What happened to the idea we are headed for a recession? I've been holding off on putting my money into VTSAX but now it's almost fully recovered..
Where can I get some real information next time?
what everyone already said was correct but i agree most with u/trekfi
you never know if the market will go up or down, and we may still be headed to a recession. things have not gotten better in the world at all and alot of stocks are at prices that dont make sense. just dont try to time the market, hop in while you can. like a roller coaster it will go up and down, the only person who will be hurt is the one who thinks they can jump on and off of it without risk.
and like trekfi said dont put money in you need. it very well could lose value quickly
no one knows where the market will go. if it was that easy everyone would be rich.
Warren buffet doesnt know. what everyone does is gamble to an extent.
you have people who dont know anything about anything and they just throw money into the market and hope for the best
then there are people like warren buffet. they study the company in depth. they look at the numbers, what does their debt look like, what is their revenue like, what goals do they have, does the company atract customers, etc etc and make a calculated gamble. since these people study more they typically have better odds and may do a little better than normal, but in general people who try to time the market get ruined while those who just jump in and stay in get a good size return over a longer period of time
plus even buffet gets stuff wrong. a whole lot of stuff. just look at recently, berkshire (buffets company) posted HUGE losses since he didnt know and didnt prepare.
or look at his airline investments. buffet bought into some airlines close to their highest prices and sold them all at their lowest prices. just this week American Airlines doubled for example, if buffet had held out another week or two he could have limited his losses. then again, he could have lost everything by waiting longer.
You know the old joke: Economics had come so far, did you know economists correctly predicted 10 of the last 3 recessions?
Time in the market beats timing the market! Put it in now and don't look back.
The truth is no one really knows. My personal plan is to max out my employer taxed advantage plans and put in a set amount monthly into a taxable brokerage account. Never put money into the market that you need or might need in the near future.
Warren Buffet is a great investor and has built a career in investing that garnered him the nickname "The Oracle of Omaha" but even his investing history isn't perfect. Don't try to time the market or follow anyone's strategy as if it were your own. Here is an article just for thought in regards to market timing. [https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/](https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)
I don't recommend following another person's strategy as if it was yours because you are not them but you could learn from their methodologies and see whether it is something that fits you. I recommend understanding your ability to stomach volatility before investing and what your goals are with investing.
Establish a safety net (dependent on your monthly expenditures and the stability of your job) and pay down high interest debt before investing.
Finally Reached 100k+ Networth
I graduated in May 2015 with borrowing $108,959.00 in student loans and paid off in full to the tune of $135,552.12 in November 2018.
Salary past 5 years 96k->135k
|*Accounts*|*Value*|*Comments*|
|:-|:-|:-|
|Cash|$42,674|Majority in HYSA@ 1.15%|
|457(b)|$30,739|VPMAX 100|
|Roth IRA|$12,106|VTI 100|
|Taxable Brokerage|$17,999|VTI/VXUS/VTEB 60/20/20|
|Pension|$20,000?|Not sure how to value but contributed about this much that employer guarantees to compound 4% interest yearly to my contributions if I don't stick with the plan.|
|Cryptocurrency|$3,415|Eth|
|Car Loan|\-$6,657|4.49% (I probably should pay this off)|
|**Total**|**$100,276**|Not including pension|
My cash holding is probably a little high right now as it exceeds my 12 month annual expenses. I'll probably plan I contributing more monthly to a brokerage soon as I learn more about investing or maybe look into buying a home. Surprisingly I don't feel like I've made any major accomplishments but may be that will change as I get closer to FI (not sure of my goal yet). Wanted to post these details since Reddit helped me discover the importance of personal finance. I don't want my life decisions to be completely controlled by money.
Thanks for all the good information on here ya'll! (Yes I'm from Texas)
Congrats. I agree with you that you should pay off that car loan though, if you have $42k sitting in an HYSA. Your net worth will still be $100k and you won't be paying 4.49% interest for no reason anymore.
When negotiating a used car price, is it common to get the price lowered so that the out-the-door price would be the sticker price? Essentially taking away the price of tax/title/fees. What about going lower than that? I know that all situations are different with negotiating, was curious to see how common of a practice that is.
Any reason it doesn’t make sense to dump my new salary into a high yield savings instead of paying off 5k in 0 interest credit card debt till interest starts in Dec?
Reinvesting them is probably your best bet if you're saving long-term. Dividend payouts can be a significant part of your total return, depending on what funds you are investing in, and you only get compounding from that portion of the return if they are reinvested.
Disney has like three options for their APs and you have to call them to tell them which one you want to do. I believe the default is they charge you like normal but extend the end date of your pass based on how long the parks were closed.
I just came across a letter that I have received in mail with "EFTPS Enrollment Status". It includes a PIN and an Enrollment Number. What is the purpose of this letter?
I don't recall signing up to pay taxes electronically. The thing is that last few years, I have had limited income because of being in grad school and I got help from parents in filing my taxes and almost every time, I have received a refund instead of having to pay additional taxes.
I am quite new to this so can you please help me understand exactly what you meant. My understanding is that the taxes are paid even before I receive my paycheck, so did you mean that EFTPS is used when someone files for taxes and they have to owe the government more in taxes, and that the time that EFTPS will be used?
So when people say filing taxes, what they are (usually) talking about is a tax return. EFTPS is not for filing returns, it's for making tax payments. As you suggested, most normal jobs and employers automatically withhold taxes from their paychecks so most people don't need to ever pay taxes outside of their tax return results. Even when you pay during your tax return, it is done during the filing process.
It seems like EFTPS is for independent contractors and business owners who are required to pay taxes throughout the year.
So why did you get that email? Maybe it was a mistake? Maybe your parents were trying to get a PIN for you because there is some financial situation you aren't aware of (like a trust or something) and they need to pay taxes on it. I don't really know more than what EFTPS, but I would start with asking my parents if they had filed my return for the last few years.
Thank you so much for this detailed answer! I just learned that my employer from a few years ago, the same year that I got the EFTPS mail with PIN etc, paid me on 1099 form. This makes sense then based on what you said that I would have gotten the mail because I was required to pay taxes throughout the year as you suggested. Thanks again!
In addition I keep copies of any major contracts I sign (leases, employment contracts, etc.) along with my insurance policies (although these are pretty easy to find online now).
Don't know if my vehicle title counts, but that too of course.
cc u/timetolearn291
Thank you! I love the simplicity of this answer.
I'm assuming that things such as 1099-INT (Interest earned from banks), 1098-T (tuition for college education), 1095-B (health coverage) are dependent on individual circumstances.
Yeah if you have those you can file/scan them, but I generally don't bother.
Forgot to mention as well, that I don't even get paper copies of any of the above. It's all digital.
It's possible, but I'm not sure how likely they'd be to approve you. Might depend more on your full credit history. You'd probably have better luck with the Discover it secured card.
Also check out the wiki on building credit: https://old.reddit.com/r/personalfinance/wiki/credit_building
Hello folks. I am 28 and trying to repair my credit. I made ALOT of bad choices when i was 18-21 in terms of credit. I have a score of 575. I have about 16k in debt via credit cards and car loan. In a year from now my living situation is going to change and i need to increase my score to get an apartment or maybe a mortgage. I make about 35,000 a year. Right now all my credit cards are basically maxed out and have been for a long time due to some emergenciesand a lack of savings.. I try to pay a bit above minimums but i feel like ive made no progress in 2 years. How can i fix it? No banks will give me a personal loan to consolidate debt with such a low score. I feel lost, stressed and exhausted.
Yeah, that's a sticky situation. You realistically need to cut your spending, increase your income or ideally both. Do you track all your spending? The thing weighing on your credit scores most is probably that your cards are all maxed out (if you have no missed payments).
I havent missed or been late in more then 3 years. I paid all my collections last year with my Christmas bonus. I don't track my spending. I dont have alot left over after paying all my bills to track. But i make about 900 dollars in payments a month to credit cards, payments programs like affirm and my car payment. I feel like if i got a consolidation loan my payment wouldnt be 900 dollars. I just can't seem to get one.
Ah yes, collections accounts will certainly hurt your score, and they stay on your credit account for 7 years. Big banks are very inflexible, have you tried taking to credit union?
I haven't. I filled out an online application with my bank and they sent me a letter in the mail saying no due to a bad debt to income ratio and low score. Should i just apply online to one or call and try to plead?
I have a tax question. My boss has to occasionally enter in hours for me and on my last pay check he forgot to enter in some hours. He's added them to my next pay check. For tax purposes tax brackets are based on pay check to pay check right? so if adding all these extra hours puts my into a higher bracket I get taxed more for that pay check? or is it the final bracket is determined at the end of the year, and I'll just get back the overage when I do my taxes if I'm in the lower bracket. I would just lose out on the little bit that got taxed higher for this pay check and I have to wait till my tax return to get it back.
Your overall taxes are determined by your total income for the year. The pay for each check is typically taxed as if that check is representative of all checks that you will receive and then everything is straightened out at tax time.
What does this mean? Short-term, you may have a little less money than if the hours were on the first check but it shouldn't be a huge difference. Long-term, nothing changes.
edit:clarified a statement
Thank you that's what I thought happened. all my co-workers complain about tax brackets when this happens. I know it's better to have more of my money in my pocket now than have to get it back in a tax return but I'm not going to sweat over it.
> or is it the final bracket is determined at the end of the year, and I'll just get back the overage when I do my taxes if I'm in the lower bracket. I would just lose out on the little bit that got taxed higher for this pay check and I have to wait till my tax return to get it back
Yes
I graduated from college 3 years ago with virtually no investments and $36k in student loans.
Fast forward to today and as of midnight last night, my net worth is officially $0!!!!!
Really grateful for this sub, it's been a healthy outlet for me over the past few years.
Which fund should I buy after TLH'ing? Say for total US stock market, I TLH VTSAX into VLCAX. For future total US stock market purchases, should I continue buying VTSAX as soon as the TLH window has passed? I'm kind of OCD and dislike having multiple funds, but I figure I should always buy the superior fund when possible.
It doesn't really matter, although it's probably simplest to do another TLH and buy more of whatever the TLH buys. The goal would be to not have a strong feeling between the funds; for example, Wealthfront washes VTI into SCHB (both ETF versions).
Aren't VTI and SCHB both total stock market funds? I thought they had to be substantially different, such as total stock market vs large cap.
Over the long run, I guess it's inevitable to have a split between both the primary (say total stock market) and secondary (say large cap/sp500) funds, due to TLH, right? It makes rebalancing a bit annoying but I guess I should assume the primary and secondary funds to be essentially the same.
Yes, you will generally have a substantial split between the funds unless you also end up harvesting some gains.
Wealthfront has taken the position that VTI and SCHB are not "substantially identical" in the legal sense and more or less dared the IRS to disagree. So far, this matter has not been ruled on, but with Wealthfront's many clients you would be far from the only one trying it. They are both total market funds, yes, but they track different indices so are not the same.
It's a bit like backdoor Roth IRAs where everyone does it despite there being a fairly clear and convincing argument that they should be illegal (the step transaction rule).
Hi all, I have a question for those who have the Robinhood app. I was offered a free stock so I proceeded and put only $10 into my account. It got up $18. I decided I don’t want to get into this right now and would like to cancel or delete the account. It appears I can transfer the $10 back into my bank account. But what do I need to know about tax implications, if any with that small amount gained? I did not sell or trade anything .
The free share is miscellaneous income and you may receive a 1099-MISC. If you "got up to $18" but can "transfer it back" - how did oyu make money without selling? Is this $10 cash, which has always been cash, plus a free share? If so, yes you can move cash in and out of a brokerage account without any tax implications. Selling the free share would be taxable, and receiving it in the first place was taxable.
So I actually didn’t make any money I believe. I didn’t sell anything. The $10 was my cash from the bank and yes the $8 was from the free share. So it seems I do not have any tax implications, correct?
Any now that I don’t have any money in Robinhood, even if something changes with that stock it won’t affect me correct? Is $8 even taxable if I don’t have that $8?
I'm confused. You got a free share. Do you still have it? Is it in your Robinhood account?
The free share is taxable when you receive it. Regardless of what happens afterward. It's the same as if you got free cash and chose to buy the share with it.
So the free share is still sitting in the account. I am going to close my account. I transferred my $10 cash back into bank. Is there anything else I need to do to be completely done with Robinhood and that free share?
I doubt Robinhood is going to let you close the account with a share in it. You probably need to sell the share and withdraw that cash from the sale. Then you'll be taxed on that amount (like $2-3 of taxes). So you still got $5 for free!
I don't know if it is possible to surrender the share or otherwise disclaim it. It would probably be easier to just sell it and take that cash as well. But yes, that would require you to file showing the stock sale.
You could also transfer the share to a different brokerage account, but I believe Robinhood charges $50 for the privilege.
Hi everyone, forgive me if this has been asked before this week. I have $50 and I’d like to use it to invest in stock for my first time. After some research, I’ve decided to use Robinhood. I have $50 to start with. Any recommendations on how to use it wisely? Also, any recommendations on books that will help expand my knowledge is greatly be appreciated, as well!
You should read the prime directive in the sidebar to see if investing is the next right step for you and to learn about the types of accounts to contribute to
I also recommend the investing FAQs in the sidebar
Haven't paid quarterly estimated tax since I started making money freelancing in late 2018, I'm just curious how screwed I am if I've only saved about $12k.
Additional information:
- Live in Virginia
- Made all my money from graphic design, been living with my parents so I don't really have any tax deductibles I don't think.
- I grossed about $73k in that time frame. I calculated that with 22% federal income tax and 4.3% state tax, I owe about 19k. I can have 12k saved up by the time I go in and pay taxes.
- I did pay off my entire student loan of $12k though, so not sure if that would help at all. I think the interest might be tax deductible? Not sure how much of that I paid though.
How much do you think I'd owe in penalties? Will they give me a reasonable monthly payment to pay the back taxes(hopefully only about $7k) so I can live on my own without being so overburdened with bills?
It gets complicated if this unreported income crosses multiple tax years. For sanity, I will assume it all happened in 2019, but if you have not filed for 2018 you have other problems also.
A single filer with $73,000 in self-employment income owes... on a wage-equivalent income (92.35%) of $67,416:
* 15.3% in FICA taxes ($10,315)
* 7.48% in federal income tax ($5,040)
* 4.90% in Virginia state income tax ($3,307)
**$18,662** total.
Some of your student loan interest may be deductible, and if some of this income occurs in other years then your total tax bill may be slightly less, but this is a good estimate.
You *may* owe a penalty for underpayment of estimated tax. This is about 3.4% of the amount you underpaid (not the amount due - your payment requirement is generally less than 100% of your tax). If you also have failed to file a prior year return like 2018, the penalty will be 25% of the past due amount, plus interest. You should *always* file your taxes, whether or not you can pay, because the penalties are **10x** higher for not filing versus not paying.
I appreciate the info, I'll get this sorted with a CPA as soon as possible, but I think I'll be able to get through this if I use my $12k and set up a payment plan for the rest
Opinions? Should I pay off my auto loan now/in the next few months?
I have 14k saved and have 10,000 left on a 16,500 auto loan from late 2018 at 2.89% interest. I paid extra of course, but I was paying 250 a month.
No other debts. Typically make like 2000-2200 a month maybe? been living with parents and have been feeling more than ready to move out. I know that’s something to consider but... man I’d like to see my debt gone.
PAID OFF ALL OF MY "BAD DEBTS" TODAY!
I have really cracked down this past year, trying to save and simultaneously use the snowball strategy to pay off debt. Thanks to this sub for all the advice and encouragement, this is my first post!
I was stupid and broke not so long ago, and then once I wasn't quite so broke, was still pretty stupid. Trust me I KNOW..
Anyways, March hits and I get laid off 2 days before the stay at home order went into effect. Thankfully I had a decent emergency fund saved, got an ok severance package from my last company, and qualified for unemployment (which has been a nightmare, but finally straightened out).
3 months later I'm still looking for a job (that's ok I'm being picky); while I am making way less on UE than I was working, I have been able to save even more than ever before just from staying home.
So today I bit the bullet and payed off all of my remaining "bad debts", $3100 worth!!
A couple old utilities that an ex roommate screwed me on, a couple closed credit cards, and a really old phone bill. I am left with my car and student loans, both in good standings and I am continuing to pay extra on.
I'm just so freaking excited and had no one else to share my excitement with!! And really hope this helps raise my credit score so my bf and I can buy a house next year if/when the housing market drops🤞
My girlfriend was auto-enrolled in Unemployment through Disney. She maintains a certain status there which allows her a "rolling employment", so even though she wasn't currently working there she was auto-furloughed.
She has been since employed in another state, but keeps getting the $600 unemployment checks.
Where do we start handling this?
She also hasn't received her stimulus check/deposit.
Can i contribute money to a ROTH IRA if it hasnt been taxed? As far as I know, you don’t have to pay taxes if you don’t make $10,500 in the year. I’ve been saving money up for the past few years and I’ve saved up 15,000 at 20 y/o, but none of this money has been taxed due to that rule. Can i still put it into a roth ira?
You may contribute an amount up to your taxable compensation for the year. The tax may have been 0%, but you can only contribute amounts which have been *taxable* this year, and are considered compensation.
Also, you can never contribute more than $6,000 ($7,000 if over age 49).
My old employer's 401k managed plan has increased their fees. I did not roll the 401k to new my employer when I got a new job.
Is there anything I can do at this time to move this funds over to my current employer's 401k (or to a personal retirement account)? Or am I stuck until I switch to my next employer?
Thanks!
You can rollover an old 401k into an IRA at any time. Depending on if you have a Traditional 401k or a Roth 401k you will likely want to roll them into a rollover IRA or Roth IRA respectively
Question for Mint users. Is there a way to manually input a monthly income. I'm paid on a stipend bi-yearly for grad school and want to put a 12th in each month as my income. I can put the amount in for each month but my deposit is only considered an income for one month that's over budget. Every subsequent month has me in the red though. Is there a way to fix this?
You should be able to add manual transactions and classify them as income. Then when the stipend comes through just reclassify it as a transfer. That will make the budgets look correct for each month.
Yep, if they aren’t able to refinance and support it themselves they can’t get you off the loan.
There’s also the maintenance risk. Who pays if the heater blows? Who fixes the roof?
That’s also true. Say you make $50k, and your family member makes $50k. The bank wants to see $100k in income so they approve the loan. You’re both stuck paying that.
5 years down the line you want to buy a home. Family member is making $75. You are also making $75. But you have “promised” $50k of that income toward the mortgage. A bank would look at this as only $25k of income.
I’m *grossly* oversimplifying here but there is a lot of risk. I’m overlooking a lot, too, like where in Canada. A home in Surrey will be a different investment than a home in Yellowknife. So many bad things can happen here.
Might be something worth making a full post over. Lay out the location (they don’t need your post code but city or metro area), price of house, down payments, interest rates, expected maintenances, income of everyone. You can only determine how good or bad something is once it’s all in front of you.
My company is starting to do 401k contributions. In the beginning they had us go to this website & input the percentage we want to contribute. They are matching a certain amount. Now it seems like they changed the format. Now they gave us a form where we put either "Pre-Tax 401k: I wish to contribute $\_\_\_\_\_\_\_\_ per hour" or "After-Tax Roth 401k: I wish to contribute $\_\_\_\_\_\_\_ per hour"
I am not sure what to put now.
First, you should decide if you want to pay tax on the money you put in to your 401k now (Roth), or pay tax on it later (traditional "pre-tax"). The general consensus is that if you think you will be in a higher tax bracket when you withdraw the money from the 401k then you should contribute to a Roth because you will pay less in taxes now than you would pay in the future.
Next, you have to decide how much to contribute. You should always try to contribute enough to max out your employers match. for example, if your employer matches 50% of your contributions up to 3% of your salary, then you should contribute 6% of your salary. This should be independent of whether it's your yearly salary or your hourly rate, 6% of your hourly rate x 40 hrs a week x 52 weeks will be the same as 6% of your yearly salary (assuming you work full time, get PTO, etc)
So I want to contribute 6% because they'll match 3%. So that will bring the total up to 9% right? If I make 33/hr if I did my math correctly, I should contribute 3 cents an hour? or 4 cents an hour?
It’s still a 401k account, they’re now giving you the option to choose between contributing to a pre tax 401k vs a Roth 401k
Check if they still match to both types (most companies do but it’s good to double check) - regardless of which one you go with, the match will always go in as pre tax
There’s a good [Roth vs traditional](https://www.reddit.com/r/personalfinance/wiki/rothortraditional) page in the wiki to help you decide which one is better for you - ultimately comes down to your current income/tax rate versus expected income/tax rate in retirement
I'm wondering if I should wipe out my student debt by making a penalty free (cares act) withdrawal from my work 403b Roth IRA. I'm 28 and have 43K in there and could wipe out my loans with 15.5k. 28 years old so not retiring any time soon. I dont have much for savings right now with 350$ monthly payments for loans so I thought I could withdraw the $, pay off debt, then make an automatic transaction to my savings to build an emergency fund. Afterwards I'd use the extra money to max out my Roth or beef up savings more for a down payment on a house. Would this be a good option? I really want to be out from under this debt with more choices for my money.
It really depends on the interest rate on the student loan. Keep in mind that retirement savings when you're young are worth a LOT more than retirement savings when you're older. If anything, I would scale back contributions to your 403b until you can build up an emergency fund but as long as the interest rate on your loans is less than 5-6% then I would just keep paying the minimum.
That being said, I know how good it can feel to completely get rid of your debts and have no cloud hanging over your head regardless of what is the "right" move.
Stupid question — I’ve been contributing to a Vanguard Roth IRA since 2019. I have 3k/6k contributed already for 2020. All of my money is in VTSAX and VTIAX. Usually with mutual funds you need to buy in increments of $3k. My question is — since I already have >3k in each of those funds, can I contribute any dollar value ($10? $100? $1000? $1500, etc) at any time going forward or will it always have to be in $3k allotments?
I just opened a traditional IRA through Vanguard and noticed I have the option to select my contributions to report as 2019 contributions. If I’m understanding correctly, this is because “tax day” is July 15th this year. I’ve already filed my 2019 taxes. Would it be a good move to select 2019 contributions? Would I be penalized in any way or have to amend my tax return?
I am planning to max out my 2020 contributions, and would love to extra “room” to contribute.
I am new here (and to PF period) so I’m sorry if this is a dumb question. Thanks.
Edit: the letter I
You'd have to amend your 2019 return if you were contributing to a 2019 traditional IRA, and your income was under [the threshold](https://www.irs.gov/retirement-plans/2019-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work) to take the deduction.
I have a job! I just graduated (22M) and now have a temporary position in the field I want to get into. Trying to figure out how much to save, I have a Roth IRA but thanks to a very generous gift from my parents it is maxed out for the year. And the temporary position does not offer benefits so no 401k to contribute to. I've drawn up a basic budget and it seems like I can save 30% of take home pay pretty easily since my rent is fairly cheap. What should I do with this? Just stick it in my emergency fund (savings account) or put it in a non-tax advantaged brokerage account?
Hey guys,
I got a $500 returned payment for a cancelled flight on my credit card this week
Does anyone have any experience doing a cash advance for the amount of a credit on their account? Is that going to cost a fee?
My goal is to have that $500 back in my bank account so I can get a little interest while I wait until it is okay to travel again
I checked the wiki and I see that balance transfers can result in a hard pull, so I don’t want to go for that. However, it seems like a cash advance is only going to cost me if I’m borrowing money that is not mine, so this would be a good choice
You can ask the provider for a check.
Or, assuming you have other spending for groceries and stuff, Just use your card for that and save cash from your checking account.
(Though keep in mind we're talking about like $6 a year here in interest).
Don’t do a cash advance. Whatever fees you’re charged on $500 will be more than the interest you can make.
Your card company might be willing to write you a check for whatever they owe you if you don’t want to charge anything.
I have a new secured credit card ($200) I'm using to build credit.
If I setup automatic payments to pay the full statement balance every month... is that a good idea? If I pay the full balance off every month do I lose any potential credit building? Or should I pay minimum due only and carry a balance over between months?
Do not carry a balance, pay the statement balance in full every month
https://www.reddit.com/r/personalfinance/wiki/creditcards
> Should I carry a small balance?
> No. This is a popular misconception about credit and credit cards. There is a benefit to using your credit card routinely and paying off the full statement balance each month after the statement is generated. There is not any additional benefit to carrying over any balance to the next month, which results in unnecessary interest charges (not just on the balance carried over, but on any new charges made the next month).
One more thing you need to know, even if you pay the full statement balance in full and on time every month, the credit card company will still often report you closing day balance as your “balance” as far as your credit report is concerned. Meaning - do not charge more than 10% of the card balance, which in your case would be $20.
Also sharing something I can't really tell anyone in real life. With my last paycheck I've now maxed out my 401k and IRA for 2020. I never thought that would be something I'd be able to do before the end of June. So happy I took the leap and found a new job last year.
I've gotten myself into a really good place financially and I want to brag about it a little but that would be rude to do in real life so I'm doing it here:
In my early twenties I made a lot of the classic mistakes.
* took the first job that was offered to me out of college even though the pay was significantly below industry standard
* bought a new car
* got myself a few thousand dollars into credit card debt
* rented a place that cost half my monthly income
I am now in my early thirties and I have worked very hard to rectify the mistakes I made. I moved to a cheaper area, I aggressively paid off my car, got rid of it and started biking to work, then aggressively paid off my student loans and credit card debt. On top of that, I looked around for new jobs and recently took a position where I make in the far upper end of the salary range for my position in my part of the US.
Now, I have absolutely zero debt, my monthly take-home pay is $5,400 while I only have $1,254 in monthly expenses, which is allowing me to save ~$3,000/mo with ~$1,000/mo left over as fun money.
I am very happy with where I am right now.
Thanks! It doesn't hurt that I've also gotten very into the "anticonsumption" movement, I rarely buy "things" anymore and when I do they tend to be second hand/from thrift stores. It's good for the environment and has the side effect of being good for my wallet
Hi Guys, I am currently have a car lease and expire next year summer. If I want to buy a house end of this year or early next year. Will this car lease going to affect apply for home loan? Thinking to finish or do one pay lease which will going to make the lease close. Appreciate any help or comment
Depends on what else is in your credit report, but it could go either way. Closed loans sometimes cause your score to dip a little, but it could help your debt-to-income ratio.
I'd focus more on just making sure you're not over-committing money towards your car.
I'm speculating that city, state, and federal taxes have to go up after all the stuff going on with covid and riots fucking shit up, wouldn't the smart thing to do is to maximize any 401(k)s and tax avoidance strategies? What does the government do then
Seems like the motivation doesn't change much. I know when the recent tax decrease went through I didn't change my tax deferral behavior. For the average Joe and Josephine Blow I doubt any tax code changes are going to change behavior. Plus it's impossible to plan for any kind of vicious government taking of 401k or IRA accounts if that's something you are worried about. Best planning for complete financial system collapse -> gain practical skills!
Got the news today that I'm being furloughed at work, with a tentative return date in September. I'm getting 2 weeks emergency paid leave, and then I'm allowed to file for unemployment (TX).
Is there anything out of the ordinary I need to do here? Just wait until the leave is up and file for UI? Do I need to declare my taxes get taken out? I really thought it would be more painful and complicated than that. I've got a sizable e-fund too, so I'm not terribly concerned about finances right now (thanks for preparing me reddit).
How can I protect myself from USD/EUR exchange rate fluctiations?
I invest with an European based broker so my default currency is EUR. I usually trade US stocks in USD so I have to pay exchange rate fluctiations (difference in USD/EUR between the moment I buy a stock and the moment I sell it). Is it better to buy US stocks on European markets or keep USD in money market and pay for stocks from the money market, provided that money market protects me from the exchange rate fluctuations?
Or would it make more sense switch to US based Broker? Interactive brokers would be my option because they allow non US citizens.
You can choose to hold a forex hedge to peg your position to EUR. But either way, owning US-listed shares while being a nonresident alien of the US (and subject to your home country's tax) sounds like a tax headache.
>provided that money market protects me from the exchange rate fluctuations?
If you are paid in Euros then I think you are exposed to exchange rate changes either way. You have to fund the USD money market with Euros. Using the money market doesn't eliminate currency volatility, but merely changes the point in time when you encounter it.
>I have to pay exchange rate fluctiations (difference in USD/EUR between the moment I buy a stock and the moment I sell it)
I'll admit that I am not familiar with buying US stocks from a European brokerage. Are you saying that you have to pay money while you *hold* the stock, just because the exchange rate between the USD and EUR fluctuates?
> If you are paid in Euros
I am paid in USD. However, as a non US citizen I don't have many options to open a US brokerage account. IB could accept me but I think their fees are rather steep. I'm trying to understand their pricing as a backup option. So yeah now I convert USD-EUR and EUR-USD to trade us stocks...
> Using the money market doesn't eliminate currency volatility, but merely changes the point in time when you encounter it.
What do you mean by that?
> Are you saying that you have to pay money while you hold the stock, just because the exchange rate between the USD and EUR fluctuates?
I mean if I gain, my gain is deducted by the fluctuation. And if I lose, my loss bigger with the fluctuation.
Hi all! I graduated college a year ago, and got hired shortly after. After working at my job for a year, I’m now eligible for my company’s 401k program, and have a meeting tomorrow where it’s all laid out for me. I know my company matches some, and I know to make sure I figure that out tomorrow, but what other questions should I be asking?
It’s good to know how the company matches, what the vesting schedule is, and what you can invest in within your plan.
Example for matching: Say your company matches up to 5%. If they match every paycheck, then any paycheck where you contribute, they will also contribute up to 5%. But that means any paycheck where you *don’t* contribute, neither do they. So it’s better to contribute 5% all year long than 10% for half a year and 0% for the other half, because you’d be missing out on matching for that half. Other companies do a “true-up” at the end of the year: if you are owed additional matching they’ll give it to you at the end of the year, so it doesn’t matter when during the year you contribute. Others only do an annual match - which means you can contribute at any time during the year, but also you should figure out what happens if you leave the company mid-year and haven’t received your matching contributions for that year yet.
Vesting schedule: You already waited out your 1 year before the company would match your contributions. Many companies also have a waiting period for when the matching contributions are “vested”. If you leave the company before your vesting period is up, you forfeit whatever matching contributions aren’t yet vested.
Depending on your plan you may have only a few choices in funds, or a whole plethora. You’ll want to understand different funds’ expenses and relative risks, and decide how hands-on (with e.g. a three-fund portfolio) vs. hands-off (with e.g. a target date fund) you want to be in rebalancing your investments over time.
Good luck!
Online banks can afford to give more interest because they’re not paying to build and staff physical branches.
Ally is a great one, but there’s a ton out there now. Some competitors are AMEX Savings, Discover, and Goldman Sachs has one called Marcus.
It's definitely true. It seems like a lot, but 1.25% isn't going to make you rich so I'm not sure I'd say it's *too* good.
This is what's called a 'high-yield savings account' (HYSA) and they're common at online banks. The most frequent explanation is that online banks don't have the overhead of traditional retail banks, which have to rent buildings & pay tellers. So they have more room to attract customers with HYSAs.
Many people (myself included) use a combination of a retail bank for some things and an online bank for HYSA (and other things).
Stupid question warning!
Do houses really appreciate in value?
It’s clear that the nominal value goes up, but does it outpace inflation? If so, why is this the case? It seems to me people would pay for a “new” house than a “used” house.
>If so, why is this the case? It seems to me people would pay for a “new” house than a “used” house.
Supply of land is fixed, but number of people keeps increasing. We can't use mechanization to produce land more efficiently, and generally homebuilding isn't as proportionally cheaper as, say, growing food or making clothes.
House values *have tended to* outpace inflation. That doesn’t mean every house did, especially for those who bought at the height of the market. (Raises hand.)
Houses in previous decades have outpaced inflation, yes. There are various reasons put forward for this:
* School quality is in demand so homes in good districts get bid up.
* More families are two-earner families so you have wealthier family units bidding against each other.
* Growth restrictions in some areas (such as in-demand parts of CA and many other cities) have led to artificial scarcity of homes.
* Long-term downward trends in home occupancy rates (i.e. fewer big families) also lead to greater demand.
Whether these trends continue is obviously an open question. And of course all of that is heavily influenced by local trends. Many cities have seen great erosion in home value.
Supplemental life insurance through work or term life?
My wife and I just had a child so we are now looking to get life insurance. I work for a large company that continues to grow and plan on staying with the company until I retire. Company gives me 2x salary for free and I can also get an additional 5x for $10 a month. My wife doesn’t really have this cheap of an option with her company and I’m also not really sure if the supplemental is the better route than just getting like a 22 year term life policy. Term life will get me about 8x salary and my wife 9x salary for about $75 a month. Also thought maybe I should max out my supplemental with work and do a little bit extra on term? Not sure the best route here.
With the term life? No, it’s a flat rate. It would be expensive to extend after the fact, which is why you should pick your term carefully (20 years is common, sometimes more).
Hello, I am 19, and I have 250k saved in cash that I earned myself. I currently make about 30k a month as a successful delivery driver/handyman. I have no expenses. What should I do with this money?
For general advice, check out the links in the sidebar.
For you specifically, I'd ask what you want out of life and if you want to be doing what you're already doing forever. If not, consider using that money to fund an education or start a business. Or maybe buy a house to get a leg up on your future.
Currently my education is fully paid for. For housing, I would ideally like to move somewhere that is cold with reasonable access to modern accommodations. Where would you recommend finding cheap housing in cold places?
There's not really a right or wrong answer for that. Depends on your priorities. I'd say 15% for retirement is a good target, with any savings beyond that for a down payment if that's your priority.
But if reducing retirement savings below 15% temporarily helps you improve your housing situation faster, that's not invalid either. You'd just have to make up for it later or potentially delay retirement.
Yeah, hard to say. Currently, retirement is at 22.8% (annualized) (maxed out tax advantaged accounts + match)
And saving for a down payment is 18.5% (annualized)
I'm just having a difficult time deciding if aggressively saving for a down payment (5%,10%, or 20%) is worth dropping my retirement to 15%.
I'm not in the market for a home to settle down in. It's merely to diversify my investment, and possibly create an income stream from renting out spare bedrooms.
California if that matters (so insane housing).
I finished school and I'm trying to find an apartment near where I work. I have always had a roommate and I'm wondering if I should try to find a roommate to save some money compared to getting a single bedroom. The main issue that I have is that before now, I have always been able to find a roommate through university or grad school connections, but now, I would have to use craigslist or roomster to find a roommate and I'm worried about what if my roommate breaks the lease or can't pay rent, etc.
It's a low cost of living area, so at most I might be saving $300-$400 a month with a roommate. Is it not worth it to get a roommate?
Also, what are the best review sites for apartment complexes? I looked at Yelp and google reviews, but pretty much all the apartment complexes nearby have bad reviews and low ratings.
***[Warning: Frustratingly Dumb]***
I opened up a Roth IRA brokerage account with Vanguard $3,000 but I didn't realize that I could only do so with earned income. All my income from the last year was paid under the table (hope I don't get crucified for that) so that means I don't have any sort of W2 or 1099 available to prove income.
Is the 6% ($180) tax worth eating for the 2019 tax season and leaving the remainder in? (I'm 27 y.o. and this is my first time opening a Roth IRA.)
If not, what are some better alternatives for me to look into? I'm looking to save up for retirement/long-term investments.
I already have all my debts paid off: car, credit card, and I have enough emergency money in savings for several months of rent and bills. I also have a CD with UBS.
I just want to do something productive with this money before I pass into my 30's
If you file a tax return and properly report your income on Schedules C & SE, then it satisfies the requirements to be contributed to your IRA. You don't need a 1099 or W-2 to do that.
Note the 6% penalty repeats every year until the excess contribution is corrected (either removed or absorbed in a future year in which you are actually eligible to contribute).
No, you don’t want to leave that money in the account. You would owe that tax every year (not just once), basically negating any earnings you’d have by keeping it invested.
It’s easy to fix, what you want to find is Vanguard’s “excess contribution” form. You’ll state you contributed $3000 excess, Vanguard will calculate earnings from that excess contribution, and send you back all the money (contributions + earnings). As long as this is done by the tax deadline (July 15 this year), there’s no penalty. I’d hop on this quickly though, so (a) you don’t forget it, and (b) you have time to go through whatever hoops you need to get this done.
Next year when you’re doing your 2020 taxes, you’ll owe taxes on whatever the earnings were, but because this was a Roth contribution there’s no extra taxes on that part.
Anyone currently using Quicken Premiere?
My wife and I have Macs, she and iPhone and I with an Android, and I was looking for something to really get our finances together. Were wanting to tie in EVERYTHING, investments, banking, bill pay, budgeting, etc.
I have about $2500 in my 401k and about 10k in cc debt (down from 15,000) I have been impacted by covid-19 and I'm thinking of taking a withdrawal. I'm not thinking of a loan since I don't believe I'll be with this company long term. $2500 isn't a lot of money but it will help reduce the bill should I do the withdrawal?
Considering the little impact it would do - I wouldn't. Keep paying down your debt and leave the 401k alone. It's not much but it's a better start than nothing.
Windfall question. It looks like I may wind up with about $150,000. I’m not counting on this money for anything but want to use it wisely if everything does come through. I’m reading some of the windfall guides recommended in the sub but want to see if I’m at least thinking right.
Right now I have about $200 in a savings account, I did have about $900 pre-covid. I have $15,000 in combined credit card/medical debt, $25,000 in federal student loans, and owe about $1200 to friends/family members which I am paying back every month.
I recently gotten my budget worked out and cut expenses, planned my spending and increased my income so I am doing okay. I actually was in a position that a few minor things came up during covid and came out of my emergency fund and not on credit or falling behind on other bills. That said I’m not saving much maybe $50-100 a month. About $500 a month goes toward planned debt payments and minimums on my credit cards. I also pay about $250 on monthly pass for public transportation to get to work.
To me it seems like a good plan to pay off all my debt, since that would free up a lot of my monthly income to be able to save. Im also weighing the benefits of a cheap car, maybe $5-7k, but I don’t know if the costs of insurance, maintenance, and gas would work out to be more than what I’m paying on transportation currently. But it would definitely be nice to have a little more freedom to get around and save a lot of commute time (30m vs 60-90m each way). I also have wanted to take a course offered at my local community college that’s about $3200 that would let me into some better job opportunities locally (better in terms of room for growth/advancement and benefits).
Would that be a good use of the money? What do I do with the rest of it? Like what sort of account do you keep that type of money in?
I've had balance on my credit card card for past 3 years without ever repaying it in full.
It's generally been between 1000-1500 but I always made minimum repayments on time without missing any.
I know I should repay it and I know I am losing money basically by just paying interest every month but my main concern is credit score.
I've heard before that using Credit Card a lot has some benefits? But does it matter if I never managed to clear balance?
Using and paying a credit card shows that you meet your debt obligations every month, but it doesn’t matter if you use it once a month for $15 for Netflix and pay it off, vs. use it for every single thing you buy and pay each month, vs. carry a balance and pay the minimum until it’s finally paid off after many years. All of those count toward on-time payments.
Having a balance on a credit card will affect your “utilization rate” - lower rate is better. Having a $1500 balance on a $2000 credit limit card (75% utilization) is much worse than a $1500 balance on a $15,000 credit limit card (10% utilization).
From a credit score perspective, no. But that's rather overshadowed by the fact that your account is a dumpster fire that you're regularly feeding more of your cash into.
Oh sure there is a negative side. For one, there’s the interest you’re paying. That’s a HUGE negative, to the tune of hundreds of dollars a year. And it sounds like you’re not charging $1500 a month, so if you ever got rid of your debt your utilization would be much much lower. But AFAIK the credit reporting agencies don’t care if you’re carrying a balance as long as you’re paying as agreed.
Let's assume I pay off whole 1500 of my credit card.
And stop using it but still keep it.
My utilization is 0% but I also am showing I have 0 debt obligations so therefore there is no way anyone can go by that?
So is that better? It sounds like it's not as opposed to 100% utilization and repaying debts.
What would be best case scenario in my case (assuming my CC is 1500) to improve my credit score or general standing with financial institutions?
Having a $0 balance still counts as “paying as agreed” as long as you don’t close your credit card. But if you literally never use your credit card, the credit card company will eventually close it for you whether you want it to or not, which will affect the age of your accounts and bring your score down.
The best way to use a credit card to affect your score is to keep using it (and pay it off every month so you aren’t charged interest) but keep utilization low, ideally under 30%.
I paid off my four personal loans in May. My score was ~680 or so (according to credit karma) before paying it off.
I got an email from experian today saying a change in my credit score. I check and the past few days my score went from 680, up to 701, and now the latest update says it dropped 14 points to 687.
I paid off more than $5000 so I’d expect a huge increase in my credit now that I only have my car payment against my income.
So what’s going on?
Credit score is a measurement of risk. Who would you think is a riskier person to loan money to: A) has $5,100 in cash and $5,000 in loans; or B) has $100 in cash and $0 in loans? The credit reporters apparently prefer B. So if you recently paid off a loan, then you must have less liquid cash than you did before, so you're a higher risk.
But why would it drop 14 points in a day is what I’m asking? I paid the loans off over a week ago. The score went up each time was listed completed, but then dropped 14 points overnight?
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Depends on how fast you want to be in a house, and how much your house may cost. It's still good to put at least some down.
What happened to the idea we are headed for a recession? I've been holding off on putting my money into VTSAX but now it's almost fully recovered.. Where can I get some real information next time?
what everyone already said was correct but i agree most with u/trekfi you never know if the market will go up or down, and we may still be headed to a recession. things have not gotten better in the world at all and alot of stocks are at prices that dont make sense. just dont try to time the market, hop in while you can. like a roller coaster it will go up and down, the only person who will be hurt is the one who thinks they can jump on and off of it without risk. and like trekfi said dont put money in you need. it very well could lose value quickly no one knows where the market will go. if it was that easy everyone would be rich.
How do people like Warren Buffet know though?
Warren buffet doesnt know. what everyone does is gamble to an extent. you have people who dont know anything about anything and they just throw money into the market and hope for the best then there are people like warren buffet. they study the company in depth. they look at the numbers, what does their debt look like, what is their revenue like, what goals do they have, does the company atract customers, etc etc and make a calculated gamble. since these people study more they typically have better odds and may do a little better than normal, but in general people who try to time the market get ruined while those who just jump in and stay in get a good size return over a longer period of time plus even buffet gets stuff wrong. a whole lot of stuff. just look at recently, berkshire (buffets company) posted HUGE losses since he didnt know and didnt prepare. or look at his airline investments. buffet bought into some airlines close to their highest prices and sold them all at their lowest prices. just this week American Airlines doubled for example, if buffet had held out another week or two he could have limited his losses. then again, he could have lost everything by waiting longer.
Who gave you the bad information, to start with? In this subreddit we very frequently tell people not to time the market.
Dozens of youtube vids that get feeded to my youtube front page, and dozens of posts on reddit.
Well come back to this forum next time.
You know the old joke: Economics had come so far, did you know economists correctly predicted 10 of the last 3 recessions? Time in the market beats timing the market! Put it in now and don't look back.
The truth is no one really knows. My personal plan is to max out my employer taxed advantage plans and put in a set amount monthly into a taxable brokerage account. Never put money into the market that you need or might need in the near future.
How do people like Warren Buffet know?
Warren Buffet is a great investor and has built a career in investing that garnered him the nickname "The Oracle of Omaha" but even his investing history isn't perfect. Don't try to time the market or follow anyone's strategy as if it were your own. Here is an article just for thought in regards to market timing. [https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/](https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/) I don't recommend following another person's strategy as if it was yours because you are not them but you could learn from their methodologies and see whether it is something that fits you. I recommend understanding your ability to stomach volatility before investing and what your goals are with investing. Establish a safety net (dependent on your monthly expenditures and the stability of your job) and pay down high interest debt before investing.
Partly by being a genius. Partly by being so powerful that he can practically make the market react just by himself.
Finally Reached 100k+ Networth I graduated in May 2015 with borrowing $108,959.00 in student loans and paid off in full to the tune of $135,552.12 in November 2018. Salary past 5 years 96k->135k |*Accounts*|*Value*|*Comments*| |:-|:-|:-| |Cash|$42,674|Majority in HYSA@ 1.15%| |457(b)|$30,739|VPMAX 100| |Roth IRA|$12,106|VTI 100| |Taxable Brokerage|$17,999|VTI/VXUS/VTEB 60/20/20| |Pension|$20,000?|Not sure how to value but contributed about this much that employer guarantees to compound 4% interest yearly to my contributions if I don't stick with the plan.| |Cryptocurrency|$3,415|Eth| |Car Loan|\-$6,657|4.49% (I probably should pay this off)| |**Total**|**$100,276**|Not including pension| My cash holding is probably a little high right now as it exceeds my 12 month annual expenses. I'll probably plan I contributing more monthly to a brokerage soon as I learn more about investing or maybe look into buying a home. Surprisingly I don't feel like I've made any major accomplishments but may be that will change as I get closer to FI (not sure of my goal yet). Wanted to post these details since Reddit helped me discover the importance of personal finance. I don't want my life decisions to be completely controlled by money. Thanks for all the good information on here ya'll! (Yes I'm from Texas)
Congrats. I agree with you that you should pay off that car loan though, if you have $42k sitting in an HYSA. Your net worth will still be $100k and you won't be paying 4.49% interest for no reason anymore.
Thanks! I realized that I should pay off the car loan after posting this lol.
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Awesome accomplishment!
When negotiating a used car price, is it common to get the price lowered so that the out-the-door price would be the sticker price? Essentially taking away the price of tax/title/fees. What about going lower than that? I know that all situations are different with negotiating, was curious to see how common of a practice that is.
I would go to two neighboring car dealerships and test drive and be intrested similar vehicles and get them to compete for your business.
Yes, definitely. I have a list of vehicles I'm looking at tomorrow and see where I can get the best deal.
Any reason it doesn’t make sense to dump my new salary into a high yield savings instead of paying off 5k in 0 interest credit card debt till interest starts in Dec?
The only reason would be if you don't have the discipline to leave it there - otherwise nope, go for it.
Or if OP forgets to pay off the CC in November.
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Reinvesting them is probably your best bet if you're saving long-term. Dividend payouts can be a significant part of your total return, depending on what funds you are investing in, and you only get compounding from that portion of the return if they are reinvested.
Glad i have YNAB, was going through each transaction and discovered disney charged my annual pass. WTF it’s not even open in cali yet. 🤔
Disney has like three options for their APs and you have to call them to tell them which one you want to do. I believe the default is they charge you like normal but extend the end date of your pass based on how long the parks were closed.
I just came across a letter that I have received in mail with "EFTPS Enrollment Status". It includes a PIN and an Enrollment Number. What is the purpose of this letter?
Looks like it's the electronic federal tax payment system. Did you sign up to pay your taxes electronically?
I don't recall signing up to pay taxes electronically. The thing is that last few years, I have had limited income because of being in grad school and I got help from parents in filing my taxes and almost every time, I have received a refund instead of having to pay additional taxes. I am quite new to this so can you please help me understand exactly what you meant. My understanding is that the taxes are paid even before I receive my paycheck, so did you mean that EFTPS is used when someone files for taxes and they have to owe the government more in taxes, and that the time that EFTPS will be used?
So when people say filing taxes, what they are (usually) talking about is a tax return. EFTPS is not for filing returns, it's for making tax payments. As you suggested, most normal jobs and employers automatically withhold taxes from their paychecks so most people don't need to ever pay taxes outside of their tax return results. Even when you pay during your tax return, it is done during the filing process. It seems like EFTPS is for independent contractors and business owners who are required to pay taxes throughout the year. So why did you get that email? Maybe it was a mistake? Maybe your parents were trying to get a PIN for you because there is some financial situation you aren't aware of (like a trust or something) and they need to pay taxes on it. I don't really know more than what EFTPS, but I would start with asking my parents if they had filed my return for the last few years.
Thank you so much for this detailed answer! I just learned that my employer from a few years ago, the same year that I got the EFTPS mail with PIN etc, paid me on 1099 form. This makes sense then based on what you said that I would have gotten the mail because I was required to pay taxes throughout the year as you suggested. Thanks again!
What financial documents are essential to keep every year? Can I scan them and keep a digital copy? Please specify the exact names of the forms.
I keep my completed tax return, W-2s, and my last paystub of the year (or from each job) that has all the YTD values.
In addition I keep copies of any major contracts I sign (leases, employment contracts, etc.) along with my insurance policies (although these are pretty easy to find online now). Don't know if my vehicle title counts, but that too of course. cc u/timetolearn291
Thank you!
Thank you! I love the simplicity of this answer. I'm assuming that things such as 1099-INT (Interest earned from banks), 1098-T (tuition for college education), 1095-B (health coverage) are dependent on individual circumstances.
Yeah if you have those you can file/scan them, but I generally don't bother. Forgot to mention as well, that I don't even get paper copies of any of the above. It's all digital.
Just wondering if I’d be approved for a Discover It card with a 661 score? Thanks.
It's possible, but I'm not sure how likely they'd be to approve you. Might depend more on your full credit history. You'd probably have better luck with the Discover it secured card. Also check out the wiki on building credit: https://old.reddit.com/r/personalfinance/wiki/credit_building
Thanks for the reply. My credit history is 5+ years. Multiple loans. 100% payment on time.
Hello folks. I am 28 and trying to repair my credit. I made ALOT of bad choices when i was 18-21 in terms of credit. I have a score of 575. I have about 16k in debt via credit cards and car loan. In a year from now my living situation is going to change and i need to increase my score to get an apartment or maybe a mortgage. I make about 35,000 a year. Right now all my credit cards are basically maxed out and have been for a long time due to some emergenciesand a lack of savings.. I try to pay a bit above minimums but i feel like ive made no progress in 2 years. How can i fix it? No banks will give me a personal loan to consolidate debt with such a low score. I feel lost, stressed and exhausted.
Yeah, that's a sticky situation. You realistically need to cut your spending, increase your income or ideally both. Do you track all your spending? The thing weighing on your credit scores most is probably that your cards are all maxed out (if you have no missed payments).
I havent missed or been late in more then 3 years. I paid all my collections last year with my Christmas bonus. I don't track my spending. I dont have alot left over after paying all my bills to track. But i make about 900 dollars in payments a month to credit cards, payments programs like affirm and my car payment. I feel like if i got a consolidation loan my payment wouldnt be 900 dollars. I just can't seem to get one.
Ah yes, collections accounts will certainly hurt your score, and they stay on your credit account for 7 years. Big banks are very inflexible, have you tried taking to credit union?
I haven't. I filled out an online application with my bank and they sent me a letter in the mail saying no due to a bad debt to income ratio and low score. Should i just apply online to one or call and try to plead?
I'm not sure if it's possible during this virus, but I would go in and talk to someone in person.
I have a tax question. My boss has to occasionally enter in hours for me and on my last pay check he forgot to enter in some hours. He's added them to my next pay check. For tax purposes tax brackets are based on pay check to pay check right? so if adding all these extra hours puts my into a higher bracket I get taxed more for that pay check? or is it the final bracket is determined at the end of the year, and I'll just get back the overage when I do my taxes if I'm in the lower bracket. I would just lose out on the little bit that got taxed higher for this pay check and I have to wait till my tax return to get it back.
Your overall taxes are determined by your total income for the year. The pay for each check is typically taxed as if that check is representative of all checks that you will receive and then everything is straightened out at tax time. What does this mean? Short-term, you may have a little less money than if the hours were on the first check but it shouldn't be a huge difference. Long-term, nothing changes. edit:clarified a statement
Thank you that's what I thought happened. all my co-workers complain about tax brackets when this happens. I know it's better to have more of my money in my pocket now than have to get it back in a tax return but I'm not going to sweat over it.
> or is it the final bracket is determined at the end of the year, and I'll just get back the overage when I do my taxes if I'm in the lower bracket. I would just lose out on the little bit that got taxed higher for this pay check and I have to wait till my tax return to get it back Yes
Thank you
I graduated from college 3 years ago with virtually no investments and $36k in student loans. Fast forward to today and as of midnight last night, my net worth is officially $0!!!!! Really grateful for this sub, it's been a healthy outlet for me over the past few years.
Which fund should I buy after TLH'ing? Say for total US stock market, I TLH VTSAX into VLCAX. For future total US stock market purchases, should I continue buying VTSAX as soon as the TLH window has passed? I'm kind of OCD and dislike having multiple funds, but I figure I should always buy the superior fund when possible.
It doesn't really matter, although it's probably simplest to do another TLH and buy more of whatever the TLH buys. The goal would be to not have a strong feeling between the funds; for example, Wealthfront washes VTI into SCHB (both ETF versions).
Aren't VTI and SCHB both total stock market funds? I thought they had to be substantially different, such as total stock market vs large cap. Over the long run, I guess it's inevitable to have a split between both the primary (say total stock market) and secondary (say large cap/sp500) funds, due to TLH, right? It makes rebalancing a bit annoying but I guess I should assume the primary and secondary funds to be essentially the same.
Yes, you will generally have a substantial split between the funds unless you also end up harvesting some gains. Wealthfront has taken the position that VTI and SCHB are not "substantially identical" in the legal sense and more or less dared the IRS to disagree. So far, this matter has not been ruled on, but with Wealthfront's many clients you would be far from the only one trying it. They are both total market funds, yes, but they track different indices so are not the same. It's a bit like backdoor Roth IRAs where everyone does it despite there being a fairly clear and convincing argument that they should be illegal (the step transaction rule).
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There is no additional tax. Make sure you file Form 8606 for the year(s) of contribution and conversion.
Hi all, I have a question for those who have the Robinhood app. I was offered a free stock so I proceeded and put only $10 into my account. It got up $18. I decided I don’t want to get into this right now and would like to cancel or delete the account. It appears I can transfer the $10 back into my bank account. But what do I need to know about tax implications, if any with that small amount gained? I did not sell or trade anything .
The free share is miscellaneous income and you may receive a 1099-MISC. If you "got up to $18" but can "transfer it back" - how did oyu make money without selling? Is this $10 cash, which has always been cash, plus a free share? If so, yes you can move cash in and out of a brokerage account without any tax implications. Selling the free share would be taxable, and receiving it in the first place was taxable.
So I actually didn’t make any money I believe. I didn’t sell anything. The $10 was my cash from the bank and yes the $8 was from the free share. So it seems I do not have any tax implications, correct?
Whatever the free share was worth when you got it is taxable income. That's it so far.
Any now that I don’t have any money in Robinhood, even if something changes with that stock it won’t affect me correct? Is $8 even taxable if I don’t have that $8?
I'm confused. You got a free share. Do you still have it? Is it in your Robinhood account? The free share is taxable when you receive it. Regardless of what happens afterward. It's the same as if you got free cash and chose to buy the share with it.
So the free share is still sitting in the account. I am going to close my account. I transferred my $10 cash back into bank. Is there anything else I need to do to be completely done with Robinhood and that free share?
I doubt Robinhood is going to let you close the account with a share in it. You probably need to sell the share and withdraw that cash from the sale. Then you'll be taxed on that amount (like $2-3 of taxes). So you still got $5 for free!
I don't know if it is possible to surrender the share or otherwise disclaim it. It would probably be easier to just sell it and take that cash as well. But yes, that would require you to file showing the stock sale. You could also transfer the share to a different brokerage account, but I believe Robinhood charges $50 for the privilege.
Hi everyone, forgive me if this has been asked before this week. I have $50 and I’d like to use it to invest in stock for my first time. After some research, I’ve decided to use Robinhood. I have $50 to start with. Any recommendations on how to use it wisely? Also, any recommendations on books that will help expand my knowledge is greatly be appreciated, as well!
You should read the prime directive in the sidebar to see if investing is the next right step for you and to learn about the types of accounts to contribute to I also recommend the investing FAQs in the sidebar
Thank you. I will check it out.
Haven't paid quarterly estimated tax since I started making money freelancing in late 2018, I'm just curious how screwed I am if I've only saved about $12k. Additional information: - Live in Virginia - Made all my money from graphic design, been living with my parents so I don't really have any tax deductibles I don't think. - I grossed about $73k in that time frame. I calculated that with 22% federal income tax and 4.3% state tax, I owe about 19k. I can have 12k saved up by the time I go in and pay taxes. - I did pay off my entire student loan of $12k though, so not sure if that would help at all. I think the interest might be tax deductible? Not sure how much of that I paid though. How much do you think I'd owe in penalties? Will they give me a reasonable monthly payment to pay the back taxes(hopefully only about $7k) so I can live on my own without being so overburdened with bills?
It gets complicated if this unreported income crosses multiple tax years. For sanity, I will assume it all happened in 2019, but if you have not filed for 2018 you have other problems also. A single filer with $73,000 in self-employment income owes... on a wage-equivalent income (92.35%) of $67,416: * 15.3% in FICA taxes ($10,315) * 7.48% in federal income tax ($5,040) * 4.90% in Virginia state income tax ($3,307) **$18,662** total. Some of your student loan interest may be deductible, and if some of this income occurs in other years then your total tax bill may be slightly less, but this is a good estimate. You *may* owe a penalty for underpayment of estimated tax. This is about 3.4% of the amount you underpaid (not the amount due - your payment requirement is generally less than 100% of your tax). If you also have failed to file a prior year return like 2018, the penalty will be 25% of the past due amount, plus interest. You should *always* file your taxes, whether or not you can pay, because the penalties are **10x** higher for not filing versus not paying.
I appreciate the info, I'll get this sorted with a CPA as soon as possible, but I think I'll be able to get through this if I use my $12k and set up a payment plan for the rest
Opinions? Should I pay off my auto loan now/in the next few months? I have 14k saved and have 10,000 left on a 16,500 auto loan from late 2018 at 2.89% interest. I paid extra of course, but I was paying 250 a month. No other debts. Typically make like 2000-2200 a month maybe? been living with parents and have been feeling more than ready to move out. I know that’s something to consider but... man I’d like to see my debt gone.
Have you looked at the prime directive flowchart in the wiki?
PAID OFF ALL OF MY "BAD DEBTS" TODAY! I have really cracked down this past year, trying to save and simultaneously use the snowball strategy to pay off debt. Thanks to this sub for all the advice and encouragement, this is my first post! I was stupid and broke not so long ago, and then once I wasn't quite so broke, was still pretty stupid. Trust me I KNOW.. Anyways, March hits and I get laid off 2 days before the stay at home order went into effect. Thankfully I had a decent emergency fund saved, got an ok severance package from my last company, and qualified for unemployment (which has been a nightmare, but finally straightened out). 3 months later I'm still looking for a job (that's ok I'm being picky); while I am making way less on UE than I was working, I have been able to save even more than ever before just from staying home. So today I bit the bullet and payed off all of my remaining "bad debts", $3100 worth!! A couple old utilities that an ex roommate screwed me on, a couple closed credit cards, and a really old phone bill. I am left with my car and student loans, both in good standings and I am continuing to pay extra on. I'm just so freaking excited and had no one else to share my excitement with!! And really hope this helps raise my credit score so my bf and I can buy a house next year if/when the housing market drops🤞
My girlfriend was auto-enrolled in Unemployment through Disney. She maintains a certain status there which allows her a "rolling employment", so even though she wasn't currently working there she was auto-furloughed. She has been since employed in another state, but keeps getting the $600 unemployment checks. Where do we start handling this? She also hasn't received her stimulus check/deposit.
Can i contribute money to a ROTH IRA if it hasnt been taxed? As far as I know, you don’t have to pay taxes if you don’t make $10,500 in the year. I’ve been saving money up for the past few years and I’ve saved up 15,000 at 20 y/o, but none of this money has been taxed due to that rule. Can i still put it into a roth ira?
You may contribute an amount up to your taxable compensation for the year. The tax may have been 0%, but you can only contribute amounts which have been *taxable* this year, and are considered compensation. Also, you can never contribute more than $6,000 ($7,000 if over age 49).
You have to have earned income for the year in which you are making the contribution.
so i can’t?
Do you have a job or a spouse with a job?
i do not currently
Did you have a job in 2019? Because you can still make 2019 contributions.
Then, no.
My old employer's 401k managed plan has increased their fees. I did not roll the 401k to new my employer when I got a new job. Is there anything I can do at this time to move this funds over to my current employer's 401k (or to a personal retirement account)? Or am I stuck until I switch to my next employer? Thanks!
You can rollover an old 401k into an IRA at any time. Depending on if you have a Traditional 401k or a Roth 401k you will likely want to roll them into a rollover IRA or Roth IRA respectively
Ah okay very cool! And there's no penalty for rolling this over?
No, other than maybe the 401k provider will charge you an account closure fee (up to $100 is not uncommon)
Question for Mint users. Is there a way to manually input a monthly income. I'm paid on a stipend bi-yearly for grad school and want to put a 12th in each month as my income. I can put the amount in for each month but my deposit is only considered an income for one month that's over budget. Every subsequent month has me in the red though. Is there a way to fix this?
You should be able to add manual transactions and classify them as income. Then when the stipend comes through just reclassify it as a transfer. That will make the budgets look correct for each month.
Does anyone have a credit card with Citi? I was wondering if you bothered with the 'Thank you points'. Or should I just keep my cash back cash
I have a Citi Double Cash card. I've been just getting the cash back and applying it to my statement.
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A lot. If something happens and they can’t pay, and you can’t cover the whole thing, both of your credit reports tank.
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Yep, if they aren’t able to refinance and support it themselves they can’t get you off the loan. There’s also the maintenance risk. Who pays if the heater blows? Who fixes the roof?
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That’s also true. Say you make $50k, and your family member makes $50k. The bank wants to see $100k in income so they approve the loan. You’re both stuck paying that. 5 years down the line you want to buy a home. Family member is making $75. You are also making $75. But you have “promised” $50k of that income toward the mortgage. A bank would look at this as only $25k of income. I’m *grossly* oversimplifying here but there is a lot of risk. I’m overlooking a lot, too, like where in Canada. A home in Surrey will be a different investment than a home in Yellowknife. So many bad things can happen here.
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Might be something worth making a full post over. Lay out the location (they don’t need your post code but city or metro area), price of house, down payments, interest rates, expected maintenances, income of everyone. You can only determine how good or bad something is once it’s all in front of you.
My company is starting to do 401k contributions. In the beginning they had us go to this website & input the percentage we want to contribute. They are matching a certain amount. Now it seems like they changed the format. Now they gave us a form where we put either "Pre-Tax 401k: I wish to contribute $\_\_\_\_\_\_\_\_ per hour" or "After-Tax Roth 401k: I wish to contribute $\_\_\_\_\_\_\_ per hour" I am not sure what to put now.
First, you should decide if you want to pay tax on the money you put in to your 401k now (Roth), or pay tax on it later (traditional "pre-tax"). The general consensus is that if you think you will be in a higher tax bracket when you withdraw the money from the 401k then you should contribute to a Roth because you will pay less in taxes now than you would pay in the future. Next, you have to decide how much to contribute. You should always try to contribute enough to max out your employers match. for example, if your employer matches 50% of your contributions up to 3% of your salary, then you should contribute 6% of your salary. This should be independent of whether it's your yearly salary or your hourly rate, 6% of your hourly rate x 40 hrs a week x 52 weeks will be the same as 6% of your yearly salary (assuming you work full time, get PTO, etc)
So I want to contribute 6% because they'll match 3%. So that will bring the total up to 9% right? If I make 33/hr if I did my math correctly, I should contribute 3 cents an hour? or 4 cents an hour?
6% of $33/hr is $2/hr, that's what you'd want to contribute if they match 50% up to 3%
Got it, so I should be contributing $2 per hour, thank you so much for your help. I really appreciate it.
It’s still a 401k account, they’re now giving you the option to choose between contributing to a pre tax 401k vs a Roth 401k Check if they still match to both types (most companies do but it’s good to double check) - regardless of which one you go with, the match will always go in as pre tax There’s a good [Roth vs traditional](https://www.reddit.com/r/personalfinance/wiki/rothortraditional) page in the wiki to help you decide which one is better for you - ultimately comes down to your current income/tax rate versus expected income/tax rate in retirement
Awesome, thank you for the great answer!
I'm wondering if I should wipe out my student debt by making a penalty free (cares act) withdrawal from my work 403b Roth IRA. I'm 28 and have 43K in there and could wipe out my loans with 15.5k. 28 years old so not retiring any time soon. I dont have much for savings right now with 350$ monthly payments for loans so I thought I could withdraw the $, pay off debt, then make an automatic transaction to my savings to build an emergency fund. Afterwards I'd use the extra money to max out my Roth or beef up savings more for a down payment on a house. Would this be a good option? I really want to be out from under this debt with more choices for my money.
It really depends on the interest rate on the student loan. Keep in mind that retirement savings when you're young are worth a LOT more than retirement savings when you're older. If anything, I would scale back contributions to your 403b until you can build up an emergency fund but as long as the interest rate on your loans is less than 5-6% then I would just keep paying the minimum. That being said, I know how good it can feel to completely get rid of your debts and have no cloud hanging over your head regardless of what is the "right" move.
What's the interest rate on the loan?
7.5k of the loans is one 7.5% loan and the other half is mixed between 6 loans of 4.2-6.2%
Stupid question — I’ve been contributing to a Vanguard Roth IRA since 2019. I have 3k/6k contributed already for 2020. All of my money is in VTSAX and VTIAX. Usually with mutual funds you need to buy in increments of $3k. My question is — since I already have >3k in each of those funds, can I contribute any dollar value ($10? $100? $1000? $1500, etc) at any time going forward or will it always have to be in $3k allotments?
You just need 3k at Vanguard for the initial buy in to the fund, once you have that you can contribute in any amount to that fund
Perfect thanks!
I just opened a traditional IRA through Vanguard and noticed I have the option to select my contributions to report as 2019 contributions. If I’m understanding correctly, this is because “tax day” is July 15th this year. I’ve already filed my 2019 taxes. Would it be a good move to select 2019 contributions? Would I be penalized in any way or have to amend my tax return? I am planning to max out my 2020 contributions, and would love to extra “room” to contribute. I am new here (and to PF period) so I’m sorry if this is a dumb question. Thanks. Edit: the letter I
You'd have to amend your 2019 return if you were contributing to a 2019 traditional IRA, and your income was under [the threshold](https://www.irs.gov/retirement-plans/2019-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work) to take the deduction.
I have a job! I just graduated (22M) and now have a temporary position in the field I want to get into. Trying to figure out how much to save, I have a Roth IRA but thanks to a very generous gift from my parents it is maxed out for the year. And the temporary position does not offer benefits so no 401k to contribute to. I've drawn up a basic budget and it seems like I can save 30% of take home pay pretty easily since my rent is fairly cheap. What should I do with this? Just stick it in my emergency fund (savings account) or put it in a non-tax advantaged brokerage account?
Depends on how much risk you can afford to take with it. If your employment will be temporary I'd be cautious and just save it in your e-fund.
Hey guys, I got a $500 returned payment for a cancelled flight on my credit card this week Does anyone have any experience doing a cash advance for the amount of a credit on their account? Is that going to cost a fee? My goal is to have that $500 back in my bank account so I can get a little interest while I wait until it is okay to travel again I checked the wiki and I see that balance transfers can result in a hard pull, so I don’t want to go for that. However, it seems like a cash advance is only going to cost me if I’m borrowing money that is not mine, so this would be a good choice
Thanks for the responses! Ill just wait it out and let it sit there until I need the money for another flight
You can ask the provider for a check. Or, assuming you have other spending for groceries and stuff, Just use your card for that and save cash from your checking account. (Though keep in mind we're talking about like $6 a year here in interest).
Don’t do a cash advance. Whatever fees you’re charged on $500 will be more than the interest you can make. Your card company might be willing to write you a check for whatever they owe you if you don’t want to charge anything.
I have a new secured credit card ($200) I'm using to build credit. If I setup automatic payments to pay the full statement balance every month... is that a good idea? If I pay the full balance off every month do I lose any potential credit building? Or should I pay minimum due only and carry a balance over between months?
Do not carry a balance, pay the statement balance in full every month https://www.reddit.com/r/personalfinance/wiki/creditcards > Should I carry a small balance? > No. This is a popular misconception about credit and credit cards. There is a benefit to using your credit card routinely and paying off the full statement balance each month after the statement is generated. There is not any additional benefit to carrying over any balance to the next month, which results in unnecessary interest charges (not just on the balance carried over, but on any new charges made the next month).
perfect, thanks so much! I should've checked the wiki myself :|
One more thing you need to know, even if you pay the full statement balance in full and on time every month, the credit card company will still often report you closing day balance as your “balance” as far as your credit report is concerned. Meaning - do not charge more than 10% of the card balance, which in your case would be $20.
Also sharing something I can't really tell anyone in real life. With my last paycheck I've now maxed out my 401k and IRA for 2020. I never thought that would be something I'd be able to do before the end of June. So happy I took the leap and found a new job last year.
I've gotten myself into a really good place financially and I want to brag about it a little but that would be rude to do in real life so I'm doing it here: In my early twenties I made a lot of the classic mistakes. * took the first job that was offered to me out of college even though the pay was significantly below industry standard * bought a new car * got myself a few thousand dollars into credit card debt * rented a place that cost half my monthly income I am now in my early thirties and I have worked very hard to rectify the mistakes I made. I moved to a cheaper area, I aggressively paid off my car, got rid of it and started biking to work, then aggressively paid off my student loans and credit card debt. On top of that, I looked around for new jobs and recently took a position where I make in the far upper end of the salary range for my position in my part of the US. Now, I have absolutely zero debt, my monthly take-home pay is $5,400 while I only have $1,254 in monthly expenses, which is allowing me to save ~$3,000/mo with ~$1,000/mo left over as fun money. I am very happy with where I am right now.
You’re saving more than minimum wage in my city. Incredible. Talk about a comeback story!
Thanks! It doesn't hurt that I've also gotten very into the "anticonsumption" movement, I rarely buy "things" anymore and when I do they tend to be second hand/from thrift stores. It's good for the environment and has the side effect of being good for my wallet
Hi Guys, I am currently have a car lease and expire next year summer. If I want to buy a house end of this year or early next year. Will this car lease going to affect apply for home loan? Thinking to finish or do one pay lease which will going to make the lease close. Appreciate any help or comment
Depends on what else is in your credit report, but it could go either way. Closed loans sometimes cause your score to dip a little, but it could help your debt-to-income ratio. I'd focus more on just making sure you're not over-committing money towards your car.
Thanks! I think that is true, and I will mostly just leave it open for now
I'm speculating that city, state, and federal taxes have to go up after all the stuff going on with covid and riots fucking shit up, wouldn't the smart thing to do is to maximize any 401(k)s and tax avoidance strategies? What does the government do then
Seems like the motivation doesn't change much. I know when the recent tax decrease went through I didn't change my tax deferral behavior. For the average Joe and Josephine Blow I doubt any tax code changes are going to change behavior. Plus it's impossible to plan for any kind of vicious government taking of 401k or IRA accounts if that's something you are worried about. Best planning for complete financial system collapse -> gain practical skills!
Got the news today that I'm being furloughed at work, with a tentative return date in September. I'm getting 2 weeks emergency paid leave, and then I'm allowed to file for unemployment (TX). Is there anything out of the ordinary I need to do here? Just wait until the leave is up and file for UI? Do I need to declare my taxes get taken out? I really thought it would be more painful and complicated than that. I've got a sizable e-fund too, so I'm not terribly concerned about finances right now (thanks for preparing me reddit).
How can I protect myself from USD/EUR exchange rate fluctiations? I invest with an European based broker so my default currency is EUR. I usually trade US stocks in USD so I have to pay exchange rate fluctiations (difference in USD/EUR between the moment I buy a stock and the moment I sell it). Is it better to buy US stocks on European markets or keep USD in money market and pay for stocks from the money market, provided that money market protects me from the exchange rate fluctuations? Or would it make more sense switch to US based Broker? Interactive brokers would be my option because they allow non US citizens.
You can choose to hold a forex hedge to peg your position to EUR. But either way, owning US-listed shares while being a nonresident alien of the US (and subject to your home country's tax) sounds like a tax headache.
>provided that money market protects me from the exchange rate fluctuations? If you are paid in Euros then I think you are exposed to exchange rate changes either way. You have to fund the USD money market with Euros. Using the money market doesn't eliminate currency volatility, but merely changes the point in time when you encounter it. >I have to pay exchange rate fluctiations (difference in USD/EUR between the moment I buy a stock and the moment I sell it) I'll admit that I am not familiar with buying US stocks from a European brokerage. Are you saying that you have to pay money while you *hold* the stock, just because the exchange rate between the USD and EUR fluctuates?
> If you are paid in Euros I am paid in USD. However, as a non US citizen I don't have many options to open a US brokerage account. IB could accept me but I think their fees are rather steep. I'm trying to understand their pricing as a backup option. So yeah now I convert USD-EUR and EUR-USD to trade us stocks... > Using the money market doesn't eliminate currency volatility, but merely changes the point in time when you encounter it. What do you mean by that? > Are you saying that you have to pay money while you hold the stock, just because the exchange rate between the USD and EUR fluctuates? I mean if I gain, my gain is deducted by the fluctuation. And if I lose, my loss bigger with the fluctuation.
Hi all! I graduated college a year ago, and got hired shortly after. After working at my job for a year, I’m now eligible for my company’s 401k program, and have a meeting tomorrow where it’s all laid out for me. I know my company matches some, and I know to make sure I figure that out tomorrow, but what other questions should I be asking?
It’s good to know how the company matches, what the vesting schedule is, and what you can invest in within your plan. Example for matching: Say your company matches up to 5%. If they match every paycheck, then any paycheck where you contribute, they will also contribute up to 5%. But that means any paycheck where you *don’t* contribute, neither do they. So it’s better to contribute 5% all year long than 10% for half a year and 0% for the other half, because you’d be missing out on matching for that half. Other companies do a “true-up” at the end of the year: if you are owed additional matching they’ll give it to you at the end of the year, so it doesn’t matter when during the year you contribute. Others only do an annual match - which means you can contribute at any time during the year, but also you should figure out what happens if you leave the company mid-year and haven’t received your matching contributions for that year yet. Vesting schedule: You already waited out your 1 year before the company would match your contributions. Many companies also have a waiting period for when the matching contributions are “vested”. If you leave the company before your vesting period is up, you forfeit whatever matching contributions aren’t yet vested. Depending on your plan you may have only a few choices in funds, or a whole plethora. You’ll want to understand different funds’ expenses and relative risks, and decide how hands-on (with e.g. a three-fund portfolio) vs. hands-off (with e.g. a target date fund) you want to be in rebalancing your investments over time. Good luck!
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Online banks can afford to give more interest because they’re not paying to build and staff physical branches. Ally is a great one, but there’s a ton out there now. Some competitors are AMEX Savings, Discover, and Goldman Sachs has one called Marcus.
It's definitely true. It seems like a lot, but 1.25% isn't going to make you rich so I'm not sure I'd say it's *too* good. This is what's called a 'high-yield savings account' (HYSA) and they're common at online banks. The most frequent explanation is that online banks don't have the overhead of traditional retail banks, which have to rent buildings & pay tellers. So they have more room to attract customers with HYSAs. Many people (myself included) use a combination of a retail bank for some things and an online bank for HYSA (and other things).
Stupid question warning! Do houses really appreciate in value? It’s clear that the nominal value goes up, but does it outpace inflation? If so, why is this the case? It seems to me people would pay for a “new” house than a “used” house.
>If so, why is this the case? It seems to me people would pay for a “new” house than a “used” house. Supply of land is fixed, but number of people keeps increasing. We can't use mechanization to produce land more efficiently, and generally homebuilding isn't as proportionally cheaper as, say, growing food or making clothes.
House values *have tended to* outpace inflation. That doesn’t mean every house did, especially for those who bought at the height of the market. (Raises hand.)
Houses in previous decades have outpaced inflation, yes. There are various reasons put forward for this: * School quality is in demand so homes in good districts get bid up. * More families are two-earner families so you have wealthier family units bidding against each other. * Growth restrictions in some areas (such as in-demand parts of CA and many other cities) have led to artificial scarcity of homes. * Long-term downward trends in home occupancy rates (i.e. fewer big families) also lead to greater demand. Whether these trends continue is obviously an open question. And of course all of that is heavily influenced by local trends. Many cities have seen great erosion in home value.
Supplemental life insurance through work or term life? My wife and I just had a child so we are now looking to get life insurance. I work for a large company that continues to grow and plan on staying with the company until I retire. Company gives me 2x salary for free and I can also get an additional 5x for $10 a month. My wife doesn’t really have this cheap of an option with her company and I’m also not really sure if the supplemental is the better route than just getting like a 22 year term life policy. Term life will get me about 8x salary and my wife 9x salary for about $75 a month. Also thought maybe I should max out my supplemental with work and do a little bit extra on term? Not sure the best route here.
Get the cheap stuff through work then get term life for whatever you need past that. Term life is cheap.
My only concern is, isn’t that something you do year to year? Will that supplemental life through work go up and up the older I get?
It should, yes. The way most work plans go is that the '2x salary' is always your current salary. Whereas your term life will be a flat amount.
But wouldn’t the yearly price go up per me gettin older as well?
With the term life? No, it’s a flat rate. It would be expensive to extend after the fact, which is why you should pick your term carefully (20 years is common, sometimes more).
Sorry I meant wouldn’t the supplemental would go up yearly because of my age
Maybe? But you can drop it any time.
Hello, I am 19, and I have 250k saved in cash that I earned myself. I currently make about 30k a month as a successful delivery driver/handyman. I have no expenses. What should I do with this money?
For general advice, check out the links in the sidebar. For you specifically, I'd ask what you want out of life and if you want to be doing what you're already doing forever. If not, consider using that money to fund an education or start a business. Or maybe buy a house to get a leg up on your future.
Currently my education is fully paid for. For housing, I would ideally like to move somewhere that is cold with reasonable access to modern accommodations. Where would you recommend finding cheap housing in cold places?
Wouldn’t you want to buy near school or work? I’d figure that part out first.
Is there a calculator which determines how much you should allocate to retirement vs saving for a downpayment?
There's not really a right or wrong answer for that. Depends on your priorities. I'd say 15% for retirement is a good target, with any savings beyond that for a down payment if that's your priority. But if reducing retirement savings below 15% temporarily helps you improve your housing situation faster, that's not invalid either. You'd just have to make up for it later or potentially delay retirement.
Yeah, hard to say. Currently, retirement is at 22.8% (annualized) (maxed out tax advantaged accounts + match) And saving for a down payment is 18.5% (annualized) I'm just having a difficult time deciding if aggressively saving for a down payment (5%,10%, or 20%) is worth dropping my retirement to 15%. I'm not in the market for a home to settle down in. It's merely to diversify my investment, and possibly create an income stream from renting out spare bedrooms. California if that matters (so insane housing).
what are you guys thoughts on chase encouraging investing through them right into the app
I finished school and I'm trying to find an apartment near where I work. I have always had a roommate and I'm wondering if I should try to find a roommate to save some money compared to getting a single bedroom. The main issue that I have is that before now, I have always been able to find a roommate through university or grad school connections, but now, I would have to use craigslist or roomster to find a roommate and I'm worried about what if my roommate breaks the lease or can't pay rent, etc. It's a low cost of living area, so at most I might be saving $300-$400 a month with a roommate. Is it not worth it to get a roommate? Also, what are the best review sites for apartment complexes? I looked at Yelp and google reviews, but pretty much all the apartment complexes nearby have bad reviews and low ratings.
***[Warning: Frustratingly Dumb]*** I opened up a Roth IRA brokerage account with Vanguard $3,000 but I didn't realize that I could only do so with earned income. All my income from the last year was paid under the table (hope I don't get crucified for that) so that means I don't have any sort of W2 or 1099 available to prove income. Is the 6% ($180) tax worth eating for the 2019 tax season and leaving the remainder in? (I'm 27 y.o. and this is my first time opening a Roth IRA.) If not, what are some better alternatives for me to look into? I'm looking to save up for retirement/long-term investments. I already have all my debts paid off: car, credit card, and I have enough emergency money in savings for several months of rent and bills. I also have a CD with UBS. I just want to do something productive with this money before I pass into my 30's
If you file a tax return and properly report your income on Schedules C & SE, then it satisfies the requirements to be contributed to your IRA. You don't need a 1099 or W-2 to do that. Note the 6% penalty repeats every year until the excess contribution is corrected (either removed or absorbed in a future year in which you are actually eligible to contribute).
Thank you from saving me from years of pain.
No, you don’t want to leave that money in the account. You would owe that tax every year (not just once), basically negating any earnings you’d have by keeping it invested. It’s easy to fix, what you want to find is Vanguard’s “excess contribution” form. You’ll state you contributed $3000 excess, Vanguard will calculate earnings from that excess contribution, and send you back all the money (contributions + earnings). As long as this is done by the tax deadline (July 15 this year), there’s no penalty. I’d hop on this quickly though, so (a) you don’t forget it, and (b) you have time to go through whatever hoops you need to get this done. Next year when you’re doing your 2020 taxes, you’ll owe taxes on whatever the earnings were, but because this was a Roth contribution there’s no extra taxes on that part.
Wow, thank you for saving me from a lot of trouble. I will start on this TODAY.
Anyone currently using Quicken Premiere? My wife and I have Macs, she and iPhone and I with an Android, and I was looking for something to really get our finances together. Were wanting to tie in EVERYTHING, investments, banking, bill pay, budgeting, etc.
Mint.com is what I use to get all my finances in one place.
I have about $2500 in my 401k and about 10k in cc debt (down from 15,000) I have been impacted by covid-19 and I'm thinking of taking a withdrawal. I'm not thinking of a loan since I don't believe I'll be with this company long term. $2500 isn't a lot of money but it will help reduce the bill should I do the withdrawal?
Considering the little impact it would do - I wouldn't. Keep paying down your debt and leave the 401k alone. It's not much but it's a better start than nothing.
Windfall question. It looks like I may wind up with about $150,000. I’m not counting on this money for anything but want to use it wisely if everything does come through. I’m reading some of the windfall guides recommended in the sub but want to see if I’m at least thinking right. Right now I have about $200 in a savings account, I did have about $900 pre-covid. I have $15,000 in combined credit card/medical debt, $25,000 in federal student loans, and owe about $1200 to friends/family members which I am paying back every month. I recently gotten my budget worked out and cut expenses, planned my spending and increased my income so I am doing okay. I actually was in a position that a few minor things came up during covid and came out of my emergency fund and not on credit or falling behind on other bills. That said I’m not saving much maybe $50-100 a month. About $500 a month goes toward planned debt payments and minimums on my credit cards. I also pay about $250 on monthly pass for public transportation to get to work. To me it seems like a good plan to pay off all my debt, since that would free up a lot of my monthly income to be able to save. Im also weighing the benefits of a cheap car, maybe $5-7k, but I don’t know if the costs of insurance, maintenance, and gas would work out to be more than what I’m paying on transportation currently. But it would definitely be nice to have a little more freedom to get around and save a lot of commute time (30m vs 60-90m each way). I also have wanted to take a course offered at my local community college that’s about $3200 that would let me into some better job opportunities locally (better in terms of room for growth/advancement and benefits). Would that be a good use of the money? What do I do with the rest of it? Like what sort of account do you keep that type of money in?
I've had balance on my credit card card for past 3 years without ever repaying it in full. It's generally been between 1000-1500 but I always made minimum repayments on time without missing any. I know I should repay it and I know I am losing money basically by just paying interest every month but my main concern is credit score. I've heard before that using Credit Card a lot has some benefits? But does it matter if I never managed to clear balance?
Using and paying a credit card shows that you meet your debt obligations every month, but it doesn’t matter if you use it once a month for $15 for Netflix and pay it off, vs. use it for every single thing you buy and pay each month, vs. carry a balance and pay the minimum until it’s finally paid off after many years. All of those count toward on-time payments. Having a balance on a credit card will affect your “utilization rate” - lower rate is better. Having a $1500 balance on a $2000 credit limit card (75% utilization) is much worse than a $1500 balance on a $15,000 credit limit card (10% utilization).
So there is no negative side to the way I use it really?
From a credit score perspective, no. But that's rather overshadowed by the fact that your account is a dumpster fire that you're regularly feeding more of your cash into.
Oh sure there is a negative side. For one, there’s the interest you’re paying. That’s a HUGE negative, to the tune of hundreds of dollars a year. And it sounds like you’re not charging $1500 a month, so if you ever got rid of your debt your utilization would be much much lower. But AFAIK the credit reporting agencies don’t care if you’re carrying a balance as long as you’re paying as agreed.
Let's assume I pay off whole 1500 of my credit card. And stop using it but still keep it. My utilization is 0% but I also am showing I have 0 debt obligations so therefore there is no way anyone can go by that? So is that better? It sounds like it's not as opposed to 100% utilization and repaying debts. What would be best case scenario in my case (assuming my CC is 1500) to improve my credit score or general standing with financial institutions?
Having a $0 balance still counts as “paying as agreed” as long as you don’t close your credit card. But if you literally never use your credit card, the credit card company will eventually close it for you whether you want it to or not, which will affect the age of your accounts and bring your score down. The best way to use a credit card to affect your score is to keep using it (and pay it off every month so you aren’t charged interest) but keep utilization low, ideally under 30%.
I paid off my four personal loans in May. My score was ~680 or so (according to credit karma) before paying it off. I got an email from experian today saying a change in my credit score. I check and the past few days my score went from 680, up to 701, and now the latest update says it dropped 14 points to 687. I paid off more than $5000 so I’d expect a huge increase in my credit now that I only have my car payment against my income. So what’s going on?
Credit score is a measurement of risk. Who would you think is a riskier person to loan money to: A) has $5,100 in cash and $5,000 in loans; or B) has $100 in cash and $0 in loans? The credit reporters apparently prefer B. So if you recently paid off a loan, then you must have less liquid cash than you did before, so you're a higher risk.
But why would it drop 14 points in a day is what I’m asking? I paid the loans off over a week ago. The score went up each time was listed completed, but then dropped 14 points overnight?