TodayForward

Stupid Tax Calculator Plus Investment Opportunity Cost

In our previous post, we introduced the concept of 'stupid tax' that has been popularized by Dave Ramsey.  Rather than keep this as a nebulous idea that reminds us of some of the stupid mistakes we've made with money, let's take it a step further and actually count the costs.  You can download our Stupid Tax Calculator by clicking the links below that are in Excel (.xls) and Open Document (.ods) formats:

Excel:  Download Stupid Tax Calculator
Open Document:  Download Stupid Tax Calculator

The reason we decided to offer this calculator to you is because it is an extremely helpful exercise to see exactly how much you paid in stupid tax, say in 1999, and what that is worth today after adjusting for inflation.  Taking it another step further, we also include the investment opportunity cost which is the amount of money you would have today if the money had been invested in a portfolio at a given rate of return.  These two numbers - inflation adjusted stupid tax and the investment opportunity cost - don't necessarily go away over time.  They get bigger.

This reality means that you could hypothetically comb through your entire financial life from start to finish and figure out how much you've paid in stupid tax.  For many, it will be a substantial sum.  Regardless of what your numbers come out to, the point of the exercise is to avoid paying stupid tax in the future.

How to Use the Calculator

When you open the file, you will see two worksheets on the bottom tabs.  You need only look at the first worksheet entitled 'Assumptions and Inputs'.  From there, here is the step by step:

1. Enter Your Assumptions - Here, you'll lay the groundwork for the calculator by entering the current year, inflation rate, and investment rate of return.  We've defaulted these values to historic averages for inflation and a balanced growth portfolio.  Feel free to change them as you see fit.
2. Enter Your Stupid Tax Events - Under the assumptions, you need to enter each of your stupid tax events by inputting a description, the estimated cost, and the year in which it occurred.  This is so the calculations will be accurate in adjusting for inflation and investment returns over the proper time period.
3. Stupid Tax in Today's Dollars - Knowing that you paid $1,000 in credit card interest 11 years ago is one thing, but adjusting it for inflation is another.  In this column, you will see what your stupid tax would equate to in today's dollars.
4. Investment Opportunity Cost - The previous column tells you what your buying power could have been today after inflation, but this column shows you how much you would have if the money were invested.  The further out from the time of the stupid tax event, the greater this number (and the queasier you'll feel).

Wrapping Up

We're not big fans of crying over spilled milk, which is what this exercise can lead to.  However, looking back at past mistakes and learning from them is a critical component to becoming smarter with your finances.  As you go about handling your money in the future, it's always a good idea to ask if you'll later be counting an expense as stupid tax later.

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What is Stupid Tax?

The grand master of debt elimination is Dave Ramsey and one of the terms he has introduced to the world of personal finance through his book, The Total Money Makeover, is 'stupid tax'.  While the exact definition is somewhat of a moving target, stupid tax can generally be defined as:  (1) anything that cost money, (2) created some form of pain, and (3) later was discovered to be a stupid decision.  Note that it's the third part that makes stupid tax difficult to avoid because going into a purchase or other financial transaction, most of us will believe we're making a good decision.  Only later do we realize our error in judgment.

It doesn't matter who you are, you either have paid or will pay stupid tax sometime in your life, but it's worthwhile to educate yourself and try to avoid it altogether.  To be an expert in any subject, it has been said that you need only know the pitfalls and avoid them.  When it comes to stupid tax, the greater your expertise, the less you'll have to pay.  

In an upcoming post, we'll walk you through how to calculate stupid tax as well as the most common ways to avoid paying a heaping ton of it.  Until then, if you're looking for a little schadenfreude fix or just want to read more about it, click here to go to DaveRamsey.com where readers have posted their stupid tax stories.

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Top Three Signs Your 'Financial Advisor' is a Salesperson

One of the chief motivations for us in developing TodayForward has been the proliferation of salespeople masquerading as financial advisors.  To the untrained eye, it may be difficult to snuff this out, but in the next several paragraphs, we'll give you three things to look for that will uncover whether you have a bona fide advisor or a simple salesperson.  Just so we are 100% clear, we do not like salespeople in the world of personal finance; there is far too much at stake to have sales incentives get in the way of good advice.

Compensation

Ask an advisor, "How do you get paid?", and you may get a wide range of responses.  Here's a breakdown of the most common answers:

• "I get paid based on the products you purchase from me." - this is a nice way of saying "I get paid through commissions."  Salesperson.
• "I get paid a salary." - careful with this one.  While it may be true that this person gets paid through a salary, it may also be tied to a bonus schedule based on the products they sell, so you need to ask another question, "Does your compensation change based on what you sell and if so, by how much?"  A salaried advisor will fall into one of three categories:  (1) salesperson, (2) entry level advisor, or (3) highly skilled advisor dealing exclusively with high net worth clients.  Consider their answers to your questions and see where they fall in these categories.
• "I am compensated through a combination of fees and commissions depending on how you would like to proceed." - even though the word 'commissions' is here, it doesn't necessarily mean you're talking to a salesperson.  Many individuals and families cannot afford to pay a fee out of pocket to an advisor or would prefer to have these fees offset or fully paid for through commissions.  As a result, you would need to ask, "If we work together, will you tell me exactly how much I pay you?"  If the answer is yes, you're talking to an advisor.  If not, salesperson.
• "I operate exclusively on a fee basis." - this is the top of the heap as advisors that work only on a fee basis can be fully unbiased in their recommendations as they work directly for you.  For this reason, fee based advisors are the best place to go.  Of course, the only problem is they aren't cheap.  Fees vary from region to region, but you can plan on paying $100 to $300 per hour for their services (this is why many will go with a fee and commission advisor).

Licensing and Credentials

A comprehensive financial planner will typically hold a number of different licenses that can include investment and insurance credentials as well as other designations such as CPA, JD, CFP, CFA, etc.  To ferret out whether an individual is a salesperson or a genuine advisor, ask them, "What licenses and industry credentials do you hold?"  At a minimum, they should have the following:

• FINRA Series 6 and 63, 65, or 66 - these are licenses to offer basic investments and are awarded by the Financial Industry Regulatory Authority (FINRA).
• State Life, Health, and Variable/Annuities - these are licenses to offer life, health, and variable insurance and annuities issued by the states.

If your advisor has at least the licenses above, they have a shot at being an advisor.  If they only hold one, the odds are very good that they are simply a salesperson.  In addition to these, other worthy credentials include:

• FINRA Series 7 - general securities license including more advanced types of investments
• FINRA Series 9/10 or 24 - supervisory license (these folks are on the hook for the people they supervise)
• State Property and Casualty - license to offer auto, home, renters, and personal liability insurance
• CPA - Certified Public Accountant
• JD - Juris Doctorate, an attorney
• PhD in Finance or Economics
• ChFC - Chartered Financial Consultant
• CFP - Certified Financial Planner
• CFA - Chartered Financial Analyst

The general rule is the more licenses and credentials listed above, the better - and the more expensive.  All of the above are widely recognized and are awarded by well known institutions.

Clients or Customers

This is a great question to ask a financial advisor:  "How many clients or customers do you service?"  The larger the number, the more likely you are talking to a volume based salesperson.  Most 'financial advisors' at retail banking locations or those selling for an insurance agency will have hundreds of customers (sometimes over 1,000) with most of them not speaking to the 'advisor' after the sale, whereas most advisors will service between 50 and 150 relationships annually, maintaining closer contact with their clients.  The bottom line with this is to find out how much time they have available to work with you.  Good advice takes time to create through questions, answers, analyses, etc., and if your advisor doesn't have time, you'll be sorely disappointed.

Wrapping Up

There are many other questions you could ask of someone to determine their ability to advise rather than to sell, but these three are the best place to start.  With answers to these questions, you know how the person sitting across from you is compensated, what skill sets they bring to the table, and the service level that you can expect going forward.  Top advisors will nearly always be fee or fee and commission based, have all of the minimum licenses as well as advanced licenses or other credentials, and have a higher number of hours available to dedicate to their clients.  Sales people fall on the other end of the spectrum - paid based on sales, minimal licensing, no advanced credentials, and very limited time available to service existing clients.  In the end, look for an advisor to help you set a course or fine tune what you're doing with your finances, and only speak with salespeople after you've determined your specific needs.

This last point is important.  Salespeople are not inherently bad, evil, or ne'er-do-wells.  They simply have a job that creates conflicts of interest that are detrimental to the financial planning process.  In the worst cases we've seen, it was the result of a product being sold before the planning process could be completed.  The top salespeople out there will be serious experts in the products that they offer, but that isn't enough.  An advisor will be able to take a wider view and improve your chances of accomplishing your objectives by offering solutions that are often outside the range available to salespeople.

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How to Set an 'Accurate' Retirement Income Goal

One of the most common retirement planning errors is setting income goals artificially high - causing many retirement plans to look much bleaker than reality.  If you're working hard on your finances, the odds are that when you retire, a large portion of your expenses will go away in your golden years.  The key to setting an 'accurate' retirement income goal is to take the time to consider what your life will look like down the road.  To help you through this process, we've broken it down into three simple steps.

Step 1:  Start with Your Gross Income

The starting point for this calculation is your gross annual household income which is defined as your total income before taxes.  While you can look at a number of line items on IRS forms, the best way to think of this number is, "What are you living off of today, before taxes?"  Once you have this number, record it on paper, in a spreadsheet, or wherever it is convenient.

Step 2:  Subtract Taxes, Savings, and Debt

The three items above will vary as a percentage of your total income, but they will typically combine for anywhere from 20% to 50% of your total income.  The reason we subtract these three items is we're trying to find your after tax income required during retirement, so today's taxes must be taken out of the calculation.  In addition, when you retire, you'll no longer be saving and by that time, you should be completely debt free.  Because of these facts, subtract your income taxes, savings, and debt servicing payments (principal and interest, not escrows for taxes or insurance).

Step 3:  Adjust for Lifestyle Changes

The final major step is to adjust for any lifestyle changes.  For example, when you're just starting your career, you may expect an upgrade in lifestyle whereas when you're in your peak earning years, a lifestyle decrease may be appropriate.  Either way, adjusting for lifestyle changes involves considering very carefully what your life will look like and what that will cost when you retire.  Once you've adjusted for these changes, you'll have a fairly 'accurate' retirement income goal.

Application:  Joe, Age 30

As an example, let's look at Joe who earns $40,000 annually, pays $4,000 in income taxes, saves $6,000, and shells out $5,000 in debt payments each year.  He is still far from his peak earnings years and has yet to start a family.  He expects his lifestyle to increase to the tune of $8,000 annually.  To calculate his retirement income goal, we do the following:

• $ 40,000 - Gross Household Income
• -   4,000 - Income Taxes
• -   6,000 - Savings
• -   5,000 - Debt Payments
• +  8,000 - Lifestyle Increase
• $ 33,000 - Retirement Income Goal

Wrapping Up

Throughout this post, we've used quotation marks around the word 'accurate' because when it comes to retirement planning, there is no such thing as accurate.  If you think about retirement planning, it is an attempt to prepare for your future that is constantly changing.  Tax rates, investment returns, and your spending will never be constant.

As a result, the best you can do is re-evaluate your retirement income goal each year to make sure that your target is a reasonable expectation of the future.  From there, a great deal of mathematics (a subject for another day) can be applied to account for changes in tax rates, investment returns, and spending patterns, but all of this will be centered on your income goal.  If you can be realistic in your goals, and not simply plug in your income today, you'll be well ahead of the game.

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The Dow is Down More than 1,200 Points in Less than a Month - Are You Taking It in Stride?

The Dow Jones Industrial Average is down more than 1,200 points since its intraday peak on April 26th, and an appropriate question is whether you're taking it in stride or if the temptation to push the panic button is creeping into your mind.  When the market sinks more than 10%, Wall Street calls it a 'correction', and now we officially have one.  While the causes of this recent decline vary based on whom you ask, we find the entire discussion irrelevant.  Here's why:

Oracles, Seers, and Fortune Tellers

The fact remains that no one can accurately predict the movements of the market.  As we have explained previously, until you can explain the decisions of the billions of global market participants, you simply cannot know what will happen in the future.  Thus, oracles, seers, and fortune tellers that go by the titles of Chief Investment Strategist, Lead Economist, Hedge Fund Manager, and the like are no better able to assess what's coming next.

If the Future is Uncertain...

Accepting this fact, it is pretty simple to know what to do, and the answer isn't 'do nothing'.  Whenever the stock market takes a tumble, it is a good time to assess where you are with your portfolio, and what we mean by this is to consider not just how your assets are allocated, but where you are with your job, insurance coverages, emergency fund, and so on.  The reason for this is your investments - even long term investments for retirement - don't live inside of a vacuum.  They are an important part of your overall financial health.

Wide Lens Investment Management

To better weather a storm in the stock market, you need to review and ensure that you are covering all of your bases with particular attention paid to job security, insurance coverages, emergency reserves, and your ability to tolerate risk.  This is what we like to call 'Wide Lens Investment Management' because instead of taking the narrow view and only examining an investment portfolio, this method incorporates other important factors that can affect your investments.

T. Rowe Price has the slogan of 'Invest with Confidence'.  We like to think that confidence is a byproduct of knowing you have a secure job, appropriate insurance, and sufficient cash for an emergency because you can be as confident in your portfolio as you'd like, but that won't help if you're exposed in other areas of your finances.  It's nice to have a well put together portfolio, but many other issues must be addressed first.

How We Do It

On our site, we help you put together an asset allocation model, just like many other investment sites, but we do it with a wide lens.  We require you to complete an emergency fund plan first so we can better understand your cash position and ability to handle a job loss or short-term disability.  Once that is complete, you can then put together a retirement investment plan that will provide you with an asset allocation model.

Again, we use a wide lens because we don't just take into account your time horizon and risk tolerance, but we also assess your ability to withstand a major financial emergency and put that in view with the market's current valuation relative to long-term averages.  If you're light on your emergency fund, we'll suggest you hold cash in your retirement portfolio to cover the difference.  When the market looks expensive (as it has for some time now), we dial down exposure to stocks.  

The goal of our software is to deliver an asset allocation that is appropriate in light of your entire financial picture and to help smooth out some of the bumps along the way.  We don't worry about returns because returns are a function of your risk tolerance (never the other way around).  If you can 'Invest with Confidence', we're betting that your returns will be more than sufficient and you won't have quite the stomach ache when times are tough - like today.

If you would like to get a wide lens view of your portfolio, feel free to setup an account with us at TodayForward.  It's free for now, as we're still in our second round of testing.

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Types of Financial Emergencies

Financial emergencies can come in many shapes and sizes.  From the small, unexpected car repair to the life altering permanence of long-term disability.  In this post, we'll share with you the various types of emergencies to help you get a better idea of how much you should keep in cash reserves.

Minor, Everyday - Under $1,000

This type of emergency happens all the time.  In any given year, they could crop up several times with the most common manifestations being car repairs, replacement of appliances, minor illnesses, short periods of lost work hours, and unexpected cost overruns, among others.  Because these things happen so regularly, it's important to set aside at least $1,000 in your cash reserves and have what Dave Ramsey refers to as a 'Baby Emergency Fund'.

Mid-Sized, Relatively Common - $1,000 to $5,000

This next category inflicts a little more financial pain as a result of more serious issues.  This can include automobile accidents that require payment of a deductible, a more significant medical or health insurance bill, a simultaneous piling up of everyday emergencies, and others.  Generally, these will range from $1,000 to $5,000, and have the potential to cause some financial ripples.  Since these are relatively common (usually once every year or two), holding around $5,000 would provide a nice buffer, and if you have a high deductible health insurance plan, it's almost a necessity.

Major, Not Uncommon - $5,000 to $10,000

Next we get into major issues that traditionally take the form of major medical problems, a fire, flood, or other property loss requiring a large deductible payment, substantial loss in income, etc.  In these cases up to $10,000 may be required to set things right, and it takes a fair amount of time to recover from the emergency.  If you make $50,000 annually, this represents up to 20% of your pre-tax income or 25% of your after-tax income, and with the average savings rate around 5%, it could take a few years to get back to even.

Mega, Relatively Rare - $10,000 and Up

Extended periods of unemployment, major medical, disability, fire, flood, theft, or other un- or under-insured event, losing a lawsuit, and many other problems can wreak havoc on your finances.  Typically, when a mega-emergency comes up, it will be the result of lost income, inadequate insurance, or both.  While you can insure against many of the common causes of mega-emergencies, unemployment is a different story.  A sharp downturn in the economy (as we're experiencing now) can cause widespread, indiscriminate unemployment.  Regardless of the cause, this type of emergency invariably creates a great deal of financial pain and can lead to bankruptcy.

Wrapping Up

The majority of emergencies fall in the first two categories and won't kill your finances.  However, if you fail to adequately plan for these, you can fall into a constant cycle of digging out from relatively small emergencies - leaving you more vulnerable to bigger problems.  In addition, having suitable insurance policies in place is critical in averting mega-emergencies.  The right policies for you will be based on the annual premiums and the required deductible in the event of a loss.

While you can set aside a fair amount of cash and obtain the right insurance coverages, you'll always be vulnerable to unemployment (or for the self-employed, serious declines in income).  Keeping your skills sharp can help, but the risk isn't insurable.  As a result, the number one item to consider in how much to keep in your emergency fund is your risk of un- or under-employment.

To put this more simply, the amount you keep in your emergency fund should be the greater of mid-sized emergency costs or the amount of lost income from a stint of un- or under-employment.

Critical Thinking

• An emergency fund is the same as running your own insurance plan and is also known as self-insurance.  If selling, general, and administrative expenses are lower for an individual than an insurance company, why wouldn't more people self-insure?
• Insurance is available for many 'small emergencies' including extended warranties on appliances, automobiles, and other bigger ticket items.  Knowing that selling, general, and administrative expenses are lower for you than the company offering the warranty, is it smarter to self-insure or buy the warranty?
• If most mega-emergencies are caused by inadequate insurance and unemployment, does that mean that to truly be financially secure, you must carry both the right insurance and a healthy stash in cash reserves?  Could you get by with one and not the other?  Which would you rather have - insurance or cash?

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Why Murphy's Law Holds True - Emergency Fund Probability of Use Chart

Murphy's Law has many variations, but as Dave Ramsey likes to put it, "If you don't have an emergency fund, you're inviting Murphy to come in."  What he's referring to is Murphy's Law that simply states if something can go wrong, it will.  While we would all agree that we need an emergency fund, that doesn't necessarily mean that we all have one or that it is sufficient to cover life's emergencies - thus, Murphy and Dave are 100% right.

About the Chart

Since most of us are visual learners, we thought it a good idea to create a simple graph that shows what the probability of using an emergency fund would be.  In the graph above, we've illustrated this by showing the value of an individual's emergency fund expressed in the number of weeks worth of expenses and the percentage likelihood of having an emergency fund that would wipe it out.  It starts at 100% with no emergency fund and works down to about 3% at 52 weeks worth of expenses in reserve.

Interpreting the Chart

Another way, perhaps a better way, to think of this is that if you don't have an emergency fund, you are guaranteed to have an emergency come up.  However, if you have a full year's worth of expenses set aside, only once every 33 years would an emergency come up that would wipe out these reserves.  Thinking in this way is very helpful because understanding the probability of needing an emergency fund and of what size can be a big assist when it comes to ranking the need to set money aside for an emergency versus putting money towards other savings goals.

Finding the Sweet Spot

We all have limited resources and unlimited wants and because of this, the central question in personal finance is always applicable:  How should resources be allocated among competing needs and wants?  In looking at this chart, it's obvious that an emergency fund is necessary, but how much?  That depends on you, but here are some numbers to consider:

• 0 weeks = 100%, guaranteed to have problems
• 4 weeks or 1 month = 70% or every 17 months
• 8 weeks or 2 months = 49% or every 2 years
• 13 weeks or 3 months = 31% or every 3 years
• 26 weeks or 6 months = 10% or every 10 years
• 52 weeks or 1 year = 3% or every 33 years

Given these numbers, it becomes a little easier to determine how much you should set aside and where this need would rank against others.  In deciding where to put your money, there is a point that you reach where the probability of a cash killing emergency is low enough that you feel comfortable putting money into longer term goals like retirement.  This is different for everyone, as it's a question of peace of mind and individual circumstances, but for many, it will be between three and six months' worth of expenses.  For very conservative folks, it could be a year or more; for aggressive people, maybe as little as a month's worth of expenses will do.

Why Murphy's Law Holds True

Regardless of where your comfort zone is, the reason Murphy's Law hold true is because most of us live paycheck to paycheck with little money in cash reserves.  On the sample chart we've created, the majority of us would fall in the range of zero to eight weeks of emergency cash.  As a result, emergencies come up frequently, and this often leads to additional debt.  In short, without sufficient cash reserves, when things can go wrong, they will.

Critical Thinking

• How do you think comfort levels change over time?  How would your perception change from the time of being young and single to getting married and having young children to approaching retirement with an empty nest?  What steps should you take to prepare for these life stages?
• Unemployment rates typically rise as we age.  How does that impact the frequency and severity of emergencies?  What actions should you take to address this fact?
• If you have too little cash set aside and have to go into debt to finance an emergency, what are the long term costs associated with this?  Does it make emergencies more or less likely in the future?
• If you have too much cash set aside, what are the quiet costs that you must pay?  How much in the way of investment returns are you giving up by holding too much cash?  Is your added peace of mind worth the extra cost?

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Add to Emergency Fund or Contribute to a Roth IRA

Everyone has limited resources and unlimited wants, and one of the most common questions is whether to add to an emergency fund or contribute to a Roth IRA.  While the answer varies from person to person, for most people, contributing to a Roth IRA is usually the better move.  The reason for this has everything to do with the nature of the Roth IRA.

Contributions are Tax and Penalty Free

With a Roth IRA, your contributions can be withdrawn tax and penalty free.  When the Roth was created in 1998, legislators wanted to be sure greater flexibility was afforded to Americans in an effort to increase retirement readiness.  The result was a retirement account that included liquidity features that were far better than its predecessor, the Traditional IRA.

Cash is King

Though you might think of a Roth IRA as an investment, it's really just a type of account.  What you hold in this account is up to you.  If you are short on your emergency fund and retirement savings, the best bet is to contribute to a Roth IRA, but keep the money in cash.  The reason for this is when an emergency comes up, you won't have to take money out when the market is down (more emergencies come up when the market is down than when it is up).

Preserving Tax Benefits

Investing in cash isn't exciting and it likely won't take you much closer to your retirement goals.  However, it does preserve your tax break.  Roth IRA withdrawals are completely tax free during retirement, and even if you don't invest it in higher yielding assets like stocks or bonds, the tax break will be preserved.  As your financial situation improves and your emergency fund grows, you can start investing more aggressively.

Application:  Roth IRA in Cash

Let's say that Jane needs an emergency fund of $15,000, but currently has $3,000 set aside.  She can save up to $300 per month and decides to put this money into a Roth IRA.  After three years, an emergency comes up and she needs to pull out $5,000.  She can do so without penalty or taxes from the Roth IRA whose balance is just north of $10,800.  She takes $5,000 out, no penalty or taxes are paid, and the emergency is taken care of.

Application:  Roth IRA in Stocks

Wild Bill loves playing the stock market.  He, just like Jane, needs $15,000 set aside, has $3,000 in reserve, and can save $300 per month.  He too decides to contribute $300 per month to a Roth IRA over a three year period, but he will invest it in stock.  Over the three year period, Wild Bill contributed the same amount as Jane, $10,800, to his Roth IRA, but because the market declined, his balance was $5,800 when an emergency came up.  His $5,000 withdrawal to take care of the emergency left him with a balance of just $800 compared to Jane at $5,800.

Wrapping Up

In answering this question of putting money into an emergency fund or a Roth IRA, the Roth is the better option.  It offers tax and penalty free withdrawals of contributions, can be invested in cash, and preserves a major tax advantage to make retiring easier.  The big caveat, however, is that if you're short on an emergency fund and retirement savings, choose cash instead of the markets.  Only after your cash reserves balance has grown to a sufficient level should these funds be invested in more volatile assets.

Critical Thinking

• Investing in cash is certainly better for protecting against an emergency, but the market is usually up more often than not.  Why should cash be held over a stock portfolio in these examples?
• If Jane and Wild Bill had $10,000 instead of $3,000 in their emergency fund, should they take money from their reserves and put them into a Roth IRA or leave the money where it is?
• Once Jane and Wild Bill have reached their emergency fund goal of $15,000 through the Roth IRA, is it safe to invest the entire amount in a portfolio of stocks and bonds?  If not, how much should be put into the markets?

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How to Get a Free Credit Report Under the FACT Act

Trying to get the free credit report that is provided by the Fair and Accurate Credit Transactions Act (FACT Act) can be a challenging task.  The most common place to look for a free credit report is either through the credit bureaus or through another service like FreeCreditReport.com.  Unfortunately, when you go to these sites, you will find it very difficult to get a truly free credit report and likely get sucked into a paid program with some type of free or inexpensive introductory offer.

DON'T SIGN UP!!!  These programs are money grabs and should only be used if your identity has been compromised.  To get your free credit report under the FACT Act, visit AnnualCreditReport.com instead.  This is the official site for consumers to obtain their free annual credit report and...Oh yes!  It's free.

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How Rich are You? Find Your Global Income Ranking

Have you ever wondered how rich you are?  Not just compared to your neighbors, your state, or your country, but how rich you are compared to the rest of the globe.  Using the Global Rich List, a simple website that determines your global income ranking, you can find out how you compare to the rest of the world.  If you're an American, even if you think you're poor, even if you are poor, you'll be surprised at how much worse things could be.

After playing with this calculator for a bit, we found some interesting figures:

• 2008 Median U.S. Household Income was $50,303 ~ #58,911,638 or Top 0.98%
• 2008 Poverty Level for Family of Four was $21,200 ~ #654,128,636 or Top 10.90%
• 2008 Poverty Level for an Individual was $10,400 ~ #793,757,388 or Top 13.22%
• 75.20% of the world lives on less than $1,500 annually
• 39.72% of the world lives on less than $2 per day

Of course, all of these numbers are relative based on currency exchange, price levels of goods and services, etc., but the fact remains that we are much better off in the U.S. than in residents of developing nations.

Recognition of this fact is the thrust of the website as they hope that you will better understand the needs of our global neighbors and move to support them.

To get your global ranking or learn more about the causes supported by Global Rich List, click here to go to their website.

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