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The Only Good Thing About Losing Income

by J. Money on Monday, October 28, 2013

money burning

You pay much less in taxes :)

It’s been an interesting ride here the past 4 months in the Money household… We’ve gone from an average of $150k in salaries down to about $80k. And throughout it I’ve come to appreciate a lot things I’ve since forgotten. Like, that nothing’s ever permanent. Or perfect. Or always fun, for that matter. All of which is okay of course, but all things that I needed to be reminded of.

Also that I can’t just buy whatever I want without thinking. Not that I used to do that all too often, but still. A good reminder to consciously stop myself before each transaction and double check the importance. In a way, it’s like I’m 21 all over again. Only now with a family, bills, and responsibility ;)

I also feel like I should be freaking out a lot more than I am. Though perhaps everything I’ve been doing over the years has since afforded me some grace and peace? Can you really get *that* freaked out when you’re sitting on a net worth of $350k? (Or, soon, $400k?) I do believe you can, but it surely helps having a foundation from which to start your leaps off again.

What I’m certain of, however, is that I’m still very much happy and even getting used to living with this lower level of income now. It’s not preferable, but I’ve come to accept my new place in this salary bracket now, and will consider everything above and beyond as “extra.” While I have no doubt our income will once again soar like a great Hawaiian tidal wave, we can only count on the money we have TODAY. And be thankful for at least that :)

And with this new life comes the benefit of having to pay much less in taxes too! In fact, I’ve put in so much over the first few quarterly payments (since they were based on last year’s numbers) that I actually *no longer need* to pay any more for the rest of the 2013 calendar year, haha… It’s as if I’ve received a nice raise for the next two months since I now don’t need to allocate any of my earnings until January comes :) Something I’m sure all you self-employed ballers can appreciate.

The reality, of course, is that this is NOT preferential at all. Sure, I get a reprieve from sending the gov’t so much of my heard-earned money, but everyone knows it’s better to earn a lot and pay more in taxes than it is the opposite. Which I’d been so accustomed to doing for the past few years…

But, it is what it is, and we now adapt to our new lifestyle and balance sheets until we edge back into the “good ol’ days.” And I’ll admit I like the challenge of doing so too. It’s a lot easier to rest on your laurels when times are good, than when they’re bad. Our excuses won’t hold much weight when it comes to paying the bills ;)

So, a silver lining to everything, eh? And with a new chapter comes an entirely new playbook too. In this case, re-working the hustles and *paying attention to the details* AKA the pennies.

In fact, I think I’ll throw on some Silver Linings Playbook action today and get myself in the spirit of the game again :) That was one hilariously entertaining flick, and it never hurts to compare yourself to others and put things in perspective! Which this movie is *perfect* for ;)

Excelsior!

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Photo cred: Images_of_Money


{ 49 comments… read them below or add one }

1 Well Heeled Blog October 28, 2013 at 7:39 am

You are handling this with equanimity and grace – two characteristics that I believe will bring you even more opportunities in the future. Plus, $400K net worth! CONGRATS! :)

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2 J. Money October 28, 2013 at 10:41 am

equanimity! great word – I learned something new today :)

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3 John S @ Frugal Rules October 28, 2013 at 7:51 am

“It’s as if I’ve received a nice raise for the next two months since I now don’t need to allocate any of my earnings until January comes :) Something I’m sure all you self-employed ballers can appreciate.” Oh, man, I can remember this two years ago when I first quit my job and “got” to pay less in taxes, it did feel like a bonus but it was weird how I wanted to be paying more…because it meant we were making more. :) Like WHB said, you’re handling this well and I’ve learned that these things are temporary and help you look at things again. That said, a $400k net worth ain’t too shabby either. :)

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4 J. Money October 28, 2013 at 10:49 am

Thanks man :) Definitely better to be paying MORE in taxes for sure, but it is what it is and we continue working on it, eh?

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5 Brian October 28, 2013 at 8:36 am

$400k is nice. Be proud of everything your family has accomplished.

Sometimes it feels good to have your back up against the wall, and not too comfortable.

You got some hustle in you. You will always be fine, so keep going forward.

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6 J. Money October 28, 2013 at 10:50 am

You’re totally right on that – it is good to be uncomfortable some times!

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7 Brian @ Debt Discipline October 28, 2013 at 8:40 am

I’m sure the dip in income will only be temporary. Still taking the hit and approaching a $400k net worth is impressive. No tax hit for the $50k sale?

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8 J. Money October 28, 2013 at 10:51 am

Nope – no hit cuz I overpaid too much already this year, and we also dumped a lot into our old house which is now a “business” since it’s a rental property. So that helped offset it too.

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9 Anne @ Unique Gifter October 28, 2013 at 8:58 am

That’s kind of like not getting our GST rebate cheques up here. It sucks to lose them, but it means you’re not poor anymore. Your taxes are sort of the inverse. At least you’ve still got a solid household income and you get to give yourself a raise for a few months!

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10 J. Money October 28, 2013 at 10:52 am

Haha yup! I’ll have to go and google GST too as hadn’t heard of that one before.

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11 Free Money Minute October 28, 2013 at 9:19 am

Refreshing to hear how thankful you are, even now, at a lower salary. Sometimes we take for granted the position we are in. Being thankful will increase your richness.

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12 J. Money October 28, 2013 at 10:55 am

I’d like to think so :) I’m reminded of all the times after college I was barely scraping by too – yet how incredibly happy I still was with life in general. I feel like as long as you can appreciate being alive and healthy, the rest is all secondary.

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13 Free Money Minute October 28, 2013 at 4:58 pm

I was reminded of how fragile life is yesterday when I found out my 42 year old brother just had a heart attack and triple bypass surgery. I am so thankful to have reasonably good health at this point in my life.

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14 J. Money October 28, 2013 at 8:47 pm

OUCH!! Sorry to hear :(

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15 moneystepper.com October 28, 2013 at 9:23 am

Its just a blip in my opinion. And a blip is easier to get through when you have your excellent attitude and $400k to fall back on!!

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16 J. Money October 28, 2013 at 10:57 am

I’ll need to keep that in mind, haha… I’m very bad at future long-term thinking, so a “blip” to me seems like forever, even though I’m sure it’ll pass sooner than later :) I’ll just have to repeat “blip” over and over again in the mirror every morning as I brush my teeth and start the days, haha…

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17 T. Thema Martin October 28, 2013 at 9:30 am

J, I thought you stated in a few posts that your income from your blog is not doing as well as it used to. Maybe I missed it in a prior post, but would you say are the contributing factors for that, i.e. less advertising offers, less readers, competition etc.?

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18 J. Money October 28, 2013 at 11:01 am

Yeah, between this blog and the other online projects I run, it’s been a mixture of Google changes, less ad offers, and probably a healthy mix of being spread to thin and not focusing on what’s important on my end too :) Which I’m not working on fixing more and regrouping which should help.

The funny thing is I’m still making more with this stuff than any other job I’ve had previously in my life, but now I have much more responsibility than back then ;) Like a family and mortgages, etc. But all things that will be fine regardless – just a matter of time to get it pumped up again.

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19 KaseyM October 28, 2013 at 9:38 am

Being grateful and managing with what you have it the mos important part. i had a hard time adapting quick enough after my income dropped drastically last year and it costed me. So glad to see your handling it well.

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20 J. Money October 28, 2013 at 11:02 am

Awww, I’m sorry to hear. Things better now and you’re rockin’ and rollin’? :)

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21 Lance at Money Life and More October 28, 2013 at 11:00 am

Bummer that the income is down but at least less taxes takes a bit of the sting out. I was running some numbers the other day and once you get in the 25% bracket you really pay almost 40% thanks to SE taxes.

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22 J. Money October 28, 2013 at 11:03 am

Yeah, freaky stuff right?? I mean, we paid a lot during our “normal” jobs too, but when it pulls out taxes automatically it’s a lot easier to swallow than when you have to manually write a check out for it *every 3 months!* haha… but I like it that way cuz it forces you to feel the sting and understand the realities of money/business :)

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23 Financial Samurai October 28, 2013 at 11:01 am

I hear ya man. At least you got $50K big ones! I’m assuming part of the income drop has to do with the sale of those sites? Does that stuff never get counted in your net worth due to being conservative?

Seems like blogging has been on a net negative end of Google since this summer. But still, it’s fun to just plug away and write. Maybe things come back, maybe they stay the same, but either way we make more than enough and not paying as much taxes is sweet! Free subsidies for Obamacare too.

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24 J. Money October 28, 2013 at 11:07 am

For sure – Google can’t take away all the fun we’re having :) Or the community we’ve built around us…

Nah, I don’t include any sites/online assets into my net worth just cuz it’s so wishy washy and can never put a “value” on it for that matter either really (except for some good guessing). So in that way it won’t ever affect my net worth whether I sell them off or keep them – only the cash afterwards from the sale, or from the monthly earnings, will be included. Which is why we’ll see a $50k bump this next month.

Missed ya at FINCON btw bud – we gotta catch up sometime :) Skype one day?

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25 Financial Samurai October 28, 2013 at 11:18 am

Baller. Nice to have $50K in hidden wealth. I totally subscribe to stealth wealth so nobody knows how big the iceberg really is haha.

I was at a friend’s wedding in Napa on Saturday. I’m looking forward to Fincon moving out to the West Coast. I think most people are from the Western side of the US too according to a survey? Next year hopefully!

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26 J. Money October 28, 2013 at 11:21 am

haha… “stealth wealth” – I like that! even if it wasn’t designed like that on purpose for me :)

My guess is if FINCON ever makes it to the west coast it will be San Diego area. But I’d be down for the Napa area too! A conference at a vineyard??? Ooooooooh…

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27 Christine @ ThePursuitofGreen October 28, 2013 at 11:19 am

Throwing in some King Arthur and Knights of the round table stuff? Quarterly taxes were the worst part about self employment for me. At least you don’t have to worry about it for a little bit. I’m sure things will pick back up though and then you’ll go back to worrying about it:P

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28 Ben @ The Wealth Gospel October 28, 2013 at 11:21 am

My first year of self-employment, I wasn’t making a ton of money and I didn’t know about estimated tax payments, so when tax season rolled around, I had to pay about $1,800 in taxes. Talk about a swift kick to the little guys!

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29 J. Money October 28, 2013 at 8:48 pm

Haha oh yeah – that’ll get you every time.

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30 Matt Becker October 28, 2013 at 12:04 pm

Does the drop in income have to do with having a baby and moving to a single income? If so, then I can totally relate to this and I think you have an awesome mindset. We decided to have my wife stay home with our son (just over 19 months ago now) and I’ll say that while the drop in income certainly isn’t ideal, it really pales in comparison to having a son and having my wife be with him all day. She loves it, he loves it, and I love that they love it. Feel me? I just feel fortunate that my income alone is enough to let it happen.

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31 J. Money October 28, 2013 at 8:51 pm

Definitely a nice situation you’re able to take advantage of :) Ours is kinda along the same lines that we lost an income due to wife staying at home, but it’s not really because of the baby – more about finishing her PHD so she can join the work force again. That mixed with less ad income online and it equals a hefty pay cut for the year… But hopefully that all changes once she’s back to working full-time and we have double income again :) She thought maybe she’d want to stay at home full-time with baby but turns out it’s not for her, haha.. so daycare it is! (I also tried myself and realized same thing :) Though working from home we get to spend more time w/ him than usual which is nice – kinda best of both worlds).

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32 Retire By 40 October 28, 2013 at 12:04 pm

It’s strange, but I am quite happy with making less money. It’s enough for us and I am a lot less stressed out. More money would be nice, but I don’t want to work more at this point…

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33 J. Money October 28, 2013 at 8:54 pm

That’s a powerful statement there too, man – I like that! You know what it takes to make more, but you choose time over work – no shame in that!

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34 Deacon @ Well Kept Wallet October 28, 2013 at 12:10 pm

I can totally relate to having to adapt to living on less. I spent 3+ years as a Financial Planner making some decent coin and then when I decided to start my own business this year, I took a serious pay cut. It is OK though, because like you, we made good decisions with our income previously and we are in a good position financially and don’t need the extra income. We can only go up from here.

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35 J. Money October 28, 2013 at 8:51 pm

Amen, brotha!

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36 Kyle | Rather-Be-Shopping.com October 28, 2013 at 6:52 pm

Hey at least when you’re tax bracket goes back up you’ll be able to bank more because you’ll be use to living on less. No lifestyle inflation, right?

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37 J. Money October 28, 2013 at 8:52 pm

Oh yeah. That’s one thing we’ve been pretty good about overall the last few years – cutting back our expenses. Which then got blown up once we got a baby and then started renting our house out, haha… but hey – that’s the way life goes :)

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38 Micro October 28, 2013 at 7:00 pm

That is some crazy optimisim you are sporting there. I know way too many people who would just scream bloody murder if their income dropped that much. Of course, the blame game would naturally follow which is just awful to listen to. Complaining won’t change the situation so instead of saying poor me, say well on the bright side. Of course, I think having the money bags tucked away helps to draw that smile out.

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39 J. Money October 28, 2013 at 8:53 pm

Haha it doesn’t hurt ;) Plus, it’s not like it happened all at once. I’ve had a lot of time to digest it all and have it soak in… I haven’t been this cheery about everything the entire time, I’ll tell you that.

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40 Donna Freedman October 28, 2013 at 10:03 pm

After Microsoft kicked all its writers to the virtual curb, I decided not to try and replace all that income right away. Instead, I’m writing one or two posts a week for Money Talks News (which will cover my basic expenses), taking some deep breaths and thinking about planning my life rather than simply reacting to it.
As I recently posted on my own site, “Time is something we can’t do over.”
I’m pretty happy with the decision, but wavered a little yesterday after writing a HUGE freakin’ check to my credit card company (medical bills + FinCon + staying after the conference to visit with my daughter). Still, I think everything will be copacetic: Like you, I just need to be mindful about spending for a while.
Sorry we didn’t have more time to chat at FinCon — it was crazy for me this year.

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41 J. Money October 30, 2013 at 10:43 pm

I love that – “planning” your life rather than reacting to it – that’s hard to do! And looks like you are now presented with the perfect opportunity to do it :) Still can’t believe all that stuff w/ MSN – that’s nutso… If you ever need anything you know where to find me!

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42 Anne October 29, 2013 at 12:07 am

$400k is really good! You must be proud of everything your family has accomplished. Congratulations! I hope that I can also accomplish that. Thank you very much for sharing this great post!

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43 J. Money October 30, 2013 at 10:44 pm

Thanks Anne :) I’m loving your blog name!!

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44 charles@gettingarichlife October 29, 2013 at 4:28 am

J you’ve got great optimism which is the key to bouncing back from everything. No woe be me here. Isn’t the power of compounding amazing when you get to that money.
If I lost half my income I would freak out and change my blog to wherethefrickismymoney.

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45 J. Money October 30, 2013 at 10:45 pm

haha… well let’s hope that never happens my brotha :)

Thanks for the kind words.

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46 The Warrior October 29, 2013 at 9:55 am

Congrats!

I couldn’t imagine having two right now. Between the financial implications and overall increase in responsibilities. Our Little Warrior is 8 months now and everyday we are still learning something.

I’m looking forward to seeing how you handle the new financial bearing. I know you will do well with it, but you explaining the up’s and down’s is always fun, for me at least, to read and learn from.

The Warrior
NetWorthWarrior.com

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47 J. Money October 30, 2013 at 10:46 pm

Cool man, I’m glad you enjoy reading about this stuff – sometimes it feels weird dishing my thoughts all the time like a diary :) It’s nice to know people get something out of it.

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48 nicole October 29, 2013 at 12:44 pm

What happened that you lost an income? I must have missed that post.

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49 J. Money October 30, 2013 at 10:47 pm

It’s been a lot of things really, not just one thing. Ad revenue down, wife no longer working, etc. Just a phase (hopefully) :)

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