ALICE- A metric used to track financial hardship. Let's not let it define us!

In 2024 United Way in partnership with many government agencies created a tool that can be useful for tracking financial hardship and ultimately financial sustainability for families given their state and regional living areas. It is a way to better classify (for better or worse) and document the financial categories for families based upon known costs for life budget items including housing, utilities, transportation, food, healthcare, taxes and technology. ALICE stands for Asset Limited Income Constrained Employed - families. On the United Way website there is an interactive tool that has been created based upon the research of all US geographic areas and the costs related to those areas that ultimately allows the user to see what wage would be necessary survive financial given that geographic area. Here in Maine the ALICE group makes up 30% of all households (not including the 12% that make up the Federal Poverty Level) group. The ALICE households earn above the FPL, but not enough to afford the basics in the communities where they live. So based upon the statistical analyses- 42% of all households are included in this group. This is quite eye opening. So much that maybe we should all get on a train and head south to find a region where we can all survive financially! But I have my own thoughts on this. That 30% is based upon a family of four (2 adults, a toddler and infant) who bring in $91,536 per year in income. Depending upon how you choose to analyze it but that is somewhere between $6173 and $6670 of take home pay per month. So a family of 4 earning $90k a year is unable to survive financially in Maine based upon the national statistics on cost of living for all the areas outlined above. This blog would be 10 pages long if I dove into all of my thoughts on this but I will address some bullet points. I get the purpose of the tool. However the metrics that it is based upon is not always real and practical for families here in Maine. Firstly, the median family size is 2.26. Not 4. The survival budget specifies costs that do not seem reasonable for some categories - rent / housing being only $726 and food being $1461 for that theoretical family of four with a small child and infant. Not that I am blind or oblivious to the rising cost of living here in Maine and everywhere for that matter. The significant impact inflation on all goods and services- are a concern we all have. But yet I have a still greater concern. For me that concern is the feeling I get reading what sounds like a never ending cascade of fiscal depravity and the dread of never being able to succeed financially. Maybe its me- but If our families making $91k a year are on the brink of financial ruin as the ALICE context seems to have it and the write ups on a daily basis in the paper as to how everyone is struggling and losing out - it all just seems hopeless! It is that hopeless feeling that bothers me to the core. What is missing here is looking at this from a more realistic perspective- and teasing out the real numbers to see how that can lift us from that hopelessness- in which we feel not in control - to a point where we can see and feel progress in the positive direction. Where we actually have control over our budgets and where we can actually produce cashflow margins monthly to do real work- paying down and eliminating debt while building cash reserves and investments for real wealth. Easy? No - not for some families. Mathematically impossible - maybe for some (the 12% possibly) - but for the ALICES's of the world-(30% of our households here in Maine) I know- sound financial knowledge, analysis and behavior changes can and will produce tremendous results. Are there pink elephants in the room of family budgets? Heck yes! Healthcare and daycare for starters. But from my experience accepting defeat and waiting for the next cost of living increase in oil, gas and housing to creep up will not benefit us. Instead challenging ourselves to find creative ways to go from $1461 in groceries to half of that (for this theoretical family) is very do-able. Being disciplined and intentional about how and where we spend our money moves us closer to freedom- and that is my goal with coaching clients. Getting them to a point where financial freedom is within their grasp. My goal is to get clients to create assets that produce value and income and also not have families or couples feel constrained by income but to discover creative ways to make more income if needed so that they are not dependent upon resources external to their own efforts.