Paycheck

(Picture from stock.xchng.)

I’ve been thinking recently, why on earth I live from paycheck to paycheck. Each time, I receive my pay slip, all the money just “disappear”. After paying all the bills, I have nothing left.

When I worked in Germany, I managed to save at least 50% of my net income. Nowadays, it is difficult to save even 10%. Where has all the money gone?

Let’s calculate our monthly living cost (me and my wife):

  • Mortgage payment: $1,800
  • Food and other groceries: $500
  • Property tax, insurance and maintenance: $250
  • Utilities (electricity, gas, water, etc.): $150
  • TV, phone, Internet: $250
  • Car gasoline, insurance and maintenance: $350
  • Transportation (bus ticket): $100
  • Life insurance and health insurance: $100

If you sum up all the above, you’ll get $3,500. This number still does not include donation (for charity), contribution to pension and entertainment. If you add them, the number could easily top $4,000 every month.

That’s the expense. How about the income? Let’s take an example of a typical software engineer who earns $70K/year (this is not my salary, it’s just an example). After tax, the net income of a typical software engineer is $45.5K/year or about $3,800/month. How can he survive with $4,000 living cost every month?

I’ve been trying many different to reduce my living cost, but apparently it’s not that easy. The easiest thing to do is to reduce our mortgage payment, but it means longer amortization. :(