Woah.  They're allocating 50% of those numbers to housing/utilities?  That would mean that the lowest possible housing/utilities expenses in the United States are from Mississippi at 89,000$ a year.  Seems . . . bizarrely high?

Yep. I'm in a HCOL area in a clown house - before we paid the mortgage off our housing related expenses were less than half that number. It's almost like they doubled all the numbers from a previous article and called it a day.

If you click down through all the clickbait, eventually you reach the real data that is used: https://livingwage.mit.edu

Which says my wife and I need to make $13.76/hr each to make a living wage in our county. Or about $57k/year which seems pretty reasonable.

Ah, yep, there it is. They took the bottom line expense numbers for 2 Working Adults + 2 Children and simply doubled it (30% discretionary + 20% savings). Which, by their definition, means $63,000/year in discretionary spending! 

I don't get the assumption that schooling should cost anything. Yes, there is a modest cost associated with equipment (pencil case, calculator, laptop for older children) and field trips. Otherwise, education is completely free.

Private schools have no real benefit to children, and if academic, musical or sporting excellence is what you're looking for, there are selective schools or scholarship places for talented children in each of those pursuits. All of those are free.

Music and sports lessons can cost money, but much less than a full-fee private school, the latter of which is more for parental bragging rights than any advantage that redounds to the child.

I agree @GilesMM   

I am enjoying digging further into the MIT living wage calculator.

One observation is that they use the word “must” when referring to costs that are associated with that personal level of comfort.

One (of many) areas where I disagree with MITs level of comfort is in their housing costs. The living wage calculator assumes every child need their own bedroom to be comfortable.

I came here to share this exact article!

Absolutely ludicrous. Living in one of the ‘Best Place to Live’ in Connecticut (West Hartford), we are very comfortable at $150k /yr. Sure, we still have to budget, but the "50/30/20" is still totally doable for us. I would argue even at 100k someone could live comfortably (unless they have to pay for childcare) if they work hard to bring their expenses down. And saving 20% with 100k income, you could afford 20% down on a good house here within 5 years.

That... is so much money.

I am raising 3 kids on less than $100K inside the Denver city limits and I would describe us as "comfortable."

BUT:
-We bought our house in 2019. We would be much less comfy if we hadn't.
-We do not have childcare expenses because we trade off work days- we would need a couple extra grand a money if the toddler was in daycare
-We don't have as much discretionary income as they are imagining. We vacation by visiting family, for instance.

Everything else is choice (eg, how much we spent on our cars) but the housing and childcare are huge.

The numbers seem ridiculous on the surface but really aren't when you consider that 50% is for discretionary and savings.  I took a quick look at the MIT data for Massachusetts and the data set shows that it would require an income of $150k before taxes to live in that state.  Included in that amount is $38k for childcare (2 working parents) and $22k for taxes. I so removed from child care so i don't know what that costs but I know its not forever so I think that warrants an adjustment of some kind.

For comparison the MA MIT data indicates that for two adults with no children the cost to live is $76k including $11k for taxes which doesn't seem off base to me.  Sure we here could quibble about some of the assumptions for transportation, cell/internet, other and such but we here are not the norm.  Just covering bills doesn't feel comfortable so 30% for fun and 20% for savings would certainly help with that. 

Also remember that when you add the additional 30% for discretionary the income requirements would be higher and thus taxes would be higher and in an even greater amount due to the progressive nature.   Not sure how they handle the 20% savings but if some of that is in after-tax accounts it would also result in higher taxes. In any event that 50% could require 75% to 100% more income because of taxes.

The Venomous Spaz Beast and I fantasize about living in San Francisco, car free and within walking distance of Wing Sing. But some of the other day to day expenses are almost prohibitive, and it would certainly involve a lifestyle change.

The condo complex that we're in are 2 bedroom 1 baths for about 180k one block over from some of the best schools in the district. There are now 4 families, three with 2 kids, that live in them because it is such a great situation for the kids. At first I thought it would be cramped, but these condos are almost exactly what my mom grew up in with her 3 siblings, so 2 kids within walking distance of school and parks I think will be fine. It just blows my mind how much people think they need compared to what used to be perfectly acceptable.

Many years ago, we lived with our then 4 kids in a  3br/1ba house. The next-door neighbour lived in the house she had grown up in, which was similar to ours. Eventually she decided to sell, and she came to tell me, gaping, that a young couple had toured the house and rejected it as being too small, "because we're about to have a baby." My neighbour said, "My parents raised six of us in that house!"

I am appreciating the discussion here. It is useful, I think, to understand how money is spent in different locations and in different amounts from my own.

In this context of ‘comfort’ I do keep getting down to how it is an individual decision about what is comfortable. And yet here is MIT and any number of click bait articles proclaiming that there is only one threshold for comfortable living.

I think I agree with the MIT calculator for my area. It suggests and after tax income of $81,721 for a family my size and I generally think the threshold standard of living is around $75,000. This is the number I have decided is where safety net programs in my state try to achieve a base standard of living.

But definitely not mustachian. And then I think about how a “comfortable” lifestyle in the US is based on gross over consumption. How much straight food waste is included in a $17,000 food budget, how much resource consumption in $17,000 in transportation. The premise I see is that hyper inefficiency is equivalent to comfort.

I keep looking at the  “civic engagement” category in the living wage calculator. It is a list of non mustachian expenses. Civic engagement is described as “ Entertainment: fees and admissions; Audio and visual equipment and services; Pets; Toys, hobbies, and playground equipment; Entertainment: other supplies, equip., & services; Reading; and Education)”.  It is a short list of things MMM tried to encourage us to DIY and spend as little as possible on.

$7,700 dollars on toys pets and what the public library offers isn’t mustachian but might be comfortable.

How did the idea of comfort become the metric that is being used? Comfort seems too difficult to define to be a metric. We often get advice to not get too comfortable. The step outside our comfort zone. To challenge ourselves. So why then strive for comfort?

The MIT living wage calculator talks about “supporting oneself”. Language that doesn’t reference comfort but does suggest self sufficiency. The calculator bakes in certain public offerings like public education and employer subsidized health insurance and social security while still proclaiming a goal of supporting oneself. I can get on board with this concept’only as a tool for determine what we need to do as a society to support each other.

I suppose the greatest comfort I am looking for is freedom from financial worry. In that sense, the living wage calculator is describing an income requirement that sets the comfort bar very high. (At the 4% rule this would be more than 2 million in investments).

These articles and calculations are useful and I enjoy thinking about them. I’d like to read some that then go on to discuss how the standard of living can and should be lowered.

New mustachian budget outline just dropped: https://www.unitedforalice.org/

They've developed the ALICE Essentials Index which is apparently what you need to make to cover the essential goods necessary to live and work in the community:  housing, child care, food, transportation, health care, and a smartphone plan.

They seem to spend a lot of time showing dramatic graphs that all start in ~2008 which seems a bit sus. But if you dig around enough you can find the income needed to cover these expenses in your county if you happen to reside in a partner state. 

In my county, for our household of two adults we need $40k/year.  Which isn't terribly far off from the MIT number of $57k/year. 

New mustachian budget outline just dropped: https://www.unitedforalice.org/

They've developed the ALICE Essentials Index which is apparently what you need to make to cover the essential goods necessary to live and work in the community:  housing, child care, food, transportation, health care, and a smartphone plan.

They seem to spend a lot of time showing dramatic graphs that all start in ~2008 which seems a bit sus. But if you dig around enough you can find the income needed to cover these expenses in your county if you happen to reside in a partner state. 

In my county, for our household of two adults we need $40k/year.  Which isn't terribly far off from the MIT number of $57k/year.

42.5% more with the MIT number is far off.  It’s kind of like when I as looking at houses and I’d think well, 900k isn’t that much higher, but then rember that was 250k more than my Max budget.

New mustachian budget outline just dropped: https://www.unitedforalice.org/

They've developed the ALICE Essentials Index which is apparently what you need to make to cover the essential goods necessary to live and work in the community:  housing, child care, food, transportation, health care, and a smartphone plan.

They seem to spend a lot of time showing dramatic graphs that all start in ~2008 which seems a bit sus. But if you dig around enough you can find the income needed to cover these expenses in your county if you happen to reside in a partner state. 

In my county, for our household of two adults we need $40k/year.  Which isn't terribly far off from the MIT number of $57k/year.

In my country for a household of 4 the survival budget is $75k/year. The equivalent MIT number (2 working adults two kids) is $110k/year. (46% difference).

My family of five has never made these numbers.  What we have been able to do is lower the survival budget.  My single wage has exceeded the combined survival wage - I had one adult making $26/hour rather than 2 adults making $18/hour.  This wasn't quite the total survival amount, but does free up a whole person.  That person was then able to reduce child care and food costs by a significant amount - equivalent to about $16/hr full time employment without any additional taxes.

I suppose a fair comparison would be adding those unrealized costs to our total income.  At that point we would be very close to the MIT number.

These two tools seem pretty reasonable to me for establishing the income level at which a household starts having some flexibility in their finances.

I don't get the assumption that schooling should cost anything. Yes, there is a modest cost associated with equipment (pencil case, calculator, laptop for older children) and field trips. Otherwise, education is completely free.

Private schools have no real benefit to children, and if academic, musical or sporting excellence is what you're looking for, there are selective schools or scholarship places for talented children in each of those pursuits. All of those are free.

Music and sports lessons can cost money, but much less than a full-fee private school, the latter of which is more for parental bragging rights than any advantage that redounds to the child.

We're currently spending $2300/month on daycare, which is not available as "public schooling".  That's for two kids and we're also getting a crazy good deal, because its through my wife's work, otherwise it would be ~$3000/month.  My sister only has one in daycare, its $3400 in the DC Metro area and that's actually a pretty good deal compared to other options in the area. 

And once your kids are out of Daycare, you still aren't off the hook.  Most public schools only run until ~3ish--the elementary school my kids are districted to finishes at 2pm!  So you have to pay for after school care too...I'm scared to even look at what that's going to cost us. 

Anyways, these numbers seem a little high, but really not too crazy high when you factor in raising kids.  Its a lot easier to have the type 2 fun of challenging yourself with a budget when you're not already overloaded with type 2 fun from raising children.  Having kids is obviously a choice, but its crazy to think that you're going to be as hardcore when you have kids as you were before. 

One problem (amongst many) with this is that it doesn't take into consideration that costs in a given state will vary widely depending on region. Here in Calif the cost to "live comfortably" in San Francisco, LA, or San Diego is going to much different then a place like Bakerfield or Fresno. Even comparing coastal communities to places 50 miles away in the same county is going to be very different. That little1950s house that's never been upgraded far from a coastal area will cost you a fraction of what it would be worth closer to the coast - which would be at least a million bucks. There was a calculated posted here somewhere that broke it down by county so was much more realistic and helpful.

Very very true.  Even county by county is not really enough resolution. 

One of my favourite statistics is (I live in an european country btw) is that if you divide my country's population income into 10 groups, the share that each month spends their total income is almost constant across the entire income distribution - obviolusly with some outliers in the highest decentile. And, as an addition if you are on income level N out of the 10 you cannot undertand how someone who is at N-2 gets by.

Quote from: tooqk4u22 on June 04, 2024, 03:00:44 PM

The numbers seem ridiculous on the surface but really aren't when you consider that 50% is for discretionary and savings. 

When this study first made the rounds, that ^ was my response as well.  Easy to lampoon, but the numbers aren't crazy if you have a kid or two in daycare, plan to pay for college, and want to save enough to have a nice retirement.

Start out with a $200k income.  In my state, that's ~134k takehome.  Save $50k for retirement, now you're at 84k.  Save $15k in a 529 to send the kids to college one day, and now you're at $69k.  Daycare for two is ~$30k, so now you've got $39k to cover housing, food, transportation, healthcare out of pockets, short term savings, and all other discretionary purchases.

If you take saving significant money as an essential component of being "comfortable" and you pay for childcare and/or college, it's going to take a lot of money.

30k for two kids in daycare? Haaaaah I wish. I think we’ve almost spend that much YTD (to be fair this also involves deposits for fall so it’s not truly half our spending for the year, but I think it’s something just north of 40k for the year.)

Seriously though, we don’t earn as much as the article and I feel rich. And we pay a minor fortune in childcare. Good news is the oldest will be ready for public school soon.

That... is so much money.

I am raising 3 kids on less than $100K inside the Denver city limits and I would describe us as "comfortable."

BUT:
-We bought our house in 2019. We would be much less comfy if we hadn't.
-We do not have childcare expenses because we trade off work days- we would need a couple extra grand a money if the toddler was in daycare
-We don't have as much discretionary income as they are imagining. We vacation by visiting family, for instance.

Everything else is choice (eg, how much we spent on our cars) but the housing and childcare are huge.

I agree with the cost of living of Denver. If you are into the free outdoor activities that Colorado funds, it doesn't need to be that expensive. Buying the house pre-pandemic really helps, but you could say that for about any location in the United States.

During summer 2022 I went to my wife's 20-year high school reunion. A doctor (husband) and nurse (wife) combo was relocating their family (2 kids) to Phoenix because Denver was just too expensive. They felt like they couldn't afford to live there anymore on their current salary. I don't think it's possible for their combined income to be less than 300K, right? He told me the salary was the same, but Phoenix was cheaper, so his salary should go farther. He also told me, he didn't really want to leave Denver, but as stated before, it's just too expensive.   

My cousin and his wife dont need to work,
they stay at home all day,
they have 2 kids at school.
All seems normal from the outside.

Its not...
They are sitting around, snorting Percocet.

I thought this was some kind of poetry, so I asked ChatGPT to make a Haiku out of your statement. 

Quiet home façade,
Children’s laughter fills the air—
Percocet whispers.

Parents stay at home,
Send their kids to summer school--
Percocet's more fun.

When parents are doped up, children are seldom happy, laughing, or playing. Also, the AI missed the necessary seasonal reference.

We don’t quite make the “comfortable” bar. And I’d say our lifestyle isn’t “comfortable” - it’s more like “explosively extravagant”. Daycare and a house with a whole extra bathroom we don’t use (2 bed 2.5 bath), and monthly cleaning service and kid activities and too much eating out (see: kid activities).  And that’s after maxing retirement and putting some away in taxable savings and college fund and budgeting for charity.

What you call "explosively extravagant" is pretty much the definition of "comfortable" that the study uses: