Category Archives: Budget

The Legend of the Job Creators

Written by in Budget, Business, Taxes
9 Comments

This is a post written by Avishai Shuter, and up-and-coming zoologist who lives in his parents house while trying to get a job with the Bronx Zoo.

I’m sure by now you’ve all heard about the class-warfare initiated by your friendly neighborhood super billionaire, Warren Buffett. Buffet has called on the government to start taxing him and his mega-rich friends a bit more in an attempt to make some sort of dent in the national deficit, which as you all know has reached see how much we could get for the Statue of Liberty in a yard sale levels.

The Republican Issue and Response

The issue, Republicans (aka FOX News) claim, is that if we start increasing taxes on millionaires of the country, we are in actuality taking money out of the pockets of job creators. Conservatives are apparently of the position that if the rich are taxed by even a fraction more, they will cease to create jobs for all the peasants depending on them for sustenance.

Wait, what? Warren Buffett even addressed this in his open letter. I’ve heard TV personalities argue this point by saying that the job creators, in actuality, often downsize in an attempt to increase profits. But this line of thought skips over a fairly obvious problem with the Legend of the Job Creators (movie rights still for sale).

The Rich Don’t Create Jobs

If you work for Apple, it doesn’t matter how much money Steve Jobs has. Your salary isn’t coming out of his pocket. The mega-rich often make their money by being in charge of companies (as well as personal investing of the money they’ve made), while the opposite is much more unusual. They’re on the company payroll as much as anyone else.

Now, I’m not denying that the mega-rich create some jobs (I’m sure Bill Gates has a small army of cleaning ladies sweeping his massive house. Hell, he could probably pay the US Army to do it), but I would be very interested to see what percentage of Americans are directly employed by these millionaires and multi-millionaires. My guess is not really enough to qualify them as Job Creators. For that matter, how many jobs does one have to create in order earn that title? How many families employ full-time housekeepers or gardeners?

Are they job creators? Do they qualify for massive tax breaks?

Additionally, as many have pointed out recently, the wealth of the top 1% of the country roughly equals the wealth of the bottom 50%. Now, while the net worth of the two groups may be the same, their effects on the economy are staggeringly different.

This is another obvious, though overlooked, fact. The larger group of people is going to have a larger affect on the economy as a whole (and subsequently on jobs) than the small, very wealthy, group. McDonald’s doesn’t make money because rich people buy their food, they make money because a lot of people buy their food.

The point I’m trying to make is that we don’t live and work within an economic system based on serving the rich. It’s OK for people to become very wealthy, and they shouldn’t suffer for it (although compared to the disappearing middle class, I can hardly call increased taxes on billionaires suffering).

But our economic system doesn’t, and shouldn’t, revolve around millionaires and billionaires. I’m not quite sure why conservatives are so adamant about turning less wealthy Americans into serfs, and I don’t see the reason for it. The top 2% aren’t separate from the economy, they’re part of it as much as anyone else.

9 Comments - Leave a comment!

Budgeting Isn’t For Everyone: Is It For You?

Written by in Budget
13 Comments

Since I started this site, I’ve been a fan of budgets. They’re useful to make sure you know where your money goes and to keep track of expenses. However, I’m having a change of heart. After 2 years, I’m realizing that they’re simply not for me.

Why?

It’s not because I want to spend and don’t want anyone telling me what to do. It’s not that I always know where each penny goes and can keep in mind where I spent my money and know exactly when to cut back. And it’s definitely not that I have enough money that where I spend it is of no consequence to me.

The reason I want to quit budgeting is that each month, things are roughly the same. I have monthly bills that are steady, I don’t go overboard in any category, and to be honest, I don’t need anyone to keep me accountable because I do a pretty good job as it is.

For the most part, when I am over budget, it is because I am going on vacation or have a large purchase that I’ve been saving for. I don’t really ever spend an extra $200 on food when I wasn’t expecting it. I experience only slight lifestyle inflation, and I’m not at risk of running into money and spending on new clothes each month.

Budgets are not for me. Budgets are for people who can’t keep their expenses in check, for those who are trying to keep themselves on a plan and who can’t do a good job without one, and that simply doesn’t describe me.

I don’t need a budget. I like seeing a snapshot every few days of my accounts, but keeping track of every transaction is time-consuming, exhausting, and stressful.

Readers, how do you feel about budgets? I’m so over them personally, but that doesn’t mean you have to be!

13 Comments - Leave a comment!

Government Could Lower Social Security Benefits Without Anyone Noticing

Written by in Budget, Insurance, Retirement, Taxes
6 Comments

I’ve believed all along that Social Security benefits as we know them aren’t going anywhere, but it turns out that there are some sneaky ways that the government can reduce the payouts it will have to make.

One step that would definitely save the government a good amount of money would be changed the way it measures inflation. Currently, Social Security calculates inflation based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Both White House officials and Congressional leaders (Republican and Democrat) are proposing calculating inflation for social security benefits using the Chained Consumer Price Index. The result would likely be that social security inflation would be slower than under the current rules.

It would be pretty hard to get away with saying that people don’t deserve the benefits they were promised and to reduce someone’s paycheck by a hundred dollars a month. There would be an uproar because it would be seen as stealing from needy seniors.

But by changing the calculation that determines just how much of an increase people get each year, this change would be much less noticed and the impact would be felt by only a small very amount each year.

The proposed change would put the rate of inflation at an average annual rate of about 0.3% less than the current calulation. So after 10 years, people would receive a check that’s about 3% smaller than what they would if no change is made.

Still, the proposed change would cost the average retiree about $18,000 over 25 years. I’m sure the government would love to save that much per retiree. It comes out to an estimated $112 billion over 10 years, and since it compounds, the savings for the government would continue to grow.

About 60% of seniors rely on Social Security benefits for at least half their income. And by 2020, Social Security benefit payments are projected to total $1 trillion, so clearly we’re dealing with a large issue. Saving $100 million over 10 years is not going to fix the problem, but it would certainly be a start.

Readers, what do you think of this proposed fix? Would it be helpful or is it just a sneaky way of reducing the benefits of seniors?

6 Comments - Leave a comment!

Tips for Combining Finances

Written by in Budget
8 Comments

The following is a post from staff writer Crystal from Budgeting in the Fun Stuff, where she writes about finding the balance between paying your bills, saving for your future, and budgeting for the fun stuff along the way.

Daniel’s engagement led me to think about my own engagement about 9 years ago. Mr. BFS and I were pretty much living together already and had already made plans for our future, so the engagement itself was more a formality than anything else. We also started looking at combining financed but were waiting until my name was officially changed to make everything easier. Here are a few tips for anybody looking to combine their finances.

Ground Rules

It is important for newly married couples to establish the ground rules for banking transactions that occur when combining finances. One spouse may be accustomed to relaxed spending while the other is used to itemized budgets. That is why it is so important to create a joint plan that both parties agree to.

My husband was not a spendthrift, but he wasn’t as detail-oriented (aka anal) as me either. When we decided to combine our finances, we agreed that I would run the budget since I cared and we picked out our target amounts together. We also eventually started giving ourselves fun money allowances so he could spend on hobbies without me freaking out all the time. It has worked out great!

Joint Accounts

I know some couples prefer to keep things separate, but I lean towards fully combining a couple’s finances. It makes it easier for me to budget. Joint accounts will also give both partners equal access to all of the money to write checks, make deposits, and conduct business. A joint account usually means less paperwork and makes keeping up with transactions much easier.

Whether you prefer joint accounts or not, the key is to simply agree on a plan together. Everything else is just details.

Insurance Policies

Having the same automobile, life, and health insurance policies can mean that both of you will spend much less out of pocket on premiums. You can qualify for multiple vehicle coverage if you have two or more cars. Being married can also mean lower rates because married people statistically have longer life spans and are deemed more stable by insurance companies.

My husband and I got married young. I was 22 and he was 21. His car insurance premiums plummeted when we got our joint policy. Apparently, a 21 year old male is high risk but a married 21 year old male is not. I doubt his driving improved overnight, but we appreciated the savings.

Taxes

Most married couples can save on tax liabilities by filing their taxes jointly. A couple with a combined household income of $80,000 will pay less in taxes than two single taxpayers who make $40,000 each. It makes sense to file separately if one spouse makes significantly more money than the other or if your combined adjusted gross income is incredibly high. Otherwise, it makes sense to use the same accountant or tax software and file your return together.

I personally loved this part since it meant I never had to file another return again. My husband enjoys doing our taxes, and I think it completely stinks, so I happily print out the necessary documentation, make lists of the numbers he needs, and then I can just let it go. It’s a fantastic part of being married in my opinion.

What other tips do you have for a couple combining their finances for the first time?

8 Comments - Leave a comment!
« Older Posts