NT: Official Personal Finances Thread

[s0lefunk]

I owe about $1300 in CC debt. I'm currently paying $350 a month to knock down the balance but my interest rate is 22%. Any hopes I could decrease the rate? I want to keep the account open and keep a slight balance on it each month but not sure it benefits me to have such a high rate. Would a balance transfer be an option, and if so does anyone have any positive experiences going that route?

I was approved for the Chase Slate CC and did a balance transfer. 15 month promo period with 0% interest, no transfer fee if done within 60 days of approval, and no annual fees. The entire process from approval to transfer took less than 2 weeks. The card is only intended for balance transfers to stop the bleeding from interest payments. It doesn’t have any perks.

I'm considering doing the same, the one thing I need to find out is if my employer is one of those places where the entire balance of the loan is due of you end up leaving for whatever reason.

Generally if you can’t pay it back within 60 days you’d have to report the loan as income when you file your taxes. It would become an early withdrawal vs a loan at that point so be prepared for taxes, early withdrawal fees, etc. You could take a loan or do a balance transfer that offers 0% interest for a promo period to settle the outstanding balance, then payoff the new personal loan/card before interest starts kicking in.

 

[pdino]

I'm considering doing the same, the one thing I need to find out is if my employer is one of those places where the entire balance of the loan is due of you end up leaving for whatever reason.

This was the case for me. I think most employers make you pay it back

 

[juice man]

s0lefunk I'm looking into Chase now, Credit Karma says I have excellent approval odds for the Chase Freedom. Same cash back rewards as my current (1.5%), and 0% for 15 months promo. Did you close the account you transferred the balance from?

 

[antidope]

Yeah that's what I'm trying to avoid. I don't plan on leaving but if I was to take the 401k loan I've effectively decided to not leave for 3-5 more years

 

[206to813]

Yeah that's what I'm trying to avoid. I don't plan on leaving but if I was to take the 401k loan I've effectively decided to not leave for 3-5 more years

Or just pay it back

 

[antidope]

Or just pay it back

I'm always thinking worst case scenario. You can borrow a max of 50k from your 401k and I would be borrowing all of that. Five year loan term and I lose my job in year two... Then what?

I'm not worried about paying it back, my budget is rock solid from a math perspective.

 

[s0lefunk]

s0lefunk I'm looking into Chase now, Credit Karma says I have excellent approval odds for the Chase Freedom. Same cash back rewards as my current (1.5%), and 0% for 15 months promo. Did you close the account you transferred the balance from?

You shouldn’t concern yourself with the purchasing perks of a balance transfer card. You just want a card that offers the lowest transfer fees and longest no interest period. The intent is to payoff the balance and close before the interest kicks in. I don’t charge anything to the Slate card. Just make my set payments on it.

I didn’t close the other card I transferred from. Keeping it open strictly for emergency purposes for now. Plan on replacing it with another card with better perks later down the line.

 

[antidope]

Debating investing the entirety of my emergency fund, curious to see if anyone here has made that decision a how they feel about it.

 

[domogotsole]

I keep the two separate antidope Investment money should be cash that would not be missed imo. If your emergency fund is secure set up an investment hoard. Personally I dedicate a set percentage from my earnings per check. You have planned well so far. Continue to do so.

 

[antidope]

I keep the two separate antidope Investment money should be cash that would not be missed imo. If your emergency fund is secure set up an investment hoard. Personally I dedicate a set percentage from my earnings per check. You have planned well so far. Continue to do so.

Yeah I'm gonna end up passing more than likely. I've been trying to save up for a house so I haven't invested outside of my 401k all year. Just been taking that money I usually put in the market into cash.

 

[JL415]

perhaps look at a short term CD?

 

[antidope]

perhaps look at a short term CD?

The small pick up in yield isn't worth the illiquidity.

Getting 1.7% on cash in online savings as is.

 

[lilchico4life]

So my core holdings are in REI. I would say about 70% of it and am acquiring more periodically. I figured that's all I would need for retirement. Just living off the cash flow and have all properties paid off by then. Then I figured why not diversify some more and have an IRA as well. I just joined Vanguard over the weekend after some research and funded the account. I have some questions about contributions and distributing funds. So the maximum I can contribute per year is $5,500? What happens if I put any more than that? Any way I can put in $100k from the get go or can I only contribute $5,500 for 18 years to reach $100k? I don't want to actively manage, but maybe rebalance occasionally as needed. Do I pick individual stocks or index funds? Do I go 100% stocks or have bonds in the mix, since I'm still fairly young? Any specific index funds I should look at at Vanguard? I was thinking maybe an 90/10 or 80/20 split stocks/bonds. From research, I've read it's best to find index funds with low costs and fees. I guess it's also called Expense Ratio. Anything else I need to know?

I'm still very new at this. I'm going to spend some time reading through this entire thread and take notes. I'm also spending time reading on Bogleheads about lazy portfolios and the two-fund, three-fund, and four-fund portfolios. Anywhere else I can get more information? Thanks in advance!

 

[pdino]

^I think it's a good idea to diversify. Maximum contribution is 5,500$ if you put in more then that you're taxed 6% every year on the exceeding amount by IRS. You can put as much as you want, as long as you're willing to eat the 6% penalty. I would just put 5,500$/year. You can pick how you would like your investment distributed, I suggest more stock heavy over bonds until you get older.

 

[tkthafm]

Any specific index funds I should look at at Vanguard?

VTSAX

 

[alfa]

I just joined Vanguard over the weekend after some research and funded the account. I have some questions about contributions and distributing funds. So the maximum I can contribute per year is $5,500? What happens if I put any more than that? Any way I can put in $100k from the get go or can I only contribute $5,500 for 18 years to reach $100k? I don't want to actively manage, but maybe rebalance occasionally as needed. Do I pick individual stocks or index funds? Do I go 100% stocks or have bonds in the mix, since I'm still fairly young? Any specific index funds I should look at at Vanguard? I was thinking maybe an 90/10 or 80/20 split stocks/bonds. From research, I've read it's best to find index funds with low costs and fees. I guess it's also called Expense Ratio. Anything else I need to know?

I'm still very new at this. I'm going to spend some time reading through this entire thread and take notes. I'm also spending time reading on Bogleheads about lazy portfolios and the two-fund, three-fund, and four-fund portfolios. Anywhere else I can get more information? Thanks in advance!

First of all, congrats on getting your finances right and deciding to diversify. I'm only vaguely familiar with the RE side of things (I'm curious about investment properties, but haven't made the time to research deeply enough to put too much skin in the game besides my own place), but as for the retirement/IRA side of things, this is what I'd recommend in terms of your questions.

Note, this is just my personal knowledge and understanding and way of doing things, I'm not a financial professional/expert by any means. I just wrote this off the cuff because I accumulated this knowledge and wanted to share with y'all NT fam. If you find contradictory information or knowledge, I'd appreciate any dialogue.

In terms of IRA's, you have 2 ways to go: Roth (post-tax, money you've been taxed on, you can withdraw later without taxes, under current tax laws) or Traditional (pre-tax, you're not taxed on this today, will be taxed when you withdraw, however, there may be ways around this, some info here: https://www.madfientist.com/traditional-ira-vs-roth-ira/). Technically, each one has a cap of $5500 in terms of contributions, as long as you're under age 50 and make less than ~$120k adjusted gross income. If you're over 50, you can make catch up contributions and contribute $6500.

There is a way to get your $100k into an IRA, but that involves a mega backdoor Roth IRA contribution. Here's one breakdown of it that I like and find helpful: https://www.madfientist.com/after-tax-contributions/

As for index funds or individual stocks, the answer is it depends... It's involves personal preference, risk tolerance, personal emotional control, and financial goals. Predominant school of thought right now is going to be majority index funds, it's a bit of set it and forget it, the slow cooker of investing in the stock market. You probably already know this but one of the premier investors in the world, Warren Buffett, advocates for people to just stick their money in the S&P500 and roll with the US economy. He just won a bet by backing the S&P 500 against some hedge fund pickers. Also, I believe his advice for his family was to put their money in the S&P 500 should he pass away. There are schools of thought that advocate for creating your own index, if you want to be more proactive and make value plays (ie buying low, etc.) and picking stocks on your own, which would involve more work, research, discipline, etc.

As for allocation, in terms of 100% or mix, there's different schools of thought there too. Common knowledge would say to have a balance of stocks and bonds based on age since bonds are historically less volatile and provide a steady income, which is something you want as you're older and relying on the cash, whereas stocks are much more volatile and returns aren't as steady. The reason it's advisable to pursue a higher allocation of stocks while you're younger is the returns of stocks can be higher, anywhere from 7-10% when looking at a timeline of decades, whereas bonds are in the 2-5% range. Personally, I went 100% since I tried the split and after a while, I felt like I didn't care about the stability of bonds and could tolerate the stock volatility since I wouldn't be touching the money for decades. One way to go would be to try a 90/10 or 80/20 and re-allocate as you feel comfortable.

As for fees, yep, go with lower cost and fees, unless the returns and index composition (what stocks the index fund buys and holds) are attractive enough to pay a higher premium. At Vanguard, you're their client and shareholder, so their financial prerogative is to make money for their clients, so they tend to have the lowest index fund fees. This guy has a good stock series that breaks things down pretty well: http://jlcollinsnh.com/stock-series/ and he's a big fan of Vanguard. I'm personally with them too and have had good experiences with their index funds. Bogleheads is a great place for index fund investors and there's a strong, helpful community there.

As for additional resources beyond the ones linked, "The Intelligent Investor" and "Security Analysis" by Ben Graham, influential for individual stock valuation if you decide to go that route. "Bogleheads guide to investing," for the index fund argument. I can't think of others off the top of my head right now.

I didn't think it'd become this wall of text, but I wanted to answer some of your questions. Lunch break wrapping up and I gotta get back to work, but feel free to reach out if you have any questions or wanna chat. Wish y'all the best, NT fam.

 

[antidope]

If you don't have a real interest in the market I'm a 100% advocate of the core satellite approach and having the core of your portfolio be the S&P500 or a global equity fund and then layer around that with other funds/single stock.

 

[jjs]

Co-sign what antidope said

Half of the professional fund managers can't beat the market consistently. You better know what you're doing out there to pretend you can beat the market in the long run.

Core in broad index, leave a certain % to do some stock picking / invest in different more specific indexes.

 

[tay1]

Just found out I'm eligible for a 401k. Which is weird because I didnt believe a job like mine would provide one. Not even gonna front, I don't know what a 401k is. I got a lot of researching to do.

 

[antidope]

Just found out I'm eligible for a 401k. Which is weird because I didnt believe a job like mine would provide one. Not even gonna front, I don't know what a 401k is. I got a lot of researching to do.

Find out what they match up to and put at least that amount in. Ideally you should do more but contributing less than the firm match is throwing money away

 

[antidope]

I am disgusted. As of June 30th I have spent more money than I did all of 2017 if you remove my student loan payments which no longer exist (which in my mind should have been contributing to savings but apparently I'm spending it) ....absolutely disgusted.

 

[alfa]

antidope what you buying though? I'm hoping you partly say assets...

But yeah, it's been a higher spending year for me this year too. Life forcing my hand with some family health issues and doing some home improvements, as well as taking some trips before our family grows bigger. Once I have kids, it might just be a wrap unless I can grow these earnings way more.

 

[para bellum]

What do you guys recommend doing with a 401k from a former employee, besides rolling it over to your new company?

No reason I have in not doing it, just want to weigh my options.

 

[superantigen]

I too have spent far more money this year, especially in the last few months, than I anticipated and would have liked. Trips to Home Depot are definitely to blame. Luckily, I have 0% interest on my Discover CC for a whole year, so my profligacy won't cost me anything extra.


...

 

[antidope]

antidope what you buying though? I'm hoping you partly say assets...

But yeah, it's been a higher spending year for me this year too. Life forcing my hand with some family health issues and doing some home improvements, as well as taking some trips before our family grows bigger. Once I have kids, it might just be a wrap unless I can grow these earnings way more.

Nope! It's consumption