What It Costs To Live In Greene County: Part Two

A short while ago, I embarked on a pretty complex and ambitious project to attempt to answer the question, "What does it really cost the "average" person in Greene County to live?" Never having done payroll, I've had to do a little research, but I think I've gotten it pretty close.
As I said in Part One (http://http://magiccoalcity.blogspot.com/2007/09/recently-i-was-part-of-discussion-where.html), it became apparent rather quickly that there's a lot to think about when defining "average" because it's not as simple as it first seems. It really boils down to the fact that assumptions must be made. So, here goes:
We'll assume the household includes two people, but how the income is split among the two doesn't really matter. It could be that both make $9.98 per hour and work a forty-hour workweek throughout the year, it could be that only one of them brings in $19.98 per hour, or some other combination thereof. The main point is two people live in the household, and the annual household brings in $41,523 -- well, actually, I calculated these hourly salaries of $9.98 each will bring in $41,517, but close enough.
Another assumption will be that there are no children in the household. Yes, I know, it's not likely -- or maybe even "average" -- but kids will complicate this way too much. Their ages alone can greatly sway things; for example, will we be buying diapers or prom dresses? So, let's just argue that they're clearly more expensive and leave it at that. (Some studies have stated it costs more than two hundred thousand dollars to raise the "average" child from cradle through college, so I'll just leave it to those experts to come up with the figures on raising kids.)
We'll also assume that the employer of this "average" couple offers a 401(k) retirement plan and will match 50% of their contributions up to 6% of their pay. This average couple takes advantage of this benefit by contributing 6% of their pay. The employer will also offer health, life, and disability insurance for an assumed rate of $100 per pay period.
Now, back to the calculations:
To start the calculations, the median family income in Greene County in 1999, which was the most current U.S. Census information found, was $41,523. From this, we calculate that if each earns $9.98 per hour, they will earn a combined $41,517 for the year. Like I said before, there's some rounding error here, but it is close enough. Dividing this by the twenty-six two-week pay periods in the year, this amounts to gross combined compensation of $1,596.80 per two-week pay period.
If 6% is contributed to the employees' 401(k) retirement account, a total of $95.81 per pay is removed from this amount before income taxes. Combining this amount with an $8,000 IRA contribution each year (this will be talked about in another part of the series), the retirement deduction for tax purposes should be $10,491.06. On the couple's 2007 tax return, taxable income is further reduced by the standard deduction of $10,700 and personal exemptions of $6,800; therefore, taxable income will be $13,526 for the year. Taxed at the 2007 percentage of 10% for this tax bracket (up to $15,600 per year for those married & filing jointly), total federal income tax should be $1,353 or $52.02 per pay period. The employees' share of Social Security will be 6.2% or $99 per pay. Medicare is 1.45% or $23.15 per pay. Of course, the Governor will want his share, too, which amounts to 3.4% for the State of Indiana or $17.69. The county will get 1.1%, or $5.72, as well.
This leaves $1,203.41 net per pay period, which was calculated as summarized below:
$1,596.80
Gross Pay ($41,517 / 26 pay periods per year)
<95.81>
401(k) Deduction
<52.02>
Federal Income Tax
<17.69>
State Income Tax
<99.00>
Social Security
<23.15>
Medicare
<5.72>
County Tax
<100.00>
Estimated Employer Health, Life, & Disability Insurance
$1,203
Net "Take-Home" Pay (Rounded)
Yearly, of course, this amounts to $31,288.52 "brought home" to spend as needed -- or $2,607.38 per month.
So, now that we've estimated what will be brought home, we'll look at "average" monthly expenses next in Part Three…