The Richest Poor Person In Babylon – When Six Figures Is Not Enough

Money is a taboo topic not to be discussed in polite company. Apparently, my friends and I didn’t get the memo. It is inevitable that any time two or more of us get together the conversation will meander into finances. Everything from investments, salaries, student loans, the cost of child rearing, and everything in between is discussed. Eventually we will all agree that we are broke and yearn for the day when we finally make enough money to afford life. The thing is we are all already in the top 5% of earners in the U.S (households with incomes above $166,200). My chapter soror dropped a particularly pithy gem when she lamented being the richest poor person alive.

First World Problems

The financial “plight” of the United States’ highest earners is nothing new. Earlier this year Financial Samurai posted a breakdown of an NYC family of four who were “scraping by” on a $500K dual income.
Screen Shot 2017-10-04 at 8.23.59 AM

When discussing the article on an online forum of Black women, many of whom are six figure earners themselves, the general consensus was

what white nonsense
While those of us who make half of anonymous NYC couple’s income could never imagine feeling average on $500K/year, the world’s best ex-roommate reminded me that I myself am neither middle class nor average and also constantly complain about my brokosity, sooo…

hello pot meet kettle

Every June when I do my taxes I am always confuzzled, not by how much I’ve paid but rather how much I kept. According to my US and IL 1040 forms, over the last three calendar years more than $100K each year has reached my bank account. I can easily account for 60%, but the rest has me like

winona ryder math
If I’ve really netted more than $300K over the last three years why don’t I have more in savings? Why isn’t my student loan paid off? Why am I not backstroking through Amazon and Google shares? Where are these alleged dollars?

I spend a lot of time believing that I’m really good with money. gif

I’m not terrible. I’ve seen terrible and it ain’t me. But not being terrible doesn’t mean there isn’t vast room for improvement. If you let Mint.com tell it I rarely spend a lot of money, but I do spend a little very often. My life is the equivalent of shopping at Target. I go in with a list (my budget), then I see umbrellas for $9.99 (and of course I could use another umbrella). Oh, those nice wood hangers are only $9.99 too. And is the cami with the lace neckline also $9.99! It all goes in my cart because it’s only $9.99 and I can totally afford $9.99. Then I get to the register and the cashier says that’ll be $300!

family feud

Classmate is getting married in New York? Sure, I can fly in. Flights are only $175. Friend is expecting a baby? Sure I’ll pitch in $50 for a gift. Don’t feel like cooking tonight? Cheers to a tasty $2 off GrubHub. Wanna get out of the country for New Year’s Eve? Lodging in Cuba is $25/night. The thing about making good money is that almost everything is affordable. The problem with affording everything is that it eventually becomes unaffordable.

When you are an edumacated professional bringing in $100k+ the chances are pretty high that you’re socializing with other edumacated professionals bringing in $100k+. Knowing that they know that you got it like that, and that everyone is spending like that, it isn’t easy to say, “I ain’t got it like that.” No one wants to be perceived as cheap, selfish, or broke so you cough up the money for the trips, the gifts, the dinners, and more then tell yourself that it didn’t cost that much. Besides the bills are paid, money is saved, and the 401K is maxed so it’s all good. Right?

wrong.gif

As life has repeatedly shown me, most of us have at best a tenuous grasp on financial security. If you’re melanated like I’m melanated then the trappings of the upper middle class likely come with student loans (contrary to some people’s beliefs we don’t get these degrees for free), financial obligations to mama n’ nem, and a boss who keeps calling you by the other Black colleague’s name (oh is that just me?). Although we’ve done everything right our finances are often precarious Jenga puzzles, susceptible to collapsing with one wrong move. Our wealth is often non-existent, with one out of four Black households having zero to negative wealth. Once the great equalizer, our education no longer bring us to parity with our non Black peers. By 2014 the wage gap between Black and white college educated men grew from 5% in 1980 to 18%. For women that gap is now 12%.

Screen Shot 2017-10-04 at 5.33.29 PM

And the story for Black women gets even more troubling when looking at all of the money we’re repaying for the education required to move that decimal point on our checks to the right. Over one-third of us who graduate with a bachelors degree have $40K in loan debt and we pay those loans off slower than our white, Asian, and Hispanic counterparts (refer back to that wage gap). Oh, and did I mention that Black college graduates are also three times more likely to be giving financial support to parents, siblings, and extended family? Yeah, that’s a thing too. Screen Shot 2017-10-04 at 6.03.14 PM

More than just statistics, this is life that I know all too well. With this understanding I can’t just not know where 40% of my money goes. If you let Mint.com tell it in the last twelve months over $6,000 wound up like this…

 

do better

Yeah, yeah, yeah. I know. While I will never preach the Black people would be wealthy if we stopped buying Jordans and weaves gospel, I do know that I could be even more effective in managing my finances. I make too much money and have too few children to be praying for payday. By no means am I advocating a bare bones existence. I like nice shit and will continue to do so. There is nothing wrong with enjoying my income. However, I can definitely be more mindful about how I allocate it. I have literally flushed thousands down the toilet due to laziness while tossing hundreds more in the trash. That does not honor the time and effort I spent in school, searching for jobs, or working my ass off.

I have come to realize that simply paying my bills on time and hiding money from myself is not the equivalent of managing my finances. I earn more than double what I did five years ago yet have felt no more comfortable than I did then. Ironically, last month was the first time that I can remember feeling like my money wasn’t funny. I didn’t make any more than I usually do. Wait, yes I did, but I sent 10% to the church and shoved the rest into savings so I didn’t really see it (there’s that false scarcity again). The difference wasn’t my bonus. It was my budget. For the first time ever I actually stuck to it. Instead of buying whatever because I knew I could afford it, I checked my budget first to see if I’d wanted to afford it in the first place. When Mint.com tells me that there is only $10 dollars left to spend on takeout it forces me to consider whether I want to spend that money now or save it for later. Adhering to the plan I created for my money made me more resourceful. But most of all it allowed me to use my funds to pay for the things I value now instead of covering the fleeting whims I had last month. Maybe I’m not so poor after all.

 


Enjoying what you read? Like, comment, and share your favorite posts.

Be sure to subscribe and follow on Twitter and Facebook

9 thoughts on “The Richest Poor Person In Babylon – When Six Figures Is Not Enough

  1. Life is a funny thing isn’t it?

    A few years ago I was living off ~$200 a month. I didn’t have too many headaches. Heck even after the expenses and eating I was able to save a couple bucks here and there.

    And now that I’m approaching that 100k money I’m scratching my head wondering where my money went. Yeah I have some cashed saved up and investments etc but like you, nowhere near what I should have. And supporting family is a real thing.

    I’ve decided to go back to frugality and hopefully I stay on budget to clear out student loan and be able to save a whole lot more than I was before.

    Good read, and keep at it.

    Will share if that’s ok with you

    Like

    1. Of course that’s ok with me! Please share away. But I feel you on looking at the numbers on paper and the numbers in my bank account and thinking this don’t make no damn sense.
      I don’t know if it’s all about frugality or if it’s moreso about prioritizing, planning, and being mindful about where, when, and for what you’re spending.

      Like

  2. Great read! When my time come (it’s coming soon) is there a budget/system you use that you can share. I’m not into that app because I don’t want to deal with all of that. I need a spreadsheet/budget that I can look at and see when I can do better. I’m no excel expert so I can’t make it myself, but if you kniw of one I’d be grateful!

    Like

  3. The reality of being able to “afford” things and actually needing the things.

    And the support provided to family for Black people is a real category that does not get enough highlight in financial conversations.

    I have been looking at FI/RE life for the past 10 years. I had a major move about 6 years that needed a lot of investment so I had to push it back a while. I am back on it though and I would like to give myself another 7-8 years to achieve it.

    Liked by 1 person

  4. This is close to several years of my life. I didn’t actually enact a budget until 2012, when being married and two student loan bills (we both went to grad school) suddenly came up (we never had student loans before) and we decided to move to the most expensive city in the US, San Francisco.

    We still use a basic budget, but managing spending really really really made a difference. I would literally have a Lambo with the butterfly doors if I just kept keeping up with the extra money we were making. Now I’m all about Fat FI/RE (compared to the minimalist Lean FI/RE) because I still want to feel a little wealthy while I work on that real wealth.

    – Damien

    Like

    1. I have found that a budget makes me feel more relaxed about spending money. When I get on a Grubhub binge I no longer feel like I shouldn’t be doing it because it’s already budgeted for. The thinking shifts from “I shouldn’t be spending this money,” to “Do I want to buy this now or use the money for something else later.” Either way I’m going to spend it.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s