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Try Living On Minimum Wage
Posted By Jim On 01/27/2009 @ 12:10 pm In Frugal Living | 127 Comments
Want to learn how to be frugal without having to resort to the extremes of spending only a dollar a day on meals? Try living on minimum wage. I’m not recommending that you pull a Morgan Spurlock but you should try to put yourself into the shoes of millions of Americans working a minimum wage job and try to figure out how they’re surviving. They do it every single day and they, through trial by fire, have learned what it takes to truly be frugal. You have to walk a mile in a man’s (or woman’s) shoes to truly understand.
So, how much is minimum wage and how much can you spend? The Federal Minimum Wage  is currently $6.55 an hour, set to increase to $7.25 an hour on July 24th, 2009 (it may be higher in your state). If you assume an 8 hour day, that’s a grand total of $52.40 in earnings that day.
Taxes: If you worked 2,000 hour (the standard number of hours budgeted by companies) year, $6.55 is only $13,100 a year. Once you deduct the standard deduction of $5,450 , we’re talking $7,650 of taxable income assuming no other deductions. According to the 2008 IRS tax brackets , you would be taxed at 10% for a total tax of $765.
Your $13,100 a year is effectively $12,335 after taxes. That’s a little under $1028 a month.
Rent: It’s difficult to assume what your rent is because it varies across the country but let’s take a nice round number of $500. Deduct $500 from $1028 and you’re left with $528. Divide that by 30 to figure out how much you can spend each day.
The answer is $17.60. (if you assumed rent of $300, that would still leave you with only $24.27 a day to spend)
That’s right, if you work eight hours of minimum wage and have a $500 a month rent payment, you can only spend $17.60 before you start going into debt ($25 if you pay only $300 a month in rent). This is why so many people working minimum wage work two or three jobs, because eight hours is simply not enough. (There may be other social programs to help, like food stamps, but I didn’t want to get overly complicated in this discussion)
Eye opening huh? Try living on less than $18 a day for an entire month, I mean really try, and you’ll discover some things you didn’t think were possible.
(Photo: ppdigital )
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URL to article: http://www.bargaineering.com/articles/try-living-on-minimum-wage.html
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 Email: mailto:?subject=http://www.bargaineering.com/articles/try-living-on-minimum-wage.html
 Federal Minimum Wage: http://www.dol.gov/whd/flsa/
 standard deduction of $5,450: http://www.irs.gov/newsroom/article/0,,id=174876,00.html
 2008 IRS tax brackets: http://www.bargaineering.com/articles/2008-federal-income-tax-brackets-official-irs-figures.html
 ppdigital: http://www.flickr.com/photos/ppdigital/2054988302/sizes/m/
Thank you for reading!