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Personal Finance Advice and Education!

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6 minutes ago, hockeymedic said:

Thanks, I'll check back later to see what what you all think of "the guy's" recommendations.

 

Just to clarify the $50K is before taxes.  Also buying a annuity to take care of the wife (when I kick off), take home is about $3500/ month after taxes.  But, you are correct, it's not bad.

So maybe $43k+ after.   Still pretty darn good.   Wife doesn't get the pension when you die?   Wife doesn't have anything else regarding pension or retirement or is that mixed into the #'s given?

Edited by NutterButter

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1 hour ago, NutterButter said:

So maybe $43k+ after.   Still pretty darn good.   Wife doesn't get the pension when you die?   Wife doesn't have anything else regarding pension or retirement or is that mixed into the #'s given?

We had a choice, take 100% of pension and payments end upon my death or take a lesser monthly amount and leave her monthly payments til she kicks.  We chose 45% option, so when I die she'll continue to receive 45% of my pension.  We figured that a lot of our expenses would be paid off and then of course she wouldn't have me hanging around spending money either.:P

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8 hours ago, Steve Tasker said:

This is what Sand is trying to advise against, FWIW.  Don't let the idea that he's not taking money directly from you - ie you're not writing a check to him for his services or he's not withdrawing money out of your account to pay himself - cloud your judgement.  The less transparent a financial advisor's fee structure, the worse the deal you're probably getting.  That's not to say that the guy isn't personally trustworthy or that he's out to scam you, but know that these fees are structured in such a way as to sell financial products with the line you've used here.  It's not transparent, but you're still paying him indirectly, and it's not always easy to quantify how much.

If you aren't comfortable with your own money management, that's fine, I don't even mind guys taking a bigger cut in these types of arrangements as many people simply need this kind of assistance in their financial planning.  But make sure you do your research before you get into anything here.

Pretty much.  Just note that some advisors (i'm being a skeptic here) make things sound so complicated that you can't live without buying what they're selling.  They're not.  It's not.  With your pension backup you could very easily just put your money in a 50% total stock ETF, 50% total bond ETF, pay .08% fees per year and be done in those tax deferred accounts.  

Just remember that if your'e paying someone a 1% fee (or the funds he wants to put you in have a 1% fee) you're giving up about a third of your investment returns over time.  If he suggests annuities, private (non-public) REITs, or funds that are front loaded just shake his hand and leave. 

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5 hours ago, hockeymedic said:

We had a choice, take 100% of pension and payments end upon my death or take a lesser monthly amount and leave her monthly payments til she kicks.  We chose 45% option, so when I die she'll continue to receive 45% of my pension.  We figured that a lot of our expenses would be paid off and then of course she wouldn't have me hanging around spending money either.:P

I would have likely made that same choice.  You don't have a massive cash nut waiting for her, but with that reduced amount and the cash you do have she should be ok.  

So far you seem to be making very good decisions here - IMO you've set yourself up quite nicely.

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On 2/27/2017 at 11:20 AM, -OZ- said:

Good question - I was contemplating the same.  I think I'm just going with the cheapest option with a highly rated company. 

I didn't get much traction in my research beyond this. Basically go with a company rated at least A+ from AM Best (it goes to A++) and then cheapest from there. Seems like you can always find examples of people who claim to be getting screwed or mess up the paperwork with any company.

What I'm looking for with 20 year term is going to cost me about $80/month. Not bad. 

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On 3/1/2017 at 11:36 AM, Steve Tasker said:

This is what Sand is trying to advise against, FWIW.  Don't let the idea that he's not taking money directly from you - ie you're not writing a check to him for his services or he's not withdrawing money out of your account to pay himself - cloud your judgement.  The less transparent a financial advisor's fee structure, the worse the deal you're probably getting.  That's not to say that the guy isn't personally trustworthy or that he's out to scam you, but know that these fees are structured in such a way as to sell financial products with the line you've used here.  It's not transparent, but you're still paying him indirectly, and it's not always easy to quantify how much.

If you aren't comfortable with your own money management, that's fine, I don't even mind guys taking a bigger cut in these types of arrangements as many people simply need this kind of assistance in their financial planning.  But make sure you do your research before you get into anything here.

To echo that- the problem with getting paid from the products being sold is different products pay differently. it is very hard to trust the advise being given. It takes a special kind of person to advise against their own interest and for your interest. They are out there- I have done that my whole career in financial services but the vast majority of people will be swayed by what is best for them if there is ever a question. That is why a flat fee adviser is the best route to go because no matter what they advise- they are getting paid the same. It takes their interests out of the equation and now you do not have to worry about their agenda- you just have to worry about their competence.  

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20 hours ago, Chadstroma said:

To echo that- the problem with getting paid from the products being sold is different products pay differently. it is very hard to trust the advise being given. It takes a special kind of person to advise against their own interest and for your interest. They are out there- I have done that my whole career in financial services but the vast majority of people will be swayed by what is best for them if there is ever a question. That is why a flat fee adviser is the best route to go because no matter what they advise- they are getting paid the same. It takes their interests out of the equation and now you do not have to worry about their agenda- you just have to worry about their competence.  

:yes: I've interviewed with two financial planning firms now, both of which get their pay from selling the product, not necessarily by providing the best service possible.  I decided against either place and am now leaning towards establishing my own estate/financial planning practice.  It doesn't pay #### at first so I'd probably do it part time (to start anyway).  

If you can find a good fee only planner, do it.  As much as people rail against Dave Ramsey here, his Endorsed local providers could be a good start.

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I'm at a point where I would like an outside person take a look at my investments and make sure that I'm not doing anything too stupid.  Is it best to work with outside financial planner, or if I have free services available from my investment outfit, should I use them?  I'm planning on doing some intro discussions with both, but just curious if there are some pifalls I need to watch out for.  I'd prefer to keep my $ where it's at (T. Rowe Price) - not because I think they are better, but I don't want to go through a big hassle just to land in a similar spot in another investment house.

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1 hour ago, -OZ- said:

:yes: I've interviewed with two financial planning firms now, both of which get their pay from selling the product, not necessarily by providing the best service possible.  I decided against either place and am now leaning towards establishing my own estate/financial planning practice.  It doesn't pay #### at first so I'd probably do it part time (to start anyway).  

If you can find a good fee only planner, do it.  As much as people rail against Dave Ramsey here, his Endorsed local providers could be a good start.

Any other places i can search for fee only planners where i dont have to give my info?

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18 minutes ago, PinkydaPimp said:

Any other places i can search for fee only planners where i dont have to give my info?

I'm sure there are, perhaps Google.  But I haven't checked. 

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2 hours ago, Brony said:

I'm at a point where I would like an outside person take a look at my investments and make sure that I'm not doing anything too stupid.  Is it best to work with outside financial planner, or if I have free services available from my investment outfit, should I use them?  I'm planning on doing some intro discussions with both, but just curious if there are some pifalls I need to watch out for.  I'd prefer to keep my $ where it's at (T. Rowe Price) - not because I think they are better, but I don't want to go through a big hassle just to land in a similar spot in another investment house.

What would your basis be for doing something "too stupid" that you're worried about? Give an example.

You can definitely use free services offered by your advisor but keep in mind that while the service is free, they could be steering you into higher cost investments.

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How much are you guys paying for fee only financial planners? I'm about to sign with a CFP who is a member of NAPFA and ACA (only a handful in our county). I'm looking at about .5% of assets under management annually for the initial financial plan + ongoing.  Meetings every quarter.  Covers all aspects from retirement goals, estate planning, insurances, tax efficiency,etc.  Sells no products.  Assets all in my name, I control. Recommendation is likely Boglehead approach with a Vanguard/Fidelity.  He's straight up that if you're looking for individual security selection or active trading he's not the guy.  I'm paying for the roadmap to get where we want to go and keeping us on track.  Questions include whether to accelerate paying off mortgages or not, what to do with lump sums, etc.

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1 hour ago, Judge Smails said:

How much are you guys paying for fee only financial planners? I'm about to sign with a CFP who is a member of NAPFA and ACA (only a handful in our county). I'm looking at about .5% of assets under management annually for the initial financial plan + ongoing.  Meetings every quarter.  Covers all aspects from retirement goals, estate planning, insurances, tax efficiency,etc.  Sells no products.  Assets all in my name, I control. Recommendation is likely Boglehead approach with a Vanguard/Fidelity.  He's straight up that if you're looking for individual security selection or active trading he's not the guy.  I'm paying for the roadmap to get where we want to go and keeping us on track.  Questions include whether to accelerate paying off mortgages or not, what to do with lump sums, etc.

 

I would look harder for a CFP that does the hourly one-time fee and get a check up once a year.  You got a couple million?  That's $10K a year ...after-tax money.  Granted its better than the typical 1% up to a million you find with some lowering of percent fees after that, but still a big chunk of change you could use to preserve that nest egg.  

Protect the egg - Albert Brooks.   :D

Especially if you plan to be fairly stable in your holdings - there is minimal need to check-in every 3 months.  

A one-time fee shouldn't be more than $3K or so - that would include most, if not all that stuff you mentioned.  And the annual check up would be less.  

 

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8 hours ago, Judge Smails said:

How much are you guys paying for fee only financial planners? I'm about to sign with a CFP who is a member of NAPFA and ACA (only a handful in our county). I'm looking at about .5% of assets under management annually for the initial financial plan + ongoing.  Meetings every quarter.  Covers all aspects from retirement goals, estate planning, insurances, tax efficiency,etc.  Sells no products.  Assets all in my name, I control. Recommendation is likely Boglehead approach with a Vanguard/Fidelity.  He's straight up that if you're looking for individual security selection or active trading he's not the guy.  I'm paying for the roadmap to get where we want to go and keeping us on track.  Questions include whether to accelerate paying off mortgages or not, what to do with lump sums, etc.

Seems like a lot of money for something you can really do yourself (with help from here or Bogleheads if needed).  

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11 hours ago, Judge Smails said:

How much are you guys paying for fee only financial planners? I'm about to sign with a CFP who is a member of NAPFA and ACA (only a handful in our county). I'm looking at about .5% of assets under management annually for the initial financial plan + ongoing.  Meetings every quarter.  Covers all aspects from retirement goals, estate planning, insurances, tax efficiency,etc.  Sells no products.  Assets all in my name, I control. Recommendation is likely Boglehead approach with a Vanguard/Fidelity.  He's straight up that if you're looking for individual security selection or active trading he's not the guy.  I'm paying for the roadmap to get where we want to go and keeping us on track.  Questions include whether to accelerate paying off mortgages or not, what to do with lump sums, etc.

We're meeting with a planner next week and the fee is $1200. The initial meeting will be a full financial review - assets, liabilities, life insurance, will (we have one), retirement plan. It does not include asset management but we have access to him for a year to review plan, etc.

Since we're planning to retire early - hopefully in two years - we thought it would be a good idea to have an independent observer look at our plans to make sure we didn't miss anything or if there was something we didn't think about.

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On 3/5/2017 at 9:56 AM, RUSF18 said:

What would your basis be for doing something "too stupid" that you're worried about? Give an example.

You can definitely use free services offered by your advisor but keep in mind that while the service is free, they could be steering you into higher cost investments.

I think my example would be having a decent % of portfolio in conservative investments with $ that I won't need in 15 to 20 years, or putting the right amount of money in the right place given high tax bracket now with potentially low tax bracket in the future. 

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3 minutes ago, Brony said:

I think my example would be having a decent % of portfolio in conservative investments with $ that I won't need in 15 to 20 years, or putting the right amount of money in the right place given high tax bracket now with potentially low tax bracket in the future. 

No need to pay another person for that kind of advice at this point. Use the free services but when they steer you from (for example, 40% bonds down to 15%), make sure the stock funds you're putting that extra 25% into have low expense ratios. 

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4 hours ago, ZenMaster said:

We're meeting with a planner next week and the fee is $1200. The initial meeting will be a full financial review - assets, liabilities, life insurance, will (we have one), retirement plan. It does not include asset management but we have access to him for a year to review plan, etc.

Since we're planning to retire early - hopefully in two years - we thought it would be a good idea to have an independent observer look at our plans to make sure we didn't miss anything or if there was something we didn't think about.

Not a bad plan at all.  That's a reasonable cost to have someone do a deep dive into your situation.  I'd be interested in what their notes to you are.

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7 hours ago, Random said:

Seems like a lot of money for something you can really do yourself (with help from here or Bogleheads if needed).  

Then again if he absolutely hates the thought of taking that on .5% is lots less than other places charge.  Unless they make it up by trying to put him into ridiculously expensive investments.

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54 minutes ago, Sand said:

Not a bad plan at all.  That's a reasonable cost to have someone do a deep dive into your situation.  I'd be interested in what their notes to you are.

I'm curious as well. We have to pull together all of our information for the meeting next Friday. They also offer asset management but for a 1% fee so I declined. He laughed and said he knew I'd be a hard sell when I mentioned Vanguard. :D

I'll update after we meet with him next week.

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11 hours ago, ZenMaster said:

We're meeting with a planner next week and the fee is $1200. The initial meeting will be a full financial review - assets, liabilities, life insurance, will (we have one), retirement plan. It does not include asset management but we have access to him for a year to review plan, etc.

Since we're planning to retire early - hopefully in two years - we thought it would be a good idea to have an independent observer look at our plans to make sure we didn't miss anything or if there was something we didn't think about.

hmmm. Now I'm thinking about this and want to get more quotes.  Came across this article.  Says 80% of the time a plan should $1,800 to $2,400.  And a check up from time to time is up to you, but you may not need it if you stay the original course.  Amount of money managed is not really relevant.

http://www.hullfinancialplanning.com/how-much-should-a-financial-planner-cost/

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6 hours ago, Judge Smails said:

hmmm. Now I'm thinking about this and want to get more quotes.  Came across this article.  Says 80% of the time a plan should $1,800 to $2,400.  And a check up from time to time is up to you, but you may not need it if you stay the original course.  Amount of money managed is not really relevant.

http://www.hullfinancialplanning.com/how-much-should-a-financial-planner-cost/

Has anyone here used his site - myfinancialanswers? 

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Has anyone used a website to set up a trust and do estate planning?  Suze Orman offers this for $250.

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On 3/5/2017 at 8:28 AM, Brony said:

I'm at a point where I would like an outside person take a look at my investments and make sure that I'm not doing anything too stupid.  Is it best to work with outside financial planner, or if I have free services available from my investment outfit, should I use them?  I'm planning on doing some intro discussions with both, but just curious if there are some pifalls I need to watch out for.  I'd prefer to keep my $ where it's at (T. Rowe Price) - not because I think they are better, but I don't want to go through a big hassle just to land in a similar spot in another investment house.

I will do it for free

 

PM if you want a good review

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1 hour ago, Random said:

Has anyone used a website to set up a trust and do estate planning?  Suze Orman offers this for $250.

No one can do a good trust for $250.  It's basic math, unless they value their time at $5-10/hr, in which case they are worthless

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9 minutes ago, wilked said:

No one can do a good trust for $250.  It's basic math, unless they value their time at $5-10/hr, in which case they are worthless

Actually you're missing the website part where 100's or 1,000s would use it.  So it would look more like $500-$1000/hr, minimum.

 

Math lesson aside, this is what I'm talking about.  Guess its only $90.  My guess is that its more like a template I would fill in, not Suze actually spending 20 hours putting it together.

http://www.suzeorman.com/books-kits/collections-and-kits/must-have-documents/

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14 minutes ago, Random said:

Actually you're missing the website part where 100's or 1,000s would use it.  So it would look more like $500-$1000/hr, minimum.

 

Math lesson aside, this is what I'm talking about.  Guess its only $90.  My guess is that its more like a template I would fill in, not Suze actually spending 20 hours putting it together.

http://www.suzeorman.com/books-kits/collections-and-kits/must-have-documents/

I'm very pro-"do it yourself" when it comes to finances but if I needed those services there is no chance I'd be looking to skimp. Get a few references from people you trust, talk to them to get a feel for things, and then you can take fees into account when comparing. 

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25 minutes ago, RUSF18 said:

I'm very pro-"do it yourself" when it comes to finances but if I needed those services there is no chance I'd be looking to skimp. Get a few references from people you trust, talk to them to get a feel for things, and then you can take fees into account when comparing. 

Yes, me too.  And I honestly dont know anyone with a trust (that I know of).  So I'm wondering for those with one, is this just a fill in the blank type document?  if not, what else is there to it?

Edited by Random

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9 hours ago, Judge Smails said:

Amount of money managed is not really relevant.

...unless you're Chet.  

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26 minutes ago, Random said:

Yes, me too.  And I honestly dont know anyone with a trust (that I know of).  So I'm wondering for those with one, is this just a fill in the blank type document?  if not, what else is there to it?

If there is a trust involved things can get super complicated.  My mother had one but due to her diligent estate planning things were much easier when she passed.  Estate planning is something that you dont want to skimp on like @RUSF18 said. 

 

As for the trust i think it depends on the type of trust and how complicated it is but its not(at least in my case) a fill in the blank type document. 

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I'm currently doing a will and trust through a legal firm that specializes in this (referred by a friend who's an attorney).  FWIW, the cost I was quoted:

Will only: $900

Will + Trust: $1,800

Both my attorney friend and the legal firm advocated for the trust to ensure that things are handled more effectively and easily when I'm 6 feet under and that's the direction we're going (legal-wise)

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While doing the will and Power of Attorney, it is thought-provoking.  I've always been in the don't-resuscitate camp, but then when you're forced to choose an option that you have to "live with", it's not as simple as choosing a topping at Chipotle.  

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5 minutes ago, Brony said:

While doing the will and Power of Attorney, it is thought-provoking.  I've always been in the don't-resuscitate camp, but then when you're forced to choose an option that you have to "live with", it's not as simple as choosing a topping at Chipotle.  

We have started our will and poa (diy) numerous times.  Always getting hung up on who gets our kids if we both go while they are still young.  I hate spending so much time thinking and debating about something that has a .00001% chance of happening.

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A trust is one thing that's worth paying an expert to look over and not DIY. 

The tiniest screw up will harm your family at the worst time, and you won't be there to fix it. 

At $2k or so, considering what's at stake in the total value of your estate, have a pro do it. 

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That said, I think it is the minority of people who actually need a trust.  

 

For most people, simple Beneficiaries take care of most of it.  Add on the usual basic docs (will, health care proxy, POA, etc) and you are done.  

I expect as we get older we may need a trust, but for the foreseeable future (10 years) no need

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2 minutes ago, wilked said:

That said, I think it is the minority of people who actually need a trust.  

 

For most people, simple Beneficiaries take care of most of it.  Add on the usual basic docs (will, health care proxy, POA, etc) and you are done.  

I expect as we get older we may need a trust, but for the foreseeable future (10 years) no need

I just did whatever one allows me to put in a clause where my kids have to do some big hurdle to earn their inheritance like learn to juggle flames or do a good deed every day for a year.   80's TV and movies made it seem like this was an important thing to consider. 

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4 minutes ago, wilked said:

That said, I think it is the minority of people who actually need a trust.  

 

For most people, simple Beneficiaries take care of most of it.  Add on the usual basic docs (will, health care proxy, POA, etc) and you are done.  

I expect as we get older we may need a trust, but for the foreseeable future (10 years) no need

Agree.  But in the mean time, would a $90 DIY trust be better than no trust?

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33 minutes ago, Random said:

Agree.  But in the mean time, would a $90 DIY trust be better than no trust?

I wouldn't think so. Set up wrong, you may end up putting the assets out of reach of the people you want to benefit.

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Any thoughts on pulling Roth contributions out in order to hit a 20% down payment for a house? I feel like my wife and I are in great shape with our accounts -- about $140k between the two of us, both 32 years old. Would it be a huge mistake to take 25k out for a house (combined with our current savings)?

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3 minutes ago, Rick James said:

Any thoughts on pulling Roth contributions out in order to hit a 20% down payment for a house? I feel like my wife and I are in great shape with our accounts -- about $140k between the two of us, both 32 years old. Would it be a huge mistake to take 25k out for a house (combined with our current savings)?

 

Why do you have to have 20% down on the house these days?  I would keep hammering the Roth.

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31 minutes ago, Instinctive said:

I wouldn't think so. Set up wrong, you may end up putting the assets out of reach of the people you want to benefit.

Agreed.  You could well do more damage then good

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13 minutes ago, Rick James said:

Any thoughts on pulling Roth contributions out in order to hit a 20% down payment for a house? I feel like my wife and I are in great shape with our accounts -- about $140k between the two of us, both 32 years old. Would it be a huge mistake to take 25k out for a house (combined with our current savings)?

How long does it take you to save $25K?  Is that 1 year?  2 Years?  6 months?

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10 minutes ago, Binky The Doormat said:

Why do you have to have 20% down on the house these days?  I would keep hammering the Roth.

Just to avoid PMI I suppose.

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1 hour ago, Random said:

Agree.  But in the mean time, would a $90 DIY trust be better than no trust?

Probably not, imo.

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1 minute ago, wilked said:

How long does it take you to save $25K?  Is that 1 year?  2 Years?  6 months?

Roughly 6-8 months. Our lease is up in December. I was going to extend one more year but the landlord is going to sell the place so we might have to move. That's put us on an accelerated schedule to save up for a house. 

Cash flow is very good. We only have 10k saved up now because we use most of our spare cash to pay down student loans. We could have a total of about 40k saved up by December. That's 20% on a 200k house. We live in and around Atlanta so that doesn't buy much.

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18 minutes ago, Rick James said:

Just to avoid PMI I suppose.

PMI is a pretty big expense.  If your PMI payment is $100 a month then you're getting about 5% return per year on the Roth monies removed.  That's not horrible.  I'd probably lean toward keeping the money in the tax shelter as it compounds much quicker there, but depending on the details it's worth considering.

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What's the minimum amount where a trust can be worthwhile? My mom is 75 and currently doesn't have a will. I'm her only kid. Her parents died intestate and she is planning to do the same. Likely has 300k of assets and doesn't spend more than her SS and a small pension per month. She is still working and mentioned delaying retirement again.

I have a wife and daughter. Want to make sure that if I die before my mom she passes to my kid. But if intestate and kid is still a minor, doesn't a trust have to be established?

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36 minutes ago, Rick James said:

Roughly 6-8 months. Our lease is up in December. I was going to extend one more year but the landlord is going to sell the place so we might have to move. That's put us on an accelerated schedule to save up for a house. 

Cash flow is very good. We only have 10k saved up now because we use most of our spare cash to pay down student loans. We could have a total of about 40k saved up by December. That's 20% on a 200k house. We live in and around Atlanta so that doesn't buy much.

401K loan would be preferable to Roth loan.  401K loan you can replenish, Roth you cannot

 

I would say your decision is this:

1. Go with an 80/10/10 loan.  Might be a bit higher of a rate but you might be surprised that it is not much.  You can always refi later

2. 401K loan - before you do you need to be reasonably certain your job won't change in the next year, and need to have an emergency plan in case you lose the job and the balance comes due (in this case I would think the Roth would be that plan)

 

I personally find Roth space MUCH too valuable to rob for a house

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2 hours ago, wilked said:

401K loan would be preferable to Roth loan.  401K loan you can replenish, Roth you cannot

 

I would say your decision is this:

1. Go with an 80/10/10 loan.  Might be a bit higher of a rate but you might be surprised that it is not much.  You can always refi later

2. 401K loan - before you do you need to be reasonably certain your job won't change in the next year, and need to have an emergency plan in case you lose the job and the balance comes due (in this case I would think the Roth would be that plan)

 

I personally find Roth space MUCH too valuable to rob for a house

Thanks I will explore these. One question - the largest portion of my wife's retirement is in a Roth 401k. Would this change your advice at all? 

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7 hours ago, Random said:

We have started our will and poa (diy) numerous times.  Always getting hung up on who gets our kids if we both go while they are still young.  I hate spending so much time thinking and debating about something that has a .00001% chance of happening.

If it helps, the chances are at least double that. 

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