I recently read an article on CNN Money that pulled data from a Harvard University study on housing. It stated that 11 million Americans were now spending at least half of their income on rent, and 21.3 million were spending at least 30% of their income on rent. Most personal finance gurus believe that you should spend at most 30% of your income on rent, and the lower that number is the better off you are. While this may be possible in a lot of areas, it is becoming increasingly difficult around many major cities.
Have you ever heard someone talking about how if they were to get a pay raise it would bump them into a higher tax bracket? This might then be followed by a rant about taxes and a speech discussing how the raise will cause them to actually earn less money because of paying more taxes. I used be someone who believed these stories but it always left me with a puzzling question: “What is the incentive to make more money then?” I always thought that you had to get a huge raise above the tax bracket so that you could finally ‘break even’ because of the extra taxes being paid. The simple answer to this is that only the additional income above that tax bracket is taxed at a higher rate and the income you were already earning will still be taxed at the same rate as before.
I’ve been trying to find some information or even personal experiences on renting a car when you need versus owning a car, but unfortunately all I have come up with is a large lack of information. When I do find information on the subject, it always seems to point more towards the cost of buying versus leasing a car. Obviously if you must have a certain model of car, leasing can be cheaper for that specific model. But it’s almost always more effective to purchase a used car and keep up with basic maintenance and that’s a completely separate argument. I am talking about owning a car and using it minimally versus not owning a car and renting for vacations or trips where it is necessary to have a car. And that’s how we arrive at my current conundrum. Since there are currently a lot of “what ifs” for me I’m going to use some real and some estimated numbers and try to reach a decision with my own math. How many times (and how long) would I have to rent a car during the year where owning a car would become cheaper?
If you have been on the hunt for an apartment in the past year, you have may noticed a strange trend of luxury apartments popping up all over the place. Even if you haven’t been on the search, you may have seen the signs all over the place pointing to the newest ones or the fresh construction of a development that seems to only have luxury housing. The strange thing is that many of these places seem far from the “luxury” that they are offering in the title. It seems that there is no legal ramifications or restrictions to using the word, so why not use it if you built a brand new apartment complex? You slap that word in front of your apartments and all of a sudden you can charge $300 a month over most market prices. I’m not sure if it’s the lack of housing in this area or the huge demand for housing – but it seems to be working.
Something that came up recently in a conversation I was having was that graduate student stipends are not taxable when it is strictly a stipend or a fellowship. Basically, if you are not teaching or doing some sort of assistantship while attending graduate school, the money is given to you tax free. While this is partially true, from everything that I have found online and from the IRS you DO in fact have to pay taxes on this income. At most universities there is a difference between fellowships and stipends that include a mandatory teaching role and those that do not, but you will have to pay taxes on both. I thought with tax season upon us that this would be a good topic to discuss and one that was interesting to research.