Economic Realities

There's so much discussion about the economy and what can be done or proposed to enhance it that I felt that a diary dedicated to the economy might be something that others (besides me) were interested in!).

I'm currently a single woman age 50 and live alone.  I've been through the raising of children and having to provide for them as a single parent.  Between the 'gas tax holiday' and the 'tax incentive checks' and some of the recent media attention on our economy there are some basic, overlooked facts.

Now we all know and anticipate that prices are going to go up, it's just the way it is - I'm grounded in reality whether I want to be or not.  As a grandmother I wonder how my children manage today - especially when compared to when I was bringing them up!

I do not know what others are paying for rent, but I will tell you what has happened to my rent over the years.

Rent 1976:  As a first time renter my rent was $45 per week and included my electricity, my gas and regular trash pickups.  I had a 2 bedroom apartment that was located in a downtown neighborhood in a three family home.  I was living with someone at the time and we managed to pay our rent rather handily.

Rent Today:  Today, I live alone (unless you count my dog) and I live in a single family home where I 'rent' rooms.  I live basically in an attic setting where there are 2 large rooms.  I share bathroom and kitchen facilities with the home owner.  I pay $220 per week which includes electricity and heat but I pay $50 per month additional to buy 'trash' bags which the town requires I use.

I figured it would be useless to generalize food prices, because I can't draw any type of a comparison because there are so many things I don't buy given that I live alone.  Instead I thought I'd talk about some specific items.  You'll note that there are families out there that are paying much higher grocery bills than I am - I can't even fathom it.

Pepsi/Coke:  I recall being horrified when a 2 liter bottle of Pepsi or Coke raised from $.67 to $.75.  Recently I paid $1.19 for that same two liter bottle.  

Coffee:  Ok so here it's a bit of a food group.   I recall purchasing ground coffee for a coffee maker in the vicinity of $2.99 for a 2 or 3 lb can.  Recently I paid $6.99 for that same size cannister of coffee.

Chicken:  If I remember correctly I was horrified when chicken went up to $.59 a lb.  Recently I bought a package of 10 pieces of chicken for $10.99 (a bargain if I say so myself).

Fish:  Not so many years ago I was going to a fresh fish market and getting haddock for $2.99 a lb which was a horrific price to pay but you excused it because it was fresh fish.  Last week haddock at my local grocery store was $8.99 a lb.

I have a dog. I've had him for 2 years.  I started out buying his dry dog food (I usually buy Beneful or Kibbles and Bits) for $3.99 for a 3 lb bag.  Last week that same 3 lb bag was $5.29.  I don't know how that happened but that's a fact.

What about some of the things that us single moms used to keep in the house for a quick lunch for the kids?? I remember as a young, single mom my children loved boxed macaroni and cheese. And, I'm not talking about Kraft here I'm talking store brand.  As recently as 1999 I can recall purchasing this at something like 10 boxes for $1.00.  Just the other day there was a 'sale' at my local market on their brand - 3 boxes for $1.00.  Remember this stuff is mostly garbage chemicals that probably aren't good for the kids anyway, but as I recall this stuff got us through some pretty lean weeks.

Pasta prices are totally out of control.  I used to pay $1 for 4-5 packages of 1 lb pasta. Today, I'm lucky if I can buy that same pasta for less than $1.00 per box.

Remember when a jar of Ragu cost $.99?  Not any more, the other day it was $1.99 for jars I'm certain I paid $.99 for!

I headed to the local market last week and my order looked something like this:  3 boxes of tissues, 1 can of air freshener, 1 bag of dog food, 1 bottle of shampoo, 3 bottles of diet soda, 5 single servings of pasta and sauce, 3 boxes of saltines and 8 cans of soup, a bottle of cough syrup and a decongestant tablet and a package of candles.  This modest order cost me $134! I didn't buy one piece of fruit or one vegetable nor did I buy one piece of meat.

Now I don't expect the government to step in and help with the overall cost of things, but what I want to know is when it became a rule that you have to make more than $500 a week just to keep your head above water.  When did you have to start worrying that a simple trip to the drug store (which is a whole other issue) was going to mean you had to make a decision as to whether to buy a prescription or eat dinner that week?

Speaking of health care.  Massachusetts recently became one of the states who now mandates health insurance.  If you're not covered you get penalized on your taxes.  My insurance plan costs me $400 per month (for a single person), it has a $2,000 deductible and my prescriptions cost me on average $25 each for a 30 day supply.  So, if you add up what my 'plan' really costs me, you'd have to consider 3 regular prescriptions (thyroid, asthma and cholesterol) are $75 per month and since I have to worry about this deductible then there's the extra $167 a month I need to put away for that.  So now my 'affordable' health plan costs me $642 a month and that's before I have to visit the doctor.  A month when I have to do that means another $25 co-payment.  Sure, that's affordable, after all it's only $150 per week and that's less than my rent.  So that means before I even think about paying for one bit of food I have to have $370 per week (take home).

I'm self employed.  So I have no employer to help offset my health care costs and on top of that I get the 'bonus' of paying my taxes to boot.

The self-employed in the United States are usually required to pay estimated income taxes quarterly. They pay both the employee and employer portions of the FICA tax (which pays for Social Security and Medicare), since they are considered both the employer and the employee. An employed person pays 7.65% (6.2% for Social Security and 1.45% for Medicare) through a paycheck deduction, and the employer pays the other 7.65%. The self-employed person pays both sides of this tax, or 15.30% total. However, since half of the hypothetical self-employment tax is allowed as a deduction against self-employment income, only 92.35% of the self-employment income is taxable at 15.30%, an effective tax rate of about 14.13%. This tax is reported on Schedule SE of the IRS Form 1040.

My health care premiums are not deductible.  Because I live in a two room apartment basically I can't deduct any portion of my rent towards my business (I can't prove that I don't use it to live in - well dah, yes of course I live in it).  Not to mention the fact that if I ever hope to retire (on something more than Social Security) I need to save for my retirement, so if I take the maximum $6,000 annually that means another $500 a month that's not really optional for me!

For me, this means that I have to make something in the vicinity of $600 a week to cover taxes, health insurance, retirement savings and rental payments. I haven't even begun to think about living expenses outside of rent!  So, the first $37,200 a year I make is gone before I have one single thing to show for it!  That means I need to make on average $20.38 per hour (which fortunately for me is do-able) if I toss in an allowance of $100 per week for food, clothing and other little necessities (which is very modest in my opinion).  I guess I'm lucky - I don't drive - let's face it at an average of $3.50 per gallon of gas if I drove and even used one tank of gas a week that would mean about another 60 dollars a week (or another dollar fifty per hour).  Then of course there would be car insurance on top of that.

I take my hat off to all those families who struggle with day to day expenses of rent (or mortgage), groceries, clothing for children, day care expenses and the plethora of other issues that face them.  With minimum wage somewhere south of the figure I've quoted above, I'm unclear where Senator McCain or Senator Clinton believe that this 'gas tax' holiday is going to help one single bit!  We're talking about $.30 a day! If the gas tax holiday was for a FULL YEAR it would save a mere $109.  But, let's not overlook the obvious - the road conditions would decline, the oil companies will raise the prices to meet the increased demand - overall it's a BAD idea.  Let's not put a band-aid on a wound that needs a tourniquet.

My children now have children of their own.  My oldest recently informed me that he paid EIGHT dollars for a gallon of milk on a Marine base (he's in Hawaii).  He has 3 children.  Can you imagine how much they're paying every week for groceries?

I must be living in la la land.  My folks raised eight children and my mom didn't work until I was well into my teens. Dad was a non union employee. We had health insurance, they owned a home, there was a new car every three years (of course then the prices of houses were about what we are paying for cars today).  I don't ever recall a time when there was a lack of food in our house, I don't ever remember one single Friday night where we didn't have take out fish and chips (no small feat for a family of 10 even then).  Either my folks were able to absorb the prices or they were really good at keeping it from us.  Remember, they had to buy 8 children clothes to start school in every year, 8 children Christmas gifts, 8 children birthday gifts and feed 8 of us three meals a day. They did it (God love them) and if there was a struggle, we certainly never knew about it.  My folks never once worried about losing their house (the mortgage payment was something in the vicinity of $200 a month).  They used S & H Green Stamps (that came with gas in those days).  We were happy, well adjusted kids with little concern about where our next meal or our next set of clothes was going to come from.

When did we become immune to the fact that things have gotten out of control - when my folks bought their home it was less than $30,000.  It recently was valued for in excess of $200,000.  How does that happen?  It's the same house as it was 30 years ago when they bought it.  Why is it valued that much higher?

I don't know the answers to a lot of these questions, these are just simply musings from a person who wonders when the excesses are going to stop and let folks live without worrying themselves sick that they can't buy medicine or afford health care or worse yet, wonder how to pay for groceries.