Adulting
Important things to know as an adult.
Not all insurance plans are the equal. For the most part you want to compare what they call comprehensive (not caused by collision such as vandalism or theft), collision (as the name says it), and liability (when it’s your fault). Typically you’ll see a set of three numbers X/Y/Z such as 15/20/5, 100/300/50, or 25/50/15 ($25,000/$50,000/$15,000). They represent numbers in thousands and stand respectively for Bodily Injury per Person/Bodily Injury per Accident/Property Damage. So if your plan has 50 ($50,000) for Property Damage and you wreck into a business building and cause $60,000 in damages your insurance would pay the $50,000, but you would have to pay the remaining $10,000. Make sure you know those numbers, and also use them when comparing pricing with different insurance companies.
You can also negotiate pricing, I’ve done it. If you get two quotes that are close you can tell company X that company Y is offering you Z price and if they can do better. If it’s not too much they will give you a better deal.
You can always open a browser with tabs of all the websites and submit your information to all to get quotes. Then just narrow down. But remember to compare the aforemention. Full coverage means they’ll pay what the car was worth at the time of the loss, not how much you originally paid for.
Just get a used car that works. Focus on saving money for a house down payment. Cars lose value quick, houses worth usually goes up. If at some point you can’t afford it, just get roomates or rent it out it out and let it pay itself.
Team up with your siblings or parents or other close family members that you trust. In a way this is what’s called crowdsourcing.
Apply for a credit card, but just know not all credit cards are good. Some give you no benefits. Some give you great benefits like cash back and insurance on your phone or other perks. Only spend what you will be able to pay at end of month, never more. The idea is to always pay your balance in full! If you don’t, then you have to pay interest which will make you lose money. Paying in full is a good thing for your credit.
Dental insurance is a bit easier to understand than health insurance.
You basically pay for a plan (premium), i.e. could be $15 or $50 per month. Then they have coverage plans for example 100/80/50 coverage (that’s percentage covered). And each number is a category as follows Preventive care/Basic procedures/Major procedures.
Preventative care is things like clean ups and x-rays. Basic procedures like tooth extractions, fillings, etc. Major procedures are things like bridges, root canals, implants, etc.
Unlike health insurance, the amount covered for each category starts immediately, there’s no deductible to meet. However, there’s a limit per year the insurance will cover, known as the maximum. Meaning once you go over the maximum in a year, you must pay 100% for any dental procedure.
Many companies such as Comcast, ATT, DirecTV, ADT, and a lot more (too many too list) usually will give you a great deal to open an account/service with them. Slowly over time they’ll raise your pricing. Some people don’t realize it others don’t do anything about it. Remember competition is in your favor! Call them up and say, “hey, my prices have been increasing, what deals can you give me? X has this deal.” They’ll usually transfer you to their “loyalty” department and will give you a better deal, especially if you’ve been a good customer. It’s cheaper for a company to retain a customer than to spend money on new acquisitions (ads for new customers)!
These companies (credit bureaus) use their own formulas to give you a credit score. The scores may vary between them and sometimes they have different information from you. There’s also a FICO score.
Understanding health insurances can be a bit confusing. Even to me I find it confusing at times. There are just so many different terms that get thrown around.
Firstly, there is generally two types of insurance types: HMO (health maintenance organization) and PPO (preferred provider organization).
Other basic terminology include co-payments which is how much you must pay for a visit.
Deductible is the amount needed (threshold) until your insurance starts kicking in to cover a larger expenses in a given each year. For example if your deductible is $6,000, that means anything below that you must pay out of pocket. Once it goes over $6,000 then the insurance will pay a percentage for it.
Preventative care are visits to, well as the name suggests prevent any disease, typically things like physicals. These are always covered by your insurance since it’s in their best interest to discover any disease or illness early rather than later as it can save them money in the long run.
Here is a complete list of useful health insurance terms, which is really helpful.
This note is generalize and may not apply to everyone, it’s best to contact your insurance to ask questions that are more suitable for you.
The worst thing you can do is leave your cash under your mattress, not only can a burglar run away with it, but it can lose it’s value over time due to inflation.
Imagine you were working in the 1940’s. At the time with 5 cents you could buy a bottle of Coke. One day during payday you decide to save 5 cents under your mattress. Time passes and it became the year 2015. You decide it’s finally time to spend your 5 cents. You go to the store to find out you can no longer afford a bottle of Coke, your saved nickel lost its orginal value! That’s why saving cash is not a good thing, and why it’s a good idea to invest it.
There are many ways you can invest your money, some riskier than others. The riskier the more money you can make, but at the same time you can lose a lot of money too so it’s a doubled edged sword. One way is to diversify your investments, meaning spread it out in different things. Think about the saying never place all your eggs in the same basket.
Here is a non-exhaustive list:
- High-Yield Online Savings account
- CD’s (Certificate of Deposits) - basically you save a set amount for a certain amount of time and the banks pay you
- Real Estate - your home, rentals, flipping homes
- REITs (Real Estate Investment Trust) - in stocks/ETFs that deal with Real Estate
- Bonds - when you let the goverment or company borrow money and they pay you interest. You can buy through brokerages and even on Treasury Direct.
- Stocks - owning a share (piece) of a company. The safest type of stocks are called blue chips.
- Dividends - getting paid to own a stock
- Options - contracts to buy/sell stocks. Almost like insurance. In a way it’s like betting if a stock will go down or up. This is more of an advanced strategy.
- Mutual Funds - basically a pool/bundle of stocks and bonds
- Index Funds - based on a category of stocks i.e. S&P 500
- Exchange-Traded Funds (ETF’s) - can be traded like stocks
- Retirement Plans - 401K, Roth, etc. all interest earned is tax free!
- Buy Gold or Silver - you can either buy physical “bullions” (bars, coins, round) from places like APMEX or JM Bullion, or invest in stocks that deal with gold and/or silver.
- Make loans / Peer-to-Peer Lending - you can make loans to stranger on platforms such as Lending Club, or to family and friends with a written contract
- Crowdfunded Real Estate Portfolio - on platforms like Fundrise or RealtyMogul.
- Commodities - oil, etc
Risk varies, but you can search around for more information on each.
Taxes are complex, but I’ll try to simplify them a bit. It’s always best to consult with your tax preparer.
At the beginning of every year you must pay taxes on all income earned in the previous year. Payroll, dividends, capital gains, business income, etc.
You must pay federal taxes to the IRS.
And then state taxes separately, with the exception of a few states that don’t have income taxes: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. If you live in those states you don’t have to worry about paying state income taxes just federal income taxes.
The federal taxes have tax brackets which dictate what percentage of your income you must pay. The brackets change all the time so just do a search for “tax brackets YEAR” and you should see some information for the year you want. For example here is the 2020 tax brakets. Whatever bracket you fall under at the end of the previous year that’s how much you’ll be taxed.
States have their own brackets too. You can do a search for “YOUR STATE tax brackets YEAR”. Here is an example of California’s 2020 Tax Bracket.
Then there is a standard deduction, the simpler one, or you can also do what is called itemized deductions. You get to pick which technique to use, some might be more advantageous depending on your situation. Basically it’s income that you won’t be taxed on. Think of it as income that will get a free pass. Do note, that like the brackets the standard deduction may change each year, to see what the current standard deduction is just search for “YEAR standard deduction”.
So after you deduct the standard or itemized deductions, you’re left on what tax bracket you’ll be taxed on.
Brackets and standard deductions differ if you’re married or single.
You can further decrease your taxable income bracket by contributing some of your money into a IRA or 401k.
For example if in the year 2020 you were single and your income was $100k and you take the standard deduction you’re down to about $88K taxable income, which puts you at the 24% tax bracket according to the 2020 brackets. The 22% tax bracket cut-off is at about $85K, so to pay 22% income tax rather than 24% income tax you can contribute about $3K to your retirement plan which would effectively drop you to $85K taxable income bracket which is in the 22%. (Numbers will change based on year, but this gives a rough idea).
In a nutshell your taxable income = gross income - retirement contributions - standard deduction. It is your taxable income that you use to figure out what bracket you fall in.
But wait, there’s more. Now you can start looking at ways to get credited for other things like expenses, education, losses, and many other things.
Remember that one saying, “it’s not what you know, but who you know”? Finding a job will be a lot easier if you have an existing network of people you know. One way to start building a network is to connect on LinkedIn with people you meet in person at events, workplaces, school, or any other place you find relevant. Also making connections with your current co-workers and classmates is vital.
Process
Each companies interview process is different, but it starts with a job application or if you’re lucky a recruiter will find you!
Then if you’re a fit you’ll get a call for an initial phone interview to see if you’re a right fit.
If they think you’re a good candidate then you’ll have a 2-3 rounds of additional interviews with different team members.
Application Tracking Systems
If you submit an application and resume, just be aware that most larger companies use an Application Tracking System (ATS) to automate some of the weeding out of applications since some of job postings receive hundreds if not thousands of applicants.
Resume
Recruiters only spend a few seconds on resume so make sure to keep 1-2 pages long and easy to read. For each job or project on your resume use the XYZ method to describe your accomplishments.
Interview Attire
What you wear is important, as it’s how you will be perceived by those interviewing you. There’s an attire color psychology when it comes to what you wear. Considered using blue, but other options are good too. Red can intimidate your interviewer and brown can make you seem like a boring person. And orange is a no.
Behavioral Questions
Be prepared for behavioral questions! Which sometimes start with, “Tell me a time when ______”. Sometimes they’ll ask tricky or random questions like, “What would you do with a million dollars?”. Number one thing is don’t be negative or trash anyone or any other company.
Answer these in a way that show your experience and if possible try to adapt them to emphasize alignment with what they’re looking for.
Some people use the STAR method, CAR method or a variation of it. The way I think about this is like a movie or book: intro, problem, climax, and resolution.
Ask Questions
Some examples, “What would you say is the most stressful part about the job?”, “Six months from now, how would you know if I was the right person for the role?”, or “If there’s something you can change about the company what would it be?”.
Miscellaneous
For those doing technical interviews practice on sites like leetcode.
Two of the most common life insurance policy types are Term Life Insurance and Permanent Life Insurance. Your age and health is one of the biggest factors in cost for obvious reasons. Other factors is how much you want to get insured for i.e. $500,000, 1 million, etc. The amount you choose is up to you, but it makes sense to get the amount your dependents would need after you’re gone. If you don’t have dependents then I don’t think it would make much sense to have life insurance, but that’s just my opinion.
Term Life Insurance
Term Life Insurance is the most simple and usually cheaper option. It basically allows you to buy life insurance in blocks of years (the term) for a fixed price, for example 10-year, 15-year, 20-year, etc. This usually is good enough for most people.
Permanent Life Insurance
Universal Life Insurance is meant to cover you throughout your entire life. Basically a life contract, but you can always terminate the contract, however, you will have to pay a penalty for doing so. What’s great about this is that some of the cash is re-invested and the earnings are tax-deferred!
Whole life insurance is also for your entire life. Premiums are usually fixed.
If you make money from interest or any job, you technically have to pay taxes on it. There are some exceptions like interest earned from retirement accounts such as 401k or college funds such as 529 Plans. That’s why Benjamin Franklin said, the only things certain are death and taxes in this life.
Banks with mostly online presence, “online banks,” typically pay you a lot more for your money in your savings account, significantly a lot more than your typical “big traditional bank” as they don’t have the overhead cost of maintaining physical branches. If having an online bank only is not an option, the alternative is to go for a credit union. Credit unions don’t pay as much as online banks, but they usually do pay more than big traditional banks.
When it comes to earning interest for your cash in a savings account, here’s the ranking order for interest paid:
- Online bank savings account (Best) - Discover, American Express, Capital One, etc.
- Credit union savings account (Good) - Golden 1, etc.
- Big bank savings account (Worst) - Wells Fargo, Bank of America, Chase, etc.
You could also opt for having all three types. For example you can have a savings account with American Express and one with Chase. It’s up to you.
Here’s a list of some of the best online banks with high interest yielding saving accounts:
By the way, it’s my understanding that these basically buy Treasury Bills (T-Bills) to get you the high interest, which means you can technically just by pass the bank and do this yourself by buying T-bills directly.
Here’s a realistic example:
Imagine you have $5,000 in a savings account. Online banks will pay you about $5.00 a month for it, credit unions will pay you about $0.75 cents for it, and big traditional banks will pay you a measely $0.05 cents for it.
Almost all stores nowadays price match. Home Depot, Lowe’s, Walmart, Target, Office Depot, etc. Don’t forget about this.
Not only are you doing a good thing for the environment, but if you go to a recycle center you get paid. A lot of people don’t notice, but when you buy drinks that come in aluminum, glass, or plastic there’s an extra charge at checkout. In California it’s called a CRV, and it’s basically a “deposit,” order to get that deposit back you sell the recycleables back.
Always price whatever you’re trying to sell more than you actually want. You want at least $100 for an old phone? Price it at $120, smart people will negotiate. You can eventually agree for $100, they’ll think they saved $20, but that’s the amount you wanted anyways.
Perks it provides, cash back, sign on bonus, and annual fee. Sure there’s the APR, but remember it shouldn’t matter much since you should always pay your monthly balance in full!
If you’re going to be driving a lot, buy the car, leasing would be to expensive since the more miles you use the more you’ll have to pay. If you’re not going to drive it much, but want a luxury vehicle lease, it becomes somewhat affordable.
These are retirement plans. You deposit a percentage from your paycheck. Technically you can’t take it out, unless you can justify it’s an emergency, but they will penalize you with a fee. Basically the difference is that traditional you don’t get taxed for the money when you put into your retirement savings, but you will have to pay tax when you take it out. With the roth you pay taxes on the money you put in, however, you won’t pay taxes when you cash out. So it really comes down to when you want to get taxed for it. For both the interest you earn is tax free! You can designate to use both if you want to in most cases.