Teetering

In the news today – more people in the U.S. are living in poverty than at anytime in nearly 3 decades. 46.2 million, in case you like your dismal news quantified.  That’s an additional 2.6 million entering the ranks since the figures were tallied last year.  Naturally the poor and minorities were hit the hardest, along with women and children.  It’s hard to believe that the recession has been over for 2 years!

What do you suppose a family living in poverty (commonly quoted as an income of $22, 350 for a family of four; for the five of us it would be $26,170) spends their money on?

Well, housing prices may have dropped but rents have gone up and up in the past few years as people wait to buy a house (or can’t qualify for a loan) so you can bet housing takes a big bite out of that – and probably more than the recommended one-third of your take home pay.  According to the Labor Department shelter costs went up an annualized 2.7 percent just in the three months prior to July of this year.  Are rents going up where you live?  You can check out the 25 metropolitan areas with the biggest rise in rents here.  The average rental cost in our area is $1,500, up over 5% from last year.  Do the math – $1,500 times 12 equals $18,000. Doesn’t leave much left over, does it? Even the average rent of $900 a month in Savanna, Georgia still brings housing costs to about half of an impoverished family’s income.

Which explains another statistic – the number of households that have doubled up (adult children returning to their parents’ home for the most part) grew from 19.7 million in 2007 to 21.8 million in the spring of 2011.  You might think that’s not a bad thing and I’m sure there are some benefits to combining households.  Pooling resources, having another adult to watch the kids or share in chores seems like a good idea to me.  But according to economists doubling up of households is bad for the economy.  Fewer households means fewer purchases – one TV in place of the two needed for separate homes, one cable bill as well.  You get the picture.  Less demand for products or services has a rippling effect on a community’s economy.  In addition if older parents are supporting adult children who are unable to find a job themselves, they may be dipping into their retirement fund to do it.

Along with housing go utilities.  Utility costs are widely variable; if you have the misfortune to live in a part of the country that freezes in the winter and undergoes a heat wave in the summer you probably pay more to heat or cool your home.  In addition to your gas and/or electricity bill there’s phone and internet and cable to pay.  I daresay a lot of impoverished families do without most or all of these.  A lot of the cities I’ve lived in have charged for water, sometimes wastewater as well, and trash services. And if you don’t have laundry facilities that’s another cost to consider. It’s hard to say what most people pay in utilities – we don’t have to pay for water or trash, just electricity, telephone and internet.  We also buy propane for cooking.  All of this runs between $210 and $230 a month depending on the price of propane, and how much electricity we use.  We have neither heat nor air conditioning in our ‘new’ trailer so we are very lucky that we don’t live in one of those extreme climate places!  I do suspect we might need a space heater when winter settles in as we don’t have insulation and cannot even close the windows tightly.

Then there’s food.  Food prices are still on the rise and not expected to turn around anytime soon, in part due to ‘food speculators’ who are making money on global hunger.  The USDA recently released the results of their annual ‘food insecurity’ study which showed that nearly 49 million Americans, including 16.2 million children, are struggling to get enough to eat.  Interestingly, thanks to programs like SNAP, TEFAP, WIC and CSFP, that number actually experienced a modest decline in 2010.  Still feeding a family of four costs money.  In an interesting cross-cultural study  of weekly food costs (for families with 4-6 members) in 24 countries (check it out – there are photos of the families and their week’s worth of groceries), families in the U.S. spent between $159 and $341 a week on food.  For comparison purposes the least expensive food budget was that of a family in Chad – their week of food cost only $1.23!   But back to the U.S. – assuming $159 a week, that family spends nearly $8,300 on food in a year.

And there’s transportation  Even if you don’t have a car loan payment (we don’t, the minivan I bought used in 2006 is paid off), it costs to get around.  Gas is on the rise– the price at our pumps has gone up more than 20 cents a gallon in the past 10 days to over $4.00.  Beyond gas there’s the mandatory car insurance (my bill as a good driver with an old minivan is $49 a month, or $588 a year), registration (just paid $104), and maintenance.  We frequently have to forego that.

If you have children, as most families of four do, there are other costs relating to them. The most substantial of which is childcare naturally.  Even if your kids are school-aged, if you work full time you need someone to watch them part of the day.  Assuming I can get my youngest into the afterschool program the cost will be $516 for four weeks.  More on days when school isn’t in session.  And of course there are a myriad of other costs – clothing, school supplies, summer camp, etc.

I think by now you can see that it’s next to impossible to live comfortably much less save any money as a family in poverty.  I skipped all sorts of other costs – bank fees if you bounce a check, pet food or veterinarian care if you have animals, health care and prescriptions for the family, repairs to cars or home, clothing, haircuts, etc, – that are a normal part of any family budget.  Could you live in poverty?  One blogger, a money-managing expert no less, had the chance to try it out herself (in a simulation).  Here’s what she had to say:

It was amazing to me how quickly my priorities changed. In a matter of minutes I transformed from the calm budgeting expert who had it all figured out to someone who was just living in survival mode. Much of my reason and logic went out the window. I could not pay the mortgage first as planned because we only took home $110 per week from my boyfriend’s job. It was 3 weeks before we had enough to pay the mortgage. In real life, I tell people to pay their mortgage first since we want them to avoid homelessness. In the simulation, we paid the mortgage next to last and had been evicted by the time we came up with enough money to pay it.

Survival mode is an apt description.  Unfortunately it doesn’t take much to derail you.

I frequently feel like I’m carefully walking a frayed tightrope,edging slowly forward while the solid ground that is my goal recedes from me, my back hunched against the inevitable gust of ill wind that will plunge me into the abyss.  Today, as I pulled away from work and into traffic, my car shuddered and died.  And I sat there and thought, ‘Damn that wind, how many more times can I climb back up onto the wire?’

This entry was posted in frugal living, money, poverty, recession and tagged . Bookmark the permalink.

6 Responses to Teetering

  1. eliza says:

    This is my first time commenting, but I’ve been following your story every since I learned of your blog (I think it was via a guest post on Get Rich Slowly). My own experience of being unemployed, even though my benefits kept me well above the poverty level, was extremely difficult. Ironically enough, I’d been looking forward to the “sabbatical.” But, as it turns out, my year off was anything but restorative. I wasn’t prepared for such a prolonged and difficult job search, and I did not use my time productively, at all. As luck would have it, I lost my child support shortly after I lost my job, so I felt the rug pulled out from under me in a big way. With no help from my family, it wasn’t long before I was almost $4000 in debt.
    While I would not want to relive the last year, I will say that I’ve chalked up some valuable lessons. Even though I was making $70,000 a year, between my job and child support, I have always felt “poor.” I have always lived paycheck to paycheck.
    So, I’m actually proud of myself for accumulating “only” $4000 in debt while living on half that much. It was my son who suffered, of course, because I ended up cutting most of his activities (which total $1000 a month when I’m working). And we did go a year without health (I should say “sickness care”) insurance. If I’d had to pay for sickness care insurance out of pocket, I would not have been able to afford to maintain my uber-healthy diet, which is my real “health” insurance.
    That said, I am also feeling shame. To think that I’d ever, ever felt poor? And to consider the feeling of “entitlement” that I had (to organic fruits and vegetables, for example) even while unemployed. One things that’s pretty glaringly clear, from reading your blog and other “frugal living” blogs: If I’d cut my food budget from $800 to $400, I’d have no debt today.
    Today, even though I am still without child support, I feel “rich.” And “lucky.” Amazing what a year of experiencing real poverty, not the “unable to keep up with the Joneses” variety I’d experienced previously, does to one’s mindset.

  2. Barb says:

    Unfortunately I live in the extreme climate place with unbearable winters and hot summers. But my costs are much less than yours. Recently saved money shopping car insurance. IMHO car maintenance is right up there at the top of the list. Without a running car you can’t get to work or get food or get kids picked up. It must last as long as possible so you have to maintain it. You need to think of a side job to pick up for cash if you can. Babysit, walk dogs, sew or whatever you can do. This economy stinks. I have felt the pain of it for over 2 years myself with job cuts and only finding part time work. I am trying to think of a side job hustle for myself too.

  3. Becky R says:

    I have been thinking so much lately about how this living in survival mode really stinks. It stresses me out and I do not like the person I am because of it.

    My budget:

    10% tithe (it still all belongs to God)
    $38 Sponsor child (we still have more than they do)
    $400 mortgage
    $400 taxes
    $100 home insurance
    $75 gas bill
    $75 elctric bill
    $50 sewer bill
    $80 internet / phone (I am required to have home phone for my in home daycare)
    $100 car insurance
    $120 gas for car
    $ 40 Mastercard

    My income:
    about $1,700 a month
    my mortgage, taxes, and home insurance are $900 that is 52% of my income

    God still is in control and even if I only made $100 a month I would still give Him 10%. It is all his money. The only thing that is really negotionable is the internet. But I use that so much for work as well (I run an in home daycare.) Because of God all bills have been paid on time. The only debt I have is mortgage, dentist $217, and Mastercard $200. But I hate debt so wish I could pay those off asap.

    I understand the struggle to live day by day!

    • Becky R says:

      What I meant to say is even though it is very stressful it teaches me to trust in God, but when I take it myself I do not like the person I am, as it gets me really stressed beynd what I should. I do like the simplicity that comes from saving and not spending so much. But I wish it was more of a choice than a necessity.

    • Linda says:

      Becky, what about food?

  4. Pam McCormick says:

    I can not imagine even thinking at that point,I do not know how you do it.Why when you are walking the tightrope do things go wrong? I have never been in your position but at my tightest days was when we would have “issues” (that’s what we call them 2 our house).Not on a day or during the week when I could cope nooooo always at your most vulnerable time.Maybe we could start to offer to each other “If you ever need a ride due to car dying etc CALL me(insert txt or whatever), If you ever need a tool for a job or DIY project CALL me,If your ever short on something aka sugar/flour/milk CALL me.I thought how many people drive by your trailer or drive a route near you and could drop you at work? This could apply to us all, in EVERY state,city across the USA we all have resources time,money,a car,a garden,clothes,something we could share.Instead of getting ahead or keeping up with the Jones maybe just help every real person you can.My sympathies on the car issue Best of luck

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