Median income, a false statement perhaps

I think that the statement that one is above or below the median income, can be a very deceiving way to view things. It is one measure – no doubt a good comparison like the traditional thought of tax paid versus tax bracket that one is in.
The reason that I believe it is a false statement is simply the fact that there are several items that can come out before being marked as income.

As an example, I’ll provide this snapshot of a spreadsheet that was easy to throw together to simplify and clarify.

Gross Income Vs Median Income

Gross Income Vs Median Income

If you look at the table above, you’ll notice that if a person or couple can use available pre-tax “benefits” such as the 401k, 403b, IRA, Medical plan payments, HSA (health savings account) payments, etc., than they can significantly reduce the amount of income that they are taxed on. I specifically chose the values seen to point out how easy it is to use the tax system to your own advantage.

If you would like, the spreadsheet is available here at no cost, and you can use it to substitute the specific values you would like. Just leave a comment, or send me an email to admin@richintheheart.com.

Posted in budget, economics, Income Tax | Tagged , , | Leave a comment

Coffee prices due to increase, potentially

I heard the folks on the radio talking this morning about a problem with Arabica Coffee bean problems. Evidently there is a coffee fungus spreading throughout Central America that is devastating crops. They also said that this will impact prices of coffee over here.
As I was driving into our local Wawa superstore for my morning coffee roll (actually it’s a cinnamon roll,) without coffee, how this would affect them. Most of the people I know drink coffee and rant about how good Wawa coffee is, and they of course go to Wawa several times throughout the day. Continue reading

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Website finally starting to generate more AdSense revenue

My website was finally starting to pick up it’s AdSense revenue. While I was a little surprise by the amount it went up, it almost falls inline with the fact that I’ve added 3 AdSense entries onto the website this month.
The website traffic is just about the same as the overall averages.

I told them that I did click on one of the ads that were on my website (for Ally Bank), simply because it was there and knowing that I was most likely logged into Google. I would just figure that they wouldn’t pay me for that one click, which I can wholeheartedly agree with them doing that.

As a result, my account has been disabled, pending verification I suppose. I also have to assume that more people are clicking on the ads, which I didn’t even start putting on my website until this year I believe.

Has anyone else experienced this?

Posted in CustomerService, Income or Pay | 1 Comment

Millennial generation is not well informed when it comes to credit scores

I just saw some folks talking on the talk show Cavuto, and they were stating Millennials do not no how to use credit scores to their advantage or what benefits there are to having a good credit score.
My question is about it is, does it really matter? A quick Google search on “millennial debt” , one would pretty much see that most of them have student loan debt primarily. That isn’t to say that there aren’t those that have other debt.
Here is one such study by Pew Research. Continue reading

Posted in budget, budgeting, Goals | Tagged , , | Leave a comment

Target Networth or Target Debt Reduction

First let me apologize to those folks that follow my blog, since I have gone through some very difficult family times recently with the passing of both my father and my father-in-law, all within the month of April &ellipse; not to mention their necessary trips to physicians and hospitals. May they both rest in peace. :-)

If your networth is increasing, should you target debt reduction? Or the other side of the coin would be to focus their financial efforts to target debt networth, or both simultaneously?

This may seem like a rather silly question, since this can be asked of both our personal finances and also of the Federal government. I know that people often examine public debt versus GDP. In the past I’ve primarily been more for reigning in public debt so that comparison to GDP is lower.
Thanks to Quicken I can easily pull up a networth report very quickly. I don’t look at it as a philosophical question either, since if you have $0 in debt, you are inherently in a much better position than someone with any debt unless it is a very, very low ratio. Continue reading

Posted in budget, economics, Financial Arsenal, networth, Retirement Savings | Tagged , , , | Leave a comment

Making the choice to pay more taxes … just to pay more taxes

That thought is the VERY first thing that entered my mind when our esteemed Senator Ray Lesniak suggested that we need to raise the gasoline tax by 5 cents per year for the next 3 years, so that we can get additional funding from Federal gov"t. His intention is well placed because it is supposed to be designed to replenish the Transportation Trust fund. That’s where I get the pay more taxes just to pay more taxes thought.

What he doesn"t seem understanding is that what he is effectively stating, is that we need to raise the tax on people who work and commute in NJ, so that everyone across the country that works and pays taxes will also pay more Federal taxes so that NJ receives some large additional funding from the Federal gov"t.

Perhaps that would make some sense, but there are a couple other wrinkles in this whole piece of legislation:

  1. The Transportation Trust fund has been “raided” by politicians that were in prior to some (but not all) of the current legislators
  2. The 15¢/gallon increase would more than double the current 14.5¢/gallon existing gas tax
  3. This is thankfully lower than his original proposed legislation which was to increase it by 24¢/gallon
  4. As already mentioned, this will not only raise NJ driver’s taxes, but will likely also increase Federal taxes

Does this make sense to anyone, or am I just being insanely silly?

Posted in budget, economics, politics | Tagged , , | 1 Comment

Your biggest expense should be you!

Your biggest expense should be for your future self for the first 5 years. The younger you are, the easier and better it is for you to take 50%-60% of your paycheck and put it away. Imagine being 19, 20, or 21 and earning $20,000 and not having to pay a student loan and you are living at home (or with a family member that is paying the rent/mortgage and you happen to live there with them). So what is an alternative choice you can make? What about putting 50% of that away and not paying a dime in Federal Income tax! Crazy?, not at all! Continue reading

Posted in budget, budgeting, Financial Arsenal, financial directive, Goals, Income Tax, networth, Retirement Savings, spending plan | Tagged , , , , | Leave a comment

Pay less taxes than you put into an IRA

Let’s see how a person could pay less taxes than they put away into an IRA (or 401k). We will use a simple scenario of a single person with a gross income (including interest earned) of $29,500 or less. You cannot use form 1040EZ to use this deduction that you may be eligible for, since an extra IRS form (f8880) would be necessary. Continue reading

Posted in 401k, Financial Arsenal, financial directive, Income Tax, IRA, thrift savings plan, tsp | Tagged , , , , , , , | 1 Comment

High yield savings doesn’t exist … think again

High yield savings accounts do exist in some regional areas. I just heard the other day on the radio of a bank that will pay you $20/month if you make X electronic deposits per month. They didn’t mention any specific balance requirement. I think I’ll have to pay attention the next time that particular advertisement is on, even if I"m in traffic.

There is another avenue of savings that a lot of people don’t consider. What about a simple brokerage account? The account could be opened with very little minimum balance, like I did over at Fidelity. Continue reading

Posted in brokerage, Financial Arsenal, spending plan | Tagged , , | 1 Comment

Net worth as of Jan 2014

Here is my our net worth report for January 2014.
I just checked our net worth and this is what I found:

  • growth by 125% from the same time 1 year ago
  • growth by 23.4% from 9 months prior
  • growth by 51.4% from 6 months prior
  • growth by 7.8% from 3 months prior
  • growth by 11.4% from previous month

Continue reading

Posted in 401k, Financial Arsenal, financial directive, networth, Retirement Savings, Roth IRA | Tagged , , , , , , | 4 Comments