On What Will You Do With Your Extra $200?

@jfruh Social security was designed to support the currently retired. You are not paying for yourself. What the designers failed to account for was what happens when you go from 16 workers per retiree, to 3 workers per retiree. That is what is known as a quagmire. While it is true that low-earners pay more of their paycheck to social security, they also get way more back. In 2010 the bottom 20% paid 8.6% of their income to social security BUT -9.6% of their income in federal income tax (yes, negative - due to credits). Net net, they paid 1.6% of their before tax income in total federal taxes (v. 24% in the highest quintile, and 29.4% in the magical top 1%). You can read all you want about who pays what and how much at CBO http://www.cbo.gov/sites/default/files/cbofiles/attachments/44604-AverageTaxRates.pdf It is a very small sliver of the 1% that is derives their income from cap gains - vast majority of high-earners are just highly-paid (paycheck, bonus) employees of large corporations (or doctors, lawyers, etc).

Posted on September 30, 2014 at 8:17 pm 0

On Defining 'Rich'

"Rich" makes me feel like I'm 8 years old, but wealth to me is about convenience and reducing worry. My wife and I are 31. Pre-grad school we made about ~$75k combined (in a large city in a state with no income tax). In grad school that got reduced to $50k. In either case, we didn't live lavishly but didn't really want for anything either. But I always feared some huge lurking expense for which we weren't prepared. Now sitting at the lower-end of those maroon bars we can afford not to worry as much about the unexpected. But what I have lost and won't get back is the time that earning those dollars requires.

Posted on June 17, 2014 at 11:29 am 0

On We Need a New Kind of Financial Advice

Strictly speaking of the middle-class and up - I don't think anyone who pays attention believes that most people get into financial trouble / achieve low-savings due to luxury splurges. It is the exact opposite, actually, and something you'll figure out quickly if you listen to any financial call-in show. What gets people in trouble is the thrice weekly trips to Target or Old navy or any number of seemingly innocuous middle-class retailers. Add in a dose of keeping up with the Jones' (new car v. used; eating at home v. dining out) and you quickly see how people of any class end up with large amounts of consumer debt. And I would add that living above your means does not stop when you make more money - if anything it becomes more tempting. Everything starts and ends with budgeting - regardless of your starting place.

Posted on June 9, 2014 at 5:17 pm 1

On Today in Terrible Bosses: Dave Ramses II

Ramsey is extremely financially conservative. I think his slogan is very apt, "live like no one else and later you can live like no one else". 100% true. Live on a lot less than you make, save and invest conservatively (things millions of Americans knew long before there was a dave ramsey) and you will have a lot of money later. He rails against credit cards because a lot of his listeners have obviously not proven to be responsible with them - "giving a drunk a drink" as he puts it. I know I can have a credit card without racking up debt just as I can have a drink and not become an alcoholic. So YMMV but I do know if you follow "his" plan / aka simple math and discipline, you will retire with a decent chunk of change. I promise you don't need a book or radio show to do those things.

Posted on May 29, 2014 at 3:04 pm 2

On Finance Dads More Likely to Have Autistic Sons

If they stripped out the "quants" i think this would fall dramatically. A lot of folks on the Asperger's side of spectrum on those floors.

Posted on May 19, 2014 at 9:28 pm 0

On Frugal Travel Moves That Backfired On Me

My favorite sign will forever be: "Free breakfast included in room rate"

Posted on April 14, 2014 at 7:40 pm 1

On A Job I Want That No Longer Exists: Professional Letter Writer

Actually this does exist - for cover letters. There is a website for those looking to break into big consulting (Mckinsey, etc) that will write you a cover letter for ~$100. I'm sure all the resume assistance services have similar options.

Posted on March 24, 2014 at 1:12 pm 0

On The Culture of Overwork on Wall Street And in Silicon Valley

@Beaks I think the knowledge/accountability issues he touches on is a big part of it. Working as a team is fundamental in investment banking but perhaps not in the way you would think. I would compare it to building a house. The most senior person (who is responsible for the quality of the product at the end of the day) is going to monitor the work at a high level and talk to the customer. Meanwhile someone needs to oversee all of the details of actual construction (a VP). Someone is going to be working on plumbing, someone else on electrical etc. There are some facets that lend themselves to multiple parties dividing and conquering but an excel model does not. Only one person can make changes at any given time and only one person (the creator/laborer) is going to fully understand all the mechanisms and dependent variables that are at play. Working towards the same goal - but everyone has different responsibilities at various times.

Posted on March 19, 2014 at 2:26 am 0

On The Culture of Overwork on Wall Street And in Silicon Valley

@Beaks See here: http://www.mergersandinquisitions.com/why-you-actually-work-so-much-as-an-investment-banker-yes-even-in-a-recession/

Posted on March 18, 2014 at 8:51 pm 0

On The Culture of Overwork on Wall Street And in Silicon Valley

@wrappedupinbooks A common refrain well addressed here http://www.mergersandinquisitions.com/why-you-actually-work-so-much-as-an-investment-banker-yes-even-in-a-recession/

Posted on March 18, 2014 at 8:51 pm 0