So what did 25-year-old me buy?

In my recent letter to my 25-year-old self, I lectured me about buying crap and not saving anything, because it's going to make getting to a comfortable retirement spot harder. That got me to thinking, what did I actually spend money on? Since I still track my spending in a piece of software called Money '97, yeah, from 24 years ago, it turns out I know because I'm a digital hoarder.

What's useful about this? It compares how a young professional lived financially to someone today. It's not particularly useful to compare to my own finances today, in part because I have a child, electric space cars and a McMansion in suburban Orange County, Florida, so the circumstances are pretty different. There were a few surprises though, because adjusted for inflation, I spent less on eating out in 2020 than in 1998, which is not entirely surprising given the pandemic. I also spent less on auto insurance. I spent less on power (electricity, natural gas, gasoline), which is super interesting when you're comparing a small 2-bedroom apartment to 4,200 square feet of difficult to cool in summer house, but that's because we now have electric cars and a solar plant.

Here's the scene: In 1998 I'm entering my third year in my first real, non-retail, non-radio job, working for the City of Medina, Ohio, as their cable TV coordinator. I run a department of 2.5 people and an annual budget of about $110,000. My salary is $28,468, or about $13.68 an hour. In 2020 dollars, that's $45,548, or $21.89. My not-yet-first-wife Stephanie is a full-time graduate student, and working part-time retail. Our finances are mostly mixed, except for her car payment, and she contributes an additional $4,269 that year. The apartment is your typical third floor walk-up built in the late 80's, 1,090 square feet, and at the end of the year, $615, or about $970 in today's dollars (amazingly, the same place is available today for $950, so right in line with inflation). I drove a leased Toyota Corolla, and then replaced it with another one mid-year, purchasing by loan.

Here's what we spent, in 1998 and 2020 dollars, and the monthly cost in 2020 dollars:

You'll note the total expense is greater than the income, which should come as no surprise given the expense of credit card interest. Where was the spending unreasonable? It's some combination of the "dining out" and "entertaining" lines, since I didn't spend cash on much of anything beyond going out. Over $300 a month for two people eating out seems like an awful lot relative to our income. We don't spend that much for three of us right now, though even in non-pandemic days, going out for lunch much of the week and going to theme parks, we top out at $390/month for three of us. I also spent a ton on computer parts, in a state of continual upgrade, like an addict to computer performance. Actually talking on a cell phone in those days was expensive, sitting in my car more for emergencies than anything else, so I still paid for a pager in those days, also probably unnecessary. People had land lines in those days.

Notably, 14% of my net income (11% of my gross) went to paying student loans. The Federal Reserve said last year that today's average payments are $393, so I was higher than average relative to today, and certainly paid a higher interest rate at 8%, compared to today's 2.75% for an undergrad loan. (Actually, due to Covid-19, the rates are 0% and forbearance goes through September.) I'm just an anecdote of course, but I went to a private school that was more expensive and had to borrow more. My dad pitched in the last few grand each year. According to the averages, my circumstances were not materially different from those found today, which is why I struggle with the debt problem (not to mention graduate school mania and borrowing for living expenses). Maybe someone will convince me the problem is that serious.

Going back to my original self-loathing over not saving for retirement, what the numbers don't show is that as a government employee in Ohio, I didn't pay into social security, I paid into the Public Employees Retirement System, which is like SS only you actually get back what you put in at 10% of your salary, plus 14% contributed from your employer, plus the market growth of the fund. And like a moron, I cashed it out when I left government, paying the taxes on the whole thing and getting none of the employer match. So that total of 24% of my salary, $6,832, using market indices as a guide, would be worth about $39,400. So yeah, had I left PERS alone from those three years, it would be worth more than $100k today. I am a big box of stupid.

And I could have put away another 5% if I wasn't paying all of that credit card interest. I could have found a way, and not materially lived less comfortably. Granted, I don't know how any of that would have played out in the divorce, because in Ohio you generally split all of your assets, and at the time, all I had was a (very) little house equity.

Steph and I had a lot of fun that year, and the excess spending on the computer stuff had nothing to do with that. Backing off of that, we would have had the same experiences, for the most part. Still, if I made better choices, I wouldn't be eyeing retirement with concern that I can't afford it.