EB: Giving ’em the business!

Brain dumps from the original Bonehead.

Overinflated.

I’ve been pretty lucky for the past few years – my rent increased at all… but that wasn’t always the case!  A few years ago while living down in Florida I had the misfortune of watching my monthly payment increase anywhere from 60-95 dollars with each annual renewal.  Also, during that time, the price of gasoline increased roughly a dollar per gallon… and at 12 miles-per-gallon, and if you want to know what THAT feels like just grab a handful of Short Curlys in a nice firm grasp and just yank as hard as you can.

Unnecessary and definitely uncool.

You’re right – my bad.  I think being away for so long has made me a bit overeager?  Sell the truck would be the conventional solution but maybe not when I already own it.  Book value is maybe four grand and buying a new vehicle is going to mean taking on a new note.  Even with the savings in gas expenses it would take years to begin to recoup any of it.

Anyways, all of this got me to thinking about the conceptual nature of how this financial stuff is supposed to work; and wondering if it’s really “supposed to work” at all?   Let’s go back to the rent thing for a second.  During those three years where my rent kept going up, let’s say I held down a job and maintained status quo… nothing special but not below average either.  I could then reasonably look forward to the average run-of-the-mill, 3% annual increase right?  That’s, of course, taking alot of ‘givens’ into account – such as the company I work for being in good enough financial standing that they’re actually giving out annual increases, but what the hell… let’s go wild. 

So to fully flesh out this scenario, let’s say I’m earning an above average salary, ok?  We’ll call it 50k per year just to simplify the math.  At the end of one year that’s an additional $1,500 to my yearly base and then at the end of year two that’s an additional $1,545 – that’s a gain of $3,045 from year one to year three by having some good days and some bad days, not getting promoted and not getting canned.  Now, before we get into some full-contact Buzzkill, I should mention that all of these are pre-tax numbers.  Once you reduce that by the national average of 30.8% to pay taxes that leaves an average of about $1,050 per year, or $87.50 in take-home income each month.   

And now to bring it full circle: back to the 12 mpg gas guzzler and the annual rent spikes.  Eighty-seven dollars a month would set me just about even on that annual rent increase if the price of gas wasn’t continually on the rise… but it is.  Or maybe I’d break even if I’d been good enough to warrant a four or five percent raise in that hypothetical scenario. 

Whatever.  Enough with the IF’s.  You remember Ed?  Remember that line he used to say?  If my aunt had balls she’d be my uncle!  Enough with the damn IFs.

Right.  So, again, how is all of this supposed to work?  When you think if pulling even, financially or otherwise, you’re thinking of average, right?  But even starting with an above-average salary the only way to break even is to be exceptional.  I’m no numbers wizard and it’s quite possible that I’m missing something here but it seems to me that something in this system is broken. 

Just to be clear – I’m not suggesting that our taxes should lowered because cutting into the profit margins just isn’t allowed… lower taxes would only mean that less gets done.  Besides, many “civilized” nations actually charge a higher percentage than the U.S. does.  What I want to understand is how does the average American citizen financially survive in our present conditions?

 

-E

June 21, 2008 - Posted by | Observations, Work

4 Comments »

  1. Well, it look like I’ve found my answer. According to Careerbuilder.com, moonlighting is back in style (http://msn.careerbuilder.com/custom/msn/careeradvice/viewarticle.aspx?articleid=1574&SiteId=cbmsn41574&catid=cj).

    I guess that settles it… everybody back to work!

    Comment by barber | July 6, 2008 | Reply

  2. What you’re forgetting unfortunately is COLA. A 3% raise isn’t really a raise at all, a 3% raise is a demotion. The US Government, which determines the Cost-Of-Living-Adjustments for Social Security receivers, used to base this on the Consumer Price Index (http://www.ssa.gov/OACT/COLA/colaseries.html). So in 1990 for example, the first 5.4% of your raise covered – for all intents and purposes – inflation. If you follow this index, you’ll see that you needed a 2.3% raise in 2007 to keep up with the economy, and when you read that, you’ll have a minor heart attack.

    What!? – 2.3%? Did no one see what just happened to the price of a home? The price of rent? A gallon of gas? Ah, but our great government, in all of its wisdom, realized that it doesn’t want to actually have to pay for the increased prices that are directly related to the downfall of the US dollar (which was their fault) … so they’ve opted to remove the cost of real-estate and the cost of oil from their COLA adjustments.

    Suffice it to say – 2.3% is nothing, absolutely nothing. The reality is that most of us needed somewhere in the vicinity of a 60 – 130% raise between the years of 2003 and 2006 to keep up with price of real estate alone. Now with the complete devaluation of the US dollar to purchase goods made overseas, and the fact that we are importing more goods from overseas now than we have ever in US history, and with the fact that our GDP (gross domestic product, what we export to other countries and build wealth off of) is at all-time lows, and with the price of oil ….. you are making less today than you were making working at Shoprite when you were 18.

    The worst part is that that’s not an exaggeration … for most of America that’s true.

    Billy

    Comment by Billy Ng | July 17, 2008 | Reply

  3. Ok bro, let’s set the record straight here… For starters it was A&P, and secondly I was only 16!

    It sounds like we’re agreeing about our nation being economically hosed but there IS hope. I was watching an old Seinfeld re-run where Kramer and Newman hooked up this awesome idea to get rich by recycling aluminum cans and glass bottles and I figure I’ve got to be able to fit a boatload of those into my SUV, right?

    -E

    Comment by barber | July 17, 2008 | Reply

  4. Always thinking ahead my friend … always thinking ahead =)

    Comment by Billy Ng | August 14, 2008 | Reply


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