Input on personal finance decisions

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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andronikus
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Input on personal finance decisions

Post by andronikus » Mon Jul 09, 2018 7:43 am

Previous posts (viewtopic.php?f=2&t=213612&p=3280779#p3280779)

Usually I would post this in about a year but I'm second guessing a lot of my decisions.They all feel wrong after the fact so I wanted to get some input on the questions below.

~Now 37, same tax/personal situation, minor bump in salary
~Now contributing max to 401k (36.5k balance)
~Now contributing max to Roth IRA (~10-11k balance)
~Have not contributed max to HSA
~550k cash between a few MMA/Savings accounts

Questions/Things I believe I did wrong:
1. Ended up buying another car (spoke of it in previous post). Another Accord (V6 touring) for about 31.5k cash, I got almost 7k for my old Accord. This decision is biting at me now. It feels as if I never should have bought it. I see it getting dings/scratches, and depreciating with every mile. My old car was old/ugly but reliable, and probably could have lasted me another 30-40k miles before I started having issues, and mostly depreciated. Am I overthinking this?

2. I ended up suffering a serious wrist injury last year that is making me rethink some of my exercise routines. I practice martial arts (muy thai) and broke my wrist (radius) in my strong arm. 8 months and 5k in deductibles later, my arm is still not where it was before I broke it. This is a 100-150$/month expense that I'm strongly reconsidering (Been doing it 4 years). Maybe I should stick to the gym only?

3. I am considering getting rid of my individual disability policy. Its currently costing me ~140$ monthly. The plan had a 5% annual increase, it started around 100-110$ monthly but it feels high now. I know some members have advocated a strong individual disability policy to handle serious issues that would keep you out of work (I have a 90 day elimination period), but what are the odds? Given my recent injury I barely used sick time to handle it. My employer provides 40% salary coverage (I know group policies are generally junk). Has anyone canceled their individual policy after the fact?

4. I know I should have invested that cash, but current market values are spooking me, and interest rates are going up (as are the returns for MMA/Savings). I have a few co-workers that are heavily into real-estate, and recommended I go that route, but the ROI calculations I see (in my high COL area for condos/rentals) are barely breaking 8%, and that's assuming everything goes right. Should I sit a little while longer on this? I initially thought of using this cash to buy a home for myself, but real estate prices have only gone higher since my last post.

5. Are there any bogleheads that never married? What did you do different with your investments/risk tolerances? Were you able to retire earlier?

:confused

bloom2708
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Re: Input on personal finance decisions

Post by bloom2708 » Mon Jul 09, 2018 10:11 am

1. Enjoy the new car. Drive it and move past this. You have $550k cash sitting. The car is no big deal

2. Exercise and hobbies should change as you age sometimes. You are no longer 25. I can't tell you to stop the martial arts. It sounds like lower impact activities might work out better at least until you heal up more. As you age, it takes a lot longer to heal and you may not get back to 100%. I am 47 and have found this out many different ways. :wink:

3. Seems expensive. I have a policy through work, that is enough for us.

4. $550k sitting on the sidelines is not good. How about going 50-50 stocks/bonds? You think you are taking no risk, but inflation is chewing on your money. The market may drop, but it frequently sets new highs many times each year. You need to set aside an Emergency Fund and get the rest invested even if it is 40% stocks. It doesn't matter for the long term if stocks seem "high".

If the money is needed for a house down payment or something, then set that aside. Invest for retirement, 20, 30, years. Invest early, invest often.

Review the 10 Boglehead principles and start. Maybe do 1/6th over 6 months if that will help you. Keep it simple.
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Dottie57
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Re: Input on personal finance decisions

Post by Dottie57 » Mon Jul 09, 2018 10:34 am

bloom2708 wrote:
Mon Jul 09, 2018 10:11 am
1. Enjoy the new car. Drive it and move past this. You have $550k cash sitting. The car is no big deal

2. Exercise and hobbies should change as you age sometimes. You are no longer 25. I can't tell you to stop the martial arts. It sounds like lower impact activities might work out better at least until you heal up more. As you age, it takes a lot longer to heal and you may not get back to 100%. I am 47 and have found this out many different ways. :wink:

3. Seems expensive. I have a policy through work, that is enough for us.

4. $550k sitting on the sidelines is not good. How about going 50-50 stocks/bonds? You think you are taking no risk, but inflation is chewing on your money. The market may drop, but it frequently sets new highs many times each year. You need to set aside an Emergency Fund and get the rest invested even if it is 40% stocks. It doesn't matter for the long term if stocks seem "high".

If the money is needed for a house down payment or something, then set that aside. Invest for retirement, 20, 30, years. Invest early, invest often.

Review the 10 Boglehead principles and start. Maybe do 1/6th over 6 months if that will help you. Keep it simple.
Agree mostly. For disability insurance , if your work doesn’t provide good one, keep purchasing.

annielouise
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Re: Input on personal finance decisions

Post by annielouise » Mon Jul 09, 2018 10:53 am

Just learn from the car decision but don't fret about it. Perhaps you can set a rule for the future. Such as: I won't replace my car until it has x miles on it or costs $y a year in maintenance.

8 months isn't long for recovery as you get older. Give it time. You can find a lower impact activity and reevaluate later. Any reason you can't stop paying for martial arts class now but still be able to return in the future?

Generally, work disability policies are taxable income when paid out. 40% and taxable is likely not much money. If you can afford the policy you have, stick with it for now. As your retirement savings grows, it may be perfectly reasonable to drop it down the road.

You have to invest money for the long term knowing that it will drop in value at times, possibly even a lot right after you invest it! You also have to believe that over time, it will grow.

delamer
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Re: Input on personal finance decisions

Post by delamer » Mon Jul 09, 2018 11:28 am

Dottie57 wrote:
Mon Jul 09, 2018 10:34 am
bloom2708 wrote:
Mon Jul 09, 2018 10:11 am
1. Enjoy the new car. Drive it and move past this. You have $550k cash sitting. The car is no big deal

2. Exercise and hobbies should change as you age sometimes. You are no longer 25. I can't tell you to stop the martial arts. It sounds like lower impact activities might work out better at least until you heal up more. As you age, it takes a lot longer to heal and you may not get back to 100%. I am 47 and have found this out many different ways. :wink:

3. Seems expensive. I have a policy through work, that is enough for us.

4. $550k sitting on the sidelines is not good. How about going 50-50 stocks/bonds? You think you are taking no risk, but inflation is chewing on your money. The market may drop, but it frequently sets new highs many times each year. You need to set aside an Emergency Fund and get the rest invested even if it is 40% stocks. It doesn't matter for the long term if stocks seem "high".

If the money is needed for a house down payment or something, then set that aside. Invest for retirement, 20, 30, years. Invest early, invest often.

Review the 10 Boglehead principles and start. Maybe do 1/6th over 6 months if that will help you. Keep it simple.
Agree mostly. For disability insurance , if your work doesn’t provide good one, keep purchasing.

Right.

As far as the investing goes, given your age there will be a time in your life when you’ll look back and be amazed at how cheap stocks were in 2018. It would be easy to find a thread in this forum where someone was afraid to invest in stocks back in 2015 because they thought they were too expensive 3 years ago...

You are thinking too short term. Also, about 1/3 of the total return in the S&P 500 is reinvested dividends. When you stay out of the market, you are giving away those returns too.

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Earl Lemongrab
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Re: Input on personal finance decisions

Post by Earl Lemongrab » Mon Jul 09, 2018 12:25 pm

andronikus wrote:
Mon Jul 09, 2018 7:43 am
4. I know I should have invested that cash, but current market values are spooking me, and interest rates are going up (as are the returns for MMA/Savings).
One of the founding principles of my IPS was that I don't have any talent for timing any market. That way I don't need to worry about "valuations" or anything else.

So, what makes you think you have talent in that direction? Because don't kid yourself, you're practicing market timing. What do you actually know about "valuations" and the direction of the market based on that? Why do you think you can outsmart the guys with the degrees, the latest news, and the best computers and programs to crunch that data?

The market might crash tomorrow. Or in ten years when it's much higher than now.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Artful Dodger
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Re: Input on personal finance decisions

Post by Artful Dodger » Mon Jul 09, 2018 12:57 pm

I don't have anything to add re 1 or 2 that hasn't already been said.

RE #3, I would just encourage you to get to know the plan offered by your employer. Most group plans are not junk. If they were, they wouldn't be bought by pretty much every major employer out there. You likely have a more restrictive definition of disability than an individual policy, and group plans usually offset payment with any social security disability income once that comes into play. 40% sounds like an odd replacement percentage; usually it will be 60% or 66% unless you are a highly paid individual and benefits are capped a a dollar amount ($5000 or $6000 monthly being common).
Your individual plan is not taxed; most group plans are taxed. But, bottom line, group plans work fine for the vast majority of people; and as a corollary, individual plans are purchased by a tiny percentage of people.

Re #4, I would echo Earl's thoughts. You are timing. I've thought the market has been overvalued for a while, and it's gone up 50% since I've thought so. Set a reasonable asset allocation for your age, then start doing dollar cost averaging into equities, until you get there. If you're hesitant because of the "overvalued" market, stretch it out some, 3 years - 5 years.

Phronesis
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Re: Input on personal finance decisions

Post by Phronesis » Mon Jul 09, 2018 1:18 pm

How specifically did you break your arm Thai boxing? I've been training for going on 8 years now. Broke several toes and fractured my shin, all sparring. I haven't stopped pad work and LIGHT sparring. Heavy bags bother my shin so I just modify. Why stop? Just don't do things that you think will get you injured.

But if you do want an alternative, try HIIT - high-intensity interval training. Kind of like conditioning classes. In fact, most of my HIIT exercises are from Thai boxing.

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andronikus
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Re: Input on personal finance decisions

Post by andronikus » Wed Jul 11, 2018 2:23 pm

Jumping in class, did not have gloves or wristwraps on. I fell to my left side and tried to stop myself by extending my arm out (palm first). Ended with distal radius fracture, straightened with a plate + screws.

The group disability policy was "downgraded" from 60 to 40%, with an option to "buy up" to 60%.

I think I'm going to max out my HSA next. I really needed it a few months ago and was short :oops:

Phronesis
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Re: Input on personal finance decisions

Post by Phronesis » Thu Jul 26, 2018 5:30 pm

andronikus wrote:
Wed Jul 11, 2018 2:23 pm
Jumping in class, did not have gloves or wristwraps on. I fell to my left side and tried to stop myself by extending my arm out (palm first). Ended with distal radius fracture, straightened with a plate + screws.

The group disability policy was "downgraded" from 60 to 40%, with an option to "buy up" to 60%.

I think I'm going to max out my HSA next. I really needed it a few months ago and was short :oops:
Yikes! Yeah, posting on a fall is a bad idea but gosh dang is it reflexive. Sounds like a bad injury. Sorry to hear it. It is hard for me to ever think about stopping martial arts full-stop. If you don't feel the same way but you Like the intensity of Thai boxing workouts, maybe HIIT or Cross fit would be satisfying. Try'em out.

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