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Financial Advice for Dancers from a Financial Advisor
I was looking for some information on this site about finding new clients that are err, dancers. I was working on the presumption that with a short lived career, relatively high income and desire not to be doing this in 15 years time, they'd be keen to invest in the future. From the descriptions that I received, I doubt I'll ever manage to find those clients - I don't plan to hang around clubs to 'get known' ... but it seemed sporting of me to offer assistance to this online community since everyone seemed so nice.
My name is Stuart. I'm an Independent International Financial Planning Consultant and I work in Europe, mainly in Brussels and Luxembourg. I help expatriates mostly with investment issues and multi-jurisdictional financial planning problems. My clients are mostly civil servants at the EU in either the Parliament or Commission, work for a national government, are big company execs or (just a few) self employed.
I have a collection of financial planning and investment qualifications from the UK (where I'm from) and a deep, rather obsessional desire to really understand economics. Sad, I know. Adam Smith may have been many things, but as far as I can tell, he wasn't sexy.
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Here is the first of my mini articles for you which will hopefully offer a bit of assistance about financial management.
Before I start, I'd like to say this:
I have worked in finance for a number of years and I have come to one guiding belief. It is this ... I am convinced that there is only one person on earth who is totally able to advise you on matters relating to your finances, in an honest and unbiased way. That person is YOU. But, for you to do that, you need to have some good quality background information which will help you to make your decisions.
I have loads of online resources available and when I can, I'll save myself the typing and put up a link to one of my own sites or another that does the job you need. At the time of writing, I don't actually sell anything online, so it's all free. However, I do have running costs, obviously, so if you see a link on a page (especially ads) and it interests you, please don't hold back from clicking on it ;) That pays for the site so that you (and more importantly, I) don't have to...
Hopefully, the posts and articles will offer some guidance for you to begin with.
None of these articles will be overly complex, in fact, they will be exactly the opposite. Why? Years of meeting clients has made me realise that most people haven't a clue about money matters. Not a clue. The vast majority of the population (95% at least) can barely balance a chequebook (and I don't mean that in a nasty way - just realistic) so I never really see the point in offering guidance that will confuse most people. Most of my clients are expatriates, multi-lingual and have both a degree and a masters, usually from top European universities (usually in politics, law or economics and economists are the worst at personal finance!!), and quite a few are really clueless about finance - and they admit it happily!!
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Let's start with debts. From what I see online, it's reckoned that there are 55,000,000 Americans with debt 'problems'. To put it into perspective, that is almost the same as the population of the UK!! Therefore, simple guesswork leads me to think that a few of you might be among them.
It's reckoned that most people with debt problems spend 10% more each month than they make. 10% might not sound like much, but over time, that will cripple you. If Vegas can get rich on a 0.5% edge, think what 10% must be worth in comparison.
If you have this budgeting problem, first up, you need to really assess where you spend your money. This will take a full month. Record every purchase. It's tedious and tiresome, but ESSENTIAL. Basic number analysis always reveals something you can cut down on.
Take a look here for more on the subject:
http://www.debtmanagementresources.c...budgeting.html
Unless you are buried under a mountain of debt (by that, I mean credit card type debt of 3+ times your annual salary!) you should be able to sort it out yourself with hard work and not resort to debt management agencies where anything can and often does happen. In the UK, some of these places are like the financial 'wild west' and you need to tread very carefully. I presume it's the same elsewhere.
If you think you can sort the debts out yourself, you should be able to. The advice is really simple. You need to have bags of discipline and follow these three simple rules:
http://www.debtmanagementresources.c...nt-advice.html
For a more rounded overview, you can download my free ebook (pdf), called 'How To Deal With Debts' by clicking on the following (ridiculously long) link:
http://www.freefinancialguide.net/pd...ebts%20(3).pdf
It's important that you realise that for the vast majority of the population, money management should actually be really simple. There is no good reason for most people to make it more complicated. The principles themselves are the same for everyone, no matter where you are. It's only taxation that alters the picture since tax rules are different almost everywhere. And that means that I/you/we all need individual tax advice.
So no matter where you happen to be, getting your budget in better alignment will help you. No real need for special advice, just spend less than you earn. Over time, your debts will reduce and you will build assets behind you.
Just remember that the advice may be simple, but following it can be very hard.
Best of luck.
Stuart
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Budgeting and Saving
For this second mini article about financial planning, I thought it wise to tackle the number one problem that most people have: basic budgeting and saving.
Whilst for most people, this is simply a straightforward calculation to ensure that each month you live within your means, it's not so cut and dried for those with a high earning but short lived career. As a general rule, the financial services industry seems to suggest that most people should try and save 10% of their net income each month.
I'll be honest, I think this 10% figure was just plucked out of thin air. We all know, you and I, that ideally we'd save more than that. I guess that financial advisers just didn't want to get pelted with rotten fruit for suggesting that every family tucks away 40% per month...
As I can tell, you all work in a 'cash' economy. In which case, the old 'different envelopes' routine will probably work just fine. Have one envelope for your taxes, one for your rent and bills, etc. Housewives have been doing this for generations, if it worked then, it'll work now.
For those of you that haven't done it yet, BUY A SAFE for your home. Reading some of the posts on your forums, people are using envelopes hidden across their appartment. Forget that, get a safe or a safety deposit box in a local bank. Think about getting both.
I get the impression that dancers are mainly split into three groups (forgive me if I'm wrong on this). Firstly, those paying their way through college. Dancing pays the bills, they'll graduate without debts and that is that. The second group are the career or professional dancers. Thirdly, those on the edge of the world who are about to fall off but are currently just clinging on for dear life.
I'm going to address this to group two - the career dancers.
How much do you need to be tucking away each month to make life easier once you retire?
I don't want to upset you, but I'd be guessing at 30% of your net income, or more if possible. if you plan to live off this for years to come, that is what you need to be doing. And more to the point, you need to be purchasing 'productive assets' with the money. When I say 'productive assets' it really could be anything - but it needs to pay it's way.
For most people, this is going to mean property. If you retire at age 30 and you already own your own home free and clear, that isn't so bad. Right? But will it be enough?
Alas, no. Probably not.
Before you do anything else, you need to have an emergency fund in place. Ideally this should be at least the equivalent of three months net income. Ideally four or five. If you have an accident that keeps you from work, you'll be glad you have this set aside.
It's possible to arrange health insurance that will pay out should you be unable to work due to an accident or injury. However, I'd be amazed if this is an option for most dancers. In my UK experience, anything considered to be a professional athlete or sportsman is almost impossible to obtain underwriting for. Sure you can do it, but it costs a fortune. That isn't to say that it is impossible. Underwriting experience will be different from place to place and market to market.
What I am saying is this ... It is likely that it will be prohibitively expensive to obtain cover, so you really need to arrange to do something yourself. If you suddenly lose your income, everything else will come crashing down around you. You won't be able to buy food, pay the rent or car payments, electricity bills and on and on. For the majority of people on earth, a three month lay off from work will be financially disasterous. Don't let it cripple you.
I read a little while ago about Caprice, she's a calendar model in the UK. Very successful and obviously attractive. She reckons to save about 90% of her net each month to ensure she can keep going in the future. Sure, being able to save 90% means that the 10% is pretty damn big to start with, and therefore is out of reach for the rest of us.
BUt, if you plan to retire and not do too much from then on, you really need to be targetting 50% of your net (after tax) income each month to be saved. That is a tough ask, I know - I couldn't do anything like it myself (but my career is just warming up).
To give you a ballpark target try this. Figure out what the income you would like to have coming in each year (without working) is. Now multiply that by 20. No matter how useless with money you are, you should be able to get 5% virtually risk free on your money pa. I know that I do this for a living, but with a reasonable lump sum, I could get 8-9% pa pretty much risk free and if I'm willing to take some very moderate risks, I can think of funds growing at 11-13% pa very consistently. 5% should always be achievable, but just think of it as a worse case scenario, something to be relied upon.
So, let's presume that you want $25,000 pa to semi retire on, at 30 or whenever. $25,000 x 20 = $500,000. Yep, you need to be aiming for half a million. Over the course of a 10 year career, you would need to be saving $4,166 per month (not including growth on the money). Adding bank account increases in, you'd need to be saving $3,750 or more I'd guess. That's a lot of money!
If nothing else, that must give you an idea as to what you need to be doing. In other words, more than you are...
If you want a better investment, if you have free time, some additional qualifications probably wouldn't go amiss. I am of the opinion that they help us all. Or perhaps you could start a separate part time business, so that when retirement arrives, you have another job to just walk into on your terms. Those are topics for another day though.
If you would like more info about the basics of financial planning, I have a free ebook that I give away on one of my sites. It's 70 pages, in pdf and covers much of this in more detail (though it wasn't targetted at the dancing profession...) just follow the link to download your copy (and get my free monthly newsletter if you want it too) at:
http://www.freefinancialguide.com/dt...AME_HERE&cpc=0
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Re: Financial Advice for Dancers from a Financial Advisor
goodness i need help!!
i still dont see how dancers can pay tax thats fair, and how you can get all those tax deductable things.....
And as a self employed person, is that enough to placate banks etc when applying for cards etc?
I want to marry an accountant!
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Re: Financial Advice for Dancers from a Financial Advisor
Hi Tallulah,
No. Sorry, but that's the answer. In the UK, being self-employed is not viewed well by banks. If you wanted a mortgage, for example, you'd need two or more usually three years of accounts or self assessment returns and generally a bigger deposit too.
Getting the deductions is pretty easy, presuming that you actually spend money on items and keep the receipts. A good start might be to visit an accountant since you will be able to use their bill as a deduction and learn at the same time how to get more.
Deductions are generally classed as essentials of the trade, which I guess limits your options somewhat. But, all businesses these days need to keep records, so you could buy your pc and accessories, stationary etc and claim them back.
Since you are in the UK, I could probably offer some general guidance if you need. If you think it'll be of help, click on the link above and subscribe to my newsletter, then when you get an email message from me respond to it and I'll reply to you (it's a bad idea putting an address online because of spam these days).
Best wishes,
Stuart
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Re: Financial Advice for Dancers from a Financial Advisor
I agree the envelopes are a bad idea for holding money, but the safe is just as bad. If someone knew I was a dancer and I had a safe, they would know it was full of cash. I would be concerned about being robbed at gunpoint.
I think a safety deposit box is really the only choice, besides regular bank deposits, of course.
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Re: Financial Advice for Dancers from a Financial Advisor
Quote:
Originally Posted by Emily
I agree the envelopes are a bad idea for holding money, but the safe is just as bad. If someone knew I was a dancer and I had a safe, they would know it was full of cash. I would be concerned about being robbed at gunpoint.
I think a safety deposit box is really the only choice, besides regular bank deposits, of course.
At least with CDs one might get a little something for it.
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Re: Financial Advice for Dancers from a Financial Advisor
Some Things To Think About
Hi everyone. I'm just adding another little post to my collection here.
Firstly to tax. The days when anyone in any western nation could just avoid taxes at will (legally or not) are over. The government collection agencies, massive computer power and stiff legislation make it virtually impossible IMHO to get away with. So, just pay up. It's easier than doing prison time. Tax evasion is illegal and governments take itpretty seriously. Even people in cash only businesses can't really get away with tax evasion any longer. Even if they could, the risks are just too high these days.
As far as I can tell, if you want to be playing that game, you really need to have a two or three country lifestyle so that you can stash it away from your home government. Yet, these days, that isn't really a very solid strategy.
So, if you are self employed, you must get an accountant. I see people commenting on these forums that they don't understand how to do it 'themselves' or what to deduct etc. In those situations, you really should spend more time with your accountant and ask lots more questions (and note down his or her answers).
Tax advice really needs to be individual too. Though you may know of someone in a specific situation, no two circumstances are ever the same. Therefore, wherever you live, you should seek out guidance for your individual needs. I ought to point out that if you find a knowledgable accountant he or she will find plenty of loopholes to legally exploit anywhere. With such complexity, any legislation will have some flaws and opportunities.
The costs of paying for your accountant are tax deductible which means that in effect, the government makes it beneficial to learn how to lower your taxes. You really should make the most of it. Plus, taxation legislation is sooooo complex that hardly anyone really understands it all. Defer to specialisation on this matter.
If you are in the USA, you should be very careful about anyone suggesting a tax shelter too. The UK is following suit on this as well. The plan, it seems, is to make all tax shelters illegal, even if they aren't. That has major consequences for investors. An investment should be a worthwhile investment first, and any tax benefits come second. If you lose 100% on a tax efficient investment, who cares about the tax savings? Many tax shelters that I have seen are so illiquid that it is almost impossible to sell out later on, at any time, meaning that even if you still 'own' the investment, you have lost your money. Be very careful.
Whilst I am on the subject, be very careful about trusts too. They add complexity and costs to your investment and are really only required in very specific investment circumstances. I used to have a friend (he has passed away now) who was a solicitor and very high level UK civil servant. He had been involved in the writing of four Acts of Parliament relating to property and bankruptcy laws, so he knew his stuff. He once told me that trusts were only for the really wealthy and then very rarely. I used to help him with his investments and admin and he was worth several million pounds, and he was convinced that he wasn't wealthy enough to warrant using a trust!!!! If he didn't think they were worthwhile for him, they probably aren't for most other people too. Bear that in mind...
Sticking with a theme, beware offshore investments. I actually work in the 'offshore' world, but these days, they really are only suitable for expatriates. If you are (lets say) an American, who lives in America, works in America, has an American passport and plans to live in America for years to come, there is really no use for international / offshore investments. The governments tax and try to penalise offshore investors too much for it to really be worth either the risk or the effort. If you are caught and the government decides to make an example of you, they won't just throw the book at you, they will throw the whole library.
I ought to point out that I am actually thinking here about locating your funds offshore in a bank account or fund in Panama or Belize or wherever. This is different to diversifying a portfolio by buying units in a fund that invests in Europe but is domiciled in the USA. Proper diversification is good for a portfolio and usually your net worth too.
Next ... The world of finance is very complex. There are so many specialties that no-one understands it all. Best advice = find one area you are interested in and stick to that. Finding a financial adviser that can assist will probably be worthwhile. Ideally, you want to find one that charges you by the hour, day or project. Why? It takes off the pressure to sell and allows them to act in your interests for what they think will be useful - as opposed to making your situation seem to fit the circumstances of a product they can sell. Financial advisers gotta eat too...
If I were you, I'd also try to find one that understands your needs. For example, a mortgage broker will probably place 10-20 mortgages each month, but only 1 investment per year. Find the people that specialise in what you need or want to do.
This is all very general again. I'll repeat ... Individuals need individual advice. Be it about tax, investment, borrowing or whatever. The advice you need must be tailored to your situation and the local laws and tax circumstances. You will probably need to pay for this advice.
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Re: Financial Advice for Dancers from a Financial Advisor
Hi Stuart, and thanks for the advice. Although I have no formal education in business & finances, I am gradually trying to learn the not-really-so-scary-basics-afterall so that I can make my dancer money work for me as much as possible. I work only 2 times a week as a dancer, and I also work a 9-5 in my field. This is an ideal situation (I wouldnt do well dancing full time), and I really appreciate any available, good, free advice. I really want to take advantage of this situation. So yeah - thanks.
(I'm also a fan of investopedia.com for teaching fundamental concepts).
Also, I am curious to hear what others have to say about keeping a safe in your apartment/home. I Finally bought a bolt-down safe to I store my $$ in, and I keep it hidden so no one knows its there. I never really considered this to be risky, until the point was brought up a few posts ago. It seems like a good idea to me - thanks for that tip, btw!
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Re: Financial Advice for Dancers from a Financial Advisor
PLEASE dont think i'm an idiot but where can i get a trustworthy accountant? where can i estimate how much i will pay in taxes?
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Re: Financial Advice for Dancers from a Financial Advisor
Hi Ladies,
You are quite right, the basics of finance aren't so tough. Really you just need to be bothered to learn. I'm amazed more people don't take their finances more seriously, after all there is money involved, but I guess that if they did I'd be out of work...
As for this sudden discussion about safes, frankly I'm amazed. Maybe I'm just a wimp, perhaps it's just because I'm not American. However, if I were worried that if anyone knew I owned any valuables and that they were in a safe - and this would cause me to be robbed at gunpoint - I'D MOVE!!!! Who needs fear like that in their lives? If every city is the same, I'd just have to find a different country. That may sound extreme to you, but worrying about being robbed at gunpoint is pretty extreme to me.
I must confess that is something of a raw nerve for me. I recently broke up with my girlfriend who was a lawyer from Sao Paolo in Brazil. She wanted 'us' to move back there. When I did some research and learned about the huge numbers of robbings, kidnappings, hold-ups, murders, car jackings and shootings, I was appalled and not at all keen to go. She wants to buy a bullet proof car!! But really, who needs that kind of fear? Life is too short as it is. Anyway, sorry, I digress...
As for finding an accountant, I'd start with recommendations if you can. Who do your fellow dancers use for this? Do you have any friends that are self employed and happy with the treatment and service they get? Ask around initially. If they are happy with the advice and service, go meet them and see for yourself. When you are there, take a pad and pen and ask a lot of questions.
As for 'estimating' your tax bill ... don't bother. Speak to an accountant and let him or her do the estimating and calculations, that's what they do. With all due respect, you'll do it wrong and get in a mess. It's easier (and far less stressful) to just find a professional and get good help.
FAO Kat - good on you. Sounds like you are doing well. Good second income being earned that will set you up with an appt or whatever and allow you to tuck some money away for the future. You are an example to us all.
Cordially,
Stuart
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Re: Financial Advice for Dancers from a Financial Advisor
KatGirl and Stuart, in the major US cities there will always be a certain element that would think nothing of ripping off a dancer big time. It's highly probable that the perpetrator would be someone the dancer knows personally, rather than some random street criminal. The premise that makes dancers an 'easy target' for theft is the (sometimes mistaken, sometimes not) belief that the dancer is not following tax laws and not paying taxes - such that they would be extremely reluctant to report a robbery of cash they have kept 'off the books', for fear of being required to explain where the cash came from in the first place.
At any rate, there IS a reasonably 'safe' way to keep money in a home safe. The secret is to buy two safes not one. The 'first' safe can be an el-cheapo floor mount special left in plain view in say a bedroom, in which you keep a few hundred dollars. The purpose of the first safe is misdirection, i.e. to use up precious minutes as a would-be robber attempts to pop the safe or coerce the dancer into opening it - and being reasonably satisfied that a few hundred dollars is all that the dancer kept on the premisis. In the meantime the serious cash is kept in a second safe, which is permanently mounted in a closet wall or hidden inside a kitchen cabinet or other well hidden location. If a would-be robber was persistent, and if no first safe was in plain view, they might invest the effort to keep looking for a safe located in a closet or under a kitchen cabinet. But if the would-be robber is 'led' to the first safe in plain view, it's a 'one in a million shot' that the robber would ever consider asking about/searching for a second safe !!!
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Re: Financial Advice for Dancers from a Financial Advisor
Star,
If you are in the US:
Take 33% of your net income (income after deductions, such as clothes, shoes, etc), and ever 4 moths, (that means by april17, june 15, sept 14, etc. ) you send that money into the IRS via form 1040-ES which is a payment voucher. That is your federal tax. Then I think 2% of your net income goes to whichever state you are in.
{ NOTE - this poster is NOT an accredited financial advisor ... and the info in this post is both incomplete and incorrect.
US federal estimated taxes are due on April 15, June 15, Sep 15 and Jan 15
US state estimated taxes are due on the same dates as federal
effective US federal income tax rates + self employment tax can vary widely, depending on income level, legitimate deductions, filing status etc.
effective US state and city income tax rates vary even more widely
In this particular thread at least, please refrain from posting 'speculative' responses unless you are an accredited financial advisor }
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Re: Financial Advice for Dancers from a Financial Advisor
As you may have spotted in one of my earlier posts, I write an email newsletter to clients and contacts each month. It is generally about investment matters, but I often stray from there.
Below is an article that I wrote in October 2005. It's self explanatory and whilst I was reading a back issue to find something I came across it again. Due to the short term careers of dancers, I thought that it might be appropriate for this forum. I hope that you enjoy it and find it to be of use.
An Alternative Investment
This month I am going a little off message, but you will see why later.
My thinking over the last six to eight weeks has been in part dominated by the trade spat between the EU and China. This thinking has been partly because of a European Commission client I have been assisting who has been rather involved in the situation and the conversations we have had.
If you have missed it, there has been a falling out over import quotas to the EU relating to a number of different types of garments made in China. The press quickly dubbed these to be the 'Bra Wars'. Quota limits from China were set earlier in the year but then breached, almost immediately in some cases.
These textile products are produced for virtually nil in China and in mind bending quantities. A pair of socks for example, can be made for just a few euro cents. There is a city in China that is the 'sock capital of the world', the factories produce over a billion pairs each year. I don't care where you are in Europe, you simply cannot compete with a manufacturer at those prices in such quantities.
As I can tell, the Eurozone cheap textiles producers are mainly in Portugal. Wages are lower in Portugal, I have seen this for myself - but they are still way to high to be able to compete with Chinese products.
The problem for Western manufacturers competing against this low cost competition is massive. Firstly, the general economics of the textile business is not very good. You can be the best textile maker on earth and that still will not offer you a competitive advantage for long. New technology brings cost savings and soon enough every player in the market must have this new technology to compete. This brings the profits of the whole industry to a new low. On and on this downward spiral will go. More new technologies produce a succession of major capital expenses for each firm and thus to reduced income and profits for the whole sector.
But it isn't just clothes. Many products that involve high labour costs will move abroad to areas with lower labour costs. It is inevitable.
Of course in time, all this production will move again. One day, Africa will become the low cost producer of socks and bras and factories will spring up to take advantage of this even cheaper pool of labour. It is just a matter of time.
Other industries are being influenced too. As I am sure we have all read, India is fast becoming the call centre capital of the world. Many of Microsoft and Intel's best guys are Indians who moved to seek their fortune. India has a huge population that is being educated to ever higher standards and just happen to also speak English.
As an employer, what would you rather have?
1) An Indian, hard working, pleased to have the job you offer, university educated and a speaker of English and one or more Indian language who works for the equivalent of US$100 per month,
or
2) A Brit, who hates the job, is fresh out of school and seems barely able to communicate in any language, demands workers rights like pensions and holidays and expects to earn over £1,000 per month
It isn't rocket science is it?
Once these jobs go, they will not return. You can only outsource to India once and after the balance sheet has had a boost from cost reductions, directors will never want to see those high wages again. Their executive bonus is riding on fatter profits and miniscule wage costs really help them.
I'd like to give you a quote if I may. The quote is taken from a book I read in early 2004 and is called 'Leadership Secrets of Colin Powell' and is about, well - you guess. I ought to admit that my copy of the book is back in Britain and I am not, so please accept my apologies if I am not exactly word for word here...
'Each day we are all becoming a little less employable, including me'.
It's quite a notion and when you really think about globalisation and the effects being seen worldwide, it is quite true. That quote has literally changed my life.
Just give it a moments thought. As more and more business is moved to other parts of the world, we are all damaged slightly here in the West. As you know, I work in the service industry as a financial adviser and my job will stay wherever I am, it is skills based. But, if all the jobs of my clients are lost to overseas competitors, what will I do then? I'll hardly move to China to become a financial adviser.
And this is a topic that really worries me. Most of my career is still in front of me - maybe yours too? The full effects of globalisation and this shift in workers and employment may take decades, but I will still be working in three or maybe four decades time. I could be unemployed and unemployable in thirty years time. Maybe most of us will be that way. Who can say?
It is obvious that in such an environment, enhancing personal skills is the route for individuals to take. Or is it?
A few weeks ago (mid July I believe) I saw a European Commissioner on TV giving a ten second soundbite interview about European workers. The policy of the EU it seems is now for every EU citizen to work towards fluency in three languages. Quite a goal and very noble.
But, is an individual really more employable and more highly paid if able to speak three languages fluently? We as individuals still need to be able to do something, unless we all become translators and interpreters. And, if we can all speak three languages, will we still need interpreters, and will they command wages worth working for?
I am fairly sure that speaking three languages fluently is not a route to fame and fortune or a rewarding career. I know a number of EU staff for whom the ability to speak five languages is their main saleable skill. However, I know a number of people in Brussels in the private sector who speak two, three or four languages and are very unhappy in their work. Knowing these people has hardly inspired me to become a linguist.
What is required is enhanced professional skills.
I gave this subject a lot of thought last year for myself (actually it was after reading the Colin Powell book). Would I be better taking lessons in French or Spanish, the two languages I claim to have a grounding in, or using that study time and energy to enhance my skills and qualifications in finance? I chose the financial qualifications. I figured that no matter how good my French may become, I still probably won't need to work in the language and if I decide one day to return to the UK, it will be of almost zero use to me.
Instead, I made a decision to learn about marketing and copywriting, sit more financial exams and sort of improve my French (my French is now up to the level of a French child aged about four I guess!) when I can. So far, it's going ok: you are reading this, which presumes that my marketing and writing is improving and I have passed some financial exams. Lets not talk about my French though!
It's been hard work, but rewarding.
But still the task continues. I'm worried about the coming thirty years of work and my ability to pay for lifes necessities and some goodies. I don't want to wake up aged 55 or more and find that I need complete retraining just to qualify for a job in Tesco filling shelves.
What we all need, is to have a financially valuable skill. Everyone has different interests and desires, but learning a trade that will provide extra income will offer options we just can't imagine now. Being able to run a small business part-time and have a second income 'just in case' could make an enormous difference to your lifestyle now and in the future.
For example, some people learn to trade in one or more financial markets. The study can be done at home in the hours you choose and the actual trade itself takes but a few minutes on the telephone. Trading may be a bit extreme as an example, but perhaps learning to really 'work' your capital is more realistic.
Others I'm sure follow other paths. Perhaps they learn to become a photographer, professional poker player (the growth in online gambling suggests that I'm right about this), cabaret singer, writer or property landlord. Whatever it may be, it's a skill.
The irony is that it's the one thing that we aren't really directed in at school. We might learn about the Jacobites, the French revolution, algebra or the periodic table but none of these things actually show us how to have a rewarding and fulfilling career. Our knowledge of the American Civil War will not pay the bills - I speak from experience there.
Over the last few months many of my friends have discussed issues like these with me. It's as if my entire generation is lost at sea. I wish I had the answers for them. All seem to have no job security, difficult promotion prospects and barely average wages. And yet I write all this, despite knowing that some of my friends would be considered to be 'genius' level in the UK. Once you have a degree, a Masters and three languages what do you do to improve? And is it worth the effort if you do?
So if you are anything like me, you may well find that some time spent learning a financially valuable skill could pay off enormously - far more than any stock or share. For the small costs involved, the return to you in increased earnings might be thousands of percent or more! It might just add to your security too and make you a little more employable each day.
It could well be the best investment you ever make.
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Best wishes,
Stuart
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Re: Financial Advice for Dancers from a Financial Advisor
if a dancer tries to directly apply the principles involved in your latest post, does this mean ...
1. Forget about giving a college education a top priority, and maximize your club working hours during the age 18-23 period ... on the premise that one can always take college courses at age 35+ but a dancer can't earn money as easily at age 35+ as she can at age 18-23 ?
2. Seek breast implants, other cosmetic surgery, personal trainers, makeup specialists, or anything else which will immediately improve a dancer's earning potential and/or open the door to more upscale clubs ASAP ?
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Re: Financial Advice for Dancers from a Financial Advisor
Hi Melonie,
I would have thought, with all due respect, that you would probably be more suitable to answer that than me! You obviously know a hell of a lot about financial issues and undoubtedly know more about the lot of a dancer than I do (anyone who has seen me dance will agree that I know very little about the subject...)
Seriously though, each individual will be in a different situation and needs to think through their own options carefully. It will all depend on how much time they have available to study, whether they can commit to it or whether they prefer to have surgery, etc as you suggest.
What I was really angling towards though is a little different to the options you have asked for my thoughts on. I was heading towards the question of, 'If you retire at age 30-35, what do you do for a living for the next 30 years?'
I'm no expert on the US educational system, I could explain the UK (with GCSEs, A Levels and Degree set up) or the European IB system to you, but not the US. Apologies. But it all depends from where you are starting.
I'll give an example ... in the UK, approx 40% of students leave school with less that 5 grade A-C GCSEs. For those of you that don't know, that makes you pretty much unemployable, unless you plan to be a lorry / taxi driver, waiter, cleaner etc. If you are in such a situation, then you need to get some basics under your belt.
For my part, and I'm not saying that this is right or wrong, only that it seems to work for me, I sit one extra professional exam each calendar year. In the last four years, I have sat five exams and passed four. Since most people (in any profession or walk of life) only do the basics to get in or get by, these little step improvements really make you stand out to employers. Most (UK trained) financial advisers have three (sometimes four) exams behind them - I now have seven, with two more planned for 06 and 07. If I pass them, I will be very qualified indeed! It works wonders.
All I do is simple. I spend one hour each day on study for three or four months, five days per week. It doesn't really impact my day too much, and three / four months is enough time to pass most exams and not have it ruin your life, then I get 8+ months off. It works for one simple reason: most adults leave education and never study again in their lives. You just start to stand out from the crowd a little more each year.
Of course, what is really required, the big first step, is some soul searching from the individual. When you retire, what do you really want to do with your life? If you can answer that question, then deciding how to improve yourself towards that goal will be relatively easy.
If, for example, you decide that you plan to be a physio then you can start towards it. First, I guess you'd want to speak to someone already doing the job to find out if you would really enjoy it, what the wages, hours etc are like. Perhaps you might like to read a book or two to get some background information. Perhaps then, you might decide to study a beginners course about human biology. From there, maybe take a course in massage to get an idea of what the job is really like and learn some basic skills. Finally, you would move on to a course about physiotherapy.
Following such a course of action would mean that when the dancing career is starting slow down for you, you are already at least half trained for another occupation and future career. It will be much easier to get work or onto a full time training course to finish your studies if you are already part way and showing commitment and motivation to the task.
I hope that helps, but sorry, I appreciate that it doesn't really answer your specific question.
Best wishes,
Stuart
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Re: Financial Advice for Dancers from a Financial Advisor
Quote:
Originally Posted by papillonluvr
If you are in the US:
Take 33% of your net income (income after deductions, such as clothes, shoes, etc), and ever 4 moths, (that means by april17, june 15, sept 14, etc. ) you send that money into the IRS via form 1040-ES which is a payment voucher. That is your federal tax. Then I think 2% of your net income goes to whichever state you are in.
{ NOTE - this poster is NOT an accredited financial advisor ... and the info in this post is both incomplete and incorrect.
US federal estimated taxes are due on April 15, June 15, Sep 15 and Jan 15
US state estimated taxes are due on the same dates as federal
effective US federal income tax rates + self employment tax can vary widely, depending on income level, legitimate deductions, filing status etc.
effective US state and city income tax rates vary even more widely
In this particular thread at least, please refrain from posting 'speculative' responses unless you are an accredited financial advisor }
.
33%? I thought that only about 15% of income goes for taxes. It doesn't seem right that a third of what I make would go to taxes. I'm planning on sending in about 10% of what I make for each quarterly payment, and the other 5% will most likely be taken care of by all my tax deductions, but could someone tell me if this is right? If 33% of what I make is going to taxes, then I'm moving out of this country... lol...
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Re: Financial Advice for Dancers from a Financial Advisor
Again I don't want to dwell on these issues too much in this particular thread, but here are some facts
... Self-Employment tax rate (which is the rough equivalent of both the employer's + employee's share of SSI and medicare payroll taxes) is 15.3% of every single dollar you earn. In addition to SE tax you also have to pay Federal income tax rates which go in brackets ...
... 10% on earnings up to $7150 (for single filers), then
... 15% on earnings between $7,150 and $29,050, then
... 25% on earnings between $29,050 and $70,350, then
... 28% on earnings between $70,350 and $146,750, then
... 33% on earnings between $146,750 and $319,100
in addition the state of Wisconsin imposes state income tax rates over several income brackets ranging from 4.6% to 6.75% of earnings
Thus if a Wisconsin dancer's earnings are somewhere in the $1000 a week ballpark = $50,000 per year, her probable combined income tax burden after some common deductions might be ...
15.3% SE tax + 16.7% Fed tax + 3.5% Wis tax = 35.5% !!!
Again these 'effective' tax rates vary widely depending on such things as home mortgage interest deductions, state and local property/school tax deductions, tax favored investments etc. But if you are single, if you are a renter instead of a homeowner, if your home state (and city) have their own income tax, and if you have an income significantly above the 'poverty level', bend over and find the KY jelly when April 15th comes around.
Quote:
If 33% of what I make is going to taxes, then I'm moving out of this country... lol...
Just be careful that the country you move to doesn't have even higher effective tax rates ! Perhaps Stuart can tell us what typical European tax rates on an equivalent amount of income look like.
~
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Re: Financial Advice for Dancers from a Financial Advisor
You ladies will be amazed at this, but US income tax rates are actually pretty favourable when compared to most of Europe.
If you take a peek at the most highly taxed nations on earth, it's 1) France 2) Belgium and 3) Sweden. If I recall correctly, 8 of the top 10 are in Europe...
Here in Belgium, for example, top rate is 52% plus 14% for social security charges. Of course, it isn't that straightforward, it's tax after all, but you get the idea. Most of the European powers have a top rate higher than the ones Melonie listed above and they get to that top rate much earlier. The UK for example hits 40% at c.£39,000, which is crippling when compared to the rates above!
That said, you could probably use Europe as a tax free zone if you tried. Maybe go on tour or something. Much of Europe has quite technical rules about taxation that include domicile. You could probably work for 3/4 months in each of perhaps 15 countries, moving on after each one and have no legal liablity for tax. Work your way round Europe for 2 years!! Since you stayed in each country for only a small part of the tax year, were not domiciled (meaning you have no plans to stay permanently) and didn't remit the money to your home country...
Although thinking about it, if you are an American, you are taxed on worldwide income above (I think $80,000) so it wouldn't quite be tax free. And of course, being American, there would be visa issues too. Oh, international tax is too complex, I'm starting to wish I hadn't begun this post!!
I'm not going to be able to explain it simply enough, but it is theoretically possible. Just very complex. Aaaahhhh. I'm stopping.
Alternatively Madison, you could look at low cost of living (hot) southern European destinations. A little research into Malta or Cyprus will have you packing your bags within days. It's certainly tempting me...
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Re: Financial Advice for Dancers from a Financial Advisor
Quote:
Alternatively Madison, you could look at low cost of living (hot) southern European destinations. A little research into Malta or Cyprus will have you packing your bags within days. It's certainly tempting me...
Well the same phenomena happens in the Americas, i.e. Mexico, Belize, the Virgin Islands ...
However, every time somebody finds a way to 'have their cake and eat it too' the gov't finds a way of slamming the door ... had a loophole which allowed rich Americans to buy a house in the US Virgin Islands, visit their house in the US Virgin Islands for New Years Eve, and avoid paying huge amounts of 'mainland' taxes to the IRS on the entire previous year's income - a loophole which was recently cut off at the knees via a residency rule change from December 31st only to 183 days out of the year. The uber-rich are already protesting this change ...
I would ask Stuart if the same situation applies in Europe as in the USA ... where the 'published' tax rates say that the very rich should be paying very high percentages of their incomes in taxes, but where loopholes and tax strategies usually mean that the very rich actually get away paying a significantly lower 'effective' real world tax rate than 'middle class' people with $100,000 incomes ?
Also, living in Mexico or Cyprus are not without certain 'additional risks' !
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Re: Financial Advice for Dancers from a Financial Advisor
Yeah that hapens here too. There are some very high profile businessmen that get away with virtually zero taxes. One of the most famous is in the UK, Philip Green, who owns about half of the UK high street clothing chains - in his wife's name. She lives full time in Monaco and he travels back and forth to the UK to manage the empire. Their last annual dividend was (as I recall) over £400 million and all tax free. Nice work if you can get it!!
This type of avoidance is much easier in Europe since it's so much smaller than the US, making it easier to jet around the continent at short notice.
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Re: Financial Advice for Dancers from a Financial Advisor
I pay a third of my income in taxes here in California. I don't get health insurance for it, the roads are in such disrepair that my tires wear out twice as quickly, I can't afford my own apartment (even a studio), and our public school district has a 43% graduation rate.
So where does the money go? As far as I can tell, much of it goes to ensuring that illegal aliens have unlimited access to free healthcare and other amenities that I, as a citizen, am forced to go without.
It's enough to make you head for the nearest bell tower and start shooting.
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Re: Financial Advice for Dancers from a Financial Advisor
Wow I didn't realize that taxes were so much... now I have to rethink how much I'm going to send in for my quarterly payments. I guess I should send in more than 10% now. Grrrrr....
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Re: Financial Advice for Dancers from a Financial Advisor
Quote:
Originally Posted by MadisonM
Wow I didn't realize that taxes were so much... now I have to rethink how much I'm going to send in for my quarterly payments. I guess I should send in more than 10% now. Grrrrr....
there is a worksheet that will tell you exactly what to send in with the 1040-ES
yeah, taxes are a lot. Now you know why people bitch about them all the time. :)
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Re: Financial Advice for Dancers from a Financial Advisor
Quote:
Originally Posted by MadisonM
I'm planning on sending in about 10% of what I make for each quarterly payment, and the other 5% will most likely be taken care of by all my tax deductions, but could someone tell me if this is right? If 33% of what I make is going to taxes, then I'm moving out of this country... lol...
It does suck, but its not as horrible as it sounds. The actual percentage of your money that goes to taxes is somewhat less than the stated "tax brackets" you would be in. Someone in a 33% bracket for instance pays that amount on the LAST dollar they make, not every dollar. To bring up Melonie's table again...
Quote:
Originally Posted by Melonie
... 10% on earnings up to $7150 (for single filers), then
... 15% on earnings between $7,150 and $29,050, then
... 25% on earnings between $29,050 and $70,350,
then in Wisconsin...
... 4.6% on earnings up to $8,840 (for single filers), then
... 6.15% on earnings between $8,840 and $17,680, then
... 6.5% on earnings between $17,680 and $132,580,
Someone in WI with a "taxable income" (see below) of $50,000 would be in a 25% federal bracket, and a 6.5% state tax bracket, combined (31.5%). But if you do the math, they actually would only pay 14.29% to the Feds, and 6.1% to the state.
Also, the tax bracket numbers come from the amount of your taxable income (if you still do your taxes by hand, this is the number you look up in the back of the 1040 booklet once all your deductions and allowances have been figured). This is NOT the amount your wages, salaries, and tips, nor your AGI. Of course when you're single, have no dependents, and don't own a house, you're simply not going to have as many deductions, although the combined standard deduction and exemption allowance for a single filer with no dependents is $8,200 this year.
This of course does not include the additional FICA (7.65% for employees, their employer pays another 7.65%) or SE taxes (15.3% for the self employed).
But no, 10% isn't going to cover you. :(
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Re: Financial Advice for Dancers from a Financial Advisor
For US-based dancers out there....
In New York City, there are people who drive Bentleys who receive financial advise from people who take the train everyday. Before hiring a financial advisor, find out their credentials (ie-Certified Financial Planner sounds good, but the CFA is best), what their commission structure is, etc. I fired my Financial Advisor when my I beat his returns in my retirement account three years in a row.