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as someone who just had a baby and had people buy EE bonds: while this is nice or whatever, I wish they had just put it in to the kid's 529
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Mar 8, 2024 17:55
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The Slack Lagoon posted:My sibling and their partner just had a baby. If I wanted to put some money aside for the kid for when they turn 21, what would be the best way to do that? EE bond? Drop it in an investment account? Can I set up an account on their behalf? Not looking to do a ton of money. The EE bonds after 20 years is appealing but I suppose putting it in the market will probably yield a higher return over the same time period. A trust is an ideal vehicle for this, unfortunately it's not economical unless "some money" is at least high-six-figures for you. 529 is good, but using the proceeds is restricted to education or $35K in Roth IRA contributions. UTMA account can be set up at a bank or brokerage - not restricted but it will become the legal property of the kid at the age of majority in his state (usually 18) so you'd need to be flexible on the 'turn 21' part. Taxable account in your own name and gift it to the kid - you control it all (and pay the taxes along the way) then gift the funds when you think the kid is ready. I agree with Kyoon that EE bonds are underwhelming on that timescale, but it's still a nice gesture and better than nada!
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Mar 8, 2024 20:06
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Use a 529
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Mar 8, 2024 20:40
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Buying them EE bonds means getting the baby a treasury direct account (no more paper, since 2012) and I think that's a form of child abuse
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Mar 8, 2024 20:43
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SlapActionJackson posted:A trust is an ideal vehicle for this, unfortunately it's not economical unless "some money" is at least high-six-figures for you. I had an EE bond in my filing cabinet for decades, at least I finally remembered to pull it out and cash it. I know you don't have to hand them the actual physical bond anymore, and shouldn't! But "remember that login to treasury.gov that has a $500 bond in it that slapactionjackson gave us 20 years ago?" is the same sort of thing. funding a 529 plan sounds good, because everyone should have one now. It won't be a random extra account with a little bit of money in it. Even if the kid doesn't go to college, they can transfer it over to *their* children.
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Mar 8, 2024 20:58
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Well as a former baby looking to cash in 30 year EE bonds now, it was a nice gesture and hey a bonus $400ish is neat, but it's only $400ish if you know what I mean. Plus as far as I know I'll have to declare the gains on my taxes next year when I get off my rear end and cash them in. I think there's two $50 and one $100 face value on them? So unless you go ham on a bond with a huge amount for some silly reason I'd do a 529. I will say that my dad starting an account for me at a local credit union when I was a baby was much more impactful as he contributed like 4% of his paycheck into it for many years, and it amounted to like 6k by the time I was 18. It was all used toward college loans anyways but I was grateful to have it for that.
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Mar 8, 2024 21:13
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The thing I hate about 529s and HSAs is it feels like universities and hospitals/insurance companies are carving out and reserving these future slices of your investments in return for "tax free returns". Tax free returns for who exactly? But on the other hand everyone is gonna need to pay out the rear end for school and being kept alive, at least for the near future.
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Mar 8, 2024 21:18
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Especially with a child, I think the 529 is good because education is such a major burden and also most 18 year olds cannot be trusted to inherit large sums of money. Also don't worry: the 529 can also be used for tuition for school before university age, so we're also supporting the hollowing out of the public school system!
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Mar 8, 2024 21:23
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When you put it that way, yeah it sucks, but we're stuck working with the crumbs we are given for the time being. And I agree with Kyoon I didn't know poo poo about the world/money/college loans at 18, and I was only "smart" enough to know that I should always keep some money in the bank, and to maybe not buy too much video game junk. Also somehow I knew that credit cards should always be paid in full each month, thanks for leading by example there parents!
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Mar 8, 2024 21:33
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KYOON GRIFFEY JR posted:Also don't worry: the 529 can also be used for tuition for school before university age, so we're also supporting the hollowing out of the public school system! I've had a warning on my kids 529 page for years about "if you use it for non-college tuition, the state may claw it back", since colorado does allow you to write contributions off against your taxes. (really generous cap too). But this seems to be another thing where its all up to you to tattle on yourself, another "tax on the conscience" from the BWM thread. I am positive people are washing private school tuitions through the colorado 529 and paying zero state tax, year after year. You should definitely check out what programs are being offered for your state's 529 though. Colorado just started "we'll put in 100 and then match the first 2500", which is kind of amazing. https://www.collegeinvest.org/first-step/ (Does feel like this ends up being a transfer of state money to CU Boulder to Deion Sanders. But yah, I'll take it. Go buffs!)
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Mar 8, 2024 21:47
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Found a bunch of EE bonds my dad had in a random box. I guess they stop gaining interest after 30 years? So, had just been sitting in a cabinet doing nothing the last 15 years. I mean, it was a couple hundred bucks, so not a big deal in the end.
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Mar 8, 2024 22:17
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My parents bought a bunch of EE bonds for me when I was a baby. Yes you have to pay income tax on the interest when you cash in an EE bond. Well, actually, you get a 1099-int in the mail around tax time, report the income on your taxes, and pay when you file your taxes. If your cashing in a lot of them this could make for quite a surprise tax bill. In my case they were actual physical paper bonds so when I turned 18 my father just didn't give them to me. I knew they existed but I didn't know the amount and he said he would give them to me when they stopped earning interest or when I actually needed them. Overall I'd say it worked out quite well as I was able to put down about 35% when buying my first home by cashing them in. Of course these were 1982 EE bonds paying 9%. I'm not sure modern ones are quite as good of a deal. My kids are getting VTI in UTMA accounts. Paper bonds are a pain in the rear end and so is Treasury Direct. Antillie fucked around with this message at 05:28 on Mar 10, 2024 |
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Mar 10, 2024 05:21
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What is everyone's recommendation for HYSA right now? I got an email from Empower, my retirement program, and they're offering 4.70% but not sure how recommended they are.
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Mar 25, 2024 16:28
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Medullah posted:What is everyone's recommendation for HYSA right now? I got an email from Empower, my retirement program, and they're offering 4.70% but not sure how recommended they are. Check out https://www.raisin.com/en-us/
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Mar 25, 2024 16:38
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Or https://www.doctorofcredit.com/high-interest-savings-to-get/
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Mar 25, 2024 16:47
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I'm selling my house, which means a big wad of money coming in. Most of it is getting invested, but I'm guessing around $50-70k of it will need to go to taxes (yes, I know about the 250k deduction). What should I do with that money while waiting for tax day 2025? Just a savings account?
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Mar 26, 2024 17:20
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A short term CD is going to be a good bet in terms of rate of return and safety. You can't touch the money while it's in there, but since it's a tax payment anyway, you don't want to.
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Mar 26, 2024 17:45
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High yield savings, a CD, or a money market fund. An MMF likely has the highest yield right now (VMFXX is at ~5.4%). You may be able to find short term CDs that are close to that and would lock the rate for the term as well. HYSA yield will be a bit lower but still not a bad place to stash it. If rates get cut later this year expect to see both HYSA and MMF yields drop alongside it.
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Mar 26, 2024 17:56
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Alright, thanks everyone!
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Mar 26, 2024 19:08
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If you already pay quarterly taxes the money is due on your next payment dates. Either all at once on the next one or evenly divided from Jan 1. (I realize this year's first quarterlies aren't due yet but they might be by the time you get this money.)
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Mar 26, 2024 21:00
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TooMuchAbstraction posted:I'm selling my house, which means a big wad of money coming in. Most of it is getting invested, but I'm guessing around $50-70k of it will need to go to taxes (yes, I know about the 250k deduction). What should I do with that money while waiting for tax day 2025? Just a savings account? Make sure you are considering any capital improvements add to your basis, as does the amounts you pay for commissions. It’s not just the spread between purchase price and sale price that determines the gain. Not saying you haven’t already done this call but just in case
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Mar 26, 2024 22:18
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I knew about the improvements thing, and am planning to claim $40k for the workshop I added. What do you mean by commissions, the real estate agent fees? Other improvements I did, off the top of my head: - Hardwood floors throughout (which had to be replaced by carpet in two rooms, prior to sale) - Three new cabinets in the kitchen - EV charging plug - Brick planters and concrete walkway in the back yard - Under-cabinet lighting in the kitchen I dunno that the hardwood floors can be claimed, insofar as they replaced some ratty old carpet. So that might fall under general maintenance? I guess I can come up with some numbers for the rest of them though.
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Mar 26, 2024 22:26
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TooMuchAbstraction posted:I knew about the improvements thing, and am planning to claim $40k for the workshop I added. What do you mean by commissions, the real estate agent fees? Yes on the commissions. The real estate agents are paying income taxes on that, so you shouldn’t have to also. I’d be comfortable claiming any of those as improvements for basis purposes on a clients returns except for maybe the EV plug since presumably you could take that with you, unless I misunderstand what you’re saying there.
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Mar 26, 2024 22:34
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EV plug is a 50A/220V outlet on the side of the house, with a cover, so you can plug your EV in to charge it. It definitely counts as an improvement, and cost me a bit under $1k. Anyway, thanks for the advice!
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Mar 26, 2024 22:55
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TooMuchAbstraction posted:EV plug is a 50A/220V outlet on the side of the house, with a cover, so you can plug your EV in to charge it. It definitely counts as an improvement, and cost me a bit under $1k. Out of curiosity, what did you go with for the charger? I'm thinking of buying an EV in the next few weeks. $1k is much less than I was expecting for a 10kw charger
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Mar 26, 2024 23:07
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I have a Nissan Leaf, it comes with a cable that plugs directly into that 50A/220V outlet, no external charger required. The cable itself costs like $500 if you need to replace it, though, because it has some smarts built into it. So I guess it'd be more accurate to say "I didn't have a choice in the charger I got, I just needed to get an outlet that the charger could plug into." (the cable also has an adapter for plugging into standard 120V residential outlets).
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Mar 26, 2024 23:27
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drk posted:$1k is much less than I was expecting for a 10kw charger TooMuchAbstraction posted:I have a Nissan Leaf, it comes with a cable that plugs directly into that 50A/220V outlet, no external charger required. The cable itself costs like $500 if you need to replace it, though, because it has some smarts built into it. So I guess it'd be more accurate to say "I didn't have a choice in the charger I got, I just needed to get an outlet that the charger could plug into." (the cable also has an adapter for plugging into standard 120V residential outlets). "Cable with some smarts in it" is exactly what any home "EV charger" really is. Everything that actually handles charging the battery is on board the vehicle. What everyone refers to as an "EV charger" is just a special extension cord that ends in the appropriate connector, with a controller inside. The controller communicates with the car to make sure the car doesn't try to pull too much amperage, makes sure the car can't drive off with the cord plugged in, and only energizes the plug when safe to do so. Running power to the charger may well cost more than the charger itself in a lot of scenarios, depending on how long of a run it is from your main panel to where you want to charge the car.
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Mar 27, 2024 02:40
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IOwnCalculus posted:"Cable with some smarts in it" is exactly what any home "EV charger" really is. Everything that actually handles charging the battery is on board the vehicle. What everyone refers to as an "EV charger" is just a special extension cord that ends in the appropriate connector, with a controller inside. The controller communicates with the car to make sure the car doesn't try to pull too much amperage, makes sure the car can't drive off with the cord plugged in, and only energizes the plug when safe to do so. "It Depends" - the charger can be either onboard or outboard. The BMS is then receiving the output of the charger (onboard or outboard via a bypass) to put the juice into the batteries. Many EVs come with a small onboard charger to allow you to conveniently charge in a lot of places. Then you can install a higher power one elsewhere, either at home or at a public charging station. The 14-50 outlet you install allows you to either plug in the cable like above which has basic protection but is likely just wiring up the onboard charger, or plug in an outboard dedicated charger which could bypass the internal one. They are definitely 2 separate charges even if they are often combined on paper. The outlet is the highly variable element.
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Mar 27, 2024 04:19
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I had a 14-50 outlet put in my garage and I've found it to be more than enough to top off my EV every night. It cost me $500 to have the outlet installed (I was lucky and my breaker box is about 3 inches away on the other side of the wall.) The charging cable came with the car. (I did have to spend ~$15 for a 14-50 adapter for the "other" end of the cable. It only came with a normal 120v 20amp wall socket adapter.) The actual AC to DC charger thing is built into the car itself.
Antillie fucked around with this message at 04:34 on Mar 27, 2024 |
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Mar 27, 2024 04:30
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I saw some stuff about student loan interest capitalization on studentaid.gov and I'm very confused Isn't that how interest always works? How is this different from "normal" interest on credit cards, loans, or any other kind of debt? Why does the loan exit counseling page have a whole section on "understand when interest capitalizes"? Or is it that most interest on credit cards, mortgages etc capitalizes automatically but student loans are unique in sometimes not capitalizing? In which case they seem to be explaining it exactly backwards in the hardest-to-understand way.
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Mar 29, 2024 02:57
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I'm a newbie, but to me that reads as to what happens if the interest isn't paid off as it accumulates. Eg, if your interest is valued at $100 and you pay $105, you pay off the interest and put $5 toward the principal and you have less interest accumulate next month. If your interest is valued at $100 and you pay $95, that $5 you don't pay gets added to your principal and that goes up and you have to pay more next month.
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Mar 29, 2024 03:16
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Well I get that part but what I dont understand is why this has a name and a whole info page on "in what situations does student loan interest capitalize". Because the "$5 unpaid interest gets added to your balance and future interest payments are calculated off that" sounds exactly how normal non student loan debt works. e: of course yeah there normally won't be unpaid interest if you're financially healthy but it can come from missing payments or from predatory companies like payday loan places. or like the irs charging interest on unpaid back taxes you owe. but it's just how compound interest always works RPATDO_LAMD fucked around with this message at 03:47 on Mar 29, 2024 |
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Mar 29, 2024 03:28
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RPATDO_LAMD posted:Well I get that part but what I dont understand is why this has a name and a whole info page on "in what situations does student loan interest capitalize". What "normal debt" typically has unpaid interest to accrue? I can think of some mortgage (or student loan) forebearance situations (not normal, especially for a mortgage). I suppose paying under the interest on income based repayment which is alos a student loan only thing as far as I know......... This sounds like overwhelmingly a student loan thing to me. Motronic fucked around with this message at 03:35 on Mar 29, 2024 |
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Mar 29, 2024 03:33
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It sometimes comes up in large construction projects. You might be able to get a bank to sign off on capitalizing the interest of a loan for a plant that takes a few years to spin up, for instance. There were some "alternative mortgage products" back in the 2006 bubble that allowed for capitalized interest too, like Option ARMs. That was a hilariously bad idea. I don't know if they are still offered anywhere but the CFPB has a page talking about them, so maybe.
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Mar 29, 2024 03:50
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That was my point of quote unquote "normal debt". Yes, this exists in commercial and weird bad idea consumer products, but the only thing it exists in that the average person would ever interact with is in fact student loan IBR as far as I can tell.
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Mar 29, 2024 04:00
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I got denied for an apartment despite making 4x the rent because of bad credit. So, I have some questions about credit which is something I’ve never really cared about. I have no credit cards or loans. I had a car loan about 10 years ago and always paid on time. I paid off some serious medical debt a few years ago. I pay my electric, cable, rent, phone, insurance, and internet mostly on time. I signed up for credit karma which shows a 671 score. Experience has me at 550. Both show the same things. I thought I was done with student loans but I have $3,300 and it’s in default. I’ll make a $300 payment and get a plan set up in a few days when I have time to make the call. E: $78 is interest I have a $600 closed credit card from 2019 that was written off and a settled account with frontier for a cable box I never returned and ignored for like two years. Which score is actually my score? 550 or 671? Why is my credit bad, or fair at best when I’ve always paid my debts? Do my regular bills not count? Anyways, 62 days until I’m homeless! Arrgytehpirate fucked around with this message at 05:13 on Mar 29, 2024 |
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Mar 29, 2024 05:10
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RPATDO_LAMD posted:I saw some stuff about student loan interest capitalization on studentaid.gov and I'm very confused Yes that's how interest normally works on most things. In subsidized student loans, when payment is deferred it doesn't accrue interest so there's no interest to capitalize. In unsubsidized loans, when payment is deferred, interest still accumulates and can capitalize.
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Mar 29, 2024 05:11
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RPATDO_LAMD posted:Isn't that how interest always works? How is this different from "normal" interest on credit cards, loans, or any other kind of debt? Why does the loan exit counseling page have a whole section on "understand when interest capitalizes"? A student loan may very well be the first time someone is encountering these concepts in their life and dealing with them first-hand. I don't think a bit of explanation is unwarranted.
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Mar 29, 2024 06:26
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Arrgytehpirate posted:I got denied for an apartment despite making 4x the rent because of bad credit. So, I have some questions about credit which is something I’ve never really cared about. You can correct the low score by establishing a pattern of credit-worthiness (as they assess it), with a credit card you pay off in full every month being the lowest hanging fruit. Check out the credit card thread for recommendations. So long as you're confident in your ability to pay on time, there's really only upsides compared to alternative forms of payment, barring edge cases where you don't want your transaction tracked. Out of curiosity, what's kept you from getting and maintaining one in the past? Paying off the remainder of your debt will also be a win. The OP has a flowchart to follow that could help.
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Mar 29, 2024 08:06
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A scenario and a rookie question: Lets say I had $100k sitting in savings and I wanted to make $200/day off of it to live. Business days, so that would 20 days per month. I'd only make a withdrawal at the end of the month, so that would be ~$4k in cash at the end of month. What would be the lowest risk avenue to try something like that? Daily stock trading of some sort? I'm not saying I'm ever going to attempt such a feat but a recent article had me wondering.
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Mar 29, 2024 14:14
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