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Archives for August 2014

Who Are The Real Job Creators?

By Frugaling 9 Comments

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Office Space Boss Are Job Creators

The term starts with classic media manipulation

For too long, big businesses and media conglomerates have propagated messages that suggest that only wealthy individuals can be graced with that moniker: “job creators.” The time has come to reappropriate and annex this title from the privileged minority.

News outlets are masterminds at twisting words to fit this greater script. Their training must be incredible, because they’re naturals at it. The trite, overused, and vapid phrases support a message that “wealthy people create jobs.”

The wealthiest elite stole the term, job creators. Instead of saying “rich,” “wealthy,” or “top one-percent,” the term puts a positive, flattering spin to scary inequality. What could possibly be wrong with job creators? Why would we want to discourage job creation? We need to help these job creators do their job — create jobs! (You can find beautiful examples of this media manipulation on Fox.)

This widely circulated logical fallacy has long been hurting the masses. Billionaires are often seen as the lubricant for our great American society. The dream that we are born into is promoted by their unique skill set, intellect, and economic wherewithal. Where would we be as a country, people, and world without the wealthiest people creating jobs? What would the world look like if we just removed the economic power that is trapped within the economic elite — our infamous one-percenters?

Started from the bottom now we here…

Let’s clear up this myth real quick. Below, I have ten (off the top of my head) of the greatest entrepreneurs of the last few decades. None of them were billionaires or part of the wealthy elite prior to creating thousands of jobs.

1. Steve Jobs (Apple)
2. Mark Zuckerberg (Facebook)
3. Elon Musk (PayPal, Tesla Motors, SpaceX)
4. Larry Page (Google)
5. Sergey Brin (Google)
6. Bill Gates (Microsoft)
7. Sean Parker (Napster, Spotify, Facebook)
8. Jeff Bezos (Amazon.com)
9. Howard Schultz (Starbucks)
10. Kevin Plank (Under Armour)

Steve Jobs was a job creator and entrepreneur
Steve Jobs unveils the latest generation iPhone. Photo: Matthew Yohe.

There’s no doubt that we’ve benefited as a world and country from these entrepreneurs. But to suggest that their billionaire status created jobs would be naive and dangerous. They created jobs through grit, timing, and intellect, but it came before the money.

Jobs was tripping on LSD and going through spiritual journeys, and then segued to the computer industry.

“[Steve Jobs] never finished college, dropping out after 18 months to take random, creative classes (such as that calligraphy, which he said is one of the main reasons why the graphics look so great on Apple devices). He was dropping in on these classes and just grabbing as much knowledge as possible without actually getting a grade in them. During the course of that he slept on the floor of friends’ dorm rooms, returning Coke bottles for food money, and getting weekly free meals at the local temple. (Source)”

He wasn’t wealthy, just a hippie looking to find salvation in the next great technology.

Larry Page and Sergey Brin were mere graduate students at Stanford University when their lives were forever changed. They weren’t rich, just motivated entrepreneurs.

Who are the real job creators?

We have entered a centralized, monopolized, anti-trust-ridden epoch where only a select few companies, organizations, and people control the dialogue. Fox News shouldn’t be able to manipulate the American people into thinking that wealthy people are job creators. And the short answer: they’re not.

Today, we must reclaim the title of “job creators” to their rightful owners: consumers and small business entrepreneurs. Every time we choose to search through Google, check/update our Facebook status, click and clack over our Apple keyboards, and slip on that Under Armour for a run, we are making an active, consumer-based choice. We are supporting jobs for that company and industry. That purchase and usage is our choice; ultimately, we create and support those jobs through this spending.

Trickle-down economics doesn’t work, and neither does trickle-down job creation. Let’s get our title back.

Filed Under: Make Money Tagged With: Apple, Business, Consumer, Consumerism, Entrepreneurs, Fox, Google, Income Inequality, Job Creators, media, Microsoft, News, Small Businesses, Steve Jobs

I Just Moved From A Utilitarian Batcave To An Opulent Apartment

By Frugaling 10 Comments

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Hope you enjoy this little tour of my old apartment!
(Warning: sarcasm ahead.)

Over the last 7 days I’ve been moving boxes, furniture, and settling into a new abode. I have a terrific roommate and some good friends with me — all in the same complex. We’re one big, amalgamated family. It feels wonderful to be around and supported and having fun with such great people.

But there’s a foreignness to my new residence. Every time I walk into the brand new apartment (for me and the area), it feels opulent and grand. It’s like I’m a little ant, looking up at the big blue sky — captivated and scared by the scale.

My home has wood floors and a stone-tiled bathroom, which reminds me of a hotel room. There’s fresh, soft carpet in the bedroom to greet me in the mornings. Central air and heating insulates me from the inevitable weather extremes of Iowa. A community center features a fitness room, laundry facilities, and regular staff.

As my friends know (and certainly some of my readers), I’m quite class conscious. When I see inequality and/or inequity, I can’t help but comment and try to change it. This new apartment, full of accoutrements and amenities is a reminder of my privilege. And with that, I feel deeply mixed.

The previous couple years were spent in a batcave-like apartment, which was comically awful. I lived 20 feet from an active railroad, 40 feet from a lurking cell tower, and my views were of a crater-filled parking lot. Despite its misgivings, I felt at home; at times, proud of it. I just never wanted to be above it all — separated too greatly from how many live.

Physical separation from more humble surroundings scares me. I worry that if I move to far from poverty, lower incomes, and more modest livelihoods, I could get swept up in craving endlessly. Perhaps more importantly, that this distance may come at the cost of being able to empathize with those who struggle economically — that I wouldn’t be as inclined to give back.

And now, I feel like I’m in a gated community. The demographics have shifted, as families departed as they couldn’t afford the new residences. The multiculturalism that once filled my old neighborhood has significantly changed. It’s evidenced in the growing number of white people and shiny cars.

I’ve joined the economically privileged, and I’m still wrapping my mind around the shift. I feel both honored to have this place, and unsettled by the way privilege begets privilege — a burdensome path and procession of more, greater, bigger, and taller. It feels paradoxical, as there’s great happiness here for my friends and I, and yet the discrepancy between the haves and the have nots has never been greater.

Filed Under: Social Justice Tagged With: apartment, Economics, home, house, Income Inequality, Inequity, moving, Renting

How To Use Dividends To Reduce Taxes And Protect Income

By Frugaling 6 Comments

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Dividends Photo
Photo: LendingMemo

Over the last few months, I developed plans to minimize my tax bill, earn more money, and invest in the stock market. Much of this financial planning is motivated by an upcoming tax burden that’s sure to sting.

The problem starts with self-employed earnings. These are filed under Schedule C of the U.S. tax code. Unfortunately, those earnings don’t include withheld funds that support Medicare and Social Security. To account for this, the federal government requests about 30% in self-employment taxes.

As someone who’s funneled as much cash as possible to swiftly pay off student loans, I don’t necessarily have a lot of liquidity or extra funds to pay this tax bill (yet). The U.S. government doesn’t adequately account for someone paying off student loans when asking for the tax bill at the end of the year (and this is just the tip of the iceberg for financial aid concerns).

With these worries in mind, I took time today to restrict my spending ability, increase my regular income, and provide a bit of a tax shelter. And it all starts with dividends.

One of the most contentious elements in our tax code has to do with capital gains and dividend taxes. Whereas normal income from work is taxed at steep, progressive rates, these stock-affiliated earnings receive an artificial discount. If you make over $406,750 as a single person, you pay only a 20% tax on dividend earnings. And if you hold stocks/assets for over one year, you also qualify for this reduced rate.

Dividend income
Only 20% of qualified dividends and long-term capital gains are taxed for those making over $406,750 per year.

For me, as a single filer with projected earnings of less than $36,900 for 2014, I’m looking at a brilliant tax rate of 0%! You heard me right: zero percent! That means for every stock that I hold onto for over one year or qualified dividend I receive, I should be able to keep the entirety of that income. Here’s where nifty financial planning will help lower my tax burden and increase the money in my pocket.

Today, I made a small (large for me, though) investment in Apple Inc. (AAPL). The stock is currently valued at $95.25, as of August 5, 2014. At that value, it is hardly one of the greatest income earners, but it pays a substantial 2% dividend yield. Simultaneously, Apple is still highly favorable among stock analysts — Yahoo Finance suggests that the collective price target is $104.79 within 1 year.

Based on stagnant yield growth, I should make about $31.96 per year from dividends. That’s all income that should receive a 0% tax due to those gains. Based on about a 10% (possible) appreciation in Apple for one year, any gains will be completely protected from taxation — even after I sell the stock. I will again have the 0% tax liability.

Long term capital gains and dividend income
This is the benefit! I’ll be paying nothing via qualified dividends and long-term capital gains taxes!

The political climate around changing capital gains taxes is terrible. The regulations should change — they need to stop benefiting the wealthy. Warren Buffett has frequently complained about this tax code inconsistency, and suggested that it unfairly rewards the wealthy. I think he knows a thing or two about investing, too! Until then, and as a low-income earner, I need to use this system to my advantage to reduce my tax liability and increase earnings.

Filed Under: Make Money Tagged With: Capital, Dividend, dividends, gains, Income, invest, Investments, stock, Stock Market, taxes, Warren Buffett

Stop Wasting Money On Your Commute

By Frugaling 3 Comments

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Traffic Jam Commute

We all want to maximize our take-home-pay, but with the constant increase in fuel prices, getting to work is costing a fortune. Thankfully, there are some easy, fun, and fast ways to reduce your commuting costs. Here are 7 ways that will put more money in your pocket:

1. Carpool Partner(s)

Find someone who lives near you and set up a deal to take turns driving to work. My co-worker lives 40 miles from work and has been fortunate enough to find someone to commute with.

Pros:

  • You’ll get to know a fellow employee better
  • You save on gas
  • You have a little flexibility since you are working with someone you know
  • Accountability, as you are more likely to be on time or early with someone else counting on you

Cons:

  • You don’t have your own transportation during the day
  • If you or your co-worker needs to stay late, someone has to wait
  • If you have an emergency and need to leave early, you may need to pay for expensive transportation

2. Third-Party Carpool Service

If you can’t find someone on your own, perhaps your area offers a carpool matching service. St. Louis and surrounding areas can take advantage of the RideFinders program. This program is free to use and funded by the Department of Transportation as a clean air initiative. RideFinders matches people with similar commutes.

Pros:

  • Potentially large commuter base
  • Someone else does the matchmaking for you

Cons:

  • You don’t have your own transportation during the day
  • Little to no flexibility as the arrangement is more formal

3. Vanpool Services

If there are enough commuters, you may way to consider the vanpool option. Vanpools are most economical for groups of 7-12 commuters that commute over 30 miles to work. One person volunteers to be the primary driver/coordinator for the vanpool. In exchange for all the coordination, the driver gets to use the van for personal transportation on nights and weekends!

Pros:

  • Driver can use the van for personal trips
  • You don’t have to use your personal vehicle
  • Meet new people (7-12 in typical vanpool)
  • RideFinders offers a Guaranteed Ride Home if you have an emergency or need to stay late
  • Commuters eligible for tax deduction though IRS Commuter Choice fringe benefit plan

Cons:

  • Driver has added responsibility of coordination (possibly time consuming)
  • Limited eligibility (most programs require certain number of people and distance)
  • Little flexibility in emergencies
  • Price split between commuters can cause price to fluctuate (30-day notice is requested before leaving)

4. Public Transportation

If you live in a city with a decent public transportation system, the bus/rail/subway could save money on your commute to/from work. Some employers will even pay for a monthly bus pass. A few years ago, I had a position in downtown St. Louis where parking was non-existent. The building was right across from a Metro Rail station, and taking the train to work made perfect sense.

Pros:

  • Save on gas and vehicle wear/tear
  • You’ll have to do a little walking, which is good for your health
  • Typically, public transportation runs frequently during work hours
  • Employers may provide public transportation subsidies; subsidizing or eliminating the cost

Cons:

  • Little privacy
  • Public transportation can be crowded and noisy
  • Not available in all areas

5. Bicycle

Perhaps you only live a few miles from your job…consider biking to work! You will shed some weight and keep more cash in your wallet. Personally, I live too far from my job for this option, but our Metro System has an accompanying bike trail. Many commuters bike to the nearest metro station, take the rail, and ride into work. If I didn’t have to pick up my son from day care, I would explore that option from time to time!

Many employers encourage health and wellness, and may provide lockers and shower facilities. Some people are invigorated by morning exercise. If you are one of those people, this may be a great option.

Pros:

  • No gas expense or wear/tear on your vehicle
  • You’re getting exercise

Cons:

  • You need to invest in a quality bike and safety gear (not really a bad thing…but an expense)
  • Limited by distance and environment (make sure your commute is safe!)
  • You need physical stamina
  • Forced to travel light
  • Dependent on weather
  • Need a backup plan in case you’re too tired to pedal home, emergencies, or inclement weather

6. Compressed/Alternative Work Schedule

The compressed work schedule is a wonderful thing! I currently take advantage of this and absolutely love it. Basically, in an 80-hour workweek, I get every other Friday off by working 9 hours (instead of the typical 8) Monday – Thursday, then Fridays I alternate between short days (8 hours) and being off. Count it – it’s still 80 hours.

Alternative work schedules (sometimes called flex) allow for variation from the employees core hours without altering the total number of hours worked in a pay period. A common alternative work schedule is 4 10-hour days. This means employees would have 1 weekday off every week. Most choose Friday or Monday to have a 3-day weekend. Another common day is Wednesday, because you are only working a max of 2 days in a row.

Entire states have implemented 4-day work weeks in the past (California and Utah come to mind), but this is a benefit many employers will offer if you ask.

Pros:

  • Break up the monotony of a 5-day work week
  • Employers benefit from extended work hour coverage
  • Quality of life benefit that makes employers competitive for best employees
  • 1 day a week you don’t have to drive to work
  • Potential flexibility

Cons:

  • You’re working longer hours when you are at work
  • Not available unless your employer approves

7. Telework

The last technique on the list is to save money by not commuting at all. If you are able to telework full or part-time, you can save money at the gas pump. Telework is basically working from home. Organizations are split on if teleworking employees are productive. If you take advantage of this option, be sure to show results! Also, full-time teleworkers often complain of being overlooked by their company.

Networking goes a long way and that is hard to do if you’re not in the office. Employees may have the option to use a hybrid approach, and telework once a week or pay period. I’m not eligible for a regular teleworking schedule because of the nature of my work; however, I can telework sporadically with supervisor approval. Usually if there is reporting or paperwork that I know will keep me in front of my desk all day, I request teleworking on that day. I haven’t been turned down yet!

Pros:

  • Immediate savings on cost of driving to work
  • Potential savings on clothes (dress in what you’d like!)
  • Save time for yourself and your company, as you can begin working faster

Cons:

  • Not available to all employees
  • Not suitable to all industries
  • Requires discipline
  • Full-time telework employees are often overlooked/report feeling detached

What about you?

There is not a one size fits all method for saving on the commute to work. You have to factor in what is available and your personal preference. I use the compressed work schedule with an occasional telework day (averaging once per quarter).

  • Do you employ any of the methods listed above to save money on your work commute?
  • Are there additional methods that you can employ?
  • If so, what are they?

MomCents is a 30-something Christian, wife, and mother of a 2-year-old son who is jumping back into the wonderful world of blogging with her attempt to create a personal finance/mom blog. If you’re looking for expert advice, she advises you to stay away! But, if you want to follow the ups, downs, twists, and turns of a real person who will make mistakes along the way…stop on by. Hopefully you’ll find a laugh, encouragement, or both! Find MomCents on Twitter and Facebook.

Filed Under: Save Money Tagged With: bike, car, Commute, Job, public, Ride, transportation, Van, Work

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