Do you make a lot of money or do you just think you do?

“A lot” is a relative term, and not to be confused with “Alot” which is both a grammatical error and a mythical beast.

What constitutes “a lot of money” depends on:

how much money you already have

how much money you need 

and

your ability to reconcile your behaviour with basic math

Sometimes it’s easy to think you have a lot of money if you have a large amount saved or invested in assets. But the reality is that even if you own a million-dollar house, if your salary is only $20K you can’t live a million-dollar lifestyle.

It’s an even bigger problem if you are already trying to live a million-dollar lifestyle on a thousand-(or even hundred)-dollar income. However, there’s some forgiveness to be had here since cost of living is as much dictated by geography as your penchant for luxury goods. There’s a significant cost difference when you compare living in a small town to trying to claim some apartment space in an overcrowded city. Nevertheless, it’s easy to get swept up in what we “need” to buy even when we can’t afford it.

When it comes to debt, it’s easy to be accusatory and insist people were living beyond their means on purpose.

But when some indebted people say “I just don’t know how this happened”, I kind of believe them.

When people think they have or make more than they do, or when they don’t have a solid grasp of what’s an appropriate cost for a certain service or material good, they will spend accordingly. From my own calculations, I only took home about 60% of my paycheque at my old job, and the rest went to things like income taxes, union dues and mandatory employer retirement plans. I did the math because I knew, deep down in my heart of hearts that I was spending like I made my gross income and not my net, and if I didn’t immediately change my behaviour, I was going to find myself in debt again and fast.

I think it’s pretty easy to think you make a lot of money, and much harder to actually make a lot of money.

So what can you do? Figure out how much you actually have and how much you actually make. This means taking stock of how much money is accessible to you, and how much is left over after other taxes and deductions from your regular pay. When it comes to finding how much you actually need, be realistic: you need a place to live, but you don’t need a 4,000 sq ft home with granite counter tops and an indoor pool. Keep track of what you spend and inform yourself so you can find the lowest price, especially on regular costs that can vary tremendously like car insurance or cellphone plans. Lastly, accept that when it comes to your income, you actually make less than you make. Figure out how much of your paycheque is actually yours after taxes and deductions, and adjust your behaviour to fit those numbers.

So tell me readers, do you make a lot of money or do you just think you do?

Finding a job with my MBA

The second term of my MBA ends in 3 months, at which point I will have crossed the halfway mark, completing 12 of the required 20 courses (with another mandatory course to be completed in the spring, reducing my second year course load to only 7 classes). At this point, my classmates and I are looking for summer jobs. Because our second year course load is almost exclusively during the evening, we will have the opportunity to continue to work full-time after the summer is over while completing the final course requirements of our program.

As a result, I’m now looking for my full-time MBA job.

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I felt hopeless when looking at the job postings on the school career website. Ironically, that’s exactly where I found my old job, but for some reason I get the feeling that I won’t be that lucky twice. I’ve more or less decided to forego the apply-online method and drum up opportunities elsewhere.

I talk a lot about managing your career on this website because it’s often your primary source of income, so you want to make sure it delivers — financially and otherwise. I don’t think many twenty-somethings realize their potential, or think seriously about the direction they want their career to take. They don’t even think about what they want their average day to look like. Instead, they just seek out the best paying job they can manage and hope it progresses upward-ish.

Of all the things in your life, please take your job seriously. 

I’m a firm believer that finding a job in your twenties should be more about where you want to be in five years, rather than the immediate need you want it to fill right now.

Unfortunately, this will make it much harder to find one. I can speak from painful experience, since I’m haemorrhaging money so fast, the panic I feel when I look at my bank accounts is tempered only by the dull memory that I once earned a good salary and there’s hope of that happening again. Honestly, this blog is the only evidence I have that living above the poverty line was a real thing that happened to me once, since I spend at least 2/3rds of every month now in serious doubt that I will be able to afford my rent. The other 1/3rd of the month, when I have managed to afford rent, I worry incessantly if I will be able to afford both rent AND food. Living as a student is, on no uncertain terms, financially agonizing in a way I probably haven’t ever felt before. But I’m trying to keep my chin up.

I feel I’m in a unique position with my almost-MBA: a blank slate. Even though I’ve already logged a couple of years of professional work experience on my resume, going back to school has reset the game. I can pursue management consulting or investment banking or marketing. I can work in the oil & gas industry or advertising or go back to academia. I can crunch numbers or write or do stakeholder & public relations.

When ever I feel overwhelmed by the number of choices I have, I remind myself to take a moment to be grateful for so much opportunity.

I know many of my peers are unemployed or underemployed or employed in a job they hate or don’t want or whatever. I have the chance to seek out something amazing unencumbered.

I’ve updated my resume to reflect my current program, new volunteer position, and a few other details, so I’m ready to start the job hunt. However, going forward there’s a few things I need to figure out first:

What do I want to do?

What am I good at?

Where would I like to work?

Who would I like to work for/with?

What kind of schedule/workload do I want?

Where do I want my career to lead and how quickly do I want to advance?

and of course:

How much do I deserve to be paid?

I’ll keep you posted over the next few months. Wish me luck!

Leaving Your Job? Do Your Research!

Employment. It’s a big watchword in today’s economic doldrums, with employment (or unemployment) figures being carefully analysed, dissected and disseminated on a regular basis. The general gist seems to be if you’re in employment then you’re lucky, and if you’re unemployed then your chances of landing another job are slim (but improving, if latest figures are to be believed).

But what if you’re in a job you’re unhappy with? Don’t let the media hype deceive you, there are still jobs out there and you should approach job hunting with the same caution you did in the first place. Receiving a job offer is a big thrill but tempting as it is, don’t just accept your first offer without careful consideration. There are several things you need to mull over before signing on the dotted line.

Location

Maybe travelling for two hours a day doesn’t bother you. But if you have other demands on your time – a young family, perhaps – then you might want a job which is closer to home.

Salary

Most people go out to work to earn a living. Of course, it’s important to be doing something you enjoy and which is fulfilling, but at the end of the day you need to know you’ll be earning what you’re worth, not to mention what you need as an income for your lifestyle. Perform a webcheck to see what others at your level expect to earn, and ask any contacts in the industry you may have, to see if the new job is presenting you with a fair deal.

The Only Way Is Up

If you’re ambitious, then it’s important to know that your new job has some prospects for promotion within the same company. Otherwise you’re likely to be job hunting again before too long.

Enjoy the Challenge

There’s little point moving from one job to another job which is exactly the same. You need to know that you are professionally capable of doing the job, and that it will give you a challenge and be fulfilling, without giving you additional stress levels which you can’t handle.

Get to Know Your Colleagues

Ultimately, you can end up spending more time with your colleagues than with your friends. Check out the company’s culture before you say yes; you need to be working with likeminded people, even if you don’t agree on everything all the time.

Do Your Research

It’s easy to do a simple webcheck to find out things about a company which may not have been apparent at interview. Getting a new job is a great achievement and one you should be proud of, just make sure that you’re not making a rash move.

Get Greedy

This isn’t a post about being a Scrooge this holiday season, but I do want to share a perspective that is too often overlooked, but might actually be the missing piece of long-term financial success:

Get greedy with your money.

Heck, I’d even encourage you to get greedy with your life, but we’ll get to that later. What I’m saying is, if you want to be rich, you have to want more from your money. You can’t want “enough”, you have to want excess. You can’t merely strive for “debt-free”, you have to push for “financially independent”. You can’t think “$40,000 per year would be perfect”, you have to say, “I have to make the most money I possibly can”.

I’ve shared this point of view before and received some deserved criticism. I understand that wealth isn’t the be all, end all for everybody (no matter how ironic that strikes me for subscribers of personal finance blogs), but for those of you that don’t want to worry about money in your 30′s, 40′s, 50′s and beyond, you need to stop settling for just ok and start pushing yourself for extraordinary.

When you’re just starting out, it’s reassuring to know you can get ahead by just contributing $25 per month to your retirement accounts. You’re new mantra is, “at least I’m saving something!”. You add it up with compounding over the rest of your working lifetime and realize it comes to tens of thousands of dollars at 65, and you pat yourself on the back because that’s way more than zero and it was totally painless.

Shut up, you can do better.

The second you’re comfortable putting $25/month into your retirement accounts, double it and then double it again. Keep increasing it until it hurts just a little. You’re not saving enough until the moment comes when you have to turn down a dinner out or a purchase with, “oh, I can’t afford that because I need to contribute x amount to my savings this month”. You have to be greedy with your money. The easiest way to become wealthy is to want it more than anything else.

I’m sorry that it’s not easy.

Savvy PF loyalists don’t blink at my suggestions to use 40% of your income for savings and debt repayment, but occasionally I’ll get a comment that my tactics are unrealistic. There’s a lot of people out there that say things like “well, this is easy for you because…” and they cite my income (before I quit, anyway), my education, my lack of mortgage or children, my free time, my skills/talents, my opportunities, whatever. I’ll admit, sometimes I got a lucky break or two, but most of the time I didn’t.

The truth is, I’m just really greedy.

My insatiable lust for oodles of disposable income is more or less the sole motivator behind all my financial behaviour. I like to spend money. I like to spend lots of money. But unlike most of my hyper-consumptive counterparts I recognize the only way to sustain spending lots of money is to make sure I have lots of money to spend, and the easiest way to do that is pile up as much of it as I can behind me.

I don’t want to live on $20,000 per year. I don’t want to cut costs in order diligently save a few hundred dollars a month for my future children’s education. I don’t want to count pennies in retirement. 

When I see an amount I need to pay for something I want, I want to shrug at it, write a cheque, and move on.

This isn’t a bad thing to want, so long as you’re willing to work for it. If you’ve had the misfortune delightful experience to work with me in the professional world, you know that I will negotiate my salary with an insistence that might be described as “bullying”. If you’re friends with me offline you know I’m usually entrenched in 3-4 side projects to generate additional income. If you have to sit next to me in class, you know I’ll spend at least 3/4′s of the lecture on Yahoo! Finance looking to maximize the return in my portfolio.

Whenever I am offered money, my first reaction is always the same:

That’s not enough, give me more.

More often than not, I’m asking this of myself. ie. “Saving $25/mo in my RRSP savings account will only generate $4 per year in interest - That’s not enough, give me more”. Greed can be good. It will push you to do more than you would otherwise. You don’t have to live your entire life at the mercy of your budget, you can create enough wealth that money will never be an issue. So stop selling yourself short, and start pushing yourself harder. Get greedy.

What are your morals worth?

As money loving personal finance enthusiasts, many of us would go to great lengths to make or save a buck. But where do we draw the line? Can we put a price on our morals?

Would you…

…sell a part of your body for cash? I’m not talking black-market-selling-your-kidneys-kinda selling your body, but more like eggs, sperm, blood, hair, etc. Maybe even leasing your body out in the form of surrogacy. Depending on who you are and what your religious and cultural beliefs are, this may or may not be considered immoral. Personally, I don’t have a problem with it, but I wouldn’t sell any of the above for other reasons.

I wouldn’t sell my eggs because I want to have children and I don’t want to have biological children that aren’t really mine running around. Same goes with surrogacy, although maybe I would consider one of these two things for a close friend or family member. I would never sell blood or plasma because needles freak me out and my hair has been processed in the past and if it weren’t I would donate, not sell.

…steal money or goods? I’m pretty sure this is unanimously immoral, however, some people may consider different things stealing. Is it stealing if the cashier forgets to scan something and you get it for free? Is it stealing if you don’t pay off your debt? Is it stealing if you take something so your kids don’t go hungry?

I wouldn’t steal anything to save a buck. I’m also lucky enough to live in a country that if my currently nonexistent children were going hungry, there are programs to make sure that we could eat. It wouldn’t be ideal, but options are available.

…sell your rights in the form of gender inequality? The U.S. and Canada are not perfect, but we are  way ahead of many countries in gender equality. Many places in the Middle East have wonderful job opportunities for Americans with killer salaries. These countries are basically gas stations and they have no idea what to do with the cash so it’s a great place to be right now. While my husband and I have discussed the possibility of looking into some of these countries, there are others we will not consider because I would lose my rights there.

For example, in Saudi Arabia, I cannot drive, vote, be in public uncovered, go out in public without my husband, leave the country without the permission of my husband, or express much of an opinion about anything. For these reasons, we would not move there for all the money in the world. There are some things that will never be worth the money, including the loss of my rights, dignity, and respect.

How is this possibly immoral? Well, in my humble opinion, gender inequality is immoral as is condoning it. I never want to be in a place that disrespects women in such a way.

Would you  do any of these things for money? Is there a dollar figure that might change your mind?