One of the classic pieces I’ve linked back to repeatedly is Monroe County median income – what can you spend on what?

My inspiration for that article more than two years ago was the sniveling in southeast Michigan that $14 an hour jobs were “not enough to live on.”

But when I did the math, I realized two full-time wage earners at $14 an hour had a combined paycheck that was pretty close to the median household income of the day. Obviously, a lot of families had figured out how to live on that pay scale. Reason: They were already doing it.

In response to the fuss, I did the math on a sample household budget for a family of four to explain how it could work.

Two years have passed since I wrote that post. Median household income in Monroe has actually dropped. Some cost of living expenses have gone up. What would that hypothetical Monroe, Mich., family be looking at now?

My analysis shows: it’s still do-able. But a family could easily get frustrated with the details.

According to newly released statistics from the U.S. Census Bureau, the Monroe County, Mich., median household income for 2009 was $52,824.

The original household budget scenario I did was on the 2005 median household income of $55,823. To compare: two full-time wage earners bringing home $14 an hour have a salary of $58,240.

The budget plan for my analysis: Crown Financial Ministries “spending plan online calculator.”

There are many other household budget guides in books and on the Internet. Feel free to use this concept and run the numbers on your favorite program if you wish.

There are two reason I like Crown’s formula. First, every household expense fits somewhere into the outline. Second, Crown gives budget recommendations based on actual household income, rather than average consumer spending or “what did you spend the last three months?”.

I am writing this scenario with two adults and two children in a two-bedroom rental apartment, because that’s an easy demographic for which to estimate household expenses.

One of the details to understand in the formula is that Crown takes out tithes and taxes before building a household budget.

Crown encourages a 10 percent tithe, as do many churches. That’s pretty generous. From what I’m hearing from the social service sector and in the headlines, southeast Michigan residents have cut back quite a bit on the contributions they make to charities and the help they can provide on an ad hoc basis to relatives and friends.

But it would be reflective of the community values in Monroe for a typical family to make some charitable efforts during the year.

So I’ll put $1,000 as cash donations in that calculator.

The tax amount I’m working with is a wild guess because tax deduction and credit rules change so much from year to year.

One item to note: This family would not be eligible for the Earned Income Credit under the Internal Revenue Service 2009 income brackets. This hypothetical family is also renting, so I will not need to consider property taxes. But there are still state taxes, Medicare taxes and Social Security taxes to add in.

For the sake of math games, I’ll put $7,000 in that line item.

This is what is left to spend: $44,824 a year or $3,735 a month.

What will our hypothetical family do with their budget? Here’s how the numbers work in the Crown calculator and with the local cost of living:

Housing: $1,344 is available for housing. The house or apartment is certainly the biggest expense. The Monroe County Network on Homelessness is reporting the “fair market rate” in 2009 for a two-bedroom apartment rental was $777. Yes, I know there are two-bedroom units currently listed in the $525 to $650 range. Keep in mind that cheaper units in this area typically do not have washer-dryer hookups, which negates your savings because laundry has to be paid for by the load. Using the $777 price point, that leaves $567 a month for gas, electric, Internet, landline phone, mobile phone, cable or satellite TV service, satellite radio, any light bulbs or furnace filters you are required to replace, any furniture you personally own, the coffee pot you might need to replace, trash fees if you pay for that, renters insurance, storage unit, and cleaning supplies. Even if the family doesn’t pick up on all those services, the household budget is gone quick.

Food: That grocery budget comes out to $448 a month. Keep in mind: cleaning supplies are in the housing budget, and eating out is in the entertainment budget. Given the household income, this family does not qualify for reduced-price lunches at school. Therefore, that grocery budget has to include all home or lunch box edibles 3 times a day, 7 days a week, for 4 people. Assuming these kids are school age, the USDA Cost of Food study estimates the August 2009 grocery budget at $579 a month on the “thrifty” range. It certainly is possible to have a grocery budget below “thrifty” for your family demographic, but you’ll need to be resourceful to do it. Check my grocery shopping reference material for tips on this topic.

Auto: Crown puts this budget at $448 a month. This is not two car payments for my local readers. This is one car payment at most. Reason: the auto budget also includes car repair, gas, turnpike tolls, parking passes and insurance. If you need a reminder of how expensive car insurance is in southeast Michigan, go look at that last bill that you paid. If Lake Erie Transit (city bus) is part of the family transportation plan, include the bus fares in this budget category.

Insurance: This category is for life, vision, dental, disability and health insurance payments that you make, or are taken out of your paycheck. The amount is listed at $186 a month on the Crown spending calculator. This is a budget category for which you may have little control. If so, you will cut back elsewhere to make the numbers work.

Debt: Crown lists debt payments such as student loan, credit card or personal loans at $186 a month for this income bracket. Look at the Crown Budget-O-Meter tool for an explanation on why the monthly debt payment amount is a critical number for family budgets.

Entertainment / recreation: This is listed at $186 a month. One could aside $1,000 a year for the “family vacation” and $100 a month for everything else. But you’ll find the money won’t go far regardless of how you split it up. This category includes drive-thrus, coffee shop, ice cream, hunting trips, sit-down dinners out, movies, bowling night, concert tickets, social club fees, lunches with girlfriends, campground fees, tickets to Detroit Tigers or Michigan International Speedway, annual passes to the zoo / science center / park district, water park fees, hotel stays and airline tickets. You can expect to have a lot of family discussion on value or fun for the buck when deciding where this money goes.

Clothing is listed at $186 a month. If you drop this amount back, Crown says plan on at least $10 a month per family member. Even if you wear second-hand jeans and T-shirts, certain items such as work boots and kids’ sneakers are typically purchased retail. I paid $29 for the most recent pair of sneakers I bought.

Savings is listed at $186 a month. If you need to cut back, Crown still suggests setting aside $5 or $10 a month. The more wiggle room you have with savings, the easier it will be to handle an unpleasant alignment of the bills vs. the paychecks.

Medical / dental is listed at $224 a month for out-of-pocket expenses such as co-pays, glasses, and dental fillings. Even minor expenses can add up fast. Let’s say both kids get sick the same week with whatever ailment is going around the neighborhood. Assuming health insurance will pick up most of the cost, that family will still be out $60 for the two $20 doctor visit co-pays and two $10 prescription co-pays. (I’ve heard of some plans requiring higher co-pays, but $20 seems to be common.)

Miscellaneous is listed at $149 a month or $1,792 a year, but you will see that fund dries up fast after you realize what all goes into that category. This includes the dog or cat food and vet bills, birthday gifts, Christmas gifts, newspaper and magazine subscriptions, Halloween costumes, Easter baskets, haircuts, candy from the vending machines, gym memberships, craft supplies and the annual studio photo of the kids trying to be really cute for Christmas. Just for some perspective: the National Retail Federation is reporting the average American spent $683 on Christmas 2009. And for another example, my haircuts usually cost about $14 (I don’t color my hair like many Monroe women do.)

School and child care: Crown lists kid expenses as a separate category that is added in if needed. That means the amount has to be subtracted from other categories if you have expenses such as school supplies, day care, yearbook photos, school tuition, sports participation fees, ACT / SAT test fees, and bus passes for the kids. I don’t remember whether diapers should go here or under another category, but you have to remember that expense somewhere. On the sample budget, the amount is listed at $224 a month. If you are a parent, you know that amount won’t go far. One trick that has worked for many working-class families on the day care bill is to have parents on different work schedules, or at least just off enough so that the babysitter expenses need only be part-time.

Investment budget is listed at $186. If you are set aside some of your paycheck into a 401k plan or IRA, that line item is listed here.

The next piece will focus on the choices and options that a median income couple does have on family expenses, despite the fact they might feel like they are “caught in the middle.”

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