Author Topic: "What Families Need to Get By" in the U. S.  (Read 5799 times)

elysianfields

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"What Families Need to Get By" in the U. S.
« on: August 28, 2015, 02:28:25 AM »
Source:  http://www.epi.org/publication/what-families-need-to-get-by-epis-2015-family-budget-calculator/

There's some pretty interesting data here that I don't have time to read through right now (I'm at work).  The article mentions that minimum-wage jobs don't provide enough money to live a middle-class lifestyle.

A few interesting points to start with:

"The basic family budget for a two-parent, two-child family ranges from $49,114 (Morristown, Tenn.) to $106,493 (Washington, D.C.). In the median family budget area for this family type, Des Moines, Iowa, a two-parent, two-child family needs $63,741 to secure an adequate but modest living standard. This is well above the 2014 poverty threshold of $24,008 for this family type."

"Transportation expenses are based on the costs of owning and operating a car for work and other necessary trips. The National Household Travel Survey (FHA 2009) is used to derive costs based on average miles driven per month by size of the metropolitan statistical area or rural area and multiplied by the cost per mile, as provided by the Internal Revenue Service (IRS 2013)."  As I've posted elsewhere, living in the public-transportation heaven that is Western Europe, we avoid these costs on our car-free diet (except vacations or weekend trips).

"EPIís basic family budgets sum each of these components to get the total cost of living in each area across the United States. Notably, these budgets do not include several components of what might be considered a middle-class lifestyle. In particular, they do not include any savings: There are no savings for a rainy day (e.g., job loss or unexpected medical bills), savings for retirement (except through Social Security payments), or further investments in their children (e.g., enrichment activities or college savings). Thus, these are adequate but decidedly modest family budgets."  Emphasis mine.

TLDR: life in the U. S. is expensive.  Mustachians can impact their COL by making wise budget choices.

One Noisy Cat

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Re: "What Families Need to Get By" in the U. S.
« Reply #1 on: August 28, 2015, 03:55:26 AM »
Source:  http://www.epi.org/publication/what-families-need-to-get-by-epis-2015-family-budget-calculator/

There's some pretty interesting data here that I don't have time to read through right now (I'm at work).  The article mentions that minimum-wage jobs don't provide enough money to live a middle-class lifestyle.

A few interesting points to start with:


Greece, Spain and Italy are doing very well now being car-free environments-not!
"The basic family budget for a two-parent, two-child family ranges from $49,114 (Morristown, Tenn.) to $106,493 (Washington, D.C.). In the median family budget area for this family type, Des Moines, Iowa, a two-parent, two-child family needs $63,741 to secure an adequate but modest living standard. This is well above the 2014 poverty threshold of $24,008 for this family type."

"Transportation expenses are based on the costs of owning and operating a car for work and other necessary trips. The National Household Travel Survey (FHA 2009) is used to derive costs based on average miles driven per month by size of the metropolitan statistical area or rural area and multiplied by the cost per mile, as provided by the Internal Revenue Service (IRS 2013)."  As I've posted elsewhere, living in the public-transportation heaven that is Western Europe, we avoid these costs on our car-free diet (except vacations or weekend trips).

"EPIís basic family budgets sum each of these components to get the total cost of living in each area across the United States. Notably, these budgets do not include several components of what might be considered a middle-class lifestyle. In particular, they do not include any savings: There are no savings for a rainy day (e.g., job loss or unexpected medical bills), savings for retirement (except through Social Security payments), or further investments in their children (e.g., enrichment activities or college savings). Thus, these are adequate but decidedly modest family budgets."  Emphasis mine.

TLDR: life in the U. S. is expensive.  Mustachians can impact their COL by making wise budget choices.

Gin1984

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Re: "What Families Need to Get By" in the U. S.
« Reply #2 on: August 28, 2015, 05:09:20 AM »
Well given the cost of daycare (remember two working adults), this does not seem high.  The average cost annually is over $10,000/child so take that from the $49114 and you are down to $29114.  Pretty close to MMM's spending especially if you added another mouth.

forummm

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Re: "What Families Need to Get By" in the U. S.
« Reply #3 on: August 28, 2015, 06:24:53 AM »
I think those estimates are actually pretty solid. When you add in taxes and loan principle to our spending (I consider those savings not spending, but that's not a typical person's view on it), and the health insurance premiums our employers pay, we spend less than that--but not that much less. And we're really good at spending very little. It would be hard to find a decent house to rent for $750 in most of the metro area (what they assigned for housing).

yachi

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Re: "What Families Need to Get By" in the U. S.
« Reply #4 on: August 28, 2015, 08:37:13 AM »
Well given the cost of daycare (remember two working adults), this does not seem high.  The average cost annually is over $10,000/child so take that from the $49114 and you are down to $29114.  Pretty close to MMM's spending especially if you added another mouth.

The estimates are solid, but the overall scenario is ridiculous.  If that is the cost of childcare in their area, than one parent is making no more than $24,557 in pre-tax income to spend $20,000 for child care and to log thousands of car miles commuting to a job.  If the parents make the sane decision to do away with the financially-debilitating second job and childcare, then they would be back to $24,557 in income, and reasonably close to the poverty threshold for this family unlocking government aid unavailable to their previously high income*.  This two working adult family reminds me of these people: http://www.mrmoneymustache.com/2012/04/04/reader-case-study-working-a-crappy-job-for-nothing/

*$49,114 should be a very comfortable family income in the Morristown, Tenn. area for families who can have one one parent providing childcare and reducing family expenses at home (in 2010 the median income for a family was $33,391), but as you noted, it requires low spending if it means you need to account for childcare.  The income is especially high if it comes from a job that did not require a degree: http://www.mrmoneymustache.com/2013/08/05/50-jobs-over-50000-without-a-degree-part-2/ .  It's the expenses required to hold the job that bring the family income below the poverty level.

What's with the decision to assume family-based childcare for rural areas and center-based childcare for urban areas?  How about family-based childcare for rural areas and Urban Tribe-based child care for urban areas? http://www.mrmoneymustache.com/2015/08/19/urban-tribe/

forummm

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Re: "What Families Need to Get By" in the U. S.
« Reply #5 on: August 28, 2015, 08:51:30 AM »
Well given the cost of daycare (remember two working adults), this does not seem high.  The average cost annually is over $10,000/child so take that from the $49114 and you are down to $29114.  Pretty close to MMM's spending especially if you added another mouth.

The estimates are solid, but the overall scenario is ridiculous.  If that is the cost of childcare in their area, than one parent is making no more than $24,557 in pre-tax income to spend $20,000 for child care and to log thousands of car miles commuting to a job.  If the parents make the sane decision to do away with the financially-debilitating second job and childcare, then they would be back to $24,557 in income, and reasonably close to the poverty threshold for this family unlocking government aid unavailable to their previously high income*.  This two working adult family reminds me of these people: http://www.mrmoneymustache.com/2012/04/04/reader-case-study-working-a-crappy-job-for-nothing/

*$49,114 should be a very comfortable family income in the Morristown, Tenn. area for families who can have one one parent providing childcare and reducing family expenses at home (in 2010 the median income for a family was $33,391), but as you noted, it requires low spending if it means you need to account for childcare.  The income is especially high if it comes from a job that did not require a degree: http://www.mrmoneymustache.com/2013/08/05/50-jobs-over-50000-without-a-degree-part-2/ .  It's the expenses required to hold the job that bring the family income below the poverty level.

What's with the decision to assume family-based childcare for rural areas and center-based childcare for urban areas?  How about family-based childcare for rural areas and Urban Tribe-based child care for urban areas? http://www.mrmoneymustache.com/2015/08/19/urban-tribe/

Sometimes people would prefer to work instead of providing child care. And sometimes being out of the workforce for over 5 years makes it really hard to get back in, and often you can only get back in well below where you left. Sometimes it can actually make long term sense to spend as much on child care as your employment income.

Lizzy B.

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Re: "What Families Need to Get By" in the U. S.
« Reply #6 on: August 28, 2015, 09:13:10 AM »
I was wondering when I'd see this mentioned on here!  :-)

If you check out the website, they have a cool tool to allow you to compare family sizes and different locations, so you can compare your living expenses directly. Due to the high regional dependence of childcare and housing, this is pretty useful. Even though these costs aren't super mustachian (see the huge transportation allocation) they're helpful for comparing different areas with better accuracy than gut feel.

ducky19

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Re: "What Families Need to Get By" in the U. S.
« Reply #7 on: August 28, 2015, 09:13:55 AM »
For our area, the overall total is spot on with what we spent in the past 12 months minus childcare (both kids are in school and DW is home during the summer). The only thing that was off was the percentages for where the money was going. If our house was paid for, we would be at $29k per year which seems to be in line with MMM standards.

celticmyst08

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Re: "What Families Need to Get By" in the U. S.
« Reply #8 on: August 28, 2015, 09:58:32 AM »
Sometimes people would prefer to work instead of providing child care. And sometimes being out of the workforce for over 5 years makes it really hard to get back in, and often you can only get back in well below where you left. Sometimes it can actually make long term sense to spend as much on child care as your employment income.

After witnessing what happened with my mom, I'm determined to keep working (at least part time) if I have kids. My mom is very well educated (undergrad in dental hygiene, masters in dietetics) and had a very lucrative career as a dental hygienist with teaching dietetics on the side. After she had me, she never went back to work full time. And she's tried -- she's kept up her continuing education all these years, in order to stay licensed. She's done on and off work substituting in various offices, but she just can't get anything that's even part time. And to be frank, no one wants to hire a 60+ year old woman who's been out of the workforce for years.

I feel bad for her and I want to try to avoid that fate.

yachi

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Re: "What Families Need to Get By" in the U. S.
« Reply #9 on: August 28, 2015, 11:07:33 AM »
I just read through the publication a little closer.  One of their solutions is to provide work supports, such as childcare assistance.  I think this is a better solution than redefining the poverty line since it directly targets the debilitating expense side.

It's ironic that they criticize the Supplemental Poverty Measure because it "uses geographic variability only for its housing calculation", but the food costs included in the calculator don't vary geographically at all unless you go to Alaska or Hawaii, so you'll spend the same amount in New York, NY as Little Rock, AR.  I'm constantly thinking I missed a part of my budget where I can cut back when I see people from the midwestern states post about cheap food costs.

Scandium

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Re: "What Families Need to Get By" in the U. S.
« Reply #10 on: August 28, 2015, 11:10:18 AM »
I was wondering when I'd see this mentioned on here!  :-)

If you check out the website, they have a cool tool to allow you to compare family sizes and different locations, so you can compare your living expenses directly. Due to the high regional dependence of childcare and housing, this is pretty useful. Even though these costs aren't super mustachian (see the huge transportation allocation) they're helpful for comparing different areas with better accuracy than gut feel.

I tried the calculator, and frankly it's on the low side for several items for us (and higher on others). In DC/Bmore metro area, and they claim a ridiculously low $1,200 for housing? Hah, we spend $2,000 on our mortgage (inlc taxes). Granted some of this is principle, but still and "expense". From what I've seen there's few rentals below $1200 here.

Child care at $800/month? I wish, try $1800 for infant care ($1400 for preschool).

Transportation at $600 is high though. We're at 1/3 that and we drive a lot.

Total was $66k/year, which is slightly below what we spend per year, including our $20k+ each for mortgage and childcare.

I'm a red panda

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Re: "What Families Need to Get By" in the U. S.
« Reply #11 on: August 28, 2015, 11:14:34 AM »
This calculator is estimating my childcare at $673 (for one child).
My actual childcare costs are over $1,000.  To get childcare as low as the estimate, I would have to get unlicensed care.

The rest seemed reasonable to live modestly.

KCM5

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Re: "What Families Need to Get By" in the U. S.
« Reply #12 on: August 28, 2015, 11:35:21 AM »
This calculator is estimating my childcare at $673 (for one child).
My actual childcare costs are over $1,000.  To get childcare as low as the estimate, I would have to get unlicensed care.

The rest seemed reasonable to live modestly.

I think the childcare is so far off because they assume a preschooler and/or school age child. The price for two children is what we pay for our one 2 year old, but once she's 4 we'll have part time public preschool and just pay for before/after care, which is right at their estimate. Also, note that the housing estimates are for rent on an apartment, not owning a home.

I live in their average statistical area, and they're right on for us. A few a bit higher and a few a bit lower. But we live a bit more extravagantly than they assume (a fair amount of travel).

mm1970

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Re: "What Families Need to Get By" in the U. S.
« Reply #13 on: August 28, 2015, 11:46:49 AM »
Hm, I saw something interesting and similar on FB today about how expensive DC is.

Now, I'm not saying it's not, but...

This calculator estimates housing at $1400 and child care at $901.

In reality, housing is more like $2500-2800 for a 2BR apartment (not house) and my child care (a relatively inexpensive home care) is $320/week, or $1387 a month.

The problem with this calculator (and most of these kinds of calculators), is that they group my "metro area" into "Santa Barbara/ Goleta/ Santa Maria".

Santa Maria is NOT Santa Barbara.  It's in the same county, but it's >60 miles away and inland.  It's a completely different cost structure there.

Kaspian

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Re: "What Families Need to Get By" in the U. S.
« Reply #14 on: August 28, 2015, 12:01:21 PM »
The article mentions that minimum-wage jobs don't provide enough money to live a middle-class lifestyle.

^^ This is what I sometimes get into debates with people about.  I always thought it was obvious.  Minimum wage is not (never was!) supposed to provide a "middle-class" lifestyle.  It's the shittiest paying job you can get.  That means you're (God forbid you use this term) "lower-class".  Yeah, poor.  Not an unemployed hobo living under a bridge, but poor!  Historically poor people (e.g., those who make the lowest wage going) have never been able been able to afford the equivalent of a modern house in the suburbs.  My friends working at McDonalds or a paper route when I was a teen obviously knew when they signed up it wasn't the sort of gig you could buy a house with.  It was supposed to be a little bit towards college and maybe some pocket money for the weekends. When did people get so thick?

This doesn't mean I'm against minimum wage increases, I'm not.  But they can increase all they want, and it will still be the lowest possible paying job.  And it'll still suck compared to what other people get.  And those who do it won't be too happy about it. 

cchrissyy

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Re: "What Families Need to Get By" in the U. S.
« Reply #15 on: August 28, 2015, 12:29:21 PM »
I'm sure the childcare row is for aftercare or occasional childcare rates, not infant care or full day care. Because I have 3 kids and it said $900 per month in childcare, and that only makes sense if it is afterschool hours. Full day infant or preschool age care in my region is between $1000-1400 per kid.

Travis

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Re: "What Families Need to Get By" in the U. S.
« Reply #16 on: August 28, 2015, 12:45:07 PM »
The article mentions that minimum-wage jobs don't provide enough money to live a middle-class lifestyle.

^^ This is what I sometimes get into debates with people about.  I always thought it was obvious.  Minimum wage is not (never was!) supposed to provide a "middle-class" lifestyle.  It's the shittiest paying job you can get.  That means you're (God forbid you use this term) "lower-class".  Yeah, poor.  Not an unemployed hobo living under a bridge, but poor!  Historically poor people (e.g., those who make the lowest wage going) have never been able been able to afford the equivalent of a modern house in the suburbs.  My friends working at McDonalds or a paper route when I was a teen obviously knew when they signed up it wasn't the sort of gig you could buy a house with.  It was supposed to be a little bit towards college and maybe some pocket money for the weekends. When did people get so thick?

This doesn't mean I'm against minimum wage increases, I'm not.  But they can increase all they want, and it will still be the lowest possible paying job.  And it'll still suck compared to what other people get.  And those who do it won't be too happy about it.

That was the first thing that came to mind with that statement. Why would the "minimum" ever grant a lifestyle in the "middle?"

EricL

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Re: "What Families Need to Get By" in the U. S.
« Reply #17 on: August 30, 2015, 12:31:42 AM »
Hm, I saw something interesting and similar on FB today about how expensive DC is.

Now, I'm not saying it's not, but...

This calculator estimates housing at $1400 and child care at $901.

In reality, housing is more like $2500-2800 for a 2BR apartment (not house) and my child care (a relatively inexpensive home care) is $320/week, or $1387 a month.

The problem with this calculator (and most of these kinds of calculators), is that they group my "metro area" into "Santa Barbara/ Goleta/ Santa Maria".

Santa Maria is NOT Santa Barbara.  It's in the same county, but it's >60 miles away and inland.  It's a completely different cost structure there.

Damn skippy! Santa Maria is at least 10% cheaper (and 15% more miserable) than Santa Barbara. Plus in Santa Maria you may need a car since it's more spread out and the bus system isn't quite as good. In Santa Barbara you generally don't need a car - or even the bus.  These one size fits all calculators aren't always on it.  But for my calculations I used this one: http://livingwage.mit.edu.  Though it also make broad assumptions.