# How much do you really make?

## Entering Core Essential Fields

The yellow cells starting with the second box of the calculator are the author’s best guesstimate of the cost of essentials such as food, shelter, and transportation. We estimate these based on data provided in the blue cells of the calculator. For instance, for a couple supporting a family, we use a range of \$600 to \$1200 per annum for utilities. For a family with income near minimum wage, we would estimate utilities closer to \$600, and about \$900 to \$1200 as the net nominal income moves beyond 250K per annum. These would be halved if the filing status were “Individual Tax Payer” instead of a family. Mortgage payments (loan, property tax plus home-owners insurance) are estimated at 28% of total nominal income, a fraction often recommended (See our calculator estimating homes one can afford, likely upfront payments and ESROW payments based on such a fraction). Other estimates used are based on national averages (such as those for health premiums from the Kaiser Foundation) and sometime solely the authors estimate. These are likely off quite a bit depending on context – someone in New York City would have a very different expense profile than someone in Oklahoma and employers often provide subsidies. The author also presumes a little over bare-bones survival level expenditure to give the reader a sense of what they have left after they have met the needs in the lower levels of Maslow’s needs hierarchy – Food, Shelter, Clothing, Transportation, and health. The user can edit and change the estimates in the yellow cells to ones closer to their actuals. Our approximations will help the reader get a quick assessment of how close or far they are from financial ‘Self-Actualization”! Collating their actuals for the yellow cells will take the reader some effort and the reader can return later to compute better estimates.

## Deductions Before it Gets to your Bank

A number of user-specific amounts in the third box of the calculator are readily available during open enrollment for benefits, typically in the 4th Quarter of the year. The third box also computes Federal, State, Social Security, and Medicare taxes. The state tax is based on New Jersey residency. The user can over-write the state tax cell with estimate taxes paid in her state. The maximum 401-K is computed within the federal wage limits, and such that the user has at least \$1.0 per hour left after essential living expenses and paycheck deductions for taxes and pre-tax premiums and accounts. A hand-written note on how various wages, W2, and calculator items are calculated as well as notes on the calculation of the maximum possible 401-k contribution are in this attached document.
The bottom of the third box provides the annualized paycheck and the annualized income after essentials. The default example in the calculator follows a hypothetical case where a couple both earn 60k per annum or a net nominal income of 120k. They may see about 60k come through to their bank accounts after taxes and deductions. After essential living expenses, they will be left with about 13K per annum.

## The Bottom Line

The bottom three boxes of the calculator provide monthly, weekly, daily and hourly nominal income, paycheck income and income after essentials respectively. The hourly income for each spouse goes from \$31.25 to \$15.68 after tax and core benefit deductions to \$3.5 after essential living expenses. We have a bottom panel in the calculator which says “You are in the Green. You have some money to spend and save” if you have income left over after deductions and essentials. Not much though, it will take one of you half a month to earn enough for that \$330 rocking chair. It could wait if retirement is a little way off! A couple making closer to the minimum wage may be underwater after deductions and essentials. If you enter 25k each for income in the first box for a young couple you will see a not very nice panel at the bottom saying “You are in the Red. Consider Moving in with your Parents”! Note that the US tax code is very complex and there are many credits and deductions which are difficult to code into the calculator, and which may sacrifice user-friendliness. Credits such as earned income tax credits could help a low income couple such as the one above, and are not evaluated through this calculator. Additional complexity such as income from social security for the elderly is not factored in. The calculator presumes earned income.

First, edit the blue cells in the spreadsheet and enter your data. Blue cells having bold font have a drop-down menu to the right of the cell. The yellow cells are the author’s pre-filled estimates based on your blue cell entries. You may over-write these yellow cells, on entering all blue cells, to enter your actuals instead of the pre-filled estimates. Computed data are in the white cells. Refresh the page before entering a new set of blue cell values.