EMS Taboo: On the Money

I was catching up with online comments from the EMS community when I spotted this text:

I’ve looked at job listings and I see most EMT-B jobs (in suburban Chicago) state either $12/hr or $25K a year with medical/dental benefits. Is anyone else able to fully cover their living expenses from a single source of income in that range?

What concerned me about that question even more than its affirmation of subsistence-level wages in EMS was the author’s apparent uncertainty about his own solvency, and the extent to which he thought others could help. That’s like polling coworkers to see which uniform fits best. Wait, I’ve seen that, too.

Money management is a domestic skill like carpentry or plumbing—natural acts for some, nightmares for others. Take me, for example; I’m fine with finances mostly because I was the kid who always saved more than he spent. If I got a few bucks for my birthday, it went into the bank because I liked to watch the numbers in that passbook grow. Ask me to fix a leaky faucet, though, and we’re going to need a bigger boat.

I think most EMTs and paramedics would rather dig a well through bedrock than spend that time balancing their books. I’m not sure why; maybe money seems confusing because we tend to have so little of it. Deconstructing life paycheck by paycheck doesn’t leave many decisions about saving. However, spending almost every dime on urgencies makes it even more important to understand at least a few bookkeeping basics:

Budgeting

Every adult should estimate their annual income versus expenses at least once a year. It’s called budgeting, something that used to be second nature for anyone not named Rockefeller.

The consequences of ignoring one’s own bottom line can be severe—overdrawn accounts, massive credit-card debt, even bankruptcy. For many in EMS, though, budgeting is harder than high-stakes patient care. It doesn’t have to be.

Start by estimating expenses monthly or even annually. Pick general categories like clothing, insurance and food. Drilling down to meat, fish and eggs is reserved for psychotic engineer/paramedic/columnists from Boston.

Round to the nearest $100. Be conservative—better to overstate expenses than to understate them. If you’re comfortable using a spreadsheet like Excel, fine; otherwise, pencil, paper and a calculator will work just as well.

When you’re finished with that part, you’ll have a list of categories something like this: cars, clothing, dental, dues, electricity, entertainment, food, furnishings, gasoline, gifts, grooming, hobbies, housewares, insurance, maintenance, medical, postage, publications, telephone, travel, water and other, with dollar figures next to them. Add those up. That’s your nut. Covering it depends on after-tax income, but taxes aren’t the only deductions that lighten your paycheck. Find a pay stub from each of your current jobs, then read on.

Deductions

The difference between earnings and take-home pay can be a source of confusion, not to mention irritation. Take two minutes for an Orwellian rant against big brother with the house anarchist, then review your deductions dispassionately. Although wages withheld count as income, you might not be taking home enough to pay bills.

The most common payroll mistake I’ve seen working people make is withholding too much for taxes. The idea of a big, annual tax refund seems to be more appealing than using those funds during the year. Can you say “strategic blunder”? I knew you could.

What those tax-refund “windfalls” really mean is you’ve made an interest-free loan to the federal government—and to your state and city, too, in some cases. Even the low interest rates you’d get for banking those sums is better than nothing, which is what you’ll earn from tax collectors who use your money.

If you deduct too little, you’ll face even bigger problems in the form of interest and penalties. The trick is to adjust withholding so that year-end taxes due is as close to zero as possible. And don’t listen to coworkers who complain about the government taking almost all of their overtime pay. Those wages aren’t treated any differently by the IRS than the first dollar you earn each year.

Taxes aren’t the only obligations coming out of paychecks. Most employees have to share the cost of medical insurance. Some pay for dental or disability, too. Savings plans such as 401Ks are also common. In general, it makes sense to contribute as much as you can to tax-advantaged investments while leaving enough to cover your bills. What you don’t want to do is make up the difference with credit card debt. As of this writing, the average interest rate on unpaid balances is over 15%. It would be hard to come up with a worse long-term investment strategy than borrowing heavily with plastic. I would be happy to lend you money at half that rate and use your interest to finance an ocean-front bungalow in Tahiti, assuming I can watch hockey in Tahiti.

Dollars and Sense

My friend Tom Bouthillet is an EKG expert. We’re talking physician-level, even though Tom’s a paramedic. Most medics don’t have anywhere near Tom’s mastery of EKGs, but that doesn’t mean we don’t read them and use our much more modest 12-lead skills to help care for patients.

Managing money is similar, in that you don’t have to be an expert to make good decisions. Learn the basics, appreciate what you don’t know, and review income versus expenses at least a few times a year. You’ll have more control and fewer surprises.

Mike Rubin is a paramedic in Nashville, Tennessee and a member of EMS World’s editorial advisory board. Contact him at mgr22@prodigy.net.