From NJ Spotlight:
INTERACTIVE MAP: TRACKING SALT DEDUCTIONS ACROSS THE STATE
The loss of the federal income tax deduction for state and local taxes paid would mean a loss of about $21,500 in write-offs for the average New Jersey taxpayer.
An analysis of the Internal Revenue Service’s 2015 Statistics of Income data, which counts all tax returns filed in 2016, the vast majority of which were for the 2015 tax year, shows that the amount New Jerseyans subtracted for state income and sales taxes and for local property taxes comprised nearly 70 percent of their total itemized deductions of $31,185. Other common deductions include home mortgage interest, medical expenses, and charitable contributions.
Congress on Thursday took the first step toward advancing the Trump administration’s proposed tax reform, which would eliminate the federal estate tax, cut corporate taxes, and reduce the rate paid by the highest earners, as well as streamline tax brackets and increase the standard deduction. Republicans are saying it will provide middle-class tax relief.
But several studies indicate it will do the opposite for a significant proportion of taxpayers in states like New Jersey, where people take large deductions for state and local taxes or SALT, especially the notoriously high property tax.
…
An analysis by the Institute on Taxation and Economic Policy, for instance, found that more than a quarter of New Jerseyans would pay higher taxes — $2,400 annually on average — under the GOP plan, although the wealthiest 1 percent would get an average tax break of $74,000 a year. Most in New Jersey would receive a modest tax cut, the analysis found. Those who would pay more in taxes would be filers with incomes between $78,000 and $329,000.“Make no mistake: this proposal is not tax ‘reform’ – not by a long shot,” said Sheila Reynertson, a senior policy analyst with New Jersey Policy Perspective, a progressive think tank. “It’s merely a package of huge tax cuts for those who are already doing well in this rigged economy: the very wealthy and large corporations.”
Because tax filings are highly individual, for instance, whether a person itemizes his taxes and takes the SALT deductions or not, and because all the details of the Trump plan are still not available, it is hard to predict how individuals would fare.
It is clear from the IRS data, though, that these deductions are more significant to filers in some parts of the state than in others.
For instance, taxpayers in three zip codes — Short Hills’ 07078, Far Hills’ 07931, and New Vernon’s 07976 — took more than $100,000 in SALT deductions on average in 2015. Short Hills led all, subtracting nearly $155,000 in state and local taxes from their federal returns. The SALT deductions were 95 percent of the total deduction taken and it represented more than a quarter of that area’s average adjusted gross income, which is gross income minus adjustments for such items as health savings account deductions, some contributions to qualified retirement plans, college tuition, and other items, of nearly $580,000.
frist
FRIST
WTF?
Of course Amazon will pick NJ. They’ll choose it for the high wage inflation, high taxes, and high local speed limits.
chi – Caps lock slowed you down just enough to lose;-)
Frist!
I love it when the liberals start eating their own.
https://www.buzzfeed.com/stevenperlberg/former-obama-adviser-anita-dunn-helped-harvey-weinstein?utm_term=.di2LaPVnK#.ct7La4eR2
From the map, it looks like all of the “average” taxpayers live really close to each other.
The loss of the federal income tax deduction for state and local taxes paid would mean a loss of about $21,500 in write-offs for the average New Jersey taxpayer.
Hurricane season is not over yet.
OMG this article.
“The loss of the federal income tax deduction for state and local taxes paid would mean a loss of about $21,500 in write-offs for the average New Jersey taxpayer”
For the married couple filing jointly, the new standard deduction exceeds this! What’s their point exactly?
Saddle River – Average adjusted gross income = $393K?
NJ maybe setting up for a new kind of white flight?
ISRG 3:1 stock split this morning. Should matter a bit, I just like pointing out stocks that Pumps is too stupid to buy for all the wrong reasons.
Shouldn’t matter a bit.
Saddle River is the wealthy town, Upper Saddle River is less so.
Sneaky, keeps the nouveau trash out.
There is a methodology issue though, those are average incomes, not median, so they are easily pulled upwards by outliers on the top end. I’m not talking about high incomes, I’m talking about one-time events (large capital gain, think sale of a company, etc).
The greed is out of control with the 1%. It’s criminal. No morals. Why in the hell do you need a tax break when you are in the top 1% of earners. If that’s not a$$ backwards, I don’t know what is. What logic is behind this?
“An analysis by the Institute on Taxation and Economic Policy, for instance, found that more than a quarter of New Jerseyans would pay higher taxes — $2,400 annually on average — under the GOP plan, although the wealthiest 1 percent would get an average tax break of $74,000 a year. Most in New Jersey would receive a modest tax cut, the analysis found. Those who would pay more in taxes would be filers with incomes between $78,000 and $329,000.
“Make no mistake: this proposal is not tax ‘reform’ – not by a long shot,” said Sheila Reynertson, a senior policy analyst with New Jersey Policy Perspective, a progressive think tank. “It’s merely a package of huge tax cuts for those who are already doing well in this rigged economy: the very wealthy and large corporations.””
I thought I read somewhere that they are now going to modify the salt proposal after pressure from Republicsn lawmakers in high tax states. Budget proposal has been passed so they can now move ahead with their tax reform.
Here is a reasonable proposal.
Cap Mortgage Interest Deduction to $500k max (cut from $1m), and only apply it to primary residence. Most importantly this eliminates the perk of being able to deduct an expensive vacation house, which everyone would agree shouldn’t be included.
Cap State and Local tax deductions as income increases, sliding scale. Perhaps completely eliminate State and Local tax deductions at the $250k mark.
Hope and change y’all.
oh please. How many people living in NJ make $78,000 household income and have more than $24k in deductions? Pumpkin…you’re really worried about all the poor and people living in Short Hills who will lose their $150k in deductions aren’t you.
“senior policy analyst with New Jersey Policy Perspective, a progressive think tank.”
I just took a quick look through Bergen county map and lots of towns including mine do just fine with doubling the standard deduction and eliminating salt.
d and 3b,
Just put on the backs of property owners, right? I said, right? As if the property taxes in this state don’t already pay for most of the costs. You guys are ridiculous.
That’s why the property taxes are so high in this state, unlike other states, the property owners foot the bill for the majority.
“1) We are not talking about the secretary of state here.
No he’s not in the State Department But he and his missus have the equivalent level in the White House!
2) Did Kushner put classified information on there.
TDB
3) Highly doubt there were 50,000 emails.
The fact there was even one negates the argument
4) Did he delete them all permanently after claiming he didn’t.
Irrelevant see point 3)
5) Does he have a lifetime of service in the public sector where he should have learned better?
No, but he has two years of DIL saying Lock her up. If you can’t get from that, “it’s not allowed” “Are you that dumb!”
6) Is he running for POTUS?
See previous point “Are you that dumb!”
7) Does he have a foundation where you can clearly pay for favor?
You are seriously asking that?!
Shall I go on?
Please do
Or should we not give this kid the benefit of the doubt?
No, Why?
When Kushner runs, then you can properly bring this up.
Sorry, laughing too hard! At best having seen what happened to Hillary, you have to ask, Why would he (and all the others do this). At best incompetence at worst entitlement.”
Fab, I’m pretty reasonable, as you know. But you completely wasted your time there. By simply admitting that Kushner should not have used private servers for gubmint related email, you are bringing Hillary down to his level. Or simply admitting that Hillary should have known better. ‘Cause during the campaign season, every Dem claimed that using private servers for government business was not a big deal? So which is it? You really need not answer at this point.
I can understand (barely) the purpose of a corporate tax break as economic growth is a possibility (barely) as is global competition (definitely). Though, the gains will surely go to those who already don’t need them.
I can’t understand the tax cut on the uber wealthy (400K and up). Heck, many of these guys have admitted that they should be paying more.
Greed is good.
LOL. And Montclair went the other way to throw us off.
One of my good friends bought his first house in (1980’s) in, I guess, Upper Saddle River as it was a run-of-the-mill Cape on a nice street (that’s 25 mph, Pumps). I helped him sheet rock an addition. I felt sorry for him for getting married in his 20’s.
I’m not sure if this still works (probably not), but he taught me something I never would have thought of back then. He would read an article in they NYT or WSJ and then call up the journalist and ask him additional questions. I did it a few time myself. I couldn’t believe I could actually do that until I did.
Saddle River is the wealthy town, Upper Saddle River is less so.
Sneaky, keeps the nouveau trash out.
Well here we go again. Who said anything about putting it on the backs of property owners and as an aside for many property owners it’s their own fault for agreeing to high spending referendums etc. anyhow all I said was for many towns in Bergen co including mine and as per the map the losss of salt but the doubling of the exemption is not gong to hurt people Towns reviewed Paramus River Edge New Mlforf Teaneck Emerson Wash township Hillsdale Rutherford.
Property taxes are high in this state for three reasons.
1) Lack of regionalization causing duplication of services.
2) Abbott decision.
3) The politicizing of public workers unions resulting in oversized salaries and benefits in return.
Fix these three and NJ will be just like every other state.
We went to our daughters’ curriculum/back to school night last night. My wife and I had to split up so we could visit both daughter’s classes at Boston Latin. Even though the school (the nth location) was built in 1922, you just can’t help but appreciate what a great school it is. There is absolutely no magic here; kids land there on merit, grades and a ISEE test score.
Here’s the takeaway and a good indication of what our complacent population is doing wrong. My younger daughter’s history teacher said that our of 136 students she has this year, 105 of them had grandparents born outside of the US. She went on to say that 86 of them had parents born outside the US. Eight of the students were themselves born abroad. Looking around the room at the parents, I saw diversity, but not the diversity the left likes to talk about, if you know what I mean?
Me no understand round eye.
LOL!! Glad I wasn’t drinking coffee!
Me no understand round eye.
@SenSchumer
GOP tax plan actually raises taxes on millions of middle-class families by repealing the state and local tax deduction, a real Trump Tax.
@SenSchumer
44 million Americans all across the country take the state & local tax deduction (~1/3 of all taxpayers) & they get $1Ks off their taxes.
@SenSchumer
In 2015, 41% of New Jerseyans took the State and Local Tax Deduction,
and the average deduction was $17,850 #TrumpTax
Stu and reckless referendums. We will now be getting a community center built from scratch. The powers that be and a small minority want it. And in this instance it’s not even going to referendum. A totally unnecessary expense.
In other words, they should be more like conservatives who encourage r@pey pvssy grabbing.
The Original NJ ExPat says:
October 6, 2017 at 7:34 am
I love it when the liberals start eating their own.
Weinstein is a Hollywood liberal he grabbed too. Does he get a pass?
So you think renters don’t effectively pay property taxes with their rent and landlords are eating that expense? You really are dumb. Funny story, rental property taxes are also tax deductible for the property owner.
The Great Pumpkin says:
October 6, 2017 at 8:43 am
That’s why the property taxes are so high in this state, unlike other states, the property owners foot the bill for the majority.
He’s being called out. You elected a confirmed pvssy grabber. And a moron. True story.
3b says:
October 6, 2017 at 9:20 am
Weinstein is a Hollywood liberal he grabbed too. Does he get a pass?
You’re not going to convert me, footstool. I don’t think I there was ever a verbal protocol that preceded puzzy grabbing. How does it work now? “Madam, with great respect I would like to request the grabbing of your puzzy? Have your people call my people and we’ll send the papers right over for signatures.”
In other words, they should be more like conservatives who encourage r@pey pvssy grabbing.
In the old days girls looked forward to being carried away like bowling balls.
That is why the Camden City/County Police model thing is such a success. Norcross is behind it, let’s see how Murphy does it.
Property taxes are high in this state for three reasons.
1) Lack of regionalization causing duplication of services.
( Here Camden Count Police model – took over Camden City & in process of other surrounding town )
2) Abbott decision.
( This does not matter, if all towns are regionalize in County based school system like Sussex County is trying to do)
3) The politicizing of public workers unions resulting in oversized salaries and benefits in return.
( Camden County police model does the “magic act” here. – The new agency can only a have a maximum of 49.9% of old employees to be a “new” agency, which means no union to start out, and benefits and salary scale set by county government at their pleasure. Everyone hire is a new employee of a new agency, with new set benefits and salary scale, new s.o.p., new everything. )
Fix these three and NJ will be just like every other state.
(Camden County police model -proved it works, just needs to be implemented in every county, in every public service agency. Police/Fire-EMS/Schools/Public Works-Roads-Parks.)
^^^^That’s what Cam Newton told me, anyway. He also sad the b1tches kept their mouths shut on routes;-)
Are you a landlord? Hate to break it to you, but depending on what stage of the market cycle, landlords sometimes end up eating it. STFU. So sick of people claiming I’m dumb when they talk out of their a$$.
Ottoman says:
October 6, 2017 at 9:22 am
So you think renters don’t effectively pay property taxes with their rent and landlords are eating that expense? You really are dumb. Funny story, rental property taxes are also tax deductible for the property owner.
“You elected a confirmed pvssy grabber.”
I’m not so sure Hillary wasn’t one as well. She obviously wasn’t pleasing men like her husband.
Otto I did not vote for him or her. First election I never voted in.
Why did Hillary make her husband go on a gluten-free diet?
I seriously doubt that. When you can’t raise your Dad on Skype to tell you, you come here to hear it from your “online” Dads.
So sick of people claiming I’m dumb
To make him light enough to push down a flight of stairs a the right time?
Why did Hillary make her husband go on a gluten-free diet?
Creative…but wrong!
To try to keep him away from FLOWERS.
I’ll be here all day folks.
Go after the workers, but leave the rich alone, right? Always the same with this type of mindset. A worker topping out at 100k needs to be attacked, but someone making 5 million a year must be left alone on the basis that the govt has their hand in their pocket. What a contradiction. That worker serves a purpose in our high cost of living state whether you acknowledge it or not.
Paying them a salary that puts them on the borderline of poverty is what you are advocating for? Why? Why do you feel the compensation for the rich is justified, but a cop putting their life on the line in Camden is not?
“The politicizing of public workers unions resulting in oversized salaries and benefits in return.
( Camden County police model does the “magic act” here. – The new agency can only a have a maximum of 49.9% of old employees to be a “new” agency, which means no union to start out, and benefits and salary scale set by county government at their pleasure. Everyone hire is a new employee of a new agency, with new set benefits and salary scale, new s.o.p., new everything. )”
Humma[sic] Weiner obviously wasn’t.
Pumps is so easy to wind up. I’ll be back later this afternoon to see what fun he’s frothed.
Again, why is alright to lower your taxes by taking away from a worker, but it’s not okay to lower your taxes by taking away from a millionaire/billionaire. This country is fuc!ed. The mindset is beyond lost.
9:20. He’s 65, will be probably be the end of Miramax, he’ll be sued relentlessly. But he isn’t running for President.
I like how Trump’s big messaging was to get rid of tax loopholes.
Most Americans thought that comment applied to corporations, not themselves.
Wow. Heating up just like I said back in 2013. I can’t believe how on point my calls were. Simply amazing.
https://www.bloomberg.com/news/articles/2017-10-06/u-s-payrolls-fall-33-000-on-storms-jobless-rate-drops-to-4-2
I am stroking my little wiener right now, trying to make it hard. Somehing isn’t working. It’s very, very small. And soft.
shocker!
Years ago, I brought up on this blog that the most important factor of going to ivy league schools is the network advantage. Of course the members of this blog blew me off and said I was dumb for stating that. Well here we are with a bloomberg article discussing what I said.
“Let’s start with studies showing that fraternity members tend to earn more money after college than other graduates do, even if the record shows their grades aren’t as good. That’s quite a tradeoff: Slack off in class, party more — then still earn more money. Sign me up!
Yes, there is likely a selection factor at work. Students who want to join fraternities and whom fraternities want to recruit may start out with social and economic advantages. They could be naturally gregarious, confident, maybe better looking than average. They might not have to work part time or pinch pennies, as many other students do.”
https://www.bloomberg.com/view/articles/2017-10-06/the-fraternity-paradox-lower-gpa-higher-incomes
The only thing heating up is your daily brain fart manifesto. Do you even read what you post:
Of the jump in average hourly earnings, Faucher said he’s “discounting that somewhat” because of the drop in employment at restaurants, a “low-paying industry.”
Stupid Reporter.. The Charlotte Observer is going to have to fire her now.
https://www.huffingtonpost.com/entry/cam-newton-jordan-rodrigque_us_59d6a9eae4b046f5ad972014?ncid=inblnkushpmg00000009
She was talking about the possible routes to her framazama.
Bystander,
These are the same clowns that didn’t see this economy coming back in 2012/13. They are always focused on the wrong details instead of what matters.
Are you really that naive to think that you won’t see a bout with inflation coming? You don’t think they are going to start having to raise wages based on the unemployment rate? A 4.2% rate will indeed create wage inflation for the lower end non skilled workers eventually. And as we all know, the high skilled jobs have been seeing wage inflation for a couple years already. The writing is on the wall, but you don’t want to see it. You want to focus on negativity and act like the sky is always falling.
Pumps,
You are right. We need to raise the wages of the high skilled workers here.
Maybe we need to hire those smart Chinese, Russian and North Korean hackers because they sure seem to be able to infiltrate anything the West considers secure. I wonder how well compensated these actors are.
http://www.businessinsider.com/john-kelly-phone-compromised-hacked-2017-10
John Kelly’s phone was reportedly compromised for months.
Trickle down.
“A 4.2% rate will indeed create wage inflation for the lower end non skilled workers eventually”
Juice…If anyone ever looked up the stuff we post in our fantasy football league, we’d be jailed. And our league is super diverse.
Why is Trump banned from India?
They’re afraid he’ll bankrupt the Taj Majal.
No applause please.
Same for my FFL league, and we are in our 20th year now.
We are pretty close to that. 14 team league.
Know lots of ex-party school frat guys and sorority gals who are very very successful salespeople.
They all tend to be likable, get along well, funny, outgoing, very good at building and sustaining relationships. It’s not that frats or sororities gave them networks, it’s that they are generally all good at BUILDING networks.
Really smart people who suck at interpersonal relationships HATE THESE PEOPLE. Generally, they all feel that it isn’t “fair” that they are successful and command high salaries.
Intelligent, ugly, introverts who can’t have a conversation about football or college basketball at a bar generally all hate these people the most, feel they are completely worthless, completely inequitable.
Good point, grim.
My point is that college is not only about education, it’s about building a network. You got to ivy league, and dorm with some ceo’s son, chances are you will end up with a good job based on your connections you built at school.
I should go into sales. I’m 37 and look like I’m 22. Hell, when I go to AC, I have to get a stamp on my hand because they ID me so much. I would kill it, but I would have a hard time morally. It’s just not in me to sell something to someone that they don’t really need.
Hmmm…. Christine Lagarde is a little bit of a cunt.
Nope. I take that back. She is a full ass smelly cunt.
The contested land is the old HESS parcel right north of Mitsuwa Market, opposite of the newly built SOJO Spa, which in spite of my prediction, and judging by the line of cars to valet and folks milling about its open air pools, is killing it.
https://www.nytimes.com/2017/10/04/nyregion/edgewater-gold-coast-new-jersey-affordable-housing.html
EDGEWATER, N.J. — The developers snatched up possibly the last large building site here on New Jersey’s red-hot gold coast, a weed-covered, waterfront parcel offering spectacular views of Manhattan.
They devised a plan they thought local officials could not refuse: They would create two parks, a waterfront esplanade, space for retail, a ferry terminal, an elementary school, and 1,863 apartments in five high-rise buildings, including 375 units for low- and moderate-income tenants. The project would pay an estimated $12 million a year in taxes.
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Footrest,
“In other words, they should be more like conservatives who encourage r@pey pvssy grabbing.”
Hey, we don’t complain when your side s0domizes little boys, so lay off.
These posts are in response to what?
grim says:
October 6, 2017 at 11:54 am
Know lots of ex-party school frat guys and sorority gals who are very very successful salespeople.
They all tend to be likable, get along well, funny, outgoing, very good at building and sustaining relationships. It’s not that frats or sororities gave them networks, it’s that they are generally all good at BUILDING networks.
Really smart people who suck at interpersonal relationships HATE THESE PEOPLE. Generally, they all feel that it isn’t “fair” that they are successful and command high salaries.
grim says:
October 6, 2017 at 12:00 pm
Intelligent, ugly, introverts who can’t have a conversation about football or college basketball at a bar generally all hate these people the most, feel they are completely worthless, completely inequitable.
oh … I see…
The Great Pumpkin says:
October 6, 2017 at 11:08 am
Years ago, I brought up on this blog that the most important factor of going to ivy league schools is the network advantage. Of course the members of this blog blew me off and said I was dumb for stating that. Well here we are with a bloomberg article discussing what I said.
“Let’s start with studies showing that fraternity members tend to earn more money after college than other graduates do, even if the record shows their grades aren’t as good. That’s quite a tradeoff: Slack off in class, party more — then still earn more money. Sign me up!
Yes, there is likely a selection factor at work. Students who want to join fraternities and whom fraternities want to recruit may start out with social and economic advantages. They could be naturally gregarious, confident, maybe better looking than average. They might not have to work part time or pinch pennies, as many other students do.”
Pumpkin…… read this….. a much better analysis….
“Success boils down to serially avoiding catastrophic failure while routinely absorbing manageable damage.”
If you want to be successful, you should emulate successful people. Seems logical, right? But David McRaney, author of the 2011 book, “You Are Not So Smart,” says the successful – great athletes, wealthy business owners, popular entertainers, powerful politicians – may not know the secrets to their success. Oh, they may think they know. But it’s closer to the truth to say the successful are lucky survivors, whose success is attributable just as much to chance, and to what they didn’t do, as it is to some unique talent, special insight, or outstanding character trait. By only looking to the survivors, we may miss some of the essential factors in success.
Survivorship Bias
Consider Microsoft co-founder Bill Gates, declared by Forbes in May 2017 to be the world’s wealthiest individual. Why did Bill Gates succeed? The best answer is a combination of skill and luck.
Some note that Gates had a predisposition to understanding not only the technology but grasping the business forces at work in the personal computer industry. Where others were developing new product features, Gates was focused on establishing standards that would make Microsoft a platform for all other programs. That insight, and the talent to execute it, were certainly key to Gates’ success.
But Malcolm Gladwell, in his book “Outliers” also posits that Gates was born at the right time (1955) in the right place (a rare high school in the early 1970s with mainframe computer access). Random “lucky” events allowed Gates to capitalize on his unique skills and insights.
Gates is by all accounts a smart guy, but no one (even himself) thinks he is the world’s best businessperson. It is quite possible there are a number of other people with greater business aptitude. Why aren’t they as successful? If we want to know the true reasons for Gates’ success, McRaney says we need to know more about those who had similar skills and opportunities but failed; what successful people didn’t do may be as important as what they did.
Unfortunately, failures often disappear without leaving a record of their mistakes; who asks for advice from businesspeople who went broke, or the investors who lost all their money? According to McRaney, this ignorance is a problem. “When failure becomes invisible, the difference between failure and success may also become invisible.”
This blind spot about failure is what psychologists refer to as survivorship bias, the error of concentrating on the people or things that succeeded while overlooking those that failed, typically because we don’t know who they are, or how they failed. Because of survivorship bias, McRaney says, “The advice business is a monopoly run by survivors.” We look to Bill Gates, and people like him, for their
wisdom about success, but we ignore (or can’t even find) the wisdom of those who failed.
The Sciences of Luck
If it’s disappointing to realize that random events beyond our control may have a critical role in any success, and that our survivorship bias may keep us from getting the truth on why the successful succeed, there’s a bright spot in McRaney’s research: there may be a “success formula” for getting lucky.
The latest psychological research indicates that luck is a long-mislabeled phenomenon. It isn’t a force, or grace from the gods, or an enchantment from fairy folk, but the measurable output of a group of predictable behaviors. Randomness, chance, and the noisy chaos of reality may be mostly impossible to predict or tame, but luck is something else.
McRaney cites research by psychologist Richard Wiseman finding that “some people are better than others at interacting with chance.” Wiseman compiled extensive psychological profiles for two groups of people:
• Those who considered themselves lucky, and had a history of positive outcomes from random events.
• Those who felt they were unlucky, and had negative results to back it up.
Wiseman found that those who considered themselves unlucky tended toward the following traits or attitudes:
– Narrowly focused
– Goal and outcome-oriented
– Seekers of security and control
– Preferring routines
In contrast, those who saw themselves as lucky had these traits in common:
– Open to new experiences
– Easily abandoned routines
– Failed often, but usually rebounded quickly.
Wiseman concluded that “lucky” people, because of their personality profiles, ended up having more interaction with random events, and because of the ways they responded, also increased the likelihood that one or more of these chance encounters would end favorably
The Real-World Secret to Success
When you strip away survivorship bias, you recognize that, (1) the successful may owe their success to what they didn’t do, or that they may have been more lucky than talented. And (2), if you understand that there are favorable ways to deal with the randomness of life, you have a better chance of getting lucky.
McRaney combines these two conclusions to produce a real-world success formula:
“Success boils down to serially
avoiding catastrophic failure while
routinely absorbing manageable
damage.”
Is There an Application for Personal Finance? (Yes, There Is.)
It’s not much of a stretch to apply McRaney’s success formula to personal finance. The details might vary, but you can serially avoid catastrophe, and routinely absorb manageable losses, with some combination of insurance and cash reserves. Having those two elements in your financial program gives you the opportunity to be lucky, to consider new experiences, to be flexible in your responses, and to fail occasionally while having more opportunities to succeed.
In the abstract, this makes sense. But even though insurance and cash reserves improve our odds of being lucky, this knowledge is often overwhelmed by our survivorship bias. It’s hard to ignore the possibility that at least one financially successful person really knows the keys to success. And if they do, why can’t you? Maybe you can – if you also look for the
financial failures.
Unlike some other fields, a record of failures in personal finance is available, in the form of bankruptcy filings. In the past 20 years, the most frequent cause of bankruptcy has been large, unexpected medical expenses; a 2015 Harvard University study found medical expenses account for 62 percent of personal bankruptcies in the U.S.
The study also reported that three-quarters of those who filed for bankruptcy due to medical expenses had health insurance. What they didn’t have was cash reserves for deductibles and out-of-pocket
costs. You won’t hear this from a selfmade millionaire, but avoiding a catastrophic medical incident is perhaps one of the “luckiest” things you can do to increase your chances for financial success.
Ironically, this insight about avoiding a catastrophic medical event is part of the Microsoft story. In the early 1980s, Paul Allen, one of Gates’ co-founders at Microsoft, was diagnosed with Hodgkin’s lymphoma. The disease and its treatment limited Allen’s participation in the business, fractured his relationship with Gates, and eventually led to his departure from the company in 2000. Allen is
still a wealthy individual (he made the Forbes Top 100 list), but he is nowhere close to Gates.
There is a segment of the financial services industry that likes to tout historical performance as a reason to follow their advice. They have 4-star ratings, 10-year track records, etc. But they might just be lucky survivors, not financial wizards.
Because we see cause-and-effect at work in some parts of life, we want to believe it is in everything. But there are too many variables to process and too many things beyond our control.
Chi,
Awesome post. I’m a firm believer in luck playing a role in success. I would have debates with some of my successful friends about this, but they refuse to acknowledge it. I just look at my own story. Yes, I took the means to save for a down payment, and took the risk to buy an investment property at a time when most didn’t want to touch real estate and instead had an obsession with stocks. But I was stupid lucky to buy at the right time and that’s something you can’t control.
I can’t believe that post made it through moderation.
So is anyone in NJ talking about this….given the recent story that broke about Weinstein?
http://pagesix.com/2017/08/24/de-niro-weinstein-have-secret-meeting-with-potential-christie-successor/
Where does the article say anything about the fraternities having to be Ivy League? Anyhow I am of two minds on fraternities they may or may not be beneficial. My was president of one and he fits the personality type outgoing personable and people like being around him. My others had no interest and all are doing well. As far as connections it depends on the circle of you are not from the right background you are not going to travel in those circles. In other words you most likely won’t get the invite to Sunday dinner at the ambassador to Belguims house.
Looks like the slack is gone. Wage inflation has to start hitting for the lower end worker sooner, rather than later.
“But let’s take a deeper look. As Yellen herself has noted, headline indicators don’t fully capture the state of the job market. The unemployment rate, for example, counts only those who are actively looking for work, so it misses a lot of people who are on the sidelines or stuck in part-time jobs. A different measure, known as the employment gap, seeks to be more comprehensive by assessing how far the labor participation rate and part-time employment are from where they should be. 1 Here’s a chart:
As of February 2014, the economy was still an estimated 6.6 million jobs away from full employment. As of September, though, the gap had almost disappeared. So even by this more demanding measure, the Fed under Yellen has accomplished its mission.
To be sure, the Fed hasn’t achieved its goal of 2 percent inflation — as of August, its preferred measure stood at just 1.3 percent, a situation that Yellen has called a “mystery.” Some critics say that the central bank could have helped get a lot of people back to work much sooner if it had been more aggressive in pursuing its inflation target, or even set the target higher. That said, Yellen must reach consensus with other Fed officials, many of whom would oppose such policies.”
https://www.bloomberg.com/view/articles/2017-10-06/janet-yellen-has-done-a-great-job-on-jobs
A while back, I debated on this forum that part of the lure of the Ivy League was the ability to network, not only the education. So that’s why I mentioned it.
3b says:
October 6, 2017 at 1:28 pm
Where does the article say anything about the fraternities having to be Ivy League?
You get into one of those exclusive fraternities at an ivy or upper level school, there’s no telling what doors will open for you. It’s just increasing your odds of creating your own luck.
Penn St alumni are like a cult. They look after their own. Just an example.
Question for the econ wonks.
Are we seeing organic wage inflation, or are we seeing the impact of legislated changes to minimum wage across the US?
Or rather, if you back out the minimum wage changes, what’s the actual organic wage growth?
Keep in mind we saw some significant yoy changes in 2017.
Per Hour
Arizona – Up $1.95 (+24%)
Arkansas – Up $0.50 (+6%)
California – Up $0.50 (+5%)
Colorado – Up $0.99 (+12%)
Connecticut – Up $0.50 (+5%)
Hawaii – Up $0.75 (+9%)
Maine – $1.50 (+20%)
Maryland – Up $0.50 (+6%)
Massachusetts – Up $1.00 (+10%)
New York – Up $0.70 (+8%)
Oregon – Up $0.50 (+5%)
Washington – Up $1.53 (+16%)
Wonk – Well No but here are really good analytics…. on wages.
https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx?panel=1
Trump University graduates are all millionaires
chicagofinance says:
October 6, 2017 at 12:36 pm
Pumpkin…… read this….. a much better analysis….
Grim I am in Mod, please release me…
https://www.youtube.com/watch?v=ch_Fz2Np-Z4
FRB has signaled the end of ZIRP, and the beginning of wage growth…..
Like the story of the legendary dog that finally caught a car what to do with it?
What are the investment strategies for a rising interest rate as much as a point a year for the next five years?
The median wage growth by age seems to provide some confirmation of minimum wage growth driving some component of the overall. 16-24 has got the largest percentage wage gains recently.
Grim, outsized wage growth is normal this deep into an economic cycle, with many A+ economics students surprised wage growth didn’t come sooner. Fading immigration growth also boosts wages. Also higher wages = lower corporate profits.
Listen, grabbing Pussy is one thing. Mr Weinstein was different. Since he could not see his own johnson he needed someone to watch him shower to make certain it was clean. Innocent enough!
Got blacklisted, not in mod.
Listen, grabbing P*ssy is one thing. Mr Weinstein was different. Since he could not see his own j*hnson he needed someone to watch him shower to make certain it was clean. Innocent enough!
Not to comment on anyone’s physical appearance but that Weinstein guy is one ugly dude.
Not to comment but I just saw a chunky Pam type Real Housewife driving a convertible white Maserati. I am lucky I did not have any coffee to spit up…
Juice maybe her and Harvey can hook up.
More shocking is that a program, run into the ground over a decade by a senile octagenarian then decimated by NCAA sanctions bc of kiddie scandal, suddenly wins BT in 2016 and good shot at BCS title this year. Barkley kid is Heisman front runner and best college back since Barry Sanders. To think he was a Butgers commit. They will never climb out of football cellar if they could not while PSU was reeling.
“every Dem claimed that using private servers for government business was not a big deal”
And every GOP claimed it was. This is not about Hillary. The consensus is that Private servers BYOD (Looks like Kelly was hacked) is a bad idea. Given the optics of the election, that was reinforced. Why would anyone in this administration ever think it was OK? And its not just JK.
Picked my kid up from a play date in Saddle River today. I would put the house at about the $4Mil mark. It had 4 garages, two on each wing and all stone construction .
Its a good lesson for my kid. Don’t get jealous when people have more than you, that’s called life!
“Not to comment on anyone’s physical appearance but that Weinstein guy is one ugly dude.”
Never stopped R0n Jeremy!
Stu,
One for you.
https://tinyurl.com/yaxrfjy7
True Greatness Gary!
http://thehill.com/policy/finance/354198-september-jobs-report
“Perhaps even more significant, wage growth and the labor force participation rate are also improving. In fact, almost like clock-work, just as the spread between U6 and U3 unemployment numbers reached its 20-year average in late 2015, the participation rate of 25-54 year-olds reversed sharply from its post-crisis downward trend. Wage growth appeared to show signs of acceleration coincident with this inflection point as well. Economists will argue that truly outsized wage growth cannot be sustained unless the somewhat mysterious decline in productivity growth that we have observed over more than a decade reverses. However, the improvements observed in the data are consistent with the theory that the labor market is slowly but surely tightening, and has reached an inflection point where wage growth may begin to trend modestly higher.”
https://www.forbes.com/sites/greatspeculations/2017/09/29/rumors-of-inflations-demise-have-been-greatly-exaggerated/#b86db04c4bce
There’s no denying that raising the floor wage has an impact on all the wages above it. My wage inflation prediction was predicated on natural wage growth due to cyclical factors and demographic spending patterns. So it very well might be a combination of both.
grim says:
October 6, 2017 at 2:44 pm
Question for the econ wonks.
Are we seeing organic wage inflation, or are we seeing the impact of legislated changes to minimum wage across the US?
It pains me to say it, but I’m hoping for a market correction soon. Sorry to the people that have to cash out, but a market correction would really help this stock market hit its stride.
Does anyone agree with the position that valuations make sense right now based on low rates?
Bingo! What do you have to say about that, no one?
“”If they pass the bill they’re talking about, I could leave $75 billion to a bunch of children and grandchildren and great-grandchildren,” Buffett said on CNBC. “And if I left it to 35 of them, they would each have a couple billion dollars. Is that a great way to allocate resources in the United States?””
Only calling out “no one” because he is in the position of pro estate tax. Stating its’ their money, so keep your hands off. Do you still hold this position knowing that you are harming the economic system by putting huge amounts of capital in losers hands like buffet understands? We are all in this economy together, passing on vast wealth should be illegal based on the logical harm it brings to the economy in the mismanagement of resources.
Oh pumpy….tsk tsk
One wonders if there is a relationship between the Dems being neutralized and a creep like Weinstein being flushed out…..
I think Buffet should have all his money confiscated by Camden NJ to prove forever the uselessness of govt redistribution.