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Paying rent is a lot like paying someone else's mortgage.
so is buying food , clothing and anything else you pay for that goes to a businessman that owns the business . they take your money and pay their mortgage or rent with it . the fact a landlord bought a property instead of a grocery store with their money is irrelevant .
in any case you utilizing their goods or services gives them the money to pay their bills and their mortgage if they have one.
this is how we all earn our living . we do things others can't or won't do for themselves .
Last edited by mathjak107; 03-17-2016 at 04:56 AM..
"The average pay for tech jobs in the San Francisco and San Jose metro areas was $197,411 in 2015, according to labor-market analysis firm Economic Modeling Specialists International. The average value of equity stakes held by engineers, product managers and data scientists was $236,066 in February, according to Paysa Inc., which tracks compensation for those professions." -- Tech Workers Get Choosy About Changing Jobs - WSJ
Understood, but the OP would need to be 300K+ for those numbers to make sense. And maybe he is!
Sounds like you are not taking advantage of all of your tax credits and deductions that we give higher earners here.
First off : go breed! You get excellent deductions for them. Even better, find a SAHM with her own flock and marry her on paper just for the *even greater deductions!* Give her a cut too of course or at least jyst add the flock to your health insurance.
Next, consider becoming "self employed" or a "small businesses owner" so you can deduct nearly 100% of your earnings via way if "expenses" (eg, car, gas, phone, computer, software, "working vacations," etc.
Buy a house. Huge mortgage interest deduction.
Savings? Buy and hold tech companies for 2 years. If/when you cash out it will be at a much lower tax rate than your income.
Contribute the max to your 401k and/or ira to keep that portion from being taxed.
Open a health savings account, that won't be taxed.
Maybe even open a 529 plan if you think you might ever continue your education. If not, you can cash it out later.
(And as an aside, you really should not complain about your SDI, Medicare and SS taxes. Anyone of us could become paralyzed or stroke out tomorrow. Ive seen it too many times. If you do, you will be thanking the moon that you at least have these "work credits" and payments so the system will be there for you when you need it.)
Quote:
Originally Posted by BoredRestless
Oh i wish i could just keep more of my own money. Here is where my money goes:
Taxes 36%
Cost of Living 34%
Other 12%
Savings 18%
Taxes - Federal, State, Social Security, Medicare, SUI, SDI
Cost of Living - Rent, Health Care, Utilities, Insurance, Gas, Groceries
Other - Fun, Stuff i don't need
I can basically make decisions with about 30% of my money, and over half of it i save. Yes, i could live in a little bit worse of an apartment (my place is not so great anyways...) but rent is high all over the bay area, it wouldn't make much of a difference. It surprised me that my federal taxes alone are more than my also absurd rent for a 1 bed apartment.
Is is normal that taxes are someones biggest expense? Or am i doing something wrong. Surely i shouldn't spend more money elsewhere because i'm already not getting far with my savings.
interest deductions are a double edge sword . paying out 4 dollars from your piggy bank to get 1 back on your taxes may not be a better idea .
that boils down to opportunity cost and it isn't a good thing all the time . in fact almost half of homeowners can't exceed the standard deduction if a couple and get nothing back for those interest payments .
sometimes the renter gets the better deal tax wise , they get to fly the empty seats . a couple who rents may have 6 or 7k in deductible items but get a deduction for almost 2x that . they get money back tax wise they never spent on deductible items . .
they get money back adding to piggy , the homeowner may actually have spent those dollars .
it really depends on the total situation as to whether the interest deduction is hurting or helping you .
I'm getting creamed, tax-wise, because aside from my 401K, which I'm maxing out, I'm also investing additional monies in a brokerage account and of course any gains are taxed come year end. I need to have better tax management strategies because I really got hit for 2015. I have a house, no kids, single, no business of my own.
Not all gains are taxed at year end. You strategy should change possibly to less turnover in taxable accounts
just weigh it out with future intentions . sometimes deferring those taxes for decades ends up hurting you if you make changes for retirement .
i was glad we paid taxes along the way because i would not have been able to make the portfolio changes we did back in 2007 in one year with decades of pent up taxes due . that would have left us exposed to 2008 to finish the changes we wanted at a loss .
on a very popular early retirement forum many of us here frequent it is not uncommon to go from growth funds to conservative balanced funds like wellesley income for retirement as an example . having to deal with 30 or 40 years of pent up taxes at the end can be quite an ordeal sometimes .
so it helps to start to think about your retirement strategy and whether or not you will be keeping what you have .
in our case we totally went from a growth model to a much more conservative income and capital preservation model .
Oh i wish i could just keep more of my own money. Here is where my money goes:
Taxes 36%
Cost of Living 34%
Other 12%
Savings 18%
Taxes - Federal, State, Social Security, Medicare, SUI, SDI
Cost of Living - Rent, Health Care, Utilities, Insurance, Gas, Groceries
Other - Fun, Stuff i don't need
I can basically make decisions with about 30% of my money, and over half of it i save. Yes, i could live in a little bit worse of an apartment (my place is not so great anyways...) but rent is high all over the bay area, it wouldn't make much of a difference. It surprised me that my federal taxes alone are more than my also absurd rent for a 1 bed apartment.
Is is normal that taxes are someones biggest expense? Or am i doing something wrong. Surely i shouldn't spend more money elsewhere because i'm already not getting far with my savings.
I think that makes sense for high-earners. Because as your income grows, in comparison to taxes, the other categories are going to grow much more slowly. If at all. So it makes sense to me that your tax burden woukd be higher as a percentage, but what you pocket after taxes would be higher too, in real dollars.
Quote:
Originally Posted by ncole1
For frugal folks with high incomes, and for childless professionals, YES, it's normal.
Try having a couple of kids. Then see what your biggest expense is!!!
Nope. Still taxes. By FAR. And that's with 4 kids, a big house, healthy saving and retirement and a substantial amount in the "fun" category.
Quote:
Originally Posted by Utopian Slums
Sounds like you are not taking advantage of all of your tax credits and deductions that we give higher earners here.
First off : go breed! You get excellent deductions for them. Even better, find a SAHM with her own flock and marry her on paper just for the *even greater deductions!* Give her a cut too of course or at least jyst add the flock to your health insurance.
Next, consider becoming "self employed" or a "small businesses owner" so you can deduct nearly 100% of your earnings via way if "expenses" (eg, car, gas, phone, computer, software, "working vacations," etc.
Buy a house. Huge mortgage interest deduction.
Savings? Buy and hold tech companies for 2 years. If/when you cash out it will be at a much lower tax rate than your income.
Contribute the max to your 401k and/or ira to keep that portion from being taxed.
Open a health savings account, that won't be taxed.
Maybe even open a 529 plan if you think you might ever continue your education. If not, you can cash it out later.
(And as an aside, you really should not complain about your SDI, Medicare and SS taxes. Anyone of us could become paralyzed or stroke out tomorrow. Ive seen it too many times. If you do, you will be thanking the moon that you at least have these "work credits" and payments so the system will be there for you when you need it.)
I can't tell if you're being tongue-in-cheek or if you're serious...if all these things barely chip away at a very large tax bill. However, I don't think high-earners should complain too much. I mean, keeping things SIMPLE: would you rather pay 25% of $50,000 in taxes? Or would you rather pay 36% of $300,000 in taxes? I know my preference
Paying rent is a lot like paying someone else's mortgage.
I pay rent. And it's a lot better deal for me than paying a mortgage. So, there's another one of your millions of excuses debunked. I'm still not convinced you are a real person. How could anyone be like you?
oh he is real alright ha ha ha . no one would want to be him ..
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