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What's a comfortable salary?

ptgatsby

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Some people, myself included, read the pre-2008 tea leaves (and profited from it) pretty damn well.

Well, any edge can earn you infinite money, though small edges require many iterations. Any idea what yours is?

Ok, yeah, if you want to become wealthy in a step-by-step fashion then surely it's much better if you start young (and you're also more likely to hit and ride a boom).

FWIW, you are also more likely to hit bad times, which can be equally devastating (or worse). There is a presumption of political security in the states. It is the surest way to become wealthy though.

In general, I'd save less and spend more investing in oneself when young. It's the safest investment and can be as simple as getting a computer, taking a course, getting certified... or just consuming the savings to volunteer in different areas. The states includes lots of options, I believe, aside from the Peace Corps. Lots of strategies, but better than working and stocking money, for the most part.

Well technically this is fraud, lol (especially if you write off your own income as a "business expense" - which I don't think can be done either, tbh).

It is fraud but not terribly uncommon. People get caught all the time.

All you need to do is find a way to get your income going to a company, then pay yourself an income from the company. You lose on fixed overhead, but expenses inside the company are pre-tax. It's been cracked down on a lot as far as I know... it's something you read more in books because it's very dangerous in practice. This doesn't apply as much for professionals who need to limit liability - most of those professions have somewhat different tax handling situations.

In short, to really make it work you need to do it with large numbers... and the larger the numbers, the more likely you are to get caught. No one cares about a few meals being mis-charged but that's because a few meals are barely profitable.

Structuring around taxes is only really worthwhile once you are already wealthy.
 

DiscoBiscuit

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Setting up a business just as a way to deduct taxes from your primary income can indeed be a fraud, especially if you're making your business run at loss while you're pillaging its cash flow to finance your own living expense and the business ends up being bankrupt. Of course you can be good at if you're careful, if everything looks legal you may get away with it (until bankruptcy). I would still not recommend this strategy unless you have a real reason to start a business.



If you have a real business then I think it's cool to set everything up so that you can pay the lowest possible amount of taxes. Starting a business as a way to pay lower income taxes is a bit different and riskier.

Any business has to be created with the intention of making a profit not with the express purpose of being a tax shelter.

But, as long as the business exists to be a real business, you can deduct most things involved with furthering that business.

Operating in good faith as a business is kind of assumed.
 

DiscoBiscuit

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FWIW, you are also more likely to hit bad times, which can be equally devastating (or worse). There is a presumption of political security in the states. It is the surest way to become wealthy though.

The longer your money stays invested the more likely you are to participate in long term growth trends. This one of the differences between smart money and dumb money. Let's say I invest in the S&P 500 in 2006.

The financial crisis hits and I lose 30% of my portfolio value (ON PAPER). Instead of lighting my hair on fire and pulling my money out I stay invested, and maybe put some more money in once we hit the bottom of the trough.

I then get to participate in the recovery (which has been very robust in the markets) and come out way ahead over the next couple of years.

The dumb money gets frightened by losses and pulls out. Turning their losses on paper to losses in their wallet. They then wait to reinvest until the market turns around.

The problem being that they likely reinvest with the rest of the dumb money at a peak and get to participate in another downturn that freaks them out. They pull their money out turning that paper loss into a real one and the cycle continues.

This is one of the reasons why day traders frequently lose their shirts. A well managed buy and hold strategy with some dollar cost averaging makes much more sense for most investors (depending on their financial goals).

Structuring around taxes is only really worthwhile once you are already wealthy.

While it is true that as assets grow the tax implications of ones financial standing also grow (in both complexity and impact), most investors above the poverty line can benefit from taking into consideration the tax implications of their financial decisions.

You don't have to qualify for the Alternative Minimum Tax to benefit from minimizing your tax liability.
 

FDG

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FWIW, you are also more likely to hit bad times, which can be equally devastating (or worse).

Of course. I'm operating under the presumption that someone whose aim is "becoming wealthy" will be as careful and as knowledgeable as possible with his (her) money, so as to ride the booms and avoid the busts, or at the very least, avoid selling depreciating assets during a bust.

DiscoBiscuit said:
Operating in good faith as a business is kind of assumed.

Yeah well OrangeAppled's suggestion was not fully in good faith, thus my objection.
 

Qlip

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Just to get by, only considering my expenses, here in the Bay area, I could definitely do it with about 30k. I've done the math in the past. It doesn't account for retirement savings, and I'm very comfortable with less than ideal conditions. I prefer them against McMansions, or even mansions, unless it's an Edwardian mansion with dark woodwork, tapestries, a study and a library and a parlor.

Edit: A pet raven in a cage, a secret bookcase entrance to a cellar, silveware, brass, wavy glass panes, gas lights, and a fireplace in each room.
 

greenfairy

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A living wage plus a little extra to save and spend on the occasional luxury.
 

kyuuei

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Just to get by, only considering my expenses, here in the Bay area, I could definitely do it with about 30k. I've done the math in the past. It doesn't account for retirement savings, and I'm very comfortable with less than ideal conditions. I prefer them against McMansions, or even mansions, unless it's an Edwardian mansion with dark woodwork, tapestries, a study and a library and a parlor.

Edit: A pet raven in a cage, a secret bookcase entrance to a cellar, silveware, brass, wavy glass panes, gas lights, and a fireplace in each room.

:wubbie: I don't see why you couldn't make a smaller house look like an Edwardian mansion.. It'd be far cheaper to do legitimate decor and architecture that way..
 

Qlip

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:wubbie: I don't see why you couldn't make a smaller house look like an Edwardian mansion.. It'd be far cheaper to do legitimate decor and architecture that way..

I can, and there are perfectly handsome smaller Edwardian houses that feel like mansions. It may happen some day, but right now I'm working on my opium den, which may be in need of an animatronic raven.
 

ptgatsby

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The longer your money stays invested the more likely you are to participate in long term growth trends.

(...)

The dumb money gets frightened by losses and pulls out. Turning their losses on paper to losses in their wallet. They then wait to reinvest until the market turns around.
(and)
Of course. I'm operating under the presumption that someone whose aim is "becoming wealthy" will be as careful and as knowledgeable as possible with his (her) money, so as to ride the booms and avoid the busts, or at the very least, avoid selling depreciating assets during a bust.

I'm referring to system collapses, not market variation. Stuff like currency collapse, nationalization, war, serious unrest and the like... where the system itself is threatened. There is a presumption of normalcy when we talk about long run even though history doesn't really bear that out. Most of the world's population lives with these risks that approach certainty over any reasonable "long period".

The normal rejection is that it is "unlikely" and "irrelevant". Getting rich over the long haul (ie: passively) implicitly trusts the system. Compare that with spending money on yourself and being able to command a higher income (eg: education, experience) or social capital (eg: golf course, sports clubs). That way you can move, or recover, or adapt to new situations, drawing upon other sources of capital. It's not talked about a lot in individualist countries, like the US, but there are alternatives to building capital. This is the normal MO of any ultra-wealthy, even in the US.

It's only the to-be new rich that consider passive/active investing as a viable strategy for being wealthy. Anyone investing in this way is still seeking security rather than legacy. Legacy builders don't think that way, and legacy builders are defined by surviving the system collapses.

---

Time is just about reaching average returns, it doesn't benefit from anything else. If it is a positive EV investment, time just manages variation to compound that positive EV over many iterations.

That is the tea leaves I'm talking when you say "riding ups" and "not selling when down". It is exactly what people should not (cannot) do, on both sides of the coin. Even though, ultimately, the market depends on it for efficient capital allocation.

This is one of the reasons why day traders frequently lose their shirts. A well managed buy and hold strategy with some dollar cost averaging makes much more sense for most investors (depending on their financial goals).

FWIW, DCA is a bad bet... it's net-negative strategy compared to upfront investing (IIRC, ~70% of the time). "Effective DCA" is about investing the income stream as fast as possible.

While it is true that as assets grow the tax implications of ones financial standing also grow (in both complexity and impact), most investors above the poverty line can benefit from taking into consideration the tax implications of their financial decisions.

If you are talking about trying to use capital gains and special vehicles (like TFSA, RRSP in Canada) and the like, I agree. And certainly pay as little tax as you are legally allowed to. I was referring to structuring everything around taxation; incorporating oneself/estate planning that was being indirectly recommended.
 

pinkgraffiti

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I mean a year. I said "good salary", implying that you do have some savings. And 2200 net a month summed up over a year makes a salary of roughly 42k euros in Germany (I think taxes are lower in France): I said that's a good salary for TWO people to live on, doesn't mean that they BOTH have to earn 45k a year.
It's not a joke, really, if you want to live comfortably (meaning: not a student life) you need to have this kind of money coming in. In a fairly expensive city, you may have to spend 700 euros a month to rent an apartment, 300 euros a month for groceries, and another 200 on everything else. Consider then a vacation per year, around 1000 thousand, so 80 euros per month, and you're up to 1300 euros per month fairly quickly.
1000 euro-month is an extremely low number for Paris, considering that rents are fairly expensive. Kudos to you.

ok ok, i had a slight suspicion you meant per month!
 

DiscoBiscuit

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FWIW, DCA is a bad bet... it's net-negative strategy compared to upfront investing (IIRC, ~70% of the time). "Effective DCA" is about investing the income stream as fast as possible.

I was operating on the assumption that all liquid capital capable of being invested initially was. (no one uses DCA except to, like you said, quickly and efficiently invest and ongoing stream of income)

I was using DCA as an example of an aspect of a buy and hold strategy going back to the fact that I thought you were talking about market variations.

The dollar is sound. If it goes the whole system goes.

And to be honest, I feel like I would be able to see the writing on the wall fairly early in the exceedingly unlikely event that it does go.
 

OrangeAppled

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Well technically this is fraud, lol (especially if you write off your own income as a "business expense" - which I don't think can be done either, tbh).

I don't think you interpreted what I was saying correctly at all.
I didn't say anything about writing off income as business expense.
But in regards to what I was saying....look into being self-employed and what that means tax-wise and it may benefit you.
 

OrangeAppled

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Setting up a business just as a way to deduct taxes from your primary income can indeed be a fraud, especially if you're making your business run at loss while you're pillaging its cash flow to finance your own living expense and the business ends up being bankrupt. Of course you can be good at if you're careful, if everything looks legal you may get away with it (until bankruptcy). I would still not recommend this strategy unless you have a real reason to start a business.



If you have a real business then I think it's cool to set everything up so that you can pay the lowest possible amount of taxes. Starting a business as a way to pay lower income taxes is a bit different and riskier.

Yeah I'm not talking about a fake business. I mean real work you can't support yourself doing, but if it gets to the point where you can, cool. In the meantime it can still benefit you.
I'm at the point where I'm 100% freelance. It was not and is not a fake business.
 

Elfboy

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I can live like a cheap mofo if I need to, but a comfortable living? I'd say around $70,000 (and I want a lot more than that, cuz I want luxury bitch!)
 

Poki

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$70k is when I started living comfortably. No worry of bills, did what I wanted for the most part, saved for retirement, etc. This was with 2 incomes and a kid.

Single making $70k a and a kid I lived even more comfortable.
 

ceecee

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In all honesty when I was still in school and my husband was making about $72k, we were fine. Anything beyond that is good too, don't get me wrong but we weren't struggling and I think I read 75K is the happy amount. Then I went to work and he was offered a big promotion at another company. This put us in a different tax bracket and it just sucks balls. I never thought I'd say this but I hope he doesn't get a promotion or a raise or me for that matter. I don't want to go from 28% to 33%.
 

Jonny

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Location location location. I live in San Francisco, and currently drop $1,700 per month on a 300sqft studio. Homes here, as DiscoBiscuit's chart illustrates, are outrageous, thanks to the internet millionaires that fill the area. I don't think I'll be comfortable until I'm making maybe $150k per year in today's dollars.

However, were I to live somewhere with reasonably priced real estate, I'd say $70k would be comfortable.
 
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