Live Off Dividends

Passive Income and Personal Finance

Month: July 2017 (page 1 of 2)

How To Calculate Your Actual Hourly Wage


For many people they’ve never heard of such a thing as “calculating your real hourly wage.” You get hired at a set dollar amount per hour and that’s what you get paid until you get a raise or a different job, right? Well, not exactly. I think we can all agree that we trade the majority of our time for money. Money allows us to do the things we enjoy and buy the things we need. In essence, time is money. We only get 24 hours in a day and for most of us we spend at least 8 of those hours working. But that’s not all we spend on work. Let’s break it down.


What We Think We Get Paid

The average American salary is about $50,000 per year so we’ll use this for our example. And we’ll reference our made up friend Adam. Adam is a personal trainer at his local gym.

Adam works 8 hours per day, 40 hours per week. His $50,000 averages to just about $24 per hour. We’ll say that he brings home $960 per week (forget about tax for this example, the calculations with tax will be the same). Adam wants to purchase an iPad to track all his clients workouts and progress. The iPad that he wants costs $500, so this would cost him about 21 hours of his time ( 21 x $24 (per hour) = $504).

It’s not quite this simple though. The argument is that we actually earn much less per hour and that it would actually cost him much more time to purchase his iPad.


Factors We Don’t Usually Consider

There’s much more to our jobs than just the 8 hours we get paid for every day. Think about what time you wake up in the morning to get ready from work, what time you actually get home from work, your commute and how much gas costs, the clothes you may need to buy for work, the work you are required to do outside of your 8 hours, food you may buy while at work, etc.

  • Work outside of work: Adam spends roughly 10 hours outside of work each week preparing workout plans for his clients.
  • Actual time spent for work per day: Adam’s work hours are 7am-3:30pm but, Adam wakes up to get ready for work at 6am and doesn’t get home until 4pm. So that’s a total of 10 hours per day. Totaling 50 hours per week.
  • Adam is paying roughly $2.30 per gallon of gas currently and he averages about 20 miles per gallon in his car. He is paying about $0.115 per mile he drives and the gym where he works is about 10 miles from his home. So 20 miles to and from work each day totaling $2.30 per day, or $23 per week. (Assume his gas tank holds 16 gallons, after 3 weeks he’ll need to spend even more time refilling his car with gas, we aren’t going to include this in our example but it shows just how many factors there are to consider).

We’ll say these are Adams only expenses for work (though we know there are many other expenses we could include). They total to 60 hours per week and $23 for per week. 40 hours working, 10 hours preparing workout plans for the week, 2 extra hours per day getting/preparing to work and returning from work and $23 per week in gas money.


Calculating Adam’s Actual Hourly Wage

Remember the original thought was that Adam makes $24 per hour and that it would cost him 21 hours of his time to earn enough money to purchase an iPad that he wants for $500.  We also stated that Adam brings home $960 per week.

The formula we’ll be using to calculate Adam’s actual hourly wage is very simply. Actual hourly wage = Earnings – Costs / Hours Spent On Work Related Tasks.

Adam’s earnings: $960

Adam’s costs: $23.

Adam’s hours spent on work related tasks: 60 hours.

Adam’s Actual Hourly Wage: $960 – $23 = $937 / 60 hours = $15.62 per hour.

How many hours it will actually cost Adam to pay for his iPad, $500 / $15.62 = 32 hours.



Before calculating Adam’s actual hourly wage it would seem as if it would’ve only cost him 21 hours of his time to pay for his new iPad. After calculating his actual hourly wage we now know that it would cost him about 52% more time, 32 hours, to be able to purchase a new iPad. It also looked like Adam was earning a wage equivalent to $24 per hour, which also turned out to be false. Adam was actually make 35% less per hour than he thought he was.

This example was very broad and could have included many more factors. But the calculations and the concept is the same. When I first ran this calculation for myself (much more specifically) it was extremely eye-opening. It really put into perspective how much I was actually earning. This has had a lasting impression on me and it definitely makes me consider whether purchasing things are really worth it sometimes.

I think this calculation can also be useful when comparing job offers or considering a job switch. Factoring in all the different variables can help you decide which job will pay you better for your time. It’s important to understand just how you’re being compensated so you can better value your time.

Do you take these factors into consideration when you think about your hourly wage?

Try Personal Capital to track your net worth! It makes life extremely easy and it’s 100% free. If you sign up with my link I’ll receive a small commission, thank you for supporting Live Off Dividends!





Rental Property Update: June 2017

Are rental properties worth it? So far, it has definitely been worth it for me. Especially in an owner occupy situation. I would hardly have any extra money every month if I didn’t have rent coming in. This would considerably hinder my investment portfolio growth and ultimately slow my plan for early retirement.


As of June, it now costs me an average of $255.58 to own this house. For those of you that read my last rental property update you might be wondering why it increased so much. Last month was the first update that I’ve done and I made a mistake and forgot to include home owner’s insurance. I couldn’t own the house without it, so I’ll be including it from now on.

This was the most expensive month that I’ve had since I bought the house. In June, it cost me $381.61 to own this house. This was largely due to the fact that I got my first quarterly water bill. Aside from the water bill I had to unclog some pipes upstairs and I purchased a couple gallons of Drano. This was really the first expense that I’ve incurred. Everything else that I’ve done I’ve been able to do on my own for free.


I managed to make another additional mortgage payment of $60.78 this month. If I continued to make that same extra payment for the life of this rental properties mortgage it would reduce my 30 year loan to 21 years. I would like to pay it down even faster than that but money is pretty tight right now and I’m working on another house deal. My father and I are partnering on a deal for 3 rental properties with a total of 7 units. Our estimated close date is July 28th, but it could be sooner depending how fast the seller and his attorney want to work. I will include those three rental properties in this post when the deal comes to fruition. Hopefully before this month ends!





Net Worth Update: June 2017 +$6,423

This was a huge month for my net worth. I got paid three times in June so this helped quite a bit. Unfortunately, next month will be an expensive month for me with the pending real estate purchases, but it will be worth it in the long run.

For those wondering, I use  Personal Capital to help track my net worth and I highly recommend giving it a shot (it’s completely free). You can link all your accounts and it does all the work for you. It also gives you access to a bunch of really cool tools, like the investment checkup tool.



My home value stayed the same at $100,000.

My truck value decreased from $6,591 to $6,394.

Total: -$197

Investment Accounts

My Robinhood account increased from $38,127 to $39,431.

My Roth IRA increased from $14,013 to $14,162.

My 457b increased from $5,083 to $5,526.

My NYS retirement account is currently at $3,422.

Total: +$5,318


My cash increased from $6,233 to $7,388.

Total: +$1,155


My total assets increased from $170,047 to $176,323.



My mortgage decreased from $59,599 to $59,452. I managed to pay a little extra on my mortgage this month.

Total: -$147


My net worth heading into July is $116,871 up from $110,448 last month! This was a $6,423 increase or a 5.81% increase. This was a huge increase for me, I expected a large increase in June but I definitely didn’t expect an increase this large. I learned recently that I can transfer my NYS retirement to an IRA, under certain criteria of course, but nonetheless I will now be including this account in my net worth.


I think it’s important to track my age and where I fall percentage wise in my age group as well. I just turned 24 years old and my net worth puts me in the 96th percentile. Here’s the link that I use to calculate that as well.

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