Author Topic: Mustachian People Problems (just for fun)  (Read 5062033 times)

Paul der Krake

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Re: Mustachian People Problems (just for fun)
« Reply #5300 on: June 21, 2018, 10:24:51 AM »
To be more precise: Direct taxes are deducted from the income.  The resulting adjusted income is then taxed.  This normally results in a lower tax payment.  The system is rigged but given that it is graduated upward with income it begs the questions against whom is it rigged?  The poor, the middle or the rich?
It would be interesting to see which income levels are paying the highest effective tax rate. I would guess that upper middle class is getting squeezed the most. My thought being that they are paying high income taxes while the rich are more likely to gain from the concept of capital gains taxes. The lack of payroll taxes above ~120k is also huge.
The poor pay the highest taxes compared to their income if you include all that stuff that is in the price of the necessary basic living expenses (sales tax for example) - or in other words, they pay the most taxes of income-% for just living.

The middle middle class pays the most percentage in regards to working income.

The higher middle class already pays less % because they have a greater capital gains percantage of their income, but already good tax evasion advisors.

And the richest pay the lowest % of their income as taxes.

It is as Warren Buffet likes to say: He pays less taxes (%) then his secretary.

And that is not even touching the topic of inheritances.
I'd like to see some test cases run with specific numbers to support the claim that the lowest-income folks pay the highest taxes compared to income.  In addition, it's not even as simple as including taxation on all levels--if we're concerned about "fairness," we must also take into account all the other government programs in place to help the poor.
Those studies are questionable at best. Here in Washington where there is no personal income tax, you often see a study quoted that the poor spend 17% of their income on local taxes, while the rich spend something like 4%.

How can anyone spend 17% of their income on taxes when sales tax is 10% and there is no income tax? Unless you spend all your money on goods subject to excise taxes like gasoline, cigarettes, and booze? Well, to arrive at these numbers the study uses things like "imputed property taxes" that the renters pay, but conveniently completely ignore federal taxes, transfer payment between the state and federal government, corporate taxes, and a million other things.

If you buy an end product, whether it's rent, an airplane ticket, or a smartphone, it's not really relevant how many taxes the people who made the product paid.

Bicycle_B

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Re: Mustachian People Problems (just for fun)
« Reply #5301 on: June 21, 2018, 12:23:02 PM »
I personally think that imputing property tax is worthwhile. Most low income people rent, not own. Property tax is paid. It should be counted.

I have tried several times to estimate effective tax rate in the US at various income levels. My feeble calculations surprised me. Once I include property tax, sales taxes, income-related taxes at state and federal levels including FICA - as best I can figure, the system is pretty close to flat.

More specifically, it's close to flat except that the tippy top does get a break. But the "flat" nature of it is that the different benefits and costs at different income levels roughly cancel out for most groups. Individuals can vary. Individuals only get full value if they learn and pursue the relevant details of the tax code.

It looked like most income levels under the top 1 in 1000 have an effective rate close to the 25% to 30% range, or a bit lower. It was pretty close to total government tax receipts and total government spending, which I used as check totals. Receipts and apparent effective tax rates were slightly lower than spending, so my attempts corresponded to the fact the govt runs at a deficit.

Examples:
$20,000 income - federal income tax $730, FICA $1530, state income tax $400, sales tax $600, property tax 25% of rent $1800, auto registration $100, total $5160 => 25.8%.

$75,000 income - FIT $6620 after deducting 15,000 in 401k contributions; FICA $5700; state income tax $3500; sales tax $1200; property tax $4000; auto registration $100.  Total $21,162 => 28.2%.

$400,000 income (250k salary, 100k dividends, 50k passthrough; retirement contribution 50,000) - FIT 60,690; FICA $12,035; state income tax $18,000; sales tax $6,000; property tax $12,000; auto registration $300.  Total $109,025 => 27.3%.

My tentative conclusion was: OMG, the politicians have us split between people who think our system's regressive and people who think it's progressive - when it's roughly flat already!

Obviously my MPP is that I can spend too much time indulging my taste for calculations.

Clookie

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Re: Mustachian People Problems (just for fun)
« Reply #5302 on: June 21, 2018, 12:41:46 PM »
Anyone else thought they found their long lost tribe when they found this site or read the comments on this topic?

Me too. I feel at home here.

It feels hard when I'm asked by friends what I want for my birthday. I can't answer rice & beans and they are not very fond of giving me money.
Oh, the drama. The difficult life a mustachian

gaja

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Re: Mustachian People Problems (just for fun)
« Reply #5303 on: June 21, 2018, 01:58:07 PM »
Anyone else thought they found their long lost tribe when they found this site or read the comments on this topic?

Me too. I feel at home here.

It feels hard when I'm asked by friends what I want for my birthday. I can't answer rice & beans and they are not very fond of giving me money.
Oh, the drama. The difficult life a mustachian

For my 30th, my parents bought me a toilet. We were adding a new bathroom to the house (made a small appartment to let), and needed a new toilet. One of the best birthday gifts I ever got. Especially since they gifted us the money, and we were able to find a brand new one on craigslist for half the price.

Hirondelle

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Re: Mustachian People Problems (just for fun)
« Reply #5304 on: June 21, 2018, 02:11:40 PM »
Anyone else thought they found their long lost tribe when they found this site or read the comments on this topic?

Me too. I feel at home here.

It feels hard when I'm asked by friends what I want for my birthday. I can't answer rice & beans and they are not very fond of giving me money.
Oh, the drama. The difficult life a mustachian

For my 30th, my parents bought me a toilet. We were adding a new bathroom to the house (made a small appartment to let), and needed a new toilet. One of the best birthday gifts I ever got. Especially since they gifted us the money, and we were able to find a brand new one on craigslist for half the price.

Friends are a tough one. My parents don't care too much so would indeed be just as happy to give me a toilet (haha) or money. My best friends know me and don't show up with crap anymore, usually we just take each other out for (cheap!) dinner or a concert/theatre or so. Friends that know me less well sometimes still show up with things like shower gels or perfumes but that means I just never have to buy those myself :).

Linea_Norway

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Re: Mustachian People Problems (just for fun)
« Reply #5305 on: June 22, 2018, 12:48:04 AM »
Anyone else thought they found their long lost tribe when they found this site or read the comments on this topic?

Me too. I feel at home here.

It feels hard when I'm asked by friends what I want for my birthday. I can't answer rice & beans and they are not very fond of giving me money.
Oh, the drama. The difficult life a mustachian

For my 30th, my parents bought me a toilet. We were adding a new bathroom to the house (made a small appartment to let), and needed a new toilet. One of the best birthday gifts I ever got. Especially since they gifted us the money, and we were able to find a brand new one on craigslist for half the price.

Friends are a tough one. My parents don't care too much so would indeed be just as happy to give me a toilet (haha) or money. My best friends know me and don't show up with crap anymore, usually we just take each other out for (cheap!) dinner or a concert/theatre or so. Friends that know me less well sometimes still show up with things like shower gels or perfumes but that means I just never have to buy those myself :).

Sometimes I just ask for a bottle of wine. We will enjoy to drink it and the friends can decide for themselves how much they want to spend on the wine.

Imma

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Re: Mustachian People Problems (just for fun)
« Reply #5306 on: June 22, 2018, 06:28:40 AM »
We hardly ever celebrate our birthdays and don't expect gifts. My mum just transfers money into my bank account.... then keeps nagging for months to hear what I spent it on. Apparantly index funds is not the right answer. One time I bought some clothes, expecting that would be a 'proper' gift, but apparantly basic clothing is not good enough for a birthday gift either. I'm starting at grad school right after my birthday this year, so hopefully she won't mind me spending the money on tuition / books.


Dicey

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Re: Mustachian People Problems (just for fun)
« Reply #5307 on: June 22, 2018, 07:01:05 AM »
My car flashes an "oil change soon" light every time you start it up when it gets down to 15% oil life remaining.  You have to hit a button to avoid having to look at the orange message on the dash.  Given how much I drive, it will take 3-4 months to get to 0-5% remaining (when I will change the oil) so I have to clear the light every time I drive until then.  Ugh.
I drive a Toyota and use synthetic oil.  I call it my nanny car because every 3k miles, not one but THREE warning lights are activated. There is a way to push buttons in an exact sequence to reset the system so it thinks you've changed the oil and stops screaming at you. I never remember the exact sequence, so I just ask Google for the YouTube video from the comfort of my very own driveway. It usually takes less than a minute to figure out.

RetiredAt63

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Re: Mustachian People Problems (just for fun)
« Reply #5308 on: June 22, 2018, 07:10:15 AM »
We hardly ever celebrate our birthdays and don't expect gifts. My mum just transfers money into my bank account.... then keeps nagging for months to hear what I spent it on. Apparantly index funds is not the right answer. One time I bought some clothes, expecting that would be a 'proper' gift, but apparantly basic clothing is not good enough for a birthday gift either. I'm starting at grad school right after my birthday this year, so hopefully she won't mind me spending the money on tuition / books.

Hi Imma   I am probably about your mother's age, and I give DD practical presents -  like winter tires for her car, a table for her living room, the materials for a powder room (half bath) in her house.  Since we live 500 km apart, what really happens is I say - "I want to get you this for your birthday/Christmas, go buy it and I will reimburse you".  So yes, I give her money for practical stuff.  I would be totally fine with you spending gift money on tuition/books.

plainjane

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Re: Mustachian People Problems (just for fun)
« Reply #5309 on: June 22, 2018, 07:35:14 AM »
I pulled up my investment account this morning, and I can't remember if that number is higher or lower than it was last week. My initial thought was "awesome", but now I'm thinking maybe it is down, and I'm benchmarking against the beginning of the month before I dropped in June's contribution.

Slow&Steady

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Re: Mustachian People Problems (just for fun)
« Reply #5310 on: June 22, 2018, 07:42:41 AM »
Anyone else thought they found their long lost tribe when they found this site or read the comments on this topic?

Me too. I feel at home here.

It feels hard when I'm asked by friends what I want for my birthday. I can't answer rice & beans and they are not very fond of giving me money.
Oh, the drama. The difficult life a mustachian

For my 30th, my parents bought me a toilet. We were adding a new bathroom to the house (made a small appartment to let), and needed a new toilet. One of the best birthday gifts I ever got. Especially since they gifted us the money, and we were able to find a brand new one on craigslist for half the price.

Friends are a tough one. My parents don't care too much so would indeed be just as happy to give me a toilet (haha) or money. My best friends know me and don't show up with crap anymore, usually we just take each other out for (cheap!) dinner or a concert/theatre or so. Friends that know me less well sometimes still show up with things like shower gels or perfumes but that means I just never have to buy those myself :).

People have adult FRIENDS that give other adult FRIENDS birthday gifts?  The only adults I get or give gifts to are immediate family (parents/siblings/kids), and I am pretty sure that is just Christmas gifts, rarely birthday gifts.  I think it would be a little weird to get or give any of my friends a gift (beside somebody picking up the dinner check or bring a bottle of wine that we will drink together).

FIRE@50

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Re: Mustachian People Problems (just for fun)
« Reply #5311 on: June 22, 2018, 07:51:21 AM »
I pulled up my investment account this morning, and I can't remember if that number is higher or lower than it was last week. My initial thought was "awesome", but now I'm thinking maybe it is down, and I'm benchmarking against the beginning of the month before I dropped in June's contribution.

I have a spreadsheet with my 401k balance at 40.5 and projected balances every year until 59.5. My plan was to simply update this every year on my .5 birthday. Now, I'm debating whether or not I should have an actual column next to the projected balances so that over the years I can see if I beat the projections or not.

Hirondelle

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Re: Mustachian People Problems (just for fun)
« Reply #5312 on: June 22, 2018, 08:40:15 AM »
Anyone else thought they found their long lost tribe when they found this site or read the comments on this topic?

Me too. I feel at home here.

It feels hard when I'm asked by friends what I want for my birthday. I can't answer rice & beans and they are not very fond of giving me money.
Oh, the drama. The difficult life a mustachian

For my 30th, my parents bought me a toilet. We were adding a new bathroom to the house (made a small appartment to let), and needed a new toilet. One of the best birthday gifts I ever got. Especially since they gifted us the money, and we were able to find a brand new one on craigslist for half the price.

Friends are a tough one. My parents don't care too much so would indeed be just as happy to give me a toilet (haha) or money. My best friends know me and don't show up with crap anymore, usually we just take each other out for (cheap!) dinner or a concert/theatre or so. Friends that know me less well sometimes still show up with things like shower gels or perfumes but that means I just never have to buy those myself :).

People have adult FRIENDS that give other adult FRIENDS birthday gifts?  The only adults I get or give gifts to are immediate family (parents/siblings/kids), and I am pretty sure that is just Christmas gifts, rarely birthday gifts.  I think it would be a little weird to get or give any of my friends a gift (beside somebody picking up the dinner check or bring a bottle of wine that we will drink together).

I never realized this would be something weird?

Do you never have adult birthday celebrations? Milestone birthdays? In my country it's normal to give gifts during those, just like it's normal to give a gift for a wedding or when someone graduates. It's also completely acceptable to give money though, so in many friend groups it's just become a habit of handing each other $5 or $10 bills.

My friends even gave me gifts when I threw a little goodbye party when moving abroad for an exchange. I also bring a little gift of appreciation when I'm on a trip and staying with a friend - usually something related to an inside joke or good times together, often edible or drinkable :).

These are normal things in my environment so hard to opt out completely. Usually gifts aren't expensive though, think in the $5-10/person range.

Slow&Steady

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Re: Mustachian People Problems (just for fun)
« Reply #5313 on: June 22, 2018, 09:27:25 AM »
Anyone else thought they found their long lost tribe when they found this site or read the comments on this topic?

Me too. I feel at home here.

It feels hard when I'm asked by friends what I want for my birthday. I can't answer rice & beans and they are not very fond of giving me money.
Oh, the drama. The difficult life a mustachian

For my 30th, my parents bought me a toilet. We were adding a new bathroom to the house (made a small appartment to let), and needed a new toilet. One of the best birthday gifts I ever got. Especially since they gifted us the money, and we were able to find a brand new one on craigslist for half the price.

Friends are a tough one. My parents don't care too much so would indeed be just as happy to give me a toilet (haha) or money. My best friends know me and don't show up with crap anymore, usually we just take each other out for (cheap!) dinner or a concert/theatre or so. Friends that know me less well sometimes still show up with things like shower gels or perfumes but that means I just never have to buy those myself :).

People have adult FRIENDS that give other adult FRIENDS birthday gifts?  The only adults I get or give gifts to are immediate family (parents/siblings/kids), and I am pretty sure that is just Christmas gifts, rarely birthday gifts.  I think it would be a little weird to get or give any of my friends a gift (beside somebody picking up the dinner check or bring a bottle of wine that we will drink together).

I never realized this would be something weird?

Do you never have adult birthday celebrations? Milestone birthdays? In my country it's normal to give gifts during those, just like it's normal to give a gift for a wedding or when someone graduates. It's also completely acceptable to give money though, so in many friend groups it's just become a habit of handing each other $5 or $10 bills.

My friends even gave me gifts when I threw a little goodbye party when moving abroad for an exchange. I also bring a little gift of appreciation when I'm on a trip and staying with a friend - usually something related to an inside joke or good times together, often edible or drinkable :).

These are normal things in my environment so hard to opt out completely. Usually gifts aren't expensive though, think in the $5-10/person range.

The last big milestone birthday party I had was at 30.  We had lots of friend over to the house, had big dinner with lots of drinks and played card games/told stories/etc.  I don't remember getting a single gift that night but did get some from family members for my birthday.  I have gotten small gifts for friends as house warming, good bye, thank you, or even inside joke type of gift but not birthdays.  Maybe my friends and I are the weird ones.

dcheesi

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Re: Mustachian People Problems (just for fun)
« Reply #5314 on: June 22, 2018, 09:47:46 AM »
US-ian here, and I'd say gifts among friends aren't necessarily "weird", but not common either. Certainly not an expectation. This obviously varies in other countries (and maybe even in other parts of the USA?).

Bracken_Joy

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Re: Mustachian People Problems (just for fun)
« Reply #5315 on: June 22, 2018, 10:31:18 AM »
US-ian here, and I'd say gifts among friends aren't necessarily "weird", but not common either. Certainly not an expectation. This obviously varies in other countries (and maybe even in other parts of the USA?).

I think it varies on when you made the friend, too. Friends from when I was younger/childhood, we still tend to do gifts, since the habit has been there so long. Friends made as adults, not so often.

plainjane

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Re: Mustachian People Problems (just for fun)
« Reply #5316 on: June 22, 2018, 10:49:07 AM »
I have a spreadsheet with my 401k balance at 40.5 and projected balances every year until 59.5. My plan was to simply update this every year on my .5 birthday. Now, I'm debating whether or not I should have an actual column next to the projected balances so that over the years I can see if I beat the projections or not.

My MPP is that I had a column next to the projected balances on how I actually did, but that was using my planned contributions as a variable. Since that changed with various life changes, I don't have a record of the actual original FIRE assumptions around contribution levels from 2012.

My other MPP is that there is a ton of food left over from the work party last night, but I've been taking advantage of free food too much the past couple of months and I have been over my comfortable weight range for a week, so I need to stick to my plan. (I put some into a plastic container to bring home for the SO, but have to leave the pizza.)

SimpleCycle

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Re: Mustachian People Problems (just for fun)
« Reply #5317 on: June 23, 2018, 05:31:26 PM »
I lost my wallet butI don’t know when.  I last had it last Friday when I went grocery shopping, but I didn’t spend money all week so no idea when it disappeared.

Roadrunner53

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Re: Mustachian People Problems (just for fun)
« Reply #5318 on: June 24, 2018, 04:14:10 AM »
Call the grocery store. They may have it in their safe.

Clookie

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Re: Mustachian People Problems (just for fun)
« Reply #5319 on: June 24, 2018, 07:23:37 AM »
I have a spreadsheet with my 401k balance at 40.5 and projected balances every year until 59.5. My plan was to simply update this every year on my .5 birthday. Now, I'm debating whether or not I should have an actual column next to the projected balances so that over the years I can see if I beat the projections or not.

My MPP is that I had a column next to the projected balances on how I actually did, but that was using my planned contributions as a variable. Since that changed with various life changes, I don't have a record of the actual original FIRE assumptions around contribution levels from 2012.

My other MPP is that there is a ton of food left over from the work party last night, but I've been taking advantage of free food too much the past couple of months and I have been over my comfortable weight range for a week, so I need to stick to my plan. (I put some into a plastic container to bring home for the SO, but have to leave the pizza.)

You might try to look what you can bring home with you and freeze. A lot of stuff can be frozen and you can either eat it in a couple of moths or you can eat it in the following weeks, maybe with a salad on the side or a generous quantity of cooked vegetables on the side.

Fomerly known as something

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Re: Mustachian People Problems (just for fun)
« Reply #5320 on: June 24, 2018, 07:03:02 PM »
We hardly ever celebrate our birthdays and don't expect gifts. My mum just transfers money into my bank account.... then keeps nagging for months to hear what I spent it on. Apparantly index funds is not the right answer. One time I bought some clothes, expecting that would be a 'proper' gift, but apparantly basic clothing is not good enough for a birthday gift either. I'm starting at grad school right after my birthday this year, so hopefully she won't mind me spending the money on tuition / books.

At this point in my life the "universal gift certificate" is used to offset my taxes, as in anything they give to me I donate.  I don't think that is what they planned but htye gave it to me so it is mine to do as I wish.

woopwoop

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Re: Mustachian People Problems (just for fun)
« Reply #5321 on: June 24, 2018, 11:24:51 PM »
People have adult FRIENDS that give other adult FRIENDS birthday gifts? 
Sure, why not? I don't think it's weird at all, gifts are fun to make and give! Usually it's the birthday person who is hosting a party or inviting others out and doing all of the arrangements, a bit of reciprocity is called for imo. Plus it's a good excuse to give a friend something nice that they wouldn't get themselves. The last birthday party I went to was a friend I made a few months ago who invited me to an art opening she was in, so I just made some homemade chocolate truffles and put them in a nice box.

When I don't know someone well enough to know what they would like, I give them a candle and a card that says "I think you are pretty darn cool and I hope that by next year I know you well enough to get you something more awesome than a generic candle". 

My spin teacher gives everybody socks with weird patterns for their birthday; I can't wait for my birthday socks to see what she picks out. In conclusion, birthday presents rule!


Loren Ver

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Re: Mustachian People Problems (just for fun)
« Reply #5322 on: June 25, 2018, 05:04:25 AM »


When I don't know someone well enough to know what they would like, I give them a candle and a card that says "I think you are pretty darn cool and I hope that by next year I know you well enough to get you something more awesome than a generic candle". 


I really like the bold above.  DH and I make many of the gifts we give.  We like to share and expect no reciprocity.  We struggle when we don't know someone well enough to make a gift and your response really made me smile.  Thanks for sharing!

My problem, DH and I just move our FIRE date closer by one year.  This is great, but now we both need to recalculate our vacation usage as our employers do not pay it out when we leave and if you use to too much you have to pay it back.   

LV

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Re: Mustachian People Problems (just for fun)
« Reply #5323 on: June 25, 2018, 05:57:20 AM »


When I don't know someone well enough to know what they would like, I give them a candle and a card that says "I think you are pretty darn cool and I hope that by next year I know you well enough to get you something more awesome than a generic candle". 


I really like the bold above.  DH and I make many of the gifts we give.  We like to share and expect no reciprocity.  We struggle when we don't know someone well enough to make a gift and your response really made me smile.  Thanks for sharing!

My problem, DH and I just move our FIRE date closer by one year.  This is great, but now we both need to recalculate our vacation usage as our employers do not pay it out when we leave and if you use to too much you have to pay it back.   

LV

My friends and I give gifts - there are only 3-4 of us in a group, so we bands together, put £4-7 in each and buy random stuff we know we all like. one of my friends had a celebration this weekend, we all went out to a dance in a local cricket club - £5 entry, £3-4 a drink (alcoholic), and put in £4 each to buy her a Mexican death mask light (sounds weird, but she loved it!).

Imma

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Re: Mustachian People Problems (just for fun)
« Reply #5324 on: June 27, 2018, 02:08:05 AM »
I love giving gifts, especially home made thoughtful gifts, and I've been trying for years to establish a christmas gift tradition with the female half of the couple we celebrate christmas with.

My fiance is a true mustachian and thinks this is stupid, because there is not a single thing in the world he needs or wants that he doesn't already have...  Not even something nice and homemade.

Linea_Norway

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Re: Mustachian People Problems (just for fun)
« Reply #5325 on: June 27, 2018, 02:36:26 AM »
I love giving gifts, especially home made thoughtful gifts, and I've been trying for years to establish a christmas gift tradition with the female half of the couple we celebrate christmas with.

My fiance is a true mustachian and thinks this is stupid, because there is not a single thing in the world he needs or wants that he doesn't already have...  Not even something nice and homemade.

The year that my brother started giving me money for a Christmas present, I suggested to stop giving gifts to the adults. I still make a yearly photo calendar for them from our own pictures, but that is just a small thing.

In the other half of the family we still do this. But we usually ask each other what we want to have. It is nice asking for something you don't want to buy yourself, but would like to have. It is also nice to buy something for another person that this person wants to receive. Buying a random gift is not nice, because you have no idea how appreciated it is.

Roadrunner53

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Re: Mustachian People Problems (just for fun)
« Reply #5326 on: June 27, 2018, 05:08:43 AM »
My family did this a couple of years.

Each person put 3 things on a list with their name on it and kept the dollar value to $50. We put the lists in a hat and each of us pulled out a list out of the hat. We would buy one thing on the list and that would be the gift the person would receive. Each person got one nice gift and we didn't have to spend a fortune buying everyone in the family a gift. It definitely worked out nicely. They wouldn't know who they received the gift from as all the givers were anonymous.

plainjane

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Re: Mustachian People Problems (just for fun)
« Reply #5327 on: June 27, 2018, 08:18:27 AM »
You might try to look what you can bring home with you and freeze. A lot of stuff can be frozen and you can either eat it in a couple of moths or you can eat it in the following weeks, maybe with a salad on the side or a generous quantity of cooked vegetables on the side.

This is what I ended up doing on Friday. A couple of fellow scavengers got together and distributed the leftover food as matched dietary desires and discussed how more challenging items (like the soggy thin crust pizza) might be repurposed or frozen for later use. Yesterday I pointed out that the last of the olives and hot pepper things could probably be made into a tapenade for someone who likes that sort of thing, so that has found a home too.

BTDretire

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Re: Mustachian People Problems (just for fun)
« Reply #5328 on: June 27, 2018, 09:09:15 AM »
To be more precise: Direct taxes are deducted from the income.  The resulting adjusted income is then taxed.  This normally results in a lower tax payment.  The system is rigged but given that it is graduated upward with income it begs the questions against whom is it rigged?  The poor, the middle or the rich?
It would be interesting to see which income levels are paying the highest effective tax rate. I would guess that upper middle class is getting squeezed the most. My thought being that they are paying high income taxes while the rich are more likely to gain from the concept of capital gains taxes. The lack of payroll taxes above ~120k is also huge.
The poor pay the highest taxes compared to their income if you include all that stuff that is in the price of the necessary basic living expenses (sales tax for example) - or in other words, they pay the most taxes of income-% for just living.

The middle middle class pays the most percentage in regards to working income.

The higher middle class already pays less % because they have a greater capital gains percantage of their income, but already good tax evasion advisors.

And the richest pay the lowest % of their income as taxes.

It is as Warren Buffet likes to say: He pays less taxes (%) then his secretary.

And that is not even touching the topic of inheritances.
I'd like to see some test cases run with specific numbers to support the claim that the lowest-income folks pay the highest taxes compared to income.  In addition, it's not even as simple as including taxation on all levels--if we're concerned about "fairness," we must also take into account all the other government programs in place to help the poor.
It always comes back to your personal philosophy regarding wages vs dividend/interest income. If you think dividend/interest income should be taxed different than wages, then you see that the rich pay much higher percentage in taxes.
  If you think dividend/interest income should be taxed the same as wages then the rich pay a lower percentage in taxes. Of course individuals very, some have lots of dividend/interest income, other high wages.
  I like the special tax treatment of dividend/interest income. even though our average inflation adjusted income has been about $71k.
  And then some people consider FICA a tax the poor pay that makes their tax rate very high. I disagree, FICA is a forced retirement program that is a savior of the poor in retirement. Most poor would never save anything for their retirement and end up living a squalid existence if they weren't forced to pay into their retirement program.
  Personally, We have had many years with income between $80k and $105k, broke down into, about $70k wages and the rest dividend/interest income. Yet, we only pay 2% to 4% in federal tax on my total income. I take full advantage of two SEPS, an HSA and College tuition credits. I do pay 15.2% into FICA and medicare. (no deductions to reduce that) We're self employed.

dragoncar

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Re: Mustachian People Problems (just for fun)
« Reply #5329 on: June 27, 2018, 10:33:37 AM »
To be more precise: Direct taxes are deducted from the income.  The resulting adjusted income is then taxed.  This normally results in a lower tax payment.  The system is rigged but given that it is graduated upward with income it begs the questions against whom is it rigged?  The poor, the middle or the rich?
It would be interesting to see which income levels are paying the highest effective tax rate. I would guess that upper middle class is getting squeezed the most. My thought being that they are paying high income taxes while the rich are more likely to gain from the concept of capital gains taxes. The lack of payroll taxes above ~120k is also huge.
The poor pay the highest taxes compared to their income if you include all that stuff that is in the price of the necessary basic living expenses (sales tax for example) - or in other words, they pay the most taxes of income-% for just living.

The middle middle class pays the most percentage in regards to working income.

The higher middle class already pays less % because they have a greater capital gains percantage of their income, but already good tax evasion advisors.

And the richest pay the lowest % of their income as taxes.

It is as Warren Buffet likes to say: He pays less taxes (%) then his secretary.

And that is not even touching the topic of inheritances.
I'd like to see some test cases run with specific numbers to support the claim that the lowest-income folks pay the highest taxes compared to income.  In addition, it's not even as simple as including taxation on all levels--if we're concerned about "fairness," we must also take into account all the other government programs in place to help the poor.
It always comes back to your personal philosophy regarding wages vs dividend/interest income. If you think dividend/interest income should be taxed different than wages, then you see that the rich pay much higher percentage in taxes.
  If you think dividend/interest income should be taxed the same as wages then the rich pay a lower percentage in taxes. Of course individuals very, some have lots of dividend/interest income, other high wages.
  I like the special tax treatment of dividend/interest income. even though our average inflation adjusted income has been about $71k.
  And then some people consider FICA a tax the poor pay that makes their tax rate very high. I disagree, FICA is a forced retirement program that is a savior of the poor in retirement. Most poor would never save anything for their retirement and end up living a squalid existence if they weren't forced to pay into their retirement program.
  Personally, We have had many years with income between $80k and $105k, broke down into, about $70k wages and the rest dividend/interest income. Yet, we only pay 2% to 4% in federal tax on my total income. I take full advantage of two SEPS, an HSA and College tuition credits. I do pay 15.2% into FICA and medicare. (no deductions to reduce that) We're self employed.

Definitely agree about FICA.  It may not have the greatest returns, and thus some portion could be considered tax, but the predicted benefits seem like a pretty fair return on investment (this ignores the effect of potential reforms in the future, and I say seem because I realize it’s not an actual investment, it just acts like one). 

People who say the FICA cap should be raised seem to miss this point.  Unless the way social security is changed, the rich will still get increased benefits from their increased payments.  Yes, the benefit increase is progressive in that it goes down the more you pay in, but it’s still positive.  I wonder if people who want to raise the fica cap also are suggesting a new tier of reduced benefits or a new regime where the rich don’t receive benefits on additional fica taxes.

I’m biased coming from an upper middle/upper class income, but I personally agree with others that the middle/upper middle class are the ones really squeezed under our tax regime and the poor/upper upper do fine.  I’d much rather leave social security alone and fund any shortfall with general tax receipts, and you can fight abough the best way to increase tax receipts most likely from the upper/ultra classes.

Paul der Krake

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Re: Mustachian People Problems (just for fun)
« Reply #5330 on: June 27, 2018, 11:04:15 AM »
Everybody thinks the upper class starts at 20% annual income above their own.

dragoncar

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Re: Mustachian People Problems (just for fun)
« Reply #5331 on: June 27, 2018, 11:59:36 AM »
Everybody thinks the upper class starts at 20% annual income above their own.

Naw, it’s at least double

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Re: Mustachian People Problems (just for fun)
« Reply #5332 on: July 03, 2018, 05:14:34 PM »
I think I posted about this before, but we opened up a savings account for our baby because family members wanted to gift her some money and insisted that it be put in a savings account in her name... I don't know if they thought we would spend it or what. I duly opened up a minor's savings account at Alliant and transferred some money over from my account, like $1k or some nice whole number, thinking that it would be easier to just say we put in the money every time she gets $20 at Christmas.

BUT now they are asking for the account details, and I threw away the letter the bank sent so I have to get it resent. A good problem, to be sure, but definitely a mustachian problem since we don't need the money and it is a minor annoyance! The relatives must think I'm horrible with money. "She lost the information for her baby's savings account?! Who loses track of money?!"


I would consider such a request to be a gross impertinence. 


You don't "have" to have the bank re-send a letter.  You can just tell them it's done.    And suggest they learn some manners if they get pushy.   


But then, I value my independence and my kid's independence more than I value money some relative might give me or my kids.



BTDretire

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Re: Mustachian People Problems (just for fun)
« Reply #5333 on: July 03, 2018, 05:33:06 PM »
Everybody thinks the upper class starts at 20% annual income above their own.


 I thought my wife and I had earned a less than median income over our 37 years of marriage.
 I recently made a spreasheet that adjusts your income for inflation, so you can see how your
lifetime income compares to the median. You can make use of it here, but need to sign into google.
https://forum.mrmoneymustache.com/welcome-to-the-forum/poll-comparing-mmmers-long-term-income-to-median-income/
 Our results, about half our years were below median family income and half above,
 and our average yearly income for those years was $71,000, about 30% above the
$55,000 median family income.
  Never realized we did that well--- but "that well" is relative, isn't it :-)
 We did manage to save ourselves into the top 6% in NW.

Sibley

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Re: Mustachian People Problems (just for fun)
« Reply #5334 on: July 03, 2018, 06:41:29 PM »
I've got an contractor coming for an estimate (no hate here, avoiding the medical bills is much less expensive than paying someone to do the work in this case). They asked if I'd heard of some government program relating to energy efficiency, I asked if there was an income limitation. She said yes. I said, thanks, but I'm above the limit. I don't even need to know the limit. My income is double the median of my state, I'm over the limit.

Linea_Norway

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Re: Mustachian People Problems (just for fun)
« Reply #5335 on: July 04, 2018, 12:57:07 AM »
I think I posted about this before, but we opened up a savings account for our baby because family members wanted to gift her some money and insisted that it be put in a savings account in her name... I don't know if they thought we would spend it or what. I duly opened up a minor's savings account at Alliant and transferred some money over from my account, like $1k or some nice whole number, thinking that it would be easier to just say we put in the money every time she gets $20 at Christmas.

BUT now they are asking for the account details, and I threw away the letter the bank sent so I have to get it resent. A good problem, to be sure, but definitely a mustachian problem since we don't need the money and it is a minor annoyance! The relatives must think I'm horrible with money. "She lost the information for her baby's savings account?! Who loses track of money?!"


I would consider such a request to be a gross impertinence. 


You don't "have" to have the bank re-send a letter.  You can just tell them it's done.    And suggest they learn some manners if they get pushy.   


But then, I value my independence and my kid's independence more than I value money some relative might give me or my kids.

As a parent you are the financial guardian for your child. You are allowed to spend the amount in whatever way you want. The relatives have now right to interfere whether you followed up their command.

But if I were you and you want to stay nice, I would just tell them that the child has now 1K on the bank account, accumulated from various gifts, theirs and others. Tell them that you also sometimes put some money in the account. That should make them happy, shouldn't it? It shows that you didn't spend the money on yourself and it shows that the child is saving up something. Asking for individual transactions is manically controlling something that is out of their control.
Why don't you put the money in an index fund in your child's name? Your child can get a lifetime of compounding.

As a parent you are the financial guardian for your child. You are allowed to spend the amount in whatever way you want.
At least here in Germany this is not true and children can sue their parents if they spend their children‘s money

Okay, I checked it. In Norway you are not allowed to freely spend your child's money if the child earned it herself or received it personally. When the children are young, the parents need to treat the money in a way that is beneficial for the child.

So maybe, the grandparent had a point after all...
« Last Edit: July 04, 2018, 01:40:12 AM by Linda_Norway »

barbaz

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Re: Mustachian People Problems (just for fun)
« Reply #5336 on: July 04, 2018, 01:06:29 AM »
As a parent you are the financial guardian for your child. You are allowed to spend the amount in whatever way you want.
At least here in Germany this is not true and children can sue their parents if they spend their children‘s money

Imma

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Re: Mustachian People Problems (just for fun)
« Reply #5337 on: July 04, 2018, 02:15:17 AM »
As a parent you are the financial guardian for your child. You are allowed to spend the amount in whatever way you want.
At least here in Germany this is not true and children can sue their parents if they spend their children‘s money

This is true in the Netherlands as well. If the account is in the child's name, the parents can't just take the money out and spend it freely. The upside is that the money is also protected against debts of the parents.

For this reason, it's not that unusual for grandparents and other relatives to insist that they pay gifts directly into an account in the child's name. I know several friends that have accounts like this and their parents or siblings have standing orders for the kid's account. If you are living truly Mustachian, I can also see why some relatives might think you're poor. I know some of my relatives think we are, even though I've told them we're not (I haven't told them the details, but did tell them not to worry about our financial situation, we're doing more than fine).

elliha

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Re: Mustachian People Problems (just for fun)
« Reply #5338 on: July 04, 2018, 03:15:44 AM »
The Swedish law seems a bit hard to grasp on this with parents and children's money. Parents are supposed to use them wisely but they can use them to a certain extent for family things and I know that people have been asked to use children's money if they want to go on welfare but I am not sure if this is all of it or just some of it. I think this is so that you can't hide your money in your children's account and also get welfare. I do sadly know parents that have used children's money and gotten away with it so I think that our law might be pretty bad in this regard. The law does state that money earned by children over 16 cannot be used by the parents.

However, if you give children a gift you can make someone other than the parents responsible for it so if the parents are POS you can protect the child that way. I personally would prefer to give money to a child once it has turned 18 or choose to support someone once they need the cash because of these somewhat unclear rules. That gives the control that I would like to see but of course there are always ways of cheating any system so you can never be 100% sure your money is not wasted.

beer-man

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Re: Mustachian People Problems (just for fun)
« Reply #5339 on: July 04, 2018, 08:14:55 AM »
The best conversation I’ve had at work was with a sick patient who happened to be a CFP and a fiduciary


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beer-man

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Re: Mustachian People Problems (just for fun)
« Reply #5340 on: July 04, 2018, 08:24:25 AM »
I spend so little, that I can barely make my credit card sign up bonus minimums.
Haha yes I have to plan for months just to prepare to meet a minimum spend


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beer-man

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Re: Mustachian People Problems (just for fun)
« Reply #5341 on: July 04, 2018, 08:30:59 AM »
We once met with a CFP who told us we were in the best financial position than any young family he’s ever met with. He then offered me a job....which I had to graciously turn down and explain to him that I didn’t believe in the products he was peddling(front loaded mutual funds/variable annuities, etc)
 Awkward mustacian moment


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dragoncar

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Re: Mustachian People Problems (just for fun)
« Reply #5342 on: July 04, 2018, 12:47:11 PM »
As a parent you are the financial guardian for your child. You are allowed to spend the amount in whatever way you want.
At least here in Germany this is not true and children can sue their parents if they spend their children‘s money

This is true in the Netherlands as well. If the account is in the child's name, the parents can't just take the money out and spend it freely. The upside is that the money is also protected against debts of the parents.

For this reason, it's not that unusual for grandparents and other relatives to insist that they pay gifts directly into an account in the child's name. I know several friends that have accounts like this and their parents or siblings have standing orders for the kid's account. If you are living truly Mustachian, I can also see why some relatives might think you're poor. I know some of my relatives think we are, even though I've told them we're not (I haven't told them the details, but did tell them not to worry about our financial situation, we're doing more than fine).

Honestly, if you are worried about a parent spending a child's money on personal stuff, it's probably better to just set aside the money for to give directly to the child later in life.  Scummy parents gonna be scrummy

woopwoop

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Re: Mustachian People Problems (just for fun)
« Reply #5343 on: July 04, 2018, 08:47:42 PM »
Why don't you put the money in an index fund in your child's name? Your child can get a lifetime of compounding.
I hadn't really thought about this, you mean opening up a brokerage account in their name? I really do need to do some more research into how best to transfer wealth to kids, but my first thought was that anything in their name is used against them for financial aid purposes, right? Okay, you've given me a good kick in the butt to actually go get informed about this stuff sooner rather than later ;)

shelivesthedream

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Re: Mustachian People Problems (just for fun)
« Reply #5344 on: July 04, 2018, 09:23:16 PM »
Not American, but my nine week old baby has a Vanguard account. The eighteen years on compounding made it a no brainer.

Imma

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Re: Mustachian People Problems (just for fun)
« Reply #5345 on: July 05, 2018, 03:09:13 AM »
As a parent you are the financial guardian for your child. You are allowed to spend the amount in whatever way you want.
At least here in Germany this is not true and children can sue their parents if they spend their children‘s money

This is true in the Netherlands as well. If the account is in the child's name, the parents can't just take the money out and spend it freely. The upside is that the money is also protected against debts of the parents.


Honestly, if you are worried about a parent spending a child's money on personal stuff, it's probably better to just set aside the money for to give directly to the child later in life.  Scummy parents gonna be scrummy

That's absolutely true and I think there are very few cases where a child can actually recoup the money their parents have stolen from them (if it comes to that). First of all they might not be aware of the account, if they are they might not have bank statements, they might not know their parent wasn't allowed to spend it and even if they do they will probably lack the will and the money to sue their parents. Relatives might feel like their gift is protected, but that protection is not real.

For tax reasons, lots of grandparents prefer to put the money in an account with the child's name though. We have a wealth tax and any money that's not in their name, will not be taxed. We don't have trust funds in this country, so savings accounts in a child's name is the most common method of making sure their grandchild will get the money even when the grandparents have passed by the time the child turns 18.



Morning Glory

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Re: Mustachian People Problems (just for fun)
« Reply #5346 on: July 05, 2018, 04:58:00 AM »
Why don't you put the money in an index fund in your child's name? Your child can get a lifetime of compounding.
I hadn't really thought about this, you mean opening up a brokerage account in their name? I really do need to do some more research into how best to transfer wealth to kids, but my first thought was that anything in their name is used against them for financial aid purposes, right? Okay, you've given me a good kick in the butt to actually go get informed about this stuff sooner rather than later ;)

Yes, in the US the child is supposed to kick in half of their income and most of their net worth before they get any financial aid. Parental income and net worth are not penalized as much.  You can say it is being used against them, but I prefer to think of it as making things more fair for other kids who do not have such generous relatives. The child can also get around this by delaying college until age 23, or by sheltering the money in a retirement account such as a Roth IRA, or purchasing a primary residence.

jinga nation

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Re: Mustachian People Problems (just for fun)
« Reply #5347 on: July 05, 2018, 05:41:12 AM »
Not American, but my nine week old baby has a Vanguard account. The eighteen years on compounding made it a no brainer.

+1. If you're in the USA, you can open an UTMA/UGMA account for your kids at Vanguard. Then VTSMX/VTSAX. Parents are custodians.

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Re: Mustachian People Problems (just for fun)
« Reply #5348 on: July 05, 2018, 10:01:09 AM »
Not American, but my nine week old baby has a Vanguard account. The eighteen years on compounding made it a no brainer.

+1. If you're in the USA, you can open an UTMA/UGMA account for your kids at Vanguard. Then VTSMX/VTSAX. Parents are custodians.

FYI -- Vanguard has high minimums to start a custodial account -- $1000 or $3000 depending on the fund.  If you can't swing that, then Schwab is a good option -- their minimum is $100.  Plus -- their fees on their total stock market index fund (SWTSX) are only .03%.

AO1FireTo

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Re: Mustachian People Problems (just for fun)
« Reply #5349 on: July 08, 2018, 08:27:24 PM »
I have the oldest car in the parking lot at work (2006 Jetta).  I love cars, and could easily afford to purchase a new one for cash (but I'm not an idiot).  I actually think I get more pleasure driving this car than I would if I purchased a newer more luxurious model.  Not planning on replacing it until it becomes economically unviable.



 

Wow, a phone plan for fifteen bucks!