Transitions at Work

Today 3 people retired and 5 people were laid off. Sorry to see everyone leave. Wish we all had work. Instead the few left will pick up more work.

The retirees are in good shape. They saved money, paid off debt, planned for collecting social security, and have interests to keep them busy. Very happy everyone was ready for the opportunity.

My laid off coworkers are in pretty good shape, with savings and little debt. A lesson aerospace workers learn early in our careers. Was told a joke when I starting out, “There are two types of aerospace workers - those who have been laid off, and those who will.”

Anytime you are not working, life gets hard fast. Unemployment does not cover rent, bills and food. Your savings has to cover what spending you can’t cut while you are job hunting. Everyone needs a minimum of 6 months savings to cover bills. I prefer over a year of savings on hand for emergencies.

How do you start building your emergency fund?

Put ~10% on your first or current job into your 401K. At least put enough to get the employers matching funds.

Then put money aside for emergencies, vacations, car repairs and hard times. Start with ~10% after taxes. Automatically deposit this to your savings account. You won’t see it, so you are less likely to spend it. Live on the 90% or less after taxes deposited to your checking.

When extra spending is necessary, you can transfer funds to your checking account to cover it. Most people may need to do this once or twice a year.

Secrets to financial independence:

1) Spend less than you make. Credit card debt not paid off every month ruins more people’s finances than any other mistake.

2) Every time you get overtime, a bonus, or a tax return: Put 10% in checking to spend on a treat. And put 90% in savings.

3) Every raise increase the percentage saved in the 401K and savings. 10% becomes 12%, then 14% and more. You aren’t use to spending the raise, so you don’t miss it.

Properly invested savings earn compounded interest and grow faster than you believe possible. When medical expenses occur, you can pay off the credit card. 6 months of job hunting becomes manageable. Eventually you can afford the down payment on a condo or house.

Good habits make you rich. Poor habits stress and shorten your life.

What Are You Doing to Make Your Life Better?

Just came from a Volunteer appreciation dinner. The church recognizes people giving for all these different activities.  People there planning for the future, teaching religion, funeral services, social justice, choirs, feeding the homeless, leading groups, ushering, greeting people, and in line with my skills - set ups, tear downs, serving coffee and doing dishes. All these people are doing the little things that build a better society.

Your life will not get better until you do something different than you are doing now. Something that stretches you, makes you uncomfortable, meeting new people, or try a new skill that you aren’t really sure you will succeed at.

In college my professors said our knowledge is always changing. So we are not teaching you the facts, we are teaching you how to learn for after you graduate.

Taking a class on navigating office politics tomorrow. Office politics are not my favorite subject. Would rather keep my head down and work. Would rather scrub walls and the floor than deal with politics. However if the right decision needs to be made, would like to have input and contribute where I can. So will take a class to improve skills for the future. 

So the question is, what are you doing to make your life better?

Simple Solutions Don’t Work

Tax the Rich - Connecticut and Maryland both found out this does not work.

Connecticut has raised income tax rates on wealthiest residence last 2 years. Net tax revenues have not increased. Tax revenue from the state's top 100 highest-paying taxpayers declined 45 percent from 2015 to 2016. The drop is a $200 million revenue loss for CT.

Maryland "millionaire's tax" pushed through by Gov. Martin O'Malley in 2007 imposed a rate of 6.25 percent on incomes of more than $1 million a year. ~300 richest residents would pay. The following year only ~200 high incomes had to pay. Result was a net loss of tax revenue.

What is happening?

First assumption is no one will adjust to higher taxes. Business owners and CFOs will find alternative methods to reduce taxes. If Capital Gains are lower, pay me in stock options instead of salary.

Second false assumption these wealthy people will make as much money every year. The wealthy are not the same every year. You only sell businesses and real estate every decade or two. Other years you earn much less.

Third wealthy people are mobile. They can move to another county, state or country. Record numbers of people have given up their US Citizenship in last 5 years. Some of these are people from other countries who built a business here, sold it and are moving for lower taxes on their windfall.

The other reason Taxing the Rich does not work, the wealthy don’t earn enough. John Stossel reports if the IRS took 100% of all incomes over $1 Million, the 2012 total would be around $616 Billion. The US Government had a 2016 deficit of $593 Billion and borrowed additional $830 Billion totaling $1.417 Trillion. About 40% of this year’s deficit.

John Stossel points out no one works to earn nothing, so those incomes would evaporate, resulting in No tax revenue to reduce the deficit.

People, businesses and corporations earn wealth. The government taxes and spends wealth for military, entitlements and programs. The government has to control spending.

The Biggest Risk to our Economy is Debt - personal, business and government. Next biggest risk is government regulations and spending.

Based on the slow growth of the economy over the last decade, your Entitlements will be Lowered and Taxes Raised by our governments.

What is Going Right?

We are all Too Hard on Ourselves. We look at our mistakes and weaknesses, and beat ourselves up. Then we try to fix our weaknesses.

Strengths Make Us Special. You are not reading this because it is spelled right, nor typed well. You read this to Make Your Life Better.
(Flunked many spelling tests, type 25 words per minute with errors,  and still contributed to 2 books.)

Forgive Yourself. None of us is perfect. New uncomfortable experiences are called Learning. 

Work on your strengths, try them out, and Be Grateful for what went right.