Summertime, and the living is…darned scary! With no real steady pay flowing from the community college into the money bin, I get nervous, even when I know very well that the vast emergency fund sitting in the credit union will cover a full year’s worth of expenses. To start with, I don’t want to use the emergency fund for day-to-day expenses, and to end with, I’d really like to stay within the $5,739 budget (Social Security + Fidelity drawdown + leftover money from the low-cost winter months) I figure will cover me during the long, hungry summer. To do that, I see I’m going to have to revise my budget…mightily downward.
There’s not a thing I can do about the $1,240/month nondiscretionary budget: the utility bills aren’t going away, and they can’t go unpaid. And while during the winter costs came in way under that budget because utilities were low, this summer they probably will bust the budget. The highest bills will hit in August, when payment for July water and electric use comes due; I expect those costs to exceed the $125 and $225 I’ve budgeted for them, respectively. Last August I had a $257 power bill, and the utility company is socking us with an 8%+ increase this year.
The only part of the budget with any give at all is for nondiscretionary spending: food, household expenses, clothing, vet bills, dental bills, gasoline, yard and house repairs, and everything else.
After I was laid off, I cut that budget from $1,500 to $800 a month. So far, so good: since Canning Day, I’ve managed to stay on track every month but May, when I had to pay for the glasses and the clothing extravaganza.
Now the plan is to cut discretionary spending from $800 to $500.
Fifty-seven hundred and thirty-nine dollars—the amount I have to see me through the summer—amounts to $1,830 a month when prorated over the whole summer. But $1,240 nondiscretionary costs plus $800 discretionary spending come to a total $2,040 in monthly spending: a $210/month shortfall.
So, I figure if I can cut $300 a month from the discretionary budget, there should be enough to get by until teaching income returns. Even if I don’t reach that goal—which I probably won’t, because it’s pretty extreme and because every time you’re short of money every damn thing in sight breaks and the dog gets sick—if I can come close, I’ll make it through the summer without eating very far into the emergency fund.
Wow! A $300-a-month budget cut! How do I plan to accomplish this?
• Cut back on food. The beans are already soaking in the slow cooker’s crock pot. I have some beef in the freezer, a fair amount of frozen fish and shellfish, a lifetime supply of pasta, a giant container of rice, and a stack of canned salmon in the pantry. I will need to buy some fresh produce and dairy, but otherwise I mostly can get by for a month or two by eating what’s on the shelves and in the freezer.
• Conserve gasoline. I’m trying not to use the car except on the once-weekly day I have to schlep to the campus to for a course preparation meeting. On that day, I’ll do grocery shopping and any other errands that are along the homeward trail.
• Buy nothing other than food unless it absolutely can’t be avoided. No clothes, no booze, no gardening stuff, no meals out, no electronic doodads, no movies, no nothin’.
• Find free ways to entertain myself. This includes hikes, long doggy walks, swimming, TV (broadcast, o’course) and freebie video downloads, and socializing with friends.
{sigh}It’ll be a challenge. That’s about the best I can say for it.
Brip Blap has an interesting post today, “Job Junkie.” It’s quite nuanced—a lot is going on in it. Overall, he’s talking about working so steadily and so faithfully that you become “addicted” to work. And he’s got something there. I once had a boss who told me how it felt when he was laid off a previous job. He said, “If you don’t have a job, you’re nothing.”
Job junkie.
One thing Brip Blap observed in passing, though, caught my attention in a slightly off-topic way:
I offer my services to giant corporations for whom my fee is a footnote to a footnote to a rounding error. They don’t mind flinging some cash in my direction to avoid the hassle of hiring a permanent employee to finish their projects; they don’t have to train me, give me benefits and then file endless mounds of paperwork before they let me go. I can come in, do the work with a minimum of supervision, and leave with no fuss. So I get paid at a premium.
I was chatting recently with another freelance contractor who also feels well paid. But what looks like good pay to the freelancer, I remarked (perhaps unkindly) looks like something altogether different to the employer.
It doesn’t much matter how much an employer pays a freelance contractor, although of course they’d like to get the person to work for a fraction of the hourly rate a full-time employee would earn. Even if the employer pays you the full equivalent of what might be considered a good salary, he (or she…for brevity’s sake, let’s get politically incorrect here) is getting a bargain. He doesn’t have to pay anything for your FICA, he doesn’t have to cover your health insurance, he doesn’t have to chip in for your dental or vision insurance.
Nor does he have to provide you a decent office. If you work on the premises during your contract, a broom closet equipped with a light plug and an Ethernet connection will do. Far to be preferred, of course, is the opportunity to offer you the inestimable privilege of working remotely: i.e., you pay for your own roof, your own desk and chair, your own lamp, your own heat and air conditioning, your own water, your own computer, your own software, your own DSL, your own pens, your own pencils, your own paper, your own business cards, your own letterhead, your own parking.
It is, in short, such an amazing bargain that “a footnote to a footnote to a rounding error” hardly does it justice.
Consider, for example, what would happen if the Great Desert University decided to call me out of Bumhood and put me back to work on a freelance basis, offering to pay my previous gross salary. What would the university not have to pay?
• $600 a month* for health insurance, the full tab charged by Cigna for a policy that used to cost me just $36 a month. Total savings for a one-year contract: $7,200 • $36 a month for dental insurance; $432/year • 7.65 percent of my pay, for the employer’s half of FICA and OASDI: $4,972.50 for the year • Employer’s match for my 403(b) contribution: $4,550 • 1 Dell computer, bells and whistles attached: $1,000, approx. • Acrobat Professional: $450 • InDesign CS5 Premium: $450 • MS Office: $150 • Steelcase office chair: $200 • Steelcase desk: $1,335 • Phone connection: unknown • Ethernet connection: unknown • Office space, air conditioning & heat, water: unknown
Before we even calculate the College of Liberal Arts and Sciences’ share of the phone, Ethernet, air conditioning, and water service, we see the university saves $20,739 on the first year of my services if it hires me on a freelance basis to work out of my home. That’s $20,739 worth of costs that the university passes to me. Before I’ve paid my income taxes.
Subtract 25% for federal taxes and 3% for state taxes; divide by 12 and you come up with a monthly net of $2656—about $400 a month less than I was taking home as a salaried employee. And that’s before I’ve paid the air conditioning, DSL, and phone service for my home office.
So, hiring you to do your job as an independent contractor works out to be a bargain for an employer. For you…not so much. Your gain out of the deal is that you don’t have to commute to work every day.
How do outsourcing employers get away with this? Beats me… But I have one theory: freelance writers and editors (and to a lesser extent, other creative talent) tend to look at their income figures through rose-colored reading glasses. In my experience with freelancers—of which I had a-plenty during my incarnation as a magazine editor—freelance writers and photographers often perceive that their income amounts to more than it really does.
I’ve lost track of the number of people who’ve proudly told me they earned umpty-umpteen tens of thousands of bucks in a given year—usually some munificent figure like 20 grand. But what you gross is not really what you earn. The figure that matters is the amount you have to live on. When someone crows about earning an amazing $20,000 or $25,000, they haven’t subtracted the many costs of doing business, nor are they connecting the cost of health insurance with their wage, in the way that a salaried earner thinks of healthcare premiums. The money that stays in the freelancer’s pocket, the amount available to pay for groceries and the roof, is much, much less than what she or he grosses—specifically because of the much higher costs of taxes and insurance.
While some people undoubtedly do make a decent income (at least now and again) at freelance contracting, the average Author’s Guild member earns less than $25,000. That figure is high, because Author’s Guild membership comprises well-paid television and movie writers and best-selling book authors, along with all the wretches with a laptop on the kitchen table. Another commonly cited figure is $10,000 a year: a number that hasn’t changed in three or four decades. Digital skills don’t help: Darren Rouse at Problogger did a 2007 survey that showed 26% of 857 bloggers earned under $10 that year. Nine percent earned $15,000 or more; 1% earned $10,000 to $14,999; all the rest earned less than $10,000.
Most people who get by as independent contractors in creative fields manage it because they have a spouse or partner who brings home a living wage. If you want to try to make it on your own, you need some demonstrable skills plus a good track record of employment in newspaper, magazine, or book publishing—preferably with a few major awards to show. And even then, you’ll have to make a lot of trade-offs, particularly in the lifestyle department.
Pay is low and workdays are long. Yesterday, for example, I started at 2:00 a.m. At 5:00 I stopped long enough to feed the dog and bolt down a small breakfast; then it was back to the keyboard. Forgot to eat lunch. Paused again for cheese and crackers around 5:00 p.m. Then worked through until 10:00 p.m.
One of my editors, who made a living in Long Island as a music critic for many years, once remarked that freelance writing is great because it lets you schedule your own work hours: any 18 hours of the day you choose.
He knew whereof he spoke.
* Figures from Great Desert University’s 2009 benefits handout
Yesterday while I was laboring through a client’s large project, in comes an e-mail from the dean of academic affairs at the college where I’m teaching adjunct for handsful of pennies and no benefits. She reminds me that I’m supposed to make an appointment for web development coaching with one of their online curriculum staff to discuss the feature writing course I’m supposed to teach online in the second eight weeks of fall semester (done that—great experience! This place has the most incredible staff!). In the boilerplate list she’s sent is a mention that I’m supposed to be paid for the course during the development phase, half upfront and half when development is done.
Huh?
Well, being a veteran of GDU, I figure that means they’re not going to pay the usual $2,400 for the three-credit course. This looks a great deal to me like a reason to cut the pay for teaching online: if you don’t have to show up in the classroom, why should you be paid the $50 an hour one gets for entertaining students on the campus?
I need that $2,400. This fall I’ll only be teaching two sections, and the full pay for both will not be enough for me to get by on comfortably. Any less, and I’ll be in deep trouble.
The main reason I dropped back from three to two sections next fall was that teaching six sections this year plus freelancing and blogging will put me over the Social Security earnings limit. The way I understand what two Social Security factotums have said is that to extract the 50% tax on income that exceeds the limit, the government withholds an entire SS check. From that, the amount they figure you owe is extracted. You get the rest back…but not until the following January!
Well, I can’t do without a Social Security check for a month, much less for several months. That’s a pretty stiff penalty for daring to earn a living.
However, what I’ll earn from teaching two sections will barely keep beans on the table. There’ll be no more frolics at J. Jill for the rest of the year…or even at Goodwill. And one unplanned expense, even a minor one, will dig into the emergency fund.
So, it’s going to be a difficult balancing act. I can’t do without full pay for one of the two three-credit courses I’m slated to teach. This news from the dean promised to knock me off the highwire.
Forthwith, I e-mailed to inquire: Soooo… How much less are they going to pay for the course?
They’re not going to pay less at all. What she was saying is that the community college district pays adjunct faculty for their time time to develop a course! And they pay the entire amount of the contract stipend for teaching the course—not instead of but on top of the pay for teaching. In other words, I will earn twice as much for teaching the online course as I would have for teaching an ordinary face-to-face course.
Holy mackerel! When we say “money happens,” we’re not kidding. This summer, instead of having no income except Social Security, I’ll have enough extra to carry me through the months when utility bills hover in the stratosphere. It’s far from what I’ve been earning teaching three sections, but it’s just about the amount extra that I figured I’d need to get through the summer without diving into the emergency fund.
And averaged out over the whole year, it in fact does provide annual pay equivalent to teaching six sections.
You realize how unheard-of this is. GDU would never in a million years pay anyone, especially not adjunct faculty, a stipend for “developing” a course. That’s course prep—it’s part of the job. It’s why I try to get each semester’s prep done before the previous semester ends. When I built the West campus’s first online course in “writing for the professions” (read: “freshman comp for juniors and seniors”), I spent the entire summer working for no pay. Three months of eight-hour days for zero dollah. And zero appreciation, too. Not so much as a f***-you-very-much. That was one of many events and conditions that led to my deep disaffection for My Beloved Former Employer.
I’d figured to spend two weeks slapping the course together and then table it. In fact, since the course doesn’t start until October—it’s an eight-week session—I planned to put off working on it until the fall and use this summer for building FaM and writing a book. This development changes that: if the district is really going to pay me (!) to prepare this course, I suppose I’m going to have to do a decent job of it. That means (gasp) actually work.
Of course, it also means I’m going to crash through the earnings limitation.
Upon reflection, I wonder why I’m worrying about that.Who cares if Social Security withholds a munificent $900? Over $16,000 is sitting in my emergency fund.
On the one hand, I don’t want to diddle away that money on living expenses. The budget is so tight that one good-sized house repair or car repair bill will gouge a hole out of that emergency fund. That stash is there to cover a major emergency that puts me in a position where I can’t work: a car accident, a heart attack, a stroke, cancer…all highly likely at this time and in this place. It is, in effect, a year’s worth of disability insurance.
On the other hand, the emergency fund has grown by almost $2000 since the first of the year, because I’m not spending all my income. I can afford to forego a month’s Social Security “benefit.” (Some of us would call that a “paycheck,” it being a payback of earned wages confiscated over a lifetime in the salt mines.) Most of the money will be returned in January, anyway. Even if it’s not returned, it won’t make much difference.
Money happens. And it’s happening at a good time—when I need it.
People talk about establishingseveral income streams to increase net household income, pay off debt, and build a safety net for hard times. I certainly have advocated that more than once, because I’ve done it and it’s worked well for me. A small, unsteady income from freelance editing combined with taking on a few courses at the Great Desert University and then at a community college earned enough to pay off the second mortgage on my house, leaving my house free and clear before I was laid off, and helped establish a $14,500 emergency fund, which, in a pinch, would cover a year’s worth of living expenses.
So…how did I manage to cobble that much together, when I certainly didn’t net $35,900 ($21,400 went to pay off the loan) in those two semesters of part-time teaching?
Well, you’ve heard ofsnowflaking, whereby we put every little windfall and every extra few pennies toward debt? I think of this as snowmelt into savings streams. For some years before I was laid off, I had several savings streams:
• One was a regular credit-union share savings account, into which I put a base amount of $200 a month. In addition, I also deposited any windfalls in here: the annual American Express card rebate, manufacturers’ rebates, gifts, whatever. In palmier days, come to think of it, I usually put the AMEX rebate into a Roth IRA, but that’s another story.
• Another was a money market savings account, into which I put everything I netted off sidestream jobs—teaching and freelancing—plus any other windfalls that came my way. This was the primary savings for the loan payoff.
• A third was a money market checking account. Each month as paychecks came in I moved $1,500 here, to cover the $1,500 a month I budgeted for credit-card spending. This represented discretionary spending, as opposed to monthly bills that have to be paid come hell or high water. Usually, I spent significantly less than this. Any money that was left over stayed in money market checking.
• A fourth was another share savings account at the credit union. It held a monthly $325 self-escrow to pay annual property taxes, homeowner’s insurance, and auto insurance.
• And a fifth savings stream was a Vanguard Prime Money Market Fund, into which I put 30% of all freelance income—a set-aside to pay income taxes and my tax preparer.
Three of the five monthly “snowmelts” happened as automatic transfers: on the first of the month, $1,500 was moved to money market checking to cover discretionary expenses; on the last, $200 went to monthly savings and $325 went to tax & insurance savings. Instead of “paying myself first,” I kept that $525 in my primary checking account until the last of the month to ensure that no checks would bounce. They never did. But in Quicken I deducted the amount from the bottom line, so I would always know what was left in the account with those savings streams flowing out.
In other words, what I left in checking from each month’s pay was only enough to cover monthly nondiscretionary expenses. Funds for costs over which I had some real, credible control were paid from the credit card budget, which flowed into an account specifically to pay off the card in full each month.
Because the discretionary budget is based on summer expenses, which are about $300 higher than late fall, winter, and early spring costs, over time quite a bit of leftover money quietly accumulated in regular checking, just as it was quietly accumulating in the discretionary spending account (because I rarely used all my discretionary budget).
It’s surprising how much money accrues—and how painlessly it accrues—when you make savings streams a part of your financial life. When I was finally laid off last December, I was pleased to find something over $28,000 lurking in the credit union. That was after the second mortgage was paid.
Admittedly, a credit union or bank account is not the best place to stash 28 grand. I simply hadn’t registered how much had accrued in the various accounts that I wasn’t deliberately using as savings accounts. When you added the serendipitous savings that resulted from living within my means to the deliberate savings, it came to quite a lot. I moved $14,000 to investments and kept $14,500 as this year’s “cushion,” knowing that with Social Security’s stringent earned-income limit, 2010 would be tight.
Although 2010 is tight, I still haven’t lost the savings-stream habit. In semiretirement, I no longer feel the need to save as much—largely because I no longer live in fear of layoffs. And restructuring The Copyeditor’s Desk from a sole proprietorship to an S-corporation changed its tax structure, so I don’t have to set aside a chunk of dough to cover taxes on freelance enterprises.
• I’m now keeping all budgeted spending money—discretionary as well as nondiscretionary—in my primary checking account. Because I’ve undershot both budgets all winter…uhm, well…ahem…until the great Shopping Spree Episode…about $2,100 extra has accrued in there. So it’s a de facto savings account, although I expect to spend that money over the summer, when teaching income dries up.
• Regular monthly savings still gets its $200/month deposit, plus all other small windfalls. As a matter of fact, this is where the $700 to cover the clothing frenzy will come from. With over 14 grand sitting in checking as a gigantic emergency fund, the regular monthly savings account, which I used to regard as “emergency” savings, is now a diddle-it-away fund.
• Another $325 still goes into the self-escrow account each month. Taxes and insurance being unavoidable, that one’s not an option. Starting this month, I’ll add another $90/month to that, to cover the annual cost of Medigap insurance.
• The corporate account now collects all freelance and blogging income. With an S-corporation, you pay yourself a salary, which can be fairly modest as long as it recompenses you reasonably for the work you do as the corporation’s director (which ain’t much). The money that remains in the corporation can be used to cover your incorporated enterprise’s operating expenses (such as computer equipment, office supplies, server space). Money that you draw out after you’ve been paid your salary is treated as dividend income. To date, I haven’t needed any of that money to live on. So, the corporate account also functions as a de facto savings account.
Even though I’m now unemployed (or, we might say, “underemployed”…in a big way), with a total gross income of about 58% of what I earned at the Great Desert University, money is still flowing through four income streams (teaching, Social Security, a small pension drawdown, and the incorporated freelance enterprise) into three formal savings streams (tax & insurance, regular monthly savings, and the corporate account) plus an informal savings stream in the form of unspent cash in regular checking.
Savings streams ensure that there’ll always be enough to cover those ugly recurring tax and insurance bills, plus something to pay for the occasional indulgence. Consequently, my lifestyle has really not changed much, despite the 42 percent cut in income. Thanks to a few small income streams and savings streams.
So I’m sitting in my counting-house entering Friday’s paycheck in an Excel account, when suddenly—ever so belatedly—it registers with me:
One of these diddly little semimonthly community college paychecks is almost as much as my entire month’s nondiscretionary budget.
Yeah. I could cover all of the monthly recurring can’t-get-out-of-it bills with a single net paycheck. Not only that, but my discretionary budget—all other costs except those that are required to keep the power and water running and creditors away from the doorstep—is about the same. Which is to say that when I’m teaching three sections, my measly community college pay alone would cover all my regular costs.
Naaaahhhh….couldn’t be! Out comes the calculator: tap tap tap tap…
Sure could be: the net pay from two paychecks comes to $35 short of my total month’s budgeted expenses. That means that Social Security—almost a thousand bucks!—is mostly gravy.
How did this come about? Three months ago I figured I would be living out of a grocery cart under the Seventh Avenue underpass. How could I have so radically misestimated my cost-to-income ratio?
Well, in the first place, when I started at the community college, I had no way of knowing for sure what my net pay would be. Tax rules are a total mystery to me. Extrapolated from what I’d earned in the fall from two courses, my guess at the net for three sections was significantly less than the actual amount.
Then there’s COBRA. From what I can tell, there’s no way to know what that will cost in any given month, at least here in the State of Arizona, where the Beast has effectively been killed. Since last January, I’ve had four bills for COBRA, no two of which have been the same. COBRA is the largest single item in the expenses list, and it’s impossible to predict. When you don’t know what the bill is going to be, all you can do is budget for the highest amount you can imagine and pray for the best.
And there’s Social Security, whose rules are almost as bizarre as the IRS’s. When you “start” SS in January, you don’t get your first check until February. No, you can’t “start” it in December so you’ll have an income during your first month of unemployment; try that and they’ll count your soon-to-be defunct 2009 salary against you and take the SS money away from you for having committed the crime of earning too much. Because I was forced to take Social Security a year early, thanks to GDU’s layoff activities, in 2010 I come under the government’s earning limitation: every penny more than $14,160 is taxed at a 50% rate—to extract the amount owed, the government withholds an entire month’s SS check, the unused remainder of which you will see (if you’re lucky) the following January.
Well, 14 grand is well under the poverty level. The gross for the two—$14,000 for the part-time teaching and $15,000 for the “unearned” Social Security—also comes to a figure that IMHO qualifies as “poverty.” Because my investment advisor wanted me to forestall taking a drawdown from savings for a year in hopes that during 2010 my investments would recover from the rape of the economic crash, that left me trying to live on 44 percent of my former pay. Significantly less than that—more like 34 percent—if you counted last year’s freelance income and noonlighting income.
So I started out feeling mighty poor. And not knowing what the 2010 take-home from the various sources of cobbled-together income would amount to, it wasn’t evident in January that enough would come in to cover $1,600 worth of expenses. Nor, since in the old regime the discretionary budget was $1,500 a month, was it evident that I could actually buy groceries and live comfortably on about half that.
What to do with these new-found riches?
Before we make an appointment with the style adviser Neiman-Marcus, let’s consider that the freelance teaching income stops in May, just as utility bills climb toward the stratosphere. It doesn’t restart until the end of August. If the only revenue that arrives during the summer is net Social security, each of the three summer months will see a $475 shortfall. So, I’ll need $475 x 3, or $1,425, stashed in savings to see me through the summer.
But that’s only a month and a half of thousand-dollar surpluses. [ahem.] But what we have here is three months of thousand-dollar surpluses. Come summer of 2011, we’ll have nine months of thousand-dollar surpluses.
Gosh.
One way or another, even in 2010, the Year of Penury, I’m looking at about $1,500 that could be saved or spent. Just during the spring semester.
My inclination? Spend. Well, at least spend part of it.
Every time I think of myself sliding into my dotage on the cusp of poverty, I think of My Bartleby, the eccentric woman of my own age I stupidly hired as a secretary. It was hard for me to go in for the kill with Bartleby, because I empathized too much with her. Crazy old ladies have a lot in common. So I think “there but for the grace of God” and contemplate ways to avoid going down her path.
To wit:
• I would like not to live so cheap that my hair looks scruffy and I go around in scroungey-looking second-hand clothes that are out of date, saggy, and baggy.
• I would like not to get so far behind the times that there’s no hope of catch-up, simply because I refuse to update my hardware and software, refuse to plug in to pop culture, pay no attention to what’s going on around me, especially if paying attention costs more than about a buck and a half.
• I would like not to let minor health issues go until they become middling- to major health issues because I’m too cheap to cough up the copay to see a doctor.
• I would like not to be so afraid of spending a few bucks here and there that I bring personal growth (and life) to an end.
So. First off, the hair: last time I went to the $30 hairdresser, he gave me a tuft sticking out of the back of my head and a half-spiked “cap” on top of too-short sides and back, which can be made presentable only by dint of 20 minutes worth of primping in front of a mirror with a hair dryer. Every. single. time I walk into that guy’s salon, I tell him I hate bangs falling down in my face. Every. single. time I walk out, I walk out with bangs falling down in my face.
The $75 hair stylist knew how to cut short hair without bangs, and he knew how to make a style that could be fingered into curls and waves without benefit of hair dryers and strand-scorching curling irons. Today I’m going to a new stylist, closer in than the old guy, about the same price. By the time I’ve added the tip to her $65 charge, it’ll be right up around $75. But it may be worth it. We shall see.
Next: I have got to get some clothes! Day after tomorrow, when I’ll have a free day, it’s off to B’Gauze and Talbot’s in search of something that will fit. Don’t hold out much hope, but at least the search can begin.
Then: entertainment. Ticket purchased for a concert downtown May 1. Then, it’s off to the Botanical Garden for a membership and tickets to Jazz in the Garden, if they have any left.
Alors, it’s a start, anyway. With any luck the clothing stores will have something on sale.
This is a guest post from Crystal of Budgeting in the Fun Stuff: A Personal Financial Blog about the Next Financial Step. It’s an open fiscal diary and a personal finance blog rolled into one that is looking to get as many people involved as possible.
This article at Yahoo Finance,How to Gauge Your Middle-Class Status, made my inner-financial competitor salivate. It’s chocked full of ways to compare yourself to others. I know that is a bad thing, but I want to spread the naughty.
According to the article, the typical two-parent, two-kid household:
Makes $51,000 to $123,000 with both parents working a total of 3747 hours per year.
Owns a home worth $231,000 that is about 2300 square feet.
Spends about $5100 a year on health insurance and non-covered expenses if their employer provides their insurance.
Spends $12,400 a year on two medium-sized sedans that were bought for $45,000.
Puts $4100 aside for college expenses for two kids (it seems to mean total…that’s a little low if you really want to help, right?)
Spends $3000 on an annual one-week vacation.
Doesn’t save at least 3.2% a year for retirement.
Spends about $14,200 a year on clothes, food, entertainment, and living expenses.
Has a typical head of household that has about 2 years of college under his/her belt.
Wants free time more than they want healthy kids, a strong marriage, or to be wealthy.
Has a net worth of about $84,000.
Spends about 18% a month towards debt.
Okay, so my husband and I seem to be doing very well comparably, but we don’t have two kids to contend with either. Here’s how we fall; we:
Make $78,000 with both of us working about 4000 hours total.
Own a home worth $130,000 that is about 1750 square feet.
Spend about $1500 a year on health insurance and non-covered expenses – my company provides insurance and hubby pays $75 a paycheck.
Spend $7000 a year (including his car payments) on two medium-sized sedans that were bought for $12,000 and $21,000.
Put $0 aside for college expenses (I know, unfair comparison, we suck)
Spend $1500 on an annual one-week vacation.
Save at least 15% a year for retirement.
Spend about $12,000 a year on clothes, food, entertainment, and living expenses.
Have two college graduates and one person in graduate school.
Want health and a strong marriage way more than free time or to be wealthy…although I want it all.
Have a net worth of about $125,000.
Spend about 19% a month towards debt (since we overpay our mortgage).
What do you think of the typical amounts?
Check out these other posts from Budgeting in the Fun Stuff:
