Recently, I was part of a discussion where the topic was how everyone was tired of reading about how they should put away so much in an emergency savings account every month, allocate a percentage of their wages into a retirement account, earmark funds for that special summer vacation or getaway, and the list goes on and on. It just couldn't be done.

Of course, if you pick up any personal finance magazine off the news rack these days, they are packed with tons of supposed sage advice, penny-wise wisdom, and general financial rules of thumb, but the question is: How practical is it to do these great, glorious things anyway? An even better question may be: Can the "average" person do this in Greene County, Indiana?

To help answer these questions -- at least theoretically -- I started putting together an Excel template with the notion that if all of those things you're "supposed to do" couldn't be done on paper then the real-life version would be nearly impossible. So, to put "pen to paper" per se, I looked up some average incomes for the area on the U.S. Census Bureau website and got started.

When I was working more on this template, it dawned on me that I should use these monthly amounts to "back out" into an amount of the original mortgage loan, for example. The thought process being is that a $100 a month mortgage payment sounds spectacular, but what does a $100 per month mortgage payment actually buy you? Say, the area's median home price is $50,000 -- which is the average value for Linton according to the census and another independent housing study-- and a normal loan-to-value is 80% then a person must figure out how much it would take per month to finance a $40,000 loan (80% of $50,000) -- just so they can own the supposed "average" home in the community.

I tried to estimate true taxes to be paid, not what a person's W-4 tells the employer to take out each pay. This is especially insightful for those who get a large tax refund check at the end of the year -- because basically they've overpaid their taxes for the year to the detriment to their bi-weekly paycheck amount. (See the "Are You Making 0% Interest Loans to Uncle Sam?" blog entry on Thursday, September 6th, 2007).

It also became apparent rather quickly that there's a lot to think about when defining "average" because it's not as simple as it first seems. Does this include a single-income or dual-income household? How many kids live in the "average" home"? With regard to having children, is it more expensive to raise girls than boys? Does everyone in the house have a cell phone? Will having cable, internet, and other electronic gadgets around the house be considered "average" or not? Even a family's faith and values can determine where -- and how much -- of their income goes to a church, various charities, sports and leagues, eating out, etc.

So, stay tuned as this project progresses and unfolds… it's a pretty complex and ambitious one.

By the way, do you have a guess of what the median family income in Greene County, Indiana was in 1999, which was the most current census information I found?

It was $41,523.