Living on less than a Living Wage: Budget & Maximize Income

Mon Sep 16, 2013 at 10:41 AM PDT


Living on less than a Living Wage: Budget & Maximize Income



 
 
I recently wrote a diary in which I detailed how a used car sales manager accused me of "mooching off the government" when I told him I manage to live reasonable well with an income of around $10,000 per year, with the help of a couple government low income assistance programs. I told him where he could shove that attitude, and enjoyed an embarrassment of riches on the rec list; I guess I should tell people off more often, lol.
 
Frankly, I was shocked that diary was so well received. I kept re-reading it, thinking I could have written is so much better. I'd stewed over my experience for a couple days, and then rather hastily belted it out. Perhaps I hit a nerve - we progressives are so fed up with this austerity bagger bullshit, that with so much income inequality, how dare they accuse us of 'mooching' when we make use of some of government programs designed to help ease this greatest income inequality since before the Great Depression?
 
I received so many kind and considerate comments on that diary, thank you all. I also had several suggestions that I attempt to explain how I manage to get by on that small an income, and assist others in how they might better get by on low income. So, I'm going to give that a shot. I think it better to break that up in a couple diaries, so as to not try to cover too much at a time. I'm going to tackle the first part in this diary:
 
1: Budgeting and Planning - Budget, Budget, Budget!
 
2: Maximizing Income - Not necessarily what you think!
 
 
Budgeting and planning your income and expenses:
 
OK, I worked in accounting, so budgeting is second nature for me. But, you don't have to be a bean counter or math wiz to make a budget. The single most important thing you can do for managing your money to to record every single item of your income and expenses. You gotta know really well what's coming in, and where it is going. I use Quicken, which is easy to setup your income in its paycheck function - you enter your gross pay, tax and any other deductions, and how often you are paid. And then save every single receipt and enter those expenses. I keep a basket on my computer desk, throw the receipts in there, and then record them in Quicken when it's convenient. I recorded this week's receipts Sunday morning while listening to Meet the Press on the TV in the background. I'll repeat it one more time: this may sound really boring or really tedious, but it doesn't have to be, and only when you take the time to record all of your income inflow and every single expense can you get a grip on effectively managing your money, however meager it may be. And don't blow alot of money on the software. I'm still using Quicken 2004 Premier - they haven't reinvented accounting, income is still always a 'credit' (a plus +), and expenses are still a debit (a minus -). They add gimmicky tools to try to get you to upgrade, but do you really need that? 99% of my finances is done online/digitally, and I don't need to link my personal finance software to any of my online accounts, and think there's a bit of a risk in that. My paycheck arrives by direct deposit into my bank account. My mortgage payment is setup to deduct automatically from my checking account. My credit cards are setup to pay the last statement balance in full by automatic payment from my checking a couple days before the due date. All I need to do is check my free online banking account regularly to confirm that's all there, and record it in Quicken.
 
Quicken is the most popular personal finance software program. If you don't already have a copy it will set you back $40-$80. Before you go blow money on a copy, look into the many free alternatives. Goggle is your friend, make it a very good friend. A simple Goggle search of "alternatives to Quicken" found me these excellent free personal software programs:
Gnu Cash - Originally developed for the Linux operating system and very popular with the Linux crowd, it is now available for Windows and Mac OS X, and completely free, you download and install on your computer.
 
Money Trackin - Instead of installing software on your computer, Money Trackin is a website on which you record your personal finances and, most importantly, doesn't require you to enter personal information to setup an account. The advantage of online personal finance software is that you can access it from anywhere you have a device and internet access, including mobile devices. Just spent $30 at a grocery store? Record that from your mobile device while you're still in the store.
 
Most important: don't enter any personal info or your full account number of anything in online finance sites. They say they're "safe & secure", and I'm sure they like to think so, but as Edward Snowden has shown us, nothing is safe from a good hacker, and even less is safe from government snooping. Even in my Quicken, where my data is stored on my hard drive and backed up regularly to a USB 'thumb' drive, I don't enter any account numbers, just in case a hacker comes in from my internet connection, despite my firewall. My bank account only gets a nickname. My credit cards get a "Visa" or "MC" and the last 4 digits of the account number, and they get that so I don't confuse them.
 
OK, so you already keep track of your finances or I've convinced you to do so, and you have at least one month of income & expenses recorded, what do you do next? The part that can be really annoying - make a budget, and stick to it. Here's my monthly budget:
 
Income: 835
Expenses:
Mortgage: -380
Property Taxes: - 65
Home Insurance: - 40
Electricity: - 60
Heating Gas: - 40
Trash/Sewer: 0
Sub-Total Housing: -585
Remaining Income: 250
Car Payment: 0
Gas for car: -65
Car Insurance: -55
Car Maintenance: -25
Sub-Total Transportation: -145
Remaining Income: 105
 
My modest income is from a part time job, 3 days/week, the only work I've been able to find. Hopefully you can do better, much better. But, I "win" with my incredibly low housing expense - not many folks are going to find a place to live for less than $400 per month. My mortgage is only around $60,000, less than half the value of my home, and I like it that way - the payment is very manageable, and I like having plenty of equity, should circumstances every arise and I need to tap into it. If I wasn't going to start collecting Social Security in a few months I would probably have to. But another way to look at it is that even with that low mortgage payment and other reasonable other housing expenses, because of my low income my housing expense is still over 70% of my income. Most should have a much lower ratio of housing expense to income. If not, get rid of that 5 bedroom "MacMansion" and find a place to live that is more appropriate for your income!
 
Next to housing, transportation expense is the most critical expense. I'm fortunate to have no car payment, I bought my car new 10 years ago and it has long been paid off. Generally with older cars you need to budget more for maintenance, and that doesn't mean just repairs - you need regular maintenance, such as oil change, filters, belts, and replacement things like new tires. My maintenance budget is low, but I've been lucky - you should consider budgeting more those unexpected "surprises". And even though I live in rural southeast Arizona and drive an SUV that doesn't get the best gas mileage, my monthly gas expense is pretty modest - because I minimize my driving as much as possible. It's only 15 miles round trip to work, and I combine shopping trips by doing much of my shopping on the drive home from work in the small town of Sunsites. The Family Dollar has the best prices for toiletries, household items (laundry & dish soap, cleaning supplies) and dog food & treats for my 2 dogs. And while the small town grocery store is more expensive, they are reasonable for fresh produce, and there's a reason why they're called "fresh". And if there's other groceries I need, I weigh their higher price with the expense of driving to the nearest supermarket or Wal-Mart. In other words: shop locally. I enjoy movies and belong to a forum for Blu-ray high definition 'DVDs'. In the "deals" section, I'm amazed how people will drive all over town to save a buck or two. Think about it! Your time is worth more than that, besides likely spending more on gas than you save, plus wear & tear.
 
Back to my budget: OK, after housing & transportation expenses I have a whole $100 per month for the "luxuries" of food, medical & dental expenses, recreation/entertainment, other utilities - telephone, internet & TV. Impossible? Nope, I do manage to pretty much get by on that - because of those expenses the only ones I have is $7/mo. for telephone and $35 for internet. The secret of getting the most out of your personal finances is exactly the same as it is for any business: Maximize Income and Minimize Expenses. Let's go with a "top down" approach - I'll tackle Maximizing Income next in this diary, and cover Minimizing Expenses in another diary.
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Maximizing your Income:
Well, duh! Everyone from the Koch brothers to folks living off unemployment or Social Security wants and tries to maximize their income. But that can mean a lot more than you think. Sure, keep your eye out for a better paying job, through the want ads in the local newspaper, or usually better, the several online job search sites. And don't overlook your state government, most have their own job search site. Here in Arizona, I check the Arizona Workforce Connection site regularly for a better paying/full-time job, or a possible 2nd part time job to supplement my income. And don't forget about that last part - consider taking a 2nd part-time job to supplement your income. A surprisingly well paying part-time job is waiting on tables in a restaurant. Although my parents wanted me to go to college right after high school and had the means to make it possible financially, I had a world I wanted to explore first. By my 30s I decided to start on that college degree by taking a full load of classes at a community college. I pretty much put myself through a year of community college by finding a busy lunchtime downtown restaurant, working only 2-3 hours daily 5 days a week, and that almost 30 years ago.
 
But, the area I'm going to emphasize in Maximizing your Income is looking at the many government assistance programs available. First of all, don't you feel the least bit hesitant to take advantage of any assistance program! Oil companies get billions in subsidies from the government, multinational corporate conglomerates get by with paying little or no incomes taxes through government tax programs - don't hesitate for one second to take advantage of the comparable paltry government assistance programs for people. Secondly, don't make the mistake of assuming you don't qualify for any assistance because you think you make too much money and/or have too many assets. Several years ago when I applied for AHCCCS (Arizona's Medicaid program, pronounced "access") it honestly didn't occur to me I might qualify for food stamps - I owned my house with around $70k in equity, and had a lot more savings than I do now. But, when I applied online at the end it asked me if I wanted to see if I qualified for any other assistance, so I clicked 'yes'. It promptly said that I appeared to qualify for nutrition assistance, and asked if I wanted to apply. Another click of 'yes', and I ended up with $200 per month in "food stamps" - now called SNAP (Supplemental Nutrition Assistance Program), credited to a debit card you receive, called EBT. Eligibility for most assistance programs are based on current income, not assets.
 
First, you need to know where you fall within the Federal Poverty Level (FPL), as that is criteria most low income assistance programs use to determine if you qualify and, if you do, the amount of your benefit. You can find the 2013 FPL income levels here, at the Dept. of Health & Human Services. For a single person, the 2013 FPL is $11,490 annual income, and increases $4,020 for each additional person living in your household. The FPL for a family of four is $23,550. If you make more than that, don't let that deter you from applying and see if if you qualify for any assistance program - each program has it's own criteria for determining eligibility. For example, I just renewed by eligibility for nutrition assistance, and see from the approval they sent me that the formula used gave a credit of 20% of my monthly income, a standard credit for each person receiving benefits, and then credits for my "shelter expense", which knocked my monthly income down to 0, actually negative income.
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Medicaid/Health Insurance - Get it!
I would rate the most important assistance program to see if you qualify for first is Medicaid/health insurance. If you're young and healthy, or even getting up there but enjoy good health - DO NOT fool yourself into thinking you can get by without health coverage. Unexpected medical expenses have forced many thousands of Americans into bankruptcy, and an unexpected medical emergency can all too easily be the thing that pushes you into financial ruin. I moved to southeast Arizona in 2005, after the office I worked at in Las Vegas closed. I kept my employer provided health insurance through COBRA - the federal law that lets you kept your employer sponsored health insurance if you leave their employment by paying the monthly premiums yourself. But that was $375 per month, a big expense. And I'd always enjoyed good health - in the 8 years I had employer paid health insurance all I ever used it for was annual checkups and preventive care. So, I dropped my COBRA insurance after a year. Of course, within months the unexpected happened - I woke up one morning with chest pains, and rapid heartbeat. I took an aspirin and hoped it would go away, but I felt worse as the day went on. So, I finally drove into the nearest emergency room in the afternoon. The ER physician was convinced I'd had a cardiac arrest - my heart rate was way above normal, and I remember the top number on my blood pressure was 190. He ordered me flown by helicopter to a Tucson hospital. I was there 2 nights, with a constant battery of tests. They finally determined that I'd just had a bad episode of acid reflux. I was drinking too much back then and had a bad habit of enjoying an early evening cocktail or two or three, and then several glasses of wine during the evening, fixing something to eat only right before going to bed. What goes down doesn't always stay down, especially in a tummy full of vodka & wine. Well, that little ER visit, life flight, and 2 night stay in the hospital racked up over $13,000 in medical bills for me! That's when I found out about AHCCCS/Medicaid, applied, and got it. Since then my medical expenses have been a $5 co-pay for the twice annual checkup and blood tests with my doctor, and a $3 co-pay for each of the 3 prescription meds I take, 2 for high blood pressure, 1 for high cholesterol. Unfortunately, the AHCCCS/Medicaid wasn't retroactive, I was still on the hook for that $13k in medical bills. There are actually several options available should you get hit with large medical bills and you have no insurance. So as to not disrupt the flow of the diary, I'll detail those options in a 'footnote' at the end of the diary.
 
To see if you qualify for Medicaid, start by going to Medicaid.gov. they have a wealth of information, and links for the program information for your state. You can apply online in most states, it cost nothing to apply, and the worst can happen is they say "sorry, you make too much money". And don't forget the states that accepted expanded Medicaid under the Affordable Care Act (ACA), the income limit raises to 138% of the FPL in 2014, and that's after your income is adjusted down with a formula of credits and allowances for housing expense. If you don't qualify for Medicaid in your state and you are uninsured, don't forget that as the ACA is implemented you can get government subsidies offsetting the cost of private health insurance if you make up to 400% of the FPL, with lower costs insurance plans offered in online exchanges. HealthCare.gov is a good place to start, with a list of states that have implemented expanded Medicaid, and good info on the subsidies for health insurance.
Don't qualify for Medicaid and still haven't signed for an ACA insurance plan? Don't forget about Community Health Centers. These are local, non-profit health centers to assist residents with their health needs with lower costs than private doctors and health centers, usually with a sliding scale that lowers your cost the less income you have. While my AHCCCS Medicaid covers my medical needs, it doesn't provide anything for dental care. So I belong to the Chiricahua Community Health Center for my dental care - with my income I pay only 35% of their standard rates. Try googling (your town) Community Health Center and see what you can find.
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Nutrition Assistance - don't let your home be a food desert!
The next assistance program you should see if you qualify for is "food stamps", SNAP, Supplemental Nutrition Assistance Program. Millions of Americans work part and even full time and still make so little they qualify for nutrition assistance. Start at the U.S. Department of Agriculture web site (USDA). They list income eligibility, starting with $1,211 monthly income for a single person. And they detail the deductions used to adjust your income with credits for things like housing expense, dependent care, and medical expenses. The one "quirk" with SNAP is that while there is no limit on your assets for things like equity in your home and amount in retirement accounts (401k/IRA), the limit is only $2,000 is cash and personal bank accounts. The USDA site has a handy screening tool for determining if you're eligible and, if so, links to the 40 some states that have online application sites.
Whether you qualify for federal nutrition assistance or not, don't forget about Community Food Banks, they are really wonderful places. Many city food banks, such as the Community Food Bank of Southern Arizona (home of the Gabrielle Giffords Family Assistance Center), are affiliated with the USDA and supplement local personal and business donations with USDA "surplus" food. I volunteer at the privately run food bank in the small town of Sunsites. They get almost all of their food donations from Wal-Mart stores in Douglas and Sierra Vista, sometimes surplus or slow selling stock, but largely food nearing its expiration date. That's a win-win for everyone - the stores get to deduct the cost of their donations off their taxes, and if they didn't donate the food they'd have to throw it away when it passed its expiration date. Instead of it ending up in a landfill, we distribute the food to people in need, while it's still good and nutritious. So, if you need some help with your grocery bill, visit your local food bank. Whether you need any nutrition assistance or not and have a little time to spare, consider volunteering at your local community food bank. I'm glad I did, every Monday evening when I come home from helping hand out food or help carry the food to the cars of the frail and elderly and remember the look of happiness on a child's face or the look of gratitude and appreciation on an elderly woman's face who's just getting by on Social Security, I come home a happier man. And we usually have food left over after distribution hours which we divvy up among the volunteers so it won't go to waste. That food I get from the local food bank helps expand my nutrition assistance so that I rarely spend anything on groceries. And I get that by helping others - talk about a win-win!
 
There are many, many other federal, state and local government assistance programs. The other assistance program I receive in addition to Medicaid and SNAP/Food Stamps is the Lifeline Telephone Program, which teabagger types like to deride as "ObamaPhone" - free mobile phone service. The program was actually started in 1985, as a federal excise tax on telephone service to subsidize free or discounted telephone service to low income citizens. Under G.W. Bush it was expanded to include cell/mobile phone service. Obama had nothing to do with, but it's still a great program. If your income is 135% or less of FPL (after credits/adjustments) and receive either Medicare, Nutrition Assistance or one of several other assistance programs, you qualify. Here's the FCC website detailing the program. You get the service through several companies, just google Lifeline Program and you'll find them. I chose Safelink Wireless service, and chose the plan that provides 120 minutes airtime each month that roll over if not used. My $7 monthly telephone expense is for a very basic VOIP internet phone service that gives me another 200 minutes per month, which I use to make sure I don't go over my Lifeline minutes. Unless you're really, really gabby, don't go with those expensive fixed rate unlimited calling plans, it's almost always better to just pay for what you use.
 
To learn about the many more assistance programs, start at the Benefits.gov site. It's a bit time consuming to answer all the questions they ask to pre-screen you for the many benefits you may qualify for, but well worth it. I'm looking at applying for a few more programs, such as energy assistance - help with utility bills and improving home energy efficiency. I even found a local program for converting my gas water heater to solar, all costs covered by the program.
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It is a wise person who helps those in need, because understanding, appreciation, respect and compassion are among the finer attributes of humanity. It is also a wise person who accepts that assistance when in need. Then, just pass it on. You don't have to rich to help others - start with just a random act of kindness and you'll see what I mean.
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Footnote:
Options available to you should you get hit with large medical bills and you have no insurance:
- If you do get hit with a big medical expense with no medicaid/insurance, medical care providers always bill at a full "retail" rate - they regularly accept much lower payment rates from insurance companies, and accept even less payment in full from Medicaid/Medicare. You can negotiate directly with them, to get them lower the bill and/or accept a payment plan. Most important: DO talk to them! If you just ignore the bills, thinking it's hopeless, they'll just assume you don't plan to pay, and turn the bill over to collections. But to get them to reduce the bill by any significant amount, you need to have the resources to pay the agreed amount in full within a short time period. That's what I did, back in 2006 I still had pretty good amount of savings, thanks to selling my house in Las Vegas in the summer of 2005, pretty much at the top. I got the hospital to lower the $7,400 in bills down to around $4,000 - but only if I paid that in full immediately, which I did. But the air ambulance service would not negotiate for any reduction in the $2200 they billed. And that's when I got lucky - a rep in the Arizona DES (Dept. of Economic Security) office mentioned to me that Arizona has a state law that healthcare providers must accept a payment plan, with a minimum payment of of $25 per month. So, I started sending that air ambulance service a check for $25 each month. After a year or so they sent me a letter stating they'd written off the remaining balance in full. So, check the laws in your state before paying or even negotiating any large medical bill!
 
 
Tue Sep 17, 2013 at 4:42 PM PT: ArchTeryx made an excellent comment that I should have mentioned in the Medicaid section that only a few states accept childless adults in their Medicaid program, it is only for families with dependent children.
 
However, the states that have accepted the ACA version of expanded Medicaid starting in 2014, that restriction for childless adults. Here in Arizona Gov. Brewer closed the program for new childless adult applicants in 2009 due to budget cuts. Current childless adults already enrolled in the program, such as myself, where grandfathered in. It reopens for childless adults in 2014, as Brewer push the ACA expanded Medicaid through the legislature, with the support of every Democrat and a couple non-crazy Republicans.
 
Also, beverlywoods made an excellent point that those who make less than 1385 of the FPL aren't eligible for subsidies for private insurance, as the ACA intended that those with less than that income would have Medicaid.
 
Originally posted to [url=http://www.dailykos.com/blog/Baja Arizona Kossaks/]Baja Arizona Kossacks[/url] on Mon Sep 16, 2013 at 10:41 AM PDT.