How to earn $100k and still feel poor, My $50,000 Salary Felt Like Minimum Wage

http://finance.yahoo.com/news/first-person-earn-more-100-000-still-feel-151200753.html
By Laura Cone | Yahoo! Contributor Network – Mon, Mar 12, 2012 11:12 AM EDT

Our family income recently topped $100,000, but we aren’t spending as though we make six figures. We don’t sip Mai Tai cocktails at resorts or buy pricey tech toys.
According to recent data, incomes are rising and consumers have more money to spend. They are also taking on more debt for the first time in three years. Financial experts say the increase in borrowing can be attributed to buying cars and paying for college . We bought a new car this past year so our son could earn money for college delivering pizzas. He may need to borrow money for grad school.
Is six figures the new minimum wage?

Although I admire people who live on fixed incomes or minimum wage, I have no idea how they do it. When I was younger, I got by on a salary of just $19,000 a year. At that time, I did not have a mortgage or two sons attending college. Back then, the high cost of childcare took a big chunk out of my pitiful paycheck . Still, I never thought we would have trouble living on $100,000.
What’s up with my net worth?

I always figured my net worth would increase as I earned more income. In fact, I thought that clearing that six figure “hurdle” meant we would be financially set. However, our net wealth plummeted since the housing bubble popped. Our home is on the “liability” side of our net worth chart. Although the stocks have recovered, our retirement accounts do not reflect the balance I would have expected once we earned six figures.

Why don’t I have money to burn?

My lifestyle isn’t extravagant. We are spending less money on clothing, entertainment and anything that is not a necessity. We don’t have money to burn because of the high cost of gasoline, car insurance, groceries and college tuition. We also have a high tax bill every year.

Housing: We live in the Tampa, Florida area, where we had our 1,800-square-foot home built at the top of the housing bubble. I’d feel a lot richer if I could take the $183,000 we spent seven years ago and buy a home twice the size today in a better neighborhood. Some of the homes in my subdivision have been vandalized. I never thought I’d see broken sliding glass doors and graffiti on the walls of homes that people had to get on a waiting list to buy. Houses were in such high demand we put a $3,000 deposit on our lot at the builder’s model home center before even seeing the subdivision. To try to stay above water on our mortgage, we pay an extra $250 a month to the mortgage company. That way, we will at least have the option to move if we need to in the future without ruining our credit.

Expenses: Our fixed expenses include $350 a month for utilities, $300 for car insurance, $175 for Internet, cable and phone. We owe $1,222.02 a month on our mortgage and $300 on a car loan. We have no other debt. We save 10 percent of our income for retirement. We spend at least $500 a month on gasoline and an astounding $1,000 a month on food. I’d feel rich if I was eating at upscale restaurants or buying gourmet foods, but our food budget just provides the basics for four people.
Education: We are spending about $15,000 a year for tuition and books to send our two sons to community college. When they transfer to the university in another year, those expenses will more than double. My older son pays $5,000 or about half of his tuition costs since he has a part-time job, but my younger son hasn’t been able to find employment. I’d feel wealthy if I was struggling to send my sons to an Ivy League College, but this is just community college.

We purchased stocks to help fund our sons’ college education, but the stocks took a big dive. We are hoping the value of their stocks will recover to help pay for the last couple years of college. We don’t want them to take out college loans, but they may have no choice.

But it’s not all bad

Although we have a lot of expenses, we have managed to stay out of debt. I am sure if we did not make six figures, we would fall into the debt trap. Experts say people tend to take out more debt when they have more equity in their homes. Even if the value of our home begins to increase one day, I won’t feel comfortable taking on more debt. Instead, we plan to be free of our mortgage debt within the next 10 years.

I may never have money to burn, but I hope to have a chance to enjoy something before the tax man takes his cut.

*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you’d like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.

 

 First Person: My $50,000 Salary Felt Like Minimum Wage

I used to think I was making a lot of money until I sat down and calculated how much I was really getting paid.

Several years ago, I made the decision to leave my work-at-home writing career to work full-time at an office. When I crunched the numbers, I discovered I was not making as much as I thought due to hidden career costs. Just because I made $50,000 a year or $1,000 a week and worked 40 hours, did not mean I was making $25 an hour. It seemed to me I was practically paying to have the job, instead of the job paying me.

Calculating the commute

I figured out I was commuting about 75 miles a day from my home to my office. I was also driving for my work. I was reimbursed mileage during the workday, but had to eat my commuting costs. The daily driving took its toll on my vehicle, which required a lot of maintenance and repairs. The total travel costs came to $100 a week.

Adding up the childcare expenses

Prior to having an office job, I took care of my children at home while I worked on the computer. In many cases, I could take them with me since I was an independent contractor. With my office job, I ended up having to arrange childcare and after-school care that totaled $300 a week.

Taking into account the worn-out factor

Because I was worn out from all the commuting, I turned into the takeout queen. My food expenses skyrocketed as I no longer had the energy or the time to cook at home. My budget showed a jump under the food category. I was spending $150 more a week on food.

Spending more to keep up an image

Instead of wearing my old jeans around the house while I worked, I had to buy a new work wardrobe. I started coloring my hair and doing my nails on a regular basis. I also spent more money on things like office parties. I was spending $40 more a week on clothes.

Combating work stress by paying others

I rarely took vacations when I was working at home because I did not have a lot of stress. With a stressful job, I needed to take expensive vacations just to unwind. I started getting weekly massages. With less time and more to juggle, I paid for someone to mow my lawn and clean my house. I was spending $100 more a week due to job stress.

When I looked at my records, I could trace a grand total of $700 a week that I was spending because of my employment. That left me with a net of $300 a week or $7.50 an hour. My high paying job equaled minimum wage.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s