Search found 5010 matches

by Admiral
Tue Mar 26, 2024 4:23 pm
Forum: Personal Finance (Not Investing)
Topic: QBI (Business Income) deduction for Self-Employed
Replies: 8
Views: 652

Re: QBI (Business Income) deduction for Self-Employed

Well, the math says it's 20% savings vs "saving" (or more accurately deferring) taxes at your marginal rate. So, what is your marginal tax rate?

You could also make the case that you could use the QBI to save the 20%, and then put that tax savings into a tax deferred retirement account.

My state does not give a tax deduction for pre-tax retirement contributions so that's not an issue. However, they don't tax withdrawals.

The issue of Roth or pre-tax is much more complicated and depends on lots of factors, now and in the future.
by Admiral
Tue Mar 26, 2024 11:06 am
Forum: Personal Finance (Not Investing)
Topic: Our State Farm agent retiring
Replies: 32
Views: 2181

Re: Our State Farm agent retiring

Funny. I've had the same SF agent for 15 years. His office is across town. I have never met him face to face, and never had a need (or desire, really) to go there. Phone and email only. Very responsive guy and am happy with them.

Tho my auto insurance did just go up like 20%, but that's national not SF specific.
by Admiral
Tue Mar 26, 2024 9:55 am
Forum: Personal Finance (Not Investing)
Topic: TSP loans don't seem like that bad of an idea
Replies: 20
Views: 1615

Re: TSP loans don't seem like that bad of an idea

I would not waste more than the time it is taking me to type this message on this "loan" idea. Do not do it. + 1,000,000 …to all you newer Fed employees, military folks serving our country, etc in the TSP, do not borrow from your retirement, ever. I’m hearing in certain and particular situations, borrowing from your retirement is reasonable, even smart. Yup, and so is that perfect timeshare, that splendid reverse mortgage, maybe a car lease, co sighting on a relative’s loan, …all sorts of money vehicles that when they go right, all is good. ….”Life Happens”, well, not with my retirement! You need to be selfish about your retirement. Protect it like your wallet or purse while walking at night where you shouldn’t be walking. …just ...
by Admiral
Tue Mar 26, 2024 7:07 am
Forum: Personal Finance (Not Investing)
Topic: TSP loans don't seem like that bad of an idea
Replies: 20
Views: 1615

Re: TSP loans don't seem like that bad of an idea

But why not just leave the money there, and reduce your retirement contribution each month until you have the money you want/need to spend? Since you've added a monthly loan payment to yourself, you're investing with one hand (retirement contribution) and withdrawing with the other (using cash to make the loan payment). Unless, that is, you plan to stop contributing and only pay back the loan?

The main issue with a TSP loan is removing a lump sum from the market for x years, not the interest rate. In general the interest rate is pretty favorable vs other forms of debt. But compounding is compounding. You don't get it back.
by Admiral
Mon Mar 25, 2024 2:38 pm
Forum: Personal Finance (Not Investing)
Topic: Would you do a house upgrade?
Replies: 49
Views: 3547

Re: Would you do a house upgrade?

Bigger house: higher taxes, more to cool, more to heat, more to clean, more to furnish, more to keep up/repair, more to insure, more to worry about. Ad infinitum.

If you don't care about the costs of those things, and the new house will bring you more joy, then buy it. But consult your family first.

I'm one of those people who prefers to keep housing costs low and spend the money on travel. But I realize not everyone does that.
by Admiral
Tue Mar 19, 2024 8:33 am
Forum: Personal Finance (Not Investing)
Topic: Home Insurance Policy - Legalities Related to Cancelling It
Replies: 13
Views: 1182

Re: Home Insurance Policy - Legalities Related to Cancelling It

If it's a significant sum you expect to have refunded, hire an attorney. If it isn't, don't sign anything and let the policy lapse. People cancel policies and change insurers all the time. Cancelling will (should) get you a refund. Since you already have another policy in place, then simply let this policy lapse when the time comes and call it a loss, unless it's many many thousands in which case: lawyer. You do not (should not) need to sign anything when abandoning an insurance policy. When you don't renew, and the grace period ends, game over. You get a cancellation notice. That has been my experience, anyway. I'm wondering what happens if a claim occurs and you have two in force policies. This is the scenario above where you simply let ...
by Admiral
Tue Mar 19, 2024 8:14 am
Forum: Personal Finance (Not Investing)
Topic: Home Insurance Policy - Legalities Related to Cancelling It
Replies: 13
Views: 1182

Re: Home Insurance Policy - Legalities Related to Cancelling It

If it's a significant sum you expect to have refunded, hire an attorney. If it isn't, don't sign anything and let the policy lapse. People cancel policies and change insurers all the time. Cancelling will (should) get you a refund. Since you already have another policy in place, then simply let this policy lapse when the time comes and call it a loss, unless it's many many thousands in which case: lawyer.

You do not (should not) need to sign anything when abandoning an insurance policy. When you don't renew, and the grace period ends, game over. You get a cancellation notice.

That has been my experience, anyway.
by Admiral
Sun Mar 17, 2024 8:16 am
Forum: Personal Investments
Topic: Back door Roth questions
Replies: 22
Views: 1449

Re: Back door Roth questions

BoilerBear wrote: Sun Mar 17, 2024 8:14 am Thanks all for the info and feedback.

I more question just to confirm … the caveats about pro-rated issues with other IRAs only apply in IRA accounts and does not apply to my 401k i have from work?

I only have my 401k from work and a very small Roth IRA I’ve had for a long time, so i don’t think i should have that complication.
Correct. You have not answered the question of a Roth workplace option. Check with your plan admin to find out if you don't know.
by Admiral
Sat Mar 16, 2024 8:59 am
Forum: Personal Investments
Topic: Back door Roth questions
Replies: 22
Views: 1449

Re: Back door Roth questions

Does your workplace plan not offer a Roth option? Most now do. If so, why not use that? No income limitations as with a Roth IRA, and no backdoor hassle.
by Admiral
Sat Mar 16, 2024 8:45 am
Forum: Personal Finance (Not Investing)
Topic: “Bellys” on sewer scope for new house
Replies: 41
Views: 2549

Re: HVAC 30 years old on house under contract

It could work for another 5 years or die tomorrow. But the new unit might also fail in 5 years, who knows. "Older" can mean 7 years old or 30 years. If they have no other offers, you can ask for a credit, but I would not say you were misled. They may or may not agree. Hard to imagine anyone would want a home sale to fall through over $7k. Maybe you and the seller split the difference and call it a misunderstanding. Might be a good opportunity to look at a more efficient system, or ductless mini-splits, etc. A 30 year old AC probably eats electricity. You'd probably save by replacing it. I don't live in Arizona but I can't imagine that most HVAC systems last more than 10-15 years due to constant use of the AC anyway. But that's jus...
by Admiral
Tue Mar 12, 2024 10:35 am
Forum: Personal Finance (Not Investing)
Topic: Paying cash for a house?
Replies: 49
Views: 4827

Re: Paying cash for a house?

There are lots of talk about how the math would work if the money was invested in a money market instead. The problem is that if the OP does get a mortgage there very little chance that the money would, or should, actually be invested in a money market fund. A more appropriate investment would be to invest the non-emergency fund money in a mixture of stocks and bonds. No matter how you try to rationalize it talking out a loan to invest the money is using leverage which increases the risk. The math is only slightly different than if the OP were to do things like take out a margin loan on their taxable account or a 401k loan to invest the money. When deciding how much risk to take one of the first questions to ask is how much need you you ha...
by Admiral
Tue Mar 12, 2024 8:15 am
Forum: Personal Finance (Not Investing)
Topic: Paying cash for a house?
Replies: 49
Views: 4827

Re: Paying cash for a house?

We currently pack away about $120k/year towards retirement annually and max out all our retirement accounts. Any additional money not used for down payment or money that is saved from not having a mortgage would go to taxable brokerage savings. Goal is to FIRE in about 12-15 years blaugranamd, You don't state your incomes, but: You are wealthy. In 10-15 years you will have at least $5m, probably more like $7m if you continue on this savings path. (Hopefully you have a college plan if you have kids, but it sounds like you could cashflow college at that savings rate.) This is all moving pieces around at the margins. If you are comfortable putting a large percentage of your investible wealth into your home, then do that. If you're not, or you...
by Admiral
Tue Mar 12, 2024 7:54 am
Forum: Personal Finance (Not Investing)
Topic: Paying cash for a house?
Replies: 49
Views: 4827

Re: Paying cash for a house?

Ok so let me attempt the rough math game: $600k home - 20% down payment = $480k mortgage @ 6.5% interest is about $30k in interest the first year (using Bankrate calculator). Considering the standard deduction is about $22k (for simplicity) I'd be deducting a net over the standard deduction of about $8k and saving an extra $2800 in taxes (@ 35%). That $480k kept as MM @ 5.3% yields $25k in interest or about $16.5k after taxes. -$30k mortgage interest +$2.8k tax deduction +$16.5k MM interest Net: -$10.7k in the first year. $10.7k/480k = 2.2% effective interest rate vs paying cash for the house? In reality it should be slightly better than that as we'll have more itemized deductions to tack on. The mortgage rate is fixed. The MM return is no...
by Admiral
Mon Mar 11, 2024 3:19 pm
Forum: Personal Finance (Not Investing)
Topic: Paying cash for a house?
Replies: 49
Views: 4827

Re: Paying cash for a house?

toddthebod wrote: Mon Mar 11, 2024 3:15 pm
Admiral wrote: Mon Mar 11, 2024 2:17 pm I have done this, in order to avoid a jumbo loan rate. Put down 40% and then took a HELOC. Obviously LOC floats, so it was kind of annoying, but I kept it for a year or two and then paid it off.
Jumbo rates are lower than conforming rates.
Not in 2003 they weren't.
by Admiral
Mon Mar 11, 2024 2:37 pm
Forum: Personal Finance (Not Investing)
Topic: Paying cash for a house?
Replies: 49
Views: 4827

Re: Paying cash for a house?

We have about $1M in retirement accounts, $500k brokerage earmarked for retirement, $500k in MM, $500k equity to make up our net worth. I think if you can have the home paid off by the time you retire, then you will be fine either way (though you don't state your age or expected retirement expenses). Ultimately it's up to you. $500k in a taxable account creates tax drag, so that's something to consider. When the time comes to actually move, I see no real downside of renting, selling the existing home, taking the profit, and investing some or potentially all of it into a new home when you find one you cannot live without. A $250k mortgage is not going to make a difference in your life or your future. But $250k invested for 10 years is likel...
by Admiral
Mon Mar 11, 2024 2:17 pm
Forum: Personal Finance (Not Investing)
Topic: Paying cash for a house?
Replies: 49
Views: 4827

Re: Paying cash for a house?

If I understand your situation correctly your net worth is $2.5 million including your home equity. If you pay $700K in cash for a house in the midwest then after selling your current home you will still have $250K-$300K in extra cash plus your retirement savings. You expect to have a very high household income in the new area especially for a medium to low cost of living area. Paying cash looks like an easy decision to me. You do not hear about it much but about 40% of homes are owned without a mortgage but people with a paid off house quickly learn to not mention that since it comes across at bragging. I've been at parties where people might be excited about having a low mortgage rate, or moaning about how their current mortgage is highe...
by Admiral
Mon Mar 11, 2024 1:56 pm
Forum: Personal Finance (Not Investing)
Topic: Paying cash for a house?
Replies: 49
Views: 4827

Re: Paying cash for a house?

At that point, no, I would not pay cash. Rates are likely to begin to fall as the Fed cuts them. Once you actually find the house you want to buy, then I would put enough down to make the payment manageable and then wait for six months to a year. Then you can refinance. That optionality for me is worth paying some interest for a year and holding onto my cash. Others can't stand paying interest, period. I would not put such a large percentage of my investible dollars into a single, illiquid asset. Honest question because I've never refinanced, but why does the likelihood of falling rates mean you should take a mortgage at higher current rates? Is it easier to refinance an existing mortgage than to get a new mortgage on a house you own witho...
by Admiral
Mon Mar 11, 2024 1:39 pm
Forum: Personal Finance (Not Investing)
Topic: Paying cash for a house?
Replies: 49
Views: 4827

Re: Paying cash for a house?

Fellow Bogleheads! TL:DR - We will have the cash/equity to buy our next home in cash. Would you do that in the current interest rate environment? I would not tie up my entire liquid net worth in my house. Your future mortgage will put you well into itemization territory which is worth about a 1/3 discount on your interest rate. Valid, but at the same time, assuming we net $500k in home equity and buy a $600k home we'd still have $300k in cash. Even if we did the standard 20% down, we'd have a $400k mortgage net losing us ~5% and taking the "saved" money in cash at 3% net in MM or taking extra risk with equities? Given you can earn 5% on your money just sitting in a money market account, your "effective" mortgage rate wo...
by Admiral
Mon Mar 11, 2024 1:24 pm
Forum: Personal Finance (Not Investing)
Topic: Paying cash for a house?
Replies: 49
Views: 4827

Re: Paying cash for a house?

Well, first I would avoid the speculation. Do nothing until the job offer is signed.

At that point, no, I would not pay cash. Rates are likely to begin to fall as the Fed cuts them. Once you actually find the house you want to buy, then I would put enough down to make the payment manageable and then wait for six months to a year. Then you can refinance. That optionality for me is worth paying some interest for a year and holding onto my cash. Others can't stand paying interest, period. I would not put such a large percentage of my investible dollars into a single, illiquid asset.

My first mortgage was 8%. A 6% mortgage is average, not high, by historical standards.
by Admiral
Mon Mar 11, 2024 7:36 am
Forum: Investing - Theory, News & General
Topic: Can we expect TBM funds to outperform inflation?
Replies: 62
Views: 5205

Re: Can we expect TBM funds to outperform inflation?

Agree with KF on this one.

Put simply:

What's relevant is your portfolio's total return, not the return of the component parts.

To answer the OP, I expect that TBM will outperform inflation. You may not. But unless you are 100% TBM (or thereabouts), it matters little whether it does or not.

Bonds are for safety.
by Admiral
Fri Mar 08, 2024 6:48 am
Forum: Personal Finance (Not Investing)
Topic: How to Estimate Return Rates for Retirement Planning
Replies: 67
Views: 6233

Re: How to Estimate Return Rates for Retirement Planning

I use 1% real for planning purposes. Probably to conservative, but that's what I use I thought I was being conservative at 2.5% … let’s check back in 10 years lol … one can buy regular treasuries or tips and do better than either of our forecasts so why are we taking any equity risks? Hmmmmmn. I hear ya... History, while not a predictor, does have years where our mix of 60/40 underperformed that 1% real (see 2022 when inflation is listed at 8% and VWELX return is listed as -14.32% ). Since we are early on in a 40 year horizon, it's tough to "make up" for those early sequence of return losses, hence my conservative, some would say ultra conservative, number (and why DW and I continue to work part time). Those factors, combined wit...
by Admiral
Thu Mar 07, 2024 3:53 pm
Forum: Personal Finance (Not Investing)
Topic: Need advice on Home addition.
Replies: 21
Views: 1964

Re: Need advice on Home addition.

In many if not most places, you will need sealed/certified drawings in order to get permits for this kind of work. Therefore you need either an architect or a design build firm with an architect on staff. A random GC is not going to be able to certify drawings (which both protects you and helps you should the addition have issues upon inspection by the municipality.)

I'd hire one or the other and not go it alone. I agree with a previous poster that often smaller jobs have higher sqft prices, in my experience.

As for price, it's just too variable and location/finish dependent to make a judgement.
by Admiral
Thu Mar 07, 2024 7:47 am
Forum: Personal Finance (Not Investing)
Topic: How to Estimate Return Rates for Retirement Planning
Replies: 67
Views: 6233

Re: How to Estimate Return Rates for Retirement Planning

The only way (IMHO) to do it properly is to look at a range of returns: Assuming a middle of the road mix of stocks and bonds, you stress test your plan with low (2% real) to high (7% real) and see how it does. 2% real over a 20-30 year span is the absolute worst-case scenario IMO and has a near-zero probability. Somewhere in the middle (5% real) strikes me as sufficiently conservative over decades.

Ofc, if you're (say) 90% bonds, your mileage will vary substantially.
by Admiral
Wed Mar 06, 2024 9:44 am
Forum: Personal Investments
Topic: the psychological value of "paycheck replacement." Any role for annuities or TIPS ladders?
Replies: 54
Views: 6529

Re: the psychological value of "paycheck replacement." Any role for annuities or TIPS ladders?

I think part of my issue was/is(?) breaking the connection between income and spending. For all our working lives, spending capacity is mainly driven by income. When done working and living off savings, that is no longer true. If I had $10 million saved up for retirement, and it was all in a no-interest checking account, I could spend to support basically any lifestyle I wanted, for as long as I wanted--with an annual income of zero. Taking me a bit to get my head around that concept. I think my financial advisor is inclined toward just what Admiral and cjcerny and dbr describe--selling accumulated assets as needed. With reasonable assumptions plugged in (and even some unreasonable ones), FireCalc and the like produce a near-100% probabili...
by Admiral
Wed Mar 06, 2024 8:54 am
Forum: Personal Finance (Not Investing)
Topic: When have you stopped saving for retirement?
Replies: 40
Views: 4005

Re: When have you stopped saving for retirement?

Stopped completely? Never. Cut back? Once I had 7 figures saved and two college tuitions to pay for.

Since we don't know your situation (amount saved, expected retirement expenses, age, and on and on) it's hard to comment on your choice. But I would say that in general it's best to try to cut back on other expenses before stopping retirement savings. You cannot get the space or the time back.

I would not advise ANYONE who gets a retirement match from their employer to give that up by contributing nothing.
by Admiral
Wed Mar 06, 2024 6:45 am
Forum: Personal Investments
Topic: the psychological value of "paycheck replacement." Any role for annuities or TIPS ladders?
Replies: 54
Views: 6529

Re: the psychological value of "paycheck replacement." Any role for annuities or TIPS ladders?

You have way more money than you will need. You can buy an annuity but you don't need to: you are correct, it's a psychological security blanket.

Have you run your numbers through Firecalc, Flexible Retirement Planner, etc?

You will find that you are HIGHLY likely to end up with double or triple your starting amount with a sub-2% SWR post-social security. Unless $130k is your floor/base for expenses (that is,it includes no discretionary expenses that could be cut) then you will be fine. You could keep $2m in bonds/Treasuries and there's your annuity right there.
by Admiral
Mon Mar 04, 2024 11:35 am
Forum: Personal Finance (Not Investing)
Topic: Should I pay off my car loan now?
Replies: 11
Views: 1112

Re: Should I pay off my car loan now?

It only makes sense to pay it off to improve your cash flow. If you both pay the car loan AND invest the money, that impacts free cash flow. If that is not an issue (liquidity) then don't pay it off. My last car loan was 2.17%. I did not pay it off early. This point appears illogical. You can use the same money you pay off the loan with to supplement your cash flow. If I lock up $1,000 in my drawer, and take out $100 per month, my cash flow is improved for the following 10 months - however do you see how that does not accomplish anything useful? It's not illogical. The question was pay it off or invest . The option was not "don't pay it off and keep the money in a drawer." If you invest the money you have to pay it off, you have ...
by Admiral
Fri Feb 23, 2024 8:00 am
Forum: Personal Finance (Not Investing)
Topic: Should I pay off my car loan now?
Replies: 11
Views: 1112

Re: Should I pay off my car loan now?

It only makes sense to pay it off to improve your cash flow. If you both pay the car loan AND invest the money, that impacts free cash flow. If that is not an issue (liquidity) then don't pay it off.

My last car loan was 2.17%. I did not pay it off early.
by Admiral
Tue Feb 20, 2024 7:03 am
Forum: Personal Finance (Not Investing)
Topic: Renting vs. Owning - still on the fence
Replies: 63
Views: 4969

Re: Renting vs. Owning - still on the fence

muffins14 wrote: Tue Feb 20, 2024 6:58 am It may have been helpful had the original post mentioned you were in the EU. People tend to make assumptions on inflation, rent increases, mortgage rates, And tax scenarios based on the country you are in.
+100 :oops:
by Admiral
Tue Feb 20, 2024 6:57 am
Forum: Personal Finance (Not Investing)
Topic: 20-30X income, is that the "retirement rut"?
Replies: 132
Views: 20431

Re: 20-30X income, is that the "retirement rut"?

Just want to point out that I have not seen that the OP has $2m in investible assets . The wording used was $2m net worth . That could mean anything, including $1m in retirement accounts and $1m in home equity. The OP certainly could not retire comfortably (or at least maintain current lifestyle) with $1m in investible assets @ age 45. Perhaps with liquidation of real estate, assuming much lower COL. Even moving to a different, lower paying job (likely) would not be an option, unless the OP has a lot of $ in taxable, or Roth. Pointing out that an investment portfolio occasionally goes up more in a month than the investor can save in a year is interesting but hardly useful. It can also fall by an amount the investor can save in three years, ...
by Admiral
Mon Feb 19, 2024 2:25 pm
Forum: Personal Finance (Not Investing)
Topic: 20-30X income, is that the "retirement rut"?
Replies: 132
Views: 20431

Re: 20-30X income, is that the "retirement rut"?

I don't see how (or really why) motivation to work is tied to a portfolio number... Setting aside the question of how easily most people can find and get a job that is fulfilling, enriching, and lovable, there are usually other people involved in this calculation too. I know that's what I'm going to run into. Whatever time I spend working after we reach financial independence is time that I'll be explicitly choosing not to give to my spouse or kids or aging parents. That may or may not be worth the extra spending power for us, but it very much becomes a choice vs. "well, I wish I could do x with you, but I need to be here and work instead" because we're depending on the continued income from that work (potentially including conti...
by Admiral
Mon Feb 19, 2024 1:41 pm
Forum: Personal Finance (Not Investing)
Topic: 20-30X income, is that the "retirement rut"?
Replies: 132
Views: 20431

Re: 20-30X income, is that the "retirement rut"?

I don't see how (or really why) motivation to work is tied to a portfolio number. If you don't like your work (or are in a "rut") then take some time off (you can afford it) and find a more fulfilling job. I love my job and find it enriching intellectually. I could retire and live off my wife's salary (or, at least once college is done being paid for I could) but have a flexible work environment and great colleagues. I'm not ready to go quite yet. If you simply don't want to work, period, then pencil out your expenses and figure out how to retire (very early, with SS in the distant future). Don't forget healthcare. Assuming $2m in investible assets (NOT net worth) you'll be living on much less than $100k. I would not personally ta...
by Admiral
Mon Feb 19, 2024 11:30 am
Forum: Personal Finance (Not Investing)
Topic: SSA Survivor Benefits
Replies: 1
Views: 259

Re: SSA SURVIVOR BENEFITS

I have gotten so many different answers to my question. Does anyone know the real answer to: if my wife is a NON-U. S. citizen and we are living in the Philippines and let's assume her green card is expired, and I passed away, would she be able to draw SSA SURVIVOR BENEFITS when she turned 60 and still living in Philippines Did you check here? https://creativeplanning.com/international/insights/financial-planning/foreign-spouse-social-security/ Requirements for Foreign Spouses to Receive Benefits First, non-U.S. citizens may receive Social Security benefits abroad if they lived in the United States for at least five (non-consecutive) years as a married couple. In the case of divorce, the foreign divorced spouse can still qualify for spousa...
by Admiral
Thu Feb 15, 2024 12:09 pm
Forum: Personal Finance (Not Investing)
Topic: Pay Down 7-Year ARM Or Invest?
Replies: 35
Views: 1756

Re: Pay Down 7-Year ARM Or Invest?

Our combined salary is around 800k a year and total investments are around 3.2M. Based on the above, I suspect a good chunk of that $3.2 million is outside of tax sheltered accounts. If so you likely have no need for additional liquidity. In that case I would do what the math dictates. 5.85% is a fantastic guaranteed return in todays environment. Currently I would be paying extra into your mortgage. If the math changes next year, re-evaluate next year. About half is in taxable. Do you think it is worth recasting after putting in 100k? I think it's around $250 to recast a loan at this lender. Why do you care about recasting (to get a lower payment) if you have $100k in extra money? This does not seem like a cash flow problem to me. Seems li...
by Admiral
Thu Feb 15, 2024 11:57 am
Forum: Personal Finance (Not Investing)
Topic: Pay Down 7-Year ARM Or Invest?
Replies: 35
Views: 1756

Re: Pay Down 7-Year ARM Or Invest?

Also, would be helpful to know your salaries and investment account balances. Our combined salary is around 800k a year and total investments are around 3.2M. Based on the above, I suspect a good chunk of that $3.2 million is outside of tax sheltered accounts. If so you likely have no need for additional liquidity. In that case I would do what the math dictates. 5.85% is a fantastic guaranteed return in todays environment. Currently I would be paying extra into your mortgage. If the math changes next year, re-evaluate next year. About half is in taxable. Do you think it is worth recasting after putting in 100k? I think it's around $250 to recast a loan at this lender. Why do you care about recasting (to get a lower payment) if you have $10...
by Admiral
Thu Feb 15, 2024 11:26 am
Forum: Personal Finance (Not Investing)
Topic: Pay Down 7-Year ARM Or Invest?
Replies: 35
Views: 1756

Re: Pay Down 7-Year ARM Or Invest?

What does your EF look like? If you have a "spare" $100k each year, like clockwork, and all the typical things are covered (max retirement accounts, college savings if you have kids, et cetera) then I see no reason to not put at least some of the $100k toward the note, perhaps half. You are not going to beat that rate, after taxes, with any current HYSA. You'd need to do the math (or use a mortgage calculator) to see what the balance will be when the ARM expires based on various extra-savings scenarios and what-if interest rate scenarios. With an extra $50k each year, the balance might be low enough so you could then pay it off from investments, or OTOH you might not care if the rate rises because your payment would be the same as...
by Admiral
Thu Feb 15, 2024 10:53 am
Forum: Personal Finance (Not Investing)
Topic: Estimating Cash Flow Needs for Retirement
Replies: 25
Views: 3854

Re: Estimating Cash Flow Needs for Retirement

Well, you would not be paying quarterlies unless you have 1099 income, right? So assuming you are just drawing from savings/retirement accounts you will simply file in January April. Doh! As for other expenses, only you know what those are but obv. if you've categorized them that makes it easy. I'd recommend a 2-3 year average not simply one year, as a single year can have a lumpy expense (HVAC, roof, car) that moves the needle quite a bit. Eliminating any savings (retirement or otherwise) makes sense. There are categories that are likely to go up (travel, entertainment, restaurants), but again only you know how much you plan to spend on those things. Healthcare is the biggie. The other large expense would be home renovations, which many pe...
by Admiral
Tue Feb 13, 2024 2:29 pm
Forum: Personal Finance (Not Investing)
Topic: Renting vs. Owning - still on the fence
Replies: 63
Views: 4969

Re: Renting vs. Owning - still on the fence

Most people with higher net worth are homeowners. Correlation does not indicate causation. I would guess Rolls Royce automobile ownership and flying international in first class are also associated with higher net worth too. For what it is worth my highest years of savings occurred when I rented. I own now and though the house is similar in value to the one I rented my costs are up by a fair amount. It was a life style decision and likely one that will reduce my ultimate net worth unless the last couple of years of real estate appreciation continue. This is true of course. But the fact remains that in the US, the majority of wealth, on average, for those that have it is in home equity, because it's forced savings. We can dicker about cause...
by Admiral
Tue Feb 13, 2024 1:58 pm
Forum: Personal Finance (Not Investing)
Topic: Renting vs. Owning - still on the fence
Replies: 63
Views: 4969

Re: Renting vs. Owning - still on the fence

Most people with higher net worth are homeowners. Correlation does not indicate causation. I would guess Rolls Royce automobile ownership and flying international in first class are also associated with higher net worth too. For what it is worth my highest years of savings occurred when I rented. I own now and though the house is similar in value to the one I rented my costs are up by a fair amount. It was a life style decision and likely one that will reduce my ultimate net worth unless the last couple of years of real estate appreciation continue. This is true of course. But the fact remains that in the US, the majority of wealth, on average, for those that have it is in home equity, because it's forced savings. We can dicker about cause...
by Admiral
Tue Feb 13, 2024 1:36 pm
Forum: Personal Finance (Not Investing)
Topic: Pension increase vs. life insurance mitigation strategy
Replies: 10
Views: 593

Re: Pension increase vs. life insurance mitigation strategy

Check with plan admin to see if there is a 50% survivorship option. This usually entails a modest reduction in benefit to the pensioner but it can make sense. Our plan offers 50% survivorship for 8% reduction.

Depends on your other finances, social security, etc.
by Admiral
Tue Feb 13, 2024 10:05 am
Forum: Personal Finance (Not Investing)
Topic: Renting vs. Owning - still on the fence
Replies: 63
Views: 4969

Re: Renting vs. Owning - still on the fence

However, anywhere in the northeast, you are looking at $5,000-$20,000 per year in property taxes. Maybe those rates are true for Bogleheads that are buying $1.5M houses but you simply can't make general statements like this. We aren't all paying these rates in the Northeast - in fact the majority of us are not. The Median prices aren't even that high. MA is somewhere around $3K while NH is somewhere around $4K (NH tends to have higher property tax since there is not income tax). One reference: https://www.bankrate.com/real-estate/property-tax-by-state/#what-are There is a lot of other misinfo in this thread - need to get back to work but maybe will come back with more corrections later today but this one stuck out like a sore thumb to me.....
by Admiral
Tue Feb 13, 2024 8:45 am
Forum: Personal Finance (Not Investing)
Topic: Renting vs. Owning - still on the fence
Replies: 63
Views: 4969

Re: Renting vs. Owning - still on the fence

I believe housing appreciates at the rate of inflation long term (zero real return). You might make money in housing, but if you did, its basically (very slow) market timing. You can also lose money (while rarely in nominal money, frequently in real terms). The long term can be longer than you expect. I bought my house in the summer of 2005. I'm not sure what happened between then and 2008, but by 2009, it was 20% below what I paid. I was at a $0 gain in nominal dollars until the COVID run up. I need another 25% gain to get to $0 real, after factoring in HVAC and roof expenses. A house is a depreciating asset that fulfills a vital need, not an investment. After 18 years and a number of refis, my mortgage payment wouldn't even get me an eff...
by Admiral
Tue Feb 13, 2024 8:08 am
Forum: Personal Finance (Not Investing)
Topic: Renting vs. Owning - still on the fence
Replies: 63
Views: 4969

Re: Renting vs. Owning - still on the fence

I believe housing appreciates at the rate of inflation long term (zero real return). You might make money in housing, but if you did, its basically (very slow) market timing. You can also lose money (while rarely in nominal money, frequently in real terms). The long term can be longer than you expect. I bought my house in the summer of 2005. I'm not sure what happened between then and 2008, but by 2009, it was 20% below what I paid. I was at a $0 gain in nominal dollars until the COVID run up. I need another 25% gain to get to $0 real, after factoring in HVAC and roof expenses. A house is a depreciating asset that fulfills a vital need, not an investment. After 18 years and a number of refis, my mortgage payment wouldn't even get me an eff...
by Admiral
Tue Feb 13, 2024 7:54 am
Forum: Personal Finance (Not Investing)
Topic: Renting vs. Owning - still on the fence
Replies: 63
Views: 4969

Re: Renting vs. Owning - still on the fence

I think we need some more information. Is this rental rent controlled? How is it your rent cannot go up for ten years? If taxes go up, and they usually do, the owner will eat this increase? Utilities go up, owner will also eat those as well? I find that difficult to believe. In any case I highly doubt you'll be renting for the next three decades (even if you don't buy now) so that comparison seems silly to me. Also how are you able to get such a low (by current standards) mortgage rate? Remember that part of your housing cost when you have a mortgage goes back into your pocket as equity. It's not all straight expense. How much and how quickly depends on the rate and term, but with a ten-year note you build equity very quickly (and certainly...
by Admiral
Mon Feb 12, 2024 6:56 pm
Forum: Personal Finance (Not Investing)
Topic: Social Security - How to maximize benefits while still in workforce
Replies: 4
Views: 683

Re: Social Security - How to maximize benefits while still in workforce

Just focus on maximizing your income and let SS take care of itself. The more you earn, the less your social security payment will represent in percentage terms of your previous income. It's a case of diminishing returns. You don't actually want SS to be a large percentage of what your earned, because it means you didn't earn a lot.

Best to focus on earning and saving well, and in that way SS will be a "bonus" and not make up a huge portion of your retirement income. Not working has many more deleterious effects than reducing your SS payment.
by Admiral
Sun Feb 11, 2024 7:40 am
Forum: Personal Finance (Not Investing)
Topic: Guidance sought re: obtaining a mortgage with the lowest APR
Replies: 4
Views: 688

Re: Guidance sought re: obtaining a mortgage with the lowest APR

1/4 or 1/10th of a percent makes no difference if the loan costs are high, and you will likely refinance later. Go with the loan that has low or no (non-required) closing costs and that closes fastest.
by Admiral
Thu Feb 08, 2024 3:54 pm
Forum: Personal Finance (Not Investing)
Topic: Traditional vs Roth Contribution
Replies: 9
Views: 1176

Re: Traditional vs Roth Contribution

While there is no "right" answer here (too much depends on decades of growth) one thing that's (currently) in favor of pre-tax is that you can always convert from pre-tax to Roth later when in a very low tax bracket: you'll get decades of growth on the higher amount saved, and pay low or no tax later. If you had a year with no income (say you went back to school, etc) you could convert then and pay no tax at all on the conversion.

You cannot convert from Roth to pre-tax later and get the taxes you paid back. Since you can also invest the credit that you're getting (via money not paid in taxes) that allows you to save even more if using traditional.
by Admiral
Tue Feb 06, 2024 6:38 am
Forum: Personal Finance (Not Investing)
Topic: Mortgage quick refinance after purchase
Replies: 22
Views: 2029

Re: Mortgage quick refinance after purchase

Hi there, Some of the big banks (bank of america, wells fargo) are offering slightly better 30yr mortgage rates than a lender recommended by my realtor. However, the big banks need longer time to close escrow, while the realtor's lender can close faster. So say Bank offers rate 6.25% today; while realtor lender is offering 6.75%. My question: If I purchase through realtor lender (to make offer strong by having shorter close), and then I approach the bank soon afterwards to refinance, would that impact the way the Bank treats me ? Specifically, can it be that the bank refinance rates tend to worse than the rates for original purchase ? To simplify things, please just asusme the rates are not changing at all during this entire period. My que...
by Admiral
Mon Feb 05, 2024 3:44 pm
Forum: Personal Finance (Not Investing)
Topic: Mortgage quick refinance after purchase
Replies: 22
Views: 2029

Re: Mortgage quick refinance after purchase

Hi there, Some of the big banks (bank of america, wells fargo) are offering slightly better 30yr mortgage rates than a lender recommended by my realtor. However, the big banks need longer time to close escrow, while the realtor's lender can close faster. So say Bank offers rate 6.25% today; while realtor lender is offering 6.75%. My question: If I purchase through realtor lender (to make offer strong by having shorter close), and then I approach the bank soon afterwards to refinance, would that impact the way the Bank treats me ? Specifically, can it be that the bank refinance rates tend to worse than the rates for original purchase ? To simplify things, please just asusme the rates are not changing at all during this entire period. My que...
by Admiral
Mon Feb 05, 2024 2:58 pm
Forum: Personal Investments
Topic: Individual Tips Ladder or Target Retirement Income Fund for bridge until SS?
Replies: 13
Views: 1758

Re: Individual Tips Ladder or Target Retirement Income Fund for bridge until SS?

Thanks everyone! Admiral... To clarify.... the ladder would replace my current bond portfolio which is 35% of my portfolio and create $72k of income between 53 and 70 when social security kicks in. I would withdraw as optimally as possible tax wise. From the 401k I would use rule 72t very likely with a combination of roth withdrawals of contributions as well as conversions. As far as taxes goes (not much) I plan to cover those from the discretionary part of the portfolio as well as any income from smaller retirement projects. 72k per year does include healthcare insurance. And yes the portfolio is $2.8M... 65% stock 35% bonds. The 4th time the number 72 comes up in this exercise! :) I guess I can go various ways here.... just wonder if the...