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

Travel Essentials

Confession: I love going on trips but I hate the actual process of getting there. I get motion sickness and I so both car and air travel makes me sick and I hate wasting a day traveling. But I do it anyway because the destination always seems to be worth it. This week I’m traveling for work so I didn’t really have much of a choice but hey, I made it! For business or pleasure summer time is always a popular time to travel and I’ve been on enough trips that I have my packing routine pretty well down so today I’m sharing some of my travel essentials. I’m not one of those people that prides themselves on packing for a week in a carry on so I tend to check my bag with all my clothes, shoes and whatnot and bring a generous sized tote as my carry on. I hate the idea of getting somewhere and thinking oh shoot, I left the perfect outfit for this at home so I tend to bring more outfits than there are days in the trip to give myself options. I think this one is pretty obvious but my valuables al…

Birthday Discounts

Woohoo! It's my birthday week y'all! Birthdays are always a great time for brands to make customers special and each year I'm able to take advantage of some pretty good discounts in July so I thought I would share the love and talk about some of my favorite discounts and how to get them.

My absolute favorite discount is from Kendra Scott! During your birthday month you can receive one regular item at 50% off. It's your first time you'll have to show your id in store and sign up for their email list but then once they have you on file you can just go into the store and say that you would like to apply your birthday discount to your purchase and give your email address. This year I purchased the Tatiana Long Pendant Necklace which usually sells for $175. This necklace takes the look of the popular Rayne necklace and really amps it up.  
If jewelry is your thing you can also get a $10 credit from Charming Charlie - this discount is sent to Charm Rewards members at the…

Beach Essentials

Summer time inevitably  means a trip to the beach. Growing up my husband and I had very different ways of beaching - he being from southern California is used to just taking a towel and maybe a boogie board while I grew up with a little more "princessey" way of beaching - chairs, umbrella, blanket, beach bag with supplies for the day. True story - I was shocked the first time I went to the beach with my husband and his family used the same towel they had on the sand to dry off with. Over our years together we've melded our styles - mostly him admitting that it's nice to sit in actual chairs.

Even if we're only going for a few hours I always bring a tote with what I consider some "beach essentials" - sunglasses, a water bottle, a magazine or book, a hair brush, some hair ties or clip, and of course sunscreen.
Prep Obsessed Tote in the Mermaid Mailer Sometimes we also turn our beach day into a picnic and this cooler tote is perfect for bringing drinks, …

Summer Beauty

I feel like Memorial Day is really the kickoff to summer but if you want to be technical yesterday was the first day of summer and it got me thinking about how I change up my beauty routine for summer. I know that it's recommended to change up beauty routines seasonally but I find that I can get away with the same routine for fall, spring and winter  - but summer is a different story and I find myself with different needs during the hot and humid Memphis summer months. Here's some of my summer beauty favorites.
Ogx Quenching Sea Mineral Moisturizing Lotion $7.99 I love this lotion because it's not to thick but not watery thin and it does a good job of keeping skin soft and moisturized without being greasy - plus the nice light sea scent is great for this time of year.
Christophe Robin Cleansing Purifying Scrub with Sea Salt $19 This shampoo scrub is great once a week for gently deep cleansing and get hair squeaky clean - I find it really preps hair to accept the moisture o…

Monobox August 2017

It's mid month which means it's time for all my subscription boxes to come rolling in. First up is the August Monobox.

This month's monogrammed item is a brown faux leather saddle bag style purse and it comes with a pen and notepad. The pen is nice enough but the notepad kinda sucks - the paper is very thin and the gold heart is only on every 4th page. Although the purse is nice enough I'm not a big fan - we received a brown purse last November so even though this one is larger I'm meh on receiving it because I really don't need nor want two brown monogrammed purses but since it's personalized it's not like I can just give it away. The Monobox is $21.95 a month plus shipping so it's not a bad value and if you weren't a subscriber last November I'm sure you'd be perfectly pleased with this purse. I'm pretty sure it's available still on the I Love Jewelry website if you're interested in one for yourself.  I'll probably us…