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19 minutes ago, Steve Tasker said:

In theory, if you have no other traditional IRA, yes, that would be an annual "Backdoor Roth".

If you have other traditional IRAs, including an old 401k that you have rolled-over previously into a traditional IRA, it gets a lot more complicated than that. 

Thanks

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50 minutes ago, Steve Tasker said:

Yes

Nice, thanks. I’m going to be up to my eyes in college costs the next 10 years so I might not use it yet but that’s an interesting option for the savings I have invested that I hope to not touch.

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56 minutes ago, Steve Tasker said:

In theory, if you have no other traditional IRA, yes, that would be an annual "Backdoor Roth".

If you have other traditional IRAs, including an old 401k that you have rolled-over previously into a traditional IRA, it gets a lot more complicated than that. 

Just having another IRA open or trying to use the same IRA? Could you open a new IRA account and then it’s not complicated?

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3 hours ago, stlrams said:

I called Fidelity regarding the backdoor Roth IRA (converting 401k money to Roth) and they indicate its a taxable event.  Paying my current tax rate on every dollar moved.  This is correct or am I misunderstanding..

Are you talking backdoor Roth, or Mega Backdoor Roth?

Backdoor Roth = transferring after tax money from a traditional IRA to a Roth.  Note if there was any pre-tax money in the traditional IRA, you need to pay taxes on that prior to transfer

Mega Backdoor = transferring after tax contributions into a 401k via an "in-service" transfer if allowed by your 401k plan through your employer. The only taxes that would be paid here is if there are any gains on the after tax contributions that you make.  If you call for the transfer the day after they are deposited, the gains (if any) should be nominal.

You should be doing the Backdoor first and then the mega backdoor after if you're eligible.

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On 7/8/2019 at 7:38 PM, -OZ- said:

So I'm pretty sure I'm switching my Roth IRA to M1. Any thoughts or recommendations? 

Don't know if I'll be switching my wife's, the college accounts, or our regular account, but maybe. My IRA is a little more than 1/3 of hers (I stopped investing in my Roth IRA for a few years while I was maxing the tsp instead, and what I did have was largely international. meanwhile I had her entirely in vanguard, US ETFs).

Any bad experiences? Any promo codes or anything?

Bueller...

Just sent my stuff in today to initiate the transfer.

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My wife hasn’t worked the last 5 years (kids) and she had drained her 401k when we bought our house. I have cash sitting around now from my bonus and real estate sales (work related) and I want to replenish what she spent. In what vehicle should I invest on her behalf?  A roth?

Also, in general, how are you allocating your investments?  Allow for x% in IRA, mutual funds, individual stocks, real estate, money market, cash etc?  What percentage of income are you contributing to your 401k (my employer only matches 3%)

 

tia

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1 hour ago, Leeroy Jenkins said:

My wife hasn’t worked the last 5 years (kids) and she had drained her 401k when we bought our house. I have cash sitting around now from my bonus and real estate sales (work related) and I want to replenish what she spent. In what vehicle should I invest on her behalf?  A roth?

Also, in general, how are you allocating your investments?  Allow for x% in IRA, mutual funds, individual stocks, real estate, money market, cash etc?  What percentage of income are you contributing to your 401k (my employer only matches 3%)

 

tia

Hindsight is 20/20 but why would she/you drain retirement for a house? Seems a really bad idea.

If eligible, Roth IRA is the first thing I'd usually invest in, after you get the match from the 401k. 

Your second paragraph mixes concepts. You usually have mutual funds or ETFs in the IRA and 401k. 

Our plan, in order:

1. Get the full match in 401k/TSP. For us this is all Roth right now.

2. max both Roth IRAs.

3. Max 401k/TSP over the course of the year.

4. $500 each month to M1 (no tax benefits)

5. $250 monthly to fundrise.

6. Keep savings just over $10,000, in a 2.1% yield (might change if I find a higher yield but for now it's fine) 

* ETA: $10k is less than recommended for most, but my pension covers necessities. If I lost my job (really unlikely but shutdowns happen) we'd be okay for a while.. Know thyself. 

7. Leftover to E-Trade (free ETF trades)

I'm using different versions of Paul Merriman's portfolios for each account (2 Roth IRAs, 2 TSP accounts)

Edited by -OZ-
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On 7/8/2019 at 8:38 PM, -OZ- said:

So I'm pretty sure I'm switching my Roth IRA to M1. Any thoughts or recommendations? 

Don't know if I'll be switching my wife's, the college accounts, or our regular account, but maybe. My IRA is a little more than 1/3 of hers (I stopped investing in my Roth IRA for a few years while I was maxing the tsp instead, and what I did have was largely international. meanwhile I had her entirely in vanguard, US ETFs).

Any bad experiences? Any promo codes or anything?

M1?  The guy from Dead Prez?

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3 hours ago, Leeroy Jenkins said:

My wife hasn’t worked the last 5 years (kids) and she had drained her 401k when we bought our house. I have cash sitting around now from my bonus and real estate sales (work related) and I want to replenish what she spent. In what vehicle should I invest on her behalf?  A roth?

Also, in general, how are you allocating your investments?  Allow for x% in IRA, mutual funds, individual stocks, real estate, money market, cash etc?  What percentage of income are you contributing to your 401k (my employer only matches 3%)

 

tia

If she's not working and doesn't have wage income, need a spousal IRA. 

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50 minutes ago, Sand said:

 

3 hours ago, Gawain said:

If she's not working and doesn't have wage income, need a spousal IRA. 

Technically sure. But (if I'm wrong I've been wrong for 16 years), there's no real difference in the account between a "spousal" and a normal IRA.  When I set it up for her she was working but I've been contributing to her account without her bringing income since son 1 was born.

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1 hour ago, -OZ- said:

 

Technically sure. But (if I'm wrong I've been wrong for 16 years), there's no real difference in the account between a "spousal" and a normal IRA.  When I set it up for her she was working but I've been contributing to her account without her bringing income since son 1 was born.

Correct. A spouse's eligibility to make an IRA contribution is determined by the spousal IRA rules, but there is no difference in the IRA account itself

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  • 3 weeks later...
27 minutes ago, Leeroy Jenkins said:

What is the benefit, if any, of doing a spousal IRA for your stay at home wife if your deduction is 100% phased out due to income/having an employer plan?

You income eligible for a Roth? Significant benefits there.

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Just now, Leeroy Jenkins said:

Depends on my bonus. Last year my W2 income would have exceeded the limit.  

I am debating whether I need a financial planner or whether I can do this all myself. 

As long as your wife doesn't have other IRAs you can fund a traditional and then convert. Fidelity/Vanguard/Schwab should be able to walk you through the process.

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  • 3 weeks later...

Just came up with a random idea with my mom over dinner this evening.

I owe about 70 grand on my house with about 10 years left at 3.75%.  I  have been planning to pay extra on the mortgage.

My mom has some extra saving laying around, and she would give me a small portion (10 grand) that I will apply to the mortgage right away. 

Then, I give her back $1,000 per month until the loan is paid off, so 10 months.  Then, I will give her a "bonus".  She says 500 bucks is cool.  

Running numbers it looks like the total interest I would pay between balance 70k to 60k is around 4 grand.  I am speeding through that 4 grand and giving her 500 bucks.

Is my math right?  Is this a no brainer move for both of us?  I mean, her money will just sit in her savings doing nothing.   She will not invest or do anything like that, so guaranteed she  makes no money on that 10 grand.  

I was going to pay an extra grand a month anyway, so this just seems to make too much sense.  

Convince me I am wrong.

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3 minutes ago, ghostguy123 said:

Just came up with a random idea with my mom over dinner this evening.

I owe about 70 grand on my house with about 10 years left at 3.75%.  I  have been planning to pay extra on the mortgage.

My mom has some extra saving laying around, and she would give me a small portion (10 grand) that I will apply to the mortgage right away. 

Then, I give her back $1,000 per month until the loan is paid off, so 10 months.  Then, I will give her a "bonus".  She says 500 bucks is cool.  

Running numbers it looks like the total interest I would pay between balance 70k to 60k is around 4 grand.  I am speeding through that 4 grand and giving her 500 bucks.

Is my math right?  Is this a no brainer move for both of us?  I mean, her money will just sit in her savings doing nothing.   She will not invest or do anything like that, so guaranteed she  makes no money on that 10 grand.  

I was going to pay an extra grand a month anyway, so this just seems to make too much sense.  

Convince me I am wrong.

What’s your 10 month breakdown of principal vs interest 

Edited by Judge Smails
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28 minutes ago, ghostguy123 said:

Just came up with a random idea with my mom over dinner this evening.

I owe about 70 grand on my house with about 10 years left at 3.75%.  I  have been planning to pay extra on the mortgage.

My mom has some extra saving laying around, and she would give me a small portion (10 grand) that I will apply to the mortgage right away. 

Then, I give her back $1,000 per month until the loan is paid off, so 10 months.  Then, I will give her a "bonus".  She says 500 bucks is cool.  

Running numbers it looks like the total interest I would pay between balance 70k to 60k is around 4 grand.  I am speeding through that 4 grand and giving her 500 bucks.

Is my math right?  Is this a no brainer move for both of us?  I mean, her money will just sit in her savings doing nothing.   She will not invest or do anything like that, so guaranteed she  makes no money on that 10 grand.  

I was going to pay an extra grand a month anyway, so this just seems to make too much sense.  

Convince me I am wrong.

I think you’re paying like 11% APR to your mom.

Edited by Juxtatarot
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21 minutes ago, Juxtatarot said:

I think you’re paying like 11% APR to your mom.

Yes.  Appears to be a win-win for both.  

How much would I save applying an extra thousand per month the next 10 months to my mortgage payment as opposed to dropping a 10 grand lump sum now.

The part I forgot was my own personal interest savings overall if I was to add that thousand every month for 10 months and subtract that from the 4 grand interest savings I projected, so really closer to 3 grand.

Also, 11% seems high.  Basically paid in a year, I am not giving her 1100, unless I am factoring something wrong here.......edit........yes I suppose that would be correct since I am making the monthly payment.

Either way, I am wanting to see if someone can show me how this is bad for me.  

Edited by ghostguy123
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1 minute ago, ghostguy123 said:

Yes.  Appears to be a win-win for both.  

How much would I save applying an extra thousand per month the next 10 months to my mortgage payment as opposed to dropping a 10 grand lump sum now.

The part I forgot was my own personal interest savings overall if I was to add that thousand every month for 10 months and subtract that from the 4 grand interest savings I projected, so really closer to 3 grand.

You would be worse off.  You’re better off paying the extra $1,000 to your mortgage for 9 months and $1,500 the 10th month.  The interest rate is much lower.

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8 minutes ago, Juxtatarot said:

You would be worse off.  You’re better off paying the extra $1,000 to your mortgage for 9 months and $1,500 the 10th month.  The interest rate is much lower.

So I will save LESS than 500 bucks in interest if i apply 10 grand now as opposed to paying an extra grand for 9 months and then a 1500 payment month 10?

I suppose that is why I posed this question.😀

Edited by ghostguy123
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9 minutes ago, ghostguy123 said:

 

Also, 11% seems high.  Basically paid in a year, I am not giving her 1100, unless I am factoring something wrong here.......edit........yes I suppose that would be correct since I am making the monthly payment.

 

You’re not giving her no money for a year, you’re paying down principal rapidly.  Your balance would only be $4,000 in 6 months. I don’t have a calculator for this payment schedule but it’s very close to 11%. (Give or take a percentage or so.)

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3 minutes ago, Juxtatarot said:

You’re not giving her no money for a year, you’re paying down principal rapidly.  Your balance would only be $4,000 in 6 months. I don’t have a calculator for this payment schedule but it’s very close to 11%. (Give or take a percentage or so.)

Yes I get that now.

However the question is what would I save?   Doing this compared to adding the grand a month for 9 months then 1500 month 10.  

Edited by ghostguy123
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5 minutes ago, ghostguy123 said:

So I will save LESS than 500 bucks in interest if i apply 10 grand now as opposed to paying an extra grand for 9 months and then a 1500 payment month 10?

I suppose that is why I posed this question.😀

You will save more money overall by paying down principal over the 10 months like I mentioned than by getting that high interest rate loan from your mom.

Edited by Juxtatarot
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1 minute ago, ghostguy123 said:

Yes I get that now.

However the question is what would I save?   Doing this compared to adding the grand a month for 9 months then 1500 month 10.  

It would take a while to do the savings calculations.  If nobody else does before me, I’ll figure this out at work tomorrow if it’s slow.

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8 minutes ago, Juxtatarot said:

It would take a while to do the savings calculations.  If nobody else does before me, I’ll figure this out at work tomorrow if it’s slow.

Heck even if it was a total break even I would rather give my mom 500 bucks instead of giving it to the lender.  

Isnt there an extra payment calculator out there that let's you input one payment at a time for the 10 payments, and then project the rest out from there without any extra principle added?

Edited by ghostguy123
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5 minutes ago, ghostguy123 said:

Heck even if it was a total break even I would rather give my mom 500 bucks instead of giving it to the lender.  

Isnt there an extra payment calculator out there that let's you input one payment at a time for the 10 payments, and then project the rest out from there without any extra principle added?

The easiest way to think about it is you’re paying down only $10,000 in 10 months if you get the loan from your mom but $10,500 if you pay extra on your mortgage over 10 months instead.  The savings by paying down the $10,000 right away won’t be as much because the mortgage interest rate is less than the 11% to your mom.

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15 minutes ago, ghostguy123 said:

Heck even if it was a total break even I would rather give my mom 500 bucks instead of giving it to the lender.  

Isnt there an extra payment calculator out there that let's you input one payment at a time for the 10 payments, and then project the rest out from there without any extra principle added?

All I know is that situations where both parties feel like they are doing the other a favor can get tricky...especially with money.

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17 minutes ago, Juxtatarot said:

The easiest way to think about it is you’re paying down only $10,000 in 10 months if you get the loan from your mom but $10,500 if you pay extra on your mortgage over 10 months instead.  The savings by paying down the $10,000 right away won’t be as much because the mortgage interest rate is less than the 11% to your mom.

Not doubting you I would just like to see the exact numbers.   I would have to play around to figure out the exact way to do that.  I haven't worked with numbers like this in quite a while.  Nurses dont use math.  

However, on the amortization table I will be paying more principle each month if the 10 grand is laid down up front.  How much??  Hmmmm

I guess I can see the payoff date in each scenario and see how much faster the loan would be paid off with the 10 grand down as opposed to the other way.

But then there is the whole "invest the 500 now for the next 7-8years".  Ugh.  Done with this.  I guess I just didnt think it through.........hence why these days I ask people this kinda stuff before I ever actually do anything.

Edited by ghostguy123
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Ok last post on this since I think I just proved my self to be stupid.

I looked at what the interest portion of the what the payment would be if the balance was 60k, then multiplied that by 10.  Then looked at what the interest would be for each payment until I made the 10 payments.  Savings was only like 200 bucks.  

I had got the idea from the stupid youtube videos I recently watched about using a HELOC to pay down your mortgage fast.  Turns out I am not going to do either and, instead, I am gonna do it the ol fashioned way by just paying extra on the principle.  

Sorry for the barrage of clutter.  

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2 hours ago, pollardsvision said:

This is FBG's. Go ahead and move the $70K out of your back up to the back up emergency fund, pay off the house, give your Mom $500 because she's your Mom, then show her what she could do with her spare cash instead parking it in a checking account. 

FootBall Guy Mom's is where the true ballers hang out

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On 5/20/2019 at 8:33 PM, Sand said:

I'm getting my child to read this book this summer.  Pretty breezy book (and free!), but it actually has a good bit of solid information in it.

got my 14-year-old daughter to read the first half of this book this summer.   She's been away for most of the summer.  Texted her today to ask her what she has learned.

Quote

when u repay debt it’s like more money then u borrowed based on the amount of time and like the interest rate

so i asked her if debt was good or bad.

Quote

it depends. cuz there’s “good” debt that like provides benefits w some kind of money in return but “bad” debt doesn’t benefit u so like a mortgage is good debt cuz in the end you get a house to ur self but if you’re renting and take a loan for that u never end up owning the house

at least it's a start...

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10 minutes ago, Freak Show said:

My daughter is 21, and started her first job. The place she works matches up to 6% on a 403b. Does anyone know anything about Schwab Target 2055 as a Contribution Investment Selection?

Just looking at easily available info, looks fine. Very low expense ratio which is most important. 

She may want to choose an even longer term fund if they offer them.

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1 hour ago, Walking Boot said:

Random, possibly stupid, question:

Say I earn some small amount of money doing consulting work and am paid with a 1099. Say it's under $5k/yr. Just for funsies, to keep as much of this money as I can from this side job, I get a Tax ID for myself as a consulting business and open a SEP IRA to keep the money out of Uncle Sam's pocket for a while. So I contribute maybe $1k/yr or whatever the allowable maximum % is into this SEP IRA.

Then, say I earn some small amount of money doing some other, completely unrelated work... perhaps selling items through a consigner... and am paid my cut through another 1099. Let's say this time I earn $3k and I'm eligible to contribute another $600 of this money to a SEP IRA.

So the question is: Can it be the same SEP IRA account or do I have to open a second account at the brokerage for the second side job?

 

Yes but you have a cap by individual. Like hsa. 

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2 hours ago, Long Ball Larry said:

at least it's a start...

Not bad at all.

Mine is 14, as well, and your message reminds me how much I despite accepted text grammar.  Maybe I'm the only one who uses proper grammar in texts.

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10 hours ago, Walking Boot said:

Random, possibly stupid, question:

Say I earn some small amount of money doing consulting work and am paid with a 1099. Say it's under $5k/yr. Just for funsies, to keep as much of this money as I can from this side job, I get a Tax ID for myself as a consulting business and open a SEP IRA to keep the money out of Uncle Sam's pocket for a while. So I contribute maybe $1k/yr or whatever the allowable maximum % is into this SEP IRA.

Then, say I earn some small amount of money doing some other, completely unrelated work... perhaps selling items through a consigner... and am paid my cut through another 1099. Let's say this time I earn $3k and I'm eligible to contribute another $600 of this money to a SEP IRA.

So the question is: Can it be the same SEP IRA account or do I have to open a second account at the brokerage for the second side job?

 

I’m in a similar situation where I will earn 12-14k this year doing website management and online marketing.  I need to find ways to lower my taxes so will look into the SEP IRA.  

Any other ideas to keep more money in my pocket?

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12 hours ago, RUSF18 said:

Just looking at easily available info, looks fine. Very low expense ratio which is most important. 

She may want to choose an even longer term fund if they offer them.

Thanks for the reply. I will have her check to see if they have the 2060

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12 hours ago, RUSF18 said:

Just looking at easily available info, looks fine. Very low expense ratio which is most important. 

She may want to choose an even longer term fund if they offer them.

The googles is telling me that expense ration is .74%.   Is that what you're seeing b/c that's not good at all?

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