Paul's Internet Landfill/ 2017/ Income Levels

Income Levels

This is part two of the long boring Six Months In series.

One driving factor in quitting my job was resentment. I gave my most productive working years to the cult, in an area which is typically well-paid, and I was making $22k per year. Some of this was my fault, because I was only on payroll for 3-3.5 days per week (whether I gave them 3-3.5 days of work per week is another matter).

To be frank, I was resentful and thought I could do better. What a fool I was. Now I am facing destitution.

Working 5 days a week would have bumped my salary to $35k or so, which would definitely have been better but would have come with its own set of challenges. Everything involves tradeoffs, and I figured that the tradeoff of lost time to extra money was not worth it.

I think of life in terms of income levels. Here are the broad categories that I think about these days.

Level 0: Zero Income

As far as I can tell, there are different ways to have zero income, and life circumstances change drastically depending on the category:

The first situation is okay. People who take sabbaticals or go into training or go on extended vacations are in this category. So are retired people. The problem with having a buffer is that staying alive costs money, and eventually that money runs out. When big expenses hit (like medical emergencies) then the money runs out faster. Inflation is another threat.

The second situation is dire. It is what I am trying to avoid. A related situation is when you are working, but not making enough money to keep up with your expenses.

The tradeoff of having no income is that (in principle) you have more time. Because I have no dependents and have dropped most of my obligations, I have plenty of time on my hands. This is a great gift, which I am squandering.

I would be okay staying on Level 0 for a while provided that I maintain some realistic opportunities to avoid destitution.

There is no reason I am alive. I have nobody and nothing to live for, and nothing to look forward to. Before the money runs out I have to figure out how I am going to receive income, or I have to figure out the mechanism for ending my life.

I consider welfare to be roughly equivalent to destitution. It does not meet the bills, and unlike my current situation it comes with a lot of obligations (rules, mandatory job searching, criticism from case workers, societal stigma) that are very expensive.

You can judge me for being a lazy bum if you want. Certainly I do. But keep in mind that I have structured my life so that I could live at level 0 for years:

Not all of these things have been fun. I am tired of several of them. Some of them (such as forgoing home ownership) will cost me in the future.

Level 1: Hand to Mouth

At this level, you can meet your monthly expenses, but maybe cannot deal with big expenses, and cannot save much money.

For me this level is about $650-800 per month, depending on how much I spend on medical costs like dental repair. By far the largest portion of this is rent, which is set to rise dramatically in this town.

If I have a big buffer then I would not mind living at this level for a while, provided I was only working a few (1-2) days per week. If I have no buffer then living at this level would make me feel anxious.

Feeling deprived all the time is the big failure mode of living at this level. Deprivation builds up and then you splurge, and then (because you are not building up a buffer) you are in trouble.

Level 2: Some Savings

At this level you can save a significant chunk of your paycheque, but you cannot save enough for retirement. This is where I have been for my last eight years at the cult. But I was spending more and more each month and my income was not keeping up, so even if I had been suited to continuing my employment there eventually I would have slipped from level 2 to level 1.

Resentment was a big factor while working at this level.

I would be willing to work for this salary again for 2-4 days of work per week, provided that four days really meant three days off and not one day off.

The biggest problem for me at this level was that although I could save some money each month, I would not be able to save for retirement. If I ever got old enough to retire, inflation will have eaten away at my savings to the extent that I would be able to get by for only a few years. In addition, I expect that medical expenses will go up dramatically as I age, so earning double my expenses now does not stretch as far as it needs to when I will need it. That is one compelling reason for me to take time off now: my expenses are still fairly low, so eating away at my buffer hurts less than it will a few years from now when I am diabetic.

If I was more comfortable with investment capitalism I could have stretched this level a lot further, because instead of earning no interest on my savings I could be earning 10-14% annually like other people I know. But I am an idiot and am not comfortable with capitalism, so I am destined to be poor.

Level 3: Retirement Savings

When I quit my job, I thought this level would be achievable, but now I have my doubts. It would have required earning at least three times my monthly expenses, so $40k or more takehome, which translates to $60-80k gross salary. At this rate I would be able to save a large fraction of my income, which means that even if I did not invest my money in capitalist returns I would have enough of a nest egg to retire if I lived to be old.

Or I could have saved the money to pay for property upfront, and then leverage that property into an income stream. But that would have been years down the road.

All of this would hinge on me continuing to live like a poor person and keep my expenses low. It would do me no good to earn $60k per year in Silicon Valley, where rents eat up almost all your income.

There would be little chance I could earn this much money without working five or more days per week, so that would be a big tradeoff. At one point I thought I would be able to manage this, but I no longer think this is feasible. How do people do it?

Level 4: Rich

At this level, I would earn enough money that I could live off income generated from my savings. Either I would put the money into capitalist investments, or maybe I would own property and live by renting my properties to others. The latter is deeply unappealing to me.

I guess startup founders have a chance at earning this kind of cash. If I had been smarter about my career choices maybe I would have be within striking position of this by now (many of my university colleagues are vice presidents at banks, after all). But I think it is out of my reach.

To put this in concrete terms: say I needed $10k per year to stay alive. At 0.5% interest, I would then need $2 million in savings to reach this goal. So it is pretty far out of reach.


My definition of poverty is simple: fragility. If you do not have the resources to overcome adversity than you are poor.

A buffer of money helps alleviate poverty. I know that I am able to sleep better at night knowing that even if my dental check up is disastrous tomorrow it will not bankrupt me.

But money is not sufficient. Social connections matter. Skills matter. Credentials and social status matter.

Conversely, I think it is possible to have little money and still avoid poverty. But in our hyperindividualistic culture it is not that feasible.

Making a lot of money can leave you poor if it robs you of other things. I am not sure I am willing to sacrifice my health for money, because once my health goes south I am much more likely to be poor. (But if I am not willing to sacrifice my health -- for example, by working long hours and being sleep-deprived -- then nobody will hire me.)