Skip to main content

A Tale of Two Cities

Well, I survived the annual screwing by Uncle Sam. Bye bye money that could have bought a lot of Lilly. I'm ticked off this year because some of my deductible expenses exceeded the allowable deductible cap so I had more income taxed than I should have if the system was fair, boo! But anyways, my sorority sister SM made a comment on my FB post on also getting screwed on her state income tax. God Bless the great state of TN for our conservative legislature and no income tax. But it got me to thinking, even though I do pay less taxes I also make less than my yankee friends, am I really winning here in the south? Any y'all know how I answered that question, I graphed it. :)
 
Ok, so we have two sweet, nice looking girls in the same sorority and upon graduation they tearfully hug goodbye and go their separate ways. One moved up to NYC and the other back to her hometown of Memphis. By age 30 NYC girl is making $100,000 and Memphis girl is making $55,000 (I just picked 100,000 as the NYC salary to keep it even then looked up the type of job that would pay that and found the Memphis salary). Both are on the company insurance plan and pay the flat single person contribution costs. Both girls are smart and take advantage of their 401K and set aside 6% of their income. Now NYC girl winds up paying 25% of her income in state and federal taxes while Memphis girl is paying 15%. Side note, why is NYC so full of democrats given this horrible tax rate?
 
With their take home pay both girls also set aside 10% in personal savings. Memphis girl is able to keep her total housing costs at 35% of her income while NYC girl needs to go to 40% to live in a safe neighborhood and have more than a closet. NYC girl spends an average of $20 a day on cabs while Memphis girl has a car and buys gas. Both girls buy groceries and have a nice dinner and drinks with friends once a week. Both girls have the same student loan expense and both girls set aside the same portion of their income for fun stuff, i.e. entertainment and looking nice.
 
Now Memphis girl has used up all of her income while NYC girl still has a little left, so she puts that into savings as well. Both girls are living very similar lives, NYC girl gets to dress fancier but we'll get to that in a minute. The real difference isn't affecting these girls today, it's when they go to retire, NYC girl will have twice the retirement account as Memphis girl so if they both go down to Florida to retire they are going to have very different retirement accommodations. The only way Memphis girl can ever hope to match this is if she buys her home while NYC girl rents, then she will have 5 years or no mortgage payment to divert to savings and be able to sell her home for cash. Now one or both of these girls might get married and have kids which would drastically change this model, but the point was to show the long term effects of the income  / tax/ cost of living gap.
 
On a personal level, this really put my love for designer clothes and accessories into perspective. I'm wanting a NYC wardrobe (ok, really a Palm Beach wardrobe) on a Memphis budget. Memphis is not perhaps less fashion sophisticated than bigger cities, it's just that a $300 purse is a bigger purchase here than it is elsewhere. Don't get me wrong, I still love my living situation in Memphis but I'm realizing it might not be the worst thing ever to consider moving one day.
 
Here's the actual numbers for my fellow math nerds if a visual helps.
 
    NYC Memphis
Income   100,000.00 55,000.00
       
Insurance   2,400.00 2,400.00
401K   6,000.00 3,300.00
Taxable   91,600.00 49,300.00
Taxes   24,598.60 8,254.00
NET   67,001.40 41,046.00
Expenses:       
Savings 10% 6,700.14 4,104.60
Housing   26,800.56 14,366.10
Transportation   7,300.00 6,980.00
Food   10,400.00 6,500.00
Student Loan   3,000.00 3,000.00
Entertainment 5% 3,350.07 2,052.30
Clothing and Beauty 10% 6,700.14 4,104.60
       
Additional Disposable   2,750.49 -61.60
       
       
Annual Savings   19,450.63 9,666.20
       
35 year    1,440,000.00 742,220.00
Inflation Adjustment   496,457.00 255,589.00

Comments

  1. Hm. This is an interesting comparison. Even CT to Memphis is an interesting comparison. It's cheaper to live in the South in general, but at the same time, the wages are lower. So it does somewhat even out at that level. Very interesting.

    ReplyDelete

Post a Comment

Popular posts from this blog

Ipsy Ocotber 2017

I thought I had unsubscribed from Ipsy but apparently I just skipped last month so yesterday I had the unexpected surprise of an ipsy bag in the mail. The October bag is really cute and I will absolutely use this as my purse makeup bag. As for the products I have mixed feelings, here's what's inside:   Marc Anthony True Professional  Hydrating Coconut Oil $11.80 I usually don't use a oil in my hair but my ends have been kinda dry and frizzy lately so I figured hey why not. I was pleasantly surprised how this didn't make my hair feel greasy or weighted down and it did make the ends smoother so it's something I would consider purchasing in the future. I do wish it came in different scents, this one smells beachy which is nice but this time of year I'd prefer a less tropical scent.
Dermelect Nail Polish $12 I'm not even going to link to this product I thought it was that awful. I personally am not a fan of the shade but that aside the formula had an awful app…

Sunday Secrets - Behind the Filter

Two weeks ago I posted a "Sunday Secrets" post giving a little insight on the real me vs the social media me and I really enjoyed it and decided to try making it a regular thing. When I first started blogged it was mostly just a journal about my life I shared with my facebook friends filled my thoughts and personal rants. Since "cleaning up" my posts earlier this year I realized that I've missed having that outlet and I've worried that in only talking about this beauty product or that outfit I might be too shallow and it's ok to be a little bit real online sometimes. So today I'm taking about my life behind the instagram filtered lens.

Instagram filtered version of me  Latley I've been a little overwhelmed by adulting. I don't remember my parents ever acting like just being an adult is hard. I was too young to remember much from when my paternal grandfather died but I do remember my maternal grandparents dying within a year of each other a…

Trunk Club Review

Recently I saw the trunk club service advertised on instagram and I was very interested. The service started as a personal shopping service for men but since being purchased by Nordstrom has expanded the service offering to women. The basic premise is something similar to Stich Fix - create a profile providing sizes, likes and dislikes, converse with a stylist and be sent a box with 10 items to try on -keep what you like and send back the rest. This service has a $25 styling fee that is waived for Nordstrom card holders. When I first created my profile I knew that I wanted to add some tops to my wardrobe but I was really looking for a dress to wear to my brother in laws upcoming wedding. I was super excited when my assigned stylist indicated I could request specific items and there were three items I asked to be included. Before the trunk is sent out you have the option to preview, decline any items that are not what you're looking for and then either just get the previewed item…

Nordstrom Rack Memphis

Last week was a big week for Memphis shoppers - our very own Nordstrom Rack opened! I like Nordstrom Rack, it's one of my favorite places to shop online, so I was excited to hear that we were getting one in Memphis.


When visiting the new store I was surprised at how much it reminded me of a TJ Maxx. The home section is much smaller, the shoe section much larger and there's no jewelry case but otherwise it's similar in size, layout and merchandise. One difference I appreciate is that the purse and clothing sections are separated out by designer - so if for example you're looking to buy a Tory Burch bag you don't have to look through all of the bags - they are organized together. Shoes are not separated by specific designer but they are in two areas - regular and designer, which seemed to be shoes over $150 a pair. Super small home section Women's clothing Purses! I really want one of these Rebecca Minkoff bags Pretty earrings For plus sizes I'm torn on ho…

Mommy Lhey Little Bits July and August

I've been terrible about sharing my Little Bits boxes lately, which is really crappy of me because they are so beautiful and definitely deserve to be shared. Each kit comes with patterned papers (double sided), a pouch, notebook, pen, stickers, decorative paper clip, die cuts, washi tape, sequins, sticky notes, clear stamps, a planner charm and bookmarks or dashboards. Trust me, it's a big bang for your buck. To me there's two things that really make the Mommy Lhey kit stand out - while each planner designer is going to have their own aesthetic some tend to follow the same theme every month and it gets well - boring. June had a cactus theme, July is florals and pretty dresses, August does have some floral but has a much sassier feel and September is going to be woodland animals; it's always fun and exciting to see what the theme will be each month and I love that Mommy Lhey releases the theme before the sign up dates so you can decide if it's for you or not. The …