Sometimes it’s the other way around.

Caller: Dave I’m a doc making $375k in the Boston area and have $300k in student loans.

Dave: good lord! 300 hundred GRANDS! In STUDENT LOANS? At least you’re a doc. Now doc I want you to live like a broke college student, rice and beans, beans and rice, you don’t see the inside of that hospital cafeteria unless you start working there to make extra money. Basic expenses is probably 50, set aside another 75 to 100 for taxes and all, that leaves around 250 to pay down debt. You HAVE TO be able to pay that in 18 months TOPS, even with a couple emergencies coming your way. I want you to attack this with a vengeance, and be free of the weight of that debt in 18 months. By thanksgiving 2025, I want you in the lobby of financial peace plaza, telling all these other docs how good it feels to be debt free and live a different life. You can do it doc, I heard it in your voice, you’re motivated.

Now we have Cassandra from Plainsview Iowa. Cassandra, how can I help?

So for capital gains what i see here is it is on top of regular income so lets say i have no job just 2 million sitting in stocks that pay me out dividends my tax rate is 15%? so if i had capital gains of 400k 20% soo why am i working a normal job? just get my capital to work for me.

It's really surprising how many people don't understand how tax brackets work. I was getting my hair cut a while back, when the guy next to me was chatting about his job. I was pretty zoned out at first, then I heard him say something along the lines of:

'So I had to turn down the pay rise because it would have put me in the next tax bracket up and I'd actually have made less money!'

The entire hairdressers turned into an economics lesson as we all tried to explain how that just isn't how it works, but he just wasn't having any of it. He just put on this stupid voice and basically told us we were idiots who didn't understand how percentages work so we gave up.

You dont understand how tax brackets work. You're not in a single tax bracket. Your income is taxed in different chunks. The first set at one rate, the second set higher, etc.