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Annath posted:I'm also working on making a budget, so any advice there (I'm 24, pre-tax yearly income will be around $56K not counting potential overtime, I am getting a new car because my current one won't survive the commute) I'd very much appreciate it. You're just in time to get some really good advice! Don't spend a lot of money on your car and definitely don't get sucked into a long term high interest loan. Ideally don't take a loan at all. If you're legitimately in a bind and not just drooling over new car options, target 1-2% interest rate and a 3 year term.
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Jun 7, 2015 16:37
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slap me silly posted:You're just in time to get some really good advice! Don't spend a lot of money on your car and definitely don't get sucked into a long term high interest loan. Ideally don't take a loan at all. If you're legitimately in a bind and not just drooling over new car options, target 1-2% interest rate and a 3 year term. The car I'm looking at is a Mazda3. Nice and affordable, but still something kind of fun. I will be buying it through USAAs car buying service, which advertises 0.79% for cars bought through the service. E: I kind of am in a bind, in the sense that my current car is in really poor shape just due to buying it for super cheap, in-town transportation. It's gotten to the point my mechanic suggested that I keep a small fire extinguisher in my car in case the massive oil leak catches fire. Now that I'll have a commute, I need something reliable. Luckily, I'll be making enough money to afford the loan easily. As for loan duration, I was honestly looking at a 5 year, because I want to keep the month to month payments below $500 to maximize the amount going into my savings. I know I'll pay more in interest in the long run, but putting more money's in savings earlier will let me take full advantage of compound interest. Annath fucked around with this message at 17:24 on Jun 7, 2015 |
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Jun 7, 2015 17:17
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slap me silly posted:The technical term for what your advisor is doing is "screwing you hard" This made me laugh out loud. Well, I'm glad I figured this out when was in my twenties instead of being in my thirties when it'd be more difficult to recover (or god forbid, after I rolled over a larger amount of funds into my roth). I know that positivity isn't really SA's style, but I've asked a lot of questions here, and I really strongly appreciate how helpful and approachable everyone has been. It really does shed light on how many success stories we tend to see in the BFC financial goals threads. I've set up a transfer to a Vanguard target date fund! I already feel a lot better. When I called the current custodian for my roth to ask for information on closing the account, I noticed that the person on the phone said some information that seemed engineered to be misleading without directly lying, even at my level of financial knowledge. He never blatantly said that the current funds would perform better, but he said things like "You have someone actively managing these funds," which I feel is a statement that's true, but designed to make someone feel like the Vanguard funds are less trustworthy. He also tried to tell me that I was messing myself up by going to Vanguard because I wouldn't have time to recover the costs of the expenses. legsarerequired fucked around with this message at 17:39 on Jun 7, 2015 |
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Jun 7, 2015 17:35
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Annath posted:As for loan duration, I was honestly looking at a 5 year, because I want to keep the month to month payments below $500 to maximize the amount going into my savings. I know I'll pay more in interest in the long run, but putting more money's in savings earlier will let me take full advantage of compound interest. If you can't get your payments under $500 a month without doing a 5-year loan, I would suggest you should be looking at cheaper cars.
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Jun 7, 2015 19:19
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legsarerequired posted:I know that positivity isn't really SA's style, Hey, we're real positive people here, jerk. 
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Jun 7, 2015 20:57
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IllegallySober posted:If you can't get your payments under $500 a month without doing a 5-year loan, I would suggest you should be looking at cheaper cars. I guess I was under the impression that 5 years was the normal loan plan. Everyone I know that's taken out a car loan has/had a 5 year plan regardless of their income level. The exceptions were people taking out small personal loans to buy cheap used cars. Like sub-$7000
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Jun 7, 2015 20:58
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Annath posted:I guess I was under the impression that 5 years was the normal loan plan. A lot of BFC would probably argue otherwise, that the five-year loan should be the exception and not the rule. I've taken several five-year loans on cars- but I've never had a payment of $500 a month and I've had everything from a brand-new RX-8 to a tricked-out Wrangler and now drive something much more reasonable. My point is more that if you're gonna be carrying a $500/month car payment for five years, you're probably looking at too nice a vehicle for what you really need. There's a range between "unreliable" and $30,000.
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Jun 7, 2015 21:05
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IllegallySober posted:If you can't get your payments under $500 a month without doing a 5-year loan, I would suggest you should be looking at cheaper cars. Are you saying that in addition to SMS's advice of a three year loan that no one should finance more than $500 a month? So no one should pay more than $18000 for a car? E: The car he was looking at is ~$18000. He isn't looking at a $30000 car. E2: What is with all the pedantry about finance vs pay at $18000? At 3% that is at most 6.5% the loan value and $400 dollars difference for 3 vs 5 years. It hardly seems relevant to the point trying to be made. Boot and Rally fucked around with this message at 21:25 on Jun 7, 2015 |
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Jun 7, 2015 21:13
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Boot and Rally posted:Are you saying that in addition to SMS's advice of a three year loan that no one should pay more than $500 a month? So no one should pay more than $18000 for a car? Or finance that amount, at least. I agree 100%. I bought a new Sierra 1 year after getting out of school with my engineering degree, and while I still like the thing, I kind of resent it. A large payment for an object that sits unused 90% of the time, and breeds a desire to get something newer constantly. I honesty wish I just kept my old pos neon. There are so many better things to blow money in (or spend wisely). My loans would have all been paid off by now, and I could be paying just for the truck at this point 4 years later.
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Jun 7, 2015 21:13
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Boot and Rally posted:Are you saying that in addition to SMS's advice of a three year loan that no one should pay more than $500 a month? So no one should pay more than $18000 for a car? Well, really that just means that no one should borrow more than $18,000 for a car. If you want to buy an expensive car, you can save up ahead of time so that you can put a lot of the cost down and only finance a portion. I don't necessarily think this is the right advice for everyone, just that a recommendation not to have more than a 3year loan at $500 a month doesn't mean never buying more car than that.
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Jun 7, 2015 21:19
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I absolutely would not be paying anything like $500 for the 5 year plan... Hell, I could get the top trim level on the Mazda3 and still keep the payments on a 5 year loan below $400/mo. I'm honestly looks more for advice on the financial planning stuff, and I'll be checking out the suggested thread and documents as soon as I get off work.
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Jun 7, 2015 21:32
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Boot and Rally posted:Are you saying that in addition to SMS's advice of a three year loan that no one should finance more than $500 a month? So no one should pay more than $18000 for a car?
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Jun 7, 2015 21:46
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Annath posted:I absolutely would not be paying anything like $500 for the 5 year plan... Hell, I could get the top trim level on the Mazda3 and still keep the payments on a 5 year loan below $400/mo. I don't think you understand, for whatever reason any type of hint on car debate in BFC incites a rage of debate on car loans, what is acceptable to be paid, and 5 pages of angry debate.
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Jun 8, 2015 01:00
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I recommend only 3 pages of debate. You don't want to have all that consumer debate hanging over your head 4 pages from now, do you?
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Jun 8, 2015 01:14
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khysanth posted:If you don't want it to be locked away (even though the tax advantages are huge), then just open a regular brokerage account at somewhere like Vanguard. Also you want index funds, probably not mutual funds (the fees and loads of a mutual fund will almost never beat the market return of a true index). You'll pay taxes on the gains and distributions but you can do them whenever you want in a regular brokerage account. I came into this thread to post a question about this, so I'm just going to piggyback this conversation. I'm at the full match amount for my 401k so I'm looking to put some of my savings money into a fund. For something like a straight up S&P 500 index fund, is it better to go through someone like Vanguard or go through something like etrade? Assuming I plan to leave the money in there for anywhere between 2-15 years, based on when new car/marriage/ buying a house happens in my life. I'm actually running into some trouble figuring out where the fees would be lowest.
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Jun 8, 2015 01:53
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Annath posted:I guess I was under the impression that 5 years was the normal loan plan. SpelledBackwards posted:I recommend only 3 pages of debate. You don't want to have all that consumer debate hanging over your head 4 pages from now, do you?
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Jun 8, 2015 03:01
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Stealth Tiger posted:I came into this thread to post a question about this, so I'm just going to piggyback this conversation. I'm at the full match amount for my 401k so I'm looking to put some of my savings money into a fund. For something like a straight up S&P 500 index fund, is it better to go through someone like Vanguard or go through something like etrade? Assuming I plan to leave the money in there for anywhere between 2-15 years, based on when new car/marriage/ buying a house happens in my life. I'm actually running into some trouble figuring out where the fees would be lowest. First of all, don't treat the end of your match as the time to stop contributing to your 401(k), IRA, and other tax-advantaged accounts. Tax-advantaged space is hugely valuable by its very existence; if you don't have definite plans for your money, and you haven't maxed out your personal limits for IRA and 401(k) contributions, it's probably best off in one of those. With that said, you should identify specific goals, and time horizons. If you will probably want to cash out in two or three years, a stock fund is only slightly more likely to make you money than lose it, and even a bond fund is pretty risky. Over a 5-10 year period, low-risk investments are your best bet. Stocks only really shine over very long time horizons, or when you can afford to eat a loss (say, you put $X a month to your wedding, and only figure out a bit beforehand whether it will be a fairytale Tahiti destination wedding or eloping to an off brand Elvis impersonator). From a strictly mechanical standpoint, for a taxable account, find the funds you want to invest in, and open a brokerage account with the company that owns those funds. Vanguard will let you own and trade Vanguard funds with basically zero fees; same for Schwab or whoever else you might want to invest with. Trading one company's funds (or other instruments like stocks and bonds) from another company's account is when you typically incur fees.
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Jun 8, 2015 03:21
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slap me silly posted:I did a five year car loan myself. The payment is $170 and the interest rate is under 1%. I would very greatly dislike having a $400/mo car loan at your salary, regardless of the interest rate. It's a judgment call at the end of the day - you were being sensible to start with compared to several BFC heroes, and you should be fine. But there's a lot to be said for spending less money on cars and more on other things, so maybe save the high trim levels for some day when you're rich. My thought was that the ridiculous headaches I've had with cheap cars over the years makes me really want to not go cheap again. Also, I do want to reward myself a little. Nursing school was hell, and I while I want to be responsible and save for the future, I also don't want to live in a cardboard box eating canned meat product in order to "maximize" my savings. No reason to save for the future if you live miserably in the present. Hyperbole for effect. Just for shits and giggles, I redid my budget to accommodate the payment on the top of the line trim, and I still have $930 a month going into savings not counting IRA/401k/etc
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Jun 8, 2015 03:27
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What you want is a cost effective and reliable car. Make sure you do your research on the problems the model of car has. Nothing worse than having a pricey car that likes going in for pricey repairs. So long as you budget for everything no one here will moan at you much.
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Jun 8, 2015 03:38
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 Seems to me that it's harder to get the above result than it is to pay it off.
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Jun 8, 2015 04:57
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Well if it's a 25 year term and assuming a 9.99% rate (just guessing) then that person has missed more than half the payments. Payments have been made unfaithfully.
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Jun 8, 2015 05:05
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I have just over $27,000 like that picture, and it will only go up with grad school. I can't see my loans still being around ten years from now.
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Jun 8, 2015 06:05
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I bet there were lots of hardship deferrals in there.
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Jun 8, 2015 06:25
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I am setting up a 3-fund portfolio. I don't have access to a total stock market index in my 401k, but I do have a S&P500 fund (VIIIX) and a small/mid cap fund (VIEIX). How much of my domestic stocks allocation should I put into VIEIX to best approximate a total stock market fund?
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Jun 8, 2015 13:32
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turevidar posted:I am setting up a 3-fund portfolio. I don't have access to a total stock market index in my 401k, but I do have a S&P500 fund (VIIIX) and a small/mid cap fund (VIEIX). How much of my domestic stocks allocation should I put into VIEIX to best approximate a total stock market fund? 80/20 per Boggleheads and Vanguard.
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Jun 8, 2015 13:42
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Space Gopher posted:First of all, don't treat the end of your match as the time to stop contributing to your 401(k), IRA, and other tax-advantaged accounts. Tax-advantaged space is hugely valuable by its very existence; if you don't have definite plans for your money, and you haven't maxed out your personal limits for IRA and 401(k) contributions, it's probably best off in one of those. My problem with 401k, as a person my age, I'd essentially be investing in a 35yr CD with, let's say, 8% annual return(more or less obv.). Sure, the potential to put more capital in your account due to the tax-advantage is nice, but that advantage becomes somewhat moot when you know that money is locked long-term, so you're less comfortable investing the farm in it. I guess it depends on how much you make, too. Locking up some money long-term means less when you make 100k vs under 50k (as most young people do). And 30+ years is such a long time. We already know the sun is going to explode and take all 401ks with it, it's just a matter of time.
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Jun 8, 2015 17:22
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None of that makes any sense.
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Jun 8, 2015 17:58
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jarjarbinksfan621 posted:My problem with 401k, as a person my age, I'd essentially be investing in a 35yr CD with, let's say, 8% annual return(more or less obv.). Sure, the potential to put more capital in your account due to the tax-advantage is nice, but that advantage becomes somewhat moot when you know that money is locked long-term, so you're less comfortable investing the farm in it. I guess it depends on how much you make, too. Locking up some money long-term means less when you make 100k vs under 50k (as most young people do). And 30+ years is such a long time. We already know the sun is going to explode and take all 401ks with it, it's just a matter of time. I can't tell if you're serious or not, but that's incredibly short-sighted thinking and I'm a little dumbfounded that you're just brushing off tax-advantaged (using your own numbers) 8% returns for 35 years as no big deal.
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Jun 8, 2015 18:12
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KYOON GRIFFEY JR posted:None of that makes any sense. It's very simple, all I'm saying is the tax advantage comes at a cost of financial flexibility. A cost I'm not very fond of. If you're 50-something, that cost is nothing. Pound the poo poo of a 401k for sure, but as a younger adult, it is a very real cost if you're going to invest any substantial percentage of your income into a 401k.
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Jun 8, 2015 19:11
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When you're young is the absolute best time to "pound the poo poo out of" your 401k. Decades of compound interest pay off big time. It's also easier to have a high savings rate when you're young and healthy without kids, etc. If you wait until you're 50 to significantly save for retirement, you're too late. Examples and math: https://www.bogleheads.org/wiki/Importance_of_saving_early Guinness fucked around with this message at 19:25 on Jun 8, 2015 |
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Jun 8, 2015 19:22
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If you're 50 something, the opportunity cost is minimal... because your returns are also minimal.
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Jun 8, 2015 19:35
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jarjarbinksfan621 posted:It's very simple, all I'm saying is the tax advantage comes at a cost of financial flexibility. A cost I'm not very fond of. If you're 50-something, that cost is nothing. Pound the poo poo of a 401k for sure, but as a younger adult, it is a very real cost if you're going to invest any substantial percentage of your income into a 401k. You're going to need at least 1mm to retire - more likely, 3-5mm++, inflation is a bitch. Get saving. Over 15%, you have to decide your goals. House in 5yrs? Savings account. House in 15yrs? Savings account/index fund + additional to 401k. It all depends on your goals though. Currently, it sounds like you haven't thought it through at all and want to retire on SSI. gently caress that noise.
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Jun 8, 2015 19:43
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jarjarbinksfan621 posted:It's very simple, all I'm saying is the tax advantage comes at a cost of financial flexibility. A cost I'm not very fond of. If you're 50-something, that cost is nothing. Pound the poo poo of a 401k for sure, but as a younger adult, it is a very real cost if you're going to invest any substantial percentage of your income into a 401k.
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Jun 8, 2015 20:03
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jarjarbinksfan621 posted:It's very simple, all I'm saying is the tax advantage comes at a cost of financial flexibility. A cost I'm not very fond of. If you're 50-something, that cost is nothing. Pound the poo poo of a 401k for sure, but as a younger adult, it is a very real cost if you're going to invest any substantial percentage of your income into a 401k. Yeah, if you want flexibility, you can keep all your money in cash and watch as its value melts away. What is the cost of investing a ton of money in your 401k when you're young? Like, I want you to put this into terms other than "financial flexibility". What would you do with all this cash laying around, instead, that you're missing out on by having this giant 401k? Is it supposed to be a rainy day fund? People have those - in cash, or very liquid forms - at the cost of returns. Is it to buy shiny toys? In which case, you're basically living at the edge of (or beyond, depending on how you want to look at it) your means. Is it to buy things like a house? Or to pay for children? These are things that should be planned for in advance and in some cases (e.g. house), you can take a loan against your 401k. I'm not sure what you are planning on doing with all this money you're not locking up earning 8% a year.
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Jun 8, 2015 20:21
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Oh god I just got my offical offer letter and there are 17 HR attachments with various bits of info. Benefits are apparently: quote:Choose from three Preferred Provider Organization (PPO) Options offered through Aetna, as well as Whats a PPO? The Aetna "standard plan" says $112.49 base premium for Single An HMO? The Optima thing says $112.49 for Single, and there are no other "tiers" Which is better? How do I figure out what the differences are between these two programs?
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Jun 8, 2015 21:39
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Annath posted:Whats a PPO?
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Jun 8, 2015 21:50
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Annath posted:Oh god I just got my offical offer letter and there are 17 HR attachments with various bits of info. The difference is the way you interact with the network and doctors. Here is a decent explanation of the difference. You need to make sure that you understand the plan by reading the benefits guide, but there are pretty big differences between a HMO and PPO plan generally and which is better for you is going to be based on expected medical expenses and preference.
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Jun 8, 2015 21:54
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So I'm trying to make good decisions, or more specifically, less bad decisions, but I've started to consider replacing the bad decision car I have with something less fun but more practical. Not even a year ago, I bought a 2005 G35 last year for near book value, with a sky high interest rate, and it needs work. That level of bad decision. I started reading the Mr. Money Mustache blog and I'm looking at getting a certified pre-owned Hyundai, because I'm tired of the high interest (though I'm paying that off asap) but more importantly, I'm tired of constantly worrying about what's going to break next. I'd rather get something without any problems and drive and maintain it until it dies ten years from now. Saving on gas would be nice as well. http://www.hyundaicertified.com/Vehicle/KMHDH4AE5EU113160/2014.aspx Is that too much/does it defeat the purpose of trying to buy to save? I typically keep my cars until the end- my last one was a Focus I had for ten years then crashed in the snow. I think over time, if I paid it off as quick as possible, I'd do better for my money than trying to throw money at my decade older car trying to keep it running.
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Jun 8, 2015 22:06
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Moneyball posted:So I'm trying to make good decisions, or more specifically, less bad decisions, but I've started to consider replacing the bad decision car I have with something less fun but more practical. A lot of people get tired of fixing their car right about when they've replaced just about everything on it that's likely to go wrong, too. I'm not suggesting you subscribe to the sunk cost fallacy, just that the things you've fixed are unlikely to break again, so you may want to reconsider whether or not to trade in at all if it will cost you anything.
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Jun 8, 2015 22:21
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I think a 2014 Elantra for $16k is pretty much the definition of a good car decision. However, if you got the Infiniti fixed up and it's going to last a while, buying anything else right now could be pretty costly overall. How big is your current loan, what's the interest rate, and how much cash do you have available to throw at this transaction?
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Jun 8, 2015 22:25
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