Dual income is something that should not be underestimated
When getting into a relationship, it is more than just companionship and butterflies in your stomach. Let’s do some simple math to prove how even poor people can benefit when both parties pull their own weight, and both agree to live within their means.
For my single readers, this can also be done with a roommate, just make sure it’s with someone you trust and get along with. Make sure you are both on the same page, as it relates to trying to better yourselves. Roommates, just like relationships, can become nightmares if the person is not vetted to the best of your ability.
This article will be based on a scenario of John and Jane Doe with no kids. Watch out for a follow up article on Jane and John Doe with kids. Let’s say that John and Jane Doe are sick of struggling to make ends meet but they, like many Americans, have to start at the bottom. Both are only high school graduates, so they are stuck in dead end jobs for the time being.
Geographical Location
First thing for them to look at is their geographical location, if they live in any of the following areas they need to move.
- New York
- California
- Oregon
- Hawaii
- Colorado
- New Jersey
- Connecticut
- Maryland
- Massachusetts
- Alaska
These states have generous social welfare programs. However, you will most likely stay poor and you will never be able to afford anything on your own. For this to work John and Jane will need to suck it up and live somewhere that may not be as exciting, but will give them an opportunity to get a leg up, and with hard work and sacrifice move on to something better.
The top five cheapest states to live in are the following:
- Mississippi
- Arkansas
- Tennessee
- West Virginia
- South Dakota
Let’s take the state of Tennessee and conduct our search data based on Memphis. There are enough activities to do there that you won’t go into major depression, if you are used to a more exciting urban lifestyle. Next, you just need to use some simple math skills and realize how living in a cheaper state is a no brainer, especially if your poor. Some people will make the argument, that some people can’t afford to move but I would argue to the contrary and propose that some people can’t afford to stay in their current position. Some of us are fortunate enough to have enough funds to move in two months. Some, it might take a year of lifestyle adjustments and sacrifices to reach that goal. But once it’s reached, it’s well worth it.
Cost of Housing
I went on an apartment research website and found the following for different apartment complexes. This was done to show that there are numerous affordable apartments in various zip codes and that you can choose the most affordable unit in the safest neighborhood. There was a total of 2,020 apartments under $800.
The following is a small sample size of what was currently available:
- 1 Bedroom 1 bathroom 603 sq ft $565 Zip Code: 38115
- 1 Bedroom 1-bathroom 754sq ft $555 Zip Code: 38019
- 1 Bedroom 1 bathroom 809 sq ft $625 Zip Code: 38128
Employment
Next, we’ll look at jobs. Remember, John and Jane only have a high school diploma so our job search will be based on that. Now let’s assume that John and Jane cannot afford to work at a place too far from home due to unreliable vehicles. I took a look at a very popular job search website and put in the following filters:
- Within 5 miles of apartments under $625 a month
- Full time
- Entry Level
- Employer Provided Health Insurance
Here is a sample of full-time hourly jobs that I was able to find that only required a high school diploma. I also focused only on jobs with health insurance in case John or Jane have expensive medication that they require:
- Sales Representative $ 15 an hour plus commission, 401k, Health Insurance, Tuition Reimbursement
- Wireless Retail Sales Representative, $40,000 – $60,0000 a year, Medical Insurance
- Retail Sales Associate $15 per hour plus commission, 401k, 401k matching, Health and dental, tuition reimbursement
- Cashier Stocker $10- $13 an hour, dental, health and vision insurance
- Fed Ex $15- 19.50 an hour, Health, dental, vision, tuition reimbursement
Worst Case Scenario Numbers
Now let’s go on worse case number which I prefer to do because anything better will just be a bonus. Let’s Say Jane gets a job at $10 and John gets a job at $11 an hour.
Jane brings home 667.93 biweekly after Federal Withholding, Social Security and Medicare and John brings home 732.21 after his withholdings that are take out. That is a total of $2799.86 a month and that is with the LOWEST paying jobs from this list, this is the worst-case scenario.
Transportation
If Jane and John do not have a car, they will need some type of transportation to get to work. I know firsthand that some cities do not have the best public transportation, so now let’s look at obtaining vehicles for the both of them. This is where the planning before the move comes in. It is not recommended to move, get a job and then not have any means of transportation to get to that job. They should at least save enough for a down payment to purchase a vehicle when they arrive to their new destination. I did a car search on a popular for sale site with the following criteria in Memphis TN:
- New
- Like New
- Excellent
- Good
- 150k miles or less
- Memphis Area
- Model Year 2010-2010
This is a sample of the following that was available:
- 2013 Ford Fiesta- 110,000 miles – $3,999
- 2010 Mazda- 126,860 miles $3,995
- 2013 Chevrolet Impala – 114k miles- $3,800
- 2012 Mazda – 88k miles- $3,200
- 2012 Chevy Malibu- 149k Miles – $3,900
Planning for a Better Future
Again, let’s go on worst case scenario and assume that both John and Jane have bad credit for numerous reasons. Let see how much their car payment would be. The average APR auto loan rates for someone with a credit score of 501-600 is 17.74%. This where planning comes in as well. If John and Jane are planning to leave after one year. They need to do all they can to raise their credit scores. There are plenty of nonprofits that teach financial education to people with low incomes, if Jane and John do not know where to start. Again, we are still going to go on worst case scenario and assume that Jane and John buy a car at $3,200 and $3,800 with an APR of 17.74%. Let’s assume John puts $500 down for his car of $3,200 add 7% sales tax and for a term of 36 months his payment is $105 a month. Let’s assume Jane puts $500 down for her car of $3,800 add 7% sales tax and for a term of 36 months his payment is $128 a month.
Car Insurance
Car insurance is mandatory, so this is not an expense that can be omitted. The average cost of car insurance in Memphis, TN is $1,949 per year. This brings a monthly expense to 162.41 a month. Phone and internet services are crucial when looking for a job. It helps with job searches, additionally, potential employers need to call if they are interested in setting up an interview. Let’s move on to communication services.
Phone Services
There are plenty of services that are not provided by major carriers but still have a nationwide coverage. A simple internet search showed a plan that provides unlimited talk, text, and 1GB of data for $20 a month. Phones are for sale on that site that you could order starting at 149.00 a month. It offered financing of 10.13% for 12 months costing the customer $13.11 a month. So, let’s take the worst-case scenario and assume Jane and John do not have the 149.00 so their phone bill is a total of 33.11 a month.
Food Expenses
Jane and John cannot live on water so let’s budget a grocery bill. Jane and John have decided that the whole purpose of the move was to save money and get ahead. As such, they made the agreement to bring their lunch to work and only go out to eat on special occasions.
There are grocery stores that are very affordable and have quality food but are missing popular name brands. John and Jane realize the food is delicious and they don’t need popular name brand food to eat decently. These grocery stores are all over Memphis and are in a close radius of apartments that are below $650 in Memphis so Jane and John make this their regular grocery store.
I took the liberty of going to one of the stores Weekly Special Ads and found the following:
- Green Grapes for .85 a pound
- Family Pack of Chicken Tenderloins for 1.99 a pound
- Spareribs 2.29 per pound
- Chicken Pot Pie .75
I’ve been to this grocery store before and everything is extremely reasonable. Let say John and Jane buy 5 pounds of chicken for $10.00, which they can freeze what they do not use. They purchase canned goods such as green beans, sweet peas, mixed vegetables, sliced carrots ranging in price of .44-.50. Cereal starts at .99 and 128 Fl. Oz. milk 2.99.
Let’s add all of this up for a simple grocery list:
- Chicken $10.00
- 10 canned foods $5.00
- 2 boxes of Cereal $2.00
- Milk $2.99
- Bread .69
- Deli Meat $3.19
- Toilet Paper – $5.00
- Incidentals – $10.00
That brings a total weekly grocery bill of 28.87 we will add $10.00 for incidentals such as tooth paste or feminine products which brings the total to 38.87. Multiply that by four and you have a food and toiletry bill of 155.48.
Grand Total of Expenses
Now let’s do a grand total of Jane and John’s total expenses:
- Apartment – $555 a month
- Utilities – 226.88
- Janes Car Payment- $128 a month
- John Car Payment – $105 a month
- Janes and Johns Car insurance- $324.82
- Janes and Johns Phone Bill: $66.22
- Grocery and Toiletries: 155.48
- Grand Total: 1,334.52
- Jane and Johns Take home Salary: 2955.34
Jane and John have $1393.94 LEFT OVER each month with the lowest paying jobs that only require a high school diploma. If Jane and John wanted to save $1,000 each month between the two of them, they would have 393.94 a month for fun money or emergency money if they chose to.
No Excuses
For people who do not have children, are not disabled, or are not responsible for taking care of a disabled family member there is no excuse. This is what living within your means look like. With this scenario Jane or John can decide to go to a local community college, after being there for one year and taking advantage of dirt cheap in state tuition. If they pick the right field, they can easily acquire a job at $15 an hour after graduation.
Now if John or Jane happen to be a bum this is not possible. Therefore, it is so important not to partner up with, date or marry a lazy mooch. You will never get anywhere. However, teamwork can really improve your lot in life, if your partner has the same mindset.
Wanting the rewards without the sacrifice
The problem with some people is that they don’t want to shop at a cheaper grocery store, by a no name phone, sign up with a non-popular phone carrier, live in an apartment that is not a block away from their favorite latte spot, drive a hooptie or God forbid “live in the south”.
They rather kick and scream about life not being fair, rather than make the sacrifices to better themselves. No one ever said that you can’t live on the coast near the beach or on a beautiful condo overlooking the Pacific Ocean in Hawaii. You can, but you must crawl before you can walk. If that’s your dream, leave for now and go to a state that will allow you to support yourself while you improve yourself economically. If living in a high-priced state is that important to you, then come back and pay ridiculous prices if you want to.
Overcoming obstacles and escaping poverty
The next article will address how people with more challenging circumstances should not lose hope. Don’t wait on someone else to improve your situation do it yourself and if someone else or the government helps it’s a bonus not a crutch.
