How much money do you need to make to spend

Brent G. · #1 08-26-2025, 01:54 PM

Quote:

Originally Posted by glchen

You should have a minimum gross income of $80K per year, if you want to spend $40K on a baseball card.

A way to re-frame this question is how much do you need to make a year if you want to save/invest $40K a year. A common guideline recommended by financial advisors is the 50/30/20 rule where 50% of your income goes to your needs like essential living expenses including housing, groceries, utilities, and transportation. 30% goes to wants which are discretionary spending such as entertainment, restaurants, and hobbies. 20% goes to savings. If you club together the wants and the savings, then you could put 50% into your investment/hobby, which makes the minimum income you need to be $80K for a $40K baseball card.

Also, where do you live, and is there another source of income (spouse)? $80,000 a yr. isn't much for a single guy living in a major metro these days, but if you live in the sticks and have another contributor, that goes a long way.

glchen · #2 08-26-2025, 02:28 PM

Quote:

Originally Posted by calvindog

What about taxes?

Included as part of your essential living expenses 50% share.

Quote:

Originally Posted by Brent G.

Also, where do you live, and is there another source of income (spouse)? $80,000 a yr. isn't much for a single guy living in a major metro these days, but if you live in the sticks and have another contributor, that goes a long way.

Where you live doesn't matter as long as you can put your housing expenses in the 50% of your essential living costs bucket. $80K is total household income as long as your spouse agrees to let you spend her share of the Want and Savings bucket on a $40K baseball card. Good luck there.

raulus · #3 08-26-2025, 02:57 PM

Quote:

Originally Posted by glchen

Included as part of your essential living expenses 50% share.

.

It�s a nice guideline, until your average tax rate is 55% like mine.

glchen · #4 08-26-2025, 03:24 PM

Quote:

Originally Posted by raulus

It�s a nice guideline, until your average tax rate is 55% like mine.

If your average tax rate is 55%, then you can afford to purchase a $40K baseball card.

ValKehl · #5 08-26-2025, 07:18 PM

Quote:

Originally Posted by raulus

It�s a nice guideline, until your average tax rate is 55% like mine.

Nicolo, I don't comprehend how your or anyone's "average" tax rate can be 55%. The highest incremental federal income tax rate is 37%. Even with adding the highest incremental state income tax rate, one is at less than 50%. One's average tax rate is going to be less than the highest incremental tax rate.

Fred · #6 08-26-2025, 09:57 PM

In reading the threads I see it mentioned that if someone had $40K in cards, they could sell all their cards and then purchase a $40K card.

So... what about realized gains on the cards being sold? Can you "technically" sell $40K in cards and have a realized $20K gain and still purchase the $40K card without other resources? Or is this one of those gray areas?

How many people on this board actually claim realized gains on cards they sell?
.
.
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raulus · #7 08-27-2025, 12:57 AM

Quote:

Originally Posted by ValKehl

Nicolo, I don't comprehend how your or anyone's "average" tax rate can be 55%. The highest incremental federal income tax rate is 37%. Even with adding the highest incremental state income tax rate, one is at less than 50%. One's average tax rate is going to be less than the highest incremental tax rate.

You’re off to a good start. But you’re missing a few bits:

Self employment tax (yep, I’m self employed)
County tax for the homeless
Local tax for preschool for all
Property tax
Bonus Medicare tax

37% for fed plus 10% for state gets you a large way there, even if some of the federal income is taxed at a lower rate. Add in some of these bonus bits and you get over 50% pretty fast.

Luckily, I live in a zero sales tax state, or that could be added to the list to boot.

And if you want to get extra excited, I’ve got phantom income due to being a partner in a partnership. A portion of my share of the partnership’s taxable income gets reinvested back into the business. So I get to pay tax on it, but I get zero cash for that income. So that raises the effective tax rate on my total cash compensation.

tschock · #8 08-27-2025, 01:39 PM

Quote:

Originally Posted by raulus

You�re off to a good start. But you�re missing a few bits:

Self employment tax (yep, I�m self employed)
County tax for the homeless
Local tax for preschool for all
Property tax
Bonus Medicare tax

37% for fed plus 10% for state gets you a large way there, even if some of the federal income is taxed at a lower rate. Add in some of these bonus bits and you get over 50% pretty fast.

Luckily, I live in a zero sales tax state, or that could be added to the list to boot.

And if you want to get extra excited, I�ve got phantom income due to being a partner in a partnership. A portion of my share of the partnership�s taxable income gets reinvested back into the business. So I get to pay tax on it, but I get zero cash for that income. So that raises the effective tax rate on my total cash compensation.

Sounds like you need the new IRS short form.
1 ) How much did you make last year?
2 ) Send it in.

Leon · #9 08-31-2025, 10:37 AM

LOL

And, if you think you are in a 55% tax bracket, you might want to check with a CPA too...

Quote:

Originally Posted by tschock

Sounds like you need the new IRS short form.
1 ) How much did you make last year?
2 ) Send it in.

gunboat82 · #10 08-31-2025, 05:58 PM

Quote:

Originally Posted by raulus

You�re off to a good start. But you�re missing a few bits:

Self employment tax (yep, I�m self employed)
County tax for the homeless
Local tax for preschool for all
Property tax
Bonus Medicare tax

37% for fed plus 10% for state gets you a large way there, even if some of the federal income is taxed at a lower rate. Add in some of these bonus bits and you get over 50% pretty fast.

Luckily, I live in a zero sales tax state, or that could be added to the list to boot.

And if you want to get extra excited, I�ve got phantom income due to being a partner in a partnership. A portion of my share of the partnership�s taxable income gets reinvested back into the business. So I get to pay tax on it, but I get zero cash for that income. So that raises the effective tax rate on my total cash compensation.

The highest federal tax rate with self-employment is just under 42%. That's nothing to sneeze at, but why are you adding property tax? That's not based on income at all.

If you choose to live in a $3M house... yes, you'll pay a lot... but your income doesn't require it. You could choose to live in a modest house and fill it with baseball cards.

raulus · #11 08-31-2025, 07:49 PM

Quote:

Originally Posted by gunboat82

The highest federal tax rate with self-employment is just under 42%. That's nothing to sneeze at, but why are you adding property tax? That's not based on income at all.

If you choose to live in a $3M house... yes, you'll pay a lot... but your income doesn't require it. You could choose to live in a modest house and fill it with baseball cards.

That you could.

Luckily, the property tax is less than 1% of my income. So you can leave it out if you prefer. Won’t move the needle very much.

But don’t forget state income tax and local and county income tax. Those add another 14% to your federal tally.

Plus the phantom income is a real kick in the shorts.

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