Making ends meet on minimum wage, currently at $6.55 per hour (unless you work as a waiter/waitress), is tough. As the numbers for a basic wage, tax and net pay breakdown below show, there is not a whole lot left over after the “Tax Man” gets his cut. Just the tax on the wages earned come to just over 22% of gross wages and that’s not including the medical deduction if you’re lucky enough to have an employer who offers it. I distinctly remember working for minimum wage when my wife and I were starting out. The local fast food restaurants were a frequent stop in our effort to save money. If we had been a little more money savvy, we’d have eaten at home and saved the leftovers.
With a net pay of $813.00 dollars per month (there are two extra pay periods each year) I’ll see how far it goes.
As I write this, gas is selling for $3.59 per gallon in my area. A compact car, such as a 2005 Corolla (EPA estimated 30 mpg City), we will assume burns a tank a week. A tank is 13.2 gallons in capacity and I’ll also assume that there is 2.2 gallons left at each weekly fill up (I like easy math). So, every week we have to buy 11 gallons of gas totaling $39.49 just to get to work, grocery shop, etc.
Rent in my area for a one bedroom, 1 bath, 500 sq. foot apartment runs about $550 per month. Adding a roommate and getting a 990 sq. foot apartment will run about $724 per month. For the purposes of this post, I’ll assume there is a roommate and rent is taking up $362.00 per month each.
The 2005 Toyota Corolla mention above I’ll assume was purchased in June 2005, using a $2,000 dollar down payment from Mom and Dad. There is a payment of $199.00 per month for a total of 60 months (5 years). There are 21 payments left on “Ole Blaze” as my grandfather used to call his cars.
Progress Energy and Duke Power are the usual providers of electricity in my area. A kilowatt hour of electricity is $96.86 per month from Progress Energy. I’ll assume that we use only half a kilowatt hour per month and that comes to a split of $24.22. I’ll also assume that water and sewer is included in the rent. I’ve had both types, included and not included in the past.
So, how do we “net out”? Taking our monthly net income of $813.00 dollars and subtracting expenses of $793.18 per month for rent, car, gas, utilities and groceries (at $50.00 per month), there is $19.82 left over.
As you might notice there is nothing in the budget for insurance, taxes or tag to keep “Ole Blaze” on the road. There also is no mention of phone, cable or internet service. I think my hypothetical “Minimum Wage Earner” needs a rich girl friend.
I listen to a morning radio show on my hour and a half drive in to work every day and one of the employees occasionally mentions how tough it is to make ends meet. Having gone through this little exercise, I can well imagine his issues. It does bring back (bad) memories of my days as a minimum “wage slave”.
$524.00 Gross Wages (Bi-Weekly Payroll)
$48.60 Federal Tax (Zero exemptions)
$28.82 State Tax (This was figured for NC, no local tax)
$406.50 Net Pay (What you take home)
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