maryellencarter:

so like. there’s this budgeting thing called the 50/30/20 method. apparently it is popularized by elizabeth warren? the idea is you spend only 50% of your budget on needs, 30% on wants, and 20% on savings or debt reduction (after counting all minimum payments on your current debt as part of Needs).

So I know my bills take up more than one of my 2 paychecks a month. (I ignore the occasional third one for budgeting purposes till it rolls around, so I don’t overbudget for months that don’t have one.) So for curiosity’s sake, I broke down my entire budget into Needs, Wants, and Savings, then did percentage math at it.

For this purpose, you count your non-tax payroll deductions, like healthcare and 401(k) contributions, as part of your income and expenses, but you don’t count money that goes away as taxes. So the budget starts off with putting 401(k) contributions in Savings and healthcare deductions in Needs. Then you start listing off shit like rent, utilities, car expenses…

Right now, while I’m still catching up on a bunch of my COVID-deferred bills and loans, my Needs come out to about 74% of my income. However, my Wants are very minimal: I have my massage subscription and tip, I’ve budgeted for fast food or takeout maybe 2-3x a month, and I pledge to one Patreon at the $1 level. All together, my Wants are about 6% of my income, leaving the requisite 20% to go toward reducing COVID debt for now.

However, once my COVID deferrals are all paid off, my Needs go down to about 67% of my income – and this is with generous projections, like at least one specialist copay every single month and gasoline if we ever start driving again. My Wants stay at about 6%. So I could either use the other 27% for savings and debt reduction, or I could stick with the recommended 20% and have 13% of my budget for Wants.

And I’m like… this is so much money. This is $150 just unallocated *after* going out to eat at least once a month and keeping my massage subscription. That’s… I do not know what else I would want. I could buy my entire wardrobe at LL Bean. I could have a massage every single week. I could eat at a sit-down restaurant every week. I could buy the newest and most expensive iPhone every single year. I could buy a brand new American Girl doll every month with money to spare. Like I couldn’t do all of those at *once* obviously, but that’s with just 7% of my income by this method of reckoning.

Like, if I somehow did make twice my Needs expenses after tax. That’s not impossible; I’d have to make a little under $33k a year, or a little over $2700 a month, which would be about $17 an hour excluding taxes. I don’t expect to get there at my current job in the near future, but it’s not astronomical.

But like, at that point I’d be saving about $545 a month, covering all my Needs expenses, and I would have *over eight hundred dollars a fucking month* to spend on Wants! Like… jesus fuckwaffles. How would I… I could buy a new one of my current phone every single month and have money left over. I could go to one of those black-tie restaurants that are like $100 a plate *twice a week*. I could not only move into a bigger apartment but hire a maid service to clean it. I could buy every single book I’ve ever read in short order and pay to store them all. I could live on like… caviar and avocado toast.

Hell, even if my living expenses were somehow miraculously reduced and my Needs were only half of my tax-excluded pay *now*, I’d be living on a little over $1000 a month, saving about $400 a month, and trying to figure out how to spend $600 a month on Wants. How… I don’t fucking know what else I could want. I’m not used to having money to spare. It’s weirder than winning the lottery, even, because it’s just like… it’s not enough to go “I will pay off all my friends’ student loans and buy a condo!” but it’s enough that I’m like “Do I just… put all 27% of my income in savings? Do I save for a car? Pay off my student loans? Invest for retirement? Am I fundamentally missing something I should be wanting?”

That sounds like a sign that 50/30/20 isn’t for you.

A lot of budgeting methods have this…maybe not “problem” exactly, but this thing where they’re clearly aimed at people who start with an entertainment budget of “everything after necessities” (or in many cases even higher) and negotiate *downwards*, which makes the methods a bad fit for people who start with an entertainment budget of zero and negotiate *upwards*. I guess the people spending money they don’t have on things they could do without are the ones most in need of frameworks, so the frameworks are designed for them. Getting *down* to 30% is a good start for people who were previously spending *more*.

Personally, I do struggle to wrap my head around things that draw a bright line between “wants” and “investments”. Sure, there are *occasional* items–like restaurant food–that are just wants and not also investments, but by far the most common reason for me to want to buy something is because I think it will leave me better off in the long run. I have a long list of things to save up for, and it’s all stuff like “house repairs” and “things that give you a leg up on Vimes Boot Theory” and “retirement funds” and “hedging against the future being wildly different from the present, such that normal retirement funds don’t cut it [link]”.

I think it’s important to bear in mind: given how weird your life is in general, and in particular the fact that your ability to work has a history of fluctuating erratically, saving is even more important for you than for most people.

There’s a concept called “self-insurance”. (…actually it turns out that there are at least *two* similar-but-not-identical concepts called self-insurance, and the Wikipedia article is about the wrong one. Investopedia [link] has the right idea.) You, in particular, *really* should get disability insurance if you can possibly manage it, and while third-party disability-insurance companies *exist*, you’d have to file claims (during the periods of time when you are least capable of filing claims!), and take the risk that whatever shit happens to you next won’t technically be disability by their standards, and operate under rules designed to let the insurance company turn a profit. (The house always wins.) Ideally, then, what you’d want is to instead save up enough in the good times that you can cover the bad times yourself.

(For example: you mention you’re digging your way out of COVID-related debt. My brother was temporarily laid off in the spring, and because of [glitches in the hastily-expanded Canadian welfare system] was unable to receive any kind of unemployment payments in time to actually help him with it. But he had lots of money in his savings account, and he used some of *that* to cover his bills until the restaurant re-opened. Now that he’s working again, he’s replenishing it; in the long run, he plans to save up enough for a condo.

(We not-quite-joked that if the glitch had to happen to *someone* at his workplace, it’s good that it happened to him: his co-workers spend all their money on booze and weed and wouldn’t have been able to handle it. His co-workers, meanwhile, not-quite-joke that they should get him hooked on something so they can drag him back into the crab bucket.))


Tags:

#reply via reblog #adventures in human capitalism #covid19 #illness mention #drugs cw #101 Uses for Infrastructureless Computers #is the blue I see the same as the blue you see


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