How to adult: Scratchpad

I had a talk with one of my kids last night, and I said that one of the major issues is not knowing how to do all the weird, random, adulty stuff.

“Like what?” my kid said.

“Well…”

“Can you make a list?”

Well, yeah. I can.

So, here it is: Random Things You Must Deal With as an Adult

Income tax

Every year, if you make over a certain amount of money, you have to file your taxes with the federal government. This cutoff amount can change every year, by the way, so check with the IRS or a reputable website. If you’re still living at home/paid for basically by your parents, you’re a dependent: 

“All taxpayers who are claimed as a dependent on someone’s tax return are subject to different IRS filing requirements, regardless of whether they are children or adults. Since a dependent is unable to claim their own exemption, a tax return is necessary when their earned income is more than the standard deduction for a single taxpayer, which in 2017 is $6,350…” – From Intuit.com

So in 2018, you do your “2017 taxes” (you report on the income you made/income tax paid for 2017).  When you’re young, your financial situation is pretty simple, and so you can get away with doing your own taxes and using a 1040EZ (“easy”) form, or a simple software like TurboTax or FreeTaxUSA.com.

As you get older, your financial situation tends to get more complex: you start to have investments, debts, and tax deductions. All of those can affect how much tax you owe, and how complicated your tax return is. I personally like using a service – an accountant, or H&R Block – for doing my taxes. But other people do their own tax returns!

Recommended reading:

Finances

An excellent basic plan to stick with is Dave Ramsey’s Baby Steps…this is for getting out of debt, sure, but if you start out with no debt, so much the better! You’re ahead of the game:

  • Baby Step 1: $1,000 cash in a beginner emergency fund
  • Baby Step 2: Use the debt snowball to pay off all your debt but the house
  • Baby Step 3: A fully funded emergency fund of 3 to 6 months of expenses
  • Baby Step 4: Invest 15% of your household income into retirement
  • Baby Step 5: Start saving for college
  • Baby Step 6: Pay off your home early
  • Baby Step 7: Build wealth and give generously

For financial literacy, read MrMoneyMustache.com especially, and maybe some NerdWallet.com. It’s never too soon to start savings, and to start saving for retirement. Also to understand the way credit card companies work, and why it’s so vital to avoid payday loans.

Cars

Maintaining cars: Cars need gas to run, you know that much. They also need periodic maintenance. While sometimes, you can get away with going a really long time without any maintenance, it’s a bad idea. Lemme show you with just one extreme example:

I had a car that burned oil, actually burned it. Not on purpose. Anyway, I went too long without adding oil, and on the freeway one day the engine seized up – the pistons just STOPPED – and I threw a rod. You don’t get your car back and working again once this happens….you’ve effectively slightly melted your engine block, and it won’t ever run again. Now, are you likely to seize your engine if you don’t do oil changes? Well, after a few thousand miles, yes!

There are other things you’ll need to do, or to have done, to your car, including tire alignment, buying new tires as they wear out, replacing brake lights and headlights, tune-ups, brake work, etc. A lot of that stuff will show up during your regular oil changes, or during your annual auto inspection.

Recommended reading: Lifehacker.

Cars – inspection and registration: You have a car, great. Many states in the union require a state inspection every year or so. It’s pretty simple: type in “auto inspection near me” into Google, take your car there, pay a fee, get a pass/fail report back. If your car fails inspection, the report will tell you WHY the car failed. So you have to get that fixed, and get it inspected again. (Many places will re-inspect your failed car for free!)

Every state requires your car to be registered. Search for “auto registration [your state]” to get information on registering. (Here’s Texas.) Lots of states let you register your car online now, as long as you do it before the deadline! I highly recommend doing it before the deadline, so that you don’t have to schlep in to some random tax office and wait in line forever only to realize that you were supposed to bring your insurance and 3 other things along and and and…anyway.

Cars – getting a ticket: I don’t have a ton to say about getting a ticket. Try not to. Decide before the deadline whether to just pay the fine, or to dispute it. (I’ve never disputed a ticket, but that doesn’t mean much.) Don’t let a ticket go, or they can actually issue a warrant for your arrest. (I’ve never had that either.)

Buying cars: New cars are bullshit, a scam. (Ask me how I know.) If you buy a brand new car, it costs X. If you buy a 1 year old car, it costs X – 25%, give or take. (A 2017 Prius costs 21k right now. A 2018 Prius costs 28k.  ONE YEAR DID NOT ACTUALLY REMOVE 1/4 OF THE CAR’S VALUE.)

So, don’t buy brand new cars. Whatever car you DO have, drive it until it falls apart. There does come a point where it’s more expensive to keep an old busted car, than it is to buy a new-used one. We’ll do that math later.

Don’t have a car? Need one? Can’t do almost new? Bummer, because I have found used beater cars to be somewhat bullshit, too. More on his soon….

2 thoughts on “How to adult: Scratchpad”

  1. Financial literacy is annoyingly complex.Much of it is just kind of ignorance. Some of it is the mega corps lobbying to keep taxes complicated on purpose.

    On a side note, if you make less than $66k, you can file your taxes online for free go here https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free. The companies agreed to do this (but try to hide it) to stop the government from filling your taxes.

    In college I almost started an infosec business with a classmate whose dad was a CPA. We never made any money. We never incorported. But we sat down with him. He explained S-corps. I learned things a lot of 30 year olds don’t know. Made things easier when I was a 1099 contractor and now a sole member of an LLC.

    I still pay a CPA. I still pay PayChex $60 a month to run payroll for myself, taking monye out of my business acount and directing it to my personal account as well as withholding (yes I need to see if there is a cheaper option). However, I have less to worry about and a decent “bullshitmeter” so when the time came for “we need this to be a Corp to Corp contract” I could make educated decisions.

    BTW, I am not a lawyer or an accountant. I will say that incfile was way cheaper than legal zoom for formation of my entity (LLC) in my state (NJ) in September of 2017. But once again I had access to lawyers for adhoc advice and to fix filing problems. I had a CPA. Talk to professionals kids.

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