BFC Newbies Thread: 33% of the interest paid is tax delectable

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Dik Hz: Feb 22, 2004; Fun with Science

Kyoubed posted:

Originally posted this in the long term savings thread but it got buried under stockchat:

I have a choice of two pension schemes to join in my new job and I'm not sure which is best - advice?

Scheme one - I pay 5.45% of salary (this percentage rises as I earn more), and this gives me 2.32% of my earnings as saved pension. The pension is adjusted for inflation each year. When I retire they will pay me the total pension each year till death. I can buy additional pension each year.

Scheme two - Standard contribution scheme, they pay 8% of my wages (this percentage rises as I age, note this is free money not paid by me) and also offer a 3% match on top of this. Funds charge 0.6% per year.

They both sound pretty generous, not sure which is best? Any help would be appreciated.

Is the pension funded when you make the contribution? Is the pension insured by a reputable company? Don't get paid in promises.

# ? Aug 24, 2015 22:26

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# ? Jun 7, 2024 19:42

Kyoubed: Nov 5, 2009

Dik Hz posted:

Is the pension funded when you make the contribution? Is the pension insured by a reputable company? Don't get paid in promises.

Not sure what you mean by the funding bit? Scheme one is government-funded and the funds in scheme two are all from either Scottish Widow or Standard Life - no idea how reputable they are as companies.

# ? Aug 25, 2015 00:05

Sonata Mused: Feb 19, 2013; I'll show you... a nightmare...

alright, really dumb question time.

For credit cards, utilization only matters at the time of statements? Or is it how much I have used it overall in the last month since the last statement?

For example, let's say I have it at $0. I spend around $600 during the month, but my statement hasn't been calculated yet. So, I pay it down to $300 (or around 20% utilization) and then the statement comes out. Will it count as the 20% utilization that I tried to get it down to, or does it factor in the other costs as well?

# ? Aug 26, 2015 17:50

pig slut lisa: Mar 5, 2012; irl is good

Utilization is calculated based on what the credit card company reports to the credit bureau upon the statement close date. If you max out your credit card on the first day of the statement period and then pay it off in full the next day, your utilization will not be affected.

# ? Aug 26, 2015 18:47

Moneyball: Jul 11, 2005; It's a problem you think we need to explain ourselves.

Also, utilization is meaningless unless you either really need good credit for a loan, or you have a spending problem to contain.

# ? Aug 26, 2015 19:43

Safety Meetings: Feb 4, 2008; My Instagram is blowin' up 24/7.

Hey I have a quick investing question.

I am just coming back to work after several months of being laid off. I only have about $4000 left in my emergency fund.

At this point I can commit 2-3k per month towards an investment of some kind. Ideally this will be my long term savings, however I need the money to be accessible as I work in the oil industry and there is a reasonable chance that I may be out of work again in the coming years.

Can anybody recommend a moderate to low risk fund that I could invest in, that won't have any crazy penalties if I have to pull the money out?

# ? Aug 27, 2015 21:18

SiGmA_X: May 3, 2004; SiGmA_X

Safety Meetings posted:

Hey I have a quick investing question.

I am just coming back to work after several months of being laid off. I only have about $4000 left in my emergency fund.

At this point I can commit 2-3k per month towards an investment of some kind. Ideally this will be my long term savings, however I need the money to be accessible as I work in the oil industry and there is a reasonable chance that I may be out of work again in the coming years.

Can anybody recommend a moderate to low risk fund that I could invest in, that won't have any crazy penalties if I have to pull the money out?

Get your 6mo cash emergency fund rebuilt first. Ally Bank offers ~1% and that's probably your best bet.

After that, max your Roth IRA, 401k match, and then raise 401k(+IRA) to 15% of gross, then either max 401k or stick money into taxable accounts.

Money you may need in ~5yrs or less shouldn't be in an investment account IMO. Too much risk.

# ? Aug 27, 2015 21:25

Blinky2099: May 27, 2007; by Jeffrey of YOSPOS

SiGmA_X posted:

After that, max your Roth IRA, 401k match, and then raise 401k(+IRA) to 15% of gross, then either max 401k or stick money into taxable accounts.

This is really confusing. (+IRA)? You already said to max IRA. Raise 401k to 15%, then max it? Which is it? OP also asked for long-term savings that "need to be accessible" in case he's out of work. 401k is the opposite of "accessible", unless there are some special unemployment rules for withdrawal (and if so they should be clarified.)

# ? Aug 27, 2015 23:08

Loan Dusty Road: Feb 27, 2007

Blinky2099 posted:

This is really confusing. (+IRA)? You already said to max IRA. Raise 401k to 15%, then max it? Which is it? OP also asked for long-term savings that "need to be accessible" in case he's out of work. 401k is the opposite of "accessible", unless there are some special unemployment rules for withdrawal (and if so they should be clarified.)

I think he means the IRA + the 401k should be at least 15% of your gross.

He addressed the accessible part by saying that money should not be in an investment account at all, and should be in savings. The 401k should be priority over these savings though once the emergency fund is complete.

# ? Aug 27, 2015 23:59

Blinky2099: May 27, 2007; by Jeffrey of YOSPOS

Dustoph posted:

I think he means the IRA + the 401k should be at least 15% of your gross.

He addressed the accessible part by saying that money should not be in an investment account at all, and should be in savings. The 401k should be priority over these savings though once the emergency fund is complete.

Right, so I'd make other recommendations, considering those accounts aren't really in line with his goals.
Maybe split it up where half, or a quarter, or 3/4ths of that $2-$3k goes to long-term savings like IRA/401k, with the other portion goes into CDs or 1% savings accounts.
Or just make your emergency fund 9/12/18-months instead of 6-months, and then just dump the rest into retirement.

# ? Aug 28, 2015 00:06

its no big deal: Apr 19, 2015

As a fresh grad and new teacher, I continue to be asked to sign away my money! The most recent request was for any number of different policies with a life insurance company, National Teachers Associates Life Insurance Company. I already get full healthcare, dental, vision, and $40k life at no cost through my district. What is the opinion on these other insurance policies? I'm not worried over cancer, disability, heart, etc. but accident insurance doesn't seem to be a bad deal. Granted, cheap insurance is cheap for a reason as I understand it (the likelihood of payout is low, right?).

It's always pitched as "It's only $10 biweekly" and all that, but with the union and this insurance stuff, it seems a lot of people want small percentage points of my income that will add up to decrease my budget.

# ? Aug 28, 2015 04:20

Droo: Jun 25, 2003

If you are interested in life insurance, compare the coverage they are offering to term life insurance (I'm sure you can find quotes online). If you don't have a wife/kids, I wouldn't bother to get life insurance in general though.

# ? Aug 28, 2015 04:34

Zeta Taskforce: Jun 27, 2002

its no big deal posted:

As a fresh grad and new teacher, I continue to be asked to sign away my money! The most recent request was for any number of different policies with a life insurance company, National Teachers Associates Life Insurance Company. I already get full healthcare, dental, vision, and $40k life at no cost through my district. What is the opinion on these other insurance policies? I'm not worried over cancer, disability, heart, etc. but accident insurance doesn't seem to be a bad deal. Granted, cheap insurance is cheap for a reason as I understand it (the likelihood of payout is low, right?).

It's always pitched as "It's only $10 biweekly" and all that, but with the union and this insurance stuff, it seems a lot of people want small percentage points of my income that will add up to decrease my budget.

You don't need accident insurance. If god forbid you have an accident, your health insurance will do just fine when you go to the hospital. If you accidentally die, you are not more dead than if if people could see your death coming. 40K is more than enough unless you have a spouse and/or kids. But I would check into long term disability though. You are much more likely to be disabled than die and the average SSI benefit is something like $1200/mo, which would probably really crimp your lifestyle.

# ? Aug 30, 2015 20:21

its no big deal: Apr 19, 2015

Zeta Taskforce posted:

You don't need accident insurance. If god forbid you have an accident, your health insurance will do just fine when you go to the hospital. If you accidentally die, you are not more dead than if if people could see your death coming. 40K is more than enough unless you have a spouse and/or kids. But I would check into long term disability though. You are much more likely to be disabled than die and the average SSI benefit is something like $1200/mo, which would probably really crimp your lifestyle.

I avoided Mr. "insurance man who's thick Tennessee accent means I understand every third word" so glad my gut was on point. Thanks!

# ? Aug 30, 2015 22:29

Hadlock: Nov 9, 2004

So I have no debt, my only payments are cell phone, rent and electric bills which are all month to month and comes out to less than 30% of my income each month.

In the last 18 months my life finally stabilized and I'm on a strong upward vector so I indulged in some travel and now I'm building up some savings. There's a good chance I'll move across the country to SF at the end of the year

I have about $10,000 in cash savings outside of my IRA/Roth etc

Should I just park this money in my bank account until next summer? The company will probably cover a big chunk of my relocation costs but SF is about 40% more expensive than where I live now, and I'll likely have to (want to) buy all new furniture when I move and use this opportunity to jettison all the Ikea-level crap I've been accumulating and start over.

I've moved cities in my metro area before and generally it cost me about $1000 each time, but I'm guessing this cross country move will be dramatically more expensive. Is it worth it to park that little money somewhere other than a bank account for less than a year? If not, where should I be parking it?

# ? Aug 31, 2015 02:43

Zeta Taskforce: Jun 27, 2002

Hadlock posted:

So I have no debt, my only payments are cell phone, rent and electric bills which are all month to month and comes out to less than 30% of my income each month.

In the last 18 months my life finally stabilized and I'm on a strong upward vector so I indulged in some travel and now I'm building up some savings. There's a good chance I'll move across the country to SF at the end of the year

I have about $10,000 in cash savings outside of my IRA/Roth etc

Should I just park this money in my bank account until next summer? The company will probably cover a big chunk of my relocation costs but SF is about 40% more expensive than where I live now, and I'll likely have to (want to) buy all new furniture when I move and use this opportunity to jettison all the Ikea-level crap I've been accumulating and start over.

I've moved cities in my metro area before and generally it cost me about $1000 each time, but I'm guessing this cross country move will be dramatically more expensive. Is it worth it to park that little money somewhere other than a bank account for less than a year? If not, where should I be parking it?

If it is less than a year just park it in a bank account. See if there is an online account that pays a bit more, but if you find one that pays 1% you are doing great.

# ? Aug 31, 2015 02:53

PerpetualSelf: Apr 6, 2015; by Ralp

Hey everyone I want to ask your guys recommendation on whether what I'm thinking of doing is financially viable and smart. I currently earn $490 a week after a tax, or 600 a week pretax (at 4 withholdings).

I have been paying for my girlfriends schooling. It has not been cheap ($3000 per 9 week term, for this second term she managed a scholarship to make it $2000). The way I had been paying that had been personally loaning the money for the first term ($3000) and paying it off over 5 months (640 a month (it wasn't exactly $300 all said and done). For her second term I got some matching funds and only had to pay $1140. I will probably not get that for the third term.

October 19th her 3rd term starts, and I just found out that one of my long term dental care loans switched back to minimum payments when I had set it to autopay the right amount to pay it off over the year. Which means if I don't pay it of by October 20th I get to pay interests on all of it ($300). The amount I still owe is $800.

Between that and the $640 a month I was looking at nearly $3000 outlay in October without much hope of personal loans. I didn't know what to do. I still owe money on those personal loans until October.

I decided to take a look at Prosper. My credit score is currently 698 with Transunion and 655 with Experian (was 679 took a 24 point dumb in the last month for no reason I can see). I got an offer to loan $4000 for 36 months with a monthly payment of something like $124 a month. I calculated the total cost of the loan after origination fee at $470. Which is 11.75%. I think that is a pretty decent rate but I may be wrong?

This kind of loan would really liberate me from having to worry about money paycheck to paycheck which has been a major source of stress for the past 3-4 months. I don't spend a lot of money on restuarants and can post my Personal Capital shots and my monthly budget here if needed be but we eat out less than twice a week and don't have any major medical expenses or credit card loans to pay off.

Do you think this is a wise decision for me to make at this point?

# ? Aug 31, 2015 03:44

Zeta Taskforce: Jun 27, 2002

PerpetualSelf posted:

Hey everyone I want to ask your guys recommendation on whether what I'm thinking of doing is financially viable and smart. I currently earn $490 a week after a tax, or 600 a week pretax (at 4 withholdings).

I have been paying for my girlfriends schooling. It has not been cheap ($3000 per 9 week term, for this second term she managed a scholarship to make it $2000). The way I had been paying that had been personally loaning the money for the first term ($3000) and paying it off over 5 months (640 a month (it wasn't exactly $300 all said and done). For her second term I got some matching funds and only had to pay $1140. I will probably not get that for the third term.

October 19th her 3rd term starts, and I just found out that one of my long term dental care loans switched back to minimum payments when I had set it to autopay the right amount to pay it off over the year. Which means if I don't pay it of by October 20th I get to pay interests on all of it ($300). The amount I still owe is $800.

Between that and the $640 a month I was looking at nearly $3000 outlay in October without much hope of personal loans. I didn't know what to do. I still owe money on those personal loans until October.

I decided to take a look at Prosper. My credit score is currently 698 with Transunion and 655 with Experian (was 679 took a 24 point dumb in the last month for no reason I can see). I got an offer to loan $4000 for 36 months with a monthly payment of something like $124 a month. I calculated the total cost of the loan after origination fee at $470. Which is 11.75%. I think that is a pretty decent rate but I may be wrong?

This kind of loan would really liberate me from having to worry about money paycheck to paycheck which has been a major source of stress for the past 3-4 months. I don't spend a lot of money on restuarants and can post my Personal Capital shots and my monthly budget here if needed be but we eat out less than twice a week and don't have any major medical expenses or credit card loans to pay off.

Do you think this is a wise decision for me to make at this point?

First thing, I doubt you will listen to this voice on a comedy forum, is I would not be paying for your girlfriend's school. If you were married, paying for your wife's school would be the thing to do, but not your girlfriend. Of course it will never happen to you, but millions of girlfriends and boyfriends have paid for their girlfriends and boyfriends to go through school only to break up. She should be the one taking out loans and working to pay for her school. There is only one way this works out in the end for you, lots of ways it doesn't. Paying for her school is a pretty bad idea.

11.75% is not a bad rate, especially for someone in such a precarious financial situation. But I don't like your use of the term "liberate". I know you are not blowing money on crap, I'm sure your budget is lean for the most part, but a loan won't liberate you from anything. This injection of cash will feel good for the next month or 2, but it does nothing to increase your income or reduce your expenses long term. The only thing it does is give you one more expense you didn't have before, that of the loan payment. While 11.75% is not bad for an unsecured loan, it is high for a student loan, which would be the better option because it would be in her name, not yours. If you are not going to pay for her school then you can pay $800 on the dental thing before October.

# ? Aug 31, 2015 05:28

Hadlock: Nov 9, 2004