The numbers used are either very bad guesses as what passes for an average or severely outdated.
Current National Median for cost of living
Current National Median for cost of living
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Sample McDonalds Budget
- Thread starter Miss Chicken
- Start date
Once you account for taxes, the income shown is more consistent with working about 80 hours a week. Let's take that as a given, then. You're working 16 hours a week. Maybe working 11-12 hours per day, more if you want a day off now and then.
$600 Mortgage/Rent - This is doable in the Midwest and other places that don't have high living costs. This amount would get you a (small) house in, say, small towns in Indiana.
$150 Car Payment - If you can only get a job at McDonald's, then a car payment this small is from a friend or family member, not something you are financing through a traditional channel. If you are poor, you're not likely to have much/any credit, so you're stuck going to a buy here/pay here place. That's going to run you more like $50 a week, maybe more. Let's be charitable and call the real payment on that $200 a month.
$100 Car/Home Insurance - That's reasonable if you've never had any accidents/tickets and you aren't actually covering your own vehicle. So, if you ever wreck it, you're also without a car--a car you still have to finish paying off, I might add. If you wanted comprehensive coverage on the car, that's going to be more like $150-200. It really depends on where you live, though.
$20 Health Insurance - AHAHAHAHAHAHA oh my god, wait, wait. You gotta be kidding me. $20 a month might get you a plan that doesn't actually pay for anything. Let's be really nice and say it's one of those $4000 deductible plans that are so common now. I'll get to that later.
$0 Heating - Well, OK. Could easily be $200-400 in the winter, depending on where you live and how natural gas prices are doing. Let's make it an even $300, say winter lasts from December through February, and so you need to find an extra $900 for the year, or $75 a month.
$100 Cable/Phone - That might get you one of those cable and VoIP packages, but what about a cell phone? Fine, let's leave that out just because.
$90 Electric - This may or may not be enough. I'm willing to leave it alone if we keep the heat separate.
(I'm ignoring the $100 Other for now, since it's so non-specific.)
Now, what bills were left out?
$30 Water - A lot of places have water bills. I see this run an average of $30-40 a month.
$50 Sewer/Trash - A lot of places have these, too. They might be combined into one bill or be separate.
$334 HSA Funding - Remember that $4000 deductible? Well, if you want to be able to actually use your health insurance, you need to be funding a health savings account so you aren't swamped with huge medical expenses you can't pay. $4000 spread out over 12 months is $334. Everything after that $4000 is paid for by the insurance (we are assuming.)
Using my adjusted numbers, actual (more or less) fixed expenses come to $1649 (I went with $150 for comprehensive car insurance, since you still have to pay off the car one way or another.) That leaves you with $411. If you want to save $100 of that, you're left with $311. That means you have (roughly) $31 per day to spend on food and gas. That's reasonable enough, I suppose, as long as you never need any of the following:
* Clothes
* Car repairs (we're assuming a used car with no warranty)
* Toiletries (those aren't free, either)
It also assumes you never get sick and have to take a significant amount of time off from your job.
So, it would seem to me that the lesson is, if you are willing (and able) to work 80 hours a week, hedge against most major disasters to the extent your finances allow, and the stars consistently align just right for you, you can probably survive by the skin of your teeth on this amount of money. YEAH!!!!
Remember, you could just not fund your HSA... and then have thousands of dollars in medical bills you have no way to pay. You could go for cheaper car insurance... and be left with a car loan you still have to pay off, but no car. You would ultimately have to pick and choose what to prioritize and just hope nothing bad happens, because if it does, you may be totally screwed.
I'd also point out that $100 in savings is about enough to keep your car in good repair, once you account for oil changes and regular maintenance, as well as any major repairs that come up (but which make sense to fix given the car's age.)
This does not sound like a fun way to live. (In fact, I did live this way for a few years, on less money, and it was fucking awful.)
$600 Mortgage/Rent - This is doable in the Midwest and other places that don't have high living costs. This amount would get you a (small) house in, say, small towns in Indiana.
$150 Car Payment - If you can only get a job at McDonald's, then a car payment this small is from a friend or family member, not something you are financing through a traditional channel. If you are poor, you're not likely to have much/any credit, so you're stuck going to a buy here/pay here place. That's going to run you more like $50 a week, maybe more. Let's be charitable and call the real payment on that $200 a month.
$100 Car/Home Insurance - That's reasonable if you've never had any accidents/tickets and you aren't actually covering your own vehicle. So, if you ever wreck it, you're also without a car--a car you still have to finish paying off, I might add. If you wanted comprehensive coverage on the car, that's going to be more like $150-200. It really depends on where you live, though.
$20 Health Insurance - AHAHAHAHAHAHA oh my god, wait, wait. You gotta be kidding me. $20 a month might get you a plan that doesn't actually pay for anything. Let's be really nice and say it's one of those $4000 deductible plans that are so common now. I'll get to that later.
$0 Heating - Well, OK. Could easily be $200-400 in the winter, depending on where you live and how natural gas prices are doing. Let's make it an even $300, say winter lasts from December through February, and so you need to find an extra $900 for the year, or $75 a month.
$100 Cable/Phone - That might get you one of those cable and VoIP packages, but what about a cell phone? Fine, let's leave that out just because.
$90 Electric - This may or may not be enough. I'm willing to leave it alone if we keep the heat separate.
(I'm ignoring the $100 Other for now, since it's so non-specific.)
Now, what bills were left out?
$30 Water - A lot of places have water bills. I see this run an average of $30-40 a month.
$50 Sewer/Trash - A lot of places have these, too. They might be combined into one bill or be separate.
$334 HSA Funding - Remember that $4000 deductible? Well, if you want to be able to actually use your health insurance, you need to be funding a health savings account so you aren't swamped with huge medical expenses you can't pay. $4000 spread out over 12 months is $334. Everything after that $4000 is paid for by the insurance (we are assuming.)
Using my adjusted numbers, actual (more or less) fixed expenses come to $1649 (I went with $150 for comprehensive car insurance, since you still have to pay off the car one way or another.) That leaves you with $411. If you want to save $100 of that, you're left with $311. That means you have (roughly) $31 per day to spend on food and gas. That's reasonable enough, I suppose, as long as you never need any of the following:
* Clothes
* Car repairs (we're assuming a used car with no warranty)
* Toiletries (those aren't free, either)
It also assumes you never get sick and have to take a significant amount of time off from your job.
So, it would seem to me that the lesson is, if you are willing (and able) to work 80 hours a week, hedge against most major disasters to the extent your finances allow, and the stars consistently align just right for you, you can probably survive by the skin of your teeth on this amount of money. YEAH!!!!
Remember, you could just not fund your HSA... and then have thousands of dollars in medical bills you have no way to pay. You could go for cheaper car insurance... and be left with a car loan you still have to pay off, but no car. You would ultimately have to pick and choose what to prioritize and just hope nothing bad happens, because if it does, you may be totally screwed.
I'd also point out that $100 in savings is about enough to keep your car in good repair, once you account for oil changes and regular maintenance, as well as any major repairs that come up (but which make sense to fix given the car's age.)
This does not sound like a fun way to live. (In fact, I did live this way for a few years, on less money, and it was fucking awful.)
FWIW - My rent is around $680 a month so a $600/mo rent is doable in less nice area. My gas bill is also $0/mo because I have an all electric apartment, my electric bill hovers around $100 pretty much all year round with electric heat. My water/sewage bill is around $20 a month at the very most and very rounded up. It's almost a non-bill.
The $20 health insurance is a joke. That's less than what I pay for single coverage, non-tobacco discount, yearly "healthy living" discount and a disability rider.
$100 cable/phone is absurd. Mine's closer $200. Granted that's with digital cable and two DVRs. (And no phone bill, I ride on my parent's plan which costs me about $50/mo.)
I suppose if you had basic cable/internet plan and a simple phone plan $100 MIGHT be doable but I doubt it. (Then again, cable is an expense one doesn't have to burden himself with.)
I'm assuming these bills, however, are for a single person living in an apartment. Otherwise the numbers are absurd and not even close to being in reality.
The $20 health insurance is a joke. That's less than what I pay for single coverage, non-tobacco discount, yearly "healthy living" discount and a disability rider.
$100 cable/phone is absurd. Mine's closer $200. Granted that's with digital cable and two DVRs. (And no phone bill, I ride on my parent's plan which costs me about $50/mo.)
I suppose if you had basic cable/internet plan and a simple phone plan $100 MIGHT be doable but I doubt it. (Then again, cable is an expense one doesn't have to burden himself with.)
I'm assuming these bills, however, are for a single person living in an apartment. Otherwise the numbers are absurd and not even close to being in reality.
I am actually living on about $1950 a month and that is in Australia which has a higher cost of living the USA does. However there are several reasons why I manage quite well on that
1) I am in government housing which means my share of the rent is about 1/4 of my income. I have to exclude certain monetary allowances I get (utility allowance, phone allowance etc) from that as the Housing Department aren't allowed to count that income when calculating how much rent we pay. All up my portion of our rent is around $450 a month) or $150 less than in this budget. Our rent for a three bedroom house in a nice suburb is $279 a week (around $1200 a month).
I live in a country with a UHC so I don't have to pay any health insurance. I also get most of my prescriptions for $6 each.
Three people share our house so we share our power bill. However our power prices are higher than the USA so my share (with heating) is about around $150 a month.
I don't have a car so I can take out car payment, car insurance etc and replace them with around $30-40 a month public transport/taxi fares. A person with two jobs as in the bedget would almost certainly need a car.
I don't have cable TV but our landphone/internet connection is around $110 a month cost shared by three people. I don't have a mobile (cell) phone.
I have sizeable amount of savings that I can withdraw on. Part of my income comes from interest on these savings but the money is there for any emergency that might come up.
As I am renting my contents (renter's insurance) is less than $25 a month.
I don't have to pay a water/sewage bill. That is covered in my rent.
1) I am in government housing which means my share of the rent is about 1/4 of my income. I have to exclude certain monetary allowances I get (utility allowance, phone allowance etc) from that as the Housing Department aren't allowed to count that income when calculating how much rent we pay. All up my portion of our rent is around $450 a month) or $150 less than in this budget. Our rent for a three bedroom house in a nice suburb is $279 a week (around $1200 a month).
I live in a country with a UHC so I don't have to pay any health insurance. I also get most of my prescriptions for $6 each.
Three people share our house so we share our power bill. However our power prices are higher than the USA so my share (with heating) is about around $150 a month.
I don't have a car so I can take out car payment, car insurance etc and replace them with around $30-40 a month public transport/taxi fares. A person with two jobs as in the bedget would almost certainly need a car.
I don't have cable TV but our landphone/internet connection is around $110 a month cost shared by three people. I don't have a mobile (cell) phone.
I have sizeable amount of savings that I can withdraw on. Part of my income comes from interest on these savings but the money is there for any emergency that might come up.
As I am renting my contents (renter's insurance) is less than $25 a month.
I don't have to pay a water/sewage bill. That is covered in my rent.
I don't know if anyone else went and looked at this in context, but I did, and it appears to me that it is just a sample of how to create a budget using their tools. I don't think it's meant as a suggested budget at all. And the how-to-budget info is actually quite good.
I think it's reasonable to expect that if you work full time at a job, or especially more than full time at two jobs, then you should be able to live independently. Probably not have a house or condo, maybe not have a car(if we had good public transportation in this country that wouldn't be a big deal), maybe you have to live in a trailer or have a studio apartment, but I don't think it's unreasonable, no.
Fast food work is actually hard work. It's not necessarily high-skilled work, but fast food workers probably work harder than people in a lot of other jobs. What's sad is that people assume most fast-food employees are teens or part-time employees, or whatever, when actually the majority are older than 30 and trying to support themselves and often a family.
Plus, the idea of taking a vacation almost has to sound like a sick joke for someone who "lives" on that budget.
The only problem that I have with this is the $20 a month on health insurance. That's absurd. Maybe save up $20/month for one walk-in clinic visit a year, but not health insurance.
Everything else? It's doable, if you're in the right area.
But arguing about the numbers here is totally missing the point. About 1/3 of American workers live on this kind of money and make it work. Let's not pretend they don't. Do they live like most of us? Probably not. But they're doing it. And some of the richest men in the country are arguing that they're making too much money.
This is so typical of our media. Drum up outrage over this budget, and not over the ridiculous wages that make this kind of budgeting necessary.
-Indy*
*Worked at McDonald's for 8 years in the run up to my doctorate, started at $4.75 an hour and left at $12.00 an hour.
Everything else? It's doable, if you're in the right area.
But arguing about the numbers here is totally missing the point. About 1/3 of American workers live on this kind of money and make it work. Let's not pretend they don't. Do they live like most of us? Probably not. But they're doing it. And some of the richest men in the country are arguing that they're making too much money.
This is so typical of our media. Drum up outrage over this budget, and not over the ridiculous wages that make this kind of budgeting necessary.
-Indy*
*Worked at McDonald's for 8 years in the run up to my doctorate, started at $4.75 an hour and left at $12.00 an hour.
You don't need food and clothes, you have unclaimed Big Macs and a spiffy uniform provided.
I think that they should at least have done a realistic sample budget and I do think that if showing that a second job is needed was not neccessarily the wisest thing that they did.
Well the budget doesn't have much wiggle room for those unforseen issues like car maintenance and repair, personal property taxes or any medical or dental care. You would be one emergency away from not being able to pay your bills. Risky.
The only way anyone "makes it work" is through sheer luck. If anything unforeseen happens, you're screwed. I sure learned that one the hard way.
But you are right that arguing the numbers is pointless. I mentioned this in another thread about the Koch brothers. Conservatives put out information like this because they know their opponents are easily baited by statistics. Throw some statistics out there and you'll get people to waste their time determining why the stats are right or wrong, or creating their own. All the while, the conservatives who sourced the data in the first place are just moving along with their agenda to gut the middle class and make working class life as miserable as possible in order to enrich themselves. One of the shrewdest things they do is convince middle class people that poor people are ripping them off--and that's the real effect examples like this budget have. "Look at that, seems someone can live just fine on McDonald's money! Guess we don't need welfare or food stamps or Medicaid, then. Screw those lazy-ass poors who just won't step up, I don't want my tax money supporting them."
It's a clever trick and most people in this thread (including me) fell for it.
I just have to remind myself: the only way to win is not to play the game.
Not saying that it was a wise choice of numbers -- it wasn't. But many people are making this thing out to be something it was never intended to be.
I've taught life skills classes that included budgeting, and the figures in the samples I saw were never very realistic. Just like "word problems" in math, where the numbers may not be realistic for the storyline.
I would question the value in presenting people with a "sample" budget that admits to not being realistic.
If you're going to teach people to budget, is it so hard to provide an actual budget that a real person lives on?
If you're going to teach people to budget, is it so hard to provide an actual budget that a real person lives on?
The value of the sample, even when unrealistic, is that it shows you the process, the mechanics of filling out a form to create a budget. Which is all it's intended to do. I agree, it would be better to use more realistic numbers, but even the unrealistic ones serve the purpose.
But again, other than the healthcare component, what's so unrealistic here?
$0 for heating? It's possible. We could be talking about the south, or it could be provided by the landlord.
The fact that food and clothing and gas aren't included? Well, it gives people $900/month for that (the $800 spending money plus the $100 in savings).
Someone mentioned property taxes. Really? Isn't it more unreasonable to criticize them for not including property taxes than it is to assume a significant number of these minimum wage workers would never be able to become property owners in the first place?
Once again: I think a guy working 80 hours a week in this country should be able to live significantly better than this, but that's not the case. So why waste energy on the budget rather than on the system that requires such budgeting?
How long would someone working at McDonald's be expecting to earn minimum wage? I'm asking, not sure I've got a reference point there, as never worked there. Assume you're 19 or 20, high school diploma, and generally show up on time and aren't a fuckup. I wouldn't think minimum wage would be your permanent wage, there should be raises over time, no? My high school/summer job started me pretty close to minimum, but while working there a few years, got several bumps up and was making a few bucks an hour more than when I started. Grocery store vs. fast food, but still.
And yes, home ownership at that salary is a dumb assumption, and not worth discussing. You can MAYBE work out kids, but spouse needs to also work full time, and there's likely assistance of some sort involved at that point, too.
Gets back again to the question i keep trying to ask: what's the minimum expectation? If your primary attribute is "generally shows up, (probably) has high school diploma", SHOULD we be talking about houses, vacations, etc.? Argue how much the cable tv bill really is, but it's stupid and irresponsible if someone in this position actually HAS that bill, should be watching broadcast TV and saving the money to try and do more important things. HBO isn't a necessity. Cell phone? maybe, but gotta be a cheap one.
Not voting for 'starve on the street', but if we're talking the bare minimum of entry level work, it kinda SHOULD be the bare minimum of reward for that work, no? It would be great if everyone was rewarded with a minimum $40k/year salary, but it's not realistic.
And yes, home ownership at that salary is a dumb assumption, and not worth discussing. You can MAYBE work out kids, but spouse needs to also work full time, and there's likely assistance of some sort involved at that point, too.
Gets back again to the question i keep trying to ask: what's the minimum expectation? If your primary attribute is "generally shows up, (probably) has high school diploma", SHOULD we be talking about houses, vacations, etc.? Argue how much the cable tv bill really is, but it's stupid and irresponsible if someone in this position actually HAS that bill, should be watching broadcast TV and saving the money to try and do more important things. HBO isn't a necessity. Cell phone? maybe, but gotta be a cheap one.
Not voting for 'starve on the street', but if we're talking the bare minimum of entry level work, it kinda SHOULD be the bare minimum of reward for that work, no? It would be great if everyone was rewarded with a minimum $40k/year salary, but it's not realistic.
^There's always going to be people that aren't suited for much more than a minimum wage crap job like this. I'd rather they not have it so shitty that they ponder robbing the rest of us.
And yeah, I think given productivity gains over the years it's a reasonable expectation that if you put in a little effort in a job, that you'll get things like basic health care, some spending money, and the ability to take vacations to keep you sane.
And yeah, I think given productivity gains over the years it's a reasonable expectation that if you put in a little effort in a job, that you'll get things like basic health care, some spending money, and the ability to take vacations to keep you sane.
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