The other day I wrote a post about how you convert your time and talent to dollars. Perhaps it might not have a lot of impact when it comes to milk money and Whataburgers. Just a few minutes of time working may not leave that large of an imprint on your thinking, especially if you're spending that time at work on the internet looking at YouTube.
So, here are some things to ponder...
Let's say over your lifetime you worked an average of 40 hours a week and make $50,000 a year. Assuming you work 50 weeks a year, your Maximizable Factor is $25 an hour over your entire lifetime.
How Much Did Your Car Cost?
So, you really wanted that new car for a really long time. Of course, you didn't have the cash to pay for it, so you financed it, and it's costing you $427 a month for 60 months, or a total of $25,620. Over those five years of payments, you would have needed to work 1,025 hours, or about six months and a week, to earn the $25,620, and that's BEFORE taxes. That means over those five years, over 10% of your time at work is spent just to make the car payment.
How Much Does Your Mortgage Set You Back?
Your largest expense is your home, and you purchased your home for $149,000. If you have a standard-amortizing 30-year mortgage, by the time you've paid your home off, you've paid for it three times over, say $450,000. That equates to nine YEARS, or 18,000 hours of working just to pay for your house, and once again, we're talking BEFORE taxes.
If you assume that about 25% of your earnings go to the government in the form of taxes, your Maximizable Factor is much less than $25 an hour; it's more like $18.75 an hour, which means you would have to work 24,000 hours, or 12 years at 2,000 hours a year, in order to buy your house.
Is there any time left to work?
What About Retirement?
Most people live paycheck to paycheck. When I conduct workshops I ask them if they live paycheck to paycheck, how they plan to survive retirement without one. That's that time of your life when you stop working, stop accumulating, and start spending. If you spend $40,000 a year in retirement, that means you have to work more than a year to make the money after taxes that you'll spend in retirement each year. Since a woman has a one-in-three chance of living to be 90, and a man has a one-in-five chance of living to be 90, you'll probably spend about 25 of your years retired without an income.
There's not enough working hours to pay for all your expenses, both pre and during retirement.
How many hours will it take to pay for your house?