$500 an month can be tough for 3 people.
I feed a family of 4, including an 18 month old and an 8 year old, very well for under $500 a month. I am not trying to get into the absurdities of living off of ramen for a year or anything but $125 a week for food is more than adequate if you are preparing the food yourself. Its the "convenient" foods that can skyrocket the costs. That and my family goes through some friggen milk. I think it would almost be cheaper to buy a damn cow but I doubt my neighbors would appreciate that much.
The rest of this debate is foolish. Could you survive off of a little more than a buck a day? Sure you "could" for a while but its not beneficial to anyone to do so unless you have no other choice. A person could "survive" off of drinking warm piss in the desert for a while if you had to but I wouldn't advocate anyone trying it.