Reddit has become a guide to personal finance • Hacker News Board

Re: Reddit has become a guide to personal finance

#201

Post by magduf » Wed, Mar 04, 2020, 4:00 PM UTC

iso1210 wrote: post #193

Humdeee wrote: post #179

Earlier quoted context omitted.

Financial literacy is pure garlic to every common vampire financial advisor. I have a couple friends right now that do not want wage raises because "it will knock them into the next tax bracket". Believe me, I've tried to explain how the simple concept of income and taxes work. I trusted my financial advisor years ago when I started my career. It took me a couple years to realize I was the product, not his client wit…

Dunno about the US, but in the UK there are a few wage points where a small rise can lead to a reduction in net income. Specifically moving into the higher tax bracket, which removes £200 off their personal allowance if they were using the pooling allowance option -- i.e. a £100 tax rise could lead to £46 extra income but £201 extra outgoing, a net reduction of £155 There are more perverse options with housing, child…

Does the US not have marginal tax brackets? That seems really odd and dumb. The benefit cliff you cite is real, but for actual income taxes, there's no such thing as a reduction in income from higher earnings. Going to a higher tax bracket just means you pay higher taxes on money over a certain threshold. So if bracket A is 20% under $50k, and bracket B is 30% over $50k, if you make $51k, you'll pay 20% of 50k, plus 30% of 1k. It's never disadvantageous to make more money (except if you're on government benefits as mentioned, where there are some weird effects).

Strangely, a lot of people don't understand this at all.

Re: Reddit has become a guide to personal finance

#202

Post by arkades » Wed, Mar 04, 2020, 4:00 PM UTC

Humdeee wrote: post #179

waylandsmithers wrote: post #161

I would personally advise against taking advice from Reddit beyond simply basic answers about various financial products and maths. My problem with larger communities on Reddit is that prevailing opinions seem to emerge, and anything that questions or disagrees with them gets downvoted to hell. On the personal finance subreddits these include ideas like "You should always have 18 months of expenses saved" and "Any mo…

Financial literacy is pure garlic to every common vampire financial advisor. I have a couple friends right now that do not want wage raises because "it will knock them into the next tax bracket". Believe me, I've tried to explain how the simple concept of income and taxes work. I trusted my financial advisor years ago when I started my career. It took me a couple years to realize I was the product, not his client wit…

Quite.

I considered going into financial advisement once, in the distant past. A family friend was in the field, and took me in for a round of advice. He was quite open that it was eat-what-you-kill, with a serious focus on people with impaired judgement (e.g., elderly), because that was the only way to make up the bulk of your revenue. He said that he hadn't had a peaceful night's sleep since he'd started, due to the guilt of day-to-day work.

Re: Reddit has become a guide to personal finance

#203

Post by tsukurimashou » Wed, Mar 04, 2020, 4:00 PM UTC

Humdeee wrote: post #179

waylandsmithers wrote: post #161

I would personally advise against taking advice from Reddit beyond simply basic answers about various financial products and maths. My problem with larger communities on Reddit is that prevailing opinions seem to emerge, and anything that questions or disagrees with them gets downvoted to hell. On the personal finance subreddits these include ideas like "You should always have 18 months of expenses saved" and "Any mo…

Financial literacy is pure garlic to every common vampire financial advisor. I have a couple friends right now that do not want wage raises because "it will knock them into the next tax bracket". Believe me, I've tried to explain how the simple concept of income and taxes work. I trusted my financial advisor years ago when I started my career. It took me a couple years to realize I was the product, not his client wit…

> I have a couple friends right now that do not want wage raises because "it will knock them into the next tax bracket".

is that not a real thing where you live?

Re: Reddit has become a guide to personal finance

#204

Post by FillardMillmore » Wed, Mar 04, 2020, 4:01 PM UTC

moksly wrote: post #146

xelhark wrote: post #23

I think a much bigger point can be summarized with this sentence from the article: > Seven of the top ten results are trying to sell you something, which really makes you question the objectivity of the advice. This is true when searching for pretty much everything in Google nowadays, that's why if you're looking for any info, searching on reddit usually yields much more objective and generally better results.

I didn’t think much about it, but now that you mention it, I’ve been typing “reddit” after my google queries almost every time I search for something that isn’t a technical problem or me looking to buy something.

I even look to Reddit when I am looking to buy something, because as pointed out above, Reddit often presents people with a more objective view on a product in contrast to the results you'd get simply from a generic Google query on the product.

Re: Reddit has become a guide to personal finance

#205

Post by Tycho » Wed, Mar 04, 2020, 4:01 PM UTC

Here's a simple personal finance question that seems very hard to answer: should you overpay your mortgage, or put more money towards retirement?

The well informed answers you tend to see on sites like MoneySavingExpert seem to converge on putting money towards retirement. They cite things like difference in interest rates and tax relief. But I feel the analysis is too one-dimensional, and there's actually a myriad of utility considerations and possible future scenarios. It might be impossible to answer well but I feel someone should turn it into an optimization problem (in the engineering sense).

Re: Reddit has become a guide to personal finance

#206

Post by themodelplumber » Wed, Mar 04, 2020, 4:01 PM UTC

waylandsmithers wrote: post #161

I would personally advise against taking advice from Reddit beyond simply basic answers about various financial products and maths. My problem with larger communities on Reddit is that prevailing opinions seem to emerge, and anything that questions or disagrees with them gets downvoted to hell. On the personal finance subreddits these include ideas like "You should always have 18 months of expenses saved" and "Any mo…

> prevailing opinions seem to emerge, and anything that questions or disagrees with them gets downvoted to hell.

I've noticed this too. Also the general bias there is toward asking for help/answers. So if your post or reply indicates that you are encouraging subjective, open-minded experimentation, especially if there is any risk involved, you are flirting with a total freak-out.

It's annoying but there's also a lot of good to be found there.

Re: Reddit has become a guide to personal finance

#207

Post by Areibman » Wed, Mar 04, 2020, 4:02 PM UTC

This isn't limited to personal finance either. I find that asking an open ended question to Google typically results in irrelevant results, discussions that are too precise to be useful (StackExchange), or just plain unhelpful (Quora). But appending "Reddit" to the end of my query almost always produces a relevant thread.

Most web forums haven't figured out SEO or how to persist quality threads (TripAdvisor). Reddit is filling in that gap.

Re: Reddit has become a guide to personal finance

#208

Post by whateveracct » Wed, Mar 04, 2020, 4:03 PM UTC

tsukurimashou wrote: post #203

Humdeee wrote: post #179

Earlier quoted context omitted.

Financial literacy is pure garlic to every common vampire financial advisor. I have a couple friends right now that do not want wage raises because "it will knock them into the next tax bracket". Believe me, I've tried to explain how the simple concept of income and taxes work. I trusted my financial advisor years ago when I started my career. It took me a couple years to realize I was the product, not his client wit…

> I have a couple friends right now that do not want wage raises because "it will knock them into the next tax bracket". is that not a real thing where you live?

I think it's more that getting knocked into the next tax bracket is better than making less money. Because you inherently still make more money due to how tax brackets works. I'm guessing this is an allusion to how many people don't understand how tax brackets work and think that you can make more money, get taxed more, and then end up with less than if you never made more money.

Re: Reddit has become a guide to personal finance

#209

Post by arkades » Wed, Mar 04, 2020, 4:03 PM UTC

iso1210 wrote: post #193

Humdeee wrote: post #179

Earlier quoted context omitted.

Financial literacy is pure garlic to every common vampire financial advisor. I have a couple friends right now that do not want wage raises because "it will knock them into the next tax bracket". Believe me, I've tried to explain how the simple concept of income and taxes work. I trusted my financial advisor years ago when I started my career. It took me a couple years to realize I was the product, not his client wit…

Dunno about the US, but in the UK there are a few wage points where a small rise can lead to a reduction in net income. Specifically moving into the higher tax bracket, which removes £200 off their personal allowance if they were using the pooling allowance option -- i.e. a £100 tax rise could lead to £46 extra income but £201 extra outgoing, a net reduction of £155 There are more perverse options with housing, child…

The benefit cliff affects one demographic, and while affecting net revenues, isn't a tax issue. Software engineers fretting about moving into a higher tax bracket is another demographic, and is a tax issue.

These are different phenomena, generally affecting different people. While (a hypothetical I) could certainly lose out his social security medicaid by going from $0 income to non-0$ income, I'm not the person worried about going from the 80k$ bracket.

IME, the people who worry about making more money and moving into a new tax bracket are not people who are eligible for any meaningful subsidies to begin with.

Re: Reddit has become a guide to personal finance

#210

Post by Humdeee » Wed, Mar 04, 2020, 4:04 PM UTC

tsukurimashou wrote: post #203

Humdeee wrote: post #179

Earlier quoted context omitted.

Financial literacy is pure garlic to every common vampire financial advisor. I have a couple friends right now that do not want wage raises because "it will knock them into the next tax bracket". Believe me, I've tried to explain how the simple concept of income and taxes work. I trusted my financial advisor years ago when I started my career. It took me a couple years to realize I was the product, not his client wit…

> I have a couple friends right now that do not want wage raises because "it will knock them into the next tax bracket". is that not a real thing where you live?

Tax brackets do, but what I was insinuating is that those select friends (bless their heart) believe that all of your income is taxed in the highest singular bracket that you reach.