on here about food cost. I’ve brought up the fact that Asian food tends to be very economical to make. Here’s a prime example. We can make a big pot of chicken pho that can easily feed 15 people for about $15. It tastes better than anything you can buy at the restaurants and it’s a lot cheaper. I can list many other dishes that are just as cheap to make.
November 24, 2014 at 2:01 AM #780293CA renter
ParticipantWould you mind sharing your recipe, AN? 🙂
We still struggle (a lot) with the grocery bills. We are nowhere near $500/month with our family of five. Does this include things like paper towels, toilet paper, soap, shampoo, deodorant, etc., etc.? Sometimes, our grocery store has a better price than places like Target, so we sometimes buy these items at the grocery store.
You and UCGal were really inspiring me to become more thrifty with groceries, but it’s just not happening in real life. It might not help that we often have other kids here for dinner. We love having others over to eat, so won’t give it up, but it does affect our bills a bit. I still think that our family is the main culprit, though; we really like good food.
November 24, 2014 at 7:29 AM #780296Guest[quote=AN]Here’s a prime example. We can make a big pot of chicken pho that can easily feed 15 people for about $15. It tastes better than anything you can buy at the restaurants and it’s a lot cheaper. I can list many other dishes that are just as cheap to make.[/quote]
Ok, but that’s still $1/meal for one of the cheapest options possible. The budget I’m skeptical about is $1.38 average.
No doubt there are inexpensive dishes, but it would be tough to eat them exclusively, three meals a day, 365 days a year. All while working two full time jobs. And, like CAR said, there’s more to grocery bills than just food.
Are there holiday meals or an occasional celebration? Those could easily break the $1.38 average.
Another challenge with maintaining such a tight budget is medical costs. The $250/month estimate is for insurance only. That policy likely won’t cover all costs. The only way to maintain that budget is to never be sick.
There’s also no fun in that budget. Do the kids play sports?
I suppose the budget is theoretically possible, but this is a good week to be thankful that I don’t have to make it work.
November 24, 2014 at 9:52 AM #780300Participant[quote=harvey]Ok, but that’s still $1/meal for one of the cheapest options possible. The budget I’m skeptical about is $1.38 average.
No doubt there are inexpensive dishes, but it would be tough to eat them exclusively, three meals a day, 365 days a year. All while working two full time jobs. And, like CAR said, there’s more to grocery bills than just food.
Are there holiday meals or an occasional celebration? Those could easily break the $1.38 average.
Another challenge with maintaining such a tight budget is medical costs. The $250/month estimate is for insurance only. That policy likely won’t cover all costs. The only way to maintain that budget is to never be sick.
There’s also no fun in that budget. Do the kids play sports?
I suppose the budget is theoretically possible, but this is a good week to be thankful that I don’t have to make it work.[/quote]As I’ve stated, I can give you a big long list of all the dishes you can make with that budget. This is just one of the many. But I didn’t feel the need to do so.
The rest of your post is essentially saying, you can’t afford luxury on a bare bone budget. Of course you can’t. But that was never the point of UCGal’s post or mine. All we’re saying is, it’s very doable. You can stay within that budget and be fully fed.
What’s the point of bringing up fun budget and sports?When you have limited income, you have to prioritize and food is much more important than sports or trips. If you make more money, then you can afford to do those other luxury things.
BTW, I’m not talking about theory here. I’m talking about plain old facts. My grocery budget on average for a family of 4 is between $400-600. My parents’ budget is much lower than that. So, it’s not just theoretically possible. It’s realistically possible.
November 24, 2014 at 10:08 AM #780301FlyerInHi
GuestDon’t buy paper towels that enrich the Koch brothers.
I just buy a big pack of regular towels at Costco in the auto department to use as rags. Then I wash them.
Most OTC medications just mask the symptoms. Don’t need them. And better not to use them.
November 24, 2014 at 10:34 AM #780302Participant[quote=CA renter]Would you mind sharing your recipe, AN? 🙂
We still struggle (a lot) with the grocery bills. We are nowhere near $500/month with our family of five. Does this include things like paper towels, toilet paper, soap, shampoo, deodorant, etc., etc.? Sometimes, our grocery store has a better price than places like Target, so we sometimes buy these items at the grocery store.
You and UCGal were really inspiring me to become more thrifty with groceries, but it’s just not happening in real life. It might not help that we often have other kids here for dinner. We love having others over to eat, so won’t give it up, but it does affect our bills a bit. I still think that our family is the main culprit, though; we really like good food.[/quote]It’s all about the type of food you eat. Of course when we eat steak and potato, it’s quite expensive. I don’t think it’s possible to stay within my budget if our daily staple is steak and potato. Luckily, our daily diet is not steak and potato. You can look at the many different noodle dishes from various Asian countries for examples. Besides noodle dishes, which are quite cheap to make, here’s another example of a dish that we eat: http://gastronomyblog.com/2007/03/20/thit-kho/. Then we would buy fresh vegetable like Ong choi. A big bunch would only cost a few $. You can stir fry some and make soup with the other. That’s typically how our meals would be broken up. You have some kind of meat dish, when you make it very flavorful, you don’t need a lot of meat. Then we would have some kind of veggies, then some kind of soup. Rice would tie it all together. The meal I just described probably will cost you about $10 and would feed about 10 people.
As for paper towels, toilet paper, soap, etc, I buy from costco. We don’t go through those stuff too often, but I guess you can budget about $50/month for all of those.
I have family parties quite often, but we still eat Asian food at those parties. An example would be eating the chicken pho that I stated earlier. It feed a party of 15 people for $15.
Here are a few more example of the kind of dishes you can make for very cheap:
http://www.food.com/recipe/rau-muong-xao-made-with-spinach-7756
http://www.food.com/recipe/vietnamese-fish-simmered-in-caramel-sauce-ca-kho-to-56112
http://www.food.com/recipe/vietnamese-beef-stew-bo-kho-108893
http://www.food.com/recipe/bun-bo-hue-spicy-hue-style-noodle-soup-with-lemongrass-113776
http://chinese.food.com/recipe/stir-fried-asian-vegetables-254752
http://www.food.com/recipe/canh-chua-ca-hot-sour-fish-soup-w-pineapple-284254
http://www.recipe.com/spicy-szechuan-noodles/
http://www.food.com/recipe/goi-cuon-vietnamese-cold-spring-rolls-20445
http://deep-fried.food.com/recipe/vietnamese-spring-rolls-34488 (you can eat this with vermicelli noodle, fish sauce and lettuce)I can list many more, but you get the point. A lot of these dishes only about about 1lb of protein. So, it’s not that expensive to make. Also, where you shop for grocery makes a huge difference too. Checkout Zion and H-Mart for veggies and herbs and you’ll be shocked as to how expensive those same thing are at Vons/Albertson/etc.
November 24, 2014 at 11:11 AM #780303Guest[quote=AN]As I’ve stated, I can give you a big long list of all the dishes you can make with that budget. This is just one of the many. But I didn’t feel the need to do so.[/quote]
Thanks, I already know how to cook spaghetti and pour milk into a bowl of corn flakes.
[quote=AN]The rest of your post is essentially saying, you can’t afford luxury on a bare bone budget. Of course you can’t. But that was never the point of UCGal’s post or mine. All we’re saying is, it’s very doable. You can stay within that budget and be fully fed.[/quote]
Actually what I’m saying is that if this couple takes on a mortgage of $2950, they are going to spend an awful lot of their time sitting in an unfurnished home eating rice and praying that nobody ever gets sick.
I guess they could cut their cable bill, since there’s no budget for a TV.
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