What’s a “Real” Job In Your Thirties?

Continuing along Jane’s career topic from the last post, I have a “what the heck is a “real” job anyway?” story from this weekend.

So I was working in Vegas for the past few days- doing my “real job” of being a self-employed presenter and product specialist at tradeshows, conventions, events and autoshows. For the past three years or so, I’ve thought of this as my ‘real job.’ There are three reasons for this:

  1. I do this job full time.
  2. I enjoy doing this job
  3. I make money from doing this job- in fact, I make just about all of my full time income from this job.

The reason I’ve only considered this my real job prior to the last 3 years, even though I’ve been doing the same thing for more than 9 years, is because I used to consider my real job:

1.PASSIONATE THEATRE DIRECTOR EXTRAORDINAIRE. OCCASIONAL VERY PASSIONATE ACTOR EXTRAORDINAIRE.

I stopped considering theater jobs as my “real job” for one very simple reason:

  1. I don’t make money from doing those jobs.

*At least not close to enough money to support myself and my formerly six figure student loan (now down to an impressive 5 figures! Woot!)

However, while working the convention this weekend, an attendee said to me in a confidential whisper, “so, what’s your ‘real’ job?

I informed him that this was, in fact, my real job. That I do this full time in differing aspects.

He wouldn’t accept my answer. He kept pushing for what my ‘real job’ really was. I attempted to explain to him that I’m building up my current job to do even more in the field of presenting. He wasn’t satisfied. He didn’t believe me. He was sure I was holding back.

I mentioned that I’m entrepreneurial and have multiple side projects, some of which are online. I even attempted to explain some of the side projects. None of this information satisfied him.

Now, at this point, I was looking for an escape route, or at least a way to get back to work and end the conversation.

Finally, I said, “Ok, I direct theater. I’m an actor. I have a theater company”

THIS answer he accepted. “I ‘KNEW IT!” he shouted. “You have a real job after all!”

And after talking my ear off for a few more minutes, and attempting to get my card, he finally went on his merry way, leaving me slightly more annoyed than before he arrived.

I guess some people just have an idea in their head of what a ‘real’ job is.  Being an ‘Actor,’ whether it makes you any money or not, is a ‘job’ that people understand. I always thought acting was the thing people kind of made fun of because a lot of the time ‘actors ‘ end up serving you in restaurants. But I guess the “real job” title of “Actor” is glamorous in it’s own way, even when it’s not.

I could’ve said “pursuing acting left me in abject poverty. Directing theater took up so much of my time that I couldn’t make money working other jobs that actually paid. I made such little money as a theater director that there was no way I could buy a weekly Metrocard, never mind pay my rent from the sad stipends I received. This “real job” that you don’t consider a real job saved my financial life.”

But I feel like he would’ve just said some platitude like, “Keep smiling, kid. Live your dreams. ”

So I simply let him walk away in ignorant bliss. Sometimes it’s just not worth it.

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Are You At Your Income Happiness Cap?

I’ve known for awhile that there’ve been scientific studies showing that your income correlates with your level of happiness only up to a certain amount and then caps off.  This is an interesting tidbit to remember in your thirties, as your income possibly grows more than it has when you were younger.

A study in 2010 found the income level happiness cap to be $75,000. So according to this research, you’d get progressively happier up to $75,000 in income and then your happiness level would remain consistent. Let’s adjust this for 2015 inflation and then adjust it once again for a major city like New York, San Francisco, or LA, plus let’s be generous, so we’ll make the number $120,000.

Now, $120,000 a year is a good chunk of money for someone in their thirties, and nothing to scoff about even in New York, especially for one person and not a household. If you made $120,000, do you think you’d be significantly happier making $140,000?

I guess it depends on who you are, and how well you know yourself. I believe happiness  definitely caps at a certain income level… that level might just be different for different people, but it’ll still work the same way.

I believe there’s a Maslow’s pyramid of needs associated with income. If you don’t know about this pyramid, click the link above…Maslow’s pyramid is a very clear way to view how our goals are naturally set up in life.

Ok, here’s a stab what I think the income pyramid of needs is:

1. Providing basic security items such as paying rent and buying food.

This is the basic bottom level of what money needs to provide- food and shelter.

2. Adding personal touches to our basic needs

At this level, you don’t only eat and pay rent, you can also buy a specific soap you like for your home, and buy a nicer can of beans than Goya.

3. Some disposable income

Once you get to this level, you can move beyond simple food and shelter and possibly go see a movie, or have dinner with friends

4. A good amount of disposable income

Here’s where you can purchase bigger items such as higher education, a vehicle, and a big screen tv. Of course, this is where a lot of people get into trouble and get stuck. Debt occurs the most at this level.

4. Money for the future and savings

This is a major jump that some people never get to.  At this level, you’re mostly out of debt or on a good payment plan, and are setting aside money in a savings account and a retirement fund.

5. Money to give away

At this level, you have all the money you need, and your future accounts are funded. Now you can really help others. This is a nice, happy level to be at.

Beyond the last level, I guess you can give even MORE to others, or sock even more money away or buy a ranch and a bunch of ponies or something, but it’s all extra from there.

So maybe it’s actually not a yearly income thing- maybe people simply need to make enough money to climb to the top of the pyramid, and then more money doesn’t really bring more joy.

What do you think?

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Credits vs Adjustments vs Deductions, The Most Common Tax Questions in Your Thirties- Part 3

On to the next one! The next tax question pertinent to those of us in our thirties, that is…

Yesterday, I wrote about Standard Deductions vs Itemized Deductions. Today I will attempt to explain Credits vs Adjustments vs Deductions in the simplest way possible.

It took me forever to understand the difference in these terms (they’re slippery). If you can grasp them, you’re miles ahead of the tax curve..so let’s start 🙂

TOTAL INCOME: So let’s say you’re single and you make $60,000 total this year in income, including every penny that goes in your pocket. That’s your total income. 

ADJUSTMENT (also known as ABOVE THE LINE deductions): Now, let’s say you paid $1,500 in student loan interest this year and contributed $3000 to a traditional IRA (retirement account). No matter whether you decide to take the standard deduction or itemize your deductions (both standard deductions and itemized deductions are known as Below the Line Deductions), you can subtract your student loan interest of $1500 and the traditional IRA contributions of $3000 from your total incomeThis is because they are adjustments. And adjustments are great! So your Adjusted Gross Income would be $55,500. ($60,000 – $1,500 – $3000 = $55,500). 

To clarify more regarding adjustments, let’s say you still made $60,000 in total income, and you still paid $1,500 in student loan interest this year and contributed $3000 to a traditional IRA. But you also gave $500 to charity and paid $1000 in medical expenses. If you took the standard deduction on your taxes ($6,300 this year for single filers), you would still able to subtract the adjustments (student loan interest and health insurance contributions) from your total income but couldn’t subtract the $500 given to charity and the $1000 in medical expenses because they count as itemized deductions. If you itemized your deductions, you could subtract the student loan interest, retirement account money paid, AND charity donations AND medical expenses. This doesn’t mean that you should itemize though- only itemize if your itemized deductions exceed $6,300 (the standard deduction) this year!

CREDIT: So far, we’ve only talked about subtracting from your total income. How about subtracting from your tax bill? Sound good?

So lets say you have to pay $6000 in taxes. If you have a credit, it will reduce that bill dollar for dollar. So if you have a $2,000 credit, your tax bill will be $4,000 (6,000-2000). Credits are the best to have but also the hardest to come by. Credits you could possibly take include the Credit for Child and Dependent Care expenses, the Child Credit, and education credits (like the Lifetime Learning Credit and the Hope Credit).

Let’s illustrate all of this below:

Total income (sum of all your income)
— Above the line deductions
=  Adjusted gross income ← “The Line”
— Standard deduction or itemized deductions
— Exemptions (you can always take an exemption for yourself, and then more for your dependents. Right now the exemption per person is $3,950.)
=  Taxable income

Here’s our example plugged in:

$60,000 Total Income
— $4,500 Above the line deductions (adjustments)
= $54,500 Adjusted Gross Income ← “the line”
— $3,950 Exemption
— $6,200 Standard deduction
= $44,350 Taxable Income

Hope this helps! Let me know if you have any questions or comments! 🙂

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