Hammered by inflation, recession fears and doubts about the future of Social Security, an increasing number of working Americans say they plan to claim their Social Security benefits early while staying on the job. Here are the factors driving this trend and the pros and cons of following suit.
Consider working with a financial advisor to create a retirement plan that fits your goals, risk profile and timeline.
More People Claim Social Security Early
42% of Americans said they plan to file for Social Security before their full retirement age while also continuing to work, according to a 2022 survey by the Nationwide Retirement Institute – up from 36% in 2021.
Workers who’ve paid into the retirement system can claim their Social Security benefits as early as age 62, but that decision can result in a monthly benefit check that’s as much as 30% less than the payment they’d receive at full retirement age, which is between ages 66 and 67 depending on what year you were born. By waiting beyond longer to file, a retiree can increase their Social Security payment by 8% each year beyond the full retirement age they wait to file, topping out at 70 years.
As of February 2023, the average monthly Social Security check among all retirees is $1,693.88, according to the agency. Meanwhile, the average check for a 62-year-old retiring this year would be $1,247.40, while the average payment at the full retirement age of 67 would be $1,782.
Over a 20-year retirement, the monthly difference of $534.6 would add up to more than $128,000 in retirement income, not counting any cost-of-living increases. These adjustments increase benefits by a set percentage calculated each year to keep retirement income paced with inflation.
Collecting benefits early isn’t always wrong, planners note. Many workers start taking Social Security benefits when they’re forced to retire because of corporate downsizing, age discrimination in hiring, illness or the need to care for a sick family member.
The Break-Even Point
Waiting to collect a higher benefit check later means the recipient is foregoing some cash flow. The “break-even” point – where the total benefits collected at full retirement are more than all the cash that could have been collected by starting early – usually comes somewhere around age 80, financial planners say.
Using this year’s average benefit amounts, someone who starts collecting benefits at 62 would collect a total of more than $254,000 over 17 years before they would have collected slightly more by waiting to claim the higher full-retirement benefit. By the year 2040, the higher benefit amount for waiting would produce slightly more than $2,000 in additional total cash (unadjusted for inflation).
Tax Considerations
Social Security benefits themselves aren’t taxable, but a downside of receiving Social Security payments early is that many of the beneficiaries will continue to work, which can make some or even much of their benefits taxable. In fact, that tax can apply to anyone collecting benefits who receives additional income.
A single tax filer receiving Social Security payments who makes more than $25,000 of what the IRS calls “combined income” will be taxed on 50% of his or her benefits, up to a limit of $34,000 in income. At that point, the tax apply to 85% of their benefits. The limits for joint tax filers are $32,000 and $44,000, respectively. Combined income is a taxpayer’s adjusted gross income, plus nontaxable interest income from bonds and half of their Social Security benefits.
Bottom line
The number of workers claiming Social Security early in their 60s is increasing, which may be due to a multitude of reasons. Everyone’s retirement path is different, so it’s important to calculate your needs and apply your Social Security accordingly. And if you continue to work while receiving benefits remember to estimate your tax penalty.
Tips on Retirement Planning
Deciding when to claim Social Security is only one part of retirement planning. A financial advisor can help you see and understand all the variables that go into a retirement plan. If you don’t have a financial advisor yet, finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Use our no-cost retirement calculator to get a quick estimate of what your net worth will be when you retire.
I was tired of fighting with mortgage lenders about self-employment income, high-interest rates, and dealing with scarce inventory that fit our family’s needs. We decided to rent a bigger home. I was beyond done. It wasn’t meant to be. The awards for entrepreneurship did not extend to quickly buying a home.
My wife found a home with motivated owners due to a divorce. They had only lived there nine months and needed to make a move. The best way to say it is that the price point didn’t accommodate the rising interest rate environment, and they were open to many options.
I discussed rent-to-own options, and finally, she said the magic words: “They would even make an assumption – they don’t need to make money on the deal.”
My father had been diagnosed with stage four liver failure at that time, and we were aggressively looking for a home so he could move in with my family. He had been working full-time, despite the immense pain and turmoil he experienced daily.
To overcome the disparity in my income, my father agreed to be our co-borrower on the mortgage assumption application. This was ideal because he was also moving in with us.
I quickly applied with our names, and our combined income was approved. We agreed on a final sale price and were off to the races.
I have been in the mortgage industry for nine years, with my loan officer in the industry for 19 years and my Realtor for over 10 years. While all parties knew this option existed, none of us had ever participated in a real mortgage assumption transaction. I had written a dozen or so mortgage assumption content pieces for various mortgage lenders and realtors, but have never seen a single deal shake out.
Everyone was in for a new experience, and here are the things we learned almost immediately.
Assuming a VA loan
I have nothing but the utmost respect for everyone serving in the military. I have several family members on active duty; this is a sacrifice, and veterans deserve every benefit possible.
Veterans Affairs (VA) mortgage loans can be an excellent product for veterans. VA loans can be assumed by anyone, and the new borrower assumes those benefits. You do not have to be a veteran to assume a VA loan.
I am not a veteran, but I did assume a VA mortgage.
Minimum timeline of 12 months
The sellers had only lived in the home for nine months. To make a mortgage assumption, you must live in the home for 12 months. To move my father in, we opted to rent the house for the remainder of the three months. Ideally, these types of loans can close in 30-45 days from application.
Assume everything
You assume everything about the loan. The focus, of course, will be the mortgage rate, which is almost half what the current market mortgage rates are today. In addition, I received the existing escrow account as well.
However, for some reason, you must pay property insurance up front for a year. Still, these small concessions and fees pale compared to what we’d have to pay if we bought a home traditionally in this high-rate environment.
The price difference
Homeowners at certain price points may need help to sell their homes in this high-rate environment. In our case, we agreed to pay the list price and the difference between the remaining loan and the list price. They had only been there nine months, and the price they bought was the same as the price they listed. So, we didn’t have much to cover.
We paid nothing down and very few fees. Hypothetically, if a homeowner lives in a home for several years, this would be an incredible option for a borrower to cover the difference and receive a mortgage rate that is potentially almost half of the current market rate.
My father grew extremely ill in the weeks leading up to moving in and passed away seven days before we took occupancy. I had to reconfigure my taxes to show income qualifying for the mortgage payment we would soon take over. If my father hadn’t stepped up, we wouldn’t have had a chance to secure the deal of a lifetime.
Three months later, at the closing table, clasping a picture of my father, I went through a traditional mortgage loan closing. The 20+ mortgage title professional had never closed a mortgage assumption in his entire career.
Were we lucky? Maybe a little bit. It was a culmination of luck, mortgage knowledge, and timing.
When going through my father’s stuff after he passed, we found a New Year’s letter from one of those television evangelists he had subscribed to. The letter spewed about affirmations and claiming victories in your life. On that piece of paper, my father wrote down our new address. So maybe it was that.
We live in a weird market. The demand to buy a home has remained strong. As mortgage and real estate professionals, we must continuously educate and inform our clients about every opportunity that may exist.
Mortgage assumptions seem to be the Bigfoot of our industry, but they exist and are a viable option for thousands of home sellers and borrowers. I would recommend checking the option out.
This column does not necessarily reflect the opinion of HousingWire and its owners.
To contact the author of this story: Steven Cooley at ArtVsMath.com To contact the editor responsible for this story: Sarah Wheeler at [email protected]
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
43k salary is a solid hourly wage when you think about it.
When you get your first job and you are making just above minimum wage making over $43,000 a year seems like it would provide amazing opportunities for you. Right?
The median household income is $68,703 in 2019 and increased by 6.8% from the previous year (source). Think of it as a bell curve with $68K at the top; the median means half of the population makes less than that and half makes more money.
The average income in the U.S. is $48,672 for a 40-hour workweek; that is an increase of 4% from the previous year (source). That means if you take everyone’s income and divided the money out evenly between all of the people.
But, the question remains can you truly live off 43,000 per year in today’s society since it is below both the average and median household incomes. The question you want to ask all of your friends is $43000 per year a good salary.
In this post, we are going to dive into everything that you need to know about a $43000 salary including hourly pay and a sample budget on how to spend and save your money.
These key facts will help you with money management and learn how much per hour $43k is as well as what you make per month, weekly, and biweekly.
Just like with any paycheck, it seems like money quickly goes out of your account to cover all of your bills and expenses, and you are left with a very small amount remaining. You may be disappointed that you were not able to reach your financial goals and you are left wondering…
Can I make a living on this salary?
$43000 a year is How Much an Hour?
When jumping from an hourly job to a salary for the first time, it is helpful to know how much is 43k a year hourly. That way you can decide whether or not the job is worthwhile for you.
$43000 a year is $20.67 per hour
Breakdown Of How Much Is 43k A Year Hourly
Let’s breakdown, how that 43000 salary to hourly number is calculated.
For our calculations to figure out how much is 43K salary hourly, we used the average five working days of 40 hours a week.
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, divide the yearly salary of $43000 by 2,080 working hours and the result is $20.67 per hour.
43000 salary / 2080 hours = $20.67 per hour
Just above $20 an hour.
Key Points….
That number is the gross hourly income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
You must check with your employer on how they plan to pay you. For those on salary, typically companies pay on a monthly, semi-monthly, biweekly, or weekly basis.
Just an interesting note… if you were to increase your annual salary by $5K to $48k per year, it would increase your hourly wage to over $23 an hour – a difference of $2.41 per hour.
To break it down – 48000 salary / 2080 hours = $23.08 per hour
That difference will help you fund your savings account; just remember every dollar adds up.
How Much is $43K salary Per Month?
On average, the monthly amount would be $3,583.
Annual Salary of $43,000 ÷ 12 months = $3,583 per month
This is how much you make a month if you get paid 43000 a year.
$43k a year is how much a week?
This is a great number to know! How much do I make each week? When I roll out of bed and do my job of $43k salary a year, how much can I expect to make at the end of the week for my effort?
Once again, the assumption is 40 hours worked.
Annual Salary of$43000/52 weeks = $827 per week.
$43000 a year is how much biweekly?
For this calculation, take the average weekly pay of $827 and double it.
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x 52 weeks = 260 working days
Annual Salary of$43000 / 260 working days = $165 per day
If you work a 10 hour day on 208 days throughout the year, you make $206 per day.
$43000 Salary is…
$43000 – Full Time
Total Income
Yearly Salary (52 weeks)
$43,000
Monthly Wage
$3,583
Weekly Pay (40 Hours)
$827
Bi-Weekly Pay (80 Hours)
$1,654
Daily Wage (8 Hours)
$165
Daily Wage (10 Hours)
$206
Hourly Wage
$20.67
Net Estimated Monthly Income
$2,735
Net Estimated Hourly Income
$15.78
**These are assumptions based on simple scenarios.
43k a year is how much an hour after taxes
Income taxes is one of the biggest culprits of reducing your take-home pay as well as FICA and Social Security. This is a true fact across the board with an all salary range up to $142,800.
When you make below the average household income, the amount of taxes taken out hurts your hourly wage.
Every single tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
So, how much an hour is 43000 a year after taxes?
Gross Annual Salary: $43,000
Federal Taxes of 12%: $5,160
State Taxes of 4%: $1,720
Social Security and Medicare of 7.65%: $3,290
$43k Per Year After Taxes is $32,830
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$32830 ÷ 2,080 hours = $15.78 per hour
After estimated taxes and FICA, you are netting $32,830 per year, which is $10,170 per year less than what you expect.
***This is a very high-level example and can vary greatly depending on your personal situation and potential deductions. Therefore, here is a great tool to help you figure out how much your net paycheck would be.***
In addition, if you live in a heavily taxed state like California or New York, then you have to pay way more money than somebody that lives in a no tax state like Texas or Florida. This is the debate of HCOL vs LCOL.
Thus, your yearly gross $43000 income can range from $29390 to $34550 depending on your state income taxes.
That is why it is important to realize the impact income taxes can have on your take home pay. It is one of those things that you should acknowledge and obviously you need to pay taxes. But, it can also put a huge dent in your ability to live the lifestyle you want on a $43,000 income.
43k salary lifestyle
Every person reading this post has a different upbringing and a different belief system about money. Therefore, what would be a lavish lifestyle to one person, maybe a frugal lifestyle to another person. And there’s no wrong or right, it is what works best for you.
One of the biggest factors to consider is your cost of living.
In another post, we detailed the differences of living in an HCOL vs LCOL vs MCOL area. When you live in big cities, trying to maintain your lifestyle of $43,000 a year is going to be much more difficult because your basic expenses, housing, transportation, food, and clothing are going to be much more expensive than you would find in a lower cost area.
To stretch your dollar further in the high cost of living area, you would have to probably live cheap and prioritize where you want to spend money and where you do not. Whereas, if you live in a low cost of living area, you can live a much more lavish lifestyle because the cost of living is less. Thus, you have more fun spending left in your account each month.
As we noted earlier in the post, $43,000 a year is below the average income that you would find in the United States. Thus, you have to be wise with how you spend your money.
What a $43,000 lifestyle will buy you:
If you are debt free and utilize smart money management skills, then you are able to enjoy the lifestyle you want.
You are able to rent in a decent neighborhood in LCOL and maybe a MCOL city.
You should be able to meet your expenses each and every month.
Participate in the 200 envelope challenge.
Ability to make sure that saving money is a priority, and very possibly save $3000 in 52 weeks.
When A $43,000 Salary Will Hold you Back:
However, if you are riddled with debt or unable to break the paycheck to paycheck cycle, then living off of 40k a year is going to be pretty darn difficult.
There are two factors that will keep holding you back:
You must pay off debt and cut all fun spending and extra expenses.
Break the paycheck to paycheck cycle.
It is possible to get ahead with money!
It just comes with proper money management skills and a desire to have less stress around money. That is a winning combination regardless of your income level.
$43k Salary to Hourly
We calculated how much $43,000 a year is how much an hour with 40 hours a week. But, more than likely, you work more or fewer hours per week.
So, here is a handy calculator to figure out your exact hourly salary wage.
$43K a year Budget – Example
As always, here at Money Bliss, we focus on covering our basic expenses plus saving and giving first, and then our goal is to eliminate debt. The rest of the money leftover is left for fun spending.
If you want to know how to manage 40k salary the best, then this is a prime example for you to compare your spending.
You can compare your budget to the ideal household budget percentages.
recommended budget percentages based on $43000 a year salary:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$251
Savings
15-25%
$645
Housing
20-30%
$932
Utilities
4-7%
$143
Groceries
5-12%
$287
Clothing
1-4%
$22
Transportation
4-10%
$143
Medical
5-12%
$179
Life Insurance
1%
$11
Education
1-4%
$11
Personal
2-7%
$32
Recreation / Entertainment
3-8%
$81
Debts
0% – Goal
$0
Government Tax (including Income Tatumx, Social Security & Medicare)
15-25%
$847
Total Gross Monthly Income
$3583
**In this budget, prioritization was given to basic expenses and no debt.
Is $43,000 a year a Good Salary?
As we stated earlier if you are able to make $43,000 a year, that is a decent salary. You are making more money than the minimum wage and close to double in many cities.
While 43000 is a good salary starting out in your working years. It is a salary that you want to increase before your expenses go up or the people you provide for increase.
However, too many times people get stuck in the lifestyle trap of trying to keep up with the Joneses, and their lifestyle desires get out of hand compared to their salary. It is okay to be driving around a beater car while you work on increasing your salary.
This $43k salary would be considered a lower middle class salary. This salary is something that you can live on if you are wise with money.
Check: Are you in the middle class?
In fact, this income level in the United States has enough buying power to put you in the top 95 percentile globally for per person income (source).
The question you need to ask yourself with your 43k salary is:
Am I maxed at the top of my career?
Is there more income potential?
What obstacles do I face if I want to try to increase my income?
In the future years and with possible inflation, many modest cities a 43,000 a year will not a good salary because the cost of living is so high, whereas these are some of the cities that you can make a comfortable living at 43,000 per year.
If you are looking for a career change, you want to find jobs paying at least $65000 a year.
Is 43k a good salary for a Single Person?
Simply put, yes.
You can stretch your salary much further because you are only worried about your own expenses. A single person will spend much less than if you need to provide for someone else.
Learn exactly what is a good salary for a single person today.
Your living expenses and ideal budget are much less. Thus, you can live extremely comfortably on $43000 per year.
And… most of us probably regret how much money wasted when we were single. Oh well, lesson learned.
Is 43k a good salary for a family?
Many of the same principles apply above on whether $43000 is a good salary. The main difference with a family, you have more people to provide for than when you are single or have just one other person in your household.
The costs of raising children are high and will steeply cut into your income. As you can tell this is a huge dent in your income, specifically $12,980 annually per child.
That means that amount of money is coming out of the income that you earned.
So, the question really remains is can you provide a good life for your family making $43,000 a year? This is the hardest part because each family has different choices, priorities, and values.
More or less, it comes down to two things:
The location where you live in.
Your lifestyle choices.
You can live comfortably as a family on this salary, but you will not be able to afford everything.
Many times when raising a family, it is helpful to have a dual-income household. That way you are able to provide the necessary expenses if both parties were making 43000 per year, then the combined income for the household would be $86,000. Thus making your combined salary a very good income.
Learn how much money a family of 4 needs in each state.
Can you Live on $43000 Per Year?
As we outlined earlier in the post, $43,000 a year:
$20.67 Per Hour
$165-206 Per Day (depending on length of day worked)
$827 Per Week
$1654 Per Biweekly
$3583 Per Month
Next up is making $45000 a year.
Like anything else in life, you get to decide how to spend, save and give your money.
That is the difference for each person on whether or not you can live a middle-class lifestyle depends on many potential factors. If you live in California or New Jersey you are gonna have a tougher time than Oklahoma or even Texas.
In addition, if you are early in your career, starting out around 34,000 a year, that is a great place to be getting your career. However, if you have been in your career for over 20 years and still making $43k, then you probably need to look at asking for pay increases, pick up a second job, or find a different career path.
Regardless of the wage that you make, if you are not able to live the lifestyle that you want, then you have to find ways to make it work for you. Everybody has choices to make.
But one of the things that can help you the most is to stick to our ideal household budget percentages to make sure you stay on track.
Learn exactly how much do I make per year…
One of the best ways to improve your personal finance situation is to increase your income. Here are a variety of side hustles that are very lucrative. With time and effort, you can start enjoying the lifestyle you want.
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32k salary is a solid hourly wage; above most minimum hourly wage jobs.
For most people, an entry-level job would be pay just over $32,000 a year. The question that remains is can you make a living off $32k a year.
The median household income is $68,703 in 2019 and increased by 6.8% from the previous year (source). Think of it as a bell curve with $68K at the top; the median means half of the population makes less than that and half makes more money.
The average income in the U.S. is $48,672 for a 40-hour workweek; that is an increase of 4% from the previous year (source). That means if you take everyone’s income and divided the money out evenly between all of the people.
But, the question remains can you truly live off 32,000 per year in today’s society since it is well below both the average and median household incomes. The question you want to ask all of your friends is $32000 per year a good salary.
In this post, we are going to dive into everything that you need to know about a $32000 salary including hourly pay and a sample budget on how to spend and save your money.
These key facts will help you with money management and learn how much per hour $32k is as well as what you make per month, weekly, and biweekly.
Just like with any paycheck, it seems like money quickly goes out of your account to cover all of your bills and expenses, and you are left with a very small amount remaining. You may be disappointed that you were not able to reach your financial goals and you are left wondering…
Can I make a living on this salary?
$32000 a year is How Much an Hour?
When jumping from an hourly job to a salary for the first time, it is helpful to know how much is 32k a year hourly. That way you can decide whether or not the job is worthwhile for you.
For our calculations to figure out how much is 32K salary hourly, we used the average five working days of 40 hours a week.
$32000 a year is $15.38 per hour
Let’s breakdown how that 32000 salary to hourly number is calculated.
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, divide the yearly salary of $32000 by 2,080 working hours and the result is $15.38 per hour.
32000 salary / 2080 hours = $15.38 per hour
Just above $15 an hour.
That number is the gross hourly income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
You must check with your employer on how they plan to pay you. For those on salary, typically companies pay on a monthly, semi-monthly, biweekly, or weekly basis.
What If I Increased My Salary?
Just an interesting note… if you were to increase your annual salary by $11K to $43K per year, it would increase your hourly wage to over $20 an hour – a difference of $5.29 per hour.
To break it down – 43k a year is how much an hour = $20.67
That difference will help you fund your savings account; just remember every dollar adds up.
How Much is $32K salary Per Month?
On average, the monthly amount would be $2,667.
Annual Salary of $32,000 ÷ 12 months = $2,667 per month
This is how much you make a month if you get paid 32000 a year.
$32k a year is how much a week?
This is a great number to know! How much do I make each week? When I roll out of bed and do my job of $32k salary a year, how much can I expect to make at the end of the week for my effort?
Once again, the assumption is 40 hours worked.
Annual Salary of$32000/52 weeks = $615 per week.
$32000 a year is how much biweekly?
For this calculation, take the average weekly pay of $615 and double it.
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x 52 weeks = 260 working days
Annual Salary of$32000 / 260 working days = $123 per day
If you work a 10 hour day on 208 days throughout the year, you make $153 per day.
$32000 Salary is…
$32000 – Full Time
Total Income
Yearly Salary (52 weeks)
$32,000
Monthly Wage
$2,667
Weekly Salary (40 Hours)
$615
Bi-Weekly Wage (80 Hours)
$1,230
Daily Wage (8 Hours)
$123
Daily Wage (10 Hours)
$153
Hourly Wage
$15.38
Net Estimated Monthly Income
$2,036
Net Estimated Hourly Income
$11.75
**These are assumptions based on simple scenarios.
32k a year is how much an hour after taxes
Income taxes is one of the biggest culprits of reducing your take-home pay as well as FICA and Social Security. This is a true fact across the board with an all salary range up to $142,800.
When you make below the average household income, the amount of taxes taken out hurts your hourly wage.
Every single tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
So, how much an hour is 32000 a year after taxes?
Gross Annual Salary: $32,000
Federal Taxes of 12%: $3,840
State Taxes of 4%: $1,280
Social Security and Medicare of 7.65%: $2,448
$32k Per Year After Taxes is $24,432.
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$24432 ÷ 2,080 hours = $11.75 per hour
After estimated taxes and FICA, you are netting $24,432 per year, which is $7,568 per year less than what you expect.
***This is a very high-level example and can vary greatly depending on your personal situation and potential deductions. Therefore, here is a great tool to help you figure out how much your net paycheck would be.***
In addition, if you live in a heavily taxed state like California or New York, then you have to pay way more money than somebody that lives in a no tax state like Texas or Florida. This is the debate of HCOL vs LCOL.
Thus, your yearly gross $32000 income can range from $21,872 to $25,712depending on your state income taxes.
That is why it is important to realize the impact income taxes can have on your take home pay. It is one of those things that you should acknowledge and obviously you need to pay taxes. But, it can also put a huge dent in your ability to live the lifestyle you want on a $32,000 income.
32k salary lifestyle
Every person reading this post has a different upbringing and a different belief system about money. Therefore, what would be a lavish lifestyle to one person, maybe a frugal lifestyle to another person. And there’s no wrong or right, it is what works best for you.
One of the biggest factors to consider is your cost of living.
In another post, we detailed the differences of living in an HCOL vs LCOL vs MCOL area. When you live in big cities, trying to maintain your lifestyle of $32,000 a year is going to be extremely difficult because your basic expenses, housing, transportation, food, and clothing are going to be much more expensive than you would find in a lower cost area.
To stretch your dollar further in the high cost of living area, you would have to probably live a very frugal lifestyle and prioritize where you want to spend money and where you do not. Whereas, if you live in a low cost of living area, you can afford the cost of living and maybe save more money. Thus, you have more fun spending left in your account each month.
As we noted earlier in the post, $32,000 a year is well below the average income that you would find in the United States. Thus, you have to be wise with how you spend your money.
What a $32,000 lifestyle will buy you:
If you are debt free and utilize smart money management skills, then you are able to enjoy the lifestyle you want.
You are able to rent in a decent neighborhood in LCOL.
You should be able to meet your basic expenses each and every month.
Not be able to afford many of the fun spending luxuries.
Start saving with the 200 envelope challenge.
Ability to make sure that saving money is a priority, and very possibly save $1000 in 52 weeks.
When A $32,000 Salary Will Hold you Back:
However, if you are riddled with debt or unable to break the paycheck to paycheck cycle, then living off of 32k a year is going to be pretty darn difficult.
There are two factors that will keep holding you back:
You must pay off debt and cut all fun spending and extra expenses.
Break the paycheck to paycheck cycle.
It is possible to get ahead with money!
It just comes with proper money management skills and a desire to have less stress around money. That is a winning combination regardless of your income level.
$32k Salary To Hourly
We calculated how much $32,000 a year is how much an hour with 40 hours a week. But, more than likely, you work more or fewer hours per week.
So, here is a handy calculator to figure out your exact hourly salary wage.
$32K a year Budget – Example
As always, here at Money Bliss, we focus on covering our basic expenses plus saving and giving first, and then our goal is to eliminate debt. The rest of the money leftover is left for fun spending.
If you want to know how to manage 32k salary the best, then this is a prime example for you to compare your spending.
You can compare your budget to the ideal household budget percentages.
recommended budget percentages based on $32000 a year salary:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$187
Savings
15-25%
$480
Housing
20-30%
$693
Utilities
4-7%
$107
Groceries
5-12%
$213
Clothing
1-4%
$16
Transportation
4-10%
$107
Medical
5-12%
$133
Life Insurance
1%
$10
Education
1-4%
$6
Personal
2-7%
$24
Recreation / Entertainment
3-8%
$60
Debts
0% – Goal
$0
Government Tax (including Income Tatumx, Social Security & Medicare)
15-25%
$631
Total Gross Monthly Income
$2,667
**In this budget, prioritization was given to basic expenses and no debt.
Is $32,000 a year a Good Salary?
As we stated earlier if you are able to make $32,000 a year, that is a low salary. You are making around or just above minimum wage.
While 32000 is a decent salary just starting out in your working years, it is a salary that you want to rapidly increase before your expenses go up or the people you provide for increase. If not, you will be left working multiple jobs to make ends meet.
However, too many times people get stuck in the lifestyle trap of trying to keep up with the Joneses, and their lifestyle desires get out of hand compared to their salary. And what they thought used to be a great salary actually is not making ends meet at this time.
This $32k salary would be considered a lower class salary. You must make each dollar count in your budget.
Check: Are you in the middle class?
In fact, this income level in the United States has enough buying power to put you in the top 95 percentile globally for per person income (source).
The question you need to ask yourself with your 32k salary is:
Am I maxed at the top of my career?
Is there more income potential?
What obstacles do I face if I want to try to increase my income?
In the future years and with possible inflation, in many modest cities a 32,000 a year is not a good salary because the cost of living is so high, whereas these are some of the cities where you can make a decent living at 32,000 per year.
If you are looking for a career change, you want to find jobs paying at least 35,000 a year.
Is 32k a good salary for a Single Person?
Simply put, you can make it work.
You can stretch your salary much further because you are only worried about your own expenses. A single person will spend much less than if you need to provide for someone else.
Learn exactly what is a good salary for a single person today.
Your living expenses and ideal budget are much less. Thus, you can live comfortably on $32000 per year.
And… most of us probably regret how much money wasted when we were single. Oh well, lesson learned.
Is 32k a good salary for a family?
Many of the same principles apply above on whether $32000 is a good salary. The main difference with a family, you have more people to provide for than when you are single or have just one other person in your household.
The costs of raising children are high and will steeply cut into your income. As you can tell this is a huge dent in your income, specifically $12,980 annually per child.
That means that amount of money is coming out of the income that you earned.
So, the question really remains is can you provide a good life for your family making $43,000 a year? This is the hardest part because each family has different choices, priorities, and values.
More or less, it comes down to two things:
The location where you live in.
Your lifestyle choices.
You can live comfortably as a family on this salary, but you will not be able to afford everything.
Many times when raising a family, it is helpful to have a dual-income household. That way you are able to provide the necessary expenses if both parties were making 32,000 per year, then the combined income for the household would be over $64,000. Thus making your combined salary a very good income.
Learn how much money a family of 4 needs in each state.
Can you Live on 32000 Per Year?
As we outlined earlier in the post, $32,000 a year:
$15.38 Per Hour
$123-153 Per Day (depending on length of day worked)
$615 Per Week
$1230 Per Biweekly
$2667 Per Month
Next up is making $35000 a year!
Like anything else in life, you get to decide how to spend, save and give your money.
That is the difference for each person on whether or not you can live a lower-class lifestyle depends on many potential factors. If you live in California or New Jersey you are gonna have a tougher time than Oklahoma or even Texas.
In addition, if you are early in your career, starting out around 30,000 a year, that is a-okay place to be getting your career. However, if you have been in your career for over 20 years and still making $32K, then you probably need to look at asking for pay increases, pick up a second job, or find a different career path.
Regardless of the wage that you make, if you are not able to live the lifestyle that you want, then you have to find ways to make it work for you. Everybody has choices to make.
But one of the things that can help you the most is to stick to our ideal household budget percentages to make sure you stay on track.
One of the best ways to improve your personal finance situation is to increase your income. Here are a variety of side hustles that are very lucrative. With time and effort, you can start enjoying the lifestyle you want.
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A hedge fund is an investment vehicle that invests in securities and other assets with money pooled from investors. They’re similar to mutual funds or exchange-traded funds, but they are riskier and more expensive. Because of this, they’re subject to different government regulations and only sophisticated investors.
While most investors may not engage with a hedge fund, especially younger ones, it can be useful to know what they are and how they work.
What Is a Hedge Fund?
Hedge funds are set up by a registered investment advisor or money manager, often as a limited liability company (LLC) or a limited partnership (LP). They differ from mutual funds in that they have more investment freedom, so they’re able to make riskier investments.
By using aggressive investing tactics, such as short-selling, debt-based investing, and leveraging hedge funds can potentially deliver higher-than-market returns, but they also have higher risks than other types of investments. In addition to traditional asset classes, hedge funds can a diverse array of alternative assets, including art, real estate, and currencies.
Hedge funds tend to seek out short-term investments rather than long-term investments. Of course assets that have significant short-term growth potential can also have greater short term losses.
Historically, hedge funds have not performed as well as safer investments, such as stock market indices. However, the goal of hedge funds isn’t necessarily to outperform the stock market. Investors also use hedge funds to provide growth during all phases of market growth and decline, providing diversification to a portfolio that also contains stocks, cash, and other investments.
Generally speaking, only qualified investors and institutional investors are able to invest in hedge funds, due to their risks and the high fees that get paid to fund managers.
Types of Hedge Funds
Each hedge fund has a different investing philosophy and invests in different types of assets. Some different hedge fund strategies include:
• Real estate investing
• Junk bond investing
• Specialized asset class investing such as art, music, or patents
• Long-only equity investing (no short selling)
• Private equity investing, in which the fund only invests in privately-held businesses. In some cases the hedge fund gets involved in the business operations and helps to take the company public.
What Is a Hedge Fund Manager?
Hedge funds are run by investment managers who make investment decisions and manage the risk level of the fund. If a hedge fund is profitable, the hedge fund manager can make a significant amount of money, often up to 20% of the profits.
Before selecting and investing in a hedge fund, it’s important to look into the fund manager’s history as well as their investing strategy and fees. This information can be found on the manager’s Form ADV, which you can find on the fund’s website as well as through the Security and Exchange Commission’s (SEC) website.
Who Can Invest in a Hedge Fund?
Hedge funds are not open to the general public, and there are several requirements to be able to invest in them. In order for an individual to invest, they must be an accredited investor. This means that they either:
• Have an individual annual income of $200,000 or more. If the married investors must have a combined income of $300,000 per year or more. They must have had this level of income for at least two consecutive years and expect to continue to earn this level of income.
• Or, the investor must have an individual or combined net worth of $1 million or more, excluding their primary residence.
If the investor is an entity rather than an individual, they must:
• Be a trust with a net worth of at least $5 million. The trust can’t have been formed solely for the purpose of investing, and must be run by a “sophisticated” investor, defined by the SEC as someone with sufficient knowledge and experience with investing and the potential risks involved.
• Or, the entity can be a group of accredited investors.
How to Invest in a Hedge Fund
Investing in hedge funds is risky and involves a deep understanding of financial markets. Before investing, there are several things to consider:
The Fund’s Investing Strategy
Start by researching the hedge fund manager and their history in the industry. Look at the types of assets the fund invests in, read the fund’s prospectus and other materials to understand the opportunity cost and risk. Generally speaking, the higher the risk, the higher potential returns.
In addition, you need to understand how the fund evaluates potential investments. If the fund invests in alternative assets, these may be difficult to value and may also have lower liquidity.
Understand the Minimums
Investment requirements can range between $100,000 to $2 million or more. Hedge funds have less liquidity than stocks or bonds, and some require that money stays invested in the fund for a specific amount of time before it can be withdrawn. It’s also common for there to be lock-up periods for funds and for there to only be certain times of year when funds can be withdrawn.
Confirm You Can Make the Investment
Make sure that the fund you’re interested in is an open fund, meaning that it accepts new investors. Financial professionals can help with this research process. Each hedge fund will evaluate an individual’s accreditation status using their own methods. They may require personal information about income, debt, and assets.
Understand the Fees
Usually hedge funds charge an asset management fee of 1-2% of invested assets, as well as a performance fee of 20% of the hedge fund’s profits.
The Takeaway
Hedge funds offer investors — usually, wealthier investors — the chance to invest in funds that are usually high-risk, but offer high potential returns. There are many rules surrounding hedge funds, and many investors may not even consider them as a part of an investing strategy.
For accredited investors, investing in a hedge fund may be one part of a diversified portfolio, although it depends on the investor’s risk tolerance, time horizon, and investing goals. If you’re not an accredited investor, or you’re worried about the risks associated with hedge funds, it may make more sense for you to consider other types of investments or to stick with ETFs, mutual funds, or funds of funds that emulate hedge fund strategies.
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47k salary is a solid hourly wage when you think about it.
When you get your first job and you are making just above minimum wage making over $47,000 a year seems like it would provide amazing opportunities for you. Right?
The median household income is $68,703 in 2019 and increased by 6.8% from the previous year (source). Think of it as a bell curve with $68K at the top; the median means half of the population makes less than that and half makes more money.
The average income in the U.S. is $48,672 for a 40-hour workweek; that is an increase of 4% from the previous year (source). That means if you take everyone’s income and divided the money out evenly between all of the people.
But, the question remains can you truly live off 47,000 per year in today’s society since it is below both the average and median household incomes. The question you want to ask all of your friends is $47000 per year a good salary.
In this post, we are going to dive into everything that you need to know about a $47000 salary including hourly pay and a sample budget on how to spend and save your money.
These key facts will help you with money management and learn how much per hour $47k is as well as what you make per month, weekly, and biweekly.
Just like with any paycheck, it seems like money quickly goes out of your account to cover all of your bills and expenses, and you are left with a very small amount remaining. You may be disappointed that you were not able to reach your financial goals and you are left wondering…
Can I make a living on this salary?
$47000 a year is How Much an Hour?
When jumping from an hourly job to a salary for the first time, it is helpful to know how much is 47k a year hourly. That way you can decide whether or not the job is worthwhile for you.
$47000 a year is $22.60 per hour
Breakdown Of How Much Is 47k A Year Hourly
Let’s breakdown, how that 47000 salary to hourly number is calculated.
For our calculations to figure out how much is 47K salary hourly, we used the average five working days of 40 hours a week.
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, divide the yearly salary of $47000 by 2,080 working hours and the result is $22.60 per hour.
47000 salary / 2080 hours = $22.60 per hour
Just above $22 an hour.
Key Points….
That number is the gross hourly income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
You must check with your employer on how they plan to pay you. For those on salary, typically companies pay on a monthly, semi-monthly, biweekly, or weekly basis.
Just an interesting note… if you were to increase your annual salary by $5K, it would increase your hourly wage to over $25 an hour – a difference of $2.40 per hour.
To break it down – 52000 salary / 2080 hours = $25.00 per hour
That difference will help you fund your savings account; just remember every dollar adds up.
How Much is $47K salary Per Month?
On average, the monthly amount would be $3,917.
Annual Salary of $47000 ÷ 12 months = $3917 per month
This is how much you make a month if you get paid 47000 a year.
$47k a year is how much a week?
This is a great number to know! How much do I make each week? When I roll out of bed and do my job of $47k salary a year, how much can I expect to make at the end of the week for my effort?
Once again, the assumption is 40 hours worked.
Annual Salary of$47000/52 weeks = $904 per week.
$47000 a year is how much biweekly?
For this calculation, take the average weekly pay of $904 and double it.
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x 52 weeks = 260 working days
Annual Salary of$47000 / 260 working days = $180 per day
If you work a 10 hour day on 208 days throughout the year, you make $226 per day.
$47000 Salary is…
$47000 – Full Time
Total Income
Yearly Salary (52 weeks)
$47,000
Monthly Wage
$3,917
Weekly Pay (40 Hours)
$904
Bi-Weekly Pay (80 Hours)
$1,808
Daily Wage (8 Hours)
$180
Daily Wage (10 Hours)
$226
Hourly Wage
$22.60
Net Estimated Monthly Income
$2,990
Net Estimated Hourly Income
$17.25
**These are assumptions based on simple scenarios.
47k a year is how much an hour after taxes
Income taxes is one of the biggest culprits of reducing your take-home pay as well as FICA and Social Security. This is a true fact across the board with an all salary range up to $142,800.
When you make below the average household income, the amount of taxes taken out hurts your hourly wage.
Every single tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
So, how much an hour is 47000 a year after taxes?
Gross Annual Salary: $47,000
Federal Taxes of 12%: $5,640
State Taxes of 4%: $1,880
Social Security and Medicare of 7.65%: $3,595
$47k Per Year After Taxes is $35,884
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$35884 ÷ 2,080 hours = $17.25 per hour
After estimated taxes and FICA, you are netting $32,830 per year, which is $10,170 per year less than what you expect.
***This is a very high-level example and can vary greatly depending on your personal situation and potential deductions. Therefore, here is a great tool to help you figure out how much your net paycheck would be.***
In addition, if you live in a heavily taxed state like California or New York, then you have to pay way more money than somebody that lives in a no tax state like Texas or Florida. This is the debate of HCOL vs LCOL.
Thus, your yearly gross $47000 income can range from $32124 to $37765 depending on your state income taxes.
That is why it is important to realize the impact income taxes can have on your take home pay. It is one of those things that you should acknowledge and obviously you need to pay taxes. But, it can also put a huge dent in your ability to live the lifestyle you want on a $47,000 income.
47k salary lifestyle
Every person reading this post has a different upbringing and a different belief system about money. Therefore, what would be a lavish lifestyle to one person, maybe a frugal lifestyle to another person. And there’s no wrong or right, it is what works best for you.
One of the biggest factors to consider is your cost of living.
In another post, we detailed the differences between living in an HCOL vs LCOL vs MCOL area. When you live in big cities, trying to maintain your lifestyle of $47,000 a year is going to be much more difficult because your basic expenses, housing, transportation, food, and clothing are going to be much more expensive than you would find in a lower cost area.
To stretch your dollar further in the high cost of living area, you would have to probably live cheap and prioritize where you want to spend money and where you do not. Whereas, if you live in a low cost of living area, you can live a much more lavish lifestyle because the cost of living is less. Thus, you have more fun spending left in your account each month.
As we noted earlier in the post, $47,000 a year is below the average income that you would find in the United States. Thus, you have to be wise with how you spend your money.
What a $47,000 lifestyle will buy you:
If you are debt free and utilize smart money management skills, then you are able to enjoy the lifestyle you want.
Have some fun money in your budget.
You are able to rent in a decent neighborhood in LCOL and maybe a MCOL city.
You should be able to meet your expenses each and every month.
Participate in the 200 envelope challenge.
Ability to make sure that saving money is a priority, and very possibly save $3000 in 52 weeks.
When A $47,000 Salary Will Hold you Back:
However, if you are riddled with debt or unable to break the paycheck to paycheck cycle, then living off of 47k a year is going to be pretty darn difficult.
There are two factors that will keep holding you back:
You must pay off debt and cut all fun spending and extra expenses.
Break the paycheck to paycheck cycle.
It is possible to get ahead with money!
It just comes with proper money management skills and a desire to have less stress around money. That is a winning combination regardless of your income level.
$47k Salary to Hourly
We calculated how much $47,000 a year is how much an hour with 40 hours a week. But, more than likely, you work more or fewer hours per week.
So, here is a handy calculator to figure out your exact hourly salary wage.
$47K a year Budget – Example
As always, here at Money Bliss, we focus on covering our basic expenses plus saving and giving first, and then our goal is to eliminate debt. The rest of the money leftover is left for fun spending.
If you want to know how to manage 47k salary the best, then this is a prime example for you to compare your spending.
You can compare your budget to the ideal household budget percentages.
recommended budget percentages based on $47000 a year salary:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$274
Savings
15-25%
$705
Housing
20-30%
$1018
Utilities
4-7%
$157
Groceries
5-12%
$313
Clothing
1-4%
$24
Transportation
4-10%
$157
Medical
5-12%
$196
Life Insurance
1%
$12
Education
1-4%
$12
Personal
2-7%
$35
Recreation / Entertainment
3-8%
$88
Debts
0% – Goal
$0
Government Tax (including Income Tatumx, Social Security & Medicare)
15-25%
$926
Total Gross Monthly Income
$3917
**In this budget, prioritization was given to basic expenses and no debt.
Is $47,000 a year a Good Salary?
As we stated earlier if you are able to make $47,000 a year, that is a decent salary. You are making more money than the minimum wage and close to double in many cities.
While 47000 is a good salary starting out in your working years. It is a salary that you want to increase before your expenses go up or the people you provide for increase.
However, too many times people get stuck in the lifestyle trap of trying to keep up with the Joneses, and their lifestyle desires get out of hand compared to their salary. It is okay to be driving around a beater car while you work on increasing your salary.
This $47k salary would be considered a lower middle class salary. This salary is something that you can live on if you are wise with money.
Check: Are you in the middle class?
In fact, this income level in the United States has enough buying power to put you in the top 95 percentile globally for per person income (source).
The question you need to ask yourself with your 47k salary is:
Am I maxed at the top of my career?
Is there more income potential?
What obstacles do I face if I want to try to increase my income?
In the future years and with possible inflation, in many modest cities 47k a year will not be a good salary because the cost of living is so high, whereas these are some of the cities where you can make a comfortable living at 47,000 per year.
If you are looking for a career change, you want to find jobs paying at least $55000 a year.
Is 47k a good salary for a Single Person?
Simply put, yes.
You can stretch your salary much further because you are only worried about your own expenses. A single person will spend much less than if you need to provide for someone else.
Learn exactly what is a good salary for a single person today.
Your living expenses and ideal budget are much less. Thus, you can live extremely comfortably on $47000 per year.
And… most of us probably regret how much money wasted when we were single. Oh well, lesson learned.
Is 47k a good salary for a family?
Many of the same principles apply above on whether $47000 is a good salary. The main difference with a family, you have more people to provide for than when you are single or have just one other person in your household.
The costs of raising children are high and will steeply cut into your income. As you can tell this is a huge dent in your income, specifically $12,980 annually per child.
That means that amount of money is coming out of the income that you earned.
So, the question really remains is can you provide a good life for your family making $47,000 a year? This is the hardest part because each family has different choices, priorities, and values.
More or less, it comes down to two things:
The location where you live in.
Your lifestyle choices.
You can live comfortably as a family on this salary, but you will not be able to afford everything.
Many times when raising a family, it is helpful to have a dual-income household. That way you are able to provide the necessary expenses if both parties were making 47000 per year, then the combined income for the household would be $94,000. Thus making your combined salary a very good income.
Learn how much money a family of 4 needs in each state.
Can you Live on $47000 Per Year?
As we outlined earlier in the post, $47,000 a year:
$22.60 Per Hour
$180-226 Per Day (depending on length of day worked)
$904 Per Week
$1808 Per Biweekly
$3916 Per Month
Next up is making $50000 a year.
Like anything else in life, you get to decide how to spend, save and give your money.
That is the difference for each person on whether or not you can live a middle-class lifestyle depends on many potential factors. If you live in California or New Jersey you are gonna have a tougher time than in Oklahoma or even Texas.
In addition, if you are early in your career, starting out around 38,000 a year, that is a great place to be getting your career. However, if you have been in your career for over 20 years and still making $47k, then you probably need to look at asking for pay increases, pick up a second job, or find a different career path.
Regardless of the wage that you make, if you are not able to live the lifestyle that you want, then you have to find ways to make it work for you. Everybody has choices to make.
But one of the things that can help you the most is to create a biweekly budget to make sure you stay on track.
Learn exactly how much do I make per year…
One of the best ways to improve your personal finance situation is to increase your income. Here are a variety of side hustles that are very lucrative. With time and effort, you can start enjoying the lifestyle you want.
As an Amazon Associate and member of other affiliate programs, I earn from qualifying purchases.
Learn how to supplement your daily, weekly, or monthly income with trading so that you can live your best life! This is a lifestyle trading style you need to learn.
Honestly, this course is a must for anyone who invests. You will lose more in the market than you will spend this quality education – guaranteed.
Read my Invest with Teri Review.
If you’ve ever wanted to make a full-time income while working from home, you’re in the right place!
This intensive training combines thousands of hours of research, years of experience in growing a virtual assistant business, and the power of a coach who has helped thousands of students launch and grow their own business from scratch.
Learn how to buy and resell items from flea markets, thrift stores and yard sales. They will teach you how to create a profitable reselling business quickly
…no matter how much or how little experience you have.
Our friends Cody & Julie of Gold City Ventures are experts at creating five figures of passive income selling printables. Learn how to create your online printables business from scratch with our programs and templates.
Are you passionate about words and reading? If so, proofreading could be a perfect fit for you, just like it’s been for me! I’m excited to share how you can create a freelance business as a proofreader, just like I did.
The ultimate discounted bundle of my 4 best-selling courses and WordPress theme on how to build and grow a profitable blog.
Learn the best SEO practices and how to monetize your blog quickly!
Designed as a 101-level course on freight brokerage, you’ll learn the basics of freight brokering in this online course.
This course is designed for freight brokers in any setting, regardless of their employment status.
If you want to start your brokerage, we’ll show you exactly how to do it. If you are an agent or employee of a brokerage, we’ll take you through sales and operations modules designed to help you source more leads and move more freight.
You can make money as a freelance writer. Learn techniques to find those jobs and earn the kind of money you deserve! Plus get tips to land your first freelance writing gig!
This is the perfect side hustle if you don’t have much time, experience, or money.
Many earn over $10,000 in a year selling printables on Etsy. Learn how to get started by watching this free workshop.
The Empowered Business Lab teaches you how to sell your digital products naturally with strategies that just make sense.
Monica helped me find my momentum and my want to pursue my business again.
After taking a second job as a driver for Amazon to make ends meet, this former teacher pivoted to be a successful stock trader.
Leaving behind the stress of teaching, now he sets his own schedule and makes more money than he ever imagined. He grew his account from $500 to $38000 in 8 months.
Check out this interview.
Know someone else that needs this, too? Then, please share!!
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
38k salary is a solid hourly wage; above most minimum hourly wage jobs.
For most people, an entry-level job would be paying just over $38,000 a year. The question that remains is can you make a living off $38k a year.
The median household income is $67,521 in 2020 which decreased by 2.9% from the previous year (source). Think of it as a bell curve with $68K at the top; the median means half of the population makes less than that and half makes more money.
The average income in the U.S. is $48,672 for a 40-hour workweek; that is an increase of 4% from the previous year (source). That means if you take everyone’s income and divided the money out evenly between all of the people.
But, the question remains can you truly live off 38,000 per year in today’s society since it is well below both the average and median household incomes. The question you want to ask all of your friends is $38000 per year a good salary.
In this post, we are going to dive into everything that you need to know about a $38000 salary including hourly pay and a sample budget on how to spend and save your money.
These key facts will help you with money management and learn how much per hour $38k is as well as what you make per month, weekly, and biweekly.
Just like with any paycheck, it seems like money quickly goes out of your account to cover all of your bills and expenses, and you are left with a very small amount remaining. You may be disappointed that you were not able to reach your financial goals and you are left wondering…
Can I make a living on this salary?
$38000 a year is How Much an Hour?
When jumping from an hourly job to a salary for the first time, it is helpful to know how much is 38k a year hourly. That way you can decide whether or not the job is worthwhile for you.
38000 salary / 2080 hours = $18.27 per hour
$38000 a year is $18.27 per hour
Let’s breakdown how that 38000 salary to hourly number is calculated
For our calculations to figure out how much is 38K salary hourly, we used the average five working days of 40 hours a week.
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, divide the yearly salary of $38000 by 2,080 working hours and the result is $18.27 per hour.
Just above $18 an hour.
That number is the gross hourly income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
You must check with your employer on how they plan to pay you. For those on salary, typically companies pay on a monthly, semi-monthly, biweekly, or weekly basis.
What If I Increased My Salary?
Just an interesting note… if you were to increase your annual salary by $5K to $43K per year, it would increase your hourly wage to over $20 an hour – a difference of $2.40 per hour.
To break it down – 43k a year is how much an hour = $20.67
That difference will help you fund your savings account; just remember every dollar adds up.
How Much is $38K salary Per Month?
On average, the monthly amount would be $3,167.
Annual Salary of $38000 ÷ 12 months = $3167 per month
This is how much you make a month if you get paid 38000 a year.
$38k a year is how much a week?
This is a great number to know! How much do I make each week? When I roll out of bed and do my job of $38k salary a year, how much can I expect to make at the end of the week for my effort?
Once again, the assumption is 40 hours worked.
Annual Salary of$38000/52 weeks = $730 per week.
$38000 a year is how much biweekly?
For this calculation, take the average weekly pay of $730 and double it.
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x 52 weeks = 260 working days
Annual Salary of$38000 / 260 working days = $146 per day
If you work a 10 hour day on 208 days throughout the year, you make $182 per day.
$38000 Salary is…
$38000 – Full Time
Total Income
Yearly Salary (52 weeks)
$38,000
Monthly Salary
$3,166
Weekly Wage (40 Hours)
$730
Bi-Weekly Wage (80 Hours)
$1,461
Daily Wage (8 Hours)
$146
Daily Wage (10 Hours)
$168
Hourly Wage
$18.27
Net Estimated Monthly Income
$2,418
Net Estimated Hourly Income
$13.95
**These are assumptions based on simple scenarios.
38k a year is how much an hour after taxes
Income taxes is one of the biggest culprits of reducing your take-home pay as well as FICA and Social Security. This is a true fact across the board with an all salary range up to $142,800.
When you make below the average household income, the amount of taxes taken out hurts your hourly wage.
Every single tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
So, how much an hour is 38000 a year after taxes?
Gross Annual Salary: $38,000
Federal Taxes of 12%: $4,560
State Taxes of 4%: $1,520
Social Security and Medicare of 7.65%: $2,907
$38k Per Year After Taxes is $29,013
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$29013 ÷ 2,080 hours = $13.95 per hour
After estimated taxes and FICA, you are netting $29,013 per year, which is $8,987 per year less than what you expect.
***This is a very high-level example and can vary greatly depending on your personal situation and potential deductions. Therefore, here is a great tool to help you figure out how much your net paycheck would be.***
Taxes Based On Your State
In addition, if you live in a heavily taxed state like California or New York, then you have to pay way more money than somebody that lives in a no tax state like Texas or Florida. This is the debate of HCOL vs LCOL.
Thus, your yearly gross $38000 income can range from $25,973 to $30,533 depending on your state income taxes.
That is why it is important to realize the impact income taxes can have on your take home pay. It is one of those things that you should acknowledge and obviously you need to pay taxes. But, it can also put a huge dent in your ability to live the lifestyle you want on a $38,000 income.
How Much Is 38K A Year Hourly Salary Calculator
More than likely, your salary is not a flat 38k, here is a tool to convert salary to hourly calculator.
Many entry level jobs start at this range, which may make you believe that a business degree is worth it.
38k salary lifestyle
Every person reading this post has a different upbringing and a different belief system about money. Therefore, what would be a lavish lifestyle to one person, maybe a frugal lifestyle to another person. And there’s no wrong or right, it is what works best for you.
One of the biggest factors to consider is your cost of living.
In another post, we detailed the differences of living in an HCOL vs LCOL vs MCOL area. When you live in big cities, trying to maintain your lifestyle of $38,000 a year is going to be extremely difficult because your basic expenses, housing, transportation, food, and clothing are going to be much more expensive than you would find in a lower cost area.
To stretch your dollar further in the high cost of living area, you would have to probably live a very frugal lifestyle and prioritize where you want to spend money and where you do not. Whereas, if you live in a low cost of living area, you can afford the cost of living and maybe save more money. Thus, you have more fun spending left in your account each month.
As we noted earlier in the post, $38,000 a year is well below the average income that you would find in the United States. Thus, you have to be wise with how you spend your money.
What a $38,000 lifestyle will buy you:
If you are debt free and utilize smart money management skills, then you are able to enjoy the lifestyle you want.
You are able to rent in a decent neighborhood in LCOL.
Driving a beater car is normal.
You should be able to meet your basic expenses each and every month.
Not be able to afford many of the fun spending luxuries.
Participate in the 200 envelope challenge.
When A $38,000 Salary Will Hold you Back:
However, if you are riddled with debt or unable to break the paycheck to paycheck cycle, then living off of 38k a year is going to be pretty darn difficult.
There are two factors that will keep holding you back:
You must pay off debt and cut all fun spending and extra expenses.
Break the paycheck to paycheck cycle.
It is possible to get ahead with money!
It just comes with proper money management skills and a desire to have less stress around money. That is a winning combination regardless of your income level.
$38K a year Budget – Example
As always, here at Money Bliss, we focus on covering our basic expenses plus saving and giving first, and then our goal is to eliminate debt. The rest of the money leftover is left for fun spending.
This is how zero based budgeting works.
If you want to know how to manage 38k salary the best, then this is a prime example for you to compare your spending.
You can compare your budget to the ideal household budget percentages.
recommended budget percentages based on $38000 a year salary:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$158
Savings
15-25%
$570
Housing
20-30%
$887
Utilities
4-7%
$127
Groceries
5-12%
$253
Clothing
1-4%
$19
Transportation
4-10%
$127
Medical
5-12%
$158
Life Insurance
1%
$10
Education
1-4%
$10
Personal
2-7%
$29
Recreation / Entertainment
3-8%
$71
Debts
0% – Goal
$0
Government Tax (including Income Tatumx, Social Security & Medicare)
15-25%
$749
Total Gross Monthly Income
$3,167
**In this budget, prioritization was given to basic expenses and no debt.
Is $38,000 a year a Good Salary?
As we stated earlier if you are able to make $38,000 a year, that is a low salary. You are making around or just above minimum wage.
While 38000 is a decent salary just starting out in your working years, it is a salary that you want to rapidly increase before your expenses go up or the people you provide for increase. If not, you will be left working multiple jobs to make ends meet.
However, too many times people get stuck in the lifestyle trap of trying to keep up with the Joneses, and their lifestyle desires get out of hand compared to their salary. And what they thought used to be a great salary actually is not making ends meet at this time.
This $38k salary would be considered a lower class salary. You must make each dollar count in your budget.
Check: Are you in the middle class?
In fact, this income level in the United States has enough buying power to put you in the top 95 percentile globally for per person income (source).
The question you need to ask yourself with your 38k salary is:
Am I maxed at the top of my career?
Is there more income potential?
What obstacles do I face if I want to try to increase my income?
In the future years and with possible inflation, in many modest cities a 38,000 a year is not a good salary because the cost of living is so high, whereas these are some of the cities where you can make a decent living at 38,000 per year.
If you are looking for a career change, you want to find jobs paying at least $50000 a year.
Is 38k a good salary for a Single Person?
Simply put, you can make it work.
You can stretch your salary much further because you are only worried about your own expenses. A single person will spend much less than if you need to provide for someone else.
Your living expenses and ideal budget are much less. Thus, you can live comfortably on $38000 per year.
And… most of us probably regret how much money wasted when we were single. Oh well, lesson learned.
Is 38k a good salary for a family?
Many of the same principles apply above on whether $38000 is a good salary. The main difference with a family, you have more people to provide for than when you are single or have just one other person in your household.
At the 38K salary with a family, you would need more than one income stream to make this possible without government help.
The costs of raising children are high and will steeply cut into your income. As you can tell this is a huge dent in your income, specifically $12,980 annually per child.
That means that amount of money is coming out of the income that you earned.
So, the question really remains is can you provide a good life for your family making $38,000 a year? This is the hardest part because each family has different choices, priorities, and values.
More or less, it comes down to two things:
The location where you live in.
Desire to improve your career and make more money.
Your lifestyle choices.
You will not be able to afford everything on this salary.
Many times when raising a family, it is helpful to have a dual-income household. That way you are able to provide the necessary expenses if both parties were making 38,000 per year, then the combined income for the household would be $76,000. Thus making your combined salary a very good income.
Learn how much money a family of 4 needs in each state.
Can you Live on 38000 Per Year?
As we outlined earlier in the post, $38,000 a year:
$18.27 Per Hour
$146-182 Per Day (depending on length of day worked)
$730 Per Week
$1,461 Per Biweekly
$3,166 Per Month
Next up is making $40,000 a year.
Like anything else in life, you get to decide how to spend, save and give your money.
That is the difference for each person on whether or not you can live a lower-class lifestyle depends on many potential factors. If you live in Washington or New Jersey you are gonna have a tougher time than in Florida or even Texas.
In addition, if you are early in your career, starting out around 32,000 a year, that is a okay place to be getting your career. However, if you have been in your career for over 20 years and still making $38K, then you probably need to look at asking for pay increases, pick up a second job, or find a different career path.
Regardless of the wage that you make, if you are not able to live the lifestyle that you want, then you have to find ways to make it work for you. Everybody has choices to make.
But one of the things that can help you the most is to stick to our ideal household budget percentages to make sure you stay on track.
Learn exactly how much do I make per year…
One of the best ways to improve your personal finance situation is to increase your income. Here are a variety of side hustles that are very lucrative. With time and effort, you can start enjoying the lifestyle you want.
As an Amazon Associate and member of other affiliate programs, I earn from qualifying purchases.
Learn how to supplement your daily, weekly, or monthly income with trading so that you can live your best life! This is a lifestyle trading style you need to learn.
Honestly, this course is a must for anyone who invests. You will lose more in the market than you will spend this quality education – guaranteed.
Read my Invest with Teri Review.
If you’ve ever wanted to make a full-time income while working from home, you’re in the right place!
This intensive training combines thousands of hours of research, years of experience in growing a virtual assistant business, and the power of a coach who has helped thousands of students launch and grow their own business from scratch.
Learn how to buy and resell items from flea markets, thrift stores and yard sales. They will teach you how to create a profitable reselling business quickly
…no matter how much or how little experience you have.
Our friends Cody & Julie of Gold City Ventures are experts at creating five figures of passive income selling printables. Learn how to create your online printables business from scratch with our programs and templates.
Are you passionate about words and reading? If so, proofreading could be a perfect fit for you, just like it’s been for me! I’m excited to share how you can create a freelance business as a proofreader, just like I did.
The ultimate discounted bundle of my 4 best-selling courses and WordPress theme on how to build and grow a profitable blog.
Learn the best SEO practices and how to monetize your blog quickly!
Designed as a 101-level course on freight brokerage, you’ll learn the basics of freight brokering in this online course.
This course is designed for freight brokers in any setting, regardless of their employment status.
If you want to start your brokerage, we’ll show you exactly how to do it. If you are an agent or employee of a brokerage, we’ll take you through sales and operations modules designed to help you source more leads and move more freight.
You can make money as a freelance writer. Learn techniques to find those jobs and earn the kind of money you deserve! Plus get tips to land your first freelance writing gig!
This is the perfect side hustle if you don’t have much time, experience, or money.
Many earn over $10,000 in a year selling printables on Etsy. Learn how to get started by watching this free workshop.
The Empowered Business Lab teaches you how to sell your digital products naturally with strategies that just make sense.
Monica helped me find my momentum and my want to pursue my business again.
After taking a second job as a driver for Amazon to make ends meet, this former teacher pivoted to be a successful stock trader.
Leaving behind the stress of teaching, now he sets his own schedule and makes more money than he ever imagined. He grew his account from $500 to $38000 in 8 months.
Check out this interview.
Know someone else that needs this, too? Then, please share!!
Hello! Today, I have a great post from my blogging friend James. James and his wife paid off $62,000 in debt in just 7 months!
Shortly after we got married, my wife Andrea and I got serious about our finances and paid off all our debt.
This is the story of how we turned a profit on our wedding, combined our finances, and paid off $62,000 of debt in 7 months.
Related:
Where’d all the debt come from?
All the debt was mine. I was a dumb young kid and thought I’d always be able to out earn my stupid decisions. Until one day I couldn’t.
Despite a generous 3-year military scholarship at my pricey, private college, I had student loans to pay for:
my housing (~$12,000 x 4)
my freshman year’s tuition (~$30,000)
and a summer study abroad program (~$15,000)
Then shortly before I graduated, USAA, a military-member’s bank, offered me a $25,000 loan at the ridiculously low rate of 2% interest. USAA dubbed it a “Career Starter Loan,” but really it was their clever way of ensuring I’d be a customer for the foreseeable future. I used $15,000 to refinance my study-abroad loan, bought a new laptop, and put the rest in savings.
If you’re keeping count, that pushed my total debt upon graduating college up over $100,000.
So of course I immediately got serious about my finances, did a budget, and started attacking my debt, right?
Nope.
I bought a sports car instead.
I was 22 years old, only 4 months into my Army career, and had racked up over ~$115,000 in debt. All I had to show for it was a fancy diploma, a 3 year old Mazda, and $1,100+/month in debt payments.
My wake up call
As can happen in the military, I got hurt.
I always knew it was a possibility, but never thought it’d happen to me. Ultimately, the Army decided it was best if they “retired” me. Just like that my once promising career was over only two years after it started.
Fortunately for me, the Army is a huge, slow moving bureaucracy and I had some time to prepare for my unexpected new life as a civilian. Unfortunately for me, I got hurt during the financial collapse of 2008 and I was entering one of the worst job markets of my life.
I didn’t know how long I’d be without a reliable income, but I knew I’d still be expected to reliably come up with $1,100/month for debt payments.
I opened an excel file and made my first crude budget, subtracting what I needed to spend each month from what I made each month. Turns out I had more money leftover at the end of the month than I realized. I saved as much of it as I could and set it aside as an emergency fund.
Six months after leaving the Army, and nearly draining my savings, I convinced a Fortune 500 company to put me in charge of a $15M/year operation. Now armed with a decent salary I set aside one month’s worth of expenses as a small emergency fund and attacked my debts with a vengeance.
I finally understood what a hindrance my debts were and I wanted them gone!
If you’d like, check out this article to get the exact tools and tactics I used to attack my debts. Following this plan, I would’ve paid off my remaining ~$80,000 and been totally debt free in 3 years.
There was just something I had to do first.
Will you marry me?
My debt was no secret to Andrea, and to her credit, she didn’t really care. She valued me more than my debt and saw how hard I worked to get through my career crisis and get my act together. In fact, we grew closer through all the craziness.
We’d been together for 5 years at this point and it was time to move our relationship forward. I paid off a couple more debts, kept current on my remaining balances, and used my excess cash each month to save for an engagement ring.
In September 2011 I asked Andrea to marry me, she said yes, and we were married a year later.
In that year, I paid the minimum payments on my remaining debts and we saved all our excess cash to pay for our wedding and honeymoon.
We made sure to stretch our dollars by:
Booking a daytime wedding, it was a lot cheaper to rent a venue during the day than at night.
We rented centerpieces (the vases all the flowers went in) instead of buying them. I’m not sure what we would’ve done with 20 identical glass cylinders after the wedding, anyway.
Made our invitations and programs using kits available from craft stores.
“Hired” friends and family in the industry we would’ve been willing to hire even if we didn’t know them
Andrea’s aunt is a seamstress and made all the bridesmaids dresses.
Our DJ/Pianist was a friend.
Our Photographer was a friend.
In the end, we had a beautiful wedding, a great honeymoon, and were able to pay for everything in cash. We even had a bit leftover.
Joining forces
After our honeymoon, we moved into a new rental house and started combining our finances. Then once we could see all our money coming into and going out of the same account, we redid our budget.
Andrea and I both earned similar incomes, but now our expenses were much less as a married couple than when we lived on our own. We only had one rent payment, one set of utilities, etc. Since our “married” expenses each month were pretty close to what each of us spent as a single person we had a lot of cash left at the end of the month.
By this point, the debt was down to ~$62,000 and it was time for us to attack it.
Andrea and I both wanted to pay off the debt quickly, but we didn’t agree on how. The main point of contention centered around the money we had leftover from our wedding, wedding gift cash, and some of Andrea’s savings from her years as a responsible person.
Even though Andrea had shown me incredible grace, I still felt ashamed of my debt. I didn’t want it hanging over our heads and was willing to take drastic action to to wipe it out.
I wanted to throw most of our savings at debt, leaving just enough to act as a small emergency fund. Then once the debt was totally gone, we’d rebuild our savings to its previous level.
That plan would have us out of debt really fast, but was risky as it would leave us with only a small emergency fund for a while. I didn’t love this risky plan, but I was anxious to pay off our debts and was already used to living with only a small emergency fund. Besides, with two incomes I figured the odds of us having a catastrophic emergency were quite small.
Andrea, however, hated that plan.
She wasn’t comfortable with the risk and did not want to drain our savings. Having a big emergency fund gave her a sense of security I’d never experienced before and the idea of only having a small emergency fund freaked her out.
Balancing speed with security was a new concept for us. We viewed risk differently and had to come up with a plan we’d both be happy with. The more we talked about it, though, the less our conversations centered on our finances.
Instead, we focussed more on building the life we wanted.
Debt freedom and a big emergency fund were just some of the ingredients.
We both wanted to travel. We both wanted to give to charity. We both wanted to pursue work we love.
Paying off the debt would give us the freedom to do so.
We never wanted to worry about putting food on the table. We never wanted to wonder how we’d pay our rent. We didn’t ever want to be tied to a job we didn’t like just because we needed the money.
A big emergency fund would help us avoid those things.
Our plan for paying down debt
So here’s what we came up with.
We agreed to use some savings to pay off a couple of my smaller student loans completely. This still left us with enough of an emergency fund to maintain Andrea’s sense of security.
We agreed to keep our expenses to less than half of our combined income. We could’ve afforded to rent a fancier house and eat lobster every night, but we chose not to. This way, if one of us lost our jobs we’d still be able to pay rent and keep food on the table. While we were both working, though, we’d use the leftover cash to attack the remaining debt.
We agreed to stay focussed and pay off all the remaining debt in less than a year. If by our first anniversary we still had some debt we’d tap into our savings to pay off whatever small amount was left.
Assuming everything went according to plan, we’d be debt free with a healthy emergency fund within the first year of our marriage.
FINALLY DEBT FREE!
Everything went according to plan and we’re done paying down debt!
Seven months later we were totally debt free. ~$62,000 paid off and we still had a healthy emergency fund.
Or to put it another way, we paid off ~$115,000 in five years, about a year faster than if we’d not gotten married and I just paid it off myself. I paid off ~$53,000 in 4 years on my own, slowed down my debt attack to get married, and together with my awesome wife wiped out the rest.
Even more important than paying off the debt, Andrea and I learned how to set the course of our lives and take action to get us there. We grew closer as a couple as we faced the challenge of paying off debt. Best of all Andrea and I learned to work together to achieve great things.
Now it’s your turn
Maybe you’ve never talked about hopes and dreams or set goals with your partner. Or maybe you’ve never even thought about it for yourself. This can be tough and tricky, but I’d like to help you out.
It’s pretty easy to articulate a “what” and a “how” for money and call it a day. Take for example “Let’s pay off our credit card/student loan debt by cutting our expenses.” That’s great and responsible, but boring. Instead, as Andrea and I learned, start with “why” you want to do something.
Think about or ask your partner:
How would it feel to have an extra $100, $500, or $1,000 leftover at the end of the month?
How would you approach your career differently if you didn’t have to trade your labor just to pay Sallie Mae or Visa?
How much fun could you have?
How generous could you be?
What new options would you have in your life?
Taking this approach, you’d come up with something like: “I want to take a job for the love of it, give more money to charity, buy that thing I’ve always wanted without feeling guilty, and/or stay home with the kids. So let’s trim our expenses to pay off our debt.”
With a solid “why” like that, the “what” and “how” are just details. You’ll also be much more likely to stick with your goals when, not if, something comes along to distract you.
Pessimism is practical
If you find yourself struggling to come up with a worthy “why” release your inner pessimist. Think about all the things you don’t want in life. Think about what you’re afraid of. Then flip it by stating the opposite.
Take “I’m afraid I’m going to work as a corporate slave forever just to pay off my student loans” and flip it to “I want to pay off these loans so I can afford to work for a non-profit.”
“We’re going to be too broke to travel or have any fun when we get older” flips to become “I want to travel the world with our friends and family, so let’s save up a bunch of money to do so.”
Once you have your “why” figured out, “what” to do with your money and “how” will come more easily.
You’ll be able to withstand temptation and not get distracted by shiny stuff. And by working towards a worthy “why” together with your partner, you’ll learn to talk about money without fighting because you won’t just be talking about money. Instead, you’ll be planning and working towards a better life together.
I hope you and your partner will face the challenge of your finances, decide what you really want for your lives, and work towards your goals together. Aggressively paying off our debts actually brought Andrea and I closer together and deepened our marriage. We learned how to talk about tough subjects, set goals, and work together to achieve them. You and your partner can do the same.
Author bio: James helps couples handle and talk about money without fighting at loveandmoneymatters.com. Enjoy his blog post about paying down debt below.
What’s your family’s biggest financial goal? Why is it important to you? Are you currently paying down debt?
If you are new to my blog, I am all about finding ways to make and save more money. Here are some of my favorite sites and products that may help you out:
Find ways to make extra money – Here are over 75 different ways to make extra money.
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Save money on food. I joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month and you get meal plans sent straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 per person or less. This allows you to save time because you won’t have to meal plan anymore, and it will save you money as well!
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Try InboxDollars. InboxDollars is an online rewards website I recommend. You can earn cash by taking surveys, playing games, shopping online, searching the web, redeeming grocery coupons, and more. Also, by signing up through my link, you will receive $5.00 for free just for signing up!
My monthly Extraordinary Lives series is something that I really enjoying doing. First up was JP Livingston, who retired with a net worth over $2,000,000 at the age of 28. Today’s interview is with Jeremy, Winnie, and Julian, also known as the family behind Go Curry Cracker.
With the goal of traveling around the world, Jeremy and Winnie were in their 30s when they retired around six years ago. Their 3-year-old son travels with them and has already been to 29 countries as well!
They were able to do this by saving intensively – over 70% of their after-tax income.
In this interview, you’ll learn:
How they retired in their 30s.
What made them want to retire early.
How they live comfortably, rent houses with private pools, fly business class, and travel a ton – as opposed to the myth that early retirees are boring and just eat beans and rice to survive.
How they decided on the amount they needed to retire.
What they do about health insurance in early retirement.
And more! This interview is jam packed full of great information!
I asked you, my readers, what questions I should ask them, so below are your questions (and some of mine) about their story and how they accomplished so much. Make sure you’re following me on Facebook so you have the opportunity to submit your own questions for the next interview.
Related content:
1. Tell me your story. When did you retire and HOW?!
We are Jeremy, Winnie, and Julian, also known as the family behind Go Curry Cracker!
Winnie and I retired about six years ago with the goal of traveling the world. Traveling more in retirement is a pretty common goal, so I suppose the interesting bits are that we were still in our 30s and our 3-year-old son has now been to 29 countries.
What made our location and financially independent lifestyle possible was a decade of intensive saving – we were literally saving 70%+ of our after-tax income. Instead of buying stuff or experiences, we were investing in our future freedom.
Alas, we had already succumbed to some lifestyle inflation so we sold the house and moved into a small apartment, sold the car and started walking and riding bicycles, and turned our home kitchen into the best restaurant in town.
Unwinding lifestyle inflation is a huge mental challenge, but we both grew up on the edge of poverty so we had some experience with prioritizing purchases and finding solutions that didn’t require money. Nowadays, our investments pay all of our bills, and we could buy a house, buy a car, live a typical life… we just happen to not want those things.
Instead, for the past many years, we’ve basically spent the summer in Europe, autumn in the US, and winter in Asia. It’s not quite a perpetual summer vacation, but close.
2. Was early retirement always something you were striving for? What made you want to retire early?
Prior to 2002, we were both essentially following the normal life script – go to school, get good grades, get a job, etc… Maybe the only unconventional thing is I had student loan payoff as the #1 priority. Every story I heard about debt while growing up had a tragic ending, so I wanted to be debt free ASAP. I even cashed out all of my vacation time for five years or so to get extra pay. We also did crazy things like using 0% interest credit card offers to accelerate student loan payoff. Literally every extra penny went to the student loans.
When I finally got my head above water, I took a vacation, my first as an adult. After three weeks of scuba diving, fresh seafood, and tropical drinks, I looked back at where life in the real world was headed and thought, “This is it? This is the American Dream?”
Within six months the house and car were gone and the early retirement plan was underway.
3. Would you say that you live comfortably?
If by comfortably you mean do we rent houses with private pools, fly business class, and enjoy an occasional Michelin Star restaurant, then yeah, that sounds about right. Combined with 52 weeks of vacation per year and full autonomy, we are probably at an above average comfort level.
That may sound a little smug, for which I apologize, but I think it is important to truly understand the power of deferred consumption. We can only live as we do today because we didn’t live like this yesterday.
By living well beneath our means for just a small part of our total lifetimes (10 years +/-), something many would consider “uncomfortable”, we are now able to live well above the standards of even high-income households – just without the need to consume all of our waking hours with a high-income job.
In summary – yeah, life is good.
4. What career did you have before you retired? Did that career help you to retire earlier?
Winnie was a Program Manager for a large PC company, and I was an Engineer at a large software company.
I do wish we had those insane technology salaries that I sometimes hear about in the news, but our average combined income over our hardcore saving years was only about $135k. I guess I should have studied harder.
I think more than the job, my degree helped us retire early. I basically applied engineering principles to our finances and our lifestyle, trying to optimize for quality of life and low expenses. I then used that same mentality in designing our investment portfolio (100% index funds) and minimizing our taxes ($100k income with $0 income tax.) If I had studied art history or interior design, I probably would have thought about these things from an entirely different perspective, perhaps one that required more expensive furnishings.
5. What advice do you have for the average person that doesn’t make six figures a year who wants to retire early?
The core principle to follow is living well beneath your means, aiming for at least 50% savings rates. Or in 1950s parlance, live off one income and save the other. This recipe for financial success has worked for much of recorded history.
Of course, this is easier when making $100k than it is when making $10k, all else being equal.
For many average income households, it helps to change perspective: It isn’t that we can’t afford to save 50%, it is that we can’t afford our current lifestyle.
This is where we were when we got started, and some tough choices are ahead… it is necessary to either earn more, spend less, or wait (much) longer. Or all 3.
For households with incomes well below average, such as our families when we were growing up, it is absolutely necessary to grow income. Public assistance can help for a while (I’ve eaten a fair amount of government cheese), but ultimately skill development and probably even relocation to a job center are necessary.
6. Do you still earn an income in retirement?
We do. With all of this free time, it is fairly difficult to NOT do something that brings in some extra cash.
Last year Winnie published her first book (in Mandarin / Chinese) which was on the bestseller list in Taiwan for a while. About three years ago, Go Curry Cracker accidentally started to earn some affiliate income. I now actually try to run the site as a business, but limit myself to just a few hours per week.
I also employ a pretty aggressive long-term tax minimization strategy, which saves us thousands of dollars every year in taxes. I suppose that can also be thought of as extra income. We’ve actually reported about $100k annual income each of the last five years with income tax bills of $0.
For anybody who is interested, I do publish our full income statements and tax returns (business and personal) every year (linked to above). A lot of people have found those helpful to optimize their own finances.
7. How did you decide how much you needed to retire?
We set a target to have an investment portfolio worth 25x our desired cost of living in Seattle, where we were living at the time, although we were spending much less to turbocharge our savings.
25x is just the standard 4% Rule, which (in oversimplified terms) says you can annually spend an inflation adjusted 4% of your portfolio, probably forever. So, say if you wanted to spend $40k/year, you would need $1 million. That was our minimum.
When we hit that target, Winnie stopped working, and I continued on for about three more years, during which we were just living off dividends, so we were essentially investing 100% of my paycheck.
We also wanted the portfolio to continue to grow so we could leave a bit of a legacy, so even after we stopped working, we wanted to continue living beneath our means. We did this by living large in Mexico and Guatemala rather than Paris or Tokyo. And as luck would have it, the stock market performance over the past five years has been pretty good, so our portfolio just continues to grow, and we can’t spend it fast enough.
8. What sacrifices or hard decisions did you have to make?
This may sound cliché, but I don’t think of anything we did as a sacrifice – we just employed a suggestion my grandmother used to make all the time, “Hey there, you hold onto your britches now young man!” Roughly translated from the original Minnesotan, I think that means “slow down.” In other words, hold off on the lifestyle inflation for a while.
When people rush out to buy their dream house (with rented money) or a new car or a big vacation, they are sacrificing their future for immediate consumption. We just waited a little longer, and along the way we discovered that none of those trappings of success have any real meaning to us.
But of course, when society and advertisers are screaming at you that you need to consume and upgrade, it can be difficult to pause and reconsider. We avoided a lot of that by not owning a television and using the great outdoors for entertainment.
9. What do you do about health insurance in early retirement?
For many years, we were self-insured and just paid cash for any medical needs. We paid $3 for a doctor visit in Mexico, $20 for some dental care in Thailand, $50 for a chest X-ray in Taiwan, and $90 for a visit to the emergency room in Portugal. Medical tourism is your friend. What we weren’t spending on health insurance, we invested in more index funds, building our own healthcare fund.
If we were in the US, we would buy health insurance on the State or Federal Health Exchanges. The US health system is all kinds of messed up, so without insurance you are only one minor incident from total financial devastation.
As of about six months ago, we are now all covered by the Taiwan national health system, which is a single payer universal healthcare provider. We pay about $25/person/month for great coverage, which includes dental. (Hot tip: marry somebody from a country with a good health system.)
10. Will you be planning a place for your child to make long term friendships and connections? Do you plan to continue travel when your child is school age?
We like the idea of homeschooling up to age 10 or 12 or so, but we are still figuring it out. Even so, it probably won’t be all or nothing (Julian is enrolled part time in a Montessori pre-school now.)
The pros/cons of life-in-place vs nomadic living is such an interesting discussion for us, because we are inherently a global family (our nuclear families are spread across 2 countries, 3 States, and 6 cities) and despite our very different backgrounds, we independently concluded that the idea of “home” for us isn’t really a place.
Our thinking comes from our existing communities – Winnie grew up in a big city (Taipei), and she has friends from back in the 3rd grade who all have kids around the same age as Julian. When we are in Taiwan, we all get together and it is like they never missed a beat. It’s a beautiful thing.
I grew up in a small town in Minnesota, and 99% of my childhood / high-school friends and family moved away for college and career. There is literally no one place I can go where all long-term friendships and connections exist, and yet I have them, just spread around the world. It’s also a beautiful thing.
We try to get quality time with all of our family every year, which is much easier now that we don’t have jobs. 2 years ago, we had 4 generations together for a week on a lake, with Grandma, my parents, my sister and 2 brothers and spouses, and their 9 kids. This year we took my Mom and Grandma on an Alaska Cruise, and also spent a couple weeks with all of Julian’s cousins. Next year will be something special again, and we all stay in touch via Skype. We also plan on having more kids, which means sibling connections.
What we do will change and evolve as we learn more and figure things out, but overall, we’ll listen to our kids, make sure we have regular quality time with family, and stay connected with friends and family via Skype. And everywhere we go, we build community with friends, family, and other adventurers. I think it will be the same for the next generation.
11. What hardships come up when traveling with a child and what do you do about it?
The hardships of traveling with a child are largely the same as the hardships of parenting. Kids have needs and wants, and if they aren’t addressed in a timely fashion then chaos ensues. As with most things, an ounce of prevention is worth a pound of cure – and even then, things go awry.
Where most families have to balance child rearing with a career and fixed schedules, we have a great deal of flexibility. Seldom are we schedule driven, and when we are (e.g. a flight departure time) we avoid other commitments. We also aren’t doing the quick 1 week vacation thing, with a lot of time getting from A to B and a whirlwind of tours and activities; that’s much too intense and exhausting. We are more so living our normal lives, just in different locations. We play at the park daily, take naps, explore by foot, and enjoy the local delicacies. If we are having too much fun at the park, we can always see the museum tomorrow. Somehow, we usually manage to see the highlights.
Since we aren’t always in one location with a regular schedule, we focus on having routine in the absence of routine. We have regular toys, regular nap time, and a bedtime ritual which involves a bath, songs, and books. Plus we all co-sleep, so we are together 24/7. It’s hard to provide a stronger sense of security than parental presence.
It all seems to be going well; Julian is a happy, healthy, normal kid. He loves being outside exploring, enjoys meeting new people, and is always ready for the next plane, train, or automobile.
12. If you were starting back in the beginning, what would you do differently from the beginning?
We made a lot of mistakes… buying a house, buying a car, spending money without a long-term plan, but I don’t know if I would change any of them. Those mistakes helped us grow and appreciate where we are today. For example, we are Renters for Life, but we probably wouldn’t really appreciate the total joy and financial advantages that come with not owning a deteriorating wooden box.
If I could go back in time and tell my younger self, “Hey, read this Go Curry Cracker blog, you’ll learn a lot!” we could probably have become Financially Independent 3 to 5 years earlier. That’s a lot, considering my entire career was only 16 years, but it’s not that that much in an 80 – 100 year life span.
But, what I would do differently:
invest only in index funds from the beginning
not waste my time dabbling in rental properties
always live within biking distance of work and prioritize biking and walking
always rent
learn to cook well sooner
start travel hacking sooner instead of paying for vacations
13. Lastly, what is your very best tip (or two) that you have for someone who wants to reach the same success as you?
Design your life so that saving a high percentage of income is the natural and ordinary outcome.
Aim for saving 50%+ of after-tax income, and minimize taxes
Today, my friend Jillian, from Mini-Retirements Mastered course and Montana Money Adventures, is sharing a guest post about mini retirements. This subject is something I find to be super interesting and she is definitely the expert at it! Below is her story and advice.
Fifteen years ago, I fell in love with my husband and we started planning our life together. But I had this crazy idea. What if we took mini-retirements? Mini-retirements go by many names: Sabbaticals, Gap Years, Time Off.
Essentially, it’s all the same idea: taking time away from the 9-5 to focus on things that really matter to us. It could be for a year or two, or just a month off.
The problem? We were in NO place to be thinking about mini-retirements! That first year we had over $50,000 in debt and only earned 12k. The next year was a little better, but not by much. Still, I held on to that dream.
I just turned 35, and we are currently in our 5th mini-retirement. We have taken a few short ones (month long), some medium (6 months) and this one is going on two years now. Mini-Retirements might seem almost impossible, until you understand how to plan, prepare and execute them. After that, you’ll be able to sprinkle them in every few years and just maybe grow your net worth in the process!
Related content:
Four common misconceptions about mini retirement
1. You have to be a high-income earner
This just isn’t true! Our combined income averaged between 30k-60k over the last 15 years. Without a high income, you might need to start with shorter one-month mini-retirements. But there is a LOT of really cool things you can do with an extra month off. When I was 24, I took a month off from my job to travel cross country with my best friend. It was an incredible trip! And we did it for under $2,000.
2. You need to be self-employed
All five of our mini-retirements we either negotiated off from a regular employer or walked away from traditional employment. In my free video training, I walk through the exact process to negotiate a month off from an employer, even if your company doesn’t have a sabbatical program. This can be scary if you have never done it, but with a little preparation, it’s totally possible!
3. You can’t take time away if you have debt
It might take you ten years to pay off your student loans, or 30 years to pay off your mortgage. If there is something you are passionate about pursuing, I don’t suggest pushing that off until you turn 65. If you have a lot of credit card debt, it will be really helpful to pay that off first. It will help supercharge your savings rate and lower your monthly expenses once that bill is gone. But there is no reason you can’t have an amazing month-long experience if you still have a mortgage payment.
4. Taking time off will postpone financial independence
Maybe. But it doesn’t have to! During two of our mini-retirements, we also bought and renovated houses. Taking that time away actually greatly increased our net worth and passive income! If you really want to increase your income and net worth, simply add some of those activities to your mini-retirement. There are no rules about what you can or can’t use this time for.
There are so many incredible things you could do if you had a bit of time away from the 9-5. The first step in my full Mini-Retirements Mastered course is to help you narrow down what you really want to focus on in the next mini-retirement! Which things are very time-sensitive and if you don’t tackle it now, the opportunity might pass you by.
Four Mini-Retirement Options
1. Once in a lifetime opportunity
There are a few things in life we just don’t get second chances on. Sometimes because the timing is never right again or life just changes. We had a chance to move overseas when I was in my 20’s for four years. While we were there, we traveled almost every month. I took art classes in Amsterdam and literature classes in Rome. Everything was close by and made it affordable. Because we had made financial sacrifices earlier in our marriage, we had the resources to invest in those experiences.
I have known people who took time off to hike the entire Appalachian Trail or bike along the Croatian coast. In our current mini-retirement, we are traveling in a pop-up camper in the summers with our five kids. They are between two years old to ten. It just wouldn’t be the same if we waited 20 years! Seeing all the US national parks has been an amazing experience and we just didn’t want to miss this time with them.
2. Passion project
People often have that ONE THING they want to do. Maybe it’s volunteer overseas for a year. Design and build a house with minimal help. Start a non-profit. Or adopt a sibling group from foster care. These are the things that, if we do very little else with our life, at least we can look back and say, “But I did that!” And these are the perfect things to fit into a mini-retirement!
By saving an extra 10-15% of your income a year, you would have enough to take a year-long mini-retirement every decade!
3. Build Financial Freedom
When we moved back to the US from Germany, the housing market had crashed and was at an all-time low. We took time off two more times to buy and renovate our primary home and then two rentals. There were other people who might have wanted to do that but didn’t have the free time to make it happen. Taking those two mini-retirements actually helped us build $1,200 in passive rental income and grow our net worth. Instead of derailing our path to financial freedom, it sped it up!
4. Grow a business
This last mini-retirement has been focused around family/travel and growing a creative and entrepreneurial business. We carved out this time, starting with one year as a test. We wanted to lean into our interests. Test some ideas. See if we could find a project that we were passionate about and was a perfect fit for our lifestyle. Something that would leverage our talents and really help people. If there is a business you want to grow and see if you can scale up, a mini-retirement might be exactly what you need!
Of course, there are logistical challenges that scare us. You might be nervous about healthcare. Or scared that you won’t be able to find another job when the time comes. It might simply be the unknown cost! How much would this month-long adventure cost? How much would it cost to start a business, or travel the world for a year?
Once you decide you want to move in this direction, you will find, for every logistical challenge, there are multiple logistical solutions. Then it’s just the matter of finding the courage to live a life that perfectly lines up with everything you value, are passionate about, and meets your goals.
I want to dive into one of the logistical challenges that be top of mind for you. How can I afford this!?! This is the first logistical stumbling block for a lot of people. I want to show you how you can get started with any budget. Even a once-in-a-lifetime experience doesn’t have to break the bank to become one of your most cherished memories in 10 or 20 years.
Let’s start with the idea that you negotiated a month off from your current employer or find yourself between jobs for a month.
How to Budget for a Month Off
Find your Baseline Budget:
If you have been tracking your expenses and budgeting for a while, this might be an easy number to find. Maybe you spend $2,000, $3,000 or $6,000 a month. Now, this won’t include any investing or savings you do. We are going to put that on hold for a month. If you want to take multiple mini-retirements like we have, simply adjust your yearly investing to cover your off times. An extra 1-3% investing a year, could cover your investing during your mini-retirements.
Then subtract any extras from that baseline. Let’s say you normally spend $200 a month on entertainment. If you are going to be traveling for a month, that expense would be put towards your trip entertainment.
Now you have your month off baseline number. Let’s say it’s $2,500. (Even if you earn $4k a month, after taxes, investments and extra expenses, your core expense might only be $2,500.)
Find your Dream Budget:
What is it you want to do with this time? I like to focus on things that could only happen in this season of life. Things that, if I waited another 10 or 20 years, the opportunity might pass me by. I’m 35 now, but the trip I did at 24 isn’t something I could do again. I have five little kids at home. My best friend is now CEO of a large non-profit organization. There is simply no way we could both escape for a month long road trip! Plus, I have given up sleeping on the frozen ground or in the front seat of my Honda Civic. I’m in my thirties, I now require a mattress of some kind!
Once you know what your next month-long adventure will entail, it’s time to figure out the cost.
As I research each cost, I add them to an Excel sheet I name my dream budget.
A dream budget will serve two purposes. First, in the planning, your adventure will get better. You will refine and customize what you really want to do. Second, you will have specific prices for each piece. If you decide to start a side hustle to help save up for your mini-retirement, you will know exactly what your extra $100 earnings will bring you.
Your extra $100 might buy three nights at a youth hostel or national park campground. $20 will pay for food for the day. $80 will pay for a yearly science museum pass for the whole family.
Open up a dream budget checking account, and stash all the extra dollars in there. Each dollar is getting you closer to building that dream experience. Even $1 will buy you a scoop of gelato in Italy.
Let’s say you settle on a US road trip for two people. You plot it all out and come up with a dream budget of $3000 plus baseline expenses of $2500. $5500 is your total cost. If you want to do this in the next 18 months you will need to save about $300 a month between now and then. Maybe that’s in your budget or maybe it’s not.
Then the question becomes how do I hustle for $300 a month to put towards something I really care about? Or maybe you would be willing to give up your eating out budget to make this happen?
Once we narrow down exactly what the challenge is, we can start to problem solve and find solutions for that challenge.
This week I will be hosting a free training on how to take a month off. I’ll be teaching the three essentials to negotiate a month from an employer who doesn’t typically offer that benefit. I’ll also talk about how to pack a mini-retirement go bag for those unexpected opportunities. With all of this leading up to the only time this year my full Mini-Retirement Mastered course will be open.
If you ever want to be able to do something like a mini-retirement, you won’t want to miss it! Now is the perfect time to start laying the foundation!
What do you think of mini-retirements? Do you want to take one?