October 31, 2013

Building a Cheap Computer Won't Save You Money

A while back I wrote an article discussing when it makes sense to build a computer.   My general conclusion that it makes sense for middle or higher end systems but not the cheaper ones.    Its now been over 4.5 years since I wrote that article so its a bit out of date.    I recently built my own computer and found that building my own made sense because I wanted a specific part (SSD drive) that are only used in the most expensive systems.   That however is kind of a rare situation.

I decided to go back and take another look to compare the cost of building your own cheap computer versus buying one off the shelf.    When I wrote that first article on the topic for low end systems I compared a Dell Inspiron 530S at $279 + $35 s/h or $314 total versus building a system from parts on Newegg totalling $333.50 s/h included.  

Again I'll compare buying a Dell versus buying decent quality parts off Newegg.   This isn't a strict apples to apples comparison though so I didn't get all the exact same parts.   I instead compared a cheap DIY entry level solution to a cheap Dell entry level solution.

DIY computer from Newegg parts

For my Newegg shopping list I looked for cheap basic parts but then filtered it to only consider the parts that had at least a 3.5 star average review.

Here is the parts list that I came up with :
Sentey Classic Series CS1-1399 Mid Tower Case w/ Power Supply SECC 0.5mm 2x USB/ Card Reader SD-MMC / ATX-MATX
LITE-ON DVD Burner - Bulk Black SATA Model iHAS124-04 - OEM
Seagate Barracuda ST250DM000 250GB 7200 RPM 16MB Cache SATA 6.0Gb/s 3.5" Internal Hard Drive Bare Drive 
Mushkin Enhanced 2GB 240-Pin DDR3 SDRAM DDR3 1066 (PC3 8500) Desktop Memory Model 991573 
ECS H61H2-I3 (v1.0) LGA 1155 Intel H61 HDMI Mini ITX Intel Motherboard 
Intel Celeron G540 Sandy Bridge 2.5GHz LGA 1155 65W Dual-Core Desktop Processor Intel HD Graphics BX80623G540 
Microsoft Windows 7 Home Premium SP1 32-bit - OEM 

 Total cost = $339.35

Off the Shelf from Dell

The cheapest desktop Dell I found is an Inspiron 660s for $349.99 with free shipping.
Winner = Off the Shelf system

If all you want is a basic entry level computer then I think you should simply buy a basic cheap desktop from Dell.  (or another decent name brand)

Technically the DIY computer is about $10 cheaper than the Dell.    However the Dell does have better specs. in several items like 4GB memory instead of 2GB on the DIY and a 500GB drive instead of just 250.    I also think that the labor and work involved in building the DIY system is not worth a mere $10 difference.

There are always exceptions

There are some situations where you can do better with the DIY system.    For example if you're like me and you have a particular desire to have an SSD drive in the system then you can absolutely build a cheaper basic computer with an SSD than you can find prebuilt.  

The operating system cost is a huge factor as well.   If you go DIY then you're spending about $100 just for a copy of Windows.    If you already have a copy of Windows or if you chose to use a free OS like a Linux build then that can make all the difference in the decision.   When I used to build computers more frequently I would simply reuse my XP disc on the new computer.   I don't believe that is allowed with Microsoft's current licensing rules however.

Another way you might make DIY more worth while is to bargain hunt for deals.   Newegg frequently has sales and discounts.    If you have some patience and wait for sales you should be able to cut $10-30 off the price of the Newegg items.   They have some deals like 10% off  your purchase up to $200 or something like that.   Newegg isn't always the cheapest either and you can shop around and find some better prices elsewhere.   You can also cash in a 1% rebate if you use Ebates for your Newegg purchases.   If you add all this up then your DIY total cost might be closer to $300 and saving $50 may be worth it.  


October 29, 2013

Where Do People Drive?

I don't drive as much as the average American.   I've put about 50,000 miles on my car in the past 6.5 years so that averages out to only about 8,000 miles a year.   I believe the typical American drivers more like 14,000 miles a year.

Id' assume that driving to work and back is a big reason people put miles on their cars.     But where else do they log all those miles? 

I found 2009 data in a Summary of Travel Trends 2009 National Household Travel Survey document from the DoT.

I'm actually surprised that commuting for work is only at 19% of the total.   But I guess I shouldn't be too surprised.   That would equate to about a 10 mile round trip commute for most people.


October 27, 2013

What Are the Chances of an Expensive Medical Bill?

Recently I made the argument that you need to have health insurance.  Sometimes when people go without insurance they do so because they feel that the risk of a large health care bill is not high enough to warrant the cost of insurance.   I thought it would be useful to see what the actual risks of a high health care bill look like.

The Kaiser Family Foundation has data on the concentration of health care spending in the U.S.   Their data there was from 2010 so the figures are a little higher now, but the general trend should be about the same.    I took their chart and reformatted into a pie chart to show the mix of spending for the different population groups.

Half of the population spent under $829.   80% of the population spent over $4639.    So you can see the vast majority of the population spend under $5000.   Only about 10% of the nation spent over $10,000.   The top 1% spent over $53,238.

OK then roughly speaking, there is about 1 in 10 rate of spending over $10k and about 1 in 100 rate of spending  over $50k.  

Now keep in mind that this is looking at the entire population so you'll have higher and lower typical spending levels for different age groups.   For example people over 65 years old will spend more than average and people in their mid 20's might be much lower than average. 

I also tried to find data on very expensive health care costs like $100,000 or $250,000 or $500,000 levels but I could not find anything saying what percent of people have such high bills.   I suspect those hefty bills are a small fraction of the population though.  

Someone might look at the chart and think well if the risk of a $50k bill is only 1% then I can risk that.  However keep in mind that a full 20% of people spend about $5000 or more and another 30% spend around $1-5k.   If your insurance cost is around $3000 a year then we could estimate that there is probably about 1 in 3 chance of repaying your insurance in any given year.   Plus there would be about 1 in 5 change that your health costs would be significantly higher than your insurance costs.   So its not just looking at spending $3000 to avoid a 1% chance at a $50k bill.      You are actually a lot more likely to have a $5000 or $10,000 bill which is still a pretty hefty burden.   I'd also point out that insurance is never a straight odds gamble but the point is to insure yourself against the very high costs which would be catastrophic to your finances.  


FREE - 100 4x6 prints at Target

Target is running a sale at their photo labs with 4x6 prints for 10¢ each.

They also have a coupon for $5 off of 50 prints.    You can use two of the coupons and get 100 of the 4x6 prints for free.

I saw this on Fatwallet

October 25, 2013

Best of Blogs for Week of October 25th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

CNNMoney  reports in State Colleges See Smallest Tuition Hike Since 1975  that the average public university tuition rose 2.9%

DoughRoller has a lengthy post on The Homeowner’s Guide to Money-Saving DIY Home Maintenance

MyMoneyBlog lets us know that Amazon Free Super Saver Shipping: Higher $35 Minimum, Officially Slower


October 24, 2013

You Need Health Insurance

If you don't have health insurance then you should really get it.   

Most people get health insurance via their employers or through existing government programs like Medicare, Medicaid or VA benefits.    But there are still a lot of people who don't have insurance for various reasons.   Before the Affordable Care Act  (ACA) (everyone calls it Obamacare) there were a lot of people who really had a difficult time affording health insurance.  But with the ACA there are now subsidies that help pay for the cost of health insurance for those with medium or lower incomes.

If you don't have enough money to afford it then you can get generally get coverage under Medicaid.  If you make too much money to qualify for Medicaid then you will probably qualify for a premium subsidy from the government that will help pay the cost of health insurance.   If you make too much to qualify for the subsidy then you can afford health insurance.    I think this really splits the uninsured into two groups, those who have difficulty affording it but can now get aid through the government programs or people who can actually afford it but don't buy it.

Some people feel they can't afford insurance but they simply aren't making it a priority.    Health insurance should be a priority over many other expenses.   If you make an average income or better than you should have money in your budget to afford health insurance.   If you don't feel you have the money then you need to re-prioritize your spending.    People without health insurance generally skimp on healthcare when they need it since they can't afford the out of pocket costs without insurance.    What good does cable TV or a nicer car do you if you end up seriously ill for lack of adequate health care?  

Its not likely you'll have a giant unaffordable hospital bill but the consequences are catastrophic.   If you do end up with a serious illness or injury then the total healthcare costs can easily bankrupt most people.   Some people feel that going without health insurance is an acceptable risk because they think the chances of needing it are low such that they feel its 'worth it' to fore go buying insurance and take the risks.   We don't treat auto insurance or home owners insurance this way so I'm not sure why people make such choices with health insurance.   Healthcare costs can wipe you out financially just as well as a severe auto accident or a home fire.  

Younger people may also feel that they have no 'need' for health insurance because their healthcare costs have been generally low.   Younger people are generally more healthy and do have relatively low healthcare needs and lower risks.    This however is not good reason to go without health insurance entirely.  Younger people are not immune from serious illness or injury.    While its not likely you'll end up with a giant hospital bill it can and does happen to people who are under 30 years old.   Just stop and think about all the people you know and who you know in their 20's who've had serious illnesses and serious injuries.  I'm sure you know someone.  

Healthy lifestyles also don't defend you against all serious healthcare costs.   A lot of people seem to think that because they do a good job taking care of themselves with good diet and exercise that this means they're immune to hospital stays.   Certainly keeping in good shape will keep you in good health but it doesn't defend against all illnesses and injuries.  

It may make good sense to get a high deductible plan but you need catastrophic coverage at a minimum.    Young and healthy people do have lower healthcare costs so a high deductible plan may be a good idea financially.  But you should at least get a plan that will kick in and protect you against extremely high medical costs for serious illness or injury.   People under 30 can still buy catastrophic plans under the ACA and the Bronze level often has $5000 level deductibles.    These plans are often quite reasonably priced (relatively speaking) especially when you consider subsidies available to most people.

Please make health insurance a priority in your budget.  Going without health insurance is not worth the risks.

October 22, 2013

What do Carbon Offets Cost?

I personally have always liked energy efficiency.  I've generally only spent money on energy efficiency when it makes financial sense to do so.   But there is also a legitimate desire by some to reduce energy use and reduce greenhouse gas emissions for the good of the environment.   I mostly consider that a nice side benefit to my energy savings projects rather than my primary goal.

Carbon Offsets are one way you can achieve reduction in greenhouse gas emissions.     If your personal goal is to reduce CO2 production then buying carbon offsets can achieve that more practically than spending money on some low return energy efficiency improvements in your own home.

As an example to illustrate the idea : I could spend $10,000 on solar energy panels and save myself $200 a year in electricity.   That would end up cutting about 1/2 ton of CO2 emissions.    But a $200 return on $10k is not great.    So it doesn't really pay to do that unless my real goal is to save the environment.   Or I could put my $10,000 into paying down our mortgage and save $400 in interest and then spend $10 to buy a carbon offset to save more a full ton of CO2 in some other more effective CO2 reduction effort like a wind farm in the Dakotas.   I could even spend $200 on carbon offsets that reduce 20 times as many CO2 emissions.    (the numbers used here are rough but meant to be realistic)

So that lead in brings me to the topic:  What do carbon offsets cost and who sells them?
I'm only looking at the cost per ton of CO2.    I'm not looking into the quality of the projects or anything like that.  

I first researched some of the more popular carbon offset services and found prices on their web sites.
The costs per ton of CO2 I found are :

Nature Conservancy : $15 (tax deductible)

NativeEnergy.com at $14
CarbonFund.org at $10 (tax deductible)

TerraPass.com at $12

Then I came across an index of providers with prices per ton at CarbonCatalog.org   They list some organizations starting as low as $5.   I'd not hear of most of those companies but theres some real cheap prices out there.

The cheapest they list was : Versus-CO2.com  at just $2.75 per ton

Clearly theres a wide range in prices.    I've got $2.75 at the cheap end all the way up to $15.

However I wouldn't recommend simply signing up for the cheapest option without further research.  Its a good idea to verify the projects are certified and examine how exactly the companies are achieving their CO2 reductions to make sure you're really paying for projects that have a legitimate impact.

I should also point out that there is some debate about the effectiveness of carbon offsets.   I'd encourage individuals to investigate the idea fully and consider any criticism before buying them.  

Photo credit: Some rights reserved by quinn.anya

Only About 2% of Retirement Assets Are Held in Roth IRAs

If you read all the personal finance sites and blogs like I do you'd get the impression that everyone and anyone has a Roth IRA and that they're a really big deal.   Well not so much in reality.  

A little under 2% of all retirement funds are held in Roth IRAs.

I figured that from data in the EBRI issue brief titled IRA Balances and Contributions: An Overview of the EBRI IRA Database.   The data in the report is for 2008 so its a little dated, but I'm assuming the mix of moneys in retirement accounts hasn't changed drastically.

First I jump forward to Box Figure A in the report that shows that about $13.3 trillion was held in retirement accounts and 26.8% of that or $3.6T is in IRAs or Keoghs. 

Next look at Figure 1 in the report that breaks down the % of different kinds of IRA accounts people have.

Here is are those #'s :

Now you might be tempted to think that if IRAs are 26.8% of retirement and 23.4% of IRAs are Roths that would mean that 26.8% x 23.4% of retirement funds are in Roths.   But thats not the case because the average balance in a Roth is actually much lower than the average balance in other IRAs.

The average balance by IRA account type out of Figure 3 in the report are :

You can see the Roths hold the smallest balances.

Roths account for just under 6% of the total money in IRAs.    And as IRAs are 26.8% of all retirement funds then that means that Roths hold about 1.6% of all retirement money.


October 20, 2013

Whats The Cheapest Car to Drive?

Some people like to buy new cars, others think used cars are a better value.   My dad drives beaters mostly.   I've looked at hybrid or electric cars as a potential way to save money.   Theres pros and cons financially to any kind of car.    An older car will likely have higher average repair bills while a newer car has worse depreciation and higher opportunity cost.

If you consider all options, then whats the cheapest kind of car to buy and drive?    Should you drive a 15 year old beater, a brand new electric car or a 10 year old economy car?

I decided to try and look at this at least as a hypothetical scenario comparing some examples.   I don't have the data to do any kind of exhaustive or scientific study, so I'm just going to pick some example cars that can be bought and then try and estimate the costs of owning and operating them.

Various options:   First of all you could go buy a brand new car that gets the very best fuel efficiency.  That would be an electric car and I'll use a Nissan Leaf as an example.    You might instead try a lease deal on an electric car.  I've seen Leaf leases advertised for $199 a month.     Next option you could consider is a bit older hybrid car.  That would give you great gas efficiency and a reasonable sticker price.   You could go for a car thats say 5-10 years old so its relatively cheap but still not going to have too much risk of high repair cost and has decent mileage.    Lastly you can buy a beater for $2000 that gets decent gas mileage and run the risk of major repair bills.   I'm not considering any other new cars since used cars are generally cheaper and I'm not considering a used electric car since they don't seem to be readily available to buy for reasonable prices on the used market yet.

A big pile of assumptions:  First I'm assuming gasoline costs $3.50 a gallon.  Of course it varies but today thats about what it costs around here.   Second I'll assume that maintenance costs like oil changes and new tires are roughly equivalent across all cars.  Thats not entirely true but close enough for my purposes.   I'm assuming 10% annual depreciation rough average for used cars and 20% depreciation in the first year for a new car.    I'm assuming 50/50 driving between city and highway miles.  I also arbitrarily assume $300 annual insurance costs for comprehensive coverage which you'd opt out of only for a beater car.    Last but not least I'm taking a semi blind guess that your annual average repair costs are going to be roughly $100 x car age in years (i.e. 2 year old car is $200,10 year old car is $1000)    I fully admit right now that some of those assumptions are not super realistic, but I'm trying to get a rough idea on total costs without spending half a year analyzing it so I'll go ahead and work with it.

Here is my table :

city hwy cost deprec opport insur repairs
2000 SC1 27 36 $2,000 $200 $100 $0 $1,300
2000 Neon 28 35 $2,000 $200 $100 $0 $1,300
2007 Rio 27 32 $5,000 $500 $250 $300 $600
2000 Civic 28 35 $5,000 $500 $250 $300 $1,300
2008 Aveo 23 32 $5,000 $500 $250 $300 $500
2001 Insight 45 49 $8,000 $800 $400 $300 $1,200
2008 Prius 48 45 $13,000 $1,300 $650 $300 $500
2014 Leaf 129 102 leased
$3,400 $300 $0
2013 Leaf 129 102 $22,000 $2,200 $1,100 $300 $0

cost : rough purchase price
deprec : How much value you'll lose in a given year due to depreciation
opport:  The opportunity cost of the value of the car or the cost in interest to finance the purchase of the car. (for the lease I just added up the lease cost for a year.)
insur : The cost of paying comprehensive insurance
repairs : Rough estimate in repair costs.

The total costs including gasoline (or electricity) that I summed up for annual mileage of 10,000, 20,000 or 30,000 miles driven  are then :

10k 20k 30k
2000 Saturn SC1 $2,734 $3,869 $5,003
2000 dodge Neon $2,725 $3,850 $4,975
2007 kia rio $2,845 $4,040 $5,235
2000 honda civic $3,475 $4,600 $5,725
2008 Chevy Aveo $2,858 $4,165 $5,473
2001 honda insight $3,446 $4,192 $4,938
2008 toyota prius $3,503 $4,257 $5,010
2014 nissan leaf $4,007 $6,814 $9,622
2013 nissan leaf $3,907 $4,214 $4,961

With the lease I'm using the eMPG rating to approximate the electricity cost but I'm honestly not sure exactly how accurate that is.   For the Nissan Leaf lease option I assumed you'd have a 25¢ per mile charge if you went above 10k miles which pretty much kills the feasibility of an electric car lease. 

Usually the cheapest option to drive will be a beater that gets decent gas mileage.     That assumes you drive under 30k miles in a year.

Note that at the 20k mile per year rate there isn't a huge difference in costs for the cars I combined.   You're spending just a little over $400 more a year for the brand new Leaf versus a 13 year old Dodge Neon.  If you're going to give me the choice of a new car for $4200 a year and a 13 year old car for $3800 a year I'd go with the new one.    But then that assumes I've got an extra $400 a year to blow on the nicety of a new car.

If however you drive a LOT then you might do a little better with a 10 year old bargain hybrid like the Insight or with a brand new electric car.   A potential problem with an electric car is that limited battery range may not allow you to drive as much as you need, so you may need a midday recharging option for that to be feasible to get above the normal range.   My total costs are marginally cheaper for the 2001 Honda Insight than the 2013 Nissan Leaf however with so little difference I'd go for the new car instead of the older car as it will be a better car since its new.

Of course this analysis is far from perfect, but I think it gives an idea of how the total costs for cars might compare.


October 18, 2013

Best of Blogs for Week of October 18th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

Saverocity shares some of the negatives of the blogger world with a Professional Blogging Reality Check
Makes me happier that I have a handful of twitter followers and never joined a blogger network.  I now realize its because I'm ethical and I just thought I was lazy.

Bargaineering asks Are women really paid only 77 cents for each dollar men are paid?

PlanetMoney explains U.S. Is The World's Largest Producer Of Natural Gas. Here's What That Means.

Yahoo has an interesting idea from Cheapism.com on Live Off the Dollar Store for a Week on a $50 Budget


When To Buy Life Insurance

This is a guest post from Gary Dek who writes at MyLifeInsuranceQuotes123.com, a site focused on providing comprehensive life insurance guides. Previously, Gary was an investment banker and private equity analyst.

Nearly every consumer today realizes the importance of life insurance for a secure, healthy financial future and retirement. About 93% of Americans say that life insurance is an essential part of financial planning; unfortunately, only 41% own a private policy outside of their employer’s benefits package. So, how do you decide when it is time to purchase life insurance?

There are going to be numerous times throughout your life where the need to have the best, affordable life insurance plan is obvious, such as potentially lethal car accidents, illnesses, or disabilities, but you can’t plan for those moments. By following a few tips, learning when to buy life insurance is easy.


One of the best times to buy life insurance is after getting married. If you are a young family with limited finances, losing all or half the household income can be financially crippling. Since funeral and burial expenses can cost between $10,000 and $15,000 nowadays, each partner should have life insurance that will at least cover final expenses. Depending on which partner passes on first, this guarantees that the expenses will not put a burden on the surviving spouse.
The need for life insurance becomes even more critical when one individual is the primary breadwinner for the family. How much life insurance you will need depends on your existing income, the amount of your assets versus liabilities, and the lifestyle you want your dependents to enjoy.

Buying A Home

Another time to prioritize life insurance is upon purchasing a home. Buying a home is a large, long-term commitment. An adequate policy would make certain that your spouse, children and dependents are not left struggling with making mortgage payments. Because a bulk of your income likely goes toward paying your mortgage, buying a life policy with a death benefit large enough to pay off your home would eliminate one huge expense for your family.

With Children

Having children is a great reason to buy or update a term life insurance policy. More coverage should be purchased with the addition of each new child. This is fundamental because there are many costs involved in providing for and supporting a full household. As children mature and start on the road to their own financial independence, there will also be college/education and living expenses to think about. Given the way tuition rates and cost of living have been increasing, $150,000 to $250,000 per child may provide the right amount of coverage. Just remember – every living situation and family budget is different, so find a figure that works for you.

In Your 30s and 40s

Although it may seem strange at the time, purchasing life insurance is best done when you are young and healthy. This is due to the fact that the life insurance quotes you will find at this time of your life are the cheapest and most affordable they will ever be. Companies are happy to insure those who are young with no pre-existing conditions or medical issues. These factors (or lack thereof) make you a low risk investment. With different kinds of life insurance policies, you will be able to lock in a low premium price because of your age and your rates will remain fixed for the life of your policy.

How To Find The Best, Affordable Life Insurance

Life insurance rates vary widely depending on several different factors, such as the applicant's age, medical history, smoker or non-smoker, diet, exercise, occupation, and dangerous hobbies. Premiums are calculated according to risk, so those who smoke or are older will often have to pay higher premiums for coverage. Comparing life insurance quotes from the best companies is a great way to save money, since it is easy to shop online and find a policy tailored to your individual needs at affordable rates. There are many insurance options to be found online, no matter your circumstances.
Even though some times are better than others for purchasing life insurance, the best, affordable coverage is a necessity for individuals in any stage of life.


October 17, 2013

Buy 1 : 1,000,000 th Share of a Football Player

For $10 a share you can buy ownership in the profit of Arian Foster.    You can read the S-1 filing on the investment deal for details.  One share will entitle you to your portion of 20% of Fosters earnings.    Sounds like fun if you're a Foster fan but it doesn't look like a great investment to me.   NFL careers are risky and can be cut short at a moments notice.   I wouldn't invest in a single NFL player since its putting all your eggs in a single risky basket financially speaking.  Foster is a very talented player so its not like betting on a random average player, but the risk is still pretty high.

This kind of investment is apparently allowed by the Jumpstart Our Business Startups Act (JOBS).   I'm not sure if this kind of novelty speculation is what they really had in mind.   Hopefully this kind of thing will be seen for what it is :  a novelty.   I don't expect this kind of investment will get much serious consideration or be treated as a serious investment.   But who knows.


I Shouldn't Be Surprised That My Acquaintance is Broke, But I Am

Recently via some second hand gossip I found out that one of my acquaintance has not saved for retirement.   That may not sound like big news to you but it was a giant shock to me.   The person in question is in her early 50's and married.   Until recently they were living in a low cost city and making >$100k annual income.   Another person we know quoted her as saying that "it was time she started thinking about retirement".   Really?  I asked, "started" thinking about retirement?  Less than 15 years from retirement age?   Yes.  Apparently they haven't saved anything for retirement and they now have little money.

I had just assumed that they were saving money.   They never appeared to live beyond their  means and didn't own an expensive house and didn't drive fancy new cars.    In general her family is pretty frugal and I think the word 'cheapskate' would apply pretty well to some of them.   In fact the word 'miserly' would even be appropriate to one or two of her relatives.    (I don't mean that in a bad way.. just saying.)  Take someone from a frugal family, give them a relatively high income in a low cost city for a couple decades and it just seemed a given to me that they'd pile up a big sum of cash.   Apparently not so.

A year or two ago her husband quit his job and they moved their family halfway across the country back to our mutual home town. At that time I remember asking what they would do for work and apparently they didn't have work lined up.  They had just quit and moved.   I distinctly remember concluding then that they would be fine because I assumed they must have had a big pile of cash saved up.   Actually the fact that he quit his job without another job lined up was another reason I assumed they had a big pile of cash.  I gave them the benefit of the doubt that they wouldn't voluntarily jump into the unemployment pool during a recession without money in the bank.  I suppose they may have had some money in the bank but apparently not enough to count towards any substantial retirement savings.

The best I can figure it, they just squandered their money and/or gave away a lot of it.   They have little to show for it.  The gossip I got also said they did have "thousands" of movies and a ton of toys for the kids.   Oh... did I mention they have 6 kids and 4 still live at home?   That kind of spending can add up of course, but I don't think they bought extravagant items.   They were quite active in their church so I'm guessing they probably tithed 10% or even more.   I also believe they were financially supporting his mother.     They also eat organic foods apparently and for a family of 6 that could be pretty pricey. 

I've tried to figure out how they could have spent all their money and where it could have gone.  Honestly this is just blind guess work and I really have no  idea where their money went.   They spent the past 20-35 years or so living about 2000 miles away from me.  After taxes they should have had $6000 to $7000 a month.  Their home payment had to have been under $1500.   That leaves them $4500 to $5500 a month to pay their bills and live on.  I suppose they could have spent up to $2000 on food and eating out.   Maybe they spent $1000 on bills.   If they gave generously to their church and supporting his mother that could have accounted for $2000 more.   This could easily account for all their money if they weren't careful to budget and save anything.  Throw in 4-6 kids to raise and it is even that much easier to see how they could walk away with nothing.   Top it off with a little credit card abuse and the resulting interest payments and it really shouldn't be hard for someone to spend away $100k a year.   Its not very hard to squander a healthy paycheck and people do it all the time.

I even found that the company they used to work for does offer employer matching on the 401k plan.   They may have never contributed to the 401k and lost out on employer matching or they may have cashed out the 401k when they quit and then spent away that money while they were unemployed after moving.

This kind of thing is way too common nowadays and unfortunately people end up like this all the time.

You should not assume someone is doing well financially and not only people with expensive new cars and McMansions are failing to save.


October 15, 2013

Preparing Our House To Rent It - Lessons Learned

We recently went through the work of cleaning out and fixing up our old house to turn it into a rental. 

At first look the short list of things we needed to do were :

  • Haul off some stuff
  • Clean house
  • Cut down two trees

I figured that would be easy enough.  Shouldn't take long right?  We'll have this place ready and rented in a couple weeks.  No problem!

We set about getting the place ready.  We hired the guy to cut down the trees and decided to hire a service to clean the house.   The trees in question were 20-30' high so I could not cut down those trees myself and we had to hire that work out.    Hiring a cleaning service was a choice we made because we wanted to get the place ready to rent quickly and honestly neither my wife nor myself wanted to do the work ourselves.  The last time we did a rental prep from my wife's old house we did ALL the work ourselves.  We found from that experience that things took longer than we thought and doing everything ourselves ended up losing us more in lost rental income than we saved if we'd simply hired people to do a lot of the work.    So this time we vowed to not make the same mistake and hire work out in order to get it turned over quickly and making us rental income.

Unfortunately our quick and easy plan wasn't as easy as we'd hoped.

In reality the list of things we had to do was (in no particular order) :

  • Haul off some stuff
  • Clean house
  • Cut down two trees
  • Make a couple trips to charity to donate items
  • Haul an old couch to the dump
  • Clean interior walls

  • Paint most of the interior walls
  • Mow the lawn
  • Replace the burner pans on stove
  • Swap out old dishwasher for another dishwasher
  • Replace the mini blinds in one bedroom
  • Repair portion of gutter that was lose
  • Replace some worn out electrical outlets
  • Replace a few light bulbs
  • Fix broken gate
  • Clean the gutters
  • Fix latch on shed in backyard
  • Shampoo the carpet
  • Fix nail holes in walls
  • Mow the lawn again
  • Fix up the flower beds, pull weeds and add bark dust
  • Haul away the wood from trees Clean up the back yard after tree removal
  • Sweep up front porch

I am undoubtedly forgetting some minor items I had to do but I think that covers most of it.

I did most of that work myself.   This is contrary to the idea we had about hiring people to do everything. 

First, here's the list of things I hired people to do and what it cost:
Clean gutter = $75
Shampoo carpets = $140
Clean up front yard and mow = $300
Cut down trees = $1000
Clean interior of house $350

Total spent to hire people : $1,865

List of items I did myself and how much I probably saved us : 
Hauling away stuff = $150 - $30 paid to dump for old couch = $120 saved
Painting interior = $1000 to hire painter (?) - $200 in paint = $800 saved
Replacing dishwasher = $150 saved
Clean up back yard = $100 saved (?)
Various other misc. fixes = $300+ saved (?)

I got quotes on hauling the stuff and replacing the dishwasher.  I'm making estimated guesses on the cost of painting, cleaning backyard and the various other fixes.

Altogether I figure I probably saved around  $1500 or more by doing that work myself.   Not bad at all for the time I put in.   I did not keep track of exactly how much time I spent working on the house.   I guess it was probably around 20 to 40 hours.

But ...

In the end it took a month longer than we hoped to rent the place.   That means we effectively lost at most a months worth of rent.    The rent for a month is $1100.    I also had to pay roughly $100 to carry the utility service at the house for that month.   Thats the minimal charges for electric, water, sewer and garbage.  That extra month also cost me $50 more to have the lawn guy mow the lawn while it was vacant.   Saving that $1500 doing the work myself took me a month and that lost month cost me $1250.  So if you figure in that lost month then the net savings of doing all the work myself is about $250.     Taxes also differ either way.   Doing it myself I've got write offs of about $100 for the utilities and around $300 for materials or $400 total.   If I'd paid someone else I'd be in for $1650 out of pocket expenses for the work but I'd be up $1100 in rent so I'd have a $550 deduction.  Thats about $150 more in deduction of which would save me approximately $50 in taxes between state and fed.    Bottom line after taxes I saved $200.

Based on a net savings of $200 that is not a great return at all.   I made in the vicinity of $5-$10 per hour after taxes for my time.

Now that makes it sound pretty bad.  That does assume that I would have been able to get all the work done and completed within a two week period.   In fact I don't think we even got the tree cut down and cleared out in that time.   The guy we use for tree work is not fast but he is good and and he's cheap.   Other quotes we've had are around double what he charged.   So going with the cheaper tree guy saved us about $1000 which is certainly worth doing as worst case we lost $1100 rent from his slower work.   I'm also making estimates on how much the painting and misc. work would cost and usually my estimates on such things are half of what the costs end up being.    So its quite possible that I would have taken 2-4 weeks to do the work even if hiring people and I might have paid $2000-$2500 to do that work.  Worst case if I'd hired everything it might have taken just as long and could have cost me $3000 more than I spent.

Its hard to know what would have happened exactly, and I can really only guess.    I can say that I didn't do a very good job of planning the work out and I'm sure I could have gotten everything done faster if I'd planned it better and hired more work done.   Given the demand we had for the property when we did rent it, I'm sure we could have made some more rent if we'd gotten it ready faster.

But ideally if I'd planned everything and just hired reasonably priced contractors then I could have saved a lot of my own labor and only spent a few hundred dollar more net.

Lessons I've learned for next time  :

1. Be more willing to have work done even if its work I know I can easily do myself.     This is a lesson I need to beat into myself since my first inclination is always to do everything myself.  I told myself after the last big project for my wife's house that I would pay for more work this time but then I lapsed into doing half of the work myself.

2. Start with a complete and accurate assessment of all the work that needs to get done.   One of the bigger problems I ran into this project was due to poor planning.   I started out with the perception that I really only had a couple main things to do : cut down two trees and clean the interior.  I hired people to do those items.  But then the project grew and grew and I realized all the other various things that needed to be done.

- -

October 13, 2013

How Many Students Get Athletic College Scholarships?


Thats the answer.   2% of college students get an athletic scholarship.    I got that answer off the NCAA site.  

By comparison when I looked at merit scholarships last year in my article How Many College Students Get Scholarships?   I found that 8.3% of students got private scholarships and 8.8% got institutional scholarships.    I assume there is some overlap though  and there is nothing I know that keeps a student from getting private scholarships and athletic scholarships.

All and all though, I'd say its about 4 times as likely that an individual will get a merit based academic scholarship than an athletic scholarship.   However I'd assume athletic scholarships have a higher average value.


October 11, 2013

Best of Blogs for Week of October 11th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

The Big Picture shares Household Debt-to-Income Ratio, USA vs Canada

Planet Money shows Everyone The U.S. Government Owes Money To, In One Graph
If you or someone you know is under the mistaken impression that we owe "all our debt" to China (or Japan or something similar) then this would be a good graphic illustration to refute that kind of notion.

CNBC reports The top 10 landowners in America

Dough Roller answers Does Being an Authorized User on a Credit Card Improve Your Credit?

October 10, 2013

How Do Parents Spend Their Time?

I read this article on Slate : Dads Watch TV Instead of Taking Care of Their Kids 
It pointed to a Pew Research study Parents’ Time with Kids More Rewarding Than Paid Work — and More Exhausting and the Pew study had a chart showing the number of hours that parents spend in leisure, childcare, paid work and housework in a week.   Dads spend 3 hours more a week in leisure time and Moms spend 7 hours more doing childcare.  So you could conclude like the Slate article did that men dump the kids on mom to go watch the NFL.

But wait...

The graphic on the Pew site shows that the total hours for men is more than the total hours for women.     Here's the break down of the numbers they show:

Moms Dads
leisure 24.5 27.5
childcare 13.5 7.3
housework 17.4 10
paid work 22.8 40.5

Clearly Dads are enjoying more leisure and Moms are doing more childcare.   But does that mean that Dads are watching TV *instead  of* or at the expense of childcare?     You'll notice that Dads do a lot more paid work than moms and moms do more housework than dads.

It just seems unfair that Dads have 3 hours more of leisure time doesn't it?

I told you to wait... are you still waiting...?       Ok, here it is lets look at the chart again :

See?    OK I'll make it more obvious :

If you add it up Dads spend a total of 57.8 hours doing paid work, housework and childcare and Moms spend 53.7 hours in those tasks.    I could stop there and make the kind of conclusion the Slate article made and declare that Dads do 4 hours more work in home and out of home than Moms in a given week.    But that would. be unfair as concluding that Dads ignore the kids to watch football.

You might notice that the hours in question don't add up to a full week.  The total for the 4 activities is 78.2 hours for Moms and 85.3 hours for dads which averages out to 11.2 hr and 12.2 hr daily for Moms and Dads respectively.   So we're only looking at about 1/2 of the total hours in a week here.   I am not going to assume people sleep 12 hours a day.   Where is the rest of the time going??

To get the real answers you have to go to the actual source of the data.  In this case the Pew Research "study" simply got the numbers from the BLS ATUS  or American Time Use Survey.   Ahh... good old BLS.  Not even shutdown during the shutdown.  

I'm honestly not sure where the Pew Research study got its numbers.   They say they used the 2010 data on the BLS ATUS but I can't find ATUS figures for 2010 that match exactly what Pew said.   I am probably just not finding the right table on the BLS so I'm not worried about that.  

In any case, I did find the BLS ATUS figures for 2012 that break down daily time use for parents and compare moms and dads.

Here''s a breakdown of the average time spent in various activities in a 24 hour day for Moms and Dads of children under 6 years of age :

And the table with the specific numbers :

Sleeping 8.36 8.92
Personal care  0.56 0.68
Eating / Drinking 1.19 1.09
Household activities 1.11 2.28
Purchasing goods and services 0.59 0.82
Caring for and helping household members 1.51 2.54
Caring for and helping nonhousehold members 0.07 0.11
Working and work-related activities 5.33 3.04
Educational activities 0.23 0.2
Organizational, civic, and religious activities 0.28 0.27
Leisure and sports 4.49 3.69
Telephone calls, mail, and e-mail 0.05 0.09
Other activities, not elsewhere classified 0.22 0.27

Personally I find it hard to believe that people average that much sleep.  

Here is how much more time Dads do things than Moms sorted in order :

Working and work-related activities 2.29
Leisure and sports 0.8
Eating / Drinking 0.1
Educational activities 0.03
Organizational, civic, and religious activities 0.01
Caring for and helping nonhousehold members -0.04
Telephone calls, mail, and e-mail -0.04
Other activities, not elsewhere classified -0.05
Personal care  -0.12
Purchasing goods and services -0.23
Sleeping -0.56
Caring for and helping household members -1.03
Household activities -1.17

Major differences in use of time not shown in teh Slate or Pew Research articles are :

Women spend 0.56 hrs more sleeping.
Women also spend 0.23  hr more purchasing goods and services, most of which is grocery shopping.  Personally I'd put grocery shopping in the household activities but I guess since it isn't actually IN the household they figure it separate.
Women spend 0.12 more on personal care.
Men spend 0.1 more eating and drinking

 Then the differences in other categories amount to only about 5 minutes of a given day.

Finally I'm going to regroup activities into larger buckets that I think make sense.   I'm putting paid work and household work and grocery shopping all in one larger 'work' category.   Then I've got sleep, leisure, childcare (which technically includes a little time for nonhousehold members and care of adult household members) and then finally everything else goes into the 'other' bucket.   Here's my chart :

The combined time spent in the work category and the childcare categories are pretty close to equal between moms and  dads.   When you add it up Moms spend about 11 minutes more in an average day on work and household and childcare than Dads do.    The other time is divided up between sleep, leisure and other stuff.    Note this is all for households with children under age 6.   When kids get older then parents spend less time on childcare and more time divided up elsewhere. 

Edit:   There is also a more detailed report on how parents spend their time on BLS : Time use of working parents: a visual essay     It dices the numbers some more.  One interesting point it has is about secondary child care which means watching the kid in addition to another activity.   For example if you're watching TV while keeping an eye on your kid at the same time.


October 8, 2013

Obamacare and My Early Retirement Planning

This blog is supposed to be centered around about my personal journey to early retirement which I hardly ever write anything about.   Way back when I started Free By 50 over five years ago.. (5 years..  really?)... it was about my personal quest to be financially free by the age of 50.   Early retirement is a gradual journey though and not exactly worthy of daily updates.   So I usually wander far far off that topic and talk about cable TV programming packages and buying cheap beater cars.    Today I thought it would be a good idea to revisit the actual theme of this blog for once.    And I've found what I think is a good reason to do so.

Obamacare officially launched October 1st 2013.  Ok not really.   The exchanges where you can buy insurance opened for enrollment.   OK not completely.  The websites claimed to open but mostly failed to work property.    Which is an amazing thing since everyone knows that large software launches are always perfect on day one.[1]   Well whether or not it works well... this is a lot of peoples real first taste of the meatier part of Obamacare.   This is the first point where people are seeing the prices and options for individuals to buy insurance via the exchanges .   That doesn't impact me now nor does it impact the other approximately 80-90% of the country currently insured by their employer or in a government program.   But it gives me an opportunity to see how the new system can impact insurance costs in the future.

One of the big unknown variables in early retirement planning has been the ever increasing cost of buying individual health insurance coverage.   Until recently we'd seen health insurance going up 8-10% a year pretty steadily.   At that rate insurance would more than double by my early retirement target age.   That kind of uncertainty can throw a wrench into my retirement plans.   On top of that if my wife or I had a preexisting condition then we could be denied coverage entirely.   I wouldn't want to quit work early if I knew we'd be unable to get insurance.    So planning for early retirement had a couple major unknown variables due to health insurance costs and availability.  Would I be able to afford insurance when I'm 58?   Would we even be able to get it?? 

Through its individual subsidies Obamacare creates more certainty in the cost of health insurance for most people and it also removes the worry about being denied coverage for existing conditions.

First of all if you're under 400% of the poverty line then you get a subsidy that is designed so that you pay no more than 9.5% of your income towards insurance.   I discussed how that works before.    I can use that as a good baseline to estimate insurance costs and assume that health insurance will cost 9.5% of my income.   That will work at least for starters, I'd have to estimate some out of pocket cost on top of the insurance premiums.   

Of course it assumes that our income stays under the 400% poverty line.    That may or may not be a good assumption.   The federal poverty line for 2013 is $15,510 for 2 people.   At 400% that would give us $62,040 for 2 people.    If I have a target early retirement income of $50,000 then that is under the threshold for 400% poverty line even for just myself and my wife and for any kids it goes up further.   For 4 people the poverty line is $23,550 and 400% would be $94,200.    Of course I would prefer to have a higher income in the future.    If its just me and my spouse then we could more easily exceed the 400% level of income of $62,040.   For a family of four though hitting the $94,200 level is a higher income target and less likely.    I did a quick, rough calculation and figured that on my current path that by the time I'm 50 years old I would have enough assets that would generate income of about $55,000 annually (in todays dollars).    I'll probably be below 400% of poverty in early retirement but that is not a given.

In some situations I could 'game' the system to limit my income in order to get a larger subsidy.   I'm not sure if I'd consider purposefully manipulating the system for a higher subsidy to be ethical.   I'll have to give that some thought if we'd actually want to do such a thing.     If I'm managing my own real estate and withdrawing money from retirement funds then I'll have flexibility to pull money out when I want to.  If for example I'm on track to hit $63,000 in income for a given year and I know that the 400% limit is at $62,040 then I could purposefully limit my income for that year to $62,000 so I don't exceed that 400% limit.   For example, instead of pulling money out of an IRA which is counted as income, I could instead borrow some money short term and use that for our living expenses then pull out a larger amount from the IRA the next year. So if it was just my wife and I and we had $60,000 of income then we'd get about a $400 subsidy. But if I shifted that so it was $40,000 one year and $80,000 the next then we'd get almost $2400 subsidy for the year with $40,000 of income.   

The amount of the subsidy we might get will depend on who's being insured.  It would be a lot less for two people versus a family of four at the same income level.   I used my states exchange to get some idea of what the plans would cost and what our subsidy could be.   Thankfully our exchange web site works well enough to give you estimated cost quotes and doesn't force you to fill out 10 pages of forms to do so.  If I was 50 years old with an income of $62,000 then the subsidy for my wife and I would only be about $200 a year and the insurance plans would $400 to $950 per month.   A $200 annual subsidy doesn't really amount to much and wouldn't be worth me gaming the system.   Now on the other hand if we had a family of four at that time then the subsidy would be more like $200 a month and insurance would run $600 to $1300 range.   So it depends on whether or not we've got dependents at the time of early retirement.   Of course dependents can be on your plan until age of 26 years old now so thats a long ways into the future.   I'd figure on having 2 dependents under our coverage for a long while.

Summary points:

With Obamacare subsidies I think I can safely guesstimate our health insurance costs to be capped around 10% of income.
We may or may not qualify for a subsidy.
If we have dependent kids at the time  its a lot more likely we would get a subsidy.

With the guarantee coverage provision we no longer have to face uncertainty about whether or not we are able to buy individual coverage.

Bottom Line:  I'm going to use 10% of income as a baseline budget cost for health insurance expenses when figuring our early retirement planning.

[1] If this comment doesn't send your sarcasm meter off the scales then you're not too familiar with software.

October 6, 2013

Traditional IRA vs Roth IRA - Which is Better for a 'Typical' Family?

In the personal finance realm it seems that most everyone is hopelessly in love with the Roth IRA.   I've seen people give blanket general advice that everyone should use a Roth IRA for their retirement savings.     There are a lot of scenarios where a Roth IRA is a poor choice.  Don't get me wrong, a Roth IRA is a good way to save for retirement but its not always the most optimal.

Today I'll look at an example of a 'typical family' and see how their retirement will fare if they use a Roth IRA exclusively or if they use a traditional IRA instead.

Assumptions for our 'typical' family:   You make exactly the median income for your age.  In your mid 20's you have 2.3  children (we'll round down for simplicity).   Then lets say you're less typical in that you consistently save a full 10% of your pay towards your retirement and then get a consistent 8% annual growth through fairly smart investing.

I got the income data from the Census.   I'm just assuming you make the median income level of each age group over your life. 

For taxes I'm assuming that the earliest age you're a single person.  Then between age 25 and 44 I'm assuming you're married with two kids.   Then after 45 years old I assumed the kids would be out of the house and you'd be filing as a married couple with no dependents.   I figured the tax bills with the TaxCaster online calculator.   TaxCaster does a good job of figuring all the credits and makes estimating the tax bill pretty easy.

You'll notice the taxes are pretty low during the 25-34 year period.   That is because of child tax credits and the two exemptions for dependent children.    Right now based on current tax laws your marginal income tax bracket would bet 15% for the entire time if you make the median income level for the given age group.

I only got median income levels for 10 year age groups, so that doesn't tell us what a 23 year old or a 46 year old would make.   I estimated the income by age by simply assuming it grew or shrunk steadily.  Here's how the income looks from my modeling :

So we're assuming your income will grow steadily over time due to promotions and increased experience.   In addition to this you will also see wage increases due to basic inflation.   I'm going to also assume a general 3% annual inflation rate.

Now once we have an assumed income pattern over time I can figure out the retirement savings.

I'm going to go with a flat 10% retirement savings rate and also assume 8% annual investment growth.

Based on all these assumptions, I figure that if you start work at age 24 and work until age 65 that you will have accumulated $2,386,085 in a Roth IRA account.

If on the other hand you wanted to save an equivalent amount of post-tax money in a Traditional IRA then you'd be saving about 18% more.   Thats because if you save the money pre-tax then you won't have to pay taxes on it, and at the 15% tax bracket that comes out to about 18% extra money pre-tax.   Now if you save over the same 41 year work history via a Traditional IRA with the same 8% investment growth then you'd have a total of $2,807,158 in your retirement.

Roth : $2,386,085
Traditional : $2,807,158

Of course this is money that is inflated over 41 years so in todays equivalent dollars you'd have less.   Working back with the 3% annual inflation rate todays dollars would be :

Roth : $710,166
Traditional : $835,489

If we assume the 4% annual withdrawal rate then that would give us retirement income in todays dollars of :

Roth : $28,407
Traditional : $33,420

You would also qualify for household social security income of about $24,000.    I used the Social Security quick calculator to estimate the monthly SS payments at full retirement age.  The exact amount of social security will vary based on the exact work history and whether or not you've got one spouse working with $60,000 income or two working spouses making a combined $60,000.  But I'm assuming a $24,000 figure which is in the ballpark of what such a couple will likely get.   Of course this is based on todays Social Security rules which are subject to change.

Roth : $28,407 + Social security : $24,000 = total = $52,407
Traditional : $33,420 + Social security : $24,000 = total =$57,420

With the Roth retirement you'd pay no taxes and none of your social security would be taxable so you'd have a tax bill of $0.   With the traditional IRA you would owe taxes on your withdrawal and you'd be making enough income that some of your social security would be taxable.   You can use the How much of my social security benefit may be taxed? calculator to find out how much of your income is taxable.  That calculator figures  with a $33,420 IRA withdrawal that 30% of your social security would be subject to taxes.  That would give you a total taxable income of $7,200 from social security and $33,420 from the IRA or $40,620.   Taxes for a married couple on $40,620 will run you $1,841.

Roth : $28,407 + Social security : $24,000 = total = $52,407 - $0 taxes = $52,407 net
Traditional : $33,420 + Social security : $24,000 = total =$57,420 - $1,841 = $55,219 net

And there we have it folks. ..   the bottom line.   When all is said and done your net take home after taxes during retirement would be :

Roth : $52,407
Traditional : $55,579

Thats a difference of $3,172 more per year you'd have with the traditional IRA route over the Roth IRA.    This is a boost of 6% to your take home after tax income.

Of course this example has a lot of variables and assumptions and changing any of them could change the picture some.   We don't know what taxes will be like in 40 years.  We don't know how social security will work in 40 years.   We don't know if your income will have a pattern like I'm assuming.  We don't know what inflation will do. We don't know how your investments will grow.   Its all a crap shoot.   But I think the assumptions I'm making are reasonable and based on historical norms.    When projecting estimates like this 40 years into the future thats about the best you can do, make assumptions based on historical averages and use current rules. 


October 4, 2013

Best of Blogs for Week of October 4th

Every Friday afternoon I share some of the more interesting or notable posts that I have seen in the personal finance blogs and other sources for the past week

DoughRoller wrote a pretty good summary with  Your 60-Second Guide to Obamacare

Planet Money stole my recent story idea with their Episode 488: The Secret History Of Your Cable Bill [audio]

fivecentnickel has some good advice with Marriage and money: Sharing the load

From the *sigh* files : Cnet carries the story :  Oops! Thanks to Twitter, penny stock Tweeter jumps 684%


October 3, 2013

Income by Select Occupations over Time

A little while  ago I watched a documentary on cable called American Teacher.   The documentary was about teaching in American and was generally pro-teacher.  But the point that I found interesting was a chart they showed in the middle of the film that compared teacher wages to other professions.   They claimed that real estate brokers and lawyers had significantly higher income growth over the period than teachers.   The numbers seemed a bit off to me.

I thought that wage trends over time for different occupations would be an interesting topic to explore.   I know the general income for my occupation where I live has gone up abut 50% in the past 15 years.   On the other hand my fathers occupation has been virtually flat for the past 15 years in his home city (though he's now retired). 

I set out to find income figures per specific occupations over several decade period.  It was pretty hard to find good consistent data breaking down income by occupations.    I looked all over the Census site to find a good list but it seemed the data they collect changes a bit over time.    I was at least able to find a hodge podge of tables that give me numbers for some common occupations.  

I couldn't find consistent data and some of its not really comparing equal information.  But I think its close enough to get an OK idea of wages for the occupations in question.  
Data for 1978, 1983, 1987 and 1992 are from the Census Consumer Income reports.  Annoyingly they seem to only give income for males or females but not the combined population so I'm using the numbers for males.   The 1999 data is from the Census page2005 is from BLS OES and 2012 is the current BLS OES.    For BLS data I and used hourly wage x 2000 wages as an estimate of annual median wages.   For the first few data points the figure for 'lawyer' is actually including judges but the later years is lawyers only, so that means that the income figures for the lawyer category are actually measuring different set of people.    For engineers I first had a general category for all engineers but then they split them up so I picked just electrical engineers which seem to be closer to the middle of income for engineer specialties.   The teacher incomes are annual averages in the later years because they didn't have median hourly rates.   Teachers are almost all paid salary and theres little variation in wages.

So let me be clear, the charts and data are pretty flawed due to my mix matched data sources with inconsistent numbers.  Almost makes this exercise futile.

Here is the income over time from 1978 to 2012 :

(click image for full size)

And here is how the income for each occupation grew from 1983 to 2012:

(click image for full size)

I only had a few data points from 1978 so I didn't include that year in this chart.

It just so happened that the occupations I sampled all grew faster than wages in general.  I suspect thats because many many low skill service jobs make up a larger portion of the employment and those wages haven't grown as fast compared to the jobs I sampled which are mostly skilled professional occupations.

Carpenter, Nurses and teachers grew the fastest.  However part of that may be a fault in my methodology of pulling together miss matched sources.    Both occupations had high jumps from 1999 to 2005 and thats when I went from a census table to the BLS figures.   Median hourly  wages x 2000 may not be very accurate approximation for median annual income for some occupations versus others.   For example carpenters tend to have higher unemployment during economic downturns and may have seasonal unemployment due to weather.   School teacher wages jumped 50% in my chart from 1999 to 2005 and I'm pretty sure thats not right and must be the difference in what I'm reporting from the different sources.   Lawyers didn't grow as fast as other professions but I started out with data for lawyers and judges and then ended up with only lawyers and I'm sure judges pulled up the initial numbers so makes it look like they haven't grown as fast.

Again, I have to point out that the numbers are not very great.   If I can find better data I'll revisit the topic.  For now we've got a set of data with some flaws.

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