A Cautionary Word on the Deferred Life Plan

Re:A Cautionary Word on the Deferred Life Plan by maeon3 on Wednesday May 30, 2012 @01:14AM (#4041478)

I took 18 months off work to follow my dreams. I tried to strike it rich, but I got experience instead. It was quite the roller coaster ride. In America, if you are not working a job and receiving a salary, you are seen as a leech, a useless appendage and worthless drain on society. Women don't want to date you, parents always asking when are you getting a job, you have to put up with the revulsion at parties when you have to admit you are not drawing a salary... And you have to take it easy on the expenses. But it was a great decision, and I'll do it again soon when I get another nest egg saved up. You gotta have nerves of steel and be able to tell the others to keep following your dreams of the deferred life plan, and call me in 2060 when that pans out.

If I don't spend the money I earn on myself, then the government will just take it away from me in the next 10 years through 10%-20% annual inflation as it tries to pay down umpteen trillion dollars in socialism. You can't plunder the value behind my bank account dollars if I don't have any to take! When the new currency comes down the pike, I'll work my butt off at age 65 and 75 to earn a 350 thousand dollar/year salary working food service.

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Re:A Cautionary Word on the Deferred Life Plan by coffeemug on Wednesday May 30, 2012 @01:41AM (#4041555)

In America, if you are not working a job and receiving a salary, you are seen as a leech, a useless appendage and worthless drain on society. Women don't want to date you, parents always asking when are you getting a job, you have to put up with the revulsion at parties when you have to admit you are not drawing a salary...

I think you might be hanging around the wrong people...

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Re:A Cautionary Word on the Deferred Life Plan by potatolicious on Wednesday May 30, 2012 @03:50AM (#4041858)

> "I think you might be hanging around the wrong people..."

Or the wrong areas.

There's a reason why startups have taken off in a huge way in the Bay Area where it hasn't elsewhere, despite the massive amount of capital flowing into aspiring startup hubs like NYC and Boston.

In SF you're one of the cool kids for doing your own startup (to a detrimental extent, actually), in many other places you can expect to run into a lot of the GP's experiences...

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Re:A Cautionary Word on the Deferred Life Plan by greggman on Wednesday May 30, 2012 @01:45AM (#4041569)

Agreed. I've never seen this kind of reaction from strangers or friends.

I also don't understand the tax reference. Yes, there are taxes on company income. There are not taxes on money sitting in the bank from the previous year. This is no different than a job.

If I earn $50k this year the gov takes say $20k and I have $30k left over. If I do absolutely nothing the next year the government doesn't take money from that $30k.

Similarly if I run a company and have gross income of $100k and expenses of $50k leaving $50k the in the bank the gov will take a percentage. The next year the gov will only tax NEW INCOME.

At least that's my understanding. I'm not a tax expert nor a lawyer and I can only go from my experience in California. Other places might be different.

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Re:A Cautionary Word on the Deferred Life Plan by replax on Wednesday May 30, 2012 @04:10AM (#4041896)

He was referring to the inflation rate. What he was saying was (as far as I understood it), if you safe e.g. $10k now, in e.g. 10years you could not buy as much with it as you could at the time you earned the money. Therefore, you "lose" money (or rather purchasing power) by not using it.

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Re:A Cautionary Word on the Deferred Life Plan by polyfractal on Wednesday May 30, 2012 @09:34AM (#4042714)

And that's why no one should be sitting on their money...invest it! Keep enough for emergencies (6-12 months of rent/food is the general mantra) in your bank account and put the rest in your IRA/401k and/or non-tax advantaged index funds.

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Re:A Cautionary Word on the Deferred Life Plan by waterlesscloud on Wednesday May 30, 2012 @01:57AM (#4041589)

I suspect it depends a lot on where you live. In Los Angeles no one blinks an eye at the no-salary-and-following-your-dream life. I highly suspect Silicon Valley is much the same.

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Re:A Cautionary Word on the Deferred Life Plan by alanfalcon on Wednesday May 30, 2012 @02:31AM (#4041669)

Yeah, unfortunately most of the United States isn't Los Angeles or Silicon Valley.

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Re:A Cautionary Word on the Deferred Life Plan by rprasad on Wednesday May 30, 2012 @05:00PM (#4044819)

The parent's reference to taxation has no basis in reality; your understanding of taxation is correct.

You are only taxed on income. If you have money in the bank, and you receive more money, that new money gets taxed. If you own a company, and it increases in value from $1M to $2M over a year (but you don't sell it), you are not taxed, because you haven't received any actual income.

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Re:A Cautionary Word on the Deferred Life Plan by nodata on Wednesday May 30, 2012 @01:59AM (#4041594)

> as it tries to pay down umpteen trillion dollars in socialism

Are you suggesting the worst value healthcare model in the world is better?

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Re:A Cautionary Word on the Deferred Life Plan by valencourt on Wednesday May 30, 2012 @01:41AM (#4041553)

Revulsion at parties? Is that a bit too strong a word, or have you had some bad experiences?

Also, have you considered getting into stocks? There are realistic hedges against inflation available.

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Re:A Cautionary Word on the Deferred Life Plan by snowwrestler on Wednesday May 30, 2012 @10:13AM (#4042884)

A broad stock index fund is a great inflation hedge, but a lot of people don't like the volatility. The most conservative hedge against inflation is probably TIPS.

http://www.treasurydirect.gov/indiv/products/prod_tips_glanc...

You're guaranteed not to lose any money to inflation. But, you probably won't make any money either.

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Re:A Cautionary Word on the Deferred Life Plan by Retric on Wednesday May 30, 2012 @09:50AM (#4042781)

When a lot of loans go bust you get deflation. The Fed's approach would seem like it's going to cause rapid inflation but in reality it's countering significant deflationary pressure the net result has vary close to zero inflation for the last few years.

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