bluntmoney.com

Adam commented on this Get Rich Slowly post, saying:

“Can’t make it to the end of the month” is just a euphemism for people who decided to have children, buy a car, mortgage a house, take out student loans and more without putting much thought into income levels and expenditures.

Since I have rather vivid memories of stressing about making it to the end of the month, every month, back when my ex-husband & I got married in 1989, reading that comment offended me. After all, we didn’t have children, a house, or student loans, and we put a LOT of thought into income levels and expenditures. (That’s what happens when your checking account constantly hovers around zero and you’re debating hard in the grocery store between toilet paper and peanut butter — peanut butter that you don’t even like.) We did have two cars & associated payments though.

I decided to dig through old paperwork to see if I could reconstruct 1989 financially to see if what I remembered matched reality. Since we got paid weekly, I broke all income and expenses down into weekly amounts to make it easier to figure. Bills that only occurred monthly were multiplied by 12 and then divided by 52 to get the weekly amounts.

Here’s what I found:

GROSS COMBINED INCOME - APPROX. $433.62 TOTAL PER WEEK
We were both employed and grossed $22,548.38 total for the year. We did not receive health insurance from our jobs. (Me because I worked one hour short of being considered full-time, and him because he worked for a small business that did not offer it.) Note that this was when minimum wage was $3.35 per hour, so we actually had pretty good jobs. We also both went to school full time.

EXPENSES - $432.04 TOTAL PER WEEK
1 bedroom apt in a bad neighborhood (water & trash included) - $84.23 wk
Electricity - $25.38 wk
Car payment #1 - $36.32 wk
Car payment #2 - $43.38 wk
Car insurance* - $41.54 wk
Car registrations - $5.38 wk
Gasoline* - $18.46 wk
Parking* - $4.56 wk
Groceries - $10 wk (yes, really $10 a week)
Laundry* - $1 wk
Haircuts* - $1.15 wk
Telephone* - $4.15 wk
Student health insurance - $19.38 wk
Pets* - $1.50 wk
Spending money (for lunches, snacks, and splurges) - $10 wk
Books at university - $11.54 wk
Charity - $2.02 wk
Medical (copays & medication) - $2.64 wk
Gifts* (birthdays and Christmas for 13 people) - $5.00 wk
Credit card payments - $23.08 wk
Federal taxes - $38.15 wk
State taxes - $5.46 wk
401k contributions - $4.92 wk
Social security taxes withheld - $32.80 wk

*Amounts with asterisks are estimated to the best of my memory since I could not find records for them.

What did this mean?
In theory we should have had an extra $1.58 per week, as long as we didn’t need to buy anything unexpected such as supplies required (but not reimbursed) by work or frivolous things like, you know, shoes, underwear or eyeglasses. We didn’t really buy ANY other clothing, relying instead on what we happened to get as gifts. We also did not go to any sort of entertainment that wasn’t free or paid for by relatives or work. At all. Still, even the tiniest unplanned expense became a major problem.

Analyzing this further, our issues were three-fold. One, we were spending way too much money on cars & transportation-related items, so it appears that Adam was right in that regard. 35% of our gross income each week went to maintain, pay for, and use our cars. That’s just way too high. We could have managed with just one paid-for car instead and been somewhat better off, IF we had had the $500-$800 to pay for a beater upfront. Which we did not. We had zero savings, and would have been in trouble if that beater broke down. I confess though that it never occurred to me at the time that our cars were too expensive, so I didn’t even go down this line of thought then. If I had, I probably would have changed things somehow.

Two, we were already in trouble with credit cards, although that $23.08 a week was significantly over the minimum payment. My ex-husband brought about $700 in debt to the marriage, and I brought about $100, so we were trying to pay them off as quickly as we could. We weren’t successful at that.

Three, although our apartment was inexpensive, the associated electric bill was huge due to poor construction. At the time though I didn’t realize that the bill was out of line. I’d never had utilities before, so thought that amount was normal for many years. (I now pay significantly less than that monthly, almost 20 years later, for a house that is more than 4 times the size.) This is a sad social issue that seems to be completely overlooked. The people who can least afford to pay high utility bills often have little choice but to live in a poorly constructed apartment or house because that’s all they can afford. But because the buildings are poorly constructed, they have thin walls, little insulation, slapped on windows & doors that leak like a sieve, and ancient and inefficient (or sometimes non-existent or dangerous) AC units & heaters. For this you get to live in an unsafe, crime and blight-ridden neighborhood without basic things like real grocery stores. You get told that you ‘deserve it’ and should just ‘get a real job’, ‘plan better’ or ‘quit buying crap that you don’t need’. Clearly this is a sore point with me.

Oh, and our budget with the extra $1.58 a week? We actually kept to it. We made it work. It completely sucked, but we made it work. (We didn’t get into trouble with budgeting until later.) It’s sad to realize now though how much better off we might have been if we hadn’t bought those cars. But you can’t see the future. I bought mine when I was living at home. Since it was pretty much my only expense, I could easily afford it. But when things changed, I didn’t realize that maybe the cars should be changed too. Unfortunately I think most of us learn by experience, instead of by really understanding the far-reaching implications of our immediate decisions before we make them. But at least we learn!

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