Money 6

[jasek78]

I have a question for this group. I was walking the other day, as I do from time to time, and ended up trying to answer this question.

How much money would you have to make annually in order to live comfortably*? (see note below for more info on 'comfortably'.)

In my opinion, you need at least $30,000/year to comfortably eke out an existance in today's society. Remember first that about 15% of that is already gone to our government to save us from the torments of anarchy or monarchy... (i.e. - taxes)

Then you got rent/mortgage, car payment (most of us do), insurance, groceries, and utilities. That takes up the majority of my (and, I'd assume, most people's) income. What is left is for your extra amenities... computer, movies, eating out, investing/savings, etc....


* - "Comfortably" is relative, I'm talking about making enough to be able to pay essential bills (rent/mortgage, car, insurance, food, etc..) and still have enough left over to be able to do things now and then (save money, see a show, eat out, purchase extra amenities.)

 

[jasek78]

...another addendum. I felt I also needed to add this.

You have to also be able to handle those odd 'bad luck' things like traffic/parking tickets (I don't know very many *perfect* drivers), accidents, car problems, etc...

ok, now I'm done.. =^)

I really would like to hear some opinions on this subject. I'm currently in the early stages of my 'Professional Development' and I am up for review very soon. I am trying to work out what I am going to ask for in terms of salary requirements.

jason

 

[goBoating]

Please consider investing at least 5% in a 401k or IRA. To often we wait to start such things until we begin to feel mortal (sometime after 32 or 33 years) and it is so much easier and turns into so much more if you start early. Factor that in as a regular bill.... something that reduces spendable income because it MUST be paid.

after that....

Seems to me it is one great big complicated balancing act. If you every listen to talk radio, you might hear a guy (Dave Ramsey) talking about debt avoidance and personal fiscal responsibility. If you can take his advise, $30k would be plenty, if you are single. But, you need to factor in all the other stuff. Job location, proximity to friends or family or a long standing membership in a church, etc, etc... For me, proximity to the coast/rivers/creeks in South Carolina is probably worth 10 - 15k.

I guess I would humbly suggest that you try to identify
your personal priorities and then make decisions based on
them.

Paying the bills is one thing.... living life is an entirely
different matter. 'hope this helps

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[dkediger]

Location is a big factor. I live in Kansas where my 20 year old, 1400 sqft, 3BR, 2BA, full basement, etc, etc house is currently appraised at $112,000. On the west coast that might get you a 2 room shack. Other than our mortgage and a car loan, we are debt free and have multiple investments for our and our son's future. We give generously to our church. My salary is around $40k and my wife earns around $20k. Out here, $60,000 for a family of 3 is plenty in our situation.

I drive a 15 year old Ford Tempo with just shy of 200,000 miles on it. It still runs like a Swiss watch though, doesn't burn any oil, and still gets 30 mpg. Of course, since I'm already married, I'm not really into impressing the chicks.

I also make make my own lunches for work every day and my wife and I each give ourselves an allowance of $20 for mad money every two weeks. We don't feel that we are missing anything in our lives, and our son is certainly not deprived - he has about as full of a collection of Thomas the Tank Engine items as you can have.

As far as traffic tickets - what traffic tickets?

 

[BeckahC]

On the other hand, try to make it work on that in a 2 income family in NYC and see what that gets you... between the 2 of us (My Hubby and me) we just about manage. I don't think I've spent less than $100 per week on things we don't expect in the past year... that's each. There's rent, insurance, car, food, 401K, cable, phone, cell phones, etc...

So I definitely agree - location, location, location!!! BeckahC

 

[wags22]

Just a sidenote: Not all places on the west coast are expensive. I live out in the high desert area of southern CA about 150 miles east of LA. The main economy out here is a military base and retirement. My salary is currently around $45K. I'm single, never married, no kids so my paycheck is mine to do with as I please. However, I find that my checkbook is still subject to rollercoaster balancing (high one week, low the next usually peaking just after payday). Over half of my paycheck goes to the "living" expenses, the rest goes to the quality of life. Although some of the living expenses could arguably be called quality expenses. The breakdown of my budget is:
$400 - rent for a 2 bdrm house.
$344 - consolidation loan paying off auto, small student loan, and two personal loans used to payoff small credit card debt (note: loan will be paid off in 2005)
$185 - student loan payment, subject to increase at least 2 more times before loan is paid off. I gladly pay this though because w/o it I'd be a ranchhand in Montana.
$35 - electric bill
$35 - gas bill
$30 - water bill paid every other month
$30 - local phone service
$84 - auto insurance: full coverage on one vehicle, liability on another (I've had a few "bad luck" driving days. ;-)

These two bills could be seen as quality of life:

$50-150 - long distance bill varying on how lonely I'm feeling and how many friends I have in a give month. ;-)

$60 - Television programming (Dishnetwork is my choice).

In addition to these bills I bowl in a couple of leagues that run me $100 a month just on league fees. I also try to give $100-200 a month to my church.

I do have the company 401K invested at 5% and I have no deductions so I get a decent refund each year.

There are some other non-monthly bills worth mentioning though. Life insurance policy runs $75 once a year, auto registration runs about $150 a year (for my two old pickups).

One thing that I advise doing is that if you find you are living on what you're getting and then are given a raise, put the raise into savings. I've done that the last two times and am able to put $200 a month into savings (which I sometimes I have to draw on for "emergencies&quot.

My job is contractual and upon the next contract award my intent is to buy a house which will of course alter my budget to some extent.

Hope I wasn't too wordy here, but felt the need to put in my two cents.
JT

 

[BeckahC]

Ok, what do you do if you already don't make enough? We get our raises and use them and our bonuses to try to pay more of the bills... 1 tip I've picked up - If you want to have a nice dinner to celebrate your raise/bonus, don't spend the whole thing on it! ;-) BeckahC

 

[wags22]

I can sympathize with not being able to pay bills on current salary. I went through that the first 3 years of my professional life when I was a school teacher. I was blessed with switching careers and moving up quite a bit on the payscale to where I could afford to live and pay the bills. But back when I was barely getting by it was pay the utilities and rent first and then the loans and amenities second.
If you are paying on student loans right now check with your lender on ways to reduce your payments. As I mentioned in my previous post my loan payments will be going up. This is because I am on a graduated payment schedule. The $185 I'm paying is the lowest I could get, it will be going up to about $300 in a few months.

I would also recommend that if you have any credit card debt to get a fixed rate consolidation loan and pay them off. Then cut them up and don't get anymore. At the very least, pay off the higher interest cards first (Sears, Discover). If you ask nicely, some credit card companies will even cut the interest rate to help you pay down the debt. As far as the consolidation loan goes, my bank even cut the interest rate because I have direct deposit and automatic withdrawal. They were even good enough to do the withdrawal the Monday following my paycheck deposit (I get paid every other Friday). The consolidation loan reduced my monthly payments by about $100.

Hope this is useful to you.
JT ;-)

 

[B827]

I've been following this thread with interest. Although I grew up in a (very) rural area in Scotland I have lived in the midlands of England for the last 25 years. After getting a degree in Physics I worked in the electronics component industry before drifting into IT.

The house were I grew up still has no mains services (electricity, gas, water/sewage etc). Many of my school friends have work in country occupations (forestry/farming/ghillie) since the sixties. I still can't work out which of us has made the right career choice. While I'm sitting in my car in a traffic jam he (one I still seem once or twice a year) is walking to where ever he needs to be watching the wildlife. He goes to see the football (soccer) team we supported since we were 5 years old I follow their progress on the internet. I have to drive on a congested motorway to another of our sites regularly delayed in jams, he goes off roading in a 4x4 which belongs to someone else and gets paid for doing it.

So despite loving my wife and sons and having what is regarded as a good standard of living here I still wonder.

Robert Burns summed up how I often feel rather well:

My heart's in the Highlands, my heart is not here,
My heart's in the Highlands a-chasing the deer -
A-chasing the wild deer, and following the roe;
My heart's in the Highlands, wherever I go.

Farewell to the Highlands, farewell to the North
The birth place of Valour, the country of Worth;
Wherever I wander, wherever I rove,
The hills of the Highlands for ever I love.

Farewell to the mountains high cover'd with snow;
Farewell to the straths and green valleys below;
Farewell to the forrests and wild-hanging woods;
Farwell to the torrents and loud-pouring floods.

My heart's in the Highlands, my heart is not here,
My heart's in the Highlands a-chasing the deer
Chasing the wild deer, and following the roe;
My heart's in the Highlands, whereever I go.


Sandy

 

[BeckahC]

wags22 -
Would a consolidation loan show up badly on a credit history? Also, can you still use the cards after? (I was thinking about doing this and then just limiting us to 2 or 3 cards instead of 8-10.) Can you just consolidate some bills, but not others?

B827, That's a beautiful sentiment. I grew up within 5 miles of where I live now and have always dealt with traffic and such. When we go camping upstate and get to enjoy nature and really get away from it all, it's one of the greatest feelings in the world! My husband and I will likely retire to someplace upstate, but for now the money (what there is of it) is here and so here we stay. (At the risk of sounding sappy) As long as we're together we can be happy wherever we are BeckahC

 

[Haf]

BechahC,

A consolidation loan will not show up badly on a credit report. BUT, if you use the consolidation loan to pay off balances on cards and then rack up new charges on those cards, that would lower your credit rating. And yes, you can still use your cards after you use the loan to pay off balances. It's the same as if you transfered the balance to another card. If your credit is good with the lender, they may even offer you promotional rates to keep your business (i.e., to keep you from closing the account after the balance is paid off).

A simple word of caution about consolidation loans: don't look at the low monthly payment as getting something for nothing. You are paying dearly for that low payment (i.e., interest). Look carefully at how much you will pay over the life of the loan (this is the actual cost of the loan). Chances are, if you are paying a substantially lower monthly payment, you are paying significantly more over the life of the loan, even if the interest rate is lower.

In my opinion, there are two reasons to consolidate:

1. You consolidate to get a lower interest rate and pay less over the life of your loan than you would pay without consolidation.

2. You cannot meet your monthly payments without lowering them by consolidation. In this case, you concede that you will be paying more over the life of the loan, but do so anyway to save your credit.

Many companies (the ones with telemarketers that call you every night [during dinner] with consolidation offers) basically mislead consumers. They tell you they can lower your monthly payment and lower your interest rate. They are hoping you will equate this to saving money, when, in truth, you are likely paying more in the long run. One simple way to avoid this is to set your monthly payment as high as you possibly can (while still being able to afford it). That is, don't simply accept the low monthly payment they offer you. Another strategy: be conservative and accept the low payment, but send in extra money with each payment. Just make sure of two things:

1. There's no prepayment penalty.
2. The extra payment goes directly towards principal.

Hope this helps!

Haf

 

[BeckahC]

Haf,

Thank you so much for this info! I was afraid we'd have to take a personal loan w/no colateral and those interest rates stink! I think we will be looking into the consolidation route, however we will do it on our terms. (ie: not just responding to pam or a telemarketer that calls us, we will go to banks and ask them about it and see what we can do)

Again, thank you for all your help. Hopefully, we'll be out of the red in a couple of years and looking at houses! BeckahC

 

[Kjonnnn]

And just an FYI if u dont know whats on your credit report.

I use to do collections for Sears.

Your Credit Report records your high and low balances, if you were late, how late, Defaults, charge offs, delinquents, and who has checked your credit (like when u apply for it). Its all recorded on there.

Since you wanna purchase a home, check your Report now, and get errorneous information off as soon as you can. And dont believe those companys that say they can FIX your credit. Nobody can do that. They can only do the leg work to help you remove erroneous stuff off, but you can do that. Anything that is real and accurate stays there 7 years.

 

[BeckahC]

I check it at least once or twice a year, along with my FICO score.

The only problem I have ever had is too much revolving credit and too high balances. Nothing late/overdue/collections, etc and I always pay more than the min. I was just a stupid kid that got hold of Credit Cards a bit too early and boy am I paying for it now... that and being a shopaholic doesn't help ;-). But marriage has improved all of the above a bit - after the initial moving expenses (just married last year and moved in together around then) and I just want to get the paying over with and forget about the cards that have the 20+% interest rates...X-) BeckahC

 

[goBoating]

.... seems we're wandering astray.... this stuff is worth knowing, but, I don't know if it belongs here. ;-) 'hope this helps

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[BeckahC]

Sorry about that! Now, where were we? Looking back at the first post and thinking over my personal situation... I would say I'd need to have at least a combined income of $80k-$100k between me and my Hubby, pre-tax and tips (medical and dental, 401k, etc.) BeckahC