Income And Rent Calculation Combination Class And Certification: Fill & Download for Free

To my international audience, currency like INR, USD, Euro, GBP, etc. doesn’t matter. My answer may be in INR but principles of Maths and Investments remains same.The only difference is, people in USA, UK, etc. may not be able to earn 15+% return from Mutual Funds but everything else remains same. But what we get in MF return is offset by cost of money which is cheaper in USA, UK, etc.My wife and I both are 37 years old with two daughters 7 and 3.We earn about 30,60,000 (30.60L) in combined annual post-deduction take-home income which comes to 200,000 for me and about 55,000 for my wife, monthly.That’s combined take-home income of 255,000 monthly.Out 255,000: -70,000 monthly goes into Equity based Mutual Funds thru Systematic Investment Plan (SIP).I started with 5000 monthly SIP back in 2005 when I was 24 years old. Today my MF portfolio is over 18,000,000 (1.80 Cr./18Mil).10,000 monthly goes into Tanishq Gold Investment Scheme. This helps us buy a nice piece of jewellery during Diwali/Dhanteras.7,500 monthly goes into Gold Savings allocation. It is only allocation and not expense.During Diwali, this allocation lets us buy 25gms gold coin annually which comes to about 85K.6,000 monthly (72,000 Annually) goes into Pension from National Pension Scheme (NPS) - (5000 for self Contribution to NPS + 903 NPS contribution thru Atal Pension Yojana).3,000 monthly (36,000 Annually) goes into Medical Insurance from MaxBupa with a combined cover of 43 Lakhs for all 4 of us (2 adults + 2 Daughters).2,500 monthly (30,000 Annually) goes to Life Insurance under Term Plan for cover of 1.75 Cr.2,400 monthly (28,800 Annually) goes into ULIP with 300K Life cover (which is a waste of money & investment).2,000 monthly (24,000 Annually) goes into Accidental Cover of 1 Cr. for each both of us.33,000 monthly goes into Rent & maintenance.25,000 monthly goes into EMI for Automobile Loan of 2017 Hyundai Elantra top end.5,000 monthly (60,000 Annually) goes into Automobile Insurance. I got it from Bajaj Allianze with DriveSmart Prestige plan.It is bumper to bumper coverage plan.6,000 monthly goes into Automobile Operation and Maintenance of 2 cars (Fuel + Maintenance).My running is less than 500kms per month combined. So its not every month that I spend money on fuel or maintenance.However, we do undertake long drive once a year. Recently we did 2,500 KMs road trip of Kerala via Ooty, Conoor, Coimbatore.25,000 monthly goes into School fees for my two daughters including transport.1,000 monthly goes into School incidentals like Annual functions, fancy dress, picnics, etc.15,000 monthly goes into Groceries, Fruits and Vegetables (includes milks/eggs etc.).5,500 monthly goes to domestic help (2500 each for 2 maids and 500 for car wash).10,000 monthly goes into Leisure (movies, dining out, shopping, birthdays, anniversary, etc.)Total amount is an allocation and we may not spend it every month. Having said that, allocation helps us plan expenses like Diwali.5,400 monthly goes into 2 Mobile + 2 Broadband + 2 DataCard connections.2,500 monthly goes into electricity bill.2,000 monthly goes into LPG & other household incidentals (newspapers, ironing, doctor’s visit, medicines, sanitary napkins, etc..).5,000 monthly (60,000 annually) goes into charity. My wife and I have undertaken expense of teaching 4 girls upto graduation.Currently they are in class 7th and I undertook their expenses when they were in class 1.It also allows us to claim 100% tax rebate under section 80G.11,200 monthly unplanned savings or cash left in hand (or whatever the figure is at the end of the month) goes into kids accounts equally.After every 6 months, saved amount goes into buying additional units of existing Mutual Funds allocated for the kids.I do not believe in RDs and FDs as what they generate is way below inflation and also taxable at highest slab if interest income is above 10,000.Apart from this my wife gets quarterly incentives ranging between 30,000 - 50,000 while I get annual bonus of 700,000 – 1,500,000. All the incentive and bonus again goes into investment.My wife puts her incentives into buying additional units of existing Mutual Funds while I split my bonus into buying additional units existing Mutual Funds and/or investing in Stock market directly.Part of my bonus also goes into investing lumpsum in a Debt fund and/or Bonds to balance out Equity Exposure. Equity portfolio which I started with 5L in 2005 when Sensex was 4000 points and Nifty was 800 odd points had 10 stocks.Today also, it has only 10 stocks, with value of over 15,000,000 (1.5Cr/15Mil). Till date no profit has been booked.Any increment we get, 75% of that increment goes into our Mutual Fund portfolio and 25% goes into maintaining/upgrading existing lifestyle and expenses (luxury/leisure, etc.). This helps us increase our MF investment annually beating inflation and also helping us build good corpus for retirement.Some of the expenses listed occur only quarterly, half yearly or annually but needs to be provisioned for monthly like Personal/Car/Health Insurance, School fees etc. Other expenses may or may not occur (like doctor’s visit and/or medicines).Any money saved at the end of the months goes into kids account equally.Investment in Pension and Gold is to balance out Equity exposure to some extent. 72K NPS also gives me 50K additional rebate during Income Tax. Gold investment over time, including what we received during our wedding 10 years back, is over 60L now.10,000 allocated to leisure takes care of our short and sweet weekend getaways or extended weekend trips nearby. Budget for big planned holidays above 5 days or out of country or which may require Air Travel comes out of our Mutual Fund investments.Our cash usage is restricted to less than 3,000 per month. Most of payment are done thru Credit/Debit Cards, Cheque/Net Banking, Electronic Wallets like PayTM.I do not have a self owned property and/or house/land. I do not plan to buy anything for another 3–5 years. I did inherit 2 houses in Delhi. One was Ground Floor DDA apartment which I sold few months back and invested all the money in Mutual Funds. Other is a 220 Sq. Ft. 3 Storey bungalow lying closed.That’s the story 255K monthly.Edit 1: Additional Details -~41% goes in planned Savings, Insurance & Investments for self and family.~25% goes into Household, Rent, Groceries and monthly bills.~14% goes into automobile ownership, maintenance & running.~10% goes into Education.~2% goes into Giving Back - Charity.~4% is cash saving at the end of the month.~4% goes in Lesiure.Edit 2: Thank you for overwhelming response. ~206.2K+ views, 10.4K+ upvotes and your questions and comments….WOW!!! Thank you! Never thought I’ll get this overwhelming response.Thank you for my first 10K upvotes and 200K+ views.Edit 3: If you have any questions let me know, I’ll be happy to respond.Edit 4: For international audience grappling with conversion: -0 Units10 Tens100 Hundred1000 Thousand10,000 Ten Thousand100,000 Hundred Thousand/ 1 Lac/Lakh/L1,000,000 Million/10 Lacs10,000,000 Ten Million/ 1 Crore/Cr./CEdit 5: Our Background!I am Computer Science graduate with MBA in Marketing.I am a (or at least I was as certifications needs to be refreshed/renewed every 3/5 years) qualified Wealth manager with NCFM certification in Capital, Derivatives and Commodities Market. I am also certified by AMFI for Mutual Funds and IRDA for Insurance.Having said that, I am marketing and strategy consultant for some of the Fortune 500 companies for last 9 years. My wife is into operations management with an ITES/KPO firm.I started investing in 2005 with a only 1.8L fixed salary, comes to 15,000 per month. I also had incentives which were uncapped which went into partying, dining out and buying a car (Swift VX which I bought in 2006 cash down for 4.20L, 12 months after starting the job).Out of my salary, 5000 monthly was invested in Equity SIP. It left me with 10k which went into my expenses which included EMI for Bajaj Pulsar 150.I was based in Delhi and living with my parents at family house. I had no liabilities around rent or anything else. Only condition of my dad was to get groceries once a week.When I started investing BSE Sensex was 4,000 odd points in an unprecedented bull run. NSE Nifty was 800 odd points. During those times, 100 point drop meant bloodbath/market crash.Edit 6: Buying a House or a property on Loan.As of today, I live on rent in Bangalore. I do not own any real estate of my own.I personally think they are sink hole and at 37 it is too early to buy a house and get bogged down. 25–45 are your prime working age/most productive age when you want mobility to grab any mouth watering opportunity. You need to be flexible.I think 40–45 is the right time to start planning to buy a house when you are settled in place/city/job of your choice, your kids are in middle/senior school and moving for job is out of question unless something out of dream comes.On an average EMI for Housing Loan comes to 1,000 Per Lakh (these days it is at about 850/lakh but won’t stay for long). Home Loan of about 60 Lacs will need around ~60,000 as EMI per month for 20 years.60,000 is the money you have blocked on your house. You are not saving it. You are not investing it. You are not earning out of it. Moreover, on a Housing loan of 6,000,000 (60 Lacs) at 10% interest rate over 20 year period, you’ll end up paying around 1.4 Crores (14,000,000).Whereas, 60,000 invested for 20 years in a Mutual Fund giving 15% will give you 9.1 Crores in 20 years. Also, if you are living in the house, then it is not an asset. Besides every year it needs house tax. Every 3–5 years it will need a new coat of paint. 10 years it will need minor repairs, By the time your Loan is paid (20 years) it will require major repairs.Having said that, I did inherit 2 residential properties from my father in 2017. One is 2 BHK DDA apartment in Delhi other is 220 Sq Mtrs. Bunglow in Noida. DDA Apartment I sold few months back and money invested in MFs and Stocks. Bunglow in Noida is locked and empty. I can tell you from my experience, house is a sink hole. There are better ways of investing money. Real Estate is not what it used to be.Edit 7: Financial Discipline!I learnt financial discipline the hard way after I lost my job due to 2008 global meltdown just 15 days before my marriage.It took me 10 months to get a new job.Good thing we didn’t have any liabilities, kids or any emergencies. My wife was working and my dad was also working.We were living in my parent’s house.Since then, it was all about being prepared. Life, Medical & Accidental insurance are for contingencies.I have a premium medical insurance and I pay big bucks for it. This has allowed me to breath easy in case of any medical emergency.Edit 8: Insurance is wastage - A very important & necessary Wastage!Make no mistake, Insurance is not an investment. It is a wastage unless you require it and eventually everyone DOES requires it.Insurance is only to cover your risk and contingencies. As one of you have asked, my Term Plans (Life Insurance) are for the family. They do not mature and return anything.Having said that, Insurance is cheaper when you are young. It becomes exponentially expensive as you age. Above 35, it become crazy with all the medical tests coming in.Someone pointed our that I am inadequately insured. You are correct!I plan to correct that over next few years. Ideally, life insurance should be 20 times of your annual take home income, in my case it should be around 6 Cr.Edit 9: Systematic Investment PlanSIP, initially looks slow and waste of time but in 12 months you start seeing the corpus building. In 12 months, 5000 monthly becomes 60,000.After 5 years you start witnessing the compounding effect in large scale.SIP can be started any day with minimum of 500 Rupees.10,000 invested for 10 years in SIP monthly earning 15% will give you 28 Lacs in 10 years time. Over 30 year period, it becomes 7 Crores.Best part is 15% is the minimum you can expect to earn out of your well placed SIP.Many MFs, over last 5 years have delivered over 21% in returns.Edit 10: Time is Money! More time you have more money you make.One thing everyone needs to understand (especially people starting their first jobs or are relatively new into jobs (1–5years) or do not come from strong financial background) the sooner your start the more money you make.It is all about “Compound Interest”.Once you have good enough corpus, hire a wealth manager to manage your investments.You need to work as hard to grow your investments as you do in your job to earn salaries or incentives/bonus.Check your SIP investment calculations here to get an idea.Always remember, “Money Attracts Money.” The more you have it the more it will attract.Edit 11: Giving Back!We were approached by Oxfam for a donation for Girl Child Education campaign. We told them we’ll only do it if we can track the progress quarterly and if they can make sure my donations goes to the girls we want and not spread over the entire organisation. They agreed!Giving back does not have to be in terms of money only. It can be your time and efforts. We agreed to teach 4 girls because at that tie we could only afford that. Also, my mother was a teacher and during her 4years of cancer treatment, she never missed a day of her school always saying her students need her more.Our efforts to teach these 4 girls, is in a very small way, to honour her memory.There are new and upcoming NGOs doing excellent work in teaching kids, girls, women. 17000Ft Foundation is one such NGO. Checkout their website - 17000 ft Foundation.One of my friend’s volunteered for this NGO. She went to Ladakh to teach kids for few weeks. She told me about the entire experience. I have been wanting to do the same. May be I’ll get an opportunity at some point in time.Disclaimer - My wife and I are in no way associated with 17000ft Foundation.Edit 12: My Portfolio of MFsMy MF portfolio is 62% Equity & 38% Debt. Out of Equity : -12% is Equity Balanced52% is Equity Diversified10% is ELSS22% is Equity Small and Midcap4% Equity Special FundI cannot help you with your investment as I am not qualified to advice you on same. But I tell you that Investments are specific to person based on his risk profile, income profile, background, capacity, capability, goals, age, requirements, liability and above all motivations.I can only share where I am investing:Axis MidCap - GrowthDSP Black Rock Small and Midcap - GrowthDSP Black Rock Opportunities - GrowthDSP Black Rock Dynamic Asset Allocation Fund - GrowthDSP Black Rock MicroCap - GrowthEdelweiss Balanced Advantage Fund - GrowthEdelweiss Maiden Opportunities Fund Series Fund - GrowthICICI Prudential Balanced Fund - GrowthICICI Prudential Balanced Advantage Fund - GrowthReliance Retirement Fund - Wealth Creation Option - GrowthReliance Tax Saver (ELSS) - GrowthReliance Regular Savings Fund - Equity Option - GrowthTata India Tax Savings Fund - GrowthSBI Multicap - GrowthHDFC SmallCap - GrowthDebt fund investment is used to finance purchase of additional units of existing MFs on dips to average out.My investments into Equity market (stock market) is my own and is balanced by investments into NPS, Gold, PPS.For every 5 Rupee invested in Stocks, 1 goes into Debt funds, bonds, NPS, Gold.I am not very concerned about the risks right now, I have age on my side.India is in a golden period. Booming market, growing economy, and low interest rates along with higher than expected Global Economic growth with US growing between 3–5%.Edit 13: Health Insurance!I got it in 2010 after the birth of my 1st daughter. My wife and I were 29 years of old.During child birth, we found out that health insurance provided to us by our jobs were seriously inadequate and highly deficient.MaxBupa was newly launched Medical Insurance provider that time with USP of ‘Direct Dealing with Company without any TPA.’Since then we have used it 6 times including birth of my 2nd daughter. All those times only thing I paid was 100 Rupees for the thermometer which was not covered.I never had any problems with the claims. I deal directly with the Insurance Provider, i.e. MaxBupa. There is no TPA involved. Additionally, I get annual health check up and loyalty bonus.When we are young in 20s we never think about mortality or medical emergencies. Unfortunately, nobody sells Medical Insurance to 20 something youth in their 1st jobs.Whenever you join your 1st job all you is credit card guys lining up to get you singed up. There is no harm in getting Credit Card. But Medical Insurance is very important.In 20s, you can get top of the line 10L medical insurance for as little as 5–7K per annum. In your 20s, there is no medical test, no exclusion and everything is covered from Day 1.As you age, Medical Insurance becomes very expensive. Once you turn 35, insurance companies will make you undergo series of medical tests.Do not rely on you medical insurance provide by your employer, if you lose your job, you lose your insurance as well.Disclaimer - My wife and I are in no way associated with MaxBupa Health Insurance.Edit 14: Inheritance or not, Start Early!I was not sure if I’ll get my parent’s inheritance. My father and I were estranged due to the fact I married a girl he didn’t like.I have 2 elder siblings. My mother passed when I was still in graduation and my father passed away in 2016 and didn’t leave any will.It was my sisters who decided to give me the complete inheritance. Part of the reason I have huge portfolio is I was certain that I’ll never get any inheritance.Start early and be proactive.No inheritance doesn’t mean you cannot become wealthy. It is difficult but it is doable.Edit 15: Get a Wealth Manager!Yes, I have a wealth manager who takes care of my investments. We meet once a month and go over the portfolio and investment strategies.I have some knowledge about markets but I am not in the market. He is! He is the professional.The amount of time that is required to build portfolio is serious. You cannot do it alone.Fortunately my wealth manager is my very best friend. We started together in the Financial Services industry. He went to start his own Wealth Management firm.Being friend, his services are free of cost.Usually WMs charge 1–2.5% of investible amount or portfolio for consulting and management.You would happily pay 5000 per month to your maid to clean your house but you will not shell out money to pay professional wealth managers who are managing your money and to large extent your future & security.Edit 16: Social Security Scheme!If you have not invested in PMJJY, APY and other social security scheme by the govt. then you are loosing out on the almost free money on the table.Edit 17: Stay Invested!There will always be market rallies and crashes. It doesn’t matter when your outlook is 10–20–30 years. In my case, my investments are for my kids and retirement.As I said earlier, I started investing when Sensex was 4000 odd points and Nifty at 800 something. Maruti Suzuki share was at 450 Rupees. Today same share is around 9000 rupee.I have seen 6 months of rally in 2005 then a 250 point crash in month of September. Diwali was muted that year.I have seem Sensex cross 10K, 15K, drop back to 11K, touch 18K drop back again to 11K and brach 20k, 25k, 30k, 36k.What matter is fundamentals in Indian market. To put things in perspective India was $450 Billion economy in 2003. Today we are over $2.5 Trillion. In last 15 years, India has grown by 5+ times and we are growing at 7+%.Edit 18: Compound Interest!When you buy MF, units gets allocated to you. These units have Net Asset Value. Fund Managers in turn invest your funds in to stocks, debts, bonds, gold, etc. depending on Fund’s Focus Area.As stocks and other asset class grows, Fund Manager book profits or get dividends which increases NAV of your MF. While fixed income investments like FD, RD, PPF etc. are limited by fixed percentage return, MF NAVs are market linked.Also, fixed income assets like FD/RD and others are Quarterly/Half Yearly/Annually compounding while MF NAVs are continuous compounding.For E.g. you invest 100 rupees and get 100 units as Rs. 1 NAV. 20% increase will mean 1.20 NAV and fund values increases to 120. Another 20% increase will be take fund value to 144….So on so forth.While this is excellent when markets are doing good, declining markets can be scary. However, 5 year outlook for MF will always be positive.Rarely there are fund which have gone negative in 5 years timeframe. There can be some fund which have long gestation period meaning 3 years is neutral or even negative. Eventually every MF turns profitable. If it doesn't, change it.Edit 19: Money and Happiness and Retirement!Well, happiness has nothing to do with money or wealth you have. Money comes and goes.I have seen it happening to my dad. My dad was an aeronautical engineer with very handsome high six figure monthly salary back in 90s. His entire savings were eroded when my mom was diagnosed with cancer. While his colleagues funded US education for their kids and brought extensive properties all over Delhi/NCR, my dad could only manage one 220 Sq Mtrs plot partly funded by my grandfather.Happiness is the state of mind. I was happy when I was making 15k a month.I am happy when my daughter tops her class. Money/wealth makes me comfortable.Am I comfortable? Definitely.Do I worry about money? Yes, may be sometimes. I worry that it might not be enough to fund my daughter’s college or Post Graduation education.Do I want to leave inheritance for my daughters? May be if they deserve it. Investments are being done so that I can fund their education from some of the top colleges and universities around the world. I have no desire to save/spend on their marriage. I would rather have my daughters spend my entire savings and retirement corpus on their education than on destination wedding.There is an very old African Proverb -“If you educate a man you educate an individual, but if you educate a woman you educate a family (nation).”Should I retire? Hell No! I love what I do. I agree I get generously compensated for it. Compensation is a gesture of thanks for my hard work, capability, skills and experience developed over the years. I work 14–16 hours a day, sometimes more. I take solid 45 vacation annually. My work makes me happy.Edit 20: Salaries to House Maids!Well, they work total of 28 hours each per month (2 maids, 1 hours daily for 28 days - 2 days off). 2500/30 = Rs. 84 per hour of work. That’s Rs. 840 for 10 hours per day coming to 25,200 per month.It is more than lot of people with Engineering and/or MBA degree make. I started my career with 15,000 per month. My wife started her career with 5,000 per month.Apart from salary they get lots of benefits including bonus equal to 2 months pay during Diwali.I am not sure what is the right amount. I pay what they asked. I didn’t bargain. Lets have dignity of labour.Edit 21: Car Loan!My car loan is of 1,500,000 (15Lacs) at 9% P.A. for 7 years. On-road price of my Hyundai Elantra 2.0 VTVT is 2,250,000 (22.5 Lacs) in Bangalore.I made the down payment of 750,000. Total interest I’ll pay over the period of 7 years is about 5.30Lacs.Whereas, from 1 Jan 2017 till 25 Jan 2018, Indian stock market saw 37% increase.There are mutual funds in my portfolio which increased by 35% in the same period making EMI paid for car loan inconsequential.Bottomline is, cash in hand is more valuable. The amount of car loan and the interest being paid is inconsequential over long term. It is all about opportunity cost.Edit 22: Why Life Insurance when you have money?The answer is pretty straight, If I die today my family gets 1.85Cr in MF + 1.75 Cr from Term Insurance. That is total of 3.6Cr. Additionally, if I die due to accident then my family get another 1 Cr. taking total amount to 4.6Cr. which is not enough to educate my daughters thru post graduation.Without Insurance all they have is 1.75Cr. from MF. Spending 54K annually gives my family potential access to 2.75 Cr. in case of my death. It is a no-brainer. Having said that, my insurance is not enough. It should be around 6 Cr.Edit 23: Rule of 72!The "Rule of 72" is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest.By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself.At 1% Interest Rate - Money will double in roughly 72 years (69.66 years to be exact).2% - 36 years5% - 14.4 years7% (Most FDs, PPFs) - 10.24 years7.5% (India’s Growth Rate) - 9.58 Years8.5% (EPF, etc.) - 8.5 years10% - 7.2 years15% (Most MFs) - 4.8 years21% (MFs during extraordinary bull run) - 3.43 years35% (BSE Sensex in 2017) - 2.06 yearsThis will give you a great idea on your current investments and how much you are losing out on FDs.The same rule also applies to an economy like India’s. Now you know why India is in golden period. It will double to 5 Trillion by 2024–2025.Edit 24: Reformatting my answer as it was collapsed due to poor formatting. Removing some of the redundant information.Cheers! Happy Investing!Ash Bee

(US context)This is a long post, so here is the short-and-sweet version:Lean on family to split burdensFocus on increasing your income: make more per hour and/or work more hours per dayIgnore advice that has the following phrases: “passive income,” “make your money work for you,” “Warren Buffet says,” and anything similarDon't feel bad about being poor; don't sacrifice your quality of life on some guilt-tripRead on for details.Of all financial advice out there:50% is geared towards the higher classes (stock investments, real estate, etc)45% is empty platitudes and guilt-tripping (“spend below your means” and “if you’re poor its your fault”)5% is helpful to the poorSo right off the bat you have to recognize that most of what you see and hear as regards personal finance is either not applicable to you, or just straight-up propaganda.As a poor person you are going to pay more for goods and services than anyone else.While a person of means can get a home equity loan at 6.25% interest, you will get a credit card at 20–25% interest. You won’t qualify for anything else -a common joke at my bank job was “the people who can get loans don’t need them; the people who need loans can’t get them.”While a person of means can buy a new car for $30,000, you will get a used car for $15,000 -along with thousands more in repairs and maintenance, and an earlier “expiry” date.While a person of means can afford quality food that will keep them healthy, you will eat heavily preserved “food” that will explode your wasteline and destroy your heath.God forbid you get sucked into the court system, where you will get buried by fees and fines and hounded by the government.And on and on.Level 1 Challenge: your bank account is in overdraft and your car is nearly out of gas.Of course you, poor person, know what you’re up against -though you may not know the depths of it. You see yourself surrounded by anti-poor propaganda, bad advice, con artists who prey on the ignorant impoverished, an uncaring government, and high expenses that threaten to drown you at any moment.You’re ready to fight, but don’t know how. One mistake can set you back for years… at best.Here is the worst-kept secret to surviving while being poor:Family.I am going to use a very liberal definition of family, to include good friends and significant others (married or not).As a poor person you are going to be shut out of most of the usual ways to make money:You will likely not have any professional networks that can help you land a good job (a significant percentage of jobs go to those who “know the right people”)You likely don’t have the education credentials to land a good job (we all know how rampant credentialism is in America today)You likely live in an area that just doesn’t have a good job market, periodSo, stuck with mostly “shit jobs,” there is going to be a ceiling as to how much income you can bring in, initially. Having worked several shit jobs that paid me peanuts and expected the world, I speak from experience. I still get angry over the $0.10 raises I’ve gotten from these places.However, if you have a solid familial network you can disperse the burdens of poverty around:You can live with your family members, splitting expensesYou and your family can share the burdens of childrearing (your kids or theirs), freeing up time for workSpeaking personally, one of the greatest financial decisions of my life was living with my boyfriend, as we split expenses and can thus afford a greater quality of life than either of us could afford alone. That $0.10 went a lot further than it would have otherwise, lol.So if you look at personal finance as an annual equation like this example:Income ($20,000/year) - Expenses ($18,000/year) = Your Net income ($2,000/year)By doing something as simple as living with your family member and splitting costs, you can change the equation to this:Income (20,000) - Expenses/2 (9000) = Your Net income (11,000)Or maybe instead of splitting costs, your family member offers to babysit your kids, allowing you to work more, which would turn the equation to this:Income x1.2 (24,000) - Expenses (18,000) = Your Net income (6,000)Both would be preferable, but any way your family can help you out works.Of course, this presumes you have a good family. Being poor with a bad family is one of the worst starting hands possible, and being poor with a bad family and kids is probably the worst of all.Should you have that hand, I honestly can’t help you much.But if you do have a good family (remember, including friends and significant others), use them. You don’t want to be that “I can do it all on my own” person; poor people can’t afford to be lone wolves. Lean on them -but don’t be a parasite. It’s about sharing burdens for the benefit of all, not offloading your burdens on others.So let’s say you’ve wisely decided to live at home while you built your resources up, or you rent an apartment with your sibling. You have now dispersed the costs of poverty, and you have people you can lean on when emergencies pop up (and they will, frequently). Car breaks down? Brother can drive you to work. Kid gets sick? Grandma can pick her up from school while you’re at work.You now have to work on your income.I won’t sugarcoat it: Most jobs available to poor people are complete garbage.The hallmarks of a shit job are:Low payLittle upwards mobilityLow skilled (you can’t learn any in-demand skills to take somewhere else)Low prestige (this means: having it on your resume for too long will make hiring managers look down on you, making it difficult to move out of the field)High turnoverThis would generally include but is not limited to: retail and customer service, warehouse workers, shelf-stockers, fast-food workers, maid services, and so on.Now, you can survive in these jobs and have a decent enough life, especially if you are sharing burdens with family. But having seen how bad these employers treat their workers and how precarious a lot of these industries are, I would not recommend it -at least not permanently.An example: the department store I worked at waited until January (and the end of the holiday season) to fire nearly all of the store’s managers -many of whom had worked for the company for decades.No warning, no time to prepare. Just poof, gone, thanks for the labor and don’t let the door hit ya.So while you are working at your shit job, you should always be planning your way out. To be blunt: if you are planning at staying at your shit job for 30–40 years until you retire with your pension/401k, you’re an idiot. This is 2020 not 1975.You need to find a way to either 1) diversify your income, 2) get a better job, or 3) both.Now, here is where you are going to run into the “bad financial advice” I mentioned at the start.In looking for ways to make more money, you are going to run into a lot of well-intentioned idiots and straight-up con artists, who are going to give you advice like this:Overall, 56 percent assume they don’t have enough money to become investors themselves.It’s simply not true. There are plenty of ways to get into the market with as little as $1, including contributing to an employer-sponsored 401(k) plan, opening a Roth IRA or using a robo-advisor such as Betterment, Wealthsimple or Ellevest, which offer $0 account minimums.The earlier you’re able to start investing, the better, even if you can’t contribute a lot just yet. That’s because compound interest allows any interest earned to then accrue interest on itself, so over time a small amount of money invested earlier will earn more than a large amount of money invested later.Krawcheck shares an example of why it’s important to start early on the Ellevest blog. She writes:Say you invest $100 today and earn 10 percent on it in the coming year; that’s $10, which means you then have $110. If you earn that same 10 percent return the next year, you earn it on the $110. So you earn $11, not $10. Do it again, and the same 10 percent return earns you $12. And so on and so on. And over time, it adds up to a lot.If you can only contribute $50 or $100, or even $5 per month, that’s OK! Start there. “Even if you’re thinking, ‘I don’t have a lot of money right now,’ you need to save for future you,” Krawcheck says.-46 percent of millennials think it takes $1,000 to start investing—here's how much you actually needSo let’s talk about this. You have an article full of advertisements for investment services (which I bolded), along with quotes from an investment advisor (Krawcheck), all talking about how easy and cheap it is to invest.Hmmmm. Wonder if they actually have your best interests at heart, of if they have ulterior motives?Luckily we have the internet, so we can check those numbers and see what they actually mean. Let’s go to Compound Interest Calculator and plug in those numbers from the article.In the interest of fairness I used only the best numbers the article provided, even though a permanent 10% annual return is absolutely batshit insane and it’s probably a stretch that a poor person has an extra $100/month to lock away for 30 years.Still, with those numbers, here would be your return:Looks great, right? $200,000 in your pocket is nothing to sneeze at.But let’s think about that.That’s $200,000 after 30 years.Assume you retire at 65 with the $200K, and will live for another 20 years.$200K / 20 = $10K year.With the way most 401ks are structured, you can’t access any of that money until you’re in your 60s. Your car break down tomorrow and you need that money back to repair it? Enjoy paying the huge fees and waiting days to get it back.So you would be putting away $1200/year for 30 years, money you can’t touch without incurring huge penalties, in order to enjoy an extra $10,000/year in retirement for 20 years. And of course this assumes that your investment will always go up, and at the enormous rate of 10% a year at that.Is there anything better you can do with that $1200?What if you put that $1200 towards a job certification or college course that allowed you to make $10,000/year more than you do now?In that case, you’d be looking at spending $1200 to earn an:Extra $10,000 a year, in 30 years and not a moment soonerExtra $10,000 a year, right nowThe choice is obvious, no?What makes bad financial advice bad is that it preys on the desire of the poor to 1) work less and 2) get out of poverty immediately. So you get a lot of “make your money work for you” and “do what Warren Buffet does” bullshit -and that’s what it is, bullshit.Remember this: Passive income is for the rich. You, poor person, need to work long and hard for your meals.Your goal should not be investing and “making your money work for you.” You should be figuring out how to make more money per hour. You want to go from $7.25/hour to $10/hour, then from there to $13/hour, to $17/hour, and on and on. You want to start the side-hustle that will increase your working hours from 5 or 6-per-day (part time)to 9-or-more-per-day.Basically: ignore any advice that starts with “Warren Buffet says,” “no risk,” “you can start investing with just $100 dollars a month,” or “all you need to do is recruit five people.” It’s not for you, and they just want your money.This doesn’t mean you shouldn’t invest, but that you should ask yourself first “is there anything better I can do with this money?” The answer will almost definitely be yes.Practically any sort of job certification or side hustle is going to bring you more income than financial investments will. Especially if you are “trading” (buying and selling short-term).Let’s say you are the next stock trading genius. You buy a stock for $1000 and it shoots up to $5000 in a year, after which you sell. Congrats! You just made $4000.If you had put that $1000 into a job certification and bumped your income up by $10,000, you’d have made $9000.Ooops!And it actually gets worse, because that stock trade was a one-time thing, while you could be making an extra $10,000 every year for as long as you have that job. So while you essentially lost $5,000 by picking the stock over the certification in the first year, that gap grows to a loss of $15,000 by the second year, $25,000 the third year, and so on.This is called Opportunity cost: by picking one option (stocks), you’ve “lost” the gains from the other option (certification).As a poor person, almost any option you pick is going to be better than financial instruments. Even buying a shitty car that will take you to your shitty job -shaving an hour off of your commute since now you don't have to ride the shitty bus- is probably going to be better for you than buying stocks.If you are poor, I would suggest traditional investing only in the following scenarios:your job is giving you free money to do so (a 401k company match)And that's it. Free money is free money. Otherwise, be cautious, and always keep alternatives in mind. Don’t say “no,” say “hmm, what are my other options?” The markets are not the be-all, end-all of personal finance.Just a normal day being poor in America.Okay poor person, let's say you've taken my advice so far.You started out like this:Income ($20,000) - Expenses ($18,000) = Net income ($2,000, or $166/month). At this point you're barely hanging on. You can't even build a savings with this. A flat tire will cripple you.But you decided to lean on your family and start a side-hustle. You ignored the con artists and wealthy worshipers, and decided to be realistic about earning; in addition to working your shit job, you now tutor kids/work a second part-time job/ have an OnlyFans account.Hey, if it's legal and you're not picky…So your annual equation is looking like this:Income x1.2 ($24,000) - Expenses/2 ($9,000) = Net income ($21,000, or $1,250/month).Now, with that spare $1,250/month, you can now afford to save. You are going to want to have 3–6 months of expenses saved up in a savings account, so that when shit hits the fan you're prepared.How much you save every month depends on your own personal circumstance. I personally save aggressively when I can, at around 50% of my net monthly income, but my expenses are especially low. Let's say you copy me and save about $600/month, and look at your new monthly situation:Income per month ($2,000) - Expenses per month, plus savings ($750 + $600 savings = $1350) = Net income per month ($650).At an aggressive savings rate of $600/month, it will take you about eight months to build a 6-month emergency savings account, which is enough to handle most of life's small emergencies. You might be able to save faster, you might have to save slower, but regardless, you want to save up to this point, at least.Alright. Eight months pass, and you take stock of your financial situation. Before you started this, here was your situation:Monthly income: $1,666Monthly expenses: $1,500Net monthly income: $166Savings account: $0.00After months of boosting your income, leaning on family to share burdens, and saving, here is your new situation:Monthly income: $2,000Monthly expenses: $750Net monthly income: $1,250Savings Account: $4,800Can you not breathe easier now?Flat tire? You can pay for it.Sudden funeral expenses? You can pitch in.Get fired from your shit job? You can pay your bills while you look for work.You can even look at “moving out” or otherwise reducing your dependency on your family, and still be financially secure -if you so choose. I do recommend moving in with a significant other though, the savings are insane.And speaking of that shit job, you now have the resources to plow into skill-building in order to ditch that job forever, and get yourself on more solid career ground.$30,000 a year baby! Still got my OnlyFans though.Now, you’re still poor, but you are on solid ground. The goal here is not to get rich or even get out of being poor necessarily; the goal is to stabilize your situation so you can breathe.Once you are stabilized, which I would define as “able to save while still having substantial funds left over,” you can actually live.When you are existing hand-to-mouth, you likely don’t have enough free time or funds to really live your life. But once you have some breathing room, it’s time to enjoy life. Vacations, five-dollar lattes, avocado toast, sword-canes, whatever.You enjoy that latte!As I said at start, around 45% of advice to the poor is a combination of guilt-tripping and empty platitudes. The basic idea of it is “you’re poor, and since you’re poor you should do nothing but save money and eat ramen until you are rich.”Let me be clear: fuck that advice and the people who spout it.If you’re a poor person, you probably work very hard at a thankless job(s) for little money. Like everyone else, you deserve to have fun and enjoy your life, when you can.If you can afford it, do it.If you’ve taken care of your bills, put aside some money for saving, and you have some left over that you don’t need, well that’s your fun money. Do whatever you want with your fun money, without remorse.If you make $2,000 a month and blow it all on Yu-Gi-Oh cards every month, that’s not good.If you make $2000 a month, save $1950, and only use the rest for ramen and spam so you don’t starve, well, that’s not good either.The goal of personal finance is not to watch your networth go up. The goal is to properly utilize the resources at your disposal in order to lead a good life. If you are not getting to that “good life” part, you’re doing something wrong -regardless of what your networth is in the end.This is a birthday food pic I took last year. My boyfriend and I had a tradition of going out to a “fancy restaurant” on our birthday (which we celebrate at the same time, since they’re only a few days apart). We don’t make a lot of money, but we can afford such things, in moderation, without regret.Had we listened to the “don’t buy lattes!” crowd, we’d spend our birthdays eating Kraft at home and reading the Bible for entertainment.This is just as fun as going out, and it saves so much money! Billionaire status here I come!EDIT: At this point, you can reasonably look at investing, starting a business, etc. Meaning: you can now start taking more risks for larger returns.EDIT 2: Cleaned up some math.

Something like this happened to me recently. I lost my only two sources of income and I had to think of something new. Something that would tide us over. My main thing is writing and that's how I want to earn my money, but until it happens (until I’m able to earn a living from my writing) I need something else.The most obvious thing I could have done would be going back to being a lawyer (I have a law school diploma and I could practice law - could find a job in some law firm), but this was the last thing I would want.Which means that after having eliminated my job prospects as a lawyer I had nothing. When you have a law school diploma and 15 years of experience but you don’t want to do this anymore nobody will care that you finished law school.Here’s what I do and what works.I sell used items on a site similar to Craigslist.One possibility I explored (and am still exploring) is selling our unused stuff on a classified advertisements website like Craigslist (its counterpart in Poland as I currently live in this country). Before I started using this site I didn’t even have an account there.I can definitely say that this idea of selling unused and unwanted items which only gather dust on people’s shelves and in their attics or cellars, or garages and doing it consistently, with all such items (as we continue to buy new items which soon become less and less important to us, and before long become forgotten), first came to me when we started having this challenging time. By no means was it (and still is) a tough time — a tough time is when there is no money to pay your bills or buy food for you and your family and this situation prolongs over several weeks and then months, nonetheless when you have a monthly budget of x (where x = y + z, where y is your income and z is your spouse’s or partner’s income), and then, out of a sudden, this budget is only y, or only z, then you need to make adjustments because you will not be able to maintain the same lifestyle (unless you want to run into serious trouble, money-wise).I mean, I heard about those sites where people can sell used stuff, I knew it was possible to sell some of this stuff we never use, but did nothing about it. There has always been something more important to do in our lives when all expenses were covered. So I guess most people don’t think about selling things they don’t use unless they’re forced to do so. Or they think about it, but never have enough time to set up this new account online, think about and look for things which they might sell, go to their attics, cellars, garages (or scan their shelves or wardrobes), then brush off or clean those items, then take a couple of photos, then find out on the Internet how much approximately they could charge for those items, comparing them to new similar items or to prices other people ask for similar used items, take measurements of this thing, open their computer, create a new page where people will be able to find this item, write a short description, set the price and then hit ‘publish’ or ‘add’.When, on May 23, I calculated for the first time how much we made selling our items on a site like Craigslist (we’ve been doing it from the beginning of this year) it was USD 845–735 (or EUR 720 — the exchange rate for this currency was more stable).On August 27 I calculated it again. It’s USD 600 (EUR 515) more. So it’s USD 1413 (EUR 1235).That’s comparable to a USD 200 (EUR 172) paycheck / month. At least! Consider taxes and other deductibles, in other words amounts paid out of pocket of any employee, as a matter of fact I guess it’s closer to USD 250 (EUR 215).And it still happens that I find new items which I didn’t think about, or had even forgotten they exist, and which, as it turns out, I can also sell.But that’s not all. Recently I’ve been paying attention to the items people throw away. In other words, which end up in the trash, or, to be more precise, near the trash containers as they’re too big and people shouldn’t use trash containers for them. In the two months preceding August 27 I sold items worth USD 210 (EUR 180) that way.Which means that the actual amount (income) for August 27 was USD 1623 (EUR 1415). That’s comparable to a USD 270 (EUR 232) paycheck / month if you actually worked.I also search for items people in my area give away for free and which they put on sites like Craigslist. Initially I thought people give away only items which are unsellable (which those who will take them will have difficulty selling) but when I reconsidered after a while I realized that people do give away sellable items but if you want the best pieces you need to be fast — they disappear almost immediately. In other words, if you’re vigilant you’ll get some of those best pieces. That’s a thing I discovered after August 27 (in the first days of September actually) so there is no real data on it — within the first two weeks I earned USD 40 this way. Plus, there are items you can buy cheap from people (who probably don’t care, or don’t want to wait, or have no idea as to what price to ask) and then sell at a margin, and there are many such opportunities (you just need to be good at spotting such occasions — have some kind of a system).I am a background actor.Apart from that I earn money being a background actor or having small episodes in movies and that’s USD 250 just in the first half of September. Which means that I can assume that it could be USD 500 per month. And I don’t take full advantage of all the opportunities. I guess it could be something like USD 750 per month (easily) for someone who is fairly well known as a background actor (by all the agencies), has good reputation and does take full advantage of it.So, being dedicated only part time to the activities which earn me money nowadays I can make approximately USD 770 per month. If I dedicated full time (if I had no passion) it could be approximately USD 1000–1200 (easily). Without being employed anywhere and at the mercy of anyone and without worrying that tomorrow I might lose my job and have no job and no money. And, what’s also very important, without any school, course, college degree, or other certificate. Without a CV even. Now that I’m no longer a lawyer my law school diploma doesn’t mean anything to anybody (whether I have it or not doesn’t affect my chances of being on a movie set or selling stuff to people on sites like Craigslist).And that’s still not all. What else I could do in the time that would be left? I bet there would be some of it left despite the fact that I dedicated full time — when you’re employed full time you also have some of it left.I could teach Polish to foreigners.I could be an UBER driver.These are two ideas I could think of immediately and which are totally doable. I bet I could come up with 3–5 more ideas if I thought about it for a while.Here’s how I approached searching for new sources of incomeI started looking for a paid work in the first days of April 2018. On May 7 I wrote and sent my first application letter. I wrote it to Gary Vaynerchuck as Gary was and still is my dream employer. So far my attempts to get noticed by Gary failed (understandably so taking into account how many people write to Gary with all sorts of requests daily).On June 7 I started writing a separate series on my blog about the process of searching for a paid work, plus created a completely new CV (unlike the traditional one) and applied for a managerial position in one of the Starbucks stores located in Warsaw. Starbucks is one of the few brands / companies in the world where I could go and start working with this childlike excitement (doesn’t mean I couldn’t be disappointed). Several weeks later they wrote me back and told me that they picked someone else for that position.Starting from June 27 (two and a half months after I started this process of looking for a paid work) I had a new source of income (something which will allow me to make money repeatedly — not just once), which, combined with my ongoing effort to sell stuff I and my family no longer use through a site similar to Craigslist or eBay, and my ongoing efforts to cut costs and live frugally, will most likely be enough to call it a decent financial contribution to the family budget.In order to have a chance at finding a new source of income quickly there are several don’ts.Let’s look at them. In order to have a chance at finding a new source of income quickly people shouldn’t:1/ Strike off any ideas, especially those which, at first, may appear ridiculous or below them (their aspirations), not good enough, embarrassing, unfitting, undoable, etc.In other words, only those who are open to any new challenges and experiences will be able to find a new source of income quickly. Those who are picky and narrow in their job search, on the other hand — those who reject their own ideas (or the ideas of others) without testing them, guided by their assumption that the idea will not be worth it, will probably need to wait much longer before they can see any money.2/ Listen to people (members of their family, friends or acquaintances) who ridicule their job ideas, their job searching ideas, their job searching methods or even the entire process, telling them that they are doing it the wrong way), and who tell them which of ideas they should or shouldn’t strike off. If they would like them in a different job, it’s their problem. If they think that something isn’t even a job, it’s their problem. If they think that something isn’t worth it, it’s their problem. They’re probably also the same people who would like them to start earning something ASAP, so this behavior (telling someone which ideas are good ideas and which aren’t / worth it or not worth it, based on some personal biases, prejudices or preferences) is often at odds with their wish.3/ Worry about the money they’ll get or their place in the hierarchy. Anything is better than zero, that’s #1.Plus, the value is also in having something and being able to start ASAP. People strike certain job offers / ideas off because they imagine what that job will look like and based on it assume that they know what that job will look like. They see it with their imagination. But they forget that our predictions are often inaccurate. They fail to factor in that very often we do a very poor job writing those future scenarios because of one simple reason — we don’t know the future (a boss who has a reputation of an asshole might die within a month in a car crash, or quit suddenly, or it may turn out that he / she likes certain people more than others and we are this example of a person he / she likes).Plus, more often than not we completely fail to factor in chance — the hidden added value of events which we can’t predict (things which might happen and opportunities which might arise). And something which we weren’t able to predict will certainly happen.The mindsetLost your job and find it hard to find a new one?You consulted experts on how to write or rewrite your CV. You’ve prepared your perfect CV, application letter and all that stuff.Each day you look for job openings. You apply as soon as you’ve seen one.Basically you’re doing the same things most unemployed people are doing.Want the upper hand over them? Do something else. Something different. Something unthinkable to most people.Don’t wait. Take any job. Even a job which is way below your aspirations/ previous title/ which doesn’t correspond with your college diploma. Meaning don’t think that you’re only this one thing.Work for free. The notion that this move makes no sense because you desperately need money and working for free isn’t an option for someone like you is just ridiculous. Today you go there and you get no paycheck, but suppose you’re good and little by little they’ll realize that actually you’re way better than the person who is always late and basically behaves like she or he doesn’t care. Things can change and things always change. Your initial position within the organization means nothing.Whereas when you sit on your sofa and wait for this long awaited phone call (Mr. Jones? We have an offer for you.) you’re playing the same game most people play. And you’re in the worst position to negotiate with a potential employer. You basically have no arguments.Do something, even if no one is paying you for it, or if no one cares, or if no one knows about it. That’s way better than waiting. If you only wait it means you have no initiative. How many employers (or people) need other people who have no initiative? Not many. Robots can easily replace people without initiative. And they’re doing just that.If you do something (create / make something) every single day you can tell the world (including your potential employer) about it. And who knows, maybe you’ll find a niche and won’t need a regular job at all?Don’t be pickyThe greatest mistake I could have made but didn’t was to be too picky and too narrow in my job search. This mistake would have led (and for many people often does lead) to prolonged unemployment / prolonged period without any source of income. And when you are looking for a job, anything is better than zero — which means that one should zero in on finding and starting something ASAP. Anything. Having something does not mean you cannot continue the search. It means you’ll be more at ease when searching. You won’t feel so much pressure.In other words, I could have imposed unnecessary limitations upon myself and missed out on some good / reasonable opportunities for a paid work.So often people zero in on a handful of things they might do (something they had initially come up with) and they overlook other possibilities. They have certain aspirations (they aim at something specific) and they choose to wait for that job which will match their aspirations. If anything they only slightly broaden that search (look for similar job opportunities).Meanwhile nothing, besides those self-imposed limitations / beliefs, prevents them from starting something ASAP. To be able to do it however they can’t wait for this ideal.Instead of thinking about it as just a trial (exploring every avenue without those unnecessary assumptions) many people obsess about the fact that they will end up doing something they didn’t want or plan. So what? So what that they will end up doing something they didn’t want or plan? They will still be able to switch to something else.Had I let my assumptions become the basis for rejecting the jobs / gigs which were outside my focus (my aspiration), it would have probably been way longer until I could start earning some money. Especially if we consider that classic recruitment processes usually take a lot of time.Be frugalWhen you are struggling financially being frugal is just as important as earning money. Being frugal is so important because it is the part which allows you to earn less.When you no longer need extravagant, expensive, luxurious items, certain (middle class, upper middle class, or rich) lifestyle you can manage with less money. When you no longer need to show off to certain people (your circle) you can manage with significantly less.Example 1: when you no longer eat USD 10–20 lunches daily (or if you no longer spend this much just on your meals — meals for one person for one day), you can manage with USD 100–300 less per month.Example 2: when you replaced your car with public transport you save on parking fees, gas, insurance, maintenance and repairs, occasional speeding tickets, and other expenses (the cost of buying a new car every three years). Of course everything depends on the kind of car you used to drive (as representative of a middle or upper middle class, employee of a corporation, lawyer, doctor, etc.). When you switched to public transport you pay a certain amount monthly (everyone pays the same amount) and you don’t need to earn money only for the sake of having a good (impressive) car and using it to commute. In most cases the saving can amount to several hundred dollars per month and in extreme cases it can even amount to a thousand dollars (and upwards) per month.Example 3: replacing very expensive cosmetics, clothes, food (bought at the most expensive groceries in town) with more modest products (not necessarily the cheapest ones), bought at cheaper chains.Example 4: moving to a cheaper (smaller) apartment, or a cheaper part of town, or a cheaper town, or even a cheaper country. If you no longer need to pay the expensive rent, or your mortgage payments represent half of what you had to pay in the past (or you were able to eliminate them entirely), you will manage with significantly less.If you lost your job tomorrow & had no other income or immediate job prospects, how long could you last?With the right mindset - indefinitely.-Part of it appeared in my postsHow to find enough money in your house to buy (and pay cash for) almost any gadget you want, or even a used car? | 812When you’re struggling frugality is just as important as earning money | 782How one struggling writer makes money | 783The top three don’ts while thinking about, searching, and applying for a day jobThe greatest mistake Lucasso could have made but didn’tA new source of income