Personal Finance Advice and Education! (1 Viewer)

[gianmarco]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

There's no restrictions and rates can change, but the one I've linked a few times, I've been with them now for a few years. They've consistently been higher than everyone else. And they've consistently increased over the last 2 years. Since I last linked a couple weeks ago, it's gone up another 0.1% and it's over 5%.

Can you link them again?

I think you've talked me into it. Once I Switch jobs in November, I'll move my Schwab and Ameritrade to Fidelity and that will cut down on 2. My wife's Prudential account takes zero energy. It's on autopilot. So you're probably right, what's 1 more at that point.

Also--while very small--there IS an expense ratio tied to the money market accounts. And that is going to eat into the gains.

Hilariously, I told you I would probably do Laurel Road since I have an account and experience with them. I have an account with their Mohela branch which handles student loans. But to start a HYSA, I'd have to make a new account on the main Laurel Road website. While googling reviews and such--there are a lot of instances of them freezing people's accounts to do a fraud review. One person on Reddit claims they were frozen out for 2 months. I don't plan on needing the money in 2 months, but I don't need/want the anxiety that comes with that.

CIT HYSA -- 5.05%

Have you used them? Looks like they are a subsidiary of First Citizens Bank. I don't know them or their service. I have ~40k at 4.30% now and it might be nice to get an extra $25/month in interest.

I've been using them for a few years. I even had a mortgage with them for about a year or two before I refinanced an even lower rate.

They don't have brick and mortar, it's all online so they have costs and pass it along as higher savings. I've had zero issues. Keep a nice chunk there, it's FDIC insured, and I do a few transfers as needed almost every month without problems.

 

[MAC_32]

Aww, man - and here I thought I had reached the mountain top with Bask at 5%

 

[SFBayDuck]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

There's no restrictions and rates can change, but the one I've linked a few times, I've been with them now for a few years. They've consistently been higher than everyone else. And they've consistently increased over the last 2 years. Since I last linked a couple weeks ago, it's gone up another 0.1% and it's over 5%.

Can you link them again?

I think you've talked me into it. Once I Switch jobs in November, I'll move my Schwab and Ameritrade to Fidelity and that will cut down on 2. My wife's Prudential account takes zero energy. It's on autopilot. So you're probably right, what's 1 more at that point.

Also--while very small--there IS an expense ratio tied to the money market accounts. And that is going to eat into the gains.

Hilariously, I told you I would probably do Laurel Road since I have an account and experience with them. I have an account with their Mohela branch which handles student loans. But to start a HYSA, I'd have to make a new account on the main Laurel Road website. While googling reviews and such--there are a lot of instances of them freezing people's accounts to do a fraud review. One person on Reddit claims they were frozen out for 2 months. I don't plan on needing the money in 2 months, but I don't need/want the anxiety that comes with that.

CIT HYSA -- 5.05%

Have you used them? Looks like they are a subsidiary of First Citizens Bank. I don't know them or their service. I have ~40k at 4.30% now and it might be nice to get an extra $25/month in interest.

Does @gianmarco use them? Dude shills so much in here for them I assumed he had taken on a second job with them!

 

[gianmarco]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

There's no restrictions and rates can change, but the one I've linked a few times, I've been with them now for a few years. They've consistently been higher than everyone else. And they've consistently increased over the last 2 years. Since I last linked a couple weeks ago, it's gone up another 0.1% and it's over 5%.

Can you link them again?

I think you've talked me into it. Once I Switch jobs in November, I'll move my Schwab and Ameritrade to Fidelity and that will cut down on 2. My wife's Prudential account takes zero energy. It's on autopilot. So you're probably right, what's 1 more at that point.

Also--while very small--there IS an expense ratio tied to the money market accounts. And that is going to eat into the gains.

Hilariously, I told you I would probably do Laurel Road since I have an account and experience with them. I have an account with their Mohela branch which handles student loans. But to start a HYSA, I'd have to make a new account on the main Laurel Road website. While googling reviews and such--there are a lot of instances of them freezing people's accounts to do a fraud review. One person on Reddit claims they were frozen out for 2 months. I don't plan on needing the money in 2 months, but I don't need/want the anxiety that comes with that.

CIT HYSA -- 5.05%

Have you used them? Looks like they are a subsidiary of First Citizens Bank. I don't know them or their service. I have ~40k at 4.30% now and it might be nice to get an extra $25/month in interest.

Does @gianmarco use them? Dude shills so much in here for them I assumed he had taken on a second job with them!

Right?

I was actually thinking this morning "I wonder if there's some referral code".

But seriously, each time, someone's like "can you link it again?" and I just feel so dirty doing it again.

 

[Sand]

2 year reprieve on catch up contributions having to go to Roths for some taxpayers. I'm pretty happy over this one. Maybe this will get repealed over the next couple.

High Earners 50-And-Older Get 2-Year Break On 401(k) Catch-Up Rule | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

 

[shuke]

2 year reprieve on catch up contributions having to go to Roths for some taxpayers. I'm pretty happy over this one. Maybe this will get repealed over the next couple.

High Earners 50-And-Older Get 2-Year Break On 401(k) Catch-Up Rule | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

The caption of the picture

 

[stbugs]

2 year reprieve on catch up contributions having to go to Roths for some taxpayers. I'm pretty happy over this one. Maybe this will get repealed over the next couple.

High Earners 50-And-Older Get 2-Year Break On 401(k) Catch-Up Rule | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

The caption of the picture

I liked that and I love the extension for another two years. While I was sort of looking forward to being able to do a Roth, I’d still way more rather get the tax deduction right now while my wife and I are working.

 

[ConstruxBoy]

2 year reprieve on catch up contributions having to go to Roths for some taxpayers. I'm pretty happy over this one. Maybe this will get repealed over the next couple.

High Earners 50-And-Older Get 2-Year Break On 401(k) Catch-Up Rule | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

The caption of the picture

Come on, all 50+ year old FBGs have wives that look like that...

 

[johnnycakes]

2 year reprieve on catch up contributions having to go to Roths for some taxpayers. I'm pretty happy over this one. Maybe this will get repealed over the next couple.

High Earners 50-And-Older Get 2-Year Break On 401(k) Catch-Up Rule | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

The caption of the picture

Come on, all 50+ year old FBGs have wives that look like that...

Either that or they're divorced. $0.02.

 

[-OZ-]

2 year reprieve on catch up contributions having to go to Roths for some taxpayers. I'm pretty happy over this one. Maybe this will get repealed over the next couple.

High Earners 50-And-Older Get 2-Year Break On 401(k) Catch-Up Rule | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

The caption of the picture

Come on, all 50+ year old FBGs have wives that look like that...

So I have a few years and a midlife crisis to look forward to.

 

[Judge Smails]

2 year reprieve on catch up contributions having to go to Roths for some taxpayers. I'm pretty happy over this one. Maybe this will get repealed over the next couple.

High Earners 50-And-Older Get 2-Year Break On 401(k) Catch-Up Rule | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

The caption of the picture

Come on, all 50+ year old FBGs have wives that look like that...

Standard FBG issue

 

[ConstruxBoy]

Have a Traditional iRA rollover decision to make and wanted to get some opinions. Wife's IRAs are currently 77% Traditional and 23% Roth. She's "retiring early" after working at the same place and accumulating a Traditional 401k for 20 years. So she has about 3 times her current IRA holdings to roll over from the 401k.

We have some passive income from her family sources so our income won't actually be down that much. So we want to roll that 401k into a tradition IRA and not pay the taxes now. However that will leave her with a pretty small percentage of Roth assets. I'd like to get more of her assets in a Roth just for the flexibility down the road. Since you generally save your Roth assets for last and since you generally assume the wife will live longer, her Roth IRA would be mostly for our kids. And the SECURE 10 year draw down rule for inherited IRAs is a lot better in a Roth without the taxes and RMDs.

We have an opportunity to really lessen the affect of the Pro Rata rule for conversions if we convert some of her Traditional into a Roth BEFORE we rollover her large 401k.
Of course, we can also just wait for my retirement with less income coming in and do a Roth conversion at that time. There is the risk that Roth conversions will be tightened up or something by that time in 10 years or so.

Do you think the affects of decreasing the tax via a smaller Pro Rata percentage is larger or smaller than the affects of doing the conversion with a larger Pro Rata percentage but a smaller annual income when I retire?

 

[ghostguy123]

Random question.
I still own one rental property, and will for at least the next 11 months. It's paid off, and worth maybe 100k or a bit more. If I were to sell, I would clear about the same amount I still owe on my house. Currently, I am able to max out my 403b every year for the foreseeable future, also my HSA, but nothing left over for a ROTH. So there's some options I'd like to hear from folks which route is the best.

1- continue as is
2- sell the rental property and max mine and my wife's ROTH as many years as I can with that extra money
3- sell the rental property, pay off my house (currently 3% rate), and invest in the ROTH as much as possible.
4- sell rental property, pay half on the house and half maxing ROTHs as long as I can.

The rental is a small condo that I highly doubt will appreciate a huge amount. I bought it for 45k back in 2015.

Wife and I are both 43, and I basically invest in index funds with everything and would continue doing so for many years to come.

Just a fun little exercise to see what people think is best longer term.

 

[Sand]

Random question.
I still own one rental property, and will for at least the next 11 months. It's paid off, and worth maybe 100k or a bit more. If I were to sell, I would clear about the same amount I still owe on my house. Currently, I am able to max out my 403b every year for the foreseeable future, also my HSA, but nothing left over for a ROTH. So there's some options I'd like to hear from folks which route is the best.

1- continue as is
2- sell the rental property and max mine and my wife's ROTH as many years as I can with that extra money
3- sell the rental property, pay off my house (currently 3% rate), and invest in the ROTH as much as possible.
4- sell rental property, pay half on the house and half maxing ROTHs as long as I can.

The rental is a small condo that I highly doubt will appreciate a huge amount. I bought it for 45k back in 2015.

Wife and I are both 43, and I basically invest in index funds with everything and would continue doing so for many years to come.

Just a fun little exercise to see what people think is best longer term.

I don't think it's a money question. It's a "pain in the ***" question. Do you want to continue to deal with renters, maintenance, management company, etc.?

But to answer the question without regard for that I'd sell the house, pay off the house, and bask in the land of FU money because your debt ledger is wiped clean. That makes you ****ing untouchable assuming you can come up with tax and insurance payments every year. Cue John Goodman. And that isn't really a money answer, it's a peace of mind answer.

 

[ghostguy123]

Random question.
I still own one rental property, and will for at least the next 11 months. It's paid off, and worth maybe 100k or a bit more. If I were to sell, I would clear about the same amount I still owe on my house. Currently, I am able to max out my 403b every year for the foreseeable future, also my HSA, but nothing left over for a ROTH. So there's some options I'd like to hear from folks which route is the best.

1- continue as is
2- sell the rental property and max mine and my wife's ROTH as many years as I can with that extra money
3- sell the rental property, pay off my house (currently 3% rate), and invest in the ROTH as much as possible.
4- sell rental property, pay half on the house and half maxing ROTHs as long as I can.

The rental is a small condo that I highly doubt will appreciate a huge amount. I bought it for 45k back in 2015.

Wife and I are both 43, and I basically invest in index funds with everything and would continue doing so for many years to come.

Just a fun little exercise to see what people think is best longer term.

I don't think it's a money question. It's a "pain in the ***" question. Do you want to continue to deal with renters, maintenance, management company, etc.?

But to answer the question without regard for that I'd sell the house, pay off the house, and bask in the land of FU money because your debt ledger is wiped clean. That makes you ****ing untouchable assuming you can come up with tax and insurance payments every year. Cue John Goodman. And that isn't really a money answer, it's a peace of mind answer.

Ok say I sell. Then you would choose pay off the house as opposed to maxing a couple Roths for a while?

 

[Nugget]

Random question.
I still own one rental property, and will for at least the next 11 months. It's paid off, and worth maybe 100k or a bit more. If I were to sell, I would clear about the same amount I still owe on my house. Currently, I am able to max out my 403b every year for the foreseeable future, also my HSA, but nothing left over for a ROTH. So there's some options I'd like to hear from folks which route is the best.

1- continue as is
2- sell the rental property and max mine and my wife's ROTH as many years as I can with that extra money
3- sell the rental property, pay off my house (currently 3% rate), and invest in the ROTH as much as possible.
4- sell rental property, pay half on the house and half maxing ROTHs as long as I can.

The rental is a small condo that I highly doubt will appreciate a huge amount. I bought it for 45k back in 2015.

Wife and I are both 43, and I basically invest in index funds with everything and would continue doing so for many years to come.

Just a fun little exercise to see what people think is best longer term.

I don't think it's a money question. It's a "pain in the ***" question. Do you want to continue to deal with renters, maintenance, management company, etc.?

But to answer the question without regard for that I'd sell the house, pay off the house, and bask in the land of FU money because your debt ledger is wiped clean. That makes you ****ing untouchable assuming you can come up with tax and insurance payments every year. Cue John Goodman. And that isn't really a money answer, it's a peace of mind answer.

Ok say I sell. Then you would choose pay off the house as opposed to maxing a couple Roths for a while?

What is your current mortgage payment? Can’t you just invest that money into the Roth accounts after the mortgage is paid off?

 

[Sand]

Random question.
I still own one rental property, and will for at least the next 11 months. It's paid off, and worth maybe 100k or a bit more. If I were to sell, I would clear about the same amount I still owe on my house. Currently, I am able to max out my 403b every year for the foreseeable future, also my HSA, but nothing left over for a ROTH. So there's some options I'd like to hear from folks which route is the best.

1- continue as is
2- sell the rental property and max mine and my wife's ROTH as many years as I can with that extra money
3- sell the rental property, pay off my house (currently 3% rate), and invest in the ROTH as much as possible.
4- sell rental property, pay half on the house and half maxing ROTHs as long as I can.

The rental is a small condo that I highly doubt will appreciate a huge amount. I bought it for 45k back in 2015.

Wife and I are both 43, and I basically invest in index funds with everything and would continue doing so for many years to come.

Just a fun little exercise to see what people think is best longer term.

I don't think it's a money question. It's a "pain in the ***" question. Do you want to continue to deal with renters, maintenance, management company, etc.?

But to answer the question without regard for that I'd sell the house, pay off the house, and bask in the land of FU money because your debt ledger is wiped clean. That makes you ****ing untouchable assuming you can come up with tax and insurance payments every year. Cue John Goodman. And that isn't really a money answer, it's a peace of mind answer.

Ok say I sell. Then you would choose pay off the house as opposed to maxing a couple Roths for a while?

Personally yes. But, again, I'm coming at it from a bit different angle than just ROI. In fact, I'm sure it isn't. Being completely debt free is a pretty awesome spot to be in, though, and worth consideration.

 

[-OZ-]

Random question.
I still own one rental property, and will for at least the next 11 months. It's paid off, and worth maybe 100k or a bit more. If I were to sell, I would clear about the same amount I still owe on my house. Currently, I am able to max out my 403b every year for the foreseeable future, also my HSA, but nothing left over for a ROTH. So there's some options I'd like to hear from folks which route is the best.

1- continue as is
2- sell the rental property and max mine and my wife's ROTH as many years as I can with that extra money
3- sell the rental property, pay off my house (currently 3% rate), and invest in the ROTH as much as possible.
4- sell rental property, pay half on the house and half maxing ROTHs as long as I can.

The rental is a small condo that I highly doubt will appreciate a huge amount. I bought it for 45k back in 2015.

Wife and I are both 43, and I basically invest in index funds with everything and would continue doing so for many years to come.

Just a fun little exercise to see what people think is best longer term.

I don't think it's a money question. It's a "pain in the ***" question. Do you want to continue to deal with renters, maintenance, management company, etc.?

But to answer the question without regard for that I'd sell the house, pay off the house, and bask in the land of FU money because your debt ledger is wiped clean. That makes you ****ing untouchable assuming you can come up with tax and insurance payments every year. Cue John Goodman. And that isn't really a money answer, it's a peace of mind answer.

Ok say I sell. Then you would choose pay off the house as opposed to maxing a couple Roths for a while?

At 3% I’m keeping the mortgage. I’ve been debt free, it was nice but I feel better / more secure with my 2.25% mortgage and investments and HYSA than I did totally debt free. YMMV.
I wouldn’t necessarily fund the IRAs with that money unless you can do a mega back door.

 

[NutterButter]

Random question.
I still own one rental property, and will for at least the next 11 months. It's paid off, and worth maybe 100k or a bit more. If I were to sell, I would clear about the same amount I still owe on my house. Currently, I am able to max out my 403b every year for the foreseeable future, also my HSA, but nothing left over for a ROTH. So there's some options I'd like to hear from folks which route is the best.

1- continue as is
2- sell the rental property and max mine and my wife's ROTH as many years as I can with that extra money
3- sell the rental property, pay off my house (currently 3% rate), and invest in the ROTH as much as possible.
4- sell rental property, pay half on the house and half maxing ROTHs as long as I can.

The rental is a small condo that I highly doubt will appreciate a huge amount. I bought it for 45k back in 2015.

Wife and I are both 43, and I basically invest in index funds with everything and would continue doing so for many years to come.

Just a fun little exercise to see what people think is best longer term.

I don't think it's a money question. It's a "pain in the ***" question. Do you want to continue to deal with renters, maintenance, management company, etc.?

But to answer the question without regard for that I'd sell the house, pay off the house, and bask in the land of FU money because your debt ledger is wiped clean. That makes you ****ing untouchable assuming you can come up with tax and insurance payments every year. Cue John Goodman. And that isn't really a money answer, it's a peace of mind answer.

Ok say I sell. Then you would choose pay off the house as opposed to maxing a couple Roths for a while?

Depends how you feel about debt. To me, its just another expense like groceries. I'm always gonna look to maximize my returns. At the moment if you want to play it safe, just throw it in a money market. Collect your extra 2% of interest every year and if you ever get cold feet, you can just pay it off at that time.

 

[jm192]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

There's no restrictions and rates can change, but the one I've linked a few times, I've been with them now for a few years. They've consistently been higher than everyone else. And they've consistently increased over the last 2 years. Since I last linked a couple weeks ago, it's gone up another 0.1% and it's over 5%.

About to set this up.

To clarify, they have given you the higher rates when they've changed? There are some negative reviews online about them saying the new higher rates are for new customers only and existing customers getting the shaft.

 

[jm192]

Random question.
I still own one rental property, and will for at least the next 11 months. It's paid off, and worth maybe 100k or a bit more. If I were to sell, I would clear about the same amount I still owe on my house. Currently, I am able to max out my 403b every year for the foreseeable future, also my HSA, but nothing left over for a ROTH. So there's some options I'd like to hear from folks which route is the best.

1- continue as is
2- sell the rental property and max mine and my wife's ROTH as many years as I can with that extra money
3- sell the rental property, pay off my house (currently 3% rate), and invest in the ROTH as much as possible.
4- sell rental property, pay half on the house and half maxing ROTHs as long as I can.

The rental is a small condo that I highly doubt will appreciate a huge amount. I bought it for 45k back in 2015.

Wife and I are both 43, and I basically invest in index funds with everything and would continue doing so for many years to come.

Just a fun little exercise to see what people think is best longer term.

I don't think it's a money question. It's a "pain in the ***" question. Do you want to continue to deal with renters, maintenance, management company, etc.?

But to answer the question without regard for that I'd sell the house, pay off the house, and bask in the land of FU money because your debt ledger is wiped clean. That makes you ****ing untouchable assuming you can come up with tax and insurance payments every year. Cue John Goodman. And that isn't really a money answer, it's a peace of mind answer.

Ok say I sell. Then you would choose pay off the house as opposed to maxing a couple Roths for a while?

Depends how you feel about debt. To me, its just another expense like groceries. I'm always gonna look to maximize my returns. At the moment if you want to play it safe, just throw it in a money market. Collect your extra 2% of interest every year and if you ever get cold feet, you can just pay it off at that time.

Agree with this!

If you've got a super safe investment that is earning better than the mortgage interest rate, I like investing the money you'd put towards the mortgage.

 

[gianmarco]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

There's no restrictions and rates can change, but the one I've linked a few times, I've been with them now for a few years. They've consistently been higher than everyone else. And they've consistently increased over the last 2 years. Since I last linked a couple weeks ago, it's gone up another 0.1% and it's over 5%.

About to set this up.

To clarify, they have given you the higher rates when they've changed? There are some negative reviews online about them saying the new higher rates are for new customers only and existing customers getting the shaft.

Never had that issue.

The only thing that's happened is that they've changed the name of the savings account with the highest rate. I noticed that when I had posted about it here once and I searched. The account I was in was getting something like 4.25% and the newer account (the one I linked here) was at 4.5%. All I did was an open another account with that new account name/APY and transferred it from my old and was getting the higher rate. Perhaps that's what those reviews were talking about but there's nothing to keep you from just switching to that new account if they do it again.

 

[gianmarco]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

There's no restrictions and rates can change, but the one I've linked a few times, I've been with them now for a few years. They've consistently been higher than everyone else. And they've consistently increased over the last 2 years. Since I last linked a couple weeks ago, it's gone up another 0.1% and it's over 5%.

About to set this up.

To clarify, they have given you the higher rates when they've changed? There are some negative reviews online about them saying the new higher rates are for new customers only and existing customers getting the shaft.

Btw, here's what I'm talking about. I had it in a Savings Connect account and then they introduced the Platinum Account. When I saw that, it took like 5 minutes to open it online (it's all under same login, etc, just another account), then did the internal transfer. The Savings Connect account is even still there, I just don't keep anything in it. It's about 0.5% lower than the Platinum.

It just looks like it was a new product they created and advertised.

 

[pecorino]

Random question.
I still own one rental property, and will for at least the next 11 months. It's paid off, and worth maybe 100k or a bit more. If I were to sell, I would clear about the same amount I still owe on my house. Currently, I am able to max out my 403b every year for the foreseeable future, also my HSA, but nothing left over for a ROTH. So there's some options I'd like to hear from folks which route is the best.

1- continue as is
2- sell the rental property and max mine and my wife's ROTH as many years as I can with that extra money
3- sell the rental property, pay off my house (currently 3% rate), and invest in the ROTH as much as possible.
4- sell rental property, pay half on the house and half maxing ROTHs as long as I can.

The rental is a small condo that I highly doubt will appreciate a huge amount. I bought it for 45k back in 2015.

Wife and I are both 43, and I basically invest in index funds with everything and would continue doing so for many years to come.

Just a fun little exercise to see what people think is best longer term.

Since the condo is paid off, I assume it throws off positive cash flow. How much per month? If that funds your Roth then why sell it? Is it a hassle to rent or is it fairly turnkey? Is there a monthly HOA fee? Is there a major expense, like a new roof, around the corner?

 

[Sand]

Average US consumer has $10,000 of credit card debt. Even if a decent chunk of this is rolling over and paid every month, that still leaves a massive amount of overhang.

The states with the highest credit card debt revealed

American households now have an average of $10,170 credit card debt, new data shows as record numbers say they are worried about being cut off from access to loans.

www.dailymail.co.uk

 

[gianmarco]

Average US consumer has $10,000 of credit card debt. Even if a decent chunk of this is rolling over and paid every month, that still leaves a massive amount of overhang.

The states with the highest credit card debt revealed

American households now have an average of $10,170 credit card debt, new data shows as record numbers say they are worried about being cut off from access to loans.

www.dailymail.co.uk

61% of Americans live paycheck to paycheck.

None of this is sustainable long term.

 

[Sand]

Average US consumer has $10,000 of credit card debt. Even if a decent chunk of this is rolling over and paid every month, that still leaves a massive amount of overhang.

The states with the highest credit card debt revealed

American households now have an average of $10,170 credit card debt, new data shows as record numbers say they are worried about being cut off from access to loans.

www.dailymail.co.uk

61% of Americans live paycheck to paycheck.

None of this is sustainable long term.

I think they don't get this particular stat right. Some 35% of those earning 200k+ are "paycheck to paycheck". Eh - yeah after they pay for vacation funds, 401ks, 529s, etc.

That said you know the median CC debt has to be sky high as only half of people carry a balance. That is super worrying, particularly when you think that banks will see a ton of pressure over commercial RE falling through the floor.

 

[-OZ-]

I think they don't get this particular stat right. Some 35% of those earning 200k+ are "paycheck to paycheck". Eh - yeah after they pay for vacation funds, 401ks, 529s, etc

Exactly. Depending on the definition, there may be nothing really wrong with living paycheck to paycheck.

That said you know the median CC debt has to be sky high as only half of people carry a balance. That is super worrying, particularly when you think that banks will see a ton of pressure over commercial RE falling through the floor.

Yep. I figure an unhealthy amount of borrowers will default.

 

[ghostguy123]

Random question.
I still own one rental property, and will for at least the next 11 months. It's paid off, and worth maybe 100k or a bit more. If I were to sell, I would clear about the same amount I still owe on my house. Currently, I am able to max out my 403b every year for the foreseeable future, also my HSA, but nothing left over for a ROTH. So there's some options I'd like to hear from folks which route is the best.

1- continue as is
2- sell the rental property and max mine and my wife's ROTH as many years as I can with that extra money
3- sell the rental property, pay off my house (currently 3% rate), and invest in the ROTH as much as possible.
4- sell rental property, pay half on the house and half maxing ROTHs as long as I can.

The rental is a small condo that I highly doubt will appreciate a huge amount. I bought it for 45k back in 2015.

Wife and I are both 43, and I basically invest in index funds with everything and would continue doing so for many years to come.

Just a fun little exercise to see what people think is best longer term.

Since the condo is paid off, I assume it throws off positive cash flow. How much per month? If that funds your Roth then why sell it? Is it a hassle to rent or is it fairly turnkey? Is there a monthly HOA fee? Is there a major expense, like a new roof, around the corner?

The rent minus taxes/insurance/HOA fees comes out to about just over $500 positive cash flow per month.
The HOA fees cover exterior building, so I will never have to pay for roof, siding, gutters, driveway.........

I don't anticipate major expenses, but there's always HVAC, water heater, appliances, plumbing.......

Currently no headaches. I have the absolute ideal tenant. Most likely I keep the condo until he moves out, even if I decide to sell. Id just sell when he moves.

 

[SFBayDuck]

Average US consumer has $10,000 of credit card debt. Even if a decent chunk of this is rolling over and paid every month, that still leaves a massive amount of overhang.

The states with the highest credit card debt revealed

American households now have an average of $10,170 credit card debt, new data shows as record numbers say they are worried about being cut off from access to loans.

www.dailymail.co.uk

61% of Americans live paycheck to paycheck.

None of this is sustainable long term.

I think they don't get this particular stat right. Some 35% of those earning 200k+ are "paycheck to paycheck". Eh - yeah after they pay for vacation funds, 401ks, 529s, etc.

That said you know the median CC debt has to be sky high as only half of people carry a balance. That is super worrying, particularly when you think that banks will see a ton of pressure over commercial RE falling through the floor.

With half of my compensation coming from commissions that tend to be intermittent but chunky I often am living "paycheck to paycheck", meaning there isn't a ton left in the account come payday. But yes, that's after maxing 401k and HSA, ESPP withholdings, 529 contributions, etc.

 

[ghostguy123]

Random question.
If your 401k or 403b has a "Roth" option, does this in any way impact a separate account Roth IRA?

As in, I have been contributing to a Roth IRA through fidelity, but my employer offers a Roth option in my 403b. What are the limits if contributing to both?

 

[McBokonon]

If your 401k or 403b has a "Roth" option, does this in any way impact a separate account Roth IRA?

No.

 

[ghostguy123]

If your 401k or 403b has a "Roth" option, does this in any way impact a separate account Roth IRA?

No.

So what's the Roth limit inside a 403b?

 

[-OZ-]

If your 401k or 403b has a "Roth" option, does this in any way impact a separate account Roth IRA?

No.

So what's the Roth limit inside a 403b?

The limit is for the account, flavor doesn’t matter. Same as your IRA(s).

 

[Senor Schmutzig]

Early in my career, I worked at a company with a pension plan. At some point, they switched over to a 401k and stopped funding the pension however I am still eligible for the time that the pension was still active. The pension payout comes to $630.37/month starting at age 65. I am 53 now.

I just received notification from that former company that I now have some options as to what I can do with the money:

1. Roll over the lump sum payout of $45,817.81 to an IRA (relative value 92%)*
2. Take a lump payout with a 20% tax withholding + a 10% penalty because I am under 59 1/2 equal to $36,654.25 (relative value 92%)
3. Start monthly payments now at various amounts based on the Joint/Survivor annuity option I select
4. Take no action and start receiving the $630.37/month payout starting at age 65

* the relative value amount is coming from the paperwork they provided, it's not my calculation

My initial thoughts:
#1 I'm assuming this will be my best option as it allows me to invest that money as I see fit. That's just an assumption though. See my partial calculus below.
#2 Probably just doesn't make sense due to penalties and the fact that I don't need the money right now.
#3 Don't need to do this so not an option I would consider
#4 The only other viable option for me

What sort of financial calculator/equation should I use to see if option #1 or #4 makes the most sense for me?

If I assume a 5% annual growth rate compounded monthly, the initial amount of $45,817.81 grows to $83,381 over the 12 years between now and when I would start the monthly payment of $630.37 at age 65.

If I take that $83,381 and divide it by $630.37/month, it comes out to roughly 11 years worth of payments, but that doesn't calculate the compounding interest that I would be getting on the principal while subtracting the $630.37/month.

Financial gurus, help an FBG out here...

I'm assuming #1 is the right option, but I want to see how the math supports it.

EDIT:
I found this calculator, and after plugging in the numbers, it appears that the principal amount would last 16 years if I started withdrawing at $630/month. Assuming I started at age 65, the payout would last until I was 81.

So, if I plan on living longer than 81, it would make more sense to stay with #4. If I think I'm kicking the bucket sooner, option #1 is the best.

I understand the variables based on assumed APR but besides that, am I thinking about it correctly?

 

[stbugs]

Using a money market rate of 5%, in 12 years #1 would get you over $82k which at 5% would throw out $343 per month. Yes, it is lower than the payout but that $82k+ is your money. If you invested in stock funds and got say 8%, it’s even better. That would give you over $115k in the IRA and would throw out $769 per month at 8%.

I like #1 because if you can invest well, you can have a solid savings which would give you the same or more monthly as the pension with the HUGE caveat of you owning the $115k that produces that monthly income.