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Personal Finance Advice and Education!

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10 hours ago, -OZ- said:

Yep. "Dammit, that policy was a waste of money" probably isn't something I'll say when I'm 70.5

You’d be surprised how often I hear that when someone is buying their second or third term policy.  
 

of course the worst is when someone buys a policy they don’t want, but a bank (or ex spouse) is forcing them to buy.

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2 hours ago, matttyl said:

You’d be surprised how often I hear that when someone is buying their second or third term policy.  
 

of course the worst is when someone buys a policy they don’t want, but a bank (or ex spouse) is forcing them to buy.

Frankly, if someone needs to buy a LI policy in their 70s, they failed somewhere along the line. 

How does a bank force someone to buy a policy? At least the spouse one I understand, even if that's mostly fear and failure. 

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1 hour ago, -OZ- said:

Frankly, if someone needs to buy a LI policy in their 70s, they failed somewhere along the line. 

Or they are winning with the 25yo second wife...

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2 hours ago, -OZ- said:

Frankly, if someone needs to buy a LI policy in their 70s, they failed somewhere along the line. 

How does a bank force someone to buy a policy? At least the spouse one I understand, even if that's mostly fear and failure. 

I have run into situations where lenders require a life insurance policy to secure a business loan.  Typically equipment loans or lines of credit where there is no real estate collateral.

It's also common for partner/shareholder agreements to require life insurance.

 

 

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23 hours ago, matttyl said:

Just read an interesting article that got me thinking...the topic was really to never take money out of your HSA (unless it's a last resort).  As it's pretty much the only account that you get a tax break on when you put money in, it grows tax free and you can take money out tax free - you should leave as much money in the account as possible.  So if you have medical claims, pay those out of pocket if you can, maybe with a rewards CC. 

Keep your records, though, of what you spent out of pocket, as you can reimburse yourself at any point in the future, even years down the road.  So if you do ever get into a cash flow bind, reimburse yourself at that time for medical expenses you had years ago. 

This is exactly what we do.  We currently have about $50K in HSA accounts that were transferred to Fidelity and invested in FZILX.  

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6 hours ago, -OZ- said:

Frankly, if someone needs to buy a LI policy in their 70s, they failed somewhere along the line. 

How does a bank force someone to buy a policy? At least the spouse one I understand, even if that's mostly fear and failure. 

Loan collateral 

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7 hours ago, Sand said:

Or they are winning with the 25yo second wife...

Lol. Maybe. 

7 hours ago, Tom Hagen said:

I have run into situations where lenders require a life insurance policy to secure a business loan.  Typically equipment loans or lines of credit where there is no real estate collateral.

It's also common for partner/shareholder agreements to require life insurance.

 

 

 

2 hours ago, matttyl said:

Loan collateral 

In the business sense, I get it. 

But I'm assuming that's not the most common reason for LI even at that point. 

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A Concise 7 Step Guide to Buying Your Dream Home 🏠

 

1️⃣ Know your credit score and work on it if need be:

 

Your credit score is one of the most basic factors used in qualifying for a mortgage. The higher the score the better rates you have access to and you increase your options to different loan types. You are entitled to a free credit report once a year at annualcreditreport.com, this is good to check for any errors, however, you will not get a credit score. Many credit cards now offer a score that can be helpful, as well as creditkarma.com and creditsesame.com offer free credit scores. Please be aware that they do use different credit formulas so the score you see there will not be the same on a mortgage application- however, it can be useful to get an idea of where you stand credit-wise and monitor your progress. Also, be aware that the way that they make money is to spam you with product offers and that you need to take their 'advice' with a large amount of salt as it is hard to tell if it really is advice or a sales pitch to make them money. I am always willing to help with coaching on how to improve your scores.

 

2️⃣ Save up money:

 

The more money you have saved up the more options you have available to you. You want money for a down payment, closing costs and don't forget other costs after you buy the home like moving or decorations. There are loan programs out there that can help with no or low down payment options. To help pay closing costs you can ask for seller credits from the seller as well. It is important to know that just because a loan may have no down payment does not make it the best choice. I help navigate the different options for my customers to find the best one for them but again the more money you have saved the more options you have available to you.

 

3️⃣ Get your documents together:

 

You will need some documentation when you apply for your mortgage. Not all lenders are the same. As a Broker, I try to limit it as much as possible. For most W-2 employees, we will need two years of your tax returns and W-2's, two months of your bank statements and pay stubs and a copy (front and back) of your ID. Other docs may be needed if applicable like a divorce decree and bankruptcy discharge papers among others. Other lenders often ask for more.

 

4️⃣ Determine your budget:

 

It is important for you to work out your monthly income and your monthly expenses. See how much you can earmark for your housing payment. You want to know you can comfortably make for your mortgage payment. Keep in mind whether your escrow or not taxes and insurance need to be a part of your calculation. Some places may have extra expenses like a homeowners association fee. Of course, also keep in mind other household expenses like electric and gas. Finally, understand as a homeowner you are responsible for the maintenance and upkeep of your new home and that will cost money. All of these can vary depending on the area and individual property. Your real estate agent would be a great resource to give you better ideas particular to the homes you are interested in.

 

5️⃣ Research:

 

You will absolutely want to and need to work with professionals like myself, a realtor and others that have a wealth of information to help you along the process of buying a home. However, would you go to buy a car without doing any research? How many of us spend a few minutes pondering which ketchup to buy at the grocery store? As any good consumer would prepare yourself. Have an idea of where you would like to buy and what you must have in that home versus things you would like to have. How much do those types of properties tend to go for in that area? Also, get familiar with the different types of mortgages. There are so many options it is impossible to list but the most common are Conventional, FHA, and VA.

 

6️⃣ Find a Broker to help you get pre-approved:

 

Yes, a broker and not just any lender. This is the biggest financial purchase for most of everyone's life. Why would you go to pay retail rates from your bank or large online lender that are trying to sell you their loan? The job of a broker is to match you with the best lender with the best solution at the best price for you. On top of that, you don't pay a broker, the lender does. Have experienced broker access multiple lenders who offer many more options than any bank can and then can get you wholesale rates. If you are suspicious about this advice (coming from a broker after all) then go to your bank and then compare against a broker. The vast majority of the time there is no comparison. Of course, I am happy to help as your friendly neighborhood broker.

 

7️⃣ Connect with a good realtor:

 

You have done all the hard work and now it is time for the fun of searching for your home. There is still more work down the road but a good realtor that you are comfortable with can help guide you. Not only do you look at houses with them but they are a great resource for information about the neighborhood, city, schools, and more. Plus, they can help you negotiate your offers and any counteroffers you get. They are crucial to a successful buying experience and that is why I make it a point to have good relationships with several. I can always provide their contact info upon request.

Edited by Chadstroma
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1 hour ago, Chadstroma said:

:
Please be aware that they do use different credit formulas so the score you see there will not be the same on a mortgage application- however, it can be useful to get an idea of where you stand credit-wise and monitor your progress.

The degree of the bold surprised me. According to all of the credit cards I have which show the score, I'm in the 800s. When my score was pulled for the refi it was 769.  The agent explained this was simply a matter of timing and it didn't matter in the end, but it was an unpleasant surprise. 

The reason it was significantly lower - back in November we bought bedroom furniture. Now, we could have paid cash for what we got and we weren't planning to finance, but the offer of zero percent over 5 years convinced us to go ahead and do that, keeping our cash reserve in place for the HVAC we plan to buy in March. 

It just so happens that we finally received the furniture in January and haven't began payments yet. So apparently that one transaction, the new debt and the stage it's in, significantly lowered our score.  Also probably not helping here is I opened a bank account to get a cash bonus, and closed 2 cards in the last few months. Of course while we were doing this we haven't been concerned at all with our FICO score as we had no intention of seeking a loan or refi. Until the rates got really attractive. 

It has worked out so far, it looks like we'll close Thursday with a rate I didn't think possible. But the churning and taking the deal for the furniture could have cost us big time.

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3 hours ago, -OZ- said:

The degree of the bold surprised me. According to all of the credit cards I have which show the score, I'm in the 800s. When my score was pulled for the refi it was 769.  The agent explained this was simply a matter of timing and it didn't matter in the end, but it was an unpleasant surprise. 

The reason it was significantly lower - back in November we bought bedroom furniture. Now, we could have paid cash for what we got and we weren't planning to finance, but the offer of zero percent over 5 years convinced us to go ahead and do that, keeping our cash reserve in place for the HVAC we plan to buy in March. 

It just so happens that we finally received the furniture in January and haven't began payments yet. So apparently that one transaction, the new debt and the stage it's in, significantly lowered our score.  Also probably not helping here is I opened a bank account to get a cash bonus, and closed 2 cards in the last few months. Of course while we were doing this we haven't been concerned at all with our FICO score as we had no intention of seeking a loan or refi. Until the rates got really attractive. 

It has worked out so far, it looks like we'll close Thursday with a rate I didn't think possible. But the churning and taking the deal for the furniture could have cost us big time.

So... yea.... to dive into that more.... 

There are two major formulas. FICO and Vantagescore. FICO is used by pretty much all lenders for all loam products. Vantagescore is pretty much used for free services providing credit scores like Credit Karma etc (because it is cheaper). They are very different formulas. 

To complicate things further there are 56+ different variations of FICO with more on the way. Each variation basically has different weightings on variables. 

When you get a CC score they give you one bureau. Credit Karma gives two. Mortgage apps pull all three, top and bottom are thrown out snd middle is used. 

Then all of what you brought up sure does impact credit except the bank account being opened unless they do sn inquiry on opening a new account but that is extremely rare these days. I generally advise against closing credit cards. 

In the end, for you, once you hit 750 you are on the top of credit. No difference in that vs a 820 score. So, it is just bragging rights. 

 

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21 hours ago, Random said:

This is exactly what we do.  We currently have about $50K in HSA accounts that were transferred to Fidelity and invested in FZILX.  

What do you use for your cash / low risk fund?

I just opened my HSA with Fidelity. We should have a thread just about HSA investing.  I do need to use my money to pay some healthcare costs, so I'm struggling with how to invest it. 

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On 2/8/2020 at 10:12 AM, -OZ- said:

Frankly, if someone needs to buy a LI policy in their 70s, they failed somewhere along the line. 

You know who wants that 70 year old to have life insurance?  The kids inheriting the money.  It is amazing how quickly the kids see the potential inheritance as their money, and they don't want to use it on stupid things like a funeral or paying it all out for a nursing home.  

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2 hours ago, Psychopav said:

What do you use for your cash / low risk fund?

I just opened my HSA with Fidelity. We should have a thread just about HSA investing.  I do need to use my money to pay some healthcare costs, so I'm struggling with how to invest it. 

I just started an HSA last year for the first time, so by no means an expert.  But I let it build up to a point where I felt comfortable with the amount of cash there for unexpected medical costs, then started investing the rest.  And I've just invested that like the rest of my retirement portfolio - low cost index funds.

In my case, I'm in sales and switched jobs last year (so no commissions for a few months) so I burned through some of my savings.  Once my savings is built back up enough I'll probably invest the rest in the HSA with no plans to touch it, or I may leave that $1,500-$2,000 (I forget the exact amount) in cash just in case.

I'd also be curious what others are doing.

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Thanks @Chadstroma, that's good stuff.  I'm planning to buy a house in the next couple of years, so I'm at the point where I've gotten my credit score where it needs to be and now on to step 2 and focus on saving money for a down payment.  Curious on people's thoughts on what to do with that cash with rates so low and knowing that my time frame is (hopefully) relatively short.

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51 minutes ago, SFBayDuck said:

Thanks @Chadstroma, that's good stuff.  I'm planning to buy a house in the next couple of years, so I'm at the point where I've gotten my credit score where it needs to be and now on to step 2 and focus on saving money for a down payment.  Curious on people's thoughts on what to do with that cash with rates so low and knowing that my time frame is (hopefully) relatively short.

In San Fran? 

Obviously home prices are so crazy in that area that even 3% can be a bit of change to come up with. Depending on how long that may take, you can look at some DPA options. I am not a fan of them and try to encourage away from them but if it takes so long to put money together the costs of rent in the meantime might end up costing more.

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21 minutes ago, Chadstroma said:

In San Fran? 

Obviously home prices are so crazy in that area that even 3% can be a bit of change to come up with. Depending on how long that may take, you can look at some DPA options. I am not a fan of them and try to encourage away from them but if it takes so long to put money together the costs of rent in the meantime might end up costing more.

Nope, planning on moving back to Oregon in the next few years and buying up there.  I've been renting most of my adult life because I haven't been able to save up for a down payment in this market.  

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1 hour ago, SFBayDuck said:

Nope, planning on moving back to Oregon in the next few years and buying up there.  I've been renting most of my adult life because I haven't been able to save up for a down payment in this market.  

Can you get 3% together for roughly what Oregon homes are going for that you would be interested i ?

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2 hours ago, SFBayDuck said:

I just started an HSA last year for the first time, so by no means an expert.  But I let it build up to a point where I felt comfortable with the amount of cash there for unexpected medical costs, then started investing the rest.  And I've just invested that like the rest of my retirement portfolio - low cost index funds.

In my case, I'm in sales and switched jobs last year (so no commissions for a few months) so I burned through some of my savings.  Once my savings is built back up enough I'll probably invest the rest in the HSA with no plans to touch it, or I may leave that $1,500-$2,000 (I forget the exact amount) in cash just in case.

I'd also be curious what others are doing.

I'm with Fidelity as well. What cash fund are you in? I did the one time lifetime transfer in, too find the account, and they just dumped it into FDRXX, which had less than 2% yield last year.  There should be better cash funds available, no?

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6 hours ago, Chadstroma said:

So... yea.... to dive into that more.... 

There are two major formulas. FICO and Vantagescore. FICO is used by pretty much all lenders for all loam products. Vantagescore is pretty much used for free services providing credit scores like Credit Karma etc (because it is cheaper). They are very different formulas. 

To complicate things further there are 56+ different variations of FICO with more on the way. Each variation basically has different weightings on variables. 

When you get a CC score they give you one bureau. Credit Karma gives two. Mortgage apps pull all three, top and bottom are thrown out snd middle is used. 

Then all of what you brought up sure does impact credit except the bank account being opened unless they do sn inquiry on opening a new account but that is extremely rare these days. I generally advise against closing credit cards. 

In the end, for you, once you hit 750 you are on the top of credit. No difference in that vs a 820 score. So, it is just bragging rights. 

 

I've heard this, but my thought was simply that I wasn't going to be taking any loans so who really cares. 

That said, after the refi closes I was planning to close a few more cards.  Unless interest rates get really crazy, like 2% or lower, we won't be taking another loan for 12-15 years. Are you suggesting we keep them all open into perpetuity?

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2 hours ago, SFBayDuck said:

Thanks @Chadstroma, that's good stuff.  I'm planning to buy a house in the next couple of years, so I'm at the point where I've gotten my credit score where it needs to be and now on to step 2 and focus on saving money for a down payment.  Curious on people's thoughts on what to do with that cash with rates so low and knowing that my time frame is (hopefully) relatively short.

In regards to saving for the down payment, you will just have to deal with the low rates that are offered on bank accounts (savings accounts, money markets and/or short term CDs).   Online banks usually have higher rates than brick and mortar banks and are easy to shop for on the web.  The rate isn’t really that important though, rather getting your money when you need it (liquidity) and making sure it hasn’t lost value should be your main objectives.  

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2 hours ago, -OZ- said:

I've heard this, but my thought was simply that I wasn't going to be taking any loans so who really cares. 

That said, after the refi closes I was planning to close a few more cards.  Unless interest rates get really crazy, like 2% or lower, we won't be taking another loan for 12-15 years. Are you suggesting we keep them all open into perpetuity?

If no annual fee there really is no reason to close them. 

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2 hours ago, Lion to myself said:

In regards to saving for the down payment, you will just have to deal with the low rates that are offered on bank accounts (savings accounts, money markets and/or short term CDs).   Online banks usually have higher rates than brick and mortar banks and are easy to shop for on the web.  The rate isn’t really that important though, rather getting your money when you need it (liquidity) and making sure it hasn’t lost value should be your main objectives.  

Yea, a savings account at a Credit Union or online bank, but honestly it wont be much noticeable regards as is with rates.

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4 hours ago, Chadstroma said:

Can you get 3% together for roughly what Oregon homes are going for that you would be interested i ?

Yeah, for sure.  Is that really all I need?  Figured I probably don't need a full 20%, but didn't think it'd be as low as 3%.  Again, just starting this part of the financial journey so haven't really done any research yet other than knowing I've got to put some money away.

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16 minutes ago, SFBayDuck said:

Yeah, for sure.  Is that really all I need?  Figured I probably don't need a full 20%, but didn't think it'd be as low as 3%.  Again, just starting this part of the financial journey so haven't really done any research yet other than knowing I've got to put some money away.

Good credit and first time buyer you can do a conventional loan with 3% down plus some for closing costs and you are rocking and rolling. When ready, let me know and I will get you in touch with a broker in Oregon to assist. 

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7 hours ago, SFBayDuck said:

I just started an HSA last year for the first time, so by no means an expert.  But I let it build up to a point where I felt comfortable with the amount of cash there for unexpected medical costs, then started investing the rest.  And I've just invested that like the rest of my retirement portfolio - low cost index funds.

In my case, I'm in sales and switched jobs last year (so no commissions for a few months) so I burned through some of my savings.  Once my savings is built back up enough I'll probably invest the rest in the HSA with no plans to touch it, or I may leave that $1,500-$2,000 (I forget the exact amount) in cash just in case.

I'd also be curious what others are doing.

I contribute the max to my HSA annually and haven't taken a distribution in like 5 years.  Pay all medical costs (thankfully they've been very few since my most recent shoulder surgery, knock on wood) out of pocket without the HSA.

I invest on the same general philosophy, asset mix, etc., as the rest of my investments.  The HSA provider I use is tied in with my work and I don't really love it, but there's no fees once you cross $5,000.  They make you keep $5,000 in cash and you can invest anything above and beyond that $5,000 cash minimum, so I do.

Edited by Steve Tasker
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21 hours ago, Psychopav said:

What do you use for your cash / low risk fund?

I just opened my HSA with Fidelity. We should have a thread just about HSA investing.  I do need to use my money to pay some healthcare costs, so I'm struggling with how to invest it. 

The payroll deduction goes into a local credit union HSA (cash) account.  I only transfer to fidelity 1-2x per year.

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10 hours ago, Steve Tasker said:

I contribute the max to my HSA annually and haven't taken a distribution in like 5 years.  Pay all medical costs (thankfully they've been very few since my most recent shoulder surgery, knock on wood) out of pocket without the HSA.

I invest on the same general philosophy, asset mix, etc., as the rest of my investments.  The HSA provider I use is tied in with my work and I don't really love it, but there's no fees once you cross $5,000.  They make you keep $5,000 in cash and you can invest anything above and beyond that $5,000 cash minimum, so I do.

Very high from what I've seen.  Most are $1-2k base, invest the rest.

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1 hour ago, matttyl said:

Very high from what I've seen.  Most are $1-2k base, invest the rest.

In from the fall of 2007 to the spring of 2009, the stock market dropped 50%.  The first purpose of your HSA is to pay for unforeseen medical costs.  $5,000 doesn't seem like a conservative balance to me, to hold in a safe place before speculating with the rest.

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2 minutes ago, Psychopav said:

In from the fall of 2007 to the spring of 2009, the stock market dropped 50%.  The first purpose of your HSA is to pay for unforeseen medical costs.  $5,000 doesn't seem like a conservative balance to me, to hold in a safe place before speculating with the rest.

Understood, but you can "invest" in a simple money market or something similar. 

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17 minutes ago, matttyl said:

Understood, but you can "invest" in a simple money market or something similar. 

Good point.

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22 minutes ago, Psychopav said:

In from the fall of 2007 to the spring of 2009, the stock market dropped 50%.  The first purpose of your HSA is to pay for unforeseen medical costs.  $5,000 doesn't seem like a conservative balance to me, to hold in a safe place before speculating with the rest.

Right, but, if you have an HSA, you have insurance, so, there's a Maximum-Out-Of-Pocket you can get hit with in a year. $5k seems like it'd be more than most max limits, so there's still cash beyond what you would reasonably expect to pay yourself. 

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11 minutes ago, Walking Boot said:

Right, but, if you have an HSA, you have insurance, so, there's a Maximum-Out-Of-Pocket you can get hit with in a year. $5k seems like it'd be more than most max limits, so there's still cash beyond what you would reasonably expect to pay yourself. 

Not really.  Especially with family coverage. 

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16 hours ago, Chadstroma said:

If no annual fee there really is no reason to close them. 

Also, many cards that DO charge an annual fee have a "no fee" version you can downgrade to. Then just throw the card in a safe for emergencies or something. 

 It keeps your credit history active, while removing the fees. You'll likely lose some sort of benefits, but if you're not using the card and are just keeping it active for the history, who cares. 

 

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2 hours ago, matttyl said:

Not really.  Especially with family coverage. 

Right.  For example, I think my max out of pocket for family is something like $8,500.

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One thing I didn't realize on the HDHP, is that once your adult child is no longer a student, but 26 and under, they can still be on your health insurance, but if you are on an HDHP, you cannot use your HSA to pay for any of their medical expenses.

Your child is allowed to open their own HSA.

My son started working full time over a year ago and an EMT and his income fell just below the level to get the Retirement Savings Contributions Savers Credit.  Going to have him opan and contribute to his own HSA in the amount to get his AGI to qualify for this credit.  He already contributed to a Roth IRA to meet the max for this credit, so an HSA is better than a traditional IRA for him I think.

 

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On ‎2‎/‎7‎/‎2020 at 12:54 PM, matttyl said:

Ok, so you were ~34 when you bought the first 20 year term policy?  Just to put some numbers out there, lets say it was $500k.  Fair?

At "select preferred" (one step down from the best health classification) a 34 year old could buy a $500k 20 year term policy for $370/yr.  I just monkeyed around a built a whole life policy  with a $5k a year premium and the same $500k of coverage (you can do that with some more flexible policies).  I get it, it's much, much more.  13 years in, which is where you are now, the term could be continued for another 7 if you wanted for the same 370 a year, or a new 20 year term could be purchased for $930/yr assuming the same health classification. 

But if you had purchased the whole life you'd have ~$71k of cash, for a net additional premium (5,000-370) 4,630 for 13 years.  I get it, that ROR of 2.71 net after tax sucks (mainly because of how low interest rates are today).  But if you were to now go out and buy another term policy for 930 a year, your additional net cost to just continue with the whole life policy would be 4,070, and because of how I built the whole life policy the premium drops from $5k to 2,883 after 20 years (so the additional net cost would be only 1,953).  20 years from now, though, at your "retirement age" of 67 you'd have just a shade over $313k of cash value, and $632k of life insurance.  I ran the ROR of your additional premiums in the WL over that entire 33 years - 4.53%. 

And I also understand that's not amazing either (with interest rates where they are, and thus dividends from insurance companies also being so low), when you compare it to equities over 20-30 years.  But I haven't seen a CD paying that (maybe a better comparison, when factoring in liquidity) since 9/11. 

If you make it to 67 - "term you" walks away with zero cash and zero death benefit.  "WL you" walks away with $313 in cash value if you wanted/needed it, and $632k of a death benefit, which could really open up some other assets for you. 

This is the facepalm moment. A simple passive S&P index fund over the past 13 years (contributing $5,000/yr) nets you $150,722.83.

Repeat: you could have purchased the term policy for those 13 years for a grand total of under 5 grand, and instead of "investing" in Whole Life, you could have invested in an actual non-sleazy investment product. The difference is approx. $80,000 extra in your pocket rather than the pocket of the insurance/snake-oil salesman.

Putrid.

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I'm probably going to need to be looking at a Term life insurance policy in the next year or so, and I'm curious how much of the principle (if any) is based off things you can control and if they will discuss that with you.  I know stuff like age and family history will affect cost, that you can't really change, but what about things like lifestyle and weight?  Do those have significant cost factors in something like a 20year Term policy?  Would someone tell me, hey, if you lose 20lbs, or x% BMI before you actually sign the paperwork for this you'll save $2 or $5 per month for the next 20 years?

I'm pretty good on the health side and active, but my weight has gotten up there a bit in the last 10 years (220's).  Curious if something like getting life insurance would be a reason to reverse a little of that.

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1 hour ago, Warrior said:

This is the facepalm moment. A simple passive S&P index fund over the past 13 years (contributing $5,000/yr) nets you $150,722.83.

Repeat: you could have purchased the term policy for those 13 years for a grand total of under 5 grand, and instead of "investing" in Whole Life, you could have invested in an actual non-sleazy investment product. The difference is approx. $80,000 extra in your pocket rather than the pocket of the insurance/snake-oil salesman.

Putrid.

Yo, Warrior.  This is a high level discussion.  Feel free to throw out all the math you want, but please stay away from the mud slinging.  There's no call for it here.

Thanks, bud.

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9 hours ago, matttyl said:

Very high from what I've seen.  Most are $1-2k base, invest the rest.

$1,000 here and was lamenting that was too high

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With all the corona virus talk I'm having a real tough time not going all cash until after the election.
I'm 40, wife is 37. Three kids, about 100K of home equity and roughly 550K saved, about 100 post-tax.

Thinking that giving up a 95% shot at a 5% gain to avoid the 5% chance of some major catastrophe is the smart move. Just not confident at all in my percentages.

Anyone want to remind me that time in the market trumps (no pun intended) timing the market?
Anyone moving out of equities?

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56 minutes ago, The Tick said:

I'm probably going to need to be looking at a Term life insurance policy in the next year or so, and I'm curious how much of the principle (if any) is based off things you can control and if they will discuss that with you.  I know stuff like age and family history will affect cost, that you can't really change, but what about things like lifestyle and weight?  Do those have significant cost factors in something like a 20year Term policy?  Would someone tell me, hey, if you lose 20lbs, or x% BMI before you actually sign the paperwork for this you'll save $2 or $5 per month for the next 20 years?

I'm pretty good on the health side and active, but my weight has gotten up there a bit in the last 10 years (220's).  Curious if something like getting life insurance would be a reason to reverse a little of that.

Many carriers have a maximum BMI for the best rate and/or any standard rates.  Thats totally separate from family history, personal factors, and other things.  DM if you like and I’ll pull some of those tables up for you.  

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1 hour ago, Warrior said:

This is the facepalm moment. A simple passive S&P index fund over the past 13 years (contributing $5,000/yr) nets you $150,722.83.

Repeat: you could have purchased the term policy for those 13 years for a grand total of under 5 grand, and instead of "investing" in Whole Life, you could have invested in an actual non-sleazy investment product. The difference is approx. $80,000 extra in your pocket rather than the pocket of the insurance/snake-oil salesman.

Putrid.

And what if you passed away?  You’d give your family $150k (likely taxable), rather than $500k tax free? 

Funny, you even bolded it and then didn’t use the right math.  You wouldn’t be “investing” the entire $5k, only the additional premium over what the term is (which I understand is most of it).  The bottom of the paragraph you bolded a portion of says it pretty clearly - 4.5% tax free ROR.  No, that likely won’t beat the market over a few decades, I never said it would.  But considering the average equity investor earned 5.19% from 1995-2015, it’s not bad.  For a totally liquid and safe emergency fund, it’s pretty decent.  No one is saying (or at least I’m not) to do permanent life coverage instead of equities.  You can do both.  

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39 minutes ago, Gawain said:

With all the corona virus talk I'm having a real tough time not going all cash until after the election.
I'm 40, wife is 37. Three kids, about 100K of home equity and roughly 550K saved, about 100 post-tax.

Thinking that giving up a 95% shot at a 5% gain to avoid the 5% chance of some major catastrophe is the smart move. Just not confident at all in my percentages.

Anyone want to remind me that time in the market trumps (no pun intended) timing the market?
Anyone moving out of equities?

I might move my 5-10 year money out of equities. Not my 10-50 year money. 

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2 hours ago, -OZ- said:

I might move my 5-10 year money out of equities. Not my 10-50 year money. 

I'd say more 5-7 or 8, but yes. 

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18 hours ago, Psychopav said:

In from the fall of 2007 to the spring of 2009, the stock market dropped 50%.  The first purpose of your HSA is to pay for unforeseen medical costs.  $5,000 doesn't seem like a conservative balance to me, to hold in a safe place before speculating with the rest.

For most. But there are some that really only see it as an investment vehicle. 

Withdrawals for reimbursements for medical expenses can be drawn during a later tax year, and there's currently no limit to what "later" means. So, you can pay current medical expenses out of pocket, keep good receipts and records, then say, 20 years from now, go ahead and take the withdrawals to reimburse. So, you pay for the medical expenses, but still get the tax-free growth from having it invested long-term.

 

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14 hours ago, The Tick said:

I'm probably going to need to be looking at a Term life insurance policy in the next year or so, and I'm curious how much of the principle (if any) is based off things you can control and if they will discuss that with you.  I know stuff like age and family history will affect cost, that you can't really change, but what about things like lifestyle and weight?  Do those have significant cost factors in something like a 20year Term policy?  Would someone tell me, hey, if you lose 20lbs, or x% BMI before you actually sign the paperwork for this you'll save $2 or $5 per month for the next 20 years?

I'm pretty good on the health side and active, but my weight has gotten up there a bit in the last 10 years (220's).  Curious if something like getting life insurance would be a reason to reverse a little of that.

My advice - if you’ve got a weight issue take care of it for the purest reason (live longer happier life with your family) VW saving $5/month

 

 

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2 hours ago, pollardsvision said:

For most. But there are some that really only see it as an investment vehicle. 

Withdrawals for reimbursements for medical expenses can be drawn during a later tax year, and there's currently no limit to what "later" means. So, you can pay current medical expenses out of pocket, keep good receipts and records, then say, 20 years from now, go ahead and take the withdrawals to reimburse. So, you pay for the medical expenses, but still get the tax-free growth from having it invested long-term.

 

My main advice on HSAs are that the amount to hold in Checking or Cash Equivalents is very dependent on the individual and their risk tolerance/capacity. But you should have an inverse relationship between how much you hold in safety and your investment aggression. If you have $8k in an HSA and want to save $6k for safety, then be pretty aggressive investing the other $2k. If you only feel like you need $2k in cash, be pretty conservative investing the other $6k. 

Edited by ConstruxBoy

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On ‎2‎/‎10‎/‎2020 at 5:42 PM, matttyl said:

Many carriers have a maximum BMI for the best rate and/or any standard rates.  Thats totally separate from family history, personal factors, and other things.  DM if you like and I’ll pull some of those tables up for you.  

would like to see some info, says you can't receive messages.

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Interesting article here about how many people run out of money before their next paycheck.  If you look at Figure 1 the initial bars make sense - those with income issues have trouble making ends meet.  The curve starts dropping a bit at 50k of income (and it should keep dropping to the bottom right).  But then it stops and stays constant.  It absolutely blows me away that 1/3 of folks earning 100+k run out of money before their next paycheck.  And the number is the same at 200+k.  Absolutely astonishing - there are very few circumstances where a 200k earner should be paycheck to paycheck.  A full third?  Blows me away.  

It looks like about 1/3 of folks just can't wait to spend every penny.  

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1 hour ago, Sand said:

Interesting article here about how many people run out of money before their next paycheck.  If you look at Figure 1 the initial bars make sense - those with income issues have trouble making ends meet.  The curve starts dropping a bit at 50k of income (and it should keep dropping to the bottom right).  But then it stops and stays constant.  It absolutely blows me away that 1/3 of folks earning 100+k run out of money before their next paycheck.  And the number is the same at 200+k.  Absolutely astonishing - there are very few circumstances where a 200k earner should be paycheck to paycheck.  A full third?  Blows me away.  

It looks like about 1/3 of folks just can't wait to spend every penny.  

It doesn’t surprise me that much. People buy crazy houses and crazy cars. I’ve got a 7 year old Highlander and a 4 year old RX350 (F sport, not a grandpa yet) and both my wife and I make very good money. I can’t tell you how many people drive around in 70k SUVs to sporting events and most of them are younger than us so their mortgages are probably much higher as well. I can only imagine what neighbors with 1 income are doing.

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