George Kamel - Can You REALLY Live On $25/hour?

Episode Date: April 14, 2023

How much does it cost to actually live? According to one influencer, if you make less than $25/hour you should be terrified. Start Your EveryDollar Budget Now! Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

What's up, guys, George Camel here, and today I want to talk about a TikTok that went viral. Not dinky. I'm talking about this TikTok. If you're making less than $25 an hour right now, you should be terrified. I just spent some time looking at some monthly averages of regular costs of living all across the U.S. average costs. So these are just normal expenses that most single consumers have, and this is all of them laid out national average rate here. But add all that up, you're looking at $3.285 a month just in your cost of living expenses. which means to break even and just squeeze by paycheck to paycheck, you have to be making 3285 every four weeks.

So this is calculated at your monthly income at a 40-hour work week, so it's your hourly rate times 160 hours for four weeks in a month. So you got your gross income, you got your net income after you pay this tax, which would go in this column, I didn't fill it all in. The first time you see a number higher than this number is at $25 an hour. My friend Ken Coleman and I reacted to this video on the Ramsey show and it blew up, almost 300,000 views, almost 2,000 comments, and one of the top comments was from Lady Luck.

I would love for these two to do a real-life mock-up. Do the hard numbers and tell us what's needed. So here we go. Basically, the self-proclaimed business strategist is claiming that right now the cost of living is way too high compared to people's wages. Meaning, according to him, if you're living in the US, you make less than 25 bucks an hour,

which is about 50,000 a year, you should be terrified. So is he right? Well, let's look at the stats. Studies show that right now almost 65% of Americans are living paycheck to paycheck. And one in three Americans said they're either struggling or in crisis with their personal finances. Which is a little suspicious because one in three Americans also have some kind of criminal record, and one in three Americans are trying to avoid gluten. Coincidence? I think not.

Coincidence? I think not! And look at these numbers from the U.S. Bureau of Labor and Statistics. Or as we call it in the biz, is... Usbles. Uz-z-bulls. Here's what's wild. The average single-person household

spends over $40,000 a year. Well, the problem is their after-tax income only comes out to about $39,000 a year. Maybe you shouldn't be spending all that money on gluten. This means they're in the whole

at least $1,000 every year. But even in light of all of this, can we really claim that people making $25 bucks an hour should be terrified? While I have my opinions, which are generally right, I wanted to see what other people

think it takes to survive in today's world. So I decided to take this question to the streets of Nashville to see what everyday people think. So here's the big question. Should you be terrified if you make less than $50,000 a year? No, I make less than $50,000 a year. You don't seem terrified. You seem happy. Yeah, I'm great. I don't think you should be terrified. What should you be? Is it enough to live on?

I don't know. I'm from New York and $50,000 is nothing. So if you live in New York, you're screwed if you make less than 50. Yeah. How high inflation has come in every state, there's There's no way that can be livable for the average person. Should you be terrified if you make less than $50,000 a year in today's world? I would say absolutely. I make $7.25 an hour. There's things that I want to experience that I don't really get the chance because, you know, that's not going to give me a lot.

I think it is doable if you have roommates. Ah, so there's a sacrifice there. Should you be terrified? Oh, my gosh. Thank you, guys. There he is. I'm terrified. I think it depends on where you live and whether you have the ability to move upward financially.

I think if that's going to be your level, then you're probably going to have difficult time. I mean, look at the cost of homes. Look at the cost of living in general. I mean, look at just the cost of eggs. There's no way you could even afford to have a decent breakfast on $50,000 a year. I make less than $50,000 a year, and I'm not terrified. You don't seem terrified at all. Do you think you should be terrified if you make less than 50?

Heck no. I grew up on much less than that. Wow. Much less. I'm like slowly considering, like, getting a sugar day. Oh, my goodness. This is going to solve your problems. I think so.

So there you go. It's all over the place. So we've looked at what the stats say and heard what the people think, but the reality is a good portion of the population is making less than $25 an hour, meaning they've got to figure out how to make it work terrified or not. So let's say Ryan's budget is completely accurate. Well, I'm going to tell you exactly what I would do if I was coaching this person using my favorite budgeting app every dollar because I hate Excel with a burning undying passion.

Now, Ryan's right about one thing. If this is what your numbers look like, this is a bad situation, and you are living paycheck to paycheck and broke. So here's what I would do to fix this. Number one, we're going to get a roommate because that will take our biggest expense down to half. So it's going to go from 1659 down to $830. And you'll see we go from $74 left in our budget

to $900 of margin left in our budget. That's a good sign. We're going to be way more intentional. We're going to meal prep. We're going to shop what's on sale. We're going to take our groceries way down instead of $500, we're going to cut that down to $350. We're shopping at Aldi.

We're on a budget. We're doing this thing the right way. Next, remember, we're splitting utilities now because we have a roommate. So all of our utilities just got cut in half. So internet goes down to $22. Our electricity goes down to $59. Our streaming services, we can take way down to $18. Our trash goes down to $12.

and our water goes down to $22. Look at that. We now have almost $1,200 in margin just by getting a roommate. It's incredible. All right, what else can we cut here? Well, he's paying a whole lot for that cell phone at $130 a month.

There's so many great options these days. So we're going to switch him over to a more budget-friendly carrier, let's say like Mint Mobile. We've all seen the Super Bowl commercial. We love Ryan Reynolds. I love Ryan more than his dumb brother, Terry. We're going to cut, please, perfect move.

We're going to cut that thing down. to, let's say, 40 bucks. All right, he's got to have gas. We're not going to touch that. And, of course, he's got his car payment, which, by the way, is killing his budget. What if we paid off that car? What if we attacked it with a vengeance,

with some side jobs, with this extra money we now have, and got rid of that payment? Well, that's going to add back $400 in our budget every single month. We're going to take that down to zero once it's paid off. Look at that.

We have almost $1,700 in margin, which is up from $74 in margins. Do you see how making some simple sacrifices can change the game when it comes to your money? Now look, I didn't do all of this to say, yeah, it's super easy to make life work on 25 bucks an hour. It's going to be hard. But it's not impossible, especially if you're single. The catch is you can't be normal. You're going to have to spend less than you make.

You're going to have to be super intentional. You're going to have to be doing a written budget every single month. That means avoiding and eliminating debt so those payments don't eat up your income. Even though I know, when you're broke, debt is as hard to resist those crabby patties. Which, we all know, go right to your thighs. It'll go right to your thighs! There's a crappy paddy clip in there that talks about that. Just for reference, and no one's confused.

So understanding that this is just for a short season, the good life is going to look a little bit different for you than the good life for Chad from college on Instagram. And you've got to examine the things you assume you're entitled to, like you're right to the newest and greatest iPhone, living in the heart of Manhattan, and yes, even Paramount Plus. Now, I remember feeling this way.

I didn't make $50,000 and I was broke and I had student loan debt, I had credit card debt, and I felt the same way. Now, I'll say, if you've got a family or multiple people relying on $50,000 a year, it's a different story. That's really tough, especially when you add in things like childcare and all the activities, and we all know kids cost a whole bunch of money. So you may not be making enough, and it might be time to look for jobs that offer higher pay or get a side job temporarily until you're on some solid ground. You also might need to move to an area with lower cost of living, or maybe downsize in house. To Chicago? No, Sheboygan. Very big in Sheboygan.

They loved it, you know. I'm sorry, did you say you could help me? And until you can get your cost of living in a better balance with your income, it's a good idea to figure out a side hustle to keep your head above water. So the truth is, there's no magic salary out there. In fact, 50% of people who are making six figures are still living paycheck to paycheck. I know that's frustrating. You're going, well, if I made that much money, that wouldn't be me. But the problem is, lifestyle creep is real.

People all over the spectrum are broke. So what this tells me is that this is mainly a behavior problem, not a math problem. You can't change inflation. You can't count on the government to bail you out or fix your life. The only thing you can really control is you. So you've got to make what you have enough to live while working towards more. And without putting yourself in a dangerous financial position. So should making $25 an hour terrify you?

Well, maybe you should be terrified if you don't have a plan and you have growing debt. Or if Dinky the Chipmunk starts to choke on peanut shrapnel and you don't know the heimlich for rodents. Then yes, you should be terrified in that case. But when you commit to taking control of your money and go fund yourself instead of waiting for someone else to do it, you might have to work hard, but I can promise you, you're going to live. You're going to be fine.

And if you want to learn more about how to get above this broken system and make the most of your money, be sure to subscribe to this channel, hit the like button so you get more content like this. And if you're willing to share, let us know how much you make in the comments and let us know if it's enough for you to live. Thanks for watching. We'll see you next time.