MAKING MINIMUM WAGE AND McLOVIN IT!

Contributing editor: Crass Cash

As I was sitting on a plane in Sydney, Australia once, I sat listening to the locals bashing the American way of life.  I'm a chameleon when I travel, so they were none the wiser that I was an American (never mind the fact that we look the same).  They went on and on about all of our lack of socialist perks, poor health care, poor public transportation, etc.  But what they agreed on lastly intrigued me, "...but it sure is cheap there!"  

This was my first trip so I had no way to gauge how correct they were.  When I arrived in Melbourne, I quickly came to see how right they were.  Australia is fucking expensive!  And I got lucky because the exchange rate at that time has dipped (they knew I was coming).  If you enjoy paying $3 for a coke, you'll love Oz.  A big reason for this is the VAT (value added tax) which acts as a regressive tax on the poor.  What this does is add sales tax to every part of the purchasing process.  In the States you get taxed at the end, but not there.  It's like this in Europe and India I've noticed as well.  It makes the basic necessities of life exponentially more expensive for the common person.  Which might in turn explain why Australia has a $15 minimum wage!  Things are so much cheaper here that Australian business men have told me that they will order goods in the States and then pay to have them shipped to Oz and it still will cost them half the price.  

So wtf does all this mean?  Well it got me thinking.  How much does it really cost to live in this country?  And when I mean 'live' I mean actually provide for yourself (yourself only) with the basic necessities of life: food, water, shelter, clothing, utilities, transportation, and health insurance.  

So here's the example: man or woman living in Orlando, in their mid-30's who has a minimum wage job ($7.93) for 2,080 hrs per year.  After tax that's going to come to $15,232 with $1,240 paid in payroll taxes.  Whoever says that the poor don't pay any taxes is either a liar or an ignorant dumbass!  The poor do pay taxes, they're just in the form of payroll taxes and not federal income taxes.  These are very real taxes as all of us know because it gets taken out of our taxes every pay day! Two thirds of the federal govt expenditures is made up of these payroll taxes (social security and Medicare)  Here's how their monthly expenses look:

Health insurance: $213 - $209 (Obamacare subsidy) = $4
Food: $200 (most say you can eat for $5/day, so I'm being generous)
Utilities: $50 (water, electricity, trash, internet)
Shelter: $500 (this is for a nice place, I found even cheaper)
Transportation: $10 (a good bike on craigslist goes for $50)
Clothing: $10 

This comes out to $9,288 per year in living expenses (poverty level for this area is $11,490).  With the take home pay of $15,232 that leaves you with annual savings of $5,944.  These are real world expenses that are used from the people that live right around me.  This shows that it's not just doable to live below the poverty level, but also somebody could save while doing it.  

So what kind of lifestyle does this person live?  They have no car, other than a bike and public transportation (if they're feeling rich). All meals have to be eaten at home.  They rent a room and share utilities with other roommates.  They shop at goodwill and get cheap clothes wherever else they can find them.  Will they be able to get laid with goodwill clothes?  No! I'm living proof of that.  However, if you're making minimum wage, than you don't need to be having sex.  For those of you who think I'm a dick for saying this, let me explain.

In nature, animals die when enough resources do not exist for them to live.  It's nature's way of thinning out the herd and keeping predator and prey in check.  It's served our world well.  However, some jackass came along and developed this theory that this constraint doesn't apply to man.  WRONG!  If you can't provide for a child, you shouldn't have one.  I know I'm a dick, but I didn't make the rules.  

Now you might think you're going to be bored out of your mind because you have no entertainment.  Well you might be right, but after the first week this will go away as you discover things like the library.  A magical building where they let you borrow books for free!  These books in turn allow you to learn more, improve yourself and also learn new skills so that you don't have to work at a minimum job for the rest of your life.  There's also this thing called exercise that can be done for free.  You'll be riding your bike everywhere, so you may want to focus on your upper body.  Want to learn another language?  You'll have time to do that!  Sounds horrible, right?  Well from what I've seen/read, I'd rather live that life than one of the other 6 billion lives that have it worse than America's poor.  Your other task will be to find ways to make extra income and also ways to save money.   

Criticisms: "That insurance plan is a high deductible plan with a $6,300 deductible.  How do you expect for that person to pay for that if they get sick?"  As you can see from the savings rate, that person would have to open an HSA and all of the money they saved would go into that account for one year.  This is what's known as building an emergency fund.  Once that deductible is taken care of, that person can then save for a full emergency fund worth 6 months of living expenses.  Once that is taken care of, that person can start saving for retirement. With over $5,500 in annual savings they could max out their traditional or Roth IRA every year, unless there was an emergency.

This is how people go from being born broke to being the richest in the world.  Sam Walton, John D. Rockefeller, Warren Buffett, Andrew Carnegie, they all lived drastically below their means when they were young in order to build up capital that they could invest.  They also got lucky, but you don't need luck if you only want to get moderately rich.  

Caveat: I have a dear friend who has 2 children that are going blind in their 20s and 30s.  This type of analysis obviously does not apply to them.  If you're disabled, then society should do everything in its power to provide for you.  Providing for the disabled is incredibly cheap and actually more needs to be done.  Only 1-2% of your income is needed to provide for those who can't do for themselves.  The individual above is most vulnerable early in his/her working life.  They will have to work at least 2 years before they have enough to be protected against a major accident or with prolonged unemployment.  Note that after just two years they will be more financially secure than the average American who doesn't even have an emergency fund, nor enough to cover their insurance deductibles.