5k Salary, No Debt

$35k is the median income for a single earner. The median for a houshold is around $50k. In this level of income, I give my advice on how to get ahead financially.

How’s it going everybody this is beat the bush today i’m gonna begin with a financial situation which may apply to the average american wilfred concepcion says hey beat the bush great video again can you do a student with a 35 k salary no debt with an average saving rate of 15k a year paying $700 a month for rent thank you the question i have with this is where

Do you live because it matters a lot if you live on the coast your effective salary is very low however if you live in the middle of the united states then this money might actually go a lot further because cost of living is a lot lower over there now for this video i’m just gonna assume you live on the coastal areas because this is a situation where i am more

Familiar with and i can speak more fluently about it just looking around in this city i live in the east bay of california you can actually rent a room for $750 there’s not that many of those around and you have to share a bathroom so let’s begin with this $35,000 usually i do a quick mental calculation on figuring out how much you earn every single hour i just

Lop off the k and divide by 2 this is essentially dividing by 2,000 hours a typical person would work 2080 hours but this is close enough a calculation you’re just doing sort of like a first-order analysis so 35 k divided by 2 you immediately get in your head is oh $17.50 every hour this is roughly how much you make i’m gonna go through a quick calculation of what

After-tax dollars you actually get very quickly here you get standard deduction of twelve thousand two hundred dollars for 2019 so 35 minus twelve thousand two hundred you end up with twenty two thousand eight hundred dollars the first nine thousand seven hundred dollars you do not pay any federal taxes on so this is zero percent so you’re actually taxed on the

Thirteen thousand and one hundred dollars at a twelve percent rate so you have to pay one thousand five hundred seventy two dollars for simplicity let’s say you’re living in california at this income level i’m going to guess you’re gonna pay around three percent tax so three percent tax on twenty two thousand eight hundred dollars it’s gonna be six hundred eighty

Four dollars now it’s not exact okay this is just roughly in the ballpark plus minus a few percent thing i just want to get a rough number of what your after-tax dollars is so your total tax is two thousand two hundred fifty six dollars effective tax rate is at six point four percent this makes somewhat sense because if your income is low your tax rate is going

To be a little bit lower your effective tax rate it’s gonna be a little bit lower this means your take-home money’s gonna be about thirty two thousand seven hundred forty-four dollars you say you put in your bank about fifteen thousand dollars every single year your rent is seven hundred dollars a month which translates to eight thousand four hundred dollars every

Year this means i’m kind of working backwards here because you didn’t really tell me how much you spend every single month outside of your rent so i’m gonna assume from these numbers you spend nine thousand three hundred forty-four dollars a year which translates to seven hundred and seventy-eight dollars every month for your living expenses this includes you know

Everything else except your rent which is you know if you have car payments student loan payments the food that you buy utilities whatever that you have to buy shoes or whatever so whenever i do these comparisons i like to compare to my own living standards which i fine tune a lot and i know it’s around the ballpark of one thousand three hundred fifty dollars and

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Four hundred of this is my living cost i have to pay property tax in hoa so if i subtract this living cost out then i would realize that i spent about nine hundred fifty dollars on living cost on the food that i eat on the internet bill and all these things so i can compare this nine hundred fifty dollars to what you spend at seven hundred seventy eight dollars

Which is you know not that far off right it’s only one hundred seventy dollars difference this might be a lot because you know it’s like twenty percent more or so but at least we try to know this is in the ballpark and i feel like you should be able to live somewhat comfortably with this amount if you’re renting a place and then you know buying your food you’re

Like not starving yourself or anything so with this analysis let’s just kind of talk about something more macroscopic here the first thing i want to know is that your spending does seem very low i would not push it any further than that because you know this is pretty oh already and judging from how much you make how much you actually spend this is a reasonable

Amount to spend the second thing i want to talk about is you should watch out for skimping too much on everything just like the last video i talked about where if you skimp too much it might hurt your socialising and then hurt your friendship and relationship with your family so you really want to watch out on not trying to push it too hard in that sense the third

Thing i want to talk about is when you say you save $15,000 it means you’re spending $17,000 right so this is your comfort level your standard of living you need 17 thousand dollars every single year in order to live the current way that you live fifteen thousand dollars it’s roughly you know around the ballpark of what you spend every single year so you can kind

Of think of it as every single year that you work your earning yourself the amount to be able to live one year during retirement so how many years you have to do this in order to retire let’s say you retire at 65 and you want to live to 95 right so you have to do that for 30 years that means if you start at 35 and you work for 30 years then you’re gonna be able to

Generate enough capital to be able to retire for 30 years once you reach 65 i think this is a good way to think about things because this is how much time that you’re buying yourself i guess every single year you’re buying yourself one year worth of your retirement freedom let’s say now there’s a great danger to making this huge assumption because wherever you’re

Living you’re renting right now and i can almost guarantee you is probably gonna increase based on inflation your salary is also going to increase as inflation goes up as well but generally the way things are progressing right now the cost of goods of real inflation the things that you actually buy it’s actually going up then this cpi metric that they calculate over

Here like two three percent if you just look at health care costs is skyrocketing much quicker than two or three percent if you look at the amount of rent that you pay it’s definitely increasing more than two three percent every single year so if you keep on renting it might be a danger for yourself in order to make these kind kind of calculations for retirement

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Now let me switch over to this income level which you say is about 35,000 every year what’s interesting is that the median individual income in the united states is roughly about $32,000 right now so you’re very close to the median when this chart over here says real personal income you’re like what what does real mean it just basically means that they need to

Chart out the past year’s number so in 1990 you can read the numbers it says about $26,000 right but if you’re able to travel back in time it’s not $26,000 it might be something like twenty-two twenty-three thousand dollars the $26,000 come from adjusted for inflation so in today’s dollars in 2018 it’s 2019 but this chart is in two thousand eighteen dollars in two

Thousand eighteen dollars how much you would have earned in 1990 so it’s not going to be what you actually earned in 1990 the fifth point i want to make is that 32,000 is the average salary for an individual earner now i would have to say if you’re watching this channel you might go oh i also want to quit my job and you know not work as well the thing is in order

To do so you probably have to do extraordinary things in order to get to into this extraordinary position if you are earning at the average rate well you’re just going to retire at the average age which is 65 or something and right now they’re talking about you know extending this a little bit further by the time you retire it might be 67 or 70 years old but i

Do think the situation you are in the single best thing you can probably do for yourself is to earn more money it’s not try to save more money because i feel you’re probably cutting you know pretty thin already spending only seven hundred some eight hundred dollars every month there’s very little that you can cut and let’s say even if you cut like another hundred

Dollars which is gonna hurt big time there’s a certain standard of living and certain means that you need in order to cut that $100 you might you know do something very drastic i do have to say your saving rate is incredible right most people that are making thirty two thousand dollars every year they are likely spending all of it so the fact that you’re saving

About fifty percent of your income this is really really good so this sort of ensures that you’re gonna be able to retire once you reach 65 if you invest it properly all throughout you know this 30 i don’t know how old you are but throughout your lifetime of working years there’s very little you can do to save anymore can either make more money on the side or try

To get more education while you are you know working full-time but you might have saved enough to be able to pay for tuition out of your own pocket you did say that you are a student so it really depends on what major you are doing if you’re earning 35 k are you working full-time or not let’s say you’re working part-time i would really try to concentrate on your

Schoolwork to get good grades so that you can get a typical job so you get that you can get paid more right now as a student i don’t think you should worry too much about saving or making too much money because the rate that you’re making money right now is very very poor you can get more bang for your buck by spending this time on your education getting better

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Grades so that you can get a better job you eventually get paid much much quicker i would even go as far as trying to not work as much just work minimally just to be able to pay your current tuition bills your living costs and stuff so that you can take that extra time and do better at your schoolwork when i went to school i also had a part-time job but it was only

Like 8 or 9 hours it completely did not interfere with my studies i still got pretty good grades but i strongly believe that you should not hold a full-time job because generally this affects your performance at your school i would rather get a bigger student debt coming out and then knowing that i have a good career lined up if you’re in a major that’s gonna earn

You a lot of money afterwards then it’s probably better to hold those student debts so that you can do better and then get the job and then pay those student loans off when you actually have a professional career you earn at a rate much quicker and you probably am able to pay off those student loans with just a few years of work now for those people that are not

Actually a student and they earn 35 k they are doing this full-time let’s say and i would push really really hard to go part-time on this and then go to school get a degree and get a better job so that you can earn more in order to get ahead this is you know one of the best ways to do it and it’s also not too risky if you apply yourself to a major that is likely

Gonna get a job afterwards if you make $32,000 and you also have to spend thirty two thousand dollars because let’s say you have a family you have kids that you have to support and you do forty hours over there that just means that you have to sort of work double-time after you do your forty hours then you got a go study it’s okay you can pretend school it’s like

Another full-time job you can have two full-time jobs spend 80 hours on getting your life better and i think this is probably doable for the next couple of years until you get your degree and then you can get a better job quit that other one that makes less money and then you would be on your way to making more money and then be in a better financial situation now

Let’s talk about something even more dire if you make thirty two thousand dollars and you actually have to hold a couple of part-time jobs this means that you can’t go around signing up to go to class or anything and you spend thirty two thousand dollars because you have a family or something and basically all your time is taking up you don’t have any time to go

To school then wow you might be stuck in a very tough spot i’m not sure how to get out of this i would say the more dire your situation is the harder it is to dig yourself out of this situation you have to work extra hard in order to get yourself out thanks for watching everybody i hope you guys enjoyed my perspective and this analysis of what you should do given

This particular situation don’t forget to give me a like on this video comment down below let me know what you think if you have other recommendations for people in this particular situation and as always don’t forget to push the subscribe button and ring that bell icon thanks for watching

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$35k Salary, No Debt By BeatTheBush

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