Free Money Finance

The Crazy Way We Work

Here's an interesting infographic on the crazy way we work.

I'm going to pick out a few of their facts and comment on them.

70% of American workers experience stress-related illnesses.

I can relate to this.

I never knew what a toll stress was taking on my body until I retired. I could literally feel the stress melting away over time. It took about six months for me to fully de-stress after working almost 30 years.

Of course, too much stress is not good for any of us. In this way, our jobs are slowly killing us every day.

33% more heart attacks occur on Monday mornings.

Uh, yeah. Because 1) people hate their jobs and 2) there's a lot of stress there. No surprise here.

In retirement, Monday becomes your favorite day. Why? Because everyone else goes back to work. The stores are quieter, the gym is quieter, the theater is quieter, and so on.

The average commute time is 47 minutes round trip.

That is BRUTAL!

Most people don't factor the physical (more stress!) and monetary (like taking a big pay cut) impact of a long commute.

Think about it this way: 47 minutes per day * 5 days per week * 50 weeks = 11,750 minutes or 196 hours or 8.2 days per year commuting. Ugh.

I never had a commute more than 20 minutes one way and if I had I would have probably hated it completely.

41% of tasks on to-do lists never get completed.

What a shock here...not really.

Most people are so busy getting to the urgent things each day that they don't get to the important things.

There's a reason Covey addressed this in his 7 Habits book.

Interesting stuff all the way around. If you want more, check out the infographic for yourself.

What's It Take to "Make It"?

Here's a very interesting post and infographic on what people think it takes to "make it" in America. 

2,000 people were asked what “making it” means to them. Their answers provide some interesting results.

Here are a few of the money-related ones and my thoughts on them:

Average annual income: Now: $57,426; Made it: $147,104

So while the average person in the survey makes $57k, they feel they would have "made it" is they earned $147k.

Wow, that's a big gap.

And one that is not achievable by most people.

According to WalletHacks, the top 5% of earners earn $130k or more.

So in other words, the vast majority will never "make it" to their desired income.

That said, if they want to, they need to get started asap at growing their careers as well as begin a side hustle.

Average home value: Now: $248k; Made it: $461k

First of all, these people are either living in high cost-of-living areas or they want HUGE houses! Yikes!

They should be careful since houses costing over $300k can actually lower your net worth.

Second, I think I have "made it" and I've never owned a home I purchased for over $400k (my current home might be worth that now, but I bought it for under $400k -- and we don't live in the high rent district).

That said, I do own $600k of rental property, so don't know if they're counting that (I assume not).

Average car value: Now: $15,789; Made it: $41,986

Uh, no.

Really? Really, America?

Maybe it's because they associate "making it" with an expensive, luxury car. Otherwise, I don't get it.

Two other pieces of information worth sharing:

• My state, Colorado, was listed as the #3 "made it" state. Oh yes...
• They asked people what it took to be "above average" in status. Women were more likely to say "income" while men were more likely to say "freedom". Interesting. That said, freedom and income are interrelated.

Check out the piece for a ton more interesting facts presented in a very nice infographic.

How Much to Borrow for College

Unless you've been hiding under a rock for the past few years, you've heard about the "student loan crisis"

I put that in quotes because it's not a crisis IMO. It's a problem caused by people who do not understand basic financial principles. But more on that in a minute.

For now, let's begin with what Wikipedia says about student loan debt:

The Economist reported in June 2014 that U.S. student loan debt exceeded $1.2 trillion, with over 7 million debtors in default. In 2014, there was approximately $1.3 trillion of outstanding student loan debt in the U.S. that affected 44 million borrowers who had an average outstanding loan balance of $37,172.

This level of debt in and of itself is not a problem -- as long as that debt can be covered by the salaries of the graduates with the debt.

The problem comes when a person borrows a huge amount that has no chance of being repaid given his expected graduating salary.

Here's a perfect example of what I'm talking about:

A Wilmington woman has reached her wits' end trying to pay off nearly $200,000 in student loan debt with a $38,000 salary.

And it's not isolated by any means. I've seen these sorts of situations for years and years and years.

Dave Ramsey deals with this sort of issue all the time. Here he is addressing it on a video:

And if you really want to hear him go off on the subject, listen to him have a meltdown over student loan debt. It's a classic. ;)

I've written several times about how to avoid this problem -- it boils down to making sure the debt is reasonable given the expected earnings upon graduation.

I only had a general suggestion on how to deal with this until I recently ran into this suggestion from Suze Orman:

Kids should not borrow more than they expect to make in their first year out of school.

In other words, if you expect to make $30k in your first year out of school, you shouldn't borrow more than $30k for the degree.

This seems like a good rule-of-thumb to me. What do you think of it?

And for those interested, here's a piece on how to select a college and another on how to save on college.

How Much You Should Have Saved by Your 40s

MSN gives some details on how much the average 40-year-old has saved.

The summary:

Among U.S. households headed by someone aged 44 to 49, the average retirement savings balance is $81,347, according to the Economic Policy Institute. But while that number may not seem all that bad, it's also a bit misleading. A small number of wealthier people who are financially able to set aside very large amounts can easily pull an average up. And in fact, they do. If we take a look at the median retirement savings balance -- signifying that half of these households have more saved, and half have less -- it's just $6,200. And what this tells us is that there are far more 40-something families whose nest eggs are below the average than above it.

Yikes! The median is $6,200???? That is totally pathetic!

But there's more -- they continue:

But even if you're between 44 and 49 and have managed to amass $81,000 or so, you still have some catching up to do. According to Fidelity, by the time you reach your mid-40s, your retirement savings balance should be equal to four times your salary. Since the average salary for American workers in their mid-40s is somewhere around the $50,000 range, to have accumulated just $81,347 at this point means you're not where you need to be. And if you're among the countless Americans who have yet to set aside a single dime for retirement, let this serve as a wake-up call.

In other words, you should have $200k saved by your mid-40's.

IMO this is not anywhere close to being enough (at 4% withdrawal, you can take $8k out per year). I'd prefer at least double that by mid-40s for sure -- hopefully even by the time you reach 40. That would allow $16k per year withdrawal at retirement. Add in savings from 40 to retirement age plus Social Security and you should have more than enough to retire -- and do so early!

One more thing: I suggest you start a side hustle because it can get you to retirement MUCH faster than you can without one. Even if you haven't saved much so far, creating a side business can help you catch up quickly and retire faster.