The Mcdonalds Millionaire Challenge

[ua_guy]

I find that to be an unrealistic budget, and I'd never prescribe dependence on government subsidized healthcare before Medicare eligibility. A lot of people forget that those things exist as a safety net, and not as a way of life.

As Greenskeeper said...minimum wage is not intended to be a living wage. The difference is, it hasn't kept pace with inflation and other lower wage jobs haven't either.

[herdjohnson]

Is that 1,500 car lasting them 38 years with no repairs? I don't see anything in the budget for car repairs or car replacement.

Also, you're talking about a family of 3 making more than 31k a year if they're each working full time minimum wage jobs. That puts them >150% of the federal poverty level, which means they're not getting Medicaid, so you can throw on another hundred or two a month for insurance on the exchanges, even with subsidies.

But to the point of your post, could a family of three have a million dollars at retirement if they lived in a craphole apartment with a roommate for 40 years, never took vacations or ate out, sat a home staring at the wall (nothing in the budget for TV or Hulu), while never spending time together (remember, they're working alternate shifts to avoid child care)? Sure I guess, if they're "lucky" and never experience an emergency or disability or any type of financial hardship.

I feel like you're proving your friend's point though. Look at the lengths these people would have to go through in order to have any type of security in their retirement age. Nobody working full time should have to live like that just to have the chance to retire one day.

[Bob B.]

Everyone has been debating the pre-retirement budget, but I'd ask - why in the world would this couple need a million bucks to retire? (I know the name of the thread is the McDonald's millionaire challenge, but still...)

If we assume, like to OP, that raises and inflation cancel each other out, the couple, as outlined, should only need a retirement fund that is 25X annual spending, which is $1,228 X 12 X 25 = $368,400.

If this couple spent $2,205 per month, saved $403 per month, realized a retirement fund growth of 4.5%, and worked until they are 62, they could fully fund their needed retirement. Needed retirement fund = $2,205 X 12 X 25 = $661,500. Monthly deposit of $403 @ 4.5% return X 44 years = $668,016.89.

Our couple can divide that $2,205 any way they want, but one way might be -

750 housing
190 utilities
80 auto insurance
160 gasoline
450 food
50 phone
50 internet
200 misc
275 auto maintenance/replacement

I would design our fictional couple such that one works 40 hrs/wk, and brings home $1,956 per month, and the other works 20 hrs/wk and brings home $652 per month. That makes low/no-cost child care more realistic. And, our main bread winner still makes a very modest income.

[Shewillbemine]

Orlando, Florida is going to be very crowded to live in based on this pollyanish budget. Why stop there? Move to Tijuana and pay even less per month.

Sociologically, people who work at minimum wage jobs and continue to work there for their lifetimes lack the drive to improve their own situations. Heck, it's called MINIMUM wage. So while it may theoretically be possible to amass some savings with any job, the quality of life with this plan is below the crapper.

[JulieAlbright]

Say two typical people who didn't decide to go to college and just wants to work at walmart/MCDs for the rest of their lives.

It's certainly possible to find people in lower wage jobs who accumulate large sums of money. Google Ronald Read, an ex-janitor and mechanic from Vermont who died leaving around $6 million to various charities. Those types of stories pop up every so often and they are kind of fun to read and at the same time a little sad too. This gentleman was by most accounts a fairly happy man who wore ratty clothes and had a hobby of investing in the stock market that he kept hidden from most of the people who knew him. But I read one a couple of months ago about a woman who lived a life of what was really untreated mental illness leading to social isolation in a house unfit for habitation. She was worth millions of dollars and could have certainly used that money to be safer, healthier and hopefully happier. That's kind of sad.

However, your entire post gives off this vibe of moral judgement and a value system that really doesn't relate to actual life. A person who doesn't go to college doesn't equate to "just wanting to work at McDonald's minimum wage forever" and conversely, there's an awful lot of underemployed financially broke college graduates out there, many of them floundering under loads of student debt that can barely make the payments on. I think we need to mention that neither Bill Gates or Steve Jobs completed college, the unmotivated schlubs. As far as I know, Mr Gates isn't even taking on a roommate in that house of his to help pay the light bill, other than his wife and kids.

As far as the "spending addiction" charges I think that is a point that can be made against a large swath of income and education levels but there's a debate to made of where you are going to draw the line on what is "spending addiction" and what is reasonable.

But yes, many people, myself included, spend money on non-necessities that could be put into one investment or the other. Sometimes we (myself included) do it with little thought and sometimes we just pitch our budget out the window and have a brief guilt inducing moment of clicking the Amazon Buy Button when we know we shouldn't.

Okay then. So we're not perfect.

[Singuy]

It's certainly possible to find people in lower wage jobs who accumulate large sums of money. Google Ronald Read, an ex-janitor and mechanic from Vermont who died leaving around $6 million to various charities. Those types of stories pop up every so often and they are kind of fun to read and at the same time a little sad too. This gentleman was by most accounts a fairly happy man who wore ratty clothes and had a hobby of investing in the stock market that he kept hidden from most of the people who knew him. But I read one a couple of months ago about a woman who lived a life of what was really untreated mental illness leading to social isolation in a house unfit for habitation. She was worth millions of dollars and could have certainly used that money to be safer, healthier and hopefully happier. That's kind of sad.

However, your entire post gives off this vibe of moral judgement and a value system that really doesn't relate to actual life. A person who doesn't go to college doesn't equate to "just wanting to work at McDonald's minimum wage forever" and conversely, there's an awful lot of underemployed financially broke college graduates out there, many of them floundering under loads of student debt that can barely make the payments on. I think we need to mention that neither Bill Gates or Steve Jobs completed college, the unmotivated schlubs. As far as I know, Mr Gates isn't even taking on a roommate in that house of his to help pay the light bill, other than his wife and kids.

As far as the "spending addiction" charges I think that is a point that can be made against a large swath of income and education levels but there's a debate to made of where you are going to draw the line on what is "spending addiction" and what is reasonable.

But yes, many people, myself included, spend money on non-necessities that could be put into one investment or the other. Sometimes we (myself included) do it with little thought and sometimes we just pitch our budget out the window and have a brief guilt inducing moment of clicking the Amazon Buy Button when we know we shouldn't.

Okay then. So we're not perfect.

You're right, it is sometimes sad to see people who are obsessed with saving money at the expense of cost of living. My point is, cost of living is an opinion and it's subjective. People like my parents would rather save than to spend because of their ENJOYMENT for saving. Some people enjoys saving money, some people (like my wife and I) get a kick from paying off any kind of debt, while others ENJOYs spending their money on everything. In your perspective, that individual lived a sad life, but that individual may have enjoyed living like a monk. I know my parents actually are MORE comfortable (and find more enjoyment) spending $20 on a meal than $200 on a meal, even if the $200 meal is 100x the quality.

For example: Have you ever done something or bought something others thought was worth it but you didn't? Remember how you felt like you got duped and regretted it? Now the "sad" people you mentioned above probably felt that way on everything that costed money..so they rather not spend.


My post is for the largest common denominator. 99% of the people you know can make at least min wage or higher. 99% of the people you know have at least a high school education (it's MCD, you don't even need a highschool education actually). My argument is, 99% of the people you know CAN potentially become millionaires(not that they need to or want to, but the oppoturnity is there!)So you go tell that to the 99%!

My example above is not for the crippled or the drug addicts.

[hamchan]

??

http://orlando.craigslist.org/apa/4951019341.html

3 br apt, 700/month. Get yourself a roommate and you are at 400 territory.

My budget is for people who doesn't live in ultra expensive cities..you don't need to because you work at mcdonalds. I picked Orlando because this is where I live. Orlando FL is not exactly in the middle of nowhere either.

I didn't live in an ultra expensive city. I lived in the boonies. Is that 3 br you found actual walking distance from anything?

[Singuy]

I didn't live in an ultra expensive city. I lived in the boonies. Is that 3 br you found actual walking distance from anything?

Yup, walking distance from a lot of things.

Also lets not forget, you can buy a house for 130k which ends up with a 700 mortgage, then rent out your bedrooms and get your tenants to PAY for your mortgage, essentially FREE rent for you!

So many ways to save money on rent if you get creative....or no way to save money on rent if you cry about it.

[bennkar]

I just saw this and it was scary how so much of it matched my budget. As a single guy, my food is $100 from Aldi's (and good food too), utilities avg $100/mo., gas is about $50/mo. (and I drive 20 miles one way to work), I have the $100 /year tracfone, $38 internet, car insurance is about $75 / mo., clothes for me are less than you listed (I do yard sales, etc... too). You haven't been watching me, have you?

Only problem I have with your numbers is there is no way to pay so little for a place to live here (unless you live in a trailer, and I know there are some people that do that in this area, or share an apartment), as well as the child care. You're right, the splitting of shifts could work for child care, but most minimum wage locations want employees "on demand" which will mess up that idea. And you really need to include expenses such as car repairs, doctor co-pays, etc...

An interesting thought exercise nonetheless, it shows what can be done (and I see some immigrants locally doing most of what you propose), but too many people are on the consumer hamster wheel, and would never consider this. Become a millionaire on minimum wage? I doubt it with just saving money in a bank. If they invest in the stock market shrewdly, then maybe. Of course if they could do that, why are they working minimum wage jobs?

[Singuy]

I just saw this and it was scary how so much of it matched my budget. As a single guy, my food is $100 from Aldi's (and good food too), utilities avg $100/mo., gas is about $50/mo. (and I drive 20 miles one way to work), I have the $100 /year tracfone, $38 internet, car insurance is about $75 / mo., clothes for me are less than you listed (I do yard sales, etc... too). You haven't been watching me, have you?

Only problem I have with your numbers is there is no way to pay so little for a place to live here (unless you live in a trailer, and I know there are some people that do that in this area, or share an apartment), as well as the child care. You're right, the splitting of shifts could work for child care, but most minimum wage locations want employees "on demand" which will mess up that idea. And you really need to include expenses such as car repairs, doctor co-pays, etc...

An interesting thought exercise nonetheless, it shows what can be done (and I see some immigrants locally doing most of what you propose), but too many people are on the consumer hamster wheel, and would never consider this. Become a millionaire on minimum wage? I doubt it with just saving money in a bank. If they invest in the stock market shrewdly, then maybe. Of course if they could do that, why are they working minimum wage jobs?

YOU SEE?! I'm not crazy! My budget is a livable budget..a crappy one but still livable! Happy that you are so frugal and continue to save even with little pay. You'll have your millions soon enough My parents are now millionaires coming from min wage AND not knowing the language all due to saving and smart investing! Because of the opportunity my parents gave me, and the life lesson of being frugal, I will join them next year in the million dollars net worth club at 33 years of age

[herdjohnson]

Yes it's livable, until something happens. A doctors bill, car repair, etc...

Have you seen the deductibles on the copper plan you suggested?

Nobody has suggested it's not "livable", it's just not "realistic".

[hamchan]

Yup, walking distance from a lot of things.

Also lets not forget, you can buy a house for 130k which ends up with a 700 mortgage, then rent out your bedrooms and get your tenants to PAY for your mortgage, essentially FREE rent for you!

So many ways to save money on rent if you get creative....or no way to save money on rent if you cry about it.

All I can say is that I have lived in many cities/towns of various sizes around the US and have never come across rent that low except for the cabin deep in the woods. Not everyone lives in Orlando.

[Singuy]

Yes it's livable, until something happens. A doctors bill, car repair, etc...

Have you seen the deductibles on the copper plan you suggested?

Nobody has suggested it's not "livable", it's just not "realistic".

There are many many ways to make this challenge easy and "realistic".

For example, start when you are 18, live at home and under your parents' health insurance till 27, save up enough for a downpayment of 20% and get some roommates to pay for your mortgage..which at an income of min wage with almost no expenses..will take you 3 years max for a 150k house. After 27, get a better health insurance..you have no rent to worry about so you can use that money toward your health IF you want to. Also not to mention from age 21-27, you paid no rent(due to roommates) so that's a savings of 5k/year x 6 years=30k(pretending that you WOULD of paid 400 dollars/month on rent). 30k is more than enough for you to make house repairs/car repairs etc etc.

[herdjohnson]

There are many many ways to make this challenge easy and "realistic".

For example, start when you are 18, live at home and under your parents' health insurance till 27, save up enough for a downpayment of 20% and get some roommates to pay for your mortgage..which at an income of min wage with almost no expenses..will take you 3 years max for a 150k house. After 27, get a better health insurance..you have no rent to worry about so you can use that money toward your health IF you want to. Also not to mention from age 21-27, you paid no rent(due to roommates) so that's a savings of 5k/year x 6 years=30k(pretending that you WOULD of paid 400 dollars/month on rent). 30k is more than enough for you to make house repairs/car repairs etc etc.

And what if your parents don't have health insurance? Or if you don't have parents? All of your assumptions are that everything always works out for this person. Roommates never move out, cause damage, you never get sick, your car never breaks down (even though you make no assumptions for saving for a new car so this person has this same old beater for 30+ years). Sorry man but that's not the real world. As Forest Gump once said, "sh*t happens". It might work out on paper, but that's not real life.

Not to mention your original "solution" to the challenge was based on government assistance, when your original point was railing against government safety nets.

[Fishindude77]

This is a great thread, and I think you are right .... it is doable.

While many of us wouldn't want to live this way, if push came to shove we absolutely could. You most certainly could walk 3-4 miles to work every day and not own a car. Two or three families could live together and share a house and expenses. You don't need to have children, and if you do have them families could help each other with child care. Vacations, nice clothes, TV's and luxuries aren't even considered.

This is how families dug out of their troubles during and after the great depression. This is also how many current US immigrants live.

Bear in mind that the majority of the world population lives on a whole lot less than what was proposed. Think of the general population of; Mexico, China, South American and African countries. Yeah, that doesn't look too appealing but the fact remains that people are going about their lives every day in these conditions. We've got it pretty good here in the good old USA.