Tuesday, August 01, 2006

Life and Leaving the Nest

The other day a young man we'll call Charles posted a question to a forum that I belong to and I gave him a couple of answers. I thought this was a useful exchange, so I'm posting it here for the potential benefit of others.

Here is Charles' original post (in blue)

Imagine that you are in your mid-20s. You still live with your parents. You have a full time job that doesn't pay much. And with your parents covering the basic necessities such as food, gas, taxes, heat, shelter, internet and the like, you are free to live a life of luxury. You can play guitar as much as you want. You are free to save money. And you thus have enough money to buy tickets to Eric Johnson concerts, buy new gear, and take vacations.

But then you are coming to the realization that this life of luxury is only temporary. Eventually, it has to end. And you are afraid. When you have to pay for the basic needs of life, how are you going to find the time to play guitar? If your guitar needs a repair, how will you be able to pay for it? How will you be able to afford new gear? Will you have to miss the next Eric Johnson concert? Will you have to quit the things you love altogether to make time for the basic needs of life?

And you also wonder, how will you be able to get a decent paying job? You are obviously still young and naive. Is entry level work the best you can do? You have met many people who have been doing the same thing you are doing, making the same amount of money, for almost 20 years. How will I make the transition from being an entry level worker to a leader? That is, someone who can handle more responsibilities, make more money, and feel more secure? And how will you handle the real world when your parents are no longer around to assist you?

What you have just read is my life today in a nutshell. Anybody here share or have shared a similar experience? How did you cope with it?

The real world is a scary place, no doubt.

And that was what Charles said. There were two answers back before mine. A sort of good cop/bad cop combination of one that was nurturing him forward, and the other that was kicking his but to get with it and take control of his life, move out of his parents house and start supporting himself.

My answer to him follows:

First, thank you so much for your intellectual honesty in revealing this, and discussing it so openly. The unexamined life is not worth living. This is where the real lessons of life begin. Soon, you will feel that everything up until now was childs-play. From here on out, life will start to feel REAL. REAL scary, REAL dangerous, REAL tedious, REAL challenging, REAL disappointing, REAL thrilling, REAL heavy, REAL important - but REAL. You have chosen to take the blue pill Mr. Anderson.

You just got some good advice from both Paige and John. It was kind of a good-cop/bad-cop routine, but both said some valuable insightful things. Listen and learn from them.

My 16 year old daughter has friends who have just been given new cars. One 16 yr old boy just got a 2006 Mazda RX8, and one 16 yr old girl (who I have known since she was 11) was just given a 2005 Corvette. How are these kids ever going to learn about the real world when they are living in a fantasy world like that? For most people who do well in life, it takes till about age 40 or more to be able to afford cars like that. To have them given to you at 16 means that the real world is going to be such an incredible letdown when they get there. That's a hard, hard lesson. Unless of course, it is the parent's plan to keep subsidizing their child's lifestyle for life.

Most don't. Usually, there is a day of reckoning where we all figure out that it is up to us to make our own way in the world. It sounds like you are at the cusp of that very epiphany now.

So first the good news - you are finally waking up from the dream of adolescence! Some people don't ever wake up. They stay in that cocoon state with their parents paying the way and shouldering all the responsibilities for them their whole lives. At least you will be able to start growing up in your 20's/30's.

There are a couple of things I'd like to mention here. You know how teenagers typically look down on anyone over 30 as being old and boring, and not with it? Not current with the latest music or the latest social trend or whatever?

Well, that's because they are struggling to spend all their time making a living, bucko. That's right. And soon you too will find that you are falling behind on the latest trends or coolest bands or whatever. Sixteen year olds will no longer be impressed with your savvy take on the current scene.
But oddly, this will no longer matter to you because you will have moved on to bigger things. Better things. More important things. You will have simply outgrown that teenage phase of your life and the opinions of 16 year olds will no longer matter to you, just like the opinions of 8 year olds probably don't influence your life decisions now.

There is no going back, from here on. Life is always moving forward. And it will do so with alarming and accelerating speed.

Once you wake up to the reality that YOU are responsible for supplying yourself with a place to live and furniture to sit on, and food to eat and clothes to wear, and a way to get where you need to be, then you start working like a machine. You give up the more trivial aspects of life and sink your teeth into real adult life. You actually become a part of the machinery of the economy. A useful member of society, as opposed to an end-consumer and a parasite living off the work and planning and efforts of your parents.

But get this - once you're up to speed, you might find that you actually enjoy the position of responsibility of being one of the ones who are actually helping to row this boat.

You are NOT the first to come to this point, trust me. Almost ALL of us do.

If your experience is like most of ours, here is what is going to happen next:
1) You may or may not have already learned that an entry level job does NOT pay enough money for a person to support themselves on, no matter how many hours or how hard you work. It's not intended to. That's why it's an entry-level job.
It's intended for kids too young to be supporting themselves, or for retired people who own their homes and things, and they have pensions, etc. and just need money for basic essentials like food, or for a person who works part time while a spouse does the real heavy-lifting to support the household.

2) You are going to start to realize how much the lifestyle you currently enjoy actually costs to maintain. From your comments, I'm thinking you're not really there yet. Not by a LOOOOONG way, my friend. But that's okay. It will come. And it will come in phases.
The funny thing is that when you start to figure it out, you'll THINK you've figured it out, but you won't have. It's a delusion we all have. Then LATER you will figure it out for real. But that comes much later. I will tell you right now, but I know you won't believe it, because you're not ready for it yet. You will think I am exaggerating. But I'm not. Eventually, you will know this yourself.

3) You are going to start to realize that you need a REAL job if you are going to support yourself. Then you have to start thinking about what REAL job you think you can get.

4) Then, it will hit you that you need to work your way up to that REAL job. In fact, even if someone just handed it to you right now, you couldn't really pull it off yet. You have to earn it. You need the education and experience combined with the talent to be able to do it properly. It takes a college degree to begin with. And not just any old BA. You'll need one in the specific area that the job you want requires. You make sacrifices of your time and money and lifestyle to get the degree.

5) Then, after you get the degree, and do the work and work up to the job, which takes years, during this process at some point you will move out of your parents house. Then you will discover how much it costs to support yourself, and you will probably discover that the job you have still might not actually pay for everything.

6) So you work harder to get higher up, to make more money. Again, you make sacrifices to do this. You work days and nights and weekends. Hell, I worked over 80 hours per week almost all through the entire 1990's. You take on extra responsibilities which takes up more time. You slowly move up. MAYBE. It depends. Moving up is DEFINITELY NOT automatic with time. You have to be smart about it. You have to strategize and plan. And you have to stay true to the plan. But all this work and planning hopefully eventually gets you into a position where you are more self-reliant.

7) Then you get married and have kids. And the whole gameboard changes. Now you are responsible for someone besides yourself. Welcome to adulthood. Now your decisions about where to live and what house to buy, and everything else in life are now based upon the child(ren).

8 ) Then it starts to slowly dawn on you that the extra food, clothing, insurance, school supplies, vacations, college tuition, etc. that it takes to raise children all costs far more than you earn. You make sacrifices. But now you are making them for your kids. And then they laugh at you behind your back for not knowing who the latest band is playing on their favorite radio station. Now you know you are a grown up. Finally.

There are many more lessons after that, but we'll stop there.

How Much Does It Cost to Live???
So how much DOES it really cost to live and support yourself? People give various guesses, and everyone's mileage differs, but I think we can get a rough idea across here. Let's work it out, shall we?

a) You'll need a place, right? I don't know what city you're in, but let's say you live in a cheap city. Not San Francisco or New York. Let's say you don't buy a house just yet. Let's say you're just going to rent an apartment for a while. Average rent is about $1500/month + utilities. It's possible to find cheaper if you look around, but you might not want to live in high crime areas. And you'll need first and last month's rent up front, so that's $3,000 in cash first, before you start paying $1500 every 30 days. You've got that, right? $4,500 in cash right now? Good. Because you'll need a lot more than that.

b) Then you'll need to pay those utilities. Let's itemize:
Home Phone: $90
Cell Phone: $90
Cable TV: $85
Internet: $35
Heating: $100
Electric: $150
Water: $50
Renters Insurance: $100
Total: $700/month. This varies. I pay well over $1,000 per month for the utilities, but then I have a house. For example, my electric bill alone averages about $400/month. We're talking an apartment here, so these numbers are closer for someone in that situation.

c) Then, you'll be wanting some furniture to put in those empty rooms. Chairs, tables, etc. The cheapest way to go is not to rent, but to buy a 3-room type of deal, put it on a credit card and pay it off. Let's say you get 3 rooms of medium level furniture (most of which you will make last you for years and years) for about $4000. Payments on that are probably about $400 per month. They'll be paid off in about a year and a half that way. (don't forget interest). You're lucky - as a renter, the fridge and stove and appliances are probably included at this point.

d) You've got a place, but you'll need a car, right? Well most new cars are $20,000 to $40,000. Even a pickup truck is $30K to $60 these days. So let's say you find a 3 yr old used car with a few miles on it for about $15K. And maybe you get about 3 more years out of that. That will run you probably about $400/month for the payment. Less per month if you lease - but that's a whole other discussion. See my blog for that duscussion.

e) By the way, will you be needing gas for that car, sir? Alrighty then. Lets see, average person drives about 20,000 miles per year. That's about 1000 gallons of gas for the average car. In a month then, that's about 83 gallons. At the current price of $3 per gallon, That's about $250/month in gas. And in a year, on a $15,000 car, you'll probably see about $1200 in repairs and maintenance. Tires, brakes, batteries, whatever. That's $100 per month. That works out to about $350/month for gas and maint on the car.

f) It's illegal to drive without insurance, so you'll need car insurance, too. That's what, $1800, per year? For a young guy, it can be thousands, For me it's 2400, but that's 3 vehicles. And two drivers. But then, the two drivers are both over 40, and married, and there is a $500 discount because my house insurance is with the same company, so the rate is lower. You won't have those big deductions, either. $1800 sounds about right for you, maybe a little low. So that's 150/month.

g) You'll need clothes to wear, right? Let's say, since you're a guy, you get away with the minimum. $150 per month to cover everything to do with clothes. Buying them, cleaning them, etc. It's also your shoes, socks, underwear, etc. That wouldn't do for a girl, but for a guy, if he is not gay, and not too fussy about his appearance or clothes, that might cover the basics. For now. Be aware that this will change later. This budget couldn't stay this way long term.

h) Were you planning on eating? Have you clocked the price of the food you consume on your parents' nickel? Count on about $200/week here. Remember, this is food + condiments, + garbage bags, every cleanser you need, shampoo, toothpaste, and anything else you've ever seen for sale in a supermarket. People don't buy this stuff for fun. It's there because people need it. Every household needs it. You probably got used to all this stuff just somehow BEING there in your parents house. Now YOU will need it. So that's $800 per month for food + consumables.

i) You WILL get sick at various points. You WILL need medical insurance, and you WILL have to pay for things beyond that. I currently pay about $1400 per month for healthcare. That's a family of 3 in good health. Last year I paid $16,000 for health care costs. My employer pays for 25% of my health insurance premium, which is $1000/month. So I pay $750 of that, then I pay for all the deductibles and the co-pays, and all the items that the insurance doesn't cover at ALL.
But let's say you are luckier than the rest of us. Since you are a young healthy guy, somehow, you manage to get a healthcare plan that than only runs you $500/month in total costs. That's say, $300 for the premiums, and $200 in stuff besides that. Of course, if you have a $2500 deductible, you might pay a lot more than that. But for now, lets leave it at $500/month

Let's just stop right there.
So far, we have:
On an annual basis, that is $63,000 per year. Of AFTER TAX dollars. To have that much to spend, you have to earn enough so that after 30% is taken off for taxes, etc. you have $63K left over to pay for this. Which means you'll need a gross annual salary of about $90,000 per year to support yourself.

Now consider this: This did NOT include paying for the following:
Vacations, magazines, books, movies, CD's, going out with friends, alcohol, cigarettes, buying presents for birthdays, weddings, babies, etc., license, registration on the car, Membership fees, dues, replacing things as they wear out - furniture, appliances, etc., no guitars, or amps, or equipment, no life insurance. No 401K pension savings. No savings of any kind. Not even a haircut, or speeding ticket. There is no way this is enough money. Life is far far more than just those basics.

If you know somebody who makes $50K or $60K and they tell you, "Naw, that's not true, you can live a decent middle class lifestyle on less than 90K per year. I do it.", then look at their situation carefully. Either they have TWO incomes from a married couple, or they were given a whole lot of things for free, or they are not really living a middle class lifestyle like this in some major respects, OR (and this is most likely), if you look carefully, you'll find they are in debt, and going deeper every year. That is what is happening all across America. People are going into debt because the average income CAN'T afford the average lifestyle.
I did not cook the books here. This is what it really actually costs to live. If you doubt it, then go back and read it again. Try to remove the things you don't need. I just put in the very basic essentials. I pointed to a list of other needed things that aren't even included yet. Add up the numbers yourself. Do the math. This IS what it is. One person living alone in a slightly less than average lifestyle in an average city needs at LEAST $90,000 gross annual income to pay the way.

Also, this is not a typical middle-class lifestyle because this is a rental apartment instead of a house. If you go to a house, be prepared to spend a LOT more per month. Also, be prepared to come up with $50K to $100K as a down payment. If you take a typical house in a typical city, you are looking at $350K. Even with a cheaper one at $250K, with a minimum $25K down payment, you've got mortgage payments of roughly $2500/month then.
With property taxes, and property homeowners insurance, etc. It's a lot more. Then you have to buy appliances. The appliances for the average house are probably close to $8,000. The fridge alone is $2000 on average. Then you have repairs. What about replacing the air conditioning unit? Or the roof after a hailstorm? Or fixing windows, doors, stairs, replacing worn-out carpeting or other flooring, and on and on and on....

The fact is that the typical middle-class lifestyle you might be accustomed to probably requires easily more than $100k per year to support. In fact, well over that.

Obviously, working at Wal-Mart for $6.00 per hour (or even 10.00 per hour) is not going to get you there. Even if you find a nice girl and get married, and you BOTH work, you're still going to need two jobs that are better than entry-level jobs to make ends meet.

So start thinking about what jobs DO pay that kind of money.

But, you ask, how do other people do it? Well, many times nowadays, it DOES take two professional incomes to make one middle-class lifestyle. And many professional incomes are around or over the 100K point. I just read an economics article that said that the average income in the US among working people is about $78K.
This is higher than you might have read before because I think it only counted people working in actual salary-type jobs, not just general population including unemployed, and not just minimum wage counter-help type jobs. Anyway, it was a real number not the artificial numbers you usually see in government statistics.

Other than that, people make sacrifices to make ends meet. And they adjust their expectations. If you find a job somewhere, even with the right college degree and it pays say 50K or 60K per year, you take it and start to work your way up. Maybe you find a cheaper apartment than that. Maybe you get a roommate. People manage somehow. But don't expect to simply go out and get a job and pay the way to supporting the lifestyle you have now right away. This is a long hard battle, and it takes time.

That is where you really start to appreciate what your parents are doing right this minute to support you in this lifestyle. Do you suppose they wouldn't have wanted to stay in the teenager lifestyle longer? And have their parents pay for everything, so they could just use their job money to buy their music stuff and hobby stuff, go to concerts, etc. etc.? ....yeah. Go hug them and thank them for all the sacrifices. They might appreciate it.

And then you've got to steel yourself for the road ahead. You've got a job to do, dude.

For some people, they struggle with just trying to stay out of jail. But just deciding to make an honest living by working hard at an honest job is not enough. Not NEARLY enough, as you can see.

You had some specific questions. Let's see now.... You wondered how you were going to keep buying guitars, and going to EJ concerts, and where you were going to get the time to practice playing guitar. Is that right? Hopefully you can now see that these questions are so overwhelmed by the larger issues of supporting yourself and getting on with life, that they are not really worth answering.

But I will answer anyway. They come later. Once you build up some momentum. Once you accumulate a few things. Once you get ahead of the ball a little. But first things first. Get out there and get on the path to a real career and a real life where you take responsibility for feeding and clothing and housing yourself like any self-respecting adult does.

You asked the question about how much longer you could expect your parents to keep subsidizing your lifestyle. Dude, if you are in your mid-20's then that ship already sailed. They shouldn't be paying the frieght for you NOW, let alone "how much longer?"... I left home when I was 18 to go be a full-time professional musician. Sure, crappy job, living on the road, constant touring, playing cover tunes in clubs for drunks who don't care. No security. No benefits, no vacation, no consistency, no pension, no medical, no future. But I was out there doing it. Then by the time I was 21, I realized that I needed a real job, because I saw guys that were 50 still doing the same thing as me and making even less money than I was. So I stopped being a full-time musician and I got out there, got the education, got started and worked my way up, and I did ok. You can too.

You need a plan. This ain't no practice run - this is REAL life. This is adulthood. Welcome.

Someone said something that really resonated with me. He said "The age of 30 will be on you before you know it like an F-16 with the afterburners lit. "

So true. Attention passengers: Please keep arms and legs inside the vehicle and hold on tight, because from here on to the end, this ride picks up speed.

I sometimes count time in cars instead of years. Most people keep a car for 5 or 6 years. They get a 5 yr loan to buy it and then once they finish paying it off, they trade in and get the next one.

So Chuck, consider this: One car from now you'll be 30. Three cars from now you'll be 40. DG, you'll be 40 in about 2 cars after the one you're driving now. Now, you can't cheat the system, either, just by hanging on to your cars twice as long. In that case, DG you'll be 40 after your next car.

Life passes so alarmingly fast. I think it was John Lennon who said that life is what happens when you're busy making plans. That is very true.

And one thing most of us forget when we are young is that we age as we get older. Most 20 year olds not only think they will live forever, but they think they will be like they are at 20 forever. It's not like you have 40 or 50 years after childhood to do all the things you want to do, because your health and your strength and your energy all diminishes as you age. Every year you get a little slower and a little less energetic and a little less capable.
Your years of young adulthood are the years of maximum potential as far as energy and stamina goes. You can prolong your energy a bit by taking vitamins and eating right and exercise - but aging is inevitable.

Also, you might die younger than you think. ev was 45. Anne was 36. And there may have been others on the list in our little group here that we didn't even realize have passed on because no one knew to tell us. As far as we know, they just simply stopped posting.

Also there are car accidents, violence, and other mishaps. I would bet that most people who are hurt or killed in an accident were thinking right up to that moment that accidents only happen to other people. Not them. The truth is that it happens to a large number of people every single day. And you never know when your ride is going to come to a sudden stop.

But don't be afraid of death. The ride ends for everyone. And I am pretty sure that there are other adventures beyond that. This is not about fear. This is simply about using your time wisely. You are here for a reason. Or possibly, for a number of reasons. It is up to each one of us to find out what the reasons are, then set our sights on them and work toward those goals.

Think of yourself at 60 looking back on this time in your life. What activities, choices will make you proud, happy and satisfied about this period? Were you brave and decisive? Did you take the steps to move forward into a better future for yourself? Did you form events, or did you simply let events form you? Did you help others where you could? Did you do enough? Is the world slightly better off for having you pass through it?

Or did you just sit and watch TV, play video games, drink beer, and listen to music during all your most energetic, strongest, best years? Did you use your potential to it's best purposes, or did you waste it in trivial self-indulgence?

What answers do you have for your 60 year old self?

I am not suggesting you are wasting time, and I am not even talking to anyone specifically here. This is just a general observation about us all.

For my part, I am doing everything I can to impress that old guy.



At 8/02/2006 11:40 AM, Anonymous lauren said...

This was interesting. I went and read the post on the EJ board. I'm 24 and live in Chicago in a nice neighborhood. I graduated college and was COMPLETELY on my own at that moment. I was living in a condo my parents owned and the SECOND I graduated I had to pay them rent. I paid my father rent. Not fun but the truth. I moved out two months later as planned into my own apartment I got on my own. I got a job, an apartment and two years later I still live by myself, completely support myself and I donno, it wasn't that hard for me. I guess I was lucky. I worked during college, saved a bit - not a ton - and have always been very independent.

Home Phone: $90 - I have vonage - unlimited long distance and calls for maybe $27 a month.

Cell Phone: $90 - I have a decent plan for closer to $50 at most.

Cable TV: $85
Internet: $35 - I have cable and internet for $90 total

Heating: $100 - I pay for my own gas and while I have a small place I don't think it's ever been over $50 in the coldest of Chicago winters.

Electric: $150 - in a small place where you are smart...I have paid maybe $30 at most. This summer with me using an ac unit it'll be more though.

Water: $50 - I don't know anyone in a chicago apartment that pays for water.

Renters Insurance: $100 - mine is maybe $200 a year. I can't imagine someone starating off with not much would pay a ton more than that.

I may just have to chime in on that thread.

At 8/02/2006 2:18 PM, Blogger Val Serrie said...

Good for you for going out on your own and becoming independent. Congratulations.
But that is what I would expect of a person your age. I was out when I was 18. I was married to my first wife at 21. Other friends were starting to have kids at that age. To be 24 and still be at home living like a teenager with your parents paying for everything was unthinkable to us then.
Also, thanks for the update on the utilities prices you pay. Yours were less than I guessed, but the ones I guessed were FAR less than I personall pay now. So there is a range. Once you get a house, things get a LOT more expensive.


At 8/02/2006 4:59 PM, Anonymous lauren said...

I personally expect that too but SO many people this age don't.

And yeah, a house is different, but I can't imagine the poster on the ej board moving from his parents' digs into his own house right away so I figured my bills (and this is in a huge city) are more like what he would pay.

I know you have at least a daughter right? Do you expect her to (say she goes to college..) be right on her own once she graduates? I think my parents pretty much (at least my dad) expected that of me. Aad if not to at least have a damn good plan if I moved home - I didn't though. If I had a kid I wouldn't want them living with me when they are 24...but that's just me.


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