Tag Archives: Good work

How to afford to do “good work”

Many would like to do good work, something meaningful, that has an impact on their special cause, but can’t figure out how to afford it. Many delay getting on with it, because they can’t figure out how to get their. Try this out:

  1. Figure out your net worth (for example, $500,000) Home equity, savings, garage sales, extra vehicles.
  2. Guess at an inflation rate. ( for example, 3%)
  3. Guess at a safe rate of return on your assets ( for example, 7%)
  4. Subtract the inflation rate from your safe rate of return on your assets. (for example, 7%-3%=4%)
  5. Multiply the result x your net worth. (for example, 4% x $500,000=$20,000)
  6. Figure out a meaningful lifestyle, that costs less than $20,000 per year)

Some will think there is no way to live for $20,000, but what about life on a university campus?

Trends in college pricing 2008 shows the average in state,  undergraduate budgets at public universities for 2008-2009 of $18,326. This includes housing and food of $7748, transportation of  $1010, and other expenses of $9568 (for tuition, books, supplies and other). Add in $2,000 per year for student group rate insurance, and you you end up with just over your target of $20, 326. It is not unusual for students to work 15 hours per week, 40 weeks a year,  at minimum wage to add a cushion. (15 x 40 x $8=$4800/yr)

Here’s the simplistic spreadsheet to change some variables. Please share a link if you have a spreadsheet that has greater flexibility for adjusting variables:

  • Variable income tax rates for different years. (Tax rates, if you use 401K rollovers for college)
  • Variable income for different years. Will you earn a different income after 4 or 6 years?
  • Variable inflation rates for different years.
  • Variable investment returns for future years.
  • Projected social security income.
  • Variable inflation rates for categories like tuition, housing and food, transportation, student health care.
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