Quitting jobs
Everyone has a job they don’t like and whenever someone complains about the job that they do, there’s always are going to be handfuls of people saying “QUIT UR JOB!” not really caring about whether it’ll benefit the complainer or not.
Quitting a job cold is one of the dumbest things you can do when you do not have any safety nets. No savings. No jobs lined up. Nothing planned. You are putting yourself back to a place of uncertainty and it’s not pleasant when that countdown starts. That countdown is tied to how much you have left to cover your expenses fully until you get another job and how long those expenses will pile up.
Because all it takes is one or two missed paychecks to upset your financial stability and the system you’ve made in how you pay for things.
For some people, unfortunately, quitting jobs is not as simple of an option. People are just jammed into where they are because their job market is poor or it’s highly competitive even when they went to college for that job.
“Don’t take that raise, it’ll put you in a higher tax bracket!”
Some people who don’t understand tax brackets actually believe this is good advice.
I’d say about 20% of people I encounter, including people in my immediate family, still believe this.
My uncle believes this and has made life decisions based on it … but has a financial advisor. So either that advisor sucks or he hasn’t actually discussed finances with them.
For anyone here who doesn’t understand why this is bad advice, it’s because income tax increases only apply to income made above that threshold.
Let’s do a simple example and pretend there’s only 2 tax brackets. From 0-50k tax is 10% and over 50k it’s 20%.
If you make exactly 50k your tax burden will be 5k and you’ll take home 45k a year.
If you get a 1k raise, only the final thousand is taxed at the higher rate, so your tax burden will be 5200 (10% of the first 50k and 20% of the remainder), and you’ll take home 45,800 a year.
So even though you change tax brackets, you still make more money.
USA here: Or people saying “Don’t work overtime, they’ll just take it all in taxes”.
Well, my marginal tax rate on income has never been 100% (yet). While there are other factors to consider if you feel working overtime is worth it or not to you personally. That is not a valid logic to use.
The same people who think they pay federal tax dollars cause they never realize they get it all back and then some.
In the UK there is a point between 100 and 125k where the tax levels of being in that region make it more financially prudent to do pension salary sacrifice or a similar scheme. You should still take the pay rise obviously.
Edit: To illustrate it I think the marginal tax rate jumos to ~60% or something like that between 100-124k. but then moves back down to 47% after you earn over 125k for some reason.
Yeah, there are some regressive taxes and fees that cause that anomalous decline in the marginal rate.
Some people may be thinking of what’s called the “benefits cliff”. At certain points you lose the ability to take certain tax credits or deductions. Theoretically this could result in a higher net out of pocket for you, but in the grand scheme it’s really minor, so always take the raise.