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Hypothetical situation: what to do with extra cash?

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08-01-2014 , 05:34 PM

#51

AngerPush

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Quote:

Originally Posted by El Diablo

Anger,

Yes, I and others are suggesting sock drawer. But do you think that he doesn't spend any money at all?

Assuming he had to pay taxes if he deposited it, you said he's going to make more doing than and investing rather than just keeping all of it as cash.

That is completely wrong and doesn't make any sense at all unless he never spends any money on anything in his life.

It isn't wrong. If it's truly "extra", and his spending habits aren't changed, then deposit in bank, pay tax of 40% to get to $3,000.

What is worth more in 30 years:

Investing $3,000 in index funds
$5,000 in sock drawer.

I don't think you are understanding what I'm saying. If you do understand, and think I'm wrong, then I'm not really sure what to tell you.

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08-01-2014 , 05:36 PM

#52

NLSoldier

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Quote:

Originally Posted by AngerPush

I guess you've never spent a dollar in your life? Yo are obviously way wrong. Even if it takes 2 years to spend the money, the 40% saved on taxes is still going to crush the return he would have gotten by paying taxes and then investing it.

0 people have suggested putting 5k in your sock drawer and leaving it there until you die.

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08-01-2014 , 05:39 PM

#53

bigalbr

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Join Date: May 2005 Posts: 197

I just reread the OP. OP has 5 figure winnings that the IRS knows about and $5kish in cash remaining. If the IRS has paper on him, he's going to pay. He can try to offset with losses, but unless he has an adequate play log he's going to have to pay on the 5 figures. Probably should save the cash to do that. Might as well put it in a bank.

There's a big difference between 5k left over from 5 figures and 5k that you just ground out playing 2/5.

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08-01-2014 , 05:43 PM

#54

AngerPush

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Quote:

Originally Posted by NLSoldier

You don't think you can earn 40% over the course of your lifetime? Sheesh.

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08-01-2014 , 05:45 PM

#55

NLSoldier

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Quote:

Originally Posted by AngerPush

You don't think you can earn 40% over the course of your lifetime? Sheesh.

Where can I get an invite to this world where you get to invest 100% of your money and never spend a dollar?

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08-01-2014 , 05:50 PM

#56

AngerPush

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Quote:

Originally Posted by NLSoldier

Where can I get an invite to this world where you get to invest 100% of your money and never spend a dollar?

I just don't understand how you think that I think he doesn't spend any money. This is just totally bizarre. Must be a communication breakdown or something.

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08-01-2014 , 05:52 PM

#57

afwoods

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Join Date: Aug 2010 Posts: 1,937

Quote:

Originally Posted by AngerPush

I just don't understand how you think that I think he doesn't spend any money. This is just totally bizarre. Must be a communication breakdown or something.

Hypothetically, the $5k is seperate from my BR, so I should be able to continue to make money. The $5k is extra.

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08-01-2014 , 05:55 PM

#58

AngerPush

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Quote:

Originally Posted by NLSoldier

I interpreted this as he just has an extra $5,000 that he can do whatever he wants to do with, but if he puts it in the bank he will owe tax.

Like whatever his normal life expenses are, this $5,000 is above and beyond that. So to me, I was just showing the scenario of:

1. Invest $3,000 for life
2. Keep $5,000 in cash

See which option you end up with more money WHEN HE DIES. lol.

Pretty much just saying that in the long-run just paying taxes and investing on the "extra" money will lead to a greater value than the reduced amount of purchasing power cash gives you each year.

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08-01-2014 , 05:58 PM

#59

NLSoldier

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Quote:

Originally Posted by AngerPush

I interpreted this as he just has an extra $5,000 that he can do whatever he wants to do with, but if he puts it in the bank he will owe tax.

Like whatever his normal life expenses are, this $5,000 is above and beyond that. So to me, I was just showing the scenario of:

1. Invest $3,000 for life
2. Keep $5,000 in cash

See which option you end up with more money WHEN HE DIES. lol.

Pretty much just saying that in the long-run just paying taxes and investing on the "extra" money will lead to a greater value than the reduced amount of purchasing power cash gives you each year.

You are making the massive assumption that 100% of these expenses are already being paid in cash. As well as the assumption that there is no chance of additional unforseen expenses coming up which could potentially be paid for in cash.

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08-01-2014 , 06:02 PM

#60

AngerPush

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No, I'm not. I guess we are interpreting "extra" differently.

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08-01-2014 , 08:36 PM

#61

Gin 'n Tonic

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Quote:

Originally Posted by AngerPush

You don't think you can earn 40% over the course of your lifetime? Sheesh.

Maths fail itt.

Pay taxes on $5k = $3k

You now have to earn a 66% return just to stand still assuming zero inflation.

Of course you will also pay taxes on those returns.

Last edited by Gin 'n Tonic; 08-01-2014 at 08:38 PM. Reason: Sheesh!

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08-01-2014 , 08:45 PM

#62

#Thinman

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$5k fight yo

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08-01-2014 , 08:48 PM

#63

AngerPush

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Quote:

Originally Posted by Gin 'n Tonic

Maths fail itt.

Pay taxes on $5k = $3k

You now have to earn a 66% return just to stand still assuming zero inflation.

Of course you will also pay taxes on those returns.

It's not a math fail. I messed up the wording lol but whatever.

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08-01-2014 , 11:30 PM

#64

fun101

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Join Date: Oct 2010 Posts: 2,237

Pay cash for expenses and invest 5K worth of employment income in indexes and you are 2K better off assuming a marginal rate of 40%. But you are also committing tax fraud but you don't seem to care.

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08-02-2014 , 01:03 AM

#65

afwoods

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Join Date: Aug 2010 Posts: 1,937

Quote:

Originally Posted by fun101

Pay cash for expenses and invest 5K worth of employment income in indexes and you are 2K better off assuming a marginal rate of 40%. But you are also committing tax fraud but you don't seem to care.

Great advice! And if I get audited now I can say it was your idea.

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08-02-2014 , 01:30 AM

#66

Tbab wins

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Is there any particular reason you said "Not Pai Gow"

Just out of curiosity

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08-02-2014 , 01:39 AM

#67

afwoods

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Quote:

Originally Posted by Tbab wins

Is there any particular reason you said "Not Pai Gow"

Just out of curiosity

There's a big thread in NVG about a degen who won and lost $150k playing Pai Gow.

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08-02-2014 , 02:45 PM

#68

Tbab wins

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Link to thread?

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08-02-2014 , 05:01 PM

#69

afwoods

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Quote:

Originally Posted by Tbab wins

Link to thread?

It's the one about Michael Borovetz.

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08-02-2014 , 05:02 PM

#70

El Diablo

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Anger,

Dude are you really this dense?

If he didn't have this money, he would have to pay for stuff with other money.

INSTEAD OF USING THAT OTHER MONEY, HE SHOULD USE THIS $5000 TO PAY FOR STUFF!

How on earth could it be a better decision to turn that into $3000?

The only way it would be a better decision is if he can invest and TURN 3K INTO 5K FASTER THAN THE AMOUNT OF TIME IT'LL TAKE HIM TO SPEND 5K.

JFC, this is not rocket science, dude.

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08-02-2014 , 05:14 PM

#71

Villian1

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Quote:

Originally Posted by afwoods

Great advice! And if I get audited now I can say it was your idea.

In a purely hypothetical situation of course.

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08-02-2014 , 07:36 PM

#72

AngerPush

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Quote:

Originally Posted by El Diablo

go to college or something. you can't even interpret my posts.

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08-02-2014 , 08:40 PM

#73

Henry17

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Quote:

Originally Posted by fun101

Pay cash for expenses and invest 5K worth of employment income in indexes and you are 2K better off assuming a marginal rate of 40%. But you are also committing tax fraud but you don't seem to care.

We are talking about $5k which is not enough money for OP to have started this topic but if this was a discussion about a significant amount of money this would accomplish nothing unless the expenses were all non-staple consumables.

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08-02-2014 , 09:26 PM

#74

afwoods

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Join Date: Aug 2010 Posts: 1,937

Ok, lets pretend the numbers are $40k in w2gs and $30k in extra cash. Hypothetically, if you wanted to make some money in an investment, off the books ... how would one do that?

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08-02-2014 , 09:34 PM

#75

daryn

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AP,

this will not end well

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