When it comes to jobs, there?s a somewhat standardized version of how they should work. It?s something like full-time hours (35 to 40 hours per week), a guaranteed salary and a full line of benefits. When it comes to job hunting, this is the typical arrangement people look for. Unfortunately ? an increasingly ? the job market seems to be taking a very different direction. Sure everyone wants a salaried job, but contingent income arrangements are fast becoming the new normal.
What is contingent income? At the most basic level, it?s a variable income. Unlike a salary, where you earn the same amount week-in, week-out, contingent income arrangements involve either unstable income, unstable hours, or unpredictable production levels on which your income is based.
As employers continue to move full-tilt with relentless cost-cutting measures, the biggest single target is usually payroll. That makes sense, since in the service economy we?re now in, payroll is usually the biggest expense most businesses have.
The problem for employers is that they continue to need certain minimum staffing levels. But they can no longer afford high fixed payroll costs. Contingent income arrangements become a means of more closely tying payroll costs to day-by-day staffing needs and income flows.
Put another way, contingent income arrangements are here to stay. And if the trend of the past few years is any indication, they?ll only become more common. That?s what we need to be prepared for.
Below are examples of common contingent income arrangements:
Gig Workers
In recent years, gig working has become the most obvious example of contingent income arrangements. In a typical scenario, you work as an independent contractor, work variable hours, and income dependent on your production. It?s been growing so fast that most of us come in contact with gig workers on a weekly basis. We most commonly think of people who drive for Uber and Lyft, but it shows up in many capacities.
It?s estimated there are 57 million gig workers in the US, representing 36% of the total workforce. This includes 24% of all full-time workers and nearly half of all part-time workers.
My guess is that the number of 57 million probably somewhat overstates the case. It?s likely that many of those gig workers do it on the side, while holding full-time jobs. The gig is just for additional income.
But there are people who do gig work as a primary occupation, often juggling two or more gig situations at a time. We should expect this to grow, as more companies look to sub-out specific jobs and capacities.
Contract Workers
It?s now estimated that 20% of the workforce is employed on a contract basis, compared to just over 10% in 2005. That?s a stunning growth level, and we should expect more of the same in the future.
The advantages of contract work squarely favors employers. They can hire people to do what are essentially full-time jobs, but absent the fixed salaries and benefit packages enjoyed by full-time, permanent workers.
Millions of people take contract work because it?s either common in specific fields (like IT as an example), or the alternative will be unemployment.
But even though income levels can be relatively constant on long-term assignments, the income is ultimately contingent. It?s usually based on a certain number of hours worked, so an employer can reduce hours to save payroll. And when an assignment is over, the employer can release the contract worker without notice or a severance package.
It?s probably the most dangerous form of contingent income, since it gives the illusion of a full-time job with none of the security.
Part-time Workers
According to the Bureau of Labor Statistics, more than 27 million Americans work part-time, representing about 17% of the total workforce. A large percentage of them are working part-time because they?ve been unable to secure full-time employment. These workers are included as part of the under-employment rate, which is consistently much higher than the official unemployment rate.
Though many people do part-time work by choice, the obvious problem ? for those relying on the income ? is a lack of consistency in hours. Since part-time work is often seasonal, the worker may find herself working something close to full time hours ?in season?, and very part-time out-of-season. That?s a very contingent income arrangement, and one that completely favors employers.
“Full-time” Job, Part-time Hours
My observation here is mostly anecdotal. I have people in my family, and know many others, who are scheduled to work a fixed number of hours. That may be full-time at 40 hours, but the hours are frequently reduced, either due to a lack of work or a reduction of income to the employer.
The complication for the employee is that such jobs are almost always hourly. The reduction in hours translates into reduced pay. By contrast, if the employee is on a flat salary, the employer is more likely to keep him on the job even if there?s little work to do. The alternative is to pay the employee to stay home, which no employer wants to do.
The same Bureau of Labor Statistics report cited above also listed more than 9.3 million workers who are classified as full-time, but work between ?one and 34 hours per week?. For the person who is relying on a 40-hour workweek to be able to pay their bills, a reduction to 30 or 32 hours for one or more weeks can cause budget problems.
It?s a frequent problem of part-time jobs as well. In fact, with most part-time jobs, variable hours seem to be built into the arrangement. Though you may be scheduled to work 25 hours, you may work 38 hours one week, and 12 the next. It?s a budgeting nightmare.
Jobs Where Much of the Income is Bonuses or Overtime
None of these employment arrangements are new, but the contingent income factor has always been part and parcel of jobs that involve either bonuses or overtime.
I?m not talking about situations where those contingent income sources are typically a small part of total compensation. In many jobs, overtime and bonuses represent a significant percentage of total income. They?re often paid to compensate for a low base salary – or to mask it.
This is another backdoor way employers control payroll costs. By keeping base salaries low, they reduce fixed costs. But bonuses and overtime enable employers to provide the income and incentives for employees to work harder at peak times.
The Usual Suspects ? Commissioned Workers, Tips and the Self-Employed
There have always been a significant number of contingent workers in the economy. This certainly includes the self-employed and those who are mostly or entirely compensated by commission income. But it also includes those who earn much or most of their income from tips, and that includes a large number of occupations. Restaurant servers, bartenders, pizza delivery drivers, baggage porters, golf caddies and parking valets are the most common examples.
There?s no indication that any of these capacities are on the rise in recent years. Contingent income has always been part of occupations with those income structures. But workers who earn substantial income from commissions, tips, and self-employment swell the ranks of those earning contingent incomes.
Why You Should be Prepared for Contingent Income Arrangements
So why should you be at all concerned about the rise of contingent income arrangements if you?re currently in a full-time salaried position with benefits? Because contingent income arrangements are the new normal. It?s one of the major reasons so many people feel so insecure, despite record low unemployment. Sure, unemployment may be hovering around 4%, a near historic low. But with tens of millions of people in contingent income arrangements, insecurity is the order of the day.
The point is, no matter what your current employment situation is, there?s more than a slight chance it?ll convert to some sort of contingent income arrangement. Or you may lose your traditional job, and find mostly contingent income arrangements as possible replacements. It completely benefits employers, which is why it?s become so popular. But as is so often the case, what benefits one party costs another. In most cases, contingent income means the employee loses.
Apart from the absence of a steady paycheck and employeef benefits, the main issue is the lack of consistent income. Sure, you might earn $1,000 in a good week, but that might drop to $500 in a bad week. Since contingent income arrangements are becoming so common, you should prepare for one even if you?re not in one now.
Strategies for Contingent Income Workers
How do you prepare? The prospect of a variable income highlights several important strategies:
- Keep your basic living expenses low, particularly fixed expenses like housing and car expenses.
- Avoid debt like the plague, particularly long-term debt. A short term, variable income doesn?t match up well with long-term, fixed debt. Not to mention, debt itself represents an additional monthly obligation.
- Stay liquid. Have solid cash reserves. The typical recommendation by financial planners is to have between three- and six-months living expenses in an emergency fund. If your income is contingent, it should be six months.
- Make sure you have a well-funded retirement plan. Very few contingent income workers have one provided by an employer. But it will become more important as you get older, and need an income supplement.
If Your Contingent Income is a Side Job Consider a Side Business Instead
One of the biggest dilemmas with contingent income is that you?re usually sitting somewhere halfway between traditional employment and self-employment. In fact, you have all the risks of self-employment, with few of the benefits of traditional employment.
That being the case, it may be worth making the full transition over to self-employment, at least if you?re using the contingent income arrangement as a second income source.
There multiple advantages to this:
- You?re halfway to self-employment anyway, so you may as well complete the transition.
- Contingent income arrangements are set to benefit the employer. You?re usually being paid a fraction of the revenue being generated by the work you?re doing. By becoming self-employed, you?ll get 100% of the revenue from your work.
- Self-employment can enable you to develop the contacts that will lead to semi-permanent and even permanent income streams.
- You?ll have more control of your time in over your workflow.
- As a self-employed person, you?ll be able to write off business-related expenses. For example, beginning with the 2018 tax year, you can no longer deduct unreimbursed employee business expenses. If you?re self-employed, you can deduct business-related expenses on Schedule C.
- A business can be expanded to any income level your time and talents will allow. Most contingent income arrangements put a limit on how much you can earn, often at a very low level.
The point is, if you have extra time on your hands and you need extra income, you may as well invest in yourself by becoming self-employed. In that way, you?ll be building a permanent future cash flow. By contrast, contingent income arrangements are just that ? contingent. They?ll come to an end either when the employer pulls the plug, or you get burned out and give up.
Final Thoughts on Contingent Income Arrangements
Since contingent income arrangements have become the new normal in the job market, and are not traditional jobs in any real way, we all need to be prepared for a future ? or a present ? where contingent income becomes our reality.
Are you in a contingent income arrangement now, or have you been in the past? What can you recommend to others in the same situation, or to those who may be contemplating it?
We use quite a few gig workers. We cut and sew for one. I’ll print the product but we have two or three people who sew for us in there homes. They come and pick up the products and work on them with there own equipment.
I send them a 1099 at the end of the year. There their own business though.
It’s the only way to work in this state and survive as a small business with no payroll, taxes and addtional insurances.
As time goes on we do this more and more. We use other companies to handle our larger scale jobs. I concentrate on the smaller retail jobs that bring in the most profit with less time used.
I can finish 6 or 7 small jobs in a day and still have larger scale jobs done.
It’s the way to go in today’s day and age.
I agree Tim, and that’s how it works in the blogging world too. If the gig workers are OK with that – and I know many on the web do it intentionally – it’s just a form of self-employment. But many of the contingent income arrangements now are mostly involuntary. Like contract workers who do it because they won’t get hired as permanents, or people who work for the formal gig economy, and make the equivalent of $10-$12 an hour while using their own cars. But that’s the way the job market is increasingly heading.
The people subbing for you are going the self-employment route, working from home and being paid directly by you as the client. They aren’t going through a corporate intermediary who skims off the largest share of the compensation. What your people are doing is what people should be doing. Sometimes it’s no more complicated than asking around about what kind of work businesses and people need done. Which is also marketing at its most basic level.
Yeah, I know this guy who teaches golf. He’s not an official instructor but he knows a lot about the golf swing.
He gives four or five half hour lessons five nights a week. It takes him about two hours a day.
He does it after work.
All cash, 50.00 dollars a half hour. He makes 1000.00 dollars a week on the side.
There are people like this all over the place, doing all kinds of things. Sometimes it takes just seeing a need and filling it. Everybody can do this.
We have guys who walk around here with lawn mowers, clippers and weed whackers doing the same thing.
With a lot of local businesses here there are guys who walk around all day cleaning windows.
All cash.
They do the same thing in the winter. They keep sidewalks clear, We do it. We have a business that people come and go during the day and we need are sidewalks clean. We slip a guy 10 or 15 dollars and he does it all. Even salts.
It beats being sued by somebody for slipping and falling. I don’t have the time to run out there everyday to do it.
My point is there are still a million ways to make money if you really want to. That is why I just don’t buy the laziness routine.
Corporations are a stay away from if you can help it.
Tim the business ideas you’re describing are something everyone can do, they just have to find that thing they do best and start asking around. Our problem, culturally, is that our world has become too sanitized. Earning a living is seen by most as a job. The don’t think in terms of self-employment. They may even be intimidated by the concept. But all it is is what we’re saying, pick a skill and find people who need it. There’s nothing fancy or scary about that. I can’t talk though, I only learned that late in life. Which is why I’ve become such an advocate. There is a better way, but you have to choose to pursue it.
This is the new normal for businesses today. Now we need government to recognize this and adapt also. Zoning needs to allow people to work from home and let boarding house type housing to expand. Taxes paid on money earned after you make it instead of estimating and paying ahead of time.
There are advantages to gig work. You can say no if the job isnt worth it to you. You can go on vacation any time. If you keep things on a cash basis you can become elegible for govermment assistance programs.
But you have to have dicipline and control of your debt and expenses. Dont count on one big client. Better to have lots of little clients. Do work as local as possible.
I say a big, fat AMEN(!) to all you’ve written Ric. Starting with government removing obstacles to people earning a living. The means of earning a living have been changing rapidly in the past 20 years, but government continues to pretend it’s 1967. That has to change. And yes, even at the local level. Homeownership should allow for operating certain businesses out of the home, the way it was for thousands of years. It’s only since WW2 that the house morphed into a commodity and “investment”, and all economic use was practically removed. That was a negative shift for sure, and now we’re paying for it.
Worked for 25 yrs in a job of base pay (it paid my basic bills) plus possibility of overtime n bonus. I always maxed the heck out of it usually doubling my base pay.
Couple yrs ago I was able to go self employed, went on husbands ins. I?m paid per appt. my first 12 mos I rocked it!
The need for this variety has been way over do. Thank goodness for this younger generation seeing the need for this. It doesn?t come without its issues but much more family friendly!
I totally agree Ruthann. The younger generation is opening up doors that seem downright foreign to a lot of us baby boomers. The gig economy may not be perfect, but it’s become the breeding ground for future entrepreneurs. Once you realize you can break free of the traditional job, a lot of possibilities open up. Being self-employed, I have to agree, I have a lot more control over my personal life, certainly more so than I did when I had a traditional job. I know they say never say never, but I believe I’ll never go back to a traditional job.
I heard that advice from a very wealthy guy. He said, find a need and figure out a way to fill it.
That’s all it is. That’s all business really is.
I know what you mean by the home. My home is zoned commercial so I can operate my business out of it.
The issue though is commercial zoning is double the expense.
Once these businesses see that you are a business, like internet they triple the price with these so called business internet plans.
Insurance is double.
I use my home internet with Wifi. I don’t bother with all that.
I was the same Kevin, I always had a job. Once I started on my own I could not imagine working for anybody else again.
I hope to never have to.
In my case Tim, I better plan to keep working for myself. At this point, I don’t think anyone will hire me. I’ve been self-employed too long. That’s the kiss of death when you’re looking for a job. In fact, I’ve read there’s no bigger negative when applying for a job than having been self-employed. Oh well, if all else fails, McDonald’s is always hiring 😉
Hi Kevin: I worked a 9-5 job for 26 years, but for most of those years, I had a side-job that I did at home. I made very good money on that side job, and I often thought of leaving my full-time job to expand on that job that I could still do from home. It was all computer work, so no issues with zoning, etc., and there was no internet back then. Just straight typing. I got so fast I could type 90 words/min. It was called word-processing back then. However, medical insurance was the problem for me, as I was single. There was no Obamacare back then and private pay was unaffordable or nonexistent. That’s one drawback to this contingent income, but with the ACA now, that alleviates that issue, not that that is affordable either…story for another day. Anyway, I was very grateful for that work, as it allowed me to save and get ahead much faster. If I had insurance from a spouse at that time, I would have left that demanding full-time job and just expanded on the second, working from my home…there was so much typing I couldn’t keep up with it.
Hi Bev – I remember the word processing days, it was quite common 20-30 years ago. It was a career all by itself. Unfortunately, health insurance is the fly in everyone’s ointment these days, whether it’s taking a new job (without coverage), early retirement, starting a business or just taking a a much needed sabbatical. But that’s a topic we’ve discussed often on this site. If we could get that fixed we’d all have a lot more career and financial freedom.
I was going to say the same thing Kevin. It’s a factor and a reason most people stay or do jobs they don’t really like or want to do.
I’m lucky in the fact that I had health insurance from my job. It is quite possible that I would have never retired and started my own business.
It is a handcuff for sure to a lot of people. It’s pretty sad when this rules the day and dictates how we live or what we do for a living.
Absolutely. I’m very blessed, being self-employed, that my wife has been able to maintain our health insurance through a series of part-time and full-time jobs. But if she loses her job, and the coverage, we’d go on COBRA at over $1,000 per month, then after 18 months we’d be stuck with the ACA plans at who knows how much. In the meantime, I thank God for each month she has coverage. Which at this point in our lives I seriously believe to be a gift from Above, because I know that not everyone has this benefit. Health insurance premiums are a SERIOUS cost, especially as you get older.
I do pay a portion. I estimate that it saves me 8000 per year that I would have to pay out of pocket, after I deduct what I pay.
I always used to argue with guys who only cared about the number on paper. I can add 8000 in hidden benefit to my final yearly income from this.
You are so right. It is a gift from above. So many struggle with this and it runs there lives.
I totally understand how it can and does.
I really had no excuse to not try and start my own business. So probably the best bet if you need the health care from your job is to do something on the side in your off hours that you enjoy and build it slowly until the day comes you can leave. Which you talk about all the time.
You, too, have had an interesting conversation going, but one thing you haven’t touched on is how does one budget themselves to withstand the ups and downs of earning. It is great if you have a nice nest egg already setup to fall back on, but that is not the norm. I am going to address this topic from the viewpoint of someone who doesn’t earn the minimum of $100,000, which is the current lowest level income labeled “middle class”.
First of all, you need to have a budget based on covering your essential needs (housing, food, utilities, clothing, and transportation). That should give you an idea of the minimum amount of money you need to earn to be self-sufficient. If you are a motivated individual, you will find a way to earn this income, without using government assistance, but it will mean a loss of certain things (time, social activity, etc) Depending on your motivation, you may get a break into a “full-time” position, which may lower your work hours, but most likely, you will be working a composite of multiple part-time positions to keep income level stable. A good employer will recognize a good employee and give them the maximum hours allowed under the part-time hour regulation, which is 1500 hours yearly spread over 52 weeks. Yes, I am talking in terms of an hourly employee versus a salaried employee, but you have to address the elephant in the room (FLSA) which is a composite of federal, state and city laws that affect employment, which most companies have to follow and since Labor is the highest cost on the profit line, most will do it the cheapest method possible, Okay, becoming your own business is one of the ideal situation, but that’s not a reality for everyone.
In this day and age of high cost for things like healthcare, etc., one has to become selfish in what they are willing to do to earn their income and how they spend their earnings. Impulse spending should be controlled by need versus instantaneous gratification. I was watching a new show called Years and Years, which addresses current thinking of people about creating changes and one quote got my attention, you need to be a thinking person to vote. Think means you don’t accept situations at face value, you do what it takes without leaning on others. You learn new skills, you keep busy, you keep improving your lot and you are not influenced by mob mentality. If you want to put food on the table, you will work to earn an income, despite not having the ideal dream job ( I have yet to find that anywhere, not even on a self-employed job). Perhaps, we are currently a minority in our thinking, that a job’s purpose is to earn money not give us pleasure. Social life has a part in our lives but it doesn’t dictate how we live to continue, plus it doesn’t pay our bills. We all need money to support ourselves.to quote Forrest Gump–Life is a bowl of cherries and sometimes we have to deal with the pits.
Actually I think Forrest Gump talked about life being a box of chocolates (“you never know what you’re going to get”), not a bowl of cherries. But that’s a minor point. I did cover – very briefly – all that you mentioned in your comment MariaRose, But I purposely kept it short because it will be different for everyone. But you’re absolutely right, so much of how you might survive and thrive in the contingent income world depends on how you live and budget your money. Earning money is critical of course, but so is spending it intelligently. I’ve known many, many people who earn relatively little income, certainly well below $100k, but they manage to save up impressive fortunes by living on relatively little. If we could all adopt that way of living, there’d be a lot less financial stress, and a lot more personal options.
Unfortunately, too many are dealing with the TV (or suburban) view of how life should look. That means the house in the suburbs, the late model cars and the expensive vacations. All of that stands in the way of developing any real flexibility on the income side, particularly if you’re forced into a contingent income situation as so many are. But already we’re seeing many millennials, already knee-deep in the contingent income universe, forgoing “traditional” trappings of the American lifestyle, like buying houses, owning cars, and even getting married or having children. There’s no question contingent income limit lifestyle options, at least of the suburban lifestyle is seen as the norm. But it can also force you to create a lifestyle that’s consistent with the income situation, and that’s what needs to be embraced. I think if that balance can be reached, it then becomes possible to save and invest money. I’d also add that the flexibility heightens the chance of finding your true occupational purpose in life, if such a thing exists. I know so many people in traditional jobs who live for weekends, vacations and most of all, retirement, to believe that everyone with such a job is really happy.
In that way, the contingent income path holds greater potential to find happiness. But as you’ve written, that largely depends on the ability to develop spending patterns that match the income. That’s a balancing act, especially at the beginning. But I think if you can master it, better things lie ahead.
But perhaps I’m taking an optimistic view of what is at its core, a negative national development, that’s mostly just masking an slow but steady deterioration in the total job market. Either way, we have no choice but to take whatever trends prevail and turn them into some advantage for ourselves. Not easy, of course, but absolutely necessary I’m afraid.
In my case Maria, like I have said in the past. I have never had debt of any kind. I own my home and pay cash for cars and the like.
I was lucky in the fact that I had a pension from my job. Plus I had a father who was basically a manic when it came to money. These things were drummed into my head from 5 years old. That is what I live on. The money I make from this business, I save and it goes into a retirement fund. I don’t live on it. I have never increased my lifestyle no matter how much I make. If I live on 50,000 then that’s it. I could make 150,000 and still live on that same 50,000.
There is no secret formula.
Identify the what you need to live on a month. That’s it. Whatever you make above that should be put away. If you want to take a vacation then you save for it. My sister wanted to take her family to Disney. It cost her 10,000 dollars for it all. She saved for three years to go. When she went she loved it. plus she came back with no debt.
To be honest though, if I didn’t have the money to fall back on then I most likely would have never started this business.
That’s why Kevin talks about side gigs a lot. It’s not realistic for most to just walk away from there steady income. You can develop something in your spare time that could turn into a steady income when you do retire from that job. It takes time. It doesn’t happen over night. It could take 20 years.
It’s not fancy advice or sexy but people can’t wait for things anymore in this day and age. They go out and purchase the TV version of life then spend the rest of there life trying to get out of it.
$10,000 in Disney?!?!? We didn’t spend half that when we went to the Bahamas in March! And that was the Atlantis resort. (And yes, we also saved for it in advance!). We used to go to Disney when our kids were young. But they so gouge on prices now that you’d be better off going to Europe. I can’t believe how expensive Disney is any more, or that anyone even goes there. I’m really glad we went when we did because I doubt we’ll ever go again. Disney can soak some other poor suckers, we’re out!
Well, that cost of a Disney trip is a bit discouraging but like Tim said it was planned. Goes totally against a controlled spending event. At least they will have a lifetime of memories. My daughter who lives in Orlando has the option to buy a yearly pass for the family for any of those tourist traps at a state resident discount but there are blackout dates, that they aren’t allowed to visit. Being local, they save on housing cost and transportation, plus they pack their own food. But I can think of better uses for $10,000 than a one time Disney vacation. But that’s me.
But you also brought up the time process, which is the key part of the discussion. I just heard on the news again today about all the college graduates who now have thousands of dollars of debt to pay but nothing is said about how they intend to pay that debt that they incurred willingly by attending college. Debt is a chosen activity and learning how to control that debt to either nothing or make it a lesser state is part of being self-sufficient. Nothing happens instantaneously. My hairdresser has been a successful entrepreneur since she was 17 when she emancipated herself from her family to live on her own. She has a big enough clientele t support her lifestyle plus has time to develop a second venture making jewelry honoring those who have passed on, using their ashes ( an actual growing trend).
We can control every aspect of life, but we can adapt to control the effect on our lives, especially if we deal with reality versus dreams. You can dream as a guide but accept reality.
As far as Forest Gump and cherries, in the movie, he was talking about chocolates and not knowing what you would get in a box, but in the book, his mother would tell him stories about how to deal with adversities, and she mentions cherries as an example. Either way, one has to be prepared to take the negative along with the positive and push through. Just like this article about jobs. You choose to work and earn a living and try to spend your money wisely or you complain about it and ask for handouts and spend beyond your means.
So, you think that is expensive?
Five people, They flew, stayed in a resort on the grounds for ten days. That alone was probably at least four thousand. They bought the meal package, which had to be another 1000 for the five of them.
It cost them over a thousand for passes to the park for seven days. They did other things also in the area which cost.
!0,000 for a family of five for ten days, doing all that. Easy.
I went to Texas and California for six weeks with s family of five and spend 8000.00, including the planes tickets for all that.
Your talking two people. Not my cup of tea neither, Disney but she always wanted to go there.
My point wasn’t about Disney. When was the last time you traveled with a family of five or more? It’s brutal. I have access to airport lounges which you can eat in. Flying perks and I still spend that much just doing things.
A cheaper dinner cost me 120.00 for five people. Unless I want to eat at McDonald’s every day. Which I don’t.
We took a trip out to the statue of liberty and ellis island and it cost me 75.00. The long island train into Manhatten cost me 120.00 dollars for all five of us to take it from Dix Hills LI into Manhatten, round trip.
To drive over the George Washington Bridge I believe is over 15.00 now. One way.
I cannot go anywhere without renting two rooms now in a Hotel. Most Hotels will not let you have five people in a room. The ones that do, require me to rent a suite which is 300 a night during travel seasons.
It is brutally expensive to Travel in the U.S. anymore. That’s where I see the real inflation show up.
My real point is this. Living debt free is a lifestyle. It isn’t a one-time thing.
I’ll break it down to exactly what I do.
I have six months of living expenses put away. That is for NOTHING but a loss of income if something should happen to either one of us.
15 percent goes into my retirement account
10 percent goes into a savings account.
It isn’t really a savings account. It is what I use for whatever. Trips, clothes or other things that come up. Car repairs, Braces etc.
The rest I live on. Monthly Bills, heat, cable, electric, food.
I don’t fund my emergency account anymore because it is fully funded. I review it yearly and if I need to add to it I will.
I want to increase my retirement fund to 20 percent next year.
It’s really very simple. It’s a lifestyle. Because I do this every month I don’t have to plan things like I used to. If I want to go on a trip I go.
I’m a big believer in having experiences. I don’t care what it is. If it is something you enjoy and as long as you are doing the above things, then go for it. Yes, you only live on this earth once, then it’s gone in the blink of an eye.
No, Maria, I disagree that you can control every aspect of life. Things happen. It’s a flawed planet and we are flawed people.
We make things way more complicated than they have to be. I’ll admit, the disney comment irked me. She saved and that is what she wanted to do. Maybe it isn’t your thing but it was her’s and she did it the way were suppose to.
I would live this way if I made 40,000 or a million.
I don’t know how we got on this topic. I’m out.
I guess that I got misunderstood, which is typical since I don?t spend money in such large amounts without reason. Yeah traveling and lodging in the USA is extremely expensive, which is why I never understood my sister?s compulsion to repeatedly visit Disney in Florida. She would get a setup that included a full kitchen (pre-Airbnb days) to eliminate/lesson food costs. But everyone has their own expectations for travel costs. The same thing applies to job situations, you alone determine how to achieve the results you want to achieve. The less needy one is for the latest in thing the more control over costs. Like picking a cell phone carrier and the phone you will use, you pick what works best for all your needs. Same with all costs deemed necessary.
As far as deciding what exactly will be a future job market, I can still that the future will hold place for both hands on jobs and jobs that don?t need physical effort. The trick is to find your nick and get paid for your efforts in some form. There will always be people who are not comfortable being in a herd mentality and will be the one who can make something work for their needs. For me, I feel if I earned my money by working for it, I will not willing be comfortable sharing that money with someone who feels entitled because they exist. I hope that the future job market eliminates this conflict in some form, because if you earn your money then you can spend it any way you want, no judgment.
No need to apologize. My point was that traveling in the U.S. is brutally expensive. Anywhere for that matter.
I took the train from Oakland to the SF Airport with five people and it cost me 60.00.
Things add up quick. You can easy spend 10,000 dollars on a trip. Between lodging, Food and length of stay.
Like I said, I blew through 8000.00 in six weeks and we didn’t do a heck of a lot.
I travel to Charleston twice a year but I stay with a friend. I still spend 800.00 Three rounds of golf can run you 300.00 depending on where you go. A couple of nice dinners, Lunch at the course and boom 800, just like that.
Prices in the U.S. especially on the road are out of control.
My point is when you travel alone or with one other person it is a lot cheaper. Once you add kids it’s a whole other ball game. There are cheaper things to do, like camp or something like that but I’m not a camper. A week in a tent is hell to me. So I need a cabin which on peak times is 4 or 500 per week. depending on where you go.
My second point was, If you are taking the proper steps above first in your life then whatever else you do is up to you. I have no issue with that at all.
Hi all! Kevin, as always enjoy reading your work and insightful commentary. But more importantly I appreciate your acknowledgement and reliance on our risen Lord! I also very much appreciate the contributions of other readers.
Please don’t take the following ramblings as bragging in anyway, but I’d like some unbiased thoughts.
So, at 56, I’m very blessed to be in a well paying hourly job with great benefits including a very good 401k with both contribution and match components that are paid on my gross wages. I often make more off my overtime than what a straight 40 hour week would be. It’s not unusual for me to work 70+ hours a week. I believe the German company that I work for is fairly well run with good prospects to complete my main working years with them. And, I generally like the work I do which is a combination of physical and mental efforts.
However, I work swing shift, rotating days and nights, in a chemical plant, so I know that’s tough on the body.
I’ve considered for years trying out some kind of side businesses that could be carried over into the retirement years. But, I’m somewhat golden handcuffed with the overtime that’s normally available and the way it can bulk up my 401k and personal savings. We do own some land (part of my families farm) in our very rural community, but my observations are that farming on a small scope is pretty much a money pit. Our area is on the fringe of a retirement/tourist area which could provide potential for multiple business opportunities. While the internet is available at our home, our service is limited to cell based and is expensive.
I put this out there for your thoughts, comments, criticisms, points of view, etc. as I consider the opportunities. I look forward to your replies! Thanks!
WKH – Here are my thoughts on your situation, if that’s what you’re asking…you’re in a good place with the company you’re at. You seem to like the work, and it’s providing a level of personal satisfaction. As long as your mind and body can handle the 70 hour work weeks, I think you should keep going as long as you can. You’re making a lot of money right now, and if you can channel it into your retirement plan and other savings and investments, you’ll be creating more career options for later on.
I’m thinking at 56 years old, and retirement just a few years away, your best strategy is to prepare for that time. Once you do retire, you’ll have both time and the financial resources to fully explore your options. It’s even possible that one you hadn’t even considered will “magically” open up for you. When you’re walking with the Lord, that kind of outcome is hardly unusual!
In the meantime, as long as the long work weeks aren’t taking a serious toll on your health, you’re probably in the right place. Just make sure you don’t overwork yourself to the point where you won’t be able to enjoy the fruits of your labor later on. The combination of good health and a strong financial position will open a lot of doors in the traditional retirement years. I think you’re in a good place and probably don’t need to change anything right now.
Kevin- Thanks, I appreciate your thoughtful reply! Please continue your good work with blog!