Friday, August 29, 2014

Live the Wage Challenge: wrap-up

DAY 7 (Thursday):
Rite Aid: $2.94
Total spent: $2.94
Total remaining: $21.49

So, as you can see, I made it through the Live the Wage challenge with money to spare. My only expense was the bottle of vitamins I decided to go ahead and buy at the Rite Aid after initially hesitating over the purchase on Tuesday. And as it turned out, they cost me only $3 rather than $5, because I had a two-dollar reward that I'd forgotten about ready-loaded onto my Wellness Plus card (the Rite Aid store loyalty card). So in the end, I had nearly one-seventh of my $154 budget for the week left over, and I didn't refrain from buying a single thing that I would have bought under normal circumstances.

Our experience on the Live the Wage challenge was clearly not typical. Representative Jan Schakowsky of Illinois says she "didn't quite make it" through the week when she tried the challenge, and she concluded that it was "impossible" to survive on $7.25 an hour. Representative Tim Ryan of Ohio ran out of money on day 5 with the purchase of a bag of trail mix. And former Ohio governor Ted Strickland ran out on Thursday evening, despite having made such sacrifices as walking to a meeting a mile from his home and eating from the McDonald's dollar menu.

So why was this challenge so easy for us when it's so hard for most people? I think one major reason is quite obvious: we're a married couple with no kids. That meant we had $77 for each person in the household, which gave us a lot more wiggle room in our budget than Strickland (who had only $77 for himself) or Ryan (who had to support a family of five on a $154 budget). As I've observed before, it may not be true that two can live as cheaply as one, but it's certainly the case that two people together, sharing the cost of housing, food, and all sorts of incidentals, can live a lot more cheaply than two people apart. Yet having kids can easily eat up all that extra income and then some; Ryan's biggest budget-busters during the challenge were $25 worth of "vitamin D drops and other incidentals" for his newborn child and "summer camp for his 10-year-old daughter."

Clearly, though, being a childless couple wasn't our only advantage. Schakowsky was in exactly the same situation, with $154 to support herself and her husband, and she still exceeded her budget for the week by $4.47. CBS also quotes her as saying that on a budget this strict, "There’s no way that you can stop into a Starbucks"—even though Brian and I did exactly that on Sunday. So what did we do that Schakowsky didn't?

Her account of her experience gives a couple of clues. First of all, she notes that one of her biggest expenses was "Driving 140 miles round trip to my granddaughter’s birthday party," even though she counted only the cost of gas and tolls and not car maintenance or insurance. Brian and I, by contrast, drove our car only once during the whole week, when we made our big grocery-shopping trip on Friday. The rest of the week, the car sat in the driveway as Brian took his bike to work. Admittedly, this is an unusually small amount of driving even for us. Our usual Thursday-night dance practice was canceled due to low attendance, so we didn't have to make a trip down to Princeton for that. We also didn't drive up to Morristown for the Minstrel concert on Friday night, which we typically do at least once or twice a month, and we were fortunate enough to have a whole week of sunny weather, so Brian didn't have to drive to work even once. But even if we'd done our usual amount of driving, it's unlikely we would have had to buy any gas, since we'd just filled up the tank on the 20th, and a full tank usually keeps us going for around two weeks. And even if by some chance we'd started the challenge with a nearly empty tank, we could still have gotten by with only a few gallons—about $13 worth—to get us through the week. That wouldn't have broken our budget.

Schakowsky also observes in her account that "pets are luxury," saying "Our family dog Lucky is disabled and his needs quite expensive." Well, we also have a pet, but we didn't need to purchase anything for her during the week. A big bag of her favorite dry food costs only $25 from the PetSmart and lasts her for months; a bag of her new cat litter (which I'll tell you about sometime) is around $20 and is also good for several months. If we had to take her to the vet for some reason, that would be a significant expense that would almost certainly put us over our $77-per-person budget, but typically, all she needs is a yearly checkup, which is an expense we can plan for. Adding up all the costs of caring for our cat over the course of a year, I find they come to around $1,086, which works out to $20.88 per week. So if the Live the Wage challenge were spread across a whole year rather than compressed into one week, the cost of pet care would definitely be manageable. Of course, our pet isn't disabled like Schakowsky's, so it's not surprising that her needs are less expensive, but I think an equally big factor is that she's a cat, and as these figures from the ASPCA show, cats are cheaper to own than dogs in general.

Finally, Schakowsky notes that on the Live the Wage challenge, "We didn’t have enough money to pick up our dry cleaning, nor could we do our laundry in the coin operated washer and dryer in our D.C. apartment building." We, by contrast, did two loads of laundry in our very own washer and hung them on the line (though one of them ended up getting caught in an unexpected shower and had to go in the dryer after all). The cost of both loads, factoring in detergent, water, electricity, and gas, was almost certainly under a dollar, and most of that is covered under utilities anyway, which aren't part of the $77 budget. As for dry cleaning, in general, we just don't do it. I think the only garment we actually own right now that requires dry cleaning is Brian's good suit, which hasn't been worn in over a year.

So, to sum up, here are my rules for making it through the Live the Wage Challenge, along with some ideas for how they could be applied to real people trying to survive long-term on the real minimum wage:
  • Challenge Rule #1: If at all possible, do the challenge as part of a couple. That way, you can split the costs not just of housing (which isn't counted in the budget) but also food, Internet service, medicines, household goods, and to some extent, transportation (since you only need to make one trip to the grocery store rather than two separate trips). What this means in real life is that, if you're a single person living on minimum wage, your ideal living situation is to either live with family or have a roommate and share your living expenses as much as possible. (This piece in the New York Times tells the stories of minimum-wage workers who live with their parents, share a home with a significant other, or rent a room in a friend's house to save money.)
  • Challenge Rule #2: If you drive, have an efficient car that's cheap to maintain—and then don't drive it that much. It's best to avoid making a 140-mile round trip if possible, but if you have to, you're definitely better off making it in a car that will take 3.5 gallons of gas to go that distance than one that will take 7. Biking to work, as Brian does, will help if you're in an area that allows it; so will carpooling, if you can find someone to ride with. And in real life, if you live in an area with a good mass transit system, you might be better off not owning a car at all (though as I noted in this post, if you already have a car, you won't save much, if anything, by using transit instead).
  • Challenge Rule #3: If you have pets, stick to smaller ones. Obviously, if you already have a dog (or several), you're not going to get rid of it for the sake of a one-week challenge. You probably won't even want to get rid of it if you're suddenly forced to live on minimum wage in real life (though you may be forced to eventually). But if you're only thinking about getting a pet, it's worth giving some thought to how much it will cost, not just to buy but to care for on a year-round basis. Cats are cheaper than dogs, and smaller pets, like a mouse, bird, or fish, are cheaper still. If you're trying to get by on a low wage, this is definitely a big consideration.
  • Challenge Rule #4: Wear low-maintenance clothes. Avoid anything that requires dry cleaning; you'll be doing the environment a favor, as well as your wallet. If you work at a job that requires you to wear a suit every day, then you're almost certainly doing this challenge for one week only, and not as a way of life; you can probably manage to get by for the space of one week wearing the same jacket every day, or going with a more business-casual look. And if you're a real-life low-wage worker, then wash-and-wear clothes are probably the most practical for you anyway. Of course, if you're an apartment dweller, then even washable clothes can be a bit costly to care for; according to my records, when we were living in an apartment, we used to spend between $6 and $23 at the laundry every month. But this is another area in which sharing with others will help keep your costs down. Two people do not produce twice as many loads of laundry as one; more likely, they'll just do two large loads per week rather than two small loads (whites and colors). At a laundromat, where smaller loads may cost just as much as larger ones, sharing your laundry could cut the cost in half.
And finally, here's one rule that doesn't work for a one-week challenge, but does work in real life: plan ahead. The politicians who took the Live the Wage challenge talk about being derailed by "unexpected" expenses, such as health care. When you only have $77 to get through the week, having a big lump of that go for a doctor visit or medicines can break your budget. But in real life, you know that you're bound to get hit by this kind of expense at some point, so you can plan for it. You can budget a certain amount each week for health care, knowing that most weeks you won't use it, but when you do, you'll go through several weeks' worth at once. If you set the money aside as you go, it'll be there when you need it. This is a strategy that nearly every budgeting expert recommends, yet it's one that you can't reasonably follow during a one-week challenge, when it's largely a matter of luck whether you get hit with an unexpected expense or not.

This just brings me back, full-circle, to my biggest gripe about the Live the Wage challenge: doing it for one week simply isn't realistic. In one way, it's too easy, because you know it'll only be a week, so you can just put off large, expected expenses like the cable bill (or pay for them ahead of time). Yet in another way, it's too hard, because you can also get hit by large, unexpected expenses, and you don't have any time to plan ahead for them. As a test of your ability to live on the minimum wage, I think the simulator at NYTimes.com is actually much more useful.
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