Today, I’d like to introduce you to Mark and Damien.
Mark and Damien are two regular blokes, living regular lives, with regular jobs. They both live in the same city, make the same amount of money, and got layed off at the exact same time.
Mark makes about $5,000 per month. He’s been working at BigFirmCo for three years, and the company has been weathering the storm. With no question about his job security, Mark recently signed a $2500 per month lease on an apartment in a fashionable part of town. On top of that, Mark drives a luxury car that he pays $750 per month on, and since he’s young, he pays exorbitant insurance rates of another $250 per month on that same car. Mark eats out for lunch almost every day, enjoys his morning latte, and doesn’t have enough income taxes withheld from his paycheck each month because he wants the extra money to spend on his lifestyle.
Damien has a pretty similar job as Mark, and works at OtherFirmCo. His company, too, has been weathering the economic storm. Damien wants to live the good life, but is also weary about the future. He lives with three other guys in a nice place in a nice part of town, but splitting the rent enables him to get by on $750 per month for rent and utilities. Damien still drives the same car he drove all through college. It runs reasonably well, the insurance is cheap, and the gas mileage is just as good, if not better, than most new cars. He spends about $100 per month on insurance and maintenance.
Damien does allow himself a weekly splurge: Every Monday, he and the people on his team at work all grab lunch at a nice little cafe downtown. For this one lunch, he spends twice as much as Mark does each day for his lunch and latte, but Damien is OK with that because it’s a cool cafe and he loves the food and atmosphere.
Even with buying groceries to bring his sack lunch the rest of the week, Damien lives on a total of about $1500 per month, even in this somewhat expensive city he lives in. He maxes out his 401k contribution, and pays in to Uncle Sam each month slightly more than he needs to, in order to ensure that he doesn’t have a tax bill come April 15th.
With all …