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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

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

I Just Received 200,000 Visitors In 2 Days

By Frugaling 36 Comments

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Google Analytics Screenshot of Web Traffic

Late Sunday night I published an article about work in America. More specifically, how the 40-hour workweek harms productivity, the environment, and psychological health. The next day, I woke up to find over 50 people on my website. And then something crazy happened.

After my article was published, it was shared on the social networking site Reddit. Currently, it’s the 53rd most visited site on the net. The users of Reddit tend to be more tech savvy and interested in social issues (but isn’t limited to these areas). My article struck a chord with people that support the Occupy Wall Street (OWS) movement and workers’ rights.

I decided to go over to Starbucks yesterday to complete some academic research, as my site was beginning to launch into a mad frenzy of traffic. In my typical frugal fashion, I had a reward and even got another free refill before I left! I was buzzed by the caffeine, but even more because of the analytics. Hell, I couldn’t concentrate on the research writing because the numbers started to grow.

Suddenly, it hit the hundreds. OWS supporters shared it on Facebook and the niche social site, Hacker News. I texted a couple friends and let my mom know what was happening. Mom hopped on the site, and I could see her individual visit. That’s the last time I could see a person’s click.

I began to tweet out progressively higher traffic statistics, which came from free Google Analytics. When I hit 200, I looked back at Reddit. A big-time user and moderator of one of the largest “subreddits” had shared my article on no less than three other boards. The über popular “Futurology” subreddit generally has thousands of visitors at any one moment. That’s when I could tell it was all about to rollover into the most popular article I’ve ever written.

From there, the article rocketed to the top of five major boards and was shared on Facebook nearly 2000 times. I kept watching the traffic — still ticking higher. It was like gambling or playing a videogame, except I couldn’t lose. The real-time traffic statistics constantly updated every second, and the visitors didn’t stop.

Every time I thought I had hit the max number of visitors at one time, it went up even further. I thought it would all stop before 500, 600, 700, 800, 900, and 1,000. But it didn’t. The highest recorded real-time, active visitors clocked in at 1,212 (see the screenshot above), with my web server straining to handle one more person.

I struggled to get to sleep because the traffic was still in the 900s by Monday night. When I finally began to drift, I assumed that the number would be back to more reasonable levels in the morning. I thought, “Maybe it’ll be around 100 or so?”

Surprise surprise, that wasn’t the case. When I woke up around 9 AM, the site was still reaching about 900 people — 150-200 visitors per minute. The stress on my server hadn’t ceased and my site was still inaccessible for much of the morning.

I was shocked by the total amount of traffic that was driven to my site over two days. Despite being a nerd through much of my life, I had no real appreciation for the level of traffic available on the Internet. After two days, my site has received about 200,000 visitors (probably more than that, due to tracking and server issues). That’s roughly three times the population size of my adopted home, Iowa City.

I was lucky to be able to share this experience with Twitter followers, friends, and family. As a writer, it put a serious smile on my face that people cared that much to read and share my work. I’m deeply honored and humbled by the magnitude of support. Thanks for your support by sharing the article and reading all about it!

Filed Under: Make Money Tagged With: Blog, Blogging, Google, Hacker News, occupy, reddit, Visitors, Writing

An Inside Look At My Stock Portfolio

By Frugaling 8 Comments

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My Stock Portfolio Market Investing

Battling back to zero debt

In May 2013, I declared war on debt. I wanted to eliminate it. I started Frugaling to catalogue the journey back to zero debt and make a side income. It worked. More than a year later, my monthly budget contains a surplus, the checking account actually has extra funds, and my student loans are nearly gone.

Done with loan payments — for now — I’ve had tremendous urges to buy new clothes and travel. I look in my closet and see the same stale outfits. Nothing excites me about wearing the same shirt today that’s been there for about four years. The clothes work, but I’m tired of the sameness. For lack of a better word, my closet is boring. As for travel, I desperately want to venture out into the world without a prescription or plan. I want to get out of the country for a while, but cannot, as work must take precedence because of my precarious budget. Both wants must take a back seat to current needs.

Invest, invest, and then invest some more

Instead of consuming and spending my newfound money — at the expense of my financial future — I’m investing and saving the money. The same rules I used to pay off my debt are working to save even more. When I had student loans, I made regular payments to lenders, which nearly emptied my bank accounts. It forced me to say “no” more often when I simply couldn’t afford to spend money. Now, I’m socking away massive amounts of funds in retirement accounts — protected by tax-deferred growth, offered investment credits during tax season, and prevented from withdrawing funds until retirement age. The squeeze of investing more than might be comfortable is pushing me to save rather than spend. While financially dangerous in some ways, I’m preventing myself from spending — the ultimate psychological prevention.

I want my money to work for me. I’m choosing to invest, rather than consume. Each investment feels like a purchase in my future and that company. Using basic principles from the “Oracle of Omaha,” Warren Buffett, I’ve invested in companies I know and love. Secondarily, I’m selecting index funds that benefit from overall market momentum and general growth.

Today, I want to share what investment decisions I’ve made and why. I do not offer this as advice, but share it to explain how I’m handling my new influx of cash. I have a lot of learning to do, and many of these positions are quite small. My only hope is that it encourages you to save as much as you can, too!

Here’s my stock portfolio

Most investment managers suggest investing in mutual funds and/or ETFs to become broadly diversified. They note that the market averages about 7-8% gains over time. Just investing in a broad group of stocks should provide that return. As a young man, with many years of investing potential, I decided to mix it up between individual stocks and index funds. The stocks I’ve chosen are from companies I know quite well and care about. I’d love to know what you think and what you’re investing in, as well!

Individual Stocks:

1. Apple (AAPL)
Shares: 7 | Cost basis: 614 | Market value: 636

Apple was one of the first stocks I ever purchased. I was in high school, and thought the company had the coolest products. The iPod had just come out. The stock was around $40-50 per share (pre-split; Apple recently split 7:1, which means 7 times more shares are on the market now and the price was 7 times current prices). Unfortunately, with little money to my name or experience investing, I sold around $90 per share. I missed hundreds of dollars in share growth, but that’s okay. Now that I have money again, I still love Apple. The products are second to none, I follow the company religiously, and have a passion for their design. I’m a believer in this company, and believe the 2% dividend yield makes it easy to wait.

2. AT&T (T)
Shares: 14 | Cost basis: 503 | Market value: 493

I’ve held AT&T for what seems to be nearly half a decade. This cost basis comes from my most recent investment in the company. While the share price has stagnated in recent years, the dividend yield, which is over 5%, makes me a patient man. AT&T is one of the leading telecommunications providers, and it seems like a safe business with a bright future. The company recently made a bid to buyout DirecTV, but they’ll have to go through a slew of governmental hearings before they’re allowed to swallow the cable company. If they are allowed to buy it, this will make AT&T a leader in cable delivery.

3. Google (GOOGL)
Shares: 2 | Cost basis: 1082 | Market value: 1170

This is hands down my favorite stock/company. I’ve recommended people invest in Google for years (without ever owning a position and missing hundreds in gains). Google is simple: they make money off of people clicking on and buying ad space. As more of the world gets access to Internet services and high-speed connections, more and more money will enter Google’s pockets. This constant revenue source is a powerful force for research and investment. Google actively uses this cash infusion to buy technology companies, startups, and start their own dream products. They founded Gmail, which is my one and only email provider. Their calendar service syncs to all my devices. And, they’re growing at a spectacular rate. I love Google!

4. Royal Bank of Canada (RY)
Shares: 7 | Cost basis: 489 | Market value: 493

I don’t have a strong affinity towards the banking sector. During the Great Recession of 2007-08, it became clear that banks were responsible for massive losses due to risky investment decisions. That led me to be cautious with any investments in the financial sector. The Royal Bank of Canada is different, though. By in large, Canadian banks missed much of the credit default swap crisis and made safe decisions with their consumer loans. Their smart, modest banks avoided getting swept up in the quick money and walked away from the crisis largely unscathed. My investment in the Royal Bank of Canada came from Michael Lewis’ new book, Flash Boys. In the book, Lewis explains that the Royal Bank is a largely ethical bank with tremendous leadership. With a solid, safe dividend and a great track record, I’m happy to be an investor.

Index Funds (ETFs):

The following are three index funds that are commission-free and low-royalty at Vanguard. I wont explain each of these, as the titles explain their contents. I highly recommend Vanguard and have found that their ETFs are some of the best on the market. For more information about selecting a broker for commission-free ETFs, check this out.

Vanguard High Dividend Yield (VYM)
Shares: 5 | Cost basis: 331 | Market value: 331

Vanguard Long-Term Bond Fund (BLV)
Shares: 2 | Cost basis: 177 | Market value: 179

Vanguard Value (VTV)
Shares: 1 | Cost basis: 81 | Market value: 81

Filed Under: Make Money, Save Money Tagged With: commission-free, Commissions, ETFs, Flash Boys, investing, Investments, Portfolio, stocks

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