You can't fix stoopid...

[pb4uski]

Amazing to me that someone would make such a big financial move without understanding the ramifications. It is scary that someone like this may be dispensing advice to people and it may be mispercieved as being from a credible source.

How a Roth IRA totally screwed up my taxes - Tax Watch - MarketWatch

 

[gerntz]

Sounds like he could use an advisor.

 

[mathjak107]

ron white said it best.

 

[nash031]

Lots of people want things easy. If it takes more than 4 minutes of reading to learn, too many young people are unwilling to do it.... and then they just take action and go back to playing Call of Duty 8 or whatever.

And I say that being a "young person"... it just amazes me how little people are willing to read and learn on their own. Makes me want to become a financial advisor.

 

[mathjak107]

many times i feel like i am bringing fire to the indians.

 

[W2R]

Well DUH....

I do remember when I first heard of a Roth IRA and not knowing what it was, though. I guess we sometimes forget how much we have all learned along the way.

 

[LOL!]

Near end of article:

But the broader lesson for me was clear: Millennials live in a world that now requires financial planning acumen.

Let me tell you, it has always been that way; the world has not changed.

 

[W2R]

Near end of article:

Let me tell you, it has always been that way; the world has not changed.

Everything old is new again (as new generations discover it).

 

[travelover]

As a millennial who’s also a journalist

The problem was quickly diagnosed in a call to the parents.

Mommy!

 

[Chuckanut]

An idiot. But, if others learn the lesson, a useful idiot.

 

[robnplunder]

Careless, yes. Stupid? Maybe. I reserve "stupid" to those who are not even contributing to 401k, IRA, etc.. Stupid are those who drives new Benz on lease when they can barely pay for their apartment rent, month to month. Stupid are those who are deep under credit card debt while living above their mean. Stupid are ....

 

[NW-Bound]

I think stupid is too strong a word. Yes, young people are ignorant of money matters and the subject of taxes is just one of many. With time, they will learn.

When I was young, I did not know much either, but I knew that I did not know. And I am still learning, as the laws keep changing. Good grief, one almost has to be retired to have time to keep up with all this cr*p.

 

[Ready]

I would say this was bad judgement, or hastiness, but I wouldn't resort to calling him stupid.

However, if you want to see a real example of genuine stupidity, read what this guy did with his money:

A Couple Needs to Overcome Debt - WSJ.com

Now that is what I call STUPID! You can count the number of ridiculous mistakes he has already made, and he is only 37 years old. I can't think of another mistake he could make if he wanted to.

 

[haha]

IMO, this guy turned a no big deal questionably mistaken tax planning move into an article that is not so deadly dull that no one other than a Boglehead would read it.. The event he describes may even have been fabricated to give a framework for his article/story.

I should be so stupid!

Ha

 

[Walt34]

However, if you want to see a real example of genuine stupidity, read what this guy did with his money:

A Couple Needs to Overcome Debt - WSJ.com

Indeed. And then people wonder what happened when the house of cards falls.

Today, he and his wife have about $20,000 in credit-card debt spread among six cards with an average interest rate of 17%. The remainder of their debt is from paying back taxes and daily living expenses.


Mr. Anthony likes nice things, whether it's good dishes, clothes or the timeshare for which he and his wife pay about $150 a month. The couple spends around $200 a month on dinners out, and about $1,000 on groceries, as Mr. Anthony's diet requires that he eat plenty of protein.

And therein lies his problem. "I want it now!" And at 17% the lenders are happy to give it to him. What a dolt.

 

[LoneAspen]

Regarding people not researching financial matters before executing them...

I have a feeling there are going to be a lot of my coworkers who are shocked when doing their taxes this year, or later when the IRS sends them a big fat tax bill.

A lot of us exercised ISO (incentive stock options) last year, at a pre-IPO company that has since IPO'd, but the lockup hasn't expired yet. That means nobody could sell before year's end, which subjects the ISO spread to AMT tax.

I knew that beforehand, and could roughly calculate my numbers and knew what I'd be facing on April 15 in added AMT tax.

I've talked to a lot of people who didn't do that research. Some just exercised their options blindly, and did it right before IPO, when the fair market value was higher, meaning their spread, and AMT tax owed, is going to be much higher. When I start talking about AMT tax, and how I chose when to exercise mine very carefully (after I was sure the company had a chance at IPO'ing, but before the FMV got too high), they look at me like deer in headlights.

I can only shake my head, walk away, and hope the AMT monster doesn't take too big a bite out of them. I expect a few folks to be in all-out panic mode when they realize what they owe. Even more so when they find out the implications of not filing an 83(b) election, so the taxes go up as their shares vest at higher and higher FMV.

 

[Dash man]

Regarding people not researching financial matters before executing them...

I have a feeling there are going to be a lot of my coworkers who are shocked when doing their taxes this year, or later when the IRS sends them a big fat tax bill.

A lot of people are surprised at how hard the new taxes are hitting those with high income from exercising stock options. We didn't get hit with AMT, but the new higher tax rate combined with the elimination of deductions and the additional Medicare tax increased our taxable income significantly. We were about to sign with a contractor to get some landscaping done on our house, but the additional taxes we owed forced us to hold off on the expense. It sucked that money right out of the economy.

 

[LoneAspen]

A lot of people are surprised at how hard the new taxes are hitting those with high income from exercising stock options. We didn't get hit with AMT, but the new higher tax rate combined with the elimination of deductions and the additional Medicare tax increased our taxable income significantly. We were about to sign with a contractor to get some landscaping done on our house, but the additional taxes we owed forced us to hold off on the expense. It sucked that money right out of the economy.

I'm sure the feds will spend it much more wisely! Uncle Sam can afford to buy several more thousand-dollar toilet seats with the check I mailed them this year

 

[nash031]

I read the credit article in WSJ last night.

My diet requires a lot (a LOT) of protein as well, but I get by on $650/month feeding my wife as well. Now, he's got a baby, but $1000/month means to me he's buying an awful lot of grass-fed Ribeye and not caring about when it's on sale. And I'm betting $200 on dinners out is an underestimate if he "likes nice things", especially in NYC.

The annuity and life insurance policies made me shudder as well. Just a lot of "financial train wreck" going on there at 37, and at a fairly advanced level. No savings? High credit card debt? THAT'S "average" at that age. Paying too much for Life Insurance? Having an annuity? That's graduate level!

 

[MBAustin]

The tax code has become so complicated that I overlooked a major tax reduction opportunity for DD for last year - she caught it herself by doing her taxes in TT and answering every single question it asks. Turns out that low income taxpayers (for singles, under about $30K) get a tax *credit* for part of their Roth IRA contributions. I had never heard of that! She may go back and file an amended return for 2012 to capture the credit for last year as well. So no wonder the millennial author also had issues knowing what to do.

 

[Walt34]

So no wonder the millennial author also had issues knowing what to do.

Given the lack of financial education in this country it isn't surprising. Based on what I read here and elsewhere having parents who know what they're doing with money and talking about it with their kids is a huge advantage. Much as Suze Orman gets knocked on this forum I think she does a great service to those who just go from day to day without thinking about the long-term effects about what they do with money.

Not many people, especially younger ones, want to sit down and read a stack of books on finances and investing and money management because retirement is so far over the hill they can't see it.

 

[Rustward]

Given the lack of financial education in this country it isn't surprising. Based on what I read here and elsewhere having parents who know what they're doing with money and talking about it with their kids is a huge advantage. Much as Suze Orman gets knocked on this forum I think she does a great service to those who just go from day to day without thinking about the long-term effects about what they do with money.

Not many people, especially younger ones, want to sit down and read a stack of books on finances and investing and money management because retirement is so far over the hill they can't see it.

+1

To the group: So if a newbie shows up in these forums asking a question that has already been answered a dozen times, or has been covered in that stack of books that they may not have time or energy to read, maybe we should just answer the question or provide links to the already-answered questions, huh?

 

[Walt34]

To the group: So if a newbie shows up in these forums asking a question that has already been answered a dozen times, or has been covered in that stack of books that they may not have time or energy to read, maybe we should just answer the question or provide links to the already-answered questions, huh?

Yes. The question is new to them or they wouldn't have asked it. There's no problem with just providing a link to an existing thread that has already hashed over a given issue or pointing them to a relevant book.

As with any other life skill or learning issue no one was born knowing that stuff.

I wish I had made a copy of a cartoon I saw. It's a drawing of an old airplane mechanic, rag in hand, a light airplane in the background, talking to a 20-something. The caption was "Don't be afraid to ask stupid questions. They're a helluva lot easier to explain than stupid mistakes".

 

[Sanbenito1]

Ok, here's a stupid newbie question, apparently covered elsewhere (although I've not seen it): what's so bad about Susie Orman?

 

[travelover]

......... what's so bad about Susie Orman?

It is the eyes.