After recently reading Budgets are Sexy’s post on lifetime earnings and the wealth ratio I decided to take a look at my own total lifetime earnings and wealth ratio. According to Social Security’s records I have made a total of $409,128 over 35 years. At the time I looked up my total earnings I had about $57,500 in retirement savings. Dividing my savings by total earnings would give me a wealth ratio of about 14%.
However, the wealth ratio is supposed to be calculated by dividing your net worth by your total earnings. I haven’t calculated my net worth for a while but a reasonable guess is that it is about – $70,000. Using my net worth to calculate the wealth ratio I will obviously have a negative wealth ratio. That is not a good result.
Looking at my earnings record, it is pretty clear why I don’t have a better net worth. My main financial problem is that I have never made very much money. It is only the past few years after obtaining my tax job that I’ve made halfway decent money. Some of the years in the 90s when I was working as a blackjack dealer in various casinos were also decent earning years. Adjusted for inflation, I was probably making as much back then as a blackjack dealer as I am now as an attorney. Even though my law degree and passing the bar has resulted in a higher income it hasn’t resulted in anywhere near a higher enough income to be worth the expense of law school. Getting my law degree did not pay off.
Looking at J. Money’s total earnings he has made over twice as much money in about half the number of years. This makes it obvious that a higher income is the key to getting ahead financially. Even though I’ve been very frugal most of my adult years (most of the time I had to be) I have nothing to show for it.
Even if I hadn’t made the huge mistake of going to law school and taking out massive amounts of student loans to pay for it I probably wouldn’t have much. In 2005 before I started law school I had no debt, but I also had very little in the way of assets. I had an old car and $1000 or so in the bank. I’d like to think that without law school I still would have found a way to increase my income a bit. I doubt I’d have the $57,500 of retirement savings that I have now though. On the other hand, considering I’ve paid about $40,000 of interest on my student loan so far maybe I would have that much in savings or even more. It doesn’t really matter since I did go to law school and that can’t be changed now.
Averaging out my lifetime earnings I’ve made a bit over $11,000 a year. Adjusting for the high school years and some income that wasn’t subject to social security I would still only have a little over $12,000 a year average income. When you only make that much money basically all of your money needs to go to living expenses. There isn’t really much if anything left for savings.
A little explanation for some of my low earning years. The first few years out of high school I worked various minimum wage jobs that usually only offered part-time hours. Even though I was employed most of the time the income didn’t add up to much. In 1990 and 1991 I was employed full-time most of each year and my income was still really low. If I remember correctly, I was making $4.50 an hour and my bi-weekly paycheck was about $350. I was living on my own and barely making more than my living expenses, but I was always able to pay my bills.
The next few years I worked a restaurant delivery job. Since a big portion of my pay was in non-taxable mileage reimbursement my earnings for these years appear a bit smaller than they actually were.
The next few years I worked as a blackjack dealer at various casinos. This is when I should have started to get ahead financially. Unfortunately, I also had a serious gambling problem during these years. Although I was making significantly more money than I previously had my finances were in much worse shape. I went through a bankruptcy during this period and even after that gambled away a lot of money that should have gone to savings.
Eventually I decided I needed to get out of the casino industry so I could break my gambling habit. I moved to Dallas and later Austin, but never managed to find a good paying job. I also started during medical studies during this time. The pay from medical studies isn’t subject to SS tax so this is why my earnings appear so low during most of this time. In 2003 though, I was employed all year as a pizza delivery driver and later providing roadside assistance and I still didn’t make much money. I’m not sure how I got by living on my own that year.
After that I decided to go to law school so I could finally start making good money. If you have been reading the blog for a while then you know how that turned out. That pretty much brings us up to the present.
Going forward, I need to significantly increase my income. I”m not sure how I am going to do that. I can work a little more overtime at my tax job when it is available. I can drive for Uber or do a different side job when I don’t have overtime available. To really increase my income I will need to find a higher-paying job or a high-paying side hustle. I don’t know if I want to leave my tax job since it is the first job that I’ve halfway liked that also paid well, but I may have to. I’m not sure what I would do for a side hustle.
When I get back from Thailand increasing my income will be a priority. Next year needs to be my highest income year ever.