|
Voodoofly posted:Not answering about the status of a joint account holder (I don't know credit cards well enough to know if that is a standardized term or what that term generally entails vis a vis liability for joint holders). This is not a credit card, this is just a standard bank debit card. By "debts" I mean if she becomes suddenly ill can cannot pay medical expenses, or something like that. Her father went through a similar situation, suddenly becoming sick and needing to go into ICU for 3 months. Because he had been laid of a few months prior and had no health insurance, his medical bills before his passing had totaled nearly $1mil. Luckily we were not held liable for that cost. We did ask about just being a signatory but they apparently do not offer that and being a joint account was the only way we would have access to the funds if necessary. Her mother is not immediately ill or anything, just diabetes and some vision problems, but her father's death was very sudden and since he was the only one in control of the finances at the time it was a mess. We'd like to have control of the account if necessary but I can't see any reason we'd need to do anything with the account for now.
|
#
?
Apr 19, 2011 03:04
|
|
|
|
| # ? May 10, 2024 02:45 |
|
|
BorderPatrol posted:This is not a credit card, this is just a standard bank debit card. By "debts" I mean if she becomes suddenly ill can cannot pay medical expenses, or something like that. Her father went through a similar situation, suddenly becoming sick and needing to go into ICU for 3 months. Because he had been laid of a few months prior and had no health insurance, his medical bills before his passing had totaled nearly $1mil. Luckily we were not held liable for that cost. Yep, saw Chase and immediately thought Credit Card. Short answer is your wife shouldn't be liable for anything for being a joint account holder - any liabilities belonging to your mother in law might attach to the account at some point, but that would just mean they could assert a right to the money inside. No liability would normally attach to your wife (assuming she isn't doing anything wrong/fraudulent with the money, like pulling it out and putting it in her own account to avoid the debt collectors). However, this is all general advice - you should ask the bank for any specifics and just to confirm (they should have people who can explain all of the possibile liabilities for each account). That said, as things go on you still might want to look into a limited power of attorney if you and your wife start taking on more responsibility. It would authorize you power to sign and otherwise manage your mother in law's finances in many situations (depending on how narrow or broad the power of attorney is drafted). They are especially useful for those random occurencces that may happen suddenly that your mother might not be able to handle herself until a later time. For instance, my grandmother had the right to draw on an account for certain medical expenses. We didn't know about this account, and it required pre-approval. My grandmother was in surgery when we found out, but because of the power of attorney my mother could sign for my grandmother, authorizing the use of the $400 to cover some expenses of the immediate post-operation recovery. It is little things like that, things you might not think of ahead of time, where a limited power of attorney is a blessing when caring for older family members.
|
|
#
?
Apr 19, 2011 03:25
|
|
|
BorderPatrol posted:My Mother-in-law closed her Chase account after they started some new fees and opened up a credit union checking account. My wife also added herself as a joint account holder in able to have access to the account should anything happen to her mother (had a difficult experience with bank accounts when her father passed). Only thing I would add is that being joint on a checking account doesn’t mean that any loans her mother has will stick to your wife, however any overdraft fees or negative balances certainly would. If there is an option where overdrafts are honored and they let the account go negative, make sure that such an option is disabled. Your wife also needs online access to the account and needs to check it on a regular basis. Just because it is a credit union doesn’t mean she can let her guard down. We had a checking account go negative about $1100 because the member wrote some bad checks and his dad was joint on his account. Dad had to get a loan to fix it. Not saying your mother-in-law is going to do that, but there are still things that she needs to monitor.
|
|
#
?
Apr 19, 2011 15:26
|
|
|
Hey guys - this thread is a great resource, thanks to everyone who contributes. I have a question about budgeting software. We have been using mint.com, and it is pretty good. However, it is missing a couple features, and I am looking for something that could do the same thing as mint but with a few extra abilities. Basically, like mint, I want it to automatically update my balance from the bank, our student loans, and our IRAs. But I would also like the ability to separate my savings into different categories - so I could earmark $100 to house savings and $100 to car savings, or whatever. Also, one of the big downsides of mint to me is that every transaction has to be put into a single category. For instance, if I go to Target and spend $100, and $50 of that is for clothes and $50 is for home furnishings, I can't split that transaction 50-50 between categories in mint. Is there a program that does these 2 things, but also has the automatic balance "get" from the bank and the nice rollover feature that mint has? I have been looking at mvelopes but I am not sure what it can do, honestly. Thanks!
|
|
#
?
Apr 19, 2011 15:52
|
|
|
Ishamael posted:Hey guys - this thread is a great resource, thanks to everyone who contributes. Mint can do both of the things you mentioned. We had set up a budget item of $100 per month to go towards "Continuing Education" (books, certifications, etc. related to our jobs) for 5 months, and now we have set the amount per month down to $0. It now says that we have $500 left to spend for that budget item, but it's not adding any more per month. I guess it's not as simple as you'd like it, since you have to set it up one month then change it to $0 the next, but it'll work. You can also split transactions. Go to the Transactions tab, click one of the entries, then click the "Edit Details" link that shows up right under the entry. There's a "split" button in the upper right that lets you put it into as many categories as you want.
|
|
#
?
Apr 19, 2011 16:07
|
|
|
Great advice, thanks a lot guys.
|
|
#
?
Apr 19, 2011 16:12
|
|
|
ObsidianBeast posted:Mint can do both of the things you mentioned. We had set up a budget item of $100 per month to go towards "Continuing Education" (books, certifications, etc. related to our jobs) for 5 months, and now we have set the amount per month down to $0. It now says that we have $500 left to spend for that budget item, but it's not adding any more per month. I guess it's not as simple as you'd like it, since you have to set it up one month then change it to $0 the next, but it'll work. Oh, that's interesting. I don't know how I never learned how to split transactions, thanks! As for the savings split, I am not sure I get what you are saying. So the way you can tell how much you have in savings for a particular item is that you budgeted for it for several months without spending anything, and then changed the budget? Or do I have this wrong?
|
|
#
?
Apr 19, 2011 16:37
|
|
|
Ishamael posted:Oh, that's interesting. I don't know how I never learned how to split transactions, thanks! Right, that's how we do it at least for short term savings. It shows up in Mint as a budget, then when you actually purchase that item, mark the category on the transaction as that budget item. I reread your original post, and it sounds like you're doing this for longer-term savings. For long-term items we create ING sub-accounts, like what is outlined at http://www.getrichslowly.org/blog/2008/07/02/how-to-open-multiple-accounts-at-ing-direct/, and we have ING as an account in Mint. If you want to, you can use the Goals feature of Mint and point the goal at the ING account, but we just name our ING subaccounts with whatever we're saving for.
|
|
#
?
Apr 19, 2011 16:54
|
|
|
I recently received an offer from ING Direct for a Line-of-Credit product that they're offering, terms are 9.9% APR and from Googling it looks like they offer ~25k on-demand. I have <2k in student loan debt and a pair of credit cards /w 20k limits that I pay off each month. Would having this line of credit help my credit score or is adding another revolving account not going to do much? The only demand for credit that I forsee is purchasing a house sometime next year. EDIT: Also, every time I've checked my credit it has always been between 710 and 750, so I supposedly have damned good credit for someone without a house or car loan. FunOne fucked around with this message at 17:31 on Apr 19, 2011 |
|
#
?
Apr 19, 2011 17:29
|
|
|
ObsidianBeast posted:Right, that's how we do it at least for short term savings. It shows up in Mint as a budget, then when you actually purchase that item, mark the category on the transaction as that budget item. Very cool. Thanks so much for the information, I really appreciate it.
|
|
#
?
Apr 19, 2011 18:25
|
|
|
Ishamael posted:Oh, that's interesting. I don't know how I never learned how to split transactions, thanks! The problem with using a rollover budget item is that it throws off your budget totals every month. If you say make $3000/mo and you budget $500 for a large expendeture that is really savings, it will say that you under-spent your budget by $500 that month. If you roll it over, on day one of the new month you will have underspent your budget by $500, leaving a theoretical $3500 to spend that month. Do that for 6 months and your total won't even break $0 by the end of the month. The better advice is to set up a goal. You set up a goal and then link it to a savings account. I don't know if Mint will share goal accounts or not, but you could always use SmartyPig. It's goal based, gives you separate buckets for each goal and gives you more interest than ING. I don't know if it reports the separate goals to Mint, because I have only one non-reirement savings goal at this time. Not to be a salesman for Mint but the problem is that Quicken is the only thing out there and it sucks donkey nuts. They are still operating on 2003 code that's buggy and prone to duplicating and deleting transactions. They keep coming out with new versions because people keep giving them $50 (I did in '08) but it's crap. Save the money and use Mint. Edit: I checked Mint, it requires a separate account per goal. No matter, use one at your bank or smartypig. KennyG fucked around with this message at 19:22 on Apr 19, 2011 |
|
#
?
Apr 19, 2011 19:14
|
|
|
FunOne posted:I recently received an offer from ING Direct for a Line-of-Credit product that they're offering, terms are 9.9% APR and from Googling it looks like they offer ~25k on-demand. It is rare that opening up an account that you don’t need helps your credit that much. Since you already have solid credit and cards with 20K in limits, it wouldn’t have much effect at all. The only way it would help you out is if you had ran up those cards, in which case you are not in a position to buy a house any time soon. I’m not reading that from you, so I would say don’t open it up if the only reason is to get more credit history.
|
|
#
?
Apr 19, 2011 19:21
|
|
|
First off, thanks for the awesome thread. Tons of great advice in there. My current question relates to credit card debt. I owe just under $4000 on a credit card and have been working to pay it off before I start really digging into my student loan debt. When I got the card the interest rate wasn't too great (probably around 14%) but I had never had a credit card before and really had no established credit. For a while I just used it and paid it off but as many people do, I got careless and starting to build up a balance. A few years later and I don't use the card anymore and my salary has gone up a little while I've cut my expenses. I have been making decent payments but the balance hasn't really dropped too much. The problem is that they raised my interest rate to just under 30% and through my own carelessness I didn't see that. It explains why I haven't been seeing much of a dent in the balance but now I need to do something about it. I don't feel like paying a credit card company any more than I have to (obviously) and I want to accelerate the paying off of this debt. I am considering one of those cards that offers 0% on transfers for 12 months but I wanted to know if a) there are any recommendations as far as what banks are "reputable" and b) if there are any better options in my situation. My current budget allows me to pay $300-400 per month in payments so I should be able to pay the majority of it off within a year. I just know it will take forever if I'm paying a ton of interest every month.
|
|
#
?
Apr 19, 2011 20:04
|
|
|
Zeta Taskforce posted:It is rare that opening up an account that you don’t need helps your credit that much. Since you already have solid credit and cards with 20K in limits, it wouldn’t have much effect at all. The only way it would help you out is if you had ran up those cards, in which case you are not in a position to buy a house any time soon. I’m not reading that from you, so I would say don’t open it up if the only reason is to get more credit history. Would it make sense to use such a product to absorb credit-card excesses? IE, if I spent more than my budget and spending reserves (it might happen, I have a lot of poo poo going on this year) then pay off the cards /w the line of credit then pay down the LOC? The spread would be about ~6% between the options.
|
|
#
?
Apr 19, 2011 20:11
|
|
|
The best way to keep your credit up is don't buy things with money you don't have. (Though if what you're talking about is some kind of major medical procedure or other unavoidable life-threatening expense then I apologize in advance.)
|
|
#
?
Apr 19, 2011 20:31
|
|
|
Sophia posted:The best way to keep your credit up is don't buy things with money you don't have. (Though if what you're talking about is some kind of major medical procedure or other unavoidable life-threatening expense then I apologize in advance.) Completely agreed, which is why I am not in a huge pile of debt or other crap. I'm getting married later this year and will be the middle man in a lot of expenses relating to that which might require me to carry debts for 30-90 days. In theory I could use the LOC to absorb those expenses rather than hold them on my CCs and get a lower APR on that short term debt. However for the time frames involved we're really only talking <100$ in savings at best. Which is why I asked what impact it would have on my credit standing. If it doesn't hurt or slightly help then why the hell not just take it however if it would hurt to have an unutilized LOC on my report then I would avoid it.
|
|
#
?
Apr 19, 2011 20:46
|
|
|
Personally, I would stick with the credit card option. The 6% net on even 90 days is about 1.5%. If you have any kind of rewards program that's going to make the credit cards more convinient and a better option. Spending just to spend is never good, but given the details you have put forth, I would say the cost/benefit of the LOC, I'd stay with CCs.
|
|
#
?
Apr 19, 2011 22:48
|
|
|
I have $60,000 in my bank account for college savings - right now I'm going to be at community college for the next year which costs $1500 a semester, and then at a college for 2 years that costs about $6-9k a semester. Right now it's all sitting in a savings account, tell me what to do with what I'm not going to use. I have absolutely no idea. I have no debt, and a new car that is 100% paid for.
|
|
#
?
Apr 20, 2011 06:47
|
|
|
Save some, invest some, and have fun with some.
|
|
#
?
Apr 20, 2011 13:31
|
|
|
Catsoup posted:I have $60,000 in my bank account for college savings - right now I'm going to be at community college for the next year which costs $1500 a semester, and then at a college for 2 years that costs about $6-9k a semester. Maybe a CD would have a better rate, but you really want to keep most of that liquid for living expenses, books, medical emergencies, etc. so you don't want to be investing in the stock market with that money. A high interest savings account is close to the best you can do. Shop around for a decent rate online.
|
|
#
?
Apr 20, 2011 13:33
|
|
|
Out of curiosity, does anyone use mvelopes? http://www.mvelopes.com/ It looked intriguing but I don't want to jump in without some more info. Just curious if anyone had used it for budgeting, and what they thought.
|
|
#
?
Apr 20, 2011 19:12
|
|
|
Catsoup posted:I have $60,000 in my bank account for college savings - right now I'm going to be at community college for the next year which costs $1500 a semester, and then at a college for 2 years that costs about $6-9k a semester. ROTH IRA You could put the whole thing in a high interest savings or perhaps put your second year tuition in a 1Yr CD and the third in a 2Yr. The amount of time and money we are talking about (for your tuition) only amounts to ~$1000(over 3 years). Your horizon is too short on that to do anything exotic. Do you have income this year, will you? If yes, Put $5K in a roth IRA and 15K in a high interest online savings account (or appropriate CD where beneficial) and make $5K contributions for each of the next 3 years. (You need to have earned income in those years to qualify, but even a crappy summer/campus job should yield you $5k in income.) That leaves you with about $5k left over. Likely you'll need that money (and perhaps what you set aside) for expenses such as text books, rent, pizza, beer, bribes etc. so I wouldn't go nuts and buy something huge, but perhaps something modest might be a fun purchase. How old are you? If you're a typical student age, say 19, $20k invested in a moderately aggressive 7% tax-preferred portfolio before 22 can grow to over $420k by the time you're 67(your standard social security age as of now).
|
|
#
?
Apr 21, 2011 00:49
|
|
|
Please direct me to a guaranteed 7% annual ROI fund, thanks. That having been said, I'd still do it, OP. Max out your Roth ($5000 per year) while you're in school (~$15000 depending on whether they raise the annual maxes), pay for school with $20-25000 so you're not in debt to student loans, keep the other $20k liquid for expenses and whatnot. Hopefully you find something coming out of college.
|
|
#
?
Apr 21, 2011 01:28
|
|
|
I'm finally getting around to investing for my future (home eventually, retirement etc). I've put $10,000 into my vanguard account and plan on putting $5000 into a Roth IRA and the other $5000 into...something. For a Roth IRA, should I just pick one of their targeted retirement funds for around when I plan to retire or what should I look for when choosing? Then for my other $5000, what are some good options vanguard offers? Mutual funds? Appreciate any input.
|
|
#
?
Apr 21, 2011 03:45
|
|
|
illcendiary posted:Please direct me to a guaranteed 7% annual ROI fund, thanks. I don't want to be snarky, and maybe I should go have a cup of coffee before responding but  . I don't see where I said it was guaranteed. That's why he shouldn't put any funds he would need in the next 30-40 years in there. 7% is not an unreasonable assumption for someone with 30+ years to retirement. How does one save for retirement if the only investments you can use are guaranteed investments? Good luck saving $1-4m+ with .5% interest.We've just gone through two recessions in the last 10 years and still many moderately aggressive investors (who were not just dumping money in buzzword du jour vehicles) are at 6.6% for the last 10 years. http://www.aaii.com/asset-allocation even suggests that 8% would even be a probable assumption for this risk profile. Because planning for retirement is basically predicting the future, there are a lot of assumptions one needs to make. 7% average aggregate return is more reasonable than hoping social security will find a magical pile of cash and up their distributions to 10x current levels. KennyG fucked around with this message at 13:21 on Apr 21, 2011 |
|
#
?
Apr 21, 2011 13:17
|
|
|
I just finished my Phd. I still have about $30k in student loans from undergrad and a car I bought, which are all the type that are interest free while you are still in school. Between my savings now and the fact that my Salary more than doubles next month, I could probably pay these all of in a year or two if I wanted. Should I? Is it worth paying them off slower to continue to contribute to my Roth IRA during this time? More importantly, how would I calculate the expected difference? If it's small I would prefer the simplicity of paying the loans off ASAP.
|
|
#
?
Apr 21, 2011 15:34
|
|
|
modig posted:I just finished my Phd. I still have about $30k in student loans from undergrad and a car I bought, which are all the type that are interest free while you are still in school. Between my savings now and the fact that my Salary more than doubles next month, I could probably pay these all of in a year or two if I wanted. Should I? Is it worth paying them off slower to continue to contribute to my Roth IRA during this time? More importantly, how would I calculate the expected difference? If it's small I would prefer the simplicity of paying the loans off ASAP. [I'm going to assume that you have federal student loans (GradPLUS) based on what you said. This would be a good situation as they allow for forebearance when you lose your job and are tax deductible under certain limitations.] Welcome to the world of investing where the answer is always "it depends." The proper calculation timeline is the rest of your life (or at least until retirement). The issue being that a ROTH IRA does not allow you to put extra money back in your IRA, The difference in making a one time $5,000 contribution at 25 vs not (basically missing that year's investment deadline) if you AVERAGE 7% would be about $70,000 over 40 years. I have run the numbers before (dependent on tax status) you are looking at about a 3-5% difference one way or the other in your lifetime (this depends largely on tax status and interest rates). If your loans are in the 5% range, and you qualify for the interest deduction, I would think about maxing your Roth and 401(k) and then just paying the basic minimum on the loan. Attack the loan when you lose the interest tax deduction. The biggest advantages for the ROTH/401(k) are in the earlier years. It may be a better strategy to start with making sure you get your 5k in and working up to getting 16.5k in your 401k and then working on attacking your loan. Yes, the strategy does mean carrying debt for longer, but if you aren't living beyond your means and are comfortable with carrying the debt there is a net benefit for it. There are others here who will tell you carrying debt is bad. I would make a distinction between useful debt and wasteful debt. If the payments are small and flexible and you get tax advantages. I don't see why you should short-change your retirement savings to be debt free. Like all things, you have to balance risk and return.
|
|
#
?
Apr 21, 2011 16:51
|
|
|
modig posted:I just finished my Phd. I still have about $30k in student loans from undergrad and a car I bought, which are all the type that are interest free while you are still in school. Between my savings now and the fact that my Salary more than doubles next month, I could probably pay these all of in a year or two if I wanted. Should I? Is it worth paying them off slower to continue to contribute to my Roth IRA during this time? More importantly, how would I calculate the expected difference? If it's small I would prefer the simplicity of paying the loans off ASAP. It depends on what financial guru you believe, but if it were me, I would pay them off as quick as you can. If you want to throw $5000/year at a Roth, that’s fine. You say a year or two to repay them. If you split the difference and say that you intend to pay them off in 18 months, that is $1667/mo. Lets say $1800/mo since there is some interest. A fully funded Roth is $417/mo. If by doing the Roth you can only pay them off at the rate of $1400/mo and it takes closer to 2 years, whatever. What I don’t want you to do is to go on the 20 year repayment plan because they are at 5% and you think you can get 9% in the market. There is just so much freedom in being debt free. You could afford to do things that you want to do, even if they don’t pay the most. You can deal with emergencies, you can travel, you can do so much more of what you want if you don’t have payments.
|
|
#
?
Apr 21, 2011 17:17
|
|
|
Zeta Taskforce posted:It depends on what financial guru you believe, but if it were me, I would pay them off as quick as you can. If you want to throw $5000/year at a Roth, that’s fine. You say a year or two to repay them. If you split the difference and say that you intend to pay them off in 18 months, that is $1667/mo. Lets say $1800/mo since there is some interest. A fully funded Roth is $417/mo. If by doing the Roth you can only pay them off at the rate of $1400/mo and it takes closer to 2 years, whatever. What I don’t want you to do is to go on the 20 year repayment plan because they are at 5% and you think you can get 9% in the market. I know very little about finances when it comes to IRAs vs. Roth vs. whatever, but I know that if I could, I would pay off these student loans right now. Having them hanging over my head is a bummer, and if modig has a chance to get rid of that burden, I would recommend doing so. EDIT: Basically I am agreeing with you.
|
|
#
?
Apr 21, 2011 17:45
|
|
|
Thanks for the advice... I haven't decided but I'm probably leaning towards paying them off a bit slower and still making Roth contributions, but I'll have to look at my actual numbers and talk with my wife (she's definitely in the debt free asap mindset).
|
|
#
?
Apr 22, 2011 05:09
|
|
|
About 4 years ago I got stupid on my payments with my Credit Union credit card and they shut off my ability to use both my credit card and debit card. My balance is completely paid off. and I got my debit card reinstated after 6 months of good behavior. I was perfect on my payments since the incident and have 4 years of perfect reports on my credit report; does anyone have experience with getting that line of credit re-opened for use? It was never sent to collections, if that matters at all.
|
|
#
?
Apr 22, 2011 20:07
|
|
|
GobiasIndustries posted:About 4 years ago I got stupid on my payments with my Credit Union credit card and they shut off my ability to use both my credit card and debit card. My balance is completely paid off. and I got my debit card reinstated after 6 months of good behavior. I was perfect on my payments since the incident and have 4 years of perfect reports on my credit report; does anyone have experience with getting that line of credit re-opened for use? It was never sent to collections, if that matters at all. You have to ask them. At my credit union we routinely reinstate accounts after good behavior. We will have the individual fill out an application, we will pull credit, ask for proof of income, and review it to see if based on today’s status they qualify for what they are trying to do. But they were burned in the past, they don’t have to give it back to you regardless of how good the last couple years have been. My guess is since you have made them whole, they will reinstate everything, but it is their call. Either way, if your credit has been clean for a few years, someone will give you a credit card, even if they don’t.
|
|
#
?
Apr 22, 2011 20:31
|
|
|
Zeta Taskforce posted:You have to ask them. At my credit union we routinely reinstate accounts after good behavior. We will have the individual fill out an application, we will pull credit, ask for proof of income, and review it to see if based on today’s status they qualify for what they are trying to do. But they were burned in the past, they don’t have to give it back to you regardless of how good the last couple years have been. Ok cool. I'm hopeful, since when I got my debit card reinstated, I feel like they asked if I wanted the credit card reinstated too, but I said no because I remember wanting to clear my balance first..but I could be making all that up. I just wanted to see if that was a common occurrence or not.
|
|
#
?
Apr 22, 2011 21:51
|
|
|
modig posted:I just finished my Phd. I still have about $30k in student loans from undergrad and a car I bought, which are all the type that are interest free while you are still in school. Between my savings now and the fact that my Salary more than doubles next month, I could probably pay these all of in a year or two if I wanted. Should I? Is it worth paying them off slower to continue to contribute to my Roth IRA during this time? More importantly, how would I calculate the expected difference? If it's small I would prefer the simplicity of paying the loans off ASAP. I imagine you would have mentioned this, but just in case: is there a retirement fund connected to your new position? If you're doing that, then I wouldn't sweat letting the Roth take a back seat for a while. On the other hand, you probably (?) get a 6 month forbearance period before you "have" to start paying off your student loans. If that means the interest doesn't start for six months either, why not take care of this year's Roth using some of that leeway, and then work on the loans? I'd probably want to be debt free sooner too, in the end.
|
|
#
?
Apr 23, 2011 15:11
|
|
|
I have a question about retirement investing that is probably totally inconsequential. Currently I have a 401k through my employer that I pay 4% into and they match 4%. I also have a private Roth IRA that I contribute on a monthly schedule to. Is there any advantage to upping my 401k contribution to like 10% or more, since it's pre-tax, and cutting back in my Roth contributions? Will this ultimately be to my advantage since it reduces my tax liability and I'm getting money that I otherwise wouldn't be able to see because of taxes?
|
|
#
?
Apr 23, 2011 19:48
|
|
|
Dreadite posted:I have a question about retirement investing that is probably totally inconsequential. To answer this question with complete clarity, you would of course need a crystal ball, but the Roth is a great way to go, and regardless of the future tax rates, having your money grow tax free, and you don't pay taxes on it when you will need it; that is a great thing. I would keep doing what you are doing since you probably have more choices and lower fees within the Roth too. But that does mean you are giving up a tax break today. Either way if you are saving that much you won't go wrong.
|
|
#
?
Apr 23, 2011 20:05
|
|
|
Dreadite posted:I have a question about retirement investing that is probably totally inconsequential. The other issue would be how much you like the funds offered in your 401k. The IRA is nice because you get to pick what you want to do with it. Also there is more flexibility with a roth IRA in terms of early withdrawal if necessary. The rules usually are 1. 401k up to matching maximum 2. (Roth) IRA 3. 401k up to maximum allowed, and I think that is the right order to follow in most normal circumstances.
|
|
#
?
Apr 23, 2011 20:45
|
|
|
Question about credit scores. I was thinking about buying a car in the next 6 months so I checked mine and it was atrocious (609). I was shocked since I've always been fairly conscientious with paying bills. I guess the biggest hits were the fact that I only have a low-limit credit card ($4900 limit) and I have a balance of $3000 so the 60% looked bad. I plan on paying off that balance soon as I'm graduating from college in a couple weeks and am getting a raise from $32k to $61k a year salary. The other thing that made a huge dent was seemingly a $50 unpaid balance that was in collections due to a parking ticket from 2009. I'd never been contacted about this, which is unusual for a collections agency, but yesterday I called them and paid it. It's insane that a parking ticket could ruin my credit but it appears it could. It seems to have made a 70+ point negative hit on my credit. I only have the one credit card, should I open up another one and keep the balance at zero? I was excited to get the big salary raise and buy a car, but I want to make sure I have a good credit score first so I don't wind up with an atrocious loan interest rate. Will the parking ticket $50 balance go away now that I've paid it? If that stays for 7 years ruining my credit I'm going to be so pissed.
|
|
#
?
Apr 24, 2011 01:01
|
|
|
Dreadite posted:I have a question about retirement investing that is probably totally inconsequential. You should evaluate your 401(k) options and see if they are competitive with your ROTH option. Many people are surprised to find that their employeer who 'cares' about their employees have stuck them with a plan that offers limited mutual fund options and almost all with expense ratios well above 1%. If you have a good 401(k) plan it can be beneficial to up your contribution to the detriment of your ROTH, but it's detail and future event specific. There are a few things to consider with this question. You need to be in the 25% or lower part of the 28% bracket to make the 401k probable to help you. There is a net benefit (under current income tax rules) to taking a greater 401k contribution in lieu of a ROTH IRA due to the way the deductions, credits and exemptions work. Basically, ROTH deductions are made with after-tax income that you are paying what is essentially your marginal rate on. If you had put it in a 401(k) you could have made a 25% larger contribution from the same income/expense level. A ROTH has benefits of flexibility and doesn't require a minimum disbursement after 70.5 years of age. These can be big benefits if you are planning on not spending all your money and leaving tax free savings to your heirs. Also you can use the ROTH contribution funds for non-retirement purposes in special instances like buying a house or after 5 years. Ultimately it is going to amount to what you think your tax burden will amount to or what the law will look like when you get to retirement. You will likely have less deductions in retirement (kids, mortgage interest, student interest should all be gone) so that weighs in favor of a ROTH, but the uncertainty of the tax code 30-40-50 or more years from now makes this an impossible question to answer. Who'se to say that the Federal Gov't doesn't tripple tax rates to pay off the bills its run up over the last 30 years in which case your ROTH plan would look great. They could also change the tax treatment of ROTH IRA plans. It's all a crap shoot. EDIT I have a question regarding credit scores. What is the easiest, safest, free way to get your FICO score. I check my creditkarma Transrisk score regularly, but I haven't checked my FICO in a while. I don't want to pay for it, but is there an easy way to get it without doing anything harmful or risky for my identity. KennyG fucked around with this message at 01:33 on Apr 24, 2011 |
|
#
?
Apr 24, 2011 01:20
|
|
|
|
| # ? May 10, 2024 02:45 |
|
|
KennyG posted:There are a few things to consider with this question. You need to be in the 25% or lower part of the 28% bracket to make the 401k probable to help you. There is a net benefit (under current income tax rules) to taking a greater 401k contribution in lieu of a ROTH IRA due to the way the deductions, credits and exemptions work. Basically, ROTH deductions are made with after-tax income that you are paying what is essentially your marginal rate on. If you had put it in a 401(k) you could have made a 25% larger contribution from the same income/expense level. Good information. I may be right at the line of a tax bracket and able to stay in the lower one with more 401k contribution. I'm pretty happy with the funds available in our plan, so I may end up increasing my contribution to the allowed max and scaling back my Roth investing.
|
|
#
?
Apr 24, 2011 03:04
|
|