What is the US Poverty Line & Could YOU Live Below it?
I keep a close watch on all of my expenses and take a bit of pride in how low I’ve been able to drive them.
Our (wife and I) average expenses over the last few months has been around $1,770 ($21,240 per year).
If I deduct my effective property taxes from my expenses and subtract the cash back credit card rewards I am getting (often 5%), the average drops to $1,630 per month, or $19,560 per year. This is consistent with my annual average over the last few years.
Getting down to this level made me curious as to whether my expenses were actually below the 2014 U.S. income poverty guidelines.
Why? Well, I have no intention of applying for any of the federal benefits one is eligible for when their income is below (or even at exceeding multiples of) the poverty line, such as the National School Lunch Program, Food Stamps, Home Energy Assistance Program, etc.
Rather, I wanted to see how close I was. What does the U.S. government view as “poor” (or at least poor enough to be eligible for federal assistance). Am I living below that level? Could I live below that level?
When I polled readers a while back on whether they thought saving money or making money was more satisfying, the result was a 45% – 55% split – 91 votes for saving money, 109 votes for making money. I tend to side more with the saving money folks because I get a thrill out of saving money and being self reliant that making money just doesn’t match. It’s a bit of a game to me.
So what is the poverty line? Let’s start there…
The 2014 U.S. Poverty Line
The numbers adjust every year, but you can see the below chart below for 2014 U.S. poverty guidelines, for the 48 contiguous states (Alaska and Hawaii carry higher levels).
As you can see, the level changes with the number of household members. For a family of two, the poverty line is set at a household income of $15,130 per year.
As of the last Census in 2010, 15.1% of the U.S. lives in poverty.
Are Our Expenses Below the Poverty Line?
At $19,560 annually, we’re not quite there, but we’re close. Could we get there? Yes.
We’d have to cut about $4,050 annually, or $337.50 monthly out of our expenses.
As it is, I feel like our lifestyle is far above the poverty line. We cook up great organic vegetarian meals, enjoy an occasional bottle of wine or homebrew, have a nice home in a desirable community, 3 pets, cell phones, internet, bikes, clothing, TV, computers, car, backpacking gear, and even take nice cheap vacations. In our view, we are not living deprived. And we certainly don’t feel impoverished in any way.
The sacrifices it would take to cut $370 per month out of our expenses would not be too painful. It would probably come from a mix of cutting some entertainment, changing our diet slightly to accommodate a shift to more bulk food purchases, reducing our HVAC energy consumption, re-evaluating our insurance levels, and appealing my property taxes with city hall. These are all things that are on my to-do list.
The bottom line is that there are plenty of opportunities to drive your expenses lower without sacrificing quality of life. When you do that, you become more immune to economic factors that are out of your control. And you might even have a little fun in the process.
Could you Live Below Poverty Level?
Regardless of your income levels,
- Are your annual expenses below the poverty line? If so, do you feel poor or deprived?
- If your expenses are above the poverty line, could you get there with effort? How would you do it?