I think your taking a "if I had to pick one over the other" point of view. I never really got that far. I maxed em both.Quote:
Originally Posted by retailguy
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I think your taking a "if I had to pick one over the other" point of view. I never really got that far. I maxed em both.Quote:
Originally Posted by retailguy
Not having kids till your 30 is probably very good financial advice. But that may or may not work for you on a personal level, so that's your call.Quote:
Originally Posted by Partial
I suggest that you don't stop contributing to your 401K at the company match limit. Go ahead and max it out for the remaining tax advantage. One of the best features of the 401K is the payroll deduction. It takes the discipline requirement completely out of the equation, as you never see the money.
Yeah, I guess I am. Assuming that he's got the funds available, or is disciplined enough to do both, AND save for a house. Great. Just don't see that on $50K a year in today's world.Quote:
Originally Posted by Scott Campbell
One more opinion seeing that I'm on a roll.
I've heard a few of you state "do what you love, the money will follow". I kind of agree with that up to a point. But my primary role in life is not to be a happy employee. I am first and foremost the provider for my family, and that takes precedence over everything else. So I'd modify that saying to "Do what you love, and make damned sure they're paying you well for it."
Most of us spend 40-80 hours a week working for someone else so that they will pay us the money we need to survive. Yet very few will spend nearly the amount of time figuring out what to do with that money as they have to earn it. It's just as important to manage the money on the way out as it is on the way in. So why is so little effort typically made to understand personal finance, when so much effort has been made to earn that money in the first place? At best it's misguided logic, and at worst it's stupid and tragic.
Sorry for the rant.
isn't 50k damn good for someone who is single and very young with plenty of room to grow?Quote:
Originally Posted by retailguy
Yeah, it's damned good. But what you'll find as a single guy with a decent income and no deductions is that $100K isn't all that much once the government is done bending you over. If you max out all your investment opportunities like we've talked about, there won't be much left to live on. That's the discipline part that we've been talking about.Quote:
Originally Posted by Partial
Word.Quote:
Originally Posted by Scott Campbell
Back to the MBA discussion - check out this video on BusinessWeek link....
http://www.businessweek.com/mediacen...08b2be8ae.html
Partial - 50K is a great income to start at. But, if you max out the 401K, say that's 15% and put 10% in a Roth (may be limited to 4K depending on the 401K plan you have available), plus pay taxes at 15% (maybe more) plus state taxes at 7%, that equals 47%. Now your income is about 28K give or take. Thats $2333 per month to live and save for a house...., it just stretches the time it takes to save a "suitable" down payment, that's all.Quote:
Originally Posted by Scott Campbell
Would it better to rent when you don't have the money for a suitable down payment, or to buy something cheap and do some minor fixes yourself and sell it? I mean you always risk losing money, but if you break even you essentially lived somewhere for free, that to me seems like a good deal.
What about buying a duplex right out of school and living in half and renting the other section to someone?
Are there any things I can do to decrease the amount I am taxed when single, straight out of school?
If the first 5 years are so important and could make me much wealthier and better off in the long run, I am considering the thought of living at home. It's essentially saving probably 1000 a month that way. That would be brutal, but I could deal with it for a year or two if it gives me a much better life in the long run.
Does that count 7.5% for FICA (Social Security) and whatever they steal now for Medicare?Quote:
Originally Posted by retailguy
Yes. Vote Republican.Quote:
Originally Posted by Partial
If you can get away with it, LIVE AT HOME FOR AS LONG AS POSSIBLE!!!
Take all the money that you're not paying in rent and put it toward your future house. At $1K/month, after 2 years you will have 24,000 dollars toward the downpayment. Then buy a duplex and let someone else pay half your mortgage for you.
Genius move if you and the parents get along, as long as you're piling all that money saved away.Quote:
Originally Posted by Partial
My understanding is that your Roth contribution limits are not tied to 401K contributions. For singles, you can contribute the maximum $4000 (for those under 50 years old not eligible for catch up contributions) as long as your adjusted gross income is less than $95K. For married couples it's $150K.Quote:
Originally Posted by retailguy
Though I'm not in the biz, and could be wrong.
what is the interest rate on a roth? 4000 contributed over 40 years is 160000 on it's own, without any compound interest. That could become a ridiculous amount of money.
Say you inherit some money, say like 200,000 dollars. Are their any CDs or anything that just have massive interest I could throw that all in?
It's a total of 7.65% and NO I didn't include it.... Don't know why, I just "forgot" about it. :shock:Quote:
Originally Posted by Scott Campbell
But I did estimate a bit high on the state taxes and maybe the fed taxes depending upon his situation so it may even out in the end.
Partial - this is why SC & I were kind of discussing options. After taxes, and savings, there is not much left. Proper savings plans really change the lifestyle you can live. A couple years of paying these kind of taxes, feeling like you're struggling while making $50K can disillusion someone pretty quickly. Personally, I think that is why all the misinformed liberals like to say "F... it" and get high with what is left over. It is the only way you can "feel" good after paying taxes. Then, the natural result is to bash Wal-Mart and the other evil companies for "taking" all the money and good jobs away.
The serious answer is that your 401K contributions do decrease your current taxable income dollar for dollar. The older style conventional IRA's used to reduce your current taxable income too, but I think the contribution limits were affected by 401K contributions. I'm not paying much attention to those lately because I much prefer the Roth for younger people. As you get much older with fewer years until retirement, you might opt instead for a conventional tax deductable IRA because you won't have time to make up for having paid the taxes up front in the Roth. For those people, getting the tax deduction now can be better than not paying taxes on Roth earnings.Quote:
Originally Posted by Partial
You can deduct mortgage interest if you buy a home too, and a second home if you live in it 14 days a year or more. Some people are able to write off their boat or RV interest this way. It's got to be a pretty big boat, and I think you're required to have a galley and toilet, and you better be able to prove you lived in it. And then you can flip houses if you live in them for at least 2 years and avoid paying capital gains taxes on any appreciation - up to a $500K limit for each home. Many states offer 529 plans that allow state income tax deductions for education savings accounts. What else am I missing??? Those are all the easy no brainer tax dodges that I can think of. I think any thing else is going to require more elaborate planning and professional advice that I'm not qualified to give.
Well, I guess starting a business opens up a whole bunch of ways to avoid taxation.
Quote:
Originally Posted by Scott Campbell
I already feel bad about this smartass comment of mine. Good financial planning is not a partisan issue.
There is no "interest rates" per se. An IRA (Roth included) is an "investment vehicle". You can buy stocks, bonds, etc. You earn a return based upon dividends and stock price, a bond would pay interest, etc.Quote:
Originally Posted by Partial
You can't really earn "massive" interest right now in any vehicle you choose, however, having that amount of cash opens up many options not resembling a passbook savings account. :wink:
Quote:
Originally Posted by retailguy
I tend to foget about it too, as I just assume I'll never see a dime of it when my time comes to collect. Frigg'n government do-gooders.
And that goes for both Republicans and Democrats.