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The Real Silicon Valley

jfornear.co

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Re: The Real Silicon Valley

#111

Post by muzz »

joonix wrote: post #100
natural219 wrote: post #49

Earlier quoted context omitted.

You and I are looking at different marginal tax rate tables if you're talking about US income tax.

Annual Gross Pay $100,000.00 Federal Withholding $19,794.50 Social Security $4,200.00 Medicare $1,450.00 California $7,257.14 SDI $955.85 Net Pay $66,342.51 http://www.paycheckcity.com/calculator/netpay/us/california/...

And if the only tax break one takes advantage of is the 401k (ie no mortgage, no business deductions, etc):

Annual Gross Pay $100,000.00 Federal Withholding $ 15,292.50 Social Security $ 4,200.00 Medicare $ 1,450.00 California $ 5,518.04 SDI $ 955.85

401k $ 17,000.00

Net Pay $ 55,583.6

Re: The Real Silicon Valley

#112

Post by mikiem »

pmorici wrote: post #75
jcdavis wrote: post #50

Earlier quoted context omitted.

This is way overly pessimistic. At 100k total taxes (Federal+CA+SS+Medicare) are in the 30% range. That leaves 30k to spend (not too hard for a single 25 year old assuming you don't have lots of student loans, even in SF) and 40k to save. And this ignores tax-advantaged savings

Are there any tax-advantaged savings options besides IRA and similar retirement savings that you essentially can't access until you are 60+?

There are different rules for "IRA". If you are a sole proprietor instead of a corporation, you can do a SEP IRA. That, depending on your earnings, will allow you to sock away up to $49k/yr. If you are incorporated, you must offer the same 401k plan to all employees (you and your team). Also, company 401k plans cost money to manage... more than you might think. When you are small it is more than you'd expect. I incorporated last year and this is my experience in So. CA.

Re: The Real Silicon Valley

#113

Post by gavanwoolery »

cabinguy wrote: post #60

Bah Humbug (please excuse me, it's just a seasonal expression). While I can feel your pain, this story has nothing to do with SV - it's the story of an entrepreneur. The same story exists in every state in the U.S. and every major city (and most small ones) in the world. Entrepreneurship is very hard. I'm 41 y/o and bootstrapped my first internet company at 24. I owned a nice home, a beautiful vacation (lake) home, a…

During any gold rush, there are a small amount of people that get rich and many who don't. The only ones who are guaranteed a small fortune are the ones who sell the tools to the miners. Maybe not the best abstraction, but in this case the company I work at does not do anything except for build products that other people ask for (namely, iPhone/Android apps). We raised $0 in capital, started as a one-person company, and grew to 10 people (a bit under 20 with our contractors) in 2 years, several million in gross revenue this year. We have no debt, owe nobody equity, and make all our own decisions (at the cost of working for the occasionally difficult client). Everybody at the company usually works 40 hours a week at most, although I sometimes do up to 80 in light of my stupidly overkill work ethic. We don't have a product, and we don't have an exit, but we are making real money at least an can perhaps bootstrap our own products at some point. (I think 37 Signals did this? Not sure...)

Re: The Real Silicon Valley

#114

Post by acchow »

jcdavis wrote: post #106
acchow wrote: post #68

Earlier quoted context omitted.

At 100k, take-home pay is $65,278. Closer to 35% "total taxes"

Where are you getting those numbers? Not saying you're wrong, just curious. A quick look online shows ~18k federal, ~6k CA, and ~6K SS + medicare, which is 30%ish

Apologies. I used the paycheckcity.com calculator, which gave take-home pay after all withholdings. It did not take into account over-paying (and thus the refund at the end of the year).

Wikipedia says federal tax for those making between $83,600 and $174,400 is a fixed $17,025 + 28% of the amount over $83,600.

ftb.ca.gov says that California state tax for those making between $48,942 and $250k is a fixed $2,154.83 + 9.3% of the amount over $48,942.

This gives

California: $6,903. Federal: $21,617.

Then there's about $6600 in SS+Medicare+SDI and approximately $5500 standard federal deduction for a grand total of about $30k in taxes.

Re: The Real Silicon Valley

#115

Post by 001sky »

arbuge wrote: post #40
noname123 wrote: post #9

Earlier quoted context omitted.

Point is having FU money, for most people it's $3mil at today's current interest rate to generate $30K which is annual young person's cost of living in a big metro. If you can cut your cost of living down $12K, then only $200K is needed.

Careful with that. That ignores inflation, which as a great man once said, is the most pernicious tax of all. Inflation is currently around ~1.8% per year. Money in a 1% CD is effectively losing 0.8% per year. If you're happy with a $30k return on a $3m portfolio, you need to get a 2.8% return in today's inflation environment.

If you're happy with a $30k return on a $3m portfolio...

-- You should never be happy with this. IMHO.

Re: The Real Silicon Valley

#116

Post by killerdark »

gavanwoolery wrote: post #113
cabinguy wrote: post #60

Bah Humbug (please excuse me, it's just a seasonal expression). While I can feel your pain, this story has nothing to do with SV - it's the story of an entrepreneur. The same story exists in every state in the U.S. and every major city (and most small ones) in the world. Entrepreneurship is very hard. I'm 41 y/o and bootstrapped my first internet company at 24. I owned a nice home, a beautiful vacation (lake) home, a…

During any gold rush, there are a small amount of people that get rich and many who don't. The only ones who are guaranteed a small fortune are the ones who sell the tools to the miners. Maybe not the best abstraction, but in this case the company I work at does not do anything except for build products that other people ask for (namely, iPhone/Android apps). We raised $0 in capital, started as a one-person company,…

There's more ways of doing it. I might be sitting across the street from you right now, doing 35 hour work weeks for a fortune 500 company, riding the SV income bubble and pulling in $150K a year as a sysadmin that keeps your oh so trendy cloud up in the air (Up, up in the air! Light as a bubble in the wind!), while living a $50K lifestyle.

Couple more years and I'll be down south, daydreaming about those good old days full of taking risks (I took the stairs last week!) and how I miss the company gym and free massages, while I'm sipping from my non-alcoholic beverage on a beach somewhere, and considering finally getting my college degree.

Re: The Real Silicon Valley

#117

Post by yen223 »

acchow wrote: post #33

> Technically I am now homeless and unemployed. But if you can code, you could be in a 100k job with a 10k signing by Monday. That's hardly "homeless".

Where are these 100k jobs that people keep talking about? Because there is no such thing where I come from.

Re: The Real Silicon Valley

#118

Post by eric-hu »

jacoblyles wrote: post #56

And nobody will ever advise you that the large cost and huge risk might not be worth it because then they would have to admit the same thing to themselves. Have you ever met anybody that works on the weekend, even when the startup doesn't need them to, just because they don't know what else to do? There are incredibly amazing things happening in Silicon Valley. And also lots of people burning their lives away for lit…

> Be sure that what you are doing is something you truly love, and not just something you want to love or want to portray that you love for the benefit of others.

Can you expand on this? How do you ever know? Whether I love what I do has been one of my existential questions for the last decade, and why I didn't immediately follow through with my CS degree out of college.

I feel like I can never know whether I'm doing something I "truly" love...but I'd like to be wrong

Re: The Real Silicon Valley

#119

Post by bsims »

rmason wrote: post #15
noname123 wrote: post #4

Why be depressed? If you are young and a programmer making 100K at 25, party with your hipster friends and sock away 40K in savings every year. You'll end up with 200K by 30, not a cool billion dollar but with 6% muni-bonds, you suddenly have tax-free interest income of equivalent of $1.2 million at regular 1% CD rate. Work on interesting projects that you want to work on. Do some traveling. Go back to grad school fo…

Where can you buy muni bonds that earn 6%? Most of the muni bonds yields I've found online are in the 3.5-4% range. That is unless you're talking about the city of Detroit (which is flirting with bankruptcy) that pays 7% plus and is riskier imho than doing a startup. http://blogs.marketwatch.com/fundmastery/2010/03/12/goldman-...

This stock/bond chart blew my mind. The bigger question is how long high bond rates will last?

http://www.businessinsider.com/t-rowe-price-us-equity-outloo...

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