Real Cost of Living

Atlantic magazine’s Web site has a story which tipped me off to this calculator, which purports to note, in 600 metro areas around the US, “the income a family needs in order to attain a secure yet modest living standard” based on local prices for food, housing and etc. For a family like mine (two parents, one child) living where I do (Dayton, OH metro area) the amount comes to $54,610, broken down like so:

Item Cost
Monthly Housing $738
Monthly Food $598
Monthly Child Care $581
Monthly Transportation $607
Monthly Health Care $1304
Monthly Other Necessities $342
Monthly Taxes $214
Monthly Total $4384
Annual Total $52610

Interesting. And it also seems about right to me. One of the mental games I play from time to time is what we would need make to get along if everything went screwy — that is, what’s the minimum our family would need to live in a way that didn’t have us eyeing the pets for the nutritive value. Running the numbers usually gets to me between $50k and $60k. The individual data points are slightly different (we pay more for housing, and rather less for child care) but in the end it tallies up.

Incidentally, the estimated median household income around these parts is a shade under $45k, and the average household size is 2.7 people. On average people around me are living at or near “securely yet modestly.” It could be worse.

68 thoughts on “Real Cost of Living

  1. It feels low for the DC metro area, specifically with regards to mortgage. We spend double the calculator to live in a ‘normal’ neighborhood with a good school. But otherwise, its an interesting concept.

  2. It gets $3626/month for my area, which I figure is about four times higher than the real figure. The outlay of $952 for health care is astonishing, are we assumed to be chronically ill? Housing, 50% too high, food costs, 300% too high, it goes on.

  3. 30% of total spend on healthcare? With worse outcomes than the rest of the rich countries? I think that’s the elephant in the room.

  4. Interesting calculator. Except that it doesn’t include us non-parents as a “family” option. I guess I can just assume the “secure but modest” level for me as a single person living alone is, well, less. Would be nice to know how much less, though.

  5. This is post-tax money. Since the government takes about a third, a family will need to make about $80k using those numbers.

    I don’t like those numbers, either. In our area, Fresno, housing *could* be that cheap, but for most people is going to be between $1100-$1600. Bog standard Kindercare is $800/month for only three days a week. Health care and transportation should be about 30% lower.

    And $20/day for food for a family of three? At two dollars a meal, that seems wildly unrealistic.

  6. Sounds reasonable for the Joplin, MO area.

    @Zeph: There are explanatory links further down on that page. See the methodology one for a description of health care costs, for example.

  7. If you’re self-employed, like many Americans, your health care is unbelievably high. We pay $28 K for a family of 4 each year. Cost more than our house.

  8. Shouldn’t a secure yet modest living standard include a monthly cost for savings/investment/retirement?

  9. It’s about right for the Kansas City area, which explains the number of people struggling mightily. When a quarter of all jobs pay below the Federal poverty line, it’s no wonder we feel like the middle class is under attack.

    I grew up thinking that if I went to college, did well, and worked, I would have a comfortable middle class life and a comfortable retirement. That rug has been pulled out from under me several times already, and I’m still nearly 20 years away from retirement… and I’m one of the lucky ones.

  10. Re: California taxes – due to Prop 13, I’m paying a lot less property tax on my house in Silicon Valley than my brother does on a house of comparable value in upstate New York. A lot depends on how long you’ve owned your house. Young couples buying their first houses in CA are pretty much taking it in the teeth.

  11. It’s not what’s SPENT on healthcare; it’s the average cost of health insurance. For a single, healthy, self-employed person in CA (I don’t know about other states), it’s about $900/month.

    But that’s not the real problem. And “health care reform” will only make matters worse, by adding another layer of middlemen:

    30 years ago, before insurance crept between doctors and patients, a day in hospital cost $90, and you could see a specialist and have a simple procedure for $10, or a complex procedure for under $100. Insurance doesn’t make a lot as business goes (about 4% profit margin, tops) but it demands itemization, so it knows what it’s paying for. There is good research about how the middleman of insurance has caused health-care costs to skyrocket, and this is certainly my observation across my lifetime.

    And I’ve watched the effects of insurance from the beginning with the pet insurance industry (which is only about 20 years old):

    Before the institution of “pet health insurance”, your bill would read:

    Spay, $60.

    However, pet insurance demands that bills be itemized, and that no risks be taken. So NOW your bill reads:

    Pre-op blood work, $150
    Pre-anesthesia, 5 ccs of [drug], $50
    Instrument pack, $30
    Anesthesia, gas, 30 minutes at $150/hour, $75,
    Surgeon, 15 minutes at $400/hour, $100
    Surgery room, 15 minutes at $200/hour, $50
    Recovery room, 2 hours at $50/hour, $100
    Sharps disposal, $5
    etc
    etc
    etc.

    and now the average cost of a spay in areas where insurance has taken hold is $600 (and I’ve seen figures as high as $1200) — despite that only about 1% of pets have health insurance.

    As to ACTUAL costs — there’s a pre-paid fee schedule posted in the Los Angeles County public clinics, and one astonishing fee was:

    Any Surgery, $400.

    Why is it so low? because, said the desk nurse, that’s what it actually costs us to perform. But when we have to bill, we have to account for insurance’s demands and the problem of deadbeats, so then the charge is the same as anywhere else.

  12. The only thing I can think of regarding medical expenses is that the cost is assumed to pay into insurance, with the overage going to out of pocket expenses for a cavity, a sprained ankle, or appendicitis.

  13. I think it would be fairly accurate if you assumed that every family is relatively debt-free, but I really don’t think that’s the case. The only debt that thing appears willing to recognize is mortgage and auto payments, lumped into “housing” and “transportation” (and I think they’re underestimating utility bills and the cost of gas).

    Still, it’s an interesting tool.

  14. I’m skeptical about that housing cost. It seems very low to me, compared to most real-world situations. (It’s similar to what I pay, in fact, but I have a small house, in an inexpensive area, on which I got a tremendous deal from a very motivated seller, and I only needed a mortgage for about 65% of its value.)

  15. @ Reziac:

    “Healthcare reform” won’t work in the US because what we actually need is healthcare reform *and* health care *financing* reform.

    Most other developed nations manage to have better overall outcomes for significantly lower per-capita costs. But our so-called leaders won’t or can’t even consider any of their approaches, because … um … socialmalizm and tyranny, I guess.

  16. @MGWA – $200/month in taxes means property taxes, most likely. 1% on a $240k house.

    It certainly does not include sales, social insurance or income tax.

    It also leaves out power, water and trash which work out to another $400/month here. (Other necessities might try to approximate it, but then you have nothing left in that category.)

    In other words, these costs aee pretty seriously underestimated.

  17. Nice to know that my husband of 30+ years and I aren’t a “family” but someone who’s spawned due to a one-night stand and ignorance of birth control is.

    The figures look a bit low for my area — what about utilities? But it still ends up with a scary huge number.

  18. Given your daughter’s age, $581 a month on child care seems a bit excessive. I guess this thing assumes very young children.

  19. 1300 dollars in health insurance is just crazy. My girlfriend and I pay 260 dollars together, but then we live in a Marxist hell scape (aka the Netherlands). To be fair more than a third of my income goes to taxes, but I love what I get back for it…

  20. The “monthly housing” seems low.
    Property taxes div 12 + gas + electric + water.sewer + phone + shit happens to the house that has to be repaired + rent/mortgage + trash collection + Something(s) I haven’t thought of.
    I have a zero on the rent/mortgage, I figured replace the roof every thirty years for fifteen thou as the _only_ ‘shit happens’ thing, I didn’t bother with air conditioning isn’t necessary and so didn’t change the electric for that, and used forty as the phone bill.
    And I get 1,100 per month for housing.
    For an on-a-lot single family house I did not include that most people have to hire somebody to deal with tree problems, and did not include that driveways need stuff done to them (a concrete driveway is the most durable, 2 grand every 30 years (Your driveway May Vary). A gravel one the least durable, don’t want to know the cost because gravel driveways really suck if you aren’t five and the gravel has fossils in.
    IIRC, an asphalt driveway needs to be sealed every few years.)
    -
    My phone bill is about 185 per month and includes 1.5 MB internet and 200 channels, which I’m saying because some courts deem ‘no internet’ a human rights violation, and I sleep better when Mom can watch Charmed.

  21. @shakauvm:

    Since you’re obstinately refusing to read the link (why? It’s not painful), let me spell it out for you: it takes into account federal & state income taxes plus FICA. Local (i.e. property and any local income tax) and sales taxes are not considered.

    For further details as to what is and is not counted, do read the link.

  22. The Seattle figure seems about right for 2p/1c. My mom, brother, and sisters, however, live in the San Jose/Morgan Hill/Vallejo area in California. That’s crazy what they have to be paying.

  23. Insurance very well could cost that much. My employer pays the entire $600/month for my policy (he’s amazing, and we are very grateful.) However, we pay $687 a month to add my husband to the policy (yes, adding a spouse costs MORE than double, because the actuaries say that married people go to the doctor more often.) So we’re paying $687 out of a total bill of $1287 to Blue Cross/Blue Shield. My daughter is on her father’s plan, I don’t know what he pays for her, but we’re almost to the $1300 number without her.

  24. @Kevin Johnson: And you’re not paying attention when I say the numbers are all wrong. $52,000 income with two personal and one dependent exemptions, with the standard deduction, is $2,998. This is already higher than the $2,568 total they estimate for taxes, and does not include state, sales, property tax, etc.

    If you *have* read their methodology, which you say they have, they’re basing their numbers on really, really poor sources. They are using average Section 8 reimbursements, for example, set at the 40th percentile and pretend it is an average (50th percentage) and hand wave away allllll the other costs associated with home ownership / renting. Power, water, trash, insurance, etc.

    This study is a joke. I could write a better one in my sleep, using actual Cost of Living estimates, instead of these idiot sources that they use.

  25. When you accuse someone of not paying attention, it’s helpful to get the other guy’s name right. ಠ_ಠ

  26. That calculator is seriously low on the tax side. It basically allots around 13% for taxes which could not possibly include state, local FICA etc.

  27. If the median income near you is $45K, and the income needed for “secure yet modest” for a one-child family is $54K… yes, it could be worse, but that’s not good.

  28. For San Francisco area for 2 parents 1 kid it is $78,700. This sounds low to me. Child care costs were listed as $720 which is way off. And $598 for a 3 person family would probably have them eyeing the pets, if not sauteing the pets.

  29. The overall cost seems about right. It gives $60-66K for two people living in the part of Essex Co. MA that I live in. (About half way between Lawrence and Boston.) The individual parts may be off a bit. God forbid I ever have to do that, because it would be unpleasant. “Secure yet modest” doesn’t include much.

  30. After looking at it deeper, there is a huge problem that I see: Most jobs making the kind of money listed require college degrees, and there is no category for student loans. I can’t imagine that such a big ticket item would be subsumed under ‘other’. In my household, student loan payments are upwards of $500 per month, so clearly don’t fit.

    It is striking to me that health care is almost as expensive (on your example) as food and housing *combined*. This is such a huge change from twenty years ago that no matter how many times I see it, I still can’t wrap my head around it.

  31. Hubby and I have moved a fair amount for employment-related reasons over the last eight years. I plugged in numbers for all the places we have lived since 2005. The numbers are accurate for Tampa-St. Petersburg, FL, Durham, NC, and even San Diego, CA but seem too low for Los Angeles. The area in question is so huge (covers LA metro plus Long Beach) but is inaccurate for the city of LA itself (rent + childcare costs are too low), especially once you factor in the effect of traffic on the feasibility of commuting to work from a less expensive area to a more expensive area (1.5-2 hrs one-way commute does not a reasonable quality of life make).

  32. These also don’t, from the looks of things, take into account a lot the hidden costs of being poor, or even struggling. For example, living in a crappy neighborhood will save you rent, but it’s going to cost you more in terms of insurance, transportation and dealing with “somebody broke into my car again” or “my shitty landlord won’t replace the fridge and I lost another week’s worth of groceries when it broke”.

  33. I tried calculating for our family. Seems pretty accurate based on our experience with income both above and below $64375.

    Bloomington, IN HUD Metro FMR Area (IN)

    Two Parents, Two Children
    Item Cost
    Monthly Housing $747
    Monthly Food $754
    Monthly Child Care $1156
    Monthly Transportation $603
    Monthly Health Care $1368
    Monthly Other Necessities $384
    Monthly Taxes $354
    Monthly Total $5365
    Annual Total $64375

  34. Assuming a normal distribution (which is almost uncertainly incorrect), that means that roughly 1/2 the population is making less than the ‘modestly secure’ level. Add in the fact that the actual distribution almost certainly skews toward the high end (though probably not as much as in other parts of the country), and the situation looks bleak, not reassuring.

  35. I’m curious what people are doing, if anything, to reduce their costs.
    Does anybody have food producing pets (i.e chickens, pet cow etc)?
    Does anybody produce their own food (veggie patches, fruit trees, other food producing plants etc etc)?
    Is anybody off-grid for electricity and/or water, or does anybody reduce their electrickery costs by selling back to the grid?
    Does anybody have any cost saving tips?

  36. Cost saving tip: Buy a bread machine. After the first dozen loaves you will be able to load it in two minutes. If you buy flour by the 20 lb bag and yeast by the pound, you can make a good quality 3 lb loaf for 50 to 75 cents, saving $3 compared to nice store-bought, and a buck even compared to wispy crappy discount loaves. When we had two teens at home we were going through a loaf a day, thus our savings were around a thousand a year. (The machine will cost about a hundred bucks and last about five years, adding maybe a nickel to the price of each loaf.)

  37. Note that there is no line item marked “entertainment”. Just “Monthly Other Necessities $342″. People going to cons spend more than that on a hotel bill alone.

  38. According to this calculator, my ole mum is making at most about a third of what she needs to be economically secure (that’s counting her and my baby sister as a family and me as nobody; oddly enough, counting me as the second parent actually increases the needed amount, presumably because adults consume more).

    Is that how a modest but secure living standard is? Even if we shave off the childcare cost (because she’s old enough to mostly fend for herself) and housing (because we sold my parents’ house to pay the mortgage and buy a townhouse) it’s still twice our combined income.

  39. best food cost saving tip, cook from scratch for a few days at a time. all the prepared food in a box or bag is very expensive

  40. Cost saving tip: If you are close enough, ride a bike or walk to work. Good exercise, your car lasts longer, and you aren’t paying nearly so much on gas.

  41. Reading into this way too much I know, but I was disappointed that two adults living together doesn’t constitute a “family.” I want my childless relationship recognized! Our house is still a home!

    Also their average housing costs for the Oakland, CA, area are laughably low.

  42. Thank you everyone for the cost saving measures, but if you’re that close to the line, probably you are already doing most if not all of the feasible ones already, and a few that aren’t mentioned here. Our Host already did a comprehensive overview of what it’s like to not always be sure when the next [necessity] was going to be available.

  43. One really nice thing about cost saving tips is they can be used by anybody – not just the people close or below the line. If your comfortable enough it gives you more money to spend on the perks of life, such as books.

    $1000 / year out of anybody’s budget is pretty good. And if it makes you feel better you can think of yourself as getting payed for it (works out at about $80/hour for the bread example I think).

  44. Seems like there are just too many variables to average it out like this. The numbers given require both parents working (since there is a child care expense) plus both parents not getting health insurance paid at work (since the health care cost is so high). There are certainly a lot of families out there where both people are working crummy jobs, but if you aren’t in that situation, these numbers don’t really apply to you.

  45. If you’ve ever actually been on the bones of your arse – so cash-strapped that you struggle to pay bills and eat – then you’ll understand that a $100 bread machine might as well be a luxury yacht, it’s just as far out of your reach. Oh, and how do you get hold of those 20lb bags of flour home when the nearest supermarket is a couple of miles away, you can’t afford a car and the local convenience stores only sell small bags at high prices.

    This isn’t intended as a put-down, or to denigrate anyone’s good intentions, but what the article Our Gracious Host highlights for me is that a decent-if-modest standard of living and what a lot of people are actually getting by on are very, very far apart.

  46. Grr should have previewed! I mean, “what the article Our Gracious Host linked to highlights for me…”

  47. I remember using a similar calculator when I was job-hunting. That other one did comparisons between different areas, like “if you make X, it’s worth Y amount in Z area, and A amount in B area.” Was very useful to guesstimate how much I’d need to make, and which jobs to therefore apply for based on what they were offering.

  48. It bothers me when economic stuff like this, as well as so much government policy, focuses on “families” (and PS – I agree with the person above who is married w/no kids that childless couples are also families). More and more people are waiting to get married and have kids, or choosing not to do so, and yet couples and families continue to get all the financial benefits and breaks – never mind the fact that even though I don’t have anyone to support, it’s extremely difficult for one person to even support him/herself in this economy. It’s a bit annoying that people get special breaks for doing society the “service” of getting married and having kids. I just wish that single citizens were more a part of the conversation. We’re kind of just lumped in with everyone else by accident and only really considered as Future Parents.

    But oh look! Ohio has an “Unmarried and Single Americans Week!” :) 53% of women and 47% over 18 in the US are single (according to the 2011 US Census). Maybe all this talk about “families” needs to be changed/re-framed? Being married and having kids is great, but it shouldn’t be the only thing that qualifies you for participation in society and government care.

    http://www.census.gov/newsroom/releases/archives/facts_for_features_special_editions/cb12-ff18.html

  49. Though, it’s interesting that even though single people over 18 are the majority in this country, only 35% of registered voters in 2010 were unmarried/single. Maybe for the conversation to change more of us need to, you know, VOTE and SPEAK UP and stuff. :)

  50. You don’t pay $100 for a bread machine, you go to Goodwill or the Sally Ann, or Savers and buy it for $5-10. You buy 5lb sacks of flour, which are easier to carry on the bus or your bike. It still means better bread for less money. And you learn to do a lot of other things like that. Slow cookers are another useful appliance to have; mine makes soups and stews and such all winter.

  51. Annual cost for my area: $47,574.

    What we both make, combined, pre-taxes: $38,700.

    Almost all of the figures on that budget are way more than we could ever afford to be able to make ends meet. So, we do without. Which is why it’s so infuriating when people tell us “just do without some things, it’s not that hard.” IT IS HARD WHEN YOU ARE ALREADY DOING WITHOUT A LOT OF THINGS TO DO WITHOUT EVEN MORE THINGS.

    Sorry, don’t mean to get my rage on. I think I’ll start pulling these numbers out the next time somebody tells me to “just do without.”

    (Of course, then they’ll tell me that I should have a better job — which duh — I am already CONSTANTLY looking for a better job. It’s just that the only jobs that are open are part time or pay less, or are jobs that require 3+ years of experience that I don’t have. THERE ARE NO BETTER JOBS, STOP TELLING ME TO JUST GET A BETTER JOB LIKE IT’S ACTUALLY A THING.)

    *deep breaths*

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