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Living on Less Than $25,000 Per Year - Is it possible? Advice?

post #1 of 70
Thread Starter 

Let's say you're a household with at least one child.  Is it possible to live on less than $25,000 per year?  What lifestyle changes would be necessary to make it happen in your area?

 

 

What advice would you give someone trying to make it work?

 

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post #2 of 70

Fun Question. 

Most likely in my area you would be qualifying for government assistance as well. If not you would need to get your application in.

you would get some bonuses in that you get a earned income tax credit so you would get some money from the gov

 

Housing would take the biggest chunk. I would say no less than $600 a month or you are living with family. Even that might get you a few rooms in someones basement.

So that leaves

$18,000 

You have to eat so say another $2000-$5000 depending on your dependence on school lunch and food stamps. So $16000 left

Utilities $200 a month at a min So now 13000 Left

I would hope that the job was one that you could walk to because a car would eat away $1000 for insurance and even assuming you get buy on 1-2 tanks of gas another $1500 at a min for gas. That doesn't put into play maintaining a auto. So at least $3000 if you have a car and it is paid for. 

That still leaves $10000 left. Assuming you have no phone, no internet, That you buy all your clothes 2nd hand. $9000 left.

That will easily be widdled away with not being able to keep such a tight bare bones budget.

 

So yes I believe you could but I don't believe that you would be able to live well and without being on some form of government program you would be having to live with someone etc. to cut rent down.  

post #3 of 70
Both of my dd's do it. One has just het and one child, but she pays child support for mother child. The other dd has to adults and a baby (plus a cat and a dog). You do what you have to do.
post #4 of 70

I was thinking about that recently because we are a family of 3 and with the pending health insurance plan, my family making $25,390 would qualify for free medical insurance.

 

http://www.familiesusa.org/resources/tools-for-advocates/guides/federal-poverty-guidelines.html

 

I was wondering what other federal "benefits" (aka: give-aways) were available at that level. I know TANF wouldn't be a possibility but I think some food stamp benefits (not the full amount, but a partial payment) would be available. That would open to the door to benefits like free school lunch program and maybe after school child care subsidy. There are also all sorts of private agencies that use this benefit level to make determinations on services they provide so there might be sliding scale psychiatric / dental care, subsidized utilities, etc.

 

However, life would still be rough. We have some lean pay periods making much more than that. I'd want my mortgage paid off, that's for sure. Right now we're paying about 20% of our income on groceries (and that includes non-food grocery purchases), 10% on utilities (including cellphones, cable and internet - we'd cut WAY back on cellphones and cable), and 30% on gasoline (which I don't know how we'd trim further.) We'd probably drop some of our annual expenses, especially some of our life insurance policies.

 

Keep in mind if that income level was from job-source income, then the net amount would be smaller (about 15%) due to some taxes. Most of the income taxes wouldn't be a burden, but there is no avoiding SS and Medicare taxes. So the net monthly amount would be approximately $1770 a month. If so, my budget might look like:

 

Mortgage: $   0.00

Property tax / insurance: $ 150.00

Food / groceries: $ 500.00 (plus SNAP subsidy)

Utilities: $ 200.00

Gas: $ 400.00

Insurance (auto / life): $ 200.00

Clothing / Entertainment / Savings / Gifts: $ 320.00 (which goes really, really fast)

 

Again, this assumes ALL my medical expenses are paid. If I have co-pays and prescription costs, it could get very ugly. If I have a huge expense like an auto repair or replacement or a major home repair, life could get very difficult, very quickly.

post #5 of 70

hmmm let's see

 

$25,000/year (after taxes I'm assuming?)

 

A small single family home with minimal land can be purchased for around $150,000. Let's add home insurance and property taxes and say a lump sum payment of $1,300/month or $15,600 year. Comparably, a modest two bedroom apartment will be in the $800/mo range or $9,600/year.

 

Electricity - $100/month or $1,200/year

Heating - I can heat my home for about $500/year using wood pellets or $1800/year using propane. I'll play devil's advocate here and go with the high estimate

Cable (hey, I'm a realist) - let's say internet and a basic television package, $80/month or $960/year

Cell phones - $100/month or $1,200/year, again not a necessity but real life

 

Most people seem to have some sort of chronic condition. Let's throw in $100/month for prescriptions or medical costs, so $1,200/year.

 

Groceries and personal care products - I'm going to choose a conservative amount of $100/week or $5,200/year  I'm not anywhere near that amount, but I also know families of 4 who spend $400/week on food, so groceries is highly variable imo

 

Vehicles - Cars should be paid in full.  Let's say $1000/year in insurance, $100/month for maintenance, and approximately $400/month in gas (I pay $600/month for my hour+ one-way commute, I believe national average is a 25 minute commute or somewhere along those lines) Grand amount of $7,000/year. We have no public transportation or larger 'walking' cities, so a car is a requirement here.

 

With my numbers I've come up with a total of $28,160 using the apartment scenario, or $34,160 using a house. Obviously higher than the $2500 provided.

 

Cable and internet could easily be eliminated. That's $27,200. Now lets trim groceries to $50/week. $24,600. Just trimming those two items back brings me within the $25,000 income and would allow you to live in an apartment without any huge sacrifices. A house looks like it would be out of the equation though, unless it was already paid for, in which case you could live very comfortably on that income amount. I believe government assistance would be eligible at that income level, but you could definately get by without it. (especially if utilities were included in the rent)


Edited by Karen1985 - 7/10/12 at 8:07am
post #6 of 70

We make ALOT less than that right now, you HAVE to do what you need to to make it and we do. We don't like it but I'm trying to better our situation by going back to school. If anyone can make it without some form of help my hat's off to them but in our situation we can't
 

post #7 of 70

And I just wanted to add, there are tons of assistance programs we qualify for and we don't take them "just because we can" like some people we've only taken what we've absoluetly had to right now

post #8 of 70

It would not be possible in my area.

post #9 of 70

Perhaps in an apartment and no luxuries like cable or internet. No room for people who smoke or drink either. Eating out would be a rarity. 

post #10 of 70
Quote:
Originally Posted by swishina View Post

It would not be possible in my area.


Same in mine. We'd have to move.

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