The Bay Area is full of entrepreneurs. There’s something in the air that creates an almost godly electric spirit that causes people to work hard and innovate. As 2011 nears, more and more I hear about how small business owners are clamping down in preparation for next year’s tax hikes. Clamping down is generally not a good term to use if you are a politician who wants to create job growth.
Let’s say you make roughly $3 million in annual gross revenue from your internet business like my friend Zach does. Not bad, but not exactly big money if you take into account his cost structure. If his pre-tax operating profit margin is 25% after he pays the salaries of all his employees, the rent, and so on, Zach is left with roughly $750,000 subject to taxes. If his tax rate goes up from 36% to 39.6%, for every dollar he makes over $375,000, he will pay roughly $25,000 more in taxes a year in 2011.
Well guess what? My friend is letting go of one of his junior programmers who makes roughly $85,000 to pay for next year’s $25,000-$35,000 tax increase! My friend feels bad letting his 2006 college graduate employee go, but he has no choice since revenue has declined since 2007, and the government is tightening the screws. Zach believes that 2011 revenue will be worse next year than this year, and is budgeting a decline. Thank goodness for 99 weeks of unemployment insurance! And no, it’s not reasonable for the junior programmer to just go work in fast food after only several weeks of looking.
DON’T LISTEN TO THEIR LIES. THEY AREN’T IN IT FOR YOU. Read more…
I ran into one of my golfing buddies the other day while waiting for a colleague. Greg the golfer is an every day fella who so happens to be worth north of $20 million dollars. I don’t know exactly how much he makes a year, but it’s likely at least $3 million during normal economic times. He’s a powerful man who deserves everything he earns, but sometimes he’s just vexing.
We got to catching up about the latest gossip on tour when he asked me if I wanted to grab a coffee at Starbucks. I told him I was good, largely because coffee hurts my stomach, not to mention I’m supposed to be waiting for my colleague at this exact spot and time to attend a meeting. Greg responds, “Of course not, you are so cheap!” in a snide, but joking sort of way. Unfortunately, every joke has a meaning, and being called cheap is one of the most annoying things to ever hear.
CAN’T COMPARE Read more…
"Carried By The Wind" by Veronika Nagy
My nose plugs up and I can hardly breathe when I’m around cats too long. I don’t know why I’m allergic, I just am. One time I stayed over a friend’s place with three cats, and I woke up with red hives. It was a surprise that I was able to fall asleep at all, because I could have sworn I sneezed over 100 times until the underside of my nose bled.
One of my best friends invited me over to visit her childhood home this fall. Her mother lives near Boston, and unlucky for me another downside of East Coast living is the enormous pollen count. I remember countless days when I couldn’t go to work because my allergies were so bad. Ever since moving out West, my reactions have been much tamer. The San Francisco Bay acts as a natural filter, sucking out stagnant air to sea.
In addition to being out East, my friend’s mother also has a couple of dogs and cats! She sees this trip as a fun homecoming to introduce me to where she grew up. To me, I have no attachment there and it’s like going to a gas chamber for vacation. Imagine only being able to breathe through your two front teeth. That’s how I feel sometimes when allergies attack. You can’t get enough oxygen, so you aren’t able to speak. You lose energy and let sleep take over even though it’s in the middle of the day.
THE QUIET PLEA Read more…
Categories: Health & Insurance, Motivation, Ninja Files, Open Letter, Relationships, Retirement, The Katana / Samurai Reflections Tags: babble, daydreaming, frustration, hmmm, marriage, thoughts, weakness
The following is a guest post by Hime, one of Financial Samurai’s first readers. Hime is a manager at a strategy consultant firm who likes the violin and going on unplanned adventures. Hope you enjoy!
All right everyone, how many times have you read an email and said to yourself “I don’t feel like replying now I’ll just do it later” only to have that email disappear into the deep abyss and completely forget that you left the sender hanging?
Come on, I know you’ve done that at least once. If you do that more like every third email – CLUNK! That is me hitting you over the head with an oversized rubber hammer as I resist the urge to shake the stubbornness out of you. Think I’m overreacting? Maybe a little but I am trying to save your career and relationships so please pay attention!
DON’T LEARN THE HARD WAY Read more…
One of my best friends is blessed with skinny genes. At 5′ 3″ tall, she weighs all of 105 pounds. When we go out to eat, she doesn’t just order a glass of iced tea and salad with dressing on the side. She goes all out with mash potatoes, creamed spinach, BBQ oysters and then a nice juicy ribeye for a main course! I gawk in amazement at her appetite while secretly groaning at trying to keep up towards the end. After all, shouldn’t she eat 40% less than me if she weighs 40% less? Guess not!
Despite my friend’s envious genetics, she isn’t exactly iron woman when it comes to sports and outdoor activities. After three miles on a 10 mile bike ride, she’s pooped and waves at me to take a break. Meanwhile, I’m going “lah, lah, lah” in my head, not even breaking a sweat as I soak in the glorious views of the Bay. I let her catch up and we take a five minute pit-stop where she catches her breath as I go do some stretches and sit-ups.
THE GIMMICK Read more…
Pick any private school. The cost is about $200,000 over four years. These figures don’t surprise anybody anymore given the ever rising application volume to storied institutions such as Harvard, Yale, and Princeton. That said, there have to be some who believe $200,000 for a private school is a hard pill to swallow over an excellent public school for just $40,000.
With an estimate 17% of people aged 20 through 24 unemployed, swallowing a bowling ball may be easier than finding a desirable job post graduation. Let’s say you are one of the unlucky few who can’t find a job after a $200,000 education. Does it really matter? Let’s think about why it doesn’t really matter from the eyes of several recent graduates.
THE BOY WHO WAS FORCED TO GO Read more…
It continues to perplex me why there should be a distinction between an emergency fund and your general savings. If you have $100,000 in the bank, what is the difference between calling it $100,000 in savings, and splicing the funds into $10,000 emergency money and $90,000 savings? The answer lies in the fact that people who need to create an emergency fund likely always have “emergencies” and are weak with their spending and savings!
Let’s say your name is Mr. Benjamin aka a $100 dollar bill. You’re relaxing with your fellow Benjamins in the bank, hopefully earning at least a 4% interest rate using the “DVD Method To CD Investing” and having a grand old yield maximizing time. A Benjamin’s purpose is to provide a solid source of liquidity and risk free interest income for the owner upon his or her retirement.
Some Benjamins are lucky. Their owners don’t discriminate between one bill or another. They treat each bill with vital respect i.e. they don’t touch it! Some owners are just nutty, always disturbing their party and separating one Benjamin from another. “Listen up Benjamins! 100 of you are to relocate to this side of the tracks, and the other 900 Benjamins get to kick back and relax!”
YOUR CRUTCH WHEN YOU CAN WALK JUST FINE Read more…
While waiting at the dentist, I picked up the April issue of Inc. Magazine and stumbled upon an article entitled, “The Secret Of Their Success.“ The article discusses what really drives salespeople to succeed. We are all salespeople, whether we know it or not, which is why being a happy loser helps bring out the best in everyone.
Clotaire Rapaille, a psychoanalyst and ethnographer describes a happy loser as someone who sees rejection as a challenge. The first “no” stimulates their brains to want to try harder and not give up. Clotaire highlights one example where a firm defines success not by how many wins a salesperson achieves, but by how many rejections instead. Read more…
The following is a guest post from @NealFrankle of Wealth Pilgrim. Neal is a Certified Financial Planner, a fellow Yakezie member, and all around good guy. Hope you guys enjoy!
During strong markets, anyone can make money. During weak markets, everyone gets hurt. For the most part, all ships rise and fall with the tide, financial adviser or not.
So what’s the point of having an adviser?
(I have my own answer to this question and it may surprise you.)
But before we get to my answer, let’s explore the wild and wonderful world of financial advisers and our clients.
1. Financial Advisers are Salespeople. Read more…
Yowza! Source: NY Times
Over 11 million people are estimated to have died by the hands of the Nazis during the Holocaust just 65 years ago. 5 to 6 million of the 11+ million were Jews and over 300,000 were Athenians during the Axis’ occupation of Greece. It’s a fallacy to blame modern day Germans about the atrocities of the past. Yet, just because the demons have all died, shall we forgive and forget? Absolutely not. The offspring and relatives of the 11+ million dead live on, and their stories will never ever be forgotten.
With a GDP of US$3.6 trillion, Germany is now the largest economy in Europe as well as the 4th largest economy in the world. Germany also has roughly $50 billion in estimated loans to Greece, a large amount, but not an overwhelmingly debilitating amount given the size of their economy. Saving Greece helps the Germans and the rest of the 27 EU members who in some way were all negatively affected by Germany decades ago.
GRAND STANDING AND FINGER WAGGING Read more…
Every large corporation has some type of annual “Diversity Training” course where we learn not to harass colleagues, send out crude jokes over e-mail, and discriminate against those unlike ourselves. Everything generally makes sense except for one rule that I once read: “One shall not discriminate against someone over 40.” I thought about this for a second, and I began to wonder if they had made a typo.
At age 40, one will have worked for 18 years out of college or 15 years out of graduate school on average. If the accepted age of retirement is 65, or 25 years away from 40, then the rule is implying that age discrimination starts before you are even half way through your average 40 year long career!
The other interesting fact is that most people are living longer nowadays. Forties are the new thirties as they say. People are looking younger and younger at various age milestones. Hence the question, why 40? Let’s explore the various reasons.
NEGATIVE PERCEPTIONS ABOUT OLDER WORKERS Read more…
Insensitive statements by Senate Majority Leader Harry Reid (D) not only infuriates many, but also raises one titillating question: Why isn’t President Obama considered white? Obama’s mother is white, and his father is black. He relates more to his white side of the family given his father left him as a child. Hence, isn’t it logical to think Obama is more white than black? Let’s see if we can change Obama’s default setting to the world.
THREE SUGGESTIONS AS TO WHY
1) “He doesn’t look white.”
Well, what does “white” look like? Yes, Obama doesn’t look like a Norwegian Viking, but you can still tell he’s mixed. Since when does being half black mean that he’s full black? If a white person is only supposed to look like Tiger Wood’s wife Elin, then we need to revise what the definition of white is. Read more…
This is the first year where I actually owe money to the government and I’m not too pleased. For all intensive purposes, I should be happy that I got a free multi-thousand loan for the year, but it just feels off. Your typical personal finance blogger will argue that it’s stupid to celebrate a tax refund, but I’m telling you to go right ahead. Tax refunds are good for most people because most people can’t save for cookies!
I’m waiting until the absolute last moment to file because I constantly find errors in the way I’m doing my returns. There’s no doubt in my mind that every single tax return submitted by an individual has at least one error, or sub-optimal input. I generally go over my taxes at least three times before submitting them. It’s in my nature to double and triple check everything when it comes to money.
Doing your own taxes forces you to learn a tremendous amount about your finances. It heightens your awareness, leading to better financial decisions. You learn about things such as deduction limit phases outs, rental property amortization, and alternative minimum taxes all too well.
Once you understand how much income leakage there is, you’ll join the side which wishes for a fair flat tax and a smaller, more efficient government. Too many people just blindly follow what their accountant tells them to do without fully understanding where their money is going. That’s irresponsible. My #1 tax tip for everyone is to do your own taxes at least once. Even if you make mistakes, which you will, you’ll be a better person because if it!
Readers, how many of you do your own taxes? With tax software making things relatively simple nowadays, why not try it out on your own if you don’t now? Taxes are due Thurs, April 15th in case you don’t know. Read more…
President Obama plans on limiting the tax break for charity deductions to 28%, penalizes those in the 33%, 35%, and soon to be 40% federal income tax brackets. Since the overwhelming majority of charitable contributions come from households, and the overwhelming absolute dollar amount comes from those in the highest tax brackets, one can deduce charitable contributions at the margin will go down in 2011 and beyond. Given this logical conclusion, why are Democrats and President Obama against helping others through monetary means?
Currently, if you are in the 25% tax bracket, you can save 25% in taxes due to your charitable contributions i.e. donate $10,000, save $2,500 off your tax bill. Meanwhile, there is equality among those who pay the highest taxes at 35%. 35% tax payers can equally save 35% in taxes from their donations. So far, so good.
Due to massive government pork spending it’s egregious that politicians now want to not only raise the highest marginal tax bracket from 35% to 40%, but also cut tax breaks on charitable contributions down to 28%! That’s two slaps in the faces of hard working Americans and a punch in the gut for those who need the most help.
BASIC UNDERSTANDING Read more…
The following is a guest post from Neal Frankle at Wealth Pilgrim. Neal is a dedicated father, insightful financial adviser, and honorable Yakezie Challenger who always writes with a breath of fresh air. You can join his 2,500+ followers on Twitter @NealFrankle. Enjoy!
Failure is not only a necessary part of life, it can be a beautiful part of life.
This may sound like crazy talk.
After all, if you are a hardworking person, you work hard because you want to succeed, not fail.
And failure stings.
It hurts.
Man….it hurts.
That pain is real….but despite that temporary pain, those set backs are likely key ingredients to your future success. And the success I’m talking about dwarfs financial or career gains.
Let me explain by telling you about an experience I had several years ago.
BACK IN THE MOTHERLAND Read more…
The Bay Area is full of entrepreneurs. There’s something in the air that creates an almost godly electric spirit that causes people to work hard and innovate. As 2011 nears, more and more I hear about how small business owners are clamping down in preparation for next year’s tax hikes. Clamping down is generally not a good term to use if you are a politician who wants to create job growth.
