r0dman.com

How much do you need to earn to sustain your lifestyle?

My mates pull figures out of thin air. On the weekend one of them said that if he could earn $100,000 he’d be happy, and he’ll do anything to earn that sort of money… “Even work 80 hour weeks!”

But to me, I think we’ve all got it a bit wrong sometimes. Why is it, that when I earned around five grand a year working for McDonald’s, I never had enough money, yet now that I’m earning over ten times that, I still “don’t have enough money”. Well, to be honest, that last bit is a lie.. I do have enough money, but only because my lifestyle has changed. My change of income hasn’t changed my situation, but rather my change of mindset. For most people I know, and most people I don’t know, they simply never have enough money because they always spend the extra money they earn on more “stuff”.

It’s not our fault that we always want more “stuff” (it’s what we’ve been taught for a long time), but it really locks us into our working life. Put simply, I have no intentions of working for my whole life. I am working full time now while I’m “getting set up”, but later in life I hope to be able to have my wife as a stay at home mum (as that’s what she wants), and ideally I will just work a few days a week.

I think the biggest issue with being able to do this is the ongoing costs that come attached to almost everything in our life nowadays. Mobile phone contracts, Internet contracts, pay tv contracts, petrol, car rego, club membership, insurance, etc. We’re committing to more than we realise. Now obviously some things you can’t live without, and obviously most people need to spend money to make themselves happy sometimes. For instance, I enjoy using the Internet, and I spend more than most people I know on it, but it’s a genuine interest of mine. I don’t have pay tv, because I don’t really watch much TV. I feel as though I can justify that expense.

The issue is that most people don’t really think before they commit to things (eg, $99 a month on their phone), and before long they are so used to having it, they “need” it. Now when you stockpile all of these weekly, monthly, yearly financial commitments up, plus the combination of getting into the habit of buying things regularly (eg, DVD’s, clothes, even expensive food), you end up broke. (Once again, I’m not saying “you should never buy a DVD”.. Some people love collecting them, it’s their hobby. Good on them. But so much stuff is thrown at us, that we just don’t think sometimes and that pay packet ends up spent.)

I tried to explain to my mate that if he earned $100,000 a year by working an 80 hour week, he wouldn’t have the time to service his car. He’d have to get someone else to paint his house… And so on. Heaps more outgoing funds, so his massive income would be eroded.

I’m actually starting a veggie patch at the moment. I intend on having a big one eventually, but I don’t really know what I’m doing so I’m starting small. A veggie patch is a prime example of an area where time means money. Later in life, my family could end up being self sufficient, but it would take a lot of time to do that. I don’t believe you could work full time and be self sufficient. But even having a small veggie patch, and working on it after work would save a family quite a lot of money. If you work an 80 hour week it’s the last thing you’d want to do in the dark when you get home, so inevitably you’d just end up buying more from the shops. More outgoing funds that erodes the huge pay packet.

I link to a blog by a dude that calls himself durianrider. He’s pretty “out there” for a lot of people, but I admire the guy. He’s stoked on life, yet works very little and just earns enough to eat and live. Now I’m not saying that I want exactly that, but I think it’s a perfect example of the other extreme. How can one man that earns next to nothing, be so happy, yet others that earn more than most of us can comprehend be so depressed that they have to be on drugs daily, and often end up killing themselves in the end because “it’s all too much”.

It gives me hope that in a financial sense, there IS more than one way to live your life. I intend on “playing the game” for the next few years and getting setup for life, but after a few years I intend on scaling back work so I can enjoy life with my family.

I work to live, and I only ever want it that way.

I was talking to a friend last Friday via email. Things were winding up for the weekend and we obviously both had time to talk.

Specifically, I mentioned having an argument with my future mother-in-law about weddings, and how my personal opinion of them is that they are a blatant waste of money, and the stress of the whole thing just erodes the actual meaning of the day. In the end, I believe that they have very little to do with the marriage, or the love that two people have for eachother, but moreso about the image that either the couple, or their parents want to portray to their friends and family. They want to be seen as the people with the really nice wedding, that “must have cost a LOT”, just in the same way that they need a nice flashy car, or a McMansion by the beach.

My ranting continued for quite sometime, as it usually does, and ended up going into the financial side of a wedding.

…fact is that the average cost of a wedding in Australia is $28,700 (or was 4 years ago.. it has probably gone up since then). The average household income is “$91,300″. In reality though, the median household income is more like $50,000 before tax. But lets say it’s $91,300. That’s $63910 after tax, assuming they are both being taxed at 30%, which they probably are.. both earning around $45k or something.

A LOT of living expenses are coming out of that figure. Chances are they’re still renting, driving two Australian made cars with poor consumption and require servicing frequently, which also drains their wallet. It doesn’t leave a whole lot of money. Most Gen Y’ers can’t save for a deposit for a house.. the government is giving them free money to get into debt which is a whole other topic which I shouldn’t get into now.

But the thing is, they just don’t have the dollars to pay for a wedding.

Now what I realised when I was explaining all this, was that there is a black and white difference between the facts, and an opinion.

When I have these “arguments” (or disagreements, or so forth), I usually end up very frustrated. I make a point of providing facts, and then afterwards explaining my opinion, which is derived from those facts. Unfortunately when I usually have these conversations though, the person I’m talking to isn’t interested in facts, only their opinion, and they have nothing to back their opinion up.

I’m happy to be told that I’m wrong, but if you’re going to do it, please have a reason why.

I don’t like to push my views on people, but from reading another blog on the internet, I have come to the conclusion that if you know something that can help others, tell them. It’s not always easy, in fact it’s very hard to be in the minority (being educated), but given a reversed role, I’d like someone to tell me if I was about to make a bad decision, or if I could do something to better my life.

The truth is in the facts.

I’ve realised that the facts are what I need to tell people, not so much my opinion. I try and drop them in everywhere now. (The rate of increase in the number of dwellings in Australia exceeded the rate of growth in the number of people in Australia by 41%. The rate of increase in the number of empty houses was 2.7 times the rate of population growth. *)

Facts are provided everywhere, and once you have verified they are in fact correct, you can make your opinion. Finance, diet, so on and so forth. There are facts, and they are all relevant for you to hold a view on the topic.

If I said to you..

“I think the healthiest way to live is to be a raw vegan, so you should be one.”

Who am I to tell you what to do?

But what if I said..

“Did you know that casein in milk has been proven to be a major cause of osteoporosis and other bone diseases in humans?”

You could then form an opinion from that fact. That opinion could be to believe it, and an action from that opinion may be to stop drinking milk.

Conspiracy theories are a perfect example of where facts can hold some vital information, but where the opinion of some presenters/producers/etc can take over and effectively turn a lot of people away from the original message that they wanted to send. Often there are facts that “the people” should know, but waking up one day and telling “the people” that “Obama is 21st century Hitler” is hardly going to go down well with the majority of people.

Stick with the facts. By all means let others know your opinion, but make sure they know it is your opinion.