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Reddit has become a guide to personal finance

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Re: Reddit has become a guide to personal finance

#231

Post by AdmiralGinge »

JackMorgan wrote: post #43

Reddit is truly amazing, such that I've mostly replaced my usage of hackernews with it. I have serious issues with anxiety, and the inability for me to filter out content related to "current news" aka "clickbait fear mongering" means when I surf hackernews for too long I'll be upset for hours afterwards as I'm riled up with current events rewritten as FUD. Reddit can be filtered by subreddit, so I've got a view with…

I kind of went the other way, I prefer the discussions on HN. Any subreddit that gets over 100K (and arguably fewer) subscribers just becomes a cesspit.

Take /r/ukpolitics for example, back in the day an anarcho-syndicalist could have a debate with a die-hard Thatcherite and while it'd be fairly heated, people tended to know their shit and I'd generally come away feeling like I learned something after reading the board for an hour or so. After 2015 (and even more so after the EU referendum) the subscriber count exploded and now it's a complete echo chamber. Try making an argument that the EU isn't some sort of Star Trekkian utopia or that Scottish independence might cause a lot of economic problems on that board and you'll get downvoted out of sight within maybe half an hour. It's very, very black and white now, the board is so fast that it's all about quick, karma-farming content rather than actual political debate.

I don't know why this seems to be a problem unique to Reddit. HN doesn't seem to have the same issue (at least not to the point it dominates the character of the platform), despite it being essentially a clone of old-school Reddit. It's a problem I'd be interested in knowing more about because I'm working on a platform with user-generated content. It's currently using a very naive "rank by votes, exclude old or heavily downvoted posts" approach but I fear this approach could lead to the same problem as Reddit.

Re: Reddit has become a guide to personal finance

#232

Post by the_watcher »

magduf wrote: post #201
iso1210 wrote: post #193

Earlier quoted context omitted.

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…

Marginal tax brackets yes, but there are also benefits that you lose access to based on income. The linked article is about food stamps, but imagine something like subsidized health insurance for people making under $50,000. Going from $49,999 to $50,0000 is much more costly than the taxes you paid on that dollar.

Re: Reddit has become a guide to personal finance

#233

Post by jeromegv »

rchaud wrote: post #226
tsukurimashou wrote: post #203

Earlier quoted context omitted.

> 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?

It isn't that black and white. For example, in Canada, I can contribute a certain amount into a tax-free savings account each year. TFSAs can be created to hold ETFs, Mutual Funds and other types of investments. I can contribute $6k for 2020, and the total I can hold in TFSA is $69,500. I can contribute more annually as long as my total is under $69.5k. With a raise, I can accelerate my contributions and continue to…

No, that's not how it works. It is a marginal tax bracket. If you get in the higher bracket, it's only the new money that gets taxed at the higher rate, not your full salary.

It has absolutely nothing to do with your contribution to retirement accounts. You can invest more and contribute more to your tax free retirement accounts with a higher salary (up to a point) but even if you didn't, that wouldn't make a difference.

Re: Reddit has become a guide to personal finance

#235

Post by prostoalex »

0xJRS wrote: post #165
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…

I think most people who have read the PF subreddits came to the same conclusion that you can't live life eating lentils and driving a 93 camry forever.

That approach is usually advised when one begins to build a "nest egg", and is not that different from the one pursued in business books, like "Rich Dad, Poor Dad".

The point is to build predictable passive income stream on top of whatever else you're earning. Getting a general idea around predictable expenses will provide a "magic number" where your basics would be covered by passive income alone.

Some people might choose to forego active earning opportunities at that point, but it's hardly a requirement.

Re: Reddit has become a guide to personal finance

#236

Post by icedchai »

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…

You're better off educating yourself.

I'm not saying they are all like this, but finance is one of those industries where you often don't get what you pay for...

Re: Reddit has become a guide to personal finance

#237

Post by erikpukinskis »

fullshark wrote: post #198
scarface74 wrote: post #173

Earlier quoted context omitted.

I can’t tell which of the ideas you think are crazy. - 18 months in low risk savings (not invested) - seems like overkill. - I personally think any money spent on a wedding is overkill - we went to the courthouse and saved a ton of money by having a smallish reception (in fairness we were in our mid 30s and on our second marriage) - 401K - I have no opinion either way. I haven’t thought about the pros and cons. I don…

The 1st and 3rd seem like clearly bad advice, there's no reason a mega backdoor roth should replace a 401k unless your company's matching policy / investment options for 401k are atrociously terrible. The 2nd: I think splurging on a wedding is a frequently valid personal choice and I wouldn't belittle someone for doing it unless they did something insanely irresponsible.

I just have to think this through because now I’ve heard both positions!

...if you put $1,000 in the 401k and it’s matched up to to $2,000 and then it grows to $20,000 and you’re in a 25% tax bracket then you’ll pay $5,000 in taxes on the $20k, leaving you with $15k.

...in the Roth IRA you put $1,000 and it grows to $10,000. You only pay $250 in tax though, so you’re left with $9,750. But that’s far less than $15k.

So, seems like if there’s a match you should take it!

After the match is used up, the next $1,000 in the IRA grows to $10,000 and you pay $2,500 in taxes on that... 10x more than the Roth.

So it sounds like the rule is use the Roth after the match is used up. (Although that will depend on your tax bracket both at the time of investment and up it expected bracket for retirement)

Re: Reddit has become a guide to personal finance

#238

Post by libria »

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…

> It can be harder to tell how accurate any answer is on Reddit, and any advice should initially be taken with a big grain of salt.

> a little skepticism is your friend [...] further investigate on your own

> always try to reference the true source material [...] don’t assume [...] cross-check [...] double check.

> scrutinize the details, lead with skepticism, and, when appropriate, consult with professionals

The article says almost the same things as you and even ends with your recommendation.

Did you read it?

Re: Reddit has become a guide to personal finance

#239

Post by commandlinefan »

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…

> from strangers on the internet

... who lean pretty heavily toward socialism.

Re: Reddit has become a guide to personal finance

#240

Post by kevstev »

magduf wrote: post #201
iso1210 wrote: post #193

Earlier quoted context omitted.

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…

There are special benefits provided for those under low incomes in many jurisdictions. If you go from $24,999 to $25,000 you may see some supplemental food income benefits go from $400 a month to $200 a month (not an actual example- but you get the idea). Generally though, these cases are not common and are really overstated as a problem IMHO. They also tend to overlook that its far more beneficial to take the raise and whatever temporary setback that might come with it to move yourself up the wage scales.

Why it comes up in these discussions as something meaningful always confuses me. To me its akin to explaining to someone that squirrels are not harmful to humans and we should not walk around terrified of them and having someone come by and say "but actually, they could have rabies...." I mean, you aren't wrong, but you are essentially spreading misinformation by implying that this is common instead of exceedingly rare and something people should be wary of as they walk down the street every day. Its the exact type of misinformation that politicians use to make disingenuous arguments to steer people into supporting their policies, and the HN crowd should be above that IMHO.

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