I checked this book out of the library because I love its catchy title: How to Survive on $50,000 to $150,000 a Year by Stanley J. Cohen & Robert Wool, copyright 1984.
Here are some of my favorite excerpts:
- Ten, fifteen years ago, when you looked ahead you thought that if you ever earned $60,000 say, or $90,000 with two incomes in the family, you’d be rich. Yet here you are, you and your wife are pulling in $90,000, and one thing you’re sure of: You’re not rich.
- First, Perception. You are not earning what you think you are earning. Or what you thought you would be earning if you reached this point when you looked up at it ten or fifteen years ago.
- You must stop looking at your earnings as if you were pulling down $75,000 or $80,000 and it were still 1965 or 1970 or earlier. You don’t have the buying power you would have had in those days.
- It could violate your sense of accomplishment – which could also be inflated – but for a sense of reality, you’re better off thinking of your $75,000 to $80,000 as if it were more like $30,000 or $40,000 in old-fashioned dollars.
- Try to bring it more up to date, in 1983 you needed an income of $60,000 to match an income of $40,000 in 1977. Alas, it’s a little like having a big title but not that much power.
- I went into my litany. That 8% interest meant 4% for Uncle Sam, 4% for Mr. and Mrs. Doremus after taxes. And with an inflation rate at 6%, that nice safe bank account was losing them 2% a year.
- Take $10,000, invest it in anything that returns you 8% a year. In sixty years your $10,000 will have compounded to $1 million. (Providing, of course, that we don’t have 8% inflation, in which case the $1 million will have exactly the purchasing power of $10,000.)
- I regretted the words as soon as I said them. It’s a problem I have. Sometimes things seem so clear to me, I can’t understand why somebody else doesn’t feel the same way I do.
- I cannot tell you the number of times I’ve given extremely sound advice and had it rejected for personal reasons.
- Everybody is searching for the new Xerox.
- They could certainly understand the math, but emotionally their hearts were still in that bank vault.
In 1984, I believe I was in junior high and I have to admit my perception of $50,000 versus the reality of $50,000 was a tad off, just as Mr. Cohen points out. I remember taking a careers class where we looked up prospective careers and their salary equivalents and I admit to thinking $50,000 was a lot of money.
If $60,000 in 1977 was the equivalent of $40,000 in 1984, the equivalent of $60,000 in 2007 factoring in the inflation of gas, groceries and healthcare, would be what? Maybe $15,000?