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Old 04-21-2014, 11:19 AM
 
491 posts, read 597,769 times
Reputation: 2095

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Nomoresnowforme,

Here's how I would do it. First off minimum wage is a lot less than the OP $20/hr.

But line by line here goes:

Rent, you don't take the average, you look at lowest and if you simply couldn't live there, you go to the next lowest. If you were going to live alone, I wouldn't rent a one bedroom, I would rent a studio or as one of my relatives has done for years, a room with a hot plate, toaster oven and dorm frig. Another option would be to have a roommate .

Auto fuel. Find a job close enough to walk(I have had several jobs thru the years that were walking distance). I also carpooled to work for at least two jobs I had. We took turns driving for a week.

Why would you have renters insurance? Pretty much all of my stuff was/is from garage sales and thrift stores. It would be hard to replace, but not really worth renters insurance.
Electricity, I don't pay that much for my house, I really doubt if he paid attention his would be more than $35.

No netflex. If I want to watch a movie, I stop at the library or occasionally Red Box. No cable(I actually have never had cable except for a apartment where it came with the rent). I get all the TV I want with antennas.

No newspaper, you can pick up the ads at many places around town. Some newpapers even deliver the ads to you at no cost, even if you don't get the paper.

Groceries, you put $180 in an envelope, when it is gone you eat what is around the house. It's a good idea to have sale bought soup, mac and cheese etc for those times.

Cellphone, you have a flip phone with Consumer Cellullar, I pay about $25/mo and it really is all of the phone I need. I know someone more financially stretched than me who gets by with their $10/mo plan. Of course he doesn't have cable. He doesn't have computer access either, he stops at the library or other hot spot to check emails etc.

He finds cheap or free entertainment, he goes to parks for walking etc, he camps, he goes to free concerts in the park, he gets library books to read, his clothes are from thrift stores and garage sales. Some of his" entertainment" is learning skills to decrease his costs. When I needed to repair something I don't automatically take it in for repairs, I go out on you tube and see if I could possibly fix it myself fist. I also do some bartering, like mending some jeans for someone in exchange for putting a new battery in my car.

At minimum wage, he probably doesn't have a job with health insurance. He doesn't pay copays because he simply doesn't go, unless it is a huge emergency.... Teeth you brush, you floss, you are careful not to eat something hard that might break off a tooth, but particularly back teeth, you proably have pulled rather than a root canal.

If you really are committed to saving at least 10% you probably don't have pets or kids until you make more money. Since your person is in theory and I am a real person, I know you can make it. It takes a lot of discipline, but it is possible. At $20/hr it is very possible.
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Old 04-21-2014, 04:32 PM
 
Location: Silicon Valley
18,081 posts, read 22,914,959 times
Reputation: 35196
Well, first - I have renter's insurance because if I get displaced because my senior neighbor upstairs floods the building or burns it down or whatever, my renter's insurance covers $2,000 to get a hotel, etc. And you may think that you can replace all of your thrift store stuff for free, but I bet everything in your house wasn't free.

See, for poor people, we don't have the resources to replace stuff. Hence, insurance makes really good sense.

Just looking around my 250 square foot studio, and there are just a couple of things I bought new - my pressure canner which cost me about $60, the canning jars I have, most of which I bought at thrift stores, still cost me at least 50 cents a piece, probably about 5 dozen. There's $30. Used bed - about $200 with mattress (daybed), curtains bought on Ebay ten years ago for about $60, my wicker chair, my computer, my printer, my kitchen table with the stools underneath, big dresser, pots and pans, dishes, silverware, lamps, cupboard, microwave, shelving, tupperware for my canning jars, prints for the walls, dog crate, medications for me and the dog, dog food, people food, all my toiletries, all my clothing, shoes...

Try replacing all of that if there's a fire. And my coverage includes earthquake insurance, which is separate in CA. So, for $25/ month, if anything happens, all of my stuff gets replaced, and I get put up in housing until the $2,000 runs out.

Insurance for poor people is basically a savings account you can never touch. The money will always be there, for that particular purpose, if something goes wrong.

So, I heartily disagree on cutting the insurance.

As for all of the other ideas on how to save money, how about a breakdown like I did. You can cut here and there (and I knew some posters would lol!), but look at the overall picture. Including when things go wrong, and unexpected expenses.

If you look at the list of potential extra expenses I listed, you'll see that there isn't enough money. I keep thinking of other normal expenses since I wrote the post, like toiletries - toothpaste, shaving cream, shampoo - what about haircuts? Razors?

Put together an actual budget to prove your point. And it's really not fair to expect the guy to live in his car, so he can save 10% of his wages. This could prove your point - yes he could save 10% if he lived in his car. But, really? If you had the choice of having internet at home and Netflix, or saving $36/month, when you're already eating Ramen for dinner, would you really?

Personally, I've tried living without internet and Netflix at home and it's thoroughly depressing. Some things are worth the money. I wouldn't go so far as to spring for cable, but life without internet at home just truly sucks! And I get the cheapest internet service possible.

I'd rather cut back on the food and have my internet and Netflix. And note, I don't spring for the additional DVD service from Netflix.

At $20/hour, yes it's more possible. But my response was to the person who said that someone should be able to save 10% of their income, even if they made $1.25/hour, if I remember correctly. I still, respectfully, disagree.
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Old 04-21-2014, 05:00 PM
 
Location: San Francisco, CA
88,057 posts, read 3,668,635 times
Reputation: 7493
Quote:
Originally Posted by Aqua Blue View Post
When I tried to rep you it said I needed to spread it around! I was one of those who chose to retire early to a simple, but free happy life. I actually could come up with a whole list of friends who per the op would be considered low income and who retired earlier than 65. I think we are advertised to to believe that the only way to be happy in retirement is to have it all: house on a golf course, money to do every little thing our hearts desire, big fancy vacations, a new wardrobe every year and so on and one and the enormous investment account to go with it. But, many of us have discovered otherwise.
So true!
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Old 04-21-2014, 05:24 PM
 
Location: State of Being
35,885 posts, read 67,135,316 times
Reputation: 22373
Quote:
Originally Posted by Clark Park View Post
Two seemingly opposite points of view, and yet I agree with both.

kwhitegocubs is correct: good hardworking people lost their jobs and were thrust into a lower economic status due to no fault of their own. They do not deserve the poorly hidden ridicule and contempt expressed by more successful people.

There are many legitimate reasons why some people are not "successful" despite having a good education, an exemplary work ethic, ambition and talent. Sometimes it is bad luck, being in the wrong place, a family crisis, health issues, and so on.

On the other hand Huckleberry could point to me as an example as one who had no choice but to fight, re-invent myself, and use every ounce of my creative imagination to get back into the job market (after being laid off in 2008) and save my properties. It may sound corny, but a role model for me was Scarlett O'Hara, who was determined to save Tara no matter what, and despite extraordinary set-backs.

I have a friend named Jerry who was laid off a decent paying position he had for something like 18 years. He was 59 at the time. After 3 years he couldn't find employment and had to collect SS much earlier than he wanted to. He had no choice, his Unemployment ran out and he was raiding his life savings. Honestly - I know this because we are very good buddies for many years - the guy was only prepared to go so far when it came to re-employment - literally and figuratively - he steadfastly refused to commute more than 15 miles from his home, and wouldn't cast a very wide net when it came to occupations much different than what he was accustomed to. I begged him to take a job he was offered but was 25 miles away. Myself, I am doing something completely different than what I did for the first 36 years of my career, and it is something that has nothing to do with my college degree ... yet I love it and I'm in one of best jobs I ever had!

Rather than judge folks for the economic class they belong to, I think we should get back on topic and share ideas to help people retire comfortably regardless of their incomes.
Flexibility, determination, innovation . . . re-inventing ourselves is often the only way to move forward. Kudos to you for being strong enough (and wise enough!) to see what had to be done -- and do it!

I totally get what you mean about Scarlett O'Hara . . . no one is going to take my property . . . I will do whatever I have to do in order to keep that roof over my head!

Sometimes, we have to compromise and even take a step backward in order to move forward. True discernment is when we can recognize an opportunity for what it is -- and how it can help us reach the bigger goal.

Your story should be mandatory reading for everyone who is going through financial difficulties. Excellent post! Thank you for sharing it, Clark Park.
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Old 04-21-2014, 06:25 PM
 
Location: Baltimore, MD
3,745 posts, read 4,213,572 times
Reputation: 6866
Quote:
Originally Posted by NoMoreSnowForMe View Post
I wish this could be reality. But, for someone very low income, not realistic.

Let's take an example. I'll use the town of Redding, where I live, as an example.

Let's say someone is living minimum wage. In CA that's $8.00/hour. x 40 hours = $320/week x 52 weeks = $16,640/year gross, or $1387/mo. gross.

I don't know how to figure out what their fed and state income taxes would be. I know there would probably be the earned income credit, so I'll just use the gross income for purposes of this little exercise.

So, Income per mo: $1387.00

I took an average of 5 - 1 bdrm apts and the average rent is $620.

So, $1387 - $620 = $767.

Let's say they have no car payment and own the same car I do: 1992 Toyota Corolla, that's paid for. I have liability only on the car and my monthly car insurance is roughly $60.

So, $767 - $60 = $707.

Now, where do they work? Right here in Redding? I don't drive very many miles, and usually just around Redding, and I budget one tank of gas per month. But, I bet someone working would need at least 2 tanks.

One tank for me is $35, so figure $70/month for gas.

$707 - $70 = $637.

Renter's Insurance for me is $25.

$637 - $25 = $612.

AT&T Internet for me is $28.

$612 - $28 = $584.

My electric bill has been averaging about $35/month for a very tiny studio. Let's figure this guy's one bedroom is at least 1/3 higher than mine. That would be $47.

$584 - $47 = $537.

How about Netflix? $8/month

$537 - $8 = $529.

He gets the Redding Searchlight newspaper with online edition and weekend paper (to get the coupons) for $10/month.

$529 - $10 = $519.

Groceries? At least $200.

$519 - $200 = $319.

Cell phone bill = $50 at least.

$319 - $50 = $269.

Even if we stop here and look at trying to save 10% of wages = $139.00

$269 - $139 savings = $130 left for...

Other utility costs (if pay for more than just electricity)? Medical insurance and co-pays? Entertainment (ha ha)? Pet costs? Pet insurance (I pay about $48/month pet insurance because I wouldn't have savings for major vet bill)? Car maintenance (my car battery is dying and will need to buy one next month, myself - probably $100)? AAA roadside membership? DMV registration (mine will be due next month, about $100)? Computer dies? Printer dies (this happened to me last month. Bought used one on Ebay, but still cost $80 with extended warranty - which means no more printer cost for 2 years)? Clothing? Shoes? Does the guy get cable TV (doubtful)?

And this is assuming there is no child or other dependent.

And assuming there are no loan payments.

And this is based on gross wages.

I can promise you that this person will always have something come up that will take away that savings. The car will need a new alternator, there will be a root canal with a 20% co-pay, the DMV registration bill will arrive, the AAA membership bill will arrive. He'll get a ticket for running that yellow light. It will always be something.

No matter how frugal this person is, saving 10% and keeping it in the bank, would be next to impossible.
You forgot FICA taxes ($106/month) are required and dental cleaning once/year might be helpful. Clothing? Duh. Even Goodwill charges for clothing. I should also point out that very few, if any, minimum wage earners work 40hr/52 weeks per year. Usually no sick pay. If the business shuts down for a few days, too bad, so sad. Jury duty? Ha ha ha. BTW, this individual would NOT be eligible for the earned income credit.

I'm sure I'm forgetting other necessities, but you get the idea.
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Old 04-21-2014, 07:30 PM
 
12,289 posts, read 15,181,947 times
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There was a story in one AARP bulletin about someone living on $600. Did it by renting from relatives, never turning on the heat, using food pantries. But $600? Even someone who has worked full time minimum wage all his life should be receiving more than that from SS.
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Old 04-22-2014, 05:24 AM
 
29,764 posts, read 34,848,700 times
Reputation: 11675
Quote:
Originally Posted by lenora View Post
You forgot FICA taxes ($106/month) are required and dental cleaning once/year might be helpful. Clothing? Duh. Even Goodwill charges for clothing. I should also point out that very few, if any, minimum wage earners work 40hr/52 weeks per year. Usually no sick pay. If the business shuts down for a few days, too bad, so sad. Jury duty? Ha ha ha. BTW, this individual would NOT be eligible for the earned income credit.

I'm sure I'm forgetting other necessities, but you get the idea.
Lenora, I am fairly sure from your many posts on here that you fully understand the concept of cradle to grave poverty. This discussion is taking place with that being the big elephant in the American landscape.
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Old 04-22-2014, 07:14 AM
 
Location: State of Being
35,885 posts, read 67,135,316 times
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Quote:
Originally Posted by TuborgP View Post
Lenora, I am fairly sure from your many posts on here that you fully understand the concept of cradle to grave poverty. This discussion is taking place with that being the big elephant in the American landscape.
So then I guess the answer is . . . people who have always lived in poverty will just continue to live in poverty, using government resources to "get by."

Or did I miss something . . . ?
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Old 04-22-2014, 07:31 AM
 
29,764 posts, read 34,848,700 times
Reputation: 11675
Quote:
Originally Posted by anifani821 View Post
So then I guess the answer is . . . people who have always lived in poverty will just continue to live in poverty, using government resources to "get by."

Or did I miss something . . . ?
I would say you have said it well. Why would anything change? In some states especially in the South over 20% of the population is at or below the poverty level. That poverty level existence is sustained and made livable by government resources and as they move on in life it continues. You know from life in NC the number of multi generation families living together on either family land or rented family land or sharing trailers.

Senior poverty is much worse than you think

Social Security Lifts 13 Million Seniors Above the Poverty Line — Center on Budget and Policy Priorities

A State-by-State Snapshot of Poverty Among Seniors: Findings From Analysis of the Supplemental Poverty Measure | The Henry J. Kaiser Family Foundation

If we tried to agree on a definition of retirement in this forum I suspect it would be all over the place. Does the concept even exist for those living at or below the poverty level who have lived with varying degrees of government intervention for much of their life or with shared benefits and multiple generations of the family living together.
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Old 04-22-2014, 08:57 AM
 
Location: Verde Valley AZ
8,611 posts, read 9,672,539 times
Reputation: 10948
Quote:
Originally Posted by pvande55 View Post
There was a story in one AARP bulletin about someone living on $600. Did it by renting from relatives, never turning on the heat, using food pantries. But $600? Even someone who has worked full time minimum wage all his life should be receiving more than that from SS.
Not so. I have worked for over 50 years of my life and my SS in under $600 month. I worked in restaurants and hotel front desk for most of that but also worked in bookkeeping/accounting for a few years. This is why I will be working till I drop dead, unless some kind of disability hits me first! My mom and dad were self employed for many years and she gets less than $700 month. She owns her home outright, and everything else she has, plus I pay her rent for her guest house. We both do okay. She does get some food stamps...about $70 month...and our church has a really good food pantry.
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