Sunday, April 3, 2011

Tax season is here again!

I read this article today. It tells us that we work for 3 months just to be able to pay our taxes. Well that's depressing.

And in our case, given that we have massive overhead and student loans (on which, we have a max on what we can deduct, despite the fact that we pay way more than that max), we have at least several more months of work just for that.

So, basically, we're keeping less than a half a year's worth of the money we earn from working, and from that, we pay our other bills (mortgages, utilities, food, gas, insurance, etc.).

After all of that, whatever's left (assuming there is any) is money you can use to pay down debt or invest or save or spend.

Hmmmm, well that little mystery is solved. I often hear people say, "Where does all the money go?" or "Why don't I have any left over after paying bills?"

Call me Sherlock.

Also, right after I posted that much-commented on post about finances (seriously, like the next day), I came across these articles:

This one explains that it's harder to get started today. Very interesting article.

And this one explains that the middle class has become the under class.

Our book club is reading The Millionaire Next Door this month. It was published in 1996 and I'm wondering how outdated it already is, how much of it already doesn't apply today. Economic shifts seem to happen so quickly sometimes and if your timing is good, you score. And if it's off, well, your finances take a hit. And you can't exactly time it. It is what it is.

So, on that note, happy Tax Season everyone! Consider this my annual tax season post. Have you filed yet? We're filing this week.

Oh, and for a more upbeat story, read this one if you're into saying things out loud like "Wow!" when you read to yourself and if you're into being happy for others. It's a pretty amazing story for more than just financial reasons.


Melanie said...

I try to avoid talking about taxes because it gets my blood boiling, but I will say that I don't mind paying my fair share. Our gov't needs to keep going & administering... but I think everyone should pay their fair share. So that's where I should stop, and Happy Tax Season to you, too!

Robynne said...

U.G.H. That's all I have to say about that - it's depressing is right! I don't mind taxes to a degree, either, but what you just said and what I see in my own life is completely ridiculous...don't get me started!! ;p

the Lady said...

Our taxes are paying for public education, hospitals, universities, local government expenditures that include fire departments, libraries and museums, sewage disposal and police departments, medicaid and medicare. Not to mention national defense, US postal service, utilities to those in need, etc.
Yes, as Americans we pay a little more than 30 percent of our income towards taxes. However, if you were to live in Canada, you'd be paying 40 percent and in Sweden- which has the highest taxes in the world, you'd be paying nearly 60 percent of your hard earned cash a year to Uncle Sven or Aunt Hildegard. Which isn't good or bad. Just a different mindset on how they feel their society should be run.
However, yep, it does hurt. Just hurts a bit less when I know where the money is going. :)

Boquinha said...

Hmmm, I'm thinking some of you didn't read the articles. ;) This post and the articles in it are less about taxes and more about economic shifts.

Taxes, I get. Taxes, I'm fine with. As long-time readers of our blog know, I usually do an annual post on taxes and one of my favorite ever posts is about taxes. My beef has never been with paying taxes, but rather with the complicated tax code. As many of my friends and family know, I'd gladly pay MORE taxes if we could switch over from our current convoluted tax system to a flat tax or a value-added tax system.

And therein lies the rub -- taxes are, at least, predictable. Economic shifts are not.

And that's where generational conversations about finances get muddied. That's why I've been impressed with the recent flurry of articles on generational conditions related to the economy. I think it's fascinating.

Melanie, we're in agreement -- everyone should pay their fair share (hence my support of a flat tax).

Robynne, UGH indeed. You totally got it! You guys went through the ringer with the recent shift. We have friends who totally made out QUITE well because of the timing (buying and selling). It was like the timing of your moves and house buying was at the totally worst times. That was rough! Bet you're glad that is over. I'm happy FOR you!

Bethany, like I said, I have no problem with taxes and I'm clear on what they go toward and how percentages vary around the world. That's all fairly predictable and statistical. I'm more interested in the economic shifts (which aren't as predictable) from year to year and generation to generation and how it impacts how we view financial realities and possibilities. But yeah, as with most anything, perspective helps.

the emily said...

We filed in January. Only way we could pay for our move.

the Lady said...

Oh, I get you, Stacy. Economics is completely unpredictable and that seriously frustrates me. Today in our economics class, the professor was trying to explain that there has been no known research to substantiate that outsourcing (ie. free trade) causes unemployment. That eventually, workers that lose their jobs to a changing economy will learn other skills and move into other fields of work. The downside of course, is that the transitional time period for the worker could possibly take a generation- and many won't even be able to find another job (but don't worry, the US government has a program to help alleviate the pain of these transitional costs...well at least this week they do.)

Thanks for clearing things up. I admit that I didn't read the articles.... but I will. :)

J Fo said...

Interesting articles. A quote that stuck out to me from the first one was “They just don’t know how to save money.” I feel like that is such a common attitude for the older generation, and that those of us who are struggling with young families and such get judged a lot. It can be disheartening, but I guess all we can do is keep plugging along and getting ahead and staying informed the best way that we can.

Boquinha said...

Em, UGH. Still working on ours. They've gotten very complicated. I wish, wish, wish we had a flat tax.

Hey Bethany, that's a really interesting thought about outsourcing. I suppose it's like Capitalism -- the freedom and changes and competition actually foster creativity and growth. Huh, never thought about it with relation to outsourcing, though. The tendency is to think just negatively about it. Food for thought.

Jess, YES!! That's EXACTLY it! The past few posts I've written about finances are about just that -- the attitude and assumptions of some in the older generations toward some in our generation without looking at all the ins and outs of finances nowadays. It's tough! And expensive. Ditto, ditto, ditto what you said.