I have to say, I live in a pretty privileged state of existence these days. The lottery of life has been so unbelievably grateful towards me that sometimes I’m in aw of the opportunities that are just handed to me. I have to admit that this wasn’t always my point of view. Like so many of us who perhaps don’t quite understand our privileged place in this world, there was a great many years where I hummed and haw’d; bitched, moaned, and felt entitled. When I think back I guess I do feel like I realized that by being in Canada, and having a radically supportive family and group friends, meant that my life could never really become that awful. I guess that’s why this topic has always interested me, a little bit, and I have to admit that my opinions on it have changed as I’ve grown older. So, let’s take a look at what the hell I’m talking about!
I see lots of people who struggle to get by, and I’ve had, and still have, some friends, acquaintances and coworkers that always seem to have financial issues. I’m sure we all know people like this. Hell, YOU may be one of those people I’m talking about. What fancy’s me though is that sometimes they’re making twice my hourly wage.
Now, of course I know everyone’s situation is different. Perhaps I’m “lucky” that mine has shaped up the way it has, but I’ve worked and planned for it to be this way. Right now I work for minimum wage. Well, that’s a lie, I work for $10.15 an hour, 15 cents ABOVE minimum wage – with another 15 cent raise coming next month. YAY! (Rolling your eyes? That isn’t a sarcastic “yay.” A 30 cent raise over a couple months is a reason to celebrate and I’ll tell you why in a future post.)
Now, I have to admit, at my age I do sometimes find myself feeling pretty down about what I’m pulling in for paychecks. I have lots of friends who have stayed on the same career path for 5+ years and are now making “big boy” money. “Big boy” money generally comes with benefits and a savings plan/pension to boot. My career path has been abnormal, and so at this point I’m technically playing financial and career catch up.
You see, I elected to be a touring Musician for most of my 20’s. This meant that unless I hit it big quickly (which I knew was not likely to ever happen) I’d be bouncing around, having to start and quit many a jobs. Most of these jobs were of course minimum wage, and I’d purposefully find something I could easily quit and walk away from when it was time to hit the road for another tour. Sometimes I was lucky and my Manager would actually give me the unpaid time off. Those were considered jackpots jobs, in touring musician land. Anyway, that “life of a musician” post is for another day.
Alright, so here I am, creeping up on the big THREE OH and I’m still working away at minimum wage. Well, you know what, my life has never been better! It’s true. My amount of free time is at an all time high. My happiness level is superb, and I actually dug myself out of a deep deep depression about 12 months ago when I started waking up to just how awesome I really have it.
Back to how privileged we all are. The fact that someone can lead such a rich, satisfying life while only pulling in $10.15/hour is fantastic. Let’s break it down, as I’m sure some people are looking for numbers. Let’s take my monthly, reoccurring bills first. NOTE: Me and Mrs. Bastard split most bills 50/50, besides our personal phone bills. The numbers here are purely what I’m responsible for.
Rent (heat+water+utilities are included in our rent bill): $345
Grocery: $100 ($25/week, roughly. This probably fluctuates between $20 and $30/week)
Home/Tenant Insurance: $7.48
That’s basically it. Adding everything together we get a monthly total of $528.29. Those are the essentials that I absolutely NEED to cover. Everything else is just frozen whip cream icing on top, that kind you find on a DQ Ice Cream Cake….god, so delicious….
Ok, now let’s break down these monthly bills by the week. This is how I prefer to pay my bills anyway. I divide every bill by four and transfer that amount off into a separate account as soon as the paycheck arrives. Since I always pay off my credit card balance I’ll even transfer these weekly amounts on to the CC, effectively overpaying it, so that when the pre-authorized payments come off the card they’ve already been paid for. This is the best way for me to keep track of my Income and Spending.**
So, let’s see what we end up with.
Home/Tenant Insurance: $1.87
What does this tell me? It tells me that I need to work at least 14 hours a week*. That blows my mind. I’m sitting here in my roomy two bedroom apartment in the middle of one of the major cities out here on the East Coast. My fridge is full of fresh veggies, milk, eggs, sauces and other goodies. The freezer is full of chicken, tofu, frozen veggies and cookies. Over on my kitchen counter the brewery is fermenting away with an endless supply of Frugal Brew Cider. The radio is on, Mrs. Bastard is putting together one of her fabulous knitted creations, and our cat, aptly named “Mr. T” because of the fools he’s constantly pitying, is relaxing at her feet. This is all provided to me, worry free, while only working 14 hours a week at MINIMUM WAGE! Amazing right? Let’s keep going down the rabbit hole.
Now, if you’re lucky enough to be working full time – I am not, I average between 22 and 30 hours a week – then that means you have an extra 26 hours a week of pure, excess income. If you follow the advice of one of my favourite bloggers, Mr Money Mustache, then you could be socking away this extra $260 a week. Assuming you do this and you don’t give into the lifestyle inflation that is easily accessible when 65% of your paycheck is technically “excess” income, you could RETIRE in 10.5 years. Yup, did you read that right? Seems crazy eh? Trust me, I felt the same way. Think about that for a second…working minimum wage, retire in 10.5 years. This also assumes you don’t receive any raises, which you almost certainly will.
So, ask yourself, how many people do you know who are struggling to make ends meet, yet are making good money? Are you one of them? Well, I’m here to tell you that it’s time to change! If the math works on minimum wage, then anything above should be an absolute breeze. Now I know everyone’s situation is different. I’m extremely lucky to have found another frugal minded person in Mrs. Bastard. Someone who shares my goals and ambitions, and doesn’t need to spend money frivolously to have fun. We’re also both lucky in the sense that we’ve been able to stay relatively financially commitment free for most of our lives. We’re lucky to have been able to avoid this even before becoming financially literate. No cars bought on credit, no mortgage, no revolving credit card/line of credit debt (sort of…maybe I’ll mention it later), minimal student loan situations, and no planned or unplanned children. This is not the case for a lot of people, and the recurring bills I described above could be a fraction of what some of you may need to cover. However, I really believe that a lot of these supersized bills may have more to do with reckless spending and the sense of entitlement that comes with our fantastic North American lifestyle.
Let’s take a step back and analyze what we’re all doing with our money. It all boils down to this: an hour of work equals an hour of your life. You’re very finite life. A life that is ending, right now, as you read this. What is your hourly wage? If you could whittle your expenses down to something similar to mine how long would you have to work before you could retire? I have a handful of friends that make $25 an hour (maybe more), and if they chose to live a similar life to mine, spending money wise, their savings rate would be north of 85 percent, meaning they could retire in three to four years. I fully admit that there’s lots to learn when it comes to how I got to those retirement numbers. I’ve spent lots of my free time learning about investing, but it’s completely worth it. And, really, in the end it’s not difficult at all. I mean, you’ve probably done the math right now and feel like the amount you’d have saved in my scenario – 65 percent savings rate on minimum wage – seems small, and maybe you’re in disbelief of the retirement math. The numbers have been written about so eloquently by many other better blog writers then myself that I’m not even going to attempt to regurgitate them. Below you’ll find some crucial reading that will help to explain it all. You’ll likely find yourself obsessed with these blogs as time goes by. Getting excited? I fucking hope so!
Mr Money Mustache – The Shockingly Simple Math b=Behind Early Retirement
Mr Money Mustache – How Much Do I Need for Retirement?
*Sure, these calculations are made pre-tax, but you guys are smart enough to realize that.
**It’s worth noting that because there’s 52 weeks in a year, and only 12 months, there are a couple months a year where you get an “extra” paycheck. By transferring bills weekly (or bi-weekly, since that’s how most companies pay out) this effectively puts you a head of the game, and you’ll sort of always be ahead of your bills. This can skew the “expenses” on a monthly basis though, as you’ll see in my Income and Spending from July 2014.