Thursday, December 04, 2003

The Land of Milk and Honey

I've been thinking lately about finances, and not just my own. (Though I admit, it's my own that led to this train of thought.)

There is practically no one in this country who lives within their means, but almost everyone thinks that they do. I could be all vague and blame it on consumerism or the media or some shite like that, but that isn't it. The root cause may be hidden in there somewhere, but that isn't the extent of it.

Note: I will be making generalizations. I am aware that this doesn't apply to everyone.

On one side, everyone has their income. Let's make up an imaginary person who makes $30K a year. After taxes, this person (X) makes about $20-$25K a year. (I am too lazy to do the exact math.)

Then there are X's expenses. Housing is bound to cost around $800-$1000 a month, assuming that X is a city dweller. If X is lucky, this amount also covers the essential utilities (by which I mean gas and electric, and water if X owns rather than renting). A basic phone line runs about $20/month after taxing; most people have voice mail, which adds about $8, but maybe X was frugal and bought an answering machine. If X got a good deal on long distance service, that is another $10/month. You can't live without internet these days, and if you're going to spend $15 on dial-up, you might as well double it and have a high speed connection. X probably has a cell phone, too. That's another $30 (I'm not counting one-time fees here, on the assumption that they were already paid). X has to eat. Despite good planning, it would seem that it's impossible to spend less than $100/week on food if you cook at home, and more if you eat out. Let's assume $600 per month. Laundry must be done, at a conservative estimate of $5/week, rounded up to $25/month. That is assuming no dry cleaning, but I like to assume. Transportation is a must. Let's assume that X bought a car with a bank loan. The bank gets $250/month and the insurance company another $150. The gas station takes $20/tank, but X gets good gas mileage and only has to fill up twice a month. An oil change every three months at $30 a pop comes to $120 a year, plus the occasional new air filter or whatever - round up to $200. Maybe more, but this is a relatively new car.

I have counted the above as essentials. The internet and cell phone have good arguments against them and could be considered luxuries, but as I said, X is a city dweller and may need these items for work. Sure, X could take the bus, but what if the bus doesn't go where X needs to be?

Many people would consider anything beyond this a luxury, but then turn around and insist that they need it. Cable, $50/month. Movie rentals, $20/month (if you rent one a week or sign up with Netflix). Actually leaving the house, priceless. Hee. I mean, variable. Let's say $10/week, which doesn't allow for much of anything.

One vacation and/or trip to visit family per year is $300 for plane tickets plus expenses of another $200. It's difficult to make it through any major gift giving season without spending, not to mention birthdays throughout the year. Let's call that $500 for the year.

Unexpected emergency expenses add up quickly too. I am including booze. Easily $1000 a year, all told.

Thank goodness I have my calculator. One moment while I tally up.

...$29,500 a year. That's nearly $10,000 more than X brings home. It's a good thing X has a credit card.

To be continued...