After writing my initial post about finances, a friend of mine commented to me that she was surprised because she thought we were “loaded,” because, as she said, we buy good foods and have a nice flat. I find this absolutely fascinating. I wonder what constitutes being “loaded,” because I certainly don’t feel that way. I think if we were loaded, I wouldn’t feel guilty about wanting to go get a hair cut when my kids need new clothes (I haven’t had my hair cut at all since last June).
I got to thinking about it, and wondered about how much money Joshua makes vs. how much our bills are, the cost of living in San Francisco vs. the cost of living in Dallas (or other places much, much cheaper than here), and what our family’s net worth is vs. the net worth of other people.
Our Income
Payscale.com shows California has an average salary of $65,834, while Texas has an average salary of $54,301. From all the stats I can find, Joshua makes more than the median for California and for San Francisco, but in his position, and in his field, he makes the upper end of the average salary.
A couple of factors helped us here. Joshua worked for a well-known and well-respected design firm here in the city as a contractor for over a year. His team leader left to start his own company, and the team dissolved. The firm’s boss then offered Joshua a position to create a new team, which enabled Joshua to ask for a higher salary than what he was making. He had this job for several months.
When his former team leader offered Joshua a job at his new firm, Joshua was able to use his new position’s salary to lobby for his salary at the new firm. He still took a pay cut when he joined the new firm, but I think he is glad he made the decision he did.
The Cost of Living
That said, the cost of living here is astronomical compared to Dallas, between 47% and 88% higher, depending on which chart you’re looking at. Our rent is 32% of Joshua’s gross income, but it is 41% of his take-home pay. Once the new insurance premium and the HSA contributions are taken out of his paycheck, our rent will be an even higher percentage. We live in a rent-controlled apartment, and our rent may be raised once a year by an amount set by the city. Our rent is due to go up in July by 2.7%.
Our rent, bills, auto and life insurance, and car payment (for a Scion xB) all take up 54% of our take-home pay. Groceries take up 16% of our budget (after rent, groceries are our biggest single category) and we cook most of our meals at home. That leaves 30% of our budget for everything from household items, clothing, and gas, to doctors visits (including all my chiropractic care), donations and saving.
If we were to follow conventional wisdom to save 20% and tithe/donate 10%, we would have nothing left to pay for anything after rent, bills, the car and groceries. And that’s where we stand today, not factoring in the insurance premium, HSA contribution, and upcoming rent increase. So it’s a pretty tight and well-oiled budget and I really have to watch what we spend where.
Net Worth
I think average net worth is interesting (and highly complicated), since if you own a home, it usually considers the value of your home as an asset, but if most of that is really debt you owe on the home, wouldn’t that be a liability? If so, then our net worth is probably better than most Americans, since the only debt we have is the balance we owe on the car. Especially considering so many people now owe more on their homes than they are worth. That said, we still have a negative net worth, since we owe more on the car than we have, including savings (unless our life insurance policies are counted - in that case, we’re worth more dead than alive!).
So.
Are we loaded?
Note: The fact of Americans’ general wealth in relation to the rest of the world has not escaped me while writing this post, so yes I understand that, in that sense we are loaded, as is anyone who lives in this country.