Bonus Withdrawal Puts Bankers in "Malaise"

[RandBlade]

Nobody is disputing the fact better decisions can be made, but bonuses were taken for granted. What I dispute is the notion someone can overnight lose two-thirds of their income without sweating. It doesn't matter how much you earn, it matters how much you earn versus how much you spend.

Reminds me of a great Dickens quote from David Copperfield

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

I do think he's brought it on himself, doesn't mean that he doesn't have a problem he's got to resolve though.

Being upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

Finally, OG has been won over to my way of thinking! Success!

I mean, I do hope you'll take this new outlook and apply it to future hard luck stories too. At long last we can agree that they brought it on themselves.

[Ominous Gamer]

We may agree on this case, but in general I think we have differing degrees of how such things are "brought on themselves"

See, when you say stupid shit like this:

I mean my summer rental is bare bones, it’s not the Hamptons.

as a way to complain that $350,000 a year isn't enough. Then you look like an idiot, and fully deserve to have flack thrown in your general direction.

[GGT]

Rand, you have the same thing going on in color post quotes that I do, where the text is black instead of white....has something changed recently?



Anywho, the difference between the OP financial guy and other workers is....his benefits and perks. He can lose his job but still have dividend-paying stocks, a 401-K retirement plan, and a platinum health insurance policy that won't lapse for at least six months to a year. He can lose 100% of his income, but still have some income and assets.

That's not true for a middle-low income earners. When they lose 2/3 of their income, they don't have as much to fall back on, and are truly hurting. The income/spending ratio you're using ignores the wealth effect. For one thing, the US doesn't have a NHS. That means the Wall Street guy can still access great healthcare in-between jobs. The minimum-average wage worker can't, since health insurance wasn't part of their "income" to begin with. They have to become practically destitute to qualify for Medicaid.

[GGT]

wiggin, the Day Care dilemma impacts the working poor much harder than professional couples living in expensive cities. There's no real comparison between paying $20k and up for child care, when each parent is earning upward of $50k/year. They still have a profit margin, so to speak.

Families barely surviving on the outer margins are often required to have any job, just to qualify for food-rent-utility subsidies, or subsidized school lunches. Even if that means a $35k annual income for a single parent, spending half their income on day care or child care, and the other half on transportation, food, and doctor visits for basic healthcare.

This is where the welfare-for-work and social conservatives lose their ideological battle, by trying to suggest poor people lack a work ethic or 'family values'. There are plenty of low income families who'd rather have one stay-home parent, saving on day care/child care and transportation costs. They really ARE smart enough to figure out that a second low income doesn't cover the other "costs" to their family. I think they're also 'smart enough' to complain that having a family shouldn't be something only wealthy people can afford.

[CitizenCain]

Planning on bonuses IS bad planning...it's a bonus, not a guarantee.

Well, not always. Could be either way in this particular instance, but I've worked for employers who recruit on the basis of giving out an x% performance-based bonus EVERY year. (Not linked to company financials or the like - you do good work, you will get your bonus, period.) And really, if you've gotten your "bonus" the past nine years, the proper "plan" probably includes the very high probability of getting it the tenth year as well.

Really, by the standard you seem to be establishing, it's foolish to plan on having a paycheck, because that's not a guarantee either, and you can generally be fired at any time for any reason.

If all you plan on in life is what you're guaranteed, then you've got death and probably taxes... and good luck coming up with a useful financial plan based on those two inputs.

Stop trolling.

Stop dumbassing.

[Veldan Rath]

Well, not always. Could be either way in this particular instance, but I've worked for employers who recruit on the basis of giving out an x% performance-based bonus EVERY year. (Not linked to company financials or the like - you do good work, you will get your bonus, period.) And really, if you've gotten your "bonus" the past nine years, the proper "plan" probably includes the very high probability of getting it the tenth year as well.

Really, by the standard you seem to be establishing, it's foolish to plan on having a paycheck, because that's not a guarantee either, and you can generally be fired at any time for any reason.

If all you plan on in life is what you're guaranteed, then you've got death and probably taxes... and good luck coming up with a useful financial plan based on those two inputs.

Sorry Cain, doesn't cut it. While contractor jobs are a different beast, I still wouldn't bet that I would get a bonus every year just because I got one the previous 9. In fact, I've gotten a bonus every year for the last 5 years. but I wont count on it next year. Bonus are not the same category as a weekly payroll.

[GGT]

Well, not always. Could be either way in this particular instance, but I've worked for employers who recruit on the basis of giving out an x% performance-based bonus EVERY year. (Not linked to company financials or the like - you do good work, you will get your bonus, period.) And really, if you've gotten your "bonus" the past nine years, the proper "plan" probably includes the very high probability of getting it the tenth year as well.

Really, by the standard you seem to be establishing, it's foolish to plan on having a paycheck, because that's not a guarantee either, and you can generally be fired at any time for any reason.

If all you plan on in life is what you're guaranteed, then you've got death and probably taxes... and good luck coming up with a useful financial plan based on those two inputs.

Stop dumbassing.

Your personal anecdotes don't mean a damn thing, so stop your dumbassery. Using your "logic", it's stupid to plan on being alive tomorrow, let alone keeping or having a job. That's a gambler's mindset, not a budget plan.

[Loki]

I think you're missing your Inanity Club meeting with Being and LD.

[Enoch the Red]

Your personal anecdotes don't mean a damn thing, so stop your dumbassery. Using your "logic", it's stupid to plan on being alive tomorrow, let alone keeping or having a job. That's a gambler's mindset, not a budget plan.

Eh? That's not what I got from his post at all. He's very plainly saying there are certain things that are safe to assume, (or at least factor into financial planning) even if they aren't a sure thing.

[CitizenCain]

Sorry Cain, doesn't cut it. While contractor jobs are a different beast, I still wouldn't bet that I would get a bonus every year just because I got one the previous 9. In fact, I've gotten a bonus every year for the last 5 years. but I wont count on it next year. Bonus are not the same category as a weekly payroll.

<shrug>

They sure can be. They're an accounting/taxation categorization for "extra" pay, and that doesn't always correlate to uncertainty, like it seems that they do in your experience.

EDIT: Of course, GE said it better:

He's very plainly saying there are certain things that are safe to assume, (or at least factor into financial planning) even if they aren't a sure thing.

Your personal anecdotes don't mean a damn thing,

Did you smoke some bad fucking PCP lately? Or are you planning on never posting another delusional rant laced with tall tales and warped anecdotes of the k0mm0n man and his j00 oppressors?

Seriously, might be time to consult your primary healthcare professional about adjusting your dosage, or quitting drinking or cutting out whatever the hell substance it is that's got your perception of reality even more bent than usual.

[GGT]

And budgeting with bonuses aren't among those safe things to assume.

[Enoch the Red]

And budgeting with bonuses aren't among those safe things to assume.

What are you saying here, GGT? First you say Cain is arguing that nothing is certain, (which he wasn't) and because of that he's an idiot. Now you're saying that he should recognize that bonuses aren't certain, and because of that he's an idiot. You don't have to talk out of both sides of your mouth if you want to call Cain an idiot, but it sure helps your case if you're doing it because he actually said something idiotic.

[Lewkowski]

Planning on bonuses IS bad planning...it's a bonus, not a guarantee.

Better Half gets a monthly bonus based upon how well his district does...I DO NOT calculate into the budget as one bad week of sales can kill it.

It really depends on how regularly you get the bonus and what the conditions are. In many cases the bonus is basically guaranteed.

[Being]

I think you're missing your Inanity Club meeting with Being and LD.

Why do insist on trolling? With personal attacks no less.

[CitizenCain]

You don't have to talk out of both sides of your mouth if you want to call Cain an idiot, but it sure helps your case if you're doing it because he actually said something idiotic.

I also find it helps if one is not acting idiotically oneself when calling someone else an idiot.... but one battle at a time, I guess?

[Wraith]

I think you're missing your Inanity Club meeting with Being and LD.

<mod hat>Please don't randomly attack people who aren't even involved in the discussion, even if it's as mild as this. You probably didn't appreciate it when it's been done to you, did you?</mod hat>

@nobody else in particular: This thread seems to be getting a bit heated, and I can't put the mod hat on once without mentioning how much I'd like not to put it on again.

[Hazir]

I don't think it's that irresponsable to plan on getting bonuses where getting them pretty much has become the norm (as it has in banking), that still doesn't mean that you have to start living outside of your means. And I think you have been living outside your means if one year of bad or no bonus throws you in a tailspin.

Other than that, the guy in the OP clearly can cut back quite a bit before the cuts really start to hurt. A vacation home is nice, but it's not really a necessity. For a significantly lower amount than it takes to have a second home you can have holidays in 5 star resorts with the family for the rest of your life.

[CitizenCain]

Other than that, the guy in the OP clearly can cut back quite a bit before the cuts really start to hurt. A vacation home is nice, but it's not really a necessity. For a significantly lower amount than it takes to have a second home you can have holidays in 5 star resorts with the family for the rest of your life.

I thought about that, then thought, real estate crisis. Sure, ideally he'd sell his second home and all would be good again... but what if he can't sell it, or it's "under water" like so many other mortgages?

[Dreadnaught]

wiggin, the Day Care dilemma impacts the working poor much harder than professional couples living in expensive cities. There's no real comparison between paying $20k and up for child care, when each parent is earning upward of $50k/year. They still have a profit margin, so to speak.

Uhh, have you done that math for couples in expensive cities?

$100k/year for both parents
- 40k for two bedroom rental in NYC. And that's being conservative
- $20-25k in federal and states taxes assuming child credits and no mortgage deductions
- $20k for said day care

That leaves only $15-20k/year for food and the "wealth taxes" Obama wants to throw at people.

******

That said, I'm just being nitpicky there, as GGT seems to feel that urban professionals are worthy of such scorn. I honestly don't have a ton of sympathy for the unintelligent people who let themselves be quoted in that Bloomberg article. Two reasons-

1) As I've maintained for years, salaries on Wall Street are pretty high. And the culture of being spendy has really taken root there. During the credit boom years, many companies probably overcompensated at various levels (especially in their lower ranks).

This is a very distinct point from saying that the government should be regulating compensation or changing how finance is regulated. I'm just saying that, objectively, the government-created credit bubble also extended into the salaries of finance.

2) Many Americans do have a problem with savings. Personally, this is in full view for me as invitations are coming in for summer weddings.

A friend from college is begging me to come to her destination wedding on the West Coast on Labor Day weekend. Flights are already $700. Hotel is easily $500. Plus gift, food, etc? I just don't think I can go, but some of my other friends (who easily make half my salary) are just going to put it on their credit card and pay it down with their quarterly bonii.

Yes, I like using the word bonii. I think it's a great GGT innovation, I've started using it in the workplace.

[GGT]

Uhh, have you done that math for couples in expensive cities? <snip>

I was talking about working-poor and/or lower middle income couples, not locations. And it's not that urban professionals 'deserve scorn' as much as changing the worn out narrative here, that poor people make bad financial decisions and that's why they're poor.

Sometimes the second income is completely consumed by child care and transportation costs, making the second income practically useless economically....and unproductive for the children socially, or the health of a family. (Depending on parenting skills and all that.) I'd agree with you that gov't policy can muck things up. When both parents are working in low-wage shift jobs, just to qualify for needed gov't assistance, the purpose of helping kids and families can be undermined.

The Day Care worker making $25,000/year can get family income up to $60,000/year, but if that means paying $20,000/year for their kids to be in Day Care then it's not such a winning family plan. /tangent

Yes, I like using the word bonii. I think it's a great GGT innovation, I've started using it in the workplace.

[Hazir]

I thought about that, then thought, real estate crisis. Sure, ideally he'd sell his second home and all would be good again... but what if he can't sell it, or it's "under water" like so many other mortgages?

Walk away from it? That would apply especially if it's under water. The upkeep of a second home easily surpasses vacation expenses. Unless you use it to generate extra income.

[Khendraja'aro]

Yes, I like using the word bonii. I think it's a great GGT innovation, I've started using it in the workplace.

That's nice. It's also wrong.

The nominative plural of bonus is "boni".

[Loki]

Walk away from it? That would apply especially if it's under water. The upkeep of a second home easily surpasses vacation expenses. Unless you use it to generate extra income.

That destroys your credit history. Not good if you want to keep your job as a banker.

[Dreadnaught]

That's nice. It's also wrong.

The nominative plural of bonus is "boni".

You know, you're correct. But bonii just looks like it makes more sense.

[Khendraja'aro]

You know, you're correct. But bonii just looks like it makes more sense.

It also makes you look like a retard to anyone with a bit of knowledge about Latin - you know, the "AHM SOOO SCHMOTTT!"-retard

[Ominous Gamer]

That destroys your credit history. Not good if you want to keep your job as a banker.

It can lower your score for ~7 years, yeah. There is hardly enough information to make a prediction on this man's scores, but the numbers and bitching he is quoted with in the OP and other articles hardly paint him as someone with anything near a perfect score.

on a more personal tangent, my mother's score never dropped below 600 after filing for bankruptcy and then dropping the house into foreclosure. Its already starting to approach 700 and its only been a couple of years.

[GGT]

Walk away from it? That would apply especially if it's under water. The upkeep of a second home easily surpasses vacation expenses. Unless you use it to generate extra income.

Workers in the financial industry know how to rent out or sublet the vacation home, and how to file their taxes (so they're not hit with rental income tax or losing their second home mortgage deduction). There are interesting "opportunities" offered for vacation homes---but they're not listed as "jobs" or "rental properties". Rent-free living in exchange for property maintenance and utility bills can be a pretty sweet deal in ski or beach regions.

Since he can afford to pay a tax attorney or CPA well-versed in the loopholes, the 'banker' in the OP can also use bankruptcy options, freeze or cancel debt liabilities, and keep their higher credit score rating. Donald Trump built an empire doing that, and it's totally legal to exploit our crapass tax code that way.

Problem is....lower/middle/average income folks are at a disadvantage, because the loopholes <with its complexity and legalese> tend to favor the wealthy. Same thing applies to workers tapping their own 401-k or IRA plans during hard times, not realizing there are penalty fees, or tax consequences for 'borrowing' from their own damn money.

[Loki]

It can lower your score for ~7 years, yeah. There is hardly enough information to make a prediction on this man's scores, but the numbers and bitching he is quoted with in the OP and other articles hardly paint him as someone with anything near a perfect score.

on a more personal tangent, my mother's score never dropped below 600 after filing for bankruptcy and then dropping the house into foreclosure. Its already starting to approach 700 and its only been a couple of years.

My point is that banks would actually fire someone who's in financial trouble because they worry this person might try to take advantage of inside information to make money.

[GGT]

That won't happen until special committee legislators are "fired" by party leadership, for using their inside positions to make laws money.

[Loki]

Do you ever try to make a coherent point? The legislator angle is utterly irrelevant and bankers (at least ones above entry-level) are routinely not hired/fired for bad credit history.