Author Topic: Overheard at Work  (Read 8263747 times)

Eric222

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Re: Overheard at Work
« Reply #11400 on: December 04, 2015, 05:48:11 AM »
I just learnt today that a co worker of mine making $40k is contributing 1% to the 401k, when the company match is 3%.
She is leaving 2% free money on the table.

I tried to speak to her, the most frustrating thing is that she wasn't even able to give me a coherent reason why she's doing that.

"Oh you know, I don't really trust this stuff and I've always put 1%, so I'll just leave it like that."
"But you're leaving 2% free money on the table"
"Well, that's not that much money".

Then these people bitch because they want a raise.
Every time I see a story about someone not taking a 401k match I get annoyed.  Mostly because I would LOVE to have a match!!  Can have 401k matches that other people don't use? ;) 

boarder42

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Re: Overheard at Work
« Reply #11401 on: December 04, 2015, 05:51:00 AM »
I just learnt today that a co worker of mine making $40k is contributing 1% to the 401k, when the company match is 3%.
She is leaving 2% free money on the table.

I tried to speak to her, the most frustrating thing is that she wasn't even able to give me a coherent reason why she's doing that.

"Oh you know, I don't really trust this stuff and I've always put 1%, so I'll just leave it like that."
"But you're leaving 2% free money on the table"
"Well, that's not that much money".

Then these people bitch because they want a raise.
Every time I see a story about someone not taking a 401k match I get annoyed.  Mostly because I would LOVE to have a match!!  Can have 401k matches that other people don't use? ;)

technically by not maxing out your tax advantaged accounts(if you're still paying any state or federal taxes) you're throwing money away to the federal govt.

Seppia

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Overheard at Work
« Reply #11402 on: December 04, 2015, 06:07:19 AM »
I just learnt today that a co worker of mine making $40k is contributing 1% to the 401k, when the company match is 3%.
She is leaving 2% free money on the table.

I tried to speak to her, the most frustrating thing is that she wasn't even able to give me a coherent reason why she's doing that.

"Oh you know, I don't really trust this stuff and I've always put 1%, so I'll just leave it like that."
"But you're leaving 2% free money on the table"
"Well, that's not that much money".

Then these people bitch because they want a raise.

Could you try to explain it to her? It sounds obvious to us but I think some people really don't get it. She is throwing away free money.

I even tried my secret weapon, the example I use for the most math-challenged individuals.

"Hey do you know that our 401k is a magical tool that basically TRIPLES your money?"
That usually gets people's attention.
Then I explain the ballpark math
"See, $100 of your gross salary become somewhere around $65-70 in your pocket (we are in NYC so with high state + city tax).
If instead you put them in the 401k not only they stay $100, but the company match makes them $200.
SEE? IT'S A MAGIC TOOL THAT TRIPLES YOUR MONEY *me faking a somewhat astonished face like it's every time the first time I really realize that*"

Nope.
Didn't work.

johnny847

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Re: Overheard at Work
« Reply #11403 on: December 04, 2015, 06:30:25 AM »
I just learnt today that a co worker of mine making $40k is contributing 1% to the 401k, when the company match is 3%.
She is leaving 2% free money on the table.

I tried to speak to her, the most frustrating thing is that she wasn't even able to give me a coherent reason why she's doing that.

"Oh you know, I don't really trust this stuff and I've always put 1%, so I'll just leave it like that."
"But you're leaving 2% free money on the table"
"Well, that's not that much money".

Then these people bitch because they want a raise.

Could you try to explain it to her? It sounds obvious to us but I think some people really don't get it. She is throwing away free money.

I even tried my secret weapon, the example I use for the most math-challenged individuals.

"Hey do you know that our 401k is a magical tool that basically TRIPLES your money?"
That usually gets people's attention.
Then I explain the ballpark math
"See, $100 of your gross salary become somewhere around $65-70 in your pocket (we are in NYC so with high state + city tax).
If instead you put them in the 401k not only they stay $100, but the company match makes them $200.
SEE? IT'S A MAGIC TOOL THAT TRIPLES YOUR MONEY *me faking a somewhat astonished face like it's every time the first time I really realize that*"

Nope.
Didn't work.

The last restort (that isn't always applicable - this requires immediate vesting of employer contributions) is to tell them even if they deposited in the 401k, and then withdrew immediately and paid the penalties, they still come out ahead!

With your numbers, they put in $100 and the company match is $100. They withdaw all $200 immediately. They pay a 10% penalty on the entire withdrawal of $200 -> $20 penalty. They pay $60-$70 in tax, so they're left with $110-$120.

That's still better than not contributing, where $100 gross becomes $65-$70.


If they're not convinced with this, then I don't think there's any hope left.

Sadly, I can still see this not working for people who live paycheck to paycheck. It'll take several days to process the 401k withdrawal and these few days without their small portion of their paycheck may break their cash flow.

Seppia

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Re: Overheard at Work
« Reply #11404 on: December 04, 2015, 07:00:56 AM »
I've tried that as well, but usually for this type of individuals the math is too obscure. :)
You lose them somewhere between the penalty and the actual taxes on the 401k withdrawal.
A couple times the TRIPLE MONEY! worked.

Squirrel away

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Re: Overheard at Work
« Reply #11405 on: December 04, 2015, 07:13:36 AM »
OMG. How ridiculous!:D

zephyr911

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Re: Overheard at Work
« Reply #11406 on: December 04, 2015, 07:14:58 AM »
I wear my pokerface when I hear people brag like this. We're driving 17-18 year old cars with hundreds of thousands of miles (like nearing 300K on one) and the cost of maintenance and repairs is tiny. Like less than a car payment per year.

It saves us a car payment per month that we keep it.

Either of our cars in its entirety would cost less than one set of tires for his truck. ;)
Anecdotal evidence unfortunately has a huge effect on people's thinking. I had a 1994 Escort with somewhere north of 100k miles that I had bought with a small loan in 2000 when I graduated from college - about $3k at $155/mo, if I recall correctly - and due to my first divorce and general financial stupidity, I only paid it off on time, in the summer of 2003. And I'll be damned if that car didn't cost me more in repairs every month for the next four months straight, than I'd been paying on the loan. I got so tired of tow trucks and loaners and copping rides that I donated it to the first charity who would take it from my driveway and borrowed five figures for my next car.
I did manage to keep the next car for a full decade and 140K miles - long after payoff - before my zeal for efficiency moved me into something newer. But I'm still trying to get over my fear of old cars. Logically, I know it's not a typical experience. Emotionally, it's imprinted strongly.

I've tried that as well, but usually for this type of individuals the math is too obscure. :)
You lose them somewhere between the penalty and the actual taxes on the 401k withdrawal.
A couple times the TRIPLE MONEY! worked.
I have a different version of this struggle with DW, whose life story is a mixed blessing. She's from a country with high inflation and constant financial/fiscal crises, and is (good news) a habitual high saver but (bad news) instinctively wants all that cash where she can reach it. It's been hard to sell retirement contributions, because her income is lower, her withholding isn't very high (even though our shared marginal rate at filing may be), and she only has access to an IRA (no match) and a SIMPLE IRA (very small match). So, even if I can convince her that she's getting roughly $1.50 for every $1 she sends... all she sees is a shrinking cash cushion. A loss, in her eyes. I don't think it matters how high our income or NW get, the cash cushion is her security blanket. But we've made progress and she's probably close to $10K in tax-deferred contributions, plus the cash buffer.

No hilarious stories from the office this week... I did go out for Moe's with a couple of CWs, facepunch me if you like but that shit was tasty... and my $7 burrito bowl was big enough to bring back half for another lunch, so not a total disaster. >.<

johnny847

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Re: Overheard at Work
« Reply #11407 on: December 04, 2015, 07:41:14 AM »
I've tried that as well, but usually for this type of individuals the math is too obscure. :)
You lose them somewhere between the penalty and the actual taxes on the 401k withdrawal.
A couple times the TRIPLE MONEY! worked.

*sigh*

With my "coworkers" (I'm an engineering grad student) they can all understand the math perfectly.

However, sometimes that's even more infuriating! They understand perfectly (when pointed out to them) how much money they stand to make from decades of compound growth, along with the tax savings from IRAs, but they still don't save a dime because they prefer to waste their money by eating out every day.

EDIT: for typos
« Last Edit: December 04, 2015, 09:28:45 AM by johnny847 »

Seppia

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Re: Overheard at Work
« Reply #11408 on: December 04, 2015, 09:06:37 AM »
Oh yes, the "I would love to do that, but I cannot afford it" when they just leased a gigantic German SUV 3 years ago (the one coworker of mine who doesn't contribute to the 401k)

Seppia

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Overheard at Work
« Reply #11409 on: December 04, 2015, 09:06:05 AM »
Double sorry
« Last Edit: December 04, 2015, 09:07:55 AM by Seppia »

Kitsune

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Re: Overheard at Work
« Reply #11410 on: December 04, 2015, 09:23:13 AM »
From my colleague, who has been the director of this company for 20 years: "you can't negotiate a contract! If they're offering that amount, then it has to be fair, and you'll look greedy if you try go get more!"

It's a freakin wonder that the company has been in business for 20 years, with that attitude.

zephyr911

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Re: Overheard at Work
« Reply #11411 on: December 04, 2015, 09:26:19 AM »
From my colleague, who has been the director of this company for 20 years: "you can't negotiate a contract! If they're offering that amount, then it has to be fair, and you'll look greedy if you try go get more!"

It's a freakin wonder that the company has been in business for 20 years, with that attitude.
Is this in the U.S.? I gather that we are less likely to be brought up with a negotiating mindset than people in many other nations. We have our hard drivers and then there are the rest of us who never think to haggle, hate doing it, and even feel bad if we try.

maco

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Re: Overheard at Work
« Reply #11412 on: December 04, 2015, 09:43:05 AM »
From my colleague, who has been the director of this company for 20 years: "you can't negotiate a contract! If they're offering that amount, then it has to be fair, and you'll look greedy if you try go get more!"

It's a freakin wonder that the company has been in business for 20 years, with that attitude.
Is this in the U.S.? I gather that we are less likely to be brought up with a negotiating mindset than people in many other nations. We have our hard drivers and then there are the rest of us who never think to haggle, hate doing it, and even feel bad if we try.
I'm gonna go out on a limb that us Quakers have something to do with that. See, we invented the price tag, on the basis that haggling is an inherently unequal (different people get different final prices) and dishonest (because you pretend about how much money you think it's worth) practice.

Dollar Slice

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Re: Overheard at Work
« Reply #11413 on: December 04, 2015, 09:46:31 AM »
From my colleague, who has been the director of this company for 20 years: "you can't negotiate a contract! If they're offering that amount, then it has to be fair, and you'll look greedy if you try go get more!"

It's a freakin wonder that the company has been in business for 20 years, with that attitude.

It's been a running joke for years that the absolute worst deals/contract we sign with our clients were offered by the owner of the company. "He's paying HOW much? Who signed off on that deal!?" "Uh... *checks file* You did." "Oh."

Kitsune

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Re: Overheard at Work
« Reply #11414 on: December 04, 2015, 10:42:34 AM »
From my colleague, who has been the director of this company for 20 years: "you can't negotiate a contract! If they're offering that amount, then it has to be fair, and you'll look greedy if you try go get more!"

It's a freakin wonder that the company has been in business for 20 years, with that attitude.
Is this in the U.S.? I gather that we are less likely to be brought up with a negotiating mindset than people in many other nations. We have our hard drivers and then there are the rest of us who never think to haggle, hate doing it, and even feel bad if we try.

Canada.

For the record, I negotiated the contract, and got the company 35% more. Which, based on my calculations, should cover costs and 15% profit. Signing the offered contract wouldn't have covered costs... like, ARGH,  you guys, come on, make an effort!

She's also the one who responded to 'we need to make more than we spend, so we need to be more efficient AND make more money in order to stay in business' with 'you think too much about money'. Like... yes. Because we're a business. Which exists to make money. And should it fail to do so, it will go under. If you don't agree with the stated goal, maybe going to work in healthcare (she's a nurse by training, initially) or perhaps for a charity, would be a better fit.

CougStache

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Re: Overheard at Work
« Reply #11415 on: December 04, 2015, 11:42:05 AM »
Recently, I referred an old "colleague" (we worked together for maybe 4 months) to my new company. He was subsequently hired. As is customary, we agree we should probably grab lunch one day to catch up. That day is today.

When he originally stopped by to catch up and suggest the lunch, he casually mentioned "you're buying with that referral bonus haha." Today, he stops by at 9:30am to confirm and ask where the office manager is because he "really needs his paycheck. Like, seriously. Today is payday, right?" Apparently, in the job switch he's gone three weeks without a paycheck. I also know his prior employer paid out any remaining vacation days (albeit at 50%), so he even should have received a bump there and he was traveling for work this past week so even a dining out habit would be subsidized.

I was originally just a little shocked he would suggest I buy him lunch, but now knowing how terrible he must be with his own money (yes, he was paid poorly at his last job, but not THAT poorly), I'm a more upset. Whatever, $6 for a slice of pizza. Really, though, shouldn't be the other way around? I'm the one that opened the door for him to get a better job and a higher salary, after all.

Fun anecdotes:
- The only reason I knew today was payday was because I made a point to check to ensure the referral bonus went through, which it did not and I needed to contact HR to ensure that process was taken care of.
- The look on his face when I couldn't provide any nearby recommendations on where we should eat was priceless. Sorry, bro, I just don't go "out" for lunch. Hell, I rarely even come to the office.
- The bonus is paid in two parts, 1/2 now and 1/2 after 6 months. It's only about $1500 taxed at an exorbitant rate, so I'll only see about $450 on my next paystub. The HR woman was over the moon apologetic that she dropped the ball. No, I don't "need the money to help out with the holidays coming up," I was genuinely just curious if I would be receiving a bonus at all.
« Last Edit: December 04, 2015, 11:56:41 AM by CougStache »

Roboturner

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Re: Overheard at Work
« Reply #11416 on: December 04, 2015, 11:50:40 AM »
VP drives up in brand-new Tesla (the expensive extra expensive P9000 extra super turbo plus one that uses freshly-printed Benjamins to run)

Me: "Wow, neato car"

Him: "yeah, i guess - it was supposed to be my wife's but she didnt end up liking it so she got something else and I'm forced to drive this, wouldn't be my first choice"

Me: ................

Goldielocks

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Re: Overheard at Work
« Reply #11417 on: December 04, 2015, 01:55:59 PM »
I just learnt today that a co worker of mine making $40k is contributing 1% to the 401k, when the company match is 3%.
She is leaving 2% free money on the table.

I tried to speak to her, the most frustrating thing is that she wasn't even able to give me a coherent reason why she's doing that.

"Oh you know, I don't really trust this stuff and I've always put 1%, so I'll just leave it like that."
"But you're leaving 2% free money on the table"
"Well, that's not that much money".

Then these people bitch because they want a raise.
Every time I see a story about someone not taking a 401k match I get annoyed.  Mostly because I would LOVE to have a match!!  Can have 401k matches that other people don't use? ;)

Oh!  I have a terrific matching story -- I recently requested what the company portion of cost was for Pension and ESPP matching (401k and ESPP).   Out of a total possible of 5% match, the company was paying 4.5%... 

I will be generous and assume that some people did not really want stock in the company, and nearly everyone matches 401k to 100%,  This is across 8000 US office employees, too.  (Architecture and Engineering Company, fyi)   Win!

MgoSam

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Re: Overheard at Work
« Reply #11418 on: December 04, 2015, 02:00:37 PM »
VP drives up in brand-new Tesla (the expensive extra expensive P9000 extra super turbo plus one that uses freshly-printed Benjamins to run)

Me: "Wow, neato car"

Him: "yeah, i guess - it was supposed to be my wife's but she didnt end up liking it so she got something else and I'm forced to drive this, wouldn't be my first choice"

Me: ................

LOL! It's funny a friend of mine just got a car and doesn't like it. She was originally happy because the salesmen did a good job in her eyes, making sure "payments were within reason." I believe it is used, so there's that at least.

mtn

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Re: Overheard at Work
« Reply #11419 on: December 04, 2015, 02:24:56 PM »


- The bonus is paid in two parts, 1/2 now and 1/2 after 6 months. It's only about $1500 taxed at an exorbitant rate, so I'll only see about $450 on my next paystub.



How can it be taxed anymore than your regular paycheck? Even if you're bumped into a higher tax bracket, would that be an exorbitant rate? Unless you mean that it acts as if that is your normal paycheck the whole year round, so it bumped you a couple of brackets?

Metta

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Re: Overheard at Work
« Reply #11420 on: December 04, 2015, 02:34:17 PM »
A co-worker is interested in retirement (age 61) and so we've been talking since he knows that I will be retiring soon. He's been asking questions about our company's benefits for official retirees and since I've already done the research, I've sent him my links on the various policies, costs for retiree health insurance, and so forth.

Yesterday he told me that he was worried that he might run out of money in retirement, so I shared my two favorite sources for reassurance: cfiresim.com and RetirePlan (an app for the iPad). He looked at my demo of them and said, "But Metta, those are not made for people like us. Those are made for financial planners. That's what my financial planner uses when I'm in his office. We can't use those."

I reassured him, of course, but I think he still went away thinking that ordinary people cannot be expected to use financial modelers for themselves.
What is it about addition, subtraction, addition, and multiplication that makes them so intimidating to otherwise intelligent and competent people?
I'll admit, even after decades of doing more complex operations, investing in real estate for years, and using my own hand-built Excel budget tracking/forecast and tax analysis sheets, I find my confidence falters when trying to make strategic decisions based on them - and they are even simpler than cfiresim or the other tools that are popular here.
Instincts can be useful but they can also fail us miserably.

I think you are right about this. He is a very smart guy, a fantastic programmer/analyst who is comfortable using mathematics and viewing complex models as part of his job, but is unsure of this. It's interesting, isn't it?

I wonder if the true discomfort is with making strategic decisions.

serpentstooth

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Re: Overheard at Work
« Reply #11421 on: December 04, 2015, 02:38:29 PM »


- The bonus is paid in two parts, 1/2 now and 1/2 after 6 months. It's only about $1500 taxed at an exorbitant rate, so I'll only see about $450 on my next paystub.



How can it be taxed anymore than your regular paycheck? Even if you're bumped into a higher tax bracket, would that be an exorbitant rate? Unless you mean that it acts as if that is your normal paycheck the whole year round, so it bumped you a couple of brackets?

One of my husband's employers withheld taxes on all bonuses at the highest marginal rate for federal and state, even if the employee was earning nowhere near enough to be in those brackets. I knew enough to understand it would all shake out at tax time, but it was a real shock the first time his bonus was paid out. It was a lot less than I was expecting!

CougStache

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Re: Overheard at Work
« Reply #11422 on: December 04, 2015, 02:41:26 PM »


- The bonus is paid in two parts, 1/2 now and 1/2 after 6 months. It's only about $1500 taxed at an exorbitant rate, so I'll only see about $450 on my next paystub.



How can it be taxed anymore than your regular paycheck? Even if you're bumped into a higher tax bracket, would that be an exorbitant rate? Unless you mean that it acts as if that is your normal paycheck the whole year round, so it bumped you a couple of brackets?

Here's the explanation I received from HR when inquiring about the same issue on my last referral:
"Yes, unfortunately bonuses are taxed at a higher rate. Your W-2 will show the full amount as income though. Itís just the tax law that we have to abide by."

Who knows if HR has a firm grip on tax laws, but honestly I have a pretty lazy approach to these types of "problems." I'll reevaluate in January when filing my taxes if anything seems particularly strange.

La Bibliotecaria Feroz

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Re: Overheard at Work
« Reply #11423 on: December 04, 2015, 02:49:30 PM »


- The bonus is paid in two parts, 1/2 now and 1/2 after 6 months. It's only about $1500 taxed at an exorbitant rate, so I'll only see about $450 on my next paystub.



How can it be taxed anymore than your regular paycheck? Even if you're bumped into a higher tax bracket, would that be an exorbitant rate? Unless you mean that it acts as if that is your normal paycheck the whole year round, so it bumped you a couple of brackets?

Here's the explanation I received from HR when inquiring about the same issue on my last referral:
"Yes, unfortunately bonuses are taxed at a higher rate. Your W-2 will show the full amount as income though. Itís just the tax law that we have to abide by."

Who knows if HR has a firm grip on tax laws, but honestly I have a pretty lazy approach to these types of "problems." I'll reevaluate in January when filing my taxes if anything seems particularly strange.

My understanding is that a bonus pushes you into a higher tax bracket and that they will withhold taxes as though EVERY paycheck was that high.

Mr. FP used to get a one-time payment of something like $2000 for coaching a sport. It pushed him into a higher tax bracket, so we didn't get very much of it. HR told him later that many coaches file a special W-4 just for the month when they get that payment.

Dollar Slice

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Re: Overheard at Work
« Reply #11424 on: December 04, 2015, 02:56:22 PM »
Bonuses are not taxed at a different rate. It's just that since it's on top of your regular income, all the extra money is taxed at your marginal rate, so it seems high. I.e. if you are in the 25% tax bracket, you might have some percentage in the teens taken out of your paycheck because it's the average of the 10%/15%/25% tax brackets. But the bonus goes on top, landing in the 25% bracket, so it's all taxed at 25%.

It's possible your HR withholds at a different rate from bonuses, but when you fill out your 1040 there is no special section for "bonus tax". It's all income and treated the same. If they over-withhold you'll get it refunded.

Source: I do payroll for my company.

runningthroughFIRE

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Re: Overheard at Work
« Reply #11425 on: December 04, 2015, 03:40:14 PM »


- The bonus is paid in two parts, 1/2 now and 1/2 after 6 months. It's only about $1500 taxed at an exorbitant rate, so I'll only see about $450 on my next paystub.



How can it be taxed anymore than your regular paycheck? Even if you're bumped into a higher tax bracket, would that be an exorbitant rate? Unless you mean that it acts as if that is your normal paycheck the whole year round, so it bumped you a couple of brackets?
This is how the payroll system works at my employer.  I was paid a relocation/signing bonus that made my gross 6x the norm for that pay period, and I got nailed with what roughly translates to the top tax bracket's effective rate.  I've asked HR about frontloading my HSA next year, and they told me tax withholding is calculated on annualized pay, so it acts as though every pay period is what you'll be making all year.

merula

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Re: Overheard at Work
« Reply #11426 on: December 04, 2015, 03:54:52 PM »
She's also the one who responded to 'we need to make more than we spend, so we need to be more efficient AND make more money in order to stay in business' with 'you think too much about money'. Like... yes. Because we're a business. Which exists to make money. And should it fail to do so, it will go under.

It's interesting, I was just talking about this phenomenon with my boss. We work for a company that is the product of a merger of two companies over a decade ago, but we both joined the merged company and so don't really have a stake in the Company A vs Company B arguments that STILL go on.

Anyway, my theory is that Company A wanted to do everything possible for their customers, regardless of if it made money, and Company B wanted to do everything the "right" way, by-the-book, regardless of if it made money. My boss agreed, and shared a story of an interaction he had with someone who worked for Company B years ago, pre-merger. He worked for a competitor, and Company B-guy told him "You can never make money doing X", where X is actually one of the most profitable things our industry does.

Luckily, together Company AB does things that make money, because they make money, serve customers and are the right thing to do. Which is part of why I love my job.

TomTX

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Re: Overheard at Work
« Reply #11427 on: December 04, 2015, 05:08:23 PM »
Got an email reminder from a coworker to lower withholding on my bonus check to "save" more of it from going into my 401k. Yeah, that is a good way to save more...
I wish my 401k could allow to indicate a flat $750 per pay period (we get paid 15th and last day of month) instead of a percentage. Instead I just adjust the percentage every April when we get our payraise and bonus to make sure I hit the exact max come 12/31.And before you ask it makes no sense to frontload as we get our match each pay period.

Thankfully on January 1 our plans are being amended so that you can specify either a percentage or a specific dollar amount per paycheck.

nanu

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Re: Overheard at Work
« Reply #11428 on: December 05, 2015, 06:15:19 AM »
I just learnt today that a co worker of mine making $40k is contributing 1% to the 401k, when the company match is 3%.
She is leaving 2% free money on the table.

I tried to speak to her, the most frustrating thing is that she wasn't even able to give me a coherent reason why she's doing that.

"Oh you know, I don't really trust this stuff and I've always put 1%, so I'll just leave it like that."
"But you're leaving 2% free money on the table"
"Well, that's not that much money".

Then these people bitch because they want a raise.

Could you try to explain it to her? It sounds obvious to us but I think some people really don't get it. She is throwing away free money.

I even tried my secret weapon, the example I use for the most math-challenged individuals.

"Hey do you know that our 401k is a magical tool that basically TRIPLES your money?"
That usually gets people's attention.
Then I explain the ballpark math
"See, $100 of your gross salary become somewhere around $65-70 in your pocket (we are in NYC so with high state + city tax).
If instead you put them in the 401k not only they stay $100, but the company match makes them $200.
SEE? IT'S A MAGIC TOOL THAT TRIPLES YOUR MONEY *me faking a somewhat astonished face like it's every time the first time I really realize that*"

Nope.
Didn't work.

The last restort (that isn't always applicable - this requires immediate vesting of employer contributions) is to tell them even if they deposited in the 401k, and then withdrew immediately and paid the penalties, they still come out ahead!

With your numbers, they put in $100 and the company match is $100. They withdaw all $200 immediately. They pay a 10% penalty on the entire withdrawal of $200 -> $20 penalty. They pay $60-$70 in tax, so they're left with $110-$120.

That's still better than not contributing, where $100 gross becomes $65-$70.


If they're not convinced with this, then I don't think there's any hope left.

Sadly, I can still see this not working for people who live paycheck to paycheck. It'll take several days to process the 401k withdrawal and these few days without their small portion of their paycheck may break their cash flow.
I actually suggested this to someone, and he was like "nah, too complicated for me and I value money now way more than I value money in the future".
In fact, the way our 401K is structured, you can contribute to Roth 401K and you get the company match (50 cents on the dollar) to pre-tax 401K. I also believe we can withdraw any Roth 401K amounts without any penalty.
This means that as long as he is willing to get paid several weeks later every time (i.e. live off [probably non-existent] savings for several weeks, and then withdraw from 401K regularly) he can still have the exact same take-home pay AND have the $9K company match every year still sitting in his 401K (or withdraw that as well for penalty+tax).

and this guy isn't stupid or finds the math too difficult - he was doing a PhD in physics at Princeton before coming to work for our company...

Bruised_Pepper

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Re: Overheard at Work
« Reply #11429 on: December 05, 2015, 05:43:15 PM »
A co-worker is interested in retirement (age 61) and so we've been talking since he knows that I will be retiring soon. He's been asking questions about our company's benefits for official retirees and since I've already done the research, I've sent him my links on the various policies, costs for retiree health insurance, and so forth.

Yesterday he told me that he was worried that he might run out of money in retirement, so I shared my two favorite sources for reassurance: cfiresim.com and RetirePlan (an app for the iPad). He looked at my demo of them and said, "But Metta, those are not made for people like us. Those are made for financial planners. That's what my financial planner uses when I'm in his office. We can't use those."

I reassured him, of course, but I think he still went away thinking that ordinary people cannot be expected to use financial modelers for themselves.
What is it about addition, subtraction, addition, and multiplication that makes them so intimidating to otherwise intelligent and competent people?
I'll admit, even after decades of doing more complex operations, investing in real estate for years, and using my own hand-built Excel budget tracking/forecast and tax analysis sheets, I find my confidence falters when trying to make strategic decisions based on them - and they are even simpler than cfiresim or the other tools that are popular here.
Instincts can be useful but they can also fail us miserably.

I think you are right about this. He is a very smart guy, a fantastic programmer/analyst who is comfortable using mathematics and viewing complex models as part of his job, but is unsure of this. It's interesting, isn't it?

I wonder if the true discomfort is with making strategic decisions.

You just blew my mind.

I've been trying to figure out why people are so scared about money my entire adult life.  I mean, even the laziest people are comfortable doing a little bit of addition, subtraction, multiplication and division, but the second you put a dollar sign on the front of those numbers?  Somehow it's suddenly too hard and stressful. 

You might be right: maybe it's because nobody sits down and tells you exactly what to do with money.  Maybe people would be perfectly happy always having a few distinct choices laid out in front of them and just be asked to choose between them, rather than evaluating their needs/wants and coming up with a solution. 

Thanks for that; you just gave me a lot to chew on. 

Argyle

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Re: Overheard at Work
« Reply #11430 on: December 05, 2015, 11:45:21 PM »
I think the reason people have difficulty around money is that the choices are high-stakes and full of emotion.  There are a lot of differing forces telling people what they should do with their money (save like crazy! live for today! buy the right stocks! forget individual stocks and buy index funds!  pay off all your debt!  leverage your debt into investments!  impress your neighbors with a new car!  be sure to get the right car!  don't let the dealership take advantage of you!  buy gold in case the economy crashes!  never buy gold!  etc. etc. etc.).  Lots of pressure, no clear path without a lot of study, and lots of potential guilt for squandering money or making the wrong choices, lots of shame for having less than other people or than you "should" have, lots of envy of those who've had an easier time of it ó no wonder it's a minefield.

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Re: Overheard at Work
« Reply #11431 on: December 06, 2015, 04:13:49 PM »
VP drives up in brand-new Tesla (the expensive extra expensive P9000 extra super turbo plus one that uses freshly-printed Benjamins to run)

Me: "Wow, neato car"

Him: "yeah, i guess - it was supposed to be my wife's but she didnt end up liking it so she got something else and I'm forced to drive this, wouldn't be my first choice"

Me: ................

My parents bought a "new" SUV from a fellow who bought it for his wife without consulting her. That wife wanted a Passat, not some big SUV. It was two weeks old more or less. Hundreds of miles tops. The way my parents tell the story he was really frustrated with his wife. Guess he wanted her to have what he wanted (SUV) and did not consider her taste in cars. He didn't get what he paid for the SUV. They made their discounted offer, and he paid it with reluctance.
« Last Edit: December 06, 2015, 04:19:11 PM by Joe Average »

Daisy

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Re: Overheard at Work
« Reply #11432 on: December 06, 2015, 08:00:05 PM »
I walked into a meeting and sat down next to this lady. Then, based on what happened in a prior meeting  (not important to this story) I  asked my boss if it was OK to sit by the door since last meeting he made me move up out of my seat and sit by the door. So kind of a joke/sarcastic remark from me to boss.

So then boss says "well maybe 《this lady's 》situation will rub off on you". Then the lady proceeds to tell me that she just announced her resignation. She is 63 and retiring. She had wanted to wait 2 more years to "retirement age" but couldn't  take the BS at work any more.

Little does my boss know how prescient his remarks were. I hope to be done soon too! I kept quiet but smiled internally with the comfort of FU/FI money.

arebelspy

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Re: Overheard at Work
« Reply #11433 on: December 07, 2015, 02:44:30 AM »
Hah. When you FIRE you can tell your boss his comment about you following her made a big impact. ;)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."

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Re: Overheard at Work
« Reply #11434 on: December 07, 2015, 07:49:39 PM »
I work an entry level social services job. My co-worker, who makes under 30,000/year, bought a new charger about 6 weeks ago. I'm not sure what year but definitely at least a 2013. She immediately starts complaining about how she doesn't like it and wants a different car.  This week I spotted her Acura key ring. Yep. Traded it in and rolled it into a new loan.

I read this and thought "charger" was like a charger for your phone.  I then wondered how you could tell the year of a phone/laptop charger, and what was particularly flashy and unnecessary about it.  Then I read car and was like ohhhhhh!  I had to go back and reread from the beginning now picturing a car.  Can you tell I'm not a car person?  Hope I wasn't the only person out there who does this sort of thing...

I'm glad I'm not the only one who did this :/

Eric222

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Re: Overheard at Work
« Reply #11435 on: December 08, 2015, 06:25:52 AM »
I work an entry level social services job. My co-worker, who makes under 30,000/year, bought a new charger about 6 weeks ago. I'm not sure what year but definitely at least a 2013. She immediately starts complaining about how she doesn't like it and wants a different car.  This week I spotted her Acura key ring. Yep. Traded it in and rolled it into a new loan.

I read this and thought "charger" was like a charger for your phone.  I then wondered how you could tell the year of a phone/laptop charger, and what was particularly flashy and unnecessary about it.  Then I read car and was like ohhhhhh!  I had to go back and reread from the beginning now picturing a car.  Can you tell I'm not a car person?  Hope I wasn't the only person out there who does this sort of thing...

I'm glad I'm not the only one who did this :/
It was the lower case "c" in charger that fooled me! :P

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Re: Overheard at Work
« Reply #11436 on: December 08, 2015, 09:11:51 AM »
VP drives up in brand-new Tesla (the expensive extra expensive P9000 extra super turbo plus one that uses freshly-printed Benjamins to run)

Me: "Wow, neato car"

Him: "yeah, i guess - it was supposed to be my wife's but she didnt end up liking it so she got something else and I'm forced to drive this, wouldn't be my first choice"

Me: ................
I know this whole situation is overall profoundly idiotic, and these people need a real facepunch, but if I may pick at just one assumption:

Operating cost of a P90D is $.05/mi at the national average of $.14/kWh, as low as $.01 with some optimizations (hypermiling, time-of-use billing plan), or even free* if he sticks to the Supercharger network. Granted, the car is ridiculous as f*ck, but operating cost is a real bright spot, not another massive drain as implied (and as it would be with an ICE equivalent in the same class). Over the warranty period alone, TCO converges with that of a much cheaper car, depending on driving cycles.
This is the primary advantage of long-range EV technology. Aside from being currently available only in an insane package of unicorn hide and Unobtainium, it really is fundamentally superior from a lifecycle energy cost standpoint, and after it's refined and scaled up for mass markets the retail price will reflect that.
--your friendly local EV nerd
*baked into purchase price, really

My parents bought a "new" SUV from a fellow who bought it for his wife without consulting her. That wife wanted a Passat, not some big SUV. It was two weeks old more or less. Hundreds of miles tops. The way my parents tell the story he was really frustrated with his wife. Guess he wanted her to have what he wanted (SUV) and did not consider her taste in cars. He didn't get what he paid for the SUV. They made their discounted offer, and he paid it with reluctance.
Oh look, the #1 and #2 biggest reasons why people get divorced. Finances, and failure to communicate. Good job, guy.

BDWW

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Re: Overheard at Work
« Reply #11437 on: December 08, 2015, 10:37:50 AM »
VP drives up in brand-new Tesla (the expensive extra expensive P9000 extra super turbo plus one that uses freshly-printed Benjamins to run)

Me: "Wow, neato car"

Him: "yeah, i guess - it was supposed to be my wife's but she didnt end up liking it so she got something else and I'm forced to drive this, wouldn't be my first choice"

Me: ................
I know this whole situation is overall profoundly idiotic, and these people need a real facepunch, but if I may pick at just one assumption:

Operating cost of a P90D is $.05/mi at the national average of $.14/kWh, as low as $.01 with some optimizations (hypermiling, time-of-use billing plan), or even free* if he sticks to the Supercharger network. Granted, the car is ridiculous as f*ck, but operating cost is a real bright spot, not another massive drain as implied (and as it would be with an ICE equivalent in the same class). Over the warranty period alone, TCO converges with that of a much cheaper car, depending on driving cycles.
This is the primary advantage of long-range EV technology. Aside from being currently available only in an insane package of unicorn hide and Unobtainium, it really is fundamentally superior from a lifecycle energy cost standpoint, and after it's refined and scaled up for mass markets the retail price will reflect that.
--your friendly local EV nerd
*baked into purchase price, really

My parents bought a "new" SUV from a fellow who bought it for his wife without consulting her. That wife wanted a Passat, not some big SUV. It was two weeks old more or less. Hundreds of miles tops. The way my parents tell the story he was really frustrated with his wife. Guess he wanted her to have what he wanted (SUV) and did not consider her taste in cars. He didn't get what he paid for the SUV. They made their discounted offer, and he paid it with reluctance.
Oh look, the #1 and #2 biggest reasons why people get divorced. Finances, and failure to communicate. Good job, guy.

I was going to nitpick that one too, but I then I figured, the costs might actually be higher than other cars (certainly more than a Leaf). The P90D probably has massive low profile, high wear tires. Regen braking might save the brakes, but the pads are probably pretty expensive when they do need replaced.

So it might cost a bit extra to run one despite the low fuel costs.

JordanOfGilead

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Re: Overheard at Work
« Reply #11438 on: December 08, 2015, 10:55:42 AM »
VP drives up in brand-new Tesla (the expensive extra expensive P9000 extra super turbo plus one that uses freshly-printed Benjamins to run)

Me: "Wow, neato car"

Him: "yeah, i guess - it was supposed to be my wife's but she didnt end up liking it so she got something else and I'm forced to drive this, wouldn't be my first choice"

Me: ................
I know this whole situation is overall profoundly idiotic, and these people need a real facepunch, but if I may pick at just one assumption:

Operating cost of a P90D is $.05/mi at the national average of $.14/kWh, as low as $.01 with some optimizations (hypermiling, time-of-use billing plan), or even free* if he sticks to the Supercharger network. Granted, the car is ridiculous as f*ck, but operating cost is a real bright spot, not another massive drain as implied (and as it would be with an ICE equivalent in the same class). Over the warranty period alone, TCO converges with that of a much cheaper car, depending on driving cycles.
This is the primary advantage of long-range EV technology. Aside from being currently available only in an insane package of unicorn hide and Unobtainium, it really is fundamentally superior from a lifecycle energy cost standpoint, and after it's refined and scaled up for mass markets the retail price will reflect that.
--your friendly local EV nerd
*baked into purchase price, really

My parents bought a "new" SUV from a fellow who bought it for his wife without consulting her. That wife wanted a Passat, not some big SUV. It was two weeks old more or less. Hundreds of miles tops. The way my parents tell the story he was really frustrated with his wife. Guess he wanted her to have what he wanted (SUV) and did not consider her taste in cars. He didn't get what he paid for the SUV. They made their discounted offer, and he paid it with reluctance.
Oh look, the #1 and #2 biggest reasons why people get divorced. Finances, and failure to communicate. Good job, guy.

I was going to nitpick that one too, but I then I figured, the costs might actually be higher than other cars (certainly more than a Leaf). The P90D probably has massive low profile, high wear tires. Regen braking might save the brakes, but the pads are probably pretty expensive when they do need replaced.

So it might cost a bit extra to run one despite the low fuel costs.
A quick google search lead me to a total cost of ownership thread on a Tesla forum.
https://my.teslamotors.com/it_CH/forum/forums/providing-total-cost-ownership-spreadsheet-tesla-vs-ice-community-here

Threshkin

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Re: Overheard at Work
« Reply #11439 on: December 08, 2015, 11:30:28 AM »
...snip...
A quick google search lead me to a total cost of ownership thread on a Tesla forum.
https://my.teslamotors.com/it_CH/forum/forums/providing-total-cost-ownership-spreadsheet-tesla-vs-ice-community-here

I just read some of the comments in this thread.  WOW, talk about first world problems!!!!

JordanOfGilead

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Re: Overheard at Work
« Reply #11440 on: December 08, 2015, 12:07:18 PM »
...snip...
A quick google search lead me to a total cost of ownership thread on a Tesla forum.
https://my.teslamotors.com/it_CH/forum/forums/providing-total-cost-ownership-spreadsheet-tesla-vs-ice-community-here

I just read some of the comments in this thread.  WOW, talk about first world problems!!!!
I didn't read too deeply into it. I just checked the document the OP posted and saw that even with the overly simplistic (and probably not-too-accurate) method of calculation, the Tesla P85D comes out to a higher cost of ownership ofer a 10 year period than a comparable vehicle of half the purchase price.

Vertical Mode

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Re: Overheard at Work
« Reply #11441 on: December 08, 2015, 12:12:38 PM »
That's ....kind of my strategy?

1. Dump money into Vanguard index funds.
2. Ignore news about the stock market for ten-fifteen years so I don't panic.
3. Profit!

RE: step 2 - when I catch myself paying attention, I like to root for the market like it's a sports team. If we win, great! If we lose, well, there's another game tomorrow. Helps me absorb the gyrations from day to day.

zephyr911

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Re: Overheard at Work
« Reply #11442 on: December 08, 2015, 02:20:38 PM »
I was going to nitpick that one too, but I then I figured, the costs might actually be higher than other cars (certainly more than a Leaf). The P90D probably has massive low profile, high wear tires. Regen braking might save the brakes, but the pads are probably pretty expensive when they do need replaced.

So it might cost a bit extra to run one despite the low fuel costs.
I really meant to limit my comment to energy/fuel cost comparisons, but WRT the other factors: you'd be surprised how much regen helps, especially if you hypermile. There are current-gen EVs with over 200K miles and original brakes.
I hear the 21" rims eat tires like candy, but the 19" ones do okay.

Tesla P85D comes out to a higher cost of ownership ofer a 10 year period than a comparable vehicle of half the purchase price.
I'm not sure if this is intended as a rebuttal, but "more than half the price" is still "much cheaper" when the purchase price in question is over $100K. ;)

Obviously, I'm not trying to talk anyone into buying one, or about to do so myself. I'm backing up a simple, carefully defined statement about the powertrain technology, Mostly because it relates to developments that are relevant to the interests of Mustachians, and will become even more so in coming years.

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Re: Overheard at Work
« Reply #11443 on: December 08, 2015, 02:31:28 PM »
I was going to nitpick that one too, but I then I figured, the costs might actually be higher than other cars (certainly more than a Leaf). The P90D probably has massive low profile, high wear tires. Regen braking might save the brakes, but the pads are probably pretty expensive when they do need replaced.

So it might cost a bit extra to run one despite the low fuel costs.
I really meant to limit my comment to energy/fuel cost comparisons, but WRT the other factors: you'd be surprised how much regen helps, especially if you hypermile. There are current-gen EVs with over 200K miles and original brakes.
I hear the 21" rims eat tires like candy, but the 19" ones do okay.

Tesla P85D comes out to a higher cost of ownership ofer a 10 year period than a comparable vehicle of half the purchase price.
I'm not sure if this is intended as a rebuttal, but "more than half the price" is still "much cheaper" when the purchase price in question is over $100K. ;)

Obviously, I'm not trying to talk anyone into buying one, or about to do so myself. I'm backing up a simple, carefully defined statement about the powertrain technology, Mostly because it relates to developments that are relevant to the interests of Mustachians, and will become even more so in coming years.

How does regen work exactly?  Does it engage only when you take your foot off the gas?  Or when you slightly depress the brake?  At what point to the actual brakes engage?

maco

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Re: Overheard at Work
« Reply #11444 on: December 08, 2015, 02:34:07 PM »
How does regen work exactly?  Does it engage only when you take your foot off the gas?  Or when you slightly depress the brake?  At what point to the actual brakes engage?
At least on the Prius, my battery recharges both when the car is slowing as my foot's off the gas and when I press the break gently / steadily. If I slam the brakes to avoid rear-ending someone, THAT is when I can feel the normal brakes engage.

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Re: Overheard at Work
« Reply #11445 on: December 08, 2015, 03:00:57 PM »
How does regen work exactly?  Does it engage only when you take your foot off the gas?  Or when you slightly depress the brake?  At what point to the actual brakes engage?
At least on the Prius, my battery recharges both when the car is slowing as my foot's off the gas and when I press the break gently / steadily. If I slam the brakes to avoid rear-ending someone, THAT is when I can feel the normal brakes engage.
You can regen nearly as much power as you can apply to accelerate.  When the brakes are kicked in depends on the vehicle, I'm sure.  I'm guessing most of these cars are brake-by-wire now, and that comes into play too.  It has to be a smooth transition.  If you're hypermiling, you'll never use the actual brakes.  If you're like most of the people on the road, you'll use them at every stop. 

I only do some portion of hypermiling with a combustion engine, and I hardly use brakes at all.  I will barely press it so my brake lights come on, and if anything, just engine brake.

dragoncar

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Re: Overheard at Work
« Reply #11446 on: December 08, 2015, 03:17:57 PM »
How does regen work exactly?  Does it engage only when you take your foot off the gas?  Or when you slightly depress the brake?  At what point to the actual brakes engage?
At least on the Prius, my battery recharges both when the car is slowing as my foot's off the gas and when I press the break gently / steadily. If I slam the brakes to avoid rear-ending someone, THAT is when I can feel the normal brakes engage.
You can regen nearly as much power as you can apply to accelerate.  When the brakes are kicked in depends on the vehicle, I'm sure.  I'm guessing most of these cars are brake-by-wire now, and that comes into play too.  It has to be a smooth transition.  If you're hypermiling, you'll never use the actual brakes.  If you're like most of the people on the road, you'll use them at every stop. 

I only do some portion of hypermiling with a combustion engine, and I hardly use brakes at all.  I will barely press it so my brake lights come on, and if anything, just engine brake.

Thanks, I was thinking of a case where you are taking a freeway offramp.  I usually have to brake pretty hard from 60 to zero unless it's a really long offramp or the freeway is empty and I can coast down prior to taking the exit (without getting rear ended)

edit: that's in a regular ICE, never driven an EV or even a hybrid

JordanOfGilead

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Re: Overheard at Work
« Reply #11447 on: December 09, 2015, 06:18:13 AM »
I was going to nitpick that one too, but I then I figured, the costs might actually be higher than other cars (certainly more than a Leaf). The P90D probably has massive low profile, high wear tires. Regen braking might save the brakes, but the pads are probably pretty expensive when they do need replaced.

So it might cost a bit extra to run one despite the low fuel costs.
I really meant to limit my comment to energy/fuel cost comparisons, but WRT the other factors: you'd be surprised how much regen helps, especially if you hypermile. There are current-gen EVs with over 200K miles and original brakes.
I hear the 21" rims eat tires like candy, but the 19" ones do okay.

Tesla P85D comes out to a higher cost of ownership ofer a 10 year period than a comparable vehicle of half the purchase price.
I'm not sure if this is intended as a rebuttal, but "more than half the price" is still "much cheaper" when the purchase price in question is over $100K. ;)

Obviously, I'm not trying to talk anyone into buying one, or about to do so myself. I'm backing up a simple, carefully defined statement about the powertrain technology, Mostly because it relates to developments that are relevant to the interests of Mustachians, and will become even more so in coming years.

How does regen work exactly?  Does it engage only when you take your foot off the gas?  Or when you slightly depress the brake?  At what point to the actual brakes engage?
If I understand correctly, regen braking has something to do with magnets and induced electrical current through motion near them. It's a no-contact braking system, but in order for it to feed energy back into the battery instead of drawing from it, a sacrifice is made to the braking power when not using the mechanical pad/rotor system. I could be wrong though.

Pooperman

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Re: Overheard at Work
« Reply #11448 on: December 09, 2015, 06:24:45 AM »
I was going to nitpick that one too, but I then I figured, the costs might actually be higher than other cars (certainly more than a Leaf). The P90D probably has massive low profile, high wear tires. Regen braking might save the brakes, but the pads are probably pretty expensive when they do need replaced.

So it might cost a bit extra to run one despite the low fuel costs.
I really meant to limit my comment to energy/fuel cost comparisons, but WRT the other factors: you'd be surprised how much regen helps, especially if you hypermile. There are current-gen EVs with over 200K miles and original brakes.
I hear the 21" rims eat tires like candy, but the 19" ones do okay.

Tesla P85D comes out to a higher cost of ownership ofer a 10 year period than a comparable vehicle of half the purchase price.
I'm not sure if this is intended as a rebuttal, but "more than half the price" is still "much cheaper" when the purchase price in question is over $100K. ;)

Obviously, I'm not trying to talk anyone into buying one, or about to do so myself. I'm backing up a simple, carefully defined statement about the powertrain technology, Mostly because it relates to developments that are relevant to the interests of Mustachians, and will become even more so in coming years.

How does regen work exactly?  Does it engage only when you take your foot off the gas?  Or when you slightly depress the brake?  At what point to the actual brakes engage?
If I understand correctly, regen braking has something to do with magnets and induced electrical current through motion near them. It's a no-contact braking system, but in order for it to feed energy back into the battery instead of drawing from it, a sacrifice is made to the braking power when not using the mechanical pad/rotor system. I could be wrong though.

Yup. It has an affect where the magnetic induced current creates an opposite magnetic field that attracts the first magnet, helping to slow the rotation. If you've ever take. A magnet and dropped it through a pipe, you've seen this happen.

maco

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Re: Overheard at Work
« Reply #11449 on: December 09, 2015, 07:30:35 AM »
I was going to nitpick that one too, but I then I figured, the costs might actually be higher than other cars (certainly more than a Leaf). The P90D probably has massive low profile, high wear tires. Regen braking might save the brakes, but the pads are probably pretty expensive when they do need replaced.

So it might cost a bit extra to run one despite the low fuel costs.
I really meant to limit my comment to energy/fuel cost comparisons, but WRT the other factors: you'd be surprised how much regen helps, especially if you hypermile. There are current-gen EVs with over 200K miles and original brakes.
I hear the 21" rims eat tires like candy, but the 19" ones do okay.

Tesla P85D comes out to a higher cost of ownership ofer a 10 year period than a comparable vehicle of half the purchase price.
I'm not sure if this is intended as a rebuttal, but "more than half the price" is still "much cheaper" when the purchase price in question is over $100K. ;)

Obviously, I'm not trying to talk anyone into buying one, or about to do so myself. I'm backing up a simple, carefully defined statement about the powertrain technology, Mostly because it relates to developments that are relevant to the interests of Mustachians, and will become even more so in coming years.

How does regen work exactly?  Does it engage only when you take your foot off the gas?  Or when you slightly depress the brake?  At what point to the actual brakes engage?
If I understand correctly, regen braking has something to do with magnets and induced electrical current through motion near them. It's a no-contact braking system, but in order for it to feed energy back into the battery instead of drawing from it, a sacrifice is made to the braking power when not using the mechanical pad/rotor system. I could be wrong though.

Yup. It has an affect where the magnetic induced current creates an opposite magnetic field that attracts the first magnet, helping to slow the rotation. If you've ever take. A magnet and dropped it through a pipe, you've seen this happen.
Or used one of those flashlights that doesn't have batteries, where you shake it so the magnet slams back and forth through the center coil.