Requesting financial advice from the wise

[msparks]

Originally Posted By: Tempest
Cash will be king in the not to distant future.


Don't know about that, but hard currency will always have some intrinsic value.

 

[msparks]

Originally Posted By: oil_spaz


4. Last priority would be an early mortgage payoff. Mortgage interest is tax deductible and you are locked in at a good rate. The best return you could hope to get is your interest rate percentage.



Has nothing to do with interest, but more to do with locking in your mortgage with todays dollars, so when inflation hits like a giant Tsunami you will have plenty of so called "dollars" to pay for it.

I bought a house and a new car to lock in at today's dollars. I'll use my other "currency" to but bread with.

 

[TallPaul]

Originally Posted By: ryansride2017
Originally Posted By: Tempest
Cash will be king in the not to distant future.


Probably....but something other than the dollar.
Very true, especially if we go into massive inflation due to excessive public works spending.

 

[Turk]

Make sure you have some tangible assets also...

 

[TallPaul]

Originally Posted By: tpitcher

Make sure you have some tangible assets also...

Like guns and ammo?

 

[eljefino]

Pull up IRS Form 8880 and check out the tax credit you get for throwing money at the market. This is above and beyond writing it off your income. Play with the numbers for different contribution amounts and for me at least the gov't is throwing sacks of money at wall street using myself as an intermediary.

 

[Smokescreen]

I paid off my mortgage when I was 33. I can't tell you how much of a relief it was to have that removed from off my shoulders. Plenty of breathing room, come what may I could lose my job and get any job and make ends meet handily. I too have savings put away for over a year. Stress off your life now or in the near short term is priceless. You never know what is going to happen in the future, I am not saying live for the now only, but plan for the future by living with less debt now has its own rewards.

 

[PandaBear]

Originally Posted By: TallPaul
Originally Posted By: tpitcher

Make sure you have some tangible assets also...

Like guns and ammo?

I have been honing my skill in tutoring, most of the family around here are desperately trying to get their kids into a good college since 9th grade and would do anything, everything (including a 1.2M home in a good school district) to give their kids an advantage. They would literally starve to death and still want their kids to get to the top 0.5% of the national scale.

Tutoring is a big business, especially if you have a great degree and can teach well.

 

[ClarkB]

One thing about paying off a mortgage. Since you are on a fixed rate, your payment never changes whether we are talking year one or year 30. Let's just say you are paying $1K/month. While it might be a lot to you right now, when we look to the future and the last 5 years of your mortgage, how much is $1K going to be worth? After factoring in inflation...well, not much.

A simple check at the inflation calculator shows that $1K in 2007 is equal to $258 1977 dollars.

Clark

 

[CivicFan]

It depends how much money Pandabear has. In general, I would:

1. Pay the payment amount on the mortgage, if less than 20% equity, make principal only payments as well to reach 20% equity sooner to get rid of the mortgage insurance premiums;
2. Put the maximum allowed into a ROTH IRA (currently $5,000 per person) - you will not pay tax on the income earned and the principal amount can be withdrawn after 5 years without penalties;
3. Contribute to the 401k at least to max out the employer match to defer the taxes until you retire;
4. Any residual money can either be invested in a taxable account (I would buy ETF-s and not individual stocks), or be put in the 401k and defer the taxes.

Remember to leave a safe cushion of working capital in a savings account.

 

[Drew99GT]

The principal amount of a ROTH can be withdrawn at anytime. That's why they, and ROTH 401Ks kick so much arse. They can also be used as an emergency fund in that way.

 

[CivicFan]

One more thing to do can be buying TIPS from the US Treasury. The interest rate is now low but it's essentially a riskless investment.

 

[PandaBear]

Originally Posted By: CivicFan
1. Pay the payment amount on the mortgage, if less than 20% equity, make principal only payments as well to reach 20% equity sooner to get rid of the mortgage insurance premiums;


25% down, no 2nd mortgage or mortgage insurance.

Quote:
2. Put the maximum allowed into a ROTH IRA (currently $5,000 per person) - you will not pay tax on the income earned and the principal amount can be withdrawn after 5 years without penalties;


Sounds interesting, didn't know about the withdraw principle at any time idea, will look into that.

Quote:
3. Contribute to the 401k at least to max out the employer match to defer the taxes until you retire;


Done, that's free income that I cannot miss.

Quote:
4. Any residual money can either be invested in a taxable account (I would buy ETF-s and not individual stocks), or be put in the 401k and defer the taxes.


What's the benefit of this over ROTH, is it because of ROTH's maximum limit?

Quote:
Remember to leave a safe cushion of working capital in a savings account.


Have been too conservative in my life, so this is not a problem.

 

[Gary Allan]

Originally Posted By: ClarkB
One thing about paying off a mortgage. Since you are on a fixed rate, your payment never changes whether we are talking year one or year 30. Let's just say you are paying $1K/month. While it might be a lot to you right now, when we look to the future and the last 5 years of your mortgage, how much is $1K going to be worth? After factoring in inflation...well, not much.

A simple check at the inflation calculator shows that $1K in 2007 is equal to $258 1977 dollars.

Clark



My experience shows that other deductible costs keep pace with inflation over the life of the mortgage. Property taxes usually out pace inflation. The assumption that income will always progress with normal inflation has historically been more true than not, but we're in paradigm altering times.

Property was typically the only (non) wealth accumulator the average person had. This has been now proven to be a less secure stash for your wealth.

 

[lazaro]

Originally Posted By: Gary Allan
Originally Posted By: ClarkB
One thing about paying off a mortgage. Since you are on a fixed rate, your payment never changes whether we are talking year one or year 30. Let's just say you are paying $1K/month. While it might be a lot to you right now, when we look to the future and the last 5 years of your mortgage, how much is $1K going to be worth? After factoring in inflation...well, not much.

A simple check at the inflation calculator shows that $1K in 2007 is equal to $258 1977 dollars.

Clark



My experience shows that other deductible costs keep pace with inflation over the life of the mortgage. Property taxes usually out pace inflation. The assumption that income will always progress with normal inflation has historically been more true than not, but we're in paradigm altering times.

Property was typically the only (non) wealth accumulator the average person had. This has been now proven to be a less secure stash for your wealth.


Don't pay the taxman




Dear IRS,

I am sorry to inform you that I will not be able to pay taxes owed April 15, but all is not lost.

I have paid these taxes: accounts receivable tax, building permit tax, CDL tax, cigarette tax, corporate income tax, dog license tax, federal income tax, unemployment tax, gasoline tax, hunting license tax, fishing license tax, waterfowl stamp tax, inheritance tax, inventory tax, liquor tax, luxury tax, Medicare tax, city, school and county property tax (up 33 percent last four years), real estate tax, Social Security tax, road usage tax, toll road tax, state and city sales tax, recreational vehicle tax, state franchise tax, state unemployment tax, telephone federal excise tax, telephone federal state and local surcharge tax, telephone minimum usage surcharge tax, telephone state and local tax, utility tax, vehicle license registration tax, capital gains tax, lease severance tax, oil and gas assessment tax, Colorado property tax, Texas, Colorado, Wyoming, Oklahoma and New Mexico sales tax, and many more that I can't recall, but I have run out of space and money.

When you do not receive my check April 15, just know that it is an honest mistake. Please treat me the same way you treated Congressmen Charles Rangel, Chris Dodd, Barney Frank and ex-Congressman Tom Daschle and, of course, your boss, Timothy Geithner. No penalties and no interest.

P.S. I will make at least a partial payment as soon as I get my stimulus check.

yours truly, an honest hard working american.

 

[Tempest]

 

[Win]

You guys are way over thinking this. Must be a bunch of engineers.

Pay off your house, and you have a place to live. As long as you pay your taxes, your family will have a roof over their head. Maybe it will be worth more, maybe it will be worth less, who cares - it's a home, not an investment.

Put that money into the stock market instead of paying off your debt, and maybe you will have something later, maybe not.

How are the guys that asked this this exact same question ten years ago looking today?

Pretty sorry I would say if they took the stock market over paying off debt. They missed a decade that they could have been paying off their debt so they will still have a good chunk of that, the money they put into the stock market is now in the kee-rapper, and they may be unemployed and at risk of being tossed to the street to add to the misery.

Seems like an easy choice to me.

 

[Turk]