FYI: Think of this as a tale of two households. They live side by side. Their houses are equal in value. They have the same income, but from different sources. They drive nearly identical cars. We could write quirky folk songs about this.
But there is one big difference. One family is retired, in their late sixties. The younger family is middle aged— new empty
nesters.
Regards,
Ted
http://assetbuilder.com/scott_burns/keeping_up_with_the_retired_joneses
Comments
Use the MFO Amazon link for these books. Scroll down on the link pages for a short book description. We give these as wedding presents for the young ones.
The Millionaire Next Door
The Power of Habit
The first book is directed towards spending habits; while the second book is directed towards the study of "habits" and how to consider "adjustments".
Take care,
Catch
That is really the crux of the matter. The more one spends on junk and wanna-have items, that is less money to invest. Just think of the average Joe and Judy who buy all kinds of stuff and fill up their garage only to sell it later on for a dime on the dollar if they are lucky. That same money going into a well managed or a index fund would grow for their future.
I came across this statement recently. Is there any truth to it ?
Thanks for any replies, Derf
Dec 27, 2014
The reason: The federal code provides that there is no tax on capital gains or qualifying dividends for people in the 15% income tax bracket. That means that a Los Angeles married couple filing jointly for 2014 with $94,100 of adjusted gross income, all from long-term capital gains and qualifying dividends, would pay nothing — zero! — in federal income tax. But their California tax bill would be north of $3,000.
In 2014, if a couple had $94,100 in AGI (all cap gains/qualified divs), then line 38 (AGI on p. 2) would be $94,100. Subtracting a standard deduction of $12,400 gets us down to $81,700. Subtracting two exemptions ($3,950 each), gets us to a taxable income of $73,800.
Taxable income under $73,800 is taxed at 15% (or less). So if that's your total income, the cap gains/qualified div portion of it is taxed at 0%.
I forgot, NO state Taxes,
PS. you wouldn't like it
And for retirees, Calif. has a one-time get out of jail free card - if you want to downsize, you can take that low assessment with you to your new home (in the same county or one of a handful other other counties) - Props 60 and 90.
Maybe if you owned your home free and clear. But taxable valuations must be high. Grocery prices appear about 50% higher than in the northern states.
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Of course many down there consider themselves to be a separate nation.