Things you should know – Consolidated best-practice tips that should be part of your common knowledge

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by yes_its_him

  • A higher tax bracket due to a raise doesn’t offset the whole raise, since the higher rate applies only to the amount in the new bracket. (You might lose some income-limited deductions, though.)
  • Likewise, all employment income goes in one bucket to determine tax liability. Your overtime / bonus is taxed the same as regular income, even if it is withheld at higher rates. You square that up when you file.
  • Keeping a significant savings account while paying 20%+ interest on an outstanding credit card balance means you are losing something like 18% annually on money that could pay down debt.
  • If you take out (or keep making payments on) an interest-bearing loan to help your credit history, then you are spending money to get a better credit rating. That’s backwards. You want to improve credit at no cost to save money on loans.
  • You want to always pay off the statement balance on your (interest-bearing) credit card each month without fail. That will keep you from paying interest. You don’t have to pay the full balance, since that includes any new charges. Just the statement balance.
  • There is no appreciable downside to an online High Yield savings account with a 2.0+% interest rate, vs. keeping the money with your local bank at .01% or some such thing.
  • Credit unions are a great source of day-to-day banking services if you want better service and competitive rates. Some credit unions have easy-to-meet membership requirements.
  • You won’t get a risk-free, high (>~3%) rate of return on your investments in any standard financial services product. You can compensate for higher risk of stock market investments by leaving the money for a period of five to ten years, to allow time for growth to overcome price fluctuations.
  • There are generally no federal gift taxes due to either the recipient or to the donor (giver), even on largeish gifts of tens or hundreds of thousands of dollars. If you give someone over $15,000 in one year, you file a form that reduces your lifetime exclusion, but you still don’t pay gift taxes.

That’s all I can write up at the moment. What else comes to mind that everybody should know?


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