As part of a recent class project, I was randomly assigned a family situation that is common in the United States. Using a loan calculator, paycheck calculator, and price estimates made by my peers, I was able to create a monthly budget to support my family. My family situation was that both my spouse and I were laid off from GE, we have an income of $400 per week for a maximum of twenty-six weeks, we have two kids, and we each owe $60,000 in student loans individually. Our monthly income, after taxes, came out to be $1,595.54.
Budget:
Rent - $450.00
Utilities - $250.00
Renter's Insurance - $25.00
College Loan Pay-Off - $320.00
Groceries - $472.40
Garbage Service - $5.00
Bus Pass - $15.73
Medical Care - $30.00
Pharmacy/Household Items - $27.41
Because of the large college loan debts and lack of steady income, most household basics had to be cut. The phone service was cut in favor of pharmacy and household items. Life insurance for both my spouse and myself was cut in favor of money for immediate medical care. The bus pass will cover all transportation costs, making car payments, car insurance, and gas money extraneous. My spouse and I will care for the children, as we are currently unemployed and will search for jobs at home. While doing this project, I realized just how expensive it is to have a family. Fellow students making money similar to mine but without a family were much better off. Also, I was surprised to find out how quickly a person can go from making $4,000 to $1,500, without any chance to prepare for the huge effect on his or her budget. I now know that saving the amount of money I thought I would need to save would only support me for one month after losing my job. The effect of the college loans on my budget also increased my awareness of just how important it is to seek out financial aid for college. I could save so much money later in life simply by making sure I do not take out too many loans for college this coming fall. I hope that the other students in my class have learned as much from this activity as I have.
I believe that unemployment dollars should be increased. I believe that the amount of money given to each family for unemployment should be proportional to the amount of income that the unemployed person(s) was last receiving. This would make it easier for higher previous-income families to adjust their budgets over a couple of months. However, there should also be a higher minimum rate, so that those without high incomes to start with would not suffer more because of the proportion. It is crucial for unemployment benefits to increase because New York State unemployment has risen to 7.6%, and is increasing by the month. Every dollar spent on unemployment benefits results in a $1.73 increase in economic activity, because those receiving the benefits use the money right away to purchase groceries and pay rent. From that statistic, it is clear that increasing the amount of money paid to the unemployed would also benefit the employed citizens of the United States by boosting the economy. The idea of extending unemployment benefits has also been raised. Last year, Congress was considering an increase of 13 weeks of benefits to all states, and an additional 13 weeks to states with an unemployment rate above 6%. An extension would give citizens a longer period of time to search for a new job before dropping off to no income, and would give some people the opportunity to keep their homes or other assets. When their is no income for unemployed families, it is very difficult for them to get back on their feet.
Sources:
Loan calculator: http://www.bankrate.com/brm/popcalc2.asap
Paycheck calculator: http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp
New York State AFL-CIO: http://www.unionvoice.org/campaign/iubenefits
Extending Unemployment Benefits Would Help Economy: http://www.house.gov/apps/list/hearing/mi12_levin/morenews/IN06102008.shtml
Random Economics (Take two)
16 years ago
1 comment:
This piece is well researched and the calculations assist in realistically evaluating the situation. Unemployment benefits are crucial in this environment to support the family. Additional benefits in food stamps and other support from family, church, and government can be of assistance as well.
The current recession and high unemployment have increased dramatically the number of families finding themselves in situations as described here. The couple in question will have great difficulty finding employment under the best of circumstances and these are far worse than those. It might be worthwile for this family to find alternative living arrangements and keeping phone and internet access in order to find jobs. Perhaps one of their parents could take them in providing shelter, food, and babysitting during job interviews and those first weeks of work when paychecks might not yet be coming in sufficient to support their current living arrangements.
If neither has parents who can be helpful do to location, death, or infirmity - then the couple might investigate sharing living arrangements with friends in a similar situation. Sharing this way however can oput a strain on any friendship and rules should be in place beforehand and opportunities to work out problems established.
Any money saving option must be weighed not only in its short term effect on the budget, but also in its long term effect on careers and the relationship. Money problems are one of the highest percentage reasons for relationship disintegration.
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