Wednesday, July 02, 2008


Ah, the almighty dollar. I've been trying to figure out what it really takes to live in this country and what that all means. The answer, of course, is "Well, that depends."

It depends on where you live.
It depends on your commuting options.
It depends on whether you can cook.
It depends on whether you can have a garden.
It depends on whether you are married.
It depends on whether you have children.

I live with a roommate in an apartment north of Philly and am fairly frugal. My general cost of living is under $2000 /month, including over-paying off debt (mostly student loans). Of course I have plenty of incidental expenses (mostly travel, like to France for a friend's wedding) not included.

Ignoring extravagances and paying only the minimum, I could get by--reasonably comfortably--on about $1500 /mo. That's $18k/year after taxes, ~$21k before (depending on your state/local). Zero debt would reduce that to closer to $1200 /mo. Having dependents does not double the amount necessary. Most expenses remain static or go up by very small amounts. Food will scale almost linear with the number of people, but even that isn't completely true.

A rather liberal estimation would add 33% of the single person cost to maintain standard of living, excepting the potential to have lots of extra education debt. This means $2000 /mo. for two people, $2500 for three, $3000 /mo. for a family of four. That is $36k /yr after taxes, somewhere in the neighborhood of $41k before.

Factor in fun expenses (like a vacation) and I think $50k /year should be plenty for most families.

But it isn't. While for many families the biggest problem is debt, that is largely self inflicted due to over-indulgence, and does not concern the real cost of living. The real first, biggest problem is housing. Housing costs, though coming down are still way too high, and they will remain there for the next few years at least. Though there is no real fix for this problem increasing taxes for better off Americans (here I am really talking any family income over $100k) would help.

The second problem is energy, including for transportation...there are several separate issues here. On the transportation side, increasing the gas tax and using it to fund public transportation, establishing routes that are bicycle/scooter/motorcycle friendly (no cars allowed), and altering safety standards (to allow city/kei cars) while taxing heavy vehicles would do way more to help ease the financial burden in the long run than trying to make gas cheaper (it would also have other benefits, but that is not for this post). On the energy side, reducing consumption is of utmost importance. There are a few other potential fixes, especially long term with respect to new, renewable energy, but for now energy is very expensive because we demand a whole lot of it.

A third, sort-of-problem, is food. Food costs are strange. Most people spend too much on food because they don't want to/don't have time to/can't cook. Preparing one's own meals from the basic ingredients is the single best way to save money on food. Eating out and buying a lot of packaged finished foods is very expensive.

The last problem I will list here is health care. For many people, this is not a major problem, but for anyone for whom it becomes a concern, it can easily outstrip all of the others listed here combined. Better preventative health care is the best option (including healthy diet and exercise), but it is not exactly an easy thing to manage. This concern is beyond the scope of this post, but I will say that I do favor a single payer system, though, for reasons passing understanding, it is a political non-starter, and I can not envision any fix for health care that relies on for-profit insurance providers.

Ok, this is already too long. Caio.

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