Anyone feel like they're not "keeping up with the Jonses"?

[RamblingMad]

What do you mean by payroll tax? The amount withheld from your payroll is for federal, state and FICA taxes. I'm not sure how people forget about that.

It never comes up in discussions about funding healthcare. Folks always talk about income tax.

 

[disneychrista]

FICA taxes. I'm not sure how people forget about that.

To me payroll taxes (aside from Federal & State and maybe Local in some places) would include FICA and at least in California that would include state disability (SDI).

 

[Allison]

It never comes up in discussions about funding healthcare. Folks always talk about income tax.

I am having a disconnect. The payroll taxes withheld from your paycheck are withholdings for your income taxes. Are you talking about FICA and other possible deductions for disability and things like that?

 

[RamblingMad]

I am having a disconnect. The payroll taxes withheld from your paycheck are withholdings for your income taxes. Are you talking about FICA and other possible deductions for disability and things like that?

I’m talking about social security and Medicare taxes that come out of your paycheck, not withholdings.

 

[Allison]

I’m talking about social security and Medicare taxes that come out of your paycheck, not withholdings.

Got it. Thanks.

 

[tzolkin]

I am always astonished at the amounts Americans pay for healthcare, whenever the discussion comes up...
If we had the additional expense of health insurance equal to a small mortgage every month we would basically have no discretionary income at all and saving for retirement or anything else would be very difficult.

Yes, it is ridiculous. We pay $7500 per year just to have insurance (and we picked the most basic policy offered by the employer). You of course then have copays and deductibles so you still have to pay something whenever you see a doctor, get meds, or have testing done. So if we are healthy and hardly ever see a doctor, we are still paying about $700 per month for healthcare for our family. I think our family max is $13,000 so if we had some major issues like surgery or hospitalization we could spend over $20,000 in one year.

Fortunately, our current insurance covers most basic things with a small copay and the deductible doesn't apply until it's something more major. With our previous insurance there were no copays, but the insurance paid nothing until you met your deductible. We are a healthy family so we NEVER met the deductible. So every time a kid got sick I had to weigh out in my mind whether it was worth spending $150 to take them to the doctor or if we should just wait it out and see.

Healthcare costs are a major financial burden for a lot of middle class American families and absolutely contribute to why people don't save enough for retirement.

we sometimes hear that you countries with government managed healthcare pay about 50% in income taxes.
...
The argument has been made to people that while our taxes may go up (and go up significantly) with managed care, the volatility of our premiums and pricing would become stable. But people are very afraid to have the government step in and manage care and they are very afraid they will lose control of their healthcare options. Although, I feel the second part has already happened or is well on its way.

I'm sure it varies quite a bit from country to country, but the few Europeans I do know do pay about 50% in income taxes but only on the second income. They are taxed at a lower rate on the primary wage earner, but a working spouse is taxed at around 50%. They do not seem to think there's anything odd about this. I guess the idea is to even things out for single income families.

As for the bolded part of your comment, that is definitely a fear that I often hear and I agree with you that it's already happening anyway with our healthcare. If your insurance company can tell you that you can't have a certain medication or a certain treatment that your doctor felt was necessary to prescribe, how are we in "control" of our options? My husband and I work in healthcare. For our current insurance, we are not allowed to see ANY physicians outside of the particular hospital system he works for. There are plenty of doctors right in my town, but I'm not allowed to see any of them. I have to drive 30+minutes. And, I just hope that if my children or I ever need to be transported by ambulance that we aren't brought to the rival hospital because it will cost us thousands of dollars.

 

[Searc]

Yes, it is ridiculous. We pay $7500 per year just to have insurance (and we picked the most basic policy offered by the employer). You of course then have copays and deductibles so you still have to pay something whenever you see a doctor, get meds, or have testing done. So if we are healthy and hardly ever see a doctor, we are still paying about $700 per month for healthcare for our family. I think our family max is $13,000 so if we had some major issues like surgery or hospitalization we could spend over $20,000 in one year.

Fortunately, our current insurance covers most basic things with a small copay and the deductible doesn't apply until it's something more major. With our previous insurance there were no copays, but the insurance paid nothing until you met your deductible. We are a healthy family so we NEVER met the deductible. So every time a kid got sick I had to weigh out in my mind whether it was worth spending $150 to take them to the doctor or if we should just wait it out and see.

Healthcare costs are a major financial burden for a lot of middle class American families and absolutely contribute to why people don't save enough for retirement.



I'm sure it varies quite a bit from country to country, but the few Europeans I do know do pay about 50% in income taxes but only on the second income. They are taxed at a lower rate on the primary wage earner, but a working spouse is taxed at around 50%. They do not seem to think there's anything odd about this. I guess the idea is to even things out for single income families.

As for the bolded part of your comment, that is definitely a fear that I often hear and I agree with you that it's already happening anyway with our healthcare. If your insurance company can tell you that you can't have a certain medication or a certain treatment that your doctor felt was necessary to prescribe, how are we in "control" of our options? My husband and I work in healthcare. For our current insurance, we are not allowed to see ANY physicians outside of the particular hospital system he works for. There are plenty of doctors right in my town, but I'm not allowed to see any of them. I have to drive 30+minutes. And, I just hope that if my children or I ever need to be transported by ambulance that we aren't brought to the rival hospital because it will cost us thousands of dollars.

That's a great point. Healthcare is decided by insurance companies, not doctors and certainly not by you.

 

[RamblingMad]

That's a great point. Healthcare is decided by insurance companies, not doctors and certainly not by you.

I invest in United Healthcare, and my dividend grows at a 20% annualized rate. We’re being screwed over by the insurance companies. And all they need to do to keep the money flowing is scare people about European medicine. Blows my mind.

 

[tzolkin]

I am having a disconnect. The payroll taxes withheld from your paycheck are withholdings for your income taxes. Are you talking about FICA and other possible deductions for disability and things like that?

I think they were referring to how people are calculating their tax rate that those items may be left out. For example, if your taxable income is $50,000 when you go to file your taxes your federal tax would be $6,945. So if you just look at that amount at tax time you may calculate that you paid 14%. However, if you had also paid $7000 in FICA taxes your actual taxes paid would really have been 28% (then you'd have to add your state tax on top of that, so you may be well over 30%).

 

[china mom]

I was my mother's primary care giver for her last few years. I had moved her into my home and provided care for her for the evening, overnight and weekend shifts but paid caregivers to be with her during the daytime hours when I was at work.

I experienced first hand how destructive it was to my family, my children and my health (partially because she was a bit on the evil/narcissistic side). I never want to become a burden for my kids.

I also saw how fast her money was going with paid caregivers and know it would have been so much more expensive if she had been in assisted living.

So, my goal is to have enough money that I never become the burden my mother was. If my kids miss out on extravagances now, oh well. I will make it up to them by not expecting them to support me later.

To that end, DH and I both have pensions that we are collecting on now. We are both on second careers. When one of us dies, the other will still get the pension of the decedent plus their own, our deferred compensation plans are well funded and DH is putting a big chunk of his current salary into his new 457.

I am confident that we have found the right balance between living and saving.

 

[skyblue17]

I think part of why people spend more on small things is that when you have significant student loans that you feel like you will never pay off, you can't just deny yourself living a live also. It can even be a quality of life issue. When it comes to "should I save this $20 to put my student loans or can I buy sushi for dinner for a change and feel like a functioning human being that isn't constantly worried about money," you're going to go with the latter sometimes. And you should. Life is meant to be lived, not saved for later.

 

[disykat]

I think part of why people spend more on small things is that when you have significant student loans that you feel like you will never pay off, you can't just deny yourself living a live also. It can even be a quality of life issue. When it comes to "should I save this $20 to put my student loans or can I buy sushi for dinner for a change and feel like a functioning human being that isn't constantly worried about money," you're going to go with the latter sometimes. And you should. Life is meant to be lived, not saved for later.

Interesting thought. To me, being constantly worried about money feels functional. It's just part of being a grown up. There's a life balance for sure, but part of the balance is worrying about money. That's where having a budget pays off - you pre plan for that $20 and set an amount to spend on things that help you keep that balance between spending, paying off debt, and saving.

 

[Searc]

I think part of why people spend more on small things is that when you have significant student loans that you feel like you will never pay off, you can't just deny yourself living a live also. It can even be a quality of life issue. When it comes to "should I save this $20 to put my student loans or can I buy sushi for dinner for a change and feel like a functioning human being that isn't constantly worried about money," you're going to go with the latter sometimes. And you should. Life is meant to be lived, not saved for later.

I grew up poor and DH and I were the definition of poor when we got married. We are comfortable now and live well.

I will never not worry about money. It doesn't matter how much we have in our checkbook, savings, 401k or investments.

 

[Turn the Page]

DH and I are in our mid 30's and we often have discussions about these topics. I only work seasonally but DH works full time and makes a pretty decent income. He isn't a doctor or lawyer but we do just fine on his income. We look around at all the fancy cars and huge houses and toys that a lot of other families have and he can't figure out how they do it on where they work.

We have medical bills they don't have and I think it's really common for people of our age to get help from their parents, at least my parents friends all complain that their kids are constantly asking for money, and I'm sure a lot of them are up to their eyeballs in debt.

We just got DH's 401k tax forms and I'm willing to bet that the vast majority of our peers don't have as much saved for retirement as we do. We aren't suffering or going without by any means but we do live more frugally than a lot of people our age and hope to be able to really enjoy the benefits of that when we retire.

 

[RamblingMad]

I grew up poor and DH and I were the definition of poor when we got married. We are comfortable now and live well.

I will never not worry about money. It doesn't matter how much we have in our checkbook, savings, 401k or investments.

Same with me. It’s a poor mindset that I haven’t worked through yet.

 

[disykat]

I don't think it's a poor mindset to worry about money, it's normal. Poverty mindset is when you think you have no control (or actually have no control) over your money and simply cycle through getting enough to get by and spending.

When you are worrying about and being somewhat systematic about savings and investments, you are beyond poverty.

 

[SaintsManiac]

I grew up poor and DH and I were the definition of poor when we got married. We are comfortable now and live well.

I will never not worry about money. It doesn't matter how much we have in our checkbook, savings, 401k or investments.

Same. I will always worry about it, plan for it, think about it, etc. Even now, when I don't have to.

My credit score was in the tank and my husband (then boyfriend) was making $10/hour when we basically had to move in together due to hurricane Katrina. Thanks to Suze Orman I got my credit score together. Thanks to his dedication and hard work and self teaching he has gone up up up the ladder.

We are finally credit card debt free. 2 more years on a car note. Still have mortgage and my stupid student loans, but life is good. I'm still a cheapskate, though. I mean does everyone realize if you cut open that tube of moisturizer that you get like 3-4 more days out of it???

 

[barkley]

When it comes to "should I save this $20 to put my student loans or can I buy sushi for dinner for a change and feel like a functioning human being that isn't constantly worried about money," you're going to go with the latter sometimes

i know for us when we were trying to pay off our home early it was a temptation not to throw that extra $20 at the principle but then we would plug that figure into a mortgage calculator and see how many days that would take off the life of our loan and it became 'one hour of sushi vs. 5 days sooner debt free'. my dd uses the same with her student loans. yeah, sometimes sushi wins out but those extra $20's, $10's and less she's thrown at her student loans over the past year have literally shaved years off how long she will be paying and lowered the minimum monthly payment so that if there are leaner paycheck months or personal financial emergencies she's obligated to a lower minimum payment.

 

[SaintsManiac]

Same with me. It’s a poor mindset that I haven’t worked through yet.

I don't think it's a poor mindset. I think it's smart.

 

[RamblingMad]

I don't think it's a poor mindset to worry about money, it's normal. Poverty mindset is when you think you have no control (or actually have no control) over your money and simply cycle through getting enough to get by and spending.

When you are worrying about and being somewhat systematic about savings and investments, you are beyond poverty.

What your describing is called Locus of Control.

When I talk about poor mindset, I’m talking about the feeling that the next dollar might not come. This leads to two potential behaviors. You either irrationally spend or save. Combine this with my grandma growing up during the depression, I irrationally save since I have a hard time spending. For example, I just went to Costco for lunch and spent $2.10 on pizza and then I got bottle water for 25 cents. I also buy my furniture at IKEA, or I get stuff at Goodwill. My big spend is outdoor stuff that I replace about once a decade. And I bought up all of the trail runners I need for the year when they were half off. When I go to Disney I stay off property and stick to DL. I’m in the top 2-3% income bracket before investment income. This is completely irrational behavior.