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Happy Father’s Day: The Benefits of Being a Parent Can’t Be Measured

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It’s true that the benefits of a parent cannot be measured or quantified in any meaningful way. It’s hard to put a price on the emotional commitment and special experience of raising a child as a parent, some of which may not even be realized by the parents themselves until afterwards. But it is undeniable that the experience of parenthood is a rewarding and special time in someone’s life.

An icon illustrating a parent and child
An icon illustrating a parent and child (Photo credit: Wikipedia)
For one thing, being a parent can you relive your childhood through your child. There are very few experiences in the world that are as intimate and vicarious as a parent who is raising their newborn child into an adult. Your child’s experiences become your experiences, their safety and learning becomes your priorities, and their success, ultimately, become your own success as a parent. You can rediscover the parts of your childhood that you may even have forgot as your child experiences them for the first time.
As a parent, you are also the center of the world for your child. This can be a tremendous source of self-confidence as well as incentive for self-improvement, to know that another human being sees you as their ultimate role model and will grow up in your footsteps. Just imagine the sense of wonder and awe with which you regarded your own parents when you were a child, and apply them to your child. That is the way they will see the world for a long time, with a constant sense of amazement and curiosity. The mundane becomes extraordinary and fantastic to a child, and a parent is part of the magic and the child’s discovery of the world.
In addition, parenting is a rewarding experience because you involved in the creation of a life and the raising of your child with your partner. There is a great amount of pressure, but also a sense of pride as your child’s characteristics and worldview will, in a large part, be derived from your interaction and education of them. All the things that you wish you had done in your childhood, or wish you had experienced or learned about earlier. These are all things that you can teach your child. As a parent, you are your child’s most important friend, teacher and role model. That is a tremendous source of empowerment and responsibility. But the reward you can get out of being a great parent is a new life in the world that you shaped with your words and actions. What you teach them becomes their most important life lessons, and your actions as a role model becomes the standard by which they live the rest of their lives.
So yes, the benefits of being a parent cannot be measured in conventional terms. But these benefits can definitely outweigh any worldly possession or unit of valuation. Parenthood is an emotional, spiritual, intellectual and educational experience that very few other experiences in the world can replace or even come close to imitating.
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Living the XBox Life on an Atari Income

Finance

Nintendo GameCube Silver.
Image via Wikipedia

At some point, everyone has “champagne wishes and caviar dreams.” Over the last 25 years, we’ve even been peddled the “you can have it all” myth from every direction, including the media and the government.

The truth is simple: you cannot have it all.  You can have anything, but you can’t have everything.  In order to have one thing, you have to give up something else.  It’s a law of nature.   If you have $5, you can either get a burger or an overpriced cup of coffee, but not both.

“But wait!” you shout, rudely interrupting the narrator, “I have a credit card. I can have both!”

Wrong.

And stop interrupting me.

If you have $5 and borrow $5 to get some coffee to go with your burger, you will eventually have to pay that money back with interest.  You will have to give up a future-burger AND a flavor shot in your overpriced coffee.

Everything you buy needs to be paid for, some day.

If you have an Atari income, but insist on living the XBox life, you will wake up one day, buried in bills, forced to live the Commodore-64 life out of sheer desperation.

There is a solution.

Don’t get all XBox-y until you are making XBox money. That way, you’ll never have to worry about going broke tomorrow paying for the fun you had yesterday.

Even when you have an XBox income, ideally you’ll restrict yourself to living a Gamecube life, so you’ll be able to put some money aside to support future-you instead of constantly having to worry about your next paycheck.

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Corporate Bankruptcy Hurts Employee’s Most

Finance

Seal of the United States bankruptcy court. Ch...
Image via Wikipedia

This is a guest post from Hunter Montgomery. He writes for Financially Consumed on every-day personal finance issues. He is married to a Navy meteorologist, proud father of 3, a mad cyclist, and recently graduated with a Master’s degree in Family Financial Planning. Read his blog at financiallyconsumed.com.

Bankruptcy has evolved from something that people and businesses were deeply ashamed of a few decades ago, to a seemingly acceptable path to restructuring; towards a more sustainable future. Bankruptcy is so common in corporate America that it is referred to by some as an acceptable and necessary business tool.

This bothers me on a number of levels, but mainly because corporate bankruptcies hurt the humble employee the most. The laws are supposedly designed to help the company stay in business, and continue to provide jobs. But at what cost to those employees?

When a company declares bankruptcy, they are essentially admitting to the world that they failed to compete. Their business model was flawed, they were poorly managed, and they simply did not organize their resources appropriately to meet their consumer needs.

Given this failure, it shocks me, that bankruptcy laws are designed to allow management to get together with their bankers. They essentially protect each other. Management is obsessed with holding on to power. The bankers are obsessed with avoiding a loss.

The bankruptcy produces a document called first-day-orders. This is a blueprint for guiding the organization towards future prosperity. But this is essentially drafted by the existing company management, and their bankers. Do you see any conflict of interest emerging here?

Bankers are given super-priority claims to the money they have loaned the company. Even before employee pension fund obligations. This is absurd. Surely if they loaned money to an enterprise that failed, they deserve to lose their money.

Management generally rewards itself with large bonuses, after declaring failure, paying off their bankers, shafting the employees, and finally re-emerging with a vastly smaller company. This is ridiculous.

The humble employee pays the highest price. Assuming there is even a job to return to after restructuring they have likely given up pay, working conditions, healthcare benefits, and pension benefits.

This is exactly what happened at United Airlines in 2002 after they filed for chapter 11 bankruptcy protections. The CEO received bonuses, and was entitled to the full retirement package. The banker’s enjoyed super-priority claims over company assets to cover their loans. Meanwhile, the employees lost wages, working conditions, healthcare benefits, and a 30% reduction in pension benefits.

An adjustment like this would force a serious re-evaluation of retirement plans. For most people, it would require additional years in the workforce before retirement could even be considered a real possibility.

Employees of General Motors, which recently went through bankruptcy proceedings, also had to give up significant healthcare benefits, and life insurance benefits. Entering bankruptcy, it was the objective to reduce retiree obligations by two-thirds. That’s a massive cut.

The warning to all of us here is that we must do everything possible not to fall victim to corporate restructuring. Save all you can, outside of your expected pension plan, because you never know when poor management, or a terrible economy, will force your employer to file bankruptcy. Always plan for the worst possible outcome.

It’s a competitive world and it’s quite possible that the traditional American system of benefits is uncompetitive, and unsustainable in the global market place. The tragedy of adjusting to a more sustainable system is that the employee suffers the most.

 

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All About Tax-Sheltered Annuity Plans

Finance

This is a guest post.

If you’ve previously heard of tax-sheltered annuity plans but are unsure of what they are, let this guide help you. Here’s what you need to know about tax-sheltered annuity plans.

What is it?

First things first, what are tax-sheltered annuity plans? A tax-sheltered annuity plan, or a 403(b) plan, is a retirement plan for some employees of various institutions to participate. This plan allows employees to contribute a portion of their salary to the plan. The employer may also contribute to the employee’s plan.

Who is Eligible?

Eligible Code Section 501(c)(3) employees tax-exempt organizations may participate, an employee of a public school, a state college, or a university, and eligible employees of churches. Employees of public school systems organized by Indian tribal governments, Ministers employed by Code Section (501)(c)(3) organizations, and self-employed ministers may also participate. Ministers must be employed by organizations that are not Code Section 501(c)(3) tax-exempt organizations, and they must function as ministers in their day-to-day professional responsibilities with their employers.

What are the Benefits of a 403(b) plan?

In a 403(b) plan, contributions are tax deductible. Taxes are paid on distributions in retirement, which is when a lot of people are in a lower tax bracket. As mentioned earlier, employers can match 403(b) contributions on a pretax basis. Loans can be taken against a 403(b) plan, which will help in certain situations, like buying your first home.

What types of contributions can be made?

In a 403(b) plan, you can have several types of contributions:

  • Elective Deferrals – These are contributions made by the employee under a salary reduction agreement. This allows an employer to withhold a certain amount of money from an employee’s salary to deposit it in their 403(b) account.
  • Nonelective Employer Contributions – These are any contributions to the 403(b) plan that were not made under a salary reduction agreement, which include matching contributions, discretionary contributions, and certain mandatory contributions that were made by the employer. The employee will pay income tax on all of these contributions, but only when they’re withdrawn.
  • After-Tax Contributions – These are contributions made by an employee, which are reported as compensation in the year they were contributed and are included in the employee’s gross income for income tax purposes.
  • Designated Roth contributions – These are elective deferrals that the employees elects to include in their gross income. The plan must keep separate accounting records for all contributions and for all gains and losses in the designated Roth account.

Can Employees Exclude Employees From Contributing?

Absolutely. The 403(b) plan must allow allow employees to make elective deferrals under the plan, but under the universal availability rule, if the employer permits one employee to defer salary by contributing it to a 403(b) plan, they must extend the offer to all of their employees. The only exceptions are employees who would contribute less than $200 annually, those employees who work less than 20 hours a week, employees who participate in a 401(k) or 457(b) plan, or students performing services that are described in Code Section 3121(b)(10).

So When Can Employees Get the Dollars?

Employees may withdraw from the 403(b) plan when the reach the age of 59 and a half, have a severance from employment, have a financial hardship, or become disabled. Money can also be taken out if an employee passes away. The employee will have to pay taxes on the amount of the distribution that was not from designated Roth or after-tax contributions, and they may have to pay an additional ten percent early distribution tax.

Are There Rules for In-Service Transfers or Exchanges?

Yes. Contract exchanges with a non-payroll slot vendor are permitted only if the plan permits it, the accumulated benefit after the exchange is, at the very least, the same as before the exchange, if the employer and the non-payroll slot vendor agree to share information regarding the plan’s terms, if any pre-exchange benefit restrictions are maintained after the exchange, and if the vendor complies with the terms outlined in the plan.

How Much Can be Contributed Annually? Does the Employee Have to be Current?

As of 2013, the maximum combined amount that an employer and an employee can contribute to a 403(b) plan is $51,000. That number may go up, depending on the annual cost-of-living.

If the plan allows, an employer can contribute up to the annual limits for an employee’s account for up to five years after the date of severance. No portion of the contributions can come from money that was due to be paid to the former employee, and these contributions must cease if the employee passes away.

There’s much more to learn about a 403(b) plan, but these are the basics. Does your company have a 403(b) plan?

 

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How Do WWE Stars Make Money?

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Have you ever wondered how your favorite WWE stars make their living? The answer can be complicated, because many of the biggest stars receive benefits above and beyond their salaries, and because the salaries vary

Darren Young & Nick
Darren Young & Nick (Photo credit: Climbing Kilimanjaro)

greatly between the true “star” wrestlers and less famous WWE competitors. Here is a look at how WWE wrestlers are paid:

Base Salaries
All WWE wrestlers are signed to a contract and paid a base salary. The contracts generally range from 1 to 5 years and the salaries vary widely. The biggest WWE names can make over a million per year, while the average WWE wrestler is more likely to make something just north of $100,000. The highest paid wrestler is Triple H, who draws a base salary of about $2,000,000 per year. Other superstars, like John Cena and Shawn Michaels, make about $1,000,000. Most other wrestlers hover closer to the $100,000 average, which sounds like a lot, but must take into account the fact that wrestling careers can be relatively short and physically demanding.

Licensing Deals
The gap between WWE’s stars and run of the mill wrestlers is even wider than the salary differences suggest. That’s because the stars’ contracts include benefits that pay off big time. Many of WWE’s biggest stars receive licensing deals to use their likeness in advertisements and WWE promotions. This can become a major source of income for top wrestlers like Triple H and John Cena.

PPV Bonuses
Additionally, wrestlers who participate in Pay Per View matches often receive bonuses on top of their base salaries. This again can be a major income boost for wrestlers whose matches are in high demand. In especially high profile PPV matches, this bonus can be as much as six figures.

Perks
The WWE also covers 100% of the costs of all in-ring injuries sustained by its wrestlers.

So in short, WWE wrestlers can expect to make at least $100,000 in any given year, with most receiving more once PPV bonuses, licensing deals, and other perks are taken into account. There is, however, a very significant gap in pay between top and average wrestlers. Most average wrestlers draw salaries very close to $100,000. Top wrestlers take in as much as $2,000,000.

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