I just finished filing my taxes, and am looking forward to quite a bit of money coming back my way, courtesy of the United States Government. Thank you, Big Brother/Sister/Father/Mother. Its good to know that you’ll just give money to people who make very little money throughout the year. If only you could not have this kind of system at all, this way everyone could keep the money they make, instead of the bottom 5% of income earners. Oh well.
My mother just finished her taxes as well. And she is not getting back nearly as much money. Why is this? She was jobless for most of the year, and began collecting retirement money in October. Apparently, people who collect retirement benefits don’t get to enjoy tax refunds. And yet they still have to pay taxes, which, in the United States, are among the highest in the world.
Because I made less than $10000 last year, I was able to get back nearly all of the income tax I paid back, and then some. I received the Earned Income Credit as well. A quick look at this chart shows that the more money you make, the more you pay. According to the chart, your income tax rate jumps from 12% to 22% if you go from making $35000 per year to $40000 per year. If you make six figures, $100000 or more, you pay only 24%.
What does this mean? It means that if you make a “middle class” income in the United States (roughly $40000 per year), you’ll pay dearly for it. But if you are decisively poor or decisively rich, you won’t pay as much, all things being equal.
It has been this way for a while, but I just find it funny that it is like this. And this is what people mean when they say that “there is no middle class anymore.” That is because those in between the poverty line and the upper quarter of earners are paying virtually all of the income taxes in the United States. This does not give me an incentive to make any more money than I am making right now.
Another incentive to go easy on my income is my student loans. I have written about this before, but there was a stage in my life where I did not want to live. And I figured that if I took out enough money in student loans to where I would rather kill myself than pay them back, I would actually do it. But because I was too scared to actually off myself, I faced the burden of paying back the loans.
…or do I?
You see, if your student loans go default, the department of education gets to seize up to 15% of your income. And that’s if they file a judgement. Even if you take out one dollar in student loans, all of your information is in the department of education’s database until you die. They monitor how much money you make, and if you cross a certain income threshold, your money gets seized (if you decide not to pay).
If the department of education sees that you are too broke to pay off any student loans, your money will not get seized. And if you owe too little, they will not even file a judgement. When I learned about this, I was ecstatic. All I had to do to avoid paying off these loans was just to stay at a low income. And to me, this has always been easy.
The reason why is twofold: First, I am a hardcore minimalist who literally lives like a spartan. I have owned the same car for nearly 11 years (and bought it with cash for $10200), and am able to pack all of the other stuff I own into that same car. I have been living like this since 2012. It is not that difficult. And for those last 6 or so years, my expenses have been very small compared to most. The only two that have been systematic and necessary have been rent, internet, and car insurance.
The second is that I have no interest in participating in the high school mentality of impressing others with possessions. When people make the really stupid decisions to take out home and car loans for no reason other than to impress others, it makes me laugh and cringe all the same. This is especially true with housing. People think that renting is bad after a certain age. Well I’m not the one paying homeowner taxes and homeowner’s association fees. I’ll be laughing last in a decade or so when you are “stuck” and I’m busy travelling anywhere I please.
Making sure I do not make too much money in the west is one way of adapting and adjusting to a culture that continues to punish people who they believe make just enough money to pay for people who live off of the government’s dime, but not enough to benefit from anything that the government provides.
Again, it does not cost too much to live off of a low income. If you are disciplined enough to not buy things that you do not need to impress others, it is actually quite easy. I have been doing so for six or so years in a row, and comfortably.
Of course, I cannot live like this forever. There is going to be a time where I will need to save up for a new car. Starting this year, I will begin travelling to select places in Southeast Asia, as I plan on moving somewhere in Southeast Asia during the early 2020s. This is where I will need to do tons of research on making sure I pay the least amount of unnecessary expenses possible.
This can be made easier if I know where I can maintain. I know where that amount is, and the next step is saving and investing. That will be covered in a later article.