A good modest income in the area that I live in is around $40,000 or $20.83 hourly wage and most families make less than this. For a typical family with children, this gives you an estimate of $35K after taxes, so you need to budget for that amount. I did figure in a state income tax since most states have it and also figured in the tax return and/or deductions/credits for children.
Always give God his 10% first! I'm estimating costs here and these may vary depending upon location and other factors. This is just to show you an average budget for a family living on this amount a month with no debt.
*This is not my family's budget or income, I'm simply providing estimates for the average, lower-income family.
Budget - $35,000 = $2,917 a month
Monthly Budget for $2,917 (after taxes)
Tithe -$334
Offerings - your choice but estimating $50
Savings - $100
Housing
Rent - $730
Renter's Insurance - $15
Utilities
Electricity - $100
Water - $25
Garbage - $25
Phone - $30
Internet - $60
Personal
Food - $275
Toiletries - $120
Life Insurance - $10
Transportation
Gas - $250
Car Insurance - $80
Maintenance - $100
Medical
Health Insurance - $350
Dental Insurance - $60
Medical Bills - $100
Entertainment & Clothing
Fun Money - $75
Clothing - $25
Debt
ZERO!
You can see that in recent years, health insurance has risen so high that it is almost impossible for families to afford it at all. With this budget, I estimated total medical costs at $510, which is actually cheap insurance, so you have to pay deductibles and co-pays throughout the year and that can eat up your savings. Obamacare jolted prices upward, and they are becoming to where there is no way a family can afford to pay for them and this brings up the question about is it ok to use medicaid?
At this income you are putting in savings $1,200 a year + any interest. That comes out to about $6K in just 5 years and $12K in 10 years. If you live in an area like mine, which I blogged about here, you would have to put most of your "savings" into your rent or cut expenses elsewhere if possible.
Having an emergency fund set up should be your first goal and it is generally recommended that that should be $1,000. Then a savings for 3-6 months in the event your husband loses his job or becomes disabled and the rest you can invest. If you don't put aside 10% for these things or live so that you can do so, you will find yourself turning to a credit card or other debt. Stay chain-free and build wealth!! I recommend Dave Ramsey's Total Money Makeover for anyone who is unsure how to budget, save or is in debt.
Wednesday, January 22, 2014
Can God Provide Housing?
In our area, several years ago, you could find a decent 3 bedroom for under $900 but as the years went by, the rent went way up. Now, it would literally be a miracle if you found a 3 bedroom rental for under $1100. Families with more than 2 children, have to have a 3 bedroom because the laws in our area deem it so with rentals. It is either 2 per room or if you have a boy and a girl, they each must have their own room. This means that most families with children NEED a 3 bedroom home to meet the law and live comfortably. Some landlords ignore these rules and allow more in a 2 bedroom or a boy and girl to reside in the same room but most do not.
The recommendation from financial experts is that your housing costs should be less than 30% of your gross income but Dave Ramsey recommends it only be 25% of your take-home pay. So let's do an example of an average one-income family who has a modest income of $40,000 a year. 30% of that would be $1000 a month that you can afford for housing or according to Dave Ramsey's guidelines, 25% of take home pay would give you $730 a month for housing. So for a family making $40K a year, they should stick within a $730 - $1,000 a month for housing. With those numbers, you can see how a typical family can't afford the rent in my area, so they have to pay more and save less, or not at all.
It is now cheaper to buy than rent, in my area, when you look at monthly payments. Some are finding that they have to buy in order to have a place to live because they can't afford $1100+ in rent but can pay a $700 mortgage, which after property taxes and insurance, comes out to still be under $1000. However, putting yourself in debt and literally setting yourself up for financial distress when something in the home needs repairing or breaks, is destroying peace in many families. Also, if you can find a home that cheap in our area, it probably means it is old or in a part of town that isn't desirable. Rent will most likely only go up from here as landlords are still trying to make up for their bad decisions on purchasing homes when homes were way over-priced in my area several years ago.
Thankfully as a Christian, we can know that even though rent is going up and laws are making it hard for many families with children - we have God as our ultimate provider and he isn't fighting against families! Now more than ever, we can see the mighty hand of God at work in His provisions, even in housing. God will supply your need but maybe not your want - some don't live within their means on purpose because they WANT something that they just can't afford and they create situations of hardship. Yes, God does sometimes give you your wants too but He will always give you your NEEDS.
He provided my family a place several years ago that seemed too good to be true at the price and size of the rental, but it was really true (and good!). Even if our landlord chooses to raise our rent, God will still make a way for our family - whether it is more income to pay the higher rent or providing another place for us. God CAN provide housing for His people and their families and He WILL if you let Him lead!
The recommendation from financial experts is that your housing costs should be less than 30% of your gross income but Dave Ramsey recommends it only be 25% of your take-home pay. So let's do an example of an average one-income family who has a modest income of $40,000 a year. 30% of that would be $1000 a month that you can afford for housing or according to Dave Ramsey's guidelines, 25% of take home pay would give you $730 a month for housing. So for a family making $40K a year, they should stick within a $730 - $1,000 a month for housing. With those numbers, you can see how a typical family can't afford the rent in my area, so they have to pay more and save less, or not at all.
It is now cheaper to buy than rent, in my area, when you look at monthly payments. Some are finding that they have to buy in order to have a place to live because they can't afford $1100+ in rent but can pay a $700 mortgage, which after property taxes and insurance, comes out to still be under $1000. However, putting yourself in debt and literally setting yourself up for financial distress when something in the home needs repairing or breaks, is destroying peace in many families. Also, if you can find a home that cheap in our area, it probably means it is old or in a part of town that isn't desirable. Rent will most likely only go up from here as landlords are still trying to make up for their bad decisions on purchasing homes when homes were way over-priced in my area several years ago.
Thankfully as a Christian, we can know that even though rent is going up and laws are making it hard for many families with children - we have God as our ultimate provider and he isn't fighting against families! Now more than ever, we can see the mighty hand of God at work in His provisions, even in housing. God will supply your need but maybe not your want - some don't live within their means on purpose because they WANT something that they just can't afford and they create situations of hardship. Yes, God does sometimes give you your wants too but He will always give you your NEEDS.
He provided my family a place several years ago that seemed too good to be true at the price and size of the rental, but it was really true (and good!). Even if our landlord chooses to raise our rent, God will still make a way for our family - whether it is more income to pay the higher rent or providing another place for us. God CAN provide housing for His people and their families and He WILL if you let Him lead!
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