(BTW this is not a plea for pity, or government handout, or private handout, or anything other than a little perspective on the part of people who seem to think the median income is insufficient to support life.)
In 2008, the median US household income was $50,300.
Mine-- or really ours-- just under $31,500.
Assuming that the person filing is the “head of household” and has two children (dependents),
Well, we're "TINK"s-- two income no kids.
this means a 1040 tax bill of $4,100,
Tax liability $1273
which leaves about $45K in income after taxes (we’re not bothering with state taxes).
$30,227.
I realize this is a simplistic calculation, but it’s a decent proxy for income in the US in 2008.
So far, so good. Wouldn't mind some of that here, especially if it's from a single paycheck.
Now, $45K in income spread out over 26 pay periods (every two weeks), means a bi-weekly paycheck of $1,730 and monthly income of $3,460. This is the money “Joe America” and his family to live off of in 2008.
Try $2,523. Call it $2500.
Now, in 2008, the median home value was roughly $225K. Assuming our “median” household put down 20% on their home (unlikely, but it used to be considered the norm), this means a $180K mortgage. Using a 5.5% fixed rate 30-year mortgage, this means Joe America’s 2008 monthly mortgage payments were roughly $1,022.
I paid cash for a mobile home in moderate condition, and pay lot rent of $250 monthly. Now I can hear you saying "well then it's apples and oranges--" But remember, the title of this piece is It's Almost Impossible To "Get By" In The US Today. All I'm saying is that it's quite possible, and showing how you could live right well on the median income, since I get by on 3/5ths of it.
So, right off the bat, Joe’s monthly income is cut to $2,438.
And mine to $2,250. I've almost caught up already, just by virtue of where I live. And yes, there's room for a family of four here, if we got rid of some tchotchkes(sp?)
According to the US Department of Agriculture, the average 2008 monthly food bill for a family of four ranged from $512-$986 depending on how “liberal” you are with your purchases. For simplicity’s sake we’ll take the mid-point of this range ($750) as a monthly food bill.
What the heck're they eating? My wife and I are, to be blunt, great big fat people who eat too much. Our grocery budget is $62.50 a week, or $270.83 per month. Double that for the two Kinder we don't have, and it's still just into the USDA's range. My advice: lay off the wagyu, and settle for store brands and generics of most products. We drink real Coca-Cola and Folger's coffee, but brand names on other stuff don't mean as much. For the continued calculations, I'll use the calculated figure for four of us instead of two, and round up to the next dollar: $542 for gross-eries.
This brings Joe’s monthly income to $1,688.
Mine to $1,708. Pulling ahead...
Now, Joe needs light, energy, heat, and air conditioning to run his home...this comes to a monthly electrical bill of $101.20.
In summer, I do about that much in electric, and cook/heat water with about $30 in gas. In winter, it flips: the AC goes off, the furnace comes on, and the electric goes to about $30 and the gas to about $100. Figure $130 for heat, air, cooking, and hot water per month.
Joe’s now down to $1,587.
And I'm at $1,578. Joe is catching up!
Let's see what's next. Now Joe needs to drive to work to make a living. Similarly, he needs to be able to drive to the grocery store, doctor, etc. According to AAA, the average cost per mile of driving a minivan (Joe’s a family man) in 2008 was 57 cents per mile. This cost is based on average fuel consumption, tires, maintenance, insurance, license and registration, and average loan finance charges. Multiply this cost by 15,000 miles per year and you’ve got an annual driving bill of $8,550. Divide this into months (by 12) and you’ve got a monthly driving bill of $712.
I'm going to assume that's about right. I haven't worked that all out, and I may actually be saving some through use of a smaller (still five-passenger) and older car. Also we have two such cars, but in this instance I'll follow Joe's math.
Joe’s now down to $877 (I’m also assuming Joe’s family only has ONE car). Indeed, if Joe’s family has two cars (one minivan and one sedan) he’s already run out of money for the month.
Somehow, with my two cars, I still managed to avoid Joe's fate.
Now...the average monthly premium for family policies in February 2008 was $369.
Tricky. My insurance premium-- for the two of us older fat people-- covering medical, dental and optical-- runs to about $60 an month and is deducted from the paycheck. Yes, the insurance actually costs more, but the company "pays it" by paying me less than the cost of employing me.
So if Joe has medical insurance on his family, he’s now down to $508. Throw in cell phone bills,
TracFone costs $10.00 when you by their cheapest phone-that-is-only-a-phone, and then you control the cost by buying minutes ahead of use. I have 500 minutes on my phone right now, and if I never use it between now and March 2011, the only cost will be the electricity to keep it charged. I'm still at $866.
cable TV and Internet bills,
I pay $130 a month for that, and feel robbed. Paying more? You're being raped-- or spending foolishly.
and the like, and he’s maybe got $100-200 discretionary income left at the end of the month.
Sound good to me. In fact, according to the above, I should be sitting pretty with $736 of uncommitted cash every month. Fact is, though, we're saving up for the next car and paying off an old-- but not troublesome-- credit card bill. This past payday I cut my discretionary budget of $50 per week in half, and my wife is mulling doing the same.
This analysis covers all of the basic necessities...It also assumes that Joe...Doesn’t take vacations.
I take vacations. My next one will cost us about $500.
Suffice to say...you’re still only looking at $100-200 in “wiggle” room for spending per month!
Again, $100-200 a month in uncommitted cash looks pretty darn good to me. Now if you were to hand me Joe's paycheck of $3460/mo, that would be $960 more per month that I would literally have trouble finding use for. I'd probably just save it up and take a trip to Europe next year.
Remember, my only goal was to give the reader some perspective. I hope no one feels offended, or worse, feels sorry for me.
I'm getting by just fine.
Stay well.