How I got out of poverty. notice – I am NOT your lawyer, investor, tax guy, but have some knowledge. This is not professional advice, this is just my advice.
Background on me – I WAS an immigrant. I am now an American citizen. I am from the USSR(it was called that then died then we were free to come to the United States) I grew up poor. So poor that minimum wage back in the 90’s was $4.25. This is what my parents made when we first got here. I didn’t know I was poor until somewhere in highschool. So, understand that when I explain the following, it is because I grew up poor, and I HATED BEING POOR. I never complained about it, but when I realized I was there, GOD did I want to get out. And I did.
Teenage years – GET YOUR LICENSE ASAP Get a job. get an old raggedy car. My first car cost $600. And I spent lots of time and very LITTLE money fixing it with my old man and HIS old man. We bonded so much from that car alone. My insurance for that shit car was $400 a year. After speeding tickets(multiple) it went to $800 a year. No fucks given, as it was nothing to me at the time. Keep it until it dies.
Cell phone was $40 a month. Required for me to have a life outside of the house.
I did no afterschool things. I worked. I saved money, and spent money like the young fuck I was, but hey you gotta learn sometime.
Everyday after school I worked from 5pm-10pm. Weekends I worked all day Saturday either opening or closing(at the mall) or did a double. I was paid less than $10 an hour, but I was living with parents, and only had my car insurance/cell phone bill.
When I got out of highschool I had over $5000 saved in my bank account. I burned it on a GF I had from highschool over the next few years. But there was motivation from that and lessons learned.
Early 20’s- Job hop like a motherfucker and go to school. I have a bachelors and a masters. I dropped out of school multiple times as I went into college right after and just wasn’t into it. When I finally decided to do it, I did it all. I went to school and picked up the bachelors and the masters in 4 years instead of 6.
You earn more money by job hopping in your professional career than staying at the same place for multiple years. The correct length these days is 2-3 years. Read more below
Until I was in my mid to late 20’s, I made less than $30,000 a year. This was for many reasons, the first, is that I was going to school, and needed flexible hours. AFTER my degrees, I jumped from 30k total to 30k base plus 30k commissions per year, to 47.5k base plus 35k commissions per year, to MID 60’s plus commissions per year. You can do the math.
the last 3 positions came within 3 years of each other, I have no loyalty to a company, it is all for my best interest. Treat companies like women, understand that they can and will turn on you. Also, treat women like companies, makes life easier
I did this by going into SALES. SALES is the most RP profession ever created. It’s the oldest profession in the world. If anyone says prostitution is, well that’s SALES. People with a hustler mentality do the best. Understanding that hustle is the most important and knowing how and why is what gets you successful. Some rules to get out and stay out of being poor. Lots of these are mental
Iron rule #1. YOU GET PAID FIRST. – 10% of what you make POST tax, goes into your savings/emergency fund. Period. No questions. Some people like to do this with commissions also. I am one of those people. This money can be used for rainy day things, investments, and whatever else you need to get you up into the next tax bracket.
Iron rule #2. If your job has a 401K plan with matching, YOU MATCH THE MAX AMOUNT. It’s FREE MONEY. And it’s PRE tax. Which means if it costs you 100 bucks a check, it really costs you 70-75. Plus, your employer matches. You can take loans out on it(I do not recommend this) but in rainy days it’s possible. They charge you interest, you can tax deduct interest paid on this
Example – your job matches 50% of your contribution to 401K up to 7%. This means if you put in 7%, they will put in 3.5%. IF you put in 10%, they will put in 3.5%. 3.5 max, 50% of whatever you put in.
Some places say “vested” after a certain time. Meaning you have to be there 2 years to get the full vested interest.
Example – If you stay with us for 1 year, you get 50% of what we vested in your 401k. that means it’s a 2 year plan. They have 2-3 year plans also. It is an incentive for people to stay at companies longer. Also, your employer has a stock buying program. USE IT. You get discounts on their stock. When they do well, you do well. This is the only stock I believe is ok for selling. Read more below for explanation.
Iron rule #3. When you invest in the stock market, that money you put into it is gone. DO NOT treat it like you still have it. Accept that it is gone. If you can’t accept this mentality, do not invest in stocks. Stocks low? Buy more. On an annual basis, I put in a few thousand dollars into my e-trade account. I do my own research, I pick the stock, and I buy about $1000 worth of each that I think is worth my time. Then I sit and wait. After a year, I re-evaluate. I bought Netflix in 2012/2013. I’ve never let it go. And I don’t care that it’s dropped so hard. The money is gone. Never sell stock unless it’s for special reasons – paying off student debt, down payment on house, BIG THINGS. Work stocks may make you sell if you don’t work there anymore. This is acceptable. Sometimes you don’t have a choice.
Iron Rule #4. Create a roth IRA. Put $1000 into said IRA once a year when it matures. If you “can’t” then save 100 a month. Place it into said IRA at maturity. Do this every year and then forget about it. I started this when I was in the early 20’s, it has grown past 10k already. I understand that isn’t lots, but once you get to about $60 a year plus in salary, you can begin to start adding more every year. This is TAX FREE when you retire.
Iron rule #5 – never buy new STUFF, and if you can BARTER or get stuff for free, do it.
There is no excuse. As a treat, sure, but on the regular, no. There are plenty of thrift shops that sell brand name bad ass clothes for pennies on the dollar and you can look right on the cheap. I spend $500 bucks on a blazer. But I also spend $2 on the button down shirt that I really like. You like video games? Steam, GOG, greenmangaming.com. sales. Amazon even has PC titles that go for dollars. I wait until a game has been out for a while and I pick it up on sale. Cars? Never new. Ever. I doubt I will own a brand new car until I’m retired. It’s just not worth. I picked up a car that is 3 years old and had less than 50k miles on it. Same model cost 26k brand new. I snagged mine for 16. You like time pieces? Go to pawn shops. Cell phones? Never buy them new. Ever. After a month lots of people hate their new phones and will sell them at a loss. Discount stores – also have “new” clothes from designers at cheap ass prices. My personal exception to this rule is shoes. I will buy new shoes when my old ones are pretty done. I’ve kept certain pairs for 15 years until I couldn’t wear them anymore. When I was a kid and had no money, I would trade food from the restaurant I worked at with the managers of the movie theater for free movie tickets. I traded food for cookie cakes I couldn’t afford. Pretty much anything that can’t be tracked like physical goods, can be bartered for.
I buy things “new in opened box” so I don’t have to pay full price. That $200 item becomes $120. That $80 item becomes 30 bucks.
Iron rule #6. Do not go out to eat too often. If anything keeps anyone poor, it’s this shit right here. Learn to shop and cook at home. This is a life skill. The amount of money you will not spend and or save while simultaneously increasing your own passive value would astound people.
Iron Rule #7. Figure out a way to have a passive income. Also known as marginal revenue which then turns into incremental revenue. Rent on a place, rent for your equipment, ideas, properties, anything. Passive income is where you don’t have to do anything and money keeps coming in. Monetizing a blog, making your youtube channel large enough, interest on large deposits in the bank. Do not be afraid to use other people’s money to invest into things that can build you a future.
Iron rule #8. Never discuss your money. It’s no one’s business. I made this mistake. When you become successful, other people resent you, they are mad that you got wherever you are now. In your mind you aren’t anywhere near where you want to be, but to them, you are already miles ahead. And people don’t like that. People don’t like knowing you are succeeding. They can’t help it. Mothers, fathers, sisters, aunts, FRIENDS, PLATES. Which leads into the next rule.
Iron rule #9. There are no “loans” to your friends/family. Never expect it back. IF you are giving, give once say it’s a gift, and then move on.
Iron rule #10. Always keep your hands in multiple pots. The goal here is multiple. You have wealth spread around in multiple places, so when things go to hell not all of your wealth is affected.
flexible rule - debt can be a financially good thing. When you make enough money, you want to be able to deduct your “interest paid” on student loans, car notes, mortgages(ESPECIALLY MORGAGES) and whatever else. This drops your effective taxable income and you get more money back. This usually happens when you are hovering closely between 2 tax brackets.
edit
]SureImShore - was corrected by this user. Thanks bro.
Not disagreeing with the overall logic, and solid post in general. However, the tax calculation is incorrect: if you make $90751 in 2015, you pay $18481 in tax. If you paid any interest(or an expense) on anything, and drop that by a DOLLAR, to go to 90750, you suddenly only have to pay 5200 plus 25% of whatever over $37450. Which totals $14518. For a dollar, there is a $4000 penalty. Yea, debt is a beautiful thing. 90750 - 37450 = 53300 53300 .25 = 13325 13325 + 5200 = 18525 I'm an accountant and I have experience in corporate and individual taxation. While interest deductions can be good, it is never a 1-for-1 deduction. In the example OP gave above, he indicates a dollar of interest paid can save you $4000. Not only is this incorrect, a dollar of interest paid will never save you even a dollar of tax. Taking the above example, lets assume you paid $10000 in interest (or combined interest/property taxes). Your taxable income goes from $90750 to $80750. Your new tax calculation: 80750 - 37450 = 43300 43300 .25 = 10825 10825 + 5200 = 16025 18525 - 16025 = 2500 Because you are in the 25% marginal tax bracket, the value of your deductions is only worth 25%. While this is an overly simplistic example, from purely a tax perspective, you would be better off not paying the $10000 in interest and giving up the $2500 you save in tax. If you are using the mortgage to purchase a home, or business loan to grow and earn more money, that is a more nuanced definition of "value" end edit
If you do only the first 4 rules, you will have 5 wells of money. 5 emergency funds. That mind shift you get when you know you can job hop because you are financially secure, that is important. That is abundance mentality realized.
My final thought – being poor sucks. It’s nature’s way of telling you something. Adapt or die.

lestratege 10y ago
I don't think this is how tax works. If you go up a bracket by a single dollar, you pay the higher rate only on that extra dollar, not on your whole income.
[deleted] 10y ago
Yeah it infuriates me that people think this is how taxes work.
thredditsowaway 10y ago
You're right. Having said that, his advice on using debt as a tax break is totally valid, especially for high income earners.
Another little nitpicking item: you're better off dumping your retirement money into a low-cost fund or ETF (as opposed to stocks or cash). Buy-and-hold is the right mentality but stockpicking is a total waste of time and limits you to investing in the US. I think you can hold similar products in a Roth IRA.
favours_of_the_moon 10y ago
You can also put gold and silver in an IRA.
[deleted] 10y ago
You could also light money on fire. Doesn't make it a wise decision.
favours_of_the_moon 10y ago
I called gold at $280/oz. How're you doing?
[deleted] 10y ago
Wow. Congrats on being right. Once.
R1fle 10y ago
In regards to that first edit, we have something similar in Canada. It's better to make 49,999 salary than 50,000 because you receive a larger tax hit at 50k. If your work wants to give you a raise or a promotion that comes with a raise it's better to go from 49,999 to 55k.
I like a lot of the points you made. I wanted to join my companies ESOP this month, stocks were just opened up to the employees. I joined 2 days after the cutoff date to be eligible for stock ownership though. So I have to wait until fucking November to buy stocks.
I really need to get on multiple savings accounts though. I've done tons of research on them and I keep putting them off.
[deleted] 10y ago
What are some good examples of sales jobs (other than car salesman)?
Equilibriun 10y ago
Software, anything digital. Except news papers and that kind of dying trash. You cab actually break six figures in the car sales side if you are willing to put in the hours. Any service sale. If you are new to selling anything in a call center will get you up to speed.Make sure there is a quota, and think hard on if you think you can actually do it.
Never take a 100% commissions job. You might as well go be a drug dealer at that point. Those companies give zero fucks about you.
If you live with parents and don't need income that much, insurance sales racks up exponentially over time. But the start sucks so hard. Because the more customers you get, the more passive revenue you get when they renew
SlamSlask 10y ago
As a 20 year old guy this is really good advice to make sure you don't make to many of the common mistakes
NakedAndBehindYou 10y ago
Your whole post was great until the tax part at the end which is completely wrong.
My advice to you: get a CPA to do your taxes this year, because you've almost certainly been doing them wrong.
APookIsAPook 10y ago
Kind of a red flag making a finance post and not knowing how tax brackets work.
You're much better off putting that $1k from a random stock into your IRA and buying a target date fund or index fund than trying to pick an individual stock. Individual investors should not attempt to beat the market, there are professionals and computers that literally do this 24 hours a day as their job competing against you. You will not come out ahead unless by sheer luck.
Good advice is to make sure you take advantage of any 401k matching, then if you have left over income contribute to your 401k and roth ira.
The job hopping advice is solid. Buying used is solid. Investment strategy is a bit iffy, I don't suggest anyone pick an individual stock for 50% of their yearly contribution, that's a terrible idea.
DadBodLover 10y ago
What is the point of putting money into stocks if you never expect a return? That shit doesn't rise forever, trust your gut and get out when the time is right.
[deleted] 10y ago
I think what he is saying is don't bank on a profit, and don't invest speculatively.
I for 1 would sell and buy depending on the market. In 08-09 and 2011 I was in a saving account the majority of the time, back in now though
YC_90 10y ago
If you try to trust your gut, you'll lose money. Invest in passive ETF and wait until you retire. It's by far the best strategy out there. And yes, it'll rise forever.
wont_tell_i_refuse 10y ago
What's a good ETF to look into?
smthsmth 10y ago
longterm stock indexes long term average ~6% return, but are volatile. if you have a 50 year horizon that could be a pretty good risk/reward trade-off, but if you have a 10 year horizon, not so much.
DadBodLover 10y ago
Tell that to the Chinese and 08
Sdom1 10y ago
Timing the market is extremely difficult. Even a lot of top pros are where they are because of several lucky breaks - i.e. chance. Taleb talks about this in the Black Swan. The top fund managers may be where they are almost entirely by chance, as opposed to being run of the mill in their industry. And chances are, you are nowhere near as smart as they are.
Every empirical study done on this shows that hopping in and out of the market decreases your returns long-term. Now, that doesn't mean that your asset allocation doesn't change.
For example, a 25 year old should have a much different portfolio than a 50 year old, whose portfolio will be different than a 65 year olds. As you grow older, your investment horizon shortens and thus you can't be as exposed to market shocks. Imagine retiring into a massive bear market and drawing on your assets while the market's down. This happened to a lot of people in the market downturns after 2000 and 2008 because they had shitty, awful financial advisers that should be getting their ass pounded in prison.
mugatucrazypills 10y ago
What's the shitty-awful advisor supposed to do when the customer hits 65 and needs to start draw down when the markets low ?
Ideally they've been accumulating for 40+ working years anyways, so their base cost is so low 1/2 is still fine. Less caviar but no catfood retirement.
Some people just end up with the shit end of the stick though.
Sdom1 10y ago
Well, a decent advisor wouldn't have a 65 year old customer heavily invested in the stock market, that was the point. Generally by retirement what investments you have in stocks are an inflation hedge.
CoriolanusRevisited 10y ago
He probably means financial advisers urging their clients, those that are approaching retirement age, to maintain a risky investment composition by promising them outrageous returns, because the adviser was so blinded by the bull market and wasn't properly accounting for his clients need for security over returns. I don't know how prevalent that was, but it seems to be what he's implying.
mugatucrazypills 10y ago
Frankly there's risk both ways. Any extended period weighted more than 50% cash is destroying the investors' purchasing power. In our inflationary fiat money system, low yield investments are actually negative yield. Investments with a guaranteed loss.
Yearly portfolio balancing between 50/50 cash/money market and an index fund would be the simplest, most worry free and robust investment for 90% of individual investors.
You can make the ETF index fund a basket of international/domestic and large/mid cap for greater security, if you can be bothered to adjust between 4 funds vs 1. With auto withdrawal contributions, you set this portfolio and adjust once a year, say on your birthday.
Vanguard takes a step further by having a fund where the ratio shifts towards cash automatically as you age towards retirement, although it's questionable whether that's even worth it it terms of complexity/fees.
Buffet has admitted himself that this is what most individuals should do before they worry about individual stocks.
In interest shielded retirement accounts, you can get more aggressive and pick income holdings. This is the opposite of what most people do as they are told to max their risk because they have long time horizons in these accounts and tend to put a bunch of speculative crap in there. But the tax advantage in the account is using it for the type of "income investment" that is heavily penalized in a non registered account. Pipelines, REITs, Tobacco Stocks, etc.
[deleted] 10y ago
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Equilibriun 10y ago
Why don't you enlighten the rest of us on that journey in a post? I get your point, but the purpose of this is not to get rich, it's to not be as poor as I used to be. I'm all for learning. That's why we are all here
[deleted] 10y ago
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nbk89 10y ago
How much money would one need to even start a business like that?
Squeezymypenisy 10y ago
Instead of a step by step. What was your business in? Like a general field I mean.
JokarAkaFatum 10y ago
You won't get rich that way, but i guess you can get out of poverty like that.
testonator 10y ago
Getting rich is more about saving money than it is earning money. Look up the book The Millionaire Next Door.
JokarAkaFatum 10y ago
Yes after maxing out my 401K or IRA, after i get old as fuck i will finally will be rich. Come on dude, you can look up the wallstreet playboys.
mugatucrazypills 10y ago
I think you're partly missing the point of that book Testo:
If you can't control your spending you'll never be rich(high income or otherwise). But you're very unlikely to scrooge yourself to wealth.
But for wealth, business creation is a more common path than working for somebody else even at a high level of income.
Equilibriun 10y ago
Yea that was the point. I'm working on getting past middle class now. I understand this isn't a long term strategy. It's a starting point. To be honest I don't know what to do after this I'm still learning myself.
I guess the next steps would be to scale said income and passive income and get into larger investments
JokarAkaFatum 10y ago
Well building businesses and investing(not only stocks etc) is the best option to get rich. With a little hard work and a plan you could do it.
smthsmth 10y ago
it's also the best option to get poor.
randarrow 10y ago
Agree with most of what you wrote. I do not agree with job hopping, depends on profession and economy; if you have a good job in a bad economy keep it; if you are learning what you need to start a business keep it. I do not agree with having a roth Ira/Ira when you are young (except to keep old 401k money); long term capital gains are better than Ira tax deferral, and Roth iras are likely to be changed and taxed in next few decades. Iras/Roth iras are good when older or rolling over 401ks. And, that's not how tax brackets work.
I agree with buying used (good) clothes/cars. Do agree with always saving 10% at least. Agree that loans to family are gifts (I put a stipulation in my last loan to a family member that if they accomplished something the loan was forgiven, you can use forgiveness for bettering the deal). Mostly agree with the don't discuss money, I discuss money with no one, not family not friends, except for one financial mentor. 401k matching is free money, take it....
ELLEN_POO 10y ago
How can capital gains offer a higher ROI when your employer MATCHES what you put in the 401k? You've already doubled your investment that way.
randarrow 10y ago
I'm talking IRAs not 401ks. With a traditional IRA, you pay full income tax when you take money out of the account with no mechanism for cost basis, where with long term capital gains you pay 15% and get to subtract out cost basis. Yes, you do not pay tax on the income going into an IRA. In both of these, when considering decades, you are likely to be tax mostly on profit, so basis doesn't really matter.
There are exceptions when IRAs work. And, places where you should simply stop. Now, let's say that you know your income tax bracket is going to be much lower when you retire or can plan years when you only pay lower tax brackets than what you are paying now; you might be good to put into an IRA. Opposite works for a Roth IRA, lets say you are going to have a higher tax bracket in the future or you are temporarily underemployed; if you put money into the Roth IRA which has been taxed at 10%, but would otherwise pay 25% in the future, might be good to do now. But, this implies you are lower income now and are retiring soon and can plan this. Also, let's say you are 25 and have 100k in an IRA; stop putting money in. 100k in 40 years would pay for your retirement, you need to invest in accounts which give you free money (like 401ks), that you can access before retirement age, or that have lower taxes. But, if you have to roll over a 401k, always roll it into an IRA. IRAs are useful for complicated tax investments as well.
IRAs were a good idea for everyone. A deffered tax account helped move taxes from the baby boomers peak earning years, into the future when the population is unbalanced, also compounds the earnings. So, the goverment gets taxes instead when the tax base was expected to be shrinking and those taxes have compounded nicely. Is a good mechanism to help replace the dying pensions. Boomers when a simpler tax mechanism and encouragements to invest, everyone wins.
Roth IRAs are skewed too much to help middle class which doesn't care and hurt the government, are effectively a tax shelter the liberals are always railing against so are likely to die. Also, are complicated. But, a strong tool if you can figure out how to use them and use them only in moderation and early on. Getting access to your principle and other emergency funds is nice.
Answer in the end is it's complicated, and is probably have only a little bit in an IRA/Roth IRA unless you are close to retirement age.
[deleted] 10y ago
"being poor sucks. It’s nature’s way of telling you something. Adapt or die."
that was hard to swallov
ELLEN_POO 10y ago
Don't invest in stocks yourself, you can't beat the market over time anyway and you could make more money using the time spent researching stocks otherwise. A randomly picked portfolio of stocks performs just as well as a handpicked one. Even professional fund managers cannot beat the market.
Instead, invest into index funds like Fidelity, Charles Schwab or Vanguard. The latter having the best reputation. Don't use active funds, they're not worth it. Also, just don't invest money into stocks that you are going to need within 20-30 years. Just don't. That advice is just wrong. Pay your debts before you invest in stocks. The goal of investing in stocks should always be early retirement, maybe a fund for your children or another goal FAR AWAY in the future.
Investing in stocks is very good though, if you do it the right way. If you had invested $100 in the S&P500 in 1980 it would be $1895 now.
Another thing that should be mentioned is to always DIVERSIFY and BALANCE. Diversify means using different index funds, like emerging markets, international index funds, total us market, etc. Don't just put all your stock into the funds that are expected to give the highest returns like emerging market funds. Balance twice a year. Balance means if your goal is to have 50% into S&P500 and 50% into an emerging markets ETF (stupid example for clarity), and S&P500 lowers in value but emerging markets rises, then the balance is not 50/50 anymore. You should balance it out again each 6 months so that you get your desired spread again.
10% each month into the emergency fund can be too much or too little. You shouldn't just keep growing the emergency fund until eternity. If you're for example a freelancer in an industry where there is not a lot of work but the pay is high, it may make sense to have a really big savings fund worth a couple of years of earnings. If you're a student you shouldn't have more than 5k, to buy things such as a new washing machine, and so on. If you're job hunting you should also make a big one, as if you're willing to move to another state that costs money, etc.
[deleted] 10y ago
[deleted]
ELLEN_POO 10y ago
Read after, it was an example for clarity. You wouldn't actually spread like that.
ELLEN_POO 10y ago
Oh and this may be worth reading as well. http://finance.yahoo.com/news/why-probably-better-investing-donald-233020366.html
Sdom1 10y ago
Those claims have been debunked. The math used was completely wrong and it makes absurd assumptions. Also, remember that Trump is worth $4.5B or so, but that is not the total worth of his company. He doesn't own that per se from what I remember. The company is held in a blind trust and he has several siblings who are also very wealthy.
favours_of_the_moon 10y ago
Only stocks I'd consider right now are mining stocks. We're in a commodity phase. Do metals, gold and silver.
But everything else I agree with.
I_Luv_Procastinating 10y ago
I'm a pretty young guy and I've realized I've been spending a lot of money on outside food the past couple of months if not years. Solid post!
--CASPER-- 10y ago
Thanks for this post inspired to get my financial shit together +1 OP.
--CASPER-- 10y ago
Thanks for this post inspired to get my financial shit together +1 OP.
savedarticles 10y ago
If you're 'investing' into single stocks you are going to get rekt. Companies come and go. Will netflix be around 10 years from now? Famous last words. Hello Motorola and a thousand huge companies that have gone into the oblivion that once dominated.
No, long term investing should at min. be in an index fund. Or a managed target day fund or managed account. At least someone is watching the investment daily for your best interest.
If you just buy and forget you are going to get lose a lot of money. I suggest people learn trading if they are going to buy individual stocks. Don't believe some post on reddit if you don't have an indepth understanding of markets.
[deleted] 10y ago
[deleted]
savedarticles 10y ago
Yeah I'm mad. Your stupidity upsets me. haha
Equilibriun 10y ago
I keep mutual funds and index also. My point was to not trade all the time and to emotionally disconnect from the money. Smart trading is smart. I will say that personally I've never sold once. I bought JC Penny at 14 I think I spent 500 on it. It's been less than 10 for a while, but I can live with that. It's preference. I evaluate every year. Nothing has compelled me to get rid of anything yet
savedarticles 10y ago
holy shit, just randomly looked at JCP. They are likely to go bankrupt. You are going to be left bag holding. What could possibly cause you to buy into it? You want to ride the trends, not buy a falling knife. Contrarian trades are very, very risky. You are essentially gambling. This was no investment at all. Set a stop and get the fuck out before you lose it all. Always set a stop when gambling.
savedarticles 10y ago
I don't believe in emotionally disconnecting unless it's in an index or target market fund. You should watch your stock and bail if you grow pessimistic on its outlook. If you are buying single stock, you are trading not investing. Trading requires diligence. 500 dollars is nothing so it's easy to disconnect but it's not right. When there's good money in it, you'll be watching it like a hawk or paying someone to.
Also, there's been a long bull run so people think set and forget is an easy way to make money. But, reversion to mean is a bitch and the market will correct as it always does and they'll lose their money. Yes, over 50 years the S&P will grow but you are likely to be dead by then.
SureImShore 10y ago
Not disagreeing with the overall logic, and solid post in general. However, the tax calculation is incorrect:
90750 - 37450 = 53300
53300 * .25 = 13325
13325 + 5200 = 18525
I'm an accountant and I have experience in corporate and individual taxation. While interest deductions can be good, it is never a 1-for-1 deduction. In the example OP gave above, he indicates a dollar of interest paid can save you $4000. Not only is this incorrect, a dollar of interest paid will never save you even a dollar of tax.
Taking the above example, lets assume you paid $10000 in interest (or combined interest/property taxes). Your taxable income goes from $90750 to $80750. Your new tax calculation:
80750 - 37450 = 43300
43300 * .25 = 10825
10825 + 5200 = 16025
18525 - 16025 = 2500
Because you are in the 25% marginal tax bracket, the value of your deductions is only worth 25%. While this is an overly simplistic example, from purely a tax perspective, you would be better off not paying the $10000 in interest and giving up the $2500 you save in tax. If you are using the mortgage to purchase a home, or business loan to grow and earn more money, that is a more nuanced definition of "value".
Equilibriun 10y ago
Thanks for the expertise and correction. I will edit the post when I'm off mobile tonight and add what you placed if that's OK with you.
smthsmth 10y ago
i'd add a few things:
dollar cost averaging: means you invest the same amount of money at regular intervals. so when the stock price is high you buy fewer stocks and when it is low you buy more. you get paid every two weeks? if you can contribute the full $5,500 roth ira amount (filing single with <$133k) invest about $210 every paycheck.
CD ladder: buy CDs such that one matures every month at an amount that can cover, or substantialy help, cover living expenses.
get a HSA. these are for "high" deductible plans, which are most employer sponsored healthcare plans these days. there are generally two kinds: one that's basically a savings account, and one that's more like a brokerage account. be sure to understand the fees. money goes in tax-free, and it can go out tax free if you spend it on qualified things. after a certain age (70-something?) it can come out tax free spent on anything.
don't buy complex life insurance or annuity products unless you have a very good reason (read: you are very welthy). if it is complex they have to charge you something for that. a lot of it comes down to being wealthy enough for the special tax treatment to be worth those fees.
diversify. throw $300 at bitcoin. buy some jewlery (it can't be taken from you if you're arrested, you can use it to pay a bail bondsman). a used, good condition glock 19 is probably not going to lose value any time soon.
houses and cars are not assets, they are comodities. they can degrade in value, and the secondary markets are volatile. you could end up making a lot of money buying a house, but you could also get under-water raped. good luck job hopping when you're 50k underwater on that house you bought three years ago.
GOATmar 10y ago
I find it appalling that financial/career advice is 100% absent from the side bar & RP network. Financial/career posts are all drowned out by "LOL HEY GUYS CHECK OUT THIS OBVIOUS EXAMPLE OF A GIRL OBVIOUSLY BEING A GIRL"
By far the #1 thing that can boost you in Life apart from getting fit (is that even in the side bar!?!?).
Start here: wallstreetplayboys.com
PissedPajamas 10y ago
Not to hijack this thread, but I've been out of highschool for three years now and didn't clean up my act until last year right around the time I found TRP. As a college student looking into the field of physical therapy, what would be a wise move in order to increase my financial stability?
About me: I work in the family business which is janitor services. My dad came an immigrant to the US dirt poor and built an empire for himself and it has the family living comfortably. I already have 11k saved from putting aside some money from work, I'm not in debt and have my college paid for with a scholarship. Any advice is welcomed.
[deleted] 10y ago
Don't you pay higher tax bracket only on the money that is in higher tax bracket?
Paranoidexboyfriend 10y ago
This is correct. Op clearly doesn't understand tax brackets, which is pretty basic financial knowledge.
Sdom1 10y ago
Well then, by all means let's disregard a post full of good financial advice because he made one mistake. That will allow us to feel good about ourselves.
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tuzki 10y ago
Sorry, that's not how income tax works.
Themooseconnection 10y ago
I went from a shit deal and 65k/ year to a great deal, full training and 150K/year by job hopping. I'm doing the exact same thing I was before for more then double the money. It's all about making connections and making them work for you. Be a man of integrity and people will do everything short of kissing your ass.
Kayyam 10y ago
Could you please develop the story. The field, the job, the connection, etc
Real_Pokemon 10y ago
That sounds like quite a story.
Can you give a little more detail about where you started, how you got to where you are, etc?
Appreciate it.
Themooseconnection 10y ago
Not that much to say really. Busted my ass even in situations that I didn't think it was worth it, people noticed, got a good reputation in the industry, made a few good contacts and good references. Paid for a few key tickets/ licenses myself. Used my new contacts to forward my resume for an open position.
toneroma 10y ago
I went from $60k to $170k in a single job change - like you, to a job doing the exact same thing I did before, but with fewer responsibilities and a lighter workload, and the freedom to live wherever I want.
I had stayed at my old job for almost five years, because the salary was okay and I my plan was to start a family with my now ex, so stability was nice. Note long after we broke up, I started shopping around my resume and I realized I should have been doing this after two years.
Interviews were easy to get as a qualified, experienced, certified professional, and I got multiple offers ( 5, to be precise) - the absolute worst offer was ~80k with a required relocation to PA, but most of them hovered around 120k (all were half travel/half work from home types). The last that I didn't take was just shy of $220k, but it was an independent contractor/1099 type of job with zero paid leave or benefits.
So yeah, I took 170k, W-2, benefits, and half work from home/half travel to work on-site. No brainer.
If I had started jumping earlier, it's possible I could be making a lot more already. I have my eye on a couple of companies that would pay me at that $220k level as a W-2 benefitted employee., but I've only been at this for one year.
And because the other commenters asked about it - I work in healthcare ITS as a Clinical Software Analyst. I didn't have any special qualifications when I started (my BS is in Biology), but it is a highly competitive field to get in to. I got lucky. That said, I don't have any special connections, just a small handful of very valuable certifications and a half decade of experience.
The jump was from a job working fulltime for a hospital system, supporting their EMR as a core analyst, to working for a contracting organization as a travelling contractor. When I worked for the hospital, I was solely responsible for... a lot of things, and my workload was killer. I do the same kind of work now, but the organization my current contract is with mostly just has me on as something of a mentor, as their employed analysts don't have a lot of experience. I spend most of my time investigating issues and then telling other people how to fix them. Least stressful job ever.
DONT_reply_with_THIS 10y ago
Dude.. I'm ~6 months into a cyber security gig making 65k out of school. What kind of certifications did you get? Do you do any programming?
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Steve_Wiener 10y ago
Hey guys, i doubled my income. Employers hate me! Work hard and you can too!
(Fill in the details yourself)
kingofi88 10y ago
Please let us know about this one weird trick on how you did it /s
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TekkomanKingz 10y ago
3,4,5,10 are extremely important these days. If you don't remember any of them remember those. You have 100% control over them if nothing else.
PlanB_pedofile 10y ago
On the job hopping thing. If you can't job hop, position hop. Don't be stuck in the same title for 3 years. Move departments, new specialty, ect. Some companies have nice health insurance and HSA contributions and 401k matching making it enticing to stay with them for 30 years but try to move around or up the ladder.
Sometime moving up the ladder requires a moving out to another company but in this economy, not all job markets are equal. You could be tied down into a particular field where jumping companies may not be as lucrative.
Try to make lateral movements if necessary. Out of my 8 years at my current comlany I've worn many different hats. Had job title changes almost every year. The climb up is very slow but never stuck at one desk for a long duration of time. I've failed interviews. Failed twice as many interviewa as I've passed. Thing is, I applied for newer and open positions. Positions that gained pay or gained skills.
When you wear many hats, it makes you a valuable person with a wide skillset that can adapt almost anywhere. This is an excellent survival mechanism to if you find yourself unlucky and swept up in a downsizing or cutbacks. I've been cutback, but instead of out on unemployment, i was able to transfer to a new area due to my expertise.
Job hopping is best suited if you live in an area like a big city with an abundance of jobs. But if you are stuck in a region or field, try to wear as many hats as you can at your current company.
*And for those who say "just be unstuck and move out of state or country... do realize there are some real and tangible obligations that can tie a man down that he must put those needs above his own"
ItalianoVero 10y ago
Could you go into a little more detail about when you were dropping in/out of college?
I went to college right after high school and did pretty poorly. It wasn't really the work. It was a sort of downward spiral of depression due to not really learning how to make connections with people and network so that I could get help, participate in study groups, etc. I also was completely clueless about women, which isn't totally relevant but made things worse I think. Eventually I got academically disqualified for one year.
I found TRP soon afterwards, got a job, got my own place(with roommates), and started lifting. I'm going back to school this summer.
What advice would you have? What were you going through during that period in your life?
Sdom1 10y ago
Bust ass. Every tenth of a GPA point helps. You are at school for one reason, to acquire marketable skills and knowledge and evidence of such (hence the GPA). Not to fuck as much puss as possible, not to drink and party. That stuff's OK in moderation, but never forget why you are there.
[deleted] 10y ago
Similar situation man, don't know what you're story is. Something made you depressed, and that something was probably not in your control.
Right now I'm focused on getting out of my parents house. Then in the fall I'm headed back to school.
ShowtimeBrodin 10y ago
I don't think you need any advice, and you're just looking to be heard and understood here - you know what needs to be done. That being said...
Study is your number one priority, over everything. Women, work, family gatherings and yes, even lifting. You need to function well so that means you need to be vigorous. Most importantly, sleep well. Go to bed at 2200 and wake at 0600. You don't need to attend every lesson, evaluate that for yourself. Keep working out as much as possible, including cardio.
But you already knew that, right?
Redjatis 10y ago
"But you already knew that, right?" I love this shit right here. We want everything mapped out for us, but we don't need it. It's an indulgence. This is why I love TRP. You answered his question, but you also told him why his question is part of whats standing in his way. Good shit.
sharp7 10y ago
I would recommend sleeping more than 8 hours some days like the weekends. Studies show resting up on weekends improves performance for the whole week. I usually slept in like crazy before a big test and then studied my ass off, the fact that I was so well rested really helped with the long nights. Make sure to catch up sleep if you miss out on it during the week too btw. And if you do an all nighter make sure you at least nap for 3ish hours before the test as sleeping solidifies memories and skills learned.
Equilibriun 10y ago
I wasn't into college the first 2 times I went. So I just dropped out eventually. Nothing special I just stopped going. First time I thought I wanted a computer science degree. I was wrong. Then I went to community college to do general stuff. Hated it. Too much like highschool.
Then I decided if I wanted money I need to pay up for that degree. It's not needed to get money but it will last my lifetime and gives me lifetime value.
If you are going to do school, really do it. Make it number 1 or 2 if you have to work, but even then I kept crap jobs because of flexibility for school. Be willing to put it first.
Boovs4life 10y ago
What did you major in if i may ask? Finance?
Equilibriun 10y ago
BA in business and then MBA
hugeveinycock 10y ago
Great post!
I went through major medical turmoil from 2007-2010 which required 9 surgeries and a shitload of missed work, which caused me to lose my entire business.
I switched careers into sales and have been consistently improving my income. For some perspective, in 2011 I made $4,000 gross income. Yes, for the entire year.
Last year my gross was $107,000. This year I'm on track for more.
If anyone is poor (as I was), just know that as OP outlines, there is hope. Hustle your ass off and be smart with your spending.
DancingC0w 10y ago
That is a good post, really helpful tips!
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[deleted] 10y ago
Very good post. If any one has HALF the drive and takes HALF the steps OP does here they will see their wealth and personal freedom double.
Money=Freedom expand your wealth expand your ability to travel, work for yourself, buy what you want vs what you need.
doubleknee24 10y ago
You should really look into index funds. They guarantee dividends. For example, ETFs like VTI.
--CASPER-- 10y ago
Thanks for this post inspired to get my financial shit together +1 OP.
1v1mebruh 10y ago
fantastic write up, thanks for sharing your story. really enjoyed reading it.
angryomlette 10y ago
Thanks for the post. It really gives directions to interesting opportunities.