"100% of people who do not save money do not have any!"--Dave Ramsey

[Xist]

Originally Posted by JSH

So why don't you move your money?

I want to have Mom put my accident money towards her mortgage. It would pay down a significant fraction.

However, since Mom isn't doing anything quickly and I have more money that I realized (although much of it probably isn't mine--like $5-6,000 in taxes) I went to transfer it to Bask for that lifechanging $1,000 per half-decade, but neither the app nor the site allow me to transfer it.

I can select my Navy Federal account, but not my Bask account--on Bask's own website.

I e-mailed them about it. It has been almost 36 hours and I haven't heard back.

Originally Posted by JSH

Can't pay the annual property taxes or can't pay an estate tax?

Read between the lines! "Can't" usually just means "Don't want to!"

Originally Posted by JSH

I really doubt your mother has an estate large enough to pay any federal estate taxes. Inheriting a house is different than buying the house from your mother.

Oh yeah?!

Zillow guesses that Mom's house is worth $226. I put that into Calculator.net's Estate Tax Calculator

Net taxable estate is $226,000.

Because the taxable estate value is within the exemption, the federal estate tax due is $0 for 2023.

Huh.

Okay okay! I can cover that!

Originally Posted by JSH

This house still has a mortgage? That brings with it a lot of questions and I’ll be direct. If your mom died tomorrow can you afford to pay the mortgage, taxes, utilities etc on your own? It doesn’t do you much good to inherit a house if you can’t afford to keep. You mother might need life insurance to pay off the mortgage or you need a plan ASAP of how you are going to get your income to a level that you can support your brother and yourself on your own

Mom charges my brother more for room and board than the mortgage itself costs, plus I have over $14,000 in the bank.

She at least used to have more in savings than she owed on the house.

I can't explain Mom!

She doesn't have life insurance. Had she gotten the $10 Colonial Pen ad they always spam on television when she turned 65, around when Dad died, she would have lost money already.

I tried looking into other plans and something about the statistical likelihood of people her age dying makes it unpractical.

I am checking again. I am guessing her birthdate, height, weight, ZIP, and diabetic data--I don't want to give away her information, but I want it to be in the ballpark.

Now it wants an e-mail address!

FreebeardIsOkay@Nunya.com

Huh.

It didn't like that!

PolicyGenius says that $100,000 of coverage would cost $110-179 for a 10-year policy and $185-286 for a 15-year one.

Remember that bit about the statistical likelihood of people her age dying?

Scar said prepared and I always try to be.

Occasionally successfully.

Not this morning. It looks like I am spending far too much time asking people "How do I prevent Windows from restarting just because I don't have a keyboard connected?"

Anyway, trying to calculate the profit margin on Mom's life expectancy is giving me the jibblies, like the painting in Strong Bad's closet.

I learned that I cannot watch this video while posting:

https://www.youtube.com/watch?v=rZ9koMUYlxg

Anyway, 120 payments of $179 total $21,480, and 180 payments of $286 total $51,480.

Am I missing something?

Originally Posted by JSH

The best time to buy is when the market is down. Remember when market lost 50% in the 2008 / 2009 recession? It is worth more than double the prerecession peak today even with the losses over the last year. However, stocks are for long term investing - not money you will need in a short period of time. Saving or investing?

Who doesn't remember?! I finally moved on from being a starving student and was a starving graduate! I was trying to figure out which meals and bills were the most important and then I joined the Army and my Drill Sergeants kept yelling at me for [checks notes] existing!

When VOO outperforms Bask--assuming I can ever deposit my money--I will switch over.

Do any of you think I could have taken this time to tell Navy Federal to send my money to Bask instead of responding to one post?

[Xist]

Originally Posted by redpoint5

I don't fully practice what I preach, but putting money into "savings" isn't how you get rich; it's how the banks get rich.

The checking account should have a few grand in it; enough to cover the monthly credit card bill, which you're purchasing everything on to get the 2% cash back, plus a grand or so extra as an emergency/buffer.

4% interest on $5k is $200 a year, or about 50 cents a day. Not life altering.

Invest the rest in index funds which over time will outperform any savings account, except...

Here's the order of operations;

0. Establish an emergency fund to your satisfaction
1. Contribute to your 401k (traditional or Roth - see "Why #4" below) up to any company match
2. Pay off any debts with interest rates ~5% or more above the current 10-year Treasury note yield.
3. Max Health Savings Account (HSA) if eligible.
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
5. Max 401k (if
- 401k fees are lower than available in an IRA, or
- you need the 401k deduction to be eligible for (and desire) a tIRA deduction, or
- you earn too much for an IRA deduction and prefer traditional to Roth, then
swap #4 and #5)
6. Fund a mega backdoor Roth if applicable.
7. Pay off any debts with interest rates ~3% or more above the current 10-year Treasury note yield.
8. Invest in a taxable account and/or fund a 529 with any extra.

Here's the thread on this. There's really not much point in listening to other "experts" talk on this subject because they are either giving a long-winded way to say the same thing, or they're wrong.

https://forum.mrmoneymustache.com/in...53/#msg1333153

I promise to move goalposts, attack a strawman, create a false dilemma, utilize Non causa pro causa, make a hasty generalization, and create a No True Scotsman scenario after this client!

[redpoint5]

Note the above order of operations does not have pay off the mortgage listed. It would fall under the category of interest rates above 5% if someone were silly enough to have such a bad mortgage interest rate.

A high mortgage interest rate still doesn't mean pay it off, it means refi it when rates are low.

I'm still kicking myself for not doing a cash out refi. Getting equity out at 2.xx% tax deductible interest is a no-brainer, especially when inflation is exploding.

[freebeard]

Originally Posted by Xist

Now it wants an e-mail address!

FreebeardIsOkay@Nunya.com

Huh.

It didn't like that!

vBulletin linkified that, I didn't. I forbid you to try that with a lower case 'f'.

I can select my Navy Federal account, but not my Bask account--on Bask's own website.

I e-mailed them about it. It has been almost 36 hours and I haven't heard back.

I hear that 'they' want to eliminate cash. I [mostly?] only deal with institutions that maintain a local counter where you can walk up and talk to a person -- so -- credit union and USPS. The electric utility has an outdoor walk-up window.

[JSH]

Originally Posted by redpoint5

I don't fully practice what I preach, but putting money into "savings" isn't how you get rich; it's how the banks get rich.

The checking account should have a few grand in it; enough to cover the monthly credit card bill, which you're purchasing everything on to get the 2% cash back, plus a grand or so extra as an emergency/buffer.

4% interest on $5k is $200 a year, or about 50 cents a day. Not life altering.

Invest the rest in index funds which over time will outperform any savings account, except...

Here's the order of operations ….

I don’t disagree with any of that but I do think people get way to wrapped up in traditional vs roth IRAs. There is no difference in taxes paid between the two if the tax rate stays the same. So really you are betting on whether your tax rate is lower today vs when you take the money out decades from now. It makes a lot of sense for someone early in their career to fund a roth since their tax rate is likely low. In makes little sense for someone at the peak of their career but with little saved to fund a roth. The VAST majority of people aren’t going have enough invested that their federal income taxes in retirement are greater than when they are working. People that owe little to no taxes in retirement made a mistake if they invested in a Roth. There is no one size fits all answer to the Roth vs Traditional question.

The other benefit to a Roth is that you can take the contributions out penalty free before the age of 59 ½. That is why FIRE enthusiasts are so sure that Roth IRAs are the way to go. And saving a 10% early withdrawal penalty is a big deal if you are planning to use the money before 59 ½.

[JSH]

Originally Posted by Xist

charges my brother more for room and board than the mortgage itself costs, plus I have over $14,000 in the bank.

Which either means your brother’s income is large or the mortgage payment is low. $14K doesn’t go far when we are talking about things like house repairs. A new roof or furnace can easily cost $10K.

Originally Posted by Xist

I learned that I cannot watch this video while posting: Anyway, 120 payments of $179 total $21,480, and 180 payments of $286 total $51,480.

Am I missing something?

You are missing the fact that insurance is not an investment – it is a way to cover the risk of having to pay large expenses you can’t pay out of pocket with small monthly payments – but only until that risk is neutralized.

Life insurance is needed if someone depends on your income to live and would be in severe financial hardship if you die and they don’t have that income. For example - when my wife and I were newly married we needed life insurance. My wife was attending university, we had less than 10% equity in the house, there was a loan on her car, I still had student loans. If I died my wife would have needed to quit school to get a job and even then the job she could get with her education at the time would not have paid the bills. So I took out enough life insurance to clear the debts and give her a few years of living expenses. When she graduated and got a better paying job than me we dropped the term policy because at that time either one of use could manage on just one income. We have never paid for life insurance since.

In your case I suggested thinking about life insurance on your mom IF you couldn’t manage to pay the mortage and other household bills with just your income and the income that comes in for your brother. It seems like you are saying you can pay all the bills on your own so in that case there is no need for life insurance.

(Life insurance is also used for some other odd cases and to dodge taxes but those of VERY specialized uses that don’t apply to most people)

Originally Posted by Xist

When VOO outperforms Bask--assuming I can ever deposit my money--I will switch over.

VOO has returned 4.24% YTD. It returned -14.25% over the last 12 months. It returned 43.39% over the last 5 years. VOO returned 261.46% since 2010.

How long are you looking for positive return so start investing money? Wait for the market to fully recover and you miss the entire recovery.

Again – what is your plan for this money beside needing to pay $5K - $6K in taxes? Have you even thought about investing for retirement considering that our generation is pretty much completely on our own? If I'm not mistaken you are a middle-aged man now.

Originally Posted by Xist

Do any of you think I could have taken this time to tell Navy Federal to send my money to Bask instead of responding to one post?

No. You have been complaining about the interest rate on your bank account for at least a year but still haven’t done anything by post about it.

[redpoint5]

Originally Posted by JSH

I do think people get way to wrapped up in traditional vs roth IRAs. There is no difference in taxes paid between the two if the tax rate stays the same. So really you are betting on whether your tax rate is lower today vs when you take the money out decades from now.

My assumption is that tax rates will increase over time, with the government funding more things that we used to privately be responsible for. There's zero chance we don't have at least single-payer health insurance by the time I retire. That money has got to come from somewhere, and tax rates will be higher in the future.

... on a tangent subject, I have been thinking a little about being a stay at home parent. My wife and I have almost identical income which has us paying more in taxes than most. If I stayed home, I'd eliminate child care expenses, and have small amounts of time to pursue side interests or simply to keep up with repairs and improvements to the 2 houses we own.

I'll have to run some numbers to see what staying home would look like. I'd probably hire someone to open a daycare here to defray childcare expenses and give me time to pursue business ideas.

[freebeard]

That money has got to come from somewhere, and tax rates will be higher in the future.

Before the income tax was necessary to pay the interest due the Federal Reserve Grift, the Country subsisted on fees and tariffs.

I'd probably hire someone to open a daycare here to defray childcare expenses and give me time to pursue business ideas.

That's recursive. Do you think the birth rate isn't dropping like a rock at the moment?

[redpoint5]

Originally Posted by freebeard

That's recursive. Do you think the birth rate isn't dropping like a rock at the moment?

It is recursive, but I expect opening a daycare will give me the fundamentals of running a business. Then I can get serious about the business I want. I've got to figure out the thing that annoys me most, that I think I have a solution to. At the moment, it's the cost and unreliability of daycare (sitter and backup) were sick all week).

I did start a "million dollar ideas" spreadsheet quite a while ago. I seemed to have a new idea every couple days, and now only a couple a month cross my mind. Not sure if it's age, or attention required by kids that has drastically reduced the ideas. I never was diligent to write them down though, figuring if they were so genius I'd simply remember them.

[JSH]

Originally Posted by redpoint5

My assumption is that tax rates will increase over time, with the government funding more things that we used to privately be responsible for. There's zero chance we don't have at least single-payer health insurance by the time I retire. That money has got to come from somewhere, and tax rates will be higher in the future.

I'm sure people thought the same thing when Medicare passed but in fact the opposite happened - Federal income taxes are lower today than in the 60's.

Graphically from the 60's to early 00's. And then it has dropped even farther since then to 13.3% in 2019 which is almost 10% less than in the 60's.https://taxfoundation.org/publicatio...come-tax-data/



However, the biggest impact on your tax rate is not the feds - it is your income in retirement which is related to how much money you have accumulated. The vast majority of people do not have a massive investment portfolio that is earning more investment income in retirement than what they made during their wage earning years. In fact most people make less in retirement than while they are working - and therefore pay less in Federal income taxes.