Growing up, I used to think anyone making $50k/year or above as a single person was making a good living. Let’s break that down in todays economy though:
1) You make $50k/year, after taxes you are left with $39k/year (22% tax)
2) Your rent is $1,500 a month, which is $18k/year, you are now left with $21k for the year
3) Your car payment is $350/month, which is $4200/year, you are now left with $16,800 for the year
4) Your utilities, phone/internet/cable is $150/month (conservative), which is $1800/year, you are now left with $15,000 for the year
5) Gas and groceries is $400/month (~$300 in food/groceries and $100 in gas), which is $4800 a year, you are now left with $10,200 for the year
6) Your health insurance/car insurance/home or renters insurance is $280/month (conservative, ~$200/month for health insurance, $40/month for car insurance, $40/month for home or renters insurance) which is $3360/year, you are now left with $6,840 for the year
7) Now lets say you allow yourself to have the basic Netflix subscription for $10/month, thats $120/year, you are now left with $6,720 for the year
8) Now lets say your car needed an oil change and tire rotation/inspection during the year at $50, you went to the dentist just once this year at $30 for the copay, and you have a monthly prescription thats $10 a month, thats $200/year, you are now left with $6,520 for the year
Your salary is $50k for the year, but after existing you are left with $6,520. You have NOT gone to the movies, you have NOT gone shopping for new clothes, NOT gotten any hair cuts, nor have you figured in the price of any student loans or pet expenses you may have. You do not go on any vacations for the year.
Let’s say after living very modestly you are able to save $4,800 for the year. The average cost of a home in your area is $300k, with just a 10% down payment, it would take you 7 years of living modestly to afford the down payment. And you better HOPE you dont incur any unexpected medical expense or car expense. WTF