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brosmike posted:I pretty much just used TurboTax's estimator tool to guess the 28%, If you're making 95k and claiming a couple of allowances (rounding here): 95k / 52 weeks = $1825/wk Gross weekly income: 1825 Fed withholding at 18%: 330 Fed MED/EE: 30 FED OASDI/EE: 75 I calculate your weekly take home at ~$1400 after federal taxes, or around $5500 a month. If you actually calculated out a 28% tax rate like you had proposed, you would have $5256. I'm not sure where you got your $6k+ number.
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Jun 6, 2011 19:10
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baquerd posted:I calculate your weekly take home at ~$1400 after federal taxes, or around $5500 a month. If you actually calculated out a 28% tax rate like you had proposed, you would have $5256. I'm not sure where you got your $6k+ number. ($1,400/wk) / (7 days/wk) * (30 days/mo) = $6,000/mo, so I'm not sure where you get $5,500. I think the 28% was a marginal tax rate or something, and I didn't realize it didn't include medicare and social security. Trying it again, this time taking into account that I'm only working for 6 months this year, I actually get better than my initial estimate (for the first 6 months, since my annual income is lower): pre:For 2011...
$46,250 income
- $8,250 401k
- $5,800 standard deduction
- $3,700 personal exemption
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$28,500 taxable income
$671 medicare (1.45% * $46,250)
+ $1,943 social security (4.2% * $46,250)
+ $3,860 TurboTax's estimated federal income tax on $28,500 taxable income
- $400 TurboTax's estimated tax credits I can claim
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$6,074 estimated total tax
$46,250 - $6,074 = $40,176 estimated annual post-tax income (for 6mo)
$40,176 / 6 = $6,696 estimated monthly post-tax income for 2H2011
brosmike fucked around with this message at 20:40 on Jun 6, 2011 |
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Jun 6, 2011 20:33
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brosmike posted:Thanks guys! Couple of random things that pop into my head (most BFC-related, some not): Microsoft recently announced a large raise (as much as 10-20%) for most R&D folks. I've heard rumblings that outstanding offers for new hires were being revised upward because of this. Have you heard anything to that effect and, if so, taken advantage? Contribute to ESPP, it's a 10% discount on 15% of your salary or effectively a 1.5% raise for maybe 45 minutes of work (transactions and tax) per year. It's also not a bad way to force yourself to save a decent amount of your paycheck. Always sell your ESPP at the end of every quarter. I know of a huge number of Microsoft employees who have half or more of their net worth held in MSFT. Don't do it, just sell right away and pocket the 10%. There's no restriction on holding it for a minimum length of time. With a $92k starting salary, $10k * 33% relocation (which is likely "grossed up" so you don't feel like you're paying tax but is still considered income), possible signing bonus stock awards, cash bonus at the one-year mark, and other things increasing your taxable income, it's possible you're going to bump up against the income limit for the Roth IRA next year. Your 401k might offset this, if not look into the "backdoor Roth IRA". This year you'll definitely be fine though. Whatever budgeting you do, for income tax/FICA purposes remember that the Social Security deduction is 4.2% this year but goes back to 6.2% in 2012 and adjust accordingly. The "free" gym membership you'll get really isn't. You'll pay income tax and sacrifice a (small) payroll credit - depending on taxes you'll effectively be paying $45-55 per month. If you want the membership go for it, but when comparison shopping consider the real cost as a point of comparison. You'll have a few options for medical and dental insurance, depending on the level of coverage you want it ranges from no payroll deduction (nearly everything you could ever ask for is covered at 100%) to a modest payroll credit (high-deductible plan with additional free money for an HSA), make your choice accordingly based on how much you expect to need medical care. You'll have a chance to choose as soon as you start and then once a year afterwards. Are you moving from inside or outside of the US? Do you have a Social Security number? I'd imagine you're OK to apply whenever and cite your upcoming salary when they ask. BECU is good as a physical bank but ATM availability kind of sucks. Get a good online checking account and use that for most things instead. Fidelity and Schwab both have really good checking accounts that refund 100% of ATM fees, have better web interfaces and features all around. Fidelity's will be more convenient because you'll already have a Fidelity account by virtue of the ESPP. Schwab's web interface is a bit poorer and you'll have one additional web portal to track but they refund ATM fees all over the world and don't charge any foreign transaction fee. Re: credit cards, since you'll have a Fidelity account soon after starting - and as long as you have reasonable credit - consider the Fidelity 2% cash back American Express card. It's pretty good. If you like to travel a lot, you might want to look at an airline rewards card instead. http://www.nerdwallet.com/ will help you do the math there. Re: Savings, American Express Personal Savings is pretty good and also pays out 1.15%. Add http://minimsft.blogspot.com to your RSS reader and read some of the older posts. Consider the comments interesting data points but take many with a grain (or truckload) of salt. Make sure you really really want to live in Redmond (or Bellevue). You may find the experience living in Redmond as an intern very different than living in Redmond as a full-timer. Most young Microsoft employees I know live in Seattle and either start off (or end up) in Capitol Hill. Without a car getting around the suburbs will be a pain. This might not apply if you hate city living, but it would suck to sign a 12 month lease then realize you're bored all the time. Don't even think about buying a house (especially in/around Redmond) as a fresh graduate and new transplant to the area... not for a while at least. Get to know the area and make sure you'll be happy there for a long time if you do. More philosophically, you're making a shitload of money and don't start to buy yourself all sorts of expensive stuff just because you can. You can definitely afford to enjoy yourself... but don't go nuts. And take advantage of the summer while it lasts, the weather is all downhill from here. 
laffa fucked around with this message at 06:08 on Jun 7, 2011 |
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Jun 7, 2011 06:04
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Somehow I missed that, nevermind. VVVVVVV baquerd fucked around with this message at 13:13 on Jun 7, 2011 |
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Jun 7, 2011 11:55
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Not vouching for his math but he isnt working a full year so that changes his tax situation.
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Jun 7, 2011 12:43
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mister itchy posted:Couple of random things that pop into my head (most BFC-related, some not): This is a ton of awesome information and advice, thanks a lot for your help! I'm just gonna reply to the stuff I have input on, some of it (the ESPP stuff) was pretty much echoing my existing plans. mister itchy posted:Microsoft recently announced a large raise (as much as 10-20%) for most R&D folks. I've heard rumblings that outstanding offers for new hires were being revised upward because of this. Have you heard anything to that effect and, if so, taken advantage? As an SDET in a normal product division (as opposed to MS Research or something), this is what I heard from my recruiter: Microsoft Onboarding posted:I wanted to let you know that [the April 21st changes] will not impact your offer or anticipated start date. You will experience the positive impact of these changes alongside all other Microsoft employees as they begin to take effect during our annual Performance Review process this summer/fall. I do not have specific details for you but you will learn more after you start. Judging by the very cookie-cutter nature of the offers myself and all of the new MSFT employees from my school (hint, if you're considering applying to a starting development position at Microsoft yourself: odds are very high your finances will look exactly like mine), I would be incredibly surprised if that wasn't the policy for all new recruits in similar divisions. mister itchy posted:With a $92k starting salary, $10k * 33% relocation (which is likely "grossed up" so you don't feel like you're paying tax but is still considered income), possible signing bonus stock awards, cash bonus at the one-year mark, and other things increasing your taxable income, it's possible you're going to bump up against the income limit for the Roth IRA next year. Your 401k might offset this, if not look into the "backdoor Roth IRA". This year you'll definitely be fine though. The $92k number was income, not salary - it includes estimates for bonuses and ESPP. I think for the first several years at least I'll probably be under the Roth limit. The backdoor Roth thing is interesting though, I didn't know about that. mister itchy posted:You'll have a few options for medical and dental insurance, depending on the level of coverage you want it ranges from no payroll deduction (nearly everything you could ever ask for is covered at 100%) to a modest payroll credit (high-deductible plan with additional free money for an HSA), make your choice accordingly based on how much you expect to need medical care. You'll have a chance to choose as soon as you start and then once a year afterwards. I didn't realize there was an HSA option at all, that's neat. As a boring person with no kids who has no medical history and has never so much as broken a bone, that'd probably be a better deal for me. mister itchy posted:BECU is good as a physical bank but ATM availability kind of sucks. Get a good online checking account and use that for most things instead. Fidelity and Schwab both have really good checking accounts that refund 100% of ATM fees, have better web interfaces and features all around. Fidelity's will be more convenient because you'll already have a Fidelity account by virtue of the ESPP. Schwab's web interface is a bit poorer and you'll have one additional web portal to track but they refund ATM fees all over the world and don't charge any foreign transaction fee. Should I still open an account at a physical credit union even if I don't plan to take out any loans in the next 2 years and keep all of my money elsewhere? If I'm doing checking, savings, and retirement all in other institutions that are also all FDIC insured, I don't really see the point of having an account at a physical bank at all. quote:Re: credit cards, since you'll have a Fidelity account soon after starting - and as long as you have reasonable credit - consider the Fidelity 2% cash back American Express card. It's pretty good. If you like to travel a lot, you might want to look at an airline rewards card instead. http://www.nerdwallet.com/ will help you do the math there. Wow, that's pretty good - I hadn't seen that because I've been telling nerdwallet my credit was only "good" (even though I've always paid off my CC bill on time, I've only had the one card for 9 months). I might try for it anyway though in the hopes that my high income would balance it out. I plan on doing 3-4 domestic flights every year, which nerdwallet says probably doesn't warrant using an airline rewards card for - evidently they're only usually good deals if you fly internationally with some regularity. mister itchy posted:Add http://minimsft.blogspot.com to your RSS reader and read some of the older posts. Consider the comments interesting data points but take many with a grain (or truckload) of salt. This is probably the single most valuable thing you mentioned to me. I'm really glad you pointed it out, I'll definitely be keeping up with that from now on. I'm flabbergasted at how unhappy the people commenting there seem with their ludicrously good jobs, though. If you think you can do better elsewhere, leave; if you don't, calm down and enjoy your six figure incomes. Christ. mister itchy posted:Make sure you really really want to live in Redmond (or Bellevue). You may find the experience living in Redmond as an intern very different than living in Redmond as a full-timer. Most young Microsoft employees I know live in Seattle and either start off (or end up) in Capitol Hill. Without a car getting around the suburbs will be a pain. This might not apply if you hate city living, but it would suck to sign a 12 month lease then realize you're bored all the time. Having lived in a city during college and in Bellevue during my internship last year, I'm fairly confident that the lessened commute outweighs the benefit of being closer to fun stuff. I loving hate commuting, and I usually prefer staying at home to going out a bunch anyway. That said, it's possible that you're right, and living in Seattle certainly isn't off the table once the first year's lease is up if we find ourselves too bored. As for the car, there's a possibility I'll end up getting one sooner rather than later if not having one turns out to be too annoying. I'm not expecting it, but it's definitely a possibility - I can certainly afford it if it seems necessary, it just means the emergency fund takes a little longer to fill out. I absolutely do not plan on buying a house at least for the first 3 years, probably not until I'm preparing for kids. Thanks again to everyone giving advice, it's really helpful
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Jun 7, 2011 17:28
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Chin Strap posted:Not vouching for his math but he isnt working a full year so that changes his tax situation. One thing to remember is that your tax situation, by default, will be calculated on a full year basis unless you fill out extra forms otherwise. It depends on your situation as to how you want to handle it, I'd personally recommend ignoring it and just dealing with the free loan to the government. Reasons: 1) It's not that big a difference. (1% on the ~3-5k for 6 months is about 25 bucks) 2) Going from no/little money, you will still have a lot availabe. 3) It is better to enforce living with less rather than having to adjust on Jan 1 after you ran up bills and now all of a sudden you have less money. The accounting department should handle appropriate withholding on your bonus, but if your actual salary is $82k, your paycheck wil, according to Paycheckcity, if you have a 5% deduction for 401K and absolutely no state obligations, that comes out to $2,275 a 2-week pay period, or $4,926. If you don't continually get that $10k, it is unwise to put it in your budget calculations. Edit: Your withholding difference, on 6 months of a 82k salary would be, without deductions, 4547 vs 7,075 - 2528 difference. I don't know that it's worth the paperwork/risk - personally I'd rather have the psychological benefit of getting a $2500 check in March - especially vs the 1% interest.. KennyG fucked around with this message at 03:06 on Jun 8, 2011 |
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Jun 8, 2011 02:56
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brosmike posted:As an SDET in a normal product division (as opposed to MS Research or something), this is what I heard from my recruiter: brosmike posted:I didn't realize there was an HSA option at all, that's neat. As a boring person with no kids who has no medical history and has never so much as broken a bone, that'd probably be a better deal for me. brosmike posted:Should I still open an account at a physical credit union even if I don't plan to take out any loans in the next 2 years and keep all of my money elsewhere? If I'm doing checking, savings, and retirement all in other institutions that are also all FDIC insured, I don't really see the point of having an account at a physical bank at all. There are also random one-offs like depositing rolls of coins that you might not ever need. Then again I don't think there are many full BECU branches that could handle that anyway. brosmike posted:Wow, that's pretty good - I hadn't seen that because I've been telling nerdwallet my credit was only "good" (even though I've always paid off my CC bill on time, I've only had the one card for 9 months). I might try for it anyway though in the hopes that my high income would balance it out. I plan on doing 3-4 domestic flights every year, which nerdwallet says probably doesn't warrant using an airline rewards card for - evidently they're only usually good deals if you fly internationally with some regularity. brosmike posted:This is probably the single most valuable thing you mentioned to me. I'm really glad you pointed it out, I'll definitely be keeping up with that from now on. I'm flabbergasted at how unhappy the people commenting there seem with their ludicrously good jobs, though. If you think you can do better elsewhere, leave; if you don't, calm down and enjoy your six figure incomes. Christ. If you've got more specific questions, PM me or send mail to cliche.ham.tire at hotmail.com and I can try to help out.
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Jun 8, 2011 03:13
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Edit: doublepost
maskenfreiheit fucked around with this message at 01:41 on Mar 13, 2017 |
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Jun 8, 2011 18:34
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GregNorc posted:So for example, if it's doing well, do I need to explicitly sell and rebuy so I have more shares? When the value of the fund jumps around, you don't have to do anything (unless you want to time the market (not recommended)). You still have the same number of shares, they are just worth less (or more) per share.
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Jun 8, 2011 18:53
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Perhaps what you are thinking of, GregNorc, is that for taxes you need to sell shares before you recognize the gain or loss. Example: Jan 1, 2011: You buy 10,000 shares @$1/share of SomethingAwful Co. (SAC) Dec 31, 2011: SAC closes the year @ $.50/share (You lost $5,000). Dec 31, 2012: SAC closes the year @ $2/share (you're up net $10,000 and $15,000 for the year) Jan 1, 2013 you sell @ $2. You only recognize a gain of $10,000 ($20,000 - $10,000 purchase price). You will pay Long Term Capital Gains on $10,000 in the 2013 tax year (April 15, 2014). Another great tax tip. The best time to sell for a gain is the first market day of the new tax year, Jan 2 or so for most individuals. This means you have 16 months of a zero interest loan from the IRS before you have to give the money back to them. Conversely, selling on the last day, as little as 3 days earlier could mean that you have to pay in less than 4 months. Even though you lost $5,000 in 2011, you didn't sell so it didn't exist. You could however have sold at that point and bought a similar stock and claimed the loss and taken a similar position. Great for index funds, tricky in stocks. For more on that http://www.investopedia.com/terms/t/taxgainlossharvesting.asp or http://www.bogleheads.org/wiki/Tax_Loss_Harvesting KennyG fucked around with this message at 00:11 on Jun 9, 2011 |
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Jun 9, 2011 00:09
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Edit: doublepost
maskenfreiheit fucked around with this message at 01:41 on Mar 13, 2017 |
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Jun 9, 2011 17:55
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GregNorc posted:What I meant was if the fund went up, I could tell them to sell and rebuy so I have more shares? Or would that be done automatically? Let's step through this. Assuming a regular equity stock style fund. You have 10 shares at 10 USD or $100 worth. The "fund goes up" and the share price increases to 15 USD. You now have 10 shares at 15 USD or $150 worth. Where in this process do you want to sell and rebuy?
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Jun 9, 2011 18:10
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GregNorc posted:What I meant was if the fund went up, I could tell them to sell and rebuy so I have more shares? Or would that be done automatically?
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Jun 9, 2011 22:38
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The only thing that selling and rebuying these shares would do is to force you to realize capital gains. Capital gains that you will pay taxes on. You might end up paying taxes on short term gains which are taxed at a higher rate than if you had waited until they became long term gains.
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Jun 9, 2011 22:57
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Since its stock price week in here, here's a situation I could use an answer on. Back in January 1997, my mother bought me 5 shares of Apple stock. The price she paid for the stock as close as I can tell was about $4.30/share. Since then there has been two splits of 2:1, giving me a total of 20 shares today. Price today was $331.49, giving a value of about $6,629.80. If I were to sell all the shares tomorrow, what sort of tax hit/liability would I have ? (It depresses me that $5,000 invested back then would be worth ~$1,540,765.52 today  )
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Jun 10, 2011 00:33
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MREBoy posted:Since its stock price week in here, here's a situation I could use an answer on. Assuming $4.30/share is accurate, accounting for the two splits you paid 1.08/share for each of the 20 shares you've got. Therefore, you'd owe long term capital gains on $6608.30. Depending on your bracket, taxes on LTCG is 10% or 15%, so you'd owe $660.83 or $991.25. All the above assumes that the shares were always in your name. If they were in her name for awhile and later you took possession of them, that *might* have reset your tax basis depending on how things were executed. If she gave them to you when they were worth more, then you may have an effective starting value that would make you better off. I can't imagine any scenario where a new tax basis would make you worse off, under the circumstances, so if they officially were handed over to you in your name at some later date, I'd work hard to find out when that was and what the value of the assets were when they changed ownership.
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Jun 10, 2011 00:42
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GregNorc posted:What I meant was if the fund went up, I could tell them to sell and rebuy so I have more shares? Or would that be done automatically? The only thing you have to worry about is dividends. Some funds (those that hold dividend stocks or bonds) will pay you distributions based on the underlying securities. This usually happens on a set schedule, like quarterly or semi-annually regardless of when the payment is delivered to the fund from the security. So for example: January 1: Purchase 1,000 shares in Something Awful Lifecycle 2040 fund @ $10 share. Dec 31: SA40 is trading at $12 share and distributes $.12 per share in bond payments from the funds holdings. You receive $120 and can tell the fund to automatically just buy you 10 more shares or to send you a check for $120. That is the only re-buy/reinvest decision you need to make. If you do re-invest you need to realize that while you now own $12,120 in the fund, your tax basis is not the original $10,000 but is $10,120 this could become important if you hold something for a long while and save you when the tax man comes calling. You will also pay tax on the $120 distribution in the year it was distributed. The actual rate will be determined by whether they are ordinary or qualified and when it happens. KennyG fucked around with this message at 01:26 on Jun 11, 2011 |
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Jun 11, 2011 01:22
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Is there an equivalent to Mint for Canadians?
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Jun 11, 2011 01:24
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My dad just called me and informed me that my Grandfather had taken out a life insurance policy on me in 1992. This year my Grandpa is going to stop paying for it. Right now it has a cash value of roughly 10K, and an 80K payout if I bite the dust. Yearly dues are around 460$ or so. I know next to nothing about long term investments so I'm looking for a little advice. My dad says at this point it's just logical to keep paying every year, as the value increases, you can take loans out against it etc. Does anyone have experience/info with/about this kind of stuff?
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Jun 14, 2011 16:47
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The Broletariat posted:My dad just called me and informed me that my Grandfather had taken out a life insurance policy on me in 1992. This year my Grandpa is going to stop paying for it. Right now it has a cash value of roughly 10K, and an 80K payout if I bite the dust. Yearly dues are around 460$ or so. Getting into whether or not your Grandfather should have taken out this policy is pointless, but in order to think about if you should keep paying it it helps to view it in light of a normal investment. The rate of return on your grandfather's policy is roughly 1.47%. (This is without taking the fees into account, so it's probably worse than that.) He would have done better putting $460 + net savings into 12 month CD at the bank every year. Or probably even just depositing it into a normal savings account. Usually (like, 99% of the time) it's a bad idea to combine savings with life insurance because the returns are poor and the fees are pretty ridiculous. It's almost always better to just keep savings and insurance separate, that way you can buy a term policy (a 100k term policy on a young man/kid would probably cost less than 10 bucks per month) and save/invest the difference in more prudent ways.
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Jun 14, 2011 17:27
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Ana Lucia Cortez posted:Is there an equivalent to Mint for Canadians? Sorry, I just realized there's Mint Canada. 
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Jun 14, 2011 17:40
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Dijkstra posted:Cash value insurance is usually a rip-off, and you shouldn't take over the payments yourself (if that is what your dad is asking). He bought one for all the grandkids in '92, and my dad said my uncle threw a fit over it, saying how bad of an investment it was. So you're saying I should cash it out and invest elsewhere? A savings account would even net me better interest?
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Jun 14, 2011 18:04
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The Broletariat posted:He bought one for all the grandkids in '92, and my dad said my uncle threw a fit over it, saying how bad of an investment it was. My parents did the same thing when I was a baby and gave me the policy when I was 18. I eneded up cashing it out and dumping it into an IRA to avoid the tax hit.
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Jun 14, 2011 18:16
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Cash value life insurance policies almost always suck. Almost as terrible is the Gerber Life College plan or what ever. The commercial where there is a bunch of young families and one family talking about how they just made possibly the worst financial decision they could make by putting money into a .9% interest account for an 18 year investment. Great plan! Suzy Orman is the Dr. Phil of finance, but this one she gets right. To quote directly, "Insurance is for insurance. Investments are for investments. Insurance is not an investment." Assuming you don't have some incredibly terrible family history and you aren't 650lbs. You can get like 30 years of 350k of life insurance at ~20 for about $20-$30 a month. That's so much more than that lovely policy it's scary. Yes, at 50 you have no coverage, but the idea is to stagger and stair step your policies so you don't need it when it expires. Life insurance is not a windfall for your heirs, it's to protect your dependents from the loss of your income. A 10 year old doesn't need a life insurance policy, unless your parents would have been so devastated from your death that they wouldn't be able to work for a while, in which case, the $80k or so would not have done them much good. Further, a retiree doesn't need a life insurance policy. Get only the insurance you need. Figure out what your dependents would need if you died tomorrow. Do you have a spouse? kids? do you have a mortgage? did anyone co-sign debt of yours? If the answer to these questions is no, then you don't need life insurance. Check out http://www.bankrate.com/calculators/insurance/life-insurance-calculator.aspx
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Jun 14, 2011 22:34
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The Broletariat posted:He bought one for all the grandkids in '92, and my dad said my uncle threw a fit over it, saying how bad of an investment it was. Your uncle was right. If you are getting the money, then do what Lorne Reams did, roll it over into an IRA. Pick a moderate growth fund from vanguard or something similar. Then put the $460 a year into that instead. If you do this be sure to follow the proper procedure for a rollover, or you will owe taxes. The mutual fund company you choose can help you do it properly. Cashing it out will cause you to owe taxes, so it wouldn't be prudent to do that and then just throw it in a savings account.
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Jun 14, 2011 23:07
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Thanks for the info, guys. I'll look into a couple options and see what I like best.
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Jun 15, 2011 15:15
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The Broletariat posted:Thanks for the info, guys. I'll look into a couple options and see what I like best. non-financial advice: don't get on the wrong side of a feud for ten grand.
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Jun 16, 2011 04:11
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I just started my new job/career and wanted some advice since I am an ignorant 24 year old when it comes to stuff like this. I recently started a job with USAA as a Software Developer. The (base) salary is $52,000 with several bonuses during the year, including a performance and christmas bonus. The performance bonus can be as much as 15%+ of the salary depending on how good of a fiscal year the company is doing (usually very well). The highest was last year at around ~17.5%. My manager and coworkers have all said that it is not uncommon for everyone in my pay bracket to earn more than $7k-$10k in bonuses ALONE per year. USAA also gave me the option to set up benefits (already did) and to move all of my finances with them. This is where I had a few questions: 1.) They provide a service where they can refinance my car loan to have it under them with a (most likely) much lower APR%. Other than a fee, is there any negative toward doing this, such as being labeled as a higher risk ("oh no he will abandon you!") or a lower credit score? My original lender is Wells Fargo. I also would like to ask what is the best way to pay this off? I hear that making sure to tell them to pay off the principle balance is the way to go every time you make a payment? Is this true? 2.) They also have a thing where they will take any credit debt/account from another bank, buy it out, and have it under them as well. Again, other than a $75 fee, does this ruin my credit rating at all? The credit card they offered me (and I accepted) has an APR of 16%, much less than the BoA card. Note: The USAA credit card I accepted had a limit of $4k, the debt they want to transfer is only around $900. Also, does opening a new card lower your credit score by a large margin? The main reason I did was that the USAA APR was going to be much lower and has no interest on the amount transferred is the amount is payed off within 6 months. It seemed like a good idea and the paper work seemed to make sense. I am also planning to get married, start a family, and move within the next 3 years so I figure it might be a good way to build my bad-to-non-existent credit rating. Does anyone see doing these things as a bad idea? notMordecai fucked around with this message at 06:51 on Jun 16, 2011 |
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Jun 16, 2011 06:41
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Money is truely fungible - I don't care if I have USD that came as income in the form of a paycheck or savings as a result of not spending. Let me take everything in turn. First, do not rely on the bonuses. They are called bonuses for a reason. Basically, if you rely on making $10,000 more than you actually do, and you don't get it, you are now $10k in the hole and sinking fast. If you don't rely on it and it comes in, you can do a lot with it like put a down payment on a house or pay for a wedding or start a college fund or contribute to your retirement. So basically, advice one, live within your means, don't rely on bonuses to make your finances work. As to your direct questions. The negatives depend on the fees. The minimal hit you get from refinancing a loan will be more than made up for if there are enough long term savings (assuming there is any) to justify the transaction. It depends entirely on the rates and fees. How much do you owe, for how long, at what apr, how much is the refi fee? Nobody is going to care that you took advantage of a better deal and paid off a loan with another loan that someone else gave you. As long as you don't do it every month, it won't cause a problem at all. Opening 5+ accounts in a year can start to hurt you but one or two, especially when you are young aren't going to be a problem for any human being looking at your application. Now, to your credit card transfer problem. Given the facts you laid out, I would hope that you realize, if you pay your card off in 6 months, that you have just signed up for a fee of 16.6% (front loaded). Add in how low the balance was and I can virtually guarantee you would lose money on any non-predatory interest rate. Assume you have $900 balance on a 29% APR card. If you wanted to pay this off in 6 months, that would be about $77.64 in interest over 6 months if you paid it off evenly (162.94/mo) over 6 months. The $75 fee doesn't really work well, and if you had anything other than a 0% rate, your minimum interest charge would gently caress you. Bottom line: Just because they are your employer, don't lose sight of the fact that they are a financial institution and trying to gently caress you at every turn.
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Jun 16, 2011 16:17
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I am looking into 529 plans for our first kid, and the whole spectrum is kind of overwhelming. We live in Massachusetts, which has a typical 529 administered by Fidelity and another plan (not technically a 529) where you buy state bonds to pre-pay future tuition percentages (so if you buy bonds worth 10% of a school's tuition today, it will always be worth 10% of the tuition). I know that may also be able to use a plan in another state. So is there any common wisdom for these? It appears that Vanguard does 529 plans, and I know they are a popular general investment choice, but they also have a higher minimum than we have on hand right now. Would it be a good idea to just start with the local state plan until we have enough to roll it into a Vanguard plan?
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Jun 16, 2011 17:28
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I'm sure someone isn't going to like my advice, but our incredible education bubble makes me feel obligated to post this: I can't answer any of your questions directly, but how special is your little snowflake? Send them to a state school. Seriously, SEND THEM TO A STATE SCHOOL! Perhaps the best college investment you could make would be sending them to a state school. UMass Amherst isn't University of Phoenix, but if they aren't strong in the area of your kids interest, you could always move to a state with a solid program for your child. If I offered you $150k (net tuition) and a larger house (cheaper property), would you move for 3 or 4 years? That's basically what I'm talking about. As an example, depending on the major, most of the big 10 public schools compete incredibly well academically, and they are about half price or better for instate students than the small private schools championed in New England. If you can make it work for you, it can be a really smart thing. I have friends who paid $40k+/yr for tuition where mine was $6k (I feel old). I had classmates who had to pay $25k just because they lived the next state over (and barely at that). Had their parents planned ahead a little more they could have saved about $75k in student debt. Even after my alma matter has upped their instate to ~$15k with average tuition at $30k+ today, the value is still amazing. You still have to save, but you can get a lot more bang for your buck at schools like Indiana, Illinois, Iowa, Michigan Michigan State, Minnesota, Nebraska, Ohio State, Penn State, Purdue, Wisconsin. (Northwestern is not the same great deal for undergrads, gently caress them!) Some people are absolutely convinced that Yale or Standford are the place for their kid to be most successful, and they may be right. There are only so many slots at the mega-elite schools and so kids end up at small private schools that claim to be 'baby ivy' or whatever, but cost 99% or more of the ivy's heavy hitters. I would argue that one would be better off at a Nebraska or Michigan than going to a Northeastern, a Wellesley, or even BC. Basically: Even if you think of education as an investment, you should think in terms of value of your investment and possible return on your investment. Be honest with yourself, you should know if your kid has a legitimate shot at getting into a college in Cambridge by the time they are 14 or 15. I will concede that it isn't possible for everyone, but the savings are so substantial that it is worth evaluating seriously.
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Jun 17, 2011 01:55
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Yeah, my sister and I both went to the state school of Purdue (15 minutes from our house) and I only had to get a couple of small scholarships to be completely covered for 4.5 years and she graduated in 3.5 with her total tuition being something like $10K. And neither of us lived in the dorms; I lived at home my first year and she and I even shared an apartment for two years. We both got out with no debt, minimal cost to our parents, and had no trouble finding jobs in our fields afterwards because Purdue is a good school. My cousin went to a very expensive private school on the East Coast and she and I work for the exact same company doing the exact same work now. I don't begrudge her that experience or anything, just pointing out that you can get to the same place at a fraction of the cost. It's still prudent, if you can, to save money as if that might not happen, of course. School can still be expensive no matter how much you can prepare. But it doesn't have to be an arm and a leg to be quality.
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Jun 17, 2011 02:11
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I have no problem at all with state schools, being as that is where I went myself. But even state schools aren't free, and not everyone can get a scholarship or grant to cover everything. Frankly, I doubt that we will be able to save enough to pay 4 years of in-state tuition at a state school, much less send him to some private school. But every dollar we save now means that much less he needs to rely on getting a scholarship or fewer hours he needs to spend delivering pizza to make ends meet. I am not particularly optimistic about external funding, considering how many states are gouging out their education budgets and I would certainly like him to avoid the shackles of student loans. If there is some better way to save money for him, please let me know. A 529 seems like a good choice because it is tax-free and pretty flexible on what it will pay out to cover (beyond just tuition). It seems like a better idea than just putting money into a custodial savings account, at least.
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Jun 17, 2011 03:07
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Sophia posted:Yeah, my sister and I both went to the state school of Purdue (15 minutes from our house) and I only had to get a couple of small scholarships to be completely covered for 4.5 years and she graduated in 3.5 with her total tuition being something like $10K. And neither of us lived in the dorms; I lived at home my first year and she and I even shared an apartment for two years. Boiler UP! Are you me in some alternate universe? Same plan, scholarships, 4.5 years! What were you? I was in the School/College of Technology How old is the first kid? I personally would stay out of the state bond programs and stick to the 529s. As I don't have a kid, I haven't researched this particular topic that much, but really I think staying out of state finances as much as you can is a good idea. I know this partially contradicts my point about state schools, but I think the logic should be obvious. The one thing you should remember with your investment strategy is that unlike saving for retirement you are pretty much going to need this money on a very definite timeline. In retirement if you need to you can sometimes fudge a few years by taking semi-retirement or just not retiring. When it comes time for Junior to go to school, the bill will be due. There will be no waiting for the market to rebound. This requires you to be on a more conservative path.
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Jun 17, 2011 03:54
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I was looking for a combination debt payoff/savings goal calculator that allowed for sequential goals, rather than concurrent ones (Mint does concurrent). That is, something where I could say... In this order, I will budget $_ dollars each month that I want to go toward, in order: 1. A debt snowball with the following items: - Credit Card A ($_ balance, _ interest rate, $_ minimum payment) - Student Loan A ($_ balance, _ interest rate, $_ minimum payment) - Student Loan B ($_ balance, _ interest rate, $_ minimum payment) 2. Saving $_ for a car down-payment. 3. Saving $_ for an emergency fund. 4. Saving $_ for a vacation. 5. Saving $_ for a home down payment/closing/repair fund. ... And be told the month and year I'd accomplish each goal. Tweaking any of the figures would automatically recalculate the timeline. I found a convoluted way to accomplish this by using a debt snowball calculator. I added the debts as usual, and then input the savings goals as debts with no minimum payment and very small interest rates in the order I wanted them funded (goal 2 with 0.004%, goal 3 with 0.003%, etc.). This gave me exactly what I wanted. I just input how much I want to spend each month on debt/savings, and it lets me know when I'll accomplish each goal. I can play with the goal amounts or the monthly budget to see how it affects the timeline. If nobody has an easier alternative, then I'd suggest trying this kind of thing with the snowball calculator. Just be mindful of a few little quirks: to rearrange or add a goal, you have to change the fake interest rates so they are in the proper order again; and it will automatically put $5/month toward all savings goals, even if you specify a $0 or $1 minimum payment (the impact is minor). Also you MUST use "Interest order," or else it won't order your savings goals correctly. According to my chart, if I budget $1600 toward these goals, I'll... Pay off my last credit card in January 2012. ($8300 starting balance) Pay off my last student loan in August 2012. ($12,000 starting balance) Have my car down payment in October 2012. ($4000) Have six months expenses saved up by April 2013. ($10,000) Save for a vacation by August 2013. ($5000) Have my house fund by August 2015. ($40,000 - 25k for down payment, 5k for closing, 10k "DNB/poo poo's probably gonna break" fund). Seeing it laid out like that is very inspiring!
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Jun 17, 2011 09:28
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KennyG posted:Boiler UP! Are you me in some alternate universe? Same plan, scholarships, 4.5 years! What were you? I was in the School/College of Technology I actually went for 5 years (I had to pay the last semester of tuition myself, which 5 years ago was practically nothing). Started out in Pre-Pharmacy for 2 years, got the grades but not the ambition to do the job, switched to Actuarial Science for the next 3 years. All in all not a bad way to get an education. And I know just enough about germs and diseases to be dangerous to myself. Though I'd amend my former advice to say that there are some drawbacks to having your kid go to the hometown college...
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Jun 17, 2011 14:33
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notMordecai posted:I just started my new job/career and wanted some advice since I am an ignorant 24 year old when it comes to stuff like this. Wanted to add a bit to what’s been said. 1. Transferring your loan will have a negligible impact on your credit, good or bad. Probably a very slight hit from the inquiry and another slight hit from the new account lowering the average age of your accounts. Eventually it will be a positive tradeline so it will have a slight positive. But I want to stress how almost completely irreverent this is would be for your credit. Wells Fargo will not take it personally that you transferred your loan over, and it’s not like anyone will hesitate to give you a loan because they think you might pay it off early someday. USAA will ask for a payoff amount from Wells Fargo, loan you that amount, and you will pay USAA instead. As long as your payment is enough to pay the interest that has accumulated since your last payment, your lender will automatically apply the appropriate amount to principal. You don’t need to do anything special 2. $75 seems steep for the privilege of transferring $900. One thing to keep in mind is that interest rate is not all that important in the length of time it takes you to pay your debt. People all the time think the opposite. They rationalize the fact that they are still in debt is the stupid banks are charging them too much interest and they just can’t ever pay enough to make any headway. This makes people think they can refinance their way out of a mess. Obviously you want to have the best terms possible, but don’t expect your payments to go down that much, and since you are making decent money, you should be able to make and stick to a budget that allows you to aggressively attack this debt.
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Jun 17, 2011 16:31
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TheShineNSB posted:According to my chart, if I budget $1600 toward these goals, I'll... While that is very cool and I like that site - I'm going to be a (hopefully helpful) critic. It essentially moves the time when all of your goals are met to as soon as possible. The only problem is that your priorities should be different! It is often better to have some goals done sooner than others, regardless of what interest rates you would be paying. Interest only factors into the logic of what to do when, it doesn't dictate it. You need to move that 6 month nest egg up to the top, probably above the credit card. The student loan should be below the car down payment and the car down payment should be renamed "buying a used car" because down payment implies that you are taking a loan to buy your car - and those payments are not factored in here (and are expensive). Maybe you just meant this as an example, but for budgeting, I strongly recommend a spreadsheet program. That's the only thing that will give you the flexibility to do a proper budget.
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Jun 18, 2011 04:32
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Sorry about double posting, but I just realized that there isn't a marriage thread from a financial perspective. I know that sounds coldhearted and evil, but jesus christ a wedding (sometimes) costs a lot. Since one of the most common reasons for divorce is money, it would be a little wrongfooted to start things off overgenerously. Personally I spent about 40k on our medium sized wedding, all in. poo poo, we focus on cars and cell phone bills, but it would take quite a bit of gas and texting to add up to something that compares. Where's the good advice for an internet nerd that's thinking of getting married?
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Jun 18, 2011 05:42
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