Escaping The Ramen Lifestyle
FROM THE DESK OF GRANT CARDONE: How does one go about escaping the ramen lifestyle? Allow me to introduce you to Greg… He’s 27-years-old and lives in San Diego, California. He graduated college in 2013 with a useless degree in communications from Cal State Fullerton and has bounced around from job to job over the past 4 years to where he now makes more than he ever has.
Greg has $40,000 a year salary. He’s also as broke as he’s ever been, albeit he has a roof over his head, food in his belly, and running water and electricity. Should he be grateful?
LET’S BREAK DOWN GREG’S FINANCES:
His income is $40,000 and he gets paid on the 1st of every month. This means he gets 12 paychecks a year. This puts Greg’s monthly income at $3,333.33
Every paycheck, however, he has deductions taken out…
- Health Insurance: $76.24
- Dental Insurance: $44.76
- Federal Income Tax: $331.15
- State Income Tax: $88.07
- Social Security: $206.67
- Medicare Tax: $48.33
This is a total of $795.22 taken out of each paycheck before he ever sees a penny of his earnings. This is $9,542.64 taken out for the year. So, you can see that Greg doesn’t make $40,000, he “makes” only $30,457.36 because he only gets $2,538.11 deposited into his checking account each month.
HERE’S HOW GREG, WHO LIVES VERY FRUGALLY, SPENDS HIS MONEY:
Having racked up debt for delaying his career and going to college for 4 years, he has a monthly student debt loan payment of $227 he’s dealing with. (National average is $280/month)
HERE’S GREG’S UPDATED FINANCIAL PICTURE AFTER THIS EXPENSE: $2,538.11- $227 = $2311.11 LEFT OVER
Instead of splurging on a studio, he roommates with 3 other dudes in a small run-down house.
His rent, which includes cable, internet, trash pickup, and utilities, is $750. This allows him to live in an “average” area (not a nice neighborhood but it’s not the ghetto).
At least he has his own small bedroom, right? There’s no dishwasher though, so imagine what the sink often looks like with 4 dudes…
HERE’S GREG’S UPDATED FINANCIAL PICTURE AFTER HIS HOUSING EXPENSES: $2311.11 – $750 = $1561.11 LEFT OVER
To get to his job in La Jolla, Greg needs to have a car. Riding a bus is too time-consuming and besides, who wants to live in southern California without a car? His old 1994 Toyota Camry he purchased 3 years ago finally broke down after it hit 220,000 miles and he was forced to get a “new” car.
He settled on a 2004 Chevy Impala that costs him now $84 a month, but the big expense is the insurance which sets him back $170 a month. Add in $150 he spends on gas and suddenly he’s spending $404 a month on transportation expenses.
HERE’S GREG’S UPDATED FINANCIAL PICTURE AFTER TRANSPORTATION EXPENSES: $1561.11- $404 = $1157.11 LEFT OVER
He likes to go to the gym to keep his body in shape, so his gym membership sets him back another $50. His monthly cell phone brings another $87.34 out of his pocket. This adds another $137.34 in monthly reoccurring expenses.
HERE’S GREG’S UPDATED FINANCIAL PICTURE AFTER ACCOUNTING FOR ALL REOCCURRING MONTHLY EXPENSES: $1157.11- $137.34 = $1,019.77 LEFT OVER
You can see that Greg has just over $1,000 of money each month left to “spend” as he chooses once the monthly reoccurring expenses are paid for.
Can you live on $1,000 a month for food and drinks, clothes, recreation, sports, birthday gifts, doctor copays, repairs, unexpected expenses, furniture, travel, etc.?
Let’s look at what Greg did. Let’s talk about food now, after all this is The Ramen Lifestyle we’re talking here. Greg goes to WalMart and loads up on Ramen Noodle, and generally eats cheap. He wants to eat healthily but never sets foot in a Whole Foods.
Because here’s what they don’t teach you in school: YOU CAN’T AFFORD $5 ORGANIC STRAWBERRIES EVEN AT $40,000 A YEAR.
“Eating out” means a $6 turkey sub which he splurges on a couple of times a week. All in all, Greg somehow manages to only spend about $500 a month in food, which is only $16 a day…