The Daily Pondering

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Wednesday, April 20, 2005

Top 10 Innovations I'm Grateful For

Every once in a while, I wonder about how different life would be if I had grown up in a different era. It's tough to imagine what it would be like without all of its little luxuries, especicially the innovations that I have become dependent on. These innovations have enhanced my life (and I'm sure others as well) significantly. So, here it is - a list of my top 10 innovations that I'm grateful for (in no particular order):
1. Contact Lenses
2. Wireless Internet
3. Searching the Internet (Google!)
4. Cars
5. Computers (especially Macs!)
6. Personal Video Recorders (TIVO!)
7. Cell phones (and to think it used to be cool to have a pager!)
8. Japanese Hair Straightening
9. Digital camera
10. Personal Tele-transporter - oops, that one hasn't been invented yet!

These are the things that really improve the way I live day-to-day. A big THANK YOU goes out to all of the inventors!!!
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Saturday, April 16, 2005

How does my paycheck dwindle so fast?

Every week, I receive my weekly paycheck stub. And every week, I gasp when I realize my income seems to disappear. So, it's time to sit down with my paycheck stub and determine how my money evaporates into thin air before I even have a chance to spend it. Here goes:

First, the number of hours I've worked each week is multiplied by the hourly wage. The result is called the total gross income. Simple enough so far.

Then, pre-tax deductions are subtracted...
- 8% of total income --> company's 401k plan (company matches 4% in pre-tax dollars)
- 2.5% of total income --> purchased company vacation time
- <1% of total income --> basic dental, vision, & medical benefits

The remaining amount is used to calculate my taxable gross income. Using my taxable gross income, all of my taxes are calculated ...
13.9% of total income (or 15.7% of taxable income) --> Federal taxes (a.k.a. Fed Withholding)
4.6% of total income (or 5.2% of taxable income) --> California taxes (a.k.a. CA Withholding)
1.4% of total income (or 1.6% of taxable income) --> Medicare (a.k.a. Fed MED/EE)
6.0% of total income (or 6.8% of taxable income) --> Social Security (a.k.a. Fed OASDI/EE)
1.0% of total income (or 1.2% of taxable income) --> California State Disability & Family Leave Temporary Disability Insurance (a.k.a. CA SDI FTDI)

Then, more post-tax deductions are subtracted...
<1% of total income (or <1% of taxable income) --> Accidental Death & Dismemberment , Long Term Disability, & Life Insurance

Believe it or not, all of the deductions and taxes add up to about 39% of my total income. So, that leaves me with a whoppin' 61% of my paycheck to actually see and play with! Wow! The leftover money is referred to as my net pay. And then, to think that we pay sales tax using our post-tax dollars to buy goods and services... what a rip-off!
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Tuesday, April 12, 2005

Money, money, money

After college, I began working and bringing in a regular income. But what I found mystifying was knowing exactly where to put all of my money. Afterall, I wanted to invest my money so that it would generate even more money for me in my sleep. The problem was that I just didn't know which banks, CDs, stocks, mutual funds, brokerage services, and retirement plans to choose. With all of the overwhelming decisions that needed to be made when you suddenly "grow up", I found it easiest to simply leave most of my money in my checking and savings account. Of course, while filing my taxes this year, I realized that I only made a few dollars and pennies on interest this year. I lost the opportunity to make more earnings on the money I saved this year and wished I had learned how to invest my money earlier so that I didn't find financial jargon so intimidating, overwhelming, and boring.

I think there are several ways that young kids can get a jump-start learning about finances in bite size amounts before they "grow up." Parents can take their kids to the bank to help choose a CD and in the process explain how CDs work. Parents can buy their kids a savings bond and calculate how much it will be worth in the future. Parents can buy their kids a small amount of stock for one of their favorite companies and monitor the stock's performance periodically. Parents can even hire their kids for small jobs and aid their kids in filing their own taxes. Or the kids can get a part-time job at their local bank as a teller. Such exposure to finance terminology and concepts will begin a personal finance education that will be quite useful later in life as the children transition into adulthood.

I have decided that it is time for me to take responsibility for my lack of personal finance knowledge. I am going to gain more personal finance knowledge by doing my own internet research, talking to people, and reading books on various subjects including: tax laws, investing, retirement planning, estate planning, and checking/savings accounts. Though I don't find personal finances a particularly intriguing subject (and it doesn't help that the laws are constantly changing), I must keep in mind that the time I spend now is an investment for my future. Ideally, if I can learn how to manage my money now, my money will grow with time so I can have financial freedom in the future. Wouldn't it be great not to worry about money? And wouldn't it be great to take vacations in different places of the world and still have plenty of money left for retirement? Well, I really hope that I can stay motivated to spend time learning about money now because I definitely think it will be worth it and pay off in the long-run.