Living on Less Than $25,000 Per Year - Is it possible? Advice? - Page 3

I honestly don't know if that would be possible here without govt assistance.  I'm quite sure there are people in  my area that do it, but I'm sure theya ren't homeowners.  I know there are kids that get free or reduced lunch.  There are kids taht do sports and such around here, but they can usually get their registration fees waived and help with uniforms. (I've actually suggested that a few times to some folks I know)  We have a public transit bus that comes through town every hour, and its used alot.  Our borough has alot of rentals, very little property ownership and I know they are alot of no frills, but I'm not sure of the amount paid for rent.   I don't live in the borough, I live in the town, so I only have to pay taxes once, not twice.  
 

I lived on less than half of that years ago. But of course things were cheaper in the 70's and 80's. But even with cheaper prices, I still had to watch every penny.

 

My main thing, was finding and doing as many free activitites with dd as I could. Also buy as many used items (clothing, furniture, cars etc...) as possible.

 

And with food, I kept the meals as simple as possible.

I think what is so interesting about this question is that it IS possible for all, or just about all, of us to crunch the numbers and find a way to make it work. It would be interesting for those of you who are saying "no" to put the numbers out like Ember or I did and see what you come up with. I think the "No, it's not possible" comes from having an income that is higher than that but feeling totally strapped or falling behind on expenses. A knee jerk reaction of "If I can't do it for X amount, no way can people do it for $25k". There are also people who have mentioned that they are doing it for less that $25k, so that alone answers the initial question pretty concretely.

 

My first thought was that there is no way in hell. I've made more money than that my entire working life and I've certainly never felt rich or not stressed from money (although the stress is a personal trait I have haha). So live on $25k? Yeah right! I used some of my families real numbers in my scenario, including housing expenses. And no matter what way you want to try and spin it, numbers don't lie. Technically my family could be living with a few luxuries (cable and an increased food budget towards eating out for example) for less than $35k a year in our current house. I'll be straight up and tell you we are NOT at those numbers. I have a budget, I follow my budget, yet my budget is much higher than that. Why? Why did I feel the need to put in so many more sections and more money in certain areas? We don't NEED those things. Hell, we don't even take full advantage of the things we do spend our money on.

 

Kim, I LOVED this question. It's totally eye opening. I hope more members try to crunch the numbers and list out expenses here. I think the information is truly interesting.

 

 

ETA: Kim, what prompted the question? Something personal or just an inspired "what if"

Edited by Karen1985 - 7/11/12 at 6:46am

Actually, when DH was first laid off, this is what we were living on for about six months. Half went to our house payment and the other half was everything else. Of course we did get behind on credit cards and we had no health insurance. So yes, it is possible but it isn't fun.

 

I disagree that it can't be done even in expensive areas like LA, SF and NYC. We used to have an active member on this board who lived IN New York City and didn't have a very high income. I know when one of my adult DD's was first married with a baby and not working, they were making it on very little money and that was in the SF Bay Area.

 

But what you're leading to, Kim, is a lifestyle change. It is almost like people are saying, "No, there isn't anyway for my family to live on $25K a year - or less - and maintain the same lifestyle." Well, that might be true, but if you dramatically change your lifestyle, it IS possible. People are doing it. People are doing it and still living well. I don't think everyone struggles when living on so little. My point was that $12/hr really is considered a good wage when I was living in ID (and that was just recently.) Clearly people ARE making it. Heck, depending on where you live, unemployment is $8 to $10 an hour and in this economy people have been living on that for two years or more.

 

Housing tends to be the biggest expense in the average budget. My first thought was to eliminate that line item by paying ff the mortgage. While that is an option we've been working toward for years, most people won't have that option. They'll have to find very inexpensive housing as an alternative. In the expensive parts of the country, that means shared housing. In the case of my newlywed adult DD with a baby, they rented the master bedroom of a house. It was a large space with its own entrance and the set-up was less than ideal, but they did it because that was all they could afford. This also reduced their utility costs. They maintained two cars (we gave them one of our old ones) because public transportation wasn't feasible in the spread-out Santa Clara County. I doubt they maintained auto insurance but if they did, it was the state minimums. I'm pretty sure the husband wasn't contributing to his 401k at work but my DD was socking away cash - a dollar here or there - when she could. I don't think they received any public assistance. They were lucky that the husband's job provided medical insurance for the whole family and I think the company covered the majority of the premiums. When my DD divorced her husband, she did qualify for subsidized housing. It was a really nice 2-bedroom apartment and the rent she paid was on a sliding scale based on her income. It wasn't cheap but it wasn't 50% of her take home pay either (which at the time was what a lot of people we doing in order to buy a house.)

 

I think at the lower income levels you do think alternately about how to obtain the things you want. DD didn't have TV service so someone gave her an old DVD player and that was how they watched "TV" - it was all videos that they borrowed from others or got from the library. She "borrowed" internet service from a neighbor who hadn't locked down their wireless network. We learned to never try to phone her. When she was working, her work phone was her only phone number or we'd just leave messages on her FB account or send her an e-mail. She'd call us back when she could borrow a phone from someone or call us from work. She got very good at finding stuff left on the street to furnish her apartment. She once told me, "A can of black spray paint does wonders." I have to admit, her apartment was cute.

 

But it IS a lifestyle change. I'd have to admit that.

When hubby was on unemployment for those 14 months, the unemployment income was far less than $25K a year (more like $16.6K a year). We were lucky that we had very little debt (which we quickly paid off), a big severance package, and supplemental income from hubby working as a contractor here or there. By the end of the year, when we did taxes, his income wasn't much different from what he is making now in a regular, full-time job. But that was the stressful part - the uncertainty. Insurance companies will tell you that their studies say that people with lower income and lower credit ratings are more likely to have an accident. The insurance companies imply that the reason for this is the poor person is trying to get money off the insurance company (wreck your car instead of repair it when the transmission is failing, for instance, or claim a major medical problem when what you really want is a vacation from your job). However, I think it is the stress. When you're worried about money, you're thinking about things other than how you're driving or whether or not you performed certain safety procedures on the job.
 

You just described our situation, and we still can't do it. I know it sounds unreal but honestly it's hard. I think alot of it is a big chunk of dh's paycheck goes toward health insurance and 401K if we didn't pay in so much it wouldn't be as bad

Can you lower 401K?  Can you lower the deductions from his check at all??  Dh was also haveing the max taken out of his check and we struggled for SO long.    It was crazy.  I finally told him it was pointless to continue have these 401K deductions coming out of his check if we are struggling NOW, how are we going to retire???    So he lowered them.  He also checked the insurance and lowered what we didn't really need.  He changed his tax with holdings so less is taken out also.  It changed to almost $200 extra we started getting in his check which helped TONS.