I Screwed Up!


Back in April, I penned a post called, Two Awesome Benefits of Being Income Poor but Asset Rich. And in this post, I made a serious error concerning the calculation of a capital gains tax. I was under the impression that there was no capital gains tax on any capital gain you had if your income was under $75,300 (i.e., the upper limit of the 15 percent tax bracket). But thanks to Brad over at Maximize Your Money, I now know that my understanding of the capital gains tax was incredibly wrong.

You only have a zero tax liability on the capital gain that extends from your adjusted gross income (AGI) up to the ceiling of the 15 percent tax bracket ($75,300 for the 2016 tax year). For tax purposes, a capital gain sits on top of your AGI, so to speak. So if my AGI was $30,000, and I had a capital gain of $50,000, my total income would be $80,000. The first $45,300 of that capital gain—the difference between $30,000 and $75,300—wouldn’t be taxed. The amount over $75,300—$4,700—would be taxed at 15 percent.

So a big shout out goes to Brad for pointing out my error. I want whatever I write on this blog to be factual. I don’t give a flip about protecting my ego. Accordingly, I have made the necessary corrections to that post. (Hey, Brad, when you get a chance, can you check out the new capital gains calculation I made in this post? I think I got it right.)


First, Ronald Reagan coined the phrase, “trust but verify,” when dealing with the Soviets. That adage applies equally well to anything you read on this or any other personal finance blog. No blogger in the PF community wants to pass on false information. But we are human, and we will make mistakes. So check out multiple blogs and sources to determine the veracity of any PF information you come across.

Second, the PF community is awesome. When Brad pointed out my error, he didn’t call me a jerk, or claim I was a moron. He just very politely suggested that I might be wrong. And that’s the way it should. No one in the PF community is out to score points and denigrate other bloggers. We’re here to help ourselves (and our readers) do a better job navigating the wacky world of money. We’re completely selfless. And because of this, I’m proud to be part of the PF community.

Okay, groovy freedomists, that’s all I got. Please “trust but verify” any PF tidbits I throw your way. And if you do find an error in this blog, please let me know in the lovingly PF way.

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  1. Well done for correcting the mistake and writing a whole post admitting you made a mistake, then thanking Brad. That’s some good humility right there.

    No-one tries to make a mistake on purpose, but good job for fixing it 100%.

    I guess that’s another benefit of the blogging community, we actually read what you put and will correct you lol.


    • Mr. Groovy

      Hey, Tristan. Agreed. It’s easy to wallow in your successes. How you react to your failures or screw-ups is a better indicator of your character. And you’re absolutely right about the personal finance blogosphere. A great bunch of people who care about getting things right. Great hearing from you, Tristan. Hope to hear from you again. Cheers.

  2. Kudos to you for being transparent and admitting the mistake! I think some other bloggers would just correct it in the main post and be on their way. As someone who is income rich and asset poor, I have to say I’m jealous of your position!

    • Mr. Groovy

      No one said blogging was going to be easy. I figured if I was front and center with my successes, I should also be front and center with my failures. And it really bothered me that I published such a blatant mistake. Thank God Brad pointed it out.

      Thanks for the kind words, DC. I really appreciate it. And don’t worry about being asset poor. The assets will come. You figured out things way sooner than Mrs. Groovy and I did. You’re gonna do great.

  3. “I think I got it right”

    Yep – looks good now 🙂

    I almost didn’t comment on the other post. It’s a sensitive situation so I’m glad I came across well. Personally it drives me CRAZY when I notice an error on one of my posts that has been online already for a long time. I always think “why didn’t someone point this out so I could fix it”… so I figured I’d do what I hope others would do and mention it.

    BTW my accountant is a rockstar and is in south Charlotte if you ever have a need. His firm has done our personal and business taxes for almost 20 years now.

    • Mr. Groovy

      I hear ya, Brad. I feel the same about errors too. You saved my arse, my friend, and I really appreciate it. I’ll let you know the next time Mrs. G and I are going to be in Charleston. I’m sure there’s a suitable bar on King Street for us to meet up and ruin some liquor. Cheers.

  4. I respect that you did not just correct the original error, but drew attention to it. This ethical step will draw the attention of people who read the first piece and did not do further research of their own. I love the FIRE community.

    • Mr. Groovy

      It’s weird. When I was younger I needed to be “right.” I don’t know why. Perhaps it was an urge to stand out or be a hero. But this need to be right led to some pretty dismal character flaws. Fortunately, though, I realized in my late 30s that being a hard-ass know-it-all wasn’t very becoming. Today, I couldn’t care less about glory. I just want to help people do a better job with their money. And if this means being forthright about my mistakes, so be it.

      Totally agree with you about the FIRE community, ZJ. Most helpful and understanding people in the blogosphere. Brad was the perfect example of this. He treated me like I was a guy who tried to get something right but failed. He didn’t treat me like I was the devil incarnate.

      P.S. I’m still not confident I got the Medicare surtax on my hypothetical capital gain correct. I’ll be reviewing that this week. The plot thickens.

  5. “Trust and verify” We use it also at home when the kids say they have done their task…!

    There is indeed a lot of value in the community and a lot of free help you can get.

    Kudos for admitting the mistake!

    • Mr. Groovy

      Yes, “trust and verify” is applicable to many things in life. Thanks for your kind words, AT. And thanks for stopping by.

  6. I made a mistake calculating our net worth a couple of months ago, but one of my readers alerted me to the error. Fortunately, it was a good mistake.

    I understand that the decision to post numbers is a very personal one, with pros and cons. However, it’s great that we can get feedback from readers if we’re calculating something wrong.

    • Mr. Groovy

      Hey, Harmony. Agreed. Mrs. Groovy and I constantly discuss how liberal we should be with our personal information. We understand the need for privacy. But we also understand the power of actual numbers. It helps make the key concepts of the personal finance community much less abstract. And it certainly doesn’t hurt that the personal finance community is a very congenial bunch. So when you make a mistake, you’ll be corrected. You won’t be vilified.