Sunday, September 28, 2008

Monthly Interest for September 2008

Making ends meet on minimum wage, currently at $6.55 per hour is tough. As the numbers for a basic wage, tax and net pay breakdown show, there is not a whole lot left over after the “Tax Man” gets his cut. Just the tax on the wages earned come to just over 22% of gross wages and that’s not including the medical deduction if you’re lucky enough to have an employer who offers it. I distinctly remember working for minimum wage when my wife and I were starting out.

As the month of September draws to a close, it’s time to see how much interest I’ve earned toward my goal of "A Dollar A Day". As the downloaded information below shows, I’ve earned 48 cents toward my goal of a dollar a day in interest. Yeah! Only $364.52 left to go. Also as the statement shows, there was a long lag time between opening the account and actually getting access to it to add the rest of the start up deposit.

HSBC Direct’s account opening process is a right pain in the posterior. At one point, I was berating the poor representative because the answer to security questions can’t contain two of the same letters adjoining in the answer. So for example, if the security question is, “What is your father’s middle name?” and your answer is “Larry”. This is an invalid response and the password creation program will flag it as an error. The suggestion from the representative? Make the response “Lary”. So as I see it, HSBC Direct is encouraging you to lie about the answers to their security questions and then remember what lie you told to them.

I did apologize to the poor representative that had to listen to my short rant concerning this, but I still stand by my response. It’s a silly process to encourage your clients to lie about the answers to the security questions and then expect them to remember the lie.


ONLINE SAVINGS: ######### (Acct number hidden)
Bank Balance: $267.48 Available Balance: $267.48
Last Statement: 09/26/2008 Interest Earned Year To Date: $0.48
Information as of: 09/27/08

Date Transaction Description Debit(-) Credit(+)
09/26/2008 INTEREST PAID FROM 08/27/08 THROUGH 09/27/08 $0.48
INCLUSIVE AVERAGE DAILY AVAILABLE BALANCE
$167.34
09/17/2008 DEPOSIT FROM HSBC ONLINE-TRANSFER $14.00
09/11/2008 DEPOSIT FROM HSBC ONLINE-TRANSFER $153.00
09/02/2008 DEPOSIT FROM HSBC DIRECT-ACCT FUND $100.00

Sunday, September 14, 2008

Making Ends Meet

Making ends meet on minimum wage, currently at $6.55 per hour is tough. As the numbers for a basic wage, tax and net pay breakdown show, there is not a whole lot left over after the “Tax Man” gets his cut. Just the tax on the wages earned come to just over 22% of gross wages and that’s not including the medical deduction if you’re lucky enough to have an employer who offers it. I distinctly remember working for minimum wage when my wife and I were starting out. The local fast food restaurants were a frequent stop in our effort to save money. If we had been a little more money savvy, we’d have eaten at home and saved the leftovers.

One of the ways I boosted my income was finding a part-time job at a local fast food restaurant. Taking this job offered several benefits over trying to get extra income from my primary job by working over time. Fast food restaurants often offer discounted or free meals to employees if they work a shift. Another benefit is that a lot of food that would otherwise be thrown out at the close of the day is willingly given to employees if they ask.

So, in our example of “Minimum Wage Earner”’s wage breakdown, I can add 20 hours a week at $6.55 per hours minus taxes and be able to afford insurance, taxes, tag and phone. And lest we not forget, the dollar a day into a savings account.

It’s even more difficult to work those extra twenty hours a week and give up your “down time” from your primary job. I did this myself for 8 months when my wife told me we were expecting our first child. Actually I work 40 extra hours a week or pretty close to it. No, I didn’t get much sleep. But, the point is to take the money and do something smart/useful with it like put it in savings, pay off a debt, prepay an upcoming bill, etc. Trying to maintain a hectic work schedule and long hours will make you old … fast.

The high yield savings account at HSBC is setup (finally) and I’ll be updating this blog with the results of the monthly statement in October. One of the things that I did forget is that 2008 is a leap year, so I need to add an extra dollar for that extra day in February. I’ll do that on or after the 26th of September when I make my next scheduled deposit of $14 dollars.


$262.00 Gross Wages (20 hour Bi-Weekly Payroll)
$20.05 FICA
$24.30 Federal Tax (Zero exemptions)
$14.41 State Tax (This was figured for NC, no local tax)
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$203.25 Net Pay (What you take home)

Tuesday, September 9, 2008

Hypothetical Minimum Wage Earner and Expenses

Making ends meet on minimum wage, currently at $6.55 per hour (unless you work as a waiter/waitress), is tough. As the numbers for a basic wage, tax and net pay breakdown below show, there is not a whole lot left over after the “Tax Man” gets his cut. Just the tax on the wages earned come to just over 22% of gross wages and that’s not including the medical deduction if you’re lucky enough to have an employer who offers it. I distinctly remember working for minimum wage when my wife and I were starting out. The local fast food restaurants were a frequent stop in our effort to save money. If we had been a little more money savvy, we’d have eaten at home and saved the leftovers.

With a net pay of $813.00 dollars per month (there are two extra pay periods each year) I’ll see how far it goes.

As I write this, gas is selling for $3.59 per gallon in my area. A compact car, such as a 2005 Corolla (EPA estimated 30 mpg City), we will assume burns a tank a week. A tank is 13.2 gallons in capacity and I’ll also assume that there is 2.2 gallons left at each weekly fill up (I like easy math). So, every week we have to buy 11 gallons of gas totaling $39.49 just to get to work, grocery shop, etc.

Rent in my area for a one bedroom, 1 bath, 500 sq. foot apartment runs about $550 per month. Adding a roommate and getting a 990 sq. foot apartment will run about $724 per month. For the purposes of this post, I’ll assume there is a roommate and rent is taking up $362.00 per month each.

The 2005 Toyota Corolla mention above I’ll assume was purchased in June 2005, using a $2,000 dollar down payment from Mom and Dad. There is a payment of $199.00 per month for a total of 60 months (5 years). There are 21 payments left on “Ole Blaze” as my grandfather used to call his cars.

Progress Energy and Duke Power are the usual providers of electricity in my area. A kilowatt hour of electricity is $96.86 per month from Progress Energy. I’ll assume that we use only half a kilowatt hour per month and that comes to a split of $24.22. I’ll also assume that water and sewer is included in the rent. I’ve had both types, included and not included in the past.

So, how do we “net out”? Taking our monthly net income of $813.00 dollars and subtracting expenses of $793.18 per month for rent, car, gas, utilities and groceries (at $50.00 per month), there is $19.82 left over.

As you might notice there is nothing in the budget for insurance, taxes or tag to keep “Ole Blaze” on the road. There also is no mention of phone, cable or internet service. I think my hypothetical “Minimum Wage Earner” needs a rich girl friend.

I listen to a morning radio show on my hour and a half drive in to work every day and one of the employees occasionally mentions how tough it is to make ends meet. Having gone through this little exercise, I can well imagine his issues. It does bring back (bad) memories of my days as a minimum “wage slave”.


$524.00 Gross Wages (Bi-Weekly Payroll)
$40.09 FICA
$48.60 Federal Tax (Zero exemptions)
$28.82 State Tax (This was figured for NC, no local tax)
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$406.50 Net Pay (What you take home)