Chadstroma
Footballguy
Yea, I mean, entertainment can always be cut but the other expenses don't jump out at me. Not in association of having a kiddo at least. Those little things are expensive.
Fantasy Football - Footballguys Forums
Welcome to Our Forums. Once you've registered and logged in, you're primed to talk football, among other topics, with the sharpest and most experienced fantasy players on the internet.
Personal Finance Advice and Education! (5 Viewers)
- Thread starter No. 16
- Start date
captain_amazing
Footballguy
I'm looking for advice on a financial question related to student loan debt.
I have an inordinate amount of student loan debt for a 4-year degree I received, mostly due to my willful ignorance when I was borrowing as a student and lack of financial support from my parents at the time. Moreover, a little under half of my debt is with private lendors, as, again, I lacked the necessary financial supports from my parents at the time, which limited my paying/borrowing options significantly. Last August, my wife and I purchased a condo via a short-sale, which has immediately put us in a position where we have equity in our home (particularly as condo prices have rebounded in our area over the past year). Of course, the IR of our mortgage is singificantly lower than that of my private student loans.
Would it be unwise to use the equity in our home to pay off some of those private student loans? I can provide more details, as needed too. TIA.
I have an inordinate amount of student loan debt for a 4-year degree I received, mostly due to my willful ignorance when I was borrowing as a student and lack of financial support from my parents at the time. Moreover, a little under half of my debt is with private lendors, as, again, I lacked the necessary financial supports from my parents at the time, which limited my paying/borrowing options significantly. Last August, my wife and I purchased a condo via a short-sale, which has immediately put us in a position where we have equity in our home (particularly as condo prices have rebounded in our area over the past year). Of course, the IR of our mortgage is singificantly lower than that of my private student loans.
Would it be unwise to use the equity in our home to pay off some of those private student loans? I can provide more details, as needed too. TIA.
Tom Hagen
Footballguy
The envelope system works for a lot of people but if nothing else Dentist needs to get more detailed in his bookkeeping. Maybe Mint has subcategories that aren't being shown here but "Shopping" is too broad of a category to be meaningful. I still use Quicken but I review each transaction and make sure they go into a meaningful category. For example I distinguish between work clothing and casual clothing and home maintenance is split between maintenance (recurring). repairs (non-recurring) and improvements.
It's more work, but once you establish the proper level of detail it's easy to see if your regular spending is out of line or if you had a rash of unusual expenses this year.
That's what mvelopes.com does - bookkeeping (in the cloud) via the envelopes system.The envelope system works for a lot of people but if nothing else Dentist needs to get more detailed in his bookkeeping. Maybe Mint has subcategories that aren't being shown here but "Shopping" is too broad of a category to be meaningful. I still use Quicken but I review each transaction and make sure they go into a meaningful category. For example I distinguish between work clothing and casual clothing and home maintenance is split between maintenance (recurring). repairs (non-recurring) and improvements.
It's more work, but once you establish the proper level of detail it's easy to see if your regular spending is out of line or if you had a rash of unusual expenses this year.
wilked
Footballguy
Add numbers. Each loan, and interest rate. Figures on condo. And how much extra you have each month to pay down loans
captain_amazing
Footballguy
Thanks. In the long run, I'd certainly save money using the equity to pay off the loans, as the IRs on the private loans are rather high. I think what I worry about is putting my home in a situation where it has less/little equity in it.
Chadstroma
Footballguy
It is an option for sure.
Through private lenders you likely have a rate higher than what you could get out of a line and perhaps even a loan. One thing to remember on the lines though is that the current rates are historically ridiculous and they will go up over time. Your student loan debt may or may not be fixed. So, keep that in mind.
My weakest area in personal finance is taxes. But I believe the student loan debt from private lenders is not tax deductible where as the equity would be.
Check around for options you have for Equities rate/fees/etc. If you want to shoot me the numbers, I will crunch them for you and tell give you more specific direction. But most likely you will be better off based off of general industry rates etc.
skol asylum
Footballguy
Chadstroma
Footballguy
Good to know. I knew the Fed loans were for sure but did not that that extended to private loans. Thanks for the clarification.
Last edited by a moderator:
But....as your link states and it should be known....the interest deduction is capped at $2500 and phases out once your gets higher (160k for MFJ).
Chadstroma
Footballguy
Sorry....your income. The deduction is phased out as your income gets higher.Your what?
Instinctive
Footballguy
@ captain_amazing:
Is consolidating your student loans under one lender possible for you? I know a decent number of recent graduates and fellow students who did that for their UG debt, did it for their grad school debt, or are planning to do it if they aren't done with school yet.
We'd be more helpful with interest rates and principal figures shared, but I understand a reticence to do so. We'll do the best we can with whatever you share
Is consolidating your student loans under one lender possible for you? I know a decent number of recent graduates and fellow students who did that for their UG debt, did it for their grad school debt, or are planning to do it if they aren't done with school yet.
We'd be more helpful with interest rates and principal figures shared, but I understand a reticence to do so. We'll do the best we can with whatever you share
ghostguy123
Footballguy
Not that I don't expect most, if not all, of you to know this, but if a child is born at any point in the year (even on Dec 31st), you get to add that to your taxes for the entire year. I thought it might have been pro-rated.
So moral of the story, if you have a due date in very early January, do what you can to have that sucker pop out a few days early.
So moral of the story, if you have a due date in very early January, do what you can to have that sucker pop out a few days early.
Chadstroma
Footballguy
Doctor Detroit
Please remove your headgear
I can offer this as some background to assist you. You can just search Roth IRA vs 401k contributions and there is a lot of info.
My take is that if you are under 30, definitely max the Roth IRA if you are putting in the percentage that gets you the max match from your employer. If you are over 30 then look at your income, whether you believe you will someday be at a level where you can no longer contribute to a Roth IRA, and of course your personal goals and preference.
I know approximately what my retirement income will be, so I chose to max my 401k over maxing the Roth. So if you think/know you'll be in the same or lower tax bracket then max the 401k. If you think/know you'll be in a higher tax bracket once you retire, max the Roths first. If you have no real idea (and I think most people fall into this category), then do some research and make a decision. It's also going to depend on your employers 401k fees, if you are in a low fee plan that compares to like a Vanguard account then that is great. If not, then that could be your tiebreaker.
Good luck.
Last edited by a moderator:
ghostguy123
Footballguy
Another side question about maxing out a 401k or 403b.
So the max is 18k. What happens if you put in 20k? Do TAXED dollars get put in, or do you get another form come tax time and pay taxes on it then?
edit.......just found a link mentioning how it is taxed taxed twice, so not a good idea anyway.
Last edited by a moderator:
Doctor Detroit
Please remove your headgear
Couple of things. First if you leave it you're going to get double taxed on the excess, now and then when you take a distribution down the road. Secondly, once you go over the max contribution you will no longer be able to get employee matching money on anything above $18k.
This can be avoided before the tax deadline by taking a distribution of the money. However you would have to pay the early distribution penalty, so basically...don't do this. Best possible scenario is you pay 10% to withdrawal money from your 401k early.
ghostguy123
Footballguy
Ok so another question.
Regarding that 18 grand total, is that the total INCLUDING my employee match from the entire year as well?
Doctor Detroit
Please remove your headgear
Shula-holic
Footballguy
Match is separate from contributions. You can contribute up to the IRS limits. The match is above and beyond.
NutterButter
Footballguy
I wish that instead of giving me a raise, my employer would increase the match instead.
xulf
Footballguy
Our 401k is run through paychex. It will automatically shut off our contributions at 18,000. There is no way for us to actually contribute more than that.
Grahamburn
Footballguy
Ask them to pay out the yearly amount you'd receive as a raise in the form of a bonus directly into your 401(k).NutterButter said:
NutterButter
Footballguy
I've had that done before for bonuses, but it wasn't considered an employer contribution. It just showed up as if I put that in their from my paycheck. Is there something that needs to be done from their end so it doesn't appear that way?
Grahamburn
Footballguy
I'm not sure. I'd think your payroll/HR department would be able to put that amount directly into your 401(k) account. It would still be considered a contribution from you, however. I might be misinterpreting the intentions of your original comment though.
ghostguy123
Footballguy
Well when you get a raise, technically it does increase the amount they match. Not the %, but the total.NutterButter said:
Granted it is small. If you get a 5% raise, then their match (say 3%) increases 3% of the 5% raise.
But yeah, that would be an interesting option, take a raise or increase the % they match.
Last edited by a moderator:
Instinctive
Footballguy
Anyone have experience getting a 401(k) with a company transferred to something you can control? Can you even do that?
My employer this coming summer will contribute 7% of my salary figure to a 401(k) in addition to my salary. Not a match, but an automatic contribution regardless of what I put in. Given this, I may or may not contribute based on other factors, since I can still max my Roth IRA (because I won't hit the limit working 10 weeks lol). I just want to try and figure out what I'm going to need to do to get at that money.
Do I need to set up a personal 401(k) of some sort? I have never had a company sponsored 401(k) before. Have any of you had one and then left that company? What do you do at that point?
My employer this coming summer will contribute 7% of my salary figure to a 401(k) in addition to my salary. Not a match, but an automatic contribution regardless of what I put in. Given this, I may or may not contribute based on other factors, since I can still max my Roth IRA (because I won't hit the limit working 10 weeks lol). I just want to try and figure out what I'm going to need to do to get at that money.
Do I need to set up a personal 401(k) of some sort? I have never had a company sponsored 401(k) before. Have any of you had one and then left that company? What do you do at that point?
Chadstroma
Footballguy
You can't move it out of the 401k while with the employer but once you leave the employer, you can roll it into an IRA however you would like
Binky The Doormat
Footballguy
I think with matching funds you are going to have a company plan. When/if you leave the company you simply "roll over" that plan to the plan in your new company or separate 401K of your own. Pretty sure you can just leave in that plan as well if you want. Depends on if you really like the investment offerings available. Though I don't think you can add to it as a part of the company plan any longer.
NutterButter
Footballguy
I'd love to be able to quit my job just for a day so that I can rollover my 401k from their crappy plan to vanguard. Would it need to be longer than that?
Binky The Doormat
Footballguy
If I understand your question NB, I didn't have to wait to transfer my plan to Vanguard when I retired. I did it within a week or two of my last day. I think that is typical.
Tom Hagen
Footballguy
You can roll the 401(k) to a traditional IRA with your choice of custodian after you stop working there.
Tom Hagen
Footballguy
I believe some 401(k) plans allow an "in service" rollover meaning you can do a rollover to an IRA while still employed. You would need to check the plan documents to se if it is permitted.
NutterButter
Footballguy
Considering how bad my plan is, I doubt that is the case.
Instinctive
Footballguy
Thank you Binky and Chad as well!
So I will need to set up either a personal traditional 401(k) or a traditional IRA to do this then? I currently only have a Roth IRA, as I've yet to have an income high enough to gain anything by using a traditional.
Binky The Doormat
Footballguy
That I don't know but your Vanguard contact should know - they will work directly with your current 401K provider (the financial company) to make the rollover.
NOTE: My Vanguard roll over account simply sez "Traditional IRA" so maybe that is the answer.
Tom Hagen
Footballguy
An individual 401(k) would technically be an option but would probably be more paperwork and higher costs without any real value unless you plan to be self employed in the future. Your best bet would most likely be to set up a traditional IRA when your summer employment is over and roll the 401(k) into it. Even if you never make a traditional IRA contribution, this account could serve as a repository for any future retirement plans left behind if you change jobs throughout your career.
Chadstroma
Footballguy
If your current 401k is traditional then you would need to set up an traditional IRA to roll it into or you can convert it at rollover to a ROTH if you wanted to go that route and pay the taxes. If you roll the traditional 401k to a traditional IRA then no taxes. You can either open an IRA now or wait when you leave your employer. Up to you. It is not a big deal to open one whether you do it now and put a little bit of cash in or wait.
Instinctive
Footballguy
Any penalties if I roll it into a Roth, or just pay the taxes? That sounds like my most appetizing option.
Sand
Footballguy
No - just separation from service (and all associated paperwork for the trail) is enough.
Grahamburn
Footballguy
NutterButter
Footballguy
Mainly the investment options. The lowest expense ratio I could find was .9%. Compare that to my fidelity account with my previous job that offers index funds with an expense ration of .07%. But the website in general is a piece of crap that looks like it was written about 10 years ago. It gives me the impression that we went with the cheapest provider we could find.
NutterButter
Footballguy
Not sure if we're on the same page and I'm mostly joking although it would be nice if it was the case is that that I'd like to quit my job just for a day, roll over my 401k and then go back to work at the same job the next day. I'm not talking about permanently quitting.
Chadstroma
Footballguy
Just being uber careful here, since this is my first backdoor Roth. Got off of live chat with Fidelity b/c I had to run to a meeting and the customer service guy sent me the following message:
He's just covering his ###, right? I'm only going to be taxed on the gains (losses) b/w the deposit and conversion (a few days)
Doctor Detroit
Please remove your headgear
Ric Edelman says a back-door Roth rarely makes sense, just keep it in the traditional.
