"SHOW ME THE MONEY" VIEWS on HOW to make MONEY GR

[Scott Campbell]

Are there any things I can do to decrease the amount I am taxed when single, straight out of school?

Yes. Vote Republican.

[MJZiggy]

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.

[Scott Campbell]

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.

Genius move if you and the parents get along, as long as you're piling all that money saved away.

[Scott Campbell]

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).............

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.

Though I'm not in the biz, and could be wrong.

[Partial]

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?

[retailguy]

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.

Does that count 7.5% for FICA (Social Security) and whatever they steal now for Medicare?

It's a total of 7.65% and NO I didn't include it.... Don't know why, I just "forgot" about it.

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.

[Scott Campbell]

Are there any things I can do to decrease the amount I am taxed when single, straight out of school?

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.

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.

[Scott Campbell]

Are there any things I can do to decrease the amount I am taxed when single, straight out of school?

Yes. Vote Republican.

I already feel bad about this smartass comment of mine. Good financial planning is not a partisan issue.

[retailguy]

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?

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.

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.

[Scott Campbell]

It's a total of 7.65% and NO I didn't include it.... Don't know why, I just "forgot" about it.

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.

[retailguy]

Well, I guess starting a business opens up a whole bunch of ways to avoid taxation.

Unless you live in the "Peoples Republic of Washington".

[retailguy]

Are there any things I can do to decrease the amount I am taxed when single, straight out of school?

Yes. Vote Republican.

I already feel bad about this smartass comment of mine. Good financial planning is not a partisan issue.

Personally, I kind of enjoyed your comment. And it is "political" in the sense that the philosophies are different. The dems believe that the government does a much better job of "distributing" the money than the people do hence Clinton's higher taxes, and the tax cuts Bush put into place kind of sum up the other view.

[retailguy]

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).............

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.

Though I'm not in the biz, and could be wrong.

Well, then things have changed since I had a big company 401K. I'm in a very small town so I'm no expert on today's 401K plans. I guess it gives me some homework for the next few nights.

[Scott Campbell]

what is the interest rate on a roth?

There is no interest rate. A Roth is merely an account. But it's your account for you to manage. Your employer has nothing to do with it. You decide how the money gets invested. Individual stocks, bonds, mutual funds, money market funds. Your choices are extremely flexible, unlike your 401K where you are only likely to have a handful of mutual fund selections to choose from.

Or you can give a financial advisor limited power of attorney for your IRA, which means that they can trade or invest in your account on your behalf, but they can't make withdrawls. Though I would never do this personally.

[Scott Campbell]

Personally, I kind of enjoyed your comment. And it is "political" in the sense that the philosophies are different. The dems believe that the government does a much better job of "distributing" the money than the people do hence Clinton's higher taxes, and the tax cuts Bush put into place kind of sum up the other view.

I know where you're coming from. But I think it would be a shame if this thread disintegrated into a partisan discussion, as there is plenty of valuable information here for god damned liberals and the filthy greedy conservatives alike. We've got FYI for that other stuff.