Thursday, June 4, 2015

How Low Can You Go?

How little money do you need to survive? The 2015 poverty threshold for a family of four is $24,250 or just over $2,000 per month. By contrast the median household income in the United States was reported at $51,939 as of 2013.

Just like work expands to fill the time allowed, lifestyle often expands to fill the budget allowed. Sure, you might save a little more when you have a little more room in the budget, but most people spend right up to the limit.

What would you do if you were a two-income family and one spouse lost a job? How much flexibility do you have to take a position making two-thirds what you are making now?

Here's a challenge: We'll call it the limbo (and chant "how low can you go" encouragingly as you do it). Take your monthly budget and just look at the expense side. Remove everything that is not a necessity (for definition's sake, necessities likely consist of food, shelter, transportation, clothing, and basic utilities (electric and water, not internet or cell phones)). That's how low you can go. Other items like child care expenses or other expenses that enable you to continue working are pretty tightly coupled in to salary expectations. As you go through the rest of the budget, take a critical eye to it - are there any items you pay just because you have been paying them? I found once that we were paying for a gym membership we had not used in over a year. It was only $19 a month and we didn't want to pay sign up fees the next time we decided to start going regularly. That was just a justification. We cut it and never looked back.

Is there anything you think you could cut out? More importantly, if you had to cut something out tomorrow, what would it be?

Knowing how low your limbo bar can be set is an empowering concept. It lets you have the freedom to explore career options that you could not if your lifestyle and expenses prop up your limbo bar too high.

So, how low can you go?

Photo credit: "Limbo crazy bambou" by Jeanmaxounou - Own work. Licensed under CC BY 3.0 via Wikimedia Commons