973beachbum
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Post by 973beachbum on Apr 14, 2011 11:15:10 GMT -5
It depends what they are used for. If it is used to pay for something like health ins premiums then it is tax exempt but they can be used to pay for things like disability ins that might be paid for with after tax dollars. I even worked at a company would would give it to the employee in cash. ;D
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Deleted
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Post by Deleted on Apr 14, 2011 11:17:40 GMT -5
"I think Flex accounts are exempt, is anyone sure?"
I think they are too. I was just pointing out the poster keeps using her situation which is based on having a flex plan available and the only year with the 2% reduction in FICA.
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Deleted
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Post by Deleted on Apr 14, 2011 11:26:09 GMT -5
"I think Flex accounts are exempt, is anyone sure?" I think they are too. I was just pointing out the poster keeps using her situation which is based on having a flex plan available and the only year with the 2% reduction in FICA. I know Pooks, but I was thinking about it for daycare. For a low income person who may not pay anything in taxes, putting $5000 in a daycare flex account may be the only saving he/she could do, in regards to FICA, it could save $382/year. I also think that you would be able to get more of the EIC if you did that as well.
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Deleted
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Post by Deleted on Apr 14, 2011 11:30:35 GMT -5
I have $200/check put into a daycare flex, $40 into medical and $115 for health insurance. All our exempt from FICA. In addition to this I have 7 or 8% (can't remember) that goes into a 401K.
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giramomma
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Post by giramomma on Apr 14, 2011 11:56:11 GMT -5
If someone were very poor, they wouldn't be worried about haircuts, travel, new clothes or sheets, furniture etc. Poor people are focused on surviving, not getting new couches and impressing others. And communities have a way of helping out their friends who are facing hard times. When I know someone is down on their luck and needs something, I try to find a way to fill that need. My family was very poor when I was a young child, my parents couldn't afford new school clothes for us, so their friends at work would bring them bags of their kids' old clothes for us to wear. And I can get oodles of snack foods free or nearly free with coupons and sales. Your "problems" with my bare-existence budget are not real problems, just inconveniences. I work with poor kids, the kid's whose parents are alcoholics, who don't have food in the house, enough gas in the car to drive 5 blocks. etc. I also work with kids who are poor, but are a step up from dirt poor..kid's parents who make 200% of the poverty line. So, they still qualify for some social services, like reduced lunches. Yes, I know that these folks visit food pantries to get food. I also know that they don't live in unfurnished apartments or trailers, either. I know that yes, they may share beds with their siblings, but the report is that they share beds, not blankets and pillows on the floor. Beds still cost money-even at goodwill, unless they get them off freecycle. But since many of these folks don't own a computer, I'm thinking freecycle probably isn't an option for them. And, those families that make enough to be poor but not dirt poor, some of the kids have nicer things than I do..And they also travel, even if it's just an hour away, to visit family. I also don't equate not having new clothes with being poor. We aren't poor, and we pass around kids clothing as much as we can, to other non-poor people. I think it's just being nice, and actually using things up.
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Angel!
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Post by Angel! on Apr 14, 2011 12:16:31 GMT -5
But that is the point - you already had the stuff & you got lucky & got it as gifts for the previous kid. I didn't get any of that as gifts, so at some point I had to shell out the money. A pump & supply of storage bottles & bags can easily run you $200-$400 depending on the quality of pump & how much storage you need (at one point I had close to 300 oz in the freezer). Considering it cost ~$40 or so a month to formula feed a 6 month old, you need to exclusive BF for 5-10 months to even start seeing a savings. It isn't exactly the money-saver some claim. Well, now you're prepared for baby #2! You'll start saving the very first month. BTW, $40/month for formula seems really low. My sister goes through a $25 can every 6 days for her 5 month old. It all depends on what you get. Namebrand is ~$25/can, but you go generic & you can get it for ~$10/can. I came up with $40 assuming about 1 can/wk. Also, I recieved tons of free samples & coupons, lowering the cost somewhat.
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Frugal Nurse
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Post by Frugal Nurse on Apr 14, 2011 12:18:40 GMT -5
gira- the furniture and bedding would be a one-time expense. I don't have a "furniture and bedding fund" in my monthly expenses, do you? If an occasion arises where I need new furniture I save up until I can afford it, but that isn't a monthly need. And bedding and such would be the same for someone low-income. Maybe they would use tax returns or gift money to purchase these things. Maybe they go dumpster diving, or ask their church pastor for help (many churches collect needed items from the congregation and donate them to the needy parishioner, without revealing that person's identity.) again, these are not monthly needs, there are usually things that only have to be purchased once per decade, and that leaves a lot of time for circumstances and incomes to change. Also, my original budget included my personal mortgage payment. A family with such a low income would likely live in a house or apartment much smaller and older than mine, for about half that cost, which would free up almost $600/month to provide those wants (or add to savings).
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Post by Deleted on Apr 14, 2011 12:21:20 GMT -5
gira- the furniture and bedding would be a one-time expense. I don't have a "furniture and bedding fund" in my monthly expenses, do you? If an occasion arises where I need new furniture I save up until I can afford it, but that isn't a monthly need. And bedding and such would be the same for someone low-income. Maybe they would use tax returns or gift money to purchase these things. Maybe they go dumpster diving, or ask their church pastor for help (many churches collect needed items from the congregation and donate them to the needy parishioner, without revealing that person's identity.) again, these are not monthly needs, there are usually things that only have to be purchased once per decade, and that leaves a lot of time for circumstances and incomes to change. Also, my original budget included my personal mortgage payment. A family with such a low income would likely live in a house or apartment much smaller and older than mine, for about half that cost, which would free up almost $600/month to provide those wants (or add to savings). I have replacement fund in my budget otherwise you get people thinking there are emergencies when there are not. These one time needs, happen more often than people think.
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Angel!
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Post by Angel! on Apr 14, 2011 12:24:06 GMT -5
You're missing the point. Did you read the original article? It was trying to prove that the least a family of four could live on was $68K/year, and I'm saying that just isn't true.Exactly. Especially if there's a SAHP. The article was about 2 working parents with 2 children. Starting to compare it to other scenarios isn't really valid. And yes, you could likely live off less than $68K. But, I think the point of the article was to use national averages & show what it would take to maintain a certain lifestyle. The numbers are not that farfetched for MOST people. They may be higher than what you need, but that is how averages work, they are low for some & high for others. To discount the entire article because someone is able to find infant daycare for $200/month & has everything they need gifted to them & is able to use cloth diapers & BF without pumping for 2 years is silly, because none of that is average at all. It isn't even an option for many people. Honestly, the only thing I thought was unreasonable in the article was the transportation costs because it assumed 2 car payments & while that may be the norm, it isn't ideal or necessary at all. Daycare is probably a necessity when you have 2 working parents, 2-$400/month car loans is not at all.
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Frugal Nurse
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Post by Frugal Nurse on Apr 14, 2011 12:26:54 GMT -5
973- I have no idea what the pre-tax income would be. I'll have to go back an read it, but I thought I stated in my post that it was after taxes. Your estimate of taxes and insurance being taken out sounds high, but I guess that varies with income and state/city. And my example, near the end, included one child. Why do people always assume kids= bigger housing cost? Housing costs in my example would not increase because the house in the example is my home, which is a 3 bedroom/3 bathroom home in a new, safe neighborhood close to good schools and parks. If anything, a poor family should downsize to an older area with a smaller home or apartment, or look at renting to get out of the added expenses of PITI (of course, owning a home just lets you take that "ITI" amount off your taxes, which would lower the taxes you'd need taken out of your salary). And if the parents are smart shoppers, the food shouldn't add that much cost either.
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Frugal Nurse
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Post by Frugal Nurse on Apr 14, 2011 12:33:15 GMT -5
gira- the furniture and bedding would be a one-time expense. I don't have a "furniture and bedding fund" in my monthly expenses, do you? If an occasion arises where I need new furniture I save up until I can afford it, but that isn't a monthly need. And bedding and such would be the same for someone low-income. Maybe they would use tax returns or gift money to purchase these things. Maybe they go dumpster diving, or ask their church pastor for help (many churches collect needed items from the congregation and donate them to the needy parishioner, without revealing that person's identity.) again, these are not monthly needs, there are usually things that only have to be purchased once per decade, and that leaves a lot of time for circumstances and incomes to change. Also, my original budget included my personal mortgage payment. A family with such a low income would likely live in a house or apartment much smaller and older than mine, for about half that cost, which would free up almost $600/month to provide those wants (or add to savings). I have replacement fund in my budget otherwise you get people thinking there are emergencies when there are not. These one time needs, happen more often than people think. I guess you're more detailed than me about your budget headings. I have a long-term emergency fund for if one of us were out of work for an extended period of time, and a short-term savings (the use for it changes depending on what needs done or what we want to do). Usually any one-time things that pop up can be covered out of our monthly "mad money", but if it is too much, we make do until we save up for it. And there are no furniture emergencies. I cannot think of a single piece of furniture in my house that I cannot live without for a few months until I can afford to replace it. Even if a baby crib breaks, they can sleep in a pack and play for awhile. We have 2 cars, so if one dies, we just drive the other until we can fix it.
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Post by Deleted on Apr 14, 2011 13:18:29 GMT -5
I didn't see "mad money" in the budget. How is the 33k family supposed to pay for anything out of the ordinary? What happens when gas increases, groceries go up, electric? Everybody needs a cushion.
BTW, I don't like the article. The author makes it sound like this family is in poverty, all their expenses are very middle class. Poor people don't pay the average for things, because their income isn't average. They live in cheaper places, they find a way to cut childcare costs, they eat for less.
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Frugal Nurse
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Post by Frugal Nurse on Apr 14, 2011 13:20:17 GMT -5
I didn't see "mad money" in the budget. How is the 33k family supposed to pay for anything out of the ordinary? What happens when gas increases, groceries go up, electric? Everybody needs a cushion. BTW, I don't like the article. The author makes it sound like this family is in poverty, all their expenses are very middle class. Poor people don't pay the average for things, because their income isn't average. They live in cheaper places, they find a way to cut childcare costs, they eat for less. No, there was no "mad money" in the budget. This was not a "post my budget for the world to see" kind of thing. I was simply showing that it could be done on a lot less. I already address the issue of unexpected expenses in an earlier post.
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Deleted
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Post by Deleted on Apr 14, 2011 14:40:00 GMT -5
I think that earning around the amount the article stated is what it would take for a family not to get into debt. Yes, you can live a very pared down lifestyle on a smaller amount of money but most families I know IRL take on credit card debt when their car breaks down, the roof leaks or the washer needs a repair.
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Post by Deleted on Apr 14, 2011 15:22:52 GMT -5
I think that earning around the amount the article stated is what it would take for a family not to get into debt. Yes, you can live a very pared down lifestyle on a smaller amount of money but most families I know IRL take on credit card debt when their car breaks down, the roof leaks or the washer needs a repair. And to avoid that, being low income, we have to have a more detailed budget with repair costs added in. We do not have 2 cars, if one breaks we need to fix it. We need that one car. If my computer died I need a new one because I need to work on my schoolwork. My fiance's died in the middle of school and it caused all sort of hardship. If the furnace goes, we need to replace it (do you have a spare furnace?). Budgets need to have room for the unexpected, just because you have more income and therefore do not budget for the problem does not mean a lower income can do it as well.
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Deleted
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Post by Deleted on Apr 14, 2011 15:30:29 GMT -5
I think that earning around the amount the article stated is what it would take for a family not to get into debt. Yes, you can live a very pared down lifestyle on a smaller amount of money but most families I know IRL take on credit card debt when their car breaks down, the roof leaks or the washer needs a repair. Interestingly enough, the only time I ever got in trouble with debt was when our household income was over 140K. There's something about going from that to 20K that changes the way you look at personal finance and being prepared. It also makes you think about what's really important. I am way more secure financially now than I was back then. I make 32K a year and my husband has been unemployed the past 8 months and haven't borrowed a dollar in the past 10 years. It makes me sick to think how well I could be doing if I'd realized all this 20 years ago! LOL A family of 4 making 68K is going to have to make sacrifices and be smarter with every dollar. They might have to work opposite shifts, or have a teenager watch their kids instead of a college prep daycare, be creative with vacations, own only one car instead of two, have a garden, live without cable...the key is simply to live within your means and do what you have to do. I just find all the negativity bizarre. I don't know. Maybe it's just the implication that I'm "poor" that I find offensive.
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Deleted
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Post by Deleted on Apr 14, 2011 16:12:14 GMT -5
Maybe it's just the implication that I'm "poor" that I find offensive. lol - I don't think it's poor. It's that most people don't earn 68k consistently. They may start out with low earnings and student loans, or go through a period of unemployment so that over time they've built up enough debt that 68k is what they need to live. For example where I live a roof replacement costs 20k. Either you take out a heloc or you have to put that money in savings - which means having enough income to save. Also I grew up in a HCOL area - most households I knew making 70k consisted of bachelors living in apartments.
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doxieluvr
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Post by doxieluvr on Apr 14, 2011 18:48:40 GMT -5
But that is the point - you already had the stuff & you got lucky & got it as gifts for the previous kid. I didn't get any of that as gifts, so at some point I had to shell out the money. A pump & supply of storage bottles & bags can easily run you $200-$400 depending on the quality of pump & how much storage you need (at one point I had close to 300 oz in the freezer). Considering it cost ~$40 or so a month to formula feed a 6 month old, you need to exclusive BF for 5-10 months to even start seeing a savings. It isn't exactly the money-saver some claim. Well, now you're prepared for baby #2! You'll start saving the very first month. BTW, $40/month for formula seems really low. My sister goes through a $25 can every 6 days for her 5 month old. We have a 5 month old, and currently spend $120 a month in formula. Our baby has leaks in every diaper except Huggies Little Movers which are $20 for a case of 80, so count on another $80-$90 a month in diapers. If he was in daycare the rate is $30 a day.
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doxieluvr
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Post by doxieluvr on Apr 14, 2011 19:01:57 GMT -5
I think that earning around the amount the article stated is what it would take for a family not to get into debt. Yes, you can live a very pared down lifestyle on a smaller amount of money but most families I know IRL take on credit card debt when their car breaks down, the roof leaks or the washer needs a repair. Interestingly enough, the only time I ever got in trouble with debt was when our household income was over 140K. There's something about going from that to 20K that changes the way you look at personal finance and being prepared. It also makes you think about what's really important. I am way more secure financially now than I was back then. I make 32K a year and my husband has been unemployed the past 8 months and haven't borrowed a dollar in the past 10 years. It makes me sick to think how well I could be doing if I'd realized all this 20 years ago! LOL A family of 4 making 68K is going to have to make sacrifices and be smarter with every dollar. They might have to work opposite shifts, or have a teenager watch their kids instead of a college prep daycare, be creative with vacations, own only one car instead of two, have a garden, live without cable...the key is simply to live within your means and do what you have to do. I just find all the negativity bizarre. I don't know. Maybe it's just the implication that I'm "poor" that I find offensive. What you fail to realize is that your COL allows you to support your family in Minnesota, on $32k. You 32k, would not stretch as far in Maryland. I know my $32k in MD, only pays for the mortgage, health insurance for myself & kids, and auto insurance. That is it. Thankfully we have another $32k income that covers food, utilities, car payments, car maintenance, gas, and debt payments.
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muttleynfelix
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Post by muttleynfelix on Apr 15, 2011 10:22:09 GMT -5
We have a 5 month old, and currently spend $120 a month in formula. Our baby has leaks in every diaper except Huggies Little Movers which are $20 for a case of 80, so count on another $80-$90 a month in diapers. If he was in daycare the rate is $30 a day. I'm so ignorant of "average" baby costs. We cloth diaper and I breastfeed and DH stays home with DS. I also never bought premade babyfood. No idea how much that costs either.
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Deleted
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Post by Deleted on Apr 15, 2011 10:24:34 GMT -5
I definitely think it's easier to live on 68k if it's one salary - then you don't have to pay for daycare or two cars necessarily. Also the benefits that you get with that type of salary are usually better. When I was working jobs that paid 30k provided really, really basic healthcare.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Apr 15, 2011 10:28:39 GMT -5
If my computer died I need a new one because I need to work on my schoolworkDon't know that on every corner is a library that provides free 24/7 internet access? Geesh and you call yourself a YM-er
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ontrack
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Post by ontrack on Apr 15, 2011 11:13:39 GMT -5
If my computer died I need a new one because I need to work on my schoolworkDon't know that on every corner is a library that provides free 24/7 internet access? Geesh and you call yourself a YM-er I know you were being sarcastic, but I've found reduced library hours to be a real problem. My area's libraries cut back their hours to 10-7 M-T, 10-5 F-Sat, closed Sun. I can usually only find time to go on Saturday. Local governments are really feeling the squeeze, and cutting library hours seems to be popular. It is a real hardship for people without computer/internet access at home.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Apr 15, 2011 11:15:23 GMT -5
Mine charges and they limit you to one hour per DAY during the summers. That's barely enough time to fill out some of those online job applications, let alone take an on-line college course.
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973beachbum
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Post by 973beachbum on Apr 15, 2011 11:38:23 GMT -5
Mine charges and they limit you to one hour per DAY during the summers. That's barely enough time to fill out some of those online job applications, let alone take an on-line college course. Most here will charge if you don't have a card for that library plus they won't even let you on if it is filled with people who do have a card from that library. They also limit people to one hour per day. I think the wave of the future will be people getting those cheap net books and going to McD's just to use the free interent. For an 89 cent cup of coffee you could use theirs for hours.
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