spwrozek posted:

What high earning family of four with a stay at home mom lives in a two bedroom apartment? This conversation is pretty dumb but let's at least have the same one...

Faerunner posted:

I was under the impression that student loans (At least direct government ones) don't get written off when you die and they just go after your next of kin to pay up instead, which is why I haven't offed myself yet. Then again I don't know many people with gov't loans at a 2% interest rate either so I'm guessing yours is private?

Thanatosian posted:

Uhhhhh... if I could take out a 2% unsecured loan to fund my IRA? gently caress yes.

In fact, I have a 2% student loan (so, effective rate closer to 1.75-1.8%) that I don't pay down for this exact reason. Additionally, if I die, my IRA is inheritable as an asset, but they'll write off the student loan, so there's yet another reason not to pay it.

MJBuddy posted:

loving nerds and their math, amirite?

Faerunner posted:

I was under the impression that student loans (At least direct government ones) don't get written off when you die and they just go after your next of kin to pay up instead, which is why I haven't offed myself yet. Then again I don't know many people with gov't loans at a 2% interest rate either so I'm guessing yours is private?

Dead Pressed posted:

He didn't say anything about it being unsecured. He also didn't say anything about it being a student loan, and not paying a governmental student loan is a different story from a typical private or conventional unsecured loans.


You are a loving idiot if you can't understand how money in your pocket is better utilized spent on the IRA over a loan taken out at any percentage. Using the money in hand is immediately a winner by whatever the gently caress percentage you want to use as your interest rate. Great job trying to be a funny guy in the financial forum, though.


Government loans are written off at death. It is cosigned private loans that are screwing families of dead family members.

spinst posted:

Does anyone use Ally for their checking account?

I will be moving this summer, and my new city will only have one branch of the bank I currently use (US Bank) and it will be on the other side of town from where I will be working and probably living…

I opened an Ally savings account, and so long as that goes smoothly for the next six months, I was thinking of using a checking account with them as well.

Has everyone had positive experiences?

james1844 posted:

Ally is the old GMAC. They were pne of the companies that was on the verge of going under and needed to take TARP funds. I would be very, very careful about putting my money in that bank until you've reviewed their management structure and are satisfied that the people who caused the near-bankruptcy are no long there.

Here is a link to a GAO paper on the subject.

http://fas.org/sgp/crs/misc/R41846.pdf

SiGmA_X posted:

Yeah, usually those families come with upper class neighborhood SFR's... Probably a maid or two, stay at home moms need help cleaning you know.

BFC is entertaining.
An IRA beneficiary bypasses your estate, and hence would not be reduced by your student loan debt. If you structured your death by not specifying a direct beneficiary then yes, the IRA would be liquidated to pay the loan. Unless you have a consigner, your loan dies when you do, either by being paid off by your estate or written off due to your death. I suppose it's time to off yourself? (Wtf? The only reason you haven't done so is because you don't want to pass your debt on?? Seek help...)

Faerunner posted:

A) I didn't understand half of what you just said and also was not the one asking the question in the first place, and B) jooooooooooooking. Clearly.

james1844 posted:

Ally is the old GMAC. They were pne of the companies that was on the verge of going under and needed to take TARP funds. I would be very, very careful about putting my money in that bank until you've reviewed their management structure and are satisfied that the people who caused the near-bankruptcy are no long there.

Here is a link to a GAO paper on the subject.

http://fas.org/sgp/crs/misc/R41846.pdf

Vilgan posted:

I've heard significantly different stories about costs, but I don't live there so whatevs

On the flipside, that sounds awful and reinforces how much I love Seattle. Slightly lower salaries in exchange for significantly cheaper housing in walkable neighborhoods with a nice easy commute via bus or light rail. I live in my favorite part of Seattle that is super walkable, right near the lake and a bunch of other cool things, etc and our monthly expenses are 1500/month for mortgage and 1k/month for food/utilities/etc that we need to spend and 1k per month that we could easily remove if necessary. We could get that a lot lower if we moved to a less nice neighborhood.

Edit> I lied, I am going to question these numbers. Zillow quotes average 2 br in silicon valley as 2200 a year ago, I doubt its gone up over 50% in the last year. I see lots of 2 br apartments in that area for WAY under 3500. Also, people usually throw around 700k for a home, that'd be like 2600 before insurance/tax not over 3500.
Other costs:
food - 600/month
Car/life insurance: 100/month and vehicle: gas/maintenance 200/month
Utilities/all other random stuff: 300
So maybe 4500 before childcare IF you need childcare, the original discussion was single earners because they probably want a 6 month cushion while its a lot less necessary for dual earners. Dual earners ought to be fine with a lot less than 6 months

I'll stand by my original point that burning through 50k in 6 months is absurd. Lots of people in SV have posted elsewhere that they are easily able to live in SV and save 60-75% of their income by not going crazy with spending. If both people are earning 60k or whatever such that you really do need both people to work, perhaps you should move just about anywhere else in the country that's not Manhattan or SV.

blah_blah posted:

No one is saving 75% of their income in SF/Silicon Valley. I can imagine living expenses for 6 months reasonably being around 50k in Palo Alto for a dual income family with a couple of kids, especially if they have a mortgage. Even as a single person my living expenses are about 50k/year, a substantial majority of which comes from rent, and I don't own a car and I have all my meals provided at work.

blah_blah posted:

No one is saving 75% of their income in SF/Silicon Valley. I can imagine living expenses for 6 months reasonably being around 50k in Palo Alto for a dual income family with a couple of kids, especially if they have a mortgage. Even as a single person my living expenses are about 50k/year, a substantial majority of which comes from rent, and I don't own a car and I have all my meals provided at work.

Rick Rickshaw posted:

Do you have roommates? You should, especially since you eat at work. No kitchen conflicts.

MrKatharsis posted:

I love how every time someone brings up a specific example of how SV is expensive, the conversation derails to frugality advice for them rather than acceptance that some areas just require very large outflows.

nelson posted:

Have you considered living as a homeless person?

MrKatharsis posted:

It makes a difference if your extra payments are going to principle or just being held for your next due date. In the first instance, you're saving money on interest. In the second, you are not. I suspect your situation is the second but you should read the paperwork for the loan.

Mersenne posted:

All right, figured I'd give this a shot. I've only very recently started looking seriously into personal finance, so feel free to call me an idiot babby moron or whatever

Background: Software engineer living in central Florida (Space Coast area). Moved here from Puerto Rico as soon as I finished college and started working at my current job in July 2013. Single, 23 years old. No student loans. No children, dependents, or major financial responsibilities outside of rent/transportation/utilities and food. I'm certainly not planning on buying a house anytime soon (not like I could right now, my credit history is barely a year old), but eventually it would be nice not to have to throw a fifth of my income into a black hole every month. Not a paragon of frugality like some of the examples/expectations in the Financial Independence thread since I do like to buy nice gadgets every once in a while, but I am interested in the concept of FI in the sense of being able to survive without a 40-hour corporate job while still doing other things on the side rather than complete early retirement.

Income: 3326.36/month (post-taxes/healthcare/deductions/401k)

Assets:
Savings: 710.69 (Untouched, as it's a remnant of a secured CC I converted to unsecured about six months ago)
Checking: 6696.96 (No yield, direct deposit, used as a buffer for day-to-day expenses)
Money market: 6746.24
401k: 7684.16 (Fidelity, 6% contribution w/employer matching, Lifecycle Target Fund 2055)
Total: 21838.05

Loans: 21678.07 (Auto loan with BB&T, 2.15%)

CCs:
1701.29 (Discover It!, 4K limit, 13 months left on introductory 0% APR)
Got this one last November, churned all my Christmas purchases for myself and the family through it because cashback rewards. Planning to clear it out sometime before Q2 since I'll be using it on a two-week vacation trip to Japan in the fall due to no forex fees. Might consider using it to churn all my monthly expenses that don't come straight out of my checking account after that's all said and done.
531.70 (Space Coast, 1K limit, 18%)
I use this one as a charge card and pay it off every month without fail. Main reason it's so high halfway into the month is because I had to order a new pair of glasses. Lenses are kinda expensive when you're at -7.0/-8.5 :/

Monthly Expenses:
Rent: 758.00
Car payment: 474.00 (technically 374, but I try to overpay by 100/month in order to pay it off a bit faster since the excess goes into principal)
Auto insurance: 96.00
Gas: 20.00 (I live literally two minutes away from my job and don't constantly drive to Orlando on the weekends like some of my peers, so I fill up maybe once every four or five weeks)
Electricity: 35~110, depends on the season and how much I use the AC that particular month
Water/trash: ~48.00
Internet: 78.04 (40mbit down/2.5mbit up)
Phone: 0.00 (Still on my dad's family plan, so gonna milk that for all it's worth)
Gym: 31.60
Food: ~400.00 (Rough estimate. I go out to lunch almost every day at work, and definitely at least twice over the weekend. I do usually make my own dinner at home, though.)
Total: ~1970.00

Remainder: ~1356.00
I don't keep track of it that tightly, but it's more than enough to where I can see my checking account grow by a good fraction of that every month.

Goals:
I'd like to be financially independent by 40 (okay, let's be realistic; 45-50 is more likely) and partially retire back to Puerto Rico. However, when the time comes I do want to not have any rent/housing expenses other than utilities and such if I can help it, so I may need to consider investing on taxable accounts rather than focus exclusively on tax-sheltered retirement savings. There's also the matter of what I would need to do while I hit age 60 and can cash out from my 401k with impunity (I understand there's ways to get around this, but I'm not well versed on withdrawal regulations and tax laws regarding retirement accounts other than the very basics, so any advice here would be greatly appreciated).

I'm seriously considering doubling my 401k contribution to 12%, which according to the take-home pay calculator on Fidelity's site would reduce my take-home pay by about 440 a month, which I think I can manage. A couple more questions come immediately to mind, however:
1) Would it be a good idea to take 5.5k between my checking/money market accounts and shove those into a Roth IRA somewhere? If so, who would you recommend?
2) Should I continue paying above the minimum on my car and pay it off as soon as I can versus, say, putting that extra 100/month into my 401k, considering the interest on the auto loan is significantly lower than my 401k gains last year?

Duckman2008 posted:

Why don't you use your $6K in checking to pay off the credit cards? Also, that car is expensive, but I would say rather than the new car debate can of worms, I would just recommend making that the biggest priority on your list: paying that off. I get its a low rate, but I personally think having less debt is a bigger reward and success than earning an extra 2-5% on investing. Especially if you are already investing (which you are). Plus, as others point out here, it's a guaranteed investment of saving 2% on paying it off, it's always possible the investing you do is an off year and it makes no interest.

Mersenne posted:

The "pay off car faster vs. increase retirement fund contribution by overpayment amount" debate is really interesting to me, because right now in my ignorance I could probably see a case for either.

Thanatosian posted:

If there were a higher rate on the car, I'd be with everyone else in saying that you should pay it down faster. However, at 2%? Assuming it's fixed-rate, I think you'd be just fine maxing out your 401k and IRA limits first; there's an opportunity cost to paying down your debt and not taking advantage of the tax-deferral on those (and the tax-free interest on a Roth IRA). I would also up your 401k contribution before paying down that discover card. Obviously, continue to kill the other CC every month.

There's a risk to not paying down the debt and locking up more of your money in retirement accounts, because if poo poo happens, you won't be nearly as liquid as you would otherwise be.

If you're planning on retiring early, you gain more by maxing your Roth IRA contributions now, for two reasons: one, the earnings on a Roth IRA will be tax free down the line, which is greatly beneficial when mixed with a traditional IRA/401k (since you can minimize your tax exposure by withdrawing from the Roth), and two, you can withdraw the principal from the Roth at any age, without penalty; that means that you can max out your Roth for 25 years, withdraw the principal to live off of, and your earnings will continue making money until you can withdraw them tax-free. The Roth limit is only $5,500, too. So, in your position, I would probably prioritize as follows:

0) Min payments on car.
1) Max matching on 401k
2) Space Coast CC
3) Discover CC, monthly payments to get it killed in ~8 months or so.
4) Max Roth IRA contribution
5) 401k/traditional IRA/other investment
6) Additional car principal

This is a little riskier than paying down the car more hurriedly, but the long-term returns are much greater. You could certainly pay down the car before doing other savings/investing. But I think you benefit a lot from the Roth IRA in particular.

Eris posted:

Kind of related to car chat, and something I'm pondering:

I saved the bulk of it and bought a new-ish car. I financed a few thousand, but it will be fully paid off this year. It's a 2014, and I'll be driving it until it croaks. I put money aside each month for repairs, maintenance, etc.

My plan: once the car is paid off, I'm going to take that car payment, quarter it and continue putting it away for "new car" in 10 years or so. This way I'll have to finance nothing.

Question: at what point are others doing this? As in, saving for a new car even though there's no immediate need?

Mersenne posted:

Yes, it's a new car, and I fully expect people to start ripping into me relentlessly over it, but long story short I got my license three days before moving and am a complete scrub at driving, so I loaded up my car with as many safety features as I could (rear camera, BSM, etc.) Those aren't really available on older cars, and I didn't want to deal with all the headaches and potential repair costs/inflated insurance payments associated with buying a used car at the moment, especially since the used car dealerships here have less-than-savory reputations. Was it a stupid move? Perhaps, but I have no regrets. Of course it goes without saying I'm planning on driving this thing until it literally starts falling apart around me

The "pay off car faster vs. increase retirement fund contribution by overpayment amount" debate is really interesting to me, because right now in my ignorance I could probably see a case for either. While my 401k's certainly outpacing the interest rate on the loan by quite a bit, you're absolutely right in that another 2008 could gently caress things up in the future. On the other hand, the faster I get rid of that loan, that's almost 400/month freed up to invest elsewhere, which may not get me nearly as much of a potential return as putting the amount I would overpay by in retirement but would get me a guaranteed 2% for paying it off early.

Vilgan posted:

New car is fine, just drive it until you are ready to retire. I always hear people throwing around 8-10 years per car or some nonsense, which blows my mind and would definitely slow down early retirement stuff.

Bloody Queef posted:

I totally agree that paying above minimum on the car at 2% probably isn't ideal from a finance perspective, but it might be better psychologically. I would probably even put additional car principal at #7 and if 1-5 are maxed out, put it in a taxable account. Even with taxes on the earnings, I feel that beating 2% net of tax should be pretty doable, plus that money would be semi liquid.

Did you not read his first post or follow up posts? He pays off the Space Coast CC every month in full, the balance now is just how much he spent on it in the last month. He also has a 0% APR on the Discover Card and plans to pay it off in his next pay cycle.

Vilgan posted:

New car is fine, just drive it until you are ready to retire. I always hear people throwing around 8-10 years per car or some nonsense, which blows my mind and would definitely slow down early retirement stuff.

The main thing I would stress is that getting $$ into tax sheltered status is huge. When evaluating whether to pay off the car or put it into a 401k or Roth IRA, the "which will have the best return" is not the only relevant factor. You get X amount of tax sheltered space per year and it will go up a LOT slower than your salary will. So, try to max it out as early on in your career as possible and keep maxing it out. I think Thanatosian's priority list is a good one and paying off a 2% or even 4% debt is unimportant until you've maxed out your Roth IRA and your 401k deferral limits. There are lots of ways to get at that money before you turn 59.5, but no good ways to turn back the clock and take advantage of unused deferral space in later years.

DaveSauce posted:

DaveSauce posted:

I have a few questions about what impacts credit score.

Mainly, my wife and I need to know how to best address our current financial situation without damaging either of our credit. I guess damage is not the right word, but we're planning on starting to think about maybe looking for a house in the near future, so we want to make sure we don't lower our credit score or otherwise hurt our chances to get the best loan possible.

First, we both have good credit scores, and we both make good money and we have zero credit card debt. The only debt we have is a car loan and my student loans. One thing we discovered is that we had a little trouble getting the car loan, and the credit union said it was because my wife doesn't have a history of installment payments (despite her otherwise good credit score), so it was good that we found that out before we were looking at a mortgage. But they may have been very conservative, because we ended up going with financing from the dealer (lower rate) and they didn't even bat an eye.

So, I want to consolidate my student loans to get a single loan at a lower interest rate (and get the hell away from Navient). First, is this a good idea to do in general when planning to buy a house?

The other problem is that I'm pretty sure I won't get a good interest rate without having a co-signer. Which means I would need my wife to co-sign. So will I trash my wife's credit by putting her on as a co-signer?

slap me silly posted:

First of all, save up for the downpayment AND fund your IRA - don't waste your tax protected long term savings space on a house. Keep the house money in a savings account or CDs if you're going to be using it in in the short term (3-5 years). Second, do some more reading about investment portfolios - ETFs and bonds aren't opposite things. Your basic options beyond cash are stocks and bonds, and you can obtain both via ETFs or via mutual funds. See the books in the OP of the retirement thread, maybe. What is in your IRA right now?

Bisty Q. posted:

if you have good credit, why do you think you need a cosigner? A cosigner generally is for situations where you otherwise couldn't get the loan at all. Student loans are magic, unremovable loans and so getting a consolidation loan for them should be straightforward. You could also investigate a federal consolidation loan as long as at least one of your loans is federal, in which case there's no credit check at all. Most education consolidation loans are fixed rate products anyway; there are rarely different tiers for credit, even in variable situations.

quote:

In general, increasing your credit limits is a good idea because it lowers utilization. However, if you're about to buy a house, it can potentially backfire on you; if your available credit across all your accounts is too high, banks can get skittish (after all, you could go $xK into debt the day after closing and then how would you pay them?) -- so depending on how much of an increase you're talking about in relation to your incomes and how much house you're buying... might be a bad idea to increase the limit just to increase the limit.