Most people take for granted that when they earn a dollar, they have most of that dollar to spend (most people do consider that they've lost some of it to taxes).
But how much of a dollar do we really have to spend?
1. 40 cents of every dollar gets eaten up in taxes (federal, state, medicare, local, gasoline, sales, property, etc.)
2. 30 cents goes to debt interest on cars, homes, credit cards, etc.
3. 6 percent goes to inflation (an old figure now since inflation is on the rise).
What does that leave? 24 cents of every dollar that you actually have to use at your own discretion. And people wonder why they have a tough time saving...
What's the Real Worth of a Dollar?
October 9th, 2007 at 05:50 pm
October 9th, 2007 at 05:57 pm 1191952677
2) Don't get into debt. We paid cash for our car, have no cc debt, and are still not sure if buying a house is automatically the greatest idea right now.
3) Very few options there - either career growth or investing well.
I agree that taxes for middle class are to high. The rich have many creative ways around them, but middle class wage-earners bear the brunt.
October 9th, 2007 at 06:04 pm 1191953045
October 9th, 2007 at 07:58 pm 1191959896
October 9th, 2007 at 09:44 pm 1191966293
Depending on income, you may be in a lower tax bracket when you are withdrawing it after retirement. You don't need to withdraw it in one lump sum, you can schedule mandatory distributions carefully.
We both max out Roth as well.
investing in mutual funds using dollar cost everaging is not that risky.
I used to use risk factor as an excuse not to save, but at some point I understood that I had to change my approach or would never get ahead.