Two years ago, I was in that same position--hustling for every last penny, doing everything I could to make just a little bit of money and applying for every job I came across. At that time, my only thought was that I had to keep some money coming in, so my savings account wouldn't be gutted in six months. I looked at my income differently because instead of trying to get ahead, I was trying to stop myself from inevitably getting behind--if that makes sense.
The first real job I got after finishing grad school, was the 19-hour-a-week position I still have. That earned me just enough money to break even each month. But I also get paid a professional salary. My job requires a masters degree, and since it's at one of the largest libraries in the state, they pay about $5 more per hour than my job at the smaller library did. Even with that, it was a struggle, so, inspired by this post at So Over Debt, I decided to run the numbers and see if I could actually live working 40 hours per week on minimum wage.
As of 2007, the minimum wage in the state of Rhode Island is $7.40. That works out to $1184 per month before taxes. Rhode Island also has one of the highest rates of state income tax, so let's just estimate that the monthly take-home pay is $1000.
Presently my budget breaks down this way:
Rent: $560
Utilities: $100 (varies month-to-month, but this is a fair estimate)
Food: $150 ($300 for the two of us, but I'm just looking at myself here)
Gas: $150 (varies, but this is the average)
Household: $50 (toilet paper and the like).
Total: $1010, which means that any kind of financial emergency completely wipes me out and I'm using savings just to get by (assuming the me in this scenario has savings). Car dies? Car stays dead, and I can't get to work anymore. I also left off the $50/ month for my phone--if I was only earning $7.40/hour, I'd just get rid of it. I only really use it as an alarm clock anyway. Let's do some tweaking.
Let's say that instead of working two jobs and commuting 28 days a month, I just have one job within walking distance from my house. If I worked at the Dunkin Donuts five blocks away, I could sell my car and stop buying gas. That would save me the $150 per month on gas, and also the $350 I'm getting charged this year in car tax from the city. The downside to that is, I'd have to start shopping at the two markets closest to me, which are significantly more expensive than where I usually shop.
That would make my budget look about like this:
Rent: $560
Utilities: $100
Food: $200
Gas: $10 ($10/a month if I start using BF's scooter, but it scares me, or $10/month bus fare)
Household: $100 (toilet paper and the like).
Total: $970. At least I'm not over, but I could never make any student loan payments, or really save anything. Potentially, I could save on household items if I took the bus out to Target or another store where items like that are cheaper than the places within walking distance. This budget means no clothes, no eating out, no doctor or dentist visits, no retirement savings, no vacations ever.
This little experiment does make me grateful that I have pretty much everything I need within walking distance. I have access to two grocery stores, plenty of corner stores, a library and even a farmer's market in the summer. I could survive, but certainly couldn't thrive, and the thought of living one paycheck away from financial ruin certainly would impact my quality of life.
How about you? Could you do it?
I couldn't do it, my budget every month is around $2,700, and the minimum wage here is around $7.25 I think.
ReplyDeleteWe definitely couldn't do it... We're a family of 6, living on one income, (lower tax bracket) as i'm a SAHM. Minimum wage here in Ontario is around $10.00 I believe. So that times 40 hours, $400, but then deductions, taxes, etc... And it's WAY lower. Our fixed expenses ring in at $1800, & that's without any "extras" like food, etc... lol! So we'd be up a creek without a paddle! ;)
ReplyDeleteEep! That's for sure. Even as one person living with a roommate, you can see it's pretty much impossible. Throw kids into the mix, and it's clearly a question of keeping the lights on vs. eating.
ReplyDeleteWe lived at just above the poverty level back in the late '70s when I was a college student/part time worker and my husband was a Catholic school teacher. But, looking back, we had great insurance back then which poorly-paid people rarely have anymore and reasonable rents since we lived in Pittsburgh. We can live poor when we have to (like during the year we had to carry two mortgages when a house deal fell through..groan). But almost noone can live on minimum wage anywhere in the country.
ReplyDeleteNope can't do it. My husband even makes $11.85/hr and we support a family of 4 off that (I'm disabled but we "make too much" for social security. According to a lawyer I'm one of the "ones who falls through the cracks that actually needs the help, but can't get any"). On a good month, actually getting all 40hrs (which hasn't been happening for the last 4months), after taxes he brings home $1680...on a good month. Right now he's been bringing home $1300-1400. Our monthly bills, basic but also including collection payments, are just over $1400/mo not including food, toiletries or diapers/pullups. There'd be no way we could live off minimum which in Idaho is only $7.25/hr.
ReplyDeleteIt can be done,but it is huge struggle and there is lots of "use it up, wear it out, make it do or do without".
ReplyDeleteI live a rural community where 47% of the families live below the poverty line. The jobs are not here.. never really have been.. and to commute the required 15 - 20 miles (at a minimum) to a job of any sort, on minimum wage in this era of high gas costs is almost prohibitive. We are rural folks who garden, fish, hunt, forage for our food. We live without many, many, of the things that others find a necessity. We drive older vehicles that are paid for, we cut wood to heat with, we work hard period. But for many of us the ability to live in a rural area where the children can roam free, we don't lock our doors, and help is only a holler away it's trade off we'll gladly make.
We couldn't do that in our current house, since the mortgage and HOA fees would take up about all of that lol. But if there's one thing my husband and I are good at, it's money. So I know we could make it on that if we had to. Fortunately God has blessed us with just what we need to afford our little 2 bedroom townhome. :)
ReplyDeleteI have often pondered this - I have been divorced for about 15 months and while I'm no where near earning minimum wage, my salary still doesn't provide me with much cushion after I pay mortgage, utilities, food & gas/car expenses. Plus I have a college-aged daughter living here at home with me until she heads off to The Big Apple in February. I just don't know how most people do it, for I believe that most people do live on much less monthly than I earn. I have nothing but respect and prayers for anyone trying to make ends meet.
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