Financial Freedom Blog Post #8

Dear Reader,

In this post, we will tackle my actual hourly rate.

It's not a surprise (or it shouldn't be) but if it is: Financial Freedom: A Proven Path to All the Money You Will Ever Need.

First, let's calculate the costs and benefits of my work.

Costs of Work	Number of Hours	Per Week	Per Year
	Working	35	1715
	Getting Ready	1	49
	Commuting	7.5	367.5
	Traveling (for work)	0.5	24.5
	Shopping	0.5	24.5
	Relaxing/Detoxing	2	98
	Total Hours		2278.5
Benefits from Work	Estimated Benefit	Per Month	Per Year
	403(b) Match	$540.49	$6,485.88
	Free Entertainment	$100	$1,200
	Free Food	$50	$600
	Vacation	$234.39	$2,812.71
	Sick Time	$234.39	$2,812.71
	Total Additional Benefits		$13,911.30

So, if you've read Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Fully Revised and Updated for 2018 or Financial Freedom, then you know they both state your hourly rate is much less than it actually is.

They say because you spend time preparing for work, detoxing from work, buying work clothes, etc, you actually spend a lot more hours than just 35 (or 40, or 50) hours per week at work.

However, I think there can be a lot of benefits from your work too. Life a 403(b) or a 401(k) match - that is income that isn't counted. Or, from my work I receive tickets to free plays, musicals, and movies. Free food is another one.

What about being paid to go on vacation? Or being paid to be sick? I believe those are important benefits that should be counted as well.

Next, let's calculate my effective hourly rate pre-tax:

Salary			$62,665.35
Effective Hourly Rate: Salary/Total Hours per Year (pretax)			$27.50

Next, I calculated my effective hourly rate post-tax:

Annual Tax Rate (Federal and State)			25%
Effective Hourly Rate: Salary/Total Hours per Year (after-tax)			$20.63

Why did I calculate post-tax? There is a way if you retire early that you can minimize or eliminate your taxes altogether. So I felt that pretax versus post-tax was valid.

A lot of FIRE community members continue to "work" in their retirement. I imagine they still pay some form of taxes, but they can probably control the amount they pay. Furthermore, their income isn't necessary, so even if it is being taxed, it's probably an additional bonus that they don't need.

Next post: I'll break down Grant's 11 questions he says you should apply to every purchase and apply them to two different purchases to give you an idea of how I would work through his questions.

Have a wonderful night,
Into the FIRE