The Debt of Life

From the moment we are born, each of us have a “debt of life”. Our debt of life is essentially how much currency we are going to need throughout our lifetime in order to survive, or roughly how much money the rest of your livable life is going to cost.

Your debt of life may vary depending on how much privilege you are born into, whether you have, or have to support people with expensive medical issues, whether you are born into a wealthy family enabling you to start your life higher up the ladder, or whatever the case may be. It also depends on your desired standard of living. What are your goals, dreams, and aspirations?

Many surveys have shown over and over again that over half of the working class are unhappy in their jobs. Despite this, most people work an average of 40 hours per week (often more) in order to pay their bills, feed and support their families and fund leisure activities. Most people also don’t have any savings or a future focused financial plan. Why is this?

Many people feel a lack of control in their lives due to needing to work a job to survive. These people don’t see a way out of the system, out of the rat race, and instead of trying to “beat the game” they play right into it’s hands and become a super consumer. Super consumers are people who work to earn enough money to distract themselves from the reality they live. They spend their money on entertainment, things, alcohol etc. They have a defeatist attitude and mindset such as “I’m stuck in this life, I might as well enjoy it while I can” and “the system is set up for you to fail, might as well have fun before you die”.

Example debt of life:

I’m going to use myself as an example. 22 years old, very minimal commitments in life, and a desire to be able to live indefinitely without having to spend the next 43 years of my life working 40 hours per week. Put another way, that’s 83,200 hours of life, a non-renewable resource, to most likely barely scrape by. That time goes quick. Too quick.

For someone like me, $50,000 net is enough to live reasonably comfortable per year. If I lived to 80 (roughly the expected lifespan for a woman born in 1998), the rest of my liveable life is about 58 years. $50,000 x 58 years is $2,900,000.

We then need to factor in the rate of inflation, which averages on 1.8% per year. That’s 104.4% over 58 years. So to live a 50k lifestyle with today’s buying power for the rest of my life, I would need to earn $5,927,600 over the 58 years.

Considering some of the 58 years I wouldn’t be able to work, its more like 43 years. To earn $5,927,600 net over 43 years, taking into consideration income taxes, which in Australia is 45% for any amount over $90,000 within a financial year. That works out to $1,127,830 in taxes. This means i’d need to earn a gross amount $7,055,430 if I want to net my goal amount.

To do this, I would need to be gainfully employed for all of those 43 years, making a steady income of at least $164,079.76 per year. So if you’re earning income from a job, that stable figure over that period of time, is highly unattainable for most people.

Closing thoughts:

The system we operate under is set up for continuous economic engagement. It requires employees to be the cogs in the system. Many people are happy being that – working isn’t all downside, it can actually fulfil many of our human needs to achieve happiness. You have community, a sense of belonging, a sense of accomplishment and achievement, and many people can be perfectly happy with this.

Not withstanding the above, in todays economy, with how the system operates, if you want to be able to live a chunk of your life without having to work, a job simply won’t cut it unless you get to a position paying you a hell of a lot more than $164,079.76 per year.

Everyone has different responsibilities, dreams, desires and lifestyle goals, and because of this, everyones debt of life can greatly vary, but one thing is sure – if you don’t find a way to amass a large sum of money to pay your debt of life off early, chances are, you’re going to be working way into old age, at which point having time might not even be enjoyable.

I don’t write any of this to make you lose any hope in the way your life can go. I’m writing this because I believe to make an informed decision about how we spend our lives, we need to be presented with the facts, and look at our lives from a pragmatic point of view. Many of us may not be able to live a large chunk of our lives free from the need to work – and for many, that will be okay.

Just remember that life, hours, your time, is a non-renewable resource. Money is practically infinite. Time is finite. It’s our most precious resource, because the more we spend on a path that we don’t want to be on, or a path that isn’t right for us? We will never get that time back. You can always stumble across a years worth of money, but you will never stumble across an extra year of life.