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I'm still getting through this thread, but it's reminding me that my dad is pretty bad with money. Not borrowing-from-his-401k bad (Oh god I hope he wasn't/isn't or I'm gonna have to start planning for his retirement), but he really liked to buy really expensive things he never used. One time he bought a really nice 500 dollar pair of skis, which on the surface isn't that bad of a purchase since he's really into skiing. Except for the part where we lived in Texas and the year before it snowed a grand total of half an inch, and he was such a workaholic that he never actually took time off to go anywhere that wasn't within a days drive. And we were planning to move to Hawaii, which is well known for it's excellent ski mountains  .Or when he took a pay cut to move out to beautiful Vermont, since in his words "Cost of living is so much cheaper compared to California!". Only he forgot to factor in the cost of heating a house in winter, and completely neglected to do his research about how you're "supposed" to heat your house. See, in Vermont most houses have wood stoves, and my dad thought they were only there because most people just like doing things the "traditional way", like they're in a loving colonial village or something. In reality most people use wood because outside of the major towns, there are no natural gas lines so you essentially fill up a tank and use that as backup heat because gas is really expensive. So we didn't buy enough wood and had to heat our house with only gas for a few months, which cost us an assload. And to top it off he sold the skis a year earlier so they were really never used. And I'm kind of sad he's not even close to the worst story in the thread. Don Gato fucked around with this message at 04:25 on Sep 25, 2014 |
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Sep 25, 2014 03:52
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Don Gato posted:And we were planning to move to Hawaii, which is well known for it's excellent ski mountains Well the runs aren't excellent (no lifts) and not well known, but you can snow ski in Hawaii. http://www.hawaiiinfoguide.com/hawaii_skiing.htm
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Sep 25, 2014 04:52
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Guinness posted:But of course the bad with money part is that almost everyone taking a 401k loan is doing it for a terrible reason and will probably mismanagement and have it blow up in their face. I took an $11k 401(k) loan to buy an investment property that has been profitable for more than two years. I have about $5,500 left on the loan and may pay it back early so I can take another loan and buy another property. Also, my loan is repaid via payroll deduction. I have a Roth 401k, but I imagine that if you have a traditional 401k, the interest portion of loan could be taken out pre-tax so it's not taxed twice. I don't know if this occurs though.
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Sep 26, 2014 03:25
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Blackjack2000 posted:I took an $11k 401(k) loan to buy an investment property that has been profitable for more than two years. I have about $5,500 left on the loan and may pay it back early so I can take another loan and buy another property. So you borrowed money just so you could use it as leverage to borrow even more money?
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Sep 26, 2014 04:57
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Blackjack2000 posted:I imagine that if you have a traditional 401k, the interest portion of loan could be taken out pre-tax so it's not taxed twice. I don't know if this occurs though. No. IRS rules say loan repayments must be post-tax.
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Sep 26, 2014 05:35
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A friend told me a story about one of his former coworkers. She took out a loan against her 401(k) to lease a new Lexus SUV. She quickly ran over the mileage limit and parked it to avoid having to pay an exorbitant penalty. Then she lost her job.
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Sep 26, 2014 11:37
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Rudager posted:So you borrowed money just so you could use it as leverage to borrow even more money? That's really risky, but it has a high reward, so tentatively not bad with money, especially given it was a Roth 401k.
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Sep 26, 2014 13:51
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Cyrezar posted:A friend told me a story about one of his former coworkers. She took out a loan against her 401(k) to lease a new Lexus SUV. She quickly ran over the mileage limit and parked it to avoid having to pay an exorbitant penalty. I don't know what's worse, this, or my coworker who has no 401k. It's not that we're not given one, he just sees it as a waste of money and doesn't contribute. He's in his mid 30s and complains all day about how much he hates work and doesn't want to work anymore. If only if there was some sort of program where your company gave you free money so you will one day no longer need to work...
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Sep 26, 2014 17:22
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Oh I have one! My coworker has spent all day working on cashing all his bonds, savings bonds, and CD's so he can help pay for his gigantic garage hes building and for his daughters incredibly expensive wedding. She's only been engaged for maybe a month and is already a massive bridezilla. He pissed off the original $4000 dollar band they were going to hire for it, so now his daughter wants a particular $8000 band and she is very likely to get it.
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Sep 26, 2014 17:27
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Renegret posted:I don't know what's worse, this, or my coworker who has no 401k. Hey now not everyone's work gives them 401k matches 
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Sep 26, 2014 18:20
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mastershakeman posted:Hey now not everyone's work gives them 401k matches Yeah and if your work does but you don't make use of it, you're a god drat idiot. And if your job doesn't give you a 401k match then
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Sep 26, 2014 19:19
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Even without a match, unless your fund choices are just all god-awful, 401ks are still a great tax-advantaged investment vehicle after you max out your IRA/HSA. Plus when you move jobs you'll be able to roll it over into an IRA and have total control. Though I really do wish the contribution limits on IRAs were a lot higher. 5500/yr is a pittance, especially if you have no/poor 401k options. Guinness fucked around with this message at 19:25 on Sep 26, 2014 |
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Sep 26, 2014 19:22
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Some of us can't even contribute to tax-advantaged accounts, so quit yer bitchin'.
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Sep 26, 2014 20:04
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disheveled posted:Some of us can't even contribute to tax-advantaged accounts, so quit yer bitchin'. Making $200k+ a year? Too bad, the poors need your monies.
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Sep 26, 2014 20:26
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Bad with money: getting a generous offer from parents to buy a perfectly maintained, older, honda for way under market value at 0% interest (100/ month till paid off). Taking the deal/car. Never pay parents (claiming financial hardahip). Use the honda as a trade in for a brand new car valued over 20,000 financed at 13% apr.
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Sep 26, 2014 20:51
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Velochis posted:Bad with money: getting a generous offer from parents to buy a perfectly maintained, older, honda for way under market value at 0% interest (100/ month till paid off). Taking the deal/car. Never pay parents (claiming financial hardahip). Use the honda as a trade in for a brand new car valued over 20,000 financed at 13% apr. If my kid did this I'd write the sale value of the new car out of his share of the will
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Sep 26, 2014 20:55
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Velochis posted:Bad with money: getting a generous offer from parents to buy a perfectly maintained, older, honda for way under market value at 0% interest (100/ month till paid off). Taking the deal/car. Never pay parents (claiming financial hardahip). Use the honda as a trade in for a brand new car valued over 20,000 financed at 13% apr. If I pulled that poo poo with my parents I would never see a favor from them again for the rest of my life. I have a funny feeling the kind of person to pull that kind of poo poo probably has a track record of being a little dipshit and it probably wasn't a surprise to anyway.
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Sep 26, 2014 21:00
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Makes me appreciate that my employer gives us a 3% match regardless of contributions. I'm contributing, but its nice to know the employees who don't are still getting 3%.
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Sep 26, 2014 21:19
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baquerd posted:Making $200k+ a year? Too bad, the poors need your monies. Nope, no earned income, thanks to some awesome technicalities.
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Sep 26, 2014 21:25
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disheveled posted:Nope, no earned income, thanks to some awesome technicalities. I'd say you've got bigger problems then, son!
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Sep 26, 2014 22:24
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MAKE NO BABBYS posted:I'd say you've got bigger problems then, son! Or a really good accountant.
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Sep 26, 2014 23:04
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Not a Children posted:If my kid did this I'd write ftfy Hyperbole, but still.
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Sep 27, 2014 04:36
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MAKE NO BABBYS posted:I'd say you've got bigger problems then, son! But income ain't one 
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Sep 27, 2014 04:37
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disheveled posted:Nope, no earned income, thanks to some awesome technicalities. Well then quit bitchin' that your greedy and potentially illegal setup doesn't allow you to be even more greedy in other ways. Geez.
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Sep 29, 2014 03:48
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StrangersInTheNight posted:Well then quit bitchin' that your greedy and potentially illegal setup doesn't allow you to be even more greedy in other ways. Geez. I'm going to go ahead and guess this guy is an owner that has his business set up as an s-corp and has an accountant that forgot to tell him that it's required for him to take a wage.
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Sep 29, 2014 04:19
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Probably a government contractor of some sort, or having to do with oil & gas.
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Sep 29, 2014 04:40
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I wonder if that one guy actually invested 20k into blizzard. They've had a steep drop in the last month.
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Sep 29, 2014 13:14
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I'm bored at work so let's read /r/personalfinance for a bit.http://www.reddit.com/r/personalfinance/comments/2hrrf7/is_investing_in_gold_bullion_as_good_as_i_hear_it/ posted:
Though to be fair, everyone is telling him not to be an idiot. http://www.reddit.com/r/personalfinance/comments/2hp5b4/my_friend_is_operating_as_a_business_but_has_not/ Guy's..."friend" runs his own business and has not paid taxes in 10 years because he doesn't want to. Reddit seems a little dry today. That or I've had too much coffee and don't have the attention span needed to read each thread enough. e: HERE WE GO http://www.reddit.com/r/personalfinance/comments/2hr78l/finally_saved_10000_what_should_i_do_with_it/ posted:Okay so my situation is complicated! My home business finally turned a profit! I made $10,000 this year. My plan is to file for bankruptcy, then use that $10,000 to buy a house. Renegret fucked around with this message at 13:45 on Sep 29, 2014 |
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Sep 29, 2014 13:33
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Renegret posted:I'm bored at work so let's read /r/personalfinance for a bit. quote:However when I fill out my tax income papers, there's a box I can check to indicate that, on top of my normal annual salary, there was an "other source of income" that year. I write how much I made doing XYZ, and I keep receipts in the event where I should be audited. Isn't that the catch-all so that they can put Al Capone wannabes in jail for tax evasion? Isn't there a more appropriate box to put self employment income? I would find it hilarious if this guy was unwittingly filling out this box and suggesting others do the same.
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Sep 29, 2014 13:42
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http://www.reddit.com/r/personalfinance/comments/2hr2t7/house_ownership_at_20_or_19/quote:Okay so I am currently 17 and I have huge ambitions so I'm blind to technical problems. A friend of mine offered to sell me his bungalow up in Oregon which is where I planned on moving (We live in New Jersey). He offered me around 50,000 for it maybe less. I'm still a kid and I have no idea what to do in these offers. I for one think this may be my ticket to achieve my dream but I have no idea. He say's I can also work for him up there and the pay is fair and enough for me to get by. With only this information what should I do? It's okay though, he saw pictures and it looks alright. He's going to buy it when he graduates high school and pay it off using the job that his friend is totally going to get him in a garage. A job he'll get after buying the house, of course.
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Sep 29, 2014 14:02
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MAKE NO BABBYS posted:I'd say you've got bigger problems then, son! StrangersInTheNight posted:Well then quit bitchin' that your greedy and potentially illegal setup doesn't allow you to be even more greedy in other ways. Geez. Admiral101 posted:I'm going to go ahead and guess this guy is an owner that has his business set up as an s-corp and has an accountant that forgot to tell him that it's required for him to take a wage. Cute guesses, but I'll put an end to the game. It's much simpler: I'm a grad student, and all of my income is a stipend off an NIH predoctoral fellowship. If you have direct funding from the feds, then it ends up not counting as wages because it's for "training." I'm required to pay income taxes on it, but I do not receive a W-2, no tax is withheld, and it does not qualify as earned income. One consequence of that is that I can not contribute to an IRA. It has zero benefit to me, as far as I can tell... it is mostly a vehicle for universities to avoid FICA, I think. Other students in my program do end up receiving a W-2, because it depends on funding source. BRAKE FOR MOOSE fucked around with this message at 15:46 on Sep 29, 2014 |
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Sep 29, 2014 15:43
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ohgodwhat posted:Isn't that the catch-all so that they can put Al Capone wannabes in jail for tax evasion? Isn't there a more appropriate box to put self employment income? I would find it hilarious if this guy was unwittingly filling out this box and suggesting others do the same. It sounds like they were using TurboTax or something. Illegal income can be disclosed just fine on Schedule C.
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Sep 29, 2014 16:52
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Does anyone ever actually report illegal income? I can't imagine your big name drug dealers putting down "Hmm, I think I made $10 million this year off of murder and drug trafficking" and sending it in to the IRS.
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Sep 29, 2014 18:06
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HonorableTB posted:Does anyone ever actually report illegal income? I can't imagine your big name drug dealers putting down "Hmm, I think I made $10 million this year off of murder and drug trafficking" and sending it in to the IRS. I think it's meant more for "escorts" and the like who make a decent living, and don't want to deal with the taxman over a disparity between reported income and lifestyle. If you're making millions through crime, you're laundering it or keeping it in a safe.
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Sep 29, 2014 18:15
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Renegret posted:
That cannot possibly be real. Someone's taking the piss.
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Sep 29, 2014 19:22
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olylifter posted:That cannot possibly be real. Someone's taking the piss. It's more likely than you think. You could probably pull this poo poo with your bank 5 or 6 years ago. But I don't know the tax consequences of bankruptcy, so I have no idea how the IRS would handle that. Folly fucked around with this message at 19:40 on Sep 29, 2014 |
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Sep 29, 2014 19:34
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If he hasn't incorporated his business properly, his personal bankruptcy could wipe it out.
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Sep 29, 2014 22:36
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His bankruptcy could also wipe it out if he's been mingling his business and personal assets, which he probably has. So he's screwed either way I think.
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Sep 29, 2014 23:46
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Rudager posted:So you borrowed money just so you could use it as leverage to borrow even more money? That's funny, I don't remember saying that. I received an inheritance ($38k) from my grandmother's estate and bought a $40k property. The $11k 401k loan bridged the difference, paid for the inspection, lawyers, etc. and kept me liquid as I took care of some of the deferred maintenance. baquerd posted:That's really risky, but it has a high reward, so tentatively not bad with money, especially given it was a Roth 401k. I would say it's risky any time you're investing a substantial amount of money in a single vehicle. In this case the risk turned out to pay off handsomely. The house that I bought six years ago as a residence, on the other hand, is still worth $30k less than what I owe. Sucks, but that's how it goes. Bad with money story: In 2008, after housing prices had already dropped substantially, I bought a SFH for about $194k. Zillow says it's now worth $141k and I still owe $170k (FHA loan, also bad with money). PITI is about $1350 (including outrageously expensive PMI) and it's currently rented out for $1500. So when you figure the income taxes on the $1500 it's a money loser even before maintenance is considered. In about 3 years, when PMI comes off, PITI will go down to about $1150, and assuming I can rent it out for $1550 or $1600 at that point, it will not be as much of a waste of money as much as a waste of time and leverage. Hopefully another two or three years after that I'll be right side up plus 6% and I can sell it.
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Sep 30, 2014 01:09
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I work at an investment firm, and for the most part our clientele are pretty clever people and easy to work with. One of the popular strategies they choose is the dividend income portfolio. We buy stocks based on their dividend pay out, which is pretty simple on the face of it. So I'm covering a coworker's desk while they're out and one of their client's calls in. Before I can even introduce myself he's asking me if now is a good time to buy back into the market. I get his name and look up his file and he has our dividend income portfolio, but it's $400K in cash. This is bad, and something we won't do unless we receive specific correspondence from the client. If we hold too much of the client's portfolio in cash they can, potentially, sue us for not living up to our end of the deal and costing them money. I talk to him for a bit and find out he second guessed our portfolio managers and told us to sell everything and hold it when the market was going down. Now he wants someone to talk him into buying back in while the market is up. So he hosed up a simple buy-and-hold strategy by selling low and buying high, when he would have been making money anyway if he'd just let the dividends roll in. So now he owns less stock and has to pay $300 in trading fees each way. It ended up not being a huge difference, but god drat that was a stupid move on his part.
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Sep 30, 2014 01:41
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