Thursday, November 26, 2009

How Long Will We Be Able to Bail Out the Boat?

Working 50 or so hours per week while "unemployed," I have thus far managed to avoid financial ruin and lean only lightly on my dwindling savings.  Curiosity led me to analyze my current income and major expenses.

I managed to bring in about $32,000 in the first 10 months of 2009.  This includes the ample salary of the job that laid me off last June, wages from p/t work in my profession, plus p/t work doing computer repair, graphic design, health assessments for insurance companies, selling nutritional supplements, rents from rental units, giving care through In Home Support Services, and unemployment insurance.

I was curious to see where I spent that money.  As expected, 13.75% went to groceries for my son and I, that's $93/wk.  I don't know about you, but $93 seems to buy no more than 2 bags of food.  Lucky for us, we grow a lot of our own food, mostly fruits and vegetables.

13.75% groceries.
11.9% automobile expenses including repairs and gasoline.
 4%     dining out.
 5.9%  donations.
 7.5%  out-of-pocket medical expenses inc what insurance denied.
11.1% taxes.
35.4% mortgage interest excluding the principle.
23.1% to insurance.

The most surprising portion, 23%, was paid to insurance companies: malpractice insurance, life insurance, auto insurance, homeowner's insurance, cell phone insurance, and medical insurance with large copays that doesn't cover my children who remain uninsured. 

Considering that the mortgage interest is a premium on a tangible asset which provides my family with shelter from the elements as well as safety and comfort, our home can be considered well worth the more than third of my income paid to the bank as loan service.  But the quarter of my income paid out to insurance companies will never be seen again.  It just seems appalling that families need to pay out such a large proportion to a predatory racket that is tantamount to extortion.  Insurance lobbies may soon get Congress to make all insurance mandatory.

113% of my income in 2009 was spent on food, automobile, medical expenses, mortgage interest, donations, taxes and insurance.  Additionally, I also purchased clothes, house repairs, utilities, telephone & internet services, school supplies, gifts, bank fees, union dues, cleaning supplies, mortgage, credit card debt, travel, and membership in the health club where I work out 2-3 times/week.  Going to the movies is beyond our budget; we watch free DVD's from the public library, or stream movies on the internet.  I can't afford to pay membership to my professional organization this year, thereby forgoing the perk of free vouchers for uninsured students to get eye exams.  Fortunately, I saved some money when I still had a f/t job with benefits, which we now draw upon to survive. 

All I can say is that we are the lucky ones.  We have kept our heads above water and have not skipped any mortgage payments.  By word of mouth and with the help of my friends and unemployment, my son and I have been treading water.  The fact that I have to draw upon our savings to keep us afloat is like bailing out the boat while the hole in the bottom gets bigger and bigger.  How long will we be able to bail out the boat?