DStark: you know that this is impossible.
@“great lakes mom” - In what universe has journalism ever been a "decently remunerative " profession? I would have moved there in the mid-80s during my reporter days, and I would send my S1 and his GF there now so they could make some actual money.
@bluebayou, do you know that for a fact? I am taking Gabler at his word.
I can think of circumstances where it is true. Stock options in the business world…
Partnerships…For example, if I am a member of an llc and the partnership makes money and decides to keep that money in the partnership, I have to pay income taxes on my share of the income even though the partnership has the income.
Folks in my town who worked for one of our local papers made a middle class living writing and editing for it. The person in question made an ok living editing an ag journal in my state. Sufficient income, with benefits, not riches, not upper middle class. Doing what you love, that can be, and was for those I know, a satisfactory life. I don’t know anything else about money and journalism. There were other jobs available if one fell through. These days, it is scary, as there are few other jobs to go to if the one remaining paper has a shake up.
My understanding of what happened is that he received a large cash advance on a book, and that generated a big tax liability for that year. He needed the money for other expenses, and so didn’t fully pay the taxes, incurring penalties and interest. This seems a terribly imprudent thing to do.
Similarly, partners in, say, a law firm have to pay quarterly taxes for their expected share of the profits for the year even though the distribution might not be til the following February. So, yes, many people pay taxes before they receive the income.
I read the same article @dstark . What gets me is that he is in “the creative class” and has gone through his adult life not understanding the financial implications of being in that class. I know, I’m married to one of these guys and most of our friends are musicians, film folk and writers. Work has always been sporadic and TV jobs are NEVER forever. That’s why most of the couples we know have one spouse working sporadically and the other with a stable occupation. It’s nothing new. Nothing is certain in this sort of work, especially now days. Electronic media has thrown a serious wrench into every working artists life. Rereading this article, as you suggested, made me wonder more and more about the wife. For crying out loud…what sort of “former” executive is so clueless about finance. ( yeah right, a MOVIE executive 8-| ). The author is a typical ego maniac who thought that his future was secure and his career trajectory was only going to be up up up. (Hey, we had business with Mr Scorsese too, but I never for a moment thought that everything was going to change for the better after that heady moment.)
I have a D in the creative class. And her future spouse is also in the creative class. We are constantly discussing finance. As I never tire of telling her: you need to know MORE about money if you are going to work as a musician or a writer, not less.
I would think someone whose income is not steady would save during the good times for the bad times. It’s just common sense - you don’t need to be a financial genius to know this.
I have loads of empathy for people trying to make ends meet on minimum wage and other low paying jobs - but this guy not a wit.
@showmom858 Hmm your parents are very similar to mine, PIL retired municipal worker, and car manufacturer, my parents car manufacturer and my mom is still working even though she couldve retired. Both sets live very comfortable, house paid off, and generous pensions, soc sec, and health insurance.
“This seems a terribly imprudent thing to do.” @Hunt that characterizes most of Gabler’s financial decisions.
He wanted good public schools to save money on private school tuition so he moves to… the Hamptons. (Whaaaaa?) Stanford tuition proved “a shock” to him. (Really? Didn’t he look at the website?) He drains his 401K to pay for a(n expensively educated) daughter’s wedding. (Huh?)
The result is that he’s living like a child: his parents are helping to pay for his children’s education, and he borrows money from his children to pay bills.
Oy.
That’s why I have so little sympathy for him. Great Lakes Mom, whose husband was a working journalist but who lived within their means - them, I do have sympathy for.
I have to admit I am a little confused by the above. For a writer, I think this is poorly written. He received an advance in one year, but the taxes owed were to be paid over several years?
Or…he received an advance over several years, but the taxes owed were due the first year?
The advance had to be amortized to last the years it would take to write the book. What is he talking about?
He should have been paying his quarterly taxes!
@mcat2 I think there are several factors. 1) Pensions. My parents have a pension, draw social security and they had a 401k. Now my moms company didnt start a 401k until late but nonetheless, its extra income. 2) My inlaws, and my parents were all union members. They had great benefits especially health insurance.
I have a friend that works at a brewery. He will be fine when he retires. The new guys they are hiring dont get a pension, health insurance upon retirement, or any of those perks. Not to mention, the starting salaries are much lower on a relative basis.
I remember seeing my dads paystub one time, and thought to myself, “now why in the hell did I go to college?”
On some level they!led an easier life, working in factories. When you left work, you left work! No email, no thinking about getting back to your client, etc. You didnt have to think about work until you clocked in the next day.
@Bestfriendsgirl, there is still some money in TV journalism, especially in markets with unionized news writers and producers. (Washington DC is one.) Between their negotiated salaries and paid overtime, even a young news writer can easily make $50-$55K. Good health benefits & 401Ks. Producers can make $75K and up, with regular (though by no means big) raises to keep up with the cost of living.
Of course, to get into one of those markets means working for little pay and even less time off at small markets, jumping from city to city every other year as you go up in market size/prestige. During that period of moving up in markets, you’re sure to have to put in some overnight shifts (10 pm - 7 am) or swing shifts (3 am-1 pm.) And of course, you’re likely to have to say goodbye to Christmas morning with the family (it’s just another news day) or 4th of July out in the country (ditto.)
I agree that they seem to be living very frugally despite the bad financial decisions that were made along the way but isn’t living frugally a tip off in itself?
One of their kids seems to be in college since 2002 and not making any money and probably borrowing money since H requires all their students to borrow a minimum of 35k on top of parental EFC before they kick in any money. So wonder what number pops up for parental efc. I don’t know if there is an age limit for the student or parent in order to ignore the parental efc.
I don’t understand your question. What do you mean? Isn’t living frugally a tip off in itself?
Lots of imprudent decisions. Chooses to live in NYC despite having a job that could be done from a farmhouse in Idaho. Moves before selling his co-op so he has to cover the cost of 2 houses. Wife quits work to stay at home then is surprised at not being able to waltz back into the job market at the same level. Instead of paying his taxes upfront he chooses to incur interest and penalties. Drains the 401K.
About the most sensible thing he writes is this:
Unfortunately he then goes on to qualify this statement seemingly hoping we’ll see him as less than responsible for his position.
I too have sympathy for people who fall into financial trouble through no fault of their own. The working couple trying to take care of a parent with Alzheimer’s, the family with disabled kids in desperate need of therapy not covered by insurance, the families with dual job loss all tug at my heart and send a “there-but-for-the-grace-of-God” shiver down my spine. The “I would have to be a different person if I didn’t follow my bliss” argument doesn’t resonate with me.
This amortization issue with his advances bugs me.
Is he saying he had to amortize his expenses so his expenses for tax purposes understated his actual expenses? This led to him paying taxes on income he did not actually make until years later?
I need to know this. 
@dstark The way I understood the book advances, he receives a large advance from the publisher at the beginning of writing the book in a lump sum, say $250K for the Disney book (this amount is just a guess on my part). He has to pay taxes on all that money the year it is received, bumping him into a higher bracket. But he has to use that money over the course of several years to research the book.
What he doesn’t go into is that once the book is finally in bookstores, he doesn’t see a further penny from the publisher until the book has sold enough copies to cover his advance. Once that is done he will finally begin to see royalties.
One of his obvious difficulties is that he did not produce enough work of ongoing interest–either in print or on TV–to establish a steady stream of reliable royalties. This was due in part to the style in which he chose to work: writing biographies of mid-level interest (Walter Winchell, Walt Disney) that take years to research and write. The Disney book is currently ranked #34,431 on Amazon. The Winchell book is ranked #463,569.
He should consider writing faster, and doing a biography of Donald J. Trump.
Edit: I’m not sure he used the word “amortization” properly or, if he did, I agree that the issue needs much more explanation than he gave it.
He wrote: “… the bulk of my earnings were lumped into a single year, even though the advance had to be amortized to last the years it would take to write the book. That meant I was hit by a huge tax bill that first year . . .” and he goes on to say that the tax burden ate into the money he actually needed to live on in order to research the book.
A book advance is kind of like buying on credit.
Right, there are lots of places with good public schools and lower cost of living than East Hampton, even in the NY region.
I liked the Time response article, but not the “growing up without money leads to common sense” logic. I grew up with money and have common sense. My mom grew up without much and is 10 times the spender I am.