Why It’s Harder to Make Ends Meet
The Wall Street Journal’s Homes section recently ran a feature called “Affordable Suburbia,” featuring a few towns with good schools and low crime that are affordable for families earning $50,000 to $60,000 a year. (You may need a subscription to the Journal online to view the story.)
If I moved from
Unfortunately, I don’t know a soul in North Carolina. And I love my town, just a 35-minute ride from the Big Apple. (See my April 6 Yahoo!Finance column for more on bailing out.)
It’s getting tougher to make ends meet no matter where you live. The core rate of the consumer price index, which excludes volatile food and energy costs, rose 2.7 percent in the 12 months ending in February – up from 2.1 percent a year earlier. And those pesky staples — like gasoline and milk are also climbing. You might be able to nickel and dime your way through some of those costs – clip coupons, buy milk at Costco ($2.15 a gallon on my last trip). But it’s tough to avoid the expense creep in fixed costs — like property taxes and health care.
Nationwide, property taxes grew 28 percent from 2000 to 2004, though income rose only 16 percent, according to an analysis by The New York Times. New Jersey has the nation’s highest property taxes — double the national average, at $6,330 per homeowner. Rates have been rising 7 percent a year. In Somerset County, they skyrocketed 41 percent between 2000 and 2004, while income rose just 5 percent. (Although recently signed legislation by Gov. Jon Corzine will give most homeowners a 20 percent rebate, or around $1,100 on average.)
In storm-prone regions, the problem is homeowners’ insurance. In February, we took a family trip to Anna Maria Island, Florida, off the coast of Sarasota. Nearly every other house sported a “for sale” sign on the lawn. A boat operator we met said her homeowner’s insurance has doubled since she bought her home a decade ago — to $1,000 a month.
Health care is another potential budget-buster. Between 1979 and 2004, the number of workers who received health insurance through their employers fell to 56 percent from 69 percent, according to the Economic Policy Institute. Meanwhile, those lucky enough to keep their benefits are paying a bigger portion of their health care tab. In 1993 about half (54 percent) of workers in the private sector with individual coverage were required to pay for some of the insurance costs; by 2005 that share had risen to 76 percent. Almost all workers with family coverage – 88 percent — are required to pay some of the insurance premium out of their own pockets.
Then, for parents like me, there is the prospect of college. According to Finaid.org, tuition tends to increase about 8 percent per year. That means the cost of college doubles every nine years! For a baby born today, college costs will be more than three times current rates when the she enters college. Tuition rates are rising at twice the inflation rate. One tip for overwhelmed parents: Try to save one-third of the cost in advance; plan to pay another third out of your income when the time comes; and expect one-third to come from grants and loans.
How do you continue to live within your means when so many expenses are rising at once? Share your comments and tips below.
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April 5th, 2007 at 1:29 pm
These are startling numbers you reference, but they certainly put that pressure I’ve been feeling into a broader — and less personal — perspective. Even as I have been minding our family budget more with two children in college and a scarcity of well-paying jobs for someone like me who has been out of the work force for some time, I am finding it harder to make our dollars stretch to meet the lowered bar of expectations. Still, I am finding certain “bargain investments” these days, such as taking accounting classes and other business classes at my local community college, and committing to both healthy exercise and diet … both of which are starting to pay off. The business classes in my readiness to take on more responsibilities at my job, paying off with more experience, even with not more income just yet — and the diet and exercise in good “numbers” for my health statistics at my last annual. Then, there are other small adjustments: like forgoing the expensive hair salon and letting my hair grow and go gray in a way that “brands” me at the same time without being indebted to fashion trends.
And then, there are the resources, like your column, that provide a wealth of tips on coping with the human dimensions of these numbers!
In some sense, working with diminishing resources and increasing expenses requires almost the same type of ingenuity and energy that was required of some of us when we were young and we had few resources but a vaster reserve of imagination, not to mention energy!
April 6th, 2007 at 11:37 am
I agree that expenses continue to rise while income doesn’t seem to keep in step with this rise. I am especially concerned about health insurance. I work part-time and on contract basis. My husband carries me on his insurance but it costs us. I am considering getting another corporate job because I can’t afford to pay insurance on my own. It is making it hard for those of us who want to be self-employed. I would love to hear what other self-employed people are doing about insurance.
April 7th, 2007 at 8:18 am
While not self employed, I’ve still turned to an HSA with a high-deductible ($5k) insurance policy. I realize it’s not something everyone can afford to do, but in our case, it has helped. Through work, my insurance costs were about $550/month. The high deductible policy is $290/month, and that’s with both my wife and I ‘rated’ for pre-existing conditions. A healthy person/couple would likely get that policy for $240/month I think.
April 7th, 2007 at 9:39 am
Hi Sheila –
Call your local or state chamber of commerce and find out if your state has created any programs for the self-employed or small business. New Jersey enacted small business health insurance reform a few years ago, making insurance more accessible to small business owners. I was previously a sole proprietor, and had to incorporate my business in order to participate. There are administrative headaches and costs related to incorporation, but it cut my health insurance bill roughly in half. Also check out freelancersunion.org; it offers group health plans in New York and is attempting to expand to other states. — Laura
April 7th, 2007 at 11:19 pm
I must say it is refreshing reading about the same concerns on topics that my wife and myself discuss often! We recently became parents and had to adjust from a two-income household to one. Yes, after visiting our accountant and filing our taxes, I must say the tax benefits for a single-income household is awesome.
Fortunately, my wife is and was a well-valued assett to her company and actually got the executives to create a work-from-home team. She is now ready to start her first day working from home(part-time) this Monday.
I sell Real Estate in Southern California and am thankful for a strong first quarter in 2007. I also manage a team of 40+ agents for my broker and am also very thankful for a salaried position with full benefits!
Now that our household is back to feeding off of two incomes, we have committed to a very large portion of my wife’s salary towards our daughter’s college fund.
May 10th, 2010 at 7:12 pm
I live within my means by turning down our thermostat in winter, careful grocery shopping (shopping at Aldi’s, using coupons), limiting clothing purchases (I don’t need many clothes…I wear mostly what I have) planting a vegetable garden and generally finding any way I can to reduce costs. I actually enjoy being thrifty….it’s like a game to me, my entertainment. I’ve been able to live a nice life with less, and I don’t feel deprived in any way….I can go to bed at night knowing I’d have enough money for emergencies or that I can pay a bill when it comes due.