21 January 2010

How Your Stuff Owns You

click on image to enlarge

A brilliant way of visually representing how your 'stuff' owns you! Reminiscent of Vicki Robin's Your Money Or Your Life...

Excerpt from Steadfast Finances, 12 January 2010

'Due to the popularity of the visualizing how your stuff owns you post from several weeks ago, I thought it would be beneficial if I documented exactly how I use a simple monthly calendar and a few personal finance metrics to visually represent how many hours, days, even weeks, I had to work in order to maintain “ownership” of my stuff when I first entered the workforce...

How to Calculate your “Stuff per Hours Worked” Metric

Generating this graphic is very simple and takes just a few minutes. All you need to know is your annual salary and how much you pay every month on each individual bill.

Calculate your daily post tax bring home pay. Take a look at your pay stub or direct deposit receipts, and convert this number to your annual, post tax bring home salary. Then, divide this number by the number of days you work each year. For example, assuming you work a standard 9 to 5, five day a week job, let’s say your biweekly direct deposit total is $1500 post taxes, retirement contributions, etc. Simply multiply $1500 by 26 paychecks, then divide this number by 260 work days. In this example, the total will equal $150 per day.

How many days you work to pay each individual bill and liability. Let’s assume your mortgage (or rent) is $1500 per month. If you bring home $150 per day, you will need to work 10 days at this pay rate to stay in your home. So take your calendar, and draw a line through the first 10 business days, and label them as “mortgage payment”, “rent” or as I did, “my townhouse owns me”.

Repeat Step #2 for every bill or liability you currently have. If you have a car, add how much you pay each month for your auto loan, your monthly auto insurance payment and any personal property taxes you might have. Do this for your student loans, credit card debt, and any other long term contractual agreements. Of course, don’t forget that having a home means you have an electric bill, water bill, in-home entertainment and telecom costs just to keep the place habitable. And finally, you still have to pay fuel costs to and from work, keeping yourself clothed and presentable just so you can keep your job. Feels like I’m forgetting something. Oh yeah… you still have to eat!..'

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