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?’