Frugaling

Save more, live well, give generously

  • Home
  • Start Here
  • Popular
    • Archives
  • Recommended
  • Contact
  • Save Money
    • Lifestyle Downgrade
    • Save Money with Mindfulness
    • Save at Starbucks
    • Psychological Trick To Reduce Your Online Shopping
    • Best Freebies
  • Minimalism
    • 8 TED Talks To Become A Minimalist
    • We Rent This Life
    • Everything Must Go
    • Lifestyle Downgrade
    • The Purchase Paradox: Wanting, Until You Own It
    • Nothing In My Pockets
  • Social Justice
    • Destroy The 40-Hour Workweek
    • Too Poor To Protest: Income Inequality
    • The New Rich: How $250k A Year Became Middle Class
    • Hunter Gatherers vs. 21st Century Desk-sitters
  • Make Money
    • Make $10k in 10 Months
    • Monetize Your Blog
    • Side Hustle for Serious Cash
  • Loans
    • 5 Rules To Follow Before Accepting Student Loans
    • Would You Marry Me?
    • Should I Have a Credit Card If I’m In Debt?
    • $50k in Scholarships in 70 Minutes

If I Were Rich, Would I Still Be Frugal?

By Frugaling 7 Comments

Share This:

Thanksgiving Dinner, Wishing I Was Rich

For my first year of graduate school in Iowa City, I wasn’t able to get back to see family for Thanksgiving. Motivated by the irony and sadness of spending the holiday alone, I watched a sappy movie and ate a cold turkey sandwich. This sorry state was only amplified by my linoleum/concrete floors that were like permafrost ice blocks for my feet, and the dingy, yellowish light of my apartment. All I could think was, “If I were rich, how would this be different?”

Dreams of a vacation I didn’t have

Presumably, I would’ve sat near the front of the airplane — speeding to my destination. The service would’ve been better, too. Maybe I could’ve afforded a first-class ticket. Perhaps this could be a regular weekend getaway. Luggage fees wouldn’t have been usury and awful — just mere pennies to my millions. Although, I probably would not have needed to pay for those fees anyways, as my credit cards and connections would lead to waivers. Either way, I would’ve been wealthy enough to afford whatever outcome. I would never stand in front of a ticket counter, after buying a ticket online, and be surprised that there’s an additional bag fee — breaking my budget and robbing me of my little available savings.

Finally at my destination’s airport, I would’ve rented a car. Not just any car, but a luxury vehicle to speed around the mean streets — something familiar and like my lifestyle. Again, I would have enjoyed the whisk and breeze of skipping lines, priority rentals, and free upgrades. My parents, family, and friends wouldn’t have needed to worry about me; I’d show up on time, no help and reliance necessary. Time would continually be on my side, as waiting would be heavily reduced.

As I walked through the airport, and saw the nice luggage and bags, I could have looked them up on my phone and instantly purchased my own. I wouldn’t need to hesitate to buy something so practical and helpful. Why not get some class with a Louis Vuitton set? Throw in those shoes, too! Traveling in style feels better.

Going home, I would have been excited to see all the friends and family I could. But I’d have to look sharp. Maybe I could stop by my favorite barber for a cleanup? My photos would be filled with the material goods that ooze success. I could show my parents, in person, what they had raised — that I had picked up my bootstraps and become a capitalistic achievement. They could be proud of my wealth and ability.

Thanksgiving without family, but not without heart

Reality is a cold shower. I can’t remember the last time I purchased something and didn’t feel guilty, nervous, and anxious for the added expense. I had looked at plane tickets for this Thanksgiving, but at nearly $500 plus airport shuttle fees, I couldn’t afford it. In a way, it felt like I was forced into frugality, without a choice (unless you consider debt to be an option, which I don’t).

As my friends and the rest of this consummate college town fled their studies and small-town lives for another location, there was a powerfully isolating feeling to my thriftiness and decision to stay. I fully expected it to be another cold turkey sandwich and night alone, but that all changed when a co-worker invited me to dinner. He knew I’d be here, without plans, and suggested I tag along.

What really matters

In that moment of deep gratitude, the Louis Vuitton dreams subsided. Pictures of first-class comfort and VIP lines faded. Suddenly, I felt humbled by his generosity and honored to be included. I was truly thankful — without any need for material goods, money, or proof of my worth.

Wealth is a funny target. If I only wanted to make money, I should’ve chosen a different career. Instead, I was motivated to help others and temporarily delay earning potential. My path to occupational success likely won’t include boatloads of cash.

Undeniably, if I had enough money available, I would’ve flown to Colorado to see my family. And honestly, if I had the money, I would’ve loved the creature comforts of first class. Both of these decisions would get me spending more money and being less frugal.

But at the end of the break, it was clear and simple: I just wanted to enjoy the day with people who are kind and open-hearted. Wealth just didn’t matter. If I were rich, I would’nt have wanted anything more than to share that moment with those I care about.

Filed Under: Save Money Tagged With: airport, cash, flying, holidays, money, rich, savings, Social Class, Thanksgiving, Travel, Wealthy

Outsourcing Corporate Responsibility And Taxation

By Frugaling 7 Comments

Share This:

Henry Ford Corporate Responsibility
Mr and Mrs Henry Ford ride in the first Ford automobile

America and business: peanut butter and jelly

America has an illustrious, grand entrepreneurial spirit. Many generations of families started from humble beginnings to succeed. The United States was an incubator for business acumen. After the industrial revolution, we became the world leader. Amidst a growing infrastructure, companies and their entrepreneurs found success in the States.

Henry Ford was one of those genius businessman. He was responsible for designing the first moving assembly line, which greatly increased manufacturing and production time. Additionally, Ford instituted a $5-per-day income for his workers. The reasoning: He wanted his employees to be able to purchase the vehicles, decrease employee turnover, and increase the company’s bottom line, in turn.

Everybody won. He sold more cars, his employees saved and purchased more, and there was a pride in creation. This was an American company — fulfilling the American dream.

During World War II, production was reinstituted for a desperate military. An enemy stood to destroy entire races, religions, and peoples. The Allies came together to extinguish this enemy, but the pains were felt at home. Families rationed necessary foods for soldiers. People bought government bonds and women went to work. The U.S. needed its people, and they stepped up to defeat the Axis of evil. We were patriots.

Businesses were essential to a powerful rise in the middle class during the 50s and 60s. Taxation among executives and companies was high. This period is famous for 90 percent marginal tax rates in the highest income brackets. Despite the most social mobility and income equality ever, the system began to crumble.

Special interest groups, political power, and declines in average America

It all starts with special interest groups. Free market principles exalted an invisible hand that led to massive outsourcing. Much of the manufacturing industry disappeared as a consequence. We’ve lost nearly all customer service and basic technological leadership to Asian countries. It’s a rarity to find anything “Made in America.” Instead of stopping and correcting this course, America and its people have held steady — buying, consuming, and destroying as much as they can. Patriotism and pride in country be damned.

These economic principles, which largely took America by storm in the 80s, were lauded by the Reagan administration. Swift cuts to taxes were made for everyone, but they mostly benefited the richest of our population. Almost immediately, an increase in income inequality, social stratification, imprisonment, and use of tax havens increased.

Each time we’ve lost another layer of pride and power in America, corporate executives have argued that they are creating jobs, cutting inefficiencies, and raising shareholder value. We can’t fall for these tired logical fallacies. Jobs have been created elsewhere and people are paid less than ever. Wages are stagnating for most, as executives get rich. We’re stuck in the twilight zone of corporate disrespect, political power, lobbying groups, and massive outsourcing of everything. It’s dystopian in the powerlessness of average people. The last thing to go: corporate headquarters and revenue.

How to avoid taxation and book record profits

In the past, tax havens were simply “offshore,” Caribbean or Mediterranean islands. Rich doctors, businessmen, and criminals used these countries to store untraced funds. The money would be protected from extradition, taxation, and/or criminal prosecution. But as businesses grew with the new, global economy, tax practices changed in step.

Yet again, the start was in the 80s. Apple — yes, the iPhone and iPad maker — pioneered a strategy to avoid federal taxes “legally.” This gets complicated quickly. Essentially, Apple setup subsidiary corporations in other countries and booked intellectual property sales from those international locations. Income then sidestepped the higher-tax policies in America for lower-tax zones. This magical strategy is called, the “double Irish arrangement.”

Named for its home location, Apple set up a location in Ireland, where corporate taxes are 0%. Then, these new funds avoided billions of dollars in taxation and could still be reported as revenue and profit. This opened the floodgates for copycat companies to do the same (e.g., Facebook, General Electric, and Google).

By harnessing the power of this tax-dodging trick, some companies whittled down their tax liability to nothing. We’re talking about multibillion dollar profits — untaxed. More importantly, all of those loopholes lead to severe federal tax revenue shortages, despite record-breaking profits. Our people, infrastructure, and future are in the balance.

The regular American, a patriot

Warren Buffett is famous for saying that if you’re born as an American, you’ve already lucked out. This is still the land of opportunity. And frankly, I couldn’t agree more. The U.S. is still an incredible place. I have a lot of pride and feel humble for my opportunities. I couldn’t have done it without this place.

Over the last couple years, I’ve built a solid side income as a writer and entered a doctoral program. This is the life I want. I’ve carved out my niche. I feel fortunate for the privilege to be given room to explore and succeed. The financial successes also increased my tax burden.

My company, Frugaling, is based in America. I don’t have an LLC or formal corporation, but it’s my business. At the end of every year, I have to account for this revenue through a Schedule C form and self-employment taxes. Last week, I explained that I had begun to prepare for this accounting challenge, as self-employment taxes are about 30% of revenue. This is because medicare, medicaid, and social security aren’t withheld. But I’m happy to contribute and do my part.

I owe it to the place where I found success. I want others to have the opportunity to excel, as well. America is empty without a cyclical, contributing populace. What goes around comes around. I pay my taxes. Why don’t companies?

Warning! We’ve crossed the tipping point

Today, the largest corporation yet, Medtronic, filed to leave America. We’re talking about a pure formality that will make more tax revenue leave America. The medical device manufacturer just purchased another company — Covidien — that is incorporated in Ireland. Medtronic will switch to that legal address. BusinessWeek reported that this is becoming increasingly popular:

Minneapolis-based Medtronic joins some 44 American companies that have reincorporated abroad or struck plans to do so, including 14 in a recent wave of moves that began in 2012. Earlier this year, Pfizer Inc., the largest U.S. drugmaker, briefly proposed taking a U.K. address, a move that might have cut its tax bills by as much as $1 billion a year…Without a change in law, a congressional panel estimated last month, future deals will cost the U.S. $19.5 billion in tax revenue over the next 10 years.

For shareholders, this is wonderful news. Those tax savings can be directed to share buybacks, increased dividends, greater research pipelines, and better compensation for employees. But meanwhile, Americans will suffer. See, we are stakeholders in a way. We have a stake in what a company does or doesn’t do. Now that companies are fleeing the states in search for individual gain, at the cost of the whole, we must realize that the last pillar of corporate responsibility and patriotism is about to fall. As this disintegrates, and taxation revenue crumbles, so will our country.

Filed Under: Social Justice Tagged With: America, Apple, Business, Consumption, Income Inequality, Ireland, Medtronic, Profit, Social Class, Social Mobility, tax havens, taxes

Too Poor To Protest: How Income Inequality Silences Your Voice

By Frugaling 11 Comments

Share This:

Pepper spray john pike occupy wall street uc davis

In September, 2011, New York City’s Zuccotti Park was flooded with tents and protesters. Sparked from an Adbusters article, the Occupy Wall Street protests began. The movement championed a variety of ideals that included wealth equality, removing money from politics, and reducing corporate influence in our political system. Diverse groups flocked to the streets to argue for a better future; potentially, one without massive corruption and greed. But the idyllic dreams faded as the campers were kicked out of the park and cities used police powers to destroy the collected masses across the country.

If you’re here, you’re probably part of the 99%

If you’ve ventured onto Frugaling.org, you’re likely interested in saving money and becoming more frugal. Moreover, you’re probably a proud member of the 99%… of incomes. The Occupy Wall Street movement embodied a siren call that said, “We are the 99%.” They owned their place in society and called for greater income equality.

The anger and resentment are building, as people think about the exorbitant bonuses that Wall Street marketmakers are taking home. Most of the recovery in Obama’s economy are limited to the richest/highest earning populations. In fact, the income inequality is reaching record proportions.

In 2012, the top 10 percent of earners took home more than half of the country’s total income.

…The 1 percent has captured about 95 percent of the income gains since the recession ended. (NYT)

The New York Times’ Op-Ed Columnist, Paul Krugman, says it best:

In practice, inherited wealth and connections matter enormously; those not born into the upper tier are, and know themselves to be, at a huge disadvantage. (NYT)

In India, they’ve long had a caste system that stratifies the demographic groups. You are frequently born into a group and the income pressure force you to stay planted in this domain. What Krugman is alluding to is a caste system in the frame of India’s horrific class structure that limits income mobility and opportunities in life – right here in America.

The consequences of mass income inequality

Poverty and income inequality both distract and debilitate people from being able to think critically. The tragic irony is that financial decisions, debt, savings, and everything that Frugaling stands for may be unattainable in this environment. Basically, there’s an unmet basic need in those suffering from poverty.

Maslow's Hierarchy of Needs Image Wikipedia
Photo: Wikipedia

In 1943, a psychology professor and researcher introduced a basic hierarchy, construct for understanding how everyone has basic needs. This pyramid included Physiological, Safety, Love/Belonging, Esteem, and Self-Actualization. An individual would be working up to a self-actualized state, but certain needs must be met first. This is called Maslow’s Hierarchy of Needs.

Poverty and income inequality test the limits for critical thinking because people are fundamentally fighting for more basic needs such as Safety. Without a universal, socialized, single-payer health care option, those most in need are forced to find basic health needs before thinking critically about a budget. When resources, property, employment, and/or health are questioned, the more advanced needs are pushed back. These requirements are particularly important when the most vulnerable populations are fighting to survive – much less to to protest, share, and become active members of societal decisions.

Protesting defamation and destruction in the impoverished

I want to take you through a little real-life experience. As a graduate student at a solid state school, I’m quite privileged with my opportunities and future employment. But graduate students like me are often short on time and money. Many are raising families at the same time. The lifestyle can be brutal.

Over the last decade, my home university has been proposing a reconstruction project and new buildings to university-owned apartments. Year after year passed without resolution, and the older buildings aged terribly. Something needed to happen, as the most vulnerable school populations were living in evermore dilapidated housing.

Colloquially, these were referred to as a project and ghetto. The most diverse students and families occupied these buildings. Housing was exceptionally affordable – cheapest in the city – with many basics covered (e.g., water, cable, internet). Despite the horrid, storied exteriors, these were an exceptional choice for those studying at the highest level of academia and the smallest wallets.

Then a resolution quickly swept over the university apartment system. New buildings and contractors were being brought in to discuss all the financial complexities. At the end of this dialogue, the university decided to do something morally aberrant. Instead of keeping the university-owned land and property, they decided to lease the land to a private property management company. Now, this property company would finally revitalize the campus housing, but the consequences to the most in need would be terrible – a trade-off that was easily overlooked by school administrators and a company that stood to benefit from serious rent increases.

As the private company builds their own property on the campus, I’ve spoken to many vulnerable student populations. My frequent question is: Will you be staying? The answer is often “no,” because they can’t afford the nearly 100% increase in rent. They’ll be forced to move out of their apartments and a diaspora of diverse students will look elsewhere in the city. Families of four, recent immigrants, those on student visas, and many other groups are now being pushed out of their homes – forced to pay up or get out.

Something seemed evil about the process, and I began to ask people if there were ever protests on campus. Nobody ever heard, was aware, or participated in any. Because these students were in a rough financial spot and short on time, gathering a mass of protesters was a near impossibility. It never came to fruition. And now, the huddled masses must move on.

Should we defend the rich because they pay the most taxes?

The rich are definitely getting richer – this is an economic fact. But more importantly, the rich are collecting most of the income growth, too. A growing debate is being waged between world leaders regarding income inequality. Surprising participants are chiming in for a powerful, heated argument.

A couple of the top mayors have chimed in to support the wealthiest populations – even going so far to argue that we should thank rich people. The former mayor of New York City, Michael Bloomberg, has stated that the rich are a blessing for the city of New York. Because millionaires and billionaires pay lots of tax revenue back to the city and state, Bloomberg believes that we should honor and respect their riches. Over his tenure, he hesitated and prevented income tax increases on the wealthiest populations. Former Mayor Bloomberg even suggested that the wealthy may leave in droves if taxation increases, but this hasn’t been proven. Moreover, the current Mayor, Bill DeBlasio, has refuted this claim:

@danarubinstein “I’ve never heard one person say I’m going to move out of the city because of the taxes. Not one.” http://t.co/EELOZF8U

— Bill de Blasio (@deBlasioNYC) October 4, 2012

Bloomberg isn’t alone in his defense of the rich. Mayor Boris Johnson of London, England also wrote about the need to thank the rich for their support of the city’s economy. These “tax heroes” (the 0.1%) pay for about 14.1% of tax revenue for the city. The mayor suggests that this is a positive thing and speaks to the contribution that the rich have on the economy. The oligarchic mayor even proposed giving knighthoods to the largest tax payers:

In fact, we should stop publishing rich lists in favour of an annual list of the top 100 Tax Heroes, with automatic knighthoods for the top 10. (The Telegraph)

After reading these two mayors defend the rich, you’d think the wealthy lifestyle was under attack – a war was being waged. But frankly, the lobbying power of the rich has stifled accurate, fair debate. And the masses – the 99% – are mostly silent again.

Thankfully, a growing number of leaders are speaking out about this economic problem that is sure to doom the masses without serious changes. Pope Francis has been an outspoken critic of trickle-down economics and supported reforms to the current capitalistic culture.

How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?

Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion… has never been confirmed by the facts.

While the Catholic church has often held that the impoverished are the most needed groups for their mission work, the analysis and critique of powerful, governmental economic systems has been overlooked. Pope Francis is bringing a sweeping message of hope to those who’ve suffered amidst these deleterious economic practices.

The President of Uruguay, José Mujica, has also been a firm supporter of those most in need financially.

Quoting the Roman court-philosopher Seneca, Mr. Mujica said, “It is not the man who has too little, but the man who craves more, who is poor.”

Mujica also upset some in Uruguay’s political establishment by selling off a presidential residence in a seaside resort city, calling the property “useless.”

His donations leave him with roughly $800 a month of his salary. He said he and his wife, Lucía Topolansky, a former guerrilla who was also imprisoned and is now a senator, do not need much to live on.

INDEED, if there is any country in South America where a president can drive a Beetle and get by without a large entourage of bodyguards, it might be Uruguay, which consistently ranks among the region’s least corrupt and least unequal nations. (NYT)

President Mujica is shirking the glam and pomp of the presidency’s opulence. Taking home around $800 a month is a ridiculous sum for a president, but the consequences have been incredibly positive. Uruguay is one of the most progressive nations in the region and widely considered to be the least corrupt. By shedding the affluent lifestyle of his predecessors, he has stripped the hierarchy and social class that may remove him from his people. He is a role model and advocate for moderation among a cultural malaise that argues for more and more growth.

When you’re too poor to protest a culture collapses

The biggest threat to our long-term economy is income inequality and social stratification. Without some sort of correction, we will be doomed to relive the mistakes that aristocracy found in generations prior to this. It’s scary to think that I may ever be too poor to protest the conditions and treatment I receive, but the risk is growing. The richest are getting even richer than the rest – the power, influence, and control of government is terrifying.

What control do we, the 99%, have when politicians can be lobbied and motivated to support the wealthiest? Who will protect the most needy?

Filed Under: Social Justice Tagged With: Economy, Equality, Government, Income Inequality, Mayor Boris Johnson, Mayor Michael Bloomberg, Occupy Wall Street, poor, Pope Francis, President, Protest, Social Class, Wealth, Wealthy

Follow

  • Facebook
  • Google+
  • Pinterest
  • RSS
  • Twitter

Subscribe

Best Of

  • The New Rich: How $250k A Year Became Middle Class
    The New Rich: How $250k A Year Became Middle Class
  • My Low-Income Lifestyle
    My Low-Income Lifestyle
  • Who Are Your Financial Role Models?
    Who Are Your Financial Role Models?
  • What Are The Best Sites For Freebies?
    What Are The Best Sites For Freebies?
  • The Real Reason Poor People Can’t Save
    The Real Reason Poor People Can’t Save
  • The Frugal Guide To Buying A Used Car
    The Frugal Guide To Buying A Used Car

Recent Posts

  • How to Pay Off Medical Debt
  • 5 Ways to Save Money Before a New Baby
  • 4 Ways to Save Money on Streaming Services
  • 5 Ways to Save Thousands in Mortgage Interest
  • Why Professional Maintenance on Your Vehicle Saves You Money in the Long Run

Search

Archives

  • January 2023 (1)
  • March 2022 (3)
  • February 2022 (2)
  • November 2021 (1)
  • October 2021 (2)
  • August 2021 (4)
  • July 2021 (5)
  • June 2021 (3)
  • May 2021 (2)
  • January 2021 (2)
  • December 2020 (2)
  • October 2020 (2)
  • September 2020 (1)
  • August 2020 (3)
  • June 2020 (1)
  • May 2020 (2)
  • April 2020 (1)
  • February 2020 (2)
  • January 2020 (1)
  • December 2019 (1)
  • November 2019 (5)
  • September 2019 (4)
  • August 2019 (1)
  • June 2019 (1)
  • May 2019 (1)
  • April 2019 (1)
  • March 2019 (3)
  • February 2019 (1)
  • January 2019 (3)
  • December 2018 (1)
  • September 2018 (2)
  • July 2018 (1)
  • June 2018 (2)
  • May 2018 (1)
  • April 2018 (5)
  • March 2018 (6)
  • February 2018 (4)
  • January 2018 (1)
  • December 2017 (10)
  • November 2017 (3)
  • July 2017 (2)
  • June 2017 (5)
  • May 2017 (2)
  • April 2017 (8)
  • March 2017 (4)
  • February 2017 (3)
  • January 2017 (2)
  • December 2016 (2)
  • November 2016 (4)
  • October 2016 (2)
  • September 2016 (1)
  • August 2016 (4)
  • July 2016 (1)
  • June 2016 (3)
  • May 2016 (3)
  • April 2016 (4)
  • March 2016 (5)
  • February 2016 (2)
  • January 2016 (2)
  • December 2015 (3)
  • November 2015 (5)
  • October 2015 (5)
  • September 2015 (4)
  • August 2015 (6)
  • July 2015 (8)
  • June 2015 (6)
  • May 2015 (14)
  • April 2015 (14)
  • March 2015 (13)
  • February 2015 (12)
  • January 2015 (15)
  • December 2014 (10)
  • November 2014 (5)
  • October 2014 (6)
  • September 2014 (7)
  • August 2014 (12)
  • July 2014 (11)
  • June 2014 (12)
  • May 2014 (16)
  • April 2014 (13)
  • March 2014 (13)
  • February 2014 (9)
  • January 2014 (20)
  • December 2013 (9)
  • November 2013 (18)
  • October 2013 (15)
  • September 2013 (11)
  • August 2013 (11)
  • July 2013 (27)
  • June 2013 (18)
  • May 2013 (16)

Best Of

  • The New Rich: How $250k A Year Became Middle Class
  • My Low-Income Lifestyle
  • Who Are Your Financial Role Models?

Recent Posts

  • How to Pay Off Medical Debt
  • 5 Ways to Save Money Before a New Baby
  • 4 Ways to Save Money on Streaming Services

Follow

  • Facebook
  • Google+
  • RSS
  • Twitter

Copyright © 2023 · Modern Studio Pro Theme on Genesis Framework · WordPress · Log in