A meme making the rounds has us wondering – are all Americans THAT BAD WITH MONEY?

My fear is that we’re a nation of financial illiterates. This fear is not unfounded: beyond the fact that you’ve got a government that racks up debt like there’s no tomorrow, you’ve got a populace that racks up credit card debt because frequent flier miles apparently grow on trees. So you can imagine my reaction when I saw the below image and thought “here’s someone making 200K a year…and broke?”

How Do I Hate This? Let Me Count The Ways.

Actually, I’m just going to pick on five – yes, 5 points that might spark a couple ideas in your head.

1. Talk to a Tax Person

I’m not a tax expert, and I can’t stress enough that you should seek professional tax advice if you can’t figure this stuff out on your own. (And it’s complicated, so you may not want to figure this stuff out on your own.)

That being said, this person is WAY OFF. On a couple things above, but the big one is tax and tax rates. Like, insanely way off.

Back-of-the-envelope calculations would have an Adjusted Gross Income (AGI) for this person at $182,000 (I’m not factoring in the vagaries of limits on other retirement accounts, nor will I talk about catch-up contributions, etc.). But the key element here that someone making $200,000 a year should know – heck, something that EVERYONE should know – is that you are not taxed 28 percent on ALL of your income, just what exceeds the 25% threshold. (Which is taxed just on what exceeds the threshold above it, and so on.)

Using a very simple Excel spreadsheet calculation, tax in this case would be $28,929.75 – or a net-effective rate of just under 16%. (15.89%, to be exact.)

2. Other retirement accounts can help, too.

We’ll getting into this person’s spending habits in a second, but they’re going to want to look into an IRA and a Roth IRA. The former is tax deductible and the latter – well, you pay the tax now, banking on the fact that the debt keeps on rising at the Federal level and tax rates are going to go up, up, and up.

3. Stop the Damn Car Payments; Don’t Go on Vacation

These could be two different categories, but bear with us: these are frivolous expenses.

Average car payment in the USA: $478. You don’t need a new car. Buy a jalopy. Advantages are many, but if you pay cash – made possible by putting away a little each month before you think you’ll need a car – you’ll also possibly pay less in insurance.

$8000 for two vacations? What are you doing, going to the Moon? Fiji? And who takes two vacations a year anyway?

4. Utilities? Cable? Cell Phone?

These are not even factored in here – an oversight of rather insane proportions. Still, these do not have to be onerous – and you need to decide what are luxuries and what are necessities.

5. Consumer Debt. What?

At this income level, TBH, there should be NO CONSUMER DEBT. None. You don’t need credit card debt. You don’t need a loan to pay off…whatever you might need to pay off.

The upshot? Stop complaining…

I’m not going to go after this person for being part of the 1% – $200,000 a year is upper-middle class, but by no stretch rolling in dough. But I will go after this person for being (a) bad at math and (2) careless.

Plan. Budget. Save. Save More. Spend Wisely.