I filed my taxes last night and realized two things: 1) I really don’t make much money. 2) Opening and fully contributing to a traditional IRA saved my hide this tax season.
Most regular readers know that I have a full-time job, I’m debt free and yet I still side hustle.
Sometimes I think it confuses people when they hear I devote a significant amount of my spare time to…well…work. Some wonder why I really need to earn extra cash if I’m debt free and not your average millennial hauling around the weight of student loan debt.
I’ve never disclosed my salary before, but let’s just say it’s been reported that people with jobs in communications have an average starting salary of just over $43,000. I don’t make that (even before taxes). I also live in New York. One of the most expensive cities in the United States.
Needless to say, extra money makes a big difference in my life, so it’s no surprise it impacts my fellow millennials who are graduating with student loans.
According to a recent study from the New America Foundation, millennials graduating with bachelor’s degrees between 2011 – 2012 are paying nearly $1000 more per year in student loans than their contemporaries who wrapped up college in 2008. This is going to have a ripple effect and I think the first thing impacted won’t be the short-term, it will be lack of building savings and decreased contributions towards retirement.
$1000 may not sound like a ton of money but here is what it represents in my life:
- 1 month of rent
- Just over 3 months of groceries
- 9 months of unlimited NYC metro cards (well that would be $1,008 — but let me have the $8)
- A full year of my utilities (electricity and internet)
- About 10 trips to visit Peach (depending on the mode of transportation I take)
- 5 years of Hulu Plus and Netflix subscriptions
- 9 years of Amazon Prime (not accounting for price hikes)
- 50 brunches
- 33 Broadway plays if I buy rush tickets or 10 if I buy decent ones
- Less money to contribute towards investing or retirement
- A nice vacation
Last week, I had the opportunity to speak with David Lazarus on Marketplace Money about what this hike in student loan payments means for millennials and some ways to handle living on less. If you’re a fan of podcasts then you can download the full episode (which I highly recommend) or you can hear just my segment online.
What does $1,000 represent in your life? How would you handle seeing $1,000 leave your annual budget?
[For your amusement: Doing my taxes made me feel like Ron Swanson trying to eat a banana.]