|
Hey BFC, The past year in here has been really illuminating from a financial standpoint. I started a Roth IRA and bumped up my contributions to my work plan. However, I recently had an unexpected expense pop up, so I'm looking for some guidance on how best to address it. I got married in November and my wife and I delayed the honeymoon til May/June. We have already bought or reserved pretty much everything that can be paid for ahead of time, including lodging. Our stay in Tokyo was going to be at an Airbnb for approximately $450 over four nights. During the past couple weeks my wife has been making a lot of noise about the Park Hyatt Tokyo. If you've ever seen Lost in Translation, that's the same hotel. I guess she doesn't think the Airbnb is "romantic" enough for the beginning of our honeymoon. So now she wants to get a suite at the Park. I priced it out and it would be $5,690.27 over the same time period. This is more than we have in cash savings right now, or at least if you exclude the cash savings that are reserved for other things we want to do on the trip. However, we don't carry any debt and we've been good savers the past 12+ months, so I don't think our situation is hopeless here. Here are the options I've come up with: 1) Draw the money from my Roth IRA. Current balance is around $11,700 after 2 years of max contributions. 2) Draw the money from her Roth IRA. Current balance is around $8,000 or so, including a max contribution this year. 3) Stop contributing to my 457 for a while. Currently chip in at $750 every two weeks, so I'd just need to stop for 8 pay cycles and I'd be good to go. 4) A mix of these three things. Right now I'm leaning towards a mix of 2 and 3. I'd prefer to draw from her IRA over mine, since I have the larger balance and will be generating more interest. Not to mention the fact that the hotel is her idea (I really liked the Airbnb cause it was in a cool neighborhood and had bikes we could ride, but oh well). But I feel like it's unfair to make it all come from her, so I'd be willing to stop my contributions for 4 pay cycles and make it a 50/50 thing. Thoughts? I realize it's a bit crazy but you only go on your honeymoon once, so I'm willing to sacrifice for this for her. Thanks.
|
#
?
Apr 23, 2015 00:53
|
|
|
|
| # ? May 5, 2024 17:32 |
|
|
quote:four nights quote:$5,690.27 This hurt just to read.
|
|
#
?
Apr 23, 2015 01:16
|
|
|
Why not just stay at the Hyatt on your last night? Or stay in a smaller room? You get the experience without sacrificing irreplaceable retirement savings
|
|
#
?
Apr 23, 2015 01:19
|
|
|
Maybe consider some middle ground between $100/night and $1300/night lodgings.
|
|
#
?
Apr 23, 2015 01:20
|
|
|
Cicero posted:Urrghghghhhgh SlapActionJackson posted:Why not just stay at the Hyatt on your last night? Or stay in a smaller room? You get the experience without sacrificing irreplaceable retirement savings Believe me, I feel you both on this but she's pretty dead set on this particular suite at this particular hotel. I feel like I kind of owe it to her too. After we got engaged we split up planning responsibilities. She was in charge of the wedding, I was in charge of the joint bachelor/bachelorette party and the honeymoon. I ended up getting some say over some aspects of the wedding, so I feel like it's only fair to let her pick this (especially since it matters so much to her).
|
|
#
?
Apr 23, 2015 01:22
|
|
|
But, did your say over the wedding increase its cost $5,000? Anyway, seems like if you just draw out what you contributed to your Roth IRAs this year, you could still replace those contributions later this year (or even beginning of next year), right? You'd lose whatever returns you would've gotten during that time, but that's not too horrible (and also that applies to any source of money you draw from).
|
|
#
?
Apr 23, 2015 01:33
|
|
|
Cicero posted:But, did your say over the wedding increase its cost $5,000? Haha no, it probably saved us about $5,000 (kept us from getting a dumb photobooth, for example). But we've never been the type to keep score on dollars and cents. Plus getting the wedding "right", so to speak, was a bigger interest of hers, whereas getting travel "right" is my thing. So it comes out equal enough in my book. Cicero posted:Anyway, seems like if you just draw out what you contributed to your Roth IRAs this year, you could still replace those contributions later this year (or even beginning of next year), right? You'd lose whatever returns you would've gotten during that time, but that's not too horrible (and also that applies to any source of money you draw from). I thought about this, but after looking into it I think you can only replace within 60 days? And even if we were allowed to replace it for the rest of the 2015 cycle, I don't know where we'd come up with that money unless I reduced my 457 contributions by an equivalent amount.
|
|
#
?
Apr 23, 2015 01:43
|
|
|
While that hotel does look absolutely gorgeous, it's not like you travel to spend your time at the hotel, right? If you want to put that money to better use, go to famous restaurants, see some great historical sites, go see a few local shows, hell, extend your stay by a couple weeks. All of that sounds better than spending $5k to get a pampered experience that you could probably get without an international flight.
|
|
#
?
Apr 23, 2015 03:07
|
|
|
Adding an extra $5,000 to your trip for a room that you'll maybe spend 8 total awake hours in is not a very good idea. Could you maybe find a more romantic alternative? There has to be a mountain cabin or ocean side cottage you can rent AND get private transport to/from for like a third of that price, and it'll be both more romantic and a hell of a lot more memorable than a fancier room at a chain hotel. If you're gonna blow a few grand more you better make it something unique and memorable.
|
|
#
?
Apr 23, 2015 03:11
|
|
|
Shifting the $5,000 to a different hotel/experience doesn't really address my main question, which is what's the optimal way of funding that unbudgeted expense. I'd rather not dip into my brokerage account cause then I'd have to pay capital gains.
|
|
#
?
Apr 23, 2015 03:15
|
|
|
pig slut lisa posted:Shifting the $5,000 to a different hotel/experience doesn't really address my main question, which is what's the optimal way of funding that unbudgeted expense. There's no optimal way to fund it because you don't have the cash on hand and can't afford it without raiding your retirement accounts? Honeymoon equity.
|
|
#
?
Apr 23, 2015 03:28
|
|
|
I mean I guess you could try Lendingclub, but interest rates on the loan will probably be pretty high.
|
|
#
?
Apr 23, 2015 03:30
|
|
|
The way I always deal with not having enough money is by making more money. Tutoring, pulling overtime, babysitting if I have to. Just... work more if you're dead set on having that money.
|
|
#
?
Apr 23, 2015 03:34
|
|
|
pig slut lisa posted:I thought about this, but after looking into it I think you can only replace within 60 days? Yes. Any money you pull out you'll only have 60 days to replace. I still think your objective should be to find a less expensive middle ground. Splurging an extra $5k on the honeymoon would be one thing if you had the money, but you don't. Did you do any premarital counselling before the wedding? Money is the #1 issue couples fight over, so learning how to deal with money conflict is an important skill in a marriage. You need to be able to tell your wife "I know this is important to you, but we don't have the $5k, let's find an affordable middle ground."
|
|
#
?
Apr 23, 2015 03:36
|
|
|
I feel like the Roth IRA withdrawal isn't a totally terrible option, because the market has been pretty flat this year and we're already a third of the way through. So it's not like I'd be missing out on any real gains.
|
|
#
?
Apr 23, 2015 03:36
|
|
|
SlapActionJackson posted:Did you do any premarital counselling before the wedding? Money is the #1 issue couples fight over, so learning how to deal with money conflict is an important skill in a marriage. You need to be able to tell your wife "I know this is important to you, but we don't have the $5k, let's find an affordable middle ground." This is one of the only things she really is holding her ground on. Most money issues I'm able to talk her down to a middle ground. One tactic that works really well is telling her we can do the more expensive things in a year or so after she finishes her PhD (right now I pull in about 75% of the household income, but she will likely make 60% to my 40% after she gets a job), but with the honeymoon it's a real one time special thing that she's just fixating on.
|
|
#
?
Apr 23, 2015 03:38
|
|
|
pig slut lisa posted:I feel like the Roth IRA withdrawal isn't a totally terrible option, because the market has been pretty flat this year and we're already a third of the way through. So it's not like I'd be missing out on any real gains. I feel like this is a troll thread
|
|
#
?
Apr 23, 2015 03:42
|
|
|
pig slut lisa posted:I feel like the Roth IRA withdrawal isn't a totally terrible option, because the market has been pretty flat this year and we're already a third of the way through. So it's not like I'd be missing out on any real gains. You have no idea what the market is going to do after you take the money out. If you absolutely must go down this path, your taxable brokerage account would be a better source of funds. ^^^^^ Or see if you can talk her into saving it for your 5/10 year anniversary when you'll be in better shape financially. Remind her you'll have lots of opportunity to travel as a couple. It's not now or never.
|
|
#
?
Apr 23, 2015 03:42
|
|
|
It sounds like you've already decided to book the hotel room, and you've already decided to raid your IRA to get the money for it, so what exactly are you looking for from this thread? Are you hoping one of us knows about a website that offers 0% loans for honeymoons?
|
|
#
?
Apr 23, 2015 03:43
|
|
|
SlapActionJackson posted:If you absolutely must go down this path, your taxable brokerage account would be a better source of funds. Why is that the case? Wouldn't that trigger a tax hit, whereas I can withdraw from the Roth at no cost? A GIANT PARSNIP posted:It sounds like you've already decided to book the hotel room, and you've already decided to raid your IRA to get the money for it, so what exactly are you looking for from this thread? Haha no (I wish). I guess I'm wondering if the Roth withdrawal is better or worse than not contributing to the 457 for a few months. e: or could this be a situation where it makes sense to only withdraw part of the money from retirement and just carry a balance on my lowest rate card for a cycle or two? The balance wouldn't be for the whole $5,500, just e.g. $2,000 or whatever I didn't pull from an account.
|
|
#
?
Apr 23, 2015 03:46
|
|
|
It makes sense to take a honeymoon you can afford, either now or after next year when you will be making more money
|
|
#
?
Apr 23, 2015 03:50
|
|
|
BEHOLD: MY CAPE posted:It makes sense to take a honeymoon you can afford, either now or after next year when you will be making more money We can afford it. It's not like we'd be taking on debt to pay for it (unless we do the partial credit card balance thing).
|
|
#
?
Apr 23, 2015 03:53
|
|
|
BEHOLD: MY CAPE posted:I feel like this is a troll thread PSL, if you need help convincing your wife, go ahead and project what $5000 will look like in 25 years. Assuming you have kids, that's like 2 years of in-state tuition plus expenses for one of your kids. For 4 nights in a hotel that you'll spend maybe 4 hours awake in. Get the AirBnB and actually enjoy the culture, instead of parking your asses in a westernized hotel.
|
|
#
?
Apr 23, 2015 04:33
|
|
|
Going to Japan and staying at a Western hotel in Tokyo just seems like such a waste - especially given the price. I guess if that's what she wants, fine... any chance of paying for it on a credit card and transferring the balance for a 0% offer? Do they still do those these days? Have either of you been to Japan before? Are you planning to stay at any Japanese hotels while you are here? https://www.japaneseguesthouses.com/ryokan-search-results/?area=Hakone I mean, the prices are about the same, but you often can get your own private hot spring in your room, and a super fancy dinner included in that price... http://www.senkei.net/eng/yamagaso/ http://www.hakoneginyu.co.jp/english/guestroom.html etc, etc...
|
|
#
?
Apr 23, 2015 06:17
|
|
|
Tokyo hotel rooms are loving tiny so I imagine a 'suite' would be the same size as a half decent family room elsewhere in the world. If she's hung up on going somewhere fancy in the film take her to the restaurant at the top one evening because the view is legitimately incredible and a proper 3 course meal for two + wine will cost you about 1/10th the price of staying there for four nights.
|
|
#
?
Apr 23, 2015 10:35
|
|
|
pig slut lisa posted:Hey BFC, Sever
|
|
#
?
Apr 23, 2015 12:37
|
|
|
Dik Hz posted:I'm getting that vibe too. Haha I wish. This is stressful enough to deal with less than a month out from departure. Dik Hz posted:PSL, if you need help convincing your wife, go ahead and project what $5000 will look like in 25 years. Assuming you have kids, that's like 2 years of in-state tuition plus expenses for one of your kids. For 4 nights in a hotel that you'll spend maybe 4 hours awake in. How are you getting that number? Maybe she'd be receptive to something like that. We had talked about opening a 529 this year (no kids yet, but I'd be the beneficiary and we'd switch over when we do have a kid), but it's looking like that's out the window. Dik Hz posted:Get the AirBnB and actually enjoy the culture, instead of parking your asses in a westernized hotel. The good (ha!) news is that the Airbnb we booked has the "super strict" cancellation, which means that we can't recover any money on it less than 30 days out. We just passed the 30 day mark like 3 days ago. So I guess we might as well check in to that too and use the bikes, if she still wants to do that? I hope she does; it's one of the parts of the trip I was most looking forward to. And the neighborhood is way cooler besides. GTGastby posted:Going to Japan and staying at a Western hotel in Tokyo just seems like such a waste - especially given the price. I guess if that's what she wants, fine... any chance of paying for it on a credit card and transferring the balance for a 0% offer? Do they still do those these days? I've been to Japan before, she has not. Good call on the nice Hakone ryokan. We're actually already booked at Yamanochaya for 2 nights. It was going to be our splurge place, at $600 a night, with everything else being far more modest. But now with the Park Hyatt thing I'm feeling like we should just axe it. I was the one who was interested in a more "authentic" experience anyway, so I suppose I can always try it if/when I get back to Japan in the future. Hyvok posted:Sever Come on man 
|
|
#
?
Apr 23, 2015 13:42
|
|
|
On our honeymoon, my husband got a cold and just wanted to sleep. If it hadn't been a cheap honeymoon, I'd have been really unhappy! Imagine paying $1000 a night to be stuck on the toilet from bad sushi. Best to stick to your existing plans.
|
|
#
?
Apr 23, 2015 13:55
|
|
|
pig slut lisa posted:But with the honeymoon it's a real one time special thing that she's just fixating on. FYI, you are going to have many "one time special things" come up that she will want to splurge on, hope you're cool with that. If you had the cash on hand I would say go for it, but if you don't that means you can't afford it.
|
|
#
?
Apr 23, 2015 15:28
|
|
|
pig slut lisa posted:I'd prefer to draw from her IRA over mine, since I have the larger balance and will be generating more interest. Not to mention the fact that the hotel is her idea (I really liked the Airbnb cause it was in a cool neighborhood and had bikes we could ride, but oh well). But I feel like it's unfair to make it all come from her, so I'd be willing to stop my contributions for 4 pay cycles and make it a 50/50 thing. It doesn't matter which IRA you draw from. You're married now. If you retire with a bigger IRA than she has, you'll just draw on that account more to cover retirement expenses (I know people are arguing about this in the marriage/finances thread, but it always comes down to the same conclusion with retirement). Also, the interest you gain on $5000 is the same regardless of the total amount in the account.
|
|
#
?
Apr 23, 2015 15:38
|
|
|
Do not take money out of your retirement savings. Why not just throw it on a credit card and stop your bi-weekly 457 contributions for a few months to pay it down ASAP? This is your honeymoon bro, you have the rest of your marriage to disappoint your wife.
|
|
#
?
Apr 23, 2015 17:06
|
|
|
No idea what's in your other accounts but that's like over a quarter of your combined 401k balances. So depending on how young you are this could potentially cost you both years of extra work. It's one thing to spend $5k if you've got $200k accruing interest but another thing if you're at $20k. If she's specifically after the Lost in Translation angle, just have several drinks at New York Bar. It's where most of the "action" in the movie actually happens anyway. If she just wants a romantic view of Tokyo from a hotel room, that's a completely different request with a LOT of better alternatives to Park Hyatt Shinjuku (it's not even in a convenient place, pretty crappy for tourism/honeymooning). Andaz, Aman, Conrad, Grand Hyatt, Ritz Carlton, Mandarin Oriental... You'll find a lot of hotels perched atop tall office buildings. Most of which are more convenient, have better views, and drastically cheaper if you don't spring for some over the top suite. Suites at 5-star hotels are like business class plane tickets... nice to have but not something you really pay for yourself. I understand it's your honeymoon and all, but are you flying business class? Probably not because the difference is pretty ridiculous.
|
|
#
?
Apr 23, 2015 17:29
|
|
|
Should have planned ahead dog. 1. Open Chase Sapphire Preferred card 2. Put wedding expenses on card 3. Get 45,000 sign up points after qualified spending + 1:1 points on wedding costs ($5000 wedding = 5000 points eg) 3. Convert said points 1:1 to Hyatt points 4. Use points + cash to reserve 4 nights at the Park Hyatt (15000 points + $300 cash per night) Total cost: ~$2000 USD But like others have said, don't stay at a fancy business hotel in Japan come on now.
|
|
#
?
Apr 23, 2015 17:31
|
|
|
ufsteph posted:FYI, you are going to have many "one time special things" come up that she will want to splurge on, hope you're cool with that. We do have the cash on hand. It's just in retirement accounts is all. fruition posted:Do not take money out of your retirement savings. Why not just throw it on a credit card and stop your bi-weekly 457 contributions for a few months to pay it down ASAP? Thanks. I'm starting to lean more towards this. The only thing that's giving me pause is missing out on future returns for those 457 contributions, whereas if I were to pull from the Roth I'd only be losing the minimal returns that we've gotten in the first 4 months since we contributed in January. Gorman Thomas posted:Should have planned ahead dog. Thought about this since I have approximately 95,000 Chase UR points right now, but we're looking to take an international trip next fall and fly business class on points. I know I won't be able to afford the cash for that, so I want to save those points for next year.
|
|
#
?
Apr 23, 2015 18:26
|
|
|
pig slut lisa posted:We do have the cash on hand. It's just in retirement accounts is all. Cognitive dissonance personified
|
|
#
?
Apr 23, 2015 18:36
|
|
|
Exactly
|
|
#
?
Apr 23, 2015 20:08
|
|
|
I actually stayed at that same hotel for a couple nights on my own honeymoon. Years later, we still talk about it as one of the awesome experiences we had. I honestly do highly recommend staying there at least for a night. My thoughts: 1) Why on earth would you need a suite?! We had a standard corner room and it was still giant and absolutely breathtaking, at "only" ~55000Y/night. Just switching to one of those would cut your costs in half. 2) The hotel is amazing. Killer views, gorgeous room, ridiculous service, etc. etc. It's the nicest hotel I've ever stayed in and likely the nicest hotel I ever will stay in. 3) If there's one time in your life it's appropriate to splurge on a hotel room, it's your honeymoon, considering the amount of time you're likely to spend in it. <wink wink nudge nudge> 4) All this said, don't defund your retirement to pay for a drat hotel room, what the hell is wrong with you.
|
|
#
?
Apr 23, 2015 20:59
|
|
|
pig slut lisa posted:Shifting the $5,000 to a different hotel/experience doesn't really address my main question, which is what's the optimal way of funding that unbudgeted expense. Once you pull that money out of the Roth IRA, if you don't put it back in 60 days, it is literally irreplaceable. You're just thinking of it as cash, which it isn't; it's cash PLUS a very limited opportunity, and by withdrawing it from there, you're losing that opportunity entirely. Roth IRAs grow tax-free. So, by cashing that out, you're not only giving up the money you're taking out, but all of the tax-free gains that money would have made. Yeah, sure, you've got the brokerage account, too, but that is going to be hit by capital gains when you cash out, which is a big loving hit. So, let's compare: $5000 in the Roth IRA, let's assume that you manage a 6% interest rate on it (reasonably conservative), in 30 years that's about $29,000. And that's what that will be: $29,000. The same amount of money in the brokerage account in 30 years (assume you don't realize any gains on it between now and then, thereby getting hit with taxes) at the same interest rate--assuming tax policy is the same (and capital gains rates are unlikely to get lower)--will be $24,500, assuming your state doesn't also have a capital gains tax. As the interest rate goes up, or the duration of the investment gets longer, the advantage only gets bigger. If you leave that money in for 40 years instead of 30 years, it turns into $50,000 versus $45,500. Manage to get 7% instead of 6%, and leave it in 40 years? $75,000 versus $65,000. And these are best-case scenarios for the brokerage account, and worst-case for the Roth IRA. Tax policy changes, increases in your income, and investment decisions are likely to hurt the brokerage account a lot more. Additionally, it sounds like you only got your poo poo together recently, financially-speaking. So, yeah, you'll get hit with capital gains on the brokerage account, but only on the GAINS on the brokerage account, not on the total value of what you withdraw. Skipping out on the 457 is an immediate 15-40% hit (depending on what your income bracket is; I'd guess given this post probably 15% or 25% for you) on the full value. Honestly, given that it doesn't sound like you're maxing out a traditional IRA, too, I'm not even sure why you have a brokerage account. Please don't take this as an endorsement of dumping a large amount of money it doesn't seem like you can really afford on a reaaaaaaalllly unnecessary expense; but if you're going to do it, at least do it in the least-stupid way. tl;dr: you can't just look at raw numbers and immediate cost/benefit when making financial decisions; you need to look at long-term ramifications. Ham Equity fucked around with this message at 21:07 on Apr 23, 2015 |
|
#
?
Apr 23, 2015 21:04
|
|
|
I don't see the problem; goons will always push the Ramen & shoebox apartment lifestyle way too hard imho. OP this is exactly why a Roth IRA is great for short term savings. You can put pretax money in it, hopefully get an employer match, and it can all be withdrawn without penalty as long as you're under 55. Real world example: When I went car shopping earlier this year, I was able to afford a 2015 Focus (thought I was going to have to settle for a 2010) by dipping into the ol' Roth Kitty for a few thou.
|
|
#
?
Apr 23, 2015 23:30
|
|
|
|
| # ? May 5, 2024 17:32 |
|
|
pig slut lisa posted:How are you getting that number? Maybe she'd be receptive to something like that. We had talked about opening a 529 this year (no kids yet, but I'd be the beneficiary and we'd switch over when we do have a kid), but it's looking like that's out the window. Pick your own numbers for projections if you want. Mine were admittedly on the optimistic side.
|
|
#
?
Apr 23, 2015 23:35
|
|