Living in this Expensive World — Part One — Redefining Living Wage
When I was in college, a friend and I often frequented Chick-fil-A. We had our meals down to a science. We knew exactly what we would eat and frequently paid for each other's meals. The sad part is, what cost us $15 then would cost us $30 today. It can be discouraging to see this.
Inflation has been pretty bad in recent years. Of course, I’ve heard all the arguments and discussions about how it was that person’s fault, or it is corporate greed, or any other number of reasons for the high cost of living.
I don’t think it really matters whose fault it is. I think the real question boils down to “What are we going to do about it?” In my opinion, regardless of the long-term options for fixing it, I do think the starting point is just knowledge. The more you know, the greater the chance there is of preventing and eventually fixing the issue. Let’s peel this onion and look at the ways you can live better in this expensive world.
I’m going against the grain a bit here as I discuss money instead of my passions in software engineering and tech. This article is something I think we need to discuss in light of the recent changes in the economy and inflation.
Living Wage
Before we can get very far into this discussion, I think there is one thing we have to talk about upfront, and that is the ‘Living Wage’. While most people have a vague idea of what Living Wage means, I’m noticing a very specific trend, at least in the U.S.A. I often see ‘Living Wage’ defined as one of two distinct definitions.
Some will likely argue that the definition of a Living Wage is quite clear and easy to understand. That is to say, using the idea of ‘Being Alive’ versus ‘Living’. While I do understand this point of view, I think it still frequently tends to get lost in translation.
When I see people arguing over Living Wage, more often than not it is because [I can see] that one person is using one definition of ‘Living Wage’, while the other person is using the other definition of ‘Living Wage’. To further complicate matters and elevate tones, neither realizes this is what is happening.
I want to start by redefining ‘Living Wage’ into ‘Comfort Wage’ and ‘Discomfort Wage’. I also want to add ‘Semi-Comfort Wage’ and ‘Party Wage’ as well. It’s worth pointing out that the ‘true’ definition of ‘Living Wage’ is unlikely to change. My goal at this point is to get us all on the same page so we can agree on the subject at hand, regardless of our political standing, personal beliefs, or established opinions.
Living Wage tends to vary greatly from person to person or family to family. That is to say that what works for you may be too much for the neighbor on your left but too little for the neighbor on your right.
Discomfort Wage
The Discomfort Wage should be exactly what it sounds like. This is the bare minimum someone has to make to pay for the bare minimum it takes to stay alive. In its rawest form, I’m talking about just a roof over the head, food in the stomach, and clothes on the back. It’s uncomfortable, but you are not hungry, cold, or wet. Anything beyond this is putting you on the path to the Semi-Comfort Wage.
To be clear, I am intentionally excluding things like electricity or a cell phone. The Discomfort Wage isn’t supposed to be comfortable. It’s going to be uncomfortable and may mean reading by candlelight.
Semi-Comfort Wage
The Semi-Comfort Wage is everything above the Discomfort Wage that hasn’t yet made it to the Comfort Wage. While this can span a wide range, I typically intend it to mean “Discomfort Wage Plus”. That is to say, you have the basic ‘amenities’ like electricity and water, plus gas to get to work and back.
Comfort Wage
The Comfort Wage should also be exactly what it sounds like. This is the amount someone needs to make to be ‘comfortable’. Their bills are paid every month, including the mortgage/rent. They have spending money to do fun things and a brand-new car. They aren’t stressed about money and are content with their way of living.
Party Wage
The party wage is the level beyond the Comfort Wage that starts getting into the world of taking trips around the world, buying a yacht, or having a hobby collecting rare cars. At this point, all the bills are paid, you likely have little or no debt, and you can just about do whatever you want to.
Defining Your Goals
Now that we’ve redefined Living Wage into Discomfort Wage, Semi-Comfort Wage, Comfort Wage, and Party Wage, it’s time we take a look at defining what each of these uniquely means to you. As I move forward in this series of articles, I am going to reference these definitions quite frequently. In my next article, “Living in this Expensive World — Part Two — Living Within Our Means”, we will use these definitions to get us back on our feet. We will also use these definitions in part three, “Living in this Expensive World — Part Three — Changing the Status Quo.”
Defining Your Comfort Wage
The reason I like the idea of the ‘Discomfort Wage’ is that it is extremely cut and dry in meaning. Without any major reasoning, you know exactly what someone means. This is a lot harder to do for the ‘Comfort Wage’. Comfort Wage is going to differ between people. For one person, Comfort may mean having a brand new car, while for another person, a bike is all they need. In addition to an individual’s personality, their location will play a part in this. If you live in New York City, you may decide you don’t need a car or a bike because their public transportation works for you. This is why it’s difficult to establish a monetary value to Comfort Wage that works as a general definition.
So, before you can start living in this expensive world, you must define your own Comfort Wage. The problem with this statement, is you don’t define your Comfort Wage. What defines your Comfort Wage is the cost of everything to meet your daily comfort level or ‘ideal circumstances’.
This exercise is supposed to exclusively focus on the realistic side of life. That is to say, your comfort wage should not include those ‘dream’ things like owning two houses or having a yacht. It should be a ‘single-family home’ style build, with all your favorite services and bills paid for, and a little extra cash to spend on the little things that bring you joy.
If you define your Comfort Wage as living in New York City in a penthouse suite overlooking Broadway while owning an Aston Martin Valour and flying on your personal jet to Panama City every weekend, that is certainly your prerogative, but is it truly realistic? That is going to cost you a pretty penny to do. I’ve some friends who live in the Queens district and the cost of their one-bedroom apartment is comparable to the cost of my 4 bedroom house on the other side of the country. I want to point this out specifically because it can be easy to cross the fine line between the Comfort Wage and the Party Wage. When you define Comfort Wage, you should define it so it only includes those ‘have to haves’ like having one place to live.
There will undoubtedly be exceptions to the ‘have to haves’. My intent is to focus on the 80% of most people and not those exceptions. If you want to make the argument that you have to have two houses, a winter home and a summer home because of your health, then so be it. Just remember that the further away your Comfort Wage is from the Discomfort Wage, the harder you will have to work to make it come true.
Ultimately, I see the Comfort Wage as being comprised of:
- House/Apartment in an ideal location
- Furniture
- Food (Yes, technically eating out counts)
- Basic Utilities — Electricity, Gas, Water, Internet
- Entertainment Utilities — Cable TV, Satellite TV, Netflix, Hulu, etc
- Each member of the family has a reliable form of transportation (Public transportation counts!)
- Electronics — Each member of the family has a TV, Tablet, or Gaming Console
- Basic Supplies — Hygiene products, pens, paper, makeup. ‘Consumable Products’ if you will
- Non-Basic Supplies — Games, fandom, holiday decorations, etc
- Fun Money — Going to the movie theatre, spending a night out on the town clubbing, smaller hobbies like crafting
- Non-Fun Money — Car repairs, house repairs, getting the carpet cleaned, etc
- Miscellaneous — An in-house maid, gaming subscriptions, magazine subscriptions, continuing education, etc
I’ve said it already, but I’m going to say it again: You MUST be realistic about this exercise. I cannot stress this enough! This may mean having to have some serious inner conversations. I’m sorry, but if you are 150 years old and the only skill you have is painting walls, there is a good chance you are not going to be able to afford a penthouse suite apartment in downtown New York City at this moment. This means you may have to make a life change, like learning new skills, so you can do a job hop that will get you into that penthouse suite. On many levels, you should focus first on your current circumstances before you look at your dream circumstances. However, don’t forget your dream circumstances, as they will be a driving force in where you go from here.
You may have noticed that up to this point, I’ve been talking about the changes you have to make and not changes your job has to make like a pay increase. I’m doing this very intentionally. I’m a firm believer that you can’t change the world around you until you first change yourself. Our society already has many phrases that you frequently hear like ‘Do not get the spec out of your brother's eye until you first get the plank out of your own’ or the more modern ‘Every time you point your finger at someone, there are three more pointing back at you’. These other points are things we’ll dive into in the additional articles. For now, I want you to focus exclusively on the things you can define yourself.
Once you have defined all the above items, you should be able to come up with a rough number of how much it will cost to meet your comfort wage. Again, keep in mind that for you it may end up being ten thousand a month, while your neighbor’s might be five thousand a month. It’s all about your unique ideals.
Defining Your Semi-Comfort Wage
Now that you’ve defined your Comfort Wage, we need to talk about defining your Semi-Comfort Wage. I had you start with your Comfort Wage intentionally. If your Comfort Wage is what you need to live comfortably, and the Discomfort Wage is the bare minimum, then obviously your Semi-Comfort Wage is going to be somewhere in between these two.
For this exercise, you need to have some hard discussions with yourself and be able to rationalize every aspect of your life. The idea here is to define the bare minimum you “need” to have, to be comfortable, while also drawing a line in the sand around anything related to pride or just general living.
I think a really good example of a Semi-Comfort Wage consideration is the Cell Phone. In my case, it’s close to $200 a month for the mobile phone bill in my family. The question I often ask myself is why do I need the cell bill? I also have a “landline”, AKA a house phone, that costs me $30 a month. $200 can go a long way. It’s roughly 40 coffees, 20 fast food meals, 25 trips to the movie theater, or 4 trips to an amusement park. I could also apply that extra $200 to my debt to get me out of debt faster. So, why do I keep the cell phone? Well, the answer is simple. My wife has extreme anxiety as a result of her extreme ADHD. If she can’t get a hold of me when I’m supposed to be driving home from work, it could easily cause her to panic. If she panics, she may have a panic attack. Well, that panic attack could cause her to have an asthma attack, forcing her to use her inhaler. What’s bad, her inhaler, while the weakest version, has chemicals in it that conflict with her ADHD medicine and could cause her to have a heart attack. With all that in mind, I think it’s a reasonable expense to keep the cell phone, simply because by allowing my wife to be able to get a hold of me at all times, I can prevent a potentially disastrous outcome.
Some may argue that keeping the cell phone in this scenario is just enabling the other scenario and I should get rid of the cell phone anyway. While you may be correct that it is enabling, remember that this exercise is solely about what I’m comfortable with. What you are comfortable with is no more my business than what I’m comfortable with is yours.
Ultimately, defining your Semi-Comfort Wage isn’t fun to do and may mean ‘giving up’ things you don’t want to give up. You have to leave your pride and your emotions at the door to do this exercise. Keep in mind, that this isn’t the end goal, and it’s only supposed to be something to hold you over until you do reach your Comfort Wage. Pay attention to things like what subscription services you have. If you claim that having Hulu is part of your Semi-Comfort Wage, but you watch it once a year for about a month, is it really worth paying for it all year long? I certainly understand wanting to have it, but if you’re watching it once a year, then let’s be honest — your pride is what is holding onto it, not your Semi-Comfort Wage. Everything you keep in your Semi-Comfort Wage must be something you can rationalize in such a way that those closest to you will say ‘Okay, That makes sense’.
Defining Your Party Wage
Truth be told, I shouldn’t have to tell anyone what it means to define your Party Wage. At the very least, I would like this to be considered the stage in which you’ve enough money you start spending big bucks on hobbies without thinking about money. All the bills are paid. Ideally, no debt either. Even if you do have debt, you’re making enough that you can pay it off quickly or can buy that yacht you’ve always wanted. Your party wage is likely going to be anything above 150% of your Comfort Wage. Some might consider this ‘rich’, but I’d like to avoid that mindset. When talking about the ‘rich’, people tend to focus on the people who have a net worth of over one billion dollars. While they certainly can be considered there, it’s not what I am focusing on.
Comparing Your Party Wage To Your Net Worth
To be clear, I’d like to establish that your net worth and your Party Wage are different. Your net worth is simply the total value of your liquid cash, that is to say, if you sold everything, what would you have in spending power? Your Party Wage is instead the amount of income you have regularly. Too often I feel like people focus so much on net worth and too little on Party Wages. That is to say, I often feel like people talk about the net worth of the top-paid CEOs and how much they are ‘worth’, but fail to realize that a lot of that net worth is in stocks and the stock market. It’s liquid cash, not reoccurring income.
Imagine for a moment you wrote a `New York Times Best Seller` book 20 years ago and sold a billion copies. You used all that money to buy you an island in the Pacific for five hundred million dollars. However, 10 years ago, the publishing companies changed and no one sells your book anymore and you are almost unknown. Now, you still own your island, so your net worth is at least five hundred million dollars, but you only make fifty thousand dollars a year as a librarian. Your party wage is substantially less than your net worth in this scenario, but people will be validating or invalidating your worth based on your net worth, under the assumption it is also your Party Wage.
Conclusion
In part one of ‘Living in this Expensive World`, I wanted to focus on redefining what we mean when we talk about a Living Wage. This will differ from person to person, but before we focus on changing the world around us, we need to first make sure we are all on the same page. Too often, I find this isn’t the case because of the differences of opinion on what a Living Wage is or is meant to be.
In parts two and three of ‘Living in this Expensive World’, we will be looking at the concept of ‘Living within our Means’. In part five, I want to dive more into the world outside our control where we explore concepts like ‘Corporate Greed’, ‘Job Hopping’, and ‘Improving the Economy’ as we discuss ‘Changing the Status Quo’.
Have an idea you’d like me to discuss? Feel free to let me know and I will see if it is something I can cover.
