On Modern Budgets

Ive been doing a lot of math lately, studying what the budget of a middle class American was like at the height of the middle class [1972], and decided to figure out what a person could afford today if we wanted to maintain the same purchasing power, considering that they had 30% disposable income and relative to today things were 300% cheaper.

Note, this is a contrast of what a person would have if they saved as much today as a person did in the 1970’s, which by all rights is the financial goal if a person is being responsible. Also, at the time I took my base values from, it was just before the end of the gold standard and the beginning of union busting.

How much overhead can you manage and still maintain the necessary purchasing power to take a hit and get back up in this economy (30% disposable income)?

$30,000 a year: 1 bedroom, in a house, shared accommodations, no car.

$40,000 a year: 1 bedroom apartment, no car, OR 1 bedroom in a house, shared accommodations, with a car.

$60,000 a year: 1 bedroom apartment, and a car. [Modern day middle class purchasing power, 40% of the population]

$120,000 a year: 1 bedroom house and a car.

$180,000 a year: 3 bedroom home, “perfect” marriage (2 children and Hindi, Sikh or Muslim wife, 95% chance of marriage success), two vehicles. [1970s middle class purchasing power, 3.26% of the population]

$320,000 a year: 3 bedroom house, western marriage (over 55% chance of divorce, two children), two vehicles. [Lower upper class, <1% of population].

It is worth noting, with a “perfect” marriage, the income needed to maintain that lifestyle can be split between both individuals since they are essentially bound and divorce risk is negligible, so each individual would only need to make $90,000 a year to maintain the “full package” lifestyle. This can be compounded with multi-generational households.

However, this essentially denies women rights in order to achieve financial success, if you consider the shunning that maintains those marriages high 95% “success” rates.

Also worth noting is that each bracket can put away a third of that a year [if nothing goes wrong], and the median cost of starting a small business is $50,000 dollars.

Since that is the only exit strategy to get to the six figure mark as an individual, keeping the overhead as many levels below your current income will decrease the amount of time it takes to earn that $50,000.

However, any prudent business man would have twice as much as they need on hand to start a business [$100,000] and at least five years of overhead saved up for their living expenses before starting a business so they can focus on the business and not be working 40 hours a week at the same time.

Considering western marriages double the necessary annual income needed to safely maintain any lifestyle, the safest strategy is earn the still fairly attainable $60,000 a year salary, and have a minimalist lifestyle on land you own, which I have been able to get down to a $20,000 a year overhead off grid home.

That takes about 5 years to attain at that income bracket. This strategy is not listed above, since it is not a conventional consideration. This would get you over the 50% disposable income mark, meaning you could reproduce and get a divorce and you would be able to maintain that lifestyle.

However, you would be working a 40 hour work week and coming home to a wife and kids in a Yurt, which may raise odds of divorce over 95%. After child support, you would be back down to the 30% disposable income mark.

The other obvious option is to forgo western marriage all together, never share residence with your partner and get a prenuptial agreement. This would only increase the overhead by $15,000 a year per child, and essentially avoids the double overhead risk of divorce.

It would still be safe to stay in the bracket below your current salary in order to mitigate the risk of the solo reproductive strategy. Compounding the off grid and solo reproductive strategy should give you a pretty safe 50% disposable income off $60,000.