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Do you have kids or have you had kids recently? Are you aware that childcare alone for just 1 or 2 kids is now easily running over $2000+/mo. in many parts of the country? That's just your standard run-of-the-mill kind of place for care too. Do you honestly think wages are keeping up enough for the exploding costs of childcare, healthcare, housing, and food?
Let's assume the following budget for a 4-person household (with two adults, two kids needing some child care). Feel free to modify or add, it's just a starting point for discussion.
Rent or mortgage: $1200 (avg 2-br apt in USA)
Child care: $1400 (avg $8300 per child per year in USA)
Electricity: $120 (avg USA)
Heat: $120 (avg USA)
Food: $900 (avg USA)
Phone+internet: $200 (avg USA)
Auto insurance: $200 (avg USA)
Auto payment: $500 (avg USA)
Health care/dental: $1000 (average $12K per year in USA)
It's about $5100 a month. And this does not include any auto repairs or other unexpected costs. Sure you can shave off a few hundred here or there, but this is far from atypical.
Let's say two people are working full time, at roughly 320 hours per month. Their net take-home pay would need to be $16/hour to just break even. Meaning that their AVERAGE gross pay would need to be about $20 per hour apiece before taxes. In other words, their gross household income needs to be about $80,000.
Let's assume the following budget for a 4-person household (with two adults, two kids needing some child care). Feel free to modify or add, it's just a starting point for discussion.
Rent or mortgage: $1200 (avg 2-br apt in USA)
Child care: $1400 (avg $8300 per child per year in USA)
Electricity: $120 (avg USA)
Heat: $120 (avg USA)
Food: $900 (avg USA)
Phone+internet: $200 (avg USA)
Auto insurance: $200 (avg USA)
Auto payment: $500 (avg USA)
Health care/dental: $1000 (average $12K per year in USA)
It's about $5100 a month. And this does not include any auto repairs or other unexpected costs. Sure you can shave off a few hundred here or there, but this is far from atypical.
Let's say two people are working full time, at roughly 320 hours per month. Their net take-home pay would need to be $16/hour to just break even. Meaning that their AVERAGE gross pay would need to be about $20 per hour apiece before taxes. In other words, their gross household income needs to be about $80,000.
Median household income in 2019 was $62,843.
Doesn't even include things like vacations and child activities. Wow
Not counting coastal cities and high cost of living cities, how do most people not afford homes? I used a mortgage calculator, and if a couple has a income of 80k (40k a person), 600 in monthly debt, and a down payment if 10k, they could afford a home of 300k! Even 200k will get you something decent. That’s a pretty nice home in most of America, and making 40k a year isn’t hard. What am I missing?
Several things. First, not everyone is married to begin with, so you can't split the 80k into 40k per person. Second, married couples may have other obligations such as helping another family member or paying for child care or tuition. Third, a lot of people are already in debt up to their eyeballs for a variety of reasons. Fourth, it is often a bad idea to borrow as much as the bank says you can "afford" as it can impact your ability to properly save for emergencies and retirement. Fifth, a lot of people aren't even making 40k or are making more but living in areas where the home would cost 500k+. And these days even finding a home to buy is difficult.
Let's assume the following budget for a 4-person household (with two adults, two kids needing some child care). Feel free to modify or add, it's just a starting point for discussion.
Rent or mortgage: $1200 (avg 2-br apt in USA)
Child care: $1400 (avg $8300 per child per year in USA)
Electricity: $120 (avg USA)
Heat: $120 (avg USA)
Food: $900 (avg USA)
Phone+internet: $200 (avg USA)
Auto insurance: $200 (avg USA)
Auto payment: $500 (avg USA)
Health care/dental: $1000 (average $12K per year in USA)
It's about $5100 a month. And this does not include any auto repairs or other unexpected costs. Sure you can shave off a few hundred here or there, but this is far from atypical.
Let's say two people are working full time, at roughly 320 hours per month. Their net take-home pay would need to be $16/hour to just break even. Meaning that their AVERAGE gross pay would need to be about $20 per hour apiece before taxes. In other words, their gross household income needs to be about $80,000.
Median household income in 2019 was $62,843.
So you can break even with all this costs at $1 above minimum wage in many places. $20 an hour should be easy to make if youre an adult with kids.
I also love how on some forums in here if you post you make 80k a year people don’t think it’s much. Or say you have 100k saved up.
Aye. You should have done a better job of picking your parents.
At least you were smart enough to pick American parents so you get all the American opportunities to make a success of yourself. Not something you can do in a few other countries in this world.
Rent or mortgage: $1200 (avg 2-br apt in USA)
Child care: $1400 (avg $8300 per child per year in USA)
Electricity: $120 (avg USA)
Heat: $120 (avg USA)
Food: $900 (avg USA)
Phone+internet: $200 (avg USA)
Auto insurance: $200 (avg USA)
Auto payment: $500 (avg USA)
Health care/dental: $1000 (average $12K per year in USA)
You can definitely reduce many of those costs. Child care at $1400? Food at $900? Heat, auto insurance, auto payment and health care at those price points?
You've got to do more shopping around than that. Have to use coupons, look into getting solar, put a bigger down payment on your car, etc. Have to learn to save more money.
Aye. You should have done a better job of picking your parents.
At least you were smart enough to pick American parents so you get all the American opportunities to make a success of yourself. Not something you can do in a few other countries in this world.
We are fairly successful through hard work. We own our home, vehicles, furniture, etc.. We have no debt except for the tractor which is 0% interest and will be paid off in February. Our net worth is probably $1 million + or -.
I had pi$$ poor parents: a mom who married too young to a philanderer and subsequently after the divorce married a man who derived great pleasure in beating me with a police belt (police brutality before it was a thing). I put myself through school while paying rent and other expenses on my own. No one gave me a thing except my mom feeling guilty gave me some money for some college $600). My derelict dad who was a womanizing, gambling drunk never paid child support.
My DH’s dad died when he was 15 so he had to work after school and on weekends to support the family as his mom started drinking.
We have both worked hard and smart for what we have with a few setbacks along the way. But, yes, we are fortunate and grateful to have been born in this country so we had the opportunity to better ourselves.
So, no, I didn’t pick parents well but I had no choice.
Last edited by xPlorer48; 07-12-2021 at 02:13 PM..
You can definitely reduce many of those costs. Child care at $1400? Food at $900? Heat, auto insurance, auto payment and health care at those price points?
You've got to do more shopping around than that. Have to use coupons, look into getting solar, put a bigger down payment on your car, etc. Have to learn to save more money.
It's pretty accurate and my budget looks VERY similar for a similar family size.
Quote:
Rent or mortgage: $1200 (avg 2-br apt in USA)
My mortgage is $1430. Luckily this is for a 3/2 house which has skyrocketed in value.
Quote:
Child care: $1400 (avg $8300 per child per year in USA)
This is about right for my area, assuming 8-5 daydare, it's about 8k a year for full service. We only use it occasionally because my job has flexibility.
Quote:
Electricity: $120 (avg USA)
Heat: $120 (avg USA)
My combined required utilities - gas, electricity, and water, are in the 350 range. Could save about 80 over 4 months a year if I didn't water the lawn in the summers. But for an apartment this does seem high, I would expect it to be more like $150-180.
Quote:
Food: $900 (avg USA)
About right for 4. $225 per person per month is about right. In a drastic situation this could be cut down to maybe 80-90 per person.
Quote:
Phone+internet: $200 (avg USA)
About right, mine is about $200 but that total includes about 60 worth of digital subscriptions such as newspaper, audible, and 3 TV apps (Netflix, Hulu, Disney). We cannot shop around internet service because my area has an internet monopoly; there is only one company. Our phones could maybe be cut by $25 a month down to the 65 range but my employer subsidizes a good phone plan for $88 that would usually cost about $130.
Quote:
Auto insurance: $200 (avg USA)
Ours is about $140, this could indeed be cut lower, to under $100 if you only buy liability.
Quote:
Auto payment: $500 (avg USA)
I pay cash for cars, but we save-invest $600 a month to buy new ones every 4-6 years so this is about right if you're financing.
Quote:
Health care/dental: $1000 (average $12K per year in USA)
My employer covers this at 90%, but the on paper cost is indeed about $1400. However, with Obamacare if your household make under $100k you can probably get coverage for a $400-500ish rate, lower the smaller your income is.
5k a month is indeed more of middle-middle class. But this is about the affording the protoytpical "American Dream" house with a picket fence and a couple kids. Somewhere between 55-80k is pretty much what takes to live that dream.
You can (maybe) barely live independently on as little as 18-1900 a month in my area if you're sharing a lot of costs with other people. Minimum bedroom rent is going to be about $750-800 a month in my area. Sharing bills with say 3 other people (assuming utilities + internet and any viewing apps are shared) probably another $150ish. With about $1000 left over you could eat alright, have a phone, afford a cheap car, and have maybe 150-200 bucks left over for a bit of play. Going to assume Obamacare will cover most of your health insurance. Hopefully the car doesn't break down. But that is not living any kind of dream and you'd have to account for every dollar. Based on my calculation the minimum needed would be 40 hours a week @ $12.50 an hour. Can do adjustments based on wages and hours.
Rent and car would be the elephant in the room that would blow things up at that income level. Can you find someone to rent a room from at that rate? Wil the roommates be reliable and pay their share? Will the leaseholder or owner kick you out? Used cars are expensive and have been ever since about 2017. Hard to find decent ones for less than about $10k. Worse now. Realistically a reasonable reliable car is 13-14k; that's what I see used Toyota Corollas going for online. You can get a 2010ish Corolla with 50k miles for about 13.7-14k on Carvana right now.
Honestly I would seriously consider a new one at that price. For 21.5k you can get a new basic Corolla. Talking an extra $120 a month difference to get a brand new one that'll last 10+ years and has updated technology vs an old one that may give out an inopportune time.
Last edited by redguard57; 07-12-2021 at 02:27 PM..
Not counting coastal cities and high cost of living cities, how do most people not afford homes? I used a mortgage calculator, and if a couple has a income of 80k (40k a person), 600 in monthly debt, and a down payment if 10k, they could afford a home of 300k! Even 200k will get you something decent. That’s a pretty nice home in most of America, and making 40k a year isn’t hard. What am I missing?
Im not sure about most of America.
Ive been pricing homes all over the country in anticipation of retirement. The good thing about my situation is I can command a high price for my current home, and I dont care all that much about finding a community with sustainable employment for me - because I will be retired, with a nest egg provided by selling my current home.
You wont get anything worth living in in California for less than 650K. And, there are people that would tell me, "try $750K or more."
Brooklyn, NY - for a home and not a condo or coop - an easy $1M+.
Homes that need updating in remote areas of Idaho and Montana - around $500K or more.
I would estimate in my research that a decent home that need updating even in what are called 'cheap' states will cost you around $350K. You can still find land in a few places for as little $750 an acre, but unless you can command a good salary while working from home, you will have a hard time finding sustainable employment in these 'cheaper areas'.
Areas with plenty of land (literally thousands of acres) not being used by anyone - the sellers still want 10K or more per acre.
As long as sellers can get their price, or dont care if they sell or not, but will, if they can get their price - the prices will not be dropping.
This is about right for my area, assuming 8-5 daydare, it's about 8k a year for full service. We only use it occasionally because my job has flexibility.
I STRONGLY discourage parents from putting their young children in daycare. I do not believe it is healthy for parent-child bonding.
And cutting $1400 a month from your expenses is certainly desirable. See my post #131.
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