Why $100,000 a Year Would Be a DREAM Income

We’ve all seen, read and commented on them: articles from this person or that about how somehow, despite all their best efforts, they can’t seem to make ends meet no matter what their salary is. From $50,000 all the way up to, if some comments can be believed, $500,000, “feeling poor” almost always seems to be a problem.

Almost without fail, these articles are rife with examples of how instead of insufficient income, it is poor decision-making, convoluted economic calculations and overspending that are the culprits when it comes to “feeling poor.” Excessive spending on college, food and luxuries; car loans that are completely out of control; monthly mortgage payments that would feed a small village for a year; “net worth charts” that are worth less than the paper they are written on (hint: a home is not a “liability” as long as you still own it); all contribute much more to “feeling poor” than anyone wants to acknowledge.

Quite frankly, I’m a little bit fed up with the whining.

Is it really as bad as it’s made out to be? And who makes $100,000 a year anyways?

I don’t make $100,000 a year. In fact, I have never made $100,000 a year. I came close once, back in the days of the Internet boom, when I was hired by a fast-growing company at a salary of $70,000 a year including bonuses and monthly allowances for my car and cell phone. Didn’t last real long though; within two months the company began having financial problems – like quite a few companies did in those days – and I found myself walking out the door with a severance check and a sneaking suspicion that I might want to consider a change of careers (this was the second Internet company I had been laid off from in less than six months).

Truth be told, I have averaged between $35,000 and $50,000 a year for most of my adult life. It hasn’t always been easy; in fact, at one point things got so out of control that I was living well beyond my means and not making smart decisions with my money. It wasn’t that I was not making enough; it was that I failed to manage what I had properly. I went out, all the time. I threw so much money away drinking and playing pool that I am ashamed to even think about it sometimes. I didn’t save, I spent. My priorities were so out of whack that it is a wonder I even knew I was out of control. And yes, I sat back sometimes, wondered where the money was going, and “felt poor.”

Prioritizing makes a difference

After I was all done feeling sorry for myself, though, I started paying attention to where my money was going. I only had so much coming in, and that was all I could have going out. Things that were not essential, like magazine subcscriptions, movie clubs, premium cable, etc., all got the ax. Weekend trips to the sports bar? Out of the question. Golf? Only if I played at my brother’s club on the weekends as his guest. In other words, we started budgeting better. We still aren’t perfect about it, but the point is that with a little thought, a bit of sacrifice and smart planning, we are able to do a whole lot with what some would call very little, but what we see as more than enough.

Breaking it Down

Our family income is around $45,000, which nets us right at $30,000 after deducting taxes, FICA, Medicare, and pre-tax deductions for health care (we have a high deductible HSA-eligible insurance plan, which I HIGHLY recommend for anyone who can get one). With the income we have left we are able to pay a mortgage of $850, a car insurance bill of $230, utilities that run in the neighborhood of $650 (cable/internet, cell phones, electric, water, sewer, trash) and a car note of $270 (yes, that one’s a bit high; sometimes you have to say “yes dear”). The remaining $500 a month is divided up between food and gas, $160 a month for gas for two cars (which is going to be going down this month because the $270 a month car gets twice the gas mileage as the one we got rid of trade-off? Perhaps…), and $340 a month for food. For four people, two of whom are teenagers. The older teenager has a job, pays for her own gas, and contributes $50 a month towards the car insurance on the car we bought her for $400. Things fluctuate a little in the utitilies department, which occasionally frees up money for family outings to the zoo – where we have an annual family membership – the movies, dinner out, etc. In other words, things are tight, but it can be done. And we are doing it, despite what some might see as insurmountable odds.

But what’s my net worth?

The last time I checked, my net was worth $9.95 at Wal-Mart. Of course, the net I am talking about is the cargo net I recently bought my daughter to stick in the corner of her room so she could put all her stuffed animals in it. As far as the other net worth is concerned, I truly couldn’t give a flip. Like I stated, economics is very simple to me; money in, money out, that’s what’s important. Knowing how much my house is worth does nothing for me unless I am planning on selling it; measuring my “assets” against my “liabilities” on a net worth chart is an effort in futility, and quite frankly the numbers can be massaged to look however I want them to look: shift this number to this column, deduct this from that, add these savings to those deductions, etc., etc., etc. When you get right down to it all a net worth chart does is prove you are good at working with numbers on paper. But when you get down to brass tacks, you can’t buy groceries with a net worth chart.

Will it ever get better?

First let me say that I don’t think we have it all that bad to begin with. The lights stay on, the refrigerator stays relatively full, the cars stay running and the kids have clothes. But yes, things are expected to get better in relatively short order; within the next 12-18 months our income is expected to double, meaning that since we already pay all of our expenses on what we make now, things are going to be pretty good. I do expect an increase in our expenses of around $500-$700 monthly, but I’ll take it; a monthly income of nearly $5000 will be MORE than enough to cover expenses of $3000.

You know what the really cool thing will be? Even with our income doubling, we STILL won’t be making $100,000 a year. But as good as things are now, I predict we will be “feeling rich” indeed.