How to escape the minimum wage hamster wheel: Student/Single edition (Part 1) is a post from: Wealth Informatics if you enjoy it, please visit us and subscribe to the Wealth Informatics feed.
This is part III of the series – “How do people survive on minimum wage?” Part I of the post talked about the demographics of people earning minimum wage, part II dealt with budgeting on minimum wage. In this part, I will explore how other people budgeted & escaped the minimum wage cycle and a plan for me to do the same if I am in that situation. As the situation is drastically different between single folks and families, this post only deals with single, healthy individuals.
How did other people budget their minimum wage/low income and got out of it?
As I mentioned earlier, I was a student when I was earning minimum wage. My conditions were different, so I interviewed 6 others who have lived on very low incomes to understand how they did it – how they budgeted their income and how they got ahead. Two of them were students, like me, when they lived on minimum wage.
How did they budget their low income (in their words)?
Case study #1:
Income: $200/week
Rent: $160 (1/2 of a 2 bedroom apartment). I had extremely limited money to cover everything else.
Food: $15/week; Vegetables and pasta for everyday dinner and lunch; Splurge once a month – McDonalds hamburger, with extra lettuce and tomato to make it more filling (no fries or drink). I’d skip breakfast every day. I’d make my own bread – just flour, water and yeast.
Car: Public transport ($10/w ticket) but I still needed a car to get to work, do the shopping and get to the train station. I had a 20 year old corolla which thankfully was bulletproof, but I missed most of the required mechanical maintenance.
Clothing was another big area I sacrificed in. I’ve never been overly fashion conscious, but I’d wear the same few shirts every day. I wore the same pair of jeans every day – eventually they tore through the knees so I cut them into shorts (which to be fair I only wore at home, not in public). I bought maybe one $5 shirt and a new pair of jeans the whole year. I wore holes in the bottoms of my shoes and in winter my socks would be soaked from puddles.
Case Study #2:
Income: $400/month
Housing: $100 (including utilities, campus housing)
Phone: $8
Food: Pasta every day.
Transportation: Walked everywhere.
Insurance: Subsidized medical and dental insurance, but I never saw a doctor.
Rest: You just forego everything, clothes, shoes, haircuts, movies and nights out… because once you have eaten and paid for books and basic expenses there isn’t much left.
How did they get out of the minimum wage living?
Case Study #1:
I started making money with my hobby. This provided an extra 200-300 per week and got me out of poverty. I’d finish my video store job at 9PM and work another few hours on my business.
Case Study #2:
I dropped my second major and started flipping burgers, then waitressing, then taking a series of odd jobs.
Both of these people got ahead by putting in more and more time into taking any money making opportunities that came their way (this is the same trend I saw when I talked to the rest of the 4 people with families). Eventually, they graduated and worked a much better paying job. For students, who make a large chunk of the minimum wage demographics, this is an excellent path – make as much money as possible during college to live and graduate debt free and get a job in your chosen career path.
What if I am single but I am not in college, therefore no prospects of getting a well-paid job in the near future? There are many people in this category and these are the people that probably need help. I am going to assume I am in that situation and see if I can still get out of the minimum wage situation.
How would I escape the minimum wage hamster wheel?
Assumption: I am a single, healthy individual. I understand it is a LOT more complicated if you have a sickness that genuinely prevents you from doing anything to better your situation. The only suggestion I have in that case is to find a mentor who was in your situation before and/or talk to someone in your local Department of Social Services to point you in the right direction.
For the rest of the single, healthy individuals who are working a very low income job, hopefully this post will help.
Back to the topic, if I were in that situation (I was. I graduated and found a job. In this case, I am assuming I don’t have a degree and am working a minimum wage job), these are the steps I would take:
I would first cut my expenses to the bone and get a handle on my budget. I would make sure this part goes smoothly so that I won’t be distracted in my efforts to make my life better.
I would think about what I want to do and make a plan – do I want to go back to school, if so, how? Do I make more money and save to start a business? Or do I look for a better paying job? What should I be doing in each of these cases?
Make whatever I am earning work for me and save more.
Step #1: Get a handle on my day to day expenses
I won’t have time and energy to waste worrying about them. I will get rid of my pride and get help from whatever source I am eligible for; after all I am doing this so that I don’t have to live like this for ever and become a contributing member of society.
Family & friends
A lot of low income people survive using help from their friends and family – be it free child care, pitching in for food and emergency expenses or just getting a ride to wherever they want to go. If I had family in the US, I won’t hesitate to ask for help. Unfortunately, I am an immigrant, so family help is out of the equation. So the next obvious place is the Government and charitable organizations.
We all pay taxes and these programs exist to help people in need. No one likes when someone milks the system, but I don’t think anyone would object to a person who genuinely wants to stand on his/her own feet getting a little help to achieve that.
Government, community & other non-profit resources that help low income people
Housing: As I mentioned in my previous post, I would definitely share a house or a room if I am single. Most of the assistance programs are available only for families; elderly and disabled, even that has a long waiting list (like Section 8 housing). So the Government won’t be of much help for me as a single, healthy individual. If I still need help (may be because I only get 20 hours a week worth of work), there are a couple of ways I would try to get help – I turn to non-profit organizations. Most states have a directory of services that can help with specific needs. For example, in WA, I can find places that will help me with the apartment deposit, rent and dorm room type shelters during transition from 2-1-1 in Washington. The website also gives me a list of low cost apartments maintained by non-profit organizations that are available for low income people. Here is a list of 2-1-1 sites for all the states –
Alabama
Hawaii
Massachusetts
New Mexico
South Dakota
Alaska
Idaho
Michigan
New York
Tennessee
Arizona
Illinois
Minnesota
North Carolina
Texas (Site was down will update it later)
Arkansas
Indiana
Mississippi
North Dakota
Utah
California
Iowa
Missouri
Ohio
Vermont
Colorado
Kansas
Montana
Oklahoma
Virginia
Connecticut
Kentucky
Nebraska
Oregon
Washington
Delaware
Louisiana
Nevada
Pennsylvania
West Virginia
Florida
Maine
New Hampshire
Rhode Island
Wisconsin
Georgia
Maryland
New Jersey
South Carolina
Wyoming
There are County and City specific 2-1-1 services. The State websites should point them out to you or you could also go to the National 2-1-1 site and enter your city to see if they have their own site.
From talking to a lot of people, it seems like they stop with Section 8 and HUD subsidized housing. Section 8 has a gigantic waiting list, HUD is a little easier but not for single people. It is easy to give up, I understand; but putting in a little more effort into how else you can make it work will be a great help to make your life better.
Utilities: I have already written about LIHEAP. Check out this post on more information about getting energy assistance.
Phone: I would check if I am eligible for the Lifeline program. I need to have income of less than 130% of the poverty level for the size of my household (just 1). If I work 40 hours, I won’t be eligible, but if I end up with less # of hours, I will check if I can get a phone to use for my job search and emergencies. The Lifeline program gives me a basic line with 250 free minutes a month.
In case I am not eligible for the free low income cell phone program, my next choice would be unlimited talk, text and data line from Republic Wireless for $19 + taxes. This way I can have internet access on the go too.
Medical & Dental: As I mentioned in my last post, I would skip medical and dental insurance. BUT if for some reason I need to have them, there is no better time to look. The health care market place that was included in the health care reform kicks in on Oct 1st of this year. Start with Healthcare.gov to explore what kind of insurance you can get for low cost.
(I have a post on what will change and how it will affect us scheduled for next week if you want more detailed information)
If you don’t have a good insurance and/or underinsured, make use of the County health clinics and low income clinics to get your maintenance work done. You can search for a low cost/free health clinic near you via
1) U.S. Department of Health and Human Services – Health Resources and Services Administration. Search by address or your State/County.
2) Needy Meds.
Clothing & Personal care (soap, shampoo, etc.): Thrift stores provide access to cheap clothing and accessories. I would check out Freecycle and Craigslist’s free section as well. Local shelters, food pantries and churches also offer free personal care items.
Transportation: Most of the transit systems in the country offer some sort of discount pass for people with low income or disabilities. If I needed a car loan, I won’t be going to a dealer – they will offer me horrible rates citing my low income (and possibly low credit score). Again, I would look for non-profit organizations that help with transportation for low income people who need a car to keep their jobs. Here are some places to start –
1-800-Charity-cars
Working Cars for working families
More than wheels
Good news garage
Ways to Work
Vehicles for change
Some credit unions also offer loans with reasonable rates, specially designed people for low income. For example, Express Credit Union Vehicle Ownership Program. Call all your local Credit Unions to see if they offer something that will fit your budget.
Food: If you are determined to cook at home and make simple meals, food expenses can be kept very low. If you need further assistance, there is Supplemental Nutritional Assistance Program (SNAP) and local food pantries.
Internet: I am a fan of Freedompop. I would definitely get that if it is available in my area. If it is not AND my library timings are inconvenient, I would call every internet provider in my area and check if they have a basic, low income plan. Here are some of the plans and numbers to call –
Century Link, Lifeline plan, 1-855-954-6546
Comcast Internet Essentials, 1-855-8-INTERNET (You can also get $149 computer and free internet training).
Time Warner also has a $9.95 but I couldn’t find the link online. Call your local Time Warner provider.
Connect 2 Compete
Don’t have a computer? Check these places-
Computer recycling center (CRC)
PCs for People
Free geek
Computers for classrooms
Castaway Computers
Technology Assisting People In Need (TAPIN)
Good PC
I don’t know where to start!
If you do not know where to start, this post would have hopefully helped you. If not, there are 4 places to start that will direct you to the right place to find help –
Benefits.Gov
Local library (ask the information desk person for resources on where to go from there)
Local Dept. of Social Services
Church (This is not a religious problem, but churches are a great resource for people in need).
At this point, I should have my monthly expenses in auto pilot. I will move on to making a plan to get out of this situation.
(I finished the post but realized it was too long, even for my standards, for anyone to digest all the information. So I split this one into two – Step #2 & #3 will continue on Wednesday).