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pig slut lisa posted:How quickly are you going to be able to pay it off? Probably 8 months.
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Apr 1, 2015 08:48
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Duckman2008 posted:Im a big advocate of recommending paying off debt when possible. There's no right answer, and yes you could potentially be not maximizing every dollar, but it's a nice load of your shoulder and just allows you to focus more. That's just my two cents. While you say you could be earning a better return over repaying the loans you aren't at the moment. As you aren't sure what you are doing paying off the student loans will leave you better off. There are ways to earn more using the loans as leverage but it has risk and is outside of the scope of the newbie finance thread. When you are working and earning a lot it can be difficult to focus on optimising finances. Concentrate on the simple items for now.
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Apr 1, 2015 08:56
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Zanthia posted:The $220,000 is pre-tax. There are lots of individual loans. The interest rates on $41,000 range from 1.62% to 3.1%, with less than $7,000 at the lowest rate. The interest rates on the rest ($34,000) are between 4% and 6.55%, with $15,000 of that at the highest rate. I haven't paid them down any faster because it seemed like investing the money could beat most of that interest, but obviously I have no idea wtf I'm doing. Do you think 6.55% is high enough to justify not investing the money instead? Zanthia posted:Thanks for the 401k analysis. It makes more sense put that way. Yeah, you're above the limit on the Roth, which means just maxing the traditional for now. Still well worth doing. Zanthia posted:I'm not sure whether to prioritize retirement or house savings. In a perfect world, I'd have our retirement at least on track before we made any major house commitments. Right now, I don't know how much I should be saving for retirement vs how much I can save for goals like that. Are you planning on having children in the next few years? There are some serious costs involved there, too, including likely loss of work time for you or your spouse. Your best bet is probably to sit down with your spouse, lay out an actual budget, and look at where the two of you want to be X years, Y years, and Z years from now (like, 3-5, 10, and 20). Honestly, with that kind of money, you could probably buy a house and retire in 20-25 years, if you didn't mind having merely an above-average quality of life and skipped out on the kids. To put the housing thing in perspective a bit: 401k limit is $18000 this year and the IRA limit is $5500. If both you and your wife maxed both it would run you $47,000, leaving you with an AGI of 173,000. $30,000 of that goes to Uncle Sam, leaving you $143000. At 4.5%, a 30-year mortgage payment on a million-dollar house (assuming a 20% down payment) is ~$4000 a month, or about a third of your income. This would be a stretch, but not a huge one. If we assume the same rate (and 20% down) on the $600,000 houses you're freaking out about, you're talking $2400 a month, which is what you're already paying (with the additional costs of homeownership, probably only a bit more). It'll work out to be a little cheaper on both because of the interest rate tax deduction, especially early on (more savings on the more expensive house). If you want to do it, you can totally afford it. On the flip side, you could just dump all that money you'd be using towards a house into investments, then when you want to retire, rent a storage unit, stick your poo poo in there, buy an RV and drive around the continent. Or move to Europe or something, which will be a lot easier to do without the albatross of a house you own hanging around your neck. Ham Equity fucked around with this message at 09:51 on Apr 1, 2015 |
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Apr 1, 2015 09:49
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I'm not eligible for Roths anymore, though, right? And I already have a traditional IRA, so I seem to have hurt my ability to use the backdoor Roth process, which I don't even understand to begin with.
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Thanatosian posted:This is really gonna depend on your personal acceptable risk level. Something to keep in mind is that your interest on those loans is tax deductible, so your actual interest rate is going to be 72%-75% of the quoted rate. Unless he has around $70-100k worth of above-the-line deductions, none of that student loan interest is deductible since it starts phasing out around $129k and completely phases out for AGI above $155k for married couples. So there's no discount on their interest rates. 6.55% is probably high enough that you're better paying it off for the guaranteed return rather than taking risks to chase something more.
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Apr 1, 2015 11:31
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If it were me I'd just pay off all the student loans right now because while not optimal, I personally would be extremely happy to be rid of it. Then I'd max my retirement accounts asap including the 401k, since you can afford to do that right now outright, then I'd probably save up so I could do the following: Max the 401k the beginning of ever year with 100% contributions until it's capped and the Roth on Jan 1. There's no reason to spread it out over the year since you don't have a match on it. Save up enough to buy a house with a significantly inflated down payment (I wouldn't personally but if I was I'd do that) I dunno, hookers and blow.
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Apr 1, 2015 11:57
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Duckman2008 posted:I would agree, I would just literally pay the student loans from your $40K cash. The norm for emergency savings is 6 months income, but quick math pegs that at $90K, so I think that's a bit crazy. I thought it was typically 6-12 months expenses, not income. As in, what you actually need to get by for that many months, with no need to worry about income tax and the like. That would make it in the 36k range for 6 months.
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Apr 1, 2015 12:47
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Dr Tran posted:Probably 8 months. In that case, do this if you can get approved: The Mandingo posted:Get a Chase Slate card with no balance transfer fee and 0% APR for 15 months. and if you can't, then put it on your existing 0% APR card.
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Apr 1, 2015 13:39
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Ancillary Character posted:Unless he has around $70-100k worth of above-the-line deductions, none of that student loan interest is deductible since it starts phasing out around $129k and completely phases out for AGI above $155k for married couples. So there's no discount on their interest rates. 6.55% is probably high enough that you're better paying it off for the guaranteed return rather than taking risks to chase something more.
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Apr 1, 2015 18:10
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SpelledBackwards posted:I thought it was typically 6-12 months expenses, not income. As in, what you actually need to get by for that many months, with no need to worry about income tax and the like. That would make it in the 36k range for 6 months.
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Apr 1, 2015 18:15
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So after some life poo poo happened, I have found myself finally established in a stable job and a place with cheap rent. I did rack up a sizeable credit card debt though. I am now realizing this and trying to stop before I dig myself a hole too big, since I already have student loans to contend with. Last time I dropped a check at my bank they recommended I convert it into a personal loan to pay it down with a lower interest rate. This seems like a good idea, but after calling relatives for advice they said just to pay off the card. So now I'm confused, is this a bad idea? A bank did suggest it so I am naturally wary, but from what I can tell it sounds like a good idea. Planning to go inside to sit down and talk with someone, but can anyone give some advice for this situation?
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Apr 1, 2015 23:41
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Dohaeris posted:So after some life poo poo happened, I have found myself finally established in a stable job and a place with cheap rent. I did rack up a sizeable credit card debt though. I am now realizing this and trying to stop before I dig myself a hole too big, since I already have student loans to contend with. Last time I dropped a check at my bank they recommended I convert it into a personal loan to pay it down with a lower interest rate. This seems like a good idea, but after calling relatives for advice they said just to pay off the card. So now I'm confused, is this a bad idea? A bank did suggest it so I am naturally wary, but from what I can tell it sounds like a good idea. Planning to go inside to sit down and talk with someone, but can anyone give some advice for this situation?
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Apr 1, 2015 23:44
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It's not bad last time I checked, but probably not stellar. That sounds like a good plan. Any recommendations for a card with a decent length?
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Apr 1, 2015 23:52
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Dohaeris posted:It's not bad last time I checked, but probably not stellar. That sounds like a good plan. Any recommendations for a card with a decent length?
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Apr 2, 2015 00:01
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Thanatosian posted:Chase Slate is kind of the default go-to at this point. ^^ This is what I would do.
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Apr 2, 2015 00:13
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If you don't qualify for the Slate card check nerdwallet for similar card offers.
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Apr 2, 2015 00:29
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Thanks, guys, I really appreciate the feedback. It scares the hell out of me to think of using up so much of the buffer we've accumulated, but I think it's fair to say at least the higher interest loans should go. You're right, the money's just sitting around right now so it isn't doing anything except making me feel safer.Duckman2008 posted:All I have to say is the problems you have are good problems to have. And to your credit, you have seemed both a high income and you have a really good budget. You're like what would happen if slomo followed good advice. Re: homeownership, we had a house when we got married, but we sold it after relocating. It was a train wreck built in the early 20s and we wound up losing a lot of money, but we had fun gardening and the privacy was nice. I'd do it differently if I went through it again, but I still prefer having a house over renting. Devian666 posted:When you are working and earning a lot it can be difficult to focus on optimising finances. Concentrate on the simple items for now.  Turns out that's not the best idea.Thanatosian posted:Well, if you're planning to live in Seattle forever, a house is a sort of retirement; you're stashing equity towards never having to pay rent again, locking in your current housing costs for 30 years, and acquiring a big, expensive risk. This is another spot where there's no real "right" answer, and is going to depend on things like where you think the housing market is going to go, and whether you feel like renting or owning offers a better quality of life for you and your spouse (renting you're not responsible for maintenance; owning you get to do whatever the gently caress you want to your living space). If it's the perfect house and we want to live there forever, that would make an expensive house easier to stomach. Thanatosian posted:Are you planning on having children in the next few years? There are some serious costs involved there, too, including likely loss of work time for you or your spouse. Your best bet is probably to sit down with your spouse, lay out an actual budget, and look at where the two of you want to be X years, Y years, and Z years from now (like, 3-5, 10, and 20). Honestly, with that kind of money, you could probably buy a house and retire in 20-25 years, if you didn't mind having merely an above-average quality of life and skipped out on the kids. FWIW, we were happy even when we were living paycheck to paycheck. But that makes it hard to plan things out so far in advance now. We know we want to be able to retire some day. We know we want to have a house some day, to plant trees and flowers and have built-in shelves and stupid little crap like that. Those aren't very clear-cut goals. We've never had the money to make long-term goals before. Thanatosian posted:To put the housing thing in perspective a bit: 401k limit is $18000 this year and the IRA limit is $5500. If both you and your wife maxed both it would run you $47,000, leaving you with an AGI of 173,000. $30,000 of that goes to Uncle Sam, leaving you $143000. At 4.5%, a 30-year mortgage payment on a million-dollar house (assuming a 20% down payment) is ~$4000 a month, or about a third of your income. This would be a stretch, but not a huge one. If we assume the same rate (and 20% down) on the $600,000 houses you're freaking out about, you're talking $2400 a month, which is what you're already paying (with the additional costs of homeownership, probably only a bit more). It'll work out to be a little cheaper on both because of the interest rate tax deduction, especially early on (more savings on the more expensive house). If you want to do it, you can totally afford it. Is it usually a good idea to try to max out retirement accounts first at this level? And then whatever's left can be used for shorter-term savings? 100 HOGS AGREE posted:Max the 401k the beginning of ever year with 100% contributions until it's capped and the Roth on Jan 1. There's no reason to spread it out over the year since you don't have a match on it. Is it even possible to max a 401k at the beginning of the year? The one I had before just wanted to know what % of income I wanted to contribute and spread that out over the year.
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Apr 2, 2015 06:42
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Every place I've worked the match was on a certain percentage of your income if you contributed, up to a max, per paycheck. So to get the most out of it you needed to contribute at least that much per paycheck all year so you got matching funds every paycheck. If you hit the cap before the end of the year you'd miss out on the match those months afterward. Some places do just a flat match based on your contributions probably but it's much more rare. And if they don't match at all it doesn't matter what you do. There's been a lot of posts in the long term thread lately saying the best thing to do is just get your money into your retirement accounts as soon as possible because since you're going for long term growth that is mathematically, the best way to go, instead of spreading it out over the year.
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Apr 2, 2015 12:13
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That being said, spreading your contributions out to ~1450/mo isn't significantly different than just doing one bolus injection of 17.5k. Like, in the best year of the stock market ever it would be ~$1800 difference, but when you're looking at total retirement balances of 1M+... not a huge difference. The stock market has bad years, too. You can front-load/micromanage your 401k for slightly better return, but it's not critical, and if you miss out on matching funds it is immediately Not Worth It. Don't worry about it unless you want to worry about it. DNK fucked around with this message at 14:28 on Apr 2, 2015 |
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Apr 2, 2015 14:26
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So I have decided that I am going to start saving for a down payment on a house. Is opening a separate savings account the best way to go about this? I currently have a savings account with my emergency fund in it, and I guess I could just throw the down payment money in there, but I kind of want it to be separate. Is this an ok idea? And should I just use the credit union I'm currently using, or is here a better place for this type of thing? I'm not anticipating I will be buying a house anytime soon (like 5 or more years away) but I want to start now.
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Apr 2, 2015 16:21
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Zanthia posted:Thanks for this, the way you break it down is very helpful. Maxing out the HSAs this year will be an additional $6,700. If I max out everything retirement-wise, that'll be $53,700. Does that mean our AGI will be $166,300 and we'll be in that level tax bracket, instead of the tax bracket for $220,000? Or is it not that simple? It doesn't seem you understand how progressive taxation works and what the tax brackets mean. Only income above certain levels are taxed at the higher tax brackets, which means that for your first X dollars, you pay 0 taxes, the next Y dollars, you pay A rate, the next Z dollars, you pay B rate, etc. It's not the case where you get a 2 dollar raise, pushing you from bracket A to bracket B, and end up taking an effective pay cut due to higher taxes. You will pay less taxes with a lower AGI, but only because there's less taxable income for you to pay taxes on.
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Apr 2, 2015 16:41
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Pipistrelle posted:So I have decided that I am going to start saving for a down payment on a house. Is opening a separate savings account the best way to go about this? I currently have a savings account with my emergency fund in it, and I guess I could just throw the down payment money in there, but I kind of want it to be separate. Is this an ok idea? And should I just use the credit union I'm currently using, or is here a better place for this type of thing? I'm not anticipating I will be buying a house anytime soon (like 5 or more years away) but I want to start now. I would open an account at Ally or similar, try to max your interest. I am a big fan of credit unions and that's all I use for real banking - but for saving I use Ally and spending I use whichever CC has the best rewards at the time.
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Apr 2, 2015 18:13
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Zanthia, please don't take anything I'm saying as gospel. I'm just doing some very rough napkin math on some hypotheticals to give you a general idea of what things would probably cost. Actual numbers are going to strongly depend on the finer points of your individual situation.
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Apr 2, 2015 18:33
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Pipistrelle posted:So I have decided that I am going to start saving for a down payment on a house. Is opening a separate savings account the best way to go about this? I currently have a savings account with my emergency fund in it, and I guess I could just throw the down payment money in there, but I kind of want it to be separate. Is this an ok idea? And should I just use the credit union I'm currently using, or is here a better place for this type of thing? I'm not anticipating I will be buying a house anytime soon (like 5 or more years away) but I want to start now. If that's what works for you or makes you feel comfortable that's fine. Some banks will let you create "subaccounts" within your savings account so that you can separate your buckets of money, that way you don't have to manage separate accounts/banks. I know that CapitalOne360 lets you set up to 25.
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Apr 2, 2015 19:27
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Wanted to run my situation and plan into this thread. Current debts: Mortgage payment 1200/mo starting May 1 Current auto principal: 12,100 @ 6.09% monthly minimum 226.28 That's all well and good. The part where it gets interesting is that my wife had some dental emergencies and now my credit card which I have paid off every month in full since I am 18 now has a balance of $7400, which I don't have to pay off right now. The APR is something like 22%. The limit is $5000 and when I called the customer support line they couldn't quite explain why small purchases are still going through. Would it make sense to open a new Credit Card (I have credit in the 'excellent' bracket) with a long introductory 0% APR to avoid paying the interest on this debt? This might also come in handy because we are going to be even further in debt short-term while we do a few projects on our new home. My concern is that I closed on the house literally this week so I had my credit pulled roughly a month ago. How would opening a new CC affect my credit? I was thinking of this card, specifically: http://creditcards.citicards.com/us...D9D230567C67701
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Apr 2, 2015 20:51
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Careful Drums posted:Wanted to run my situation and plan into this thread. As long as the house has completely closed and finalized already if you can get that card I don't see why it wouldn't make sense to. The big thing is you don't want to do anything to change your credit picture while the closing process is still going on.
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Apr 3, 2015 00:33
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IllegallySober posted:As long as the house has completely closed and finalized already if you can get that card I don't see why it wouldn't make sense to. The big thing is you don't want to do anything to change your credit picture while the closing process is still going on. Yeah, definitely. We closed on Wednesday so that's not a problem.
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Apr 3, 2015 00:53
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poo poo like unexpected dental expenses is why you have an emergency fund.
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Apr 3, 2015 02:21
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SiGmA_X posted:I like the idea of 2 accounts, or 3 maybe. Short term savings (new car, vacation, etc), efund, downpayment. Yeah I've been looking into Ally; I really like my cu but the interest rates aren't so great. I haven't really cared about the interest rate for my efund account but it would be nice not to lose quite as much to inflation for my downpayment one. Thanks!
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Apr 3, 2015 03:13
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totalnewbie posted:It doesn't seem you understand how progressive taxation works and what the tax brackets mean.  Thanatosian posted:Zanthia, please don't take anything I'm saying as gospel. I'm just doing some very rough napkin math on some hypotheticals to give you a general idea of what things would probably cost. Actual numbers are going to strongly depend on the finer points of your individual situation. I'm only getting frustrated lately because I don't even know what the gently caress an expense ratio is or whether my 401k is "high fee" or how to balance a portfolio (reading The Four Pillars now) but apparently that's part of being a functional adult now. Just too much at once. I need a list like "Have a budget? Great! Next steps:" And on that list, this kind of stuff: "If you don't know what you're doing, don't buy mutual funds with expense ratios between 1% and 3%." Anyway, thanks all for the input!
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Apr 3, 2015 04:38
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Pipistrelle posted:Yeah I've been looking into Ally; I really like my cu but the interest rates aren't so great. I haven't really cared about the interest rate for my efund account but it would be nice not to lose quite as much to inflation for my downpayment one. Thanks! Zanthia posted:Thanks. I actually learned that recently (while doing 2014 taxes, ha), but I was tired and not thinking. Sorry. Buying low ER and no load is just common sense. It's called an EXPENSE ratio for a reason - it costs you money.
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Apr 3, 2015 05:27
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Zanthia posted:
This is a decent checklist, with reading suggestions. http://www.etf.com/docs/IfYouCan.pdf
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Apr 3, 2015 05:33
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The Mandingo posted:This is a decent checklist, with reading suggestions. http://www.etf.com/docs/IfYouCan.pdf I actually really enjoyed reading that. It was well written. Should be in the OP if it isn't already.
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Apr 3, 2015 14:24
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Hypothetical question: If I'm doing a balance transfer of credit card debts to a citi simplicity, how many accounts can i transfer? Is there a limit? Or, if I BT a few accounts, can I add some this month and add an additional one the next month to the card for the same 0% for 21 months APR? Can you BT personal loans onto citi simplicity?
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Apr 3, 2015 15:18
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CompeAnansi posted:I actually really enjoyed reading that. It was well written. Should be in the OP if it isn't already. That is a very good read, and is basically the conventional BFC wisdom boiled down in one well written summary.
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Apr 3, 2015 18:47
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CompeAnansi posted:I actually really enjoyed reading that. It was well written. Should be in the OP if it isn't already. Just added it to the top of the recommended reading section.
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Apr 3, 2015 21:52
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The Mandingo posted:This is a decent checklist, with reading suggestions. http://www.etf.com/docs/IfYouCan.pdf
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Apr 4, 2015 04:25
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My wife and I are planning to move out of state to Denver and wanted to get some advice on how stupid of an idea this would be. We're thinking of taking out some money from my Roth IRA and using that to help with a down payment on a house. Right now we have about $13K in savings and are saving about $4K a month for a down payment. I would be transferring through my work which could be as soon as August. Ideally we would just save up to buy a house, but we plan on having kids soon and my wife would be staying home for the first few years. This would make saving up for a down payment difficult and lengthy. Rentals seem to be going for about the same amount as what we would be paying for the mortgage, so we wont save much on renting either. We currently live in a smallish condo and we're hoping we could get about $30-40K back from the equity. I have a Roth IRA and 401K with about $55K in each. I have not been funding both for the past two years due to saving for the wedding and now a house. When we buy a house we want to put down 20% and are looking to buy something between $350K and $450K which would mean we would need around $70K-90K for a down payment plus some additional funds for moving. I think I've contributed $20-$25K into my Roth. Depending on how much the condo sells for and the new house costs we would probably need between $10-20K from my Roth. I'm wondering how bad of an idea this would be? My understanding is I can take out all my contributions tax and penalty free? I'd rather not take money out of the account as I intended this to be for retirement and I understand compounding interest. However this seems like our best option if we want to buy a house.
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Apr 5, 2015 00:55
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mcpringles posted:My wife and I are planning to move out of state to Denver and wanted to get some advice on how stupid of an idea this would be. I'm confused. You are saving near 4k per month for a down payment, and you estimate that you'd need 10-20K from the IRA. Why don't you just save for the 2-5 extra months it would take to make up the difference instead of robbing from yourself?
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Apr 5, 2015 02:26
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balancedbias posted:I'm confused. You are saving near 4k per month for a down payment, and you estimate that you'd need 10-20K from the IRA. Why don't you just save for the 2-5 extra months it would take to make up the difference instead of robbing from yourself?
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Apr 5, 2015 02:47
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SiGmA_X posted:Especially being you're (OP) looking to move to a new market. Rent for a year or more, keep saving, and don't touch the Roth IRA. Yeah if you are doing a move I wouldn't buy immediately. Rent for a year or two to see if you actually like the area/job opportunities.
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Apr 5, 2015 02:55
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