Expenses for a Frugal 4 Person Family
As a follow-up of my post last night on precariousness, I want to run a thought experiment. Consider a family of four – husband, wife, and two kids age seven and eight – that lives in a small in the West. Both the husband and wife lose their jobs – perhaps the town sawmill or the factory where he worked closed down costing him his job, and as a result, the waitress job she had dried up as well. That story has been told millions of times recently.
Now, what should they do? Well, they should move where the jobs are. Usually, that’s the city. Say the city they pick is Los Angeles. I put together a basic spreadsheet of expenses they need. I left out things like, well, clothes, toys, entertainment, car repairs from well known companies like justcarchecks.co.uk, unexpected expenses, and the like.
Before I put up figures, let’s talk about where they come from. From what I can tell, $1,200 a month gets you a one bedroom apartment in a neighborhood where police helicopters fly overhead several times a week. I know because I live in such a neighborhood, and $1,200 seems to be what they charge people moving in around here based on the signs I’ve seen. (The Ex-GF and I pay quite a bit less than that – as I’ve alluded before, I suspect the landlord is in a coma.) I’m sure there are neighborhoods where its even less, and perhaps you can pay less if you’re twenty feet from the freeway.
But you can’t put a family of four in a one bedroom apartment. Two bedrooms is probably a bit tight. But let’s say the family goes for a two bedroom. $1,500 is the lowest price I’ve seen posted around here lately for anything that is even a step up from a hovel.
Health insurance… the Ex-GF and I pay nearly $300 apiece. Surprisingly, there is no discount for a joint account. I am assuming adding two kids adds $300 to the bill. (Correct me if I’m wrong.)
Food… I’m assuming its as cheap as it gets: $4 per meal per adult, and $2.50 per meal per child, on average, every day.)
Car insurance and gasoline… one needs a car in order to look for work, and for most jobs. Most jobs are not going to be close to a place where one can rent a two bedroom apartment for $1,500 a month. I rode a bus every day for many years, and I can tell you its only possible if there’s a bus that goes where you want to go. I can also tell you its not free either. Anyway, the car insurance and gasoline figures are based on mine and the Ex-GF’s. Bear in mind, I work from home.
Cellphones: I assumed they need to communicate, and won’t bother with a landline.
Taxes: I figured 5% and 15% is probably just about at the low end (but not egregiously so) for people making the monthly income they’re making.
Anyway, the figures are:
Thus, the family’s absolute minimum expenses come to close to $65K. As reader ddickson reminds us in the thread to the previous post, the four person median income in CA is about $70K. Throw in clothes for the kids, something to entertain them (do kids like playing with string as much as cats do?), the odd emergency and visit to Chuck E. Cheese… I don’t think they should move here unless they’re going to make well over the median income.
Update. When you’re in a hurry, you forgot things. I forgot SS… Assume its 7.5% (they’re not entrepreneurs), add that back in, and the expenses are now just about at $70K.
Granted, its a difference of $5K a year, but I don’t think privatizing SS is going to be the panacea that saves this family, even in the short run.
Update 2. Fellow Angry Bear Divorced One Like Bush notes that EPI has a family budget calculator. Their figures (which date to September 2005) for the LA – Long Beach are a bit different from mine. They come up with figures of $48K a year. That said, I’d hate to see what housing costs of $1,124 buys a family of four around here these days. And their health care figures presumably assume only the kids have health insurance.
Finally, with their lower figures… they still conclude that 33% of people in the state live with incomes below that minimum family budget line.