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What's your age and the value of your 401k?

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12 minutes ago, Shula-holic said:

Kind of a different question here, but how does everyone here value your primary residence in your net worth?  Similarly, how do you value your tax liability on retirement accounts? 

I've always discussed this with a close friend of mine and he always puts his primary residence on his personal financial statement as well as his retirement accounts at gross value.  I've always omitted my primary residence because I'm always going to need a place to live.  I've also put a 33% reduction factor on any pre-tax accounts knowing that when I cash them out I'm going to owe the IRS and can't liquidate without triggering that tax.  I realize technically net worth is the gross of those two items as well, but when looking at retirement and future funds available I adjusted for those two things.

I ignore my home for my net worth as lots of factors go in to picking its value and income I could get out of it when I sell.  Easier to just ignore it since as you point out you need someplace to live.  

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17 minutes ago, Shula-holic said:

Kind of a different question here, but how does everyone here value your primary residence in your net worth?  Similarly, how do you value your tax liability on retirement accounts? 

I've always discussed this with a close friend of mine and he always puts his primary residence on his personal financial statement as well as his retirement accounts at gross value.  I've always omitted my primary residence because I'm always going to need a place to live.  I've also put a 33% reduction factor on any pre-tax accounts knowing that when I cash them out I'm going to owe the IRS and can't liquidate without triggering that tax.  I realize technically net worth is the gross of those two items as well, but when looking at retirement and future funds available I adjusted for those two things.

I count it as part of net worth. I also count it as part of retirement balance for two reasons. We received an inheritance and made the decision to pay off the remaining $130k balance vs investing. (there were a lot of variables that factored into this decision). We are going to be downsizing in the next year. So some of the equity will end up being invested. I add the remaining in as the last part of retirement income. Which would cover living in a home or health costs.

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39 minutes ago, Shula-holic said:

Kind of a different question here, but how does everyone here value your primary residence in your net worth?  Similarly, how do you value your tax liability on retirement accounts? 

I've always discussed this with a close friend of mine and he always puts his primary residence on his personal financial statement as well as his retirement accounts at gross value.  I've always omitted my primary residence because I'm always going to need a place to live.  I've also put a 33% reduction factor on any pre-tax accounts knowing that when I cash them out I'm going to owe the IRS and can't liquidate without triggering that tax.  I realize technically net worth is the gross of those two items as well, but when looking at retirement and future funds available I adjusted for those two things.

I never included primary home residence value/equity when planning.

If you 100% know for sure that you will downsize in retirement and will be able to create a pool of extra money from the down sizing, then it would be ok to track that pool of money as a possible asset.

We intend to downsize but the variables in trying to figure what cash that might get us are massive.  So for now I am just assuming downsizing will be a financial wash and if anything positive happens, I will just treat it like new found money and add it to the plan when it happens.

Edited by NewlyRetired
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I count home value. I just casually pay attention to it. No way we live in this house when we retire. 

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Of course you have to count your home in your net worth.  If you lived in a 4 million dollar house that was paid off would you count it?  Of course.

If you want to pick and choose what you count, that sounds more like retirement planning.  Net worth is what it is.  Your assets minus your debt.  Your house is an asset.  

If you dont want to factor it into your retirement planning that's just looking at something different than net worth.  

Besides, it's more fun to have a bigger number🤑

Edited by ghostguy123
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3 hours ago, Shula-holic said:

Kind of a different question here, but how does everyone here value your primary residence in your net worth?  Similarly, how do you value your tax liability on retirement accounts? 

I've always discussed this with a close friend of mine and he always puts his primary residence on his personal financial statement as well as his retirement accounts at gross value.  I've always omitted my primary residence because I'm always going to need a place to live.  I've also put a 33% reduction factor on any pre-tax accounts knowing that when I cash them out I'm going to owe the IRS and can't liquidate without triggering that tax.  I realize technically net worth is the gross of those two items as well, but when looking at retirement and future funds available I adjusted for those two things.

I mentioned this earlier but I intend to use my house as the funding for my long term care.   If I don't need ltc, then the house just goes to my kin.  As far as tax, I just do a rough estimate based upon what portion of my retirement assets are taxable and what my tax liability will be based upon how much I intend to withdraw each year.   As of now, I intend to retire in a high tax state, but if the kids move elsewhere and I with them to be near the grandkids, then I'll be in even better shape.   

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3 hours ago, Shula-holic said:

Kind of a different question here, but how does everyone here value your primary residence in your net worth?  Similarly, how do you value your tax liability on retirement accounts? 

I've always discussed this with a close friend of mine and he always puts his primary residence on his personal financial statement as well as his retirement accounts at gross value.  I've always omitted my primary residence because I'm always going to need a place to live.  I've also put a 33% reduction factor on any pre-tax accounts knowing that when I cash them out I'm going to owe the IRS and can't liquidate without triggering that tax.  I realize technically net worth is the gross of those two items as well, but when looking at retirement and future funds available I adjusted for those two things.

Yes - I count the residence as part of net worth.  Makes sense to have real estate as a line item (I also have my rental in there).  Obviously a residence doesn't cashflow, though, so I don't count it as assets to draw from for a retirement nest egg.  But it is part of net worth and I do track it.  

As far as your tax liability on retirement accounts - almost no one will get anywhere close to a 33% liability.  Back of the envelope, if all your income comes in the form of regular income you need about 875k of income to have a tax liability of 33% overall.  If so please consider adoption - specifically me?  

Seriously, your tax liability will be way less on a percentage basis.  If you end up retiring before you have RMDs and have a chance to do some Roth rollovers every year you can dramatically help yourself in tax liability when RMDs roll around.  

 

 

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12 hours ago, Nugget said:

I'm adding a LBFSA to my HSA this year.  We can carry over $500, so I'm going to start with that.  My son and I both wear glasses, and I seem to have some dental expenses that aren't covered by preventitive.  I will track these costs better in 2020 and adjust going forward.  

Goal is to keep more of the money in the HSA and invesments.  

Someone give me or point me to a good primer on HSAs and how to best take advantage of them.  We are getting higher deductible plans at work now and last year was the first year they really pushed the HSA, but it was right around open enrollment, so I didn't have time to process it.

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58 minutes ago, Sand said:

Yes - I count the residence as part of net worth.  Makes sense to have real estate as a line item (I also have my rental in there).  Obviously a residence doesn't cashflow, though, so I don't count it as assets to draw from for a retirement nest egg.  But it is part of net worth and I do track it.  

 

This is my approach, I count it as part of my net worth but do not count it for retirement planning.  My net worth calculation is essentially a personal financial statement I could give to a lender if necessary, as such my home needs to be accounted for.

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5 hours ago, Shula-holic said:

Kind of a different question here, but how does everyone here value your primary residence in your net worth?  Similarly, how do you value your tax liability on retirement accounts? 

I've always discussed this with a close friend of mine and he always puts his primary residence on his personal financial statement as well as his retirement accounts at gross value.  I've always omitted my primary residence because I'm always going to need a place to live.  I've also put a 33% reduction factor on any pre-tax accounts knowing that when I cash them out I'm going to owe the IRS and can't liquidate without triggering that tax.  I realize technically net worth is the gross of those two items as well, but when looking at retirement and future funds available I adjusted for those two things.

Is your house part of your net worth?  Yes absolutely.

Is your house part of your retirement assets?  Not unless you plan on using the equity in retirement (downsizing, reverse mortgage).

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1 hour ago, Sand said:

Yes - I count the residence as part of net worth.  Makes sense to have real estate as a line item (I also have my rental in there).  Obviously a residence doesn't cashflow, though, so I don't count it as assets to draw from for a retirement nest egg.  But it is part of net worth and I do track it.  

As far as your tax liability on retirement accounts - almost no one will get anywhere close to a 33% liability.  Back of the envelope, if all your income comes in the form of regular income you need about 875k of income to have a tax liability of 33% overall.  If so please consider adoption - specifically me?  

Seriously, your tax liability will be way less on a percentage basis.  If you end up retiring before you have RMDs and have a chance to do some Roth rollovers every year you can dramatically help yourself in tax liability when RMDs roll around.  

 

 

Very interesting, I need to look into this more.  

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27 minutes ago, Long Ball Larry said:

Someone give me or point me to a good primer on HSAs and how to best take advantage of them.  We are getting higher deductible plans at work now and last year was the first year they really pushed the HSA, but it was right around open enrollment, so I didn't have time to process it.

A good start from a retirement savings point of view.

15 minutes ago, Shula-holic said:

Very interesting, I need to look into this more.  

There are complicating factors such as the ACA cliff, SS taxability, IRMAA, etc., but at the least if you don't get swamped by one of those converting up to the 12% cap makes a lot of sense.  RMDs can hit like a freight train, particularly if it's only your wife who's left in the household.

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On 11/2/2019 at 7:06 AM, ConstruxBoy said:

One more comment on this: I did some "research" (read:Googled) market drops and recoveries awhile back and it was a much shorter down time than I expected. Looking at the Great Depression, dot com bust, Great Recession, etc. it was like 6 years or so on average from top to bottom and back up again. Of course we could go into a Japan-like slide for 20 years or whatever, but odds are that at 15 years you have more than enough time to recover and should still be pretty heavily into equities. 

I don't understand why people say this. And I fully admit I'm not the brightest guy in the room (or in this thread). But there are so many instances of long ups and downs when looking historically at the market.

You mentioned the Great Depression - The DOW was at about 5600 in 1929. 10,000 invested in 1929 would be worth negative dollars for over 20 years (it would be worth $9,474 in 1950).

$10,000 invested in 1956 would be worth $12,338 in 1974, an average return of 1.2% over 18 years.

$10,000 invested in 1961 would be worth 11,968 in 1981, an average return of 0.9% for 20 years.

$10,000 invested in 1999 would be worth $10,627 in 2011, an average return of 0.5% for 12 years.

Don't get me wrong, I am heavily invested in the market. And I get that people are generally putting money in over time and not one lump sum. But I think people automatically think if they invest they are guaranteed 7-10 percent over a long time. There are plenty of examples when this just isn't true.

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10 minutes ago, kutta said:

I don't understand why people say this. And I fully admit I'm not the brightest guy in the room (or in this thread). But there are so many instances of long ups and downs when looking historically at the market.

You mentioned the Great Depression - The DOW was at about 5600 in 1929. 10,000 invested in 1929 would be worth negative dollars for over 20 years (it would be worth $9,474 in 1950).

$10,000 invested in 1956 would be worth $12,338 in 1974, an average return of 1.2% over 18 years.

$10,000 invested in 1961 would be worth 11,968 in 1981, an average return of 0.9% for 20 years.

$10,000 invested in 1999 would be worth $10,627 in 2011, an average return of 0.5% for 12 years.

Don't get me wrong, I am heavily invested in the market. And I get that people are generally putting money in over time and not one lump sum. But I think people automatically think if they invest they are guaranteed 7-10 percent over a long time. There are plenty of examples when this just isn't true.

This where the monte carlo simulations shine imo, like the one that firecalc uses.   These simulations gave me more confidence in my plan than any other tools I used during the accumulation phase of my life.

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8 hours ago, Sand said:

Me 3.  The longer you can hide money from the taxation universe the more valuable it is.  This money is gold, Jerry.

 

How does this process work? As far as I can tell, you must first enroll in high deductible health insurance, then open an HSA. Does the latter have to be sponsored by your employer?

ETA: Oops. I see Long Ball Larry asked a similar question.

Edited by Terminalxylem

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23 minutes ago, kutta said:

I don't understand why people say this. And I fully admit I'm not the brightest guy in the room (or in this thread). But there are so many instances of long ups and downs when looking historically at the market.

You mentioned the Great Depression - The DOW was at about 5600 in 1929. 10,000 invested in 1929 would be worth negative dollars for over 20 years (it would be worth $9,474 in 1950).

$10,000 invested in 1956 would be worth $12,338 in 1974, an average return of 1.2% over 18 years.

$10,000 invested in 1961 would be worth 11,968 in 1981, an average return of 0.9% for 20 years.

$10,000 invested in 1999 would be worth $10,627 in 2011, an average return of 0.5% for 12 years.

Don't get me wrong, I am heavily invested in the market. And I get that people are generally putting money in over time and not one lump sum. But I think people automatically think if they invest they are guaranteed 7-10 percent over a long time. There are plenty of examples when this just isn't true.

I’ll have to find the links. It surprised me as well but the only one I looked at it more detail was the most recent Great Recession. That did recover quite quickly. 
Agreed that people shouldn’t expect 7-10%. People have been spoiled the last 10 years. But I think a big issue is people trying to time the market and moving their money and contributions to bonds or cash because they think the market is “too high now” and we’re “due for a recession.”  If you don’t need that money for 15-20 years, just leave it where it is if your AA is reasonable. 

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17 minutes ago, NewlyRetired said:

This where the monte carlo simulations shine imo, like the one that firecalc uses.   These simulations gave me more confidence in my plan than any other tools I used during the accumulation phase of my life.

This. Monte Carlo simulations are a fantastic tool. 

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54 minutes ago, ConstruxBoy said:

This. Monte Carlo simulations are a fantastic tool. 

Is this were you just put it all on black?

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Debating between a 3% 15 yr refi and a 3.5% 30 yr refi.    Difference in monthly payments is about $700.    Just looking at this from a pure numbers perspective and I want to make sure I'm not missing anything in my calculations.   For sake of comparison, let's say I intend to pay the 30 at the normal schedule and then after 15 years, pay off the remaining balance.   I'd wind up paying more interest with the 30, but with that higher interest does come a higher deduction.   If I just invest the monthly savings in a trading account (IRAs are maxed), I'll need to consider a realistic rate of return, plus dividends minus a 15% tax rate on those dividends and earnings (assuming I just throw it into total market index and leave it there).   Anything that I missing?

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8 hours ago, Redwes25 said:

I would not go into this type of rental property as really making any money and it being a huge hassle.  We have a house on the jersey shore and we used to rent it out for August and use for rest of year.  We did this for a couple of years but the amount of income was not worth the hassle and gave up on it.  With our house we used to rent it for the the month of August and a house a couple blocks from the beach was a big number but a big problem was the time of year you get the most rental income out of the house is the time of year we wanted to use it most.  With a ski house this is even more true as there will only be demand a few weeks a year (think February break and Christmas break but that is about it) which is the time you want to use it most.  

Also, if it is not a full rental property you don't get all the benefits of running it as business so almost all the income is pure income and gets taxed at your marginal rate.  If you are in higher brackets and given you are in NY state go ahead and kiss half of the amount goodbye to the government.  Add in the hassle of renting/setting it up for rental and stupid crisis that comes up when renter has a problem and it is not worth the amount of money you get paid for it.  Being a landlord even for short period of time is a huge pain in the ###.  Especially when you aren't near the house so if renters have a minor problem and you are paying someone else to go check on it for them or driving a couple hours to check it out yourself.   

We love our beach house and you will likely love a mountain house but wouldn't look to it for any real/significant rental income.  Look to get as munch value out of the house as a family destination.  For example, my kids and wife live at the beach for the whole summer and do camp there, etc.  Much of my family is in NJ so we also use it for Thanksgiving and have hosted my extended family there for like the last decade.  So many great times/memories at the house and that is what it is for.  Renting it out for a few weeks a year is just not worth it.  

Yeah, it wouldn’t be a rental property first and foremost.  It would be a vacation property and local getaway that we rent out, really only because we have no interest in skiing and likely wouldn’t spend anything other than a single weekend up there all winter, and there are lots of ski nerds out there who would pay and arm and a leg to go up there so they can go out in the freezing cold all day and do ski stuff.  That’s why we’d rent it out.  We enjoy it most up there in the Fall, and I’m sure we’d go up in Spring and Summer for a few weekends.  If it were a beach house, I’d have the same concern — we’d want to use it when all the renters would want to use it.

Anyway, we’ll see.  My biggest problem is I just don’t know how often we’d get up there.  Maybe a handful of weekends per year.  And would it be worth the hassle for that, or are we just better off staying in a hotel and going up whenever we feel like it.  I just really like the idea of it, and, for those few weekends when the weather is perfect, I could see us loving it.  But definitely sounds like a PIA rest of the year...

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1 hour ago, Terminalxylem said:

How does this process work? As far as I can tell, you must first enroll in high deductible health insurance, then open an HSA. Does the latter have to be sponsored by your employer?

ETA: Oops. I see Long Ball Larry asked a similar question.

I believe that, yes, if you are employed a plan needs to be offered to you to take advantage of this.  I've seen HSA plans on the ACA website, I believe, as well.

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On 11/2/2019 at 6:06 AM, ConstruxBoy said:

One more comment on this: I did some "research" (read:Googled) market drops and recoveries awhile back and it was a much shorter down time than I expected. Looking at the Great Depression, dot com bust, Great Recession, etc. it was like 6 years or so on average from top to bottom and back up again. Of course we could go into a Japan-like slide for 20 years or whatever, but odds are that at 15 years you have more than enough time to recover and should still be pretty heavily into equities. 

The Japan 20  year slide was because they didn't have a baby boom after WW II, like the USA did.  They literally had no masses of people to buy things.   Our masses of three waves of  baby boomers ended their major spending in 2008.    

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1 hour ago, Terminalxylem said:

How does this process work? As far as I can tell, you must first enroll in high deductible health insurance, then open an HSA. Does the latter have to be sponsored by your employer?

ETA: Oops. I see Long Ball Larry asked a similar question.

Yes, you elect the High Deductible plan through your employer.  Along with that you can elect up to $7000/yr to be put in a Health Savings Account.  The HSA (usually comes with a check book or debit card) can be used for medical expenses.

The magic happens when you transfer the money to Fidelity (or any other institution) HSA and invest it.  Pretax on your paycheck, no taxes on the growth, and no taxes when it come out if used for qualifying expenses (which can be years down the road).

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15 minutes ago, Otis said:

 

Anyway, we’ll see.  My biggest problem is I just don’t know how often we’d get up there.  Maybe a handful of weekends per year.  And would it be worth the hassle for that, or are we just better off staying in a hotel and going up whenever we feel like it.  I just really like the idea of it, and, for those few weekends when the weather is perfect, I could see us loving it.  But definitely sounds like a PIA rest of the year...

So just rent a place like it in that area every once in a while.  Seems like the much wiser move, and its headache free.

Edited by ghostguy123

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1 minute ago, Random said:

Yes, you elect the High Deductible plan through your employer.  Along with that you can elect up to $7000/yr to be put in a Health Savings Account.  The HSA (usually comes with a check book or debit card) can be used for medical expenses.

The magic happens when you transfer the money to Fidelity (or any other institution) HSA and invest it.  Pretax on your paycheck, no taxes on the growth, and no taxes when it come out if used for qualifying expenses (which can be years down the road).

I am probably switching to HSA this year.  

The family deductible is 3100 and out of pocket max is 5100

Honestly seems like a no brainer since the traditional plan is a 1300 deductible with 4500 out of pocket max.

With the HSA my premiums are 200 bucks a month less, plus every year my employer puts 1000 into the account.

I mean, no brainer right?  I cant even see any sort of usage where the HSA doesnt have me coming out ahead.

 

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Just now, ghostguy123 said:

I am probably switching to HSA this year.  

The family deductible is 3100 and out of pocket max is 5100

Honestly seems like a no brainer since the traditional plan is a 1300 deductible with 4500 out of pocket max.

With the HSA my premiums are 200 bucks a month less, plus every year my employer puts 1000 into the account.

I mean, no brainer right?  I cant even see any sort of usage where the HSA doesnt have me coming out ahead.

 

Yes, no brainer.  My employer also adds $800/year.  It's free money. 

Don't use it for medical expenses.  Just let the balance build and get it invested.  As mentioned above, the gains aren't taxed and it isn't taxed when used.  It can be used years and years down the road on many different things that qualify as medical expenses.  It's a great tax vehicle.

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8 minutes ago, Sand said:

I believe that, yes, if you are employed a plan needs to be offered to you to take advantage of this.  I've seen HSA plans on the ACA website, I believe, as well.

 

1 minute ago, Random said:

Yes, you elect the High Deductible plan through your employer.  Along with that you can elect up to $7000/yr to be put in a Health Savings Account.  The HSA (usually comes with a check book or debit card) can be used for medical expenses.

The magic happens when you transfer the money to Fidelity (or any other institution) HSA and invest it.  Pretax on your paycheck, no taxes on the growth, and no taxes when it come out if used for qualifying expenses (which can be years down the road).

Thanks for the info. I'll have to check with my employer. A quick google search suggested most banks can also set up HSAs.

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6 minutes ago, gianmarco said:

Yes, no brainer.  My employer also adds $800/year.  It's free money. 

Don't use it for medical expenses.  Just let the balance build and get it invested.  As mentioned above, the gains aren't taxed and it isn't taxed when used.  It can be used years and years down the road on many different things that qualify as medical expenses.  It's a great tax vehicle.

I am going to have to use that HSA money to pay for our medical expenses, at least until our house is paid off (which I am currently accelerating for peace of mind).  

After that yeah, it will be invested

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1 hour ago, NutterButter said:

Debating between a 3% 15 yr refi and a 3.5% 30 yr refi.    Difference in monthly payments is about $700.    Just looking at this from a pure numbers perspective and I want to make sure I'm not missing anything in my calculations.   For sake of comparison, let's say I intend to pay the 30 at the normal schedule and then after 15 years, pay off the remaining balance.   I'd wind up paying more interest with the 30, but with that higher interest does come a higher deduction.   If I just invest the monthly savings in a trading account (IRAs are maxed), I'll need to consider a realistic rate of return, plus dividends minus a 15% tax rate on those dividends and earnings (assuming I just throw it into total market index and leave it there).   Anything that I missing?

Typically you do not get to deduct 100% of your interest so you only get a percentage of that money you are paying.  It is better for you to pay less interest and then you get 100% of that money you aren't paying to interest.  I have never understood the idea of paying more interest so you get a bigger write off.  Unless you are able to write off 100% of the interest you are paying you are losing money (unless I am missing something). 

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1 minute ago, Gally said:

Typically you do not get to deduct 100% of your interest so you only get a percentage of that money you are paying.  It is better for you to pay less interest and then you get 100% of that money you aren't paying to interest.  I have never understood the idea of paying more interest so you get a bigger write off.  Unless you are able to write off 100% of the interest you are paying you are losing money (unless I am missing something). 

I thought you still can still deduct 100% as long as you're below the cap?   I mean its a deduction, not a credit, so you're only going to save whatever your marginal rate is of that deduction in taxes.    Just to be clear, the deduction isn't the sole financial reason for going with the 30.   The much larger piece is being able to invest that difference in monthly payments.   

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1 minute ago, NutterButter said:

I thought you still can still deduct 100% as long as you're below the cap?   I mean its a deduction, not a credit, so you're only going to save whatever your marginal rate is of that deduction in taxes.    Just to be clear, the deduction isn't the sole financial reason for going with the 30.   The much larger piece is being able to invest that difference in monthly payments.   

yes, that is what I meant.  You aren't getting 100% of the money you are spending on interest so you might as well keep it rather than pay extra interest.  I am sure there are other reasons in your decision.  I was more making a comment that I would rather keep the money than get a portion of it as a deduction. 

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I also never understood the thought process of "it's ok to spend that money because I can write it off"

You are still spending most of that money.  Plus the standard deduction is pretty high right now

Edited by ghostguy123

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11 minutes ago, ghostguy123 said:

I also never understood the thought process of "it's ok to spend that money because I can write it off"

You are still spending most of that money.  Plus the standard deduction is pretty high right now

Not sure if you're responding to my scenario.   If you are, what spending are you referring to?

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6 minutes ago, NutterButter said:

Not sure if you're responding to my scenario.   If you are, what spending are you referring to?

Taking a higher rate with more years because of the write offs.

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Just now, ghostguy123 said:

Taking a higher rate with more years because of the write offs.

I'm not taking it just b/c of the write offs; they're really just an ancillary benefit.  The main reason to take it b/c it means 8400 per year less in payments which can instead be invested.  Now depending on the rate of return on that among other things like the write off, it could be a smarter financial decision to take the 30 instead of the 15.   

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We just hit a combined $400K today, not counting real estate. I’d feel better about that if I was 39 instead of 49, but we are chipping away. Having a retirement home largely paid for is a huge relief. At least we won’t be homeless. Shooting for $1.6 million before retiring but that’s feeling ambitious right now.

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18 minutes ago, NutterButter said:

I'm not taking it just b/c of the write offs; they're really just an ancillary benefit.  The main reason to take it b/c it means 8400 per year less in payments which can instead be invested.  Now depending on the rate of return on that among other things like the write off, it could be a smarter financial decision to take the 30 instead of the 15.   

How often do people use their extra money optimally?

Meh, pay off the house so you dont blow the money🤑

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3 minutes ago, ghostguy123 said:

How often do people use their extra money optimally?

Meh, pay off the house so you dont blow the money🤑

I really didn't want to get into that b/c that's really dependent on the person just like there are people that value paying off a house a lot more than others and not having that debt hanging over them.    I just wanted to get feedback based solely on the numbers to make sure that there's nothing I'm missing when making this decision.

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1 hour ago, NutterButter said:

I'm not taking it just b/c of the write offs; they're really just an ancillary benefit.  The main reason to take it b/c it means 8400 per year less in payments which can instead be invested.  Now depending on the rate of return on that among other things like the write off, it could be a smarter financial decision to take the 30 instead of the 15.   

One thing to think about.  With the new standard deduction you may not be able to claim any of that interest.  

The rest of it comes down to your personal risk tolerance.  You need 4.25% or so return to make it worth it.  And you need a long time horizon.  Hopefully you're pretty young and have  a while until retirement.

Not trying to dissuade you, just a couple items there.  I had the same decision 4 years ago and chose the 15 year.  But the details here matter.

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15 minutes ago, Sand said:

One thing to think about.  With the new standard deduction you may not be able to claim any of that interest.  

The rest of it comes down to your personal risk tolerance.  You need 4.25% or so return to make it worth it.  And you need a long time horizon.  Hopefully you're pretty young and have  a while until retirement.

Not trying to dissuade you, just a couple items there.  I had the same decision 4 years ago and chose the 15 year.  But the details here matter.

You thinking I would just take the standard?   I'm single so its only 12k for me and I already have 10k in salt besides the interest. 

Curious to know how you arrived at the 4.25.    I came up with a little less than 4 if you also include the current 1.85 dividend yield on the s&p 500  a tax rate of 15% and reinvesting the additional tax write off; that would enable me to pay off the remainder of the 30 at the end of the 15 year mark if I chose.  

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13 hours ago, AAABatteries said:

Yeah - I had the same thought.  Granted, everybody’s situation is different and what they plan for retirement is different but with that portfolio I would be checking out this afternoon.

If everything works out, I hope to fund some scholarships. And I may live longer than average, based on my lineage.  And I plan to live outside the US for about 7-8 months of the year.  Actually, I'm not retiring for another 2-3 years.  I like what I do. It's not 'work'.  I'm well compensated. And I'll take some time to line up a few things for post-retirement.  

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3 hours ago, Getzlaf15 said:

The Japan 20  year slide was because they didn't have a baby boom after WW II, like the USA did.  They literally had no masses of people to buy things.   Our masses of three waves of  baby boomers ended their major spending in 2008.    

Seems obvious, strange that they didn't see it coming...

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21 minutes ago, Zerp said:

If everything works out, I hope to fund some scholarships. And I may live longer than average, based on my lineage.  And I plan to live outside the US for about 7-8 months of the year.  Actually, I'm not retiring for another 2-3 years.  I like what I do. It's not 'work'.  I'm well compensated. And I'll take some time to line up a few things for post-retirement.  

I have two kids.   Just throwing that out there.

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47 minutes ago, NutterButter said:

You thinking I would just take the standard?   I'm single so its only 12k for me and I already have 10k in salt besides the interest. 

Curious to know how you arrived at the 4.25.    I came up with a little less than 4 if you also include the current 1.85 dividend yield on the s&p 500  a tax rate of 15% and reinvesting the additional tax write off; that would enable me to pay off the remainder of the 30 at the end of the 15 year mark if I chose.  

Ah - being single makes a big difference.  The 24k for married is a big hunk to overcome.  I just guessed at a rate to base total return off of (including qualified dividends) - say 15% cap gains and 5% state.

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7 minutes ago, Sand said:

Ah - being single makes a big difference.  The 24k for married is a big hunk to overcome.  I just guessed at a rate to base total return off of (including qualified dividends) - say 15% cap gains and 5% state.

Ah, forgot about state tax. Good catch.   

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6 hours ago, ConstruxBoy said:

I’ll have to find the links. It surprised me as well but the only one I looked at it more detail was the most recent Great Recession. That did recover quite quickly. 
Agreed that people shouldn’t expect 7-10%. People have been spoiled the last 10 years. But I think a big issue is people trying to time the market and moving their money and contributions to bonds or cash because they think the market is “too high now” and we’re “due for a recession.”  If you don’t need that money for 15-20 years, just leave it where it is if your AA is reasonable. 

FWIW, reading the latest issue of Kiplingers and they state the following:

Since WWII, average bear market was 33% decline lasting 14 months. Typically takes 25 months to get back to where the bear market started. 
Worst in that time was 07-09 which lost 57% and took 49 months to get back. 
 

 

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7 hours ago, kutta said:

I don't understand why people say this. And I fully admit I'm not the brightest guy in the room (or in this thread). But there are so many instances of long ups and downs when looking historically at the market.

You mentioned the Great Depression - The DOW was at about 5600 in 1929. 10,000 invested in 1929 would be worth negative dollars for over 20 years (it would be worth $9,474 in 1950).

$10,000 invested in 1956 would be worth $12,338 in 1974, an average return of 1.2% over 18 years.

$10,000 invested in 1961 would be worth 11,968 in 1981, an average return of 0.9% for 20 years.

$10,000 invested in 1999 would be worth $10,627 in 2011, an average return of 0.5% for 12 years.

Don't get me wrong, I am heavily invested in the market. And I get that people are generally putting money in over time and not one lump sum. But I think people automatically think if they invest they are guaranteed 7-10 percent over a long time. There are plenty of examples when this just isn't true.

Does this consider dividends?  Dividend yield for s&p 500 was a lot higher then today for some of those time periods.  

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1 hour ago, NutterButter said:

Does this consider dividends?  Dividend yield for s&p 500 was a lot higher then today for some of those time periods.  

I just looked at a couple different stock market calculators. Not sure how it takes into account dividends.

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5 hours ago, kutta said:

I just looked at a couple different stock market calculators. Not sure how it takes into account dividends.

I know what im doing at work today. :lol:

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