How on earth are people doing this?

This is a topic I’ve touched on before, so bear with me if you’re a regular reader, but I’m astonished all over again.

The median family income — not for an individual, but a family — in the United States in 2013 was $51,939.

My personal income — just for me — in my current job (alas, old overpaid-for-my-field job, I miss you!) is $47,500.

So I make about $4500 below the median income. That’s probably a take-home pay differential of, say, $3000/year. While I could certainly put an extra $250 a month to some use, it wouldn’t pay for a spouse and children, that’s for sure.

And I’m using every penny. Granted I’m putting a lot towards retirement savings. But in theory we all have to do that, especially those of us starting late (as I’m sure most people at or below the median are.) Rent, food, car expenses, it just…adds up.

I’m fine — I can definitely live decently on this amount of money, though God knows I’d rather have more so I could travel more freely to see my friends, or save up for a house — but I just don’t know how families are getting by.

17 thoughts on “How on earth are people doing this?

  1. Huy Tran says:

    I think it has to do with so many families are not saving for retirement.

    http://www.benefitspro.com/2014/03/17/only-72-percent-of-americans-saving-for-retirement

    If 28% of people aren’t saving for retirement then it helps them get by.

    http://www.usatoday.com/story/money/personalfinance/2014/03/18/retirement-confidence-survey-savings/6432241/

    36% of people have less than $1000 in savings/retirements and 60% have less $25000.

    Imagine if you weren’t putting any money towards retirement or savings how much extra money you’d have! (Of course that’d be a terrible idea)

    I agree though. I’m not sure how families survive. I think I’m over the median by about as much as you’re under it but I can’t imagine providing for a family until I make more money. I think it has to do with the majority of people in the US don’t live in high cost of living areas like San Francisco, New York, Boston, etc.

    Also I love your Emergency Fund status of going from “LOL” to “slightly less LOL” which I know happened a while ago but makes me laugh (in a good way!)

    1. Sorry it took me so long to reply! I agree that people are making up the difference in not saving. It’s just really sad. And also thanks for noticing my move to “slightly less LOL.” It amused me, but I wasn’t sure anyone else was going to see it 🙂

  2. This is Us! says:

    I agree with your comment about retirement, as well as Huy’s. We are a family of 4 living on $39,000 a year (that’s gross – I’m assuming the numbers above are also gross). I also have a son with Autism, and man, it’s expensive!
    My husband has a 401K with his job that he contributes towards, but that’s it (and he only contributes 6% of his pay). I work, but don’t receive benefits.

    You know, families and people just do what they can with what they have…it blows my mind how anyone can survive making less than we do, but I know there are people doing it. For us? The retirement and the emergency savings account are not getting enough contributions – that’s where we “make up” the money, most likely. We also live in Utah. Not sure how the cost of living compares to the midwest, but I know it’s cheaper here than New York or California. 🙂

    1. Huy Tran says:

      You have beautiful children! Also, it seems like you have a lot of fun with them as well 🙂

    2. Sorry it took me so long to reply! In order:

      Yes, the numbers above are gross — so actually it occurs to me a family with the same pay as mine would have a higher take-home because of better tax deductions. I guess that would help. Also it REALLY helps to live in a cheap place (I moved from NY to the midwest for work, and wow, it makes a huge difference to COL.)

      Having a kid with serious special needs is never easy, financially or emotionally or in terms of time — I know a lot of people, including some in my extended family with autistic or otherwise seriously disabled children, and they’re wonderful families, but it’s a huge extra expense/time investment that we just never give enough support to as a society.

  3. I hear ya! I make a pretty decent salary, probably pretty close to the household income Canada (just me, not D), and I feel like it is still tight-ish. Sure I could live on less, at the expense of my work retirement account (which is actually mandatory) and debt repayment. My car is 8 years old, paid off, cheap on gas, insurance, etc. rent is cheap – $900 all in for the two of us. The only thing I can actively think Is “too much” would be our 2 cell phones, but they’re locked in a contract that would be expensive to buy out.

    1. Huy Tran says:

      Do you think America would benefit from a similar mandatory retirement account? Are you talking about the the Canada Pension Plan or is that something else?

    2. I actually wasn’t referring to CPP. My employer has a mandatory pension plan that is forcing me to save, and giving me a great match on top of it. But I know that’s where the buffet would be slashed if push came to shove.

    3. Yeah, if I had to, the obvious place to cut would be retirement…but man, that seems like a BAD IDEA.

  4. Tania says:

    It can be done… I am not sure how, but it can be done. My dad makes a little less than you, and when he was the only income of the house, we still got it done. Then me and my sister got jobs (first PT, then FT), and we were in no better or worse situation. Actually, the more money that went into the house, the worse it got. If we don’t count for my savings, I guess you could say I live on only $21k/yr, including rent, utilities, food, everything. I get taxed like crazy for some reason. The gov’t doesn’t care much for the young/healthy/childless/single adults.

    1. Yeah, I’m with you on being childless and single! It occurred to me reading a comment from a family above that if I had dependents, I’d have significantly higher take-home pay, so I guess that would help some.

  5. hmm, we make less than you make and we’re a family of 4 😉 (although my husband just got a raise, so we’ll see where that puts us…)

    i guess it just varies so much depending on where people live, what kind of food they eat, personal interpretations of wants vs needs, healthcare expenses…we’ve only experienced a few months where we felt pinched (one time we had $9.80 in checking for a week until payday — fun stuff! we did have an emergency fund, though.)

    this, i think, is why it’s kind of fun to read other personal finance blogs. because there are families making less than median income blogging about it (like Six Figures Under), so you kind of get a feel for how it can be done.

    i waffle between “gosh, we make so much more than we need!” and “how on earth can we do this??” a lot. i think a lot of financial failure or success has to do with mindsets of scarcity vs mindsets of abundance. i need to read more about it.

    1. That’s a really interesting comment at the end, about mindsets. I definitely am coming off over a decade of real financial insecurity, and I haven’t adjusted yet to the idea that I have “enough” (actually more than “enough”) coming in.

      I agree that this is why it’s fun to read blogs from people in a wide variety of situations — actually I prefer the ones where people are getting by on tight-ish budgets, because I don’t really have much to learn from some investment banker putting away 90% of his salary 🙂

  6. Sarah says:

    Super interesting read!! I guess when there’s a will there’s a way. We’re all just trying to do the best we can and trying to get by – which we all do month after month regardless of our income. My husband and I both work for ourselves (we’re also a family of four) so our income varies often. Some months we save over $1000, other months we go into savings lol! But overall, we’re going up so I guess that’s what matters! We also do live a pretty cheap lifestyle – since we have two little kids we don’t really go out to eat, most of our activities are free (library, park, etc), we make our coffee at home, etc.

    Thanks for the post!! Great read!!

    1. When I used to freelance it was just like that — so variable, so some months I was socking it away and others I was just living on my savings. I never went up steadily though so you’re doing better than me 🙂

      I love how cheap kids’ activities can be; when I’m with my goddaughter, everything we do is free or nearly so — park, library, going on walks, going to the museum (kids get free memberships).

      Thanks for stopping by!

  7. CheapMom says:

    We are a one income family with an income about the median for Canada, which seems much higher than in the US. All I can say is that Housing and Car expenses don’t need to increase when you get a spouse and kids after and they’re the big parts of most budgets. Also, just spending time with your family is a much cheaper form of entertainment than the nights out I had in my single days…

    1. Yeah, there was a big deal recently here about Canadian median incomes being higher than US-ian ones for the first time — part of a realization that the middle class is being “hollowed” here, so there are some very rich people, and a lot of quite poor people, and the middle class as a whole is losing a lot ground. Real incomes, adjusted for inflation, are substantially lower than they were before the financial crisis. Sigh.

      But those are good points about housing and cars — especially if you can stay in the house/apartment you were already in (I know some people who’ve had to move because they just wouldn’t fit!)

      Thanks for stopping by!

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