Author Topic: Case Studies: Start with Gross or Net Income?  (Read 1776 times)

MDM

  • Walrus Stache
  • *******
  • Posts: 9413
Case Studies: Start with Gross or Net Income?
« on: July 07, 2014, 11:36:34 PM »
When people write case studies, some list gross income and others list something similar to "Monthly Net Salary:  (after taxes, insurance, etc)."

If all they want is for posters to say "stop spending a zillion dollars on cable and caffè latte", gross vs. net income is irrelevant.

But if they want comments on their overall cash flow, ignoring taxes and "etc" risks overlooking significant issues.  Two examples: "incorrect withholding" and "opportunity for better use of pre-tax options". 

Of course, people will do whatever they want.  If case study writers merely overlook the benefits of examining the cash flows between gross and net, however, it could be helpful to guide them.

In How To: Write a "Case Study" Topic, there is currently no mention of gross vs. net income. 

Question:  What do you think of suggesting that people start with gross income when writing a case study?

DoubleDown

  • Handlebar Stache
  • *****
  • Posts: 1989
Re: Case Studies: Start with Gross or Net Income?
« Reply #1 on: July 08, 2014, 10:22:59 AM »
I agree, both gross and net are important. It might not be that common, but in some cases there could be some dubious deductions coming straight out of a person's paycheck that should not be ignored (like buying unnecessary "Cadillac" health plans, or withholding too much in taxes in order to get a big return at tax filing time, for example).

matchewed

  • Magnum Stache
  • ******
  • Posts: 4319
  • Location: CT
Re: Case Studies: Start with Gross or Net Income?
« Reply #2 on: July 08, 2014, 10:47:31 AM »
Eh, depends on the question. For general "I'm a spendypants what do I do" net is just fine.

For "how do I optimize my investments between all these options" gross is just fine.

For both, well both I guess, although I guess you can infer some of the information and just make some educated guesses/assumptions when answering people.

Cheddar Stacker

  • Magnum Stache
  • ******
  • Posts: 3714
  • Age: 41
  • Location: USA
Re: Case Studies: Start with Gross or Net Income?
« Reply #3 on: July 08, 2014, 12:57:17 PM »
It seems like there could be a lost opportunity with net, so I would vote gross.

However, many people posting case studies are newbies and might not even know one of the two. Also, the 26 v.s 24 paycheck thing could trip people up.