money Financial Planning

[MRROUGHSEX]

I generally have no loans to pay at the moment, very minimal expenses. Been able to save 10,000 monthly in my savings for the past 2 years. Pero I feel nasasayang ko yung potential if sa bank lang siya nakalagay.

 

What book would you people recommend for starters?

Magandang rate of savings yan. I remember I was so happy when I reached Php10K per month savings. Tapos every year lumalaki with interest earned and as salary increases (kasi % of take home pay savings ko).

 

At that time, wala pa internet to ask for advise kaya puro time deposit lang ako.

 

Now people can advise you to go with mutual funds or ETFs. Parehas na good investments yan. Just research the fees (loading fee, expense ratio, transaction or trading fee). Try to minimize the fees but also research the holdings of the fund. Much of the battle IMHO is won by the quality of holdings. Blue chips should be a good start and frankly, that's where bulk of my savings go as I do not have time to monitor the papers for growth or value funds or individual stocks. Over time, say 15 years, it will grow on average 7%/year while TDs only grow around 2 to 2.5% a year.

 

As such, TDs are just hedge investments. They hedge against inflation so that you don't lose money while prices go up also at 2.5%. T-Bills and T-Bonds give about 3% and 4% respectively. So, not only were you able to hedge, but you gain some without market risks.

 

The stock market, gives higher returns but also higher risks so like they others mentioned, don't risk what you will need for the short-term (i.e., less than 1 year). In fact, try to invest with the mindset of not touching/selling for 3 years at least and just regularly buy (aka PCA or Peso Cost Averaging). .

 

As you can glean, investing is long-term. No Book needed. But if you want to trade (short-term), then you need to learn to read charts. So look for a book re chart-reading. But hey, internet is free and there are a lot of materials on youtube and others about this topic. Maybe start there.

 

Books about fundamentals is no good. This is because the market is not based on rational thought. Technical (chart reading) is the key and would actually help if you are going to do some market timing on your investments. While I don't trade, I do marrket-timing a bit

 

For your first buy, divide your stock/fund money (not emergency money or short-term money you will need) by 10 and invest only 4/10th (40%). Then invest the remaining 6 parts over the course of the next 6 months. This helps you sane because many times, people put all their savings in 1 initial transaction and then, if the market suddenly drops, they sell and get traumatized into not investing again. By spreadking your hard-earned savings in 6 months, you could actually take advantage of a market drop by being able to buy at discounted prices.

[JohannBeckham]

I generally have no loans to pay at the moment, very minimal expenses. Been able to save 10,000 monthly in my savings for the past 2 years. Pero I feel nasasayang ko yung potential if sa bank lang siya nakalagay.

 

What book would you people recommend for starters?

 

I've read lots of books nung nagsisimula pa lng ako from Rich Dad Poor Dad to the latest one on the list that i attach here in this post.

I dont normally read paper books but listen to Audible books so yan ang list of books na currently nasa phone ko.

[redeswaq]

I'm more of the place and forget kind of guy as I still have my day job which takes up most of my time at the moment.

If I understand it correctly, my options are Mutual funds, ETFs and long term investments in stocks?

[JohannBeckham]

I'm more of the place and forget kind of guy as I still have my day job which takes up most of my time at the moment.

 

If I understand it correctly, my options are Mutual funds, ETFs and long term investments in stocks?

Yep, you're what is called in the industry as a "passive investor". I'm a passive investor myself. 100% of my investment (outside tax sheltered account called superannuation which is the equivalent of 401k in the U.S.) is invested in ETFs. All of my ETFs I bought here in Australia since dito ako nkatira and most likely ito ang magiging base ko pag retire ko (primary because as an Australian citizen, we get great free HealthCare system, unlike other country like the U.S. where their healthcare system is not free).

Dati i bought Philippine Index Fund ETF with the ticker code FMETF and it was the only ETF available sa Pinas pero im not sure kung may mas low coast ETF pa sa kanya kaya you do your research.

[MRROUGHSEX]

(primary because as an Australian citizen, we get great free HealthCare system, unlike other country like the U.S. where their healthcare system is not free).

 

Just an off-topic thought on this if I may.

 

It's all just allocation. In a sense, one can argue nothing is free. Either you pay your health care via taxes so that it is "free" or you save the money upfront via lower taxes so you can pay a private health nsurance later on. If it is becomeing a system where more people are truly getting it free, that means someone ELSE is paying for theim and that is not a good country to be in for productive people. Initially, it will be good/advantageous for for the non- and less-productive. But how would it make the productive people feel? It is a disincentive for them to work hard and be productive if they know they will be relied upon to pay for someone else's healthcare and hence the system of socialism takes in and people become all non-productive citizens.

 

Can you imagine yourself working out, eating a balanced diet, taking good care of yourself and hence not incurring too much medical bills and then your neighbor does the opposite and is getting it all free? Now extrapolate that to majority of Aussies and it becomes a simple case of having to increase more taxes to shoulder the "free" health care system.

Edited March 29, 2019 by MRROUGHSEX

[JohannBeckham]

Just an off-topic thought on this if I may.

 

It's all just allocation. In a sense, one can argue nothing is free. Either you pay your health care via taxes so that it is "free" or you save the money upfront via lower taxes so you can pay a private health nsurance later on. If it is becomeing a system where more people are truly getting it free, that means someone ELSE is paying for them

 

I 100% agree on your point that it's about allocation and that nothing is free. Forgive me for mentioning the word free out of convenience rather than saying e.g. "my wife had a cesarean delivery and we do not fork out money because it was paid out of taxes paid to the government", etc. I guess what im trying to express is that having a "you do not have to pay for anything on healthcare upon discharge from a clinic or hospital becuase taxes" is one less issue to worry about. Yes i paid for it in taxes and i could possibly be better off investing that portion of what i paid in taxes financially but the social impact of that is big.

If it is becomeing a system where more people are truly getting it free, that means someone ELSE is paying for theim and that is not a good country to be in for productive people. Initially, it will be good/advantageous for for the non- and less-productive. But how would it make the productive people feel? It is a disincentive for them to work hard and be productive if they know they will be relied upon to pay for someone else's healthcare and hence the system of socialism takes in and people become all non-productive citizens.

 

Can you imagine yourself working out, eating a balanced diet, taking good care of yourself and hence not incurring too much medical bills and then your neighbor does the opposite and is getting it all free? Now extrapolate that to majority of Aussies and it becomes a simple case of having to increase more taxes to shoulder the "free" health care system.

I dont think i agree with this argument. By that i mean not everyone in the country would be able to pay taxes e.g. people with mental disabilities, children, etc. The way i look at it is this,there are cost that the country requires that needs to be shared. Cost like building or maintaining roads, government services (e.g. Police, Defence, Fire & Emergency Services, etc.) needs to be shared amoung its people. I think Health Service for me should be the same level as other key government services like police and fire where you get the service but you should not pay money for outright. I mean, imagine paying a FIRE brigade for responding to a house fire or paying a police person for stoping an unruly nabour or for domestically beating a spouse or a child. Its absurd paying these government service men/women. So i dont understand why the rule apply to health services. Are we saying police, fire, court, etc. Is for everyone but health Services are only for people employed or people with money?

Can you imagine yourself working out, eating a balanced diet, taking good care of yourself and hence not incurring too much medical bills and then your neighbor does the opposite and is getting it all free? Now extrapolate that to majority of Aussies and it becomes a simple case of having to increase more taxes to shoulder the "free" health care system.

I don't see it this way. The way i see it is that people doing bad choices (all of us do bad choice in one way or another, big or small) will pay for it, maybe not in money but in quality of life. I mean, if someone has depression and not taking care of himself, thus having health issue, i bet you 100% that person's quality of life is diminished e.g. cant take jobs, relationships broken, low self esteem, etc. Health care is free (no out of pocket cost), but quality of life is a choice.

I still havent discuss the possitive impact of free (meaning no out of pocket) healthcare to society, but thats for another post

[MRROUGHSEX]

I 100% agree on your point that it's about allocation and that nothing is free. Forgive me for mentioning the word free out of convenience rather than saying e.g. "my wife had a cesarean delivery and we do not fork out money because it was paid out of taxes paid to the government", etc. I guess what im trying to express is that having a "you do not have to pay for anything on healthcare upon discharge from a clinic or hospital becuase taxes" is one less issue to worry about. Yes i paid for it in taxes and i could possibly be better off investing that portion of what i paid in taxes financially but the social impact of that is big.

I dont think i agree with this argument. By that i mean not everyone in the country would be able to pay taxes e.g. people with mental disabilities, children, etc. The way i look at it is this,there are cost that the country requires that needs to be shared. Cost like building or maintaining roads, government services (e.g. Police, Defence, Fire & Emergency Services, etc.) needs to be shared amoung its people. I think Health Service for me should be the same level as other key government services like police and fire where you get the service but you should not pay money for outright. I mean, imagine paying a FIRE brigade for responding to a house fire or paying a police person for stoping an unruly nabour or for domestically beating a spouse or a child. Its absurd paying these government service men/women. So i dont understand why the rule apply to health services. Are we saying police, fire, court, etc. Is for everyone but health Services are only for people employed or people with money?

I don't see it this way. The way i see it is that people doing bad choices (all of us do bad choice in one way or another, big or small) will pay for it, maybe not in money but in quality of life. I mean, if someone has depression and not taking care of himself, thus having health issue, i bet you 100% that person's quality of life is diminished e.g. cant take jobs, relationships broken, low self esteem, etc. Health care is free (no out of pocket cost), but quality of life is a choice.

I still havent discuss the possitive impact of free (meaning no out of pocket) healthcare to society, but thats for another post

No argument here. Health services for those who cannot take care of themselves due to disabilities, age, and just bad circumstances ought to be paid by a shared account, just like the other basic services like police, fire, roads, public school, national security -- paid by tax.

 

The only question is: which system is better -- low tax rate but pay for your own private health care or high tax rate and get free health care?

 

Out of curiosity I calculated my tax between Australia and US.

 

In Australia, my tax would be 24,497.

In US, my tax is 16,754 (Federal tax + State tax)

 

I did not convert my salary to Australia and I just used the same salary figure.

 

I really prefer having my money as I know I can manage it better than the goverment. There is also that feeling of being able to "work with it" through one's life, meaning, emergencies and business opportunity. Once the money is paid out, it is hard to get back.

 

It is this very reason why I left Califonia and moved to Tennessee. Here in Tennessee, we have no State tax (similar to Australia). The tax I paid above is purely Federal. It is nice not paying the addtional 3.9% yearly to Califonia mob LOL and just pocketing that money all to myself. We do have a higher sales tax - 9.25% vs 7.25% but that is only a 2% difference compared to paying 3.9% State tax. So the benefit of moving from Cali to Teni is 2% gain per year.

 

But here is the rub. Sales tax won't hurt you until you buy something. Again it is the concept of being able to personally manage my sales tax based on what I consume compared to not having a say on it and just getting levied by a State tax. And for a while, Amazon and other online stores were not charging any sales tax since they are not in the State.

 

Oh man, those were the days! No State tax and no sales tax!

Edited March 29, 2019 by MRROUGHSEX

[MRROUGHSEX]

I thought more about it, and sorry for belaboring the topic.

 

But in a country like Australia where there is not much corruption by government, I think it is ideal to have a Single Payer health care. This is because it is forced savings via taxes and there are majority of people who are just not good at saving or financial planning. (Hah, this topic is not off-topic at all! LOL).

 

So yes, I see the advantage of Australia's free health care system. Sa Pinas, I don't think this will work. Kukurakutin lang.

 

It's good though that Pinas has one of the lowest tax rates in the world. If I am there, my salary would probably be Php500K a year as based on my research for software engineer. The tax would compute to Php30K + (PHp100K * 25%) or Php55K, which is only 11% tax rate of Php500K. Daym. Time to go back to Pinas haha.

[JohannBeckham]

No argument here. Health services for those who cannot take care of themselves due to disabilities, age, and just bad circumstances ought to be paid by a shared account, just like the other basic services like police, fire, roads, public school, national security -- paid by tax.

 

The only question is: which system is better -- low tax rate but pay for your own private health care or high tax rate and get free health care?

 

Out of curiosity I calculated my tax between Australia and US.

 

In Australia, my tax would be 24,497.

In US, my tax is 16,754 (Federal tax + State tax)

 

I did not convert my salary to Australia and I just used the same salary figure.

 

I really prefer having my money as I know I can manage it better than the goverment. There is also that feeling of being able to "work with it" through one's life, meaning, emergencies and business opportunity. Once the money is paid out, it is hard to get back.

 

It is this very reason why I left Califonia and moved to Tennessee. Here in Tennessee, we have no State tax (similar to Australia). The tax I paid above is purely Federal. It is nice not paying the addtional 3.9% yearly to Califonia mob LOL and just pocketing that money all to myself. We do have a higher sales tax - 9.25% vs 7.25% but that is only a 2% difference compared to paying 3.9% State tax. So the benefit of moving from Cali to Teni is 2% gain per year.

 

But here is the rub. Sales tax won't hurt you until you buy something. Again it is the concept of being able to personally manage my sales tax based on what I consume compared to not having a say on it and just getting levied by a State tax. And for a while, Amazon and other online stores were not charging any sales tax since they are not in the State.

 

Oh man, those were the days! No State tax and no sales tax!

Damn, you got a good deal there man! No comparison, hands down Tennessee's No state tax wins. I wonder if you compare let say New York or California versus Australia, how much of a comparison would that be? I love the idea of Geo-arbitrage, moving into a city with less or no state tax, lower cost of living and same if not higher average income kasi your savings rate would for surely increase. I love to live in a place with a good quality of living and would still allow me to save and invest 55% or more of my take home pay. Currently thats Australia for me but who knows I could move somewhere else (Italy, Portugal, maybe Spain).

 

Ako due to my income, i pay the highest tax rate of 45% (for annual salary greater than 180,001, highest in Australia https://www.ato.gov.au/Rates/Individual-income-tax-rates/) although I'm not complaining about it kasi i would rather pay more tax because of higher income than lower tax because of low income. I mean, walang choice dito, you can't escape death and taxes as the saying goes. We do not have state tax so it doesnt really matter where you live tax wise. Ang pwede mo na lng gawin is to move to a location where cheaper housing is available.

 

 

Due to transparency sa government and less corruption, money is spent on services for the people. Nae enjoy namn namin. Its a little weird kse Australia would prefer to pay more even in taxes for better services, than pay lower taxes and get poor services. No wonder 3 of our cities is at the top 10 most livable city (Melbourne, Sydney, Adelaide) https://en.m.wikipedia.org/wiki/Global_Liveability_Ranking

 

The question is would anyone pay more for a better quality of life, meaning stability, healthcare, culture & environment, education and infrastructure? Would that command a premium compare to other places? For me personally, its a yes and no. There is such thing as too much cost and too much taxes. I mean, at the moment personally i can still stomach and enjoy it. I dont feel the pinch kasi rock and roll pa kme at hindi pa nkaranas ng recession ang Australia in the last 27 years compared to U.S. and other nations but that could soon change (bloody house prices).

Because tax and cost of living is just one side of the coin, the other side is quality of life din. There should be a balance based on what you value the most. Kasi if someone would only decide base on taxes and cost of living alone, then one should consider Pakistan,Bangladesh, Tunisia etc.

[MRROUGHSEX]

Damn, you got a good deal there man! No comparison, hands down Tennessee's No state tax wins. I wonder if you compare let say New York or California versus Australia, how much of a comparison would that be? I love the idea of Geo-arbitrage, moving into a city with less or no state tax, lower cost of living and same if not higher average income kasi your savings rate would for surely increase. I love to live in a place with a good quality of living and would still allow me to save and invest 55% or more of my take home pay. Currently thats Australia for me but who knows I could move somewhere else (Italy, Portugal, maybe Spain).

 

Ako due to my income, i pay the highest tax rate of 45% (for annual salary greater than 180,001, highest in Australia https://www.ato.gov.au/Rates/Individual-income-tax-rates/) although I'm not complaining about it kasi i would rather pay more tax because of higher income than lower tax because of low income. I mean, walang choice dito, you can't escape death and taxes as the saying goes. We do not have state tax so it doesnt really matter where you live tax wise. Ang pwede mo na lng gawin is to move to a location where cheaper housing is available.

 

 

Due to transparency sa government and less corruption, money is spent on services for the people. Nae enjoy namn namin. Its a little weird kse Australia would prefer to pay more even in taxes for better services, than pay lower taxes and get poor services. No wonder 3 of our cities is at the top 10 most livable city (Melbourne, Sydney, Adelaide) https://en.m.wikipedia.org/wiki/Global_Liveability_Ranking

 

The question is would anyone pay more for a better quality of life, meaning stability, healthcare, culture & environment, education and infrastructure? Would that command a premium compare to other places? For me personally, its a yes and no. There is such thing as too much cost and too much taxes. I mean, at the moment personally i can still stomach and enjoy it. I dont feel the pinch kasi rock and roll pa kme at hindi pa nkaranas ng recession ang Australia in the last 27 years compared to U.S. and other nations but that could soon change (bloody house prices).

Because tax and cost of living is just one side of the coin, the other side is quality of life din. There should be a balance based on what you value the most. Kasi if someone would only decide base on taxes and cost of living alone, then one should consider Pakistan,Bangladesh, Tunisia etc.

I really struggled earlier when I was doing my Australia vs Tennessee tax comparison because I seem to not find data on average standard tax deducation in Australia. So I just calculated based on Gross Salary instead of the Net of Standard Deduction Income (AKA Taxable Income) to make them comparable.

 

But for this second attempt, I will caculate US with Standard Deduction and feel free to inform me if any for Australia.

 

I also changed my methodology to calculate based on industry salary of a Software Engineer in the respective area.

 

 

Step 1: Get comparable salary from 3 areas: The currency will not matter because in the second step, what we are comparing is the Tax Rate.

 

Nashville, TN: 82,000

https://www.glassdoor.com/Salaries/nashville-software-engineer-salary-SRCH_IL.0,9_IM604_KO10,27.htm

 

Sydney, AU: 113,000

https://www.glassdoor.com/Salaries/sydney-senior-software-engineer-salary-SRCH_IL.0,6_IM962_KO7,31.htm

 

San Francisco, CA: 126,000

https://www.glassdoor.com/Salaries/san-francisco-software-engineer-salary-SRCH_IL.0,13_IM759_KO14,31.htm

 

 

 

Step 2: Get comparable tax rate. I used Tax Paid/Gross Salary (vs Tax Paid/Taxable Income) becausse the objective is to get the tax paid as a % of the total salary.

 

The simplified formula I use is:

 

Tax Bracket Initial Amount + [((Gross Salary - Standard Deduction) - Prior Tax Bracket Amount) * Tax Bracket %] = National Tax

 

National Tax + Local Tax = Total Tax

 

Total Tax / Gross Salary = Tax Rate

 

 

Nashville, TN: 4,453 + [((82,000-12,2000-38,700)*22%] = 11,295. 11,295 + 0% Local = 11,295. 11,295/82,000 = 14%

https://www.nerdwallet.com/blog/taxes/federal-income-tax-brackets/

 

 

Sydney, AU: 20,797 + [((113,000-0)-90,000)*37%] = 29,307 + 0% Local = 29,307. 29,307/113,000 = 26%

https://www.ato.gov.au/Rates/Individual-income-tax-rates/

 

 

San Francisco, CA: [14,090 + ((126,000-12,200)-82,500)*24%] = 21,650 + 1.9% Local = 24,044. 24,044/126,000 = 19%

https://www.nerdwallet.com/blog/taxes/federal-income-tax-brackets/

The 1.9% came from average CA State tax of 3.9%, then less the 2% difference between Sales Tax in CA and TN.

Edited March 30, 2019 by MRROUGHSEX

[MRROUGHSEX]

@JohannBeckham, great overall post you had btw.

 

Geo-arbitrage, I like the sound of that. That is exactly what I did. I was paid close to San Franciso rate as Manager in Tennessee. However, my personal relationship soured and I am left with bringing up my kid on my own. What can you do right? Hahaha.

 

Just had to roll with punches and resigned to be able to take care of my kid and found a job that though pays low, allows me to take care of my kid especially in hs education which is a priority on my list.

 

Now I am in a good spot. Good job, good salary that is close to where I was, good house in a good area, manageable mortgage, great health overall, great kids (2 na kasi me nadisgrasya nung uwi ko nung 2014 LOL). I could say I have recovered :D.

 

 

Great and happy for you pre. I guess I am older than you and for someone younger and earning maximum tax bracket is a fantastic achievement. I hope to join you someday in the near future. You are correct in saying that at high salaries, the taxes and expenses in general matter less.

[JohannBeckham]

I really struggled earlier when I was doing my Australia vs Tennessee tax comparison because I seem to not find data on average standard tax deducation in Australia. So I just calculated based on Gross Salary instead of the Net of Standard Deduction Income (AKA Taxable Income) to make them comparable.

 

But for this second attempt, I will caculate US with Standard Deduction and feel free to inform me if any for Australia.

 

I also changed my methodology to calculate based on industry salary of a Software Engineer in the respective area.

 

 

Step 1: Get comparable salary from 3 areas: The currency will not matter because in the second step, what we are comparing is the Tax Rate.

 

Nashville, TN: 82,000

https://www.glassdoor.com/Salaries/nashville-software-engineer-salary-SRCH_IL.0,9_IM604_KO10,27.htm

 

Sydney, AU: 113,000

https://www.glassdoor.com/Salaries/sydney-senior-software-engineer-salary-SRCH_IL.0,6_IM962_KO7,31.htm

 

San Francisco, CA: 126,000

https://www.glassdoor.com/Salaries/san-francisco-software-engineer-salary-SRCH_IL.0,13_IM759_KO14,31.htm

 

 

 

Step 2: Get comparable tax rate. I used Tax Paid/Gross Salary (vs Tax Paid/Taxable Income) becausse the objective is to get the tax paid as a % of the total salary.

 

The simplified formula I use is:

 

Tax Bracket Initial Amount + [((Gross Salary - Standard Deduction) - Prior Tax Bracket Amount) * Tax Bracket %] = National Tax

 

National Tax + Local Tax = Total Tax

 

Total Tax / Gross Salary = Tax Rate

 

 

Nashville, TN: 4,453 + [((82,000-12,2000-38,700)*22%] = 11,295. 11,295 + 0% Local = 11,295. 11,295/82,000 = 14%

https://www.nerdwallet.com/blog/taxes/federal-income-tax-brackets/

 

 

Sydney, AU: 20,797 + [((113,000-0)-90,000)*37%] = 29,307 + 0% Local = 29,307. 29,307/113,000 = 26%

https://www.ato.gov.au/Rates/Individual-income-tax-rates/

 

 

San Francisco, CA: [14,090 + ((126,000-12,200)-82,500)*24%] = 21,650 + 1.9% Local = 24,044. 24,044/126,000 = 19%

https://www.nerdwallet.com/blog/taxes/federal-income-tax-brackets/

The 1.9% came from average CA State tax of 3.9%, then less the 2% difference between Sales Tax in CA and TN.

I think we are forgetting one more thing in the calculation to give you the Full financial picture. I want to introduce you to Australia's super guarantee contributions or concessional (pre-tax) contributions, or Superannuation. I think it's similar to the U.S. 401k with a twist.

 

Australia requires all employers to pay a percentage of your gross pay before tax (currently 9.5% and gradually increasing to 12% in the coming years https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?anchor=Superguaranteepercentage#Superguaranteepercentage) into a 3rd party account in your name. It is legally required no matter your role, whether youre a CEO, a bartender, a social worker, a janitor, waiter, barista, etc. You do not need to contribute as an employee in order to receive this money (correct me if im wrong but in the u.s. your company match what you put into 401k) it is similar to a 401(K) or pension, in that if you cash it out before a certain age, you have to pay additional taxes.

 

So based on your example calculation above (assuming your calculation is correct), when you pay that 26% in tax, thats offseted by 9.5% superannuation guarantee (as of currently but as i say it will gradually increase to 12% in the coming years), making your total return of 26% tax - 9.5% super = 16.5%.

Edited March 31, 2019 by JohannBeckham

[neville]

Ohmaygad, the numbers! Nalula ako!

 

Cross that...tumirik utak ko! 😆😆😆

 

 

 

 

Seriously speaking, math is not my strongest point, but I do know my financial basics.

 

My Ate and I entered a business venture in response to a client's request. We're still in the paperwork stage. Hopefully, the second quarter gives us a positive and productive financial Outlook.

 

And...I've decided to quit my office job by the end of the first half of the year at the latest. I'm leaving the BPO industry and the graveyard shift for good.

 

Here's to that great leap toward the B and I quadrants. 😁

Edited March 31, 2019 by neville

[JohannBeckham]

Ohmaygad, the numbers! Nalula ako!

 

Cross that...tumirik utak ko! 😆😆😆

 

 

 

 

Seriously speaking, math is not my strongest point, but I do know my financial basics.

 

My Ate and I entered a business venture in response to a client's request. We're still in the paperwork stage. Hopefully, the second quarter gives us a positive and productive financial Outlook.

 

And...I've decided to quit my office job by the end of the first half of the year at the latest. I'm leaving the BPO industry and the graveyard shift for good.

 

Here's to that great leap toward the B and I quadrants. 😁

Cheers Neville! Hopefully mapalago nyo ang business nyo na yan. I do not have any experience on starting or growing up a business though I've been involved in other people's business as a Business Analyst or Project Manager (sometimes doing both role). So kung may tanong ka, post ka lng dito and hopefully makatulong syo.

In terms of Math, i love 'em and I'm crazy enough to pursue and complete a degree in Mathematics many moons ago. Di lng ako aware sa specific Philippine rules since matagal na akong wla sa Pinas.

[MRROUGHSEX]

@neville, I wish you and your sis the best. I am also planning to be my own business in the coming years. Hoping to join your league soon.

 

@ JB, The supperannuation or 401K is to be deducted from the Gross Salary. I just thought of not doing it because if it is same % to use (say a deduction of 10%), it would not affect the comparability of the tax rates of the 3 areas.

 

You are correct thought that it will decrease all 3 tax rates, as the new formula would be.

 

Tax Bracket Initial Amount + [((Gross Salary - Retirement Contribution - Standard Deduction) - Prior Tax Bracket Amount) * Tax Bracket %] = National Tax

[JohannBeckham]

@ JB, The supperannuation or 401K is to be deducted from the Gross Salary. I just thought of not doing it because if it is same % to use (say a deduction of 10%), it would not affect the comparability of the tax rates of the 3 areas.

 

You are correct thought that it will decrease all 3 tax rates, as the new formula would be.

 

Tax Bracket Initial Amount + [((Gross Salary - Retirement Contribution - Standard Deduction) - Prior Tax Bracket Amount) * Tax Bracket %] = National Tax

Australian Supperannuation is different. You don't substract Retirement Contribution from the Gross Salary (the HORROR!). The correct formula in Australia is this:

 

Gross Salary - Tax - Deduction = Net Salary (net salary paid to the employee)

Gross Salary (Pre-tax) * 9.5% = Superannuation (payment to the employee in their superannuation fund). Again this is NOT SUBSTRACTED from the GROSS! I think what your saying is a salary sacrifice, but that's optional if you want to make additional super contributions above the 9.5% your employer is paying you additionally.

 

So in your example for someone working in Sydney:

Sydney, AU: 20,797 + [((113,000-0)-90,000)*37%] = 29,307 + 0% Local = 29,307. 29,307/113,000 = 26% Tax percentage

Australian Superannuation = 113,000 * 9.5 = 10,735.00

Total return to the emploee is = Net income + Australian Superannuation = (113,000 - 29,307) + 10,735 = 94,428.00

 

Now you can say, "JB, are you saying each employee is being paid 109.5% of ordinary time earnings (100% of their pay check + 9.5% of super)"? And the answer to that my friend is an austounding YES.

 

Check out this links https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works & https://www.ato.gov.au/business/super-for-employers/how-much-to-pay/

 

From my understanding, this is unique to Australia that we are being paid effectively 109.5% of our ordinary income. Again that 9.5% is not deducted from your gross salary and then paid out back to you. No No No. That is paid by employee on top of your salary, your base salary where your ordinary time earnings is calculated. Check the links out or and let me know if you have question.

@JohannBeckham, great overall post you had btw.

 

Geo-arbitrage, I like the sound of that. That is exactly what I did. I was paid close to San Franciso rate as Manager in Tennessee. However, my personal relationship soured and I am left with bringing up my kid on my own. What can you do right? Hahaha.

 

Just had to roll with punches and resigned to be able to take care of my kid and found a job that though pays low, allows me to take care of my kid especially in hs education which is a priority on my list.

 

Now I am in a good spot. Good job, good salary that is close to where I was, good house in a good area, manageable mortgage, great health overall, great kids (2 na kasi me nadisgrasya nung uwi ko nung 2014 LOL). I could say I have recovered :D.

 

 

Great and happy for you pre. I guess I am older than you and for someone younger and earning maximum tax bracket is a fantastic achievement. I hope to join you someday in the near future. You are correct in saying that at high salaries, the taxes and expenses in general matter less.

 

I was born in the 80s man, I'm ancient.

Edited March 31, 2019 by JohannBeckham

[MRROUGHSEX]

 

@ JB, The supperannuation or 401K is to be deducted from the Gross Salary. I just thought of not doing it because if it is same % to use (say a deduction of 10%), it would not affect the comparability of the tax rates of the 3 areas.

 

You are correct thought that it will decrease all 3 tax rates, as the new formula would be.

 

Tax Bracket Initial Amount + [((Gross Salary - Retirement Contribution - Standard Deduction) - Prior Tax Bracket Amount) * Tax Bracket %] = National Tax

Australian Supperannuation is different. You don't substract Retirement Contribution from the Gross Salary (the HORROR!). The correct formula in Australia is this:

 

Gross Salary - Tax - Deduction = Net Salary (net salary paid to the employee)

Gross Salary (Pre-tax) * 9.5% = Superannuation (payment to the employee in their superannuation fund). Again this is NOT SUBSTRACTED from the GROSS! I think what your saying is a salary sacrifice, but that's optional if you want to make additional super contributions above the 9.5% your employer is paying you additionally.

 

So in your example for someone working in Sydney:

Sydney, AU: 20,797 + [((113,000-0)-90,000)*37%] = 29,307 + 0% Local = 29,307. 29,307/113,000 = 26% Tax percentage

Australian Superannuation = 113,000 * 9.5 = 10,735.00

Total return to the emploee is = Net income + Australian Superannuation = (113,000 - 29,307) + 10,735 = 94,428.00

 

Now you can say, "JB, are you saying each employee is being paid 109.5% of ordinary time earnings (100% of their pay check + 9.5% of super)"? And the answer to that my friend is an austounding YES.

 

Check out this links https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works & https://www.ato.gov.au/business/super-for-employers/how-much-to-pay/

 

From my understanding, this is unique to Australia that we are being paid effectively 109.5% of our ordinary income. Again that 9.5% is not deducted from your gross salary and then paid out back to you. No No No. That is paid by employee on top of your salary, your base salary where your ordinary time earnings is calculated. Check the links out or and let me know if you have question.

 

I was born in the 80s man, I'm ancient.

 

Now you just made me feel like a bibilical figure LOL. Born in the disco 70s!

 

Holy Cow! 9.5% mimimum additional salary. That is just, well, Super Mega! That is even higher than Pinas' minimum additional salary of 13th month pay, which computes to 1/12 = 8.33%.

 

I must move to Australia. LOL. That is a game changer there. In US, our average additional is only 5%. One of the sad things I learned right away when I got here. I missed the 8.33% Christmas Superannuation. I always tell my Pinoy friends that they should treat the 8.33% as retirement and put at least half of it right away to a retirement account. But in Australia, I just learned from you that you have evem more than 8.33%. Outstanding info.

 

Dito sa US, puro deduction from Gross Salary haha. To get our Superannuation of 5%, we must make a counterpart, say 6%, which is deducted from Gross. Otherwise we do not get any. Same thing with Social Security, we deduct 6.2% from our Gross pay to get the 6.2% counterpart from employer contributed to our future SS checks.

Edited April 1, 2019 by MRROUGHSEX

[JohannBeckham]

On another topic, lets discuss about emergency fund? Do you guys have one? What's your strategy?

 

Ako to be honest with you guys, i'll come clean, i dont actually have one myself. I know, i know, i've been a hypocrite telling others to have one (the standard 3-6 months), but thats because i dont know other people's circumstances so i tend to be more on the conservative side.

Since i do have a high savings rate (52-55% of take-home pay), i dont feel the need to have cash in the bank earning almost nothing. I want my dollars to be invested working for me.

So what's my emergency fund plan?

1. Keep savings in an online high interest bank account short term, meaning until mareceive ko yung next salary ko.

E.g.

31-Mar-2019 Do my monthly budget pra sa sweldo na marereceived kinabukasan (monthly ang sweldo ko)

01-Apr-2019 nareceived sweldo. Transfer agad ang savings sa online High interest savings account.

30-Apr-2019 Do my monthly budget ulit pra sa marereceive na sweldo kinabukasan

01-May-2019 salary received, therefore transfer the March savings to brokerage account to buy ETF. Transfer May savings to online high savings account.

 

And so on, and so forth:

 

2. If plan 1 didnt work, use credit cards

3. If plan 2 is not enough, sell ETF

 

so yan ang financial emergency plan ko. Kyo ba?

[PenetrayShawn]

On another topic, lets discuss about emergency fund? Do you guys have one? What's your strategy?

 

Ako to be honest with you guys, i'll come clean, i dont actually have one myself. I know, i know, i've been a hypocrite telling others to have one (the standard 3-6 months), but thats because i dont know other people's circumstances so i tend to be more on the conservative side.

Since i do have a high savings rate (52-55% of take-home pay), i dont feel the need to have cash in the bank earning almost nothing. I want my dollars to be invested working for me.

So what's my emergency fund plan?

1. Keep savings in an online high interest bank account short term, meaning until mareceive ko yung next salary ko.

E.g.

31-Mar-2019 Do my monthly budget pra sa sweldo na marereceived kinabukasan (monthly ang sweldo ko)

01-Apr-2019 nareceived sweldo. Transfer agad ang savings sa online High interest savings account.

30-Apr-2019 Do my monthly budget ulit pra sa marereceive na sweldo kinabukasan

01-May-2019 salary received, therefore transfer the March savings to brokerage account to buy ETF. Transfer May savings to online high savings account.

 

And so on, and so forth:

 

2. If plan 1 didnt work, use credit cards

3. If plan 2 is not enough, sell ETF

 

so yan ang financial emergency plan ko. Kyo ba?

 

yes i have an emergency fund, mine is set to approximate expenses for up to 6 months, including bank account maintaining balances, insurance, etc.. i keep it in a savings account at a conservative ish bank so i have easy access to it when needed. for me "emergency fund" is a misnomer, i like to think of it as unemployment insurance since i reasonably expect insurance to take of emergencies like accidents, etc. i don't touch the unemployment fund unless im actually between jobs

 

anything after that i feel i can invest for short, medium, and long-term things. say i plan on buying a TV in 3 months, i set aside the cost of the TV in a good time deposit to simmer for 3 months, thats short term for me. medium term im not a fan of, mga bonds etc. long term is what interests me so dito mga stock that i want to pick, mutual funds. maybe real estate in the future. of course i make sure to set aside some money for fun things too since i dont want to feel so deprived that i have to dip into investments, or worse, my unemployment insurance. budgeting for fun makes me more mindful of where my money goes too and what really makes me happy, which is why i dont really buy video games anymore

[MRROUGHSEX]

Me, I'm quite inefficient with what I do with my Savings/EF. I just keep them in a Savings Account. 5% of my Gross is my simple rule. I know when it comes to an Emergency I can just sell some of my MF/ETF.

[MRROUGHSEX]

20190408 Updates:

* Reduce total debt to $58K by year end (currently at $69.0K)

* Grow retirement savings to $170K by year end (currently at $156K)

* Anticipate house value to appreciate to $280K by year end (currently at $269.5K)

* Increase college savings of children to $20K by year end (currently at $14.0K)

* Buttress business fund to $65K by year end (currently at $57.2K)

* Expect condo value to appreciate to $50K by year end (currently at $48.6K)

[Papa Popoy]

20190408 Updates:

 

* Reduce total debt to $58K by year end (currently at $69.0K)

* Grow retirement savings to $170K by year end (currently at $156K)

* Anticipate house value to appreciate to $280K by year end (currently at $269.5K)

* Increase college savings of children to $20K by year end (currently at $14.0K)

* Buttress business fund to $65K by year end (currently at $57.2K)

* Expect condo value to appreciate to $50K by year end (currently at $48.6K)

Anglaki ng sweldo..estimated budget per month from the above targets approximately USD5.5K na...hndi pa ksma ang expenses..pautang nman sir 😜😂✌️

[JohannBeckham]

Anglaki ng sweldo..estimated budget per month from the above targets approximately USD5.5K na...hndi pa ksma ang expenses..pautang nman sir 😜😂✌️

MRS has a good handle of his finances, well done!

His savings rate i guess is high kya mabilis bumulusok ang networth, something all of us needs to emulate. High-five MRS!

 

By the way, sa Pinas lumalaki na rin ba ang sweldo (particularly those in I.T. or BPO industry)?

 

I think ang huling sweldo ko sa Pinas way back in 2006 (13 years ago) before ako mag abroad is just Php 40k/month.

Edited April 8, 2019 by JohannBeckham

[Papa Popoy]

MRS has a good handle of his finances, well done!

His savings rate i guess is high kya mabilis bumulusok ang networth, something all of us needs to emulate. High-five MRS!

By the way, sa Pinas lumalaki na rin ba ang sweldo (particularly those in I.T. or BPO industry)?

I think ang huling sweldo ko sa Pinas way back in 2006 (13 years ago) before ako mag abroad is just Php 40k/month.

Wala rin akong alam sa sweldo sa Pinas kung gaano na ba kalaki..(working overseas din ako)

Ayoko rin pag-usapan sweldo baka malungkot lang ako pag nalaman ko sweldo nyo 😂 Pero magkano nga ba sweldo nyo ni MRS?? 😂😂😂✌️✌️✌️

[neville]

On another topic, lets discuss about emergency fund? Do you guys have one? What's your strategy?

 

Ako to be honest with you guys, i'll come clean, i dont actually have one myself. I know, i know, i've been a hypocrite telling others to have one (the standard 3-6 months), but thats because i dont know other people's circumstances so i tend to be more on the conservative side.

Since i do have a high savings rate (52-55% of take-home pay), i dont feel the need to have cash in the bank earning almost nothing. I want my dollars to be invested working for me.

So what's my emergency fund plan?

1. Keep savings in an online high interest bank account short term, meaning until mareceive ko yung next salary ko.

E.g.

31-Mar-2019 Do my monthly budget pra sa sweldo na marereceived kinabukasan (monthly ang sweldo ko)

01-Apr-2019 nareceived sweldo. Transfer agad ang savings sa online High interest savings account.

30-Apr-2019 Do my monthly budget ulit pra sa marereceive na sweldo kinabukasan

01-May-2019 salary received, therefore transfer the March savings to brokerage account to buy ETF. Transfer May savings to online high savings account.

 

And so on, and so forth:

 

2. If plan 1 didnt work, use credit cards

3. If plan 2 is not enough, sell ETF

 

so yan ang financial emergency plan ko. Kyo ba?

 

 

I have an emergency fund. Money that I barely touch and left to rot in a savings account. I actually have two. Hehe

 

One is the 100k balance I barely touch and another one that I pegged at 60k as contingency fund for when I finally leave the regular nightly desk jock job in the second half of the year.

 

I won't really touch both funds. I'll still have my income coming in, but it won't be as predictable as a regular salary in terms of when it hits my bank account (consistent estimate vs frequency is the following month).

 

So, now I have 140k but I prefer to have 250k total to make me feel secure enough. Then I have roughly 240k in stocks and mutual funds.

 

As long as the money comes in, I will continue to pile up on the savings and investment. My investment approach is aggressive so the growth is faSter.