Overheard at Work

[MgoSam]

Two people in my area have bought new cars in the last month.  One was a new muscle car (I think it's a camero with a lot of options), the other a used truck (for ~$25k).  Each time, there was a parade of people who went out and looked at it.

That reminds me: my coworker got a new car recently. It's a BMW SUV. However, it only seats 4 people because it has this weird console thing in the middle of the back seat. It's bigger, but less useful than his previous car: a Civic. Lol!
But, at least he doesn't brag about it.

Now I have to go look that up. How would the back seats fold down? That's the biggest advantage of the wagon body style (SUV or sporty wagon).

It's a BMW. They didn't buy it for utility, they bought it for luxury. They probably bought the SUV for some illusion of safety. My supervisor and my dad both refuse to drive anything lower than a small SUV because they say it feels dangerous.

I remember when my dad bought a Mercedes for the luxury of it, he says it was the worst car he's ever owned due to the high cost of maintenance. He still likes Luxury though, and has bought Lexus since, but has no regrets about them. He has the money for the cars anyways, just hates wasting money on unnecessary things.

[trailrated]

A worker here ordered two guns from a local store. In California you must wait 10 days from the time of purchase to pick them up. Store policy for one type is to wait 11 days. So yesterday he went to pick one up...

Me: "Are you going shooting tonight?"
Him: "No"
Me: "So you are driving an extra 20 minutes out of your way tonight to get something that you will not use today?"
Him: "Yeah"
Me: "Then you are going back there tomorrow to pick up the other one?"
Him: "Yeah..."
Me: "If you are not using it tonight why not just pick up both tomorrow and save yourself the time and the trip today?"
Him: "You just don't get it"

[hudsoncat]

This isn't crazy or shocking, but it did amuse me... a co-worker today was telling me about her husband's new truck. At the end of the conversation we had this exchange:

CW: Does your husband have a truck?
Me: He has a work truck.
CW: What is his personal car?
Me: He doesn't have one. He is allowed to drive the work truck home. It's really a great perk!
CW: But what does he drive for fun or on the weekends?
Me: My car.
CW: But what do you drive then?
Me: Uh, we either go somewhere together or I ride my bike.
CW: You ride your bike TO TOWN?! But you live out in the county!

She seemed shocked by this entire conversation. It continued on a bit and she couldn't imagine not having two cars just in case. And biking all the way into town was just crazy. We live about 2 miles outside town limits, we bike in a lot of the time. I also decided it probably wasn't worth it to explain that we were a one car family before the work truck and likely would be again if it was no longer an option. But I did smile and shake my head as I walked back to my office.

[MgoSam]

A worker here ordered two guns from a local store. In California you must wait 10 days from the time of purchase to pick them up. Store policy for one type is to wait 11 days. So yesterday he went to pick one up...

Me: "Are you going shooting tonight?"
Him: "No"
Me: "So you are driving an extra 20 minutes out of your way tonight to get something that you will not use today?"
Him: "Yeah"
Me: "Then you are going back there tomorrow to pick up the other one?"
Him: "Yeah..."
Me: "If you are not using it tonight why not just pick up both tomorrow and save yourself the time and the trip today?"
Him: "You just don't get it"

Clearly you just don't get it!

[horsepoor]

Not really an anti-mustachian thing, but someone who is retiring soon came by my cubicle today.  I asked when the actual date was, since people tend to leave around New Year's.  He said he had 3 months because it was so advantageous to work until he turns 62.  Then later someone else who's retiring came by and had a similar conversation with a co-worker who's almost to minimum retirement age (57).  I just nodded and thought about how I won't give a crap about any extra money I might get for sticking around past my MRA considering the stacks of money I'll have piled up if I decide to work that long.  And today was one of those days where that seemed like a bigger IF than usual.

[zephyr911]

Not really an anti-mustachian thing, but someone who is retiring soon came by my cubicle today.  I asked when the actual date was, since people tend to leave around New Year's.  He said he had 3 months because it was so advantageous to work until he turns 62.  Then later someone else who's retiring came by and had a similar conversation with a co-worker who's almost to minimum retirement age (57).  I just nodded and thought about how I won't give a crap about any extra money I might get for sticking around past my MRA considering the stacks of money I'll have piled up if I decide to work that long.  And today was one of those days where that seemed like a bigger IF than usual.

Ahh, you're one of my fellow feds, aren't you.
I had the worst thing happen to me recently... I've begun having more fun at my damn job than ever before! WTF!? Now I may actually feel like staying, voluntarily, past five years (my previously established minimum) >.<
But I'll never get near MRA. Meanwhile, most here, some with military retirements, are still looking at 20-30 years in the system to reach their goals.

[Middlesbrough]

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...

[No Name Guy]

Met up today with a co worker I hadn't seen in 10 years.  Somehow retirement came up.....she said 68 is her goal...since she wouldn't have social security and the pension until then.  Asked if she was maxing the 401k and nope was the answer....at least she is putting in the 8% to get the 6% (75 cents on the dollar) match.  She is about 10 years younger and could RE if she chose as she is in engineering as well, so makes early-mid career engineer wages.  I shake my head at the fact that she is planning on working 30-ish more years.

[boarder42]

Met up today with a co worker I hadn't seen in 10 years.  Somehow retirement came up.....she said 68 is her goal...since she wouldn't have social security and the pension until then.  Asked if she was maxing the 401k and nope was the answer....at least she is putting in the 8% to get the 6% (75 cents on the dollar) match.  She is about 10 years younger and could RE if she chose as she is in engineering as well, so makes early-mid career engineer wages.  I shake my head at the fact that she is planning on working 30-ish more years.

i mean to each their own ... i could see this being bad if she wasnt at least getting the company match.  but most people dont think about the concept of early retirment.  and many others dont even understand its an option.  i mean her reasons are typical reasons most people would give if they werent apart of this community.  maybe you should show her the light.  doesnt sound like you tried too hard to show her a different way.

[Metta]

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.

[zephyr911]

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.

[trailrated]

Coworker just showed up with a new lifted pick-up this morning. He had just paid off his old pick up last week. He was telling everyone how he got it to save money cause the old truck had 95,000 miles on it and was not under warranty anymore.

I tried not to laugh as he told people he was "saving" money on upcoming repairs by trading in his paid off truck and taking out a new loan of $560 a month for 60 months. He makes around 50k/yr.

But hey, at least he contributes 2% to his 401k.

[horsepoor]

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...

Blow her mind by thanking her... because the extra withholding would push you over the annual max prematurely.

[JLee]

Coworker just showed up with a new lifted pick-up this morning. He had just paid off his old pick up last week. He was telling everyone how he got it to save money cause the old truck had 95,000 miles on it and was not under warranty anymore.

I tried not to laugh as he told people he was "saving" money on upcoming repairs by trading in his paid off truck and taking out a new loan of $560 a month for 60 months. He makes around 50k/yr.

But hey, at least he contributes 2% to his 401k.

I had a good friend trade in his cared-for Lexus IS300 (with the bulletproof inline 6) because it was around 100k and he wanted to sell it before it became unreliable (they're notoriously solid cars). He bought something new which ended up getting bought back by the dealer after a year because it had a chronic problem they were unable to fix...lol.

[iowajes]

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...

Blow her mind by thanking her... because the extra withholding would push you over the annual max prematurely.

I think this humblebrag would require a lot of explaining. I don't think the average person would understand what you meant here. Many people probably don't know there is a max.

[MgoSam]

But hey, at least he contributes 2% to his 401k.

That outta do it!

[Davids]

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.

[boarder42]

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.

its incredibly difficult for me to do even that.  i work OT throughout the year.  and next week i will be told what my bonus is for the year, and it changes and increases yearly.  so i have to try to time the last paycheck of the year to at least have me put in enough to get company match or i lose out on that match til the following april when they do taxes and put it in.  usually this isnt hard.  but it could be difficult if i got a huge bonus unexpectedly.. but i guess thats not a tough problem to have.

[Making Cookies]

Coworker just showed up with a new lifted pick-up this morning. He had just paid off his old pick up last week. He was telling everyone how he got it to save money cause the old truck had 95,000 miles on it and was not under warranty anymore.

I tried not to laugh as he told people he was "saving" money on upcoming repairs by trading in his paid off truck and taking out a new loan of $560 a month for 60 months. He makes around 50k/yr.

But hey, at least he contributes 2% to his 401k.

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. ;)

[Seppia]

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.

[Squirrel away]

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.

[Eric222]

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]

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]

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]

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]

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]

OMG. How ridiculous!:D

[zephyr911]

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]

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

[Seppia]

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]

Double sorry

[Kitsune]

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]

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]

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]

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]

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]

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.

[Roboturner]

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]

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]

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]

- 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]

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]

- 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]

- 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. It’s 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.

[frugalparagon]

- 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. It’s 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]

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]

- 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]

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]

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]

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...