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Good call, Im not super familiar with how any of the self-employed options work.
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Jan 2, 2023 20:03
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Amara posted:Unfortunately he cannot do backdoor Roth since he has a SEP IRA (this is considered like a traditional IRA and is subject to pro-rata). In order to do backdoor Roth he would have to roll his SEP IRA into a 401k. He could do this by establishing a solo 401k, but this is more complex than the usual "just do a backdoor Roth" guides out there. I'm very unfamiliar with these rolling things into other things strategy other than I've heard about them. Let's say I rolled my SEP-IRA into a 401k. Is this something I'd do every year (Fund a SEP-IRA -> Covert to existing 401k)? The benefit of the SEP-IRA is I can use LLC money to offset taxes owed, so my contribution of $27500 in 2022 lowered my liability by that same amount.
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Jan 3, 2023 15:45
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No, you would stop using a SEP-IRA in favor of a 401k. Your business can then fill the entire "employer contribution"/"profit sharing" which is... 43500 in 2023. You, the employee, can contribute an additional 22500. Both of these should lower your tax liability. This is a total of 66k tax-deferred, plus it doesn't interfere with your backdoor Roth IRA (6500). The downside is that 401k is more complex to set up, so you only want to do this if you need that much tax-advantaged space. If you're done saving and don't need the Roth IRA space or the extra 401k "employer contribution" space you can stick to the SEP IRA. I also have a s-corp and take K1 distributions which is why I know way too loving much about this BS. If you expect your business to grow and expect not to hire employees (all the retirement accounts get more complex once you have additional employees) you probably want to at least look at a 401k because it's a lot more retirement space.
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Jan 3, 2023 19:26
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Amara posted:No, you would stop using a SEP-IRA in favor of a 401k. Your business can then fill the entire "employer contribution"/"profit sharing" which is... 43500 in 2023. You, the employee, can contribute an additional 22500. Both of these should lower your tax liability. This is a total of 66k tax-deferred, plus it doesn't interfere with your backdoor Roth IRA (6500). The downside is that 401k is more complex to set up, so you only want to do this if you need that much tax-advantaged space. If you're done saving and don't need the Roth IRA space or the extra 401k "employer contribution" space you can stick to the SEP IRA. Thanks, what type of person could I talk to for advising me on this? Would a generic "financial advisor" know the ins and outs, or would I want to talk to someone more specialized? My CPA isn't super up on all the retirement stuff (she had to research the SEP-IRA rules for me), so I would probably need them to talk and discuss the impacts. It's unlikely I will hire any employees and I don't think the business will grow, money wise I'd be happy for it to stay the same. You make a good point of need of tax-advantaged space. I obviously could have used it this year and taken very little K1 / bonus, but at the same point I do also want to take cash out for quality of life. I think my tentative plan is to stick with the SEP-IRA for now with healthy contributions and then if something significantly changes for the better I can consider converting to a 401k.
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Jan 4, 2023 00:47
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Wanting to enjoy the fruits of your labor is reasonable. I would talk to a fiduciary fee for service financial planner who can look at your whole situation with you and your wife, figure out retirement savings targets, reserve targets for your business, and then you can allocate your income accordingly to reduce your overall taxes across the board. When interviewing them make sure they under the nuances of having a business and don't balk at the terms solo 401k, sep-ira, partner distribution, etc. For example: If it's going to cost a higher marginal tax rate to withdraw money from your business rather than having your spouse take it as income for whatever reason, you can adjust where you meet your retirement goals to meet that. Which dollar goes to the goal does not matter as long as you reach that goal as a team.
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Jan 4, 2023 01:22
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Just got my first credit card, pretty much entirely to build credit. When should I pay off my balance to maximize my credit score payoff? I have a $4500 limit and probably around $1000 (maybe a little less) of monthly expenses that I would feasibly use my card for. I obviously don't intend on paying even the slightest amount of interest.
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Jan 5, 2023 00:38
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DildenAnders posted:Just got my first credit card, pretty much entirely to build credit. When should I pay off my balance to maximize my credit score payoff? I have a $4500 limit and probably around $1000 (maybe a little less) of monthly expenses that I would feasibly use my card for. I obviously don't intend on paying even the slightest amount of interest. In full at the end of the month. This is an iron law of credit cards. Set up autopay
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Jan 5, 2023 00:44
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BIG FLUFFY DOG posted:In full at the end of the month. This is an iron law of credit cards. Set up autopay Note: you can also pay off earlier too. I pay mine off every 2ish weeks when I get my paychecks. More personal preference.
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Jan 5, 2023 00:50
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DildenAnders posted:Just got my first credit card, pretty much entirely to build credit. When should I pay off my balance to maximize my credit score payoff? I have a $4500 limit and probably around $1000 (maybe a little less) of monthly expenses that I would feasibly use my card for. I obviously don't intend on paying even the slightest amount of interest. BIG FLUFFY DOG posted:In full at the end of the month. This is an iron law of credit cards. Set up autopay Note that "in full" is not the same as "minimum amount due." You want to completely pay off the card each and every month. And I second setting up auto pay.
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Jan 5, 2023 00:59
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Duckman2008 posted:Note: you can also pay off earlier too. I pay mine off every 2ish weeks when I get my paychecks. More personal preference. Same. Sometimes I pay every week, particularly if I'm putting a lot on it for one reason or another
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Jan 5, 2023 01:20
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Omne posted:Same. Sometimes I pay every week, particularly if I'm putting a lot on it for one reason or another I'll often just pay when I'm looking through purchases, it's annoying because my Wells Fargo 2% card only allows a limited amount of non WF account payments per month.
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Jan 5, 2023 01:24
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I got a card in the mail that's apparently for the California Middle Class Tax Refund. Apparently it's a weird way the state is distributing funds to residents. They charge minor fees for pretty much any way of actually getting money off the thing (as opposed to using it to buy stuff). Am I correct in thinking that I should request my refund as a check instead of activating the card?
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Jan 5, 2023 01:24
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Medullah posted:I'll often just pay when I'm looking through purchases, it's annoying because my Wells Fargo 2% card only allows a limited amount of non WF account payments per month. ..what? Wells Fargo allows a limited number of transactions to pay off their card?
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Jan 5, 2023 01:27
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TooMuchAbstraction posted:I got a card in the mail that's apparently for the California Middle Class Tax Refund. Apparently it's a weird way the state is distributing funds to residents. They charge minor fees for pretty much any way of actually getting money off the thing (as opposed to using it to buy stuff). Am I correct in thinking that I should request my refund as a check instead of activating the card? How they paid you depends on how you previously filed your taxes & refund. If you did direct deposit, you should have received a direct deposit instead of that stupid card. Not sure if they'll fix it, but you could try. 
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Jan 5, 2023 01:52
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Omne posted:..what? Wells Fargo allows a limited number of transactions to pay off their card? Yeah it's nothing crazy, I think the month I hit it I'd made like 5 or 6 payments through the month.
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Jan 5, 2023 02:01
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Medullah posted:Yeah it's nothing crazy, I think the month I hit it I'd made like 5 or 6 payments through the month. This is insanely stupid, but also its Wells Fargo so yeah. Most people I assume arent making 6+ payments on their card, but there probably are people, especially poor people, who may be.
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Jan 5, 2023 02:04
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Savings accounts have a six-per-month transaction limit; are you paying your CC bill from that? Checking accounts shouldn't have any limits. If WF limits external transactions into WF checking accounts to X per month, that's also crazy. But it's Wells Fargo, pretty universally known that they're the worst
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Jan 5, 2023 02:07
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Omne posted:Savings accounts have a six-per-month transaction limit; are you paying your CC bill from that? Checking accounts shouldn't have any limits. If WF limits external transactions into WF checking accounts to X per month, that's also crazy. But it's Wells Fargo, pretty universally known that they're the worst No, it was the WF credit card being paid from my Chase account. The limit was "payments from non Wells Fargo accounts"
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Jan 5, 2023 02:09
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Medullah posted:No, it was the WF credit card being paid from my Chase account. The limit was "payments from non Wells Fargo accounts" Wow...that sucks
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Jan 5, 2023 02:10
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Sundae posted:How they paid you depends on how you previously filed your taxes & refund. If you did direct deposit, you should have received a direct deposit instead of that stupid card. Not sure if they'll fix it, but you could try. I've always done direct deposit, so yeah, this is just weird I don't like the idea of opening an account with someone and getting a card that I almost certainly won't be able to precisely zero out the balance on without jumping through hoops...and then having to close the account when I'm done.
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Jan 5, 2023 02:13
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Omne posted:Same. Sometimes I pay every week, particularly if I'm putting a lot on it for one reason or another It's in the same app as my bank account and I can pay off the balance pretty much whenever. Is there any reason not to pay off the balance every time I use the card?
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Jan 5, 2023 02:14
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TooMuchAbstraction posted:I've always done direct deposit, so yeah, this is just weird I mean, if you use Amazon you can always reload your gift balance with the exact amount and throw the card away. I do that with cards that have some weird amount on them.
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Jan 5, 2023 02:14
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DildenAnders posted:It's in the same app as my bank account and I can pay off the balance pretty much whenever. Is there any reason not to pay off the balance every time I use the card? Not that I can think of, unless you're paying it from a savings account (limited to six transactions a month), or just overall time spent. I use YNAB to track spending, and log in to my CCs usually on Tuesday since that's when weekend transactions have cleared, and if it's above some threshold, I pay it. And then I know when my statements close and try to remember to pay balances before then
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Jan 5, 2023 02:17
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TooMuchAbstraction posted:I've always done direct deposit, so yeah, this is just weird i set up an online account with whatever vendor manages the card and was able to send an ach payment to my checking account within like 10 minutes and without fees. it's stupid they did it but not too onerous to fix
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Jan 5, 2023 02:31
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TooMuchAbstraction posted:I got a card in the mail that's apparently for the California Middle Class Tax Refund. Apparently it's a weird way the state is distributing funds to residents. They charge minor fees for pretty much any way of actually getting money off the thing (as opposed to using it to buy stuff). Am I correct in thinking that I should request my refund as a check instead of activating the card? https://mctrpayment.com/locator Go to target or cvs and withdraw up to $600 at a shot. Looks suspiciously similar to the "allpoint" atm network.
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Jan 5, 2023 02:34
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Noted...I'm still a bit skeevy on the whole "make an account for a new card" thing, but maybe that's just paranoia?
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Jan 5, 2023 03:17
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Medullah posted:No, it was the WF credit card being paid from my Chase account. The limit was "payments from non Wells Fargo accounts" They probably make a secret savings account and route the transaction through that to juice their numbers. https://en.wikipedia.org/wiki/Wells_Fargo_cross-selling_scandal
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Jan 5, 2023 04:10
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Duckman2008 posted:Note: you can also pay off earlier too. I pay mine off every 2ish weeks when I get my paychecks. More personal preference. I don't like recommending this, it leads to possible weird scenarios where it may not be clear what billing period a payment was for, or if a payment fully paid a statement balance, and other edge case uncertainties. It makes it more likely a payment gets missed before a due date, or not paid in full and you start accruing interest on purchases immediately. You can do it, and if you pay it in full every 2 weeks without fail you won't run into those issues, but I still recommend universally just paying the statement balance in full before the due date.
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Jan 5, 2023 04:33
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THF13 posted:I don't like recommending this, it leads to possible weird scenarios where it may not be clear what billing period a payment was for, or if a payment fully paid a statement balance, and other edge case uncertainties. It makes it more likely a payment gets missed before a due date, or not paid in full and you start accruing interest on purchases immediately. Sorry, Im not like, recommending it, Im just saying its fine to pay early if you want to.
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Jan 5, 2023 04:35
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I dimly recall reading that you can get slightly dinged on your credit record if you do that a lot, but I don't know if it's actually true. I guess the logic is something like "if you don't trust yourself with this much credit, why should we trust you with it?"
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Jan 5, 2023 04:44
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TooMuchAbstraction posted:I dimly recall reading that you can get slightly dinged on your credit record if you do that a lot, but I don't know if it's actually true. I guess the logic is something like "if you don't trust yourself with this much credit, why should we trust you with it?" Sorry, there is no way this is true. Credit reports arent going to get dinged because you pay your cards off twice a month. Mine certainly are not affected.
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Jan 5, 2023 05:08
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I think the edge case scenario is you have 2+ dates, whatever date the amount you used is posted/reported/utilization, and when the statement is "cut" for payoff. I've paid off a card before in such a way that it didn't have time to get reported as used at all that month and that can slightly ding you. I just pay monthly now.
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Jan 5, 2023 05:54
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I used to know the answer to this, but it's been awhile since I've had to access this information and my recollection may be imperfect. With that caveat, here's how I remember it: --Having lines of credit that report zero utilization does not impact your credit score. If anything, it may increase your credit score since your aggregate credit utilization is lower. --As QQQ says above, due to the difference between payment dates and reporting dates, a credit line may report as "$0 utilized" even if you're actually using it, simply due to the fact that it gets paid off in full immediately prior to the date the bank reports on it to the credit bureau. --Although a zero utilization credit line won't impact your credit score as calculated by the credit bureau, it may impact the willingness of a particular bank to extend additional credit to you. I believe the logic here is as stated by TMA above, i.e. "if you don't trust yourself with this much credit, why should we trust you with it?" or perhaps, "you're probably just going to let our credit sit unused, no thanks, why bother?" --Note that all of the above is separate from the persistent myth that letting a little bit of your balance roll over from each statement period is good for you. Paying off your statement balance in full is always the correct choice if it is financially feasible. It is never good to pay off 99% of your balance and let 1% roll over with interest.
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Jan 5, 2023 06:19
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On some edge cases you might be missing a point or two by paying obsessively. But you will be missing dozens or hundred of points with lates or high utilization. Have credit, don't gently caress up, and you will be fine. It's better to pay 6 times a month for 5 years than be late even once on accident. Setup autopay for "statement balance" a few days before the due date so if something happens and the payment bounces you have time to resolve it before its late.
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Jan 5, 2023 06:23
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pig slut lisa posted:--Although a zero utilization credit line won't impact your credit score as calculated by the credit bureau, it may impact the willingness of a particular bank to extend additional credit to you. I believe the logic here is as stated by TMA above, i.e. "if you don't trust yourself with this much credit, why should we trust you with it?" or perhaps, "you're probably just going to let our credit sit unused, no thanks, why bother?" Coincidentally, I just received confirmation of the above. My wife was recently denied for a Citi Premier application. The explanatory letter arrived today, and the letter lists the following main factors that contributed to her rejection: quote:-Your credit report shows a high amount of unused credit compared to your available credit lines. Meanwhile, the reported credit score itself is still excellent.
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Jan 5, 2023 19:47
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pig slut lisa posted:Coincidentally, I just received confirmation of the above. My wife was recently denied for a Citi Premier application. The explanatory letter arrived today, and the letter lists the following main factors that contributed to her rejection: This is weird; I recently got instapproved for the Premier despite a decent sock drawer of cards that are almost all utilized by a single small bill and nothing else. Technically the cards are all active, but the vast majority of my available credit just sits there untouched. I should be guilty of both of those supposed dealbreakers. I wonder what Citi's rubric is for determining this. Maybe it's an arbitrary dollar amount of total unused credit that disqualifies you, rather than your overall percentage? And unless she has a monstrous card library, I have to assume the number of revolving accounts thing is a minor factor that they only tack on if you have another medium/large red flag. Also, in regards to the prior chat: I pay most of my cards off weekly or biweekly on paycheck day just like Duckman does, so that is certainly not a factor in Citi's decision-making (or any other bank I've applied to). It has also never caused any of the weird scenarios THF13 mentioned. The only issue it has ever caused was a double payment to BofA because their system for business cards is archaic and evil, so it did not update the monthly autopay amount to reflect the money I had already given them. Literally every other financial institution I interact with does, though.
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Jan 5, 2023 23:49
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TooMuchAbstraction posted:I dimly recall reading that you can get slightly dinged on your credit record if you do that a lot, but I don't know if it's actually true. I guess the logic is something like "if you don't trust yourself with this much credit, why should we trust you with it?" Duckman2008 posted:Sorry, there is no way this is true. Credit reports arent going to get dinged because you pay your cards off twice a month. Mine certainly are not affected. I pay them weekly, and my scores are 800+. Definitely not true. pig slut lisa posted:Coincidentally, I just received confirmation of the above. My wife was recently denied for a Citi Premier application. The explanatory letter arrived today, and the letter lists the following main factors that contributed to her rejection: I was worried about this when I applied for a Chase United Club card and wasn't insta-approved. I have ~$65k of available credit, but I ended up being approved (bringing my total available credit with them to ~$80k.
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Jan 6, 2023 00:00
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moana posted:I was in your spot and started a Roth IRA with a boring retirement target date fund at Vanguard. Don't talk to a financial advisor. Your parents' advisor likely is terrible as well, it is rare to find a good advisor. I say this as a former financial advisor myself. Thanks, I'll check that out. By the by, I've heard people say financial advisors aren't too helpful, is that just because most people working with money don't know what they're talking about? (as opposed to "they're bad at making you money because they get kickbacks or whatever for themselves if they take more risks with other people's money")I heard people say that a lot with the 2008 crash, but that was way way before I was handling any actual money. I assume my parents' financial advisor is at least ok at her job since they've made money working with her, but I don't really know much about that.
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Jan 7, 2023 06:41
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Most "advisors" get paid partially by commissions on overpriced funds, and/or by fees on a per trade basis which generates churn for no reason. It would be hard not to make money investing in the long term, but even a 1% fee can drag down returns significantly. The biggest benefit to having an advisor is if you're prone to making emotional decisions. We had people calling us to take everything out of the market after the big dip in 2020, had to talk a bunch of people off the ledge there. Also convinced someone not to put all her life savings in crypto. Those are the big wins an advisor can help with. A good CFP will also help with tax planning. But like 95% of advisors are not CFPs and aren't worth jack poo poo.
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Jan 7, 2023 09:53
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Is it as simple as asking "Are you a Fiduciary?" Or is that not quite enough? I know a CFP is a fiduciary but I don't know if there are non-CFP fiduciary advisors that might be okay as well, or if fiduciary responsibility is enough on its own to avoid most advisor pitfalls.
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Jan 7, 2023 12:03
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