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In a different thread I stated that a $50k/year income makes a household poor. No matter where they live in the US. That caused vocal disagreement so I hope those of you who seriously think about personal finance can assess my statement.
Let us consider a not very healthy middle aged couple with that income (don't even worry about kids) in a low tax state.
After their low taxes, they will be left with $3,500 / month. Let's draw a bare bones budget against it.
$1,000 : Rent/Mortgage (and that is seriously low balling it in places where there are actual jobs).
$400 : groceries (weekly trip at $100)
$250 : utilities+internet/phone
$100: daily necessaties (hygenic supplies, storage supplies etc)
$100: bigger purchases (clothes, furniture, home improvement, assume one $300 shopping trip every 3 months)
$100 - entertainment (movie + cheap dinner twice a month)
$500 : healthcare (assume a typical employer-provided meh insurance plan with $3,000 / person annual deductible)
$150 - auto insurance for 2 cars (cheap places have no transit)
$200 - car loan payment (assume the other car is paid off)
$200 - gas (assume 30mpg economy and both jobs at 15 miles from home)
...so that is $3,000 to simply stay afloat, which leaves us with $500 disposable income / month.
I did not include "luxuries" like dental work, home repairs (e.g. AC dies) or occasional out of town trips. And most importantly, I did not include kid expenses as most people have kids. Once that is taken into account, it should be obvious that those left over $500/month are just not going very far.
In summary, 50k/year enables a household to barely make ends meet even in the cheapest places in the US. That, I think, is the definition of "poor".
Is a household with income of $50k/year poor? Anyone here can find holes in the math above?
It's mostly about WHERE in the country they are...
and how much of their NET income gets chewed up for housing.
There ARE places where $50,000, steadily earned, still allows for a lot of living.
But in most areas with a decent job market...
a$50K household income is at the BOTTOM of the getting by scale.
"Poor" is a subjective and relative term. Some might consider "having $500 disposable income every month" poor, while others might not.
Generally speaking, in most larger cities, $50K would likely be considered a very modest income for a family of 2-3. In smaller cities and rural areas, it would likely be considered an average income. In third world countries or highly depressed areas, it could be considered a high income.
I guess poor is subjective. When you consider how we live to 90% of the rest of the world even those many would consider poor have a smartphone, internet, food to eat, etc.
If were gonna call someone who can't take a family vacation every and drive a new model car then yeah 50k a year is poor. I think that's the big question. Things like having two cars while "normal" and pretty much accepted as middle class are also a luxury if you really think about it. There were times I was what I would consider poor and I didn't have a car, a smart phone, cable, etc.
When we hear these facts about how 80% of people don't have 5k in the bank, 70% of people live check to check, etc these numbers kind of back up that statistic because even if your willing to have no luxuries and assuming you have nothing in your house break you have $500 a month to put away, each year thats $6,000 to put away.
Some people have lived in one city all their lives. If that city has a low COL than yes it's more than enough. In areas that have a high COL than it's scraping by. You can get a sense of who is sheltered in life by their responses. Cannot think outside their little bubble.
But can anyone take a stab at the detailed budget I provided and provide a smaller one?
I think the budget was pretty good. We can all knitpick oh my internet doesn't cost that much or oh I don't need cable but I thought your assumptions were pretty conservative and probably less than what most people have. Are there people with no car payment sure but there's also people making 50k with $450 car payments. I thought the budget estimates were pretty good and really an eye opener in terms of how little 50k can actually be.
Poor is so subjective though. Many people would say if you can live a fairly comfortable life ie decent home in a safe neighborhood, reliable car to drive, food in the fridge, cable, etc then your not poor. You may not be living in luxury and its not to say you won't ever have money issues but it's not poor.
I think today having a side hustle or multiple streams of income is becomming a necessity. Even if your only making 5k a year doing some hobby, driving uber, whatever your thing is, that's $416 extra per month. That could be a car payment, family cellhone bill plus some, grocery budget, etc.
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