Fun With Numbers

There was a Letter to the Editor in yesterday's News & Record from Beth McKee-Huger, the director of the Greensboro Housing Coalition. Very insightful, although I can break her math down into an even simpler formula. Take your monthly rent amount. Multiply by 3. If you're not making at least that much per month, you're in trouble. And that's not even including utilities and fees.

Another math formula is to take your monthly budget (you may have to come up with one; there's all sorts of information in the library and online to help you), add up everything, and divide by either 160 or 80. These are of course the hours you'd work in a month full-time or part-time, respectively. Note the resulting figure; this is what you would have to make per hour in order to maintain the lifestyle indicated by your budget. For most of us normal human beings, this figure will be at least 8 or 9 dollars an hour; far above what most "service" jobs are willing to pay*. At least in the South. And we won't even talk about the minimum wage** (3).

There's been much made in the news lately about Americans' poor saving rate and it's fun watching all the lofty economic experts sitting in their magnificently appointed offices cluck their tongues and stroke their beards and ponder why we aren't putting money aside in the banks. Duh! If you've already sent that money on to the landlord, the utility companies, your workplace (in the form of gas, fees and maintenance for your car so you can get to work), the government, your doctor, and all the other niggling little places that money has to go "or else", it's kind of hard to put money aside, isn't it?

*I last used this calculation just before I got my job at the ad agency in 2000. At the time, I calculated I'd have to make somewhere around $8.50 an hour just to get by, even after cutting expenses to the bone. Things have only gotten more expensive since.

**Currently standing at $5.15 an hour. After an intense fight in Congress. Now when was the last time you could afford anything at $5.15 an hour?

(3) gerard v will no doubt jump all over me for my computations I've included here, but I had to go through them quickly -- I've got to go to work soon.

We're a bit over that times-three formula, talking about take-home pay of course, and we have a mortgage--so I guess we're doing okay. What our biggest problems are right now are credit cards--when we lived in Massachusetts five years ago, we were very broke and ran up thousands of dollars in credit card debt. Now, little by little, we are paying them all off. My husband was told instead of cutting them up and cancelling the cards, keeping the cards and just never using them is good for your credit--shows open, unused, established credit or something. And we have the control, now that we have the means, to not use those cards, so that's not a worry for me. Like at our work (we both work for the same place) I just found out I'm getting a bonus this year, and that will completely pay off one more credit card--woo hoo! Baby steps. One day soon we'll be credit free--I'm aiming for three years from now, which includes car payments and everything except the house.
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If you think my motives are to jump all over you, then I apologize and won't post again... Sorry.

Good luck with your situation and, contrary to popular belief, I'm really hoping you get through this.
Michael: The direct link for Beth's letter is here.
I've deleted most of the comments I've made on your blog that I thought you might find beligerent, but if there are any more let me know and I'll delete them as well. If you honestly are interested in the comments I deleted, then let me know and I'll put them up on my blog so I won't take up your space here.

Once again, I'm sorry and Good Luck with everything.
I'm not over the three-times formula, at least not yet. I hope to be soon... but thanks for pointing it out. And good luck with everything.
Additionally, if you multiply your annual salary times 3 than it the MAXIMUM amount of home you can afford. In Miami I dont understand(Primarily) how people who make $45,000 combined annual household income canpurchase a home that costs $440,000. That is 10x what you earn. That screams foreclosure and bankruptcy, which is the case why if you look, Miami Dade posts more bankruptcies and foreclosures than any other county in the Southeastern USA. But wait, we havent spoken about the interest only ARMs, nor negative amortization or reverse mortgages. HA!
For $5.15/hr one has to work 160 hours a week to earn a worthy check. Hey! I m promoting cannibalism here so when we re all poor and standong on front of a trash can trying to keep warm I can feast on your souls like the government is doing to us right now. But you still havent focused on the point that people feel that if you make more than minimum wage then you re doing good, which means that people truly dont understand there own finances nor baic economic principles.
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