Interesting conversation with a friend of mine .

nomas

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His financial plan is to draw SS , Pension , 401k , and pay the CC companies the minimum every month . I'm guessing that his vehicle is paid for . When it's all said and done , the kids will inherit something , just not nearly what it could be .
 
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He says he has no mortgage , so I assume the house will be sold and his debts paid from the proceeds . He really doesn't have a whole lot of debt , He just doesn't care if he dies with a CC balance .

Also , I'm assuming he has a 401k because we have talked about it before . No idea of the value . If the kids are the beneficiaries then that money is safe .

His financial plan is to draw SS , Pension , 401k , and pay the CC companies the minimum every month . I'm guessing that his vehicle is paid for . When it's all said and done , the kids will inherit something , just not nearly what it could be .
Hmm, sort of interesting. When I asked if the house was paid for, I was wondering if his approach was to stick it to the CC companies by having minimal assets to collect against. Sounds more like his approach is I'm not going to worry about "balancing the checkbook" every month for spending to equal money coming in/available and it will be tomorrow's problem (get settled at death with whatever the assets are worth). Granted debt could end up being larger than assets at that point but your two posts above, that sounds like less of the intent. 🤷‍♂️

Seems like a home equity to draw on would be better in long run from a rate perspective but I guess a lot of it comes down to home much he cares about the interest in the end (doesn't seem like he does) versus managing the monthly payment. Plus linking the debt to the home has different implications when the payment comes use.
 

nomas

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I can assure you , he doesn't care about the interest , etc. :D Pay them just enough to keep them happy and when he dies it's not his problem .
 
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A number of the credit card companies provide life insurance for the balance of the account in case the account holder dies. This might not be a problem.
 

wwillson

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You mean in excess of 15k per person per year ?
You can give more than 15k/yr/person, but anything in excess will come off your lifetime gifting allowance. For 2022 the lifetime gifting allowance is $12.06 million for an individual and $23.4 million for a married couple. Let's say you give your kid $1 million in 2022. You must file IRS form 709 IRS stating you gave $985k in excess of your $15k exemption. When you die, the $985k comes off your $12.06 million lifetime gifting allowance. let's say you are single and when you die, your estate is worth $20 million. You will only be able to pass on $11.075 ($12.06-$985k) million tax free to your heirs, not $12.06. So your heirs pay taxes on $20 million - $11.075 million=$8.925 million taxable inheritance. The tax man will get his due.

If you don't report the large gift on form 709 and you get caught, there will be trouble.
 
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Since 95%of USA will never reach that lifetime threshold op's buddy has the right idea. Gift his house and whatever other assets he's got to his kids and screw the banks
 
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Sitting around a backyard fire the other night , drinking a Beer and talking about things . The conversation turned to finances , debt , inheritance , etc. My friend said that at his age ( 65 ) , he didn't care if he carried any debt when he died . Why pay off a Credit Card , just pay the monthly minimum . He said " As long as I can live comfortably and have a positive cash flow every month , why does it matter if I'm debt free or not " ? He has a couple of kids but they are doing fine themselves . He's not a rich man so we're not talking about a lot of assets anyway . Long story , short he's not concerned about his kids inheriting anything and he doesn't care if the creditors get stuck with his debt . I know he sounds selfish but that's the way he feels and there was nothing I could say that would change the way he looked at things .
Sounds crazy to me to carry balances on credit cards, he is giving 25% of after tax income on that debit to the banks instead of spending it on himself.

This may sound cold (to some) but his kids are owed nothing as long as the kids do not have to support him in anyway once he gets older.
The kid thing drives me nuts, somehow society being conditioned to leave your hard labor to another person. Its laughable.

My kids will get a significant something that they will be happy with, but in no way do I feel obligated in any way and I will continue to live my life to its fullest, which I still think is modest and would be considered modest to some. I have worked since the age of 12 years old and enjoy the fruits of my labor, I am also proud of my self supporting now adult children and their work ethics. Actually they are proud too.
 
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Since 95%of USA will never reach that lifetime threshold op's buddy has the right idea. Gift his house and whatever other assets he's got to his kids and screw the banks
*LOL* The banks are making a fortune off him, last laugh is on him @ over 25% interest and that is after tax income. Guy might live a long time paying that and once a loss occurs to the bank, its a "write off"which means less tax dollars to Washington that everyone makes up. On top of that, whatever debt there is, is sold off to collection agencies, banks don't go after consumer debt like CC cards, not worth it.


Not sure why some people have something against the people or banks whom they ask to borrow money from. Kind of like backwards thinking.
A friend (or bank) lends you money and you hate them for it and look to cheat them. It kind of reflect what I posted above, not being responsible and seems more pervasive than ever, sadly the youth will pay with higher and higher interest rates over time, when they ask to borrow money because the bank passes on the cost. Banks are smarter than most think.
 
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Sitting around a backyard fire the other night , drinking a Beer and talking about things . The conversation turned to finances , debt , inheritance , etc. My friend said that at his age ( 65 ) , he didn't care if he carried any debt when he died . Why pay off a Credit Card , just pay the monthly minimum . He said " As long as I can live comfortably and have a positive cash flow every month , why does it matter if I'm debt free or not " ? He has a couple of kids but they are doing fine themselves . He's not a rich man so we're not talking about a lot of assets anyway . Long story , short he's not concerned about his kids inheriting anything and he doesn't care if the creditors get stuck with his debt . I know he sounds selfish but that's the way he feels and there was nothing I could say that would change the way he looked at things .
**** attitude.

Pay your debts. Idiots.
 
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You can give more than 15k/yr/person, but anything in excess will come off your lifetime gifting allowance. For 2022 the lifetime gifting allowance is $12.06 million for an individual and $23.4 million for a married couple. Let's say you give your kid $1 million in 2022. You must file IRS form 709 IRS stating you gave $985k in excess of your $15k exemption. When you die, the $985k comes off your $12.06 million lifetime gifting allowance. let's say you are single and when you die, your estate is worth $20 million. You will only be able to pass on $11.075 ($12.06-$985k) million tax free to your heirs, not $12.06. So your heirs pay taxes on $20 million - $11.075 million=$8.925 million taxable inheritance. The tax man will get his due.

If you don't report the large gift on form 709 and you get caught, there will be trouble.

Thats why I like Joint Tenants with Right of Survivorship…… no need to deal with IRS and money passes on to next person(s) without the tax man getting a penny.

And when I say not getting a penny, I mean $0.00


Bank accounts are the same way with TOD and POD, zero taxes.
 
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*LOL* The banks are making a fortune off him, last laugh is on him @ over 25% interest and that is after tax income. Guy might live a long time paying that and once a loss occurs to the bank, its a "write off"which means less tax dollars to Washington that everyone makes up. On top of that, whatever debt there is, is sold off to collection agencies, banks don't go after consumer debt like CC cards, not worth it.


Not sure why some people have something against the people or banks whom they ask to borrow money from. Kind of like backwards thinking.
A friend (or bank) lends you money and you hate them for it and look to cheat them. It kind of reflect what I posted above, not being responsible and seems more pervasive than ever, sadly the youth will pay with higher and higher interest rates over time, when they ask to borrow money because the bank passes on the cost. Banks are smarter than most think.
Maybe cause they caused financial disasters like 2008 need bailouts just so they give themselves bigger bonuses?
 

Astro14

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Maybe cause they caused financial disasters like 2008 need bailouts just so they give themselves bigger bonuses?
That’s a gross oversimplification - and conveniently ignores the role lawmakers played by repealing Glass-Steagall (a 1933 reform following bank excess earlier in that decade) in 1999.
 

nomas

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No , I think the last laugh is NOT on him . He is not concerned with how much the banks are making . Ya'll are way overthinking this and trying to crunch numbers and see who wins . The way he see's it , if he dies with a 8k CC balance , he won . I get where he's coming from but it's not something I could be comfortable doing .
 

Astro14

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What’s ironic - The “friend” is actually giving the banks more money than he would by paying the card off.

He is OK with giving the banks thousands of dollars every year in unnecessary interest.

Look, if we assume that his cards are at 18%, then after 5 years, he’s paid back every borrowed dollar, and now he’s just a cash cow for the bank. He’s paying them 18% on the balance. The banks are free and clear, raking in 18%.

If he lives more than five years, he’s paid those “evil” banks more than he would have had he just paid them off.

He‘s not “screwing the bank” - he’s playing their game and losing, badly.

Banks love credit card holders like him.

He’s a sucker and a cash cow, giving the bank far more money than he should.
 

nomas

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I see what you're saying but I'm not sure I agree . The balance is fluctuating up and down because he's still using the cards , but at the end of the day the bank is owed thousands that HE will never pay .
 
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What’s ironic - The “friend” is actually giving the banks more money than he would by paying the card off.

He is OK with giving the banks thousands of dollars every year in unnecessary interest.

Look, if we assume that his cards are at 18%, then after 5 years, he’s paid back every borrowed dollar, and now he’s just a cash cow for the bank. He’s paying them 18% on the balance. The banks are free and clear, raking in 18%.

If he lives more than five years, he’s paid those “evil” banks more than he would have had he just paid them off.

He‘s not “screwing the bank” - he’s playing their game and losing, badly.

Banks love credit card holders like him.

He’s a sucker and a cash cow, giving the bank far more money than he should.
Exactly.

He thinks he is sticking it to the "man" but he is getting used, and does not even understand. Even if he owes when he dies, they made money on interest off him over the years, so its not a loss.
 
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