Are Your Housing and Car Costs Out of Control? See How These Expenses Can Ruin Your Budget Skip to main content

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Are Your Housing and Car Costs Out of Control? See How These Expenses Can Ruin Your Budget


House and car

Are your house and car expenses way too much?

Image source: Flickr User William Creswell

The Bureau of Labor Statistics (BLS) is a great organization that is always busy gathering data about how much money we all earn and how we save and spend it. Today we'll take a look at two of the most important pieces of that data – how much we spend on housing and transportation and how much heavier these costs weigh on those that are earning less. In fact, even though those that earn more can afford to indulge, the percentage of income remains about the same for middle to high income earners for most categories except for these two. Let's take a look.

Lowest income earners spend more than they earn

For those that earn $5,000-$10,000, the BLS says 100% of earnings are spent on housing, 40% on transportation and 35% on food. That adds up to 175% of earnings. This means that consumers may be using government assistance, borrowing or racking up credit card debt to pay for these necessities. This is not good and doesn't leave room for other quality of life spending like clothing, entertainment, health care, insurance or savings.

Those that earn $10,000-$15,000 are only slightly better off, spending roughly 60% on housing, 25% on transportation and another 25% on good totaling more than 110% of pay. That earning $15-$20k are shelling out 55% to keep a roof over their head and roughly the same for transportation and food as those in the next lowest tax bracket. In the $20-$30k range, housing drops to a little less than 40%, transportation to around 20% and food to about 15%. These are all disproportionately high. And what we're spending is just part of the bad news for low income earners.

Lower and middle income earners also aren't able to save

It's pretty obvious by the fact that those that earn the least are spending more than they earn on just the basic necessities, but those in this bracket are unable to save. But it's more than just the lower income bracket that are not saving. According to the BLS, 40% of us aren't saving because we are spending more than we earn.

You may think you're saving if you're putting money into a savings or retirement account each paycheck, but if your credit car balances outweigh those accounts, you're not really saving, you're debt spending and it will eventually catch up with you. This 40% extends will beyond low income earners and into the middle class and even higher income earners. We've written before about how even very high earners can over-extend themselves and set up a lifestyle beyond their means that has them living paycheck to paycheck just like lower income earners.

How you can become more than another debt statistic

Don't let these BLS statistics get you down even if they reflect your current living situation. While this may be what you're dealing with now, it doesn't have to be your future. It can be hard to get your spending under control when your debt is out of control. If your debts are truly far more than you can afford or will ever be able to afford on your income and a great many of them are unsecured debts like medical bills, credit cards and taxes that were filed on time but that you can't pay, Chapter 7 bankruptcy may be a good solution to get you a clean slate so that you can get a financial fresh start and break out of the spending habits that are crushing you.

Contact the law offices of John T Orcutt for a free consultation about filing bankruptcy in North Carolina to get the debt relief you deserve.

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