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jasper-xian

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tevatron_fiqa_qrel_test

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[ { "docid": "468144", "title": "", "text": "Even without fraud, a company can get into serious trouble overnight, often through no fault of their own. That's part of the hazard of being part owner of a company -- which is what a share of stock is. As a minority owner not involved in actually running the business, there really isn't a lot you can do about that excep to play the odds and think about how that risk compares to the profit you're taking (which is one reason the current emphasis on stock price rather than dividends is considered a departure from traditional investing) and, as everyone else has said, avoid putting too much of your wealth in one place." } ]

[ { "docid": "569224", "title": "", "text": "What most respondents are forgetting, is when a company allows its employees to purchase its shares at a discount with their salary, the employee is usually required to hold the stock for a number of years before they can sell them. The reason the company is allowing or promoting its employees to purchase its shares at a discount is to give the employees a sense of ownership of the company. Being a part owner in the company, the employee will want the company to succeed and will tend to be more productive. If employees were allowed to purchase the shares at a discount and sell them straight away, it would defeat this purpose. Your best option to decide whether or not to buy the shares is to work out if the investment is a good one as per any other investment you would undertake, i.e. determine how the company is currently performing and what its future prospects are likely to be. Regarding what percentage of pay to purchase the shares with, if you do decide to buy them, you need to work that out based on your current and future budgetary needs and your savings plan for the future." }, { "docid": "190351", "title": "", "text": "\"There may well be several such graphs, I expect googling will turn them up; but the definition of risk is actually quite important here. My definition of risk might not be quite the same as yours, so the relative risk factors would be different. For example: in general, stocks are more risky than bonds. But owning common shares in a blue-chip company might well be less risky than owning bonds from a company teetering on the edge of bankruptcy, and no single risk number can really capture that. Another example: while I can put all my money in short-term deposits, and it is pretty \"\"safe\"\", if it grows at 1% so that my investment portfolio cannot fund my retirement, then I have a risk that I will run out of money before I shuffle off this mortal coil. How to capture that \"\"risk\"\" in a single number? So you will need to better define your parameters before you can prepare a visual aid. Good Luck\"" }, { "docid": "319051", "title": "", "text": "So ensuring retiree health benefits by investing in them is fraud? How is not passing a massive healthcare pension on to future generations to pay fraud? If the benefits aren't affordable maybe they shouldn't exist? My employer doesn't give me benefits they can't afford!" }, { "docid": "308964", "title": "", "text": "\"I think you're right that these sites look so unprofessional that they aren't likely to be legitimate. However, even a very legitimate-looking site might be a fake designed to separate you from your money. There is an entire underground industry devoted to this kind of fakery and some of them are adept at what they do. So how can you tell? One place that you can consult is FINRA's BrokerCheck online service. This might be the first of many checks you should undertake. Who is FINRA, you might ask? \"\"The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States.\"\" See here. My unprofessional guess is, even if a firm's line of business is to broker deals in private company shares, that if they're located in the U.S. or else dealing in U.S. securities then they'd still need to be registered with FINRA – note the \"\"all securities firms\"\" above. I was able to search BrokerCheck and find SecondMarket (the firm @duffbeer703 mentioned) listed as \"\"Active\"\" in the FINRA database. The entry also provides some information about the firm. For instance, SecondMarket appears to also be registered with the S.E.C.. You should also note that SecondMarket links back to these authorities (refer to the footer of their site): \"\"Member FINRA | MSRB | SIPC. Registered with the SEC as an alternative trading system for trading in private company shares. SEC 606 Info [...]\"\" Any legitimate broker would want you to look them up with the authorities if you're unsure about their legitimacy. However, to undertake any such kind of deal, I'd still suggest more due diligence. An accredited investor with serious money to invest ought to, if they are not already experts themselves on these things, hire a professional who is expert to provide counsel, help navigate the system, and avoid the frauds.\"" }, { "docid": "286329", "title": "", "text": "This is a review of Broad and Wade’s Betrayers of the Truth. The author uses a subtitle which is revealing: the loyalist responds to heresy not by seeing that something might be wrong, that there may be some merit to this sort of reassessment, but by defending the ideology. Zinder has managed to misread Broad and Wade in several places. There is sufficient misrepresentation to mean that he read the book very selectively. “The authors continually confound science with scientists. And the book not only fails to enlighten us on science but doesn’t even begin to provide any insight on scientific method.” (p. 94) “Thirty four cases of fraud over a 2,000 year period are documented in the book, a number roughly comparable to the number of lawyers who went to jail for Watergate. Despite this small number, the authors imply that scientific fraud is common. They estimate that there are 100 additional major frauds, plagiarisms, and data fabrications for each one detected" }, { "docid": "458047", "title": "", "text": "Indeed the IRS publication references the 3-6 year time span. And no limit for fraud. But. I get a notice that some stock I owned 10 years ago has a settlement pending, and the records of this stock purchase and sale would potentially get me back some money. I get my Social Security statement (the one they stopped sending, but this was before then) and I see the 1995 income shows zero. Both of these were easily resolved with my returns going all the way back, and my brokerage statement as well. For the brokerage, I recently started downloading all statements as PDFs, and storing a copy away from home. Less concerned about the bank statements as I've never had an issue where I'd need them." }, { "docid": "451898", "title": "", "text": "\"Discussing individual stocks is discouraged here, so I'll make my answer somewhat generic. Keep in mind, some companies go public in a way that takes the shares that are held by the investment VCs (venture capitalists) and cashes them out of their positions, i.e. most if not all shares are made public. In that case, the day after IPO, the original investors have their money, and, short of the risk of being sued for fraud, could not care less what the stock does. Other companies float a small portion up front, and retain the rest. This is a way of creating a market and valuing the company, but not floating so many shares the market has trouble absorbing it. This stock has a \"\"Shares Outstanding\"\" of 2.74B but has only floated 757.21M. The nearly 2 billion shares held by the original investors certainly impact their wallets with how this IPO went. See the key statistics for the details.\"" }, { "docid": "575007", "title": "", "text": "\"I will disagree with some of the other answers here. In my view, the most important dimension of the situation is not your friend's potential loss but the potential losses of the people he may convince by using his position as youth group leader, etc., to draw more them into the scam. Exactly how to handle this depends on many factors that aren't mentioned in your question (and probably rightly so, as this aspect of the situation moves beyond personal finance). For instance, if your friend is a \"\"pillar of the community\"\" who is widely trusted, and you are not, there may be little you can do, since people will believe him and not you. If you have some influence over the groups he is trying to recruit, you can attempt to provide a counterweight to his recruitment activities. Again, how to do this depends on other factors, such as how he is recruiting them. If he is just privately contacting individuals and inviting them to these meetings, you may have to just keep your eyes peeled for anyone who seems tempted and try to dissuade them before they suffer the \"\"brainwashing\"\". If he actually tries to do some sort of public recruitment (e.g., holding a meeting himself), you could try to inject doubt by, e.g., attending and asking probing questions to expose the dangers. If you think the danger is widespread, you could consider taking some more public action, like writing a column in a local paper about this organization. Of course, another major factor is how much you think people stand to lose by this. However, in your question you indicated that your friend has invested \"\"multiple month or years of income\"\". If he intends to pressure others to invest similar amounts, this sounds to me like enough danger to warrant some preventive action. Few people can afford to lose months or years of income, and sadly those most vulnerable to a scammer's siren song are often those who can least afford it. It doesn't sound like a situation where you'd have to devote your life to the cause of stopping it, but if I knew that dozens of people in my community stood to lose years of income, I'd want to make at least a small effort to stop them, rather than just keep my mouth shut. In doing this, you may lose your friendship. However, you stated that your goal is to resolve the situation in a way that is \"\"best with lowest loss of money for everybody\"\". If you really take this utilitarian view, it is likely that you may have to give up on the friendship to prevent other people from losing more money.\"" }, { "docid": "272840", "title": "", "text": "Without making specific recommendations, it is worthwhile to point out the differing tax treatments for a Roth IRA: investments in a Roth IRA will not be taxed when you withdraw them during retirement (unless they change the law on that or something crazy). So if you are thinking about investing in some areas with high risk and high potential reward (e.g. emerging market stocks) then the Roth IRA might be the place to do it. That way, if the investment works out, you have more money in the account that won't ever be taxed. We can talk about the possible risks of certain kinds of investments, but this is not an appropriate forum to recommend for or against them specifically. Healthcare stocks are subject to political risk in the current regulatory climate. BRICs are subject to political risks regarding the political and business climate in the relevant nations, and the growth of their economies need not correspond with growth in the companies you hold in your portfolio. Energy stocks are subject to the world economic climate and demand for oil, unless you're talking alternative-energy stocks, which are subject to political risk regarding their subsidies and technological risk regarding whether or not their technologies pan out. It is worth pointing out that any ETF you invest in will have a prospectus, and that prospectus will contain a section discussing the risks which could affect your investment. Read it before investing! :)" }, { "docid": "423978", "title": "", "text": "> There are plenty of people that consistently beat the market. If the market were truly efficient, then everyone should just passively invest, which would make the market inefficient, leading to active investment. Passive investing a.) Doesn't mark the market *less* efficient, I don't know how you came to that conclusion. b.) There is not a big group of people who consistently beat the markets. There's a tiny, *tiny* sliver of a fraction of a portion of a group of people that beat the market over any ten year period, which is *consistent* with pure randomness. You're statistically likely to say those kinds of anomalies. In fact, it'd be stranger if we *didn't*. c.) The markets aren't *truly* efficient. They can't. There's imperfect information. The point is the potential exploits cannot 1.) be exploited on scale, because that creates market efficiency, and cannot 2.) be public, because that also creates efficiency. As more and more exploits are found, we're eliminating all these black swans. If you compare all 400 professionally managed mutual funds, only 2 have ever beaten the market, and by less than 50 basis points. That's 0.5%. That's not even consistent with randomness, that's worse than random. It goes to show how few and far between any potential exploits exist. It's simply not worth your time as an investor, because if giant firms employing hundreds cannot find them, a handful of people won't be able to find them by anything other than chance. It's almost always better to passively invest. You can read more about this, because while intuitively you may feel active investment can be better, the numbers don't lie and I promise you you're very wrong." }, { "docid": "374309", "title": "", "text": "If you've got shares in a company that's filed for U.S. Chapter 11 bankruptcy, that sucks, it really does. I've been there before and you may lose your entire investment. If there's still a market for your shares and you can sell them, you may want to just accept the loss and get out with what you can. However, shares of bankrupt companies are often delisted once bankrupt, since the company no longer meets minimum exchange listing requirements. If you're stuck holding shares with no market, you could lose everything – but that's not always the case: Chapter 11 isn't total and final bankruptcy where the company ceases to exist after liquidation of its assets to pay off its debts. Rather, Chapter 11 is a section of the U.S. Bankruptcy Code that permits a company to attempt to reorganize (or renegotiate) its debt obligations. During Chapter 11 reorganization, a company can negotiate with its creditors for a better arrangement. They typically need to demonstrate to creditors that without the burden of the heavy debt, they could achieve profitability. Such reorganization often involves creditors taking complete or majority ownership of the company when it emerges from Chapter 11 through a debt-for-equity swap. That's why you, as an investor before the bankruptcy, are very likely to get nothing or just pennies on the dollar. Any equity you may be left holding will be considerably diluted in value. It's rare that shareholders before a Chapter 11 bankruptcy still retain any equity after the company emerges from Chapter 11, but it is possible. But it varies from bankruptcy to bankruptcy and it can be complex as montyloree pointed out. Investopedia has a great article: An Overview of Corporate Bankruptcy. Here's an excerpt: If a company you've got a stake in files for bankruptcy, chances are you'll get back pennies to the dollar. Different bankruptcy proceedings or filings generally give some idea as to whether the average investor will get back all or a portion of his investment, but even that is determined on a case-by-case basis. There is also a pecking order of creditors and investors of who get paid back first, second and last. In this article, we'll explain what happens when a public company files for protection under U.S. bankruptcy laws and how it affects investors. [...] How It Affects Investors [...] When your company goes bankrupt, there is a very good chance you will not get back the full value of your investment. In fact, there is a chance you won't get anything back. [...] Wikipedia has a good article on Chapter 11 bankruptcy at Chapter 11, Title 11, United States Code." }, { "docid": "522991", "title": "", "text": "\"What would be the consequences if they do realize their error some day in the far future? You've informed them of the error and they've informed you that nevertheless the points are yours and you should use them. So you have a couple of issues: have you made what your jurisdiction considers a reasonable effort to correct the mistake, and did the customer service rep actually have the authority to make such a large goodwill gesture as letting you keep all the points? The first is your legal responsibility (otherwise you're stealing), and you need to know specifically for your jurisdiction whether a phone call is sufficient. I can't tell you that. Maybe you should send them a letter, maybe you should wait until you've had written confirmation from them, maybe you're OK as you are. You might be able to get free advice from some body that helps with consumer issues (here in the UK you could ask Citizen's Advice). The second is beyond your ability to know for sure but it's not dishonest to work on the basis that what the company's proper representative tells you, is true. With the usual caveats that I'm not qualified to give legal advice: once told you've been clearly told that it's an intentional gift, I don't see any way you could be held to have done anything fraudulent if you then go about enjoying it. The worst case \"\"far future\"\" problem, I would expect, is that someone decides the gift was never legitimately made in the first place. In other words the company made two separate errors, first crediting the card and then telling you the erroneous points stand. In that case you might have to pay them back whatever you've spent on the card (beyond the points you're entitled to). To avoid this you'd need to establish what constitutes a binding gift in your jurisdiction, so that you can say \"\"no, the point balance was not erroneous and here's the legal reason why\"\", and pay them nothing. You might also need to consider any tax implications in receiving such a large gift, and of course before paying tax on it (if that's necessary) you'd probably want to bug them for confirmation in writing that it really is yours. If that written confirmation isn't forthcoming then so be it, they've rescinded the gift and I doubt you're inclined to take them to court demanding that they stand by the words of their rep. Use them and play stupid. It's not my duty to check their math, right? That's potentially fraud or theft if you lie. You did notice, and even worse they have proof you noticed since you made the call. So never say you didn't notice. If you hadn't called them (yet), then you've been given something in error, and your jurisdiction will have an opinion on what your responsibilities are. So if you hadn't already called them, I would strongly suggest that you should call them or write to them about it to give them the opportunity to correct the error, or at least seek assurance that in your jurisdiction all errors in the customer's favour are final. Otherwise you're in the position of them accidentally handing you their wallet without realising, and you deciding to keep it without telling them. My guess is, that's unlikely to be a legally binding gift, and might legally be theft or fraud on your part.\"" }, { "docid": "122182", "title": "", "text": "\"To answer length validity and security implications of draft checks issued and negotiated within the United States, I am heavily addressing the common erroneous assumptions of where the funds sit while they're \"\"in\"\" a draft check and how to get them out. Tl;Dr The existing answers are incomplete and in some ways dangerously misleading. Jerry can still be potentially defrauded by Tom, and even if the check is legitimately drawn and negotiable, Jerry may still experience delayed access to the funds. The funds sit in an account held by the issuing bank. As long as the bank has sufficient funds, the check does. However, there are significantly more factors that go into whether a check will be returned unpaid (\"\"bounce\"\"). If I hand you $5000 in cash, will you give me $5000 in cash? Probably, and you'd probably be pretty safe. How about I give you a $5000 draft check, will you give me $5000 in cash without doing anything except looking at it to verify the check? I hope not (Cash America sure wouldn't) but people sell expensive goods with the \"\"same as cash\"\" attitude. Remember: The only non-cash form of payment which cannot somehow be held, reversed or returned unpaid in the U.S. without consent of the receiving party is a payment order (a.k.a wire transfer)! The draft check is \"\"as good as cash\"\" in the sense that the money for a draft check is withdrawn from your account before the check is negotiated (deposited). This does NOT mean that a draft check will not bounce, so Jerry is NOT as secure in handing the goods to Tom as if Tom had handed him cash, as it is still a check. Jerry's bank will not receive the funds for Tom's draft check for an average 3 to 5 business days, same as a personal check. Jerry will probably have access to the first $5000 within two business days... provided that he deposits the draft check in person at his bank's branch or in a bank-owned ATM. In the United States, Regulation CC governs funds availability. Regarding official, draft, or tellers checks: \"\"If the customer desires next-day availability of funds from these checks, [your bank] may require use of a special deposit slip.\"\" Mobile deposit availability in the U.S. is NOT regulated in this way and will likely be subject to a longer hold on more, if not all, of the check! Draft checks, don't, as a habit, \"\"bounce\"\" in the colloquial sense of \"\"returned for insufficient funds.\"\" This is because they are prepaid and drawn upon a financial institution's account. Banks are insolvent far less frequently than other businesses or individuals. Draft checks, tellers checks, official checks, bank checks, etc CAN, however, be returned unpaid if one of the following is true: As an aside: an institution is not obligated to honor a stale dated check, but may do so at its discretion. If you have a personal check outstanding for over 6 months, it may still clear and potentially overdraw your account. In this case, contact your bank ASAP to process a reversal. The depositing bank mis-scans the check and the issuing bank refuses the resulting data. I have seen systems mis-read which data field is which, or its contents. Also, there is the possibility the image if the check will be illegible to the issuing bank. The draft check has been cancelled (stop paid). This can happen if: a) The check was fraudulently bought from the issuing bank using Tom's account b) Tom has completed an indemnification agreement that the check was lost or otherwise not used for its intended purpose, without fraud having occurred against Tom c) The draft check is escheated (paid to the state as unclaimed property). This case is a subset of case 1, but will lead to a different return reason stamped on the (image replacement document of) the check. The draft check was never any good in the first place. Because of the perception that draft checks are as good as cash (they're not but are a lot better than personal checks), forgery and attempted fraud is shockingly common. These aren't actually underwritten by a real bank, even if they appear to be. The only money \"\"in\"\" them is what the fraudster can get out of you. Jerry did not properly endorse the check before presenting it for deposit or otherwise negotiating it. In my time in banking, I most commonly saw cases 3 and 4. Unlike most counterfeit cash, case 3 will fool Jerry and Jerry's teller. Tom gets an immediate payout (a car, a wire transfer, a payday loan, etc) and Jerry's bank doesn't know the check isn't valid until they call the alleged issuing bank to verify its negotiability, or in the case of smaller checks into lower-risk accounts, it is simply returned unpaid as fraudulently drawn. To conclude: Call the alleged issuing bank's verification line before handing over the goods, always properly endorse your deposits, and address what happens if one does not receive or collect on prompt payment in your contracts.\"" }, { "docid": "247083", "title": "", "text": "There are two scenarios that I see. You have a mortgage on the property. Generally the insurance company sends the funds to the lender, who then releases the funds to you as you make the repairs. They do it this way because if you never make the repairs the value of the collateral is decreased, and the lender wants to protect their investment. There is no mortgage. You will get the funds directly, and the insurance company will not force you to make the repairs especially if the repairs are cosmetic in nature. In either case if you don't fix the cause of the leak, and make repairs to the site around the leak, you will run into a problem in the future if the leak continues, or the rot and mold continues to spread. If you file a future claim they are likely to ask for proof of the original repair. If you didn't make it, they are likely to deny the second claim. They will say the cause is the original incident and if you had made the repair, the second incident wouldn't have happened. They are likely to drop you at that point. If you try to sell the house you will have to disclose the original leak, and the potential buyers will want you to make the repairs. Any mold or rot spotted by the home inspector will be a big issue for them. It is also likely to be an item that they will be advised to demand that you get a legitimate company to make the repair before the deal can move forward, and won't negotiate a lower price or a credit for $x so they can get the repair done. Some will just cancel the deal based on the inspection report." }, { "docid": "388414", "title": "", "text": "\"I appreciate the actually reasonable initial response. I've been consistently called a fake and a fraud mostly by, as you can probably guess, my competitors and my ex who has turned genuinely psycho. She and her father have now made the news for being directly connected to well documented international and American human rights violations, her father being directly connected to apparently a police chiefs admitted systematic protected records falsification/tampering/destruction and so much else. Those two groups arent exactly mutually exclusive at the moment. Her father works in PR/lobbying and she basically tried to make it a goal to ruin me. Why you might ask? Thats a great question. Could have something to do with the money I make people and people potentially owing me more than a few million. You really have to also consider though that would be an absurdly small price to pay for a billion especially if it took about 20 min to deliver in just that instance. Also the fact that she couldnt keep her clothes on to save her life after that point. All of the fake/fraud rhetoric is despite the fact, and probably because, I literally completed industry leading and often freely available open source economic work for no pay for several years as well as my comp (when I actually bill) being largely entirely performance based which almost nobody in the industry will even contemplate. Im not even that smart I just basically as it appears comparably dont have a sudden compulsive need to actively feel like I'm causing problems for people or just bullshit people frankly. Quite the opposite. A good number of the people who have tried to discredit or defame me in some way, if they knew the cause of this situation, probably wouldnt exactly be happy with it. Especially so considering how much money its likely very tangibly cost them just largely due to a psycho ex. On an anecdotal basis, despite previously knowing this was reflected in the data, I can hardly think of more of a good reason to just actually work with people and see how it goes than this. All of its to basically say I'm sure a guy (and his company) who is that wealthy publicly has had a few situations that make his life complicated and some probably without any good reason. You might have missed out. I know a few very skilled people who went to work for them. If you were offered to be flown out to them for an interview like that (again), definitely go (especially if you have fallback(s)) and just see what they are willing to do to address your concerns. I know Amazon being stressful is a common thing thats said; however, Amazon isnt a dumb company. They need skilled people and if it makes sense for them it wouldnt surprise me if they could figure something out that would work for both of you. Plus you can always quit as opposed to some things that you cant just say \"\"stop\"\" or \"\"be reasonable\"\" and have it resolved in a few weeks or less. I hope this helps you in some way.\"" }, { "docid": "126144", "title": "", "text": "First and foremost, I would warn about having to shell out your own money for start-up, inventory, or other sunk costs. If I have to significant amounts of goods and stockpile them, that would be a warning. Some goods-based MLM have significant start-up costs. Along with this - how realistic are your time expectations. Is this to be a part-time occasional endeavor - or your full-time occupation? Do you know enough people that you believe you can recruit, as it is the pyramid that makes you the money, not the goods themselves. Secondly, market research. Companies that I would consider real franchise-like companies generally either have, or demand you do, significant market research in an area before you start. They don't want the good name of their company tarnished by having a venue close down. MLM generally don't care as much (generalization). Similarly, are there others in the same neighborhood/town already in the scheme? If so, and depending on the size of your community, many of your potential target recruits may already either be in the scheme, or already scared/annoyed. Third, and last for my list are any kind of pressure tactics. Again - franchisee companies and their ilk generally want a long-term relationship with the right people - not just more and more people as part of the pyramid. MLM and the like tend to want expand at all costs." }, { "docid": "344041", "title": "", "text": "I can't say specifically about charities to help Greece. If someone on here has specific knowledge, please chime in. The only shortcut I know to tell if a charity is legitimate is to consult one of the ratings/watchdog type groups that monitor charities. For example, for explicitly Christian charities, there's a group called the Evangelical Council for Financial Accountability. To be a member in good standing a charity has to meet a bunch of criteria, like having an independent board of directors, i.e. you can't start a charity, make yourself the president and your brother-in-law the vice president and you're not answerable to anyone else; their fund-raising and administrative costs can't be more than a certain percentage of total income, etc. There are similar groups with similar standards for more general charities. I'm not naming any of those groups because there's a potential catch: How reputable is the group that rates other people's reputations? And I don't want to recommend someone without knowing. Years ago I came across a news story about an organization that rated colleges, and that had given one particular college their top rating. But, the news story said, investigators found that that one college was the ONLY college they ever gave a rating to, and that their address was the same as the college's address. It turned out, of course, that the college was a scam. The other method is to take some time to investigate the charity. For starters, get a copy of their annual report or their newsletter. If they're total frauds, often they don't have an annual report or a newsletter. Of course a fraud could make up beautiful flyers describing all the wonderful work they do, with pictures of people they helped and detailed case histories, and it's all complete fiction. But that's more work than most con men go to. I've gotten lots of pleas for contributions from people who call on the phone or come to my door or send an email. If the message does not have a logo, a mailing address and phone number, reasonably coherent English, and a fair amount of text describing what they do, I don't give them anything. They COULD be a new start up that hasn't had time to prepare these things. They COULD believe that pretty flyers are a waste of money and they want to put all their resources into helping the needy. But more likely it's a scam that somebody through together in his basement. Of course the best thing is if you personally know people who are officers in the organization. (Well, assuming you personally know them AND you know that they are honest people. If you know the president and you know he's a sleazy con man, you might want to stay away from that group.) See if you can find information about the charity in the news or on-line. If they're being investigated for fraud by the Justice Department, you might want to avoid them. Etc. Maybe you've thought this through, but you also might want to think about exactly who in Greece you want to help, and what your philosophy of charity is. Do you want to help people who lost their jobs because of the economic problems there and who are now unemployed? Do you want to donate to the government to help them balance the budget? Do you want to help support an orphanage or a homeless shelter, or give money directly to needy people? Etc. And one piece of unsolicited advice: Unless you have millions to give -- and I'm assuming you don't as you said your first gift would be $50 -- I'd pick one or two charities and give regularly to them. I think you can do more good by giving $X per month to a single charity than to give to a different charity every month. You make more difference." }, { "docid": "551867", "title": "", "text": "This is why I didn't bother to read the article. My neighbor is a robbery detective and he says that they are almost all for drug habits. To get drugs they can either steal from a dealer or get cash from a bank then buy drugs. The dealers are armed, the banks aren't. That's the thought process. He says it is sad how easy they are to catch. Review the bank footage, get their plates then drive to their house and arrest them." }, { "docid": "541391", "title": "", "text": "The signature actually harks back to the days before every business checked every transaction online. When charge cards were introduced modems didn't exist. Nowadays, stolen credit cards are usually reported within 24 hours and the card won't work. Businesses that face low fraud rates don't bother checking. They probably figure that a certain percentage of charges get charged back because the cardholder claims that they didn't make them, and the credit card company usually just passes the cost on to the merchant, so it's really the merchant who should be worried about fraud since he or she is going to pay for it. The real question for the merchant is whether checking signatures actually reduces charge backs. If the credit card is stolen, how hard would it be for thieves to practice the signature on the card a few times until they can reproduce it well enough to fool someone? Businesses that face high fraud rates are often more careful. In New York City, try buying some Nikes on 34th Street, and you'll get your signature checked, your driver's license checked, and they'll call up your 5th grade social studies teacher." } ]

[ { "docid": "296528", "title": "", "text": "Yes it is legal, in fact according to statistics.gov.uk, foreign investors are the largest holders of UK shares (as of 2008). Investors from outside the UK owned 41.5 per cent of shares listed on the London Stock Exchange at the end of 2008, up from 40.0 per cent at end of 2006, according to the latest Office for National Statistics report on share ownership." } ]

[ { "docid": "534031", "title": "", "text": "\"It depends on what exactly do you mean by \"\"seat of residence\"\". That term has different meanings (legally) in different countries and different contexts. If you're foreigner (even from within the EU), any czech bank will most likely ask you to provide a residence permit. Here are some details: http://www.mvcr.cz/mvcren/article/third-country-nationals-long-term-residence.aspx http://www.czech.cz/en/Business/How-it-works-here/Making-business/How-to-open-a-bank-account-%E2%80%93-Part-1\"" }, { "docid": "385221", "title": "", "text": "As the name says, its for income earned in a Foreign country. If you have been paying US income tax on this while living in the US, nothing is going to change here. You should be informing yourself on how to avoid double taxation in your new country of residence. Passive income earned abroad (dividends, interest) also do not fall under this exemption. The purpose of the Foreign Earned Income Exclusion is to make it easy for expats who work abroad to avoid double income taxation without going through the complicated process of applying for tax credits. The US is the only industrial country that taxes its residents regardless of where they reside. That is also why it only goes to about $100,000 a year. If you are a high earner, they want to make it more difficult. Also as a side note, since you are going to be abroad for a year. I will point out that if you have more than $10,000 in foreign accounts at any point in the year you need to declare this in an FBAR form. This is not advertised as well as it should be and carries ridiculous penalties for non-compliance. I can't count the number of times I have heard a US expat say that they were unaware of this." }, { "docid": "544992", "title": "", "text": "As a gift, the responsibility lays with the giver to file a 709 with their taxes for gifting to a single entity (barring certain exclusions) an amount over $14,000 within the (2017) tax year. https://www.irs.gov/pub/irs-pdf/i709.pdf If this person is a foreign entity from outside the country, you might need to provide in your tax filing a form 3520 https://www.irs.gov/businesses/gifts-from-foreign-person The reporting limits are: more than $100,000 from a foreign estate or non-resident alien, or more than $15,102 from a foreign company. If you don't know who/where the money came from i.e. cash, it would be considered found money and fall under income (not a gift)." }, { "docid": "104128", "title": "", "text": "Short answer: it's complicated. The UK govt pages on foreign income are probably your best starting point: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_10027480 As you can see, it depends on your precise residence status here. (There is a tax treaty between the UK and the US so you wouldn't be double taxed on the income either way. But there might still be reporting obligations)." }, { "docid": "451729", "title": "", "text": "Open an account with a US discount online broker, or with a European broker with access to the US market. I think ETRADE allow non-resident accounts, for instance, amongst others. The brokerage will be about $10, and there is no annual fee. (So you're ~1% down out of the gate, but that's not so much.) Brokers may have a minimum transaction value but very few exchanges care about the number of shares anymore, and there is no per-share fee. As lecrank notes, putting all your savings into a single company is not prudent, but having a flutter with fun money on Apple is harmless. Paul is correct that dividend cheques may be a slight problem for non-residents. Apple don't pay dividends so there's no problem in this specific case. More generally your broker will give you a cash account into which the dividends can go. You may have to deal with US tax which is more of an annoyance than a cost." }, { "docid": "566028", "title": "", "text": "As other people have said they should register with a broker in the country they reside in that can deal in US stocks, then fill out a W8-BEN form. I have personally done this as I am from the Uk, it's not a very complicated process. I would assume that most US brokers don't allow foreign customers due to the person having to pay tax where they reside and the US brokers don't want to have to keep approximately 200 different tax codes in track." }, { "docid": "291011", "title": "", "text": "Hi We are looking to connect with UK medical technology companies and other relevant people who could help us complete a project we are currently working on. We are currently representatives of a consortium of Drs based in the Middle East and Iran. With the lifting of international sanctions by the 5+1 group of nations and JCPOA in early 2016, on Iran, has resulted in our clients being very interested in purchasing and becoming official distributors off medical equipment from the UK. I have had some lengthy discussions with this team in Dubai and Tehran, and I'm told the the domestic Persian market has a very deep sense of of affiliation with German, Italian and French companies, whom have been involved more in the Persian Gulf region than Britain since 2012. One key point I did however notice is the demand and respect that British Tech commands. This has encouraged our team to take on this project to help these guys access the products they require. They are interested in buying from UK manufacturing and reselling it as official distributors to the domestic Persian markets 80million population. They are also very interested in collaborating with and acquiring the licences to UK medical technologies, which they would like to then buy the rights too or licence/franchise for their locality and they have the capacity to invest in manufacturing this product in the Middle East, working in conjunction with the UK companies. An example of how this has worked in the past is the French car manufacturer working in collaboration with Iranian Engineering company to produce and manufacture Peugeot Pars car. Which looks very much like a peugeot 405 but is infact designed and developed specifically for the local market and is also manufactured locally. This is a huge success and we feel we can imitate its success in our plan too. I have been in discussions with a number of sources where I could possibly complete this project through. I have come to know from my research globally within this sector that there are approx 3500 medical technology companies registered in the UK. All specialising in various fields. I was wondering is there a database anywhere which I can't access to see whom and where these companies are exactly in the UK. I have until now established that between 70-80% of companies worldwide in MED Tech field are based in or affiliated with either the USA or Israel, with the majority of the remaining 20% of companies being European or Japanese. There are also many collaborations between Euro companies which was quiet pleasing for me to see. We fully understand that the USA under Trump have reinstated the sanction for USA. However our understanding is that we in the UK are not at present restricted by Sanctions to trade with Iranian companies. We strongly feel that the British medical technology sector here in the UK could benefit considerably it could also help It to progress and grow to take a bigger global Market share as well bring in 100s of millions in revenues for the UK economy. We strongly feel that with Brexit negotiations in the pipeline, as well as the geo political situation that the world finds itself in right now, that this is the right time to work in collaboration with this consortium and help them with completion of this project successfully and lawfully. We strongly feel though that the due diligence carried in any trade deals needs to be within a framework of EU, UK regulations and in compliance with any UN or other sanctions we are un aware off. We had been planning to use due diligence guidelines from the USA when dealing with Iranian companies, however we feel this is the main reason why France and Germany along with Italy are winning all the contracts in Iran, and with the help of relevant government departments we would like to develop our own plan for this based on the current situation. We would like this to be the beginning of a number of high level trade deals we are in negotiations with right now with high level Middle Eastern business consortiums, in Dubai, Doha, Muscat, Tehran, Kuwait. We feel Britain has missed it to France and Germany when it comes to Iran, and would like to work with all the relevant departments to create a due diligence plan which is effective and helps us reach our goals. I would appreciate any advice you can give us in this respect. Thanks Alfie Star Senior project manager [email protected] http://www.commodustrade.com" }, { "docid": "507828", "title": "", "text": "\"I'm adding to @Dilip's basic answer, to cover the additional points in your question. I'll assume you are referring to publicly traded stock options, such as those found on the CBOE, and not an option contract entered into privately between two specific counterparties (e.g. as in an employer stock option plan). Since you are not obligated to exercise a call option you purchased on the market, you don't need to maintain funds on account for possible exercising. You could instead let the option expire, or resell the option, neither of which requires funds available for purchase of the underlying shares. However, should you actually choose to exercise the call option (and usually this is done close to expiration, if at all), you will be required to fund your account much like if you bought the underlying shares in the first place. Call your broker to determine the exact rules and timing for when they need the money for a call-option exercise. And to expand on the idea of \"\"cancelling\"\" an option you purchased: No, you cannot \"\"cancel\"\" an option contract, per se. But, you are permitted to sell the call option to somebody else willing to buy, via the market. When you sell your call option, you'll either make or lose money on the sale – depending on the price of the underlying shares at the time (are they in- or out- of the money?), volatility in the market, and remaining time value. Once you sell, you're back to \"\"no position\"\". That's not the same as \"\"cancelled\"\", but you are out of the trade, whether at profit or loss. Furthermore, the option writer (i.e. the seller who \"\"sold to open\"\" a position, in writing the call in the first place) is also not permitted to cancel the option he wrote. However, the option writer is permitted to close out the original short position by simply buying back a matching call option on the market. Again, this would occur at either profit or loss based on market prices at the time. This second kind of buy order – i.e. made by someone who initially wrote a call option – is called a \"\"buy to close\"\", meaning the purchase of an offsetting position. (The other kind of buy is the \"\"buy to open\"\".) Then, consider: Since an option buyer is free to re-sell the option purchased, and since an option writer (who \"\"sold to open\"\" the new contract) is also free to buy back an offsetting option, a process known as clearing is required to match remaining buyers exercising the call options held with the remaining option writers having open short positions for the contract. For CBOE options, this clearing is performed by the Options Clearing Corporation. Here's how it works (see here): What is the OCC? The Options Clearing Corporation is the sole issuer of all securities options listed at the CBOE, four other U.S. stock exchanges and the National Association of Securities Dealers, Inc. (NASD), and is the entity through which all CBOE option transactions are ultimately cleared. As the issuer of all options, OCC essentially takes the opposite side of every option traded. Because OCC basically becomes the buyer for every seller and the seller for every buyer, it allows options traders to buy and sell in a secondary market without having to find the original opposite party. [...]   [emphasis above is mine] When a call option writer must deliver shares to a call option buyer exercising a call, it's called assignment. (I have been assigned before, and it isn't pleasant to see a position called away that otherwise would have been very profitable if the call weren't written in the first place!) Also, re: \"\"I know my counter party cannot sell his shares\"\" ... that's not strictly true. You are thinking of a covered call. But, an option writer doesn't necessarily need to own the underlying shares. Look up Naked call (Wikipedia). Naked calls aren't frequently undertaken because a naked call \"\"is one of the riskiest options strategies because it carries unlimited risk\"\". The average individual trader isn't usually permitted by their broker to enter such an order, but there are market participants who can do such a trade. Finally, you can learn more about options at The Options Industry Council (OIC).\"" }, { "docid": "46791", "title": "", "text": "\"ECI is relevant to non-resident aliens who are engaged in trade or business in the US. For that, you have to be present in the US, to begin with, or to own a business or property in the US. So the people to whom it is relevant are non-resident aliens in the US or business/property owners, not foreign contractors. From the IRS: The following categories of income are usually considered to be connected with a trade or business in the United States. You are considered to be engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant on an \"\"F,\"\" \"\"J,\"\" \"\"M,\"\" or \"\"Q\"\" visa. The taxable part of any U.S. source scholarship or fellowship grant received by a nonimmigrant in \"\"F,\"\" \"\"J,\"\" \"\"M,\"\" or \"\"Q\"\" status is treated as effectively connected with a trade or business in the United States. If you are a member of a partnership that at any time during the tax year is engaged in a trade or business in the United States, you are considered to be engaged in a trade or business in the United States. You usually are engaged in a U.S. trade or business when you perform personal services in the United States. If you own and operate a business in the United States selling services, products, or merchandise, you are, with certain exceptions, engaged in a trade or business in the United States. For example, profit from the sale in the United States of inventory property purchased either in this country or in a foreign country is effectively connected trade or business income. Gains and losses from the sale or exchange of U.S. real property interests (whether or not they are capital assets) are taxed as if you are engaged in a trade or business in the United States. You must treat the gain or loss as effectively connected with that trade or business. Income from the rental of real property may be treated as ECI if the taxpayer elects to do so.\"" }, { "docid": "488920", "title": "", "text": "Even with non-voting shares, you own a portion of the company including all of its assets and its future profits. If the company is sold, goes out of business and liquidates, etc., those with non-voting shares still stand collect their share of the funds generated. There's also the possibility, as one of the comments notes, that a company will pay dividends in the future and distribute its assets to shareholders that way. The example of Google (also mentioned in the comments) is interesting because when they went to voting and non-voting stock, there was some theoretical debate about whether the two types of shares (GOOG and GOOGL) would track each other in value. It turned out that they did not - People did put a premium on voting, so that is worth something. Even without the voting rights, however, Google has massive assets and each share (GOOG and GOOGL) represented ownership of a fraction of those assets and that kept them highly correlated in value. (Google had to pay restitution to some shareholders of the non-voting stock as a result of the deviation in value. I won't get into the details here since it's a bit of tangent, but you could easily find details on the web.)" }, { "docid": "192083", "title": "", "text": "It's not just the US based mailing address for registration or US based credit-card or bank account: even if you had all these, like I do, you will find that these online filing companies do not have the infrastructure to handle non-resident taxes. The reason why the popular online filing companies do not handle non-resident taxes is because: Non-residents require a different set of forms to fill out - usually postfixed NR - like the 1040-NR. These forms have different rules and templates that do not follow the usual resident forms. This would require non-trivial programming done by these vendors All the NR forms have detailed instructions and separate set of non-resident guides that has enough information for a smart person to figure out what needs to be done. For example, check out Publication 519 (2011), U.S. Tax Guide for Aliens. As a result, by reading these most non-residents (or their accountants) seem to figure out how the taxes need to be filed. For the remaining others, the numbers perhaps are not significant enough to justify the non-trivial programming that need to be done by these vendors to incorporate the non-resident forms. This was my understanding when I did research into tax filing software. However, if you or anyone else do end up finding tax filing software that does allow non-resident forms, I wil be extremely happy to learn about them. To answer your question: you need to do it yourself or get it done by someone who knows non-resident taxes. Some people on this forum, including me for gratis, would be glad to check your work once you are done with it as long as you relieve us of any liability." }, { "docid": "102287", "title": "", "text": "\"I'm assuming that by saying \"\"I'm a US resident now\"\" you're referring to the residency determination for tax purposes. Should I file a return in the US even though there is no income here ? Yes. US taxes its residents for tax purposes (which is not the same as residents for immigration or other purposes) on worldwide income. If yes, do I get credits for the taxes I paid in India. What form would I need to submit for the same ? I am assuming this form has to be issued by IT Dept in India or the employer in India ? The IRS doesn't require you to submit your Indian tax return with your US tax return, however they may ask for it later if your US tax return comes under examination. Generally, you claim foreign tax credits using form 1116 attached to your tax return. Specifically for India there may also be some clause in the Indo-US tax treaty that might be relevant to you. Treaty claims are made using form 8833 attached to your tax return, and I suggest having a professional (EA/CPA licensed in your State) prepare such a return. Although no stock transactions were done last year, should I still declare the value of total stocks I own ? If so what is an approx. tax rate or the maximum tax rate. Yes, this is done using form 8938 attached to your tax return and also form 114 (FBAR) filed separately with FinCEN. Pay attention: the forms are very similar with regard to the information you provide on them, but they go to different agencies and have different filing requirements and penalties for non-compliance. As to tax rates - that depends on the types of stocks and how you decide to treat them. Generally, the tax rate for PFIC is very high, so that if any of your stocks are classified as PFIC - you'd better talk to a professional tax adviser (EA/CPA licensed in your State) about how to deal with them. Non-PFIC stocks are dealt with the same as if they were in the US, unless you match certain criteria described in the instructions to form 5471 (then a different set of rules apply, talk to a licensed tax adviser). I will be transferring most of my stock to my father this year, will this need to be declared ? Yes, using form 709. Gift tax may be due. Talk to a licensed tax adviser (EA/CPA licensed in your State). I have an apartment in India this year, will this need to be declared or only when I sell the same later on ? If there's no income from it - then no (assuming you own it directly in your own name, for indirect ownership - yes, you do), but when you sell you will have to declare the sale and pay tax on the gains. Again, treaty may come into play, talk to a tax adviser. Also, be aware of Section 121 exclusion which may make it more beneficial for you to sell earlier.\"" }, { "docid": "535340", "title": "", "text": "\"As user quid states in his answer, all you need to do is open an account with a stock broker in order to gain access to the world's stock markets. If you are currently banking with one of the six big bank, then they will offer stockbroking services. You can shop around for the best commission rates. If you wish to manage your own investments, then you will open a \"\"self-directed\"\" account. You can shelter your investments from all taxation by opening a TFSA account with your stock broker. Currently, you can add $5,500 per year to your TFSA. Unused allowances from previous years can still be used. Thus, if you have not yet made any TFSA contributions, you can add upto $46,500 to your TFSA and enjoy the benefits of tax free investing. Investing in what you are calling \"\"unmanaged index funds\"\" means investing in ETFs (Exchange Traded Funds). Once you have opened your account you can invest in any ETFs traded on the stock markets accessible through your stock broker. Buying shares on foreign markets may carry higher commission rates, but for the US markets commissions are generally the same as they are for Canadian markets. However, in the case of buying foreign shares you will carry the extra cost and risk of selling Canadian dollars and buying foreign currency. There are also issues to do with foreign withholding taxes when you trade foreign shares directly. In the case of the US, you will also need to register with the US tax authorities. Foreign withholding taxes payable are generally treated as a tax credit with respect to Canadian taxation, so you will not be double taxed. In today's market, for most investors there is generally no need to invest directly in foreign market indices since you can do so indirectly on the Toronto stock market. The large Canadian ETF providers offer a wide range of US, European, Asian, and Global ETFs as well as Canadian ETFs. For example, you can track all of the major US indices by trading in Toronto in Canadian dollars. The S&P500, the Dow Jones, and the NASDAQ100 are offered in both \"\"currency hedged\"\" and \"\"unhedged\"\" forms. In addition, there are ETFs on the total US Market, US Small Caps, US sectors such as banks, and more exotic ETFs such as those offering \"\"covered call\"\" strategies and \"\"put write\"\" strategies. Here is a link to the BMO ETF website. Here is a link to the iShares (Canada) ETF website.\"" }, { "docid": "307008", "title": "", "text": "\"I think you've got basics, but you may have the order / emphasis a bit wrong. I've changed the order of the things you've learned in to what I think is the most important to understand: Owning a stock is like owning a tiny chunk of the business Owning stock is owning a tiny chunk of the business, it's not just \"\"like\"\" it. The \"\"tiny chunks\"\" are called shares, because that is literally what they are, a share of the business. Sometimes shares are also called stocks. The words stock and share are mostly interchangeable, but a single stock normally means your holding of many shares in a business, so if you have 100 shares in 1 company, that's a stock in that company, if you then buy 100 shares in another company, you now own 2 stocks. An investor seeks to buy stocks at a low price, and sell when the price is high. Not necessarily. An investor will buy shares in a company that they believe will make them a profit. In general, a company will make a profit and distribute some or all of it to shareholders in the form of dividends. They will also keep back a portion of the profit to invest in growing the company. If the company does grow, it will grow in value and your shares will get more valuable. Price (of a stock) is affected by supply/demand, volume, and possibly company profits The price of a share that you see on a stock ticker is the price that people on the market have exchanged the share for recently, not the price you or I can buy a share for, although usually if people on the market are buying and selling at that price, someone will buy or sell from you at a similar sort of price. In theory, the price will be the companies total value, if you were to own the whole thing (it's market capitalisation) divided by the total number of shares that exist in that company. The problem is that it's very difficult to work out the total value of a company. You can start by counting the different things that it owns (including things like intellectual property and the knowledge and experience of people who work there), subtract all the money it owes in loans etc., and then make an allowance for how much profit you expect the company to make in the future. The problem is that these numbers are all going to be estimates, and different peoples estimates will disagree. Some people don't bother to estimate at all. The market makers will just follow supply and demand. They will hold a few shares in each of many companies that they are interested in. They will advertise a lower price that they are willing to buy at and a higher price that they will sell at all the time. When they hold a lot of a share, they will price it lower so that people buy it from them. When they start to run out, they will price it higher. You will never need to spend more than the market makers price to buy a share, or get less than the market makers price when you come to sell it (unless you want to buy or sell more shares than they are willing to). This is why stock price depends on supply and demand. The other category of people who don't care about the companies they are trading are the high speed traders. They just look at information like the past price, the volume (total amount of shares being exchanged on the market) and many other statistics both from the market and elsewhere and look for patterns. You cannot compete with these people - they do things like physically locate their servers nearer to the stock exchanges buildings to get a few milliseconds time advantage over their competitors to buy shares quicker than them.\"" }, { "docid": "401329", "title": "", "text": "I'm a bit out of my element here, but my guess is the right way to think about this is: knowing what you do now about the underlying company (NZT), pretend they had never offered ADR shares. Would you buy their foreign listed shares today? Another way of looking at it would be: would you know how to sell the foreign-listed shares today if you had to do so in an emergency? If not, I'd also push gently in the direction of selling sooner than later." }, { "docid": "514970", "title": "", "text": "You didn't mention a country, and precise rules will be different from country to country. The usual rules are: Shares that you didn't sell don't count. If you buy shares, there is no taxable gain until you sell them. When you sell shares, it is assumed that the shares you are selling are the last ones that you bought. In many places, if you sell shares, and buy the same shares back very quickly, the tax office may have rules to pretend you never sold the shares. For example in the UK, where a good amount of profit per year is tax free, you can't just sell enough shares to stay below your tax limit and then buy them back to take profits out of the shares you own. In your case, you made $30 profit on every share you sold, and that is what you will be taxed for in most countries. According to the rules of your country." }, { "docid": "111131", "title": "", "text": "The key factors here are You will need to pay tax in the UK only if you live more than 183 days - that too in a tax year. Indian tax system will also classify you as a NR (Non-resident) if you live outside for more than 182 days in a tax year. In your case, your income will be in India and will stay in India. So there should not be any UK tax until you try and get that money to the UK. I will not go into outlining what if you want to go down that road since it does not apply. As for tax in India, You will need to pay tax since the source of income is Indian. Hope this helps." }, { "docid": "457455", "title": "", "text": "It essentially works the same. Some states don't have any income taxes at all (like Florida or Wyoming), some only tax income derived in the state, and some tax worldwide income (like New York or California), similarly to the Federal income taxes. However, if you're living abroad (i.e.: you're a citizen or resident of a foreign country and you live there), you're not considered resident by most of the states (check with your state for specific definitions) for most, if not all, the time of your residency abroad. In such case - you don't pay state taxes, only Federal. You have to remember that foreign income exclusion doesn't apply to the income from your 401k, so you pay the taxes as if you're in the US. You can not use foreign taxes credit as well (but depending on the tax treaty with the country you're moving to, your 401k income might not be taxable there). In some cases you may end up with double taxation: US will tax your 401k income as you're a US citizen and the income is derived from the US sources, and the foreign country will tax the income based on its own laws. This is not a tax advice, and this answer was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer." }, { "docid": "157712", "title": "", "text": "I am a US citizen and I want to transfer some amount 10 lakhs+ to my brother from my NRE account in India to his account. My brother is going to purchase something for his business. He is going to return my amount after 3-4 Months From the description it looks like you would like to loan to your brother on repatriation basis. Yes this is allowed. See the RBI Guide here and here for more details. There are some conditions; (iv) Scheme for raising loans from NRIs on repatriation basis Borrowings not exceeding US$ 2,50,000 or its equivalent in foreign exchange by an individual resident in India from his close relatives resident outside India, subject to the conditions that - a) the loan is free of interest; b) the minimum maturity period of the loan is seven years; c) The amount of loan is received by inward remittance in free foreign exchange through normal banking channels or by debit to the NRE/FCNR account of the non-resident lender; d) The loan is utilised for the borrower's personal purposes or for carrying on his normal business activity but not for carrying on agricultural/plantation activities, purchase of immovable property or shares/debentures/bonds issued by companies in India or for re-lending. Although it is mentioned as Seven years, this is revised to one year. Since he cannot deposit into my NRE account I guess he has to deposit it into my NRO account. A repatriate-able loan as above can be deposited into NRE Account. Is there any illegality here doing such transaction? No. Please ensure proper paper work to show this as loan and document the money trail. Also once I get my money in NRO account do I need to pay taxes in India on the money he deposited? This question does not arise." } ]

[ { "docid": "209493", "title": "", "text": "\"It's easy to own many of the larger UK stocks. Companies like British Petroleum, Glaxo, and Royal Dutch Shell, list what they call ADRs (American Depositary Receipts) on the U.S. stock exchanges. That is, they will deposit local shares with Bank of NY Mellon, JP Morgan Chase, or Citicorp (the three banks that do this type of business), and the banks will turn around and issue ADRs equivalent to the number of shares on deposit. This is not true with \"\"small cap\"\" companies. In those cases, a broker like Schwab may occasionally help you, usually not. But you might have difficulty trading U.S. small cap companies as well.\"" } ]

[ { "docid": "169598", "title": "", "text": "Best consult a CA as you may anyway need his/her service. I am NRI, availed secured loan (Against house property) in India and now I want to get that money transferred to Finland. Loans by NRI taken in India cannot be transferred outside of India. Refer FOREIGN EXCHANGE MANAGEMENT (BORROWING AND LENDING IN RUPEES) REGULATIONS Loans in Rupees to non-residents 1[***]. 7. Subject to the directions issued by the Reserve Bank from time to time in this regard, an authorised dealer in India may grant loan to a non-resident Indian, (B) against the security of immovable property (other than agricultural or plantation property or farm house), held by him in accordance with the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 : ...... Provided that- (d) the loan amount shall not be remitted outside India; Alternative: Sell the property in India, transfer the proceeds to NRO account. Repatriate the funds outside India as per Liberalized Remittance Scheme. Form 15CA/CB with CA certificate will be required." }, { "docid": "91870", "title": "", "text": "I haven't seen any of the other answers address this point – shares are (a form of) ownership of a company and thus they are an entitlement to the proceeds of the company, including proceeds from liquidation. Imagine an (extreme, contrived) example whereby you own shares in a company that is explicitly intended to only exist for a finite and definite period, say to serve as the producers of a one-time event. Consider a possible sequence of major events in this company's life: So why would the shares of this hypothetical company be worth anything? Because the company itself is worth something, or rather the stuff that the company owns is worth something, even (or in my example, especially) in the event of its dissolution or liquidation. Besides just the stuff that a company owns, why else would owning a portion of a company be a good idea, i.e. why would I pay for such a privilege? Buying shares of a company is a good idea if you believe (and are correct) that a company will make larger profits or capture more value (e.g. buy and control more valuable stuff) than other people believe. If your beliefs don't significantly differ from others then (ideally) the price of the companies stock should reflect all of the future value that everyone expects it to have, tho that value is discounted based on time preference, i.e. how much more valuable a given amount of money or a given thing of value is today versus some time in the future. Some notes on time preference: But apart from whether you should buy shares in a specific company, owning shares can still be valuable. Not only are shares a claim on a company's current assets (in the event of liquidation) but they are also claims on all future assets of the company. So if a company is growing then the value of shares now should reflect the (discounted) future value of the company, not just the value of its assets today. If shares in a company pays dividends then the company gives you money for owning shares. You already understand why that's worth something. It's basically equivalent to an annuity, tho dividends are much more likely to stop or change whereas the whole point of an annuity is that it's a (sometimes) fixed amount paid at fixed intervals, i.e. reliable and dependable. As CQM points out in their answer, part of the value of stock shares, to those that own them, and especially to those considering buying them, is the expectation or belief that they can sell those shares for a greater price than what they paid for them – irrespective of the 'true value' of the stock shares. But even in a world where everyone (magically) had the same knowledge always, a significant component of a stock's value is independent of its value as a source of trading profit. As Jesse Barnum points out in their answer, part of the value of stocks that don't pay dividends relative to stocks that do is due to the (potential) differences in tax liabilities incurred between dividends and long-term capital gains. This however, is not the primary source of value of a stock share." }, { "docid": "125568", "title": "", "text": "\"No, there are neither advantages nor disadvantages. I'll take on this question from an accounting standpoint. Financial statements, the tools at which the market determines (amongst other things) the value of a stock, are converted at year end to the home currency (see 1.1.3).If Company A has revenue of 100,000 USD and the conversion to EUR is .89, revenue in the European market will be reported as 89,000 EUR. These valuations, along with ratios, analysis, and \"\"expert\"\" opinions determine if a person should own shares in Company A. Now, if we're talking about comparing markets this is a entirely different question. Example: Should I buy stock of Company A, who is in the American market (as an European)? Should I buy stock of Company B, who is in the European market (as an American)? I would recommend this as additional level of diversification of your portfolio to inlcude possible large inflation of either the currency. The possible gains of this foreign exchange may be greater if one or the other currency becomes weak.\"" }, { "docid": "272944", "title": "", "text": "\"Although there are occasional cases where simply moving money between countries results in a tax liability - for example a \"\"non-domiciled\"\" UK resident using the \"\"remittance basis\"\" - this is not the case in your situation. In general it would be extremely rare for non-residents of a country to be taxed on bringing money into that country, as it would be bad for tourism which most countries want to encourage. The requirement to declare large sums of money on entry is primarily so that the authorities can detect money laundering, rather than tax. Note that you will have to pay US tax on any interest you earn on that US bank account.\"" }, { "docid": "528880", "title": "", "text": "Here're some findings upon researches: Two main things to watch out for: Estate tax and the 30% tax withholding. These 2 could be get around by investing in Luxembourg or Ireland domiciled ETF. For instance there's no tax withholding on Ireland domiciled ETF dividend, and the estate tax is not as high. (source: BogleHead forums) Some Vanguard ETF offered in UK stock market: https://www.vanguard.co.uk/uk/mvc/investments/etf#docstab. Do note that the returns of S&P 500 ETF (VUSA) are adjusted after the 30% tax withholding! Due to VUSA's higher TER (0.09%), VOO should remain a superior choice. The FTSE Emerging Markets and All-World ETFs though, are better than their US-counterparts, for non-US residents. Non-US residents are able to claim back partials of the withhold tax, by filing the US tax form 1040NR. In 2013, non-US resident can claim back at least $3,900. Kindly correct me if anything is inaccurate." }, { "docid": "38863", "title": "", "text": "You won't be able to know the trading activity in a timely, actionable method in most cases. The exception is if the investor (individual, fund, holding company, non-profit foundation, etc) is a large shareholder of a specific company and therefore required to file their intentions to buy or sell with the SEC. The threshold for this is usually if they own 5% or greater of the outstanding shares. You can, however, get a sense of the holdings for some of the entities you mention with some sleuthing. Publicly-Traded Holding Companies Since you mention Warren Buffett, Berkshire Hathaway is an example of this. Publicly traded companies (that are traded on a US-based exchange) have to file numerous reports with the SEC. Of these, you should review their Annual Report and monitor all filings on the SEC's website. Here's the link to the Berkshire Hathaway profile. Private Foundations Harvard and Yale have private, non-profit foundations. The first place to look would be at the Form 990 filings each is required to file with the IRS. Two sources for these filings are GuideStar.org and the FoundationCenter.org. Keep in mind that if the private foundation is a large enough shareholder in a specific company, they, too, will be required to file their intentions to buy or sell shares in that company. Private Individuals Unless the individual publicly releases their current holdings, the only insight you may get is what they say publicly or have to disclose — again, if they are a major shareholder." }, { "docid": "481488", "title": "", "text": "My concern is if I need to report and pay extra taxes for the part of the company that will be under my name Yes, d'uh. Of course. It's actually quite complicated when it comes to foreign companies owned by US people, and you'll need a good tax adviser (EA/CPA licensed in your State) who's fluent in that area. Citizenship has nothing to do with this, from tax perspective there's no difference between a green card holder and a citizen (except that green card holder cannot claim non-resident exemptions and certain tax treaties' exemptions)." }, { "docid": "562007", "title": "", "text": "Transfers of money to the UK for any purpose are not generally taxed, so you can just transfer it here and invest. Once the money is here, you'll be taxed on the business activity like anyone else - the company will have to pay corporation tax, and depending on your own residency you might have to pay income tax on any distributions from the company." }, { "docid": "226568", "title": "", "text": "\"It is unusual to need a consultant to open a bank account for you, and I would also be concerned that perhaps the consultant could take the money and do nothing, or continue to demand various sums of money for \"\"expenses\"\" like permits, licenses, identity check, etc. until you give up. Some of the more accepted ways to open a bank account are: A: Call up an established bank and follow their instructions to open a personal account . Make sure you are calling on a real bank, one that has been around a while. Hints: has permanent locations, in the local phone book, and has shares traded on a national stock exchange. Call the bank directly, don't use a number given to you by a 3rd party consultant, as it may be a trick... Discuss on the phone and find out if you can open an account by mail or if you need to visit in person. B: Create a company or branch office in the foreign country, assuming this is for business or investing. and open an account by appointing someone (like a lawyer or accountant or similar professional) in the foreign country to represent the company to open an account in person. If you are a US citizen, you will want to ask your CPA/accountant/tax lawyer about the TD F 90-22.1 Foreign Account Bank Report form, and the FATCA Foreign Account Tax Compliance Act. There can be very large fines for not making the required reports. The requirements to open a bank account have become more strict in many countries, so don't be surprised if they will not open an account for a foreigner with no local address, if that is your situation.\"" }, { "docid": "566028", "title": "", "text": "As other people have said they should register with a broker in the country they reside in that can deal in US stocks, then fill out a W8-BEN form. I have personally done this as I am from the Uk, it's not a very complicated process. I would assume that most US brokers don't allow foreign customers due to the person having to pay tax where they reside and the US brokers don't want to have to keep approximately 200 different tax codes in track." }, { "docid": "458730", "title": "", "text": "I assume you are talking about a publicly traded company listed on a major stock exchange and the buyer resides in the US. (Private companies and non-US locations can change the rules really a lot.) The short answer is no, because the company does not own the stock, various investors do. Each investor has to make an individual decision to sell or not sell. But there are complications. If an entity buys more than about 10% of the company they have to file a declaration with the SEC. The limit can be higher if they file an assertion that they are buying it solely for investment and are not seeking control of the company. If they are seeking control of the company then more paperwork must be filed and if they want to buy the whole company they may be required to make a tender offer where they offer to buy any and all shares at a specific price. If the company being bought is a financial institution, then the buyer may have to declare as a bank holding company and more regulations apply. The company can advise shareholders not to take the tender offer, but they cannot forbid it. So the short answer is, below 10% and for investment purposes only, it is cash and carry: Whoever has the cash gets to carry the stock away. Above that various regulations and declarations apply, but the company still does not have the power prevent the purchase in most circumstances." }, { "docid": "488920", "title": "", "text": "Even with non-voting shares, you own a portion of the company including all of its assets and its future profits. If the company is sold, goes out of business and liquidates, etc., those with non-voting shares still stand collect their share of the funds generated. There's also the possibility, as one of the comments notes, that a company will pay dividends in the future and distribute its assets to shareholders that way. The example of Google (also mentioned in the comments) is interesting because when they went to voting and non-voting stock, there was some theoretical debate about whether the two types of shares (GOOG and GOOGL) would track each other in value. It turned out that they did not - People did put a premium on voting, so that is worth something. Even without the voting rights, however, Google has massive assets and each share (GOOG and GOOGL) represented ownership of a fraction of those assets and that kept them highly correlated in value. (Google had to pay restitution to some shareholders of the non-voting stock as a result of the deviation in value. I won't get into the details here since it's a bit of tangent, but you could easily find details on the web.)" }, { "docid": "110862", "title": "", "text": "\"For Non-Resident filers, New York taxes New York-sourced income. That includes: real or tangible personal property located in New York State (including certain gains or losses from the sale or exchange of an interest in an entity that owns real property in New York State); services performed in New York State; a business, trade, profession, or occupation carried on in New York State; and a New York S corporation in which you are a shareholder (including installment income from an IRC 453 transaction). There are some exclusions as well. It is all covered in the instructions to form IT-203. However, keep in mind that \"\"filing\"\" as non-resident doesn't make you non-resident. If you spend 184 days or more in New York State, and you have a place to stay there - you are resident. See definitions here. Even if you don't actually live there and consider yourself a CT resident.\"" }, { "docid": "535340", "title": "", "text": "\"As user quid states in his answer, all you need to do is open an account with a stock broker in order to gain access to the world's stock markets. If you are currently banking with one of the six big bank, then they will offer stockbroking services. You can shop around for the best commission rates. If you wish to manage your own investments, then you will open a \"\"self-directed\"\" account. You can shelter your investments from all taxation by opening a TFSA account with your stock broker. Currently, you can add $5,500 per year to your TFSA. Unused allowances from previous years can still be used. Thus, if you have not yet made any TFSA contributions, you can add upto $46,500 to your TFSA and enjoy the benefits of tax free investing. Investing in what you are calling \"\"unmanaged index funds\"\" means investing in ETFs (Exchange Traded Funds). Once you have opened your account you can invest in any ETFs traded on the stock markets accessible through your stock broker. Buying shares on foreign markets may carry higher commission rates, but for the US markets commissions are generally the same as they are for Canadian markets. However, in the case of buying foreign shares you will carry the extra cost and risk of selling Canadian dollars and buying foreign currency. There are also issues to do with foreign withholding taxes when you trade foreign shares directly. In the case of the US, you will also need to register with the US tax authorities. Foreign withholding taxes payable are generally treated as a tax credit with respect to Canadian taxation, so you will not be double taxed. In today's market, for most investors there is generally no need to invest directly in foreign market indices since you can do so indirectly on the Toronto stock market. The large Canadian ETF providers offer a wide range of US, European, Asian, and Global ETFs as well as Canadian ETFs. For example, you can track all of the major US indices by trading in Toronto in Canadian dollars. The S&P500, the Dow Jones, and the NASDAQ100 are offered in both \"\"currency hedged\"\" and \"\"unhedged\"\" forms. In addition, there are ETFs on the total US Market, US Small Caps, US sectors such as banks, and more exotic ETFs such as those offering \"\"covered call\"\" strategies and \"\"put write\"\" strategies. Here is a link to the BMO ETF website. Here is a link to the iShares (Canada) ETF website.\"" }, { "docid": "385221", "title": "", "text": "As the name says, its for income earned in a Foreign country. If you have been paying US income tax on this while living in the US, nothing is going to change here. You should be informing yourself on how to avoid double taxation in your new country of residence. Passive income earned abroad (dividends, interest) also do not fall under this exemption. The purpose of the Foreign Earned Income Exclusion is to make it easy for expats who work abroad to avoid double income taxation without going through the complicated process of applying for tax credits. The US is the only industrial country that taxes its residents regardless of where they reside. That is also why it only goes to about $100,000 a year. If you are a high earner, they want to make it more difficult. Also as a side note, since you are going to be abroad for a year. I will point out that if you have more than $10,000 in foreign accounts at any point in the year you need to declare this in an FBAR form. This is not advertised as well as it should be and carries ridiculous penalties for non-compliance. I can't count the number of times I have heard a US expat say that they were unaware of this." }, { "docid": "111131", "title": "", "text": "The key factors here are You will need to pay tax in the UK only if you live more than 183 days - that too in a tax year. Indian tax system will also classify you as a NR (Non-resident) if you live outside for more than 182 days in a tax year. In your case, your income will be in India and will stay in India. So there should not be any UK tax until you try and get that money to the UK. I will not go into outlining what if you want to go down that road since it does not apply. As for tax in India, You will need to pay tax since the source of income is Indian. Hope this helps." }, { "docid": "407551", "title": "", "text": "\"Also note that a share of voting stock is a vote at the stockholder's meeting, whether it's dividend or non-dividend. That has value to the company and major stockholders in terms of protecting their own interests, and has value to anyone considering a takeover of the company or who otherwise wants to drive the company's policy. Similarly, if the company is bought out, the share will generally be replaced by shares in whatever the new owning company is. So it really does represent \"\"a slice of the company\"\" in several vary practical ways, and thus has fairly well-defined intrinsic value linked to the company's perceived value. If its price drops too low the company becomes more vulnerable to hostile takeover, which means the company itself will often be motivated to buy back shares to protect itself from that threat. One of the questions always asked when making an investment is whether you're looking for growth (are you hoping its intrinsic value will increase) or income (are you hoping it will pay you a premium for owning it). Non-dividend stocks are a pure growth bet. Dividend-paying stocks are typically a mixture of growth and income, at various trade-off points. What's right for you depends on your goals, timeframe, risk tolerance, and what else is already in your portfolio.\"" }, { "docid": "141458", "title": "", "text": "\"Not really, no. The assumption you're making—withdrawals from a corporation are subject to \"\"[ordinary] income tax\"\"—is simplistic. \"\"Income tax\"\" encompasses many taxes, some more benign than others, owing to credits and exemptions based on the kind of income. Moreover, the choices you listed as benefits in the sole-proprietor case—the RRSP, the TFSA, and capital gains treatment for non-registered investments—all remain open to the owner of a small corporation ... the RRSP to the extent that the owner has received salary to create contribution room. A corporation can even, at some expense, establish a defined benefit (DB) pension plan and exceed individual RRSP contribution limits. Yes, there is a more tax-efficient way for small business owners to benefit when it comes time to retirement. Here is an outline of two things I'm aware of: If your retirement withdrawals from your Canadian small business corporation would constitute withdrawal from the corporation's retained earnings (profits), i.e. income to the corporation that had already been subject to corporate income tax in prior years, then the corporation is able to declare such distributions as dividends and issue you a T5 slip (Statement of Investment Income) instead of a T4 slip (Statement of Remuneration Paid). Dividends received by Canadian residents from Canadian corporations benefit from the Dividend Tax Credit (DTC), which substantially increases the amount of income you can receive without incurring income tax. See TaxTips.ca - Non-eligible (small business) dividend tax credit (DTC). Quote: For a single individual with no income other than taxable Canadian dividends which are eligible for the small business dividend tax credit, in 2014 approximately $35,551 [...] could be earned before any federal* taxes were payable. * Provincial DTCs vary, and so combined federal/provincial maximums vary. See here. If you're wondering about \"\"non-eligible\"\" vs. \"\"eligible\"\": private small business corporation dividends are generally considered non-eligible for the best DTC benefit—but they get some benefit—while a large public corporation's dividends would generally be considered eligible. Eligible/non-eligible has to do with the corporation's own income tax rates; since Canadian small businesses already get a big tax break that large companies don't enjoy, the DTC for small businesses isn't as good as the DTC for public company dividends. Finally, even if there is hardly any same-year income tax advantage in taking dividends over salary from an active small business corporation (when you factor in both the income tax paid by the corporation and the individual), dividends still allow a business owner to smooth his income over time, which can result in a lower lifetime average tax rate. So you can use your business as a retained earnings piggy bank to spin off dividends that attract less tax than ordinary income. But! ... if you can convince somebody to buy your business from you, then you can benefit from the lifetime capital gains exemption of up to $800,000 on qualifying small business shares. i.e. you can receive up to $800K tax-free on the sale of your small business shares. This lifetime capital gains exemption is a big carrot—designed, I believe, to incentivize Canadian entrepreneurs to develop going-concern businesses that have value beyond their own time in the business. This means building things that would make your business worth buying, e.g. a valued brand or product, a customer base, intellectual property, etc. Of course, there are details and conditions with all of what I described, and I am not an accountant, so please consult a qualified, conflict-free professional if you need advice specific to your situation.\"" }, { "docid": "104128", "title": "", "text": "Short answer: it's complicated. The UK govt pages on foreign income are probably your best starting point: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_10027480 As you can see, it depends on your precise residence status here. (There is a tax treaty between the UK and the US so you wouldn't be double taxed on the income either way. But there might still be reporting obligations)." } ]

[ { "docid": "589625", "title": "", "text": "Yes, However if you live in the USA a lot of companies will refuse to sent you any report and will not let you take part in “right issues” as they don’t wish to come under USA investment law." } ]

[ { "docid": "307008", "title": "", "text": "\"I think you've got basics, but you may have the order / emphasis a bit wrong. I've changed the order of the things you've learned in to what I think is the most important to understand: Owning a stock is like owning a tiny chunk of the business Owning stock is owning a tiny chunk of the business, it's not just \"\"like\"\" it. The \"\"tiny chunks\"\" are called shares, because that is literally what they are, a share of the business. Sometimes shares are also called stocks. The words stock and share are mostly interchangeable, but a single stock normally means your holding of many shares in a business, so if you have 100 shares in 1 company, that's a stock in that company, if you then buy 100 shares in another company, you now own 2 stocks. An investor seeks to buy stocks at a low price, and sell when the price is high. Not necessarily. An investor will buy shares in a company that they believe will make them a profit. In general, a company will make a profit and distribute some or all of it to shareholders in the form of dividends. They will also keep back a portion of the profit to invest in growing the company. If the company does grow, it will grow in value and your shares will get more valuable. Price (of a stock) is affected by supply/demand, volume, and possibly company profits The price of a share that you see on a stock ticker is the price that people on the market have exchanged the share for recently, not the price you or I can buy a share for, although usually if people on the market are buying and selling at that price, someone will buy or sell from you at a similar sort of price. In theory, the price will be the companies total value, if you were to own the whole thing (it's market capitalisation) divided by the total number of shares that exist in that company. The problem is that it's very difficult to work out the total value of a company. You can start by counting the different things that it owns (including things like intellectual property and the knowledge and experience of people who work there), subtract all the money it owes in loans etc., and then make an allowance for how much profit you expect the company to make in the future. The problem is that these numbers are all going to be estimates, and different peoples estimates will disagree. Some people don't bother to estimate at all. The market makers will just follow supply and demand. They will hold a few shares in each of many companies that they are interested in. They will advertise a lower price that they are willing to buy at and a higher price that they will sell at all the time. When they hold a lot of a share, they will price it lower so that people buy it from them. When they start to run out, they will price it higher. You will never need to spend more than the market makers price to buy a share, or get less than the market makers price when you come to sell it (unless you want to buy or sell more shares than they are willing to). This is why stock price depends on supply and demand. The other category of people who don't care about the companies they are trading are the high speed traders. They just look at information like the past price, the volume (total amount of shares being exchanged on the market) and many other statistics both from the market and elsewhere and look for patterns. You cannot compete with these people - they do things like physically locate their servers nearer to the stock exchanges buildings to get a few milliseconds time advantage over their competitors to buy shares quicker than them.\"" }, { "docid": "481169", "title": "", "text": "Firstly a stock split is easy, for example each unit of stock is converted into 10 units. So if you owned 1% of the company before the stock split, you will still own 1% after the stock split, but have 10 times the number of shares. The company does not pay out any money when doing this and there is no effect on tax for the company or the share holder. Now onto stock dividend… When a company make a profit, the company gives some of the profit to the share holders as a dividend; this is normally paid in cash. An investor may then wish to buy more shares in the company using the money from the dividend. However buying shares used to have a large cost in broker charges etc. Therefore some companies allowed share holders to choose to have the dividend paid as shares. The company buys enough of their own shares to cover the payout, only having one set of broker charges and then sends the correct number of shares to each share holder that has opted for a stock dividend. (Along with any cash that was not enough to buy a complete share.) This made since when you had paper shares and admin costs where high for stock brokers. It does not make sense these days. A stock dividend is taxed as if you had been paid the dividend in cash and then brought the stock yourself." }, { "docid": "194359", "title": "", "text": "I don't know what restrictions are put on the average employee at your company. In my case, we were told we were not permitted to either short the stock, or to trade in it options. That said, I was successful shorting the exact number of shares I'd be buying at the 6 month close, the same day the purchase price would be set. I then requested transfer of the stock purchase to my broker where the long and short netted to zero. The return isn't 15%, it's 100/85 or 17.6% for an average 3 months they have your money. So do the math on APR. (Higher if the stock has risen over 6 months and you get the lower price from 6 months prior.) My method was riskless, as far as I am concerned. I did this a dozen times. The stock itself was +/- 4% by the time the shares hit, so in the end it was an effort, mostly to sleep better. I agree with posts suggesting the non-zero risk of a 20% 4 day drop." }, { "docid": "450132", "title": "", "text": "crank out expensive shares when markets are frothy Corporations go public (sell their shares for the first time) in market conditions that have a lot of liquidity (a lot of people buying shares) and when they have to make the fewest concessions to appease an investing public. When people are greedy and looking to make money without using too much due diligence. Think Netscape's IPO in 1995 or Snapchat's IPO in 2017. They also issue more shares after already being public in similar circumstances. Think Tesla's 1 billion dollar dilution in 2017. Dilution results in the 1 share owning less of the company. So in a less euphoric investing environment, share prices go down in response to dilution. See Viggle's stock for an example, if you can find a chart. issue debt Non-financial companies create bonds and sell bonds. Why is that surprising to you? Cash is cash. This is called corporate bonds or corporate debt. You can buy Apple bonds right now if you want from the same brokers that let you buy stocks. mutual fund investor Bernstein is making a cynical assessment of the markets which carries a lot of truth. Dumping shares on your mom's 401k is a running gag amongst some financial professionals. Basically mutual fund investors are typically the least well researched or most gullible market participants to sell to, influenced by brand name more than company fundamentals, who will balk at the concept of reading a prospectus. Financial professionals and CFOs have more information than their investors and can gain extended advantages because of this. Just take the emotions out of it and make objective assessments." }, { "docid": "528880", "title": "", "text": "Here're some findings upon researches: Two main things to watch out for: Estate tax and the 30% tax withholding. These 2 could be get around by investing in Luxembourg or Ireland domiciled ETF. For instance there's no tax withholding on Ireland domiciled ETF dividend, and the estate tax is not as high. (source: BogleHead forums) Some Vanguard ETF offered in UK stock market: https://www.vanguard.co.uk/uk/mvc/investments/etf#docstab. Do note that the returns of S&P 500 ETF (VUSA) are adjusted after the 30% tax withholding! Due to VUSA's higher TER (0.09%), VOO should remain a superior choice. The FTSE Emerging Markets and All-World ETFs though, are better than their US-counterparts, for non-US residents. Non-US residents are able to claim back partials of the withhold tax, by filing the US tax form 1040NR. In 2013, non-US resident can claim back at least $3,900. Kindly correct me if anything is inaccurate." }, { "docid": "566028", "title": "", "text": "As other people have said they should register with a broker in the country they reside in that can deal in US stocks, then fill out a W8-BEN form. I have personally done this as I am from the Uk, it's not a very complicated process. I would assume that most US brokers don't allow foreign customers due to the person having to pay tax where they reside and the US brokers don't want to have to keep approximately 200 different tax codes in track." }, { "docid": "11132", "title": "", "text": "The big problem I see with this article is it does not state what the profits would be minus the licensing fees. It only states revenue, which is obviously a bad indicator of taxes owed. Also, licensing fees are applicable in some markets. For example in markets like China that mandate a company do business under a subsidiary, licensing is a legitimate expense, considering the subsidiary might not be wholly owned by the parent company (per the country's laws). That said, this is the UK we're talking about, so it is clearly not in that situation. I was just pointing out in some markets it is a legitimate expense. Maybe the UK could make licensing fees a non-deductible expense after a certain percentage of subsidiary income. Its a complex problem, I would be interested to see if any other jurisdictions have tackled it." }, { "docid": "591616", "title": "", "text": "\"The (U.S) \"\"accredited investor\"\" laws apply to investments in the U.S. Foreign countries may or may not have their own laws regarding investment in startups, and if so, the foreign laws apply. One way around the net worth minimum is to be a member of the management team. \"\"Active\"\" (management) investors don't need to be accredited because they can see what's going on on a day to day basis. The accredited investor laws apply to the target companies, not to the investors. Basically, a start-up company can't take \"\"other people's money\"\" from a non-accredited investor. But you can invest \"\"your own\"\" money in it if you are a manager.\"" }, { "docid": "598607", "title": "", "text": "So I want to sell my 100 shares of AAPL to him at a price of 10 or even 1 US Dollar. Is that legal/allowed? Of course. It's your stocks - do with it what you want. if the two persons are not served by a same broker. You'll have to talk to your broker about the technicalities of the transaction. if the person who sell are US citizen and the person who buy are not, and and vice-versa Since you asked specifically about US citizenship, I'll assume you're in the US or the transaction is taking place in the US. Citizenship has nothing to do with it (except may be for economic sanctions against Russians or Iranians that may come into play). What is important is the tax residency status. Such a transfer is essentially a gift, and if you're a US tax resident (which doesn't correlate to your immigration status necessarily) - you'll have to deal with the gift tax consequences on the discount value. For example - you have 100 shares of AAPL which you sold to your friend for $1 each when the fair market value (FMV) was $501. So essentially, the friend got $50,100 value for $100. I.e.: $50K gift. Since this amount is above the annual $14K exemption - you'll have to deal with the gift tax and file gift tax return. There are also consequences for the capital gains tax for both you and your friend. I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State) about the specifics given your circumstances. If you (or the recipient) are also a foreign citizen/tax resident - then that country's laws also may affect your situation." }, { "docid": "279782", "title": "", "text": "\"Usually insiders are in a better position than you to understand their business, but that doesn't mean they will know the future with perfect accuracy. Sometimes they are wrong, sometimes life events force them to liquidate an otherwise promising investment, sometimes their minds change. So while it is indeed valuable information, as everything in fundamental analysis it must be taken with a grain of salt. Automatic Sell I think these refer to how the sell occurred. Often the employees don't get actual shares but options or warrants that can be converted to shares. Or there may be special predetermined arrangements regarding when and how the shares may be traded. Since the decision to sell here has nothing to do with the prospects of the business, but has to do with the personal situation of the employee, it's not quite the same as outright selling due to market concerns. Some people, for instance, are not interested in holding stock. Part of their compensation is given in stock, so they immediately sell the stock to avoid the headache of watching an investment. This obviously doesn't indicate that they expect the company will go south. I think automatic sell refers to these sorts of situations, but your broker should provide a more detailed definition. Disposition (Non Open Market) These days people trade through a broker, but there's nothing stopping you from taking the physical shares and giving them to someone in exchange for say a stack of cash. With a broker, you only \"\"sell\"\" without considering who is buying. The broker then finds buyers for you according to their own system. If selling without a broker you can also be choosy with who is buying, and it's not like anybody can just call up the CEO and ask to buy some stock, so it's a non-open market. Ultimately though it's still the insider selling. Just on a different exchange. So I would treat this as any insider sell - if they are selling, they may be expecting the stock to become less valuable. indirect ownership I think this refers to owning an entity that in turn owns the asset. For instance CEO of XYZ owns stock in ACME, but ACME holds shares of XYZ. This is a somewhat complicated situation, it comes down to whether you think they sold ACME because of the exposure to XYZ or because of some other risk that applies only to ACME and not XYZ. Generally speaking, I don't think you would find a rule like \"\"if insider transactions of so and so kinds > X then buy\"\" that provides guaranteed success. If such a rule was possible it would have been exploited already by the professionals. The more sensible option is to consider all data available to you and try to make a holistic evaluation. All of these insider activities can be bullish or bearish depending on many other factors.\"" }, { "docid": "192083", "title": "", "text": "It's not just the US based mailing address for registration or US based credit-card or bank account: even if you had all these, like I do, you will find that these online filing companies do not have the infrastructure to handle non-resident taxes. The reason why the popular online filing companies do not handle non-resident taxes is because: Non-residents require a different set of forms to fill out - usually postfixed NR - like the 1040-NR. These forms have different rules and templates that do not follow the usual resident forms. This would require non-trivial programming done by these vendors All the NR forms have detailed instructions and separate set of non-resident guides that has enough information for a smart person to figure out what needs to be done. For example, check out Publication 519 (2011), U.S. Tax Guide for Aliens. As a result, by reading these most non-residents (or their accountants) seem to figure out how the taxes need to be filed. For the remaining others, the numbers perhaps are not significant enough to justify the non-trivial programming that need to be done by these vendors to incorporate the non-resident forms. This was my understanding when I did research into tax filing software. However, if you or anyone else do end up finding tax filing software that does allow non-resident forms, I wil be extremely happy to learn about them. To answer your question: you need to do it yourself or get it done by someone who knows non-resident taxes. Some people on this forum, including me for gratis, would be glad to check your work once you are done with it as long as you relieve us of any liability." }, { "docid": "226568", "title": "", "text": "\"It is unusual to need a consultant to open a bank account for you, and I would also be concerned that perhaps the consultant could take the money and do nothing, or continue to demand various sums of money for \"\"expenses\"\" like permits, licenses, identity check, etc. until you give up. Some of the more accepted ways to open a bank account are: A: Call up an established bank and follow their instructions to open a personal account . Make sure you are calling on a real bank, one that has been around a while. Hints: has permanent locations, in the local phone book, and has shares traded on a national stock exchange. Call the bank directly, don't use a number given to you by a 3rd party consultant, as it may be a trick... Discuss on the phone and find out if you can open an account by mail or if you need to visit in person. B: Create a company or branch office in the foreign country, assuming this is for business or investing. and open an account by appointing someone (like a lawyer or accountant or similar professional) in the foreign country to represent the company to open an account in person. If you are a US citizen, you will want to ask your CPA/accountant/tax lawyer about the TD F 90-22.1 Foreign Account Bank Report form, and the FATCA Foreign Account Tax Compliance Act. There can be very large fines for not making the required reports. The requirements to open a bank account have become more strict in many countries, so don't be surprised if they will not open an account for a foreigner with no local address, if that is your situation.\"" }, { "docid": "481488", "title": "", "text": "My concern is if I need to report and pay extra taxes for the part of the company that will be under my name Yes, d'uh. Of course. It's actually quite complicated when it comes to foreign companies owned by US people, and you'll need a good tax adviser (EA/CPA licensed in your State) who's fluent in that area. Citizenship has nothing to do with this, from tax perspective there's no difference between a green card holder and a citizen (except that green card holder cannot claim non-resident exemptions and certain tax treaties' exemptions)." }, { "docid": "34338", "title": "", "text": "\"If you live outside the US, then you probably need to deal with foreign tax credits, foreign income exclusions, FBAR forms (you probably have bank account balances enough for the 10K threshold) , various monsters the Congress enacted against you like form 8939 (if you have enough banking and investment accounts), form 3520 (if you have a IRA-like local pension), form 5471 (if you have a stake in a foreign business), form 8833 (if you have treaty claims) etc ect - that's just what I had the pleasure of coming across, there's more. TurboTax/H&R Block At Home/etc/etc are not for you. These programs are developed for a \"\"mainstream\"\" American citizen and resident who has nothing, or practically nothing, abroad. They may support the FBAR/FATCA forms (IIRC H&R Block has a problem with Fatca, didn't check if they fixed it for 2013. Heard reports that TurboTax support is not perfect as well), but nothing more than that. If you know the stuff well enough to fill the forms manually - go for it (I'm not sure they even provide all these forms in the software though). Now, specifically to your questions: Turbo tax doesn't seem to like the fact that my wife is a foreigner and doesn't have a social security number. It keeps bugging me to input a valid Ssn for her. I input all zeros for now. Not sure what to do. No, you cannot do that. You need to think whether you even want to include your wife in the return. Does she have income? Do you want to pay US taxes on her income? If she's not a US citizen/green card holder, why would you want that? Consider it again. If you decide to include here after all - you have to get an ITIN for her (instead of SSN). If you hire a professional to do your taxes, that professional will also guide you through the ITIN process. Turbo tax forces me to fill out a 29something form that establishes bonafide residency. Is this really necessary? Again in here it bugs me about wife's Ssn Form 2555 probably. Yes, it is, and yes, you have to have a ITIN for your wife if she's included. My previous state is California, and for my present state I input Foreign. When I get to the state tax portion turbo doesn't seem to realize that I have input foreign and it wants me to choose a valid state. However I think my first question is do i have to file a California tax now that I am not it's resident anymore? I do not have any assets in California. No house, no phone bill etc If you're not a resident in California, then why would you file? But you might be a partial resident, if you lived in CA part of the year. If so, you need to file 540NR for the part of the year you were a resident. If you have a better way to file tax based on this situation could you please share with me? As I said - hire a professional, preferably one that practices in your country of residence and knows the provisions of that country's tax treaty with the US. You can also hire a professional in the US, but get a good one, that specializes on expats.\"" }, { "docid": "188816", "title": "", "text": "I'll start with the bottom line. Below the line I'll address the specific issues. Becoming a US tax resident is a very serious decision, that has significant consequences for any non-American with >$0 in assets. When it involves cross-border business interests, it becomes even more significant. Especially if Switzerland is involved. The US has driven at least one iconic Swiss financial institution out of business for sheltering US tax residents from the IRS/FinCEN. So in a nutshell, you need to learn and be afraid of the following abbreviations: and many more. The best thing for you would be to find a good US tax adviser (there are several large US tax firms in the UK handling the US expats there, go to one of those) and get a proper assessment of all your risks and get a proper advice. You can get burnt really hard if you don't prepare and plan properly. Now here's that bottom line. Q) Will I have to submit the accounts for the Swiss Business even though Im not on the payroll - and the business makes hardly any profit each year. I can of course get our accounts each year - BUT - they will be in Swiss German! That's actually not a trivial question. Depending on the ownership structure and your legal status within the company, all the company's bank accounts may be reportable on FBAR (see link above). You may also be required to file form 5471. Q) Will I need to have this translated!? Is there any format/procedure to this!? Will it have to be translated by my Swiss accountants? - and if so - which parts of the documentation need to be translated!? All US forms are in English. If you're required to provide supporting documentation (during audit, or if the form instructions require it with filing) - you'll need to translate it, and have the translation certified. Depending on what you need, your accountant will guide you. I was told that if I sell the business (and property) after I aquire a greencard - that I will be liable to 15% tax of the profit I'd made. Q) Is this correct!? No. You will be liable to pay income tax. The rate of the tax depends on the kind of property and the period you held it for. It may be 15%, it may be 39%. Depends on a lot of factors. It may also be 0%, in some cases. I also understand that any tax paid (on selling) in Switzerland will be deducted from the 15%!? May be. May be not. What you're talking about is called Foreign Tax Credit. The rules for calculating the credit are not exactly trivial, and from my personal experience - you can most definitely end up being paying tax in both the US and Switzerland without the ability to utilize the credit in full. Again, talk to your tax adviser ahead of time to plan things in the most optimal way for you. I will effectively have ALL the paperwork for this - as we'll need to do the same in Switzerland. But again, it will be in Swiss German. Q) Would this be a problem if its presented in Swiss German!? Of course. If you need to present it (again, most likely only in case of audit), you'll have to have a translation. Translating stuff is not a problem, usually costs $5-$20 per page, depending on complexity. Unless a lot of money involved, I doubt you'll need to translate more than balance sheet/bank statement. I know this is a very unique set of questions, so if you can shed any light on the matter, it would be greatly appreciated. Not unique at all. You're not the first and not the last to emigrate to the US. However, you need to understand that the issue is very complex. Taxes are complex everywhere, but especially so in the US. I suggest you not do anything before talking to a US-licensed CPA/EA whose practice is to work with the EU/UK expats to the US or US expats to the UK/EU." }, { "docid": "501686", "title": "", "text": "Are these PFIC rules new? No, PFIC rules are not new, they've been around for a very long time. what would that mean if a person owned a non-US company stock, like a company in Europe that makes chocolate? Is that considered assets that produces passive income? No. But if a person owned a non-US company stock like a company that holds a company that makes chocolate - that would be passive income. this is non-US mutual funds that hold foreign shares, like a mutual fund in India, not a US fund which owns Indian stocks? Non-US fund. For those of you who are tax advisors, is the time length (30 hours) true for filing form 8621? I would suggest not to fill this form on your own. Find a tax adviser specializing on providing services to expats, and have her do this. 30 hours for a person who has never dealt with taxes on this level before is probably not enough to learn all about PFIC, the real number is closer to 300 hours. While ZeroHedge article may be a sales pitch, PFIC rules should frighten you if they apply to your investments. Do not take them lightly, as penalties are steep and if you don't plan ahead you may end up paying way too much taxes than you could have." }, { "docid": "401329", "title": "", "text": "I'm a bit out of my element here, but my guess is the right way to think about this is: knowing what you do now about the underlying company (NZT), pretend they had never offered ADR shares. Would you buy their foreign listed shares today? Another way of looking at it would be: would you know how to sell the foreign-listed shares today if you had to do so in an emergency? If not, I'd also push gently in the direction of selling sooner than later." }, { "docid": "141458", "title": "", "text": "\"Not really, no. The assumption you're making—withdrawals from a corporation are subject to \"\"[ordinary] income tax\"\"—is simplistic. \"\"Income tax\"\" encompasses many taxes, some more benign than others, owing to credits and exemptions based on the kind of income. Moreover, the choices you listed as benefits in the sole-proprietor case—the RRSP, the TFSA, and capital gains treatment for non-registered investments—all remain open to the owner of a small corporation ... the RRSP to the extent that the owner has received salary to create contribution room. A corporation can even, at some expense, establish a defined benefit (DB) pension plan and exceed individual RRSP contribution limits. Yes, there is a more tax-efficient way for small business owners to benefit when it comes time to retirement. Here is an outline of two things I'm aware of: If your retirement withdrawals from your Canadian small business corporation would constitute withdrawal from the corporation's retained earnings (profits), i.e. income to the corporation that had already been subject to corporate income tax in prior years, then the corporation is able to declare such distributions as dividends and issue you a T5 slip (Statement of Investment Income) instead of a T4 slip (Statement of Remuneration Paid). Dividends received by Canadian residents from Canadian corporations benefit from the Dividend Tax Credit (DTC), which substantially increases the amount of income you can receive without incurring income tax. See TaxTips.ca - Non-eligible (small business) dividend tax credit (DTC). Quote: For a single individual with no income other than taxable Canadian dividends which are eligible for the small business dividend tax credit, in 2014 approximately $35,551 [...] could be earned before any federal* taxes were payable. * Provincial DTCs vary, and so combined federal/provincial maximums vary. See here. If you're wondering about \"\"non-eligible\"\" vs. \"\"eligible\"\": private small business corporation dividends are generally considered non-eligible for the best DTC benefit—but they get some benefit—while a large public corporation's dividends would generally be considered eligible. Eligible/non-eligible has to do with the corporation's own income tax rates; since Canadian small businesses already get a big tax break that large companies don't enjoy, the DTC for small businesses isn't as good as the DTC for public company dividends. Finally, even if there is hardly any same-year income tax advantage in taking dividends over salary from an active small business corporation (when you factor in both the income tax paid by the corporation and the individual), dividends still allow a business owner to smooth his income over time, which can result in a lower lifetime average tax rate. So you can use your business as a retained earnings piggy bank to spin off dividends that attract less tax than ordinary income. But! ... if you can convince somebody to buy your business from you, then you can benefit from the lifetime capital gains exemption of up to $800,000 on qualifying small business shares. i.e. you can receive up to $800K tax-free on the sale of your small business shares. This lifetime capital gains exemption is a big carrot—designed, I believe, to incentivize Canadian entrepreneurs to develop going-concern businesses that have value beyond their own time in the business. This means building things that would make your business worth buying, e.g. a valued brand or product, a customer base, intellectual property, etc. Of course, there are details and conditions with all of what I described, and I am not an accountant, so please consult a qualified, conflict-free professional if you need advice specific to your situation.\"" }, { "docid": "193367", "title": "", "text": "\"Be careful here: If ACME were in California, I would pay taxes on USD 17,000 because I had revenue of 20,000 and expenses of 3,000. To CALIFORNIA. And California taxes S-Corps. And, in addition, you'd pay $800 for the right of doing business in the State. All that in addition to the regular Federal and State taxes to the State where you're resident. Suppose that ACME is in Britain (or anywhere else for that matter). My revenue and expenses are the same, but now my money has been earned and my expenses incurred in a foreign country. Same thing exactly. Except that you'll have to pay taxes to the UK. There may be some provision in the tax treaty to help you though, so you may end up paying less taxes when working in the UK than in California. Check with a licensed tax adviser (EA/CPA licensed in your State) who won't run away from you after you say the words \"\"Tax Treaty\"\". Does it even make sense to use my S-Corporation to do business in a foreign country? That should be a business decision, don't let the tax considerations drive your business.\"" } ]

[ { "docid": "147343", "title": "", "text": "Nope. Credit Unions are for the customers. Since the customers own them, the credit union does what is best for the members. They aren't giving you money, they are loaning it to you for for interest. Furthermore then judged you like any other bank would. High horse moment: I believe the only reason you have to open an account, is because the banking industry didn't want to compete and got legislation to limit the size and reach of a credit union. The credit union wants your business, and they want to work for you, but they are required to have these membership requirements because their lobby isn't as powerful as regular banks." } ]

[ { "docid": "106161", "title": "", "text": "I would have asked for the intended recipient's account number and pursue sending the money there. If it's the same as yours (except for one digit) that would be a good sign. But even here, the crook could send money to dozens of different accounts, all off by one digit, just to make it look authentic. I'm going with scam just to be safe. As for the checksum, it's used on paper checks (next to the last digit) but not necessarily the actual account. Credit card accounts use an algorithm, but online tools create as many legitimate character strings as you want. I used to work at a credit union, and when the time was just right, I opened account number 860000 (actual account number except for the second digit). All their account numbers were sequential, so the oldest account number was 000001. Sadly, many important systems are set up to meet the simple needs of the masses, and are easy to beat if you really want to. Check out If you dare hackers to hack you, they'll hack you good." }, { "docid": "500755", "title": "", "text": "Set up a meeting with the bank that handles your business checking account. Go there in person and bring your business statements: profit and loss, balance sheet, and a spreadsheet showing your historical cash flow. The goal is to get your banker to understand your business and your needs and also for you to be on a first-name basis with your banker for an ongoing business relationship. Tell them you want to establish credit and you want a credit card account with $x as the limit. Your banker might be able to help push your application through even with your credit history. Even if you can't get the limit you want, you'll be on your way and can meet again with your banker in 6 or 12 months. Once your credit is re-established you'll be able to shop around and apply for other rewards cards. One day you might want a line of credit or a business loan. Establishing a relationship with your banker ahead of time will make that process easier if and when the time comes. Continue to meet with him or her at least annually, and bring updated financial statements each time. If nothing else, this process will help you analyze your business, so the process itself is useful even if nothing comes of it immediately." }, { "docid": "20670", "title": "", "text": "\"•Have you had any problems with bills not being paid? NO •If you had issues, were they addressed satisfactorily? Answer: A big issue that blindsided me: With my bank, the funds come out of my account right away, but the actual payment is done through a third-party service. On my bank's online site it appears that the payment has been made, but that does not necessarily mean that the intended recipient has cashed it. Looking online at my credit union's site is useless, because all I can tell is that the payment has been sent. The only way to verify payment is to contact the intended recipient. Or I may telephone the online bill pay representative at my bank/credit union, who has access to the third party service. If I do nothing, after 90 days, the check is void, at which time the third party service notifies the bank/credit union and the funds will eventually end up back in my account. I learned this today, after a third-party paper check to a health care provider was returned to me via mail by the recipient (because insurance had already paid and I did not owe them anything). The money was in the hands of the third-party service, not in my account, nor that of my credit union nor the recipient. At first my credit union told me that I would have to contact the third-party service myself and work it out. I said \"\"NO WAY\"\" and the credit union did get the money back into account the same day. This is a sweet deal for the third party, who has my money interest-free anywhere from a few days to three months. And risk-free as well, because the money goes directly from my account to the third party service.\"" }, { "docid": "180071", "title": "", "text": "\"There are two options (according to Wells Fargo). You can either apply for a Business/Commercial Equity Loan or a Line of Credit. A loan is what it sounds like - they give you a lump sum of money for you to use and you have to pay it in monthly installments. A line of credit is like a credit card, you have money that you can borrow (up to a certain amount) and you have to make monthly payments. The process can differ for different business, they probably look at what your real estate is worth, how much money you are generating from it, etc. I am not recommending or endorsing Wells Fargo, other major banks offer the same types of products, Wells Fargo just happened to appear first when I searched for \"\"business line of credit\"\".\"" }, { "docid": "60996", "title": "", "text": "\"I don't recommend balance transfers. Like many credit card things, they distract you with shiny (\"\"0 percent interest!\"\") and ream you on a 'balance transfer fee'. If you have a decent credit score and working relationship, talk to banks about opening what's called a 'signature loan,' and use that to shift the debt to a lower rate. A local credit union advertises rates 'as low as' 9.75 percent. Which is itself a shiny that you may not qualify for. The really low loans rates you see are secured loans; if you don't pay, they can take the collateral.\"" }, { "docid": "452540", "title": "", "text": "If the checking account is in a FDIC insured bank or a NCUA insured Credit Union then you don't have to worry about what happens if the bank goes out of business. In the past the government has made sure that any disruption was minimal. The fraud issue can cause a bigger problem. If they get a hold of your debit card, they can drain your account. Yes the bank gives you fraud protection so that the most you can lose is $50 or $500; many even make your liability $0 if you report it in a timely manor. But there generally is a delay in getting the money put back in your account. One way to minimize the problem is to open a savings account,it also has the FDIC and NCUA coverage . The account may even earn a little interest. If you don't allow the bank to automatically provide an overdraft transfer from savings to checking account, then the most they can temporarily steal is your checking account balance. Getting a credit card can provide additional protection. It also limits your total losses if there is fraud. The bill is only paid once a month so if they steal the card or the number, they won't be able to drain the money in the bank account. The credit card, if used wisely can also start to build a positive credit file so that in a few years you can get a loan for a car or a place to live. Of course if they steal your entire wallet with both the credit and the debit card..." }, { "docid": "423569", "title": "", "text": "I wouldn't worry about his credit score. The hit from a credit inquiry is not that big and it's absolutely worth it in the long run. I suggest you sign him up for a free budgeting app (just google budgeting app) that will help him not only take control of his spending but also help him with his loans. Transferring debt comes with a few caveats: His credit score is bad so I don't know if he'll be able to get 0% loan, but even if he gets 6% - 8% that will save him money; just don't forget about the transfer fee. If he has checking/savings account it's worth talking to that bank first - they might be able to give him a better deal for being their customer. Also if he tells them his story and credit score they might be able to give him an idea what they can offer him without doing a credit check. Another option is to become a member of a local credit union - they have great rates on loans / credit cards. Credit card or personal loan doesn't matter much, whatever he can get. With his credit score I doubt he'll be able to get a good rate at Chase or one of the other big credit card companies. Good luck." }, { "docid": "571295", "title": "", "text": "\"You have figured out most of the answers for yourself and there is not much more that can be said. From a lender's viewpoint, non-immigrant students applying for car loans are not very good risks because they are going to graduate in a short time (maybe less than the loan duration which is typically three years or more) and thus may well be leaving the country before the loan is fully paid off. In your case, the issue is exacerbated by the fact that your OPT status is due to expire in about one year's time. So the issue is not whether you are a citizen, but whether the lender can be reasonably sure that you will be gainfully employed and able to make the loan payments until the loan is fully paid off. Yes, lenders care about work history and credt scores but they also care (perhaps even care more) about the prospects for steady employment and ability to make the payments until the loan is paid off. Yes, you plan on applying for a H1-B visa but that is still in the future and whether the visa status will be adjusted is still a matter with uncertain outcome. Also, these are not matters that can be explained easily in an on-line application, or in a paper application submitted by mail to a distant bank whose name you obtained from some list of \"\"lenders who have a reliable track record of extending auto loans to non-permanent residents.\"\" For this reason, I suggested in a comment that you consider applying at a credit union, especially if there is an Employees' Credit Union for those working for your employer. If you go this route, go talk to a loan officer in person rather than trying to do this on the phone. Similarly, a local bank,and especially one where you currently have an account (hopefully in good standing), is more likely to be willing to work with you. Failing all this, there is always the auto dealer's own loan offers of financing. Finally, one possibility that you might want to consider is whether a one-year lease might work for you instead of an outright purchase, and you can buy a car after your visa issue has been settled.\"" }, { "docid": "228871", "title": "", "text": "Please realize that your issuer can close the account for any number of reasons. Inactivity is one, as having a credit line open costs them money and if you never charge anything, the company doesn't get any transaction fees from vendors nor does the company get to charge you any interest. An occasional charge is likely to keep your card from being closed automatically, but it is not a guarantee. Another reason they may close the account is that you have other bad marks show up on your credit score, or their criteria for offering you the card change so you no longer match their target demographic. I have a credit card issued by my credit union that I have not used for a couple of years. They will not close the card account because my other accounts are still very profitable for them. If I were not an otherwise profitable customer, I wouldn't be surprised if they closed my credit card account. If you are serious about keeping the account open, you should probably have more than a trivial amount of usage." }, { "docid": "54322", "title": "", "text": "First, you need to be aware that the credit score reported by Mint is Equifax Credit Score. Equifax Credit Score, like FICO, Vantagescore, and others, is based on a proprietary formula that is not publicly available. Every score is calculated with a different formula, and can vary from each other widely. Lenders almost exclusively only use FICO scores, so the score number you have is likely different than the score lenders will use. Second, understand that the advice you see from places like Mint and Credit Karma will almost always tell you that you don't have enough credit card accounts. The reason for this is that they make their money by referring customers to credit card applications. They have a financial interest in telling you that you need more credit cards. Finally, realize that credit score is just a number, and is only useful for a limited number of things. Higher is better to a point, and after that, you get no benefit from increasing your score. My advice to you is this: Don't stress out about your credit score, especially a free score reported by Credit Karma or Mint. If you really have a desire to find out your score, you can pay FICO to get your actual score, but it's not cheap. You can also sometimes get your FICO score by applying for a loan and asking the lender. I last saw my FICO scores (there were three, one from each credit bureau) when I applied for a mortgage a couple of years ago, and the mortgage rep gave them to me for free. But honestly, knowing your score doesn't do much for you, as the best way to increase it is to simply make your payments on time and wait. Don't give in to bad conventional advice from places that are funded by the financial services industry. The thing that makes your credit score go up is a long history of paying your bills on time. Despite what you commonly read about credit scores, I'm not convinced that you can radically boost your scores by having lots of open credit card accounts. At the time I applied for my last mortgage, I only had 2 open credit cards (still true), and the oldest open account was about 1.5 years old. The average of my 3 scores was just over 800. But I've been paying my bills on time for at least 20 years now. Only get credit cards that you actually want, and close the ones you don't want." }, { "docid": "372993", "title": "", "text": "\"I had to apply for an American Express card, which was also rejected. Then I had searched for a Marbles Credit Card Stop applying for credit cards/loans. Doing so is just making your credit rating worse. Credit agencies will downgrade your credit rating if they see lots of signs of credit checking. It's a sign you're desperately looking for credit, which you are...! 44.9% APR This is very expensive credit. You can get personal loans on the high street for 3-4%. 44.9% is really bad value. You're simply going to make the situation worse. Am I taking off a loan from website as amingos loans to help me build up my credit rating Again this is 44% interest! You also need a guarantor. So you're not only going to get yourself in trouble but a family member too: don't do this! This will only help your credit rating if you pay it back successfully, which given your situation seems like a risk. Contact the Money Advice Service or the National Debt Line. Explain your situation in detail to them. They are a government-backed service designed for people in your situation. They will offer practical advice and can even help negotiate with your creditors, etc. Here's some general advice about getting out of debt from Money Saving Expert Traditional debt help says 'never borrow your way out of a debt problem'. But this ignores the varying cost of different debts. The MoneySaving approach is: \"\"Never borrow more to get out of a debt problem.\"\"\"" }, { "docid": "127144", "title": "", "text": "I love working for a CU. Our CRO revels in articles like this. He will post them and tell us this is why we do what we do. We would rather be financial physicians. Our job is heal financial worries and get people on the right path. I have seen our lenders convince folks to not take a loan best that is truly in their best interest. I have seen our investment group tell folks that their investment goals and personal goal don't line up and honestly they should wait. We also do crazy stuff like identifying folks who live in the flood zones and offer them 90 day loan deferment with no fees. That and a care loan for repairs. It's an insanely low interest loan (2%) to help folks get their repairs done. We also lowered our credit requirements for that to where just about every who needs it qualifies. It's also hard to get fired. If you don't hit your sales goal it's ok. You will not lose your job. Yes we are encouraged to meet our goals with incentives but we pretty much get paid something no matter what you do. Pretty much the only way to get fired is to pull a Wells Fargo. If you do something like that your ass is not only fired, the CRO will personally come down and will kick you out the door. Hell, I wouldn't be surprised if if he then tied you to his car and dragged you down the street. And you know what, it's working. We are repeatedly breaking every record we set for ourselves. Record loans, record deposits, record account openings. And you better believe that is heavily audit internally and externally. We actually hire auditors to make sure this crap doesn't even start. TLDR; Wells Fargo is the devil. Credit Unions Rule!!!!!" }, { "docid": "278671", "title": "", "text": "If it costs more to fix the car than the car is worth, then those repairs are not worth it. Hit craigslist and look for another junker that runs, but is in your cash price range. Pay to get it looked at by a mechanic as a condition of sale. Use consumer reports to try and find a good model. Somebody in your position does not need a $15K car. You need a series of $2K or $4K cars that you will replace more often, but pay cash for. Car buying, especially from a dealer financed, place isn't how I would recommend building your credit back up. EDIT in response to your updates: Build your credit the smart way, by not paying interest charges. Use your lower limit card, and annually apply for more credit, which you use and pay off each and every month. Borrowing is not going to help you. Just because you can afford to make payments, doesn't automatically make payments a wise decision. You have to examine the value of the loan, not what the payments are. Shop for a good price, shop for a good rate, then purchase. The amount you can pay every month should only be a factor than can kill the deal, not allow it. Pay cash for your vehicle until you can qualify for a low cost loan from a credit union or a bank. It is a waste of money and time to pay a penalty interest rate because you want to build your credit. Time is what will heal your credit score. If you really must borrow for the purchase, you must secure a loan prior to shopping for a car. Visit a few credit unions and get pre-qualified. Once you have a pre-approved loan in place, you can let the deal try and beat your loan for a better deal. Don't make the mistake of letting the dealer do all the financing first." }, { "docid": "151435", "title": "", "text": "\"A credit Union makes loans exactly the same ways a bank does. A portion of the money deposited in checking, savings, money market, Certificate of Deposit, or IRA is then used to make loans for cars, boats, school, mortgages, 2nd mortgages, lines of credit... The government dictates the percentage of each type of deposit that must be held in reserve for non-loan transactions. The Credit Union members are the share holders of the \"\"company\"\". There are no investors in the \"\"company\"\" because the goal is not to make money. In general the entire package is better because there is no pressure to increase profits. Fees are generally lower because they are there to discourage bad behavior, not as a way to make a profit off of the bad behavior. Dividends/interest are treated the same way as bank interest. The IRS forms are the same, and it is reported the same way. Some of bizarre rules they have to follow: maximum number of transactions between accounts, membership rules, are there because banks want to make it harder to be a member of a credit union.\"" }, { "docid": "181816", "title": "", "text": "\"Pete B mentioned adjusting your payments using the Debt Snowball Method and I agree it is one possible solution, another being the Debt Avalanche Method. Here is a link that describes both. There was a time in my past when I had 17 credit lines open totaling about $12,000. If I had paid them the way the banks asked (minimum monthly payments) it would have taken decades to pay off. Then I was shown these two techniques and as a result I was able pay them down rapidly and close all but 2 lines within 5 years. Like others I am going to say that if you already own your house free and clear never Never NEVER put a loan on it unless the loan is (a) to improve the house, or (b) a life & death emergency. If you get sick or fired and miss even a single payment on a HELOC you could lose your house forever and that just plain sucks. Not only will you then be forced into renting a place (money down the drain) but your credit rating will take such a huge hit it will be years (if ever) before you can even try and buy a new home. Debts come and go, as do the \"\"toys\"\" and other things we buy with that debt. Homes are security & stability for tomorrow. Never give that up for a little ease & comfort today. UPDATE: I had to go looking for it but here is some software that I used all those years ago to figure out my strategy for paying down all my credit bills. It's a bit clunky but it's super easy to use plus it has some other variations on snowball and avalanche methods as well. I definitely found it helpful.\"" }, { "docid": "487067", "title": "", "text": "The original poster indicates that he lives in the UK, but there are likely strong similarities with the US banking system that I am more familiar with: The result is that you are likely going to be unable to be approved for 10 checking accounts opened in rapid succession, at least in the US. Finally, in the US, there is no need to have checking accounts with a bank in order to open a credit card with them (although sometimes it can help if you have a low credit score)." }, { "docid": "96150", "title": "", "text": "\"TL;DR: It doesn't matter. At a point of sufficient credit score, your income is far more important, for loan approval, than your credit score. Apparently this was a big mistake because it caused my score to drop to 744 Not really, except for the questionability of opening a margin account. A credit score of 744 is sufficient for the best rates. Credit score algorithms are dynamic and advice that may have been good in years past may not be applicable today. Pay your bills and don't have unnecessary credit, that will lead to your best credit score. For me, despite not following conventional wisdom, I am \"\"enjoying\"\" the highest credit score of my life. I have closed accounts that are just unnecessary and have done some other things that the experts say I should not do to keep a high credit score. However, all that doesn't matter. I do not have a need for credit and will likely never have a need beyond my rebate card. I feel like this is also true for you. What difference does it make if you have an 822 or a 744? Probably none. At that point, your income counts more toward loan eligibility.\"" }, { "docid": "175522", "title": "", "text": "I have gotten a letter of credit from my credit union stating the maximum amount I can finance. Of course I don't show the dealer the letter until after we have finalized the deal. I Then return in 3 business days with a cashiers check for the purchase price. In one case since the letter was for an amount greater then the purchase price I was able drive the car off the lot without having to make a deposit. In another case they insisted on a $100 deposit before I drove the car off the lot. I have also had them insist on me applying for their in-house loan, which was cancelled when I returned with the cashiers check. The procedure was similar regardless If I was getting a loan from the credit union, or paying for the car without the use of a loan. The letter didn't say how much was loan, and how much was my money. Unless you know the exact amount, including all taxes and fees,in advance you can't get a check in advance. If you are using a loan the bank/credit Union will want the car title in their name." }, { "docid": "170209", "title": "", "text": "WFC shareholder here. I bought up a ton more during last summer's scandal. The reason people don't switch banks is because it's a huge pain in the ass. Take myself for example. I have a savings, checking, credit card, and brokerage through them. If I were to change, Id have to pull all my money out, put it into a new bank, and resetup all my autopayments. Im not even sure how my brokerage account would work. Would I have to sell everything to move it? And face a huge tax liability? Im not sure. It's really just not worth it to me. And the more money you have with a bank, the less likely you are to do it. When I was younger, I switched banks 3 times. I had money in two different banks, and switched them to a credit union. Then the credit union pissed me off, so I pulled all my money out and switched to Wells Fargo. But that was when I was still a teenager so my accounts werent very complicated yet." } ]

[ { "docid": "231614", "title": "", "text": "\"Credit unions require you to open an account because of their history. A credit union is just that: a union. Only instead of a union of workers collectively bargaining for better pay or worker's comp, they are lending each other money. They are chartered to offer their services to members of the union, rather than the public at large. For that reason, credit unions historically had targeted niche memberships (ie, employees at a specific company, or property with a specific hobby such as fishing). Most credit unions these days attempt to skirt the issue, by claiming to serve members of a specific geographic area. Anyway, membership is defined a owning a stake in the union, which is usually termed a share. By opening the account and \"\"purchasing a share,\"\" you are becoming both an owner and member of the union, and are eligible for their services. That's why the account is required before you can have a loan.\"" } ]

[ { "docid": "277477", "title": "", "text": "The details of credit score calculation tend to change periodically, but the fundamentals are mostly consistent. Pay your bills, keep your average account age high, overpay your credit card minimums, and keep your overall debt low. And do soft pulls on your credit report to see what's happening. First, the simplest route: pay all your bills early or on time. Automatic deduction may be useful in this regard, especially for bills with predictable amounts. A corollary to this tip is to never leave an unpaid bill. What often happens to young people is in the course of moving around they leave the final bill unpaid and it gets reported to collections. Make sure you follow up online with all bills, even after canceling the service. Second, average account age and oldest account age matter. Open an account like a credit card and never close it, so you'll have an older account (hopefully a zero-fee card). Try to keep other accounts open rather than closing them (no need to cancel a zero-fee credit card) so your average account age stays higher. A card that works on internal systems (like a gift card) is not going to show up on a credit report; a card that works like any VISA/MC is likely going to show up. The rule of thumb is if they need your SSN to run a credit check for the application, then the card will appear on a credit report. You can pull your credit report to find out if the card is listed (you may have to allow time for lag before the card appears, but I'm not sure how long that might be). Third, a tip for extra credit score is to pay more than the minimum required on credit card bills. You can achieve this by either using your credit card at least once a month or by leaving a small hanging balance each month so there's always something to overpay next month. Credit card reporting will be either: unpaid, underpaid, minimum paid, or overpaid. Minimum payment helps your score and overpayment helps more. If you can use your credit card every month, that will give you something to overpay every month. Otherwise, you can leave a small debt left on the card but still pay over the monthly minimum. However, your total debt load, especially debt carried on your cards, counts against your score; aim for less than 10% of your limit. Finally, of course, is to pull your credit report periodically. You need to know what others are seeing. Since debt load utilization matters, make sure the reported card maximum is correct on your credit report. Talk to your bank or account issuer if the limit is wrong. If a collection appears, then you need to handle it. Often you can negotiate with the collector, but be careful to negotiate how they will report the resolution. You want them to agree to remove any negative information (either in exchange for payment or because of a mistake). Failing that, you want them to mark it paid in full or satisfied in full; letting them notate your score that you only partially paid is what you want to avoid, since it most signals someone with cash flow problems and credit issues. They control their reporting to credit bureaus, so if the person on the phone demurs, ask to speak to their supervisor or someone with negotiating authority. Try to get any agreements in writing. Remember that your total debt load is a factor in your credit score. Home loans and student loans do affect credit score. If you take on a smaller home loan, then it will affect your credit less harshly (and leave you with smaller monthly payments)." }, { "docid": "597291", "title": "", "text": "I think you have to dispute with the Credit Union provider that the funds have not reached the account. Ask them for the details, even if electronic, they will have reference numbers. Also provide the Credit union your copy of the current loan account ... it would not reflect the credit. Keep following up" }, { "docid": "459257", "title": "", "text": "I am going to break rank slightly with the consensus so far. Here's the deal, it probably DOES help your credit slightly to pay it multiple times per month if it isn't a hassle, but the bump is likely to be minimal and very temporary. Here's why: A key component of your score is your credit usage ratio. That is the ratio of how much of your credit limits you are using. You want to keep this number down as low as possible. Now here is where it gets tricky. Although you have a grace period to pay off your card with no interest, the credit card companies don't generally report the balance as of the due date. They either report the high balance or an average balance over the month. That is, it is based on how much you use, not how much balance you carry over each month. It isn't very intuitive, but that's just how it is. So technically, keeping that balance lower over the course of the month WILL probably help you, but the credit usage ratio is generally a rolling average over the last x months, so the effect will wear off quickly. So it is probably not worth doing unless you know you are going to apply for a loan in the next 6 months and need a temporary, small bump. Another consideration is that paying early provides no real financial benefit in terms of finance charges, but you are giving up liquidity which does have some value. 1) You probably could get at least a little interest for keeping the money in your account a few more weeks. 2) If you have a major financial emergency, e.g. broken down car, you might appreciate the fact that you kept your options open to carry that balance over a month." }, { "docid": "500755", "title": "", "text": "Set up a meeting with the bank that handles your business checking account. Go there in person and bring your business statements: profit and loss, balance sheet, and a spreadsheet showing your historical cash flow. The goal is to get your banker to understand your business and your needs and also for you to be on a first-name basis with your banker for an ongoing business relationship. Tell them you want to establish credit and you want a credit card account with $x as the limit. Your banker might be able to help push your application through even with your credit history. Even if you can't get the limit you want, you'll be on your way and can meet again with your banker in 6 or 12 months. Once your credit is re-established you'll be able to shop around and apply for other rewards cards. One day you might want a line of credit or a business loan. Establishing a relationship with your banker ahead of time will make that process easier if and when the time comes. Continue to meet with him or her at least annually, and bring updated financial statements each time. If nothing else, this process will help you analyze your business, so the process itself is useful even if nothing comes of it immediately." }, { "docid": "336276", "title": "", "text": "\"Your first question has been answered quite well already. To answer your second question: \"\"If you pay extra, do you want the extra to go toward the interest or toward the principal?\"\" This gives the consumer some flexibility to decide how additional payments are applied. It might seem like a no-brainer to always apply extra payments towards principal - that way, the interest amounts on future payments will be lower and (if you're billed a fixed amount each month) more of each regular payment will then be applied to principal, shortening the term of the loan. However, while it would mean spending more over the life of the loan, there are certain advantages to applying extra payments towards interest†. The main advantage is that it pays your account ahead and means you don't have to make another payment as soon. You could use this strategy to give yourself a buffer of several months, so that if you should ever run into financial hardship you can stop making mortgage payments for a while without the risk of foreclosure. † Note, in most cases it's more likely that you are simply paying more without specifying to the lender that it should be used as principal curtailment. I haven't seen cases where you can explicitly ask the extra to be \"\"applied toward interest\"\". In this situation the funds would be held until you've provided enough to cover one or more monthly payments in full, at which point your \"\"next payment due\"\" date will simply be extended. Another advantage is that the funds that are being held (not due yet, not allocated toward any specific payment, maybe held in escrow) may be refundable to you, upon request. This would depend on the lender's policy. Some will permit refunds of credit balances that go beyond what is necessary to cover the current month's bill. Whether you apply extra payments towards principal or not, it makes little difference to the bank. Any additional payments received increase their immediate cash flow. The cash can be reinvested immediately by them into whatever they are currently focusing on.\"" }, { "docid": "386095", "title": "", "text": "I have only been comfortable using my credit unions online bill payment system where the service they use already has the target in the database. When I enter the name of the company and the zip code from the bill, the system responds with the address that matches what is on the bill. In most cases the money is not sent via mail, but it is sent electronically. This eliminates the case of somebody finding the check. Though electronic delivery doesn't guarantee that I didn't type the wrong account number. When adding a new target, I like to pick those that also have an online system that I can check in a few days to make sure the money was received and properly credited. Recently a company failed to credit my account in a timely manner, my credit union actually noticed that the payment hadn't been cashed, and alerted me. I asked the credit union about mistakes, either by me or by them. They claimed that the payment is treated like any other check, and that if there was a problem the money could be pulled back, and my account credited with the funds. Your bank should have a disclosure document stating the risks and protections with the service." }, { "docid": "222476", "title": "", "text": "\"Generally it is not recommended that you do anything potentially short-term deleterious to your credit during the process of seeking a mortgage loan - such as opening a new account, closing old accounts, running up balances, or otherwise applying for any kind of loan (people often get carried away and apply for loans to cover furniture and appliances for the new home they haven't bought yet). You are usually OK to do things that have at least a short-term positive effect, like paying down debt. But refinancing - which would require applying for a non-home loan - is exactly the sort of hard-pull that can drop your credit rating. It is not generally advised. The exception to this is would be if you have an especially unusual situation with an existing loan (like your car), that is causing a deal-breaking situation with your home loan. This would for example be having a car payment so high that it violates maximum Debt-to-Income ratios (DTI). If your monthly debt payments are more than 43% of your monthly income, for instance, you will generally be unable to obtain a \"\"qualified mortgage\"\", and over 28-36% will disqualify you from some lenders and low-cost mortgage options. The reason this is unusual is that you would have to have a bizarrely terrible existing loan, which could somehow be refinanced without increasing your debt while simultaneously providing a monthly savings so dramatic that it would shift your DTI from \"\"unacceptable\"\" to \"\"acceptable\"\". It's possible, but most simple consumer loan refis just don't give that kind of savings. In most cases you should just \"\"sit tight\"\" and avoid any new loans or refinances while you seek a home purchase. If you want to be sure, you'll need to figure out your DTI ratio (which I recommend anyway) and see where you would be before and after a car refinance. If this would produce a big swing, maybe talk with some mortgage loan professionals who are familiar with lending criteria and ask for their opinion as to whether the change would be worth it. 9 times out of 10, you should wait until after your loan is closed and the home is yours before you try to refinance your car. However I would only warn you that if you think your house + car payment is too much for you to comfortably afford, I'd strongly recommend you seriously reconsider your budget, current car ownership, and house purchasing plans. You might find that after the house purchase the car refi isn't available either, or fine print means it wouldn't provide the savings you thought it would. Don't buy now hoping an uncertain cost-saving measure will work out later.\"" }, { "docid": "169632", "title": "", "text": "I think most people have already answered this one pretty well. (It's usually worth it, as long as you pay it off before the interest kicks in, and you don't get hit with any fees.) I just wanted to add one thing that no one else has pointed out: Applying for the loan usually counts as a hard pull on your credit history. It also changes your Debt-to-income ratio (DTI). This can negatively impact your credit score. Usually, the credit score impact for these (relatively) small loans isn't that much. And your score will rebound over time. However, if it makes your score drop below a certain threshold, (e.g. FICO dips below 700), it could trip you up if you are also applying for other sources of credit in the immediate future. Not a big deal, but it is something to keep in mind." }, { "docid": "127144", "title": "", "text": "I love working for a CU. Our CRO revels in articles like this. He will post them and tell us this is why we do what we do. We would rather be financial physicians. Our job is heal financial worries and get people on the right path. I have seen our lenders convince folks to not take a loan best that is truly in their best interest. I have seen our investment group tell folks that their investment goals and personal goal don't line up and honestly they should wait. We also do crazy stuff like identifying folks who live in the flood zones and offer them 90 day loan deferment with no fees. That and a care loan for repairs. It's an insanely low interest loan (2%) to help folks get their repairs done. We also lowered our credit requirements for that to where just about every who needs it qualifies. It's also hard to get fired. If you don't hit your sales goal it's ok. You will not lose your job. Yes we are encouraged to meet our goals with incentives but we pretty much get paid something no matter what you do. Pretty much the only way to get fired is to pull a Wells Fargo. If you do something like that your ass is not only fired, the CRO will personally come down and will kick you out the door. Hell, I wouldn't be surprised if if he then tied you to his car and dragged you down the street. And you know what, it's working. We are repeatedly breaking every record we set for ourselves. Record loans, record deposits, record account openings. And you better believe that is heavily audit internally and externally. We actually hire auditors to make sure this crap doesn't even start. TLDR; Wells Fargo is the devil. Credit Unions Rule!!!!!" }, { "docid": "282168", "title": "", "text": "http://www.andrewsfcu.org/ is one of the only US financial institutions to issue a low or no annual fee chip and pin visa or mastercard.. Andrews is primarily for civilian employees of the Andrews Air Force Base but is available to members of the American Consumer Council, which offers free membership, see http://www.andrewsfcu.org/page.php?page=330 . The chip and pin card is a visa with $0 annual fee and charges a 1% foreign transaction fee. Getting one is modestly difficult because you have to first join the credit union then apply for the card, then go through underwriting as if it were a personal loan rather than a revolving credit account. Still, for travelers, it is probably worth it." }, { "docid": "370496", "title": "", "text": "You have little chance of getting it deleted. I have the same situation, I closed mine in 2006, and the login still works. Keep the paperwork that you closed it (or print a PDF of the site showing so), and forget about it. If someone is trying to cheat, re-opening it should be the same difficulty as making a new one in your name, so it is not really an additional risk. You could also set the username and password both to a long random string, and not keep them. That soft-forces you to never login again. Note that it will also stay on your credit record for some years (but that's not a bad thing, as it is not in default; in the contrary). The only negative is that if you apply for credit, you might be ashamed of people seeing you ever having had a Sears or Macy's card or so." }, { "docid": "315974", "title": "", "text": "If you have a 20,000 balance and a 8.75% interest rate, you should be paying between $145 and $150 in interest each month, with the balance going to principal. (0.0875/12=0.007292, and that times 20,000 is 145.83; as interest is compounded daily, it'll be a little higher than that.) If the minimum is below $145, then you are not covering the interest; I suspect that is what is happening here, and they're reporting interest paid that wasn't covered in a prior month (assuming you have some months where you only pay the statement minimum, which is less than the total accrued interest). Assuming you're in the US (or most other western countries), your loan servicer should be explaining the exact amount each payment that goes to principal and interest. I recommend calling them up and finding out exactly why it's not consistent; what should be happening, assuming you pay more than the amount of interest each month, is the interest should go down (very) slowly each month and the amount paying off principal should go up (also slowly). EG: Etc., until eventually the interest is zero and your loan is paid off. It probably won't go this quickly for this size of loan - you're only paying off a tiny percentage of principal each month, $50/$20000 or 1/400th - so you won't make too much headway at this rate. Even adding another $25 would make a huge difference to the length of the loan and the amount of interest paid, but that's another story. You will eventually at this rate pay off the loan (at $200 a month for all 12 months); this isn't dissimilar to a 30 year mortgage in terms of percent interest to principal (in fact, it's better!). $50 a month times twelve is $600; 400 payments would take care of it (so a bit over 30 years). However, as you go you pay more principal and less interest, so you will actually pay it off in 15 years if you continue paying $200 a month exactly. What you may be seeing in your case is a combination of things: In months you pay less (ie, $100, say), the extra $45 in interest needs to go somewhere. It effectively becomes part of the principal, but from what I've seen that doesn't always happen directly - ie, they account it differently at least for a short time (up to a year, in my experience). This is because of tax laws, if I understand correctly - the amount you pay in interest is tax-deductible, but not the amount of the principal - so it's important for you to have as much called 'interest' as possible. Thus, if you pay $100 this month and $200 next month, that total of $300 is paying ~$290 of interest and $10 of principal, just as if you'd paid it $150 each month. If you had any penalties, such as for late payments, those come out off the top before interest; they may sometimes take that out as well. All in all, I strongly suggest having an enforced minimum (on your end) of the interest amount at least; that prevents you from being in a situation where your loan grows. If you can't always hit $200, that's fine; but at least hit $150 every single month. Otherwise you have a never ending cycle of student loan debt that you really don't want to be in. Separately, on the $1000 payment: As long as you make sure it's not assigned in such a way that the lender only accepts a month's worth at a time (which shouldn't happen, but there are shady lenders), it shouldn't matter what is called 'principal' and what is called 'interest'. The interest won't go up just because you're making a separate payment (it'll go down!). The portion that goes to interest will go to paying off the amount of interest you owe from the time of your last payment, plus any accrued but unpaid interest, plus principal. You won't have the option of not paying that interest, and it doesn't really matter anyway - it's all something you owe and all accruing interest, it only really matters for accounting and taxes. Double check with your lender (on the phone AND on their website, if possible) that overpayments are not penalized and are applied to principal immediately (or within a few days anyway) and you should be fine." }, { "docid": "199508", "title": "", "text": "This may not answer your question but it may be an alternative. My credit union credits my account for deposits immediately (ones I make in an envelope). They view it as a service to their members. They take the risk that the member could deposit an empty envelope, say they deposited $400, and then withdraw the money. There may be banks in your country that do business this way." }, { "docid": "293389", "title": "", "text": "\"This is the sad state of US stock markets and Regulation T. Yes, while options have cleared & settled for t+1 (trade +1 day) for years and now actually clear \"\"instantly\"\" on some exchanges, stocks still clear & settle in t+3. There really is no excuse for it. If you are in a margin account, regulations permit the trading of unsettled funds without affecting margin requirements, so your funds in effect are available immediately after trading but aren't considered margin loans. Some strict brokers will even restrict the amount of uncleared margin funds you can trade with (Scottrade used to be hyper safe and was the only online discount broker that did this years ago); others will allow you to withdraw a large percentage of your funds immediately (I think E*Trade lets you withdraw up to 90% of unsettled funds immediately). If you are in a cash account, you are authorized to buy with unsettled funds, but you can't sell purchases made on unsettled funds until such funds clear, or you'll be barred for 90 days from trading as your letter threatened; besides, most brokers don't allow this. You certainly aren't allowed to withdraw unsettled funds (by your broker) in such an account as it would technically constitute a loan for which you aren't even liable since you've agreed to no loan contract, a margin agreement. I can't be sure if that actually violates Reg T, but when I am, I'll edit. While it is true that all marketable options are cleared through one central entity, the Options Clearing Corporation, with stocks, clearing & settling still occurs between brokers, netting their transactions between each other electronically. All financial products could clear & settle immediately imo, and I'd rather not start a firestorm by giving my opinion why not. Don't even get me started on the bond market... As to the actual process, it's called \"\"clearing & settling\"\". The general process (which can generally be applied to all financial instruments from cash deposits to derivatives trading) is: The reason why all of the old financial companies were grouped on Wall St. is because they'd have runners physically carting all of the certificates from building to building. Then, they discovered netting so slowed down the process to balance the accounts and only cart the net amounts of certificates they owed each other. This is how we get the term \"\"bankers hours\"\" where financial firms would close to the public early to account for the days trading. While this is all really done instantly behind your back at your broker, they've conveniently kept the short hours.\"" }, { "docid": "170209", "title": "", "text": "WFC shareholder here. I bought up a ton more during last summer's scandal. The reason people don't switch banks is because it's a huge pain in the ass. Take myself for example. I have a savings, checking, credit card, and brokerage through them. If I were to change, Id have to pull all my money out, put it into a new bank, and resetup all my autopayments. Im not even sure how my brokerage account would work. Would I have to sell everything to move it? And face a huge tax liability? Im not sure. It's really just not worth it to me. And the more money you have with a bank, the less likely you are to do it. When I was younger, I switched banks 3 times. I had money in two different banks, and switched them to a credit union. Then the credit union pissed me off, so I pulled all my money out and switched to Wells Fargo. But that was when I was still a teenager so my accounts werent very complicated yet." }, { "docid": "300139", "title": "", "text": "\"In summary: In long form: Spreads and shorts are not allowed in cash accounts, except for covered options. Brokers will allow clients to roll option positions in a single transaction, which look like spreads, but these are not actually \"\"sell to open\"\" transactions. \"\"Sell to open\"\" is forbidden in cash accounts. Short positions from closing the long half of a covered trade are verboten. Day-trading is allowed in both margin and cash accounts. However, \"\"pattern day-trading\"\" only applies to margin accounts, and requires a minimum account balance of $25,000. Cash accounts are free to buy and sell the same security on the same day over and over, provided that there is sufficient buying power to pay for opening a new position. Since proceeds are held for both stock and option sales in a cash account, that means buying power available at the start of the day will drop with each purchase and not rise again until settlement. Unsettled funds are available immediately within margin accounts, without restriction. In cash accounts, using unsettled funds to purchase securities will require you to hold the new position until funds settle -- otherwise your account will be blocked for \"\"free-riding\"\". Legally, you can buy securities in a cash account without available cash on deposit with the broker, but most brokers don't allow this, and some will aggressively liquidate any position that you are somehow able to enter for which you didn't have available cash already on deposit. In a margin account, margin can help gloss over the few days between purchase and deposit, allowing you to be somewhat more aggressive in investing funds. A margin account will allow you to make an investment if you feel the opportunity is right before requiring you to deposit the funds. See a great opportunity? With sufficient margin, you can open the trade immediately and then run to the bank to deposit funds, rather than being stuck waiting for funds to be credited to your account. Margin accounts might show up on your credit report. The possibility of losing more than you invested, having positions liquidated when you least expect it, your broker doing possibly stupid things in order to close out an over-margined account, and other consequences are all very serious risks of margin accounts. Although you mentioned awareness of this issue, any answer is not complete with mentioning those risks.\"" }, { "docid": "353980", "title": "", "text": "\"The biggest (but still temporary) ding you'll see on your credit score from opening a new account is from the low average (and low minimum) account age. This will have a stronger effect than the hard pull of the credit report, which is still a factor (but not much of one if you only have 1-2 pulls in the past couple years). Having a lower average account age increases your risk to lenders. Your average will go up by one month per month, and each time you open an account it will suffer a drop proportional to the number of accounts you already had open before. So if you want to have a more \"\"solid\"\" credit score that stays strong in the face of new accounts in the future, it's better to open a few more accounts now (assuming you can ride out the temporary drop in score and aren't planning to go e.g. mortgage-shopping in the very near future). Having an additional line of credit will also likely cause your credit card utilization (total balance / total credit limit, expressed as a percentage) to decrease, which would tend to increase your credit score, counteracting the age factor, unless your utilization is already extremely low (which it probably is given your monthly account payoffs). There are various credit score simulators out there, from places that show you your credit score, and you can put in a hypothetical new card account to see the immediate likely impact for your particular situation. You identified other costs, such as risk of fraud and fees. You should check your statements once in a while even if you're not using the card, just to make sure no one else is. The bit of additional time required for this is a nonzero cost of having an open credit card account. So is the additional hassle of dealing with having the card stolen etc. if you carry it in your wallet and your wallet's stolen. If you have an account with zero activity for some number of years, the bank may close it automatically and that can reflect negatively on a credit report (as a bank closure of the account, the reason is often obscured). Check your terms and conditions and/or have some activity every so often to prevent this from happening. Some of the otherwise most attractive credit cards have monthly or annual fees, which will cost you, and you won't want to close those because it would then reduce your credit score (e.g. by reducing the total available credit and increasing your utilization percentage) - so the solution is don't apply for credit cards that have monthly/annual fees. There are plenty of good cards without those fees. With a credit score that high, you can get cards that have some very good benefits and rewards programs, as well as some with great introductory offers. Though I'm not familiar with details of Amazon's offer, $80 cash up-front with nothing else seems unlikely to be among your best options. I would think that for at least some of the fee-free cards available to you, the benefits exceed the costs, and you could \"\"cash in\"\" some of the benefits of your good credit record to get those benefits (i.e. this is one of those things you work hard to build good credit for), while also building your long-term reputation for repayment reliability. Also be aware as you shop around for cards that credit card companies pay fairly high referral fees to websites that send customers their way, so if you want you can think about who you're supporting when you click the link that takes you to an application you complete, and choose to support a site you think is providing a useful consumer-focused service. As factors affecting your credit score in addition to payment history (i.e. making regular payments as agreed on the new account will help you), Equifax lists:\"" }, { "docid": "529312", "title": "", "text": "\"The basic optimization rule on distributing windfalls toward debt is to pay off the highest interest rate debt first putting any extra money into that debt while making minimum payments to the other creditors. If the 5k in \"\"other debt\"\" is credit card debt it is virtually certain to be the highest interest rate debt. Pay it off immediately. Don't wait for the next statement. Once you are paying on credit cards there is no grace period and the sooner you pay it the less interest you will accrue. Second, keep 10k for emergencies but pretend you don't have it. Keep your spending as close as possible to what it is now. Check the interest rate on the auto loan v student loans. If the auto loan is materially higher pay it off, then pay the remaining 20k toward the student loans. Added this comment about credit with a view towards the OP's future: Something to consider for the longer term is getting your credit situation set up so that should you want to buy a new car or a home a few years down the road you will be paying the lowest possible interest. You can jump start your credit by taking out one or two secured credit cards from one of the banks that will, in a few years, unsecure your account, return your deposit, and leave no trace you ever opened a secured account. That's the route I took with Citi and Wells Fargo. While over spending on credit cards can be tempting, they are, with a solid payment history, the single most important positive attribute on a credit report and impact FICO scores more than other type of credit or debt. So make an absolute practice of only using them for things you would buy anyway and always, always, pay each monthly bill in full. This one thing will make it far easier to find a good rental, buy a car on the best terms, or get a mortgage at good rates. And remember: Credit is not equal to debt. Maximize the former and minimize the latter.\"" }, { "docid": "171339", "title": "", "text": "\"One of the factors of a credit score is the \"\"length of time revolving accounts have been established\"\". Having a credit card with any line of credit will help in this regard. The account will age regardless of your use or utilization. If you are having issues with credit limits and no credit history, you may have trouble getting financing for the purchase. You should be sure you're approved for financing, and not just that the financing option is \"\"available\"\" (potentially with the caveat of \"\"for well qualified borrowers\"\"). Generally, if you've gotten approved for financing, that will come in the form of another credit card account (many contracting and plumbing companies will do this in hopes you will use the card for future purchases) or a bank loan account (more common for auto and home loans). With the credit card account, you might be able to perform a balance transfer, but there are usually fees associated with that. For bank loan accounts, you probably can't pay that off with a credit card. You'll need to transfer money to the account via ACH or send in a check. In short: I wouldn't bet on paying with your current credit card to get any benefit. IANAL. Utilizing promotional offers, whether interest-free for __ months, no balance transfer fees, or whatever, and passing your debt around is not illegal, not fraudulent, and in many cases advised (this is a link), though that is more for people to distribute utilization across multiple cards, and to minimize interest accrued. Many people, myself included, use a credit card for purchasing EVERYTHING, then pay it off in full every month (or sometimes immediately) to reap the benefit of cash back rewards and other cardholder benefits. I've also made a major payment (tuition, actually) on a Discover card, and opened up a new Visa card with 18-months of no interest and no balance transfer fees to let the bill sit for 12 months while I finished school and got a job.\"" } ]

[ { "docid": "528132", "title": "", "text": "\"Credit Unions turn a profit by lending money at a higher interest rate than their savings do, just like banks do. It is an amoral feat, completely parallel to any moral weights you have assigned to \"\"the system\"\". If the most favorable circumstance is you receiving access to capital, then you can easily achieve that with zero reservations about the system that granted it to you.\"" } ]

[ { "docid": "222476", "title": "", "text": "\"Generally it is not recommended that you do anything potentially short-term deleterious to your credit during the process of seeking a mortgage loan - such as opening a new account, closing old accounts, running up balances, or otherwise applying for any kind of loan (people often get carried away and apply for loans to cover furniture and appliances for the new home they haven't bought yet). You are usually OK to do things that have at least a short-term positive effect, like paying down debt. But refinancing - which would require applying for a non-home loan - is exactly the sort of hard-pull that can drop your credit rating. It is not generally advised. The exception to this is would be if you have an especially unusual situation with an existing loan (like your car), that is causing a deal-breaking situation with your home loan. This would for example be having a car payment so high that it violates maximum Debt-to-Income ratios (DTI). If your monthly debt payments are more than 43% of your monthly income, for instance, you will generally be unable to obtain a \"\"qualified mortgage\"\", and over 28-36% will disqualify you from some lenders and low-cost mortgage options. The reason this is unusual is that you would have to have a bizarrely terrible existing loan, which could somehow be refinanced without increasing your debt while simultaneously providing a monthly savings so dramatic that it would shift your DTI from \"\"unacceptable\"\" to \"\"acceptable\"\". It's possible, but most simple consumer loan refis just don't give that kind of savings. In most cases you should just \"\"sit tight\"\" and avoid any new loans or refinances while you seek a home purchase. If you want to be sure, you'll need to figure out your DTI ratio (which I recommend anyway) and see where you would be before and after a car refinance. If this would produce a big swing, maybe talk with some mortgage loan professionals who are familiar with lending criteria and ask for their opinion as to whether the change would be worth it. 9 times out of 10, you should wait until after your loan is closed and the home is yours before you try to refinance your car. However I would only warn you that if you think your house + car payment is too much for you to comfortably afford, I'd strongly recommend you seriously reconsider your budget, current car ownership, and house purchasing plans. You might find that after the house purchase the car refi isn't available either, or fine print means it wouldn't provide the savings you thought it would. Don't buy now hoping an uncertain cost-saving measure will work out later.\"" }, { "docid": "374443", "title": "", "text": "Based on your question details, I doubt you'll like this answer...but first things first, you need to focus on rebuilding your credit and your savings. $1K isn't a huge loan amount, so I'm going to assume you've made some poor decisions in the past to get to this point. I'm a small business owner, and I make it a goal to have 3-6 months of expected expenses in an account, should my circumstances ever drastically change or something happen that would keep me from working. Without knowing your living situation and daily expenses, here's some general advice on building a small business without a loan: 1) Find steady, gainful employment anywhere you can. 2) Pay off outstanding debts and rebuild a savings account to rebuild your credit score. 3) If you need fast cash, sell some stuff you don't need (gaming systems, home electronics, etc.). Also, minimize your unnecessary expenses (dining out, etc.). 4) Once your debts are paid off, create a business startup savings plan (put away as much as you can afford every week, until you reach your goal. 5) Once your goal is reached, you can begin your flipping business. Open a bank account, and separate your profits into buckets for operations, self-pay, and taxes (if you declare this income, which I hope you do). For myself, I put away 35% for income taxes, which I do not touch until my taxes are paid. I put 40% away for daily operations -- this keeps my business running, allowing me to pay for the equipment I need, the products I deliver, and advertising to keep my business running. I pay myself 25%. This is a simple method, but it works well for me." }, { "docid": "315974", "title": "", "text": "If you have a 20,000 balance and a 8.75% interest rate, you should be paying between $145 and $150 in interest each month, with the balance going to principal. (0.0875/12=0.007292, and that times 20,000 is 145.83; as interest is compounded daily, it'll be a little higher than that.) If the minimum is below $145, then you are not covering the interest; I suspect that is what is happening here, and they're reporting interest paid that wasn't covered in a prior month (assuming you have some months where you only pay the statement minimum, which is less than the total accrued interest). Assuming you're in the US (or most other western countries), your loan servicer should be explaining the exact amount each payment that goes to principal and interest. I recommend calling them up and finding out exactly why it's not consistent; what should be happening, assuming you pay more than the amount of interest each month, is the interest should go down (very) slowly each month and the amount paying off principal should go up (also slowly). EG: Etc., until eventually the interest is zero and your loan is paid off. It probably won't go this quickly for this size of loan - you're only paying off a tiny percentage of principal each month, $50/$20000 or 1/400th - so you won't make too much headway at this rate. Even adding another $25 would make a huge difference to the length of the loan and the amount of interest paid, but that's another story. You will eventually at this rate pay off the loan (at $200 a month for all 12 months); this isn't dissimilar to a 30 year mortgage in terms of percent interest to principal (in fact, it's better!). $50 a month times twelve is $600; 400 payments would take care of it (so a bit over 30 years). However, as you go you pay more principal and less interest, so you will actually pay it off in 15 years if you continue paying $200 a month exactly. What you may be seeing in your case is a combination of things: In months you pay less (ie, $100, say), the extra $45 in interest needs to go somewhere. It effectively becomes part of the principal, but from what I've seen that doesn't always happen directly - ie, they account it differently at least for a short time (up to a year, in my experience). This is because of tax laws, if I understand correctly - the amount you pay in interest is tax-deductible, but not the amount of the principal - so it's important for you to have as much called 'interest' as possible. Thus, if you pay $100 this month and $200 next month, that total of $300 is paying ~$290 of interest and $10 of principal, just as if you'd paid it $150 each month. If you had any penalties, such as for late payments, those come out off the top before interest; they may sometimes take that out as well. All in all, I strongly suggest having an enforced minimum (on your end) of the interest amount at least; that prevents you from being in a situation where your loan grows. If you can't always hit $200, that's fine; but at least hit $150 every single month. Otherwise you have a never ending cycle of student loan debt that you really don't want to be in. Separately, on the $1000 payment: As long as you make sure it's not assigned in such a way that the lender only accepts a month's worth at a time (which shouldn't happen, but there are shady lenders), it shouldn't matter what is called 'principal' and what is called 'interest'. The interest won't go up just because you're making a separate payment (it'll go down!). The portion that goes to interest will go to paying off the amount of interest you owe from the time of your last payment, plus any accrued but unpaid interest, plus principal. You won't have the option of not paying that interest, and it doesn't really matter anyway - it's all something you owe and all accruing interest, it only really matters for accounting and taxes. Double check with your lender (on the phone AND on their website, if possible) that overpayments are not penalized and are applied to principal immediately (or within a few days anyway) and you should be fine." }, { "docid": "362060", "title": "", "text": "I am not an accountant, but I have a light accounting background, despite being primarily an engineer. I also have a tiny schedule C business which has both better and worse years. I am also in the United States and pay US taxes. I assume you are referring to the US Form 1040 tax return, with the attached Schedule C. However little I know about US taxes, I know nothing about foreign taxes. You are a cash-basis taxpayer, so the transactions that happen in each tax year are based on the cash paid and cash received in that year. You were paid last year, you computed your schedule C based on last year's actual transactions, and you paid taxes on that income. You can not recompute last years schedule C based on the warranty claim. You might want to switch to an accrual accounting method, where you can book allowances for warranty claims. It is more complex, and if your business is spotty and low volume, it may be more trouble than it is worth. At this point, you have two months to look for ways to shift expenses into next year or being income into this year, both of which help offset this loss. Perhaps a really aggressive accountant would advise otherwise (and remember, I am not an accountant), but I would take the lumps and move on. This article on LegalZoom (link here) discusses how to apply a significant net operating loss (NOL) in this year to the previous two years, and potentially carry it forward to the next two years. This does involve filing amended returns for the prior two years, showing this year's NOL. For this to be relevant, your schedule C loss this year must exceed your other W2 and self-employment income this year, with other tests also applied. Perhaps a really aggressive accountant would advise otherwise (and remember, I am not an accountant), but I would take the lumps and move on." }, { "docid": "69938", "title": "", "text": "If your credit is good, you should immediately attempt to refinance your high rate credit cards by transferring the balance to credit cards with lower interest rates.You might want to check at your local credit union, credit unions can offer great rates. Use the $4000 to pay off whatever is left on the high rate cards. If your credit is bad, I suggest you call your credit card company and try to negotiate with them. If they consider you a risk they might settle your account for fraction of what you own if you can send payment immediately. Don't tell them you have money, just tell them your are trying to get your finances under control and see what they can offer you. This will damage your credit score but will get you out of depth much sooner and save you money in the long term. Also keep in mind that if they do settle, they'll close your account. That way, you leverage the $4000 and use it as a tool to get concessions from the bank." }, { "docid": "81941", "title": "", "text": "\"From your question, I believe that you are looking for what these mean in accounting terms and not the difference between a debit and a credit card. I'll deal with purchase and sale first as this is easier. They are the same thing seen from different points of view. If I sell something to you then I have made a sale and you have made a purchase. Every sale is a purchase and every purchase is a sale. Debits and Credits are accounting terms and refer to double column accounting (the most common accounting system used). The way a set of accounts works is, accounts are set up under the following broad headings: The first 3 appear on the Balance Sheet, so called because the accounts balance (Assets = Liabilities + Equity). This is always a \"\"point-in-time\"\" snapshot of the accounts (1 June 2015). That last 3 appear on the Profit and Loss sheet, Profit (or loss) = Income - Cost of Goods Sold - Expenses. This is always an interval measure (1 July 2014 to 30 June 2015). Changes in these accounts flow through to the Equity part of the Balance Sheet. When you enter a transaction the Debits always equal the Credits, they are simply applied to different accounts. Debits increase Assets, Cost of Goods Sold and Expenses and decrease Liabilities, Equity and Income. Credits do the reverse For your examples: 1. a customer buy something from me, what is the debit and credit? I will assume they pay $1,000 and the thing cost you $500 Your cash (asset) goes up by $1,000 (Debit), your inventory (asset) goes down by $500 (Credit), your Sales revenue (income) goes up by $500 (credit). This gives you a profit of $500. 2. a customer buy something of worth 1000 but gives me 500 what is debit and credit Your cash (asset) goes up by $500 (Debit), your debtors (asset) goes up by $500, your inventory (asset) goes down by $500 (Credit), your Sales revenue (income) goes up by $500 (credit). This also gives you a profit of $500. 3. if I buy a product from supplier worth 1000 and pay equally what is credit and debit I assume you mean pay cash: Your cash (asset) goes down by $1000 (Credit), your inventory (asset) goes up by $1000 (Debit). There is no profit or loss here - you have swapped one asset (cash) for another (inventory). 4. if I buy a product from supplier worth 1000 and don't pay what is credit and debit Your creditors (liability) goes up by $1000 (Credit), your inventory (asset) goes up by $1000 (Debit). There is no profit or loss here - you have gained an asset (inventory) but incurred a liability (creditors). The reason for confusion is that most people only see Debits and Credits in one place - their bank statement. Your bank statement is a journal of one of the banks liability accounts - its their liability because they owe the money to you (even loan accounts adopt this convention). Credits happen when you give money to the bank, they credit your account (increase a liability) and debit their cash balance (increase an asset). Debits are when they give money to you, they debit your account (decrease a liability) and credit their cash balance (decrease an asset) . If at the end of the period, you have a credit balance then they owe money to you, a debit balance means you owe money to them. If you were keeping a book of accounts then your record of the transactions would be a mirror image of the bank's because you would be looking at it from your point of view.\"" }, { "docid": "314742", "title": "", "text": "\">> You are in an endless loops of \"\"maybe\"\"(s)... > No, my point was that your \"\"maybe\"\" puts you in an endless loop of \"\"maybe\"\"s. Please try to keep up. Check the \"\"maybe\"\"(s): they are all yours! I have no \"\"maybe\"\" on Trump and never had one. **I am SURE(!) he will fix the healthcare system and lower all prices and costs. Remember: I voted for him and I support him.** >>But the paranoia and \"\"end of the world\"\" folks do not impress me. > Me neither but that doesn't mean global warming is not going to bring a whole lot of expense and instability. No expense and no \"\"instability\"\". You just said \"\"me neither\"\", you just said it(!), and, immediately, you try to bring paranoia, baseless fears and scare tactics. What \"\"instability\"\"? Wars will not happen because it's a bit hotter. Hunger will not happen - there's more rain now, and the world produce more food than it can eat, and can produce much more more food if we just bothered. No diseases because it's a bit hot. What expenses? Less fuel to hit homes? Less need to water the fields? What on earth are you talking about? How \"\"instability\"\" will happen because it's tiny bit hotter? > You have no idea of the scale of the problem with weather and climate. You are the one who have no idea. I studied the subject very well. Very well! It was far hotter in the world, and far colder in the world, and the world is just fine now, and back then. >> You can't come with one ACTION by Trump you oppose, and you are still against him. > Now you're moving the goalposts. LOL!!!!!! LOL!!!!!!! I asked you, again, and again, and again, and again, to give me one ACTION by Trump that you oppose. How on earth I \"\"move goalposts\"\"? (Probably I have more actions by Trump that I oppose than you). > Okay, fine. Here are about a dozen categories of reasons I do not support President Trump. > He is a liar. He is unpresidential. He is a narcissist. [etc] Got it! He's a liar, so you won't believe anything he said, anything he does or anything I say about him. On the other hand, Hillary and the DNC are not liars. So you voted for them. He's \"\"unpresidential\"\", but Hillary with her handling of e-mail(s), cheating on debate questions, rigging elections against Sanders, etc, is definitely a \"\"presidential\"\" material that you voted for her. He is a \"\"narcissist\"\", but Hillary is not with her \"\"deplorables\"\" remarks, seeking presidency despite all the scandals and cheating, her \"\"I should be 50 points ahead\"\", etc, etc. So you voted for Hillary. **Darling, already since July the whole media, even Fox, are trying to show the Trump lied, unpresidential, etc. And so far? Anything?** **YOU ARE, how can I say plainly, despite wanting a non-liar, presidential, etc president, you voted for Hillary and the DNC, who are the EPITOMY of liars, cheaters, narcissists, unreliable, criminals, untrustworthy. Do you see how your tribalism make you ridiculous?** And meanwhile, Trump deliver what he promised, has yet to on a single investigation, while Hilary, Comey, Lynch, Holder, Podesta etc are all under investigations.\"" }, { "docid": "249839", "title": "", "text": "My favorite part about using a local credit union is, if I have an account issue, I can just call up and talk to someone who works five minutes from my house without *ever* punching numbers into an automated answering system. Good luck doing that with Bank of America." }, { "docid": "260631", "title": "", "text": "\"I was able to attend an open discussion on Illinois pensions a few years back. Dick Ingram, head of the Illinois Teacher's Retirement System spoke, as did a public employee union leader, Governor Quin's budget director and Christine Radogno who is a state lawmaker. It was eye opening on many levels. Some of the points that stick with me are: * The state has never, over 30 years, followed standard practice and used an actuary to determine how much to put into the pension funds each year. The legislators just pulled numbers out of the air each year. As a result the pensions have never been properly funded. The benefits are rich but, according to the people on this panel the main issue is this under funding. * Some years the state declared a pension holiday and put nothing into the pension funds at all. When this was brought up the largely union crowd started to turn on Radogno but she held up her hand, said she had voted against that and then commented that the unions all signed off on the pension holidays. As one the crowd's heads turned to the union rep on the board. He turned red and stared at the floor. * 2/3 of the teacher's pension hole is for people already retired. Changing benefits for current teachers will not help enough. I asked Mr Ingram how much additional tax he would need to plug the hole in the system he manages. He answered \"\"double\"\". I asked for how long. He said \"\"It doesn't work like that. I'd need double the current amount forever.\"\" I came away much better informed but deeply saddened. Like 69% of the people polled, I want these teachers and public employee to get their money. I just don't see how it can happen.\"" }, { "docid": "580560", "title": "", "text": "\"Under the assumption you're not looking for a particular credit union/bank (since that'll make this question off topic), you can apply for a secure credit card. That's where you essentially put up a sum of money as collateral. That would be the safe way for someone with \"\"little or no credit history\"\" and wants to build credit. Any big bank (Wells Fargo, Chase, etc.) should be able to do that for you. You can also do that online provided you have the means to transfer money into the account.\"" }, { "docid": "63698", "title": "", "text": "I agree with you that you need to consolidate this debt using a loan. It may be hard to find a bank or credit organization that will give you an unsecured personal loan for that much money. I know of one, called Lending Club (Disclaimer - I'm an investor on this platform. Not trying to advertise, it's just the only place I know of off the top of my head) that facilitates loans like this, but instead of a bank financing the loan, the loan is split up accross hundreds of investors who each contribute a small amount (such as $25). They have rates anywhere between 5-30%, based on your credit profile(s), and I believe they have some loan amounts that go up to the area that you're discussing. Regarding buying the house - The best thing you can do when trying to buy a house is to save up a 20% downpayment, if at all possible. Below this amount, you may be asked to pay for 'PMI' - Private Mortgage Insurance. This is a charge that doesn't go away for quite a while (until you've paid them 20% of the appraised value of the home), where you pay a premium because you didn't have the 20% downpayment for the house. I would suggest you try to eliminate your credit card debt as soon as possible, and would recommend the same for your father. Getting your utilization down and reconsolidating the large debts with a loan will help to reduce interest charges and get you a reasonable, fixed payment. Whether you decide to pay off your own balances using your savings account is up to you; if it were me, personally, I'd do so immediately rather than trying to pay it off over time. But if you lose money to taxes by withdrawing the money from your 'tax free savings account', it may not be a beneficial situation. Treat debt, especially credit card debt, like an emergency at all times, and you'll find yourself in a better place as a result. Credit card debt and balances are and should be temporary, and their rates and fees are structured that way. If, for any reason, you expect that a credit card's balance will remain for an extended period of time, you may want to consider whether it would be advantageous for you to consolidate the debt into a loan, instead." }, { "docid": "291445", "title": "", "text": "Ok, so as a result of the Equifax breach I placed a credit freeze on all my accounts. Just to verify my understanding, if in the future I want to apply for a home loan, open a new bank account, etc... I need to individually unfreeze my accounts with each of the credit companies right? (e.g. I can't just unfreeze one, I have to unfreeze them all)" }, { "docid": "423569", "title": "", "text": "I wouldn't worry about his credit score. The hit from a credit inquiry is not that big and it's absolutely worth it in the long run. I suggest you sign him up for a free budgeting app (just google budgeting app) that will help him not only take control of his spending but also help him with his loans. Transferring debt comes with a few caveats: His credit score is bad so I don't know if he'll be able to get 0% loan, but even if he gets 6% - 8% that will save him money; just don't forget about the transfer fee. If he has checking/savings account it's worth talking to that bank first - they might be able to give him a better deal for being their customer. Also if he tells them his story and credit score they might be able to give him an idea what they can offer him without doing a credit check. Another option is to become a member of a local credit union - they have great rates on loans / credit cards. Credit card or personal loan doesn't matter much, whatever he can get. With his credit score I doubt he'll be able to get a good rate at Chase or one of the other big credit card companies. Good luck." }, { "docid": "471019", "title": "", "text": "Since this post was migrated from Parenting, my reply was in the context where it appeared to be misrepresenting facts to make a point. I've edited it to be more concise to my main point. In my opinion, the best way to save for your childs future is to get rid of as much of your own debt as possible. Starting today. For the average American, a car is 6-10%. Most people have at least a couple credit cards, ranging from 10-25% (no crap). College loans can be all over the map (5-15%) as can be signature (8-15%) or secured bank loans (4-8%). Try to stop living within your credit and live within your means. Yeah it will suck to not go to movies or shop for cute things at Kohl's, but only today. First, incur no more debt. Then, the easiest way I found to pay things off is to use your tax returns and reduce your cable service (both potentially $Ks per year) to pay off a big debt like a car or student loan. You just gave yourself an immediate raise of whatever your payment is. If you think long term (we're talking about long-term savings for a childs college) there are things you can do to pay off debt and save money without having to take up a 2nd job... but you have to think in terms of years, not months. Is this kind of thing pie in the sky? Yes and no, but it takes a plan and diligence. For example, we have no TV service (internet only service redirected an additional $100/mo to the wifes lone credit card) and we used '12 taxes to pay off the last 4k on the car. We did the same thing on our van last year. It takes willpower to not cheat, but that's only really necessary for the first year-ish... well before that point you'll be used to the Atkins Diet on your wallet and will have no desire to cheat. It doesn't really hurt your quality of life (do you really NEED 5 HBO channels?) and it sets everyone up for success down the line. The moral of the story is that by paying down your debt today, you're taking steps to reduce long haul expenditures. A stable household economy is a tremendous foundation for raising children and can set you up to be more able to deal with the costs of higher ed." }, { "docid": "166627", "title": "", "text": "That is an opinion. I don't think so. Here are some differences: If you use credit responsibly and take the time to make sure the reporting agencies are being accurate, a good report can benefit you. So that isn't like a criminal record. What is also important to know is that in the United States, a credit report is about you, not for you. You are the product being sold. This is, in my opinion, and unfortunate situation but it is what it is. You will more than likely benefit for keeping a good report, even if you never use credit. There are many credit scores that can be calculated from your report; the score is just a number used to compare and evaluate you on a common set of criteria. If you think about it, that doesn't make sense. The score is a reflection of how you use credit. Having and using credit is a commitment. Your are committing to the lender that you will repay them as agreed. Your choice is who you decide to make agreements with. I personally find the business practices of my local credit union to be more palatable than the business practices of the national bank I was with. I chose to use credit provided by the credit union rather than by the bank. I am careful about where I take auto loans from, and to what extent I can control it, where I take home loans from. Since it is absolutely a commitment, you are personally responsible for making sure that you like who you are making commitments with." }, { "docid": "180071", "title": "", "text": "\"There are two options (according to Wells Fargo). You can either apply for a Business/Commercial Equity Loan or a Line of Credit. A loan is what it sounds like - they give you a lump sum of money for you to use and you have to pay it in monthly installments. A line of credit is like a credit card, you have money that you can borrow (up to a certain amount) and you have to make monthly payments. The process can differ for different business, they probably look at what your real estate is worth, how much money you are generating from it, etc. I am not recommending or endorsing Wells Fargo, other major banks offer the same types of products, Wells Fargo just happened to appear first when I searched for \"\"business line of credit\"\".\"" }, { "docid": "138511", "title": "", "text": "Are you doing the right thing? Yes, paying back some of the expense of college is a great way to show your gratitude. Could your sister also pitch in a little to help pay the debt down? Will you get approved for a $30,000 unsecured loan? You don't mention your credit rating but that will have an effect obviously. You might consider visiting a credit union with your father and co-signing a loan since it is his debt that you are assuming. You might still want to write a loan for your dad to sign even if he isn't co-signed on a loan. This could protect you in case of his death if there are other assets to divide. If you are not approved for a loan, you could also simply join your dad in paying down the highest-rate cards first and have a loan agreement for him to pay back that money if/when it is possible. You've mentioned that you have no collateral. There aren't many options for loans with no collateral. Your dad's bank or a credit union might consider a debt consolidation loan with you as a co-signer. That's why I mentioned going to a credit union. Talking to a loan officer at a local financial institution will make it easier to get approved. If they see that you are taking responsible steps to pay off the debt, that reduces your credit risk. If you do get a debt consolidation loan, they will probably ask your dad to close some credit card accounts." }, { "docid": "181816", "title": "", "text": "\"Pete B mentioned adjusting your payments using the Debt Snowball Method and I agree it is one possible solution, another being the Debt Avalanche Method. Here is a link that describes both. There was a time in my past when I had 17 credit lines open totaling about $12,000. If I had paid them the way the banks asked (minimum monthly payments) it would have taken decades to pay off. Then I was shown these two techniques and as a result I was able pay them down rapidly and close all but 2 lines within 5 years. Like others I am going to say that if you already own your house free and clear never Never NEVER put a loan on it unless the loan is (a) to improve the house, or (b) a life & death emergency. If you get sick or fired and miss even a single payment on a HELOC you could lose your house forever and that just plain sucks. Not only will you then be forced into renting a place (money down the drain) but your credit rating will take such a huge hit it will be years (if ever) before you can even try and buy a new home. Debts come and go, as do the \"\"toys\"\" and other things we buy with that debt. Homes are security & stability for tomorrow. Never give that up for a little ease & comfort today. UPDATE: I had to go looking for it but here is some software that I used all those years ago to figure out my strategy for paying down all my credit bills. It's a bit clunky but it's super easy to use plus it has some other variations on snowball and avalanche methods as well. I definitely found it helpful.\"" }, { "docid": "51873", "title": "", "text": "I used to work for Ally Auto (formerly known as GMAC) and I'd advise not to pay off the account unless you need to free up some debt in your credit report since until the account is paid off it will show that you owe your financial institution the original loan amount. The reason why I am saying not to pay-off the account is because good/bad payments are sent to the credit bureau 30 days after the due date of the payment, and if you want to increase your credit score then its best to pay it on a monthly basis, the negative side to this is you will pay more interest by doing this. If ever you decide to leave $1.00 in loan, I am pretty much sure that the financial institution will absorb the remaining balance and consider the account paid off. What exactly is your goal here? Do you plan to increase your credit score? Do you need to free up some debt?" } ]

[ { "docid": "376126", "title": "", "text": "The vast majority of retail Forex brokers are market makers, rather than ECNs. With that said, the one that fits your description mostly closely is Interactive Brokers, is US-based, and well-respected. They have a good amount of exoitcs available. Many ECNs don't carry these because of the mere fact that they make money on transactions, versus market makers who make money on transactions and even more on your losses. So, if the business model is to make money only on transactions, and they are as rarely traded as exotics are, there's no money to be made." } ]

[ { "docid": "535340", "title": "", "text": "\"As user quid states in his answer, all you need to do is open an account with a stock broker in order to gain access to the world's stock markets. If you are currently banking with one of the six big bank, then they will offer stockbroking services. You can shop around for the best commission rates. If you wish to manage your own investments, then you will open a \"\"self-directed\"\" account. You can shelter your investments from all taxation by opening a TFSA account with your stock broker. Currently, you can add $5,500 per year to your TFSA. Unused allowances from previous years can still be used. Thus, if you have not yet made any TFSA contributions, you can add upto $46,500 to your TFSA and enjoy the benefits of tax free investing. Investing in what you are calling \"\"unmanaged index funds\"\" means investing in ETFs (Exchange Traded Funds). Once you have opened your account you can invest in any ETFs traded on the stock markets accessible through your stock broker. Buying shares on foreign markets may carry higher commission rates, but for the US markets commissions are generally the same as they are for Canadian markets. However, in the case of buying foreign shares you will carry the extra cost and risk of selling Canadian dollars and buying foreign currency. There are also issues to do with foreign withholding taxes when you trade foreign shares directly. In the case of the US, you will also need to register with the US tax authorities. Foreign withholding taxes payable are generally treated as a tax credit with respect to Canadian taxation, so you will not be double taxed. In today's market, for most investors there is generally no need to invest directly in foreign market indices since you can do so indirectly on the Toronto stock market. The large Canadian ETF providers offer a wide range of US, European, Asian, and Global ETFs as well as Canadian ETFs. For example, you can track all of the major US indices by trading in Toronto in Canadian dollars. The S&P500, the Dow Jones, and the NASDAQ100 are offered in both \"\"currency hedged\"\" and \"\"unhedged\"\" forms. In addition, there are ETFs on the total US Market, US Small Caps, US sectors such as banks, and more exotic ETFs such as those offering \"\"covered call\"\" strategies and \"\"put write\"\" strategies. Here is a link to the BMO ETF website. Here is a link to the iShares (Canada) ETF website.\"" }, { "docid": "594655", "title": "", "text": "\"Forex. I will employ my skill for \"\"suspension of disbelief\"\" and answer with no visceral reaction to Bitcoin itself. The Euro is not an 'investment.' It's a currency. People trade currencies in order to capture relative movements between pairs of currencies. Unlike stocks, that have an underlying business and potential for growth (or failure, of course) a currency trade is a zero sum game, two people on opposite sides of a bet. Bitcoin has no underlying asset either, no stock, no commodity. It trades, de facto, like a currency, and for purposes of objective classification, it would be considered a currency, and held similar to any Forex position.\"" }, { "docid": "172025", "title": "", "text": "I recommended Currency Trading For Dummies, in my answer to Layman's guide to getting started with Forex (foreign exchange trading)? The nature of the contract size points toward only putting up a fraction of the value. The Euro FX contract size is 125,000 Euro. If you wish to send the broker US$125K+ to trade this contract, go ahead. Most people trade it with a few thousand dollars." }, { "docid": "584479", "title": "", "text": "I'm a bit skeptical of some of the views the author states, in particular: > The likelihood of executing a trade at the best price depends on the length of the queue to buy or sell and the incentives to trade. Longer queues lead to longer delays to execute a trade. Delays typically lead to worse outcomes. Quite simply, it makes no sense to wait on a longer line to receive a worse execution. Why would this be the case? If anything, I'd think that forcing through too many orders at once risks price slippage created by excess supply or demand. He argues that waiting in queue may impair price performance, but I'd think that possible favourable or adverse shifts in the price will average to zero over time. If this is the case and they do average to zero, then I think funds are doing the savvy thing by putting relatively small, low-priority trades in to the flow at a rate that saves the most money on average. I can see why day traders may not be too thrilled with this, but that is such a small slice of the mutual fund/brokerage clientele. In the broader picture, funds and brokerages are being squeezed so tightly on expense ratios that I'd think any cost saving/rebates they do get probably filter back to customers in the form of reduced fees. Take Robinhood as an example: they use their trading rebates to provide an extremely low cost trading platform for retail investors. That hardly seems unfair to me. Any traders care to comment? This is all just speculation on my part and I've not looked at any time series data yet." }, { "docid": "282947", "title": "", "text": "\"Starting with small amount of money is definitely a good idea, as it is a fact that majority of the online traders lose their initial investment. No wonder that for example in the UK, FCA decided to make steps to raise the chances of clients staying in business by limiting leverage to 1:50 and 1:25. http://www.financemagnates.com/forex/bloggers/new-fca-regulations-going-affect-retail-brokers/ Trading leveraged products is risky and you will lose some, or all your money with very high chance. But that doesn't mean necessarily it is a \"\"bad investment\"\" to trade on your own. Imagine you have a $1000 account, and you trade max 0,1 lot fx position at once maximum (=$10.000 position size, that is 1:10 leverage max). Beginner steps are very challenging and exiting, but turning back to your initial question: is there a better way to invest with a small amount of money Obviously you could purchase a cheap ETF that follows a broad market index or an already existing successful portfolio.\"" }, { "docid": "153179", "title": "", "text": "Its the relative leverage available to retail traders between the two. In the US one can trade equities with 2:1 leverage while with commodities the leverage can go much higher. Combine this with the highly volatile nature of commodities, and it makes losing BIG too easy for the average trader." }, { "docid": "114624", "title": "", "text": "Fx Pip partnership Limited is a reliable trading signal and consultancy provider with many years of experience and significant success in the field of investments. All the members of the team, utilizing in the best way their scientific background and their excellent professionalism, achieve the best results. The Fx Pip Signal which has at its disposal its Research and Development department, has an aim to offer the international community of traders, the most reliable solution to the most difficult daily questions, such as: which product do we buy and which do we sell, at what price do we enter the market and at what price do we exit? The employees have a long term experience in the international foreign exchange industry, which gives them the edge of competitiveness and professionalism. We guarantee independency at the selection of online trading options. The only obligation of fxpipsignal.com is to you, our customer. An ongoing training of our employee(s) is a priority, to have good knowledge and to meet your needs. Fx Pip Signal provides signals of major currency pairs as EUR/USD, GBP/USD, USD/JPY USD/CHF. It provides signals which suits almost all the market around the world.It has four packages named Trial, Standard, Premium, Premium Plus. It has well organised support team to provide 24/7 live support and forex consultancy to gain meaningful profit. It believes in transperancy , relaibility and accuracy. All the signals are provided in a flexible way so that the subscribers can easily execute them and their desire profit. Fx Pip Signal is available in almost all the countries of the world. It provides signals via sms, email and updated in the website." }, { "docid": "51203", "title": "", "text": "\"Brokers need to assess your level of competency to ensure that they don't allow you to \"\"bite off more than you can chew\"\" and find yourself in a bad situation. Some brokers ask you to rate your skills, others ask you how long you've been trading, it always varies based on broker. I use IB and they gave me a questionairre about a wide range of instruments, my skill level, time spent trading, trades per year, etc. Many brokers will use your self-reported experience to choose what types of instruments you can trade. Some will only allow you to start with stocks and restrict access to forex, options, futures, etc. until you ask for readiness and, for some brokers, even pass a test of knowledge. Options are very commonly restricted so that you can only go long on an option when you own the underlying stock when you are a \"\"newbie\"\" and scale out from there. Many brokers adopt a four-tiered approach for options where only the most skilled traders can write naked options, as seen here. It's important to note that all of this information is self-reported and you are not legally bound to answer honestly in any way. If, for example, you are well aware of the risks of writing naked options and want to try it despite never trading one before, there is nothing stopping you from saying you've traded options for 10 years and be given the privilege by your broker. Of course, they're just looking out for your best interest, but you are by no means forced into the scheme if you do not wish to be.\"" }, { "docid": "417365", "title": "", "text": "\"First, as @littleadv mentions, and as I've pointed out before, anyone who participates in a market using limit orders (which, by the way, should be every non-professional investor) is by definition a market maker. So, I will assume that your question pertains both to official market makers and to \"\"retail investors\"\" using limit orders. When you remark that there are such \"\"tight spreads\"\" in \"\"liquid assets\"\", what you are really saying is \"\"wow, look at all the market makers in these products!\"\" That's the benefit of electronic trading and algorithmic traders -- millions of participants each with their own opinion of the value of a financial instrument, trying to find people who have very specifically opposing opinions of the value of that same instrument. This is called price discovery, and is the entire point of financial markets. So, you ask why are there all these market makers present to create such tight spreads in assets like SPY? Answer: Because they can make money in these markets: Imagine (towards a contradiction) that market makers thought they couldn't make money by offering tight spreads in SPY, and so SPY had a wider spread than it actually does. For example, say the highest bid for SPY was $99.98 and the lowest ask was $100.01. Now imagine that a market maker with perfect knowledge of the future came along knowing that he would be able to sell SPY for $100.01 in 5 minutes. Then he would load up as many buy orders as he could for $100.00 or lower. (He wouldn't bid $100.01 or higher because those trades would not be profitable according to his information -- at least not 5 minutes from now.) So the spread had previously been $0.03 and then suddenly it was $0.01, all because a market maker with better information came along and realized he could make money by creating a tighter market! Now, nobody has perfect knowledge of the future, which is why markets are never infinitely tight or infinitely liquid. Each market maker has to weigh possible profits against the probability that those profits will actually turn into losses. But if one market maker decides not to participate in a particular instrument, there's bound to be another market maker who will happily take his place. So the very fact that there are so many market participants with resting buy/sell orders for SPY right now is proof that there are market makers able to make money doing so. If they could not make money, they wouldn't be there, and the spread would be wider. 10-15 years ago, before electronic trading and algorithmic trading, the number of market participants was far lower, and the spreads were far wider, meaning retail investors like you and me had a much harder time making money. The only people making money were the institutional investors, the brokers, and the exchanges. Now that all these new millions of players are present in the market, retail investors like you and me get to participate and make money too.\"" }, { "docid": "390524", "title": "", "text": "\"A lot (sometimes called a round lot) always refers to the quantity of physical good that you're getting, like a carton of eggs or a barrel of oil. The tricky thing in the case of forex is that the physical good also happens to be a currency. A spot currency product trades in the denomination on the right-hand side (RHS) of the product name. So if you're buying EUR/USD you are paying USD currency to get EUR \"\"units\"\", and if you're selling EUR/USD you are receiving USD by giving away EUR \"\"units\"\". The EUR is the \"\"physical good\"\" in this case. The way I remember it is to think of all products (not just currencies) as trading pairs. So AAPL in my mind is AAPL/USD. When I buy AAPL/USD I am paying USD to get AAPL units. When I sell AAPL/USD I am receiving USD by giving away AAPL units. The thing on the left is the physical good (even if it happens to be money) that you are exchanging, and the thing on the right is the money that you are exchanging. So, when I buy a lot of AAPL, I am buying 100 shares at their current price in dollars. Similarly, when I buy a lot of EUR/USD, I am buying 100K Euros at their current price in dollars.\"" }, { "docid": "583838", "title": "", "text": "\"While every successful forex trader has his or her own way of being consistently profitable, there are a few \"\"common denominators\"\" that all profitable traders follow without exception. This forex training article will walk through one of those critical keys to success.\"" }, { "docid": "447303", "title": "", "text": "For question #1, at least some US-based online brokers do permit direct purchases of stocks on foreign exchanges. Depending on your circumstances, this might be more cost effective than purchasing US-listed ADRs. One such broker is Interactive Brokers, which allows US citizens to directly purchase shares on many different foreign exchanges using their online platform (including in France). For France, I believe their costs are currently 0.1% of the total trade value with a 4€ minimum. I should warn you that the IB platform is not particularly user-friendly, since they market themselves to traders and the learning curve is steep (although accounts are available to individual investors). IB also won't automatically convert currencies for you, so you also need to use their foreign exchange trading interface to acquire the foreign currency used to purchase a foreign stock, which has plusses and minuses. On the plus side, their F/X spread is very competitive, but the interface is, shall we say, not very intuitive. I can't answer question #2 with specific regards to US/France. At least in the case of IB, though, I believe any dividends from a EUR-denominated stock would continue to accumulate in your account in Euros until you decide to convert them to dollars (or you could reinvest in EUR if you so choose)." }, { "docid": "529007", "title": "", "text": "You're on the hook for the nominal value of what you hold. A single ES S&P e-mini future contract is leveraged 50x, equivalent to $60,000 in stock, so it should be treated the same. The problem is that trading is done with only a fraction of the value as margin, so people can and do end up owing more than their account. Some markets are extremely illiquid and volatile as well. Similar to forex, the industry has made it easy for small traders to get in the game in an entirely overleveraged way, and the vast majority lose." }, { "docid": "162616", "title": "", "text": "No free lunch You cannot receive risk-free interest on more money than you actually put down. The construct you are proposing is called 'Carry Trade', and will yield you the interest-difference in exchange for assuming currency risk. Negative expectation In the long run one would expect the higher-yielding currency to devalue faster, at a rate that exactly negates the difference in interest. Net profit is therefore zero in the long run. Now factor in the premium that a (forex) broker charges, and now you may expect losses the size of which depends on the leverage chosen. If there was any way that this could reliably produce a profit even without friction (i.e. roll-over, transaction costs, spread), quants would have already arbitraged it away. Intransparancy Additionaly, in my experience true long-term roll-over costs in relation to interest are a lot harder to compute than, for example, the cost of a stock transaction. This makes the whole deal very intransparant. As to the idea of artificially constructing a USD/USD pair: I regret to tell you that such a construct is not possible. For further info, see this question on Carry Trade: Why does Currency Carry Trade work?" }, { "docid": "316993", "title": "", "text": "Can't totally agree with that. Volatility trading is just one trading type of many. In my opinion it doesn't depend on whether you are a professional trader or not. As you might have heard, retail traders are said to create 'noise' on the market, mainly due to the fact that they aren't professional in their majority. So, I would assume, if an average retail trader decided to trade volatility he would create as much noise as if would have been betting on stock directions. Basically, most types of trading would require a considerable amount of effort spent on fundamental analysis of the underlying be it volatility or directional trading. Arbitrage trading would be an exception here, I guess. However, volatility trading relies more on trader's subjective expectations about future deviations, whereas trading stock directions requires deeper research of the underlying. Is it a drawback or an advantage? I.d.k. On the other hand-side volatility trading strategies cover both upward and downward movements, but you can set similar hedging strategies when going short or long on stocks, isn't it? To summarise, I think it is a matter of preference. Imagine yourself going long on S&P500 since 2009. Do you think there are many volatility traders who have outperformed that?" }, { "docid": "580757", "title": "", "text": "If you do not understand the volatility of the fx market, you need to stop trading it, immediately. There are many reasons that fx is riskier than other types of investing, and you bear those risks whether you understand them or not. Below are a number of reasons why fx trading has high levels of risk: 1) FX trades on the relative exchange rate between currencies. That means it is a zero-sum game. Over time, the global fx market cannot 'grow'. If the US economy doubles in size, and the European economy doubles in size, then the exchange rate between the USD and the EUR will be the same as it is today (in an extreme example, all else being equal, yes I know that value of currency /= value of total economy, but the general point stands). Compare that with the stock market - if the US economy doubles in size, then effectively the value of your stock investments will double in size. That means that stocks, bonds, etc. tied to real world economies generally increase when the global economy increases - it is a positive sum game, where many players can be winners. On the long term, on average, most people earn value, without needing to get into 'timing' of trades. This allows many people to consider long-term equity investing to be lower risk than 'day-trading'. With FX, because the value of a currency is in its relative position compared with another currency, 1 player is a winner, 1 player is a loser. By this token, most fx trading is necessarily short-term 'day-trading', which by itself carries inherent risk. 2) Fx markets are insanely efficient (I will lightly state that this is my opinion, but one that I am not alone in holding firmly). This means that public information about a currency [ie: economic news, political news, etc.] is nearly immediately acted upon by many, many people, so that the revised fx price of that currency will quickly adjust. The more efficient a market is, the harder it is to 'time a trade'. As an example, if you see on a news feed that the head of a central bank authority made an announcement about interest rates in that country [a common driver of fx prices], you have only moments to make a trade before the large institutional investors already factor it into their bid/ask prices. Keep in mind that the large fx players are dealing with millions and billions of dollars; markets can move very quickly because of this. Note that some currencies trade more frequently than others. The main currency 'pairs' are typically between USD and / or other G10 country-currencies [JPY, EUR, etc.]. As you get into currencies of smaller countries, trading of those currencies happens less frequently. This means that there may be some additional time before public information is 'priced in' to the market value of that currency, making that currency 'less efficient'. On the flip side, if something is infrequently traded, pricing can be more volatile, as a few relatively smaller trades can have a big impact on the market. 3) Uncertainty of political news. If you make an fx trade based on what you believe will happen after an expected political event, you are taking risk that the event actually happens. Politics and world events can be very hard to predict, and there is a high element of chance involved [see recent 'expected' election results across the world for evidence of this]. For something like the stock market, a particular industry may get hit every once in a while with unexpected news, but the fx market is inherently tied to politics in a way that may impact exchange rates multiple times a day. 4) Leveraging. It is very common for fx traders to borrow money to invest in fx. This creates additional risk because it amplifies the impact of your (positive or negative) returns. This applies to other investments as well, but I mention it because high degrees of debt leveraging is extremely common in FX. To answer your direct question: There are no single individual traders who spike fx prices - that is the impact you see of a very efficient market, with large value traders, reacting to frequent, surprising news. I reiterate: If you do not understand the risks associated with fx trade, I recommend that you stop this activity immediately, at least until you understand it better [and I would recommend personally that any amateur investor never get involved in fx at all, regardless of how informed you believe you are]." }, { "docid": "314085", "title": "", "text": "\"The difference is in the interrelation between the varied investments you make. Hedging is about specifically offsetting a possible loss in an investment by making another related investment that will increase in value for the same reasons that the original investment would lose value. Gold, for instance, is often regarded as the ultimate hedge. Its value is typically inversely correlated to the rest of the market as a whole, because its status as a material, durable store of value makes it a preferred \"\"safe haven\"\" to move money into in times of economic downturn, when stock prices, bond yields and similar investments are losing value. That specific behavior makes investing in gold alongside stocks and bonds a \"\"hedge\"\"; the increase in value of gold as stock prices and bond yields fall limits losses in those other areas. Investment of cash in gold is also specifically a hedge against currency inflation; paper money, account balances, and even debt instruments like bonds and CDs can lose real value over time in a \"\"hot\"\" economy where there's more money than things to buy with it. By keeping a store of value in something other than currency, the price of that good will rise as the currencies used to buy it decrease in real value, maintaining your level of real wealth. Other hedges are more localized. One might, for example, trade oil futures as a hedge on a position in transportation stocks; when oil prices rise, trucking and airline companies suffer in the short term as their margins get squeezed due to fuel costs. Currency futures are another popular hedge; a company in international business will often trade options on the currencies of the companies it does business in, to limit the \"\"jitters\"\" seen in the FOREX spot market caused by speculation and other transient changes in market demand. Diversification, by contrast, is about choosing multiple unrelated investments, the idea being to limit losses due to a localized change in the market. Companies' stocks gain and lose value every day, and those companies can also go out of business without bringing the entire economy to its knees. By spreading your wealth among investments in multiple industries and companies of various sizes and global locations, you insulate yourself against the risk that any one of them will fail. If, tomorrow, Kroger grocery stores went bankrupt and shuttered all its stores, people in the regions it serves might be inconvenienced, but the market as a whole will move on. You, however, would have lost everything if you'd bet your retirement on that one stock. Nobody does that in the real world; instead, you put some of your money in Kroger, some in Microsoft, some in Home Depot, some in ALCOA, some in PG&E, etc etc. By investing in stocks that would be more or less unaffected by a downturn in another, if Kroger went bankrupt tomorrow you would still have, say, 95% of your investment next egg still alive, well and continuing to pay you dividends. The flip side is that if tomorrow, Kroger announced an exclusive deal with the Girl Scouts to sell their cookies, making them the only place in the country you can get them, you would miss out on the full possible amount of gains you'd get from the price spike if you had bet everything on Kroger. Hindsight's always 20/20; I could have spent some beer money to buy Bitcoins when they were changing hands for pennies apiece, and I'd be a multi-millionaire right now. You can't think that way when investing, because it's \"\"survivor bias\"\"; you see the successes topping the index charts, not the failures. You could just as easily have invested in any of the hundreds of Internet startups that don't last a year.\"" }, { "docid": "369266", "title": "", "text": "A stock, bond or ETF is basically a commodity. Where you bought it does not really matter, and it has a value in USD only inasmuch as there is a current market price quoted at an American exchange. But nothing prevents you from turning around and selling it on a European exchange where it is also listed for an equivalent amount of EUR (arbitrage activities of investment banks ensure that the price will be equivalent in regard to the current exchange rate). In fact, this can be used as a cheap form of currency conversion. For blue chips at least this is trivial; exotic securities might not be listed in Europe. All you need is a broker who allows you to trade on European exchanges and hold an account denominated in EUR. If necessary, transfer your securities to a broker who does, which should not cost more than a nominal fee. Mutual funds are a different beast though; it might be possible to sell shares on an exchange anyway, or sell them back to the issuer for EUR. It depends. In any case, however, transferring 7 figure sums internationally can trigger all kinds of tax events and money laundering investigations. You really need to hire a financial advisor who has international investment experience for this kind of thing, not ask a web forum!" }, { "docid": "588569", "title": "", "text": "\"I'm just trying to visualize the costs of trading. Say I set up an account to trade something (forex, stock, even bitcoin) and I was going to let a random generator determine when I should buy or sell it. If I do this, I would assume I have an equal probability to make a profit or a loss. Your question is what a mathematician would call an \"\"ill-posed problem.\"\" It makes it a challenge to answer. The short answer is \"\"no.\"\" We will have to consider three broad cases for types of assets and two time intervals. Let us start with a very short time interval. The bid-ask spread covers the anticipated cost to the market maker of holding an asset bought in the market equal to the opportunity costs over the half-life of the holding period. A consequence of this is that you are nearly guaranteed to lose money if your time interval between trades is less than the half-life of the actual portfolio of the market maker. To use a dice analogy, imagine having to pay a fee per roll before you can gamble. You can win, but it will be biased toward losing. Now let us go to the extreme opposite time period, which is that you will buy now and sell one minute before you die. For stocks, you would have received the dividends plus any stocks you sold from mergers. Conversely, you would have had to pay the dividends on your short sales and received a gain on every short stock that went bankrupt. Because you have to pay interest on short sales and dividends passed, you will lose money on a net basis to the market maker. Maybe you are seeing a pattern here. The phrase \"\"market maker\"\" will come up a lot. Now let us look at currencies. In the long run, if the current fiat money policy regime holds, you will lose a lot of money. Deflation is not a big deal under a commodity money regime, but it is a problem under fiat money, so central banks avoid it. So your long currency holdings will depreciate. Your short would appreciate, except you have to pay interest on them at a rate greater than the rate of inflation to the market maker. Finally, for commodities, no one will allow perpetual holding of short positions in commodities because people want them delivered. Because insider knowledge is presumed under the commodities trading laws, a random investor would be at a giant disadvantage similar to what a chess player who played randomly would face against a grand master chess player. There is a very strong information asymmetry in commodity contracts. There are people who actually do know how much cotton there is in the world, how much is planted in the ground, and what the demand will be and that knowledge is not shared with the world at large. You would be fleeced. Can I also assume that probabilistically speaking, a trader cannot do worst than random? Say, if I had to guess the roll of a dice, my chance of being correct can't be less than 16.667%. A physicist, a con man, a magician and a statistician would tell you that dice rolls and coin tosses are not random. While we teach \"\"fair\"\" coins and \"\"fair\"\" dice in introductory college classes to simplify many complex ideas, they also do not exist. If you want to see a funny version of the dice roll game, watch the 1962 Japanese movie Zatoichi. It is an action movie, but it begins with a dice game. Consider adopting a Bayesian perspective on probability as it would be a healthier perspective based on how you are thinking about this problem. A \"\"frequency\"\" approach always assumes the null model is true, which is what you are doing. Had you tried this will real money, your model would have been falsified, but you still wouldn't know the true model. Yes, you can do much worse than 1/6th of the time. Even if you are trying to be \"\"fair,\"\" you have not accounted for the variance. Extending that logic, then for an inexperienced trader, is it right to say then that it's equally difficult to purposely make a loss then it is to purposely make a profit? Because if I can purposely make a loss, I would purposely just do the opposite of what I'm doing to make a profit. So in the dice example, if I can somehow lower my chances of winning below 16.6667%, it means I would simply need to bet on the other 5 numbers to give myself a better than 83% chance of winning. If the game were \"\"fair,\"\" but for things like forex the rules of the game are purposefully changed by the market maker to maximize long-run profitability. Under US law, forex is not regulated by anything other than common law. As a result, the market maker can state any price, including prices far from the market, with the intent to make a system used by actors losing systems, such as to trigger margin calls. The prices quoted by forex dealers in the US move loosely with the global rates, but vary enough that only the dealer should make money systematically. A fixed strategy would promote loss. You are assuming that only you know the odds and they would let you profit from your 83.33 percentage chance of winning. So then, is the costs of trading from a purely probabilistic point of view simply the transaction costs? No matter what, my chances cannot be worse than random and if my trading system has an edge that is greater than the percentage of the transaction that is transaction cost, then I am probabilistically likely to make a profit? No, the cost of trading is the opportunity cost of the money. The transaction costs are explicit costs, but you have ignored the implicit costs of foregone interest and foregone happiness using the money for other things. You will want to be careful here in understanding probability because the distribution of returns for all of these assets lack a first moment and so there cannot be a \"\"mean return.\"\" A modal return would be an intellectually more consistent perspective, implying you should use an \"\"all-or-nothing\"\" cost function to evaluate your methodology.\"" } ]

[ { "docid": "593029", "title": "", "text": "You are in a difficult situation because of US regulation, that is much more demanding to fulfill than in EU or rest of the world. Second, Interactive Brokers stopped serving FX for US clients. Third, EU brokers - like Saxo Bank - don't accept US clients: Almost any private client can open an account with Saxo Bank, although there are few exceptions. You can’t open an account if you are US, Iranian or North Korean resident - Brokerchooser: Saxo Bank Review Working for Brokerchooser, I would say you are limited to Oanda or Gain Capital. The latter is an ECN broker, and operates through other white label partners, you could try Forex.com also." } ]

[ { "docid": "167717", "title": "", "text": "\"As you say, the currency carry trade shouldn't work. The deluge of new cash into a high-interest currency should result in falling exchange rates. A November 2009 paper by Òscar Jordà and Alan Taylor of the University of California, Davis, may be offer one approach which is more stable. According to The Economist: They find that a refined carry-trade strategy—one that incorporates a measure of long-term value—produces more consistent profits and is less prone to huge losses than one that targets the highest yield. However, exchange rates, central bank interest rates, as well as money supply are all political as well as economic constructs. An economic driver for arbitrage may be offset by political will (such as US quantative easing) or even social malaise (Japanese continual low inward investment). I wouldn't go so far as calling the carry trade \"\"free money\"\" - currencies have proven far too unstable for that - but state interference in markets tends to be clearly telegraphed and a trader with nerves of steel may take advantage of it.\"" }, { "docid": "394924", "title": "", "text": "Interactive Brokers advertises the percent of profitable forex accounts for its own customers and for competitors. They say they have 46.9% profitable accounts which is higher than the other brokers listed. It's hard to say exactly how this data was compiled- but I think the main takeaway is that if a broker actually advertises that most accounts lose money, it is probably difficult to make money. It may be better for other securities because forex is considered a very tough market for retail traders to compete in. https://www.interactivebrokers.com/en/?f=%2Fen%2Ftrading%2Fpdfhighlights%2FPDF-Forex.php" }, { "docid": "303240", "title": "", "text": "I've always understood inflation to be linked to individual currencies, although my only research into the subject was an intro economics course in undergrad and I don't recall seeing why that would be the case. I guess the basic principle is that currency traders are watching the printing presses and trading in exchange markets to the point that the exchange rates fall in relation to increases in money supply. There's probably something about the carry trade in there as well, but it's late and I took some medications, so someone else will have to carry that torch. I must admit I've not really paid attention to foreign currencies like HKD, but the proximity and political relationship with China probably greatly complicates your question, since part of the problem has been China's currency peg." }, { "docid": "148948", "title": "", "text": "It ought to be possible to buy a foreign exchange future (aka forex future / FX future). Businesses use these futures to make sure their exchange rate is predictable: if they put a bunch of money into manufacturing things that'll be ready a year later, it helps to know that the currency exchange rate shifts won't wipe out all their profits. If you're willing to take on some of that risk, and if things go your way, you can make money. They are essentially contracts between two private parties to pay each other a certain amount of money based on the movement of the currencies, so the Chinese government doesn't actually need to be involved and no renminbi need to change hands, you can just trade the contracts. Note that the exchange rate is currently fixed by the Chinese government, so you're going to be subject to enhanced levels of political risk, and they may not be as widely available or readily tradable as other foreign exchange futures, so check with a broker before opening your account. I couldn't find them on my personal Etrade account, but a quick Google search reveals CME Group offering some. There are probably others. Foreign exchange futures are an advanced investing tool and carry risk. Be sure you understand the risk, in particular how much money you can end up on the hook for if things don't go your way. Also remember, futures expire: you're not just betting on the rate changing, but you're betting on it changing within a certain amount of time." }, { "docid": "210514", "title": "", "text": "That is such a vague statement, I highly recommend disregarding it entirely, as it is impossible to know what they meant. Their goal is to convince you that index funds are the way to go, but depending on what they consider an 'active trader', they may be supporting their claim with irrelevant data Their definition of 'active trader' could mean any one or more of the following: 1) retail investor 2) day trader 3) mutual fund 4) professional investor 5) fund continuously changing its position 6) hedge fund. I will go through all of these. 1) Most retail traders lose money. There are many reasons for this. Some rely on technical strategies that are largely unproven. Some buy rumors on penny stocks in hopes of making a quick buck. Some follow scammers on twitter who sell newsletters full of bogus stock tips. Some cant get around the psychology of trading, and thus close out losing positions late and winning positions early (or never at all) [I myself use to do this!!]. I am certain 99% of retail traders cant beat the market, because most of them, to be frank, put less effort into deciding what to trade than in deciding what to have for lunch. Even though your pension funds presentation is correct with respect to retail traders, it is largely irrelevant as professionals managing your money should not fall into any of these traps. 2) I call day traders active traders, but its likely not what your pension fund was referring to. Day trading is an entirely different animal to long or medium term investing, and thus I also think the typical performance is irrelevant, as they are not going to manage your money like a day trader anyway. 3,4,5) So the important question becomes, do active funds lose 99% of the time compared to index funds. NO! No no no. According to the WSJ, actively managed funds outperformed passive funds in 2007, 2009, 2013, 2015. 2010 was basically a tie. So 5 out of 9 years. I dont have a calculator on me but I believe that is less than 99%! Whats interesting is that this false belief that index funds are always better has become so pervasive that you can see active funds have huge outflows and passive have huge inflows. It is becoming a crowded trade. I will spare you the proverb about large crowds and small doors. Also, index funds are so heavily weighted towards a handful of stocks, that you end up becoming a stockpicker anyway. The S&P is almost indistinguishable from AAPL. Earlier this year, only 6 stocks were responsible for over 100% of gains in the NASDAQ index. Dont think FB has a good long term business model, or that Gilead and AMZN are a cheap buy? Well too bad if you bought QQQ, because those 3 stocks are your workhorses now. See here 6) That graphic is for mutual funds but your pension fund may have also been including hedge funds in their 99% figure. While many dont beat their own benchmark, its less than 99%. And there are reasons for it. Many have investors that are impatient. Fortress just had to close one of its funds, whose bets may actually pay off years from now, but too many people wanted their money out. Some hedge funds also have rules, eg long only, which can really limit your performance. While important to be aware of this, that placing your money with a hedge fund may not beat a benchmark, that does not automatically mean you should go with an index fund. So when are index funds useful? When you dont want to do any thinking. When you dont want to follow market news, at all. Then they are appropriate." }, { "docid": "180428", "title": "", "text": "That metric is not very useful for anything other than very extremely long trading periods. Most strategies or concerned with price movement over much shorter time frames, 15 mins, 1 hr, 4 hr, daily, weekly, monthly. The MA or moving average is a trend following lagging indicator used to smooth out price fluctuations and more accurately reflect the price of trading instrument such as a stock (AAPL), commodity, or currency pair. Traders are generally concerned with current market trends and price action of the instrument they are trading. As such, an extremely long MA (average daily price, over a period of 365 days) are generally not that important." }, { "docid": "583838", "title": "", "text": "\"While every successful forex trader has his or her own way of being consistently profitable, there are a few \"\"common denominators\"\" that all profitable traders follow without exception. This forex training article will walk through one of those critical keys to success.\"" }, { "docid": "513055", "title": "", "text": "Most of the Indian Brokers started offering API's to retail client these days. And NSE Exchange also supports algo trading at retail level. Currently two levels of API are offered. 1)Semi-automatic or one touch trading (Retail Traders) 2)Fully Automatic ( Dealers) I had tested the API with a discount broker www.tradejini.com and it is good at retail level. But to make your trading systems fully automatic you need to pass NISM Series VIII certification (Dealer Certification) and have to take dealer terminals from the broker. You also have to register as a dealer and have to take permission from exchange to run your algos fully automated. Without Exchange permission it is illegal to involve in algo trading." }, { "docid": "204297", "title": "", "text": "\"I interned for about six months at a firm that employed a few technical analysts, so I'll try to provide what little information I can. Since the bulk of the intra-day trading was decided algorithmically, technical analysts had two main functions: This basically boils down to my answer to your question. There are still enough people, trading firms, etc. who believe in candlestick charting and other visually subjective patterns that if you notice a trend, pattern, etc. before the majority of traders observing, you may be able to time the market successfully and profit. This is becoming increasingly dangerous, however, because of the steps I outlined above. Over time, the charting patterns that have been proven effective (often in many firms individually since the algorithms are all proprietary) are incorporated into computer algorithms, so the \"\"traders\"\" you're competing with to see the pattern are increasingly low-latency computer clusters less than a few blocks from the exchange. Summary: Candlestick charting, along with other forms of subjective technical analysis, has its believers, and assuming enough of these believers trade the standard strategies based on the standard patterns, one could conceivably time the market with enough skill to anticipate these traders acting on the pattern and therefore profit. However, the marginal benefits of doing so are decreasing rapidly as computers take over more trading responsibility. Caveats: I know you're in Australia, where the market penetration of HF/algo traders isn't as high as in the US, so it might be a few more years before the marginal benefits cease to be profitable; that being said, if various forms of technical analysis proved wildly profitable in Australia, above and beyond profits available in other markets, rest assured that large American or British trading firms would already have moved in. My experience is limited to one trading firm, so I certainly can't speak for the industry as a whole. I know I didn't address candlestick charts specifically, but since they're only one piece of visual technical analysis, I tried to address the issue as a whole. This somewhat ties into the debate between fundamental or technical analysis, which I won't get into. Investopedia has a short article on the subject. As I said, I won't get into this because while it's a nice debate for small traders, at large trading firms, they don't care; they want to make profit, and any strategy that can be vetted, whether it's fundamental, technical, or astrological, will be vetted. I want to add more information to my answer to clear up some of the misconceptions in the comments, including those talking about biased studies and a lack of evidence for or against technical analysis (and candlestick charts; I'll explore this relationship further down). It's important to keep in mind that charting methods, including candlestick charts, are visually subjective ways of representing data, and that any interpretations drawn from such charts should, ideally, represent objective technical indicators. A charting method is only as good as the indicators it's used to represent. Therefore, an analysis of the underlying indicators provides a suitable analysis for the visual medium in which they're presented. One important study that evaluates several of these indicators is Foundations of Technical Analysis: Computational Algorithms, Statistical Inference, and Empirical Implementation by Lo, Mamaysky, and Wang. Lest anyone accuse its authors of bias, I should point out that not only is it published by the National Bureau of Economic Research (a highly reputable organization within economics and finance), but also that the majority of its authors come from MIT's Sloan school, which holds a reputation second to none. This study finds that several technical indicators, e.g. head-and-shoulder, double-bottom, and various rectangle techniques, do provide marginal value. They also find that although human judgment is still superior to most computational algorithms in the area of visual pattern recognition, ... technical analysis can be improved by using automated algorithms Since this paper was published in 2000, computing power and statistical analysis have gained significant ground against human ability to identify and exploit for visual pattern detection like candlestick charts. Second, I suggest you look into David Aaronson's book, Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals. He finds similar results to the Lo, et. al. paper, in that some technical indicators do add value to the investment process, but those that do are those that can be represented mathematically and thus programmed directly into trading algorithms (thus bypassing visual tools like candlestick charts). He describes how studies, including Lo, et al., have found that head and shoulders patterns are worse than random, i.e. you would earn higher returns if you simply traded at random. That point is worth than repeating. If a day-trader is using a candlestick chart and using head-and-shoulders patterns as part of their toolkit, he's rolling the dice when he uses that pattern and returns that come from its application come from chance. This reminds me of that old story about a company that sends out pamphlets predicting the results of sports games, complete with \"\"strategies\"\" and \"\"data\"\" to back up the predictions. The company sends out several versions of the pamphlet every game, each predicting a different winner. Given a large enough sample size, by the end of the season, there are a few people who have received a pamphlet that accurately predicted the winner for every game and they're convinced the system is perfect. The others weren't so lucky, however. Relying on candlestick charts and TA patterns that are relics from the pre-computerized era is reassuring to some traders and gives them a sense of control and \"\"beating the market,\"\" but how long will chance remain on your side? This is why I maintain that visual tools like candlestick charts are a slowly dying medium. They certainly still add value to some trading firms, which is why Bloomberg terminals still ship with this functionality built in, but as more and more research shows, automated algorithms and statistical indicators can provide more value. It's also important to think about whether the majority of the value added by visual tools like candlestick charts comes in the form of profit or a sense of security to traders who learned the field using them over the past few decades. Finally, it's extremely important to realize that the actions of retail investors in the equities market cannot begin to represent the behaviors of the market as a whole. In the equities markets alone, trading firms and institutional investors dwarf retail investors, and the difference in scale is even more vastly pronounced in derivatives and currency markets. The fact that some retail investors use candlestick charts and the technical indicators they (hope) underlie them provides nothing but minor anecdotal evidence as to their effectiveness.\"" }, { "docid": "420672", "title": "", "text": "One simplest way is to to do Forex trading. You can do this by buying Foreign Currency Futures when you feel Rupee is going down or by selling those Futures when you feel Rupee will go up." }, { "docid": "264474", "title": "", "text": "Forex trading is easy, but developing the discipline and skills necessary to trade and be consistent in profits over an extended period of time takes years to achieve. As a beginner in currency trading it is quite normal to have the potential profits as your driving force, but when you jump into the trade without a plan, your chances of making at profits remain just hopes and you may never succeed. Fortunately, you can always borrow a leaf from the experts to help you start with a firm foundation to increase your success rates." }, { "docid": "390524", "title": "", "text": "\"A lot (sometimes called a round lot) always refers to the quantity of physical good that you're getting, like a carton of eggs or a barrel of oil. The tricky thing in the case of forex is that the physical good also happens to be a currency. A spot currency product trades in the denomination on the right-hand side (RHS) of the product name. So if you're buying EUR/USD you are paying USD currency to get EUR \"\"units\"\", and if you're selling EUR/USD you are receiving USD by giving away EUR \"\"units\"\". The EUR is the \"\"physical good\"\" in this case. The way I remember it is to think of all products (not just currencies) as trading pairs. So AAPL in my mind is AAPL/USD. When I buy AAPL/USD I am paying USD to get AAPL units. When I sell AAPL/USD I am receiving USD by giving away AAPL units. The thing on the left is the physical good (even if it happens to be money) that you are exchanging, and the thing on the right is the money that you are exchanging. So, when I buy a lot of AAPL, I am buying 100 shares at their current price in dollars. Similarly, when I buy a lot of EUR/USD, I am buying 100K Euros at their current price in dollars.\"" }, { "docid": "472052", "title": "", "text": "There are fees on retail trades imposed by trading houses, but not on traders like MS and GS. That's why HFT is possible. Personally, I get 100 free trades per year and that's more than enough for me. Adding a tax to this is just stupid." }, { "docid": "417365", "title": "", "text": "\"First, as @littleadv mentions, and as I've pointed out before, anyone who participates in a market using limit orders (which, by the way, should be every non-professional investor) is by definition a market maker. So, I will assume that your question pertains both to official market makers and to \"\"retail investors\"\" using limit orders. When you remark that there are such \"\"tight spreads\"\" in \"\"liquid assets\"\", what you are really saying is \"\"wow, look at all the market makers in these products!\"\" That's the benefit of electronic trading and algorithmic traders -- millions of participants each with their own opinion of the value of a financial instrument, trying to find people who have very specifically opposing opinions of the value of that same instrument. This is called price discovery, and is the entire point of financial markets. So, you ask why are there all these market makers present to create such tight spreads in assets like SPY? Answer: Because they can make money in these markets: Imagine (towards a contradiction) that market makers thought they couldn't make money by offering tight spreads in SPY, and so SPY had a wider spread than it actually does. For example, say the highest bid for SPY was $99.98 and the lowest ask was $100.01. Now imagine that a market maker with perfect knowledge of the future came along knowing that he would be able to sell SPY for $100.01 in 5 minutes. Then he would load up as many buy orders as he could for $100.00 or lower. (He wouldn't bid $100.01 or higher because those trades would not be profitable according to his information -- at least not 5 minutes from now.) So the spread had previously been $0.03 and then suddenly it was $0.01, all because a market maker with better information came along and realized he could make money by creating a tighter market! Now, nobody has perfect knowledge of the future, which is why markets are never infinitely tight or infinitely liquid. Each market maker has to weigh possible profits against the probability that those profits will actually turn into losses. But if one market maker decides not to participate in a particular instrument, there's bound to be another market maker who will happily take his place. So the very fact that there are so many market participants with resting buy/sell orders for SPY right now is proof that there are market makers able to make money doing so. If they could not make money, they wouldn't be there, and the spread would be wider. 10-15 years ago, before electronic trading and algorithmic trading, the number of market participants was far lower, and the spreads were far wider, meaning retail investors like you and me had a much harder time making money. The only people making money were the institutional investors, the brokers, and the exchanges. Now that all these new millions of players are present in the market, retail investors like you and me get to participate and make money too.\"" }, { "docid": "114624", "title": "", "text": "Fx Pip partnership Limited is a reliable trading signal and consultancy provider with many years of experience and significant success in the field of investments. All the members of the team, utilizing in the best way their scientific background and their excellent professionalism, achieve the best results. The Fx Pip Signal which has at its disposal its Research and Development department, has an aim to offer the international community of traders, the most reliable solution to the most difficult daily questions, such as: which product do we buy and which do we sell, at what price do we enter the market and at what price do we exit? The employees have a long term experience in the international foreign exchange industry, which gives them the edge of competitiveness and professionalism. We guarantee independency at the selection of online trading options. The only obligation of fxpipsignal.com is to you, our customer. An ongoing training of our employee(s) is a priority, to have good knowledge and to meet your needs. Fx Pip Signal provides signals of major currency pairs as EUR/USD, GBP/USD, USD/JPY USD/CHF. It provides signals which suits almost all the market around the world.It has four packages named Trial, Standard, Premium, Premium Plus. It has well organised support team to provide 24/7 live support and forex consultancy to gain meaningful profit. It believes in transperancy , relaibility and accuracy. All the signals are provided in a flexible way so that the subscribers can easily execute them and their desire profit. Fx Pip Signal is available in almost all the countries of the world. It provides signals via sms, email and updated in the website." }, { "docid": "369266", "title": "", "text": "A stock, bond or ETF is basically a commodity. Where you bought it does not really matter, and it has a value in USD only inasmuch as there is a current market price quoted at an American exchange. But nothing prevents you from turning around and selling it on a European exchange where it is also listed for an equivalent amount of EUR (arbitrage activities of investment banks ensure that the price will be equivalent in regard to the current exchange rate). In fact, this can be used as a cheap form of currency conversion. For blue chips at least this is trivial; exotic securities might not be listed in Europe. All you need is a broker who allows you to trade on European exchanges and hold an account denominated in EUR. If necessary, transfer your securities to a broker who does, which should not cost more than a nominal fee. Mutual funds are a different beast though; it might be possible to sell shares on an exchange anyway, or sell them back to the issuer for EUR. It depends. In any case, however, transferring 7 figure sums internationally can trigger all kinds of tax events and money laundering investigations. You really need to hire a financial advisor who has international investment experience for this kind of thing, not ask a web forum!" }, { "docid": "576632", "title": "", "text": "\"If I really understood it, you bet that a quote/currency/stock market/anything will rise or fall within a period of time. So, what is the relationship with trading ? I see no trading at all since I don't buy or sell quotes. You are not betting as in \"\"betting on the outcome of an horse race\"\" where the money of the participants is redistributed to the winners of the bet. You are betting on the price movement of a security. To do that you have to buy/sell the option that will give you the profit or the loss. In your case, you would be buying or selling an option, which is a financial contract. That's trading. Then, since anyone should have the same technic (call when a currency rises and put when it falls)[...] How can you know what will be the future rate of exchange of currencies? It's not because the price went up for the last minutes/hours/days/months/years that it will continue like that. Because of that everyone won't have the same strategy. Also, not everyone is using currencies to speculate, there are firms with real needs that affect the market too, like importers and exporters, they will use financial products to protect themselves from Forex rates, not to make profits from them. [...] how the brokers (websites) can make money ? The broker (or bank) will either: I'm really afraid to bet because I think that they can bankrupt at any time! Are my fears correct ? There is always a probability that a company can go bankrupt. But that's can be very low probability. Brokers are usually not taking risks and are just being intermediaries in financial transactions (but sometime their computer systems have troubles.....), thanks to that, they are not likely to go bankrupt you after you buy your option. Also, they are regulated to insure that they are solid. Last thing, if you fear losing money, don't trade. If you do trade, only play with money you can afford to lose as you are likely to lose some (maybe all) money in the process.\"" }, { "docid": "521712", "title": "", "text": "Unless you need extremely large sums of money, I suggest you use an ATM or look for a credit card that has no foreign transaction fees (rare). AFAIK, it's not possible for a retail buyer to purchase currency at the current exchange rate quoted online. You are always going to be paying some spread above that, and the ATM gets you the closest. You could also try to use a bank that has branches in your country and Japan (like HSBC) and do your banking there. Then you likely wouldn't have to pay as much in fees (and possibly could draw on your account in Japan)." }, { "docid": "450184", "title": "", "text": "\"Depends. The short answer is yes; HSBC, for instance, based in New York, is listed on both the LSE and NYSE. Toyota's listed on the TSE and NYSE. There are many ways to do this; both of the above examples are the result of a corporation owning a subsidiary in a foreign country by the same name (a holding company), which sells its own stock on the local market. The home corporation owns the majority holdings of the subsidiary, and issues its own stock on its \"\"home country's\"\" exchange. It is also possible for the same company to list shares of the same \"\"pool\"\" of stock on two different exchanges (the foreign exchange usually lists the stock in the corporation's home currency and the share prices are near-identical), or for a company to sell different portions of itself on different exchanges. However, these are much rarer; for tax liability and other cost purposes it's usually easier to keep American monies in America and Japanese monies in Japan by setting up two \"\"copies\"\" of yourself with one owning the other, and move money around between companies as necessary. Shares of one issue of one company's stock, on one exchange, are the same price regardless of where in the world you place a buy order from. However, that doesn't necessarily mean you'll pay the same actual value of currency for the stock. First off, you buy the stock in the listed currency, which means buying dollars (or Yen or Euros or GBP) with both a fluctuating exchange rate between currencies and a broker's fee (one of those cost savings that make it a good idea to charter subsidiaries; could you imagine millions a day in car sales moving from American dealers to Toyota of Japan, converted from USD to Yen, with a FOREX commission to be paid?). Second, you'll pay the stock broker a commission, and he may charge different rates for different exchanges that are cheaper or more costly for him to do business in (he might need a trader on the floor at each exchange or contract with a foreign broker for a cut of the commission).\"" } ]

[ { "docid": "307120", "title": "", "text": "\"Unemployment insurance provides a temporary safety net to workers who lose their jobs by replacing a portion of their salary for certain periods. Each state administers its own unemployment insurance program so some rules may vary from state to state. To receive unemployment insurance payments, you must have lost your job through no fault of your own. If you quit your job or lost it because of poor performance or another justifiable reason, you are not eligible for unemployment insurance benefits. State unemployment insurance programs require claimants to have worked sufficiently before they can claim benefits. As soon as you apply for unemployment insurance, an agency with the state in which you live will verify that you were a victim of a layoff by contacting your previous employer and making sure you lost your job due to lack of work and not an action within your control. After the state verifies you were indeed the victim of a layoff, your weekly payment is calculated. Your payment will be a percentage of what you made in your previous job, generally between 20 percent and 50 percent, depending on your state. Unemployment insurance replaces only a portion of your previous pay because it is intended to pay only for the essentials of living such as food and utilities until you find new employment. Before you begin receiving benefits, you must complete a waiting period of typically one or two weeks. If you find a new job during this period, you will not be eligible for unemployment benefits, even if the job does not pay you as much as your previous job. After the waiting period, you will begin to receive your weekly payments. Employers pay for unemployment insurance through payroll taxes. So, while employees' work and earnings history are important to funding their unemployment benefits, the money does not come from their pay. Employer unemployment insurance contributions depend on several factors, including how many former employees have received benefits. Employers pay taxes on an employee's base wages, which vary by state. California, for example taxes employers on the first $7,000 of an employee's annual earnings, while neighboring Oregon taxes up to $32,000 of wages. Employers must set aside funds each payroll period and then report taxes and pay their states quarterly. States have several categories of tax rates they charge employers. New businesses and those first adding employees pay the \"\"new rate,\"\" which is typically lower and geared toward small businesses. Established businesses who haven't paid their taxes recently or properly are usually assessed the \"\"standard rate\"\" --- the highest possible tax rate, which in 2010 ranged from 5.4 percent in several states including Georgia, Hawaii and Alaska to 13.56 percent in Pennsylvania. Businesses in good standing may receive discounts under the \"\"experienced rate.\"\" Depending on the number of employees a business has and how many former employees have claimed unemployment, states can give sizable rate reductions. The fewer claims, the lower the rate a business pays in unemployment insurance taxes. As a result of the economic crisis legislation has been passed to extend Unemployment benefits. Regular unemployment benefits are paid for a maximum of 26 weeks in most states. However, additional weeks of extended unemployment benefits are available during times of high unemployment. The unemployment extension legislation passed by Congress in February 2012 changed the way the tiers of Emergency Unemployment Compensation (EUC) are structured. A tier of unemployment is an extension of a certain amount of weeks of unemployment benefits. There are currently four tiers of unemployment benefits. Each tier provides extra weeks of unemployment in addition to basic state unemployment benefits. Emergency Unemployment Compensation (EUC) Tiers June - August 2012: Source and further information can be found here - Unemployment Tiers - About.com Sources: Unemployment Insurance(UI) - US Dept. of Labor How Does Unemployment Insurance Work? - eHow Percentage of Pay That Goes to Unemployment Insurance - eHow Additional Info: You can file for UI over the internet here are some useful resources. OWS Links State Unemployment Offices - About.com How to Apply for Unemployment Over the Internet - eHow\"" } ]

[ { "docid": "247578", "title": "", "text": "For example, it is not allowed to buy flood insurance at peak flood season and then cancel it when it is over. They are not offering this right now. So it would be interesting to see if they offer this and how they offer this. For example, you can insure your camera for a week when you are going on vacation. They call it on-demand insurance. They segment Trov is targeting consumer electronics. More often people don't take insurance in this segment as the insurance cost is high and benefits low. However if going on vacation, most are afraid of loosing / damaging equipments. Generally although we are afraid, most often nothing happens. It is this segment; you make the insurance cheap and easy to buy and create a new segment. Insurance fraud detection is an important part of insurance process such that insurance companies allocate a lot of resources to detect improper insurance claims. The website does not mention how they process claims. Although it looks easy, they may have a more stringent process. For example what is stopping me from buying an insurance after event; i.e. break my phone Monday, buy insurance on Monday and make a claim on Tuesday saying the phone broke on Tuesday." }, { "docid": "491528", "title": "", "text": "\"Disclaimer: I work in life insurance, but I am not an agent. First things first, there is not enough information here to give you an answer. When discussing life insurance, the very first things we need to fully consider are the illustration of policy values, and the contract itself. Without these, there is no way to tell if this is a good idea or not. So what are the things to look for? A. Risk appetite. People love to discuss projections of the market, like for example, \"\"7-8% a year compounded annually\"\". Go look at the historical returns of the stock market. It is never close to that projection. Life insurance, however, can give you a GUARANTEED return (this would be show in the 'Guaranteed' section of the life insurance illustration). As long as you pay your premiums, this money is guaranteed to accrue. Now most life insurance companies also show 'Non-Guaranteed' elements in their illustrations - these are non-guaranteed projections based on a scale at this point in time. These columns will show how your cash value may grow when dividends are credited to your policy (and used to buy paid-up additional insurance, which generates more dividends - this can be compared to the compounding nature of interest). B. Tax treatment. I am definitely not an expert in this area, but life insurance does have preferential tax treatment, particularly to your beneficiaries. C. Beneficiaries. Any death benefit (again, listed as guaranteed and maybe non-guaranteed values) is generally completely tax free for the beneficiary. D. Strategy. Tying all of this together, what exactly is the point of this? To transfer wealth, to accrue wealth, or some combination thereof? This is important and unstated in your question. So again, without knowing more, there is no way to answer your question. But I am surprised that in this forum, so many people are quick to jump in and say in general that whole life insurance is a scam. And even more surprising is the fact the accepted answer has already been accepted. My personal take is that if you are just trying to accrue wealth, you should probably stick to the market and maybe buy term if you want a death benefit component. This is mostly due to your age (higher risk of death = higher premiums = lower buildup) and how long of a time period you have to build up money in the policy. But if a 25 year old asked this same question, depending on his purposes, I may suggest that a WL policy is in fact a good idea.\"" }, { "docid": "384541", "title": "", "text": "\"An employee costs the company in four ways: Salary, taxes, benefits, and capital. Salary: The obvious one, what they pay you. Taxes: There are several taxes that an employer has to pay for the privilege of hiring someone, including social security taxes (which goes to your retirement), unemployment insurance tax (your unemployment benefits if they lay you off), and workers compensation tax (pays if you are injured on the job). (There may be other taxes that I'm not thinking of, but in any case those are the main ones.) Benefits: In the U.S. employers often pay for medical insurance, sometimes for dental, life, and disability. There's usually some sort of retirement plan. They expect to give you some number of vacation days, holidays, and sick days where they pay you even though you're not working. Companies sometimes offer other benefits, like discounts on buying company products, membership in health clubs, etc. Capital: Often the company has to provide you with some sort of equipment, like a computer; furniture, like a chair and desk; etc. As far as the company is concerned, all of the above are part of the cost of having you as an employee. If they would pay a domestic employee $60,000 in salary and $20,000 in taxes, then assuming the same benefits and capital investment, if a foreign employee would cost them $0 in taxes they should logically be willing to pay $80,000. Any big company will have accountants who figure out the total cost of a new employee in excruciating detail, and they will likely be totally rational about this. A smaller company might think, \"\"well, taxes don't really count ...\"\" This is irrational but people are not always rational. I don't know what benefits they are offering you, if any, and what equipment they will provide you with, if any. I also don't know what taxes, if any, a U.S. company has to pay when hiring a remote employee in a foreign country. If anybody on here knows the answer to that, please chime in. Balanced against that, the company likely sees disadvantages to hiring a foreign remote employee, too. Communication will be more difficult, which may result in inefficiency. My previous employer used some contractors in India and while there were certainly advantages, the language and time zone issues caused difficulties. There are almost certainly some international bureaucratic inconveniences they will have to deal with. Etc. So while you should certainly calculate what it would cost them to have a domestic employee doing the same job, that's not necessarily the end of the story. And ultimately it all comes down to negotiations. Even if the company knows that by the time they add in taxes and benefits and whatever, a domestic employee will cost them $100,000 a year, if they are absolutely convinced that they should be able to hire an Austrian for $60,000 a year, that might be the best offer you will get. You can point out the cost savings, and maybe they will concede the point and maybe not.\"" }, { "docid": "329099", "title": "", "text": "The biggest flaw in the unemployment rate is that it does not count individuals who have fallen off the unemployment benefit rolls. So if your unemployment has lasted longer than your unemployment benefits, guess what, your not unemployed anymore and the rate decreases. Also as this older article below illustrates, individuals are being pushed into other programs as a means to survive further removing them from employment opportunities. http://www.marketplace.org/topics/economy/when-unemployment-runs-out-whats-next" }, { "docid": "594320", "title": "", "text": "\"> and very doubtful once normalized for socioeconomics that race is at all a factor. Very doubtful? Once you account for socioeconomic status in violent crime, you find that blacks commit way more violent crime. For example, there are twice as many white people under the poverty line in America than there are poor black people. And yet, [you get these results](https://infogram.com/us-crime-in-black-and-white-1gzxop49q0okmwy). So that's one instance where \"\"controlling for socioeconomic\"\" status doesn't matter. Culture has more of an impact than you think. My friend works in an insurance industry where the target market is poor people. He no longer advertises heavily in black communities, after tracking his stats for years, as inevitably over 50% of his black clients do not pay their bills unless you literally swing by their house to collect the check whenever they forget to pay. Meanwhile, white people with the same amount of wealth stay on the books over 90% of the time after signing up. How do you explain that? This study indicates that not everybody should be getting degrees. And certainly not joke degrees that leave people unemployable/in debt.\"" }, { "docid": "297102", "title": "", "text": "For big values the loss becomes negligible. Say you have a 10% chance to get 10 million $/€/Whatever, expected value 1m. You sell that chance for 990k, which loses you 10k of expected income. Why would you throw away 10k? Because in the face of getting almost 1m the 10k are insignificant, 1m and 990k will make you roughly equally rich. Also the richness increase from 1m to 10m is less than 10x since 1m gives you maybe 90% of the freedom that 10m does (depending on how well you can make 10m work for you, most people will just let it rot in the bank). Another way to look at it is to look at bankruptcy risk. Say I have 10k in the bank, which is nice. Those 10k cannot pay for a new house or 2 cars (mine and the one I hit), so I have a small risk of significant loss. If I buy an insurance I reduce my chance of going bankrupt from maybe 0.001% to 0% for a fairly small price. Usually you can buy insurance fairly cheap if you raise your deductible to maybe 5k (both for the house and the car) so that you shoulder the risk you can (shouldering risk = gaining money) and paying an insurance to shoulder the rest for you. That way you minimize the cost to remove the risk of bankruptcy. It makes sense to shoulder as much risk as you can (unless a fixed fee of the insurance makes in unfeasible) before paying others to do it for you so you can optimize your income while removing fatal risks." }, { "docid": "449062", "title": "", "text": "> In Economics, people are no longer included in the unemployment rate after 1 year of unemployment ~~Bullshit.~~ [As long as they have actively looked for work in the past four weeks (which can include asking friends or family about work), they are part of the labor force.](http://www.bls.gov/cps/cps_htgm.htm#unemployed) Edit: The post is now correct. I replied hastily and threw in an editorial comment that was unnecessary." }, { "docid": "13304", "title": "", "text": "\">You are starting from false premises built on politically driven economic theories. The reality does not square with anything that you just wrote. I like to see the historical evidence (statistical, not anecdotal) for that. I'll provide a good starting point for you: [list of recessions in the United States](http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States). A quote \"\"The National Bureau of Economic Research dates recessions on a monthly basis back to 1854; according to their chronology, from 1854 to 1919, there were 16 cycles. The average recession lasted 22 months, and the average expansion 27. From 1919 to 1945, there were six cycles; recessions lasted an average 18 months and expansions for 35. From 1945 to 2001, and 10 cycles, recessions lasted an average 10 months and expansions an average of 57 months. **This has prompted some economists to declare that the business cycle has become less severe. Factors that may have contributed to this moderation include the creation of a central bank and lender of last resort, like the Federal Reserve System in 1913**, the establishment of deposit insurance in the form of the Federal Deposit Insurance Corporation in 1933, increased regulation of the banking sector, the adoption of interventionist Keynesian economics, and the increase in automatic stabilizers in the form of government programs (unemployment insurance, social security, and later Medicare and Medicaid). \"\" In fact, the US at the time wanted to get away from the destructive boom and bust cycles that were destroying the economy, so went to Europe to find out how come they had significantly less disruptive cycles, and learned that the notion of a central bank was very useful to smooth out cycles. Also read about [The Great Moderation](http://en.wikipedia.org/wiki/Great_Moderation). One of the causes is listed as \"\"Greater central bank independence, in which the Fed balanced money supply more closely with demand\"\". How do you propose that the money supply in an economy should be *matched* with economic growth and contractions? Letting be independent is a proven recipe for more harm than *trying* to match them. All sourced with ample data. Now you can try and argue that the Fed is not necessary, but then you'll have to explain the vast difference in boom/bust cycles seen in virtually every economy that has adopted an independent central bank that has followed reasonble monetary policy. That means covering hundreds of examples. Good luck. This is not driven by economic theories. This is historical fact. Ignoring it and similar evidence from hundreds of years over dozens of countries and economies is ignorant. >Fiat money and fractional reserve banking guarantee monetary collapse More non-fiat economies crashed than fiat economies. Like pretty much every historical economy up to modern times. The majority of economies that have not crashed are fiat, so it seems you have not actually tried listing all the various economies and counted them. >The idea that economics is hard science is ridiculous. No one claimed that. You're arguing against a strawman and repeating whatever phrases you think go here. >In a smallish closed or partially closed system, formulas and equations can determine probable outcomes, in the infinitely complex economy of the modern world, the very idea that you can predict anything beyond general directions is absurd No one claimed that either. However the entire universe is a pretty complex system, and plenty of long term predictions are probably very accurate. >And the general directions are not understandable without considering the human motivations that drive each of the billions of sentient actors involved. Also irrelevant, since no one is claiming we need that.\"" }, { "docid": "81886", "title": "", "text": "Here's how the CBO says the top 1% got their income in 2013 (latest data): Source|% from source :--------|---------: Cash Wages and Salaries|33.4% Business Income|23.2% Capital Gains|19.1% Capital Income|11.2% Corporate Tax Borne by Capital|7.3% Other Income|3.2% Employer's Share of Payroll Taxes|0.9% Employee's Contributions to Deferred Compensation Plans|0.7% Employer's Contributions to Health Insurance|0.5% And here are there definitions of the types of income: * Labor income—Cash wages and salaries, including those allocated by employees to 401(k) plans; employer-paid health insurance premiums; the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll taxes; and the share of corporate income taxes borne by workers. * Business income—Net income from businesses and farms operated solely by their owners, partnership income, and income from S corporations. * Capital gains—Profits realized from the sale of assets. Increases in the value of assets that have not been realized through sales are not included in the Congressional Budget Office’s measure of market income. * Capital income (excluding capital gains)—Taxable and tax-exempt interest, dividends paid by corporations (but not dividends from S corporations, which are considered part of business income), positive rental income, and the share of corporate income taxes borne by owners of capital. * Other income—Income received in retirement for past services and other sources of income." }, { "docid": "272137", "title": "", "text": "Does the Insurance value differ from state to state (for example I've a car in Hawaii and there is another car in Illinois with same model, make and same features), does the Insurance vary for both? Yes, quotes will vary based on where you live for various reasons, (propensity for accidents, value of cars, etc.), and state laws regarding required car insurance can vary. How is the insurance quote calculated? It's likely a proprietary formula that the insurance company will not disclose. If they did, they could be giving away a competitive advantage. However, like all insurance, the goal is to determine the probability of the insured having an accident, and the projected cost of such an accident. That will be based on actuarial tables for each of the risk factors you mention." }, { "docid": "293412", "title": "", "text": "I've considered just calling the out-of-network hospital and asking them to reduce the charges. Ideally they would send my health insurance provider a smaller bill which I could just pay. However I want to be careful about how I proceed. Yes, that's what you should be doing. They might give you a discount, but even if not - they will definitely be willing to work out a payment plan for you so that you could pay in installments and not in a lump sum. I have experience with the El Camino group in California, that did just that. It was several hundreds, so they didn't give a discount, but were able to work out an installment plan for several months without much hassle. That is something to do before you get to lawyers. I'm not sure I know how the lawyer could be useful to you, other than claiming bankruptcy or waiting for them to turn to collections and then fight those. You should also work with your insurance. How much is your deductible? If your deductible is so high that it exceeds the several thousands bill you got - do you have a HSA? FSA? These will allow you paying the bill with pre-tax money, saving quite a lot (depending on your brackets and how much you put there). I would expect the insurance to bill you for the deductible, and cover all the rest. Is it not what is happening?" }, { "docid": "79903", "title": "", "text": "Unanticipated unemployment is usually the triggering factor for drawing on an emergency fund. Ask yourself: what happens if I lose my job tomorrow? Or my spouse becomes unemployed? What happens if I become disabled and can't work for x amount of time? Sure, you can discount your chances of needing such a fund if you have free health care. But having health insurance doesn't change the fact that an emergency fund is a good idea. There are many ways to go broke!" }, { "docid": "418910", "title": "", "text": ">Starting in 2014, the hiring of a company's 50th worker will cost an extra $40,000 per year. Assuming 19 employees *do not have qualifying coverage* (FTA the first 30 are exempt) >This is one reason the unemployment rate is still above 8 percent three years after the end of the recession. Employers plan ahead. Reaching. >$750 a year, is too small relative to the cost of health care coverage -- about $5,500 a year. Because insurance companies are required to take all applicants, healthy people (especially the young) would be wise to pay the penalty rather than buy the insurance. This makes the pool of insured individuals sicker and more costly, on average, and their premiums will higher. With higher premiums, more people will choose to pay the penalty, and a downward spiral will unfold. An assumption that no healthy person wants to pay for insurance means the whole system will fall apart? A lot of broad assumptions, although it is an OpEd." }, { "docid": "583909", "title": "", "text": "No, it won't go on the front page because it uses bullshit math and reveals a deep lack of understanding of how the numbers are calculated. The unemployment rate is calculated from the Current Population Survey as well as the participation rate. To add to the unemployment rate of one month/survey by calculating the participation rate from a different month/survey is very problematic. If you are looking to include those who have stopped looking for a job because of poor job prospects, you could try using the U5 unemployment estimate. The U5 number includes those who have recently stopped looking for a job. It only goes back a year for the respondents, but at least it is comparable because it is in the same month/survey. The author also states that the U6 unemployment estimate should be 20% without explaining why it can be calculated like that. I don't think the participation rate can be used to suggest that the U6 is higher than it is when the U6 already takes into account a large percent of those that have stopped looking for economic reasons." }, { "docid": "471755", "title": "", "text": "\"You can pontificate about how life is so hard for her because shit costs money and you're right, she can't support herself and kids. However, that doesn't change the basic economic reality that working full time at Popeyes simply DOES NOT provide enough value to her employer and there are two many people with her very low skill set that she cannot command a higher wage. No amount of government programs will change that. Robbing the tax payers through welfare, killing businesses and destroying jobs by imposing a wage that simply is infeasible is counter productive, unsustainable, and simply misguided. Don't believe me? Ask the University of Washington who have the numbers on Seattle's ever escalating minimum wage and the effect on [jobs.] (http://www.zerohedge.com/news/2017-06-26/shocking-study-finds-seattle-min-wage-hikes-has-cost-works-14mm-hours-year-6700-jobs) This is, of course, assuming you care that people are being put out of work so a few can be paid a \"\"living wage\"\". Welfare is an endless tap of free money, [right?] (http://www.usdebtclock.org) The irony of your oh so well cited comment is that you didn't apply it to your own proposed solution of a minimum wage increase. [Here's](http://www.heritage.org/jobs-and-labor/report/higher-fast-food-wages-higher-fast-food-prices) a great analysis of effect of this change on consumer prices, how it affects the capital side of the equation of whether to operate a restaurant at all, and how a higher minimum wage impairs the creation of entry level jobs. Succinctly, minimum wage jobs were never meant to be able to support a family of three, no matter how much you wish it could. By creating artificially higher wages you'll get higher unemployment, more substitution of labor with more capital intensive solutions (ordering kiosks, etc), and higher taxes and consumer prices. Edit: Link B.S. Edit 2: **trigger warning** Also, it's a lot easier to raise kids with two working parents, that's just math for you. Talk about a bad personal choice that no one has touched on. Poor kids :(\"" }, { "docid": "59687", "title": "", "text": "\"For the person being hired this is a tricky situation. Specially with the new laws. There is no real magic number that can be applied as a lot will depend on what benefits you want, and what is actually available. This will really shift the spectrum quite a bit. Under the affordibal care act, everyone has to have insurance or pay a ?fine? (were really not sure what to call this yet) but there are two provisions that really mess with the numbers you look at as an employee. First, the cost of heath care has skyrocketed. So the same benefits that you had 5 years ago now cost maybe 10-15 times as much as they used to. This gets swept under the rug a bit because the \"\"main costs\"\" of insurance has only increased a tiny amount. What this actually comes down to is does your new ACA approved heath plan cover exactly the benefits you need, or does it cut corners. Sorry this is complicated, and I don't mean it to come off as a speech against the ACA so I will give an example. My wife has RA, she really has it under control with the help of her RA doctor. This is not something she ever wants to change. Because she has had RA from the age of 15, and because it's degenerative, she doesn't want to spend 5 years working with a new doctor to get to the same place she is with her current doctor. In addition, the main drugs she takes for RA are not covered under any ACA plan, nor are the \"\"substitutions\"\" that her doctor makes (we are trying to have kids so she has to be off the main meds, and a couple of the things this doctor has tried has been meds that reduce inflammation, are pregnancy safe, but are not for the treatment of RA) You now have to take into effect rather the cost of health insurance + the cost of the things now not covered by the heath insurance + the out of pocket expenses is worth the insurance. Second the ACA has set up provisions to straight up trick those people that have lower income and are not paying close attention. When shopping for insurance, they get quotes like \"\"$50 a month\"\" or \"\"$100 a month\"\". The truth is that the remainder of the actual cost is deducted from their tax returns. This takes consideration, because if you thing your paying $50 a month for insurance but your really paying $650 then you need to make sure your doing your math right. Finally, you need to understand how messed up things are right now in the US with heath care. Largely this goes unreported. I'm not really sure why. But in order to do this I will have to give examples. For my wife to see a specialist (her RA doctor) the co-pay is $75. So she goes to the doctor, he charges her $75 and bills the insurance $200. The insurance pays the doctor $50. With out insurance, the visit costs $50. At first you want to blame the doctor for cheating the system, but the doctor has to pay for hours of labor to get the $50 back from the insurance company. From the doctors perspective it's cheaper to take the $50 then it is to charge the insurance company. And by charging the insurance company he has no control over the cost of the co pay. He essentially has to charge more to make the same money and the patient gets the shaft in the process. Another example, I got strep throat last year. I went to the walk in clinic, paid $75, saw the doctor got my Z-Pack for $15, went home crawled in bed and got better. My wife (who still had separate insurance from before the marriage) got strep throat (imagen that) went to the same clinic, they charged her $200 for the visit ($50 co-pay) and $250 for the z-pack ($3 co-pay). The insurance paid the clinic $90 for the visit and $3 for the drugs. Again the patient is left out in this scenario. In this case it worked better for my wife, unless you account for the fact that to get that coverage she had to pay $650/month. My point is that when comparing costs of heathcare with insurance, and without out insurance, its often times much cheaper for the practices to have you self pay then it is for them to go through the loops of trying to insurance to make them whole. This creates two rates. Self pay rates and Insured rates. When your trying to figure out the cost of not having insurance then you need to use the self pay rates. These can be vastly different. So as an employee you need to figure out your cost of heath care with insurance, and your cost of heath care without insurance. Then user those numbers when your trying to negotiate a salary. The problem is that there is no magic number to use for this because the cost will very a lot. For us, it was cheaper to not have insurance. Even with a pre-existing condition that takes constant attention, it's just better if we set aside $500 a month then it is to try to pay $750 a month. That might not hold true for everyone. For some people or conditions it may be better to pay the $750 then to try to handle it themselves. So for my negotiations I would go with x+$6,000 without insurance or x+$4,500 with insurance. Now as an employer it's a lot simpler. Usually you have a \"\"group plan\"\" that offers you a pretty straight $x per year per person or $y per year per family. So you can offer exactly that. Salary - $x or Salary - $y. AS a starting point. However this is where negotiations start. If your offering me $50,500 and insurance, I would rather just have $57,000 and no insurance. Of course your real cost is only $55,000 cause you don't care about my heath care costs only about insurance costs. So you try to negotiate down towards $55,000 and no insurance. But that's not good enough for me. So I either go else where and you loose talent, or I accept $50,500 and insurance (or somewhere in between).\"" }, { "docid": "192495", "title": "", "text": "\"Yes, and the math that tells you when is called the Kelly Criterion. The Kelly Criterion is on its face about how much you should bet on a positive-sum game. Imagine you have a game where you flip a coin, and if heads you are given 3 times your bet, and if tails you lose your bet. Naively you'd think \"\"great, I should play, and bet every dollar I have!\"\" -- after all, it has a 50% average return on investment. You get back on average 1.5$ for every dollar you bet, so every dollar you don't bet is a 0.5$ loss. But if you do this and you play every day for 10 years, you'll almost always end up bankrupt. Funny that. On the other hand, if you bet nothing, you are losing out on a great investment. So under certain assumptions, you neither want to bet everything, nor do you want to bet nothing (assuming you can repeat the bet almost indefinitely). The question then becomes, what percentage of your bankroll should you bet? Kelly Criterion answers this question. The typical Kelly Criterion case is where we are making a bet with positive returns, not an insurance against loss; but with a bit of mathematical trickery, we can use it to determine how much you should spend on insuring against loss. An \"\"easy\"\" way to undertand the Kelly Criterion is that you want to maximize the logarithm of your worth in a given period. Such a maximization results in the largest long-term value in some sense. Let us give it a try in an insurance case. Suppose you have a 1 million dollar asset. It has a 1% chance per year of being destroyed by some random event (flood, fire, taxes, pitchforks). You can buy insurance against this for 2% of its value per year. It even covers pitchforks. On its face this looks like a bad deal. Your expected loss is only 1%, but the cost to hide the loss is 2%? If this is your only asset, then the loss makes your net worth 0. The log of zero is negative infinity. Under Kelly, any insurance (no matter how inefficient) is worth it. This is a bit of an extreme case, and we'll cover why it doesn't apply even when it seems like it does elsewhere. Now suppose you have 1 million dollars in other assets. In the insured case, we always end the year with 1.98 million dollars, regardless of if the disaster happens. In the non-insured case, 99% of the time we have 2 million dollars, and 1% of the time we have 1 million dollars. We want to maximize the expected log value of our worth. We have log(2 million - 20,000) (the insured case) vs 1% * log(1 million) + 99% * log(2 million). Or 13.7953 vs 14.49. The Kelly Criterion says insurance is worth it; note that you could \"\"afford\"\" to replace your home, but because it makes up so much of your net worth, Kelly says the \"\"hit it too painful\"\" and you should just pay for insurance. Now suppose you are worth 1 billion. We have log(1 billion - 20k) on the insured side, and 1%*log(999 million) + 99% * log(1 billion) on the uninsured side. The logs of each side are 21.42 vs 20.72. (Note that the base of the logarithm doesn't matter; so long as you use the same base on each side). According to Kelly, we have found a case where insurance isn't worth it. The Kelly Criterion roughly tells you \"\"if I took this bet every (period of time), would I be on average richer after (many repeats of this bet) than if I didn't take this bet?\"\" When the answer is \"\"no\"\", it implies self-insurance is more efficient than using external insurance. The answer is going to be sensitive to the profit margin of the insurance product you are buying, and the size of the asset relative to your total wealth. Now, the Kelly Criterion can easily be misapplied. Being worth financially zero in current assets can easily ignore non-financial assets (like your ability to work, or friends, or whatever). And it presumes repeat to infinity, and people tend not to live that long. But it is a good starting spot. Note that the option of bankruptcy can easily make insurance not \"\"worth it\"\" for people far poorer; this is one of the reasons why banks insist you have insurance on your proprety. You can use Kelly to calculate how much insurance you should purchase at a given profit margin for the insurance company given your net worth and the risk involved. This can be used in Finance to work out how much you should hedge your bets in an investment as well; in effect, it quantifies how having money makes it easier to make money.\"" }, { "docid": "422156", "title": "", "text": "My Prediction: Expect to see a lot more automation of check out stands for big brand retail stores as employees are let go to save on health insurance costs and many brick&mortar stores will accelerate their extinction pace. The era of big online stores with huge warehouses fulfillment centers (again more automation will make its way here as well) will be the new and dominate trend when high volume b&m do not meet the ability to compensate this added tax burden placed onto them by Obamcare and thus unemployment will again surge. The big winner though in all of this will be health insurance companies who have figuratively been given a license to print money by this mandate." }, { "docid": "599485", "title": "", "text": "\"There are two types of insurance, which causes some confusion. Social Security Disability Insurance (which you indicate you have) is insurance you can receive benefit from if you earn enough \"\"work credits\"\" (payroll taxes) prior to your disability onset. It is not a needs-based program. Supplemental Security Income is a need-based program which does not consider your work history. To qualify for this, your total assets need to be lower than some threshold and your family income also below some threshold. If you inherit a home, or money, I doubt this would jeopardize your SSDI qualification, since your qualification was based on a disabling condition and work history. If you inherit an income property, which you manage (i.e. you become a landlord), this may jeopardize your claim that you are unable to work. Even if you are not making an \"\"income\"\" as the landlord, but the work your are performing is deemed to have some \"\"value\"\" this too could jeopardize your claim. All of this can be very complicated, and there are some excellent references on the web including SSA website, and some other related websites. Finally, if you become able to work while on SSDI, your benefit may/will end depending on the level of work you are able to perform. But just because you are able to work again does not mean you need to repay past benefits received (assuming your condition has not been falsified). Your local social security office, or the social security main office both offer telephone support and can also answer questions regarding your concern. Here are a couple relevant links:\"" } ]

[ { "docid": "55666", "title": "", "text": "I don't think there's much you can do. Losses from the sale of personal-use automobiles (used for pleasure, commuting, etc) are not deductible as capital losses. See IRS Tax Topic 409, end of the first paragraph. The expenses you incurred in owning and operating the car (insurance, fuel, maintenance, service plans, etc) are not deductible either. If you used it partly for business, then some of your expenses might be deductible; see IRS Tax Topic 510. This includes depreciation (decline in value), but only according to a standard schedule; you don't generally just get to deduct the difference between your buying and selling price. Also, you'd need to have records to verify your business use. But anyway, these deductions would apply (or not) regardless of whether you sell the car. You don't get your sales tax refunded when you resell the vehicle. That's why it's a sales tax, not a value-added tax. Note, however, that if you do sell it, the sales tax on this new transaction will be the buyer's responsibility, not yours. You do have the option on your federal income tax return to deduct the state sales tax you paid when you bought the car; in fact, you can deduct all the sales taxes you paid in that year. (If you have already filed your taxes for that year, you can go back and amend them.) However, this takes the place of your state income tax deduction for the year; you can't deduct both. See Tax Topic 503. So this is only useful if your sales taxes for that year exceeded the state income tax you paid in that year. Also, note that state taxes are not deductible on your state income tax return. Again, this deduction applies whether you sell the car or not." } ]

[ { "docid": "100128", "title": "", "text": "Here's an excerpt from the Charles Schwab website which I think will help evaluate your position: The simple answer to your question is no, the value of a gift of stock for gift tax liability is NOT the donor's cost basis, but rather the fair market value of the stock at the time the gift is given. So let's say you purchased 100 shares of XYZ stock at $50 a share. Your cost basis is $5,000. Now the stock is $80 a share and you give it as a gift. The value of your gift for gift tax purposes is $8,000. In 2015, you can give up to $14,000 to an unlimited number of individuals each year without paying a gift tax or even reporting the gifts. If you give over that amount to any individual, however, you must report the gift on your tax return, but you don't have to pay taxes until you give away more than the current lifetime limit of $5,430,000—for the amount above and beyond $14,000 per person per year. So in the example above, there would be no gift tax liability. However, if the stock happened to be $150 a share, the value of the gift would be $15,000. You'd then have to report it and $1,000 would be applied toward your $5,430,000 lifetime exclusion. You will need to pay a gift tax on the current value of the stock. I'm not familiar with the tax laws in India, but if your brother was in the US, he wouldn't pay taxes on that gift until he sells the stock. The recipient doesn’t have to worry about gift taxes. It's when the recipient decides to sell the stock that the issue of valuation comes up—for income taxes. And this is where things can get a bit more complicated. In general, when valuing a gift of stock for capital gains tax liability, it's the donor's cost basis and holding period that rules. As an example, let's say you receive a gift of stock from your grandfather. He bought it for $10 a share and it's worth $15 a share on the day you receive it. If you then sell the stock, whether for a gain or a loss, your cost basis will be the same as your grandfather’s: $10 per share. Sell it at $25 and you'll pay tax (at the short- or long-term rate, depending on how long he owned the stock) on a gain of $15 a share; sell it at $8 and your capital loss will be $2 a share. Ultimately, with a gift this large that also crosses international borders, you really should hire a professional who is experienced with these types of transactions. Their fees/commission will be completely offset by the savings in risk and paperwork. http://www.schwab.com/public/schwab/nn/articles/How-Do-You-Value-a-Gift-of-Stock-It-Depends-on-Whether-You-re-the-Giver-or-the-Receiver" }, { "docid": "31221", "title": "", "text": "That's tricky, actually. First, as the section 1015 that you've referred to in your other question says - you take the lowest of the fair market value or the actual donor basis. Why is it important? Consider these examples: So, if the relative bought you a brand new car and you're the first title holder (i.e.: the relative paid, but the car was registered directly to you) - you can argue that the basis is the actual money paid. In essence you got a money gift that you used to purchase the car. If however the relative bought the car, took the title, and then drove it 5 miles to your house and signed the title over to you - the IRS can argue that the car basis is the FMV, which is lower because it is now a used car that you got. You're the second owner. That may be a significant difference, just by driving off the lot, the car can lose 10-15% of its value. If you got a car that's used, and the donor gives it to you - your basis is the fair market value (unless its higher than the donor's basis - in which case you get the donor's basis). You always get the lowest basis for losses (and depreciation is akin to a loss). Now consider the situation when your relative is a business owner and used the car for business. He didn't take the depreciation, but he was entitled to. IRS can argue that the fact that he didn't take is irrelevant and reduce the donor's basis by the allowable depreciation. That may bring your loss basis to below the FMV. I suggest you take it to a tax professional licensed in your state who will check all the facts and circumstances of your situation. Your relative might be slapped with a gift tax as well, if the car FMV is above certain amount (currently the exemption is $14000)." }, { "docid": "224800", "title": "", "text": "\"> Without welfare to keep it alive Tesla would've gone under, they had a few near death experiences. The near death experience was saved by Mercedes, not the government. Any other prior near death experiences were saved by private financing rounds from various VC firms and Musk himself. The government loan accelerated release and production ramp of the Model S, it did not save the company. By the way, Nissan took a loan almost 10x the size of Tesla's, I believe Ford took almost as much as well. I do not blame either, nor do I blame the government, because the point of these loans is to improve advanced powertrains to get us off of gasoline, which is a plague on the world, and thus these were a fantastic way to spend a small amount of our resources to make a big result - and produce a profit for the country at the same time. >On top of that, if you're wealthy enough to buy a model S in California, you qualify for nearly $10,000 in state and federal subsidies. The government is all up in there making it happen. The Model S has routinely destroyed every competitor in just about every way, has won top marks in nearly every review and just about every award it's eligible for, has received the best customer satisfaction numbers recorded, and has outsold the competition despite being new and constrained in many ways and even blocked from selling in multiple states. And is selling at a price point where $10,000 is nice, but hardly breaks the bank, especially considering the amount of people who buy the upgraded battery pack, which costs them $10,000, even though they don't need it. So you really think a car which is so much better than anything else anywhere near its price point is going to sell solely because of the tax credit? If so, I suspect you haven't driven one, because if you had, you would know that it sells because of the driving experience, not the tax credit. Rich people aren't sitting down with their friends' accountants to tell them to buy one, they're giving their friends test drives and blowing their freaking minds. Further, the oil industry has accepted subsidies for over 100 years, as have many other automakers, and as referenced before there are some states where the government blocks Tesla from selling cars. So I suppose \"\"the gubmint is all up in there making it happen\"\" for everyone else as well, aren't they?\"" }, { "docid": "536610", "title": "", "text": "\"The wash sale rule only applies when the sale in question is at a loss. So the rule does not apply at all to your cases 3, 4, 7, 8, 11, 12, 15, and 16, which all start with a gain. You get a capital gain at the first sale and then a separately computed gain / loss at the second sale, depending on the case, BUT any gain or loss in the IRA is not a taxable event due to the usual tax-advantaged rules for the IRA. The wash sale does not apply to \"\"first\"\" sales in your IRA because there is no taxable gain or loss in that case. That means that you wouldn't be seeking a deduction anyway, and there is nothing to get rolled into the repurchase. This means that the rule does not apply to 1-8. For 5-8, where the second sale is in your brokerage account, you have a \"\"usual\"\" capital gain / loss as if the sale in the IRA didn't happen. (For 1-4, again, the second sale is in the IRA, so that sale is not taxable.) What's left are 9-10 (Brokerage -> IRA) and 13-14 (Brokerage -> Brokerage). The easier two are 13-14. In this case, you cannot take a capital loss deduction for the first sale at a loss. The loss gets added to the basis of the repurchase instead. When you ultimately close the position with the second sale, then you compute your gain or loss based on the modified basis. Note that this means you need to be careful about what you mean by \"\"gain\"\" or \"\"loss\"\" at the second sale, because you need to be careful about when you account for the basis adjustment due to the wash sale. Example 1: All buys and sells are in your brokerage account. You buy initially at $10 and sell at $8, creating a $2 loss. But you buy again within the wash sale window at $9 and sell that at $12. You get no deduction after the first sale because it's wash. You have a $1 capital gain at the second sale because your basis is $11 = $9 + $2 due to the $2 basis adjustment from wash sale. Example 2: Same as Example 1, except that final sale is at $8 instead of at $12. In this case you appear to have taken a $2 loss on the first buy-sell and another $1 loss on the second buy-sell. For taxes however, you cannot claim the loss at the first sale due to the wash. At the second sale, your basis is still $11 (as in Example 1), so your overall capital loss is the $3 dollars that you might expect, computed as the $8 final sale price minus the $11 (wash-adjusted) basis. Now for 9-10 (Brokerage->IRA), things are a little more complicated. In the IRA, you don't worry about the basis of individual stocks that you hold because of the way that tax advantages of those accounts work. You do need to worry about the basis of the IRA account as a whole, however, in some cases. The most common case would be if you have non-deductable contributions to your traditional IRA. When you eventually withdraw, you don't pay tax on any distributions that are attributable to those nondeductible contributions (because you already paid tax on that part). There are other cases where basis of your account matters, but that's a whole question in itself - It's enough for now to understand 1. Basis in your IRA as a whole is a well-defined concept with tax implications, and 2. Basis in individual holdings within your account don't matter. So with the brokerage-IRA wash sale, there are two questions: 1. Can you take the capital loss on the brokerage side? 2. If no because of the wash sale, does this increase the basis of your IRA account (as a whole)? The answer to both is \"\"no,\"\" although the reason is not obvious. The IRS actually put out a Special Bulletin to answer the question specifically because it was unclear in the law. Bottom line for 9-10 is that you apparently are losing your tax deduction completely in that case. In addition, if you were counting on an increase in the basis of your IRA to avoid early distribution penalties, you don't get that either, which will result in yet more tax if you actually take the early distribution. In addition to the Special Bulletin noted above, Publication 550, which talks about wash sale rules for individuals, may also help some.\"" }, { "docid": "265013", "title": "", "text": "\"On top of the given answers, the type of referral will also factor in. When you're up for renewal and go to a comparison site (in the UK: CompareTheMarket, MoneySupermarket, Confused, GoCompare, ... ) and struggle accurately through all their lists of questions, you see that some of the data differs (e.g., not all the same jobs can be entered; if you have had an accident, not all ask whose fault it was and/or don't leave the option \"\"not yet resolved\"\" --possibly forcing you to guess which way it will be adjudicated,-- and/or what the total repair cost was). So as these referrers feed slightly different data to roughly the same set of insurance providers, you will get slightly different quotes on the same providers. And expect your own provider to offer a slightly better quote than you'll get in reality for renewing: The referrer's (one-time) cut has to be still taken off, but they count it as a new client so somebody gets a bonus for that --- you they disregard as a captive client and give what boils down to a loyalty penalty. [Case in point: I had an unresolved car accident, resolved months later in my favour. With all honest data including unresolved claim and its cost and putting my 'accident-free years' factor at 0 instead of 7, my old provider quoted about 8% more than the previous year on comparison sites; but my renewal papers quoted me 290% more, upon telephone enquiry the promised to refund the difference if court found in my favour though they refused to give this in writing. So: No thanks!] Then the other set of referrals they get is from you directly going to their website asking for a quote. They know what type of link you've followed (banner, or google result, etc), they may know some info from your browser's cookies (time spent where) or other tracking service, and from your data they may guess how tech-savvy and shop-wise you are, and scale your offer accordingly. [Comparison-site shoppers are lumped together at a relatively high savvy-level, of course!]. Companies breaking down your data and their own in a particular way can find advantages and hence offer you better terms, as said in the main answer (this is like Arbitration in stock exchanges, ensuring a certain amount of sanity: if there's something to exploit, somebody will, and everybody will follow). It may be that they find a certain group of people maybe more accident-prone but cheaper to deal with (more flexible in repair-times, or easy to bully in accepting shared-fault when they weren't at fault), or they want a certain client (for women, for civil servants, for sporty drivers, for homeowners --- often for cross-selling other insurance services). Or they claim to want pensioners because the company can offer them 'a familiar voice' (same account manager always contacting them) while they're easier to bamboozle and less likely to shop around when offered a rubbish deal. Also, 100% straight comparison of competing offers isn't possible as the fine details of the T&Cs (terms & conditions) would differ, as well as various little pinpricks in the claims handling process. And depreciation of a car, and various ways of dealing with it: You insure it for the buying prices, but two years later it's worth about 40% less on paper --- so in case of total loss, replacing like-for-like will cost you still at least 80% of the value for which you've been insuring it while they'll probably offer you the 100-40= 60%. Mostly because instead of your trusted car you have something unknown that may have hidden defects, or been mistreated and about to die. [Case in point: My 3-y-old dealer-bought car's gearbox died just outside the 6month warranty period, notwithstanding its \"\"150-item inspection you can rely on\"\". In the end the national brand agreed to refund the parts (15% of what I paid for the car) but not the labour (a few hours).] And any car model's value differs (in descending order) from its \"\"forecourt price\"\", \"\"private selling price\"\", \"\"part exchange price\"\", and \"\"auction price\"\". Depending on your ompanies may happily insure you for forecourt price (=what you paid to dealer) but then point out that the value of that car is the theoretical P/X value, i.e., the car without anybody's profit, far less than you've been paying for. [Conversely, if you crash it after insuring below market value, they can pay you your stupidly low figure.]\"" }, { "docid": "583666", "title": "", "text": "Wikipedia has a nice definition of financial literacy (emphasis below is mine): [...] refers to an individual's ability to make informed judgments and effective decisions about the use and management of their money. Raising interest in personal finance is now a focus of state-run programs in countries including Australia, Japan, the United States and the UK. [...] As for how you can become financially literate, here are some suggestions: Learn about how basic financial products works: bank accounts, mortgages, credit cards, investment accounts, insurance (home, car, life, disability, medical.) Free printed & online materials should be available from your existing financial service providers to help you with your existing products. In particular, learn about the fees, interest, or other charges you may incur with these products. Becoming fee-aware is a step towards financial literacy, since financially literate people compare costs. Seek out additional information on each type of product from unbiased sources (i.e. sources not trying to sell you something.) Get out of debt and stay out of debt. This may take a while. Focus on your highest-interest loans first. Learn the difference between good debt and bad debt. Learn about compound interest. Once you understand compound interest, you'll understand why being in debt is bad for your financial well-being. If you aren't already saving money for retirement, start now. Investigate whether your employer offers an advantageous matched 401(k) plan (or group RRSP/DC plan for Canadians) or a pension plan. If your employer offers a good plan, sign up. If you get to choose your own investments, keep it simple and favor low-cost balanced index funds until you understand the different types of investments. Read the material provided by the plan sponsor, try online tools provided, and seek out additional information from unbiased sources. If your employer doesn't offer an advantageous retirement plan, open an individual retirement account or IRA (or personal RRSP for Canadians.) If your employer does offer a plan, you can set one of these up to save even more. You could start with access to a family of low-cost mutual funds (examples: Vanguard for Americans, or TD eFunds for Canadians) or earn advanced credit by learning about discount brokers and self-directed accounts. Understand how income taxes and other taxes work. If you have an accountant prepare your taxes, ask questions. If you prepare your taxes yourself, understand what you're doing and don't file blind. Seek help if necessary. There are many good books on how income tax works. Software packages that help you self-file often have online help worth reading – read it. Learn about life insurance, medical insurance, disability insurance, wills, living wills & powers of attorney, and estate planning. Death and illness can derail your family's finances. Learn how these things can help. Seek out and read key books on personal finance topics. e.g. Your Money Or Your Life, Why Smart People Make Big Money Mistakes, The Four Pillars of Investing, The Random Walk Guide to Investing, and many more. Seek out and read good personal finance blogs. There's a wealth of information available for free on the Internet, but do check facts and assumptions. Here are some suggested blogs for American readers and some suggested blogs for Canadian readers. Subscribe to a personal finance periodical and read it. Good ones to start with are Kiplinger's Personal Finance Magazine in the U.S. and MoneySense Magazine in Canada. The business section in your local newspaper may sometimes have personal finance articles worth reading, too. Shameless plug: Ask more questions on this site. The Personal Finance & Money Stack Exchange is here to help you learn about money & finance, so you can make better financial decisions. We're all here to learn and help others learn about money. Keep learning!" }, { "docid": "484149", "title": "", "text": "mhoran answered the headline question, but you asked - Could someone shed some light on and differentiate between a retirement account and alternative savings plans? Retirement accounts can contain nearly anything that one would consider an investment. (yes, there are exception, not the topic for today). So when one says they have an S&P fund or ETF, and some company issued Bonds, etc, these may or may not be held in a retirement account. In the US, when we say 'retirement account,' it means a bit more than just an account earmarked for that goal. It's an account, 401(k), 403(b), IRA, etc, that has a special tax status. Money can go in pre-tax, and be withdrawn at retirement when you are in a lower tax bracket. The Roth flavor of 401(k) or IRA lets you deposit post-tax money, and 'never' pay tax on it again, if withdrawn under specific conditions. In 2013, a single earner pays 25% federal tax on taxable earnings over $36K. But a retiree with exactly $46K in gross income (who then has $10K in standard deduction plus exemption) has a tax of $4950, less than 11% average rate on that withdrawal. This is the effect of the deductions, 10% and 15% brackets. As with your other question, there's a lot to be said about this topic, no one can answer in one post. That said, the second benefit of the retirement account is the mental partitioning. I have retirement money, not to be touched, emergency money used for the broken down car or appliance replacement, and other funds it doesn't feel bad to tap for spending, vacations, etc. Nothing a good spreadsheet can't handle, but a good way to keep things physically separate as well. (I answered as if you are in US, but the answer works if you rename the retirement accounts, eg, Canada has similar tax structure to the US.)" }, { "docid": "387435", "title": "", "text": "\"This is a very disingenuous argument. The tax subsidies for electric cars aren't for Tesla. They are for the development of an electric car industry in the United States, hopefully comprising many different car manufacturers, not just Tesla. It's very convenient to take the tax subsidies for a decade, establish your business, then say \"\"Well, we don't need these anymore so therefore nobody should have them.\"\" It would be a massive institutional hurdle for a competitor to start-up under those circumstances, significantly increasing start-up costs. I'll cede that perhaps the subsidies can be used as advertisements against his company by traditional car companies, but the competitive advantage Tesla would have by reduced competition by ending the subsidies would grossly outweigh that (something Musk conveniently omits). The subsidies should remain in place until there is at least one significant competitor to Tesla in electric car production (and preferably several). It's not about one company. It's about an industry.\"" }, { "docid": "476763", "title": "", "text": "\"When your dream car is not just 200 times your disposable income but in fact 200 times your whole monthly salary, then there is no way for you to afford it right now. Any attempt to finance through a loan would put you into a debt trap you won't ever dig yourself out. And if there are any car dealerships in your country which claim otherwise, run away fast. Jon Oliver from Last Week tonight made a video about business practices of car dealerships in the United States which sell cars on loans to people who can't afford them a while ago. As usual: When a deal seems too good to be true, it generally isn't true at all. After a few months, the victims customers usually end up with no car but lots of outstanding debt they pay off for years. So how do you tell if you can afford a car or not? A new car usually lives for about 10-20 years. So when you want to calculate the monthly cost of owning a new car, divide the price by 120. But that's just the price for buying the vehicle, not for actually driving it. Cars cost additional money each month for gas, repairs, insurance, taxes etc. (these costs depend a lot on your usage pattern and location, so I can not provide you with any numbers for that). If you have less disposable income per month (as in \"\"money you currently have left at the end of each month\"\") than monthly cost of purchase plus expected monthly running costs, you can not afford the car. Possible alternatives:\"" }, { "docid": "97561", "title": "", "text": "For larger items such as cars this is certainly possible; I've donated a car before (in Canada) and got a tax receipt that was probably worth more than I would have got from a dealer for the car. However with donations of this kind there are two obstacles: Two other options for you to consider. Most medium towns have used book shops which you can sell them to. If the used book shops don't want them then your books really aren't worth enough to be worrying about, in which case see option two: give the books to a charity or thrift shop and don't worry about the receipt. Sometimes a nice feeling is the best return you will get." }, { "docid": "86526", "title": "", "text": "i haven't done the precise math to update with the latest call, so you might be right about that. I will do it some week next time. As to the other questions: 1. Every major car company is doing research. There is going to be massive competition. 2. Your last sentence confirms my view that you don't understand the issues. In the real world there is specialization. Some companies design cars, others design batteries. So of course the car companies don't have the good battery tech, because they are not battery companies. The rest of the industry isn't stupid. Battery companies don't try to make cars, and car companies don't make batteries. Musk has jumped into an industry he is not a specialist at. It just so happens I know something about batteries. The simple fact that Musk is talking about Lithium Ion batteries proves that his tech is no good. the ACTUAL BATTERY COMPANIES declined to spend massive capital for a plant to supply TSLA cars. That is why he has to make his own. Committing huge amounts of capital on old technology is a frightful idea. THE ACTUAL BATTERY COMPANIES wouldn't do it. But you think Musk knows more about batteries than the actual battery companies." }, { "docid": "269987", "title": "", "text": "\"As cryptocurrencies are rather new compared to most assets, there hasn't been a lot of specific guidance for a lot of situation, but in 2014 the IRS announced that it published guidance in Notice 2014-21. I'm not aware of further guidance that has been published beyond that, though it wouldn't surprise me if treatments changed over time. In that notice, the answer to the first question describes the general treatment: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. Your specific questions (about what constitutes a \"\"business\"\", and when you're considered to be \"\"selling\"\" the cryptoproperty) are likely to be considered on a case by case basis by the IRS. As the amounts involved here are so small (relatively speaking), my recommendation would be to read through what the IRS has published carefully, make reasonable assumptions about what scenarios that are described are closest to what you're doing, and document doing so clearly as part of your tax preparations. And when in doubt, erring on the side of whichever option incurs more tax is unlikely to be objected to by them. Of course, I'm not a lawyer or tax advisor, I'm a stranger on the Internet, so for \"\"real\"\" advice you should contact somebody qualified. I doubt you'd be faulted too much for not doing so given the amounts involved. You could also attempt contacting a local IRS office or calling them with your specific questions, and they may be able to provide more specific guidance tailored to you, though doing so may not save you from an auditor deciding something differently if they were to examine your return later. There are also phone numbers to contact specific people listed at the end of Notice 2014-21; you could try calling them as well.\"" }, { "docid": "412921", "title": "", "text": "\"If you take the argument that the larger the purchase, the more important the CEO then you look at the two largest purchases consumers make... a house and a car. The house we can eliminate because there aren't any CEOs or companies involved... well, unless you want to look at the banks hosting the mortgages. When it comes to cars I can tell you from my experince that the company or CEO never entered into it. I decided on a make and model based on reliability and price and never once comsidered the company backing it. Turned out to have been a mistake because I bought a Chrysler and most of the local dealers went out of business shortly after I bought it. Car purchases are largely an emotional deal, not an intellectual or financial one. The best brands sell you on what you feel about the brand, not what you know about the brand. Heck, there have been reams and reams written about \"\"selling the experience\"\", which is what companies like BMW, Apple and REI all do incredibly well. I think you'd find that if you replaced \"\"water\"\" with \"\"automobile\"\" you'd get a similar result. Who was the CEO of Chrysler when I bought my car? No freaking clue. At all. I still don't know.\"" }, { "docid": "497764", "title": "", "text": "\"I'll start with a question... Is the 63K before or after taxes? The short answer to your question on how much is reasonable is: \"\"It depends.\"\" It depends on a lot more than where you live, it depends on what you want... do you want to pay down debt? Do you want to save? Are you trying to buy a house? Those will influence how much you \"\"can\"\" (should let yourselves) spend. It also depends on your actual salary... just because I spend 5% of my salary on something doesn't mean bonkers to you if you're making 63,000 and I'm only making 10,000. I also have a lot of respect for you trying to take this on. It's never easy. But I would also recommend you start by trying to see what you can do to track how much you are actually spending. That can be hard, especially if you mostly use cash. Once you're tracking what you spend, I still think you're coming at this a bit backwards though... rather than ask 'how much is reasonable' to spend on those other expenses, you basically need to rule out the bigger items first. This means things like taxes, your housing, food, transportation, and kid-related expenses. (I've got 2.5 kids of my own.) I would guess that you're listing your pre-tax salaries on here... so start first with whatever it costs you to pay taxes. I'm a US citizen living in Berlin, haven't filed UK taxes, but uktaxcalculators.co.uk says that on 63,000 a year with 3 deductions your net earnings will actually be 43,500. That's 3,625/month. Then what does it cost you each month for rent/utilities/etc. to put a house over your family's head? The rule of thumb they taught in my home-economics class was 35-40%, but that's not for Europe... you'll know what it costs. Let's say its 1,450 a month (40%) for rent and utilities and maybe insurance. That leaves 2,175. The next necessity after housing is food. My current food budget is about 5-6% of my after-tax salary. But that may not compare... the cost to feed a family of 3 is a fairly fixed number, and our salaries aren't the same. As I said, I am a US expat living in Berlin, so I looked at this cost of living calculator, and it looks like groceries are about 7-10% higher there around Cardiff than here in Germany. Still, I spend about 120 € per week on food. That has a fair margin in it for splurging on ice cream and a couple brewskies. It feeds me (I'm almost 2m and about 100 kilos) and my family of four. Let's say you spend 100£ a week on groceries. For budgeting, that's 433£ a month. (52 weeks / 12 months == 4.333 weeks/month) But let's call it 500£. That leaves 1,675. From here, you'll have to figure out the details of where your own money is going--that's why I said you should really start tracking your expenses somehow... even just for a short time. But for the purposes of completing the answers to your questions, the next step is to look at saving before you try spending anything else. A nice target is to aim for 10% of your after-tax pay going into a savings account... this is apart from any other investments. Let's say you do that, you'll be putting away 363£ per month. That leaves 1,300£. As far as other expenses... you need some money for transport. You haven't mentioned car(s) but let's say you're spending another 500£ there. That would be about enough to cover one with the petrol you need to get around town. That leaves 800£ As far as a clothing budget and entertainment, I usually match my grocery budget with what I call \"\"mad money\"\". That's basically money that goes towards other stuff that I would love to categorize, but that my wife gets annoyed with my efforts to drill into on a regular basis. That's another 500£, which leaves 300£. You mentioned debts... assuming that's a credit card at around 20% interest, you probably pay 133£ a month just in interest... (20% = 0.20 / 12 = 0.01667 x 8,000 = 133) plus some nominal payment towards principal. So let's call it 175£. That leaves you with 125£ of wiggle room, assuming I have even caught all of your expenses. And depending on how they're timed, you are probably feeling a serious squeeze in between paychecks. I recognize that you're asking specific questions, but I think that just based on the questions you need a bit more careful backing into the budget. And you REALLY need to track what you're spending for the time being, until you can say... right, we usually spend about this much on X... how can we cut it out? From there the basics of getting your financial house in order are splattered across the interwebs. Make a budget... stick to it... pay down debts... save. Develop goals and mini incentives/rewards as a way to make sure your change your psyche about following a budget.\"" }, { "docid": "324210", "title": "", "text": "This question is about PROPERTY acquired before becoming a resident of the US. If you bought property before you were a resident, and sold it after you were a resident, then you pay capital gains tax on the whole thing. Just see if it qualifies for long term capital gains tax treatment, because it is a substantially lower tax rate. You either have a tax event or you don't, and there's nothing wrong with an audit to prove that, so don't worry too much about it (unless you have a legitimate reason to be worried). Simply having what YOU perceive as a lot of money, doesn't make the possible lack of taxes more or less serious. If he has things that have declined in value, he can sell them at a loss this year and buy identical assets immediately. This is called tax harvesting and creates a loss that can offset capital gains tax." }, { "docid": "218695", "title": "", "text": "RSU are taxed when vested, based on their value at that point, as salary. If you don't sell to cover, you need to pay the taxes, if you sell to cover - you sell the portion that is worth the taxes (brokers do that automatically, and remit the taxes on your behalf). Once paid your taxes, it becomes a regular stock position - short term gains if you sell within a year after vesting, long term if you wait for more than a year. The consideration whether to wait or sell is as with any other investment, them being previously restricted has no meaning. You calculate the gain for each position, so the fact that you have more than one position is not a problem. The RSU income and the taxes paid will appear on your W2, so when the broker reports proceeds, you can show the basis and thus calculate the gain. See this question for some useful answers on how to report the RSU sale on your taxes." }, { "docid": "51771", "title": "", "text": "My mother worked for one of the major American car rental companies. She talked about this topic with me and my answer will summarize the talk. Does the fact that they sell the car mean during this time suggest that they know the car's cost of further maintenance or other costs will be higher? Or is there another reason they sell at this time which, has a calculated advantage to them, but which is less than idea statistically for me, the purchaser? There is much more to the price equation. A premium rental car company (one that only rents fairly new, nice cars) has a certain image to maintain to protect their perceived value. A new-ist car also, besides the point of the image of the general company, commands a better rental price. Many Web sites and articles warn against buying former rental cars, because people renting these cars often mistreat them. This is a bad argument you've read. If former rental cars are in bad shape, the price will reflect that. If they are priced the same for the same miles ridden, they have equivalent wear and tear. In other words, the relative price of the car determines whether rental cars are more heavily worn not random people's opinions on the internet. People on the internet are mostly wrong. Irony intended. From the single company I have as reference, I also don't see that as relevant. There are company and governmental regulations to keep maintenance up. I clean my car once a year. Change the oil twice. Replace my wipers every eighteen months. And so forth. The maintenance cycles required for rental cars may (and this is just speculation) negate the gradual extra degradation that drivers may have on rental cars." }, { "docid": "40257", "title": "", "text": "\"The government thought of that a long time ago, and has any loophole there plugged. Like if you set up a company to buy a car and then allow you to use it ... You can use the car for company business, like driving to a customer's office to make a sales call or delivery, and the cost of the car is then tax deductible. But the company must either prohibit personal use of the car, or keep a log of personal versus business use and the personal use becomes taxable income to you. So at best you'd get to deduct an expense here and then you'd have to add it back there for a net change in taxable income of zero. In general the IRS is very careful about personal use of business property and makes it tough to get away with a free ride. I'm sure there are people who lie about it and get away with it because they're never audited, but even if that causes you no ethical qualms, it's very risky. I don't doubt that there are people with very smart lawyers who have found loopholes in the rules. But it's not as simple as, \"\"I call myself a business and now all my personal expenses become tax deductible business expenses.\"\" If you could do that, everybody would do it and no one would pay taxes. Which might be a good thing, but the IRS doesn't see it that way.\"" }, { "docid": "366560", "title": "", "text": "Your question is missing too much to be answered directly. Instead - here are some points to consider. Short term gains taxed at your marginal rates, whereas long term gains have preferable capital gains rates (up to 20% tax rate, instead of your marginal rate). So if you're selling at gain, you might want to consider to sell FIFO and pay lower capital gains tax rate instead of the short term marginal rate. If you're selling at loss and have other short term gains, you would probably be better selling LIFO, so that the loss could offset other short term gains that you might have. If you're selling at loss and don't have short term gains to offset, you can still offset your long term gains with short term losses, but the tax benefit will be lower. In this case - FIFO might be a better choice again. If you're selling at loss, beware of the wash sale rules, as you might not be able to deduct the loss if you buy/sell within too short a window." } ]

[ { "docid": "384532", "title": "", "text": "For your girlfriend (congrats to you both on the coming new baby!), full-time mothers often become work-at-home moms using skills that they may have utilized in the outside-the-home workforce before they made the decision to stay home. Etsy can be a place where some do this, but there are many articles out there pointing out that it also doesn't work for many people. I tried to earn some side money there and didn't make a dime. For those with a niche product, though, it can really work. A book on working at home as a mother (from a Christian perspective with specifically religious overtones, so not the right book for someone who would not appreciate that aspect) is Hired @ Home. There are secular resources, such as the website Work From Home. From everything I've ever heard in researching the topic of becoming a WAHM (work at home mother), it's a challenging but rewarding lifestyle. Note that according to one WAHM I know, only contract work is reliable enough to be depended on for family obligations (this is true of any part time work). Freelancing will have so many ups and downs that you can't bank on it to, say, pay the mortgage unless you really get going. Ramit Sethi of I Will Teach You To Be Rich focuses a lot on Earning More Money with ideas that might benefit both of you. His angle is that of working on top of an existing job, so it may specifically help you think of how to take your programming skills (or a hobby you have besides programming) and translate them into a career." } ]

[ { "docid": "449745", "title": "", "text": "Unfortunately, in this market environment your goal is not very realistic. At the moment real interest rates are negative (and have been for some time). This means if you invest in something that will pay out for sure, you can expect to earn less than you lose through inflation. In other words, if you save your $50K, when you withdraw it in a few years you will be able to buy less with it then than you can now. You can invest in risky securities like stocks or mutual funds. These assets can easily generate 10% per year, but they can (and do) also generate negative returns. This means you can and likely will lose money after investing in them. There's an even better chance that you will make money, but that varies year by year. If you invest in something that expects to make 10% per year (meaning it makes that much on average), it will be extremely risky and many years it will lose money, perhaps a lot of it. That's the way risk is. Are you comfortable taking on large amounts of risk (good chances of losing a lot of your money)? You could make some kind of real investment. $50K is a little small to buy real estate, but you may be able to find something like real estate that can generate income, especially if you use it as a down payment to borrow from the bank. There is risk in being a landlord as well, of course, and a lot of work. But real investments like that are a reasonable alternative to financial markets for some people. Another possibility is to just keep it in your bank account or something else with no risk and take $5000 out per year. It will only last you 10 years that way, but if you are not too young, that will be a significant portion of your life. If you are young, you can work and add to it. Unfortunately, financial markets don't magically make people rich. If you make a lot of money in the market, it's because you took a risk and got lucky. If you make a comfortable amount with no risk, it means you invested in a market environment very different from what we see today. --------- EDIT ------------ To get an idea of what risk free investments (after inflation) earn per year at various horizons see this table at the treasury. At the time of this writing you would have to invest in a security with maturity almost 10 years in order to break even with inflation. Beating it by 10% or even 3% per year with minimal risk is a pipe dream." }, { "docid": "83538", "title": "", "text": "\"It could be simple as far as who gets what accounts after the initial assignments go. So, for this example let's look at: Employee A - 5 accounts worth 15 million *FLAGGED FOR FULL* Employee B - 1 account worth 75 million Employee C - 3 accounts worth 50 million Employees have the ability to decide if they do not want anymore accounts, or if they can take on more. That's pretty much what happens now. \"\"Hey can you handle one more account?\"\" **\"\"Actually, my accounts are pretty chaotic right now and look that way for the foreseeable future. Can I pass on this one?\"\"** So, when a new account comes available if I've flagged myself as full I simply don't participate in what would be a random handing out of the Alpha Account. The only problem I could see is if employees are stretching themselves out a bit too much for extra money, and not necessarily because they can rightfully handle the workload. Now they're just not flagging themselves because they want more money, but that sounds like a problem that can be easily handled by looking at their performance. Can you handle the load? No. Then I'm flagging you. Again, this is what happens now. If some people volunteered for more Alpha Accounts they'd be told no. There have been times now when a support has too many accounts and they pull it away and give to someone else. As far as losing money based on accounts, there could simply be a baseline salary. From baseline X apply the modifiers for the account values, quantities, and years worked there, but if you were to lose all but 1 account, all to no fault of you, the support, you'd be at the baseline X salary. Right now if that happened, they'd lay you off and hand your accounts to someone else. So, what's worse is how I see it. I don't disagree with the office politics, innovation being kept to the support personnel and not shared, and I could see toxicity, but I only see it if the numbers of employees don't decrease which they inevitably would. Turnover I think is key in the beginning. The crew would be dwindled down to half the numbers, and the requirements for the position should inevitably increase thus cultivating an environment that's no more toxic than an internal sales department who work side by side, for commission.\"" }, { "docid": "174308", "title": "", "text": "\"I'll start by focussing on the numbers. I highly recommend you get comfortable with spreadsheets to do these calculations on your own. I assume a $200K loan, the mortgage for a $250K house. Scale this up or down as appropriate. For the rate, I used the current US average for the 30 and 15 year fixed loans. You can see 2 things. First, even with that lower rate to go 15 years, the payment required is 51% higher than with the 30. I'll get back to that. Second, to pay the 30 at 15 years, you'd need an extra $73. Because now you are paying at a 15 year pace, but with a 30 year rate. This is $876/yr to keep that flexibility. These are the numbers. There are 2 camps in viewing the longer term debt. There are those who view debt as evil, the $900/mo payment would keep them up at night until it's gone, and they would prefer to have zero debt regardless of the lifestyle choices they'd need to make or the alternative uses of that money. To them, it's not your house as long as you have a mortgage. (But they're ok with the local tax assessor having a statutory lien and his hand out every quarter.) The flip side are those who will say this is the cheapest money you'll ever see, and you should have as large a mortgage as you can, for as long as you can. Treat the interest like rent, and invest your money. My own view is more in the middle. Look at your situation. I'd prioritize In my opinion, it makes little sense to focus on the mortgage unless and until the first 5 items above are in place. The extra $459 to go to 15? If it's not stealing from those other items or making your cash flow tight, go for it. Keep one subtle point in mind, risk is like matter and energy, it's not created or destroyed but just moved around. Those who offer the cliche \"\"debt creates risk\"\" are correct, but the risk is not yours, it's the lender's. Looking at your own finances, liquidity is important. You can take the 15 year mortgage, and 10 years in, lose your job. The bank still wants its payments every month. Even if you had no mortgage, the tax collector is still there. To keep your risk low, you want a safety net that will cover you between jobs, illness, new babies being born, etc. I've gone head to head with people insisting on prioritizing the mortgage payoff ahead of the matched 401(k) deposit. Funny, they'd prefer to owe $75K less, while that $75K could have been deposited pretax (so $100K, for those in the 25% bracket) and matched, to $200K. Don't make that mistake.\"" }, { "docid": "187010", "title": "", "text": "\"If I understand correctly, your question boils down to this: \"\"I have $X to invest over 25 years, are guaranteed returns at a 0.6% lower rate better than what I expect to get from the stock market over the same period?\"\" Well, I believe the standard advice would go something like: Rational investors pay a premium to reduce risk/volatility. Or, put another way, guaranteed returns are more valuable than risky returns, all things equal. I don't know enough about student loans in America (I'm Australian). Here a student loan is very low interest and the minimum repayments scale with what you earn not what you owe, starting at $0 for a totally liveable wage - Here I'd say there's a case to just pay the minimum and invest extra money elsewhere. If yours is a private loan though, following the same rules as other loans, remember the organisation extending your loan has access to the stock market too! why would they extend a loan to you on worse terms than they would get by simply dumping money into an index fund? Is the organisation that extends student loans a charity or subsidised in some way? If not, someone has already built a business on the the analysis that returns at 6.4% (including defaults) beats the stock market at 7% in some way. What I would put back to you though, is that your question oversimplifies what is likely your more complex reality, and so answering your question directly doesn't help that much to make a persuasive case - It's too mathematical and sterile. Here are some things off the top of my head that your real personal circumstances might convince you to pay off your loan first, hit up Wall Street second:\"" }, { "docid": "162864", "title": "", "text": "Look, honestly, I don't care how much they make. Its a tough job and they're working a lot of hours. I'm glad they make this much money, that means they're having a good life. The fact that they are earning this money does not invalidate the fact that a lot of teachers and military personnel do not live as well. That is the problem. We don't have to take from these guys to give to another. We need to take from the people that are hoarding the wealth in this country. This is obviously a story, I don't want to say planted, but most certainly encouraged by special interest to once again stir up anti-union outrage and make us 99%s fight amongst ourselves over the few crumbs that the 1% let drop down to us. The problems in this country are not because a few transit cops figured out a way to gets some extra money, it's because we allow 400 people to have all the money when everyone else gets none." }, { "docid": "123226", "title": "", "text": "\"The first thing you have to do is to decided what area in finance you want to get into. For example, investment banking and quant are very different jobs. Learning all the CFA material is useful, so you might as well take the exams too while you are at it. You may be able to get into financial IT or some type of financial programming job. That is one step closer to your goal because at least you will be at a finance company and you can network with people that are in the field. Also, if you want to go into the buy side like I did, I recommend you invest your own money and manage your own portfolio. That way you would have some intimate familiarity with some companies/strategies. You can't get this from a textbook. There is something a little wrong with someone who wants to manage other people's money when he doesn't manage his own. That is a tough sell. You can't be too picky about where you get in. Getting in the door is the most important. I got a lot of quant interviews because I was an engineer. Those interviews consist of a lot of math and brain teaser type questions. For fundamental analyst positions, they will typically want to figure out how you think about businesses/companies. You can typically steer the interview any way you want, which is why I think it is important that you invest your own money. If you say \"\"the largest position I hold is in XYZ company\"\", you can be 99% certain that they will be asking about that investment for the next 15 minutes (at least). That is your opportunity to show how you can add value. Most companies prefer students for entry level, because why hire a guy who is already working in another field when you can get someone fresh? I stood out in the interviews because I could say \"\"I put $50k into this position because...\"\". It's not the only way to do it, but I can only provide you with my anedoctal experience.\"" }, { "docid": "540527", "title": "", "text": "TL:DR: You should read something like The Little Book of Common Sense Investing, and read some of the popular questions on this site. The main message that you will get from that research is that there is an inescapable connection between risk and reward, or to put it another way, volatility and reward. Things like government bonds and money market accounts have quite low risk, but also low reward. They offer a nearly guaranteed 1-3%. Stocks, high-risk bonds, or business ventures (like your soda and vending machine scheme) may return 20% a year some years, but you could also lose money, maybe all you've invested (e.g., what if a vandal breaks one of your machines or the government adds a $5 tax for each can of soda?). Research has shown that the best way for the normal person to use their money to make money is to buy index funds (these are funds that buy a bunch of different stocks), and to hold them for a long time (over 10-15 years). By buying a broad range of stocks, you avoid some of the risks of investing (e.g., if one company's stock tanks, you don't lose very much), while keeping most of the benefits. By keeping them for a long time, the good years more than even out the bad years, and you are almost guaranteed to make ~6-7%/year. Buying individual stocks is a really, really bad idea. If you aren't willing to invest the time to become an expert investor, then you will almost certainly do worse than index funds over the long run. Another option is to use your capital to start a side business (like your vending machine idea). As mentioned before, this still has risks. One of those risks is that it will take more work than you expect (who will find places for your vending machines? Who will fill them? Who will hire those who fill them? etc.). The great thing about an index fund is that it doesn't take work or research. However, if there are things that you want to do, that take capital, this can be a good way to make more income." }, { "docid": "30311", "title": "", "text": "\"You're in good shape as long as your income stays. Your only variable-rate debt now is your private student loan. I think you'd be wise to pay that down first, and you sense that already. Worst-case, in the event of a bankruptcy, student loans usually cannot be discharged, so that isn't a way out. Once that loan is gone, apply what you were paying to your other student loan to knock that out. You might investigate refinancing your home (to another 30-year fixed). You may be able to shave a half-percent off if your credit is stellar. Given the size of the mortgage, this could be several thousand out of pocket, so consider that when figuring out potential payback time. Consider using any \"\"free time\"\" to starting up a side business (I'm assuming you both have day jobs but that may not be a correct assumption). Start with what you know well. You and your wife are experts in something, and have passion about something. Go with that. Use the extra income from that to either pay down your debts faster, or just reinvest in the business so that you can offset the income on your taxes. Again, you're in good shape. Just do what you can to protect and grow your income streams.\"" }, { "docid": "134764", "title": "", "text": "\"Given the current low interest rates - let's assume 4% - this might be a viable option for a lot of people. Let's also assume that your actual interest rate after figuring in tax considerations ends up at around 3%. I think I am being pretty fair with the numbers. Now every dollar that you save each month based on the savings and invest with a higher net return of greater than 3% will in fact be \"\"free money\"\". You are basically betting on your ability to invest over the 3%. Even if using a conservative historical rate of return on the market you should net far better than 3%. This money would be significant after 10 years. Let's say you earn an average of 8% on your money over the 10 years. Well you would have an extra $77K by doing interest only if you were paying on average of $500 a month towards interest on a conventional loan. That is a pretty average house in the US. Who doesn't want $77K (more than you would have compared to just principal). So after 10 years you have the same amount in principal plus $77k given that you take all of the saved money and invest it at the constraints above. I would suggest that people take interest only if they are willing to diligently put away the money as they had a conventional loan. Another scenario would be a wealthier home owner (that may be able to pay off house at any time) to reap the tax breaks and cheap money to invest. Pros: Cons: Sidenote: If people ask how viable is this. Well I have done this for 8 years. I have earned an extra 110K. I have smaller than $500 I put away each month since my house is about 30% owned but have earned almost 14% on average over the last 8 years. My money gets put into an e-trade account automatically each month from there I funnel it into different funds (diversified by sector and region). I literally spend a few minutes a month on this and I truly act like the money isn't there. What is also nice is that the bank will account for about half of this as being a liquid asset when I have to renegotiate another loan.\"" }, { "docid": "595287", "title": "", "text": "I wouldn't be too concerned, yet. You're young. Many young people are living longer in the family home. See this Guardian article: Young adults delay leaving family home. You're in good company. Yet, there will come a time when you ought to get your own place, either for your own sanity or your parents' sanity. You should be preparing for that and building up your savings. Since you've got an income, you should – if you're not already – put away some of that money regularly. Every time you get paid, make a point of depositing a portion of your income into a savings or investment account. Look up the popular strategy called Pay Yourself First. Since you still live at home, it's possible you're a little more loose with spending money than you should be – at least, I've found that to be the case with some friends who lived at home as young adults. So, perhaps pretend you're on your own. What would your rent be if you had to find a place of your own? If, say, £600 instead of the £200 you're currently paying, then you should reduce your spending to the point where you can save at least £400 per month. Follow a budget. With respect to your car, it's great you recognize your mistake. We're human and we can learn from our mistakes. Plan to make it your one and only car mistake. I made one too. With respect to your credit card debt, it's not an insurmountable amount. Focus on getting rid of that debt soon and then focus on staying out of debt. The effective way to use credit cards is to never carry a balance – i.e. pay it off in full each month. If you can't do that, you're likely overspending. Also, look at what pensions your employer might offer. If they offer matching contributions, contribute at least as much to maximize the tax free extra pay this equates to. If you have access to a defined benefit plan, join it as soon as you are eligible. Last, I think it's important to recognize that at age 23 you're just starting out. Much of your career income earning potential is ahead of you. Strive to be the best at what you do, get promotions, and increase your income. Meanwhile, continue to save a good portion of what you earn. With discipline, you'll get where you want to be." }, { "docid": "532012", "title": "", "text": "\"Wow all the answers here are a joke. Retained earnings is a funding side (liabilities + equity) of the balance sheet accounting entry. It's a residual value, so if you end up funding your assets with more liabilities, for example, then retained earnings will be smaller. When worrying about the funding side of the balance sheet, you should consider mainly (1) how much you want in the business of your own money (equity) and (2) how much debt your business can support, as well as how much debt you're comfortable with. #2 is a function of looking at your income generating capacity. Once you've figured out how much you will fund with debt, you then need the remainder to be your money. Some of this is contributed capital, the rest is retained earnings. So to wonder about how much in retained earnings to have isn't really the way to think about it. You should have the \"\"debt vs. equity\"\" conversation with yourself and figure it out that way. Don't worry about the components of equity if you're a sole owner and it's all yours. (There are other ways to finance equity like preferred shares, but for all intents and purposes this is a small business). From a risk perspective, retained earnings is largely irrelevant on a standalone basis. You should pay far more attention to your assets. For example, if you asked \"\"how much cash or working capital do I need?\"\", that's an operational question that's very important to know for running the business. It can be debated and there is a right answer. Retained earnings is just a partial accounting entry of equity (and can even be manipulated by repurchasing shares and then contributing more capital), so I wouldn't focus on it.\"" }, { "docid": "308837", "title": "", "text": "You would probably be better off wiring the money from your US account to your French account. That IMHO is the cheapest and safest way. It doesn't matter much which bank to use, as it will go through the same route of SWIFT transfer, just choose the banks with the lowest fees on both sides, shop around a little." }, { "docid": "89624", "title": "", "text": "It's a little extra hassle come tax-time if you have a distribution to account for, as you'd be required to file Form 8606. If you pay for tax-preparation the extra fees could easily wipe out any interest earned. Roth IRA savings accounts don't seem to earn much interest, so while you could come out slightly ahead with this approach, I don't think it's worth it. I prefer to keep a portion of my emergency fund in an online savings account (0.75% interest), and another portion in CD's (2.10% interest) through the same bank." }, { "docid": "127664", "title": "", "text": "\"Your employment status is not 100% clear from the question. Normally, consultants are sole-proprietors or LLC's and are paid with 1099's. They take care of their own taxes, often with schedule C, and they sometimes can but generally do not use \"\"employer\"\" company 401(k). If this is your situation, you can contact any provider you want and set up your own solo 401(k), which will have great investment options and no fees. I do this, through Fidelity. If you are paid with a W2, you are not a consultant. You are an employee and must use your employer's 401(k). Figure out what you are. If you are a consultant, open a solo 401(k) at the provider of your choice. Make sure beforehand that they allow incoming rollovers. Roll all of your previous 401(k)s and IRA's into it. When you have moved your 401(k) to a better provider, you won't be paying any extra fees, but you will not recoup any fees your original provider charged. I'm not sure why you mention a Roth IRA. If you try to roll your 401(k) into a Roth instead of a traditional IRA or 401(k), be aware that you will be taxed on everything you roll. ---- Edit: a little info about IRA's in response to your comment ---- Tax advantaged retirement accounts come in two flavors: one is managed by your company and the money is taken out of your paycheck. This is usually a 401(k) or 403(b). You can contribute up to $18K per year and your company can also contribute to it. The other flavor is an IRA. You can contribute $5,500 per year to this for you and $5,500 for your spouse. These are outside of your company and you make the deposits yourself. You choose your own provider, so competition has driven prices way down. You can have both a 401(k) and an IRA and contribute the max to both (though at high incomes you lose the ability to deduct IRA contributions). These accounts are tax advantaged because you only pay taxes once. With a regular brokerage account, you pay income tax in the year in which you earn money, then you pay tax every year on dividends and any capital gains that have been realized by selling. There are two types of tax-advantaged accounts: Traditional IRA or Traditional 401(k). You do not pay income tax on this money in the year you earn it, nor do you pay capital gains tax. Instead you pay tax only in the year in which you take the money out (in retirement). Roth IRA or Roth 401(k). You do pay income tax on money on this money in the year in which you earn it. But then you don't pay tax on any gains or withdrawals ever again. When you leave your job (and sometimes at other times) you can move your money out of a 401(k) into your IRA, where you can do a better job managing it. You can also move money from your IRA into a 401(k) if your 401(k) provider will allow you to. Whether traditional or Roth is better depends on your tax rate now and your tax rate at retirement. However, if you choose to move money from a traditional account into a Roth account, you must pay tax on it in that year as if it was income because traditional and Roth accounts are taxed at different times. For that reason, if you are just trying to move money out of your 401(k) to save on fees, the logical place to put it is in a traditional IRA. Moving money from a traditional to a Roth may make sense, for example, if your tax rate is temporarily low this year, but that would be a separate decision from the one you are looking at. You can always roll your traditional IRA into a Roth later if that does become the case. Otherwise, there's no reason to think your traditional 401(k) should be rolled into a Roth IRA according to what you have described.\"" }, { "docid": "105543", "title": "", "text": "So long as you don't hate what you are doing, I'd say the price is somewhere in the neighborhood of $100-200 year of income to be worth the bookkeeping. I'd only say more than that if you have a ridiculously complex tax situation, you have an irrational hatred of filling out a few forms once a year, or if you just have such a stupidly large amount of money that even having a few hundred dollars a year to donate to people in desperate need just doesn't mean anything to you. Or if you are under special income limits and just a few dollars of income would put you in a bad situation (like a loss of medical benefits, etc). The reason is actually quite simple: the taxes aren't really that hard or time consuming. I've handled three self-employment businesses in my life, and unless you are trying to itemize every last dollar of business deductions and expenses, or you really want to scrape out every last cent from minor deductions that require considerable extra paperwork, it's a few extra forms on your taxes. Most of the extra taxes are as a percentage, so it reduces the benefits, but really not by much. You don't have to make it extra complicated if the extra complexity doesn't give you a big payoff in benefit. I would suggest you pick the simplest imaginable possible system for accounting for this, so that you might only spend an extra few hours per year on the books and taxes. Don't keep $10 sheet music receipts if you feel it's a burden to try to itemize expenses, etc. Instead, the decision should be if you (or in this case your wife) would enjoy doing it, and bringing in money can just be nice in it's own way. I'd suggest she keep some out for little extra niceties, earmark some for feel-good charitable giving, and then of course sock away the rest. Don't let extra income be an unnecessary burden that prevents you from getting it in the first place." }, { "docid": "291376", "title": "", "text": "\"What you are doing is neither one. You are simply watching to make sure you don't overdraw, which itself suggests you might be living hand to mouth and not saving. Keeping track of your money and budgeting are useful tools which help people get on top of their money. Which tends to have the effect of allowing you to save. How much did you spend on groceries last month? Eating out? Gas? If you were \"\"keeping track of your money\"\", you could say immediately what you spent, and whether that is above or below average, and why. How much do you plan to spend in the next 3 months on gas, groceries, eating out? If you knew the answer to that question, then you would have a \"\"budget\"\". And if those months go by, and your budget proves to have been accurate, or educates you as to what went wrong so you can learn and fix it... then your budget is a functioning document that is helping you master your money. Certainly the more powerful of the two is the \"\"keeping track\"\", or accounting of what has happened to you so far. It's important that you keep track of every penny without letting stuff \"\"slip through the cracks\"\". Here you can use proper accounting techniques and maybe accounting software, just like businesses do where they reconcile their accounting against their bank statements and wallet cash. I shortcut that a little. I buy gift cards for McDonalds, Panera, Starbucks, etc. and buy my meals with those. That way, I only have one transaction to log, $40 - McDonalds gift card instead of a dozen little meals. It works perfectly fine since I know all that money went to fast food. A little more dangerous is that I treat wallet cash the same way, logging say two monthly entries of $100 to cash rather than 50 little transactions of left $1 tip at restaurant. This only works because cash is a tiny part of my overall expenditures - not worth accounting. If it added up to a significant part, I'd want accounting on that.\"" }, { "docid": "442110", "title": "", "text": "75k is short of the 'highly compensated' category. Most US citizens in that pay range would consider paying someone to do their taxes as an unnecessary expense. Tax shelters usually don't come into play for this level of income. However, there are certain things which provide deductions. Some things that make it better to pay someone: Use the free online tax forms to sandbox your returns. If all you're concerned about is ensuring you pay your taxes correctly, this is the most cost efficient route. If you want to minimize your tax burden, consult with a CPA. Be sure to get one who is familiar with resident aliens from your country and the relevant tax treaties. The estimate you're looking at may be the withholding, of which you may be eligible for a refund for some part of that withholding. Tax treaties likely make sure that you get credit on each side for the money paid in the other. For example, as a US citizen, if I go to Europe and work and pay taxes there, I can deduct the taxes paid in Europe from my tax burden in the US. If I've already paid more to the EU than I would have paid on the same amount earned in the US, then my tax burden in the US is zero. By the same token, if I have not paid up to my US burden, then I owe the balance to the US. But this is way better than paying taxes to your home country and to the host country where you earned the money." }, { "docid": "438038", "title": "", "text": "\"You don't want to do that. DON'T LIE TO THE IRS!!! We live overseas as well and have researched this extensively. You cannot make $50k overseas and then say you only made $45k to put $5k into retirement. I have heard from some accountants and tax attorneys who interpret the law as saying that the IRS considers Foreign Earned Income as NOT being compensation when computing IRA contribution limits, regardless of whether or not you exclude it. Publication 590-A What is Compensation (scroll down a little to the \"\"What Is Not Compensation\"\" section). Those professionals say that any amounts you CAN exclude, not just ones you actually do exclude. Then there are others that say the 'can' is not implied. So be careful trying to use any foreign-earned income to qualify for retirement contributions. I haven't ran across anyone yet who has gotten caught doing it and paid the price, but that doesn't mean they aren't out there. AN ALTERNATIVE IN CERTAIN CASES: There are two things you can do that we have found to have some sort of taxable income that is preferably not foreign so that you can contribute to a retirement account. We do this by using capital gains from investments as income. Since our AGI is always zero, we pay no short or long term capital gains taxes (as long as we keep short term capital gains lower than $45k) Another way to contribute to a Roth IRA when you have no income is to do an IRA Rollover. Of course, you need money in a tax-deferred account to do this, but this is how it works: I always recommend those who have tax-deferred IRA's and no AGI due to the FEIE to roll over as much as they can every year to a Roth IRA. That really is tax free money. The only tax you'll pay on that money is sales tax when you SPEND IT!! =)\"" }, { "docid": "407726", "title": "", "text": "\"An annuity is a product. In simple terms, you hand over a lump sum of cash and receive an agreed annual income until you die. The underlying investment required to reach that income level is not your concern, it's the provider's worry. So there is a huge mount of security to the retiree in having an annuity. It is worth pointing out that with simple annuities where one gives a lump sum of money to (typically) an insurance company, the annuity payments cease upon the death of the annuitant. If any part of the lump sum is still left, that money belongs to the company, not to the heirs of the deceased. Fancier versions of annuities cover the spouse of the annuitant as well (joint and survivor annuity) or guarantee a certain number of payments (e.g. 10-year certain) regardless of when the annuitant dies (payments for the remaining certain term go to the residual beneficiary) etc. How much of an annuity payment the company offers for a fixed lump sum of £X depends on what type of annuity is chosen; usually simple annuities give the maximum bang for the buck. Also, different companies may offer slightly different rates. So, why should one choose to buy an annuity instead of keeping the lump sum in a bank or in fixed deposits (CDs in US parlance), or invested in the stock market or the bond market, etc., and making periodic withdrawals from these assets at a \"\"safe rate of withdrawal\"\"? Safe rates of withdrawal are often touted as 4% per annum in the US, though there are newer studies saying that a smaller rate should be used. Well, safe rates of withdrawal are designed to ensure that the retiree does not use up all the money and is left destitute just when medical bills and other costs are likely to be peaking. Indeed, if all the money were kept in a sock at home (no growth at all), a 4% per annum withdrawal rate will last the retiree for 25 years. With some growth of the lump sum in an investment, somewhat larger withdrawals might be taken in good years, but that 4% is needed even when the investments have declined in value because of economic conditions beyond one's control. So, there are good things and bad things that can happen if one chooses to not buy an annuity. On the other hand, with an annuity, the payments will continue till death and so the retiree feels safer, as Chris mentioned. There is also the serenity in not having to worry how the investments are doing; that's the company's business. A down side, of course, is that the payments are fixed and if inflation is raging, the retiree still gets the same amount. If extra cash is needed one year for unavoidable expenses, the annuity will not provide it, whereas the lump sum (whether kept in a sock or invested) can be drawn on for the extra expense. Another down side is that any money remaining is gone, with nothing left for the heirs. On the plus side, the annuity payments are usually larger than those that the retiree will get via the safe rate of withdrawal method from the lump sum. This is because the insurance company is applying the laws of large numbers: many annuitants will not survive past their life expectancy, and their leftover monies are pure profit to the insurance company, often more than enough (when invested properly by the company) to pay those old codgers who continue to live past their life expectancy. Personally, I wouldn't want to buy an annuity with all my money, but getting an annuity with part of the money is worthwhile. Important: The annuity discussed in this answer is what is sometimes called a single-premium or an immediate annuity. It is purchased at the time of retirement with a single (large) lump sum payment. This is not the kind of annuity that is described in JAGAnalyst's answer which requires payment of (much smaller) premiums over many years. Search this forum for variable annuity to learn about these types of annuities.\"" } ]

[ { "docid": "154113", "title": "", "text": "I don't know what you program during the day, but you could always try your hand a programming for iPhone, Android or Blackberry. Just spend an hour or two a night on a simple but useful application. Find something that matches a hobby interest of yours and come up with an app that would be beneficial to people of that hobby." } ]

[ { "docid": "543463", "title": "", "text": "The likely outcome of adding extra money to your escrow account is that the bank will send you a check for excess funds at the end of the year (or whenever your property tax and insurance payments are processed). Could you just redeposit that money immediately? Possibly. I bet most banks wouldn't care and would just follow the routine of clearing the excess from the account next time they process payments. I've never received a 1099 for interest in an escrow account. It is possible that when you start earning enough interest that a 1099 is required by law ($10/year) that the bank gets a little more aggressive about pushing your money back to you. I'm not sure why that hassle is any better than just opening up your average internet savings account (many don't have any of the fees you mentioned) and parking it there with a similar interest rate. You can deposit and withdraw using ACH transactions that post by the next business day. That said, unless they do start rejecting your money, there aren't a lot of downsides in your plan." }, { "docid": "30311", "title": "", "text": "\"You're in good shape as long as your income stays. Your only variable-rate debt now is your private student loan. I think you'd be wise to pay that down first, and you sense that already. Worst-case, in the event of a bankruptcy, student loans usually cannot be discharged, so that isn't a way out. Once that loan is gone, apply what you were paying to your other student loan to knock that out. You might investigate refinancing your home (to another 30-year fixed). You may be able to shave a half-percent off if your credit is stellar. Given the size of the mortgage, this could be several thousand out of pocket, so consider that when figuring out potential payback time. Consider using any \"\"free time\"\" to starting up a side business (I'm assuming you both have day jobs but that may not be a correct assumption). Start with what you know well. You and your wife are experts in something, and have passion about something. Go with that. Use the extra income from that to either pay down your debts faster, or just reinvest in the business so that you can offset the income on your taxes. Again, you're in good shape. Just do what you can to protect and grow your income streams.\"" }, { "docid": "335164", "title": "", "text": "\"My education on this topic at this age range was a little more free-form. We were given a weeklong project in the 6th grade, which I remember pretty clearly: Fast forward 6 years (we were 12). You are about to be kicked out of your parents' house with the clothes on your back, $1,000 cash in your pocket, your high school diploma, and a \"\"best of luck\"\" from your parents. That's it. Your mission is to not be homeless, starving and still wearing only the clothes on your back in 3 months. To do this, you will find an apartment, a job (you must meet the qualifications fresh out of high school with only your diploma; no college, no experience), and a means of transportation. Then, you'll build a budget that includes your rent, estimated utilities, gasoline (calculated based on today's prices, best-guess fuel mileage of the car, and 250% of the best-guess one-way distance between home and job), food (complete nutrition is not a must, but 2000cal/day is), toiletries, clothing, and anything else you want or need to spend your paycheck or nest egg on. Remember that the laundromat isn't free, and neither is buying the washer/dryer yourself. Remember most apartments aren't furnished but do have kitchen appliances, and you can't say you found anything on the side of the road. The end product of your work will be a narrative report of the first month of your new life, a budget for the full 3 months, plus a \"\"continuing\"\" budget for a typical month thereafter to prove you're not just lasting out the 3 months, and all supporting evidence for your numbers, from newspaper clippings to in-store mailers (the Internet and e-commerce were just catching on at the time, Craigslist and eBay didn't exist yet, and not everyone had home Internet to begin with). Extra Credit: Make your budget work with all applicable income and sales taxes. Extra Extra Credit: Have more than your original $1000 in the bank at the end of the 3 months, after the taxes in the Extra Credit. This is a pretty serious project for a 12-year-old. Not only were we looking through the classified ads and deciphering all the common abbreviations, we were were taking trips to the grocery store with shopping lists, the local Wal-Mart or Target, the mall, even Goodwill. Some students had photos of their local gas station's prices, to which someone pointed out that their new apartment would be on the other side of town where gas was more expensive (smart kid). Some students just couldn't make it work (usually the mistakes were to be expected of middle-class middle-schoolers, like finding a job babysitting and stretching that out full-time, only working one job, buying everything new from clothes to furniture, thinking you absolutely need convenience items you can do without, and/or trying to buy the same upscale car your dad takes to work), though most students were able to provide at least a plausible before-tax budget. A few made the extra credit work, which was a lot of extra credit, because not only were you filling out a 1040EZ for your estimated income taxes, you were also figuring FICA and Social Security taxes which even some adults don't know the rates for, and remember, no Internet. Given that the extra-extra credit required you to come out ahead after taxes (good luck), I can't remember that anyone got that far. The meta-lesson that we all learned? Life without a college education is rough.\"" }, { "docid": "89624", "title": "", "text": "It's a little extra hassle come tax-time if you have a distribution to account for, as you'd be required to file Form 8606. If you pay for tax-preparation the extra fees could easily wipe out any interest earned. Roth IRA savings accounts don't seem to earn much interest, so while you could come out slightly ahead with this approach, I don't think it's worth it. I prefer to keep a portion of my emergency fund in an online savings account (0.75% interest), and another portion in CD's (2.10% interest) through the same bank." }, { "docid": "521042", "title": "", "text": "I would question whether your stated goal (of strictly controlling your expenses) is really the problem you should be tackling. In my opinion, unless you're under financial hardship where you can barely make ends meet, you're much better off using a budget as a high-level, descriptive tool rather than a low-level, prescriptive tool. This is what I would do in your situation: After the first few months, you can start to think about high-level changes that you can make to your spending habits to get the most bang for your buck. I wouldn't worry about the little expenses, unless they're really adding up to a sizable chunk of your total expenses. Instead, I would look at things like: eating out too often, buying too many movies, too many impulse buys over $100, etc. Identifying patterns like that will help you make lifestyle changes that will allow you to spend less money without having to micromanage every single expense. I have tried the micromanaged approach in the past, and it simply doesn't work for me. There's too much overhead, and eventually I start to feel that it's just not worth it. Think about it - is it really worth the extra time and energy required to worry about where every dollar goes all month long just to save an additional hundred bucks over what you can do with this passive approach? I think that by focusing on the big picture, you can get within a couple percentage points of the same amount of savings as if you had micro-managed your expenses, but with much less work and mental strain. Let's put some numbers on this and see what the hourly returns are with each approach, always being optimistic about the micromanaged approach and conservative on the passive approach. Let's assume you earn $50,000/year. Let's also assume that if you micromanage all of your expenses, you could manage to save $5000/year beyond what you do now. And let's say that with the passive approach, you can get within 20 percentage points instead of the 2 I stated earlier, for a savings of $4000/year. Now what will your hourly returns look like? The following are based on how I would personally use both systems, so your numbers may vary a bit. Micromanaged Budgeting Savings = $5000 per year = $416.67 per month Time spent = 15-30 minutes per day = 7.5 - 15 hours per month Hourly return = $27.78 - $55.56 Passive Budgeting Savings = $4000 per year = $333.33 per month Time spent = 1 - 2 hours per month Hourly return = $166.67 - $333.33 So clearly the passive approach gives a substantially higher hourly return, even though it gives a lower absolute return. Maybe more importantly though, if passive budgeting opens up an extra 10 hours a month, you could potentially put those hours into your job and make an extra (10 hours * $25/hour) = $250 a month, or $3000 per year, assuming no extra pay for overtime. So that means that the passive budgeting approach would actually allow you to save ($4000 + $3000 * .75) = $6250 per year, compared to the $5000 you would save by micromanaging. If you're in a situation where you can't put those hours into more work and you really need that extra $83.34 per month to help make ends meet, then by all means micromanage your expenses and try to save as much as possible. But if either of the previous conditions are not true for you, you're much better off, in my opinion, using a passive budget." }, { "docid": "11998", "title": "", "text": "\"I have a couple other important considerations regarding external HSA accounts vs employer sponsored HSA accounts. Depending on your personal financial situation and goals; some people like to use HSA accounts as an extra retirement account (since the money can be withdrawn penalty free in retirement for non-medical expenses, and completely tax & penalty free at any time for medical expenses). If your intended use for the HSA account is an investment vehicle for retirement, then you may find more use/benefit out of an external provider that may provide more or better investment options than your employers HSA investment options. There can be a lot of additional value in those extra investment options over greater periods of time. Another VERY important consideration for FICA taxes (FICA includes Social Security & Medicare) that I don't believe was mentioned before - for those earners who are under the maximum social security wage limit, you are paying 6.2% of each paycheck into social security taxes. As others have mentioned you can \"\"save\"\" this tax through your employer’s plan if you set up the account to be funded pre-tax from your paychecks. However, in doing so, you are lowering your overall contributions into social security, which may lower your social security benefits in your retirement years! If this is ultimately going to lower your SSA benefits in retirement then that is a big future cost that may steer you against the pre-tax employer contributions. Think of social security as part of your retirement plan, not as a tax but instead as an additional check you put away for yourself for retirement every month. Of course, this is only an important consideration if SSA is still going to be around when you retire, but let's assume that it will be. This is not an issue for higher earners, earning well above the max SSA taxable wages. There is no wage limit on the 1.45% Medicare tax withholding's, and there is certainly no harm in saving Medicare taxes because it will not affect future Medicare benefits. So for taxpayers earning well over the max SSA wages, they will just save the 1.45% Medicare taxes without affecting their SSA contributions and resulting retirement benefits. So again, it all comes down to personal situations. Depending on your earnings and goals, employer plan may or may not be the way to go. Personally, for my lower earning clients, friends and family, I tend to recommend that they do whatever they can to maximize their social security benefits in retirement. So I would advise them to either use the external provider account, or the employer plan but with post-tax contributions so you don't lower the SSA withholding's but can still claim the income tax deduction on your tax return. YMMV -Dan\"" }, { "docid": "308837", "title": "", "text": "You would probably be better off wiring the money from your US account to your French account. That IMHO is the cheapest and safest way. It doesn't matter much which bank to use, as it will go through the same route of SWIFT transfer, just choose the banks with the lowest fees on both sides, shop around a little." }, { "docid": "55841", "title": "", "text": "\"I posted a comment in another answer and it seems to be approved by others, so I have converted this into an answer. If you're talking about young adults who just graduated college and worked through it. I would recommend you tell them to keep the same budget as what they were living on before they got a full-time job. This way, as far as their spending habits go, nothing changes since they only have a $500 budget (random figure) and everything else goes into savings and investments. If as a student you made $500/month and you suddenly get $2000/month, that's a lot of money you get to blow on drinks. Now, if you put $500 in savings (until 6-12 month of living expenses), $500 in investments for the long run and $500 in vacation funds or \"\"big expenses\"\" funds (Ideally with a cap and dump the extra in investments). That's $18,000/yr you are saving. At this stage in your life, you have not gotten used to spending that extra $18,000/yr. Don't touch the side money except for the vacation fund when you want to treat yourself. Your friends will call you cheap, but that's not your problem. Take that head start and build that down payment on your dream house. The way I set it up, is (in this case) I have automatics every day after my paychecks come in for the set amounts. I never see it, but I need to make sure I have the money in there. Note: Numbers are there for the sake of simplicity. Adjust accordingly. PS: This is anecdotal evidence that has worked for me. Parents taught me this philosophy and it has worked wonders for me. This is the extent of my financial wisdom.\"" }, { "docid": "556545", "title": "", "text": "\"If you're looking for ways to turn $1000 into more, don't just think of ways it can make money -- also consider whether there are any ways you can use it to save money. Among the advantages of this approach is that you're not taxed for reducing your expenditures. The good news is that there are a lot more ways to save a little bit of money on a $1000 budget than there are to make a little money on that budget. The bad news is that most of them will require some additional input: labor. Have you taken an economics course? Capital + Labor => output. I don't know what you spend your money on exactly, but some thoughts: You may find more opportunities for things like this as you move out from college and into your own apartment (/house) and the university isn't taking care of as many of your needs. Just don't confuse yourself about where the line is between actually saving money that you were going to spend anyway, and just consuming more. Consumption is fine in and of itself (and ultimately it's what you have money for) but doesn't make you financially better off. Also, when considering what to do with the money, don't just think \"\"I can spend $2000 on this bike and it will ultimately save me gas money\"\" unless you also know how to think \"\"I could spend $200 on a slightly lesser bike and still save all the gas money, or maybe even spend $20 on a yard sale bike.\"\". Consider borrowing kitchen equipment from the parents, instead of buying new stuff, or buy it at a yard sale. Also, make sure you actually will use the things you buy.\"" }, { "docid": "575552", "title": "", "text": "\"So you are in IT, that is great news because you can earn a fabulous income. The part time is not great, but you can use this to your advantage. You can get another job or three to boost your income in the short term. In the long term you should be able to find a better paying job fairly easily. There is one way to never deal with creditors again: never borrow money again. Its pretty damn simple and from the suggestions of your post you don't seem to be very good at handling credit. This would make you fairly normal. 78% of US households don't have $1000 saved. How are they going to handle a brake job/broken dryer/emergency room visit? Those things happen. Cut your lifestyle to nothing, earn money and save it. Say you have 2000 saved up. Then a creditor calls saying you owe 5K. Tell me you are willing to settle for the 2K you have saved. If they don't, hang up. If they are willing getting it writing and pay by a method that insulates you from further charges. Boom one out of the way and keep going. You will be 1099'd for some income, but it is a easy way to \"\"earn\"\" extra money. This will all work if you commit yourself to never again borrowing money.\"" }, { "docid": "528052", "title": "", "text": "\"Your question indicates that you might have a little confusion about put options and/or leveraging. There's no sense I'm aware of in which purchasing a put levers a position. Purchasing a put will cost you money up front. Leveraging typically means entering a transaction that gives you extra money now that you can use to buy other things. If you meant to sell a put, that will make money up front but there is no possibility of making money later. Best case scenario the put is not exercised. The other use of the term \"\"leverage\"\" refers to purchasing an asset that, proportionally, goes up faster than the value of the underlying. For example, a call option. If you purchase a put, you are buying downside protection, which is kind of the opposite of leverage. Notice that for an American put you will most likely be better off selling the put when the price of the underlying falls than exercising it. That way you make the money you would have made by exercising plus whatever optional value the put still contains. That is true unless the time value of money is greater than the optional (insurance) value. Since the time value of money is currently exceptionally low, this is unlikely. Anyway, if you sell the option instead of exercising, you don't need to own any shares at all. Even if you do exercise, you can just buy them on the market and sell right away so I wouldn't worry about what you happen to be holding. The rules for what you can trade with a cash instead of a margin account vary by broker, I think. You can usually buy puts and calls in a cash account, but more advanced strategies, such as writing options, are prohibited. Ask your broker or check their help pages to see what you have available to you.\"" }, { "docid": "3315", "title": "", "text": "I'll have to think it through, but at the very least unless your debt is a pure discount instrument and you are using cash flows, some if that money IS getting paid during those 5 years. As in if you are using earnings, they pay p&i. Or if earnings and pure discount instruments, then amortized interest (I think, been a while). You see the actual numbers and know what you are trying to do, but I'm a little lost. Are you building a discount model with a multiple terminal and using ev as the multiple? Are you using free cash flow to firm for the discounting? I'm guessing that's the case." }, { "docid": "365899", "title": "", "text": "\"For scoring purposes, having a DTI between 1-19% is ideal. From Credit Karma: That being said, depending on the loan type you looking at receiving (FHA, VA, Conventional, etc), there are certain max DTIs that you want to stay away from. As a rule, for VA, you want to try to stay away from 41% DTI. Exceptions are made for people with sufficient funds in the bank (3-9 months) to go to higher DTIs. If you keep a 19% utilization overall, that will get you a higher score but it will also show that you have a monthly payment on a particular revolving credit account. While the difference between 729 and 745 seems like a lot of points, there are rules as to how the interest rates are determined. So you will find that many banks have the same or similar rates due to recent legislation in Dodd-Frank. In the days of subprime mortgages, this was not the case. Adjustable rate mortgages did not necessarily go away, the servicer just has to make sure that the buyer can weather the full amount once it reaches maturity, not the lower amount. That is what got a lot of people in trouble. From \"\"how interest rates are set\"\": Before quoting you an interest rate, the loan officer will add on how much he and his branch want to earn. The branch or company sets a policy on how little that can be (the minimum amount the loan officer adds on to his cost) but does not want to overcharge borrowers either (so they set a maximum the loan officer can charge) Between that minimum and maximum, the loan officer has a great deal of flexibility. For example, say the loan officer decides he and his branch are going to earn one point. When you call and ask for a rate quote, he will add one point to the cost of the loan and quote you that rate. According to the rate sheet above, seven percent will cost you zero points. Six and three-quarters percent will cost you one point. In our example, at 7.125% the loan officer and branch would earn one point and have some money left over. This could be used to pay some of the fees (processing, documents, etc), which is how you get a \"\"no fees -no points\"\" mortgage. You just pay a higher interest rate. Where this scoring helps you is in credit card interest rates and auto loan and personal loan rates, which have different rate structures. My personal opinion is to avoid the use of the credit cards. Playing games to try to maximize your score in this situation won't help you when you are talking about 20 points potentially. If you were at the bottom level and were trying to meet a minimum score to qualify, then I would recommend you try to game this scoring system. Take the extra money you would put on a credit card and save it for housing expenses. Taking the Dave Ramsey approach, you should have at least $1000 in emergency funds as most problems you encounter will be less than $1000. That advice rings true.\"" }, { "docid": "449745", "title": "", "text": "Unfortunately, in this market environment your goal is not very realistic. At the moment real interest rates are negative (and have been for some time). This means if you invest in something that will pay out for sure, you can expect to earn less than you lose through inflation. In other words, if you save your $50K, when you withdraw it in a few years you will be able to buy less with it then than you can now. You can invest in risky securities like stocks or mutual funds. These assets can easily generate 10% per year, but they can (and do) also generate negative returns. This means you can and likely will lose money after investing in them. There's an even better chance that you will make money, but that varies year by year. If you invest in something that expects to make 10% per year (meaning it makes that much on average), it will be extremely risky and many years it will lose money, perhaps a lot of it. That's the way risk is. Are you comfortable taking on large amounts of risk (good chances of losing a lot of your money)? You could make some kind of real investment. $50K is a little small to buy real estate, but you may be able to find something like real estate that can generate income, especially if you use it as a down payment to borrow from the bank. There is risk in being a landlord as well, of course, and a lot of work. But real investments like that are a reasonable alternative to financial markets for some people. Another possibility is to just keep it in your bank account or something else with no risk and take $5000 out per year. It will only last you 10 years that way, but if you are not too young, that will be a significant portion of your life. If you are young, you can work and add to it. Unfortunately, financial markets don't magically make people rich. If you make a lot of money in the market, it's because you took a risk and got lucky. If you make a comfortable amount with no risk, it means you invested in a market environment very different from what we see today. --------- EDIT ------------ To get an idea of what risk free investments (after inflation) earn per year at various horizons see this table at the treasury. At the time of this writing you would have to invest in a security with maturity almost 10 years in order to break even with inflation. Beating it by 10% or even 3% per year with minimal risk is a pipe dream." }, { "docid": "224695", "title": "", "text": "\"Below is just a little information on this topic from my small unique book \"\"The small stock trader\"\": The most significant non-company-specific factor affecting stock price is the market sentiment, while the most significant company-specific factor is the earning power of the company. Perhaps it would be safe to say that technical analysis is more related to psychology/emotions, while fundamental analysis is more related to reason – that is why it is said that fundamental analysis tells you what to trade and technical analysis tells you when to trade. Thus, many stock traders use technical analysis as a timing tool for their entry and exit points. Technical analysis is more suitable for short-term trading and works best with large caps, for stock prices of large caps are more correlated with the general market, while small caps are more affected by company-specific news and speculation…: Perhaps small stock traders should not waste a lot of time on fundamental analysis; avoid overanalyzing the financial position, market position, and management of the focus companies. It is difficult to make wise trading decisions based only on fundamental analysis (company-specific news accounts for only about 25 percent of stock price fluctuations). There are only a few important figures and ratios to look at, such as: perhaps also: Furthermore, single ratios and figures do not tell much, so it is wise to use a few ratios and figures in combination. You should look at their trends and also compare them with the company’s main competitors and the industry average. Preferably, you want to see trend improvements in these above-mentioned figures and ratios, or at least some stability when the times are tough. Despite all the exotic names found in technical analysis, simply put, it is the study of supply and demand for the stock, in order to predict and follow the trend. Many stock traders claim stock price just represents the current supply and demand for that stock and moves to the greater side of the forces of supply and demand. If you focus on a few simple small caps, perhaps you should just use the basic principles of technical analysis, such as: I have no doubt that there are different ways to make money in the stock market. Some may succeed purely on the basis of technical analysis, some purely due to fundamental analysis, and others from a combination of these two like most of the great stock traders have done (Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, William O’Neil, and Steven Cohen). It is just a matter of finding out what best fits your personality. I hope the above little information from my small unique book was a little helpful! Mika (author of \"\"The small stock trader\"\")\"" }, { "docid": "85647", "title": "", "text": "I view it as a “zero sum game” from the perspective of the customer. Don’t tell me that my meal is $25 when EVERYONE KNOWS that it’s actually, $25 + $5 tip = $30. Just make the menu price $30 and pay people properly. It’s the exact same cost for a customer. Then, if a tip is left, it is truly a tip for the worker(s) and not the majority of their earnings. And before anyone chimes in to tell me that servers like to tax-dodge on their unreported earnings... Yeah, so would we all. In the same way that we’d never pay a Doctor, Accountant, Soldier, or Teacher a fraction of their pay and then hope that the people they serve were in a good mood to give them a little something extra, neither should we do this to tipped workers." }, { "docid": "291376", "title": "", "text": "\"What you are doing is neither one. You are simply watching to make sure you don't overdraw, which itself suggests you might be living hand to mouth and not saving. Keeping track of your money and budgeting are useful tools which help people get on top of their money. Which tends to have the effect of allowing you to save. How much did you spend on groceries last month? Eating out? Gas? If you were \"\"keeping track of your money\"\", you could say immediately what you spent, and whether that is above or below average, and why. How much do you plan to spend in the next 3 months on gas, groceries, eating out? If you knew the answer to that question, then you would have a \"\"budget\"\". And if those months go by, and your budget proves to have been accurate, or educates you as to what went wrong so you can learn and fix it... then your budget is a functioning document that is helping you master your money. Certainly the more powerful of the two is the \"\"keeping track\"\", or accounting of what has happened to you so far. It's important that you keep track of every penny without letting stuff \"\"slip through the cracks\"\". Here you can use proper accounting techniques and maybe accounting software, just like businesses do where they reconcile their accounting against their bank statements and wallet cash. I shortcut that a little. I buy gift cards for McDonalds, Panera, Starbucks, etc. and buy my meals with those. That way, I only have one transaction to log, $40 - McDonalds gift card instead of a dozen little meals. It works perfectly fine since I know all that money went to fast food. A little more dangerous is that I treat wallet cash the same way, logging say two monthly entries of $100 to cash rather than 50 little transactions of left $1 tip at restaurant. This only works because cash is a tiny part of my overall expenditures - not worth accounting. If it added up to a significant part, I'd want accounting on that.\"" }, { "docid": "187010", "title": "", "text": "\"If I understand correctly, your question boils down to this: \"\"I have $X to invest over 25 years, are guaranteed returns at a 0.6% lower rate better than what I expect to get from the stock market over the same period?\"\" Well, I believe the standard advice would go something like: Rational investors pay a premium to reduce risk/volatility. Or, put another way, guaranteed returns are more valuable than risky returns, all things equal. I don't know enough about student loans in America (I'm Australian). Here a student loan is very low interest and the minimum repayments scale with what you earn not what you owe, starting at $0 for a totally liveable wage - Here I'd say there's a case to just pay the minimum and invest extra money elsewhere. If yours is a private loan though, following the same rules as other loans, remember the organisation extending your loan has access to the stock market too! why would they extend a loan to you on worse terms than they would get by simply dumping money into an index fund? Is the organisation that extends student loans a charity or subsidised in some way? If not, someone has already built a business on the the analysis that returns at 6.4% (including defaults) beats the stock market at 7% in some way. What I would put back to you though, is that your question oversimplifies what is likely your more complex reality, and so answering your question directly doesn't help that much to make a persuasive case - It's too mathematical and sterile. Here are some things off the top of my head that your real personal circumstances might convince you to pay off your loan first, hit up Wall Street second:\"" }, { "docid": "336276", "title": "", "text": "\"Your first question has been answered quite well already. To answer your second question: \"\"If you pay extra, do you want the extra to go toward the interest or toward the principal?\"\" This gives the consumer some flexibility to decide how additional payments are applied. It might seem like a no-brainer to always apply extra payments towards principal - that way, the interest amounts on future payments will be lower and (if you're billed a fixed amount each month) more of each regular payment will then be applied to principal, shortening the term of the loan. However, while it would mean spending more over the life of the loan, there are certain advantages to applying extra payments towards interest†. The main advantage is that it pays your account ahead and means you don't have to make another payment as soon. You could use this strategy to give yourself a buffer of several months, so that if you should ever run into financial hardship you can stop making mortgage payments for a while without the risk of foreclosure. † Note, in most cases it's more likely that you are simply paying more without specifying to the lender that it should be used as principal curtailment. I haven't seen cases where you can explicitly ask the extra to be \"\"applied toward interest\"\". In this situation the funds would be held until you've provided enough to cover one or more monthly payments in full, at which point your \"\"next payment due\"\" date will simply be extended. Another advantage is that the funds that are being held (not due yet, not allocated toward any specific payment, maybe held in escrow) may be refundable to you, upon request. This would depend on the lender's policy. Some will permit refunds of credit balances that go beyond what is necessary to cover the current month's bill. Whether you apply extra payments towards principal or not, it makes little difference to the bank. Any additional payments received increase their immediate cash flow. The cash can be reinvested immediately by them into whatever they are currently focusing on.\"" } ]

[ { "docid": "370300", "title": "", "text": "\"You or your girlfriend might also consider one of the myriad home \"\"franchises\"\" available (Pampered Chef, Thirty-One, etc). The real question, in my mind, though, is how much do you need to add to your monthly income? Is it $50, or $500? Might moving to a smaller apartment/house work?\"" } ]

[ { "docid": "82039", "title": "", "text": "\"If you have enough earned income to cover this amount you should be all set. If I understand you correctly you proposed two transactions. The first, a withdrawal from the beneficiary IRA. Some of which is an RMD the rest is an extra withdrawal of funds. Next, you propose to make a deposit to a combination of your IRA and your wife's IRA. As long as there's earned income to cover this deposit, your plan is fine. To be clear, you can't \"\"take a bene IRA and deposit the RMD to an IRA.\"\" But, money is fungible, the dollars you deposit aren't traceable, only need to be justified by enough earned income. A bene IRA is a great way to get the money to increase your own IRA or 401(k) deposits. Further details - The 2016 contribution limit is $5,500 per person, so I did make the assumption you knew the $9000 deposit need to be split between the 2 IRAs, with no more than $5500 going into either one.\"" }, { "docid": "141949", "title": "", "text": "Math - The half-match is 3% or $3900. After 5 years, $19,500. If you stay, you are vested, and have $20K (I hope it's actually far more) extra. For you, it's like 2 month's salary bonus after 5 years. If you leave early, the good news is that even if the expenses within the plan weren't great, you have the money you put in, along with what vested so far. You move that to an IRA and choose your own thrifty funds or ETFs. For me (as Duff said, there's no one answer, so to be clear, this is my feeling, or preference, not gospel) 6% is far too little to save as a percent of my income. So if the 401(k) fees ran say .8% or higher, I'd put in the 6% to get the potential match, and then save on the side. Our answers might change slightly depending on the exact fees you're exposed to." }, { "docid": "3315", "title": "", "text": "I'll have to think it through, but at the very least unless your debt is a pure discount instrument and you are using cash flows, some if that money IS getting paid during those 5 years. As in if you are using earnings, they pay p&amp;i. Or if earnings and pure discount instruments, then amortized interest (I think, been a while). You see the actual numbers and know what you are trying to do, but I'm a little lost. Are you building a discount model with a multiple terminal and using ev as the multiple? Are you using free cash flow to firm for the discounting? I'm guessing that's the case." }, { "docid": "85647", "title": "", "text": "I view it as a “zero sum game” from the perspective of the customer. Don’t tell me that my meal is $25 when EVERYONE KNOWS that it’s actually, $25 + $5 tip = $30. Just make the menu price $30 and pay people properly. It’s the exact same cost for a customer. Then, if a tip is left, it is truly a tip for the worker(s) and not the majority of their earnings. And before anyone chimes in to tell me that servers like to tax-dodge on their unreported earnings... Yeah, so would we all. In the same way that we’d never pay a Doctor, Accountant, Soldier, or Teacher a fraction of their pay and then hope that the people they serve were in a good mood to give them a little something extra, neither should we do this to tipped workers." }, { "docid": "259924", "title": "", "text": "As others have mentioned yes it is taxable. Whether it goes through payroll and has FICA taken out is your issue in terms that you need to report it and you will an extra 7.5% self employment taxes that would normally be covered by your employer. Your employer may have problems but that isn't your issue. Contrary to what other users are saying chances are there won't be any penalties for you. Best case you have already paid 100% of last years tax liability and you can file your normal tax return with no issues. Worst case you need to pay quarterly taxes on that amount in the current quarter. IRS quarters are a little weird but I think you need to pay by Jan 15th for a December payment. You don't have to calculate your entire liability you can just fill out the very short form and attach a check for about what you will owe. There is a form you can fill out to show what quarter you received the money and you paid in it is a bit more complex but will avoid the penalty. For penalties quarterly taxes count in the quarter received where as payroll deductions count as if they were paid in the first quarter of the year. From the IRS The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay your tax through withholding, or do not pay enough tax that way, you might also have to pay estimated taxes. If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller." }, { "docid": "29197", "title": "", "text": "\"As the saying goes... \"\"Failing to plan is planning to fail.\"\" If you want to be successful you must have a plan on how you are going to succeed. Part of making that plan is understanding what the potential points of failure are and how you are going to handle them. It is impossible to do this if you do not understand the business. If you have to react to situations and make snap decisions your risks of making bad decisions increase. This increases your chances of your business failing. You also need to be able to tell when there are problems with your business. If you do not understand the business, and have little experience with the business, then it will take you longer to recognize that there are problems. The earlier you spot or prevent problems the easier, and less costly, it is to deal with them. When it can work is when you go in as the silent partner with someone who does know the business. If you watch the show \"\"Shark Tank\"\" you will notice the sharks invest in either business that they know and understand and can help guide the business through the pit falls, or in people they believe in because they just need the money not the partner. None of them say heck neither of us know what I we are doing but lets take a shot together. The reason is there are more fun ways to throw away money than investing your heart, soul, blood and sweat, into learning a business the hard way. Most people who do learn and build a business with no prior experience actually start from nothing rather than buying a business that has already been built. Of those that succeed big, they teamed up with someone who understood the business side, but they were the power behind the innovation. And most of them got in when there was virtually no competition. Your question does not fit in here.\"" }, { "docid": "246472", "title": "", "text": "Well, if someone is paid hourly and works less hours—then clearly there is lost income. Additionally, there may be promotions that a parent gets passed over for because he/she often leaves work early to be with the kids. Usually, I think, one of the two spouses slows his/her career a bit while raising the kids, this obviously effects the earning potential of the family. Ultimately, the point I was focused on is that the amount, $900,000, isn't just paying for food, diapers, clothes, books, the larger house you need to house a larger family, the larger car/van you need to tote the kids around in, the extra gas you use in that car/van taking the kids to places you wouldn't otherwise be going, the baby-sitter for date-night, the potential extra seats on planes etc., it includes other lost opportunities (hey, that great job offer on the other side of the country, can't take it unless you want to pull your kids out of 8th grade in the middle of February... etc). All of this adds up, it doesn't seem entirely unreasonable that it would be close to a million dollars. Also, the $900,000 estimate is probably an estimate of the average. Obviously, I can't speak for your friends, they may be outliers. Edited: grammar" }, { "docid": "449745", "title": "", "text": "Unfortunately, in this market environment your goal is not very realistic. At the moment real interest rates are negative (and have been for some time). This means if you invest in something that will pay out for sure, you can expect to earn less than you lose through inflation. In other words, if you save your $50K, when you withdraw it in a few years you will be able to buy less with it then than you can now. You can invest in risky securities like stocks or mutual funds. These assets can easily generate 10% per year, but they can (and do) also generate negative returns. This means you can and likely will lose money after investing in them. There's an even better chance that you will make money, but that varies year by year. If you invest in something that expects to make 10% per year (meaning it makes that much on average), it will be extremely risky and many years it will lose money, perhaps a lot of it. That's the way risk is. Are you comfortable taking on large amounts of risk (good chances of losing a lot of your money)? You could make some kind of real investment. $50K is a little small to buy real estate, but you may be able to find something like real estate that can generate income, especially if you use it as a down payment to borrow from the bank. There is risk in being a landlord as well, of course, and a lot of work. But real investments like that are a reasonable alternative to financial markets for some people. Another possibility is to just keep it in your bank account or something else with no risk and take $5000 out per year. It will only last you 10 years that way, but if you are not too young, that will be a significant portion of your life. If you are young, you can work and add to it. Unfortunately, financial markets don't magically make people rich. If you make a lot of money in the market, it's because you took a risk and got lucky. If you make a comfortable amount with no risk, it means you invested in a market environment very different from what we see today. --------- EDIT ------------ To get an idea of what risk free investments (after inflation) earn per year at various horizons see this table at the treasury. At the time of this writing you would have to invest in a security with maturity almost 10 years in order to break even with inflation. Beating it by 10% or even 3% per year with minimal risk is a pipe dream." }, { "docid": "438038", "title": "", "text": "\"You don't want to do that. DON'T LIE TO THE IRS!!! We live overseas as well and have researched this extensively. You cannot make $50k overseas and then say you only made $45k to put $5k into retirement. I have heard from some accountants and tax attorneys who interpret the law as saying that the IRS considers Foreign Earned Income as NOT being compensation when computing IRA contribution limits, regardless of whether or not you exclude it. Publication 590-A What is Compensation (scroll down a little to the \"\"What Is Not Compensation\"\" section). Those professionals say that any amounts you CAN exclude, not just ones you actually do exclude. Then there are others that say the 'can' is not implied. So be careful trying to use any foreign-earned income to qualify for retirement contributions. I haven't ran across anyone yet who has gotten caught doing it and paid the price, but that doesn't mean they aren't out there. AN ALTERNATIVE IN CERTAIN CASES: There are two things you can do that we have found to have some sort of taxable income that is preferably not foreign so that you can contribute to a retirement account. We do this by using capital gains from investments as income. Since our AGI is always zero, we pay no short or long term capital gains taxes (as long as we keep short term capital gains lower than $45k) Another way to contribute to a Roth IRA when you have no income is to do an IRA Rollover. Of course, you need money in a tax-deferred account to do this, but this is how it works: I always recommend those who have tax-deferred IRA's and no AGI due to the FEIE to roll over as much as they can every year to a Roth IRA. That really is tax free money. The only tax you'll pay on that money is sales tax when you SPEND IT!! =)\"" }, { "docid": "535793", "title": "", "text": "\"@jidugger mostly got it right. It basically mean that past performance of a stock, or a basket of stocks, are not at all useful when trying to predict its future. There is no proven correlation between past and future performance. If there was such a correlation, that was \"\"proven\"\" or known, then investors would quickly exploit this correlation by buying or selling this stock, thus nullifying the prediction. It doesn't mean the specific individuals cannot predict the future stock market - hell, if I set up 2^100 different robots, where every robots gives a different series of answers to the 100 questions \"\"how will stock X do Y days from now\"\" (for 1<=Y<=100), then one of those robots would be perfectly correct. The problem is that an outside observer has no way of knowing which of the predictor robots is right. To say that stock is memoryless strikes me as not quite right -- to the extent that stocks are valued based on earnings, much of what we infer about future earnings relies on past and present earnings. To put it another way - you have $1000 now, and need to decide whether to invest in a particular stock, or a stock index. The \"\"memoryless\"\" property means that no matter how many earning reports you view ... by the time you see them, the stock price already accounts for them, so they're not useful to you. If the earning reports are positive, the stock is already \"\"too high\"\" because people bought it before you did. So on average, you can't use this information to predict the stock's future performance, and are better off investing in an index fund (unless you desire extra risk that doesn't come with more profitability).\"" }, { "docid": "521042", "title": "", "text": "I would question whether your stated goal (of strictly controlling your expenses) is really the problem you should be tackling. In my opinion, unless you're under financial hardship where you can barely make ends meet, you're much better off using a budget as a high-level, descriptive tool rather than a low-level, prescriptive tool. This is what I would do in your situation: After the first few months, you can start to think about high-level changes that you can make to your spending habits to get the most bang for your buck. I wouldn't worry about the little expenses, unless they're really adding up to a sizable chunk of your total expenses. Instead, I would look at things like: eating out too often, buying too many movies, too many impulse buys over $100, etc. Identifying patterns like that will help you make lifestyle changes that will allow you to spend less money without having to micromanage every single expense. I have tried the micromanaged approach in the past, and it simply doesn't work for me. There's too much overhead, and eventually I start to feel that it's just not worth it. Think about it - is it really worth the extra time and energy required to worry about where every dollar goes all month long just to save an additional hundred bucks over what you can do with this passive approach? I think that by focusing on the big picture, you can get within a couple percentage points of the same amount of savings as if you had micro-managed your expenses, but with much less work and mental strain. Let's put some numbers on this and see what the hourly returns are with each approach, always being optimistic about the micromanaged approach and conservative on the passive approach. Let's assume you earn $50,000/year. Let's also assume that if you micromanage all of your expenses, you could manage to save $5000/year beyond what you do now. And let's say that with the passive approach, you can get within 20 percentage points instead of the 2 I stated earlier, for a savings of $4000/year. Now what will your hourly returns look like? The following are based on how I would personally use both systems, so your numbers may vary a bit. Micromanaged Budgeting Savings = $5000 per year = $416.67 per month Time spent = 15-30 minutes per day = 7.5 - 15 hours per month Hourly return = $27.78 - $55.56 Passive Budgeting Savings = $4000 per year = $333.33 per month Time spent = 1 - 2 hours per month Hourly return = $166.67 - $333.33 So clearly the passive approach gives a substantially higher hourly return, even though it gives a lower absolute return. Maybe more importantly though, if passive budgeting opens up an extra 10 hours a month, you could potentially put those hours into your job and make an extra (10 hours * $25/hour) = $250 a month, or $3000 per year, assuming no extra pay for overtime. So that means that the passive budgeting approach would actually allow you to save ($4000 + $3000 * .75) = $6250 per year, compared to the $5000 you would save by micromanaging. If you're in a situation where you can't put those hours into more work and you really need that extra $83.34 per month to help make ends meet, then by all means micromanage your expenses and try to save as much as possible. But if either of the previous conditions are not true for you, you're much better off, in my opinion, using a passive budget." }, { "docid": "129903", "title": "", "text": "Paying this off early is robbing yourself of the extra earning potential for this money. Think of it as an interest free loan from your future self. If you can otherwise use that money to get a better rate of return then you are better off putting it there. Best options would normally be to use it to buy additional regular RRSPs, RESPs, or TFSA because of government benefits but even puting the extra into a GIC for a year is better than paying back home buyers plan early." }, { "docid": "442110", "title": "", "text": "75k is short of the 'highly compensated' category. Most US citizens in that pay range would consider paying someone to do their taxes as an unnecessary expense. Tax shelters usually don't come into play for this level of income. However, there are certain things which provide deductions. Some things that make it better to pay someone: Use the free online tax forms to sandbox your returns. If all you're concerned about is ensuring you pay your taxes correctly, this is the most cost efficient route. If you want to minimize your tax burden, consult with a CPA. Be sure to get one who is familiar with resident aliens from your country and the relevant tax treaties. The estimate you're looking at may be the withholding, of which you may be eligible for a refund for some part of that withholding. Tax treaties likely make sure that you get credit on each side for the money paid in the other. For example, as a US citizen, if I go to Europe and work and pay taxes there, I can deduct the taxes paid in Europe from my tax burden in the US. If I've already paid more to the EU than I would have paid on the same amount earned in the US, then my tax burden in the US is zero. By the same token, if I have not paid up to my US burden, then I owe the balance to the US. But this is way better than paying taxes to your home country and to the host country where you earned the money." }, { "docid": "393857", "title": "", "text": "The short answer is that it depends on the taxation laws in your country. The long answer is that there are usually tax avoidance mechanisms that you can use which may make it more economically feasible for you to go one way or the other. Consider the following: The long term average growth rate of the stock market in Australia is around 7%. The average interest on a mortgage is 4.75%. Assuming you have money left over from a 20% deposit, you have a few options. You could: 1) Put that money into an index fund for the long term, understanding that the market may not move for a decade, or even move downwards; 2) Dump that money straight into the mortgage; 3) Put that money in an offset account Option 1 will get you (over the course of 30-40 years) around 7% return. If and when that profit is realised it will be taxed at a minimum of half your marginal tax rate (probably around 20%, netting you around 5.25%) Option 2 will effectively earn you 4.75% pa tax free Option 3 will effectively earn you 4.75% pa tax free with the added bonus that the money is ready for you to draw upon on short notice. Of the three options, until you have a good 3+ months of living expenses covered, I'd go with the offset account every single time. Once you have a few months worth of living expenses covered, I would the adopt a policy of spreading your risk. In Australia, that would mean extra contributions to my Super (401k in the US) and possibly purchasing an investment property as well (once I had the capital to positively gear it). Of course, you should find out more about the tax laws in your country and do your own maths." }, { "docid": "228694", "title": "", "text": "\"This is the infographic from the Fidelity. It exemplifies what's wrong with the financial industry, and the sad state of innumeracy that we are in. To be clear, Fidelity treats the 401(k) correctly, although the assumption that the withdrawals are all at a marginal 28% is a poor one. The Roth side, they assume the $5000 goes in at a zero tax rate. This is nonsense, as Elaine can't deposit $5000, she has to pay tax first, no? She'd deposit $3600, and would have the identical $27,404 at withdrawal time. And this is pure nonsense - \"\"Let’s look at the numbers another way. Tom takes the $1,400 he saved in taxes from his $5,000 pretax contributions, and invests that money in a taxable brokerage account. That could boost his total at age 75 to $35,445.\"\" The $1400 saved is in his 401(k) already, there's no extra $1400. $5000 went in pretax. Let me go one more step, and explain what I think Joe meant in his comment below - tax table first - At retirement, say a couple has exactly $168,850 of income. With the $20K in standard deduction and exemptions, they are right at the top of the 25% bracket. And have a federal tax bill of $28,925. Overall, an effective rate of 17%. Of course this is a blend from 0%-25%, and I maintain that if some money could have gone in post tax while in the 10%/15% brackets, that would be great, but in the end, if it all skims off at 25%, and comes out at an effective 17%, that's not too bad. The article is incorrect. Misleading. And offends any of us that have any respect for numbers. And the fact that the article claim that \"\"87% found this helpful\"\" just makes me... sad. I've said it elsewhere, and will repeat, there are not just two points in time. The ability to convert Traditional 401(k) to Roth 401(k), and if in IRAs, not just convert, but also recharacterize, opens up other possibilities. It's worth a bit of attention and ongoing paperwork to minimize your lifetime tax bill. Time makes no difference. There is no \"\"crossover point\"\" as with other financial decisions. For this illustration, the results are identical regardless of time. By the way, in today's dollars, it would take $4M pretax to produce an annual withdrawal of $160K. This number is about top 2-3%. The 90%ers need not worry about saving their way to a higher tax bracket.\"" }, { "docid": "336276", "title": "", "text": "\"Your first question has been answered quite well already. To answer your second question: \"\"If you pay extra, do you want the extra to go toward the interest or toward the principal?\"\" This gives the consumer some flexibility to decide how additional payments are applied. It might seem like a no-brainer to always apply extra payments towards principal - that way, the interest amounts on future payments will be lower and (if you're billed a fixed amount each month) more of each regular payment will then be applied to principal, shortening the term of the loan. However, while it would mean spending more over the life of the loan, there are certain advantages to applying extra payments towards interest†. The main advantage is that it pays your account ahead and means you don't have to make another payment as soon. You could use this strategy to give yourself a buffer of several months, so that if you should ever run into financial hardship you can stop making mortgage payments for a while without the risk of foreclosure. † Note, in most cases it's more likely that you are simply paying more without specifying to the lender that it should be used as principal curtailment. I haven't seen cases where you can explicitly ask the extra to be \"\"applied toward interest\"\". In this situation the funds would be held until you've provided enough to cover one or more monthly payments in full, at which point your \"\"next payment due\"\" date will simply be extended. Another advantage is that the funds that are being held (not due yet, not allocated toward any specific payment, maybe held in escrow) may be refundable to you, upon request. This would depend on the lender's policy. Some will permit refunds of credit balances that go beyond what is necessary to cover the current month's bill. Whether you apply extra payments towards principal or not, it makes little difference to the bank. Any additional payments received increase their immediate cash flow. The cash can be reinvested immediately by them into whatever they are currently focusing on.\"" }, { "docid": "201302", "title": "", "text": "Another, completely different way to look at your huge mistake: It's not a huge mistake. You're getting your money out of a restricted account. You're paying taxes now (plus an extra tax of 10%) to regain some of your privacy of where you're putting your money. You're paying up now as a trade-off to paying much later, when the rules can be completely different and the tax rates much higher. You're deciding not to put the money into another restricted account, which has yearly reporting requirements to the IRS above and beyond those required with taxable earnings. It's a cost-benefit analysis whether you roll your money over to an IRA account or not. You hear about the benefits a lot more often than you hear about the costs, which it what I'm introducing you to with my answer." }, { "docid": "158629", "title": "", "text": "\"Just an FYI, this can be a risky move. Unless you have been in the industry for a while, or are extremely well averse in investment management/research, keep it pretty short. In a lot of ways, you might want to think about tailoring it more like a sell-side report. Also, make sure you understand the style of investing the PM/company you are applying to likes. The reason I say this is because every buy-side shop is different. Some do 1-2 page write-ups with models and walk through's, others will expect 60 page \"\"decks\"\" (i.e. Powerpoints). The longer the deck, the more you have that can go wrong. If one tiny thing is wrong, or you have a typo anywhere, it hurts you more than it helps that you wrote something long (I once had the wrong rating on one issuance of a bond ladder I was pitching; it's all the PM's focused on). The more important aspect is that you understand the shop you are applying to and then tailoring the pitch to them. For example, don't do a growth tech company with an 80x forward P/E if you're applying to a fundamental value shop. It shows you didn't do research on the firm you're applying to and that you won't fit the culture. This is part of why I was saying that this can be a risky move, if the firm is large enough to have an HR department, they likely have a lot of different investment styles in house. Finally, try to keep it to a small/mid-cap company. Analysts/PMs follow stocks all day long and will most likely have an opinion on 99% of large caps, no matter the sector. In summary, I'd recommend a 1-2 page sell-side style write-up with a backup model (printed excel file). KISS (keep it simple stupid), have a summary, couple years worth of historical's, 2 years forward, and a few main bullet points of why you like them. In your case, this pitch should be something to pique the interest so that you can NAIL a real pitch in the interview. If you get an interview, know everything about everything in the industry as well as that specific company. For example, lets say you do a smartphone secular theme investment. Do you know what outstanding AAPL/Android cases there are, and more importantly, how would each ruling likely affect the marketplace? This is because I can guarantee if you're pitching to another tech guy, he knows and has an educated opinion on it. Also, in many cases having a great model can mean more than a long write-up, it shows that you're good with numbers and can think about FUTURE earnings, which are all that matter. Last point, IMO you'd be better off trying to get your foot in the door through networking than HR. HR doesn't really do much on the buy-side with recruiting and won't really understand what to look for in a good pitch (they're HR after-all, not an analyst). Try to meet someone over coffee and then have a pitch READY to bring out/discuss. The buy-side is selective enough that usually when positions open up it's either because they are creating one for you or they already have an idea of who is going to fill it. This mean HR has little to no say in helping you get in. You'll have a lot more success this way than blasting to a bunch of HR emails.\"" }, { "docid": "274298", "title": "", "text": "First of all, MLM was not made to make all members earn good money. An honest MLM is made to allow members to make SOME money using their connections - a good example is AVON, popular among students, who sell some cosmetics to their friends and make some money to repair budget. A scam MLM is made to lure naive people to buy some crap by making them believe they will get rich, and in that systems only the most successive scammers get rich. Tell your friend to forget about the virtual profit from 'recruiting' other people and concentrate only on this what he/she will earn if he/she recruits nothing and simply sell some stuff. MLM gurus love to draw trees - state clearly, that every tree has more leaves than branches. Of course, under that criteria, no MLM can make your living, but the truth is, to earn for life you need to generate volume, which is unlikely in such sales model, but you can use it to make some extra money to repair your budget." } ]

[ { "docid": "37900", "title": "", "text": "Congratulations to you and good luck and good health with the baby. I had a friend in a similar situation, and I told him that he could do quite well by putting out the word to an upper-middle-class neighborhood that he was available to setup routers, home networks, etc. I suggested that he could start at a low enough wage that people would see the beneficial tradeoff to having him come over for a few hours versus doing it themselves. After a few months, he hired someone to take the extra work he was receiving, and directed the more routine requests his employee. He had a full-time job plus all the extra work he wanted. Most people who hire him simply want someone they would trust in their home, and his service spread by word-of-mouth. He also got to meet many people who liked him and were impressed by his work ethic, resulting in many good connections if he ever wanted to pursue other employment. My friend was an IT professional, the best support person at our tech-heavy firm, so he wasn't giving his time away. He did enjoy doing it, and he did enjoy the extra money. On an hourly basis, especially once he added the assistant, he was making more on the side than he did at his job. However, I believe he did start lower than that. Good luck!" } ]

[ { "docid": "30311", "title": "", "text": "\"You're in good shape as long as your income stays. Your only variable-rate debt now is your private student loan. I think you'd be wise to pay that down first, and you sense that already. Worst-case, in the event of a bankruptcy, student loans usually cannot be discharged, so that isn't a way out. Once that loan is gone, apply what you were paying to your other student loan to knock that out. You might investigate refinancing your home (to another 30-year fixed). You may be able to shave a half-percent off if your credit is stellar. Given the size of the mortgage, this could be several thousand out of pocket, so consider that when figuring out potential payback time. Consider using any \"\"free time\"\" to starting up a side business (I'm assuming you both have day jobs but that may not be a correct assumption). Start with what you know well. You and your wife are experts in something, and have passion about something. Go with that. Use the extra income from that to either pay down your debts faster, or just reinvest in the business so that you can offset the income on your taxes. Again, you're in good shape. Just do what you can to protect and grow your income streams.\"" }, { "docid": "228694", "title": "", "text": "\"This is the infographic from the Fidelity. It exemplifies what's wrong with the financial industry, and the sad state of innumeracy that we are in. To be clear, Fidelity treats the 401(k) correctly, although the assumption that the withdrawals are all at a marginal 28% is a poor one. The Roth side, they assume the $5000 goes in at a zero tax rate. This is nonsense, as Elaine can't deposit $5000, she has to pay tax first, no? She'd deposit $3600, and would have the identical $27,404 at withdrawal time. And this is pure nonsense - \"\"Let’s look at the numbers another way. Tom takes the $1,400 he saved in taxes from his $5,000 pretax contributions, and invests that money in a taxable brokerage account. That could boost his total at age 75 to $35,445.\"\" The $1400 saved is in his 401(k) already, there's no extra $1400. $5000 went in pretax. Let me go one more step, and explain what I think Joe meant in his comment below - tax table first - At retirement, say a couple has exactly $168,850 of income. With the $20K in standard deduction and exemptions, they are right at the top of the 25% bracket. And have a federal tax bill of $28,925. Overall, an effective rate of 17%. Of course this is a blend from 0%-25%, and I maintain that if some money could have gone in post tax while in the 10%/15% brackets, that would be great, but in the end, if it all skims off at 25%, and comes out at an effective 17%, that's not too bad. The article is incorrect. Misleading. And offends any of us that have any respect for numbers. And the fact that the article claim that \"\"87% found this helpful\"\" just makes me... sad. I've said it elsewhere, and will repeat, there are not just two points in time. The ability to convert Traditional 401(k) to Roth 401(k), and if in IRAs, not just convert, but also recharacterize, opens up other possibilities. It's worth a bit of attention and ongoing paperwork to minimize your lifetime tax bill. Time makes no difference. There is no \"\"crossover point\"\" as with other financial decisions. For this illustration, the results are identical regardless of time. By the way, in today's dollars, it would take $4M pretax to produce an annual withdrawal of $160K. This number is about top 2-3%. The 90%ers need not worry about saving their way to a higher tax bracket.\"" }, { "docid": "85647", "title": "", "text": "I view it as a “zero sum game” from the perspective of the customer. Don’t tell me that my meal is $25 when EVERYONE KNOWS that it’s actually, $25 + $5 tip = $30. Just make the menu price $30 and pay people properly. It’s the exact same cost for a customer. Then, if a tip is left, it is truly a tip for the worker(s) and not the majority of their earnings. And before anyone chimes in to tell me that servers like to tax-dodge on their unreported earnings... Yeah, so would we all. In the same way that we’d never pay a Doctor, Accountant, Soldier, or Teacher a fraction of their pay and then hope that the people they serve were in a good mood to give them a little something extra, neither should we do this to tipped workers." }, { "docid": "280099", "title": "", "text": "Well said. To put it shortly I think both can be a viable source of some side income when proper risk management is in place. It is likely not going to work when you are trading/betting with money that is important to you. Paper trade/bet until you find a viable strategy. Then use proper bankroll management and some expendable income to pick up some extra bucks on the side. Sports betting is nice because the initial investment is much lower than day trading." }, { "docid": "532113", "title": "", "text": "\"This question can simply be answered with \"\"it depends\"\", but I am sure that is not the answer you want. So here is all of the reasons why it depends... The philosophy behind real time energy pricing is that you pay for what it actually costs for the energy to be produced. Peak times costs the power company a lot of money to produce the power. There are many reasons for this, but the simplest reason is that at some point the company will have to build extra power plants in order to be able to provide for the peak demand, while these plants will be widely underused during off-peak times. In the traditional flat rate charge per killowatt billing, you had to be charged higher then it actually costs during the off-peak hours in order for the power company to make sure they brought in enough money to cover the costs of the peak hours. Technology has now advanced enough that power company can charge you more directly of what it actually costs them. Potentially this could mean that you would pay more in electricity. This can happen if you are a person who loves to use energy during peak hours. Do you like turning on all of your lights when you get home from work in the summer? What about watching TV? Or what about cooking dinner? Or what about turning the AC down colder to overcome the heat produced by cooking dinner? All of those things that you might be used to doing are actually costing the power company more money because they have to plan for those higher peak loads. You can save yourself money if you are willing to shift your usage to other times of day, such as cook later in the evening or decide to grill outside, or wait to watch your TV show until later in the evening. If you are someone who is stuck in your ways and doesn't want to adjust the time of day that you do certain things, doing real time pricing may end up costing you more. Some people could argue that it actually should cost you more. Why should someone who is saving the power company money have to pay extra for someone who is costing the power company more money? All of this is viewed from the short term though. You may save some money here or there, or you may end up paying a little extra here or there, but I truly believe that in the long run everything will equalize out such that you will be paying the same anyways, or at least a small enough difference I wouldn't worry about it. If you stick with the flat rate pricing, they are already have to factor in you being a peak rate user when you might not actually be one. In short, if you are willing to adjust your habits, I will almost promise you that you will save money. If you don't want to change and especially like to use energy during Summer afternoons, you might want to just stay where you are at.\"" }, { "docid": "79496", "title": "", "text": "\"Pyramid Schemes are illegal. This is not a pyramid scheme but I wouldn't dive into it unless you either had some killer marketing skills OR you are an extremely social and likable person; like high-school popularity contest winner level, but older. The affiliate earning system is way more complicated than what you mentioned (in a good way) because there are many ways to earn, but the biggest way to earn requires someone who \"\"knows how to throw a party\"\" or someone who absolutely loves people. (I don't). I personally am documenting my experience with PMB CBD oil and am posting my no B.S. review about everything from the product to the affiliate system on my personal FB. I'm not a people-person so i don't see me standing on a podium with a little mic around my cheek, but oddly my candid (and often funny) reviews inspired many of my Facebook friends to buy CBD. I get $30 for every bottle i sell through my affiliate page; this is a better way for me to earn than standing up in front of people like Martha Stewart. It helps if you actually like and use the product because that way you don't feel pressured to sell. I'm experimenting with CBD because I simply can't relax and suffer from some major anxiety and stress attacks. Results? Well it's 6am and i'm writing to you not freaking out about work tomorrow and browsing for Rick and Morty memes. I like it so far but we'll see.\"" }, { "docid": "259924", "title": "", "text": "As others have mentioned yes it is taxable. Whether it goes through payroll and has FICA taken out is your issue in terms that you need to report it and you will an extra 7.5% self employment taxes that would normally be covered by your employer. Your employer may have problems but that isn't your issue. Contrary to what other users are saying chances are there won't be any penalties for you. Best case you have already paid 100% of last years tax liability and you can file your normal tax return with no issues. Worst case you need to pay quarterly taxes on that amount in the current quarter. IRS quarters are a little weird but I think you need to pay by Jan 15th for a December payment. You don't have to calculate your entire liability you can just fill out the very short form and attach a check for about what you will owe. There is a form you can fill out to show what quarter you received the money and you paid in it is a bit more complex but will avoid the penalty. For penalties quarterly taxes count in the quarter received where as payroll deductions count as if they were paid in the first quarter of the year. From the IRS The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay your tax through withholding, or do not pay enough tax that way, you might also have to pay estimated taxes. If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller." }, { "docid": "131365", "title": "", "text": "but then they make suggestions such as paying extra each month on your mortgage. How else does one pay off his mortgage early other than by paying extra each month? The principal and interest are fixed, no matter how much money you throw at them. The interest rate is fixed. The total interest paid varies depending on how much extra you pay towards the principal. You'll pay the same amount every month regardless. That's factually incorrect. just put the extra money into savings At 1.2%, if you're smart enough to put it in an on-line savings account. until you have enough to pay off the mortgage Which costs you 3.5%. This way, the money is locked up in your home. Who says that all of your money must be locked up in your home? (I'm sure that there are financial advisors who recommend that you throw every single spare dime into extra mortgage payments, but they're rare.) Am I missing something? Yes: the mathematical sense to see that a 3.5% loan costs more than than 1.2% savings earns you" }, { "docid": "166669", "title": "", "text": "At least these people are looking for extra money by putting something into the system instead of just begging for dollars by the side of the road. These situations make me sad because we don't want people who can't work to starve and we do need disability payments. On the other hand, we seem to have found a way to discourage people from doing even what they can do and this can't be the right way to handle things." }, { "docid": "42738", "title": "", "text": "The book value is Total Assets minus Total Liabilities and so if you increase the Total Assets without changing the Total Liabilities the difference gets bigger and thus higher. Consider if a company had total assets of $4 and total liabilities of $3 so the book value is $1. Now, if the company adds $2 to the assets, then the difference would be 4+2-3=6-3=3 and last time I checked 3 is greater than 1. On definitions, here are a couple of links to clarify that side of things. From Investopedia: Equity = Assets - Liabilities From Ready Ratios: Shareholders Equity = Total Assets – Total Liabilities OR Shareholders Equity = Share Capital + Retained Earnings – Treasury Shares Depending on what the reinvestment bought, there could be several possible outcomes. If the company bought assets that appreciated in value then that would increase the equity. If the company used that money to increase sales by expanding the marketing department then the future calculations could be a bit trickier and depend on what assumptions one wants to make really. If you need an example of the latter, imagine playing a game where I get to make up the rules and change them at will. Do you think you'd win at some point? It would depend on how I want the game to go and thus isn't something that you could definitively say one way or the other." }, { "docid": "82039", "title": "", "text": "\"If you have enough earned income to cover this amount you should be all set. If I understand you correctly you proposed two transactions. The first, a withdrawal from the beneficiary IRA. Some of which is an RMD the rest is an extra withdrawal of funds. Next, you propose to make a deposit to a combination of your IRA and your wife's IRA. As long as there's earned income to cover this deposit, your plan is fine. To be clear, you can't \"\"take a bene IRA and deposit the RMD to an IRA.\"\" But, money is fungible, the dollars you deposit aren't traceable, only need to be justified by enough earned income. A bene IRA is a great way to get the money to increase your own IRA or 401(k) deposits. Further details - The 2016 contribution limit is $5,500 per person, so I did make the assumption you knew the $9000 deposit need to be split between the 2 IRAs, with no more than $5500 going into either one.\"" }, { "docid": "146632", "title": "", "text": "\"Yes. There are several downsides to this strategy: You aren't taking into account commissions. If you pay $5 each time you buy or sell a stock, you may greatly reduce or even eliminate any possible gains you would make from trading such small amounts. This next point sounds obvious, but remember that you pay a commission on every trade regardless of profit, so every trade you make that you make at a loss also costs you commissions. Even if you make trades that are profitable more often than not, if you make quite a few trades with small amounts like this, your commissions may eat away all of your profits. Commissions represent a fixed cost, so their effect on your gains decreases proportionally with the amount of money you place at risk in each trade. Since you're in the US, you're required to follow the SEC rules on pattern day trading. From that link, \"\"FINRA rules define a “pattern day trader” as any customer who executes four or more “day trades” within five business days, provided that the number of day trades represents more than six percent of the customer’s total trades in the margin account for that same five business day period.\"\" If you trip this rule, you'll be required to maintain $25,000 in a margin brokerage account. If you can't maintain the balance, your account will be locked. Don't forget about capital gains taxes. Since you're holding these securities for less than a year, your gains will be taxed at your ordinary income tax rates. You can deduct your capital losses too (assuming you don't repurchase the same security within 30 days, because in that case, the wash sale rule prevents you from deducting the loss), but it's important to think about gains and losses in real terms, not nominal terms. The story is different if you make these trades in a tax-sheltered account like an IRA, but the other problems still apply. You're implicitly assuming that the stock's prices are skewed in the positive direction. Remember that you have limit orders placed at the upper and lower bounds of the range, so if the stock price decreases before it increases, your limit order at the lower bound will be triggered and you'll trade at a loss. If you're hoping to make a profit through buying low and selling high, you want a stock that hits its upper bound before hitting the lower bound the majority of the time. Unless you have data analysis (not just your intuition or a pattern you've talked yourself into from looking at a chart) to back this up, you're essentially gambling that more often than not, the stock price will increase before it decreases. It's dangerous to use any strategy that you haven't backtested extensively. Find several months or years of historical data, either intra-day or daily data, depending on the time frame you're using to trade, and simulate your strategy exactly. This helps you determine the potential profitability of your strategy, and it also forces you to decide on a plan for precisely when you want to invest. Do you invest as soon as the stock trades in a range (which algorithms can determine far better than intuition)? It also helps you figure out how to manage your risk and how much loss you're willing to accept. For risk management, using limit orders is a start, but see my point above about positively skewed prices. Limit orders aren't enough. In general, if an active investment strategy seems like a \"\"no-brainer\"\" or too good to be true, it's probably not viable. In general, as a retail investor, it's foolish to assume that no one else has thought of your simple active strategy to make easy money. I can promise you that someone has thought of it. Trading firms have quantitative researchers that are paid to think of and implement trading strategies all the time. If it's viable at any scale, they'll probably already have utilized it and arbitraged away the potential for small traders to make significant gains. Trust me, you're not the first person who thought of using limit orders to make \"\"easy money\"\" off volatile stocks. The fact that you're asking here and doing research before implementing this strategy, however, means that you're on the right track. It's always wise to research a strategy extensively before deploying it in the wild. To answer the question in your title, since it could be interpreted a little differently than the body of the question: No, there's nothing wrong with investing in volatile stocks, indexes, etc. I certainly do, and I'm sure many others on this site do as well. It's not the investing that gets you into trouble and costs you a lot of money; it's the rapid buying and selling and attempting to time the market that proves costly, which is what you're doing when you implicitly bet that the distribution of the stock's prices is positively skewed. To address the commission fee problem, assuming a fee of $8 per trade ... and a minimum of $100 profit per sale Commissions aren't your only problem, and counting on $100 profit per sale is a significant assumption. Look at point #4 above. Through your use of limit orders, you're making the implicit assumption that, more often than not, the price will trigger your upper limit order before your lower limit order. Here's a simple example; let's assume you have limit orders placed at +2 and -2 of your purchase price, and that triggering the limit order at +2 earns you $100 profit, while triggering the limit order at -2 incurs a loss of $100. Assume your commission is $5 on each trade. If your upper limit order is triggered, you earn a profit of 100 - 10 = 90, then set up the same set of limit orders again. If your lower limit order is triggered this time, you incur a loss of 100 + 10 = 110, so your net gain is 90 - 110 = -20. This is a perfect example of why, when taking into account transaction costs, even strategies that at first glance seem profitable mathematically can actually fail. If you set up the same situation again and incur a loss again (100 + 10 = 110), you're now down -20 - 110 = -130. To make a profit, you need to make two profitable trades, without incurring further losses. This is why point #4 is so important. Whenever you trade, it's critical to completely understand the risk you're taking and the bet you're actually making, not just the bet you think you're making. Also, according to my \"\"algorithm\"\" a sale only takes place once the stock rises by 1 or 2 points; otherwise the stock is held until it does. Does this mean you've removed the lower limit order? If yes, then you expose yourself to downside risk. What if the stock has traded within a range, then suddenly starts declining because of bad earnings reports or systemic risks (to name a few)? If you haven't removed the lower limit order, then point #4 still stands. However, I never specified that the trades have to be done within the same day. Let the investor open up 5 brokerage accounts at 5 different firms (for safeguarding against being labeled a \"\"Pattern Day Trader\"\"). Each account may only hold 1 security at any time, for the span of 1 business week. How do you control how long the security is held? You're using limit orders, which will be triggered when the stock price hits a certain level, regardless of when that happens. Maybe that will happen within a week, or maybe it will happen within the same day. Once again, the bet you're actually making is different from the bet you think you're making. Can you provide some algorithms or methods that do work for generating some extra cash on the side, aside from purchasing S&P 500 type index funds and waiting? When I purchase index funds, it's not to generate extra liquid cash on the side. I don't invest nearly enough to be able to purchase an index fund and earn substantial dividends. I don't want to get into any specific strategies because I'm not in the business of making investment recommendations, and I don't want to start. Furthermore, I don't think explicit investment recommendations are welcome here (unless it's describing why something is a bad idea), and I agree with that policy. I will make a couple of points, however. Understand your goals. Are you investing for retirement or a shorter horizon, e.g. some side income? You seem to know this already, but I include it for future readers. If a strategy seems too good to be true, it probably is. Educate yourself before designing a strategy. Research fundamental analysis, different types of orders (e.g., so you fully understand that you don't have control over when limit orders are executed), different sectors of the market if that's where your interests lie, etc. Personally, I find some sectors fascinating, so researching them thoroughly allows me to make informed investment decisions as well as learn about something that interests me. Understand your limits. How much money are you willing to risk and possibly lose? Do you have a risk management strategy in place to prevent unexpected losses? What are the costs of the risk management itself? Backtest, backtest, backtest. Ideally your backtesting and simulating should be identical to actual market conditions and incorporate all transaction costs and a wide range of historical data. Get other opinions. Evaluate those opinions with the same critical eye as I and others have evaluated your proposed strategy.\"" }, { "docid": "3315", "title": "", "text": "I'll have to think it through, but at the very least unless your debt is a pure discount instrument and you are using cash flows, some if that money IS getting paid during those 5 years. As in if you are using earnings, they pay p&amp;i. Or if earnings and pure discount instruments, then amortized interest (I think, been a while). You see the actual numbers and know what you are trying to do, but I'm a little lost. Are you building a discount model with a multiple terminal and using ev as the multiple? Are you using free cash flow to firm for the discounting? I'm guessing that's the case." }, { "docid": "575552", "title": "", "text": "\"So you are in IT, that is great news because you can earn a fabulous income. The part time is not great, but you can use this to your advantage. You can get another job or three to boost your income in the short term. In the long term you should be able to find a better paying job fairly easily. There is one way to never deal with creditors again: never borrow money again. Its pretty damn simple and from the suggestions of your post you don't seem to be very good at handling credit. This would make you fairly normal. 78% of US households don't have $1000 saved. How are they going to handle a brake job/broken dryer/emergency room visit? Those things happen. Cut your lifestyle to nothing, earn money and save it. Say you have 2000 saved up. Then a creditor calls saying you owe 5K. Tell me you are willing to settle for the 2K you have saved. If they don't, hang up. If they are willing getting it writing and pay by a method that insulates you from further charges. Boom one out of the way and keep going. You will be 1099'd for some income, but it is a easy way to \"\"earn\"\" extra money. This will all work if you commit yourself to never again borrowing money.\"" }, { "docid": "393857", "title": "", "text": "The short answer is that it depends on the taxation laws in your country. The long answer is that there are usually tax avoidance mechanisms that you can use which may make it more economically feasible for you to go one way or the other. Consider the following: The long term average growth rate of the stock market in Australia is around 7%. The average interest on a mortgage is 4.75%. Assuming you have money left over from a 20% deposit, you have a few options. You could: 1) Put that money into an index fund for the long term, understanding that the market may not move for a decade, or even move downwards; 2) Dump that money straight into the mortgage; 3) Put that money in an offset account Option 1 will get you (over the course of 30-40 years) around 7% return. If and when that profit is realised it will be taxed at a minimum of half your marginal tax rate (probably around 20%, netting you around 5.25%) Option 2 will effectively earn you 4.75% pa tax free Option 3 will effectively earn you 4.75% pa tax free with the added bonus that the money is ready for you to draw upon on short notice. Of the three options, until you have a good 3+ months of living expenses covered, I'd go with the offset account every single time. Once you have a few months worth of living expenses covered, I would the adopt a policy of spreading your risk. In Australia, that would mean extra contributions to my Super (401k in the US) and possibly purchasing an investment property as well (once I had the capital to positively gear it). Of course, you should find out more about the tax laws in your country and do your own maths." }, { "docid": "232983", "title": "", "text": "If you know that your tax situation is not easily handled by the standard withholding table then you can use that line to ask for additional funds be withheld. You could also ask for less money to be withheld. Why would somebody do this? They had a small side business that made them extra income, and wanted to withhold extra money from their full time job to cover the extra income. They might have been awarded a big bonus and it caused too much in taxes to be withheld so they wanted to not have as much taxes from their regular pay check. Given the fact that you are young, in your first real job, and almost the entire tax year ahead of you, it is likely that the standard tax tables will be close enough. So leave the line blank or put zero." }, { "docid": "542764", "title": "", "text": "\"A stock, at its most basic, is worth exactly what someone else will pay to buy it right now (or in the near future), just like anything else of value. However, what someone's willing to pay for it is typically based on what the person can get from it. There are a couple of ways to value a stock. The first way is on expected earnings per share, most of would normally (but not always) be paid in dividends. This is a metric that can be calculated based on the most recently reported earnings, and can be estimated based on news about the company or the industry its in (or those of suppliers, likely buyers, etc) to predict future earnings. Let's say the stock price is exactly $100 right now, and you buy one share. In one quarter, the company is expected to pay out $2 per share in dividends. That is a 2% ROI realized in 3 months. If you took that $2 and blew it on... coffee, maybe, or you stuffed it in your mattress, you'd realize a total gain of $8 in one year, or in ROI terms an annual rate of 8%. However, if you reinvested the money, you'd be making money on that money, and would have a little more. You can calculate the exact percentage using the \"\"future value\"\" formula. Conversely, if you wanted to know what you should pay, given this level of earnings per share, to realize a given rate of return, you can use the \"\"present value\"\" formula. If you wanted a 9% return on your money, you'd pay less for the stock than its current value, all other things being equal. Vice-versa if you were happy with a lesser rate of return. The current rate of return based on stock price and current earnings is what the market as a whole is willing to tolerate. This is how bonds are valued, based on a desired rate of return by the market, and it also works for stocks, with the caveat that the dividends, and what you'll get back at the \"\"end\"\", are no longer constant as they are with a bond. Now, in your case, the company doesn't pay dividends. Ever. It simply retains all the earnings it's ever made, reinvesting them into doing new things or more things. By the above method, the rate of return from dividends alone is zero, and so the future value of your investment is whatever you paid for it. People don't like it when the best case for their money is that it just sits there. However, there's another way to think of the stock's value, which is it's more core definition; a share of the company itself. If the company is profitable, and keeps all this profit, then a share of the company equals, in part, a share of that retained earnings. This is very simplistic, but if the company's assets are worth 1 billion dollars, and it has one hundred million shares of stock, each share of stock is worth $10, because that's the value of that fraction of the company as divided up among all outstanding shares. If the company then reports earnings of $100 million, the value of the company is now 1.1 billion, and its stock should go up to $11 per share, because that's the new value of one ten-millionth of the company's value. Your ROI on this stock is $1, in whatever time period the reporting happens (typically quarterly, giving this stock a roughly 4% APY). This is a totally valid way to value stocks and to shop for them; it's very similar to how commodities, for instance gold, are bought and sold. Gold never pays you dividends. Doesn't give you voting rights either. Its value at any given time is solely what someone else will pay to have it. That's just fine with a lot of people right now; gold's currently trading at around $1,700 an ounce, and it's been the biggest moneymaker in our economy since the bottom fell out of the housing market (if you'd bought gold in 2008, you would have more than doubled your money in 4 years; I challenge you to find anything else that's done nearly as well over the same time). In reality, a combination of both of these valuation methods are used to value stocks. If a stock pays dividends, then each person gets money now, but because there's less retained earnings and thus less change in the total asset value of the company, the actual share price doesn't move (much). If a stock doesn't pay dividends, then people only get money when they cash out the actual stock, but if the company is profitable (Apple, BH, etc) then one share should grow in value as the value of that small fraction of the company continues to grow. Both of these are sources of ROI, and both are seen in a company that will both retain some earnings and pay out dividends on the rest.\"" }, { "docid": "540527", "title": "", "text": "TL:DR: You should read something like The Little Book of Common Sense Investing, and read some of the popular questions on this site. The main message that you will get from that research is that there is an inescapable connection between risk and reward, or to put it another way, volatility and reward. Things like government bonds and money market accounts have quite low risk, but also low reward. They offer a nearly guaranteed 1-3%. Stocks, high-risk bonds, or business ventures (like your soda and vending machine scheme) may return 20% a year some years, but you could also lose money, maybe all you've invested (e.g., what if a vandal breaks one of your machines or the government adds a $5 tax for each can of soda?). Research has shown that the best way for the normal person to use their money to make money is to buy index funds (these are funds that buy a bunch of different stocks), and to hold them for a long time (over 10-15 years). By buying a broad range of stocks, you avoid some of the risks of investing (e.g., if one company's stock tanks, you don't lose very much), while keeping most of the benefits. By keeping them for a long time, the good years more than even out the bad years, and you are almost guaranteed to make ~6-7%/year. Buying individual stocks is a really, really bad idea. If you aren't willing to invest the time to become an expert investor, then you will almost certainly do worse than index funds over the long run. Another option is to use your capital to start a side business (like your vending machine idea). As mentioned before, this still has risks. One of those risks is that it will take more work than you expect (who will find places for your vending machines? Who will fill them? Who will hire those who fill them? etc.). The great thing about an index fund is that it doesn't take work or research. However, if there are things that you want to do, that take capital, this can be a good way to make more income." }, { "docid": "291376", "title": "", "text": "\"What you are doing is neither one. You are simply watching to make sure you don't overdraw, which itself suggests you might be living hand to mouth and not saving. Keeping track of your money and budgeting are useful tools which help people get on top of their money. Which tends to have the effect of allowing you to save. How much did you spend on groceries last month? Eating out? Gas? If you were \"\"keeping track of your money\"\", you could say immediately what you spent, and whether that is above or below average, and why. How much do you plan to spend in the next 3 months on gas, groceries, eating out? If you knew the answer to that question, then you would have a \"\"budget\"\". And if those months go by, and your budget proves to have been accurate, or educates you as to what went wrong so you can learn and fix it... then your budget is a functioning document that is helping you master your money. Certainly the more powerful of the two is the \"\"keeping track\"\", or accounting of what has happened to you so far. It's important that you keep track of every penny without letting stuff \"\"slip through the cracks\"\". Here you can use proper accounting techniques and maybe accounting software, just like businesses do where they reconcile their accounting against their bank statements and wallet cash. I shortcut that a little. I buy gift cards for McDonalds, Panera, Starbucks, etc. and buy my meals with those. That way, I only have one transaction to log, $40 - McDonalds gift card instead of a dozen little meals. It works perfectly fine since I know all that money went to fast food. A little more dangerous is that I treat wallet cash the same way, logging say two monthly entries of $100 to cash rather than 50 little transactions of left $1 tip at restaurant. This only works because cash is a tiny part of my overall expenditures - not worth accounting. If it added up to a significant part, I'd want accounting on that.\"" } ]

[ { "docid": "382005", "title": "", "text": "It depends on where you live and how you can think out of the box on earning little extra income on the side. If you live in North America and based on the needs in your city, you can try out these ideas. Here is what one of my friend has done, The family has two kids and the wife started a home day care as she was already taking care of two kids anyways. Of course, she had to be qualified and she took the relevant child care classes and got certified, which took six months. And she is managing 4 kids in addition to her two kids bringing in at least 2000$ per month in addition. And my friend started a part time property management business on the side, with one client. For example there is always work on real estate whether its going up or going down. You have to be involved locally to increase your knowledge on real estate. You can be a property manager for local real estate investors. If its going down, you can get involved in helping people sell and buy real estate. Be a connector, bring the buyers and sellers together." } ]

[ { "docid": "82039", "title": "", "text": "\"If you have enough earned income to cover this amount you should be all set. If I understand you correctly you proposed two transactions. The first, a withdrawal from the beneficiary IRA. Some of which is an RMD the rest is an extra withdrawal of funds. Next, you propose to make a deposit to a combination of your IRA and your wife's IRA. As long as there's earned income to cover this deposit, your plan is fine. To be clear, you can't \"\"take a bene IRA and deposit the RMD to an IRA.\"\" But, money is fungible, the dollars you deposit aren't traceable, only need to be justified by enough earned income. A bene IRA is a great way to get the money to increase your own IRA or 401(k) deposits. Further details - The 2016 contribution limit is $5,500 per person, so I did make the assumption you knew the $9000 deposit need to be split between the 2 IRAs, with no more than $5500 going into either one.\"" }, { "docid": "497281", "title": "", "text": "There are a number of scholarly articles on the subject including a number at the end of the Vanguard article you reference. However, unfortunately like much of financial research you can't look at the articles without paying quite a bit. It is not easy to make a generic comparison between lump-sum and dollar cost averaging because there are many ways to do dollar cost averaging. How long do you average over? Do you evenly average or exponentially put the money to work? The easiest way to think about this problem though is does the extra compounding from investing more of the money immediately outweigh the chance that you may have invested all the money when the market is overvalued. Since the market is usually near the correct value investing in lump sum will usually win out as the Vanguard article suggests. As a side note, while using DCA on a large one time sum of money is generally not optimal, if you have a consistent salary DCA by frequently investing a portion of your salary has been frequently shown to be a very good idea of long periods over saving up a bunch of money and investing it all at once. In this case you get the compounding advantage of investing early and you avoid investing a large chunk of money when the market is overvalued." }, { "docid": "11998", "title": "", "text": "\"I have a couple other important considerations regarding external HSA accounts vs employer sponsored HSA accounts. Depending on your personal financial situation and goals; some people like to use HSA accounts as an extra retirement account (since the money can be withdrawn penalty free in retirement for non-medical expenses, and completely tax & penalty free at any time for medical expenses). If your intended use for the HSA account is an investment vehicle for retirement, then you may find more use/benefit out of an external provider that may provide more or better investment options than your employers HSA investment options. There can be a lot of additional value in those extra investment options over greater periods of time. Another VERY important consideration for FICA taxes (FICA includes Social Security & Medicare) that I don't believe was mentioned before - for those earners who are under the maximum social security wage limit, you are paying 6.2% of each paycheck into social security taxes. As others have mentioned you can \"\"save\"\" this tax through your employer’s plan if you set up the account to be funded pre-tax from your paychecks. However, in doing so, you are lowering your overall contributions into social security, which may lower your social security benefits in your retirement years! If this is ultimately going to lower your SSA benefits in retirement then that is a big future cost that may steer you against the pre-tax employer contributions. Think of social security as part of your retirement plan, not as a tax but instead as an additional check you put away for yourself for retirement every month. Of course, this is only an important consideration if SSA is still going to be around when you retire, but let's assume that it will be. This is not an issue for higher earners, earning well above the max SSA taxable wages. There is no wage limit on the 1.45% Medicare tax withholding's, and there is certainly no harm in saving Medicare taxes because it will not affect future Medicare benefits. So for taxpayers earning well over the max SSA wages, they will just save the 1.45% Medicare taxes without affecting their SSA contributions and resulting retirement benefits. So again, it all comes down to personal situations. Depending on your earnings and goals, employer plan may or may not be the way to go. Personally, for my lower earning clients, friends and family, I tend to recommend that they do whatever they can to maximize their social security benefits in retirement. So I would advise them to either use the external provider account, or the employer plan but with post-tax contributions so you don't lower the SSA withholding's but can still claim the income tax deduction on your tax return. YMMV -Dan\"" }, { "docid": "201302", "title": "", "text": "Another, completely different way to look at your huge mistake: It's not a huge mistake. You're getting your money out of a restricted account. You're paying taxes now (plus an extra tax of 10%) to regain some of your privacy of where you're putting your money. You're paying up now as a trade-off to paying much later, when the rules can be completely different and the tax rates much higher. You're deciding not to put the money into another restricted account, which has yearly reporting requirements to the IRS above and beyond those required with taxable earnings. It's a cost-benefit analysis whether you roll your money over to an IRA account or not. You hear about the benefits a lot more often than you hear about the costs, which it what I'm introducing you to with my answer." }, { "docid": "556545", "title": "", "text": "\"If you're looking for ways to turn $1000 into more, don't just think of ways it can make money -- also consider whether there are any ways you can use it to save money. Among the advantages of this approach is that you're not taxed for reducing your expenditures. The good news is that there are a lot more ways to save a little bit of money on a $1000 budget than there are to make a little money on that budget. The bad news is that most of them will require some additional input: labor. Have you taken an economics course? Capital + Labor => output. I don't know what you spend your money on exactly, but some thoughts: You may find more opportunities for things like this as you move out from college and into your own apartment (/house) and the university isn't taking care of as many of your needs. Just don't confuse yourself about where the line is between actually saving money that you were going to spend anyway, and just consuming more. Consumption is fine in and of itself (and ultimately it's what you have money for) but doesn't make you financially better off. Also, when considering what to do with the money, don't just think \"\"I can spend $2000 on this bike and it will ultimately save me gas money\"\" unless you also know how to think \"\"I could spend $200 on a slightly lesser bike and still save all the gas money, or maybe even spend $20 on a yard sale bike.\"\". Consider borrowing kitchen equipment from the parents, instead of buying new stuff, or buy it at a yard sale. Also, make sure you actually will use the things you buy.\"" }, { "docid": "129903", "title": "", "text": "Paying this off early is robbing yourself of the extra earning potential for this money. Think of it as an interest free loan from your future self. If you can otherwise use that money to get a better rate of return then you are better off putting it there. Best options would normally be to use it to buy additional regular RRSPs, RESPs, or TFSA because of government benefits but even puting the extra into a GIC for a year is better than paying back home buyers plan early." }, { "docid": "532113", "title": "", "text": "\"This question can simply be answered with \"\"it depends\"\", but I am sure that is not the answer you want. So here is all of the reasons why it depends... The philosophy behind real time energy pricing is that you pay for what it actually costs for the energy to be produced. Peak times costs the power company a lot of money to produce the power. There are many reasons for this, but the simplest reason is that at some point the company will have to build extra power plants in order to be able to provide for the peak demand, while these plants will be widely underused during off-peak times. In the traditional flat rate charge per killowatt billing, you had to be charged higher then it actually costs during the off-peak hours in order for the power company to make sure they brought in enough money to cover the costs of the peak hours. Technology has now advanced enough that power company can charge you more directly of what it actually costs them. Potentially this could mean that you would pay more in electricity. This can happen if you are a person who loves to use energy during peak hours. Do you like turning on all of your lights when you get home from work in the summer? What about watching TV? Or what about cooking dinner? Or what about turning the AC down colder to overcome the heat produced by cooking dinner? All of those things that you might be used to doing are actually costing the power company more money because they have to plan for those higher peak loads. You can save yourself money if you are willing to shift your usage to other times of day, such as cook later in the evening or decide to grill outside, or wait to watch your TV show until later in the evening. If you are someone who is stuck in your ways and doesn't want to adjust the time of day that you do certain things, doing real time pricing may end up costing you more. Some people could argue that it actually should cost you more. Why should someone who is saving the power company money have to pay extra for someone who is costing the power company more money? All of this is viewed from the short term though. You may save some money here or there, or you may end up paying a little extra here or there, but I truly believe that in the long run everything will equalize out such that you will be paying the same anyways, or at least a small enough difference I wouldn't worry about it. If you stick with the flat rate pricing, they are already have to factor in you being a peak rate user when you might not actually be one. In short, if you are willing to adjust your habits, I will almost promise you that you will save money. If you don't want to change and especially like to use energy during Summer afternoons, you might want to just stay where you are at.\"" }, { "docid": "365899", "title": "", "text": "\"For scoring purposes, having a DTI between 1-19% is ideal. From Credit Karma: That being said, depending on the loan type you looking at receiving (FHA, VA, Conventional, etc), there are certain max DTIs that you want to stay away from. As a rule, for VA, you want to try to stay away from 41% DTI. Exceptions are made for people with sufficient funds in the bank (3-9 months) to go to higher DTIs. If you keep a 19% utilization overall, that will get you a higher score but it will also show that you have a monthly payment on a particular revolving credit account. While the difference between 729 and 745 seems like a lot of points, there are rules as to how the interest rates are determined. So you will find that many banks have the same or similar rates due to recent legislation in Dodd-Frank. In the days of subprime mortgages, this was not the case. Adjustable rate mortgages did not necessarily go away, the servicer just has to make sure that the buyer can weather the full amount once it reaches maturity, not the lower amount. That is what got a lot of people in trouble. From \"\"how interest rates are set\"\": Before quoting you an interest rate, the loan officer will add on how much he and his branch want to earn. The branch or company sets a policy on how little that can be (the minimum amount the loan officer adds on to his cost) but does not want to overcharge borrowers either (so they set a maximum the loan officer can charge) Between that minimum and maximum, the loan officer has a great deal of flexibility. For example, say the loan officer decides he and his branch are going to earn one point. When you call and ask for a rate quote, he will add one point to the cost of the loan and quote you that rate. According to the rate sheet above, seven percent will cost you zero points. Six and three-quarters percent will cost you one point. In our example, at 7.125% the loan officer and branch would earn one point and have some money left over. This could be used to pay some of the fees (processing, documents, etc), which is how you get a \"\"no fees -no points\"\" mortgage. You just pay a higher interest rate. Where this scoring helps you is in credit card interest rates and auto loan and personal loan rates, which have different rate structures. My personal opinion is to avoid the use of the credit cards. Playing games to try to maximize your score in this situation won't help you when you are talking about 20 points potentially. If you were at the bottom level and were trying to meet a minimum score to qualify, then I would recommend you try to game this scoring system. Take the extra money you would put on a credit card and save it for housing expenses. Taking the Dave Ramsey approach, you should have at least $1000 in emergency funds as most problems you encounter will be less than $1000. That advice rings true.\"" }, { "docid": "134764", "title": "", "text": "\"Given the current low interest rates - let's assume 4% - this might be a viable option for a lot of people. Let's also assume that your actual interest rate after figuring in tax considerations ends up at around 3%. I think I am being pretty fair with the numbers. Now every dollar that you save each month based on the savings and invest with a higher net return of greater than 3% will in fact be \"\"free money\"\". You are basically betting on your ability to invest over the 3%. Even if using a conservative historical rate of return on the market you should net far better than 3%. This money would be significant after 10 years. Let's say you earn an average of 8% on your money over the 10 years. Well you would have an extra $77K by doing interest only if you were paying on average of $500 a month towards interest on a conventional loan. That is a pretty average house in the US. Who doesn't want $77K (more than you would have compared to just principal). So after 10 years you have the same amount in principal plus $77k given that you take all of the saved money and invest it at the constraints above. I would suggest that people take interest only if they are willing to diligently put away the money as they had a conventional loan. Another scenario would be a wealthier home owner (that may be able to pay off house at any time) to reap the tax breaks and cheap money to invest. Pros: Cons: Sidenote: If people ask how viable is this. Well I have done this for 8 years. I have earned an extra 110K. I have smaller than $500 I put away each month since my house is about 30% owned but have earned almost 14% on average over the last 8 years. My money gets put into an e-trade account automatically each month from there I funnel it into different funds (diversified by sector and region). I literally spend a few minutes a month on this and I truly act like the money isn't there. What is also nice is that the bank will account for about half of this as being a liquid asset when I have to renegotiate another loan.\"" }, { "docid": "55841", "title": "", "text": "\"I posted a comment in another answer and it seems to be approved by others, so I have converted this into an answer. If you're talking about young adults who just graduated college and worked through it. I would recommend you tell them to keep the same budget as what they were living on before they got a full-time job. This way, as far as their spending habits go, nothing changes since they only have a $500 budget (random figure) and everything else goes into savings and investments. If as a student you made $500/month and you suddenly get $2000/month, that's a lot of money you get to blow on drinks. Now, if you put $500 in savings (until 6-12 month of living expenses), $500 in investments for the long run and $500 in vacation funds or \"\"big expenses\"\" funds (Ideally with a cap and dump the extra in investments). That's $18,000/yr you are saving. At this stage in your life, you have not gotten used to spending that extra $18,000/yr. Don't touch the side money except for the vacation fund when you want to treat yourself. Your friends will call you cheap, but that's not your problem. Take that head start and build that down payment on your dream house. The way I set it up, is (in this case) I have automatics every day after my paychecks come in for the set amounts. I never see it, but I need to make sure I have the money in there. Note: Numbers are there for the sake of simplicity. Adjust accordingly. PS: This is anecdotal evidence that has worked for me. Parents taught me this philosophy and it has worked wonders for me. This is the extent of my financial wisdom.\"" }, { "docid": "564453", "title": "", "text": "It will depend on how much you expect to earn this way, and whether you expect the company to become profitable soon. Has the company just not made a profit yet, or has it actually made a significant loss that your invoices would just be offsetting? If you're earning over £10,000 per year then invoicing through the company is preferable. Above that level, you'd be taking money from the company as dividends after paying 20% corporation tax with no other tax to pay on your personal tax return. As a sole trader you'd be paying 20% income tax and 9% NI. (Note however that the company can only pay dividends from profits, which is a problem if there are significant losses to offset.) Below £10,000, there's little difference. Through the company, you can take a salary of £7956 per year without paying any income tax or NI. With the new £2000 discount on employers' NI you could then take salary up to £10,000 and just pay 12% employee's NI. As a sole trader, you pay 9% Class 4 NI over £7956 and a fixed £143 per year for Class 2 NI. Paying 9% rather than 12% saves you £60, but then you add the £143. In practice the company would work out more expensive at this level because you'll probably want to pay an accountant to deal with the payroll for you. Having the company repay your £2000 from the invoices doesn't really save any tax if the company will become profitable in the future. You don't pay any tax now since the money you receive isn't income, and the company doesn't pay any tax if the extra £2000 of revenue doesn't put it back in profit. However, if the company is profitable next year then it will have an extra £2000 of profit that would otherwise have been offset against this year's loss, and you do end up paying 20% corporation tax on the £2000. You could still have the company repay the loan in order to delay the tax liability, but it's not really tax free money. Loaning additional money to the company has no tax benefit, you just give the company £1000 and get your original £1000 back later. You pay no tax and neither does the company, but it was your money in the first place." }, { "docid": "224695", "title": "", "text": "\"Below is just a little information on this topic from my small unique book \"\"The small stock trader\"\": The most significant non-company-specific factor affecting stock price is the market sentiment, while the most significant company-specific factor is the earning power of the company. Perhaps it would be safe to say that technical analysis is more related to psychology/emotions, while fundamental analysis is more related to reason – that is why it is said that fundamental analysis tells you what to trade and technical analysis tells you when to trade. Thus, many stock traders use technical analysis as a timing tool for their entry and exit points. Technical analysis is more suitable for short-term trading and works best with large caps, for stock prices of large caps are more correlated with the general market, while small caps are more affected by company-specific news and speculation…: Perhaps small stock traders should not waste a lot of time on fundamental analysis; avoid overanalyzing the financial position, market position, and management of the focus companies. It is difficult to make wise trading decisions based only on fundamental analysis (company-specific news accounts for only about 25 percent of stock price fluctuations). There are only a few important figures and ratios to look at, such as: perhaps also: Furthermore, single ratios and figures do not tell much, so it is wise to use a few ratios and figures in combination. You should look at their trends and also compare them with the company’s main competitors and the industry average. Preferably, you want to see trend improvements in these above-mentioned figures and ratios, or at least some stability when the times are tough. Despite all the exotic names found in technical analysis, simply put, it is the study of supply and demand for the stock, in order to predict and follow the trend. Many stock traders claim stock price just represents the current supply and demand for that stock and moves to the greater side of the forces of supply and demand. If you focus on a few simple small caps, perhaps you should just use the basic principles of technical analysis, such as: I have no doubt that there are different ways to make money in the stock market. Some may succeed purely on the basis of technical analysis, some purely due to fundamental analysis, and others from a combination of these two like most of the great stock traders have done (Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, William O’Neil, and Steven Cohen). It is just a matter of finding out what best fits your personality. I hope the above little information from my small unique book was a little helpful! Mika (author of \"\"The small stock trader\"\")\"" }, { "docid": "277548", "title": "", "text": "\"Personally I would have a hard time \"\"locking up\"\" the money for that very little return. I would probably rather earn no interest in favor of the liquidity. However, you should find out what the early removal penalties are. If those are minimal and you are very confident that you will not need the money over the term period then its definitely better to earn something rather than nothing. If inflation is negative you aren't out as much not getting any interest as you would be normally. Consider that in 2014 US inflation was 0.8%. Online liquid savings accounts pay about 1%. so that's only .2% positive. In comparison at -.4% you are better off with no interest than a US person putting their money in a paying savings account. Keep in mind though that inflation can change month to month so just because June was negative doesn't mean the year will be that way. Not sure your ability to invest in the US market or what stable dividend payers may exist in Sweden.... You said you are risk averse, but it may be worth it to find a stable dividend paying fund. I like one called PFF, it pays a monthly dividend of 6% and over 5 years stock price is very stable. Of course this is quite a significant jump in risk because you can lose money if markets tank (PFF is down over 10 years quite a bit). Maybe splitting up the money and diversifying?\"" }, { "docid": "123226", "title": "", "text": "\"The first thing you have to do is to decided what area in finance you want to get into. For example, investment banking and quant are very different jobs. Learning all the CFA material is useful, so you might as well take the exams too while you are at it. You may be able to get into financial IT or some type of financial programming job. That is one step closer to your goal because at least you will be at a finance company and you can network with people that are in the field. Also, if you want to go into the buy side like I did, I recommend you invest your own money and manage your own portfolio. That way you would have some intimate familiarity with some companies/strategies. You can't get this from a textbook. There is something a little wrong with someone who wants to manage other people's money when he doesn't manage his own. That is a tough sell. You can't be too picky about where you get in. Getting in the door is the most important. I got a lot of quant interviews because I was an engineer. Those interviews consist of a lot of math and brain teaser type questions. For fundamental analyst positions, they will typically want to figure out how you think about businesses/companies. You can typically steer the interview any way you want, which is why I think it is important that you invest your own money. If you say \"\"the largest position I hold is in XYZ company\"\", you can be 99% certain that they will be asking about that investment for the next 15 minutes (at least). That is your opportunity to show how you can add value. Most companies prefer students for entry level, because why hire a guy who is already working in another field when you can get someone fresh? I stood out in the interviews because I could say \"\"I put $50k into this position because...\"\". It's not the only way to do it, but I can only provide you with my anedoctal experience.\"" }, { "docid": "532012", "title": "", "text": "\"Wow all the answers here are a joke. Retained earnings is a funding side (liabilities + equity) of the balance sheet accounting entry. It's a residual value, so if you end up funding your assets with more liabilities, for example, then retained earnings will be smaller. When worrying about the funding side of the balance sheet, you should consider mainly (1) how much you want in the business of your own money (equity) and (2) how much debt your business can support, as well as how much debt you're comfortable with. #2 is a function of looking at your income generating capacity. Once you've figured out how much you will fund with debt, you then need the remainder to be your money. Some of this is contributed capital, the rest is retained earnings. So to wonder about how much in retained earnings to have isn't really the way to think about it. You should have the \"\"debt vs. equity\"\" conversation with yourself and figure it out that way. Don't worry about the components of equity if you're a sole owner and it's all yours. (There are other ways to finance equity like preferred shares, but for all intents and purposes this is a small business). From a risk perspective, retained earnings is largely irrelevant on a standalone basis. You should pay far more attention to your assets. For example, if you asked \"\"how much cash or working capital do I need?\"\", that's an operational question that's very important to know for running the business. It can be debated and there is a right answer. Retained earnings is just a partial accounting entry of equity (and can even be manipulated by repurchasing shares and then contributing more capital), so I wouldn't focus on it.\"" }, { "docid": "407726", "title": "", "text": "\"An annuity is a product. In simple terms, you hand over a lump sum of cash and receive an agreed annual income until you die. The underlying investment required to reach that income level is not your concern, it's the provider's worry. So there is a huge mount of security to the retiree in having an annuity. It is worth pointing out that with simple annuities where one gives a lump sum of money to (typically) an insurance company, the annuity payments cease upon the death of the annuitant. If any part of the lump sum is still left, that money belongs to the company, not to the heirs of the deceased. Fancier versions of annuities cover the spouse of the annuitant as well (joint and survivor annuity) or guarantee a certain number of payments (e.g. 10-year certain) regardless of when the annuitant dies (payments for the remaining certain term go to the residual beneficiary) etc. How much of an annuity payment the company offers for a fixed lump sum of £X depends on what type of annuity is chosen; usually simple annuities give the maximum bang for the buck. Also, different companies may offer slightly different rates. So, why should one choose to buy an annuity instead of keeping the lump sum in a bank or in fixed deposits (CDs in US parlance), or invested in the stock market or the bond market, etc., and making periodic withdrawals from these assets at a \"\"safe rate of withdrawal\"\"? Safe rates of withdrawal are often touted as 4% per annum in the US, though there are newer studies saying that a smaller rate should be used. Well, safe rates of withdrawal are designed to ensure that the retiree does not use up all the money and is left destitute just when medical bills and other costs are likely to be peaking. Indeed, if all the money were kept in a sock at home (no growth at all), a 4% per annum withdrawal rate will last the retiree for 25 years. With some growth of the lump sum in an investment, somewhat larger withdrawals might be taken in good years, but that 4% is needed even when the investments have declined in value because of economic conditions beyond one's control. So, there are good things and bad things that can happen if one chooses to not buy an annuity. On the other hand, with an annuity, the payments will continue till death and so the retiree feels safer, as Chris mentioned. There is also the serenity in not having to worry how the investments are doing; that's the company's business. A down side, of course, is that the payments are fixed and if inflation is raging, the retiree still gets the same amount. If extra cash is needed one year for unavoidable expenses, the annuity will not provide it, whereas the lump sum (whether kept in a sock or invested) can be drawn on for the extra expense. Another down side is that any money remaining is gone, with nothing left for the heirs. On the plus side, the annuity payments are usually larger than those that the retiree will get via the safe rate of withdrawal method from the lump sum. This is because the insurance company is applying the laws of large numbers: many annuitants will not survive past their life expectancy, and their leftover monies are pure profit to the insurance company, often more than enough (when invested properly by the company) to pay those old codgers who continue to live past their life expectancy. Personally, I wouldn't want to buy an annuity with all my money, but getting an annuity with part of the money is worthwhile. Important: The annuity discussed in this answer is what is sometimes called a single-premium or an immediate annuity. It is purchased at the time of retirement with a single (large) lump sum payment. This is not the kind of annuity that is described in JAGAnalyst's answer which requires payment of (much smaller) premiums over many years. Search this forum for variable annuity to learn about these types of annuities.\"" }, { "docid": "85647", "title": "", "text": "I view it as a “zero sum game” from the perspective of the customer. Don’t tell me that my meal is $25 when EVERYONE KNOWS that it’s actually, $25 + $5 tip = $30. Just make the menu price $30 and pay people properly. It’s the exact same cost for a customer. Then, if a tip is left, it is truly a tip for the worker(s) and not the majority of their earnings. And before anyone chimes in to tell me that servers like to tax-dodge on their unreported earnings... Yeah, so would we all. In the same way that we’d never pay a Doctor, Accountant, Soldier, or Teacher a fraction of their pay and then hope that the people they serve were in a good mood to give them a little something extra, neither should we do this to tipped workers." }, { "docid": "543463", "title": "", "text": "The likely outcome of adding extra money to your escrow account is that the bank will send you a check for excess funds at the end of the year (or whenever your property tax and insurance payments are processed). Could you just redeposit that money immediately? Possibly. I bet most banks wouldn't care and would just follow the routine of clearing the excess from the account next time they process payments. I've never received a 1099 for interest in an escrow account. It is possible that when you start earning enough interest that a 1099 is required by law ($10/year) that the bank gets a little more aggressive about pushing your money back to you. I'm not sure why that hassle is any better than just opening up your average internet savings account (many don't have any of the fees you mentioned) and parking it there with a similar interest rate. You can deposit and withdraw using ACH transactions that post by the next business day. That said, unless they do start rejecting your money, there aren't a lot of downsides in your plan." }, { "docid": "158629", "title": "", "text": "\"Just an FYI, this can be a risky move. Unless you have been in the industry for a while, or are extremely well averse in investment management/research, keep it pretty short. In a lot of ways, you might want to think about tailoring it more like a sell-side report. Also, make sure you understand the style of investing the PM/company you are applying to likes. The reason I say this is because every buy-side shop is different. Some do 1-2 page write-ups with models and walk through's, others will expect 60 page \"\"decks\"\" (i.e. Powerpoints). The longer the deck, the more you have that can go wrong. If one tiny thing is wrong, or you have a typo anywhere, it hurts you more than it helps that you wrote something long (I once had the wrong rating on one issuance of a bond ladder I was pitching; it's all the PM's focused on). The more important aspect is that you understand the shop you are applying to and then tailoring the pitch to them. For example, don't do a growth tech company with an 80x forward P/E if you're applying to a fundamental value shop. It shows you didn't do research on the firm you're applying to and that you won't fit the culture. This is part of why I was saying that this can be a risky move, if the firm is large enough to have an HR department, they likely have a lot of different investment styles in house. Finally, try to keep it to a small/mid-cap company. Analysts/PMs follow stocks all day long and will most likely have an opinion on 99% of large caps, no matter the sector. In summary, I'd recommend a 1-2 page sell-side style write-up with a backup model (printed excel file). KISS (keep it simple stupid), have a summary, couple years worth of historical's, 2 years forward, and a few main bullet points of why you like them. In your case, this pitch should be something to pique the interest so that you can NAIL a real pitch in the interview. If you get an interview, know everything about everything in the industry as well as that specific company. For example, lets say you do a smartphone secular theme investment. Do you know what outstanding AAPL/Android cases there are, and more importantly, how would each ruling likely affect the marketplace? This is because I can guarantee if you're pitching to another tech guy, he knows and has an educated opinion on it. Also, in many cases having a great model can mean more than a long write-up, it shows that you're good with numbers and can think about FUTURE earnings, which are all that matter. Last point, IMO you'd be better off trying to get your foot in the door through networking than HR. HR doesn't really do much on the buy-side with recruiting and won't really understand what to look for in a good pitch (they're HR after-all, not an analyst). Try to meet someone over coffee and then have a pitch READY to bring out/discuss. The buy-side is selective enough that usually when positions open up it's either because they are creating one for you or they already have an idea of who is going to fill it. This mean HR has little to no say in helping you get in. You'll have a lot more success this way than blasting to a bunch of HR emails.\"" } ]

[ { "docid": "303293", "title": "", "text": "There are a number of ways and it all depends on your concentration and range of skills (or skills you're willing to develop). As for involving your wife ... things that can be done locally for neighbours is always a good idea. The most important thing is not to spend too much time or cash on anything that will take a long time to pay off. That excludes writing your own iPhone apps, for example, which would take long hours of development and much marketing (and luck) to be successful. Good luck and congrats." } ]

[ { "docid": "174308", "title": "", "text": "\"I'll start by focussing on the numbers. I highly recommend you get comfortable with spreadsheets to do these calculations on your own. I assume a $200K loan, the mortgage for a $250K house. Scale this up or down as appropriate. For the rate, I used the current US average for the 30 and 15 year fixed loans. You can see 2 things. First, even with that lower rate to go 15 years, the payment required is 51% higher than with the 30. I'll get back to that. Second, to pay the 30 at 15 years, you'd need an extra $73. Because now you are paying at a 15 year pace, but with a 30 year rate. This is $876/yr to keep that flexibility. These are the numbers. There are 2 camps in viewing the longer term debt. There are those who view debt as evil, the $900/mo payment would keep them up at night until it's gone, and they would prefer to have zero debt regardless of the lifestyle choices they'd need to make or the alternative uses of that money. To them, it's not your house as long as you have a mortgage. (But they're ok with the local tax assessor having a statutory lien and his hand out every quarter.) The flip side are those who will say this is the cheapest money you'll ever see, and you should have as large a mortgage as you can, for as long as you can. Treat the interest like rent, and invest your money. My own view is more in the middle. Look at your situation. I'd prioritize In my opinion, it makes little sense to focus on the mortgage unless and until the first 5 items above are in place. The extra $459 to go to 15? If it's not stealing from those other items or making your cash flow tight, go for it. Keep one subtle point in mind, risk is like matter and energy, it's not created or destroyed but just moved around. Those who offer the cliche \"\"debt creates risk\"\" are correct, but the risk is not yours, it's the lender's. Looking at your own finances, liquidity is important. You can take the 15 year mortgage, and 10 years in, lose your job. The bank still wants its payments every month. Even if you had no mortgage, the tax collector is still there. To keep your risk low, you want a safety net that will cover you between jobs, illness, new babies being born, etc. I've gone head to head with people insisting on prioritizing the mortgage payoff ahead of the matched 401(k) deposit. Funny, they'd prefer to owe $75K less, while that $75K could have been deposited pretax (so $100K, for those in the 25% bracket) and matched, to $200K. Don't make that mistake.\"" }, { "docid": "521042", "title": "", "text": "I would question whether your stated goal (of strictly controlling your expenses) is really the problem you should be tackling. In my opinion, unless you're under financial hardship where you can barely make ends meet, you're much better off using a budget as a high-level, descriptive tool rather than a low-level, prescriptive tool. This is what I would do in your situation: After the first few months, you can start to think about high-level changes that you can make to your spending habits to get the most bang for your buck. I wouldn't worry about the little expenses, unless they're really adding up to a sizable chunk of your total expenses. Instead, I would look at things like: eating out too often, buying too many movies, too many impulse buys over $100, etc. Identifying patterns like that will help you make lifestyle changes that will allow you to spend less money without having to micromanage every single expense. I have tried the micromanaged approach in the past, and it simply doesn't work for me. There's too much overhead, and eventually I start to feel that it's just not worth it. Think about it - is it really worth the extra time and energy required to worry about where every dollar goes all month long just to save an additional hundred bucks over what you can do with this passive approach? I think that by focusing on the big picture, you can get within a couple percentage points of the same amount of savings as if you had micro-managed your expenses, but with much less work and mental strain. Let's put some numbers on this and see what the hourly returns are with each approach, always being optimistic about the micromanaged approach and conservative on the passive approach. Let's assume you earn $50,000/year. Let's also assume that if you micromanage all of your expenses, you could manage to save $5000/year beyond what you do now. And let's say that with the passive approach, you can get within 20 percentage points instead of the 2 I stated earlier, for a savings of $4000/year. Now what will your hourly returns look like? The following are based on how I would personally use both systems, so your numbers may vary a bit. Micromanaged Budgeting Savings = $5000 per year = $416.67 per month Time spent = 15-30 minutes per day = 7.5 - 15 hours per month Hourly return = $27.78 - $55.56 Passive Budgeting Savings = $4000 per year = $333.33 per month Time spent = 1 - 2 hours per month Hourly return = $166.67 - $333.33 So clearly the passive approach gives a substantially higher hourly return, even though it gives a lower absolute return. Maybe more importantly though, if passive budgeting opens up an extra 10 hours a month, you could potentially put those hours into your job and make an extra (10 hours * $25/hour) = $250 a month, or $3000 per year, assuming no extra pay for overtime. So that means that the passive budgeting approach would actually allow you to save ($4000 + $3000 * .75) = $6250 per year, compared to the $5000 you would save by micromanaging. If you're in a situation where you can't put those hours into more work and you really need that extra $83.34 per month to help make ends meet, then by all means micromanage your expenses and try to save as much as possible. But if either of the previous conditions are not true for you, you're much better off, in my opinion, using a passive budget." }, { "docid": "82039", "title": "", "text": "\"If you have enough earned income to cover this amount you should be all set. If I understand you correctly you proposed two transactions. The first, a withdrawal from the beneficiary IRA. Some of which is an RMD the rest is an extra withdrawal of funds. Next, you propose to make a deposit to a combination of your IRA and your wife's IRA. As long as there's earned income to cover this deposit, your plan is fine. To be clear, you can't \"\"take a bene IRA and deposit the RMD to an IRA.\"\" But, money is fungible, the dollars you deposit aren't traceable, only need to be justified by enough earned income. A bene IRA is a great way to get the money to increase your own IRA or 401(k) deposits. Further details - The 2016 contribution limit is $5,500 per person, so I did make the assumption you knew the $9000 deposit need to be split between the 2 IRAs, with no more than $5500 going into either one.\"" }, { "docid": "542764", "title": "", "text": "\"A stock, at its most basic, is worth exactly what someone else will pay to buy it right now (or in the near future), just like anything else of value. However, what someone's willing to pay for it is typically based on what the person can get from it. There are a couple of ways to value a stock. The first way is on expected earnings per share, most of would normally (but not always) be paid in dividends. This is a metric that can be calculated based on the most recently reported earnings, and can be estimated based on news about the company or the industry its in (or those of suppliers, likely buyers, etc) to predict future earnings. Let's say the stock price is exactly $100 right now, and you buy one share. In one quarter, the company is expected to pay out $2 per share in dividends. That is a 2% ROI realized in 3 months. If you took that $2 and blew it on... coffee, maybe, or you stuffed it in your mattress, you'd realize a total gain of $8 in one year, or in ROI terms an annual rate of 8%. However, if you reinvested the money, you'd be making money on that money, and would have a little more. You can calculate the exact percentage using the \"\"future value\"\" formula. Conversely, if you wanted to know what you should pay, given this level of earnings per share, to realize a given rate of return, you can use the \"\"present value\"\" formula. If you wanted a 9% return on your money, you'd pay less for the stock than its current value, all other things being equal. Vice-versa if you were happy with a lesser rate of return. The current rate of return based on stock price and current earnings is what the market as a whole is willing to tolerate. This is how bonds are valued, based on a desired rate of return by the market, and it also works for stocks, with the caveat that the dividends, and what you'll get back at the \"\"end\"\", are no longer constant as they are with a bond. Now, in your case, the company doesn't pay dividends. Ever. It simply retains all the earnings it's ever made, reinvesting them into doing new things or more things. By the above method, the rate of return from dividends alone is zero, and so the future value of your investment is whatever you paid for it. People don't like it when the best case for their money is that it just sits there. However, there's another way to think of the stock's value, which is it's more core definition; a share of the company itself. If the company is profitable, and keeps all this profit, then a share of the company equals, in part, a share of that retained earnings. This is very simplistic, but if the company's assets are worth 1 billion dollars, and it has one hundred million shares of stock, each share of stock is worth $10, because that's the value of that fraction of the company as divided up among all outstanding shares. If the company then reports earnings of $100 million, the value of the company is now 1.1 billion, and its stock should go up to $11 per share, because that's the new value of one ten-millionth of the company's value. Your ROI on this stock is $1, in whatever time period the reporting happens (typically quarterly, giving this stock a roughly 4% APY). This is a totally valid way to value stocks and to shop for them; it's very similar to how commodities, for instance gold, are bought and sold. Gold never pays you dividends. Doesn't give you voting rights either. Its value at any given time is solely what someone else will pay to have it. That's just fine with a lot of people right now; gold's currently trading at around $1,700 an ounce, and it's been the biggest moneymaker in our economy since the bottom fell out of the housing market (if you'd bought gold in 2008, you would have more than doubled your money in 4 years; I challenge you to find anything else that's done nearly as well over the same time). In reality, a combination of both of these valuation methods are used to value stocks. If a stock pays dividends, then each person gets money now, but because there's less retained earnings and thus less change in the total asset value of the company, the actual share price doesn't move (much). If a stock doesn't pay dividends, then people only get money when they cash out the actual stock, but if the company is profitable (Apple, BH, etc) then one share should grow in value as the value of that small fraction of the company continues to grow. Both of these are sources of ROI, and both are seen in a company that will both retain some earnings and pay out dividends on the rest.\"" }, { "docid": "38359", "title": "", "text": "I contend that there is great value in over-paying during the year and reaping a bigger refund. I'm an engineer and understand the concept interest earned, blah blah. But for most of us, this isn't reality. The reality is that we spend what we earn, plus a little more. At the end of each month, if the typical American has money left over - we spend it. We don't faithfully put that money that we would have payed into taxes to good use (such as savings or paying off that credit card). Getting that big refund at the end of the year tends encourage us to make that one-time large payment to that high interest account, or to purchase that item that we otherwise wouldn't have saved for (or purchased with a credit card). I say, give Uncle Sam the free interest - you'll have wasted that money during the year anyway - and enjoy a nice healthy refund that you can put to use for something you enjoy. Life is just too short. [Edit] For the nose snubbers that can't think beyond the possibility of a different perspective: Link1 Huff Post SteveJ" }, { "docid": "30311", "title": "", "text": "\"You're in good shape as long as your income stays. Your only variable-rate debt now is your private student loan. I think you'd be wise to pay that down first, and you sense that already. Worst-case, in the event of a bankruptcy, student loans usually cannot be discharged, so that isn't a way out. Once that loan is gone, apply what you were paying to your other student loan to knock that out. You might investigate refinancing your home (to another 30-year fixed). You may be able to shave a half-percent off if your credit is stellar. Given the size of the mortgage, this could be several thousand out of pocket, so consider that when figuring out potential payback time. Consider using any \"\"free time\"\" to starting up a side business (I'm assuming you both have day jobs but that may not be a correct assumption). Start with what you know well. You and your wife are experts in something, and have passion about something. Go with that. Use the extra income from that to either pay down your debts faster, or just reinvest in the business so that you can offset the income on your taxes. Again, you're in good shape. Just do what you can to protect and grow your income streams.\"" }, { "docid": "162864", "title": "", "text": "Look, honestly, I don't care how much they make. Its a tough job and they're working a lot of hours. I'm glad they make this much money, that means they're having a good life. The fact that they are earning this money does not invalidate the fact that a lot of teachers and military personnel do not live as well. That is the problem. We don't have to take from these guys to give to another. We need to take from the people that are hoarding the wealth in this country. This is obviously a story, I don't want to say planted, but most certainly encouraged by special interest to once again stir up anti-union outrage and make us 99%s fight amongst ourselves over the few crumbs that the 1% let drop down to us. The problems in this country are not because a few transit cops figured out a way to gets some extra money, it's because we allow 400 people to have all the money when everyone else gets none." }, { "docid": "540527", "title": "", "text": "TL:DR: You should read something like The Little Book of Common Sense Investing, and read some of the popular questions on this site. The main message that you will get from that research is that there is an inescapable connection between risk and reward, or to put it another way, volatility and reward. Things like government bonds and money market accounts have quite low risk, but also low reward. They offer a nearly guaranteed 1-3%. Stocks, high-risk bonds, or business ventures (like your soda and vending machine scheme) may return 20% a year some years, but you could also lose money, maybe all you've invested (e.g., what if a vandal breaks one of your machines or the government adds a $5 tax for each can of soda?). Research has shown that the best way for the normal person to use their money to make money is to buy index funds (these are funds that buy a bunch of different stocks), and to hold them for a long time (over 10-15 years). By buying a broad range of stocks, you avoid some of the risks of investing (e.g., if one company's stock tanks, you don't lose very much), while keeping most of the benefits. By keeping them for a long time, the good years more than even out the bad years, and you are almost guaranteed to make ~6-7%/year. Buying individual stocks is a really, really bad idea. If you aren't willing to invest the time to become an expert investor, then you will almost certainly do worse than index funds over the long run. Another option is to use your capital to start a side business (like your vending machine idea). As mentioned before, this still has risks. One of those risks is that it will take more work than you expect (who will find places for your vending machines? Who will fill them? Who will hire those who fill them? etc.). The great thing about an index fund is that it doesn't take work or research. However, if there are things that you want to do, that take capital, this can be a good way to make more income." }, { "docid": "158629", "title": "", "text": "\"Just an FYI, this can be a risky move. Unless you have been in the industry for a while, or are extremely well averse in investment management/research, keep it pretty short. In a lot of ways, you might want to think about tailoring it more like a sell-side report. Also, make sure you understand the style of investing the PM/company you are applying to likes. The reason I say this is because every buy-side shop is different. Some do 1-2 page write-ups with models and walk through's, others will expect 60 page \"\"decks\"\" (i.e. Powerpoints). The longer the deck, the more you have that can go wrong. If one tiny thing is wrong, or you have a typo anywhere, it hurts you more than it helps that you wrote something long (I once had the wrong rating on one issuance of a bond ladder I was pitching; it's all the PM's focused on). The more important aspect is that you understand the shop you are applying to and then tailoring the pitch to them. For example, don't do a growth tech company with an 80x forward P/E if you're applying to a fundamental value shop. It shows you didn't do research on the firm you're applying to and that you won't fit the culture. This is part of why I was saying that this can be a risky move, if the firm is large enough to have an HR department, they likely have a lot of different investment styles in house. Finally, try to keep it to a small/mid-cap company. Analysts/PMs follow stocks all day long and will most likely have an opinion on 99% of large caps, no matter the sector. In summary, I'd recommend a 1-2 page sell-side style write-up with a backup model (printed excel file). KISS (keep it simple stupid), have a summary, couple years worth of historical's, 2 years forward, and a few main bullet points of why you like them. In your case, this pitch should be something to pique the interest so that you can NAIL a real pitch in the interview. If you get an interview, know everything about everything in the industry as well as that specific company. For example, lets say you do a smartphone secular theme investment. Do you know what outstanding AAPL/Android cases there are, and more importantly, how would each ruling likely affect the marketplace? This is because I can guarantee if you're pitching to another tech guy, he knows and has an educated opinion on it. Also, in many cases having a great model can mean more than a long write-up, it shows that you're good with numbers and can think about FUTURE earnings, which are all that matter. Last point, IMO you'd be better off trying to get your foot in the door through networking than HR. HR doesn't really do much on the buy-side with recruiting and won't really understand what to look for in a good pitch (they're HR after-all, not an analyst). Try to meet someone over coffee and then have a pitch READY to bring out/discuss. The buy-side is selective enough that usually when positions open up it's either because they are creating one for you or they already have an idea of who is going to fill it. This mean HR has little to no say in helping you get in. You'll have a lot more success this way than blasting to a bunch of HR emails.\"" }, { "docid": "259924", "title": "", "text": "As others have mentioned yes it is taxable. Whether it goes through payroll and has FICA taken out is your issue in terms that you need to report it and you will an extra 7.5% self employment taxes that would normally be covered by your employer. Your employer may have problems but that isn't your issue. Contrary to what other users are saying chances are there won't be any penalties for you. Best case you have already paid 100% of last years tax liability and you can file your normal tax return with no issues. Worst case you need to pay quarterly taxes on that amount in the current quarter. IRS quarters are a little weird but I think you need to pay by Jan 15th for a December payment. You don't have to calculate your entire liability you can just fill out the very short form and attach a check for about what you will owe. There is a form you can fill out to show what quarter you received the money and you paid in it is a bit more complex but will avoid the penalty. For penalties quarterly taxes count in the quarter received where as payroll deductions count as if they were paid in the first quarter of the year. From the IRS The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay your tax through withholding, or do not pay enough tax that way, you might also have to pay estimated taxes. If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller." }, { "docid": "327237", "title": "", "text": "The short answer to your question is yes. Index funds are about the easiest and most efficient diversified way to invest your money. Vanguard's are among the cheapest and best. Be aware, though, that passive income doesn't mean you do nothing for your money. In the case of investing, what you are doing is bearing risk. That is, you are being paid (on average) to put your money in a situation where you may lose money. If you keep your eye on the long-term prize, then when (not if) you sustain losses in your investment account, you will have the patience to leave the money in there. I'm a little confused by your wording about increasing your salary. Normally we think of index funds as a way to increase our wealth. If you are making new investments, presumably you have more salary than you need right now. Normal index funds will reinvest dividends automatically, so you will see the value of your investments rise but will not see any cash flows per se unless you are selling your holdings. If you want actual cash coming out of your investment, you can use ETF's to achieve the same type of investment and treat the dividends as a supplement to your income. Note, however, that some gains in your ETF will be in the form of capital gains and some will be dividends. Think more like 2% year per in dividend payments and the rest in capital gains. If your objective is to save for retirement, please consider investing through an IRA, Roth IRA, or through your 401(k). No need to give uncle sam a gift from your hard-earned money." }, { "docid": "310112", "title": "", "text": "\"The first consideration for the banking part of your portfolio is safety. In the United States that is FDIC protection, or the equivalent for a Credit Union. The second consideration is does it have the level of service you need. For this I mean the location of branches, ATMs, or its online services meet your needs for speed, accuracy, and ability to access or move the money as you need. The rest are then balanced on the extras. For your situation those extras include the ability to make free trades. For other it might be a discount on their mortgage. For others it is free checking. In your current situation if the first two things are met, and you are using those extra benefits then don't change. For me the free trades wouldn't be a benefit, so any major degradation in the safety and service would cause me to leave. Keep in mind that free services exist to entice you to make a deposit: which they can then make money by lending it out; or they offer a free service to entice you to use a service they can charge you to use. All Free services come with a cost. I earned a completely paltry $3.33 YTD over the last 9 months on my savings at my bank presumably in exchange for these \"\"free\"\" trades. Without knowing how much you had deposited in your savings account there is no way to know how much you could have made at the bank across the street. But with the low rates of the last decade there is not big money to be made off the emergency savings of a typical american family.\"" }, { "docid": "187010", "title": "", "text": "\"If I understand correctly, your question boils down to this: \"\"I have $X to invest over 25 years, are guaranteed returns at a 0.6% lower rate better than what I expect to get from the stock market over the same period?\"\" Well, I believe the standard advice would go something like: Rational investors pay a premium to reduce risk/volatility. Or, put another way, guaranteed returns are more valuable than risky returns, all things equal. I don't know enough about student loans in America (I'm Australian). Here a student loan is very low interest and the minimum repayments scale with what you earn not what you owe, starting at $0 for a totally liveable wage - Here I'd say there's a case to just pay the minimum and invest extra money elsewhere. If yours is a private loan though, following the same rules as other loans, remember the organisation extending your loan has access to the stock market too! why would they extend a loan to you on worse terms than they would get by simply dumping money into an index fund? Is the organisation that extends student loans a charity or subsidised in some way? If not, someone has already built a business on the the analysis that returns at 6.4% (including defaults) beats the stock market at 7% in some way. What I would put back to you though, is that your question oversimplifies what is likely your more complex reality, and so answering your question directly doesn't help that much to make a persuasive case - It's too mathematical and sterile. Here are some things off the top of my head that your real personal circumstances might convince you to pay off your loan first, hit up Wall Street second:\"" }, { "docid": "365899", "title": "", "text": "\"For scoring purposes, having a DTI between 1-19% is ideal. From Credit Karma: That being said, depending on the loan type you looking at receiving (FHA, VA, Conventional, etc), there are certain max DTIs that you want to stay away from. As a rule, for VA, you want to try to stay away from 41% DTI. Exceptions are made for people with sufficient funds in the bank (3-9 months) to go to higher DTIs. If you keep a 19% utilization overall, that will get you a higher score but it will also show that you have a monthly payment on a particular revolving credit account. While the difference between 729 and 745 seems like a lot of points, there are rules as to how the interest rates are determined. So you will find that many banks have the same or similar rates due to recent legislation in Dodd-Frank. In the days of subprime mortgages, this was not the case. Adjustable rate mortgages did not necessarily go away, the servicer just has to make sure that the buyer can weather the full amount once it reaches maturity, not the lower amount. That is what got a lot of people in trouble. From \"\"how interest rates are set\"\": Before quoting you an interest rate, the loan officer will add on how much he and his branch want to earn. The branch or company sets a policy on how little that can be (the minimum amount the loan officer adds on to his cost) but does not want to overcharge borrowers either (so they set a maximum the loan officer can charge) Between that minimum and maximum, the loan officer has a great deal of flexibility. For example, say the loan officer decides he and his branch are going to earn one point. When you call and ask for a rate quote, he will add one point to the cost of the loan and quote you that rate. According to the rate sheet above, seven percent will cost you zero points. Six and three-quarters percent will cost you one point. In our example, at 7.125% the loan officer and branch would earn one point and have some money left over. This could be used to pay some of the fees (processing, documents, etc), which is how you get a \"\"no fees -no points\"\" mortgage. You just pay a higher interest rate. Where this scoring helps you is in credit card interest rates and auto loan and personal loan rates, which have different rate structures. My personal opinion is to avoid the use of the credit cards. Playing games to try to maximize your score in this situation won't help you when you are talking about 20 points potentially. If you were at the bottom level and were trying to meet a minimum score to qualify, then I would recommend you try to game this scoring system. Take the extra money you would put on a credit card and save it for housing expenses. Taking the Dave Ramsey approach, you should have at least $1000 in emergency funds as most problems you encounter will be less than $1000. That advice rings true.\"" }, { "docid": "280099", "title": "", "text": "Well said. To put it shortly I think both can be a viable source of some side income when proper risk management is in place. It is likely not going to work when you are trading/betting with money that is important to you. Paper trade/bet until you find a viable strategy. Then use proper bankroll management and some expendable income to pick up some extra bucks on the side. Sports betting is nice because the initial investment is much lower than day trading." }, { "docid": "418801", "title": "", "text": "There are several issues with paying for furniture and appliances with 0% credit instead of paying with cash. When you pay with 0% credit, you might be tempted to spend more on something than you would have if you paid with cash, because it feels like free money, and you've justified in your mind that the extra you earn will help pay for the more expensive item. Businesses don't offer 0% credit for free, and they don't lose money on the deal. When you shop at a store that offers 0% credit, you are generally overpaying for the item. By shopping at a store that does not offer 0% credit, you might be able to get a better price. Your savings account is likely earning very little interest. You might invest the money you intend for your purchases in a place that gets better returns, but in most of these places the returns are not guaranteed, and you might not do as well as you think. 0% loans typically come with lots of conditions that have very heavy penalties and interest rate hikes for late payments. You can mitigate this risk by setting up automatic payments, but things can still go wrong. Your bank might change your account number, making the automated payment fail. As you mentioned, you might also forget to put the proper amount of money in the account. A single mistake can negate all of the tiny gains you are trying to achieve. Ultimately, the decision is yours, of course, but in my opinion, there is very, very little to gain with buying something on 0% credit when you could be paying cash." }, { "docid": "269380", "title": "", "text": "If commuting is a big budget item, then can you: A side job is one way to make extra money, but I'd suggest a home business. If your wife substitute teaches, I bet she writes fairly well, and in any case you can. Write a personal finance blog or just a site with articles. Focus on surviving and thriving with child(ren) in a one-income Christian household in the suburbs of Philadelphia. Or if you have a hobby that stokes your furnace, write about that. Heck, do both. The content just stays there and gets traffic day after day that you can monetize. My main suggestion would be to start this now because it's not overnight money. But in the long run it can turn into a nice, fairly passive income. The big advantage of this is that mommy gets to stay home with the kids and build up a decent business. The cost is $10/year for the domain (per domain) and maybe $10/month for hosting. Or, if some other legitimate work-at-home business presents itself, go with that. I suggest blogging because it's what I know, but everyone's an expert in something unique." }, { "docid": "543463", "title": "", "text": "The likely outcome of adding extra money to your escrow account is that the bank will send you a check for excess funds at the end of the year (or whenever your property tax and insurance payments are processed). Could you just redeposit that money immediately? Possibly. I bet most banks wouldn't care and would just follow the routine of clearing the excess from the account next time they process payments. I've never received a 1099 for interest in an escrow account. It is possible that when you start earning enough interest that a 1099 is required by law ($10/year) that the bank gets a little more aggressive about pushing your money back to you. I'm not sure why that hassle is any better than just opening up your average internet savings account (many don't have any of the fees you mentioned) and parking it there with a similar interest rate. You can deposit and withdraw using ACH transactions that post by the next business day. That said, unless they do start rejecting your money, there aren't a lot of downsides in your plan." }, { "docid": "595287", "title": "", "text": "I wouldn't be too concerned, yet. You're young. Many young people are living longer in the family home. See this Guardian article: Young adults delay leaving family home. You're in good company. Yet, there will come a time when you ought to get your own place, either for your own sanity or your parents' sanity. You should be preparing for that and building up your savings. Since you've got an income, you should – if you're not already – put away some of that money regularly. Every time you get paid, make a point of depositing a portion of your income into a savings or investment account. Look up the popular strategy called Pay Yourself First. Since you still live at home, it's possible you're a little more loose with spending money than you should be – at least, I've found that to be the case with some friends who lived at home as young adults. So, perhaps pretend you're on your own. What would your rent be if you had to find a place of your own? If, say, £600 instead of the £200 you're currently paying, then you should reduce your spending to the point where you can save at least £400 per month. Follow a budget. With respect to your car, it's great you recognize your mistake. We're human and we can learn from our mistakes. Plan to make it your one and only car mistake. I made one too. With respect to your credit card debt, it's not an insurmountable amount. Focus on getting rid of that debt soon and then focus on staying out of debt. The effective way to use credit cards is to never carry a balance – i.e. pay it off in full each month. If you can't do that, you're likely overspending. Also, look at what pensions your employer might offer. If they offer matching contributions, contribute at least as much to maximize the tax free extra pay this equates to. If you have access to a defined benefit plan, join it as soon as you are eligible. Last, I think it's important to recognize that at age 23 you're just starting out. Much of your career income earning potential is ahead of you. Strive to be the best at what you do, get promotions, and increase your income. Meanwhile, continue to save a good portion of what you earn. With discipline, you'll get where you want to be." } ]

[ { "docid": "594182", "title": "", "text": "Have you considered doing some small freelance programming jobs? One site I like for this type of thing is eLance.com, but I am sure there are others. Heck, you are soon going to be up all night anyway, why not earn some cash during those hours the rest of us foolishly waste on sleep?" } ]

[ { "docid": "246472", "title": "", "text": "Well, if someone is paid hourly and works less hours—then clearly there is lost income. Additionally, there may be promotions that a parent gets passed over for because he/she often leaves work early to be with the kids. Usually, I think, one of the two spouses slows his/her career a bit while raising the kids, this obviously effects the earning potential of the family. Ultimately, the point I was focused on is that the amount, $900,000, isn't just paying for food, diapers, clothes, books, the larger house you need to house a larger family, the larger car/van you need to tote the kids around in, the extra gas you use in that car/van taking the kids to places you wouldn't otherwise be going, the baby-sitter for date-night, the potential extra seats on planes etc., it includes other lost opportunities (hey, that great job offer on the other side of the country, can't take it unless you want to pull your kids out of 8th grade in the middle of February... etc). All of this adds up, it doesn't seem entirely unreasonable that it would be close to a million dollars. Also, the $900,000 estimate is probably an estimate of the average. Obviously, I can't speak for your friends, they may be outliers. Edited: grammar" }, { "docid": "201302", "title": "", "text": "Another, completely different way to look at your huge mistake: It's not a huge mistake. You're getting your money out of a restricted account. You're paying taxes now (plus an extra tax of 10%) to regain some of your privacy of where you're putting your money. You're paying up now as a trade-off to paying much later, when the rules can be completely different and the tax rates much higher. You're deciding not to put the money into another restricted account, which has yearly reporting requirements to the IRS above and beyond those required with taxable earnings. It's a cost-benefit analysis whether you roll your money over to an IRA account or not. You hear about the benefits a lot more often than you hear about the costs, which it what I'm introducing you to with my answer." }, { "docid": "187010", "title": "", "text": "\"If I understand correctly, your question boils down to this: \"\"I have $X to invest over 25 years, are guaranteed returns at a 0.6% lower rate better than what I expect to get from the stock market over the same period?\"\" Well, I believe the standard advice would go something like: Rational investors pay a premium to reduce risk/volatility. Or, put another way, guaranteed returns are more valuable than risky returns, all things equal. I don't know enough about student loans in America (I'm Australian). Here a student loan is very low interest and the minimum repayments scale with what you earn not what you owe, starting at $0 for a totally liveable wage - Here I'd say there's a case to just pay the minimum and invest extra money elsewhere. If yours is a private loan though, following the same rules as other loans, remember the organisation extending your loan has access to the stock market too! why would they extend a loan to you on worse terms than they would get by simply dumping money into an index fund? Is the organisation that extends student loans a charity or subsidised in some way? If not, someone has already built a business on the the analysis that returns at 6.4% (including defaults) beats the stock market at 7% in some way. What I would put back to you though, is that your question oversimplifies what is likely your more complex reality, and so answering your question directly doesn't help that much to make a persuasive case - It's too mathematical and sterile. Here are some things off the top of my head that your real personal circumstances might convince you to pay off your loan first, hit up Wall Street second:\"" }, { "docid": "158629", "title": "", "text": "\"Just an FYI, this can be a risky move. Unless you have been in the industry for a while, or are extremely well averse in investment management/research, keep it pretty short. In a lot of ways, you might want to think about tailoring it more like a sell-side report. Also, make sure you understand the style of investing the PM/company you are applying to likes. The reason I say this is because every buy-side shop is different. Some do 1-2 page write-ups with models and walk through's, others will expect 60 page \"\"decks\"\" (i.e. Powerpoints). The longer the deck, the more you have that can go wrong. If one tiny thing is wrong, or you have a typo anywhere, it hurts you more than it helps that you wrote something long (I once had the wrong rating on one issuance of a bond ladder I was pitching; it's all the PM's focused on). The more important aspect is that you understand the shop you are applying to and then tailoring the pitch to them. For example, don't do a growth tech company with an 80x forward P/E if you're applying to a fundamental value shop. It shows you didn't do research on the firm you're applying to and that you won't fit the culture. This is part of why I was saying that this can be a risky move, if the firm is large enough to have an HR department, they likely have a lot of different investment styles in house. Finally, try to keep it to a small/mid-cap company. Analysts/PMs follow stocks all day long and will most likely have an opinion on 99% of large caps, no matter the sector. In summary, I'd recommend a 1-2 page sell-side style write-up with a backup model (printed excel file). KISS (keep it simple stupid), have a summary, couple years worth of historical's, 2 years forward, and a few main bullet points of why you like them. In your case, this pitch should be something to pique the interest so that you can NAIL a real pitch in the interview. If you get an interview, know everything about everything in the industry as well as that specific company. For example, lets say you do a smartphone secular theme investment. Do you know what outstanding AAPL/Android cases there are, and more importantly, how would each ruling likely affect the marketplace? This is because I can guarantee if you're pitching to another tech guy, he knows and has an educated opinion on it. Also, in many cases having a great model can mean more than a long write-up, it shows that you're good with numbers and can think about FUTURE earnings, which are all that matter. Last point, IMO you'd be better off trying to get your foot in the door through networking than HR. HR doesn't really do much on the buy-side with recruiting and won't really understand what to look for in a good pitch (they're HR after-all, not an analyst). Try to meet someone over coffee and then have a pitch READY to bring out/discuss. The buy-side is selective enough that usually when positions open up it's either because they are creating one for you or they already have an idea of who is going to fill it. This mean HR has little to no say in helping you get in. You'll have a lot more success this way than blasting to a bunch of HR emails.\"" }, { "docid": "336276", "title": "", "text": "\"Your first question has been answered quite well already. To answer your second question: \"\"If you pay extra, do you want the extra to go toward the interest or toward the principal?\"\" This gives the consumer some flexibility to decide how additional payments are applied. It might seem like a no-brainer to always apply extra payments towards principal - that way, the interest amounts on future payments will be lower and (if you're billed a fixed amount each month) more of each regular payment will then be applied to principal, shortening the term of the loan. However, while it would mean spending more over the life of the loan, there are certain advantages to applying extra payments towards interest†. The main advantage is that it pays your account ahead and means you don't have to make another payment as soon. You could use this strategy to give yourself a buffer of several months, so that if you should ever run into financial hardship you can stop making mortgage payments for a while without the risk of foreclosure. † Note, in most cases it's more likely that you are simply paying more without specifying to the lender that it should be used as principal curtailment. I haven't seen cases where you can explicitly ask the extra to be \"\"applied toward interest\"\". In this situation the funds would be held until you've provided enough to cover one or more monthly payments in full, at which point your \"\"next payment due\"\" date will simply be extended. Another advantage is that the funds that are being held (not due yet, not allocated toward any specific payment, maybe held in escrow) may be refundable to you, upon request. This would depend on the lender's policy. Some will permit refunds of credit balances that go beyond what is necessary to cover the current month's bill. Whether you apply extra payments towards principal or not, it makes little difference to the bank. Any additional payments received increase their immediate cash flow. The cash can be reinvested immediately by them into whatever they are currently focusing on.\"" }, { "docid": "336144", "title": "", "text": "\"Why it is good to be risky The reason why it is good to be risky is because risky investments can result in higher returns on your money. The problem with being risky, is there is a chance you can lose money. However, in the long term you can usually benefit from higher returns even if you have a few slip ups. Let me show you an example: These two lines are based off of placing $2,000 in a retirement fund at age of 20 and then at age of 25 start investing $6,500 a year (based off of a salary of $65,000 with a company that will 1 to 1 match up to 5% IRA contribution, presumably someone with a Master's should be able to get this) and then being able to increase your contribution amount by $150 a year as your salary begins to increase as well. The blue line assumes that all of this money that you are putting in a retirement account has a fixed 3% interest (compounded yearly for simplicity sake) every year until you retire. The red line is earning a 12% interest rate while you are 20 years old and then decreasing by 0.5% per year until you retire. Since this is using more risky investments when you are younger, I have even gone ahead and included losing 20% of your money when you are 24, another 20% when you are 29, and then again another 20% when you are 34. As you can see, even with losing 20% of your money 3 different times, you still end up with more money then you would have had if you stuck with a more conservative investment plan. If I change this to 50% each 3 times, you will still come out about equal to a more conservative investment. Now, I do have these 3 loses placed at a younger age when there is less to lose, but this is to be expected since you are being more risky when you are young. When you are closer to retirement you have less of a chance of losing money since you will be investing more conservatively. Why it is OK to be risky when you are young but not old Lets say you loose 20% of your $2,000 when you are young, you have 30-40 years to make that back. That's roughly $1 a month extra that you are having to come up with. So, if you have a risky investment go bad when you are young, you have plenty of time to account for it before you retire. Now lets say you have $1,000,000 when you are 5 years from retiring and loose 20% of it, you have to come up with an extra $3,333 a month if you want to retire on time. So, if you have a risky investment go bad when you are close to retiring, you will most likely have to work for many more years just to be able to recover from your loses. What to invest in This is a little bit more difficult question to answer. If there was one \"\"right\"\" way to invest your money, every one would be doing that one \"\"right\"\" way and would result in it not turning out to be that good of investment. What you need to do is come up with a plan for yourself. My biggest advice that I can give is to be careful with fees. Some places will charge a fixed dollar amount per trade, while others might charge a fixed dollar amount per month, while even others might charge a percentage of your investment. With only having $2,000 to invest, a large fee might make it difficult to make money.\"" }, { "docid": "269380", "title": "", "text": "If commuting is a big budget item, then can you: A side job is one way to make extra money, but I'd suggest a home business. If your wife substitute teaches, I bet she writes fairly well, and in any case you can. Write a personal finance blog or just a site with articles. Focus on surviving and thriving with child(ren) in a one-income Christian household in the suburbs of Philadelphia. Or if you have a hobby that stokes your furnace, write about that. Heck, do both. The content just stays there and gets traffic day after day that you can monetize. My main suggestion would be to start this now because it's not overnight money. But in the long run it can turn into a nice, fairly passive income. The big advantage of this is that mommy gets to stay home with the kids and build up a decent business. The cost is $10/year for the domain (per domain) and maybe $10/month for hosting. Or, if some other legitimate work-at-home business presents itself, go with that. I suggest blogging because it's what I know, but everyone's an expert in something unique." }, { "docid": "542764", "title": "", "text": "\"A stock, at its most basic, is worth exactly what someone else will pay to buy it right now (or in the near future), just like anything else of value. However, what someone's willing to pay for it is typically based on what the person can get from it. There are a couple of ways to value a stock. The first way is on expected earnings per share, most of would normally (but not always) be paid in dividends. This is a metric that can be calculated based on the most recently reported earnings, and can be estimated based on news about the company or the industry its in (or those of suppliers, likely buyers, etc) to predict future earnings. Let's say the stock price is exactly $100 right now, and you buy one share. In one quarter, the company is expected to pay out $2 per share in dividends. That is a 2% ROI realized in 3 months. If you took that $2 and blew it on... coffee, maybe, or you stuffed it in your mattress, you'd realize a total gain of $8 in one year, or in ROI terms an annual rate of 8%. However, if you reinvested the money, you'd be making money on that money, and would have a little more. You can calculate the exact percentage using the \"\"future value\"\" formula. Conversely, if you wanted to know what you should pay, given this level of earnings per share, to realize a given rate of return, you can use the \"\"present value\"\" formula. If you wanted a 9% return on your money, you'd pay less for the stock than its current value, all other things being equal. Vice-versa if you were happy with a lesser rate of return. The current rate of return based on stock price and current earnings is what the market as a whole is willing to tolerate. This is how bonds are valued, based on a desired rate of return by the market, and it also works for stocks, with the caveat that the dividends, and what you'll get back at the \"\"end\"\", are no longer constant as they are with a bond. Now, in your case, the company doesn't pay dividends. Ever. It simply retains all the earnings it's ever made, reinvesting them into doing new things or more things. By the above method, the rate of return from dividends alone is zero, and so the future value of your investment is whatever you paid for it. People don't like it when the best case for their money is that it just sits there. However, there's another way to think of the stock's value, which is it's more core definition; a share of the company itself. If the company is profitable, and keeps all this profit, then a share of the company equals, in part, a share of that retained earnings. This is very simplistic, but if the company's assets are worth 1 billion dollars, and it has one hundred million shares of stock, each share of stock is worth $10, because that's the value of that fraction of the company as divided up among all outstanding shares. If the company then reports earnings of $100 million, the value of the company is now 1.1 billion, and its stock should go up to $11 per share, because that's the new value of one ten-millionth of the company's value. Your ROI on this stock is $1, in whatever time period the reporting happens (typically quarterly, giving this stock a roughly 4% APY). This is a totally valid way to value stocks and to shop for them; it's very similar to how commodities, for instance gold, are bought and sold. Gold never pays you dividends. Doesn't give you voting rights either. Its value at any given time is solely what someone else will pay to have it. That's just fine with a lot of people right now; gold's currently trading at around $1,700 an ounce, and it's been the biggest moneymaker in our economy since the bottom fell out of the housing market (if you'd bought gold in 2008, you would have more than doubled your money in 4 years; I challenge you to find anything else that's done nearly as well over the same time). In reality, a combination of both of these valuation methods are used to value stocks. If a stock pays dividends, then each person gets money now, but because there's less retained earnings and thus less change in the total asset value of the company, the actual share price doesn't move (much). If a stock doesn't pay dividends, then people only get money when they cash out the actual stock, but if the company is profitable (Apple, BH, etc) then one share should grow in value as the value of that small fraction of the company continues to grow. Both of these are sources of ROI, and both are seen in a company that will both retain some earnings and pay out dividends on the rest.\"" }, { "docid": "543463", "title": "", "text": "The likely outcome of adding extra money to your escrow account is that the bank will send you a check for excess funds at the end of the year (or whenever your property tax and insurance payments are processed). Could you just redeposit that money immediately? Possibly. I bet most banks wouldn't care and would just follow the routine of clearing the excess from the account next time they process payments. I've never received a 1099 for interest in an escrow account. It is possible that when you start earning enough interest that a 1099 is required by law ($10/year) that the bank gets a little more aggressive about pushing your money back to you. I'm not sure why that hassle is any better than just opening up your average internet savings account (many don't have any of the fees you mentioned) and parking it there with a similar interest rate. You can deposit and withdraw using ACH transactions that post by the next business day. That said, unless they do start rejecting your money, there aren't a lot of downsides in your plan." }, { "docid": "228694", "title": "", "text": "\"This is the infographic from the Fidelity. It exemplifies what's wrong with the financial industry, and the sad state of innumeracy that we are in. To be clear, Fidelity treats the 401(k) correctly, although the assumption that the withdrawals are all at a marginal 28% is a poor one. The Roth side, they assume the $5000 goes in at a zero tax rate. This is nonsense, as Elaine can't deposit $5000, she has to pay tax first, no? She'd deposit $3600, and would have the identical $27,404 at withdrawal time. And this is pure nonsense - \"\"Let’s look at the numbers another way. Tom takes the $1,400 he saved in taxes from his $5,000 pretax contributions, and invests that money in a taxable brokerage account. That could boost his total at age 75 to $35,445.\"\" The $1400 saved is in his 401(k) already, there's no extra $1400. $5000 went in pretax. Let me go one more step, and explain what I think Joe meant in his comment below - tax table first - At retirement, say a couple has exactly $168,850 of income. With the $20K in standard deduction and exemptions, they are right at the top of the 25% bracket. And have a federal tax bill of $28,925. Overall, an effective rate of 17%. Of course this is a blend from 0%-25%, and I maintain that if some money could have gone in post tax while in the 10%/15% brackets, that would be great, but in the end, if it all skims off at 25%, and comes out at an effective 17%, that's not too bad. The article is incorrect. Misleading. And offends any of us that have any respect for numbers. And the fact that the article claim that \"\"87% found this helpful\"\" just makes me... sad. I've said it elsewhere, and will repeat, there are not just two points in time. The ability to convert Traditional 401(k) to Roth 401(k), and if in IRAs, not just convert, but also recharacterize, opens up other possibilities. It's worth a bit of attention and ongoing paperwork to minimize your lifetime tax bill. Time makes no difference. There is no \"\"crossover point\"\" as with other financial decisions. For this illustration, the results are identical regardless of time. By the way, in today's dollars, it would take $4M pretax to produce an annual withdrawal of $160K. This number is about top 2-3%. The 90%ers need not worry about saving their way to a higher tax bracket.\"" }, { "docid": "335164", "title": "", "text": "\"My education on this topic at this age range was a little more free-form. We were given a weeklong project in the 6th grade, which I remember pretty clearly: Fast forward 6 years (we were 12). You are about to be kicked out of your parents' house with the clothes on your back, $1,000 cash in your pocket, your high school diploma, and a \"\"best of luck\"\" from your parents. That's it. Your mission is to not be homeless, starving and still wearing only the clothes on your back in 3 months. To do this, you will find an apartment, a job (you must meet the qualifications fresh out of high school with only your diploma; no college, no experience), and a means of transportation. Then, you'll build a budget that includes your rent, estimated utilities, gasoline (calculated based on today's prices, best-guess fuel mileage of the car, and 250% of the best-guess one-way distance between home and job), food (complete nutrition is not a must, but 2000cal/day is), toiletries, clothing, and anything else you want or need to spend your paycheck or nest egg on. Remember that the laundromat isn't free, and neither is buying the washer/dryer yourself. Remember most apartments aren't furnished but do have kitchen appliances, and you can't say you found anything on the side of the road. The end product of your work will be a narrative report of the first month of your new life, a budget for the full 3 months, plus a \"\"continuing\"\" budget for a typical month thereafter to prove you're not just lasting out the 3 months, and all supporting evidence for your numbers, from newspaper clippings to in-store mailers (the Internet and e-commerce were just catching on at the time, Craigslist and eBay didn't exist yet, and not everyone had home Internet to begin with). Extra Credit: Make your budget work with all applicable income and sales taxes. Extra Extra Credit: Have more than your original $1000 in the bank at the end of the 3 months, after the taxes in the Extra Credit. This is a pretty serious project for a 12-year-old. Not only were we looking through the classified ads and deciphering all the common abbreviations, we were were taking trips to the grocery store with shopping lists, the local Wal-Mart or Target, the mall, even Goodwill. Some students had photos of their local gas station's prices, to which someone pointed out that their new apartment would be on the other side of town where gas was more expensive (smart kid). Some students just couldn't make it work (usually the mistakes were to be expected of middle-class middle-schoolers, like finding a job babysitting and stretching that out full-time, only working one job, buying everything new from clothes to furniture, thinking you absolutely need convenience items you can do without, and/or trying to buy the same upscale car your dad takes to work), though most students were able to provide at least a plausible before-tax budget. A few made the extra credit work, which was a lot of extra credit, because not only were you filling out a 1040EZ for your estimated income taxes, you were also figuring FICA and Social Security taxes which even some adults don't know the rates for, and remember, no Internet. Given that the extra-extra credit required you to come out ahead after taxes (good luck), I can't remember that anyone got that far. The meta-lesson that we all learned? Life without a college education is rough.\"" }, { "docid": "129903", "title": "", "text": "Paying this off early is robbing yourself of the extra earning potential for this money. Think of it as an interest free loan from your future self. If you can otherwise use that money to get a better rate of return then you are better off putting it there. Best options would normally be to use it to buy additional regular RRSPs, RESPs, or TFSA because of government benefits but even puting the extra into a GIC for a year is better than paying back home buyers plan early." }, { "docid": "595287", "title": "", "text": "I wouldn't be too concerned, yet. You're young. Many young people are living longer in the family home. See this Guardian article: Young adults delay leaving family home. You're in good company. Yet, there will come a time when you ought to get your own place, either for your own sanity or your parents' sanity. You should be preparing for that and building up your savings. Since you've got an income, you should – if you're not already – put away some of that money regularly. Every time you get paid, make a point of depositing a portion of your income into a savings or investment account. Look up the popular strategy called Pay Yourself First. Since you still live at home, it's possible you're a little more loose with spending money than you should be – at least, I've found that to be the case with some friends who lived at home as young adults. So, perhaps pretend you're on your own. What would your rent be if you had to find a place of your own? If, say, £600 instead of the £200 you're currently paying, then you should reduce your spending to the point where you can save at least £400 per month. Follow a budget. With respect to your car, it's great you recognize your mistake. We're human and we can learn from our mistakes. Plan to make it your one and only car mistake. I made one too. With respect to your credit card debt, it's not an insurmountable amount. Focus on getting rid of that debt soon and then focus on staying out of debt. The effective way to use credit cards is to never carry a balance – i.e. pay it off in full each month. If you can't do that, you're likely overspending. Also, look at what pensions your employer might offer. If they offer matching contributions, contribute at least as much to maximize the tax free extra pay this equates to. If you have access to a defined benefit plan, join it as soon as you are eligible. Last, I think it's important to recognize that at age 23 you're just starting out. Much of your career income earning potential is ahead of you. Strive to be the best at what you do, get promotions, and increase your income. Meanwhile, continue to save a good portion of what you earn. With discipline, you'll get where you want to be." }, { "docid": "224695", "title": "", "text": "\"Below is just a little information on this topic from my small unique book \"\"The small stock trader\"\": The most significant non-company-specific factor affecting stock price is the market sentiment, while the most significant company-specific factor is the earning power of the company. Perhaps it would be safe to say that technical analysis is more related to psychology/emotions, while fundamental analysis is more related to reason – that is why it is said that fundamental analysis tells you what to trade and technical analysis tells you when to trade. Thus, many stock traders use technical analysis as a timing tool for their entry and exit points. Technical analysis is more suitable for short-term trading and works best with large caps, for stock prices of large caps are more correlated with the general market, while small caps are more affected by company-specific news and speculation…: Perhaps small stock traders should not waste a lot of time on fundamental analysis; avoid overanalyzing the financial position, market position, and management of the focus companies. It is difficult to make wise trading decisions based only on fundamental analysis (company-specific news accounts for only about 25 percent of stock price fluctuations). There are only a few important figures and ratios to look at, such as: perhaps also: Furthermore, single ratios and figures do not tell much, so it is wise to use a few ratios and figures in combination. You should look at their trends and also compare them with the company’s main competitors and the industry average. Preferably, you want to see trend improvements in these above-mentioned figures and ratios, or at least some stability when the times are tough. Despite all the exotic names found in technical analysis, simply put, it is the study of supply and demand for the stock, in order to predict and follow the trend. Many stock traders claim stock price just represents the current supply and demand for that stock and moves to the greater side of the forces of supply and demand. If you focus on a few simple small caps, perhaps you should just use the basic principles of technical analysis, such as: I have no doubt that there are different ways to make money in the stock market. Some may succeed purely on the basis of technical analysis, some purely due to fundamental analysis, and others from a combination of these two like most of the great stock traders have done (Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, William O’Neil, and Steven Cohen). It is just a matter of finding out what best fits your personality. I hope the above little information from my small unique book was a little helpful! Mika (author of \"\"The small stock trader\"\")\"" }, { "docid": "274298", "title": "", "text": "First of all, MLM was not made to make all members earn good money. An honest MLM is made to allow members to make SOME money using their connections - a good example is AVON, popular among students, who sell some cosmetics to their friends and make some money to repair budget. A scam MLM is made to lure naive people to buy some crap by making them believe they will get rich, and in that systems only the most successive scammers get rich. Tell your friend to forget about the virtual profit from 'recruiting' other people and concentrate only on this what he/she will earn if he/she recruits nothing and simply sell some stuff. MLM gurus love to draw trees - state clearly, that every tree has more leaves than branches. Of course, under that criteria, no MLM can make your living, but the truth is, to earn for life you need to generate volume, which is unlikely in such sales model, but you can use it to make some extra money to repair your budget." }, { "docid": "351833", "title": "", "text": "\"I strongly suggest you read up the Option Greeks. You can be right about a stocks price movement and still not make money b/c other factors come into play from time or volatility. For a \"\"free\"\" option hedge you can look at collars. Buying puts and selling calls to offset the debit you pay for the transaction. Ex: AAPL is 115, You buy the 110 puts and sell the 120 calls. This gives you a collar around he current price. Your hedged below 110 and can still participate in upside move to 120. Also look into time value. Time decays exponentially in the last 30 days. If you are long this hurts you, if you are short(selling) this is good. Be sure to take this into account. Delta: relation of the option to the underlying stock move on a .01-1 scale, .50 is \"\"normal.\"\" Deep in the money options have higher deltas. It is possible other factors can offset this delta move. This is why people will lose money on earnings plays even though they are right. EX: Say you buy an AAPL call at 120, earnings comes out and the stock goes to 121. Even though you are \"\"in the money\"\" your contract may still have less value than what you paid because of VOLATILITY collapse. The market place knows earnings move a stock and that is factored into the price of the options expected volatility. As mentioned watch out for dividend dates. Always be aware of dividend dates and earnings dates and if your contract is going to cover one of these events. Interest rates have an effect as well but since the Fed has near 0 rates there is little impact at the present. Though this could certainly change if the fed starts raising rates. Research the Black Scholes Pricing model. Whenever you trade always think about what the other guys is thinking. Sometimes we forget their is someone else on the other side of my trade that thinks essentially the exact opposite of me. Its a zero sum game. As far as choosing strikes you can look at calculating the At THe money straddle to see if the options are \"\"cheap\"\" [stock Price * Implied Volatility (for 30, 60, 90 days Depending on your holding period)* Sq root of days to expiration] / 19 (which is sq root of days/yr) Add and subtract this number to the current stock price to give you an approximate 1 standard deviation of expected price movement. Keeping with our example. AAPL at 115, lets say your formula spits out a 6; therefore price range is expected to be 109 to 121 for the time period. Helpful for selling options, I would sell the 122 call or the 108 puts. Hope this helps. Start small and get a feel for things.\"" }, { "docid": "291376", "title": "", "text": "\"What you are doing is neither one. You are simply watching to make sure you don't overdraw, which itself suggests you might be living hand to mouth and not saving. Keeping track of your money and budgeting are useful tools which help people get on top of their money. Which tends to have the effect of allowing you to save. How much did you spend on groceries last month? Eating out? Gas? If you were \"\"keeping track of your money\"\", you could say immediately what you spent, and whether that is above or below average, and why. How much do you plan to spend in the next 3 months on gas, groceries, eating out? If you knew the answer to that question, then you would have a \"\"budget\"\". And if those months go by, and your budget proves to have been accurate, or educates you as to what went wrong so you can learn and fix it... then your budget is a functioning document that is helping you master your money. Certainly the more powerful of the two is the \"\"keeping track\"\", or accounting of what has happened to you so far. It's important that you keep track of every penny without letting stuff \"\"slip through the cracks\"\". Here you can use proper accounting techniques and maybe accounting software, just like businesses do where they reconcile their accounting against their bank statements and wallet cash. I shortcut that a little. I buy gift cards for McDonalds, Panera, Starbucks, etc. and buy my meals with those. That way, I only have one transaction to log, $40 - McDonalds gift card instead of a dozen little meals. It works perfectly fine since I know all that money went to fast food. A little more dangerous is that I treat wallet cash the same way, logging say two monthly entries of $100 to cash rather than 50 little transactions of left $1 tip at restaurant. This only works because cash is a tiny part of my overall expenditures - not worth accounting. If it added up to a significant part, I'd want accounting on that.\"" }, { "docid": "82039", "title": "", "text": "\"If you have enough earned income to cover this amount you should be all set. If I understand you correctly you proposed two transactions. The first, a withdrawal from the beneficiary IRA. Some of which is an RMD the rest is an extra withdrawal of funds. Next, you propose to make a deposit to a combination of your IRA and your wife's IRA. As long as there's earned income to cover this deposit, your plan is fine. To be clear, you can't \"\"take a bene IRA and deposit the RMD to an IRA.\"\" But, money is fungible, the dollars you deposit aren't traceable, only need to be justified by enough earned income. A bene IRA is a great way to get the money to increase your own IRA or 401(k) deposits. Further details - The 2016 contribution limit is $5,500 per person, so I did make the assumption you knew the $9000 deposit need to be split between the 2 IRAs, with no more than $5500 going into either one.\"" }, { "docid": "83538", "title": "", "text": "\"It could be simple as far as who gets what accounts after the initial assignments go. So, for this example let's look at: Employee A - 5 accounts worth 15 million *FLAGGED FOR FULL* Employee B - 1 account worth 75 million Employee C - 3 accounts worth 50 million Employees have the ability to decide if they do not want anymore accounts, or if they can take on more. That's pretty much what happens now. \"\"Hey can you handle one more account?\"\" **\"\"Actually, my accounts are pretty chaotic right now and look that way for the foreseeable future. Can I pass on this one?\"\"** So, when a new account comes available if I've flagged myself as full I simply don't participate in what would be a random handing out of the Alpha Account. The only problem I could see is if employees are stretching themselves out a bit too much for extra money, and not necessarily because they can rightfully handle the workload. Now they're just not flagging themselves because they want more money, but that sounds like a problem that can be easily handled by looking at their performance. Can you handle the load? No. Then I'm flagging you. Again, this is what happens now. If some people volunteered for more Alpha Accounts they'd be told no. There have been times now when a support has too many accounts and they pull it away and give to someone else. As far as losing money based on accounts, there could simply be a baseline salary. From baseline X apply the modifiers for the account values, quantities, and years worked there, but if you were to lose all but 1 account, all to no fault of you, the support, you'd be at the baseline X salary. Right now if that happened, they'd lay you off and hand your accounts to someone else. So, what's worse is how I see it. I don't disagree with the office politics, innovation being kept to the support personnel and not shared, and I could see toxicity, but I only see it if the numbers of employees don't decrease which they inevitably would. Turnover I think is key in the beginning. The crew would be dwindled down to half the numbers, and the requirements for the position should inevitably increase thus cultivating an environment that's no more toxic than an internal sales department who work side by side, for commission.\"" } ]

[ { "docid": "468923", "title": "", "text": "Your problem is one that has challenged many people. As you said there are two aspects to balancing a budget, reducing expenses or increasing income. And you state that you have done all the cost-cutting that you can find. Looking at ways to increase your income is a good way to balance your budget. How big is your problem? Do you need to find another $100/month, or do you need $1000/month? There are many part-time jobs you could obtain (fast food, retail, grocery), you could obtain a sales-job (cars, real estate, even working for a recruiting firm) where you could connect buyers and sellers. If your need is $100/month, a part-time job on weekends would fill the gap. When I was trying to solve my budget problems a few years ago, I thought that I needed to increase my income. And I did increase my income. But then I realized that my expenses were too high. And I re-evaluated my priorities. I challenge you to revisit your expenses. Often we assume that we need things that we really cannot afford. Consider a few of your (possible) expenses, My problems included mortgage debt, auto loans, high utilities, high car insurance, too much spending on kids activities, and a few other problems." } ]

[ { "docid": "454082", "title": "", "text": "\"This scheme doesn't work, because the combination of corporation tax, even the lower CCPC tax, plus the personal income tax doesn't give you a tax advantage, not on any realistic income I've ever worked it out on anyway. Prior to the 2014 tax year on lower incomes you could scrape a bit of an advantage but the 2013 budget changed the calculation for the tax credit on non-eligible dividends so there shouldn't be an advantage anymore. Moreover if you were to do it this way, by paying corporation tax instead of CPP you aren't eligible for CPP. If you sit with a calculator for long enough you may figure out a way of saving $200 or something small but it's a lot of paperwork for little if any benefit and you wouldn't get CPP. I understand the money multiplier effect described above, but the tax system is designed in a way that it makes more sense to take it as salary and put it in a tax deferred saving account, i.e. an RRSP - so there's no limit on the multiplier effect. Like I said, sit with a calculator - if you're earning a really large amount and are still under the small business limit it may make more sense to use a CCPC, but that is the case regardless of using it as a tax shelter because if you're earning a lot you're probably running a business of some size. The main benefit I think is that if you use a CCPC you can carry forward your losses, but you have to be aware of the definition of an \"\"allowable business investment loss\"\".\"" }, { "docid": "232983", "title": "", "text": "If you know that your tax situation is not easily handled by the standard withholding table then you can use that line to ask for additional funds be withheld. You could also ask for less money to be withheld. Why would somebody do this? They had a small side business that made them extra income, and wanted to withhold extra money from their full time job to cover the extra income. They might have been awarded a big bonus and it caused too much in taxes to be withheld so they wanted to not have as much taxes from their regular pay check. Given the fact that you are young, in your first real job, and almost the entire tax year ahead of you, it is likely that the standard tax tables will be close enough. So leave the line blank or put zero." }, { "docid": "83538", "title": "", "text": "\"It could be simple as far as who gets what accounts after the initial assignments go. So, for this example let's look at: Employee A - 5 accounts worth 15 million *FLAGGED FOR FULL* Employee B - 1 account worth 75 million Employee C - 3 accounts worth 50 million Employees have the ability to decide if they do not want anymore accounts, or if they can take on more. That's pretty much what happens now. \"\"Hey can you handle one more account?\"\" **\"\"Actually, my accounts are pretty chaotic right now and look that way for the foreseeable future. Can I pass on this one?\"\"** So, when a new account comes available if I've flagged myself as full I simply don't participate in what would be a random handing out of the Alpha Account. The only problem I could see is if employees are stretching themselves out a bit too much for extra money, and not necessarily because they can rightfully handle the workload. Now they're just not flagging themselves because they want more money, but that sounds like a problem that can be easily handled by looking at their performance. Can you handle the load? No. Then I'm flagging you. Again, this is what happens now. If some people volunteered for more Alpha Accounts they'd be told no. There have been times now when a support has too many accounts and they pull it away and give to someone else. As far as losing money based on accounts, there could simply be a baseline salary. From baseline X apply the modifiers for the account values, quantities, and years worked there, but if you were to lose all but 1 account, all to no fault of you, the support, you'd be at the baseline X salary. Right now if that happened, they'd lay you off and hand your accounts to someone else. So, what's worse is how I see it. I don't disagree with the office politics, innovation being kept to the support personnel and not shared, and I could see toxicity, but I only see it if the numbers of employees don't decrease which they inevitably would. Turnover I think is key in the beginning. The crew would be dwindled down to half the numbers, and the requirements for the position should inevitably increase thus cultivating an environment that's no more toxic than an internal sales department who work side by side, for commission.\"" }, { "docid": "442110", "title": "", "text": "75k is short of the 'highly compensated' category. Most US citizens in that pay range would consider paying someone to do their taxes as an unnecessary expense. Tax shelters usually don't come into play for this level of income. However, there are certain things which provide deductions. Some things that make it better to pay someone: Use the free online tax forms to sandbox your returns. If all you're concerned about is ensuring you pay your taxes correctly, this is the most cost efficient route. If you want to minimize your tax burden, consult with a CPA. Be sure to get one who is familiar with resident aliens from your country and the relevant tax treaties. The estimate you're looking at may be the withholding, of which you may be eligible for a refund for some part of that withholding. Tax treaties likely make sure that you get credit on each side for the money paid in the other. For example, as a US citizen, if I go to Europe and work and pay taxes there, I can deduct the taxes paid in Europe from my tax burden in the US. If I've already paid more to the EU than I would have paid on the same amount earned in the US, then my tax burden in the US is zero. By the same token, if I have not paid up to my US burden, then I owe the balance to the US. But this is way better than paying taxes to your home country and to the host country where you earned the money." }, { "docid": "79496", "title": "", "text": "\"Pyramid Schemes are illegal. This is not a pyramid scheme but I wouldn't dive into it unless you either had some killer marketing skills OR you are an extremely social and likable person; like high-school popularity contest winner level, but older. The affiliate earning system is way more complicated than what you mentioned (in a good way) because there are many ways to earn, but the biggest way to earn requires someone who \"\"knows how to throw a party\"\" or someone who absolutely loves people. (I don't). I personally am documenting my experience with PMB CBD oil and am posting my no B.S. review about everything from the product to the affiliate system on my personal FB. I'm not a people-person so i don't see me standing on a podium with a little mic around my cheek, but oddly my candid (and often funny) reviews inspired many of my Facebook friends to buy CBD. I get $30 for every bottle i sell through my affiliate page; this is a better way for me to earn than standing up in front of people like Martha Stewart. It helps if you actually like and use the product because that way you don't feel pressured to sell. I'm experimenting with CBD because I simply can't relax and suffer from some major anxiety and stress attacks. Results? Well it's 6am and i'm writing to you not freaking out about work tomorrow and browsing for Rick and Morty memes. I like it so far but we'll see.\"" }, { "docid": "336144", "title": "", "text": "\"Why it is good to be risky The reason why it is good to be risky is because risky investments can result in higher returns on your money. The problem with being risky, is there is a chance you can lose money. However, in the long term you can usually benefit from higher returns even if you have a few slip ups. Let me show you an example: These two lines are based off of placing $2,000 in a retirement fund at age of 20 and then at age of 25 start investing $6,500 a year (based off of a salary of $65,000 with a company that will 1 to 1 match up to 5% IRA contribution, presumably someone with a Master's should be able to get this) and then being able to increase your contribution amount by $150 a year as your salary begins to increase as well. The blue line assumes that all of this money that you are putting in a retirement account has a fixed 3% interest (compounded yearly for simplicity sake) every year until you retire. The red line is earning a 12% interest rate while you are 20 years old and then decreasing by 0.5% per year until you retire. Since this is using more risky investments when you are younger, I have even gone ahead and included losing 20% of your money when you are 24, another 20% when you are 29, and then again another 20% when you are 34. As you can see, even with losing 20% of your money 3 different times, you still end up with more money then you would have had if you stuck with a more conservative investment plan. If I change this to 50% each 3 times, you will still come out about equal to a more conservative investment. Now, I do have these 3 loses placed at a younger age when there is less to lose, but this is to be expected since you are being more risky when you are young. When you are closer to retirement you have less of a chance of losing money since you will be investing more conservatively. Why it is OK to be risky when you are young but not old Lets say you loose 20% of your $2,000 when you are young, you have 30-40 years to make that back. That's roughly $1 a month extra that you are having to come up with. So, if you have a risky investment go bad when you are young, you have plenty of time to account for it before you retire. Now lets say you have $1,000,000 when you are 5 years from retiring and loose 20% of it, you have to come up with an extra $3,333 a month if you want to retire on time. So, if you have a risky investment go bad when you are close to retiring, you will most likely have to work for many more years just to be able to recover from your loses. What to invest in This is a little bit more difficult question to answer. If there was one \"\"right\"\" way to invest your money, every one would be doing that one \"\"right\"\" way and would result in it not turning out to be that good of investment. What you need to do is come up with a plan for yourself. My biggest advice that I can give is to be careful with fees. Some places will charge a fixed dollar amount per trade, while others might charge a fixed dollar amount per month, while even others might charge a percentage of your investment. With only having $2,000 to invest, a large fee might make it difficult to make money.\"" }, { "docid": "556545", "title": "", "text": "\"If you're looking for ways to turn $1000 into more, don't just think of ways it can make money -- also consider whether there are any ways you can use it to save money. Among the advantages of this approach is that you're not taxed for reducing your expenditures. The good news is that there are a lot more ways to save a little bit of money on a $1000 budget than there are to make a little money on that budget. The bad news is that most of them will require some additional input: labor. Have you taken an economics course? Capital + Labor => output. I don't know what you spend your money on exactly, but some thoughts: You may find more opportunities for things like this as you move out from college and into your own apartment (/house) and the university isn't taking care of as many of your needs. Just don't confuse yourself about where the line is between actually saving money that you were going to spend anyway, and just consuming more. Consumption is fine in and of itself (and ultimately it's what you have money for) but doesn't make you financially better off. Also, when considering what to do with the money, don't just think \"\"I can spend $2000 on this bike and it will ultimately save me gas money\"\" unless you also know how to think \"\"I could spend $200 on a slightly lesser bike and still save all the gas money, or maybe even spend $20 on a yard sale bike.\"\". Consider borrowing kitchen equipment from the parents, instead of buying new stuff, or buy it at a yard sale. Also, make sure you actually will use the things you buy.\"" }, { "docid": "543463", "title": "", "text": "The likely outcome of adding extra money to your escrow account is that the bank will send you a check for excess funds at the end of the year (or whenever your property tax and insurance payments are processed). Could you just redeposit that money immediately? Possibly. I bet most banks wouldn't care and would just follow the routine of clearing the excess from the account next time they process payments. I've never received a 1099 for interest in an escrow account. It is possible that when you start earning enough interest that a 1099 is required by law ($10/year) that the bank gets a little more aggressive about pushing your money back to you. I'm not sure why that hassle is any better than just opening up your average internet savings account (many don't have any of the fees you mentioned) and parking it there with a similar interest rate. You can deposit and withdraw using ACH transactions that post by the next business day. That said, unless they do start rejecting your money, there aren't a lot of downsides in your plan." }, { "docid": "193303", "title": "", "text": "The value of an option has 2 components, the extrinsic or time value element and the intrinsic value from the difference in the strike price and the underlying asset price. With either an American or European option the intrinsic value of a call option can be 'locked in' any time by selling the same amount of the underlying asset (whether that be a stock, a future etc). Further, the time value of any option can be monitised by delta hedging the option, i.e. buying or selling an amount of the underlying asset weighted by the measure of certainty (delta) of the option being in the money at expiry. Instead, the extra value of the American option comes from the financial benefit of being able to realise the value of the underlying asset early. For a dividend paying stock this will predominantly be the dividend. But for non-dividend paying stocks or futures, the buyer of an in-the-money option can realise their intrinsic gains on the option early and earn interest on the profits today. But what they sacrifice is the timevalue of the option. However when an option becomes very in the money and the delta approaches 1 or -1, the discounting of the intrinsic value (i.e. the extra amount a future cash flow is worth each day as we draw closer to payment) becomes larger than the 'theta' or time value decay of the option. Then it becomes optimal to early exercise, abandon the optionality and realise the monetary gains upfront. For a non-dividend paying stock, the value of the American call option is actually the same as the European. The spot price of the stock will be lower than the forward price at expiry discounted by the risk free rate (or your cost of funding). This will exactly offset the monetary gain by exercising early and banking the proceeds. However for an option on a future, the value today of the underlying asset (the future) is the same as at expiry and its possible to fully realise the interest earned on the money received today. Hence the American call option is worth more. For both examples the American put option is worth more, slightly more so for the stock. As the stock's spot price is lower than the forward price, the owner of the put option realises a higher (undiscounted) intrinsic profit from selling the stock at the higher strike price today than waiting till expiry, as well as realising the interest earned. Liquidity may influence the perceived value of being able to exercise early but its not a tangible factor that is added to the commonly used maths of the option valuation, and isn't really a consideration for most of the assets that have tradeable option markets. It's also important to remember at any point in the life of the option, you don't know the future price path. You're only modelling the distribution of probable outcomes. What subsequently happens after you early exercise an American option no longer has any bearing on its value; this is now zero! Whether the stock subsequently crashes in price is irrelevent. What is relevant is that when you early exercise a call you 'give up' all potential upside protected by the limit to your downside from the strike price." }, { "docid": "595287", "title": "", "text": "I wouldn't be too concerned, yet. You're young. Many young people are living longer in the family home. See this Guardian article: Young adults delay leaving family home. You're in good company. Yet, there will come a time when you ought to get your own place, either for your own sanity or your parents' sanity. You should be preparing for that and building up your savings. Since you've got an income, you should – if you're not already – put away some of that money regularly. Every time you get paid, make a point of depositing a portion of your income into a savings or investment account. Look up the popular strategy called Pay Yourself First. Since you still live at home, it's possible you're a little more loose with spending money than you should be – at least, I've found that to be the case with some friends who lived at home as young adults. So, perhaps pretend you're on your own. What would your rent be if you had to find a place of your own? If, say, £600 instead of the £200 you're currently paying, then you should reduce your spending to the point where you can save at least £400 per month. Follow a budget. With respect to your car, it's great you recognize your mistake. We're human and we can learn from our mistakes. Plan to make it your one and only car mistake. I made one too. With respect to your credit card debt, it's not an insurmountable amount. Focus on getting rid of that debt soon and then focus on staying out of debt. The effective way to use credit cards is to never carry a balance – i.e. pay it off in full each month. If you can't do that, you're likely overspending. Also, look at what pensions your employer might offer. If they offer matching contributions, contribute at least as much to maximize the tax free extra pay this equates to. If you have access to a defined benefit plan, join it as soon as you are eligible. Last, I think it's important to recognize that at age 23 you're just starting out. Much of your career income earning potential is ahead of you. Strive to be the best at what you do, get promotions, and increase your income. Meanwhile, continue to save a good portion of what you earn. With discipline, you'll get where you want to be." }, { "docid": "123226", "title": "", "text": "\"The first thing you have to do is to decided what area in finance you want to get into. For example, investment banking and quant are very different jobs. Learning all the CFA material is useful, so you might as well take the exams too while you are at it. You may be able to get into financial IT or some type of financial programming job. That is one step closer to your goal because at least you will be at a finance company and you can network with people that are in the field. Also, if you want to go into the buy side like I did, I recommend you invest your own money and manage your own portfolio. That way you would have some intimate familiarity with some companies/strategies. You can't get this from a textbook. There is something a little wrong with someone who wants to manage other people's money when he doesn't manage his own. That is a tough sell. You can't be too picky about where you get in. Getting in the door is the most important. I got a lot of quant interviews because I was an engineer. Those interviews consist of a lot of math and brain teaser type questions. For fundamental analyst positions, they will typically want to figure out how you think about businesses/companies. You can typically steer the interview any way you want, which is why I think it is important that you invest your own money. If you say \"\"the largest position I hold is in XYZ company\"\", you can be 99% certain that they will be asking about that investment for the next 15 minutes (at least). That is your opportunity to show how you can add value. Most companies prefer students for entry level, because why hire a guy who is already working in another field when you can get someone fresh? I stood out in the interviews because I could say \"\"I put $50k into this position because...\"\". It's not the only way to do it, but I can only provide you with my anedoctal experience.\"" }, { "docid": "38359", "title": "", "text": "I contend that there is great value in over-paying during the year and reaping a bigger refund. I'm an engineer and understand the concept interest earned, blah blah. But for most of us, this isn't reality. The reality is that we spend what we earn, plus a little more. At the end of each month, if the typical American has money left over - we spend it. We don't faithfully put that money that we would have payed into taxes to good use (such as savings or paying off that credit card). Getting that big refund at the end of the year tends encourage us to make that one-time large payment to that high interest account, or to purchase that item that we otherwise wouldn't have saved for (or purchased with a credit card). I say, give Uncle Sam the free interest - you'll have wasted that money during the year anyway - and enjoy a nice healthy refund that you can put to use for something you enjoy. Life is just too short. [Edit] For the nose snubbers that can't think beyond the possibility of a different perspective: Link1 Huff Post SteveJ" }, { "docid": "407726", "title": "", "text": "\"An annuity is a product. In simple terms, you hand over a lump sum of cash and receive an agreed annual income until you die. The underlying investment required to reach that income level is not your concern, it's the provider's worry. So there is a huge mount of security to the retiree in having an annuity. It is worth pointing out that with simple annuities where one gives a lump sum of money to (typically) an insurance company, the annuity payments cease upon the death of the annuitant. If any part of the lump sum is still left, that money belongs to the company, not to the heirs of the deceased. Fancier versions of annuities cover the spouse of the annuitant as well (joint and survivor annuity) or guarantee a certain number of payments (e.g. 10-year certain) regardless of when the annuitant dies (payments for the remaining certain term go to the residual beneficiary) etc. How much of an annuity payment the company offers for a fixed lump sum of £X depends on what type of annuity is chosen; usually simple annuities give the maximum bang for the buck. Also, different companies may offer slightly different rates. So, why should one choose to buy an annuity instead of keeping the lump sum in a bank or in fixed deposits (CDs in US parlance), or invested in the stock market or the bond market, etc., and making periodic withdrawals from these assets at a \"\"safe rate of withdrawal\"\"? Safe rates of withdrawal are often touted as 4% per annum in the US, though there are newer studies saying that a smaller rate should be used. Well, safe rates of withdrawal are designed to ensure that the retiree does not use up all the money and is left destitute just when medical bills and other costs are likely to be peaking. Indeed, if all the money were kept in a sock at home (no growth at all), a 4% per annum withdrawal rate will last the retiree for 25 years. With some growth of the lump sum in an investment, somewhat larger withdrawals might be taken in good years, but that 4% is needed even when the investments have declined in value because of economic conditions beyond one's control. So, there are good things and bad things that can happen if one chooses to not buy an annuity. On the other hand, with an annuity, the payments will continue till death and so the retiree feels safer, as Chris mentioned. There is also the serenity in not having to worry how the investments are doing; that's the company's business. A down side, of course, is that the payments are fixed and if inflation is raging, the retiree still gets the same amount. If extra cash is needed one year for unavoidable expenses, the annuity will not provide it, whereas the lump sum (whether kept in a sock or invested) can be drawn on for the extra expense. Another down side is that any money remaining is gone, with nothing left for the heirs. On the plus side, the annuity payments are usually larger than those that the retiree will get via the safe rate of withdrawal method from the lump sum. This is because the insurance company is applying the laws of large numbers: many annuitants will not survive past their life expectancy, and their leftover monies are pure profit to the insurance company, often more than enough (when invested properly by the company) to pay those old codgers who continue to live past their life expectancy. Personally, I wouldn't want to buy an annuity with all my money, but getting an annuity with part of the money is worthwhile. Important: The annuity discussed in this answer is what is sometimes called a single-premium or an immediate annuity. It is purchased at the time of retirement with a single (large) lump sum payment. This is not the kind of annuity that is described in JAGAnalyst's answer which requires payment of (much smaller) premiums over many years. Search this forum for variable annuity to learn about these types of annuities.\"" }, { "docid": "583800", "title": "", "text": "For a $350 monthly payment, she is currently paying $200 monthly in interest. You say that no bank will refinance her, but that is not true, I'm sure many banks are happy to refinance her to the value of the car. She should start that process. You'll find that your suggestion to pay $5000 down on the current loan is pretty similar to what she would need to bring to a bank to refinance (maybe as much as $7000 to refinance). After that she would be paying a much lower amount in interest, and she could still retire the loan a year or two (but she would be paying even less in interest). The advantage to borrowing from her emergency fund is that she retires the loan 14 months earlier. The problem is that you are prioritizing the least amount paid, and she is prioritizing an emergency fund. Emergency funds are also very important. You might have better success if you prioritize paying back the emergency fund in your plan. If she puts $7000 down to refinance, assume a 3 year loan at 4.5% with a $150 monthly payment. Instead of paying down the remaining $5000 quickly what if she put the extra $200/month toward paying back her emergency fund? It would take the same 3 years to fully pay it back without impacting the rest of her budget at all. If she has extra room in her budget, she could pay back that emergency fund even faster. Many of us who prioritize minimizing interest paid and maximizing interest earned already have a robust emergency fund. Your girlfriend isn't wrong to value that. Unexpected emergencies can cause much more interest to be paid if there is no way to deal with them. (That's how paycheck and title lenders capture their customers.) Talk to her about what emergencies she might need the money for, and make a plan to replenish the fund, and you're much more likely to have her buy in." }, { "docid": "127664", "title": "", "text": "\"Your employment status is not 100% clear from the question. Normally, consultants are sole-proprietors or LLC's and are paid with 1099's. They take care of their own taxes, often with schedule C, and they sometimes can but generally do not use \"\"employer\"\" company 401(k). If this is your situation, you can contact any provider you want and set up your own solo 401(k), which will have great investment options and no fees. I do this, through Fidelity. If you are paid with a W2, you are not a consultant. You are an employee and must use your employer's 401(k). Figure out what you are. If you are a consultant, open a solo 401(k) at the provider of your choice. Make sure beforehand that they allow incoming rollovers. Roll all of your previous 401(k)s and IRA's into it. When you have moved your 401(k) to a better provider, you won't be paying any extra fees, but you will not recoup any fees your original provider charged. I'm not sure why you mention a Roth IRA. If you try to roll your 401(k) into a Roth instead of a traditional IRA or 401(k), be aware that you will be taxed on everything you roll. ---- Edit: a little info about IRA's in response to your comment ---- Tax advantaged retirement accounts come in two flavors: one is managed by your company and the money is taken out of your paycheck. This is usually a 401(k) or 403(b). You can contribute up to $18K per year and your company can also contribute to it. The other flavor is an IRA. You can contribute $5,500 per year to this for you and $5,500 for your spouse. These are outside of your company and you make the deposits yourself. You choose your own provider, so competition has driven prices way down. You can have both a 401(k) and an IRA and contribute the max to both (though at high incomes you lose the ability to deduct IRA contributions). These accounts are tax advantaged because you only pay taxes once. With a regular brokerage account, you pay income tax in the year in which you earn money, then you pay tax every year on dividends and any capital gains that have been realized by selling. There are two types of tax-advantaged accounts: Traditional IRA or Traditional 401(k). You do not pay income tax on this money in the year you earn it, nor do you pay capital gains tax. Instead you pay tax only in the year in which you take the money out (in retirement). Roth IRA or Roth 401(k). You do pay income tax on money on this money in the year in which you earn it. But then you don't pay tax on any gains or withdrawals ever again. When you leave your job (and sometimes at other times) you can move your money out of a 401(k) into your IRA, where you can do a better job managing it. You can also move money from your IRA into a 401(k) if your 401(k) provider will allow you to. Whether traditional or Roth is better depends on your tax rate now and your tax rate at retirement. However, if you choose to move money from a traditional account into a Roth account, you must pay tax on it in that year as if it was income because traditional and Roth accounts are taxed at different times. For that reason, if you are just trying to move money out of your 401(k) to save on fees, the logical place to put it is in a traditional IRA. Moving money from a traditional to a Roth may make sense, for example, if your tax rate is temporarily low this year, but that would be a separate decision from the one you are looking at. You can always roll your traditional IRA into a Roth later if that does become the case. Otherwise, there's no reason to think your traditional 401(k) should be rolled into a Roth IRA according to what you have described.\"" }, { "docid": "542764", "title": "", "text": "\"A stock, at its most basic, is worth exactly what someone else will pay to buy it right now (or in the near future), just like anything else of value. However, what someone's willing to pay for it is typically based on what the person can get from it. There are a couple of ways to value a stock. The first way is on expected earnings per share, most of would normally (but not always) be paid in dividends. This is a metric that can be calculated based on the most recently reported earnings, and can be estimated based on news about the company or the industry its in (or those of suppliers, likely buyers, etc) to predict future earnings. Let's say the stock price is exactly $100 right now, and you buy one share. In one quarter, the company is expected to pay out $2 per share in dividends. That is a 2% ROI realized in 3 months. If you took that $2 and blew it on... coffee, maybe, or you stuffed it in your mattress, you'd realize a total gain of $8 in one year, or in ROI terms an annual rate of 8%. However, if you reinvested the money, you'd be making money on that money, and would have a little more. You can calculate the exact percentage using the \"\"future value\"\" formula. Conversely, if you wanted to know what you should pay, given this level of earnings per share, to realize a given rate of return, you can use the \"\"present value\"\" formula. If you wanted a 9% return on your money, you'd pay less for the stock than its current value, all other things being equal. Vice-versa if you were happy with a lesser rate of return. The current rate of return based on stock price and current earnings is what the market as a whole is willing to tolerate. This is how bonds are valued, based on a desired rate of return by the market, and it also works for stocks, with the caveat that the dividends, and what you'll get back at the \"\"end\"\", are no longer constant as they are with a bond. Now, in your case, the company doesn't pay dividends. Ever. It simply retains all the earnings it's ever made, reinvesting them into doing new things or more things. By the above method, the rate of return from dividends alone is zero, and so the future value of your investment is whatever you paid for it. People don't like it when the best case for their money is that it just sits there. However, there's another way to think of the stock's value, which is it's more core definition; a share of the company itself. If the company is profitable, and keeps all this profit, then a share of the company equals, in part, a share of that retained earnings. This is very simplistic, but if the company's assets are worth 1 billion dollars, and it has one hundred million shares of stock, each share of stock is worth $10, because that's the value of that fraction of the company as divided up among all outstanding shares. If the company then reports earnings of $100 million, the value of the company is now 1.1 billion, and its stock should go up to $11 per share, because that's the new value of one ten-millionth of the company's value. Your ROI on this stock is $1, in whatever time period the reporting happens (typically quarterly, giving this stock a roughly 4% APY). This is a totally valid way to value stocks and to shop for them; it's very similar to how commodities, for instance gold, are bought and sold. Gold never pays you dividends. Doesn't give you voting rights either. Its value at any given time is solely what someone else will pay to have it. That's just fine with a lot of people right now; gold's currently trading at around $1,700 an ounce, and it's been the biggest moneymaker in our economy since the bottom fell out of the housing market (if you'd bought gold in 2008, you would have more than doubled your money in 4 years; I challenge you to find anything else that's done nearly as well over the same time). In reality, a combination of both of these valuation methods are used to value stocks. If a stock pays dividends, then each person gets money now, but because there's less retained earnings and thus less change in the total asset value of the company, the actual share price doesn't move (much). If a stock doesn't pay dividends, then people only get money when they cash out the actual stock, but if the company is profitable (Apple, BH, etc) then one share should grow in value as the value of that small fraction of the company continues to grow. Both of these are sources of ROI, and both are seen in a company that will both retain some earnings and pay out dividends on the rest.\"" }, { "docid": "42738", "title": "", "text": "The book value is Total Assets minus Total Liabilities and so if you increase the Total Assets without changing the Total Liabilities the difference gets bigger and thus higher. Consider if a company had total assets of $4 and total liabilities of $3 so the book value is $1. Now, if the company adds $2 to the assets, then the difference would be 4+2-3=6-3=3 and last time I checked 3 is greater than 1. On definitions, here are a couple of links to clarify that side of things. From Investopedia: Equity = Assets - Liabilities From Ready Ratios: Shareholders Equity = Total Assets – Total Liabilities OR Shareholders Equity = Share Capital + Retained Earnings – Treasury Shares Depending on what the reinvestment bought, there could be several possible outcomes. If the company bought assets that appreciated in value then that would increase the equity. If the company used that money to increase sales by expanding the marketing department then the future calculations could be a bit trickier and depend on what assumptions one wants to make really. If you need an example of the latter, imagine playing a game where I get to make up the rules and change them at will. Do you think you'd win at some point? It would depend on how I want the game to go and thus isn't something that you could definitively say one way or the other." }, { "docid": "141949", "title": "", "text": "Math - The half-match is 3% or $3900. After 5 years, $19,500. If you stay, you are vested, and have $20K (I hope it's actually far more) extra. For you, it's like 2 month's salary bonus after 5 years. If you leave early, the good news is that even if the expenses within the plan weren't great, you have the money you put in, along with what vested so far. You move that to an IRA and choose your own thrifty funds or ETFs. For me (as Duff said, there's no one answer, so to be clear, this is my feeling, or preference, not gospel) 6% is far too little to save as a percent of my income. So if the 401(k) fees ran say .8% or higher, I'd put in the 6% to get the potential match, and then save on the side. Our answers might change slightly depending on the exact fees you're exposed to." }, { "docid": "3315", "title": "", "text": "I'll have to think it through, but at the very least unless your debt is a pure discount instrument and you are using cash flows, some if that money IS getting paid during those 5 years. As in if you are using earnings, they pay p&amp;i. Or if earnings and pure discount instruments, then amortized interest (I think, been a while). You see the actual numbers and know what you are trying to do, but I'm a little lost. Are you building a discount model with a multiple terminal and using ev as the multiple? Are you using free cash flow to firm for the discounting? I'm guessing that's the case." } ]

[ { "docid": "305904", "title": "", "text": "From strictly a gross revenue point of view, the parking spot is going to yield a higher rate (5.4%) versus a 3% savings account, assuming you have it rented all year. Your break-even point (not considering other expenses) is 7-8 months of rent per year. So, what are things to consider? Here's a few to start with. The parking spot is a nice investment in that you get a decent return, and the potential for appreciation. The savings account/CD will give you a fixed return with no risk. To support your decision, make sure you understand all of the costs and understand all of the downside risk. If you're 50 and this is alot of money to you, be conservative. If you're 25 and have a good job, you can afford to chase the yield." } ]

[ { "docid": "178303", "title": "", "text": "\"Some thoughts: 1) Do you have a significant emergency fund (3-6 months of after-tax living expenses)? If not, you stand to take a significant loss if you have an unexpected need for cash that is tied up in investments. What if you lose/hate your job or your car breaks down? What if a you want to spend some time with a relative or significant other who learns they only have a few months to live? Having a dedicated emergency fund is an important way to avoid downside risk. 2) Lagerbaer has a good suggestion. Given that if you'd reinvested your dividends, the S&P 500 has returned about 3.5% over the last 5 years, you may be able to get a very nice risk-free return. 3) Do you have access to employer matching funds, such as in a 401(k) at work? If you get a dollar-for-dollar match, that is a risk-free pre-tax 100% return and should be a high priority. 4) What do you mean by \"\"medium\"\" volatility? Given that you are considering a 2/3 equity allocation, it would not be at all out of the realm of possibility that your balance could fall by 15% or more in any given year and take several years to recover. If that would spook you, you may want to consider lowering your equity weights. A high quality bond fund may be a good fit. 5) Personally, I would avoid putting money into stocks that I didn't need back for 10 years. If you only want to tie your money up for 2-5 years, you are taking a significant risk that if prices fall, you won't have time to recover before you need your money back. The portfolio you described would be appropriate for someone with a long-term investment horizon and significant risk tolerance, which is usually the case for young people saving for retirement. However, if your goals are to invest for 2-5 years only, your situation would be significantly different. 6) You can often borrow from an investment account to purchase a primary residence, but you must pay that amount back in order to avoid significant taxes and fees, unless you plan to liquidate assets. If you plan to buy a house, saving enough to avoid PMI is a good risk-free return on your money. 7) In general, and ETF or index fund is a good idea, the key being to minimize the compound effect of expenses over the long term. There are many good choices a la Vanguard here to choose from. 8) Don't worry about \"\"Buy low, sell high\"\". Don't be a speculator, be an investor (that's my version of Anthony Bourdain's, \"\"don't be a tourist, be a traveler\"\"). A speculator wants to sell shares at a higher price than they were purchased at. An investor wants to share in the profits of a company as a part-owner. If you can consistently beat the market by trying to time your transactions, good for you - you can move to Wall Street and make millions. However, almost no one can do this consistently, and it doesn't seem worth it to me to try. I don't mean to discourage you from investing, just make sure you have your bases covered so that you don't have to cash out at a bad time. Best of luck! Edit Response to additional questions below. 1) Emergency fund. I would recommend not investing in anything other than cash equivalents (money market, short-term CDs, etc.) until you've built up an emergency fund. It makes sense to want to make the \"\"best\"\" use of your money, but you also have to account for risk. My concern is that if you were to experience one or more adverse life events, that you could lose a lot of money, or need to pay a lot in interest on credit card debt, and it would be prudent to self-insure against some of those risks. I would also recommend against using an investment account as an emergency fund account. Taking money out of investment accounts is inefficient because the commissions/taxes/fees can easily eat up a significant portion of your returns. Ideally, you would want to put money in and not touch it for a long time in order to take advantage of compounding returns. There are also high penalties for early disbursements from retirement funds. Just like you need enough money in your checking account to buy food and pay the rent every month, you need enough money in an emergency fund to pay for things that are a real possibility, even if they are less common. Using a credit card or an investment account is a relatively expensive way to do this. 2) Invest at all? I would recommend starting an emergency fund, and then beginning to invest for retirement. Once your retirement savings are on track, you can begin saving for whatever other goals you may have\"" }, { "docid": "437427", "title": "", "text": "\"There is no zero risk option! There is no safe parking zone for turbulent times! There is no such thing as a zero-risk investment. You would do well to get this out of your head now. Cash, though it will retain its principle over time, will always be subject to inflation risk (assuming a positive-inflation environment which, historically in the US anyway, has always been the case since the Great Depression). But I couldn't find a \"\"Pure Cash - No investment option\"\" - what I mean by this is an option where my money is kept idle without investing in any kind of financial instrument (stocks, bonds, other MFs, currencies, forex etc etc whatever). Getting back to the real crux of your question, several other answers have already highlighted that you're looking for a money market fund. These will likely be as close to cash as you will get in a retirement account for the reasons listed in @KentA's answer. Investing in short-term notes would also be another relatively low-risk alternative to a money market fund. Again, this is low-risk, not no-risk. I wanted such kinda option because things may turn bad and I may want nothing invested in the stock markets/bond markets. I was thinking that if the market turns bear then I would move everything to cash Unless you have a the innate ability to perfectly time the market, you are better off keeping your investments where they are and riding out the bear market. Cash does not generate dividends - most funds in a retirement account do. Sure, you may have a paper loss of principle in a bear market, but this will go away once the market turns bull again. Assuming you have a fairly long time before you retire, this should not concern you in the slightest. Again, I want to stress that market timing does not work. Even the professionals, who get paid the big bucks to do this, on average, get it right as often as they get it wrong. If you had this ability, you would not be asking financial questions on Stack Exchange, I can tell you that. I would recommend you read The Four Pillars of Investing, by William Bernstein. He has a very no-nonsense approach to investing and retirement that would serve you (or anybody) well in turbulent financial markets. His discussion on risk is especially applicable to your situation.\"" }, { "docid": "115741", "title": "", "text": "We don't have a good answer for how to start investing in poland. We do have good answers for the more general case, which should also work in Poland. E.g. Best way to start investing, for a young person just starting their career? This answer provides a checklist of things to do. Let's see how you're doing: Match on work pension plan. You don't mention this. May not apply in Poland, but ask around in case it does. Given your income, you should be doing this if it's available. Emergency savings. You have plenty. Either six months of spending or six months of income. Make sure that you maintain this. Don't let us talk you into putting all your money in better long term investments. High interest debt. You don't have any. Keep up the good work. Avoid PMI on mortgage. As I understand it, you don't have a mortgage. If you did, you should probably pay it off. Not sure if PMI is an issue in Poland. Roth IRA. Not sure if this is an issue in Poland. A personal retirement account in the US. Additional 401k. A reminder to max out whatever your work pension plan allows. The name here is specific to the United States. You should be doing this in whatever form is available. After that, I disagree with the options. I also disagree with the order a bit, but the basic idea is sound: one time opportunities; emergency savings; eliminate debt; maximize retirement savings. Check with a tax accountant so as not to make easily avoidable tax mistakes. You can use some of the additional money for things like real estate or a business. Try to keep under 20% for each. But if you don't want to worry about that kind of stuff, it's not that important. There's a certain amount of effort to maintain either of those options. If you don't want to put in the effort to do that, it makes sense not to do this. If you have additional money split the bulk of it between stock and bond index funds. You want to maintain a mix between about 70/30 and 75/25 stocks to bonds. The index funds should be based on broad indexes. They probably should be European wide for the most part, although for stocks you might put 10% or so in a Polish fund and another 15% in a true international fund. Think over your retirement plans. Where do you want to live? In your current apartment? In a different apartment in the same city? In one of the places where you inherited property? Somewhere else entirely? Also, do you like to vacation in that same place? Consider buying a place in the appropriate location now (or keeping the one you have if it's one of the inherited properties). You can always rent it out until then. Many realtors are willing to handle the details for you. If the place that you want to retire also works for vacations, consider short term rentals of a place that you buy. Then you can reserve your vacation times while having rentals pay for maintenance the rest of the year. As to the stuff that you have now: Look that over and see if you want any of it. You also might check if there are any other family members that might be interested. E.g. cousins, aunts, uncles, etc. If not, you can probably sell it to a professional company that handles estate sales. Make sure that they clear out any junk along with the valuable stuff. Consider keeping furniture for now. Sometimes it can help sell a property. You might check if you want to drive either of them. If not, the same applies, check family first. Otherwise, someone will buy them, perhaps on consignment (they sell for a commission rather than buying and reselling). There's no hurry to sell these. Think over whether you might want them. Consider if they hold any sentimental value to you or someone else. If not, sell them. If there's any difficulty finding a buyer, consider renting them out. You can also rent them out if you want time to make a decision. Don't leave them empty too long. There's maintenance that may need done, e.g. heat to keep water from freezing in the pipes. That's easy, just invest that. I wouldn't get in too much of a hurry to donate to charity. You can always do that later. And try to donate anonymously if you can. Donating often leads to spam, where they try to get you to donate more." }, { "docid": "575029", "title": "", "text": "\"My visa would put the goods on the current monthly balance which is no-interest, but the cash part becomes part of the immediate interest-bearing sum. There is no option for getting cash without paying immediate interest, except perhaps for buying something then immediately returning it, but most merchants will do a refund to the card instead of cash in hand. This is in New Zealand, other regions may have different rules. Also, if I use the \"\"cheque\"\" or \"\"savings\"\" options at the eftpos machine instead of the \"\"credit\"\" option, then I can have cash immediately, withdrawn from my account, with no interest charge. However the account has to have sufficient balance to do so.\"" }, { "docid": "132900", "title": "", "text": "\"but you're not revolutionizing \"\"the industry\"\" once the law catches up. all you do is replace locally owned dispatching companies with a national corporation, and strain the already tight income of drivers so people can justify the rent they pay for their parking spot.\"" }, { "docid": "62019", "title": "", "text": "A better answer is to put the money in a Dodd-Frank qualified non interest bearing checking account. FDIC covers the entire balance, there is no upper limit on the insurance. This will only be good till the end of 2012 but for short term landing spot this works well. Forget the interest you will earn and go for the safety of the principal." }, { "docid": "136427", "title": "", "text": "\"A checking account almost never earns any significant interest. A checking accounts often does not have any limits in terms of how many times you can draw funds from it. A checking account often comes with a debit card allowing you to pay online, draw cash from an ATM machine etc. A savings accounts has much higher yields, so you should be getting a decent interest. Unfortunately in the current climate this is not always true (especially not with the big banks) so you may want to look into a high-yield savings account. A savings account is often limited in terms of number of transactions, meaning you can't constantly draw funds from it, it must be stable. A savings account often does not come with a debit card. No, a savings account should not be used for regular transactions. It's an account to park your money for a medium/long time. Understand that banks loan out the money in your savings account to third-parties, so if it would constantly fluctuate, they can't have this money available to others. In return of you parking your money with your bank, you should get a nice return (interest). Yes, but it's not common. Assuming you are from USA, passing banking data (account number and routing number) to third-parties is not safe. In Europe it's totally safe to share your account number to accept money. Depends, some banks do charge fees, some don't. Often there are fees when you're not using the account (no transactions), or when you don't have a certain minimum in an account. Assuming you are American (please specify this information clearly in future) I would look into an \"\"internet bank\"\", like Ally. They don't have many fees and they have an excellent high-yield savings account. They also give you a debit card. Disadvantage is that they don't have physical branches.\"" }, { "docid": "158140", "title": "", "text": "\"after 30 years, you'd have a million dollar house vs a quarter million dollar house. You've captured three quarters of a million dollars in rent, given my napkin math hypothetical. As I figure the math, a 250,000 house appreciating to a million dollar house in 30 years requires a sustained ~4.9% appreciation every year--seems unrealistic. The historical rate of inflation, on average, has been closer to 3-3.5%; a 3% appreciation would give a final value of $589k. This also doesn't taken into account the idea that you may have bought a property during a housing bubble, and so then you wouldn't get 3% year-over-year returns. But also, in terms of \"\"capturing rent\"\", you are not factoring in necessary or possible costs that renting doesn't have: mortgage interest and insurance, maintenance, property tax, insurance, buying and selling associated fees, and, importantly, opportunity costs (in that the money not tied up in the house could be invested elsewhere). So it is not such a slam dunk as you make it out. Many use the NY Times buy/rent calculator to compare renting vs. buying.\"" }, { "docid": "451782", "title": "", "text": "Investing in mutual funds, ETF, etc. won't build a large pool of money. Be an active investor if your nature aligns. For e.g. Invest in buying out a commercial space (on bank finance) like a office space and then rent it out. That would give you better return than a savings account. In few years time, you may be able to pay back your financing and then the total return is your net return. Look for options like this for a multiple growth in your worth." }, { "docid": "585494", "title": "", "text": "\"Pay off the credit cards. From now on, pay off the credit cards monthly. Under no circumstances should you borrow money. You have net worth but no external income. Borrowing is useless to you. $200,000 in two bank accounts, because if one bank collapses, you want to have a spare while you wait for the government to pay off the guarantee. Keep $50,000 in checking and another $50k in savings. The remainder put into CDs. Don't expect interest income beyond inflation. Real interest rates (after inflation) are often slightly negative. People ask why you might keep money in the bank rather than stocks/bonds. The problem is that stocks/bonds don't always maintain their value, much less go up. The bank money won't gain, but it won't suddenly lose half its value either. It can easily take five years after a stock market crash for the market to recover. You don't want to be withdrawing from losses. Some people have suggested more bonds and fewer stocks. But putting some of the money in the bank is better than bonds. Bonds sometimes lose money, like stocks. Instead, park some of the money in the bank and pick a more aggressive stock/bond mixture. That way you're never desperate for money, and you can survive market dips. And the stock/bond part of the investment will return more at 70/30 than 60/40. $700,000 in stock mutual funds. $300,000 in bond mutual funds. Look for broad indexes rather than high returns. You need this to grow by the inflation rate just to keep even. That's $20,000 to $30,000 a year. Keep the balance between 70/30 and 75/25. You can move half the excess beyond inflation to your bank accounts. That's the money you have to spend each year. Don't withdraw money if you aren't keeping up with inflation. Don't try to time the market. Much better informed people with better resources will be trying to do that and failing. Play the odds instead. Keep to a consistent strategy and let the market come back to you. If you chase it, you are likely to lose money. If you don't spend money this year, you can save it for next year. Anything beyond $200,000 in the bank accounts is available for spending. In an emergency you may have to draw down the $200,000. Be careful. It's not as big a cushion as it seems, because you don't have an external income to replace it. I live in southern California but would like to move overseas after establishing stable investments. I am not the type of person that would invest in McDonald's, but would consider other less evil franchises (maybe?). These are contradictory goals, as stated. A franchise (meaning a local business of a national brand) is not a \"\"stable investment\"\". A franchise is something that you actively manage. At minimum, you have to hire someone to run the franchise. And as a general rule, they aren't as turnkey as they promise. How do you pick a good manager? How will you tell if they know how the business works? Particularly if you don't know. How will you tell that they are honest and won't just embezzle your money? Or more honestly, give you too much of the business revenues such that the business is not sustainable? Or spend so much on the business that you can't recover it as revenue? Some have suggested that you meant brand or stock rather than franchise. If so, you can ignore the last few paragraphs. I would be careful about making moral judgments about companies. McDonald's pays its workers too little. Google invades privacy. Exxon is bad for the environment. Chase collects fees from people desperate for money. Tesla relies on government subsidies. Every successful company has some way in which it can be considered \"\"evil\"\". And unsuccessful companies are evil in that they go out of business, leaving workers, customers, and investors (i.e. you!) in the lurch. Regardless, you should invest in broad index funds rather than individual stocks. If college is out of the question, then so should be stock investing. It's at least as much work and needs to be maintained. In terms of living overseas, dip your toe in first. Rent a small place for a few months. Find out how much it costs to live there. Remember to leave money for bigger expenses. You should be able to live on $20,000 or $25,000 a year now. Then you can plan on spending $35,000 a year to do it for real (including odd expenses that don't happen every month). Make sure that you have health insurance arranged. Eventually you may buy a place. If you can find one that you can afford for something like $100,000. Note that $100,000 would be low in California but sufficient even in many places in the US. Think rural, like the South or Midwest. And of course that would be more money in many countries in South America, Africa, or southern Asia. Even southern and eastern Europe might be possible. You might even pay a bit more and rent part of the property. In the US, this would be a duplex or a bed and breakfast. They may use different terms elsewhere. Given your health, do you need a maid/cook? That would lean towards something like a bed and breakfast, where the same person can clean for both you and the guests. Same with cooking, although that might be a second person (or more). Hire a bookkeeper/accountant first, as you'll want help evaluating potential purchases. Keep the business small enough that you can actively monitor it. Part of the problem here is that a million dollars sounds like a lot of money but isn't. You aren't rich. This is about bare minimum for surviving with a middle class lifestyle in the United States and other first world countries. You can't live like a tourist. It's true that many places overseas are cheaper. But many aren't (including much of Europe, Japan, Australia, New Zealand, etc.). And the ones that aren't may surprise you. And you also may find that some of the things that you personally want or need to buy are expensive elsewhere. Dabble first and commit slowly; be sure first. Include rarer things like travel in your expenses. Long term, there will be currency rate worries overseas. If you move permanently, you should certainly move your bank accounts there relatively soon (perhaps keep part of one in the US for emergencies that may bring you back). And move your investments as well. Your return may actually improve, although some of that is likely to be eaten up by inflation. A 10% return in a country with 12% inflation is a negative real return. Try to balance your investments by where your money gets spent. If you are eating imported food, put some of the investment in the place from which you are importing. That way, if exchange rates push your food costs up, they will likely increase your investments at the same time. If you are buying stuff online from US vendors and having it shipped to you, keep some of your investments in the US for the same reason. Make currency fluctuations work with you rather than against you. I don't know what your circumstances are in terms of health. If you can work, you probably should. Given twenty years, your million could grow to enough to live off securely. As is, you would be in trouble with another stock market crash. You'd have to live off the bank account money while you waited for your stocks and bonds to recover.\"" }, { "docid": "390556", "title": "", "text": "\"From what you say, a savings account sounds like the most appropriate option. (Of course you should keep your checking account too to use for day-to-day expenses, but put money that you want to sock away into the savings account.) The only way to guarantee you won't lose money and also guarantee that you can take the money out whenever you want is to put your money in a checking or savings account. If you put it in a savings account you will at least earn some paltry amount of interest, whereas with a checking account you wont. The amount of interest you earn with only a few hundred (or even a few thousand) dollars will be miniscule, but you know that the nominal value of your money won't go down. The real value of your money will go down, because the interest you're earning will be less than inflation. (That is, if you put $1000 in, you know there will be at least $1000 in there until you take some out. But because of inflation, that $1000 won't buy as much in the future as it does today, so the effective buying power of your money will go down.) However, there's no way to avoid this while keeping your money absolutely safe from loss and maintaining absolute freedom to take it out whenever you want. To address a couple of the alternatives you mentioned: It's good that you're thinking about this now. However, you shouldn't worry unduly about \"\"getting the most out of your money\"\" at this stage. As you said, you have $400 and will soon be making $200/week. In other words, two weeks after your job starts, you'll have earned as much as your entire savings before you started the job. Even if all your cash \"\"went down the drain\"\", you'd make it up in two weeks. Of course, you don't want to throw your money away for nothing. But when your savings are small relative to your income, it's not really worth it to agonize over investment choices to try to get the maximum possible return on your investment. Instead, you should do just what you seem to be doing: prioritize safety, both in terms of keeping your money in a safe account, and try to save rather than spending frivolously. In your current situation, you can double your savings in one month, by working at your part-time job. There's no investment anywhere there that can even come close to that. So don't worry about missing out on some secret opportunity. At this stage, you can earn far more by working than you can by investing, so you should try to build up your savings. When you have enough that you are comfortable with more risk, then you will be in a position to consider other kinds of investments (like stock market index funds), which are riskier but will earn you better returns in the long run.\"" }, { "docid": "150893", "title": "", "text": "\"I would strongly consider renting; as homes are often viewed by people as \"\"investments\"\" but in reality they are costs, just like renting. The time-frame for return is so long, the interest rate structure in terms of your mortgage payments; if you buy, you must be prepared to and willing to stay at minimum 7-10 years; because anything can happen. Hot markets turn cold. Or stale, and just the closing costs will cause it be less advantageous to renting. Before buying a property, ask yourself does it meet these 5 criteria: IDEAL I - Income; the property will provide positive cash flow through renters. D - Depreciation; tax savings. E - Equity; building equity in the property- the best way is through interest only loans. There is NO reason to pay any principle on any property purchase. You do 5 year interest only loans; keep your payments low; and build equity over time as the property price rises. Look how much \"\"principle\"\" you actually pay down over the first 7 years on a 30 year mortgage. Virtually Nil. A - Appreciation - The property will over time go up in value. Period. There is no need to pay any principle. Your Equity will come from this... time. L - Leverage; As the property becomes more valuable; you will have equity stake, enabling you to get higher credit lines, lines of equity credit, to purchase more properties that are IDEA. When you are RICH, MARRIED, and getting ready for a FAMILY, then buy your home and build it. Until then, rent, it will keep your options open. It will keep your costs low. It will protect you from market downturns as leases are typically only 1 year at most. You will have freedom. You will not have to deal with repairs. A new Water Heater, AC unit, the list goes on and on. Focus on making money, and when you want to buy your first house. Buy a duplex; rent it out to two tenants, and make sure it's IDEAL.\"" }, { "docid": "109938", "title": "", "text": "\"I'm going to start with your title question: How can home buying be considered a sound investment with all of that interest that needs to be paid? If taken literally, this is a loaded question because if you pay cash for a home, you don't pay any interest. Furthermore, if your interest rate is 3% for 10 years you won't pay nearly as much interest as you will if your rate is 10% for 30 years, so \"\"all of that interest\"\" is relative to your personal situation. Having said that, of course I understand what you mean. Most people pay interest, and interest is expensive, so how do you calculate if it's worth it? That question has been asked and answered, but for your particular situation, you really have two separate questions: I believe you should answer these questions independently. If you move far away, it's probably the case that you can save a lot of money by either renting or buying in that location. So you should first consider if it's worth it to move, and then if it is, decide if it's worth it to rent or buy. If you decide not to move far away, then decide if maybe you can save money by renting somewhere near your current home. Since it sounds like if you move you may have to become a landlord, living close by to your tenant may also make it easier to deal with problems when they arise.\"" }, { "docid": "5188", "title": "", "text": "Basically you have 4 options: Use your cash to pay off the student loans. Put your cash in an interest-bearing savings account. Invest your cash, for example in the stock market. Spend your cash on fun stuff you want right now. The more you can avoid #4 the better it will be for you in the long term. But you're apparently wise enough that that wasn't included as an option in your question. To decide between 1, 2, and 3, the key questions are: What interest are you paying on the loan versus what return could you get on savings or investment? How much risk are you willing to take? How much cash do you need to keep on hand for unexpected expenses? What are the tax implications? Basically, if you are paying 2% interest on a loan, and you can get 3% interest on a savings account, then it makes sense to put the cash in a savings account rather than pay off the loan. You'll make more on the interest from the savings account than you'll pay on interest on the loan. If the best return you can get on a savings account is less than 2%, then you are better off to pay off the loan. However, you probably want to keep some cash reserve in case your car breaks down or you have a sudden large medical bill, etc. How much cash you keep depends on your lifestyle and how much risk you are comfortable with. I don't know what country you live in. At least here in the U.S., a savings account is extremely safe: even the bank goes bankrupt your money should be insured. You can probably get a much better return on your money by investing in the stock market, but then your returns are not guaranteed. You may even lose money. Personally I don't have a savings account. I put all my savings into fairly safe stocks, because savings accounts around here tend to pay about 1%, which is hardly worth even bothering. You also should consider tax implications. If you're a new grad maybe your income is low enough that your tax rates are low and this is a minor factor. But if you are in, say, a 25% marginal tax bracket, then the effective interest rate on the student loan would be more like 1.5%. That is, if you pay $20 in interest, the government will then take 25% of that off your taxes, so it's the equivalent of paying $15 in interest. Similarly a place to put your money that gives non-taxable interest -- like municipal bonds -- gives a better real rate of return than something with the same nominal rate but where the interest is taxable." }, { "docid": "131391", "title": "", "text": "I recently engaged in a dispute with a ski resort that was proposing several hotels (about 500 rooms) along with a new lodge, which will host conventions. I have a home (3 bedrooms) I rent on Airbnb located next to the resort and was a statutory party to their permit hearing. After all was said and done, I managed to take away approximately 250 parking spots, forcing them to build a parking garage. They were permitted for the new lodge, which they are building now, but not for the hotels. I will now be able to raise my rates as there will be a severe lack of short term housing to accommodate the new lodge." }, { "docid": "169004", "title": "", "text": "Basically there are 2 ways you can make money from an investment, through income (eg: rent or dividends) and through the price of the investment going up (capital growth or gains). Most people associate negative gearing with investment properties but it can be done with shares and other investments where you borrow money to buy the investment and it produces an income of some sort. If the investment does not produce an income then you cannot negative gear it. Using a property as an example (in Australia), if all your expenses each month (loan interest payments, council and water rates, insurance and/or strata, advertising and management fees, depreciation, and maintenance expense) are greater than your income (rent), then you are negative gearing the investment property. This is a monthly loss on your investment which can be used to offset and reduce the amount of tax you pay during the year. So most people negative gearing an investment property will get a nice sum back when they do their tax returns. The problem with negative gearing is that you have to lose money in order to save some tax. So as an example, if you are on a marginal tax rate of 30%, for every $1 you lose from the investment property you will save 30c in tax. If your marginal tax rate is 45% then will save 45c in tax for every $1 lost on the investment property. Thus negative gearing becomes more tax effective the higher your income (and tax bracket). But you are still losing money overall. The problem is that most novice investors buy an investment property for the main purpose of reducing their taxes. This can be dangerous because the main reason to buy any investment should be that you consider it to be a good investment, not to save you tax. Because if the investment is not a good one, then you will not only lose money on the income side but also on the capital side. Negative gearing should be looked at as a bonus or additional benefit when chosing a good investment to buy, not as the reason to buy the investment." }, { "docid": "220127", "title": "", "text": "\"Other people have already demonstrated the effect of compound interest to the question. I'd like to add a totally different perspective. Note that the article says if you can follow this simple recipe throughout your working career, you will almost certainly beat out most professional investors [...] you'll likely accumulate enough savings to retire comfortably. (the latter point may be the more practical mark than the somewhat arbitrary million (rupees? dollars?) My point here is that the group of people who do put away a substantial fraction of their (lower) early wages and keep them invested for decades show (at least) two traits that will make a very substantial difference to the average (western) person. They may be correlated, though: people who are not tempted or able to resist the temptation to spend (almost) their whole income may be more likely to not touch their savings or investments. (In my country, people like to see themselves as \"\"world champions in savings\"\", but if you talk to people you find that many people talk about saving for the next holidays [as opposed to saving for retirement].) Also, if you get going this way long before you are able to retire you reach a relative level of independence that can give you a much better position in wage negotiations as you do not need to take the first badly paid job that comes along in order to survive but can afford to wait and look and negotiate for a better job. Psychologically, it also seems to be easier to consistently keep the increase in your spending below the increase of your income than to reduce spending once you overspent. There are studies around that find homeowners on average substantially more wealthy than people who keep living in rental appartments (I'm mostly talking Germany, were renting is normal and does not imply poverty - but similar findings have also been described for the US) even though someone who'd take the additional money the homeowner put into their home over the rent and invested in other ways would have yielded more value than the home. The difference is largely attributed to the fact that buying and downpaying a home enforces low spending and saving, and it is found that after some decades of downpayment homeowners often go on to spend less than their socio-economic peers who rent. The group that is described in this question is one that does not even need the mental help of enforcing the savings. In addition, if this is not about the fixed million but about reaching a level of wealth that allows you to retire: people who have practised moderate spending habits as adults for decades are typically also much better able to get along with less in retirement than others who did went with a high consumption lifestyle instead (e.g. the homeowners again). My estimate is that these effects compound in a way that is much more important than the \"\"usual\"\" compounding effect of interest - and even more if you look at interest vs. inflation, i.e. the buying power of your investment for everyday life. Note that they also cause the group in question to be more resilient in case of a market crash than the average person with about no savings (note that market crashes lead to increased risk of job loss). Slightly off topic: I do not know enough how difficult saving 50 USD out of 50 USD in Pakistan is - and thus cannot comment whether the savings effort called for in the paper is equivalent/higher/lower than what you achieve. I find that trying to keep to student life (i.e. spending that is within the means of a student) for the first professional years can help kick-starting a nest egg (European experience - again, not sure whether applicable in Pakistan).\"" }, { "docid": "443094", "title": "", "text": "\"In addition to the possibility of buying gold ETFs or tradable certificates, there are also firms specializing in providing \"\"bank accounts\"\" of sorts which are denominated in units of weight of precious metal. While these usually charge some fees, they do meet your criteria of being able to buy and sell precious metals without needing to store them yourself; also, these fees are likely lower than similar storage arranged by yourself. Depending on the specifics, they may also make buying small amounts practical (buying small amounts of physical precious metals usually comes with a large mark-up over the spot price, sometimes to the tune of a 50% or so immediate loss if you buy and then immediately sell). Do note that, as pointed out by John Bensin, buying gold gets you an amount of metal, the local currency value of which will vary over time, sometimes wildly, so it is not the same thing as depositing the original amount of money in a bank account. Since 2006, the price of an ounce (about 31.1 grams) of gold has gone from under $500 US to over $1800 US to under $1100 US. Few other investment classes are anywhere near this volatile. If you are interested in this type of service, you might want to check out BitGold (not the same thing at all as Bitcoin) or GoldMoney. (I am not affiliated with either.) Make sure to do your research thoroughly as these may or may not be covered by the same regulations as regular banks, particularly if you choose a company based outside of or a storage location outside of your own country.\"" }, { "docid": "544020", "title": "", "text": "When the inflation rate increases, this tends to push up interest rates because of supply and demand: If the interest rate is less than the inflation rate, then putting your money in the bank means that you are losing value every day that it is there. So there's an incentive to withdraw your money and spend it now. If, say, I'm planning to buy a car, and my savings are declining in real value, then if I buy a car today I can get a better car than if I wait until tomorrow. When interest rates are high compared to inflation, the reverse is true. My savings are increasing in value, so the longer I leave my money in the bank the more it's worth. If I wait until tomorrow to buy a car I can get a better car than I would be able to buy today. Also, people find alternative places to keep their savings. If a savings account will result in me losing value every day my money is there, then maybe I'll put the money in the stock market or buy gold or whatever. So for the banks to continue to get enough money to make loans, they have to increase the interest rates they pay to lure customers back to the bank. There is no reason per se for rising interest rates to consumers to directly cause an increase in the inflation rate. Inflation is caused by the money supply growing faster than the amount of goods and services produced. Interest rates are a cost. If interest rates go up, people will borrow less money and spend it on other things, but that has no direct effect on the total money supply. Except ... you may note I put a bunch of qualifiers in that paragraph. In the United States, the Federal Reserve loans money to banks. It creates this money out of thin air. So when the interest that the Federal Reserve charges to the banks is low, the banks will borrow more from the Feds. As this money is created on the spot, this adds to the money supply, and thus contributes to inflation. So if interest rates to consumers are low, this encourages people to borrow more money from the banks, which encourages the banks to borrow more from the Feds, which increases the money supply, which increases inflation. I don't know much about how it works in other countries, but I think it's similar in most nations." } ]

[ { "docid": "29372", "title": "", "text": "\"Lets say you owed me $123.00 an wanted to mail me a check. I would then take the check from my mailbox an either take it to my bank, or scan it and deposit it via their electronic interface. Prior to you mailing it you would have no idea which bank I would use, or what my account number is. In fact I could have multiple bank accounts, so I could decide which one to deposit it into depending on what I wanted to do with the money, or which bank paid the most interest, or by coin flip. Now once the check is deposited my bank would then \"\"stamp\"\" the check with their name, their routing number, the date, an my account number. Eventually an image of the canceled check would then end up back at your bank. Which they would either send to you, or make available to you via their banking website. You don't mail it to my bank. You mail it to my home, or my business, or wherever I tell you to mail it. Some business give you the address of another location, where either a 3rd party processes all their checks, or a central location where all the money for multiple branches are processed. If you do owe a company they will generally ask that in the memo section in the lower left corner that you include your customer number. This is to make sure that if they have multiple Juans the money is accounted correctly. In all my dealings will paying bills and mailing checks I have never been asked to send a check directly to the bank. If they want you to do exactly as you describe, they should provide you with a form or other instructions.\"" } ]

[ { "docid": "359830", "title": "", "text": "It's bad enough folks can't push carts and walk sometimes. Now you want to introduce looking at their cellphones? Joking aside, I don't think I've ever had issues getting an employee to help guide me. I even had a store manager mail my rebate check out of country." }, { "docid": "186138", "title": "", "text": "Saltgrass used to charge per shift for an apron cleaning fee-- their aprons and their cleaning. One day I a couple years later I got a class action settlement check in the mail for a couple hundred bucks. Even if this is a legal practice I think it would be one that invited class action litigation." }, { "docid": "544956", "title": "", "text": "If one does pay, one should only pay after they get a letter stating such a payment fully satisfies the debt. Then, one should only pay via money order or cashiers check. Never pay by personal check or credit card. Send such a payment via certified mail to ensure delivery. As stated in other answers: There might be an issue of honoring your debts, but that doesn't come into play here. You already didn't pay your debt, and the original owner of the note already took money. Paying this debt is only money in pocket of the debt collector. The scammier they are, and the worse they treat you would factor in." }, { "docid": "349866", "title": "", "text": "In my book if it comes in the mail with official looking envelopes, language and seals to try and get you to open it, the company isn't trust worthy enough for my business. I get a pile of these for my VA loan every week, I imagine FHA loans get similar junk mail. Rates are very low at the moment so it is likely that rates from reputable lenders are 1 to 2% lower than say a year or 2 years ago. In general if a lender gives you a GFE the numbers on it are going to be pretty accurate and there isn't a great deal of wiggle room for the lender so the concerns with reputation should focus on is this outfit some type of scam and then reviews on how good or bad their customer service is. Chances of running into a scam seem pretty low but the costs could be really high. As far as checking if an unknown lender is any good it is kind of tough to do. There is a list of Lenders on HUD's site. Checking BBB can't hurt but I wouldn't put a lot of stock into their recommendations. Doing some general Google searches certainly can't hurt but aren't fool proof either. Personally I would start by checking what prevailing rates are for your current situation. You could go to your proffered bank or to any number of online sites to get a couple of quotes." }, { "docid": "521540", "title": "", "text": "If the check is made out to him, he will have to endorse it. Which means that at some point he will have to physically have the check in his hands. At which point, he could probably just deposit it himself. If there's some problem getting the check to him for him to sign it, you could call the bank and ask if they'll accept it for deposit to his account without a signature. I understand some banks will do this. I would be very surprised if they would let you deposit a check made out to your son to your account. They'd have no way of knowing if your son was agreeable to this or if you were stealing his money. Traditionally, the person the check was made out to could endorse it, give the check to someone else, and then the second person could endorse it and deposit it to their (the second person's) account. That is, the endorsement would have your son's signature, and below that, your signature. But I understand some banks won't accept this any more, so you'd be best to check before trying it." }, { "docid": "153729", "title": "", "text": "\"One advantage of the chip cards is that the card information needed to make purchases can't be easily skimmed or \"\"stolen\"\". Another is that it is more difficult to create a fake physical card. These advantages still exist regardless of what form of verification is used (or even if no verification is used). The type of fraud you're describing, in which your card is physically lost or stolen, is a relatively small proportion of total fraud (14% according to this site). One reason this is not as big a problem is that often, if you lose your card or get robbed, you know the card is compromised and you can cancel it. (Even if it takes you a while to do this, at least you are on the alert.) The real danger comes when your card info is stolen without your knowledge, and this is harder to do with a chip card. It's also worth noting that there are more ways for a fraudster to get nabbed than being caught red-handed entering the wrong PIN at the point of sale. The credit card companies are still tracking card usage and watching for unusual purchases that might indicate fraud. Also, sometimes fraudsters do surprisingly dumb stuff, like use the card to buy something online and mail it to themselves. So it's not correct to say that there is \"\"zero risk of getting caught\"\". With both stripe and chip cards, you can catch the person by tracking them via their usage of the card. The biggest security risk with the new cards is that many vendors don't actually require use of the chip at all -- they still let you swipe. However, with changes to credit card liability policies, this is a risk for the vendors, not for you.\"" }, { "docid": "481052", "title": "", "text": "\"You should check if your card issuer provides a \"\"Bill Pay\"\" service. I have a CapitalOne card, and I know they don't. But Wells Fargo may, I don't know. However, for that to work your biller must accept credit cards as payments, at least that's the restriction I have with such a feature on my USBank card. That means, that if the company doesn't accept credit cards directly - they're likely not to participate in the credit cards' bill-pay system as well. Some credit cards are actually mailing these balance transfer checks quite frequently trying to \"\"seduce\"\" you into taking advantage of your available credit. Unless you really don't have any other choice - you shouldn't. But if that's the only way you have of paying - go for it. That willwill not be treated as a cash advance but rather as balance transfer. You can call the customer service and have them a check mailed to you. You may want to consider talking to your bank and checking if they can give you a line of credit. That would be similar to the credit card (i.e.: revolving credit line) from your credit report/score perspective, but may have lower interest rates.\"" }, { "docid": "476582", "title": "", "text": "Lost checks happen occasionally, and there are procedures in place (banking & business) to handle the situation. First and foremost you need to: Note: The money is legally yours, so the company is obligated to work with you here. If they refuse to cancel or reissue the check, at a minimum you'll want to contact the state government and let them know about the company's actions, if small claims court is not an option. Businesses aren't permitted to keep 'forfeited funds' in most states, instead they are required to turn them over to the government who would then return them to you when you ask for it. It's rather scummy of the government bureaucrats, because it puts them in the sole position to benefit from forgotten money, but that's the system we've given ourselves. Since you've moved overseas since the last time you worked with this company, you might need to exercise a little patience and be willing to jump through some hoops to get this resolved. Be prepared to provide them proof of who you are, and be ready to pay for extra security such as certified mail / FedEx so that you're both sure that the new check is delivered to you and only you. Last of all, learn from your mistake this time and be a little more cautious / proactive in keeping track of checks and depositing them in the future." }, { "docid": "374020", "title": "", "text": "\"This will depend on individual bank policy. Federal Reserve Regulation D is the regulation that requires banks to disallow more than 6 \"\"convenient transactions\"\" in a month on savings accounts. If they do allow it, they will fail their audits and be fined. As a result, banks will do one of several things: either prevent you from any more transactions for the month, charge you a fee, convert your account to a checking account, or simply close the account altogether. If they do that, they will give you the money in it (probably by mailing you a check). You have a few options before that happens. First of all, if this is an account that you regularly spend money out of, the appropriate account type is a checking account. You could go to the bank and open a checking account, which will not have a transaction limit. If you are unable or unwilling to do that, you'll need to stay under this limit. However, you should be aware that not all withdrawal types fall under this \"\"6 transaction\"\" limit. The regulations talk about \"\"convenient transactions,\"\" which generally include things like automated payments, debit card, check, internet transfers, etc. Cash withdrawals in person or at an ATM generally do not fall under this limit, so that is an option for you if you hit your limit for the month.\"" }, { "docid": "48866", "title": "", "text": "I have been using Bill Pay from BoA, Chase, and a local Credit Union, all for at least five years (maybe even 10), and never had any issues with lost checks. Sometimes, an address given to me was incorrect, and what happens is either nothing (meaning, after 90 days, the check is considered outdated and the money gets reimbursed in the account) the bank notifies me after about two weeks that the check was returned as 'recipient not found at that address' or 'invalid address', and the money gets restored right then. That is no guarantee, of course, that nothing will ever happen. But banks are not supposed to accept checks where the recipient name does not match. Also, you should consider using 'Quick Pay' or 'Pay an individual' instead, whatever your bank calls it. That will transfer the money same or next day to your other account, without ever mailing a check. You do not need to enter account information across banks, it works by both banks contacting you through your logins/emails." }, { "docid": "126771", "title": "", "text": "\"Tax is often calculated per item. Especially in the days of the internet, some items are taxable and some aren't, depending on the item and your nexus. I would recommend calculating and storing tax with each item, to account for these subtle differences. EDIT: Not sure why this was downvoted, if you don't believe me, you can always check with Amazon: http://www.amazon.com/gp/help/customer/display.html/ref=hp_468512_calculated?nodeId=468512#calculated I think they know what they're talking about. FINAL UPDATE: Now, if someone goes to your site, and buys something from your business (in California) and the shipping address for the product is Nevada, then taxes do not have to be collected. If they have a billing address in California, and a shipping address in Nevada, and the goods are shipping to Nevada, you do not have to declare tax. If you have a mixture of tangible (computer, mouse, keyboard) and intangible assets (warranty) in a cart, and the shipping address is in California, you charge tax on the tangible assets, but NOT on the intangible assets. Yes, you can charge tax on the whole order. Yes for most businesses that's \"\"Good enough\"\", but I'm not trying to provide the \"\"good enough\"\" solution, I'm simply telling you how very large businesses run and operate. As I've mentioned, I've done several tax integrations using software called Sabrix (Google if you've not heard of it), and have done those integrations for companies like the BBC and Corbis (owned and operated by Bill Gates). Take it or leave it, but the correct way to charge taxes, especially given the complex tax laws of the US and internationally, is to charge per item. If you just need the \"\"good enough\"\" approach, feel free to calculate it by total. Some additional reading: http://en.wikipedia.org/wiki/Taxation_of_Digital_Goods Another possible federal limitation on Internet taxation is the United States Supreme Court case, Quill Corp. v. North Dakota, 504 U.S. 298 (1992),[6] which held that under the dormant commerce clause, goods purchased through mail order cannot be subject to a state’s sales tax unless the vendor has a substantial nexus with the state levying the tax. In 1997, the federal government decided to limit taxation of Internet activity for a period of time. The Internet Tax Freedom Act (ITFA) prohibits taxes on Internet access, which is defined as a service that allows users access to content, information, email or other services offered over the Internet and may include access to proprietary content, information, and other services as part of a package offered to customers. The Act has exceptions for taxes levied before the statute was written and for sales taxes on online purchases of physical goods.\"" }, { "docid": "564301", "title": "", "text": "The paper check method also allows the bank to use your money while the check is in the mail. My bank debits my account immediately, so while my $100 utility bill is traveling the U.S. Postal System for two days, they can make use of my $100 in whatever slush fund they like." }, { "docid": "21174", "title": "", "text": "Dude- my background is in banking specifically dealing with these scenarios. Take my advice-look for a balance transfer offer-credit card at 0%. Your cost of capital is your good credit, this is your leverage. Why pay 4.74% when you can pay 0%. Find a credit card company with a balance transfer option for 0%. Pay no interest, and own the car outright. Places to start; check the mail, or check your bank, or check local credit unions. Some credit unions are very relaxed for membership, and ask if they have zero percent balance transfers. Good Luck!" }, { "docid": "286942", "title": "", "text": "In order for you to send me check for $10 you would have to know my banking details. You would have to know the bank number and the account number. Giving you this information does put my funds at risk. While you would know this for a small circle of friends you wouldn't know this for everybody. My parents have 19 grand kids. They would have to know the banking account information for all 19. While my parents can be trusted with this information their grand children would have to make sure that they had the updated information. Instead they just mail them a check or give them a check on their birthday or other special occasion. Most of the time that money needs to be transferred it is not important that it immediately be converted to cash. The question you referenced is about how the Unbanked function: The unbanked are adults who do not have their own bank accounts. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available. These people need check cashing places to get money. They don't have a bank account. There is no place for you to electronically send money. Every source of income for them has to start as cash, or be converted to cash. All spending they do is by cash. If they need to pay by check they convert cash to a money order for a fee." }, { "docid": "352610", "title": "", "text": "They won't survive. If it looks like they will, the right wing will pass more laws that only aim to bankrupt the postal service. They'll keep hammering until it's dead, hand it over to some ridiculously inefficient monopoly, and then hold it up as an example of how awful government run servhices are. And in a decade or so it'll cost a dollar to send a letter, you'll have to go to the past office to pick up your mail because there's no money in service to your door, and service will take weeks. Another decade, probably less, and the postal service will be a distant memory, and your only option for physical goods will be FedEx or ... well, nothing, because by then FedEx will have a monopoly. And it'll cost two dollars to send a letter, you'll have to pick it up wherever they decide to send it, and if you don't like it, too bad! Because there will be laws in place making it impossible to start up a competitor. They'll make billions, delivering worse service for higher prices, and all we'll ever hear about is how awful it was when the government ran the show and incompetently bankrupted the agency." }, { "docid": "193186", "title": "", "text": "\"At this point, a great deal of the world's wealth exists only in electronic form, and just as you can write a check or pay by debit card and trust the banks will handle it, banks can conduct wire transfers\"\" through higher-level banking networks. In the US, when there is a need to convert physical money to electronic or vice versa, it is typically handled by armored car and armed guard transfer between a bank and the local Federal Reserve Bank office. Physical money is moved around only when necessary, and for as short a distance as possible, to the most secure facilities possible, to minimize risk. I can't vouch for how it's managed elsewhere in the world, where the networks and repository banks may not be as available. I would presume (I would hope!) that the same general concepts and approaches are followed.\"" }, { "docid": "502781", "title": "", "text": "My reason for not using direct debit is #4 on Dheer's list. I just don't know where exactly I'm going to have what balance on what day, because I usually don't leave more than $100-$200 on my checking, all my cash is in Savings. I also don't want to direct debit from Savings in order to not break the 6-withdrawals limit accidentally. I use direct debit to my credit card where its available, but most places charge for that and I don't want to pay the extra fee. So, I prefer to pay my bills manually. What I don't understand is the people who pay the credit card bills when the statement arrives. I haven't received a credit card statement in years. Don't they have on-line access? Can't they set reminders there? If so - throw the card away, and get a normal one. Same with mailing checks, by the way. I'm still not even half done with the free checks I got from Washington Mutual 5 years ago. I almost never write checks. All the bills are paid online, whether through bill-pay service or an ACH transfer." }, { "docid": "584170", "title": "", "text": "just FYI i have a simple account where you can generate a check to a person and they will send it via regular mail. this is not getting away from check but it makes process simpler of not writing a check and sticking a stamp and then putting it in a mailbox" }, { "docid": "198730", "title": "", "text": "The most important thing to do when moving is to change your address with the post office. This will forward most mail for a year, and even automatically send change of address notices to many businesses that send mail to you. If you do this, and the IRS needs to send you something over the next year, you'll get it. The IRS does have a procedure for changing your address, and you would want to do this if you are expecting something from the IRS and are unable to do a change of address with the post office for some reason. But if you do forward your mail and you aren't expecting a refund check, I don't think it is necessary. The IRS will get your new address when you file your return next year." } ]

[ { "docid": "388147", "title": "", "text": "\"You can try writing on the back of the check, in the signature area, \"\"For deposit only to account xxxxxxxxx\"\", leaving room for the signature. This may or may not be legally binding, but it states your intnt and is in a form the bank will recognize.\"" } ]

[ { "docid": "153121", "title": "", "text": "\"Can you get a cashier's check from your bank, made out in the charity's name, and mail it to the charity? From what I recall of the last few times I've gotten a cashier's check from the bank, it didn't have anything on it that identified me. A determined person could probably trace it back to you, but you're not really looking for strong anonymity. Another possibility would be a postal money order, but I'm not sure whether you can leave the \"\"From\"\" section blank. The money order would have a fee, but the cashier's check should be free. (It is at both my local bank and my CU.)\"" }, { "docid": "46381", "title": "", "text": "\"The definite answer if you want to give a larger amount of money is: Ask the charity. Just drop them a mail with something like: Dear Sirs, I've decided to donate you $1,000,000 because I like what you do. Could you please tell me which option is more convenient and less costly for you? I can do either an online debit/credit card payment, send you a check by mail, or make a bank transfer [cross out whichever you can't do]. I'm looking forward to hearing from you. Yours faithfully, Even if you give \"\"just\"\" $2,000, it's surely enough to be worth for them writing you a reply and clarifying whichever way they prefer, so you don't waste neither their time nor the money this way.\"" }, { "docid": "58271", "title": "", "text": "The cost for publication is US$ 25, which they accept only via money order or check. I only own a saving account in an Indian bank. India does not have International Money Order to US. If check's are fine, walk into your Branch and request for a US Dollar Banks Check. They should be able to arrange for one, there are fees associated with this. You can then mail this out to the US Organization." }, { "docid": "350642", "title": "", "text": "\"Let's divide all bank accounts into savings and checking. The main difference is that checking is easy to get money from; savings is hard to get money from. Because of this, the federal Reserve requires that banks keep more money on hand to cover transactions in checking accounts. Here is a related question from a banking customer regarding a recent notice on their bank statement: Deposit Reclassification. It seems that the bank was moving the customer's money between hidden sub accounts to make it look like the checking account was really a savings account and thus \"\"reduce the amount of funds we are required to keep on deposit at the Federal Reserve Bank.\"\" If they didn't have to transfer the money many times the bank could keep less cash on hand. But once they did 5 hidden transactions the rest of the money in the hidden savings account would be moved by the bank. The 6 transaction limit is done to not allow you to treat savings like checking. Here is a relevant quote from the Federal Reserve Savings Deposits Savings deposits generally have no specified maturity period. They may be interest-bearing, with interest computed or paid daily, weekly, quarterly, or on any other basis. The two most significant features of savings deposits are the ‘‘reservation of right’’ requirement and the restrictions on the number of ‘‘convenient’’ transfers or withdrawals that may be made per month (or per statement cycle of at least four weeks) from the account. In order to classify an account as a ‘‘savings deposit,’’ the institution must in its account agreement with the customer reserve the right at any time to require seven days’ advance written notice of an intended withdrawal. In practice, this right is never exercised, but the institution must nevertheless reserve that right in the account agreement. In addition, for an account to be classified as a ‘‘savings deposit,’’ the depositor may make no more than six ‘‘convenient’’ transfers or withdrawals per month from the account. ‘‘Convenient’’ transfers and withdrawals, for purposes of this limit, include preauthorized, automatic transfers (including but not limited to transfers from the savings deposit for overdraft protection or for direct bill payments) and transfers and withdrawals initiated by telephone, facsimile, or computer, and transfers made by check, debit card, or other similar order made by the depositor and payable to third parties. Other, less-convenient types of transfers, such as withdrawals or transfers made in person at the bank, by mail, or by using an ATM, do not count toward the six-per-month limit and do not affect the account’s status as a savings account. Also, a withdrawal request initiated by telephone does not count toward the transfer limit when the withdrawal is disbursed via check mailed to the depositor. Examiners should be particularly wary of a bank’s practices for handling telephone transfers. As noted, an unlimited number of telephone-initiated withdrawals are allowed so long as a check for the withdrawn funds is mailed to the depositor. Otherwise, the limit is six telephone transfers per month. The limit applies to telephonic transfers to move savings deposit funds to another type of deposit account and to make payments to third parties.\"" }, { "docid": "421803", "title": "", "text": "If it is a well known company that wants to give you a refund, I would not worry about giving them your credit card number. However, I would never type my credit card number into an e-mail message. E-mail messages are very insecure, and can be read by many people along its way to the destination. They also can be archived in many places, meaning that your number will continue to be posted out there for someone to grab in the future. If you need to give this company your credit card number, do it over the phone. Having said that, ultimately you are not generally responsible for fraudulent charges if your card number is stolen and misused. I've had so many fraudulent charges, despite my being relatively careful with my number, that I don't really worry much anymore about losing my number. I just check my statement for false charges, and when they happen, the bank cancels the charge and issues me a new number. It has happened to either my wife or I maybe 5 times over the last two years." }, { "docid": "25906", "title": "", "text": "\"To avoid nitpicks, i state up front that this answer is applicable to the US; Europeans, Asians, Canadians, etc may well have quite different systems and rules. You have nothing to worry about if you pay off your credit-card statement in full on the day it is due in timely fashion. On the other hand, if you routinely carry a balance from month to month or have taken out cash advances, then making whatever payment you want to make that month ASAP will save you more in finance charges than you could ever earn on the money in your savings account. But, if you pay off each month's balance in full, then read the fine print about when the payment is due very carefully: it might say that payments received before 5 pm will be posted the same day, or it might say before 3 pm, or before 7 pm EST, or noon PST, etc etc etc. As JoeTaxpayer says, if you can pay on-line with a guaranteed day for the transaction (and you do it before any deadline imposed by the credit-card company), you are fine. My bank allows me to write \"\"electronic\"\" checks on its website, but a paper check is mailed to the credit-card company. The bank claims that if I specify the due date, they will mail the check enough in advance that the credit-card company will get it by the due date, but do you really trust the USPS to deliver your check by noon, or whatever? Besides the bank will put a hold on that money the day that check is cut. (I haven't bothered to check if the money being held still earns interest or not). In any case, the bank disclaims all responsibility for the after-effects (late payment fees, finance charges on all purchases, etc) if that paper check is not received on time and so your credit-card account goes to \"\"late payment\"\" status. Oh, and my bank also wants a monthly fee for its BillPay service (any number of such \"\"electronic\"\" checks allowed each month). The BillPay service does include payment electronically to local merchants and utilities that have accounts at the bank and have signed up to receive payments electronically. All my credit-card companies allow me to use their website to authorize them to collect the payment that I specify from my bank account(s). I can choose the day, the amount, and which of my bank accounts they will collect the money from, but I must do this every month. Very conveniently, they show a calendar for choosing the date with the due date marked prominently, and as mhoran_psprep's comment points out, the payment can be scheduled well in advance of the date that the payment will actually be made, that is, I don't need to worry about being without Internet access because of travel and thus being unable to login to the credit-card website to make the payment on the date it is due. I can also sign up for AutoPay which takes afixed amount/minimum payment due/payment in full (whatever I choose) on the date due, and this will happen month after month after month with no further action necessary on my part. With either choice, it is up to the card company to collect money from my account on the day specified, and if they mess up, they cannot charge late payment fees or finance charge on new purchases etc. Also, unlike my bank, there are no fees for this service. It is also worth noting that many people do not like the idea of the credit-card company withdrawing money from their bank account, and so this option is not to everyone's taste.\"" }, { "docid": "126771", "title": "", "text": "\"Tax is often calculated per item. Especially in the days of the internet, some items are taxable and some aren't, depending on the item and your nexus. I would recommend calculating and storing tax with each item, to account for these subtle differences. EDIT: Not sure why this was downvoted, if you don't believe me, you can always check with Amazon: http://www.amazon.com/gp/help/customer/display.html/ref=hp_468512_calculated?nodeId=468512#calculated I think they know what they're talking about. FINAL UPDATE: Now, if someone goes to your site, and buys something from your business (in California) and the shipping address for the product is Nevada, then taxes do not have to be collected. If they have a billing address in California, and a shipping address in Nevada, and the goods are shipping to Nevada, you do not have to declare tax. If you have a mixture of tangible (computer, mouse, keyboard) and intangible assets (warranty) in a cart, and the shipping address is in California, you charge tax on the tangible assets, but NOT on the intangible assets. Yes, you can charge tax on the whole order. Yes for most businesses that's \"\"Good enough\"\", but I'm not trying to provide the \"\"good enough\"\" solution, I'm simply telling you how very large businesses run and operate. As I've mentioned, I've done several tax integrations using software called Sabrix (Google if you've not heard of it), and have done those integrations for companies like the BBC and Corbis (owned and operated by Bill Gates). Take it or leave it, but the correct way to charge taxes, especially given the complex tax laws of the US and internationally, is to charge per item. If you just need the \"\"good enough\"\" approach, feel free to calculate it by total. Some additional reading: http://en.wikipedia.org/wiki/Taxation_of_Digital_Goods Another possible federal limitation on Internet taxation is the United States Supreme Court case, Quill Corp. v. North Dakota, 504 U.S. 298 (1992),[6] which held that under the dormant commerce clause, goods purchased through mail order cannot be subject to a state’s sales tax unless the vendor has a substantial nexus with the state levying the tax. In 1997, the federal government decided to limit taxation of Internet activity for a period of time. The Internet Tax Freedom Act (ITFA) prohibits taxes on Internet access, which is defined as a service that allows users access to content, information, email or other services offered over the Internet and may include access to proprietary content, information, and other services as part of a package offered to customers. The Act has exceptions for taxes levied before the statute was written and for sales taxes on online purchases of physical goods.\"" }, { "docid": "521540", "title": "", "text": "If the check is made out to him, he will have to endorse it. Which means that at some point he will have to physically have the check in his hands. At which point, he could probably just deposit it himself. If there's some problem getting the check to him for him to sign it, you could call the bank and ask if they'll accept it for deposit to his account without a signature. I understand some banks will do this. I would be very surprised if they would let you deposit a check made out to your son to your account. They'd have no way of knowing if your son was agreeable to this or if you were stealing his money. Traditionally, the person the check was made out to could endorse it, give the check to someone else, and then the second person could endorse it and deposit it to their (the second person's) account. That is, the endorsement would have your son's signature, and below that, your signature. But I understand some banks won't accept this any more, so you'd be best to check before trying it." }, { "docid": "233251", "title": "", "text": "\"Changed to answer match the edited version of the question No, you do not need to write the date of your endorsement, but you can choose to do so if you want to. The bank stamp on the back will likely have the date and perhaps even the exact time when the check was deposited. The two lines are there in case you want to write something like \"\"For deposit only to Acct# uvwxyz\"\" above your signature (always a good idea if you are making the deposit by sending the paper check (with or without a deposit slip) by US mail or any other method that doesn't involve you handing the check to a bank teller). If you are wanting to get encash the check, that is, get cash in return for handing the check over to the bank instead of depositing the check in your account, then the rules are quite a bit different.\"" }, { "docid": "311358", "title": "", "text": "See this website. In my opinion you should physically exist there to open your account.The bank needs to fulfill all requirements such as checking your identity, taking your signatures for future transactions etc. However, there might be some exceptions as Banking industry works pretty much on personal relations and money power. Also check these links: http://answers.google.com/answers/threadview?id=722141 http://askville.amazon.com/open-bank-account-abroad/AnswerViewer.do?requestId=7004217 and http://www.talkgold.com/forum/r18761-.html" }, { "docid": "224000", "title": "", "text": "\"A money order is basically a pre-paid check. The physical cash would probably get deposited into a \"\"master\"\" custodial bank account. Each money order has a different bank account number on the check where the funds are available as you have paid-for already. With the routing number as well, your traditional bank account will be able to process it as a deposit. For USPS money orders though, they can be cashed directly at their retail locations.\"" }, { "docid": "359830", "title": "", "text": "It's bad enough folks can't push carts and walk sometimes. Now you want to introduce looking at their cellphones? Joking aside, I don't think I've ever had issues getting an employee to help guide me. I even had a store manager mail my rebate check out of country." }, { "docid": "369202", "title": "", "text": "I don't believe there is any particular structural or financial reason that outgoing wire transfers cost so much in Canada, their costs are no higher than other countries (and lower than many). Wires seem to be an area where the Canadian banks have decided people don't comparison shop, so it's not a competitive advantage to offer a better price. The rates you quoted are on the low side: $80 for a largish international wire is not unusual, and HSBC charges up to $150! There are several alternative ways to transfer money domestically in Canada. If the recipient banks at the same bank, it's possible to go into a branch and transfer money directly from your own account to their account (I've never been charged for this). The transfer is immediate. But it couldn't be done online, last time I checked. For transfers where you don't know the recipients bank account, you can pay online with Interac E-Transfers, offered by most Canadian banks. It's basically e-mailing money. It usually costs $1 to $1.50 per transfer, and has limits on how much you can send per day/week. Each of the banks also have a bill-pay service, but unlike similar services in the US (where they mail a paper check if the recipient isn't on their system), each Canadian bank has a limited number of possible payees (mostly utilities, governments, major stores)." }, { "docid": "293687", "title": "", "text": "\"Yes, you can do that, but you have to have the stocks issued in your name (stocks that you're holding through your broker are issued in \"\"street name\"\" to your broker). If you have a physical stock certificate issued in your name - you just endorse it like you would endorse a check and transfer the ownership. If the stocks don't physically exist - you let the stock registrar know that the ownership has been transferred to someone else. As to the price - the company doesn't care much about the price of private sales, but the taxing agency will. In the US, for example, you report such a transaction as either a gift (IRS form 709), if the transaction was at a price significantly lower than the FMV (or significantly higher, on the other end), or a sale (IRS form 1040, schedule D) if the transaction was at FMV.\"" }, { "docid": "165364", "title": "", "text": "You should write a demand letter immediately, send the letter by certified mail, and then wait 30 days. Here is a sample demand letter for the state of california that you can send: http://www.courts.ca.gov/11151.htm It seems like most of the demand letters assumed that you tried to cash the check and incurred a service fee. Personally, I wouldn't risk incurring even most cost. Instead, after 30 days, I would take him to small claims court and show all the evidence you have (checks, receipts, and letters of correspondence)." }, { "docid": "134011", "title": "", "text": "In the US, expense ratios are stated in the Prospectus of the fund, which you must acknowledge as having read before the fund will accept your money to invest. You never acknowledged any such thing? Actually you did when you checked the box saying that you accept the Terms of the Agreement when you made the investment. The expense ratio can be changed by vote of the Board of Directors of the fund but the change must be included in the revised Prospectus of the fund, and current investors must be informed of the change. This can be a direct mailing (or e-mailing) from the mutual fund or an invitation to read the new Prospectus on the fund's website for those who have elected to go paperless. So, yes, the expense ratio can be changed (though not by the manager of the fund, e.g. just because he/she wants a bigger salary or a fancier company car, as you think), and not without notice to investors." }, { "docid": "73505", "title": "", "text": "Ask your bank or credit union. Mine will let me issue recurring payments to anyone, electronically if they can, if not a check gets mailed and (I presume) I get billed for the postage." }, { "docid": "518393", "title": "", "text": "Your dividend should show up in one of a few methods: (1) Cash in your trading account (2) A check mailed to you (3) A deposit to a linked bank account (4) As additional new shares in the stock, as the result of a DRIP setup." }, { "docid": "186138", "title": "", "text": "Saltgrass used to charge per shift for an apron cleaning fee-- their aprons and their cleaning. One day I a couple years later I got a class action settlement check in the mail for a couple hundred bucks. Even if this is a legal practice I think it would be one that invited class action litigation." } ]

[ { "docid": "491472", "title": "", "text": "\"Determine which fund company issues the fund. In this case, a search reveals the fund name to be Vanguard Dividend Growth Fund from Vanguard Funds. Locate information for the fund on the fund company's web site. Here is the overview page for VDIGX. In the fund information, look for information about distributions. In the case of VDIGX, the fourth tab to the right of \"\"Overview\"\" is \"\"Distributions\"\". See here. At the top: Distributions for this fund are scheduled Semi-Annually The actual distribution history should give you some clues as to when. Failing that, ask your broker or the fund company directly. On \"\"distribution\"\" vs. \"\"dividend\"\": When a mutual fund spins off periodic cash, it is generally not called a \"\"dividend\"\", but rather a \"\"distribution\"\". The terminology is different because a distribution can be made up of more than one kind of payout. Dividends are just one kind. Capital gains, interest, and return of capital are other kinds of cash that can be distributed. While cash is cash, the nature of each varies for tax purposes and so they are classified differently.\"" } ]

[ { "docid": "363741", "title": "", "text": "I wrote about this a while back: http://blog.investraction.com/2006/10/mutual-funds-dividend-option-or-growth.html In short: Growth options of a mutual fund scheme don't pay out any money, they reinvest the dividend they receive. Dividend options pay out some money, at different intervals, based on the surplus they accumulate. In India, the options have very similar underlying portfolios, so HDFC Equity Fund (Growth) and HDFC Equity Fund (dividend) will have the same percentage allocation to each stock. Update: I also have a video you might want to see on the subject: http://www.youtube.com/watch?v=Bx8QtnccfZk" }, { "docid": "367960", "title": "", "text": "\"I think you are asking about actively managed funds vs. indexes and possibly also vs. diversified funds like target date funds. This is also related to the question of mutual fund vs. ETF. First, a fund can be either actively managed or it can attempt to track an index. An actively managed fund has a fund manager who tries to find the best stocks to invest in within some constraints, like \"\"this fund invests in large cap US companies\"\". An index fund tries to match as closely as possible the performance of an index like the S&P 500. A fund may also try to offer a portfolio that is suitable for someone to put their entire account into. For example, a target date fund is a fund that may invest in a mix of stocks, bonds and foreign stock in a proportion that would be appropriate to someone expecting to retire in a certain year. These are not what people tend to think of as the canonical examples of mutual funds, even though they share the same legal structure and investment mechanisms. Secondly, a fund can either be a traditional mutual fund or it can be an exchange traded fund (ETF). To invest in a traditional mutual fund, you send money to the fund, and they give you a number of shares equal to what that money would have bought of the net asset value (NAV) of the fund at the end of trading on the day they receive your deposit, possibly minus a sales charge. To invest in an ETF, you buy shares of the ETF on the stock market like any other stock. Under the covers, an ETF does have something similar to the mechanism of depositing money to get shares, but only big traders can use that, and it's not used for investing, but only for people who are making a market in the stock (if lots of people are buying VTI, Big Dealer Co will get 100,000 shares from Vanguard so that they can sell them on the market the next day). Historically and traditionally, ETFs are associated with an indexing strategy, while if not specifically mentioned, people assume that traditional mutual funds are actively managed. Many ETFs, notably all the Vanguard ETFs, are actually just a different way to hold the same underlying fund. The best way to understand this is to read the prospectus for a mutual fund and an ETF. It's all there in reasonably plain English.\"" }, { "docid": "46818", "title": "", "text": "Ponzi schemes (or pyramid schemes) are based on paying earlier investors from the money invested by the later ones. For Ponzi scheme, the idea is generally to distribute some relateviely high consistent dividend/payout based on the inflow of money from new investors. As long as new investors are coming, the scheme can be sustained for quite some time (see the Madoff's example that spanned over decades). In the mean time the scheme operator can take (some of) the investment money to himself (legally as fees and salary, illegally as embezzling). The scheme operator doesn't actually have to put in any money other than some organizational expenses. However, at some point the new investors' money won't be enough to pay all the existing investors (inevitably, sooner or later, since the dividend payout grows with each new investor and there are no infinite exponential amount of new investors to cover for it). That's when the $#!+ hits the fan and sons of the schemers start ending up hanging from the ceiling. Pyramid scheme is built on similar idea, but the dividend payout varies based on the level of the investor (i.e.: the investor gets paid based on how many new ones he brought in, and how many new ones rooted from them). Thus the incentive to bring new investors is directly shifted to the investors themselves. The schemers here are at the top and get the most payouts from all the rest of the participants. They themselves usually put no or very little investment. However, the end result is the same: couldn't possibly be enough investors to sustain this model forever, and it will inevitably fail at some point. When such a scheme fails - the paying fund ends up being bankrupt, either due to cashflow problems (not enough money in to pay money out) or because all the money dries out (usually - both). How to detect - if the reports are not falsified (which in most cases they are) you'll see clearly that there's no actual investment income in the cash-flow. But, the reports are usually falsified to conceal this exact fact. So, that's where the independent auditors and regulatory oversight come in handy. Generally, if an investment fund doesn't have a reputable independent auditor - stay away." }, { "docid": "446727", "title": "", "text": "This decision depends upon a few things. I will list a couple:- 1.) What is your perception about financial markets in your time span of investments? 2.) What kind of returns are you expecting? 3.) How much liquidity do you have to take care of your daily/monthly expenses? 1.)If your perception about financial markets is weak for the near future, do not invest all your money in a mutual fund at 1 time. Because, if the market falls drastically, chances are that your fund will also lose a lot of money and the NAV will go down. On the other hand, if you think it is strong, go ahead and invest all at one time. 2.) If you are expecting very high returns in a short time frame, then SIP might not be a very good option as you are only investing a portion of your money. So, if the market goes higher, then you will make money only on what you have invested till date and also buy into the fund in the upcoming month at a higher rate( So you will get less units). 3.) If you put all your money into a mutual fund, will you have enough money to take care of your daily needs and emergencies? The worst thing about an investment is putting in all what you have and then being forced to sell in a bear market at a lower rate because you really require the money. Other option is taking a personal loan(15-16%) and taking care of your daily needs, but that would not make sense either as the average return that you can expect from a mutual fund in India is 12-13%. To summarize:- 1.) If you have money to spare and think the market is going to go higher, a mutual fund is a better option. 2.) If you have the money to spare and think that the market is going to fall, DON'T DO ANYTHING!.(It is always better to be even than lose). 3.) If you don't have the money and don't know about markets, but want to be part of it, then you can invest in an SIP because the advantages of this are if the market goes high, you make money on what you've put it, and if the market falls, you get to buy more units of the fund for a cheaper price. Eventually, you can expect to make a return of 14-15% on these, but again, INVESTMENTS ARE SUBJECT TO MARKET RISK! Please watch the funds average return over the last 10 years and their portfolio holdings. All the best!:) PS:- I am assuming you are talking about equity funds." }, { "docid": "155797", "title": "", "text": "\"FSEMX has an annual expense ratio of 0.1% which is very low. What that means is that each month, the FSEMX will pay itself one-twelfth of 0.1% of the total value of all the shares owned by the shareholders in the mutual fund. If the fund has cash on hand from its trading activities or dividends collected from companies whose stock is owned by FSEMX or interest on bonds owned by FSEMX, the money comes out of that, but if there is no such pot (or the pot is not large enough), then the fund manager has the authority to sell some shares of the stocks held by FSEMX so that the employees can be paid, etc. If the total of cash generated by the trading and the dividend collection in a given year is (say) 3% of the share value of all the outstanding mutual fund, then only 2.9% will be paid out as dividend and capital gain distribution income to the share holders, the remaining 0.1% already having been paid to FSEMX management for operating expenses. It is important to keep in mind that expenses are always paid even if there are no profits, or even if there are losses that year so that no dividends or capital gains distributions are made. You don't see the expenses explicitly on any statement that you receive. If FSEMX sells shares of stocks that it holds to pay the expenses, this reduces the share value (NAV) of the mutual fund shares that you hold. So, if your mutual fund account \"\"lost\"\" 20% in value that year because the market was falling, and you got no dividend or capital gains distributions either, remember that only 19.9% of that loss can be blamed on the President or Congress or Wall Street or public-sector unions or your neighbor's refusal to ditch his old PC in favor of a new Mac, and the rest (0.1%) has gone to FSEMX to pay for fees you agreed to when you bought FSEMX shares. If you invest directly in FSEMX through Fidelity's web site, there is no sales charge, and you pay no expenses other than the 0.1% annual expense ratio. There is a fee for selling FSEMX shares after owning them only for a short time since the fund wants to discourage short-term investors. Whatever other fees finance.yahoo.com lists might be descriptive of the uses that FSEMX puts its expense ratio income to in its internal management, but are not of any importance to the prudent investor in FSEMX who will never encounter them or have to pay them.\"" }, { "docid": "226967", "title": "", "text": "It is not necessary that the mutual fund pays out the dividend. The money would be used to buy more shares of the same stock or of some other stock depending on overall policy goal of the fund and current allocation of funds. This would increase the NAV of the mutual fund and hence its indirectly comes to you once you sell the mutual fund. The dividend would not be taxable as its not directly paid out." }, { "docid": "286227", "title": "", "text": "diversifying; but isn't that what mutual funds already do? They diversify and reduce stock-specific risk by moving from individual stocks to many stocks, but you can diversify even further by selecting different fund types (e.g. large-cal, small-cap, fixed- income (bond) funds, international, etc.). Your target-date fund probably includes a few different types already, and will automatically reallocate to less risky investments as you get close to the target date. I would look at the fees of different types of funds, and compare them to the historical returns of those funds. You can also use things like morningstar and other ratings as guides, but they are generally very large buckets and may not be much help distinguishing between individual funds. So to answer the question, yes you can diversify further - and probably get better returns (and lower fees) that a target-date fund. The question is - is it worth your time and effort to do so? You're obviously comfortable investing for the long-term, so you might get some benefit by spending a little time looking for different funds to increase your diversification. Note that ETFs don't really diversify any differently than mutual funds, they are just a different mechanism to invest in funds, and allow different trading strategies (trading during the day, derivatives, selling short, etc.)." }, { "docid": "7208", "title": "", "text": "Some other suggestions: Index-tracking mutual funds. These have the same exposure as ETFs, but may have different costs; for example, my investment manager (in the UK) charges a transaction fee on ETFs, but not funds, but caps platform fees on ETFs and not funds! Target date funds. If you are saving for a particular date (often retirement, but could also be buying a house, kids going to college, mid-life crisis motorbike purchase, a luxury cruise to see an eclipse, etc), these will automatically rebalance the investment from risk-tolerant (ie equities) to risk-averse (ie fixed income) as the date approaches. You can get reasonably low fees from Vanguard, and i imagine others. Income funds/ETFs, focusing on stocks which are expected to pay a good dividend. The idea is that a consistent dividend helps smooth out volatility in prices, giving you a more consistent return. Historically, that worked pretty well, but given fees and the current low yields, it might not be smart right now. That said Vanguard Equity Income costs 0.17%, and i think yields 2.73%, which isn't bad." }, { "docid": "42427", "title": "", "text": "Sources such as Value Line, or S&P stock reports will show you dividend payout ratios (the American usage. These are the inverse of dividend cover ratios, with dividends being in the numerator, and earnings in the denominator. For instance, if the dividend cover ratio is 2, the dividend payout ratio is 1/2= 50%." }, { "docid": "474512", "title": "", "text": "\"In the US, and in most other countries, dividends are considered income when paid, and capital gains/losses are considered income/loss when realized. This is called, in accounting, \"\"recognition\"\". We recognize income when cash reaches our pocket, for tax purposes. So for dividends - it is when they're paid, and for gains - when you actually sell. Assuming the price of that fund never changes, you have this math do to when you sell: Of course, the capital loss/gain may change by the time you actually sell and realize it, but assuming the only price change is due to the dividends payout - it's a wash.\"" }, { "docid": "153660", "title": "", "text": "\"For a non-ETF mutual fund, you can only buy shares of the mutual fund from the mutual fund itself (at a price that the mutual fund will reveal only at the end of the day) and can only shares back to the mutual fund (again at a price that the mutual fund will reveal only at the end of the day). There is no open market in the sense that you cannot put in a bid to buy, say, 100 shares of VFINX at $217 per share through a brokerage, and if there is a seller willing to sell 100 shares of VFINX to you at $217, then the sale is consummated and you are now the proud owner of 100 shares of VFINX. The only buyer or seller of VFINX is the mutual find itself, and you tell it that you \"\"want to buy 100 shares of VFINX and please take the money out of my checking account\"\". If this order is entered before the markets close at 4 pm, the mutual fund determines its share price as of the end of the day, opens a new account for you and puts 100 shares of VFINX in it (or adds 100 shares of VFINX to your already existing pile of shares) and takes the purchase price out of your checking account via an ACH transfer. Similarly for redeeming/selling shares of VFINX that you own (and these are held in an account at the mutual fund itself, not by your brokerage): you tell the mutual fund to that you \"\"wish to redeem 100 shares and please send the proceeds to my bank account\"\" and the mutual fund does this at the end of the day, and the money appears in your bank account via ACH transfer two or three days later. Generally, these transactions do not need to be for round lots of multiples of 100 shares for efficiency; most mutual fund will gladly sell you fractional shares down to a thousandth of a share. In contrast, shares of an exchange-traded fund (ETF) are just like stock shares in that they can be bought and sold on the open market and your broker will charge you fees for buying and selling them. Selling fractional shares on the open market is generally not possible, and trading in round lots is less expensive. Also, trades occur at all times of the stock exchange day, not just at the end of the day as with non-ETF funds, and the price can fluctuate during the day too. Many non-ETF mutual funds have an ETF equivalent: VOO is the symbol for Vanguard's S&P 500 Index ETF while VFINX is the non-ETF version of the same index fund. Read more about the differences between ETFs and mutual funds, for example, here.\"" }, { "docid": "548329", "title": "", "text": "\"So you've already considered relocation. Here are a few additional things to consider with respect to negotiating a signing bonus (if any): Would you be leaving a position where you are eligible for an upcoming bonus, profit-share, or other special incentive payout, such as a stock option or RSU vesting date? A signing bonus can help offset the opportunity cost of leaving a previous job when an incentive payout date is near. At the new company, would you be required to wait some pre-defined period to be eligible to participate in the pension or retirement savings plan with employer basic or matching contributions? If you were receiving ongoing employer contributions in your previous company's plan and would need to wait, say, six months before participating in the new company's plan, a signing bonus can offset lost employer contributions in the interim. Consider funding your own IRA in that time. Would you be required to give up something else of value to you that your previous employer was providing, such as an expensive laptop, that is not expected to otherwise be replaced by the new company? Whether they offer a signing bonus and how much you can expect to negotiate is based on a lot of factors and you'll need to \"\"play it by ear.\"\" Remember what bonus means: \"\"A payment or gift added to what is usual or expected, in particular.\"\" Remember also that a signing bonus is a one time thing. In general, it's more important to consider the overall ongoing compensation package – salary and incentive plans, vacation, retirement benefits, health benefits, etc. – and whether those meet your long-term needs.\"" }, { "docid": "360716", "title": "", "text": "\"What you seem to want is a dividend reinvestment plan (DRIP). That's typically offered by the broker, not by the ETF itself. Essentially this is a discounted purchase of new shares when you're dividend comes out. As noted in the answer by JoeTaxpayer, you'll still need to pay tax on the dividend, but that probably won't be a big problem unless you've got a lot of dividends. You'll pay that out of some other funds when it's due. All DRIPs (not just for ETFs) have potential to complicate computation of your tax basis for eventual sale, so be aware of that. It doesn't have to be a show-stopper for you, but it's something to consider before you start. It's probably less of a problem now than it used to be since brokers now have to report your basis on the 1099-B in the year of sale, reducing your administrative burden (if you trust them to get it right). Here's a list of brokerages that were offering this from a top-of-the-search-list article that I found online: Some brokerages, including TD Ameritrade, Vanguard, Scottrade, Schwab and, to a lesser extent, Etrade, offer ETF DRIPs—no-cost dividend reinvestment programs. This is very helpful for busy clients. Other brokerages, such as Fidelity, leave ETF dividend reinvestment to their clients. Source: http://www.etf.com/sections/blog/23595-your-etf-has-drip-drag.html?nopaging=1 Presumably the list is not constant. I almost didn't included but I thought the wide availability (at least as of the time of the article's posting) was more interesting than any specific broker on it. You'll want to do some research before you choose a broker to do this. Compare fees for sure, but also take into account other factors like how soon after the dividend they do the purchase (is it the ex-date, the pay date, or something else?). A quick search online should net you several decent articles with more information. I just searched on \"\"ETF DRIP\"\" to check it out.\"" }, { "docid": "154525", "title": "", "text": "You would have to compare your backtesting to what you will be doing in real trading, and try to have the backtesting as close to your real trading as possible. Note: you may never get the backtesting to match your real trading exactly but you need to get as close as possible. The whole purpose of backtesting is to check if your trading strategies - your signals, entries and exits, and your stops - are profitable over various market conditions. As you would be using actual closes to do your real trading you should be using this to also do your backtesting. Rather than using adjusted data to get an idea of your total return from your backtesting, you can always add the value of the dividends and other corporate actions to the results from using the actual data. You may even find a way to add any dividends and other corporate action to your results automatically, i.e. any dividend amount added to your total return if the stock is held during the ex-dividend date. If you are using adjusted data in your backtesting this may affect any stops you have placed, i.e. it may cause your stop to be triggered earlier or later than in real trading. So you will need to determine how you will treat your stops in real trading. Will you adjust them when there is corporate action such as dividends? Or will you leave them constant until actual prices have gone up? If you will be leaving your stops constant then you should definitely be using actual data in your backtesting to better match your real trading." }, { "docid": "122012", "title": "", "text": "In a taxable account you're going to owe taxes when you sell the shares for a gain. You're also going to owe taxes on any distributions you receive from the holdings in the account; these distributions can happen one or more times a year. Vanguard has a writeup on mutual fund taxation. Note: for a fund like you linked, you will owe taxes annually, regardless of whether you sell it. The underlying assets will pay dividends and those are distributed to you either in cash, or more beneficially as additional shares of the mutual fund (look into dividend reinvestment.) Taking VFIAX's distributions as an example, if you bought 1 share of the fund on March 19, 2017, on March 20th you would have been given $1.005 that would be taxable. You'd owe taxes on that even if you didn't sell your share during the year. Your last paragraph is based on a false premise. The mutual fund does report to you at the end of the year the short and long term capital gains, along with dividends on a 1099-DIV. You get to pay taxes on those transactions, that's why it's advantageous to hold low turnover mutual funds in taxable accounts." }, { "docid": "52908", "title": "", "text": "Your investment is probably in a Collective Investment Trust. These are not mutual funds, and are not publicly traded. I.e. they are private to plan participants in your company. Because of this, they are not required* to distribute dividends like mutual funds. Instead, they will reinvest dividends automatically, increasing the value of the fund, rather than number of shares, as with dividend reinvestment. Sine you mention the S&P 500 fund you have tracks closely to the S&P Index, keep in mind there's two indexes you could be looking at: Without any new contributions, your fund should closely track the Total Return version for periods 3 months or longer, minus the expense ratio. If you are adding contributions to the fund, you can't just look at the start and end balances. The comparison is trickier and you'll need to use the Internal Rate of Return (look into the XIRR function in Excel/Google Sheets). *MFs are not strictly required to pay dividends, but are strongly tax-incentivized to do so, and essentially all do." }, { "docid": "232932", "title": "", "text": "\"In the case of mutual funds, Net Asset Value (NAV) is the price used to buy and sell shares. NAV is just the value of the underlying assets (which are in turn valued by their underlying holdings and future earnings). So if a fund hands out a billion dollars, it stands to reason their NAV*shares (market cap?) is a billion dollars less. Shareholder's net worth is equal in either scenario, but after the dividend is paid they are more liquid. For people who need investment income to live on, dividends are a cheap way to hold stocks and get regular payments, versus having to sell part of your portfolio every month. But for people who want to hold their investment in the market for a long long time, dividends only increase the rate at which you have to buy. For mutual funds this isn't a problem: you buy the funds and tell them to reinvest for free. So because of that, it's a prohibited practice to \"\"sell\"\" dividends to clients.\"" }, { "docid": "376485", "title": "", "text": "\"Congratulations on deciding to save money and choosing to invest it. One thing to know about mutual funds including index funds is that they typically require a minimum investment of a few thousand dollars, $3000 being a typical amount, unless the investment is in an IRA in which case $1000 might be a minimum. In some cases, automated monthly investments of $50 or $100 might need to be set up if you are beginning with a small balance. There is nothing wrong with your approach. You now should go and look at the various requirements for specific index funds. The Fidelity and Vanguard families are good choices and both offer very low-cost index funds to choose from, but different funds can have different requirements regarding minimum investments etc. You also have a choice of which index you want to follow, the S&P 500 Index, MidCap Indexes, Small-Cap Indexes, Total Stock Market Indexes etc., but your choice might be limited until you have more money to invest because of minimum investment rules etc. Most important, after you have made your choice, I urge you to not look every day, or even every month, to see how your investment is doing. You will save yourself a lot of anxiety and will save yourself from making wrong decisions. Far too many investors ignore the maxim \"\"Buy Low, Sell High\"\" and pull money out of what should be long-term investments at the first flicker of a downturn and end up buying high and selling low. Finally, the time is approaching when most stock funds will be declaring dividends and capital gains distributions. If you invest now, you may end up with a paper profit on which you will have to pay taxes (in non-tax-advantaged accounts) on your 2012 tax return (this is called \"\"buying a dividend\"\"), and so you might want to spend some time investigating now, but actually make the investment in late December after your chosen fund has made its distributions (the date for this will be on the fund's web site) or in early 2013.\"" }, { "docid": "593475", "title": "", "text": "There are more than a few ideas here. Assuming you are in the U.S., here are a few approaches: First, DRIPs: Dividend Reinvestment Plans. DRIP Investing: How To Actually Invest Only A Hundred Dollars Per Month notes: I have received many requests from readers that want to invest in individual stocks, but only have the available funds to put aside $50 to $100 into a particular company. For these investors, keeping costs to a minimum is absolutely crucial. I have often made allusions and references to DRIP Investing, but I have never offered an explanation as to how to logistically set up DRIP accounts. Today, I will attempt to do that. A second option, Sharebuilder, is a broker that will allow for fractional shares. A third option are mutual funds. Though, these often will have minimums but may be waived in some cases if you sign up with an automatic investment plan. List of mutual fund companies to research. Something else to consider here is what kind of account do you want to have? There can be accounts for specific purposes like education, e.g. a college or university fund, or a retirement plan. 529 Plans exist for college savings that may be worth noting so be aware of which kinds of accounts may make sense for what you want here." } ]

[ { "docid": "32172", "title": "", "text": "\"Mutual funds generally make distributions once a year in December with the exact date (and the estimated amount) usually being made public in late October or November. Generally, the estimated amounts can get updated as time goes on, but the date does not change. Some funds (money market, bond funds, GNMA funds etc) distribute dividends on the last business day of each month, and the amounts are rarely made available beforehand. Capital gains are usually distributed once a year as per the general statement above. Some funds (e.g. S&P 500 index funds) distribute dividends towards the end of each quarter or on the last business day of the quarter, and capital gains once a year as per the general statement above. Some funds make semi-annual distributions but not necessarily at six-month intervals. Vanguard's Health Care Fund has distributed dividends and capital gains in March and December for as long as I have held it. VDIGX claims to make semi-annual distributions but made distributions three times in 2014 (March, June, December) and has made/will make two distributions this year already (March is done, June is pending -- the fund has gone ex-dividend with re-investment today and payment on 22nd). You can, as Chris Rea suggests, call the fund company directly, but in my experience, they are reluctant to divulge the date of the distribution (\"\"The fund manager has not made the date public as yet\"\") let alone an estimated amount. Even getting a \"\"Yes, the fund intends to make a distribution later this month\"\" was difficult to get from my \"\"Personal Representative\"\" in early March, and he had to put me on hold to talk to someone at the fund before he was willing to say so.\"" } ]

[ { "docid": "295906", "title": "", "text": "\"Probably not, though there are a few things to be said for understanding what you are doing here. Primerica acts as an independent financial services firm and thus has various partners that specialize in various financial instruments and thus there may exist other firms that Primerica doesn't use that could offer better products. Now, how much do you want to value your time as it could take more than a few months to go through every possible insurance firm and broker to see what rate you could get for the specific insurance you want. There is also the question of what constitutes best here. Is it paying the minimal premiums before getting a payout? That would be my interpretation though this requires some amazing guesswork to know when to start paying a policy to pay out so quickly that the insurance company takes a major loss on the policy. Similarly, there are thousands of mutual funds out there and it is incredibly difficult to determine which ones would be best for your situation. How much risk do you want to take? How often do you plan to add to it? What kind of accounts are you using for these investments, e.g. IRAs or just regular taxable accounts? Do tax implications of the investments matter? Thus, I'd likely want to suggest you consider this question: How much trust do you have that this company will work well for you in handling the duty of managing your investments and insurance needs? If you trust them, then buy what they suggest. If you don't, then buy somewhere else but be careful about what kind of price are you prepared to pay to find the mythical \"\"best\"\" as those usually only become clear in hindsight. When it comes to trusting a company in case, there are more than a few factors I'd likely use: Questions - How well do they answer your questions or concerns from your perspective? Do you feel that these are being treated with respect or do you get the feeling they want to say, \"\"What the heck are you thinking for asking that?\"\" in a kind of conceited perspective. Structure of meeting - Do you like to have an agenda and things all planned out or are you more of the spontaneous, \"\"We'll figure it out\"\" kind of person? This is about how well do they know you and set things up to suit you well. Tone of talk - Do you feel valued in having these conversations and working through various exercises with the representative? This is kind of like 1 though it would include requests they have for you. Employee turnover - How long has this person been with Primerica? Do they generally lose people frequently? Are you OK with your file being passed around like a hot potato? Not that it necessarily will but just consider the possibility here. Reputation can be a factor though I'd not really use it much as some people can find those bad apples that aren't there anymore and so it isn't an issue now. In some ways you are interviewing them as much as they are interviewing you. There are more than a few companies that want to get a piece of what you'll invest, buy, and use when it comes to financial products so it may be a good idea to shop around a little.\"" }, { "docid": "584128", "title": "", "text": "Vanguard (and probably other mutual fund brokers as well) offers easy-to-read performance charts that show the total change in value of a $10K investment over time. This includes the fair market value of the fund plus any distributions (i.e. dividends) paid out. On Vanguard's site they also make a point to show the impact of fees in the chart, since their low fees are their big selling point. Some reasons why a dividend is preferable to selling shares: no loss of voting power, no transaction costs, dividends may have better tax consequences for you than capital gains. NOTE: If your fund is underperforming the benchmark, it is not due to the payment of dividends. Funds do not pay their own dividends; they only forward to shareholders the dividends paid out by the companies in which they invest. So the fair market value of the fund should always reflect the fair market value of the companies it holds, and those companies' shares are the ones that are fluctuating when they pay dividends. If your fund is underperforming its benchmark, then that is either because it is not tracking the benchmark closely enough or because it is charging high fees. The fact that the underperformance you're seeing appears to be in the amount of dividends paid is a coincidence. Check out this example Vanguard performance chart for an S&P500 index fund. Notice how if you add the S&P500 index benchmark to the plot you can't even see the difference between the two -- the fund is designed to track the benchmark exactly. So when IBM (or whoever) pays out a dividend, the index goes down in value and the fund goes down in value." }, { "docid": "367960", "title": "", "text": "\"I think you are asking about actively managed funds vs. indexes and possibly also vs. diversified funds like target date funds. This is also related to the question of mutual fund vs. ETF. First, a fund can be either actively managed or it can attempt to track an index. An actively managed fund has a fund manager who tries to find the best stocks to invest in within some constraints, like \"\"this fund invests in large cap US companies\"\". An index fund tries to match as closely as possible the performance of an index like the S&P 500. A fund may also try to offer a portfolio that is suitable for someone to put their entire account into. For example, a target date fund is a fund that may invest in a mix of stocks, bonds and foreign stock in a proportion that would be appropriate to someone expecting to retire in a certain year. These are not what people tend to think of as the canonical examples of mutual funds, even though they share the same legal structure and investment mechanisms. Secondly, a fund can either be a traditional mutual fund or it can be an exchange traded fund (ETF). To invest in a traditional mutual fund, you send money to the fund, and they give you a number of shares equal to what that money would have bought of the net asset value (NAV) of the fund at the end of trading on the day they receive your deposit, possibly minus a sales charge. To invest in an ETF, you buy shares of the ETF on the stock market like any other stock. Under the covers, an ETF does have something similar to the mechanism of depositing money to get shares, but only big traders can use that, and it's not used for investing, but only for people who are making a market in the stock (if lots of people are buying VTI, Big Dealer Co will get 100,000 shares from Vanguard so that they can sell them on the market the next day). Historically and traditionally, ETFs are associated with an indexing strategy, while if not specifically mentioned, people assume that traditional mutual funds are actively managed. Many ETFs, notably all the Vanguard ETFs, are actually just a different way to hold the same underlying fund. The best way to understand this is to read the prospectus for a mutual fund and an ETF. It's all there in reasonably plain English.\"" }, { "docid": "45523", "title": "", "text": "Most bond ETFs have switched to monthly dividends paid on the first of each month, in an attempt to standardize across the market. For ETFs (but perhaps not bond mutual funds, as suggested in the above answer) interest does accrue in the NAV, so the price of the fund does drop on ex-date by an amount equal to the dividend paid. A great example of this dynamic can be seen in FLOT, a bond ETF holding floating rate corporate bonds. As you can see in this screenshot, the NAV has followed a sharp up and down pattern, almost like the teeth of a saw. This is explained by interest accruing in the NAV over the course of each month, until it is paid out in a dividend, dropping the NAV sharply in one day. The effect has been particularly pronounced recently because the floating coupon payments have increased significantly (benchmark interest rates are higher) and mark-to-market changes in credit spreads of the constituent bonds have been very muted." }, { "docid": "346345", "title": "", "text": "If you want to go far upstream, you can get mutual fund NAV and dividend data from the Nasdaq Mutual Fund Quotation Service (MFQS). This isn't for end-users but rather is offered as a part of the regulatory framework. Not surprisingly, there is a fee for data access. From Nasdaq's MFQS specifications page: To promote market transparency, Nasdaq operates the Mutual Fund Quotation Service (MFQS). MFQS is designed to facilitate the collection and dissemination of daily price, dividends and capital distributions data for mutual funds, money market funds, unit investment trusts (UITs), annuities and structured products." }, { "docid": "403755", "title": "", "text": "\"1) When it says \"\"an investment or mutual fund\"\", is a mutual fund not an investment? If no, what is the definition of an investment? A mutual fund is indeed an investment. The article probably mentions mutual funds separately from other investments because it is not uncommon for mutual funds to give you the option to automatically reinvest dividends and capital gains. 2) When it says \"\"In terms of stocks\"\", why does it only mention distribution of dividends but not distribution of capital gains? Since distributions are received as cash deposits they can be used to buy more of the stock. Capital gains, on the other hand, occur when an asset increases in value. These gains are realized when the asset is sold. In the case of stocks, reinvestment of capital gains doesn't make much sense since buying more stock after selling it to realize capital gains results in you owning as much stock as you had before you realized the gains. 3) When it says \"\"In terms of mutual funds\"\", it says about \"\"the reinvestment of distributions and dividends\"\". Does \"\"distributions\"\" not include distributions of \"\"dividends\"\"? why does it mention \"\"distributions\"\" parallel to \"\"dividends\"\"? Used in this setting, dividend and distribution are synonymous, which is highlighted by the way they are used in parallel. 4) Does reinvestment only apply to interest or dividends, but not to capital gain? Reinvestment only applies to dividends in the case of stocks. Mutual funds must distribute capital gains to shareholders, making these distributions essentially cash dividends, usually as a special end of year distribution. If you've requested automatic reinvestment, the fund will buy more shares with these capital gain distributions as well.\"" }, { "docid": "118663", "title": "", "text": "\"OK, I found this filing by JCI on the SEC website: U.S. Federal Income Tax Consequences of the Distribution to U.S. Holders For U.S. federal income tax purposes, the distribution will not be eligible for treatment as a tax-free distribution by Johnson Controls with respect to its stock. Accordingly, the distribution will be treated as a taxable distribution by Johnson Controls to each Johnson Controls shareholder in an amount equal to the fair market value of the Adient ordinary shares received by such shareholder (including any fractional shares deemed received and any Adient ordinary shares withheld on account of any Irish withholding taxes), determined as of the distribution date (such amount, the \"\"Distribution Amount\"\"). The Distribution Amount received by a U.S. holder will be treated as a taxable dividend to the extent of such U.S. holder's ratable share of current or accumulated earnings and profits of Johnson Controls for the taxable year of the distribution (as determined under U.S. federal income tax principles). Any portion of the Distribution Amount that is treated as a dividend will not be eligible for the dividends-received deduction allowed to corporations under the Code. My broker's 1099-B form tells me that I received a Qualified Dividend from JCI on 10/31/2016 of $512.44, which would be equivalent to $45.349 valuation of ADNT as of the spinoff date for my 11.3 shares (before the 0.3 shares were sold as cash-in-lieu) .\"" }, { "docid": "333339", "title": "", "text": "\"4) Finally, do all companies reduce their stock price when they pay a dividend? Are they required to? There seems to be confusion behind this question. A company does not set the price for their stock, so they can't \"\"reduce\"\" it either. In fact, nobody sets \"\"the price\"\" for a stock. The price you see reported is simply the last price that the stock was traded at. That trade was just one particular trade in a whole sequence of trades. The price used for the trade is simply the price which the particular buyer and particular seller agreed to for that particular trade. (No agreement, well then, no trade.) There's no authority for the price other than the collection of all buyers and sellers. So what happens when Nokia declares a 55 cent dividend? When they declare there is to be a dividend, they state the record date, which is the date which determines who will get the dividend: the owners of the shares on that date are the people who get the dividend payment. The stock exchanges need to account for the payment so that investors know who gets it and who doesn't, so they set the ex dividend date, which is the date on which trades of the stock will first trade without the right to receive the dividend payment. (Ex-dividend is usually about 2 days before record date.) These dates are established well before they occur so all market participants can know exactly when this change in value will occur. When trading on ex dividend day begins, there is no authority to set a \"\"different\"\" price than the previous day's closing price. What happens is that all (knowledgeable) market participants know that today Nokia is trading without the payment 55 cents that buyers the previous day get. So what do they do? They take that into consideration when they make an offer to buy stock, and probably end up offering a price that is about 55 cents less than they would have otherwise. Similarly, sellers know they will be getting that 55 cents, so when they choose a price to offer their stock at, it will likely be about that much less than they would have asked for otherwise.\"" }, { "docid": "131224", "title": "", "text": "\"A stock insurance company is structured like a “normal” company. It has shareholders (that are the company's investors), who elect a board of directors, who select the senior executive(s), who manage the people who run the actual company. The directors (and thus the executives and employees) have a legal responsibility to manage the company in a way which is beneficial for the shareholders, since the shareholders are the ultimate owner of the company. A mutual insurance company is similar, except that the people holding policies are also the shareholders. That is, the policyholders are the ultimate owners of the company, and there generally aren't separate shareholders who are just “investing” in the company. These policyholder-shareholders elect the board of directors, who select the senior executive(s), who manage the people who run the actual company. In practice, it probably doesn't really make a whole lot of difference, since even if you're just a \"\"customer\"\" and not an \"\"owner\"\" of the company, the company is still going to want to attract customers and act in a reasonable way toward them. Also, insurance companies are generally pretty heavily regulated in terms of what they can do, because governments really like them to remain solvent. It may be comforting to know that in a mutual insurance company the higher-ups are explicitly supposed to be working in your best interest, though, rather than in the interest of some random investors. Some might object that being a shareholder may not give you a whole lot more rights than you had before. See, for example, this article from the Boston Globe, “At mutual insurance firms, big money for insiders but no say for ‘owners’ — policyholders”: It has grown into something else entirely: an opaque, poorly understood, and often immensely profitable world in which some executives and insiders operate with minimal scrutiny and, no coincidence, often reap maximum personal rewards. Policyholders, despite their status as owners, have no meaningful oversight of how mutual companies spend their money — whether to lower rates, pay dividends, or fund executive salaries and perks — and few avenues to challenge such decisions. Another reason that one might not like the conversion is the specific details of how the current investor-shareholders are being paid back for their investment in the process of the conversion to mutual ownership, and what that might do to the funds on hand that are supposed to be there to keep the firm solvent for the policyholders. From another Boston Globe article on the conversion of SBLI to a mutual company, “Insurer SBLI wants to get banks out of its business,” professor Robert Wright is cautiously optimistic but wants to ensure the prior shareholders aren't overpaid: Robert Wright, a professor in South Dakota who has studied insurance companies and owns an SBLI policy, said he would prefer the insurer to be a mutual company that doesn’t have to worry about the short-term needs of shareholders. But he wants to ensure that SBLI doesn’t overpay the banks for their shares. “It’s fine, as long as it’s a fair price,” he said. That article also gives SBLI's president's statement as to why they think it's a good thing for policyholders: If the banks remained shareholders, they would be likely to demand a greater share of the profits and eat into the dividends the insurance company currently pays to the 536,000 policyholders, about half of whom live in Massachusetts, said Jim Morgan, president of Woburn-based SBLI. “We’re trying to protect the policyholders from having the dividends diluted,” Morgan said. I'm not sure there's an obvious pros/cons list for either way, but I'd think that I'd prefer the mutual approach, just on the principle that the policyholders “ought” to be the owners, because the directors (and thus the executives and employees) are then legally required to manage the company in the best interest of the policyholders. I did cast a Yes vote in my proxy on whether SBLI ought to become a mutual company (I'm a SBLI term-life policyholder.) But policy terms aren't changing, and it'd be hard to tell for sure how it'd impact any dividends (I assume the whole-life policies must be the ones to pay dividends) or company solvency either way, since it's not like we'll get to run a scientific experiment trying it out both ways. I doubt you'd have a lot of regrets either way, whether it becomes a mutual company and you wish it hadn't or it doesn't become one and you wish it had.\"" }, { "docid": "88575", "title": "", "text": "\"A mutual fund's return or yield has nothing to do with what you receive from the mutual fund. The annual percentage return is simply the percentage increase (or decrease!) of the value of one share of the mutual fund from January 1 till December 31. The cash value of any distributions (dividend income, short-term capital gains, long-term capital gains) might be reported separately or might be included in the annual return. What you receive from the mutual fund is the distributions which you have the option of taking in cash (and spending on whatever you like, or investing elsewhere) or of re-investing into the fund without ever actually touching the money. Regardless of whether you take a distribution as cash or re-invest it in the mutual fund, that amount is taxable income in most jurisdictions. In the US, long-term capital gains are taxed at different (lower) rates than ordinary income, and I believe that long-term capital gains from mutual funds are not taxed at all in India. You are not taxed on the increase in the value of your investment caused by an increase in the share price over the year nor do you get deduct the \"\"loss\"\" if the share price declined over the year. It is only when you sell the mutual fund shares (back to the mutual fund company) that you have to pay taxes on the capital gains (if you sold for a higher price) or deduct the capital loss (if you sold for a lower price) than the purchase price of the shares. Be aware that different shares in the sale might have different purchase prices because they were bought at different times, and thus have different gains and losses. So, how do you calculate your personal return from the mutual fund investment? If you have a money management program or a spreadsheet program, it can calculate your return for you. If you have online access to your mutual fund account on its website, it will most likely have a tool called something like \"\"Personal rate of return\"\" and this will provide you with the same calculations without your having to type in all the data by hand. Finally, If you want to do it personally by hand, I am sure that someone will soon post an answer writing out the gory details.\"" }, { "docid": "288679", "title": "", "text": "ETFs are both liquid (benefits active traders) and a simple way for people to invest in funds even if they don't have the minimum balance needed to invest in a mutual fund (EDIT: in which purchases are resolved at the end of the trading day). One big difference between ETFs and mutual funds is that you must buy ETFs in whole units, whereas you can add $100 to a mutual fund and the fund will determine -- usually to 4 decimal places -- how many shares you've purchased." }, { "docid": "61193", "title": "", "text": "Do not confuse the DIV (%) value and the dividend yield. As you can see from this page, the DIV (%) is, as you say, 165%. However, the dividend yield is 3.73% at the time of writing. As the Investopedia page referenced above says: The payout ratio is calculated as follows: Annual Dividends per Share / Earnings per Share. which means that the dividends being paid out are more than the earnings of the company: In extreme cases, dividend payout ratios exceed 100%, meaning more dividends were paid out than there were profits that year. Significantly high ratios are unsustainable." }, { "docid": "232932", "title": "", "text": "\"In the case of mutual funds, Net Asset Value (NAV) is the price used to buy and sell shares. NAV is just the value of the underlying assets (which are in turn valued by their underlying holdings and future earnings). So if a fund hands out a billion dollars, it stands to reason their NAV*shares (market cap?) is a billion dollars less. Shareholder's net worth is equal in either scenario, but after the dividend is paid they are more liquid. For people who need investment income to live on, dividends are a cheap way to hold stocks and get regular payments, versus having to sell part of your portfolio every month. But for people who want to hold their investment in the market for a long long time, dividends only increase the rate at which you have to buy. For mutual funds this isn't a problem: you buy the funds and tell them to reinvest for free. So because of that, it's a prohibited practice to \"\"sell\"\" dividends to clients.\"" }, { "docid": "548329", "title": "", "text": "\"So you've already considered relocation. Here are a few additional things to consider with respect to negotiating a signing bonus (if any): Would you be leaving a position where you are eligible for an upcoming bonus, profit-share, or other special incentive payout, such as a stock option or RSU vesting date? A signing bonus can help offset the opportunity cost of leaving a previous job when an incentive payout date is near. At the new company, would you be required to wait some pre-defined period to be eligible to participate in the pension or retirement savings plan with employer basic or matching contributions? If you were receiving ongoing employer contributions in your previous company's plan and would need to wait, say, six months before participating in the new company's plan, a signing bonus can offset lost employer contributions in the interim. Consider funding your own IRA in that time. Would you be required to give up something else of value to you that your previous employer was providing, such as an expensive laptop, that is not expected to otherwise be replaced by the new company? Whether they offer a signing bonus and how much you can expect to negotiate is based on a lot of factors and you'll need to \"\"play it by ear.\"\" Remember what bonus means: \"\"A payment or gift added to what is usual or expected, in particular.\"\" Remember also that a signing bonus is a one time thing. In general, it's more important to consider the overall ongoing compensation package – salary and incentive plans, vacation, retirement benefits, health benefits, etc. – and whether those meet your long-term needs.\"" }, { "docid": "475457", "title": "", "text": "\"There are probably many correct answers to this question, but for most people, the main reason is qualified dividends. To be a qualified dividend (and therefore eligible for lower tax rates), the dividend-paying stock or fund must be held for \"\"more than 60 days during the 121-day period that begins 60 days before the ex-dividend date\"\". Since many stocks and funds pay out dividends at the end of the year, that means it takes until mid- to late February to determine if you held them, and therefore made the dividend qualified. Brokerages don't want to send out 1099s in January and then possibly have to send out revised versions if you decide to sell something that paid a dividend in December that otherwise would have been qualified.\"" }, { "docid": "583203", "title": "", "text": "You did something that you shouldn't have done; you bought a dividend. Most mutual fund companies have educational materials on their sites that recommend against making new investments in mutual funds in the last two months of the year because most mutual funds distribute their earnings (dividends, capital gains etc) to their shareholders in December, and the share price of the funds goes down in the amount of the per share distribution. These distributions can be taken in cash or can be re-invested in the fund; you most likely chose the latter option (it is often the default choice if you ignored all this because you are a newbie). For those who choose to reinvest, the number of shares in the mutual fund increases, but since the price of the shares has decreased, the net amount remains the same. You own more shares at a lower price than the day before when the price was higher but the total value of your account is the same (ignoring normal market fluctuations in the price of the actual stocks held by the fund. Regardless of whether you take the distributions as cash or re-invest in the fund, that money is taxable income to you (unless the fund is owned inside a 401k or IRA or other tax-deferred investment program). You bought 56 shares at a price of $17.857 per share (net cost $1000). The fund distributed its earnings shortly thereafter and gave you 71.333-56= 15.333 additional shares. The new share price is $14.11. So, the total value of your investment is $1012, but the amount that you have invested in the account is the original $1000 plus the amount of the distribution which is (roughly) $14.11 x 15.333 = $216. Your total investment of $1216 is now worth $1012 only, and so you have actually lost money. Besides, you owe income tax on that $216 dividend that you received. Do you see why the mutual fund companies recommend against making new investments late in the year? If you had waited till after the mutual fund had made its distribution, you could have bought $1000/14.11 = 70.871 shares and wouldn't have owed tax on that distribution that you just bought by making the investment just before the distribution was made. See also my answer to this recent question about investing in mutual funds." }, { "docid": "446727", "title": "", "text": "This decision depends upon a few things. I will list a couple:- 1.) What is your perception about financial markets in your time span of investments? 2.) What kind of returns are you expecting? 3.) How much liquidity do you have to take care of your daily/monthly expenses? 1.)If your perception about financial markets is weak for the near future, do not invest all your money in a mutual fund at 1 time. Because, if the market falls drastically, chances are that your fund will also lose a lot of money and the NAV will go down. On the other hand, if you think it is strong, go ahead and invest all at one time. 2.) If you are expecting very high returns in a short time frame, then SIP might not be a very good option as you are only investing a portion of your money. So, if the market goes higher, then you will make money only on what you have invested till date and also buy into the fund in the upcoming month at a higher rate( So you will get less units). 3.) If you put all your money into a mutual fund, will you have enough money to take care of your daily needs and emergencies? The worst thing about an investment is putting in all what you have and then being forced to sell in a bear market at a lower rate because you really require the money. Other option is taking a personal loan(15-16%) and taking care of your daily needs, but that would not make sense either as the average return that you can expect from a mutual fund in India is 12-13%. To summarize:- 1.) If you have money to spare and think the market is going to go higher, a mutual fund is a better option. 2.) If you have the money to spare and think that the market is going to fall, DON'T DO ANYTHING!.(It is always better to be even than lose). 3.) If you don't have the money and don't know about markets, but want to be part of it, then you can invest in an SIP because the advantages of this are if the market goes high, you make money on what you've put it, and if the market falls, you get to buy more units of the fund for a cheaper price. Eventually, you can expect to make a return of 14-15% on these, but again, INVESTMENTS ARE SUBJECT TO MARKET RISK! Please watch the funds average return over the last 10 years and their portfolio holdings. All the best!:) PS:- I am assuming you are talking about equity funds." }, { "docid": "118485", "title": "", "text": "\"There are a couple of misconceptions I think are present here: Firstly, when people say \"\"interest\"\", usually that implies a lower-risk investment, like a government bond or a money market fund. Some interest-earning investments can be higher risk (like junk bonds offered by near-bankrupt companies), but for the most part, stocks are higher risk. With higher risk comes higher reward, but obviously also the chance for a bad year. A \"\"bad year\"\" can mean your fund actually goes down in value, because the companies you are invested in do poorly. So calling all value increases \"\"interest\"\" is not the correct way to think about things. Secondly, remember that \"\"Roth IRA fund\"\" doesn't really tell you what's \"\"inside\"\" it. You could set up your fund to include only low-risk interest earning investments, or higher risk foreign stocks. From what you've said, your fund is a \"\"target retirement date\"\"-type fund. This typically means that it is a mix of stocks and bonds, weighted higher to bonds if you are older (on the theory of minimizing risk near retirement), and higher to stocks if you are younger (on the theory of accepting risk for higher average returns when you have time to overcome losses). What this means is that assuming you're young and the fund you have is typical, you probably have ~50%+ of your money invested in stocks. Stocks don't pay interest, they give you value in two ways: they pay you dividends, and the companies that they are a share of increase in value (remember that a stock is literally a small % ownership of the company). So the value increase you see as the increase due to the increase in the mutual fund's share price, is part of the total \"\"interest\"\" amount you were expecting. Finally, if you are reading about \"\"standard growth\"\" of an account using a given amount of contributions, someone somewhere is making an assumption about how much \"\"growth\"\" actually happens. Either you entered a number in the calculator (\"\"How much do you expect growth to be per year?\"\") or it made an assumption by default (probably something like 7% growth per year - I haven't checked the math on your number to see what the growth rate they used was). These types of assumptions can be helpful for general retirement planning, but they are not \"\"rules\"\" that your investments are required by law to follow. If you invest in something with risk, your return may be less than expected.\"" }, { "docid": "59670", "title": "", "text": "\"Lifecycle funds might be a suitable fit for you. Lifecycle funds (aka \"\"target date funds\"\") are a mutual fund that invests your money in other mutual funds based on how much time is left until you need the money-- they follow a \"\"glide-path\"\" of reducing stock holdings in favor of bonds over time to reduce volatility of your final return as you near retirement. The ones I've looked at don't charge a fee of their own for this, but they do direct your portfolio to actively managed funds. That said, the ones I've seen have an \"\"acquired\"\" expense ratio of less than what you're proposing you'd pay a professional. FWIW, my current plan is to invest in a binary portfolio of cheap mutual funds that track S&P500 and AGG and rebalance regularly. This is easy enough that I don't see the point of adding in a 1 percent commission.\"" } ]

[ { "docid": "426678", "title": "", "text": "There are a few ways to get money from property, but I'm not sure any would work for you: 1) Firstly you could sell it. Selling the building might require enough repairs that the building is habitable; if the repair costs are too high, you might not be able to recover costs from selling. For a particularly old and unkempt building, this is more likely to be the case. In extreme scenarios, you may earn more net profit by demolishing a decrepit building, and simply selling the land. Make sure you aren't setting your price too high if you are desperate to sell; dropping your price might make the headache of upkeep go away, and might be better for you financially in the long run. 2) You could rent it - but if it is so uninhabitable you can't sell it, then this is unlikely without repairs (and it seems you don't want to do this anyway). 3) If your building is in an area where the zoning laws are not strict, you may be able to apply for a permit to have it zoned for commercial use - and either run a business out of it, or rent it to someone else to do so. Again, this would be dependent on repairs if the building is uninhabitable, and also would require the building to well-situated for a business. 4) You could take out a mortgage on the building. Of course, this has two big caveats: (a) the bank would need to assess the building for value [and it seems not to be worth much in your case]; and (b) this provides only temporary cash, which you would need to pay back to the bank over time. In some cases, if you had a solid plan, you might be able to take a mortgage out against the value of the land, and use the cash from the mortgage to do some repairs, so that it would be in good shape for selling." } ]

[ { "docid": "397749", "title": "", "text": "There could be a number of reasons for a rent increase. The only information I can offer is how I calculate what rent I will charge. The minimum I would ever charge per unit (Mortgage payment + Water) / Number of units This number is the minimum because it's what I need to keep afloat. Keep in mind these are ballpark numbers The target rent ((Mortgage payment + Water) / Number of units)*1.60 I mark up the price 60% for a few reasons. First, the building needs a repair budget. That money has to come from somewhere. Second, I want to put away for my next acquisition and third I want to make a profit. These get me close to my rental price but ultimately it depends on your location and the comparables in the area. If my target rent is 600 a month but the neighbors are getting 700-800 for the same exact unit I might ask more. It also depends on the types of units. Some of my buildings, all of the units are identical. Other buildings half of the units are bigger than the other half so clearly I wouldn't charge a equal amount for them. Ultimately you have to remember we're not in the game to lose money. I know what my renters are going to pay before I even put an offer in on a building because that's how I stay in business. It might go up over the years but it will always outpace my expenses for that property." }, { "docid": "318676", "title": "", "text": "\"Village? Are you in the states? I am not saying start a car dealership, I am saying look for cars that are sold below the value they usually go for. This takes a bit of time and effort of looking at each car and seeing what they generally sell for. Blue book is a decent indicator, but do not go solely on that alone. Go to a car auction, and write down each car you can, judge each car, the mileage, and condition, and see what it goes for at auction. Then go to other areas and find other similar cars and see what they are sold for there. Build up a database of sorts, and the cars with the best margins, and preferably higher turnover, and get those. This is not a \"\"business\"\" per say, it is a way to make money and learn the market for a while. Once you get a good bit of general knowledge, and build up a lot more money, then you could likely start a car dealership. Depending on your area you will likely need a good 50k to get started, maybe more depending on insurance and lease agreements.\"" }, { "docid": "469731", "title": "", "text": "\"This is unfortunately the truth, and I spend a lot of time with my clients trying to help them through this process. One of the key metrics that banks judge themselves on is \"\"products per household.\"\" The more things you have attached to them, the less likely you are to leave, and they deliberately tie you in with more and more services, e.g. direct deposit, billpay, debit cards, credit cards, etc. If you want to switch but are held back by the daunting task of all the stuff you need to do, it's easier than most people think, and bankers at those smaller banks who are getting your accounts should be more than happy to do about 80% of the work for you. *The other 20% can only be done by you personally due to privacy laws, but your banker can guide you through that too. A prime example: A customer of mine wanted to switch, but he didn't want to go to the old bank to actually wait in line and go through with the nonsense of actually closing the account. I see that anxiety over confrontation a lot, by the way. So I have saved on my desktop a form letter is a simple request by the customer to close their account at 2B2F bank. They sign it, I notarize it, and send it off to the branch. The branch of receipt has to close the account per the request. Before we send that letter, we get everything set up with the new bank, draw the old one down to $10 or so, and give instructions to the old bank to remit a check payable to the customer and mail it to me. Then the old account is closed, and I just deposit that nominal amount into the customer's account. The customer literally never has to set foot in the old bank again. The unfortunate thing is that not everyone knows that these kinds of things are even possible: that your banker should help you with this stuff, or that you can do pretty much everything remotely. Plus, if you look at the smaller banks and CUs these days, they have eliminated the need or ubiquity (i.e. \"\"but their ATMs are everywhere!\"\") because a good bank or CU will never allow you to get charged to get your money, they will give you the direct line and email address of your branch manager, and a lot of places have mobile apps that allow you to deposit checks remotely.\"" }, { "docid": "140775", "title": "", "text": "\"First and foremost, being \"\"cool\"\" stops being a thing you have to worry about once you graduate from secondary school. Nobody's really going to care what car you drive; the ones that do care aren't worth maintaining personal friendships or relationships with. The notable exception would be a sales job, requiring you to look successful to be successful, and in that case you'll need to either have a nice-looking car or buy one very quickly. Also, consider what you're buying. An E46 (which for the U.S. crowd was the previous generation of 3-series coupes and sedans) will be, at best, a 6-year-old car, and they made these as long ago as '98 which would make it 15 years old. The standard in the U.S. is to put about 10k miles (which would be about 17k km) per year on it, so you would expect even the newest E46s to have at least 100 000 km on them. At this point, even the best cars start needing increasing amounts of maintenance, and on a BMW that maintenance doesn't come cheap. Consider why a BMW would be sold. It sounds cliche, but in the U.S. at least there are three \"\"tiers\"\" of used car in the luxury class; there are the one- and two-year-olds, used by the dealer as a loaner or owned by the type of guy who buys a new car every year; they're practically new, for 30-50% off sticker, and a great deal when you find them. There are the 15-year-old (or older) cars which were used up and traded in; the majority of these end up auctioned off and cannibalized for parts with the remaining hulk sold for salvage. Then there are the in-betweens; between three and ten years old, you get a wide variety. This car could have been garaged all its life and driven to and from work and around town before its owner got a raise and decided to splurge, or its previous owner could have driven the wheels off all over the continent for work or travel. It could have a major problem that developed or was discovered after the warranty expired (and there isn't an E46 on the road that's still under warranty) which caused the owner to sell. Overall, I would wait until you have your first real job to spend real money on a car like this; the one that will actually pay the bills with enough left over for fun. When you're making 35k a year with only your own personal expenses, as long as you manage your debt well and don't get in trouble with credit, you should have no trouble buying a car like this (or even a newer one). If you are going to buy used even then, I recommend you do your homework on required maintenance for the brand and in general, what each milestone will cost you, and (based on mileage) how soon, and I would find a reputable used car dealer (which is stereotypically a contradiction in terms, but there are guys out there who aren't out to completely screw you over).\"" }, { "docid": "185301", "title": "", "text": "&gt;one of the major backbones of domestic transit in the US is the highway system. No businessman wanted to touch that until the government decided to pitch in and do most of the work. Maybe that's because it wasn't a good idea? What were businessmen building with their money instead of roads? You completely ignore the cost. Governments have no real incentive to be efficient with money. In fact, they have a large incentive to be wasteful! An expensive, shitty road tends to get *more* money. Or look at a police force. Which one do you think gets more money, the one that has completely eliminated crime or the one that is ineffective at reducing crime? &gt; Would it benefit all users equally and would they allow anyone (including competitors) to use the infrastructure they built? Does it benefit everyone equally when the government builds it? Does it benefit, say, people who don't even live anywhere near it? Does it benefit competitors? Does it benefit people who prefer catching trains?" }, { "docid": "198412", "title": "", "text": "One reason for this is that many people don't simply allow their houses to rot and decay. If you're talking about a house built in 1980 and left vacant and unmaintained for 35 years, it probably will be in pretty poor shape. But a homeowner generally wants to preserve their house and maintain it in good condition, so they invest in things like new roofs, siding, gutters, windows, paint, exterminators, new furnaces, hot water heaters, air conditioners, etc... All this stuff costs money (and for tax purposes, can often be factored into the cost basis of the house when it is sold), but it maintains the value of the property. A small hole in the roof may be fairly cheap to fix, but if left unrepaired, it could eventually cause much of the building to rot, making the structure near worthless. If a car slams into your living room, you don't generally leave it there; most people repair the damage. It's not uncommon in some areas to have 100 year old houses (or 300+ year old houses in some countries) that were built well in the first place and have been well maintained in the interim. People also renovate their homes, ripping out outdated construction and appliances and sometimes building new additions, decks, porches, etc... This also serves to make the property more attractive and increases its value." }, { "docid": "302951", "title": "", "text": "Gonna have to think about this one yourself. How much is the old house worth if you sell it? How much can you rent it out for? If you can sell it for a decent amount, you might be able to pay off the current house completely, save yourself nearly 200k in interest, and maybe end up with a bit more cash. If you can rent it for a high amount, it might be worth doing that and you could possibly use that and get more money than what the interest is. Just gotta weigh up your options, find out what you can get for the house if you rent or sell." }, { "docid": "221285", "title": "", "text": "No. I have partaken of but not lately. It's only become non-taboo here in the last 10 years and I was raised to think it was bad and people who do it are slackers or lazy and the like. I've thankfully grown out of that old way of thinking and now know how profitable it is and feel this is a good venture to begin building a nice portfolio. I'd also like to get into real estate and solar and wind as well" }, { "docid": "5602", "title": "", "text": "You're losing money. And a lot of it. Consider this: the inflation is 2-4% a year (officially, depending on your spending pattern your own rate might be quite higher). You earn about 1/2%. I.e.: You're losing 3% a year. Guaranteed. You can do much better without any additional risk. 0.1% on savings account? Why not 0.9%? On-line savings account (Ally, CapitalOne-360, American Express, E*Trade, etc) give much higher rates than what you have. Current Ally rates are 0.9% on a regular savings account. 9 times more than what you have, with no additional risk: its a FDIC insured deposit. You can get a slightly higher rate with CDs (0.97% at the same bank for 12 months deposit). IRA - why is it in CD's? Its the longest term investment you have, that's where you can and should take risks, to maximize your compounding returns. Not doing that is actually more risky to you because you're guaranteeing compounding loss, of the said 3% a year. On average, more volatile stock investments have shown to be not losing money over periods of decades, even if they do lose money over shorter periods. Rental - if you can buy a property that you would pay the same amount of money for as for a comparable rental - you should definitely buy. Your debt will be secured by the property, and since you're paying the same amount or less - you're earning the equity. There's no risk here, just benefits, which again you chose to forgo. In the worst case if you default and walk away from the property you lost exactly (or less) what you would have paid for a rental anyway. 14 years old car may be cheaper than 4 years old to buy, but consider the maintenance, licensing and repairs - will it not some up to more than the difference? In my experience - it is likely to. Bottom line - you think you're risk averse, but you're exactly the opposite of that." }, { "docid": "344641", "title": "", "text": "She said he's been in business for 3 years and I've Googled it and found it to be accurate from the paperwork I've seen that's public knowledge. I know this isn't a get-rich-quick thing bc hard work and money went into making and building not only a business but a brand as well. Brand building is a lot harder than business building. Anyone can get a loan with decent enough credit and open up a shop: it's keeping people coming in that is the hard part. I understand all areas of this business except for the growing part. I've never known how to grow weed or the technicalities it takes to maintain healthy plants and things. I'm just looking to invest in something I believe in because weed shouldn't be illegal and the medicinal reports state that it's far from a gateway drug or anything of the sort. I do wanna thank you for (so far) being the nicest reply to my post. We seem to have some haters and naysayers on here who like to just start shit and while you may find it hard to believe that I'm trying to just get rich, that simply isn't the case. I believe her and I believe in her so I know what she's trying to do is all legit" }, { "docid": "357427", "title": "", "text": "What do you mean doesn't allow private entities to attach to the fixtures? Do you mean fixtures like lamp posts etc? This would only be suitable for small cells anyway. Putting a small cell on a rooftop is silly. A roof site would be a full build site with radios, sector antennas, an equipment cabinet or two, and a power/battery cabinet. If you mean attach fixtures to buildings, I don't believe that. Create a business to lease the space. Bob's Rooftop, Inc., etc. Make sure they carry sufficient insurance and that it includes protection for your building against any contractor error (roof damage, accidentally drill something, damage to cosmetic materials, etc), against fire, and basically anything else. I've only seen cell equipment catch fire a couple of times, both of which were the result of lightning strikes. On the other hand, the bank of batteries they use for backup power is pretty big and has more than enough power to do some accidental arc welding. Are they limited to leasing to a single carrier? You need this all spelled out in writing. PM me the name of the vendor if you are allowed to. I don't need the name of the carrier. You don't need to give me too much identifying information, so there is no exposure for you. Are they offering the $350 or are you asking it? I feel like a minimum of $1000 is reasonable. Try to find out what they will be paid by the carrier. You might be able to negotiate something like 65% of the money the carrier pays. Do remember that the vendor does basically nothing other than make the space available. They don't build the site and they don't maintain it." }, { "docid": "453624", "title": "", "text": "\"Historically, Banks are mandated to take relatively safe risks with their money. In exchange, they gain a de-facto permission to invent new money. They have regulations about what mix of assets they are permitted to own. Real estate speculation will be in a different category than a mortgage to someone with good credit. Second, mortgages with a secured asset are pretty safe almost all of the time. That person might stop paying their mortgage, but it is secured; when that happens, the bank gets the secured asset (the right-to-apartment or house or what have you). In a sense, the bank loses only if both the person paying the mortgage is less creditworthy than they look, and the secured asset cannot recoup their losses. In comparison, the person paying the mortgage loses if the secured asset cannot recoup their losses. The bank is buffered from risk two fold. What more, the bank uses the customer to determine what to invest in. Deciding what to do with money is expensive and hard. By both having a customer willing to put their good credit on the line and doing due diligence on the apartment, the Bank in effect uses you as a consultant who decides this may be a solid investment. Much of the risk of failure is on you, so you have lots of incentive to make a good choice. If the Bank was instead deciding which apartment where worth buying, who would decide? A bank employee, whose bonus this year depends on finding a \"\"great apartment to invest in?\"\", but the consequence of a bad choice doesn't show up for many years? The people selling the bank the apartments? Such a business can exist. There are real estate companies that take money, and invest it in real estate. Often the borrow money from Banks secured against their existing real estate and use it to build more real estate. (Notice the bit about it being secured against existing real estate; things go south, Bank gets stuff). The Bank's indirect investment in that apartment in the current system is covered by appraisals, the seller, the mortgage holder, and the system deciding that the mortgage holder is creditworthy. Banks sell risk. They lend you money, you go off and do something risky with it, and they get a the low-risk return on investment of your loan. Multiple such low-risk investments provides them with a relatively dependable stream of money, which they give out to their bondholders, deposit account customers, shareholders or what have you. When you take a mortgage out for that, you are buying risk from the bank. You are more exposed to the failure of the investment than they are. They get less return if things go really well.\"" }, { "docid": "396933", "title": "", "text": "I would say you are typical. The way people are able to build their available credit, then subsequently build their average balances is buy building their credit score. According to FICO your credit score is made up as follows: Given that you had no history, and only new credit you are pretty much lacking in all areas. What the typical person does, is get a card, pay on it for 6 months and assuming good history will either get an automatic bump; or, they can request a credit limit increase. Credit score has nothing to do with wealth or income. So even if you had 100K in the bank you would likely still be facing the same issue. The bank that holds the money might make an exception. It is very easy to see how a college student can build to 2000 or more. They start out with a $200 balance to a department store and in about 6 months they get a real CC with a 500 balance and one to a second department store. Given at least a decent payment history, that limit could easily increase above 2500 and there could be more then one card open. Along the lines of what littleadv says, the companies even welcome some late payments. The fees are more lucrative and they can bump the interest rate. All is good as long as the payments are made. Getting students and children involved with credit cards is a goal of the industry. They can obtain an emotional attachment that goes beyond good business reasoning." }, { "docid": "565691", "title": "", "text": "The assumption that house value appreciates 5% per year is unrealistic. Over the very long term, real house prices has stayed approximately constant. A house that is 10 years old today is 11 years old a year after, so this phenomenon of real house prices staying constant applies only to the market as a whole and not to an individual house, unless the individual house is maintained well. One house is an extremely poorly diversified investment. What if the house you buy turns out to have a mold problem? You can lose your investment almost overnight. In contrast to this, it is extremely unlikely that the same could happen on a well-diversified stock portfolio (although it can happen on an individual stock). Thus, if non-leveraged stock portfolio has a nominal return of 8% over the long term, I would demand higher return, say 10%, from a non-leveraged investment to an individual house because of the greater risks. If you have the ability to diversify your real estate investments, a portfolio of diversified real estate investments is safer than a diversified stock portfolio, so I would demand a nominal return of 6% over the long term from such a diversified portfolio. To decide if it's better to buy a house or to live in rental property, you need to gather all of the costs of both options (including the opportunity cost of the capital which you could otherwise invest elsewhere). The real return of buying a house instead of renting it comes from the fact that you do not need to pay rent, not from the fact that house prices tend to appreciate (which they won't do more than inflation over a very long term). For my case, I live in Finland in a special case of near-rental property where you pay 15% of the building cost when moving in (and get the 15% payment back when moving out) and then pay a monthly rent that is lower than the market rent. The property is subsidized by government-provided loans. I have calculated that for my case, living in this property makes more sense than purchasing a market-priced house, but your situation may be different." }, { "docid": "386044", "title": "", "text": "&gt; make reddit more ~~accessible~~ profitable. Seriously, come on. Reddit is plenty accessible to the nerdy weirdo base that loves it, me included. Making it more like Facebook and Twitter will only drive existing users (unprofitable users) away and bring in or try to bring in more profitable users. It's like Kitchen Nightmares, we're the old-school customers, we love our microwaved lamb shank and stewed potatoes, but that isn't making money for the restaurant. Now we only come here for those things, it's familiar, comforting we're not your typical customer. BUT, for the restaurant to stay open they need to be more accessible to the average customer, have new and exciting things. So the menu needs to be changed. They'll get new customers, one's who like the new menu, but at the expense of loosing us. Which is fine, because we don't pay the bills. We don't matter. That's what you don't get. We're not paying for Reddit, and that IS a problem. That's why there's been more rounds of funding, diluting the already existing shares, because without this influx Reddit would sink. They're trying to stay open with the old menu, but at some point they need to make a buck and a new menu is what IS going to happen. Being in denial isn't going to stop that. &gt;Do you think companies like Uber who absolutely haemorrhage money are thinking that profit is their top priority? Uber is forcing traditional Taxi companies out of their own market. They can ride on losses for a very long time because they are clearly the future, much like Amazon. Reddit is not doing anything like that. &gt;No, it's about growing the user base. There's arguably more value in that these days for tech companies. Reddit isn't a tech company, it's a social media company it's 'technology' is neat but doesn't produce a profit mostly because Reddit users are savvy enough to run Ad-Block and we don't buy Reddit Gold enough to care. Notice the privacy policy changes and the Do Not Track abandonment? Selling our data is the next attempt to make money, and better targeted marketing. But for that to work we need Facebook and Twitter users, meaning we need to be dumbed down to be more like them." }, { "docid": "509077", "title": "", "text": "Let's look at some numbers. These are just example rates that I found online. You can substitute your own quotes and compare yourself. I'm not going to name the company, but these advertised rates are all from one nationally-known company for a 25-year old female. If you went with the whole life option, you would be paying $937.56 per year. The policy builds a cash value; the amount this grows can vary greatly, and you'll need to look at the fine print to see how it will grow, but let's pretend that after 30 years, the cash value of the policy is $50,000 (a reasonable guess, in my opinion). Let's look at what this means: You can cash out your policy, but at that point, you'll stop paying payments, and your heirs won't get your $100,000 death benefit. You can borrow against it, but you'll have to pay it back. You could use it to pay your premium, in which case you'll stop paying payments. However, keep in mind that if you do pass away, you lose the cash value you've built up; your beneficiaries only get the $100,000 death benefit. Now let's look at the term insurance option. We'll go with the 30-year term. It will only cost you $242.76 per year, and the death benefit is more than double the whole life coverage. If you were to take the difference between the two premiums ($58 per month) and invest it in a mutual fund growing at 8% per year, you would have $86,441 in your account after 30 years. This money is yours (or your heirs), whether or not you pass away before your term is up. After the 30 years is up, your insurance is over, but you are now almost all the way up to the death benefit of the whole life policy anyway. In my opinion, term life insurance is better than whole life for just about everybody. I don't want to be morbid here, but the earlier someone dies, the more benefit they get with term insurance vs whole life. If someone does have reason to believe that his life expectancy is shorter than average, term insurance makes even more sense, as he is more likely to get the death benefit for much less money in premiums than he would in whole life." }, { "docid": "534988", "title": "", "text": "\"Given that a poor person probably has much less to invest, how can odds be in their favor? To add to Lan's great answer, if one is \"\"poor\"\" because they don't have enough income to build wealth (invest), then there are only two ways to change the situation - earn more or spend less. Neither are easy but both are usually possible. One can take on side jobs, look for a better-paying career, etc. Cutting spending can also be hard but is generally easier than adding income. In general, wealth building is more about what you do with your income than about how much you make. Obviously the more you make, the easier it is, but just about anyone can build wealth if they spend less than they make. Once your NET income is high enough that you have investible income, THEN you can start building wealth. Unfortunately many people have piles of debts to clean up before they are able to get to that point. What could a small guy with $100 do to make himself not poor anymore, right? Just having $100 is not going to make you \"\"rich\"\". There is a practical limit to how much return you can make short of high-risk activities like gambling, lottery tickets, etc. (I have actually seen this as a justification for playing the lottery, which I disagree with but is an interesting point). If you just invest $100 at 25% per year (for illustration - traditional investments typically only make 10-12% on average), in 10 years you'll have about $931. If instead you invest $100 per month at 12% annualized, in 10 years you'll have over $23,000. Not that $23,000 makes you rich - the point is that regularly saving money is much more powerful than having money to start with.\"" }, { "docid": "111466", "title": "", "text": "When you start living in US, it doesn't actually matter what was your Credit history in another country. Your Credit History in US is tied to your SSN (Social Security Number), which will be awarded once you are in the country legally and apply for it. Getting an SSN also doesn't guarantee you nothing and you have to build your credit history slowly. Opening a Checking or Savings account will not help you in building a credit history. You need to have some type of Credit Account (credit card, car loan, mortgage etc.) linked to your SSN to start building your credit history. When you are new to US, you probably won't find any bank that will give you a Credit Card as you have no Credit history. One alternative is to apply for a secured credit card. A secured credit card is one you get by putting money or paying money to a bank and open a Credit Card against that money, thereby the bank can be secure that they won't lose any money. Once you have that, you can use that to build up your credit history slowly and once you have a good credit history and score, apply for regular Credit Card or apply for a car loan, mortgage etc. When I came to US 8 years ago, my Credit History was nothing, even though I had pretty good balance and credit history back in my country. I applied for secured credit card by paying $500 to a bank ( which got acquired by CapitalOne ), got it approved and used it for everything, for three years. I applied for other cards in the mean time but got rejected every time. Finally got approved for a regular credit card after three years and in one year added a mortgage and car loan, which helped me to get a decent score now. And Yes, a good Credit Score is important and essential for renting an apartment, leasing a car, getting a Credit Card etc. but normally your employer can always arrange for an apartment given your situation or you need to share apartment with someone else. You can rent a car without and credit score, but need a valid US / International Drivers license and a Credit Card :-) Best option will be to open a secured credit card and start building your credit. When your wife and family arrives, they also will be assigned individual SSN and can start building their credit history themselves. Please keep in mind that Credit Score and Credit History is always individual here..." }, { "docid": "541713", "title": "", "text": "\"Aesthetics aside, laminate floor is attached to the floor and as such is a part of the building. So you depreciate it with the building itself, similarly to the roof. I believe the IRS considers these permanently attached because the foam itself is permanently attached, and is a part of the installation. To the best of my knowledge, the only flooring that is considered as a separate unit of property is tucked-in carpet or carpet pads (typically installed in commercial buildings, not homes). Everything else you'll have to prove to be an independent separate unit of property. Technically, you can take the tucked in carpet, and move it elsewhere as-is and be able to install it there assuming the size fits. You cannot do it with the foam (at the very least you'll need a new foam cover in the new location since you cannot take the foam with you from the old one). That's the difference between a \"\"separate unit of property\"\" and \"\"part of the building\"\". Note that the regulations in this area have changed significantly starting of 2014, so you may want to talk to a professional.\"" } ]

[ { "docid": "540571", "title": "", "text": "I have been a private tutor on and off for about 30 years, in three countries, so I understand your concerns! I always kept records as though it was a real business - even if I only had one student I kept records of dates/times/names, and also tracked where the money went (I never spent it straight up - it always got deposited to complete the paper trail; yes, this is paranoia on my part). I've never been asked to prove anything with regards this income (although I have no Canadian experience). It's always been a case of tell the tax folks and make sure my arse is covered if they come asking questions. Hope this helps." } ]

[ { "docid": "261280", "title": "", "text": "No. You don't need to pay the IRS before such a transfer – though you'll need to fill out certain paperwork to report the money transfer to authorities if it exceeds a threshold amount. If the money is income, you'll need to declare it on your income tax return and then pay the taxes due. If it is a gift, other rules apply and tax may be due. Do proper due diligence and consult with a trusted tax professional. However:  Please see the comments above – this sounds like a potential scam." }, { "docid": "523521", "title": "", "text": "\"You have several questions in your post so I'll deal with them individually: Is taking small sums from your IRA really that detrimental? I mean as far as tax is concerned? Percentage wise, you pay the tax on the amount plus a 10% penalty, plus the opportunity cost of the gains that the money would have gotten. At 6% growth annually, in 5 years that's more than a 34% loss. There are much cheaper ways to get funds than tapping your IRA. Isn't the 10% \"\"penalty\"\" really to cover SS and the medicare tax that you did not pay before putting money into your retirement? No - you still pay SS and medicare on your gross income - 401(k) contributions just reduce how much you pay in income tax. The 10% penalty is to dissuade you from using retirement money before you retire. If I ... contributed that to my IRA before taxes (including SS and medicare tax) that money would gain 6% interest. Again, you would still pay SS and Medicare, and like you say there's no guarantee that you'll earn 6% on your money. I don't think you can pay taxes up front when making an early withdrawal from an IRA can you? This one you got right. When you file your taxes, your IRA contributions for the year are totaled up and are deducted from your gross income for tax purposes. There's no tax effect when you make the contribution. Would it not be better to contribute that $5500 to my IRA and if I didn't need it, great, let it grow but if I did need it toward the end of the year, do an early withdrawal? So what do you plan your tax withholdings against? Do you plan on keeping it there (reducing your withholdings) and pay a big tax bill (plus possibly penalties) if you \"\"need it\"\"? Or do you plan to take it out and have a big refund when you file your taxes? You might be better off saving that up in a savings account during the year, and if at the end of the year you didn't use it, then make an IRA contribution, which will lower the taxes you pay. Don't use your IRA as a \"\"hopeful\"\" savings account. So if I needed to withdrawal $5500 and I am in the 25% tax bracket, I would owe the government $1925 in taxes+ 10% penalty. So if I withdrew $7425 to cover the tax and penalty, I would then be taxed $2600 (an additional $675). Sounds like a cat chasing it's tail trying to cover the tax. Yes if you take a withdrawal to pay the taxes. If you pay the tax with non-retirement money then the cycle stops. how can I make a withdrawal from an IRA without having to pay tax on tax. Pay cash for the tax and penalty rather then taking another withdrawal to pay the tax. If you can't afford the tax and penalty in cash, then don't withdraw at all. based on this year's W-2 form, I had an accountant do my taxes and the $27K loan was added as earned income then in another block there was the $2700 amount for the penalty. So you paid 25% in income tax for the earned income and an additional 10% penalty. So in your case it was a 35% overall \"\"tax\"\" instead of the 40% rule of thumb (since many people are in 28% and 35% tax brackets) The bottom line is it sounds like you are completely unorganized and have absolutely no margin to cover any unexpected expenses. I would stop contributing to retirement today until you can get control of your spending, get on a budget, and stop trying to use your IRA as a piggy bank. If you don't plan on using the money for retirement then don't put it in an IRA. Stop borrowing from it and getting into further binds that force you to make bad financial decisions. You don't go into detail about any other aspects (mortgage? car loans? consumer debt?) to even begin to know where the real problem is. So you need to write everything down that you own and you owe, write out your monthly expenses and income, and figure out what you can cut if needed in order to build up some cash savings. Until then, you're driving across country in a car with no tires, worrying about which highway will give you the best gas mileage.\"" }, { "docid": "347186", "title": "", "text": "Tax liability in US: You would need to determine if you are a resident alien or non resident alien. Resident alien are taxed normally as per US citizens. For the annual remuneration you have quoted it would be in the range of 25%. Refer http://www.moneychimp.com/features/tax_brackets.htm To determine if you are resident alien or non resident alien, you need to be present for certain period in US. There is also an exemption even if you meet this you can still be treated as non resident alien if your tax home is outside US [India in this case] Refer to the link for details to determine your category, the durations are for number of days in financial year, hence it matters when you are in US and the exact durations. http://www.irs.gov/taxtopics/tc851.html Also note that if you are assessed as resident alien, even the income from India will be taxed in US unless you declare there is no income in India. Tax liability in India: The tax liability in India would be depending on your NRI status. This again is tied to the financial year and the number of days you are in country. While the year you are going out of India you need to be away for atleast 183 days for you be considred are NRI. So if you are treated as Indian resident, you would have to pay tax in India on entire income. In the worst case, depending on the period you travel and the dates you travel, you could get classified as citizen in US as well as India and have to pay tax at both places. India and US do not have a dual tax avoidance treaty for individuals. Its there for certain category like small business and certain professions like teacher, research etc." }, { "docid": "210829", "title": "", "text": "And this tells me you have little to no understanding. I have LIVED this life, I am black, from an inner city, my father is a deadbeat and my mother was diagnosed with MS, leaving her disabled until she died before I graduated from high school. My grandmother raised me while trying to care for a daughter that couldn't walk and another daughter struck blind by disease. Without public assistance, I wouldn't have been healthy enough to get a scholarship to a very expensive boarding high school, and really isolate myself from the shit around me. i have cousins who died living the gangster bullshit life, I know this world from seeing it. I make a fairly decent amount of money now, why, because when I couldn't find a job, I could still eat on food stamps and go to a free program to qualify for the government to pay for my IT certification. So, seeing as I KNOW how the system can be used to get to a better place, make a goddamn argument that your idea works better, not how you feel things should be. I make me decisions based on what I've seen, I have known women shafted by circumstance struggling to be able to work because they need a specific number of hours to ensure they can have child care so they can work at all. I have tutored adults that never graduated high school because they had to drop out and work years ago to help their families afford to live. I have used medicaid to help with my horrible episodes of depression, gotten treatment my family alone could not afford. I have watched my aunt recover from drug addiction using treatment my family could not afford. My grandmother is alive and still helping the down and out in our family due to medical equipment the family could not afford on its own. I do base my decisions on evidence, I have lived the fucking evidence." }, { "docid": "318716", "title": "", "text": "First of all, in the U.S., no Federal gift tax has to be paid by the recipient of the gift; it is the donor who has to pay gift tax, if any is due. Nor does the recipient have to pay Federal income tax on the gift; it is not considered taxable income. I do not believe that any states view matters differently for the purposes of state gift and income taxes, but I am always ready to be disabused of any such fondly-held notions. If your parents were required to pay any gift tax, that would have been at the time the gift was originally given and only if they gifted more than the maximum allowable exemption per person for that year. Currently the exemption is $14K from each donor per recipient per year. Additional gifts were made by your parents to you during your minority when your parents paid any income tax due on the distributions in your account, but these amounts would unlikely to have been larger than the exemption for that year. In any case, gift tax is none of your concern. If you have been declaring the income from distributions from the mutual funds all these years, then the only tax due on the distributions from the funds in 2013 is the Federal income tax for the 2013 tax year (plus a special assessment of Medicare tax on investment income if your income is large; unlikely based on your question and follow-up comment). If you sold all or part of your shares in the funds in 2013, then you would need to calculate the basis of your investments in the fund in order to figure out if you have capital gains or losses. Ditto if you are thinking of cashing out in 2014 and wish to estimate how much income tax is due. But if you want to just hang on to the funds, then there is no immediate need to figure out the basis right away, though taking care of the matter and keeping in top of things for the future will be helpful. As a final note, there is no tax due on the appreciation of the fund's shares. The increased value of your account because the fund's share price rose is not a taxable event (nor are decreases in the account deductible). These are called unrealized capital gains (or losses) and you do not pay tax on them (or deduct them as losses) until you realize the gains by disposing of the property." }, { "docid": "291614", "title": "", "text": "how much taxes would I pay on my income from the rent they would pay me? The same as on any other income. California doesn't have any special taxes for rental/passive income. Bothe CA and the Federal tax laws do have special treatment, but it is for losses from rental. Income is considered unearned regular income and is taxed at regular brackets. Would I be able to deduct the cost of the mortgage from the rental income? The cost of mortgage, yes. I.e.: the interest you pay. Similarly you can deduct any other expense needed to maintain the property. This is assuming you're renting it out at FMV. If not, would I pay the ordinary income tax on that income? In particular, would I pay CA income tax on it, even though the property would be in WA? Yes. Don't know how WA taxes rental income, but since you are a California tax resident - you will definitely be taxed by California on this, as part of your worldwide income." }, { "docid": "597865", "title": "", "text": "By earning money, I assume you are being paid a salary [and not allowance] in UK. For the Financial Year 2013-2014: You are still a tax resident in India. India taxes Global income. Hence your salary from 4th Feb to 31st March, needs to be declared as Income. The tax will be at your total tax brackets. India does have a Double Tax Avoidance Treaty [DTAA] with UK, so you can deduct any taxes you paid on this income and pay balance in India. Please note that it is not relevant whether you transfer money to India or keep in UK, it does not change the taxability. For the financial Year 2014-2015: Depending on the exact date, you may or may not be a NRI [away for more than 182 days] for tax purposes. If you are an NRI there no tax, else as above para." }, { "docid": "349424", "title": "", "text": "\"As you are earning an income by working in India, you are required to pay tax in India. If you contract is of freelance, then the income earned by you has to be self declared and taxes paid accordingly. There are some expenses one can claim, a CA should be able to guide you. Not sure why the Swiss comapny is paying taxes?. Are they depositing this with Income Tax, India, do they have a TAN Number. If yes, then you don't need to pay tax. But you need to get a statement from your company showing the tax paid on behalf of you. You can also verify the tax paid on your behalf via \"\"http://incometaxindia.gov.in/26ASTaxCreditStatement.asp\"\" you cna register. Alternatively if you have a Bank Account in India with a PAN card on their records, most Banks provide a link to directly see\"" }, { "docid": "519123", "title": "", "text": "\"I had been pondering this recently myself too. This question motivated me to do a little research. It appears that what happens is that (take a deep breath) the capital gain does push you into the next tax bracket, but the capital gain is always interpreted as the \"\"last\"\" income you received, so that if your non-capital-gains income is less than the threshold, it will all be taxed in the lower bracket, and only your capital gain will be taxed in the higher bracket (but it will be taxed at the capital-gains rate of that higher bracket). In short, a capital gain can only push capital gains into higher capital-gains tax brackets; it cannot push ordinary income into higher ordinary-income tax brackets. In addition, the amount of the capital gain is taxed in a marginal fashion, such that any portion of the gain that will \"\"fit\"\" into a lower bracket will be taxed at a lower level, with only the topmost portion of any gain being taxed at the top rate. This site is one claiming this: Will capital gain or dividend income push my other income into a higher tax bracket? No, the tax rates apply first to your “ordinary income” (income from sources other than long-term capital gains or qualifying dividends) so these items that are taxed at special rates won’t push your other income into a higher tax bracket. If my ordinary income puts me in the 15% tax bracket, can I receive an unlimited amount of long-term capital gain at the 0% rate? No, the 0% rate applies only to the amount of long-term capital gain and dividend income needed to “fill up” the 15% tax bracket. For example, if your ordinary income is $4,000 below the figure that would put you in the 25% bracket and you have a $10,000 long-term capital gain, you’ll pay 0% on $4,000 of your capital gain and 15% on the rest. There are several Bogleheads forum threads (here, here, here and here) that also touch on the same issue. The last of those links to the IRS capital gains worksheet. I traced through the logic and I believe it confirms this. Here's how it works: (In conclusion, we now know Mitt Romney's secret.)\"" }, { "docid": "336272", "title": "", "text": "1) Document that you held the bitcoins for more than one year. This should not be particularly difficult. Since you haven't moved the bitcoins, you hold the key to an address that has held them for more than one year. While this isn't absolute proof, it should be sufficient. 2) Since you can't document how you bought them easily, you can just assume a tax basis of zero. This will mean you will pay microscopically more in taxes, but don't worry about it. 3) Sign up with an exchange that can handle your sales. Coinbase will work if you want to sell it slowly. Gemini will work if you want to sell more quickly. 4) Get a decent, secure bitcoin wallet. Transfer the bitcoins to the exchange only as you're selling them. Make you first sale fairly small just in case something goes wrong. 5) Keep meticulous notes about each sale -- the date of the sale, the number of bitcoins you sold, and the number of dollars you got. 6) Make sure to keep enough money for taxes. In Michigan, 24.3% would be the highest possible tax rate you might have to pay if you sold a lot or had high income otherwise. 7) Either get a professional to file your taxes for you or learn how to correctly report long-term capital gains. You must report each individual sale. You may get audited or investigated, but there's nothing to find. The bitcoins have been in stasis for a long time, and it's completely plausible that you bought them and held them. If you can find any proof you bought them (such as a transfer to an exchange) that would be great, but it's not essential. Many people have this same story and unless you're connected to something illegal, you probably don't have anything to worry about. Congratulations! So thats my question, what steps do I need to take to declare this money and obtain it without getting arrested / investigated? There's nothing special you need to do other than keep very good documentation. When you file your taxes, you will need to declare each sale. (This answer assumes that you didn't have a lot of income last year and significantly less income this year. If that's the case, you may have to pay estimated taxes to avoid a penalty. But that penalty is very small and will be calculated by the IRS for you automatically. So I wouldn't worry about it.) You may wish to read up on gift taxes to understand how they work. You won't owe any, but you may need to file paperwork with the IRS if you give large gifts (over $14,000) to people and you will use up some of your lifetime exemption. Keep records of any gifts you give." }, { "docid": "203889", "title": "", "text": "We have a house here in India worth Rs. 2 Crores. We want to sell it and take money with us. Selling the house in India will attract Capital Gains Tax. Essentially the price at which you sell the property less of the property was purchased [or deemed value when inherited by you]. The difference is Capital Gains. You have to pay tax on this gains. This is currently at 10% without Indexation and 20% with Indexation. Please note if you hold these funds for more than an year, you would additionally be liable for Wealth tax at 1% above Rs 50 lacs. Can I gift this whole amount to my US Citizen Daughter or what is the maximum limit of Gift amount What will be the tax liability on me and on my Daughter in case of Gift Whether I have to show it in my Income Tax Return or in my Daughter's Tax Return. What US Income Tax Laws says. What will be the procedure to send money as Gift to my Daughter. Assuming you are still Indian citizen when to gift the funds; From Indian tax point of you there is no tax to you. As you daughter is US citizen, there is no gift tax to her. There is no limit in India or US. So you can effectively gift the entire amount without any taxes. If you transfer this after you become a US Resident [for tax purposes], then there is a limit of USD 14,000/- per year per recipient. Effective you can gift your daughter and son-in-law 14,000/- ea and your husband can do the same. Net 14,000 * 4 USD per year. Beyond this you either pay tax or declare this and deduct it from life time estate quota. Again there is no tax for your daughter. What are the routes to take money from India to US Will the money will go directly from my Bank Act.to my Daughter's Bank Account. Will there will be wire transfer from bank to bank Can I send money through other money sender Certified Companies also. The best way is via Bank to Bank transfer. A CA Certificate is required to certify that taxes have been paid on this funds being transferred. Under the liberalized remittance scheme in India, there is a limit of USD 1 Million per year for moving funds outside of India. So you can move around Rs 6-7 Crore a year." }, { "docid": "224667", "title": "", "text": "Sure; you can deposit cash. A few notes apply: Does the source of cash need to be declared ? If you deposit more than $10,000 in cash or other negotiable instruments, you'll be asked to complete a form called a Currency Transaction Report (here's the US Government's guidance for consumers about this form). There's some very important information in that guidance document about structuring, which is a fairly serious crime that you can commit if you break up your deposits to avoid reporting. Don't do this. The linked document gives examples. Also don't refuse to make your deposit and walk away when presented with a CTR form. In addition, you are also required to report to Customs and Border Protection when you bring more than $10,000 in or out of the country. If you are caught not doing so, the money may be seized and you could be prosecuted criminally. Many countries have similar requirements, often with different dollar amounts, so it's important to make sure you comply with their laws as well. The information from this reporting goes to the government and is used to enforce finance and tax laws, but there's nothing wrong or illegal about depositing cash as long as you don't evade the reporting requirements. You will not need to declare precisely where the cash comes from, but they will want the information required on the forms. Is it taxable ? Simply depositing cash into your bank account is not taxable. Receiving some forms of income, whether as cash or a bank deposit, is taxable. If you seem to have a large amount of unexplained cash income, it is possible an IRS audit will want an explanation from you as to where it comes from and why it isn't taxable. In short, if the income was taxable, you should have paid taxes on it whether or not you deposit it in a bank account. What is the limit of the deposit ? There is no government limit. An individual bank may have their own limit and/or may charge a fee for larger deposits. You could always call the bank and ask." }, { "docid": "235266", "title": "", "text": "In the general case if you have income coming in from a foreign source you need to declare it on your Canadian tax form, and nominally pay tax on it. However Canada has a tax agreement with the UK to ensure that you are not taxed twice. You also declare how much tax you have paid to the UK, and that is deducted from your Canadian tax bill. You may need to consult a tax professional, or maybe just read the Revenue Canada website to get the details. If you are holding this money for a friend, then you may find that this does not count as income to you. If you are getting it transferred to you in Canada, and then immediately passed on to your friend, it probably doesn't count as income (though again a tax professional will probably be helpful). This would mean you don't have to pay Canadian tax. But it's also a bummer because you've paid UK tax, which you might also have avoided, and you can't get that back without a lot of form filling. If this is going to be an ongoing situation, and the amount is significant, then you might look at getting your friend's money (and any you have in a UK account yourself) transferred to an offshore account, where UK tax is not automatically deducted. Most UK banks will do this for non-UK residents." }, { "docid": "162286", "title": "", "text": "\"By living in Sweden and having a Swedish personal identification number (personnummer), you are required to declare your entire worldwide income for tax purposes with the Swedish tax authorities, Skatteverket. It would seem to not make any difference if some of that income is kept outside of Sweden. A company that has no permanent base of operations within Sweden should not deduct any preliminary taxes for an employee that lives in Sweden. Rather, the employee should apply for \"\"special A tax\"\" (\"\"SA\"\" tax status), and pay the taxes that, had the company had a permanent base of operations in Sweden, the company would have paid. The information available on the tax authority's web site in English seems limited, but the relevant page in Swedish in your situation is very likely Lön från utländska arbetsgivare utan fast driftställe i Sverige. There is a summary at Paying taxes – for individuals. Particularly do note the summary section: When staying for at least six months, you are considered as resident in Sweden for tax purposes, and are liable for taxation in Sweden on all of your worldwide income. You must also file a Swedish income tax return. Your tax return must be filed no later than May 2nd of the year after the fiscal year. as well as that: If you stay in Sweden for a continuous period of at least six months you are considered to be resident in Sweden. /.../ As a resident you are liable for taxation in Sweden on all of your worldwide income. In some cases a tax treaty with with your ordinary country of residence may limit the Swedish taxation. /.../ For a more detailed answer, including which exact forms you need to fill out and what data is needed, I strongly recommend that you either contact Skatteverket (they are usually quite nice to deal with, and they tend to realize that everyone benefits from getting the tax paperwork and payments right from the beginning), or find an attorney specializing in Swedish tax law. They even point out themselves that (my emphasis): the practical applications of these rules are relatively complicated and for more information you can contact the Tax Information (“Skatteupplysningen”) at 0771 567 567.\"" }, { "docid": "512939", "title": "", "text": "You should check this with a tax accountant or tax preparation expert, but I encountered a similar situation in Canada. Your ISA income does count as income in a foreign country, and it is not tax exempt (the tax exemption is only because the British government specifically says so). You would need to declare the income to the foreign government who would almost certainly charge you tax on it. There are a couple of reasons why you should probably keep the funds in the ISA, especially if you are looking to return. First contribution limits are per year, so if you took the money out now you would have to use future contribution room to put it back. Second almost all UK savings accounts deduct tax at source, and its frankly a pain to get it back. Leaving the money in an ISA saves you that hassle, or the equal hassle of transferring it to an offshore account." }, { "docid": "274360", "title": "", "text": "No. Income inside an RRSP is sheltered from income tax until you withdraw it. That is, indeed, the major benefit of RRSPs. Note that you will eventually declare this as income. Consider the following case: - in 2015, you make $1000 in income. - in 2015, you contribute $100 to your RRSPs. You store this in an account that pays interest, rather than investing it in stocks, bonds, or mutual funds. - between 2015 and 2025, your money makes an additional $100 in interest. - in 2025, you are retired and pull out the entire amount in your RRSP, i.e. $200. Now, between 2015 and 2025, you did not declare the income from interest. You'd have had to do this if the money was in a regular bank account (instead of an RRSP or a TFSA). Indeed, your bank would have issued tax forms in that case. But you don't report income sheltered in an RRSP. This is good, as it increases the power of compounding. In 2015, you pay tax on only $900 rather than the full $1000. In 2025, you pull out the entire $200. You report all $200 as income (or, actually, as a withdrawal from your RRSP, but it's the same thing). You pay tax on the initial $100 investment (which you did not do in 2015), and you also pay tax on the $100 that your investment has made (and which you are now pulling out). The hope is that your income is now lower, as you are retired. So you'll end up paying less income tax. Plus, your investment has had many years of opportunity to compound, tax-free. TL;DNR: You don't pay tax on, or report gains in, an RRSP account. The bank or investment house won't even issue tax forms, not until you withdraw the money." }, { "docid": "484375", "title": "", "text": "\"DirectGov has a good overview here: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017814 and answers to your specific questions here: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10013435 In short, you do need to declare the rental income on your tax return and will need to pay tax on it (and note that only the mortgage interest (not the full repayment) is deductible as an \"\"allowable expense\"\", see the full list of what is deductible here: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10014027 ).\"" }, { "docid": "283459", "title": "", "text": "\"Please declare everything you earn in India as well as the total amount of assets (it's called FBAR). The penalties for not declaring is jail time no matter how small the amount (and lots of ordinary people every 2-3 years are regularly sent to jail for not declaring such income). It's taken very seriously by the IRS - and any Indian bank who has an office in the US or does business here, can be asked by IRS to provide any bank account details for you. You will get deductions for taxes already paid to a foreign country due to double taxation, so there won't be any additional taxes because income taxes in US are on par or even lower than that in India. Using tricks (like transferring ownership to your brother) may not be worth it. Note: you pay taxes only when you realize gains anyway - both in India or here, so why do you want to take such hassles. If you transfer to your brother, it will be taxed only until you hold them. Make sure you have exact dates of gains between the date you came to US and the date you \"\"gifted\"\" to your brother. As long as you clearly document that the stocks transferred to your brother was a gift and you have no more claims on them, it should be ok, but best to consult a CPA in the US. If you have claims on them, example agreement that you will repurchase them, then you will still continue to pay taxes. If you sell your real estate investments in India, you have to pay tax on the gains in the US (and you need proof of the original buying cost and your sale). If you have paid taxes on the real estate gains in India, then you can get deduction due to double tax avoidance treaty. No issues in bringing over the capital from India to US.\"" }, { "docid": "417769", "title": "", "text": "How do I directly get my Freelancing amount in my Axis bank account? Do I need to inform my Bank before receiving any such payment? Yes you can get it directly into your Axis Bank Account. You would need to inform your client your Bank Account Number, Bank Name and Address and Swift BIC or IFSC Code [Axis Bank website or Branch can tell you]. You can receive credits in Euro's. Upon receipt Axis Bank will automatically convert this into Rupees using standard rate. Your Bank [Axis] may also charge some Bank fees for the wire transfer. How do I pay tax for this extra income in India? You would need to treat this as income and add it to total income including salary and calculate tax accordingly. You can pay taxes online using Income Tax India website. You can also approach a CA who would do the tax computation, paying taxes and filing returns for as little as Rs 1000 - 2000/- Edit: IBAN is International Bank Account Number. Explain to you client that India does not subscribe to IBAN. Its right now only used by Europe and Australia. Give you normal Bank Account Number. Please call up your Bank / walk into your Branch to get the SWIFT BIC. It will be something like this http://www.theswiftcodes.com/india/page/3/" } ]

[ { "docid": "587192", "title": "", "text": "If you're under age 55 and in good health generally you cannot withdraw your funds from super and your super fund cannot provide you with any financial assistance eg lend you money. However, for a very small percentage of people with unrestricted non preserved superannuation components ( check your statement most people's superannuation is 'preserved'which means they cannot access it until they meet a 'condition of release')they may withdraw their super benefits upto the unrestricted non preserved amount. For healthy (& able) persons aged 55 and over they may access their super under the following conditions: I can understand your frustration of having your money compulsory tied up in superannuation especially given the poor investment returns of the past 5 years. However, superannuation may be more flexible than you realize, I am an adviser at Grant Thornton and I am constantly telling clients that superannuation is not an invest but it the most tax effective long term savings vehicle available to Australians for their investment savings eg max 15% tax on income and capital gains if held for a year are taxed at 10%. If you're not happy with your investment returns you may like to seek some advice or,set up your own super fund - a self managed super fund where you can invest a wide variety of assets; shares, managed funds,cash, term deposits, property( your super fund can even borrow to help acquire the property) I hope this helps" } ]

[ { "docid": "510736", "title": "", "text": "If your savings account linked to the mortgage account is an 100% offset account then you don't need to put extra funds into the mortgage account apart from the minimum payments which is done automatically. Any funds you have in an 100% offset acount reduces the amount of interest you have to pay on the mortgage. So if your mortgage is $100,000 and you have $10,000 in the offset account then you only pay interest on $90,000 within the mortgage. Also the funds in the offset account are at call any time as it is simply a savings account. You can have all your pay go into it and have direct debits set up for all your bills. This way you will benefit from maximising the amounts in your offset account and reducing the amount of interest you pay on your mortgage. If your current linked savings account is not an 100% offset account ask your bank if you can change it over to one that is. If they don't have offset accounts for that particular mortgage account ask them if they have a different mortgage account with offset accounts. If they can't help you then shop arround for a bank or lender that does. I am currently with ANZ and they have a product with 100% offset account and about 0.7% below the standard variable rate, and there are plenty more similar products out there." }, { "docid": "211810", "title": "", "text": "https://personal.vanguard.com/pub/Pdf/sai059.pdf?2210128720 your colleague's right. *The Agreement provides that the Funds will not contribute to Vanguard’s capitalization or pay for corporate management, administrative, and distribution services provided by Vanguard. However, each Fund will bear its own direct expenses, such as legal, auditing, and custodial fees. In addition, the Agreement further provides that the Funds’ direct expenses will be offset, in whole or in part, by a reimbursement from Vanguard for (1) the Funds’ contributions to the cost of operating the underlying Vanguard funds in which the Funds invest and (2) certain savings in administrative and marketing costs that Vanguard expects to derive from the Funds’ operations.* **The Funds expect that the reimbursements should be sufficient to offset most or all of the direct expenses incurred by each Fund.** *Therefore, the Funds are expected to operate at a very low—or zero—direct expense ratio. Of course, there is no guarantee that this will always be the case. Although the Funds are not expected to incur any net expenses directly, the Funds’ shareholders indirectly bear the expenses of the underlying Vanguard funds.* It's basically a gamble..." }, { "docid": "114679", "title": "", "text": "Assuming neither one charges a fee and you are talking about automated non-cash, non-check transactions: Withdrawal is slightly better if you are 100% sure you have the money (or better yet, twice the money) to cover it. It puts more incentive on the bank that is responsible for the act to do it correctly, because they will then be the bank holding the money. It also creates an added check because there is no possibility of having an error in transfer information result in sending your money to the wrong account. (This is unlikely anyway, but not impossible depending on the bank and interface). Deposit may be slightly better if you are not, or if you are concerned about technical foul-ups at the bank. Depending on the bank, a deposit with insufficient funds may be cancelled rather than going through and then being cancelled, which could result in various banking fees (returned item fees, overdraft fees, etc...). If there is a technical foul-up during a withdrawal, you run the risk of having banks get confused--I know of a case where it took a major bank months to fix a withdrawal transaction that was denied the second time when they activated it twice, but the account balance mistakenly showed an extra thousand dollars for the duration." }, { "docid": "93828", "title": "", "text": "You can make a start to learn how to make better investing decisions by learning and understanding what your current super funds are invested in. Does the super fund give you choices of where you can invest your funds, and how often does it allow you to change your investment choices each year? If you are interested in one area of investing over others, eg property or shares, then you should learn more on this subject, as you can also start investing outside of superannuation. Your funds in superannuation are taxed less but you are unable to touch them for another 30 to 35 years. You also need to consider investing outside super to help meet your more medium term goals and grow your wealth outside of super as well. If you are interested in shares then I believe you should learn about both fundamental and technical analysis, they can help you to make wiser decisions about what to invest in and when to invest. Above is a chart of the ASX200 over the last 20 years until January 2015. It shows the Rate Of Change (ROC) indicator below the chart. This can be used to make medium to long term decisions in the stock market by investing when the ROC is above zero and getting out of the market when the ROC is below zero. Regarding your aggressiveness in your investments, most would say that yes because you are still young you should be aggressive because you have time on your side, so if there is a downturn in your investments then you still have plenty of time for them to recover. I have a different view, and I will use the stock market as an example. Refer back to the chart above, I would be more aggressive when the ROC is above zero and less aggressive when the ROC is below zero. How can you relate this to your super fund? If it does provide you to change your investment choices, then I would be invested in more aggressive investments like shares when the ROC crosses above zero, and then when the ROC moves below zero take a less aggressive approach by moving your investments in the super fund to a more balanced or capital guaranteed strategy where less of your funds are invested in shares and more are invested in bonds and cash. You can also have a similar approach with property. Learn about the property cycles (remember super funds usually invest in commercial and industrial property rather than houses, so you would need to learn about the commercial and industrial property cycles which would be different to the residential property cycle). Regarding your question about SMSFs, if you can increase your knowledge and skills in investing, then yes switching to a SMSF will give you more control and possibly better returns. However, I would avoid switching your funds to a SMSF right now. Two reasons, firstly you would want to increase your knowledge as mentioned above, and secondly you would want to have at least $300,000 in funds before switching to a SMSF or else the setup and compliance costs would be too high as a percentage of your funds at the moment ($70,000). You do have time on your side, so whilst you are increasing your funds you can use that time to educate yourself in your areas of interest. And remember a SMSF is not only an investment vehicle whilst you are building your funds during your working life, but it is also an investment vehicle when you are retired and it becomes totally tax free during this phase, where any investment returns are tax free and any income you take out is also tax free." }, { "docid": "137736", "title": "", "text": "\"A great deal of analysis on this question relies on misunderstandings of the market or noticing trends that happened at the same time but were not caused by each other. Without knowing your view, I'll just give the basic idea. The amount of active management is self-correcting. The reason people have moved out of actively managed funds is that the funds have not been performing well. Their objective is to beat their benchmarks by profiting as they correct mispricing. They are performing poorly because there is too much money chasing too few mispricings. That is why the actively managed industry is shrinking. If it gets small enough, presumably those opportunities will become more abundant and mispricing correction will become more profitable. Then money will flow back into active funds. Relevant active management may not be what a lay person is thinking of. At the retail level, we are observing a shift to passive funds, but there is still plenty of money in other places. For example, pension and endowment funds normally have an objective of beating a market benchmark like the Russell 3000. As a result they are constantly trying to find opportunities to invest in active management that really can outperform. They represent a great deal of money and are nothing like the \"\"buy and forget\"\" stereotype we sometimes imagine. Moreover, hedge funds and propreitary trading shops explicitly and solely try to correct mispricings. They represent a very, very large bucket of money that is not shrinking. Active retail mutual funds and individual investors are not as relevant for pricing as we might think. More trading volume is not necessarily a good thing, nor is it the measure of market quality. One argument against passive funds is that passive funds don't trade much. Yet the volume of trading in the markets has risen dramatically over time as a result of technological improvements (algorithmic traders, mostly). They have out-competed certain market makers who used to make money on inefficiencies of the market. Is this a good thing or a bad thing? Well, prices are more efficient now and it appears that these computers are more responsive to price-relevant information than people used to be. So even if trading volume does decrease, I see no reason to worry that prices will become less efficient. That's not the direction things have gone, even as passive investing has boomed. Overall, worries about passive investing rely on an assumption that there is not enough interest in and resources for making arbitrage profits to keep prices efficient. This is highly counterfactual and always will be. As long as people and institutions want money and have access to the markets, there will be plenty of resources allocated to price correction.\"" }, { "docid": "440805", "title": "", "text": "\"Who are the losers going to be? If you can tell me for certain which firms will do worst in a bear market and can time it so that this information is not already priced into the market then you can make money. If not don't try. In a bull market stocks tend to act \"\"normally\"\" with established patterns such as correlations acting as expected and stocks more or less pricing to their fundamentals. In a bear market fear tends to overrule all of those things. You get large drops on relatively minor bad news and modest rallies on even the best news which results in stocks being undervalued against their fundamentals. In the crash itself it is quite easy to make money shorting. In an environment where stocks are undervalued, such as a bear market, you run the risk that your short, no matter how sure you are that the stock will fall, is seen as being undervalued and will rise. In fact your selling of a \"\"losing\"\" stock might cause it to hit levels where value investors already have limits set. This could bring a LOT of buyers into the market. Due to the fact that correlations break down creating portfolios with the correct risk level, which is what funds are required to do not only by their contracts but also by law to an extent, is extremely difficult. Risk management (keeping all kinds to within certain bounds) is one of the most difficult parts of a manager's job and is even difficult in abnormal market conditions. In the long run (definitions may vary) stock prices in general go up (for those companies who aren't bankrupted at least) so shorting in a bear market is not a long term strategy either and will not produce long term returns on capital. In addition to this risk you run the risk that your counterparty (such as Lehman brothers?) will file for bankruptcy and you won't be able to cover the position before the lender wants you to repay their stock to them landing you in even more problems.\"" }, { "docid": "96423", "title": "", "text": "Loving the discussion. I can't argue that new areas of the economy will open up and allow for some offset for those jobs lost through increasing productivity/efficiency, but I have a hard time believing that they can fully offset, but certainly anything is possible. Do you think that this push toward self employment can happen as fast as losses due to automation, or will there be some lag time? That lag time is where we (as a society) will feel massive pain, which, I argue is at least part of what we've been seeing in the last few years." }, { "docid": "307999", "title": "", "text": "For a lot of info on different funds, fees, average returns, etc, see this site. (Not all sections are free - but areas like Best of the Rest are, and they offer good basic starting info.) I think for getting further into the nitty-gritty, for example if a fund is socially responsible, you will need to go to the individual fund sites or read reviews - although sites like Morningstar may help. However, a few funds like this are: HESTA, Cruelty Free Super, and VicSuper (I'm with the latter). It might be useful to check out their sites to orient yourself to the Aussie approach to this issue, and then start searching more broadly from there. And for what it's worth, for a general overview of the Superannuation system, and some nice-to-know info, see this page on the Oz govt website." }, { "docid": "162630", "title": "", "text": "Firstly if you've formed a limited company you don't need to register as self-employed. You're an employee and shareholder of the company and your taxes will be handled that way. Registering as self-employed is only necessary if you're operating as a sole trader (i.e. without a company). Secondly you absolutely do want to get set-up correctly with HMRC as soon as possible, whether you're a company or a sole trader. Ignoring the legal question your worry about paying taxes when you have no income is groundless - if you're not making any money there won't be any tax to pay. Furthermore it seems likely that the business is currently losing money. Those losses, if correctly recorded, can be carried forward and offset against future profits so not only do you not have to pay tax now, but you can reduce the tax you pay later when the money does start rolling in." }, { "docid": "576097", "title": "", "text": "Well, I am an investor/ Lessor under DHA properties. Oflate, DHA lost it identity as a Govt agency and try to imitate a worst (not the best) real eastate agent. Every year rental valuation is a drama or waste of time and money to lessor. They pull down the rent by 10 to 22% and ask for a secondary valuation for no reasons. They don't even agree with market evidence and start bullying or black mailing tactics to force you to aceept a below market rent or the threat of third review , a very expensive review shared 50% by lessor and rest the poor tax payers! The thir review also badly influenced by DHA by submitting biased valuations and thereby destroying the independence of valuation. The API appointed valuer neither follow the DHA gudie nor the API guide and also ignore the market reality and take the average rent for the area. You also losse 14 to 18% as management fees paid to DHA. Selling also a problem and its high time the CWG and the Minster in charge of the DHA must institute an independent investigation to expose the potential nexus between the valuers and the DHA and how the lessor (a self funded retiree, pensioners and others). I already lodged a complaint with Ombudsman and waiting for a reply. There are 14 Lessors all in a Private street (Only DHA leased property in that street) near 213 Ray rd Epping 2121 that are leased to DHA for more than 10 years. Please note most of those Lessors almost lost $10000 per year because DHA under cut the rent to them when they paid me the market rent for many years. DHA by mistake send the rent paid to all. We have called for the details of rent paid to all the 14 lessors in that private street from 2008 todate under the Freedom of Information Act and waiting." }, { "docid": "255329", "title": "", "text": "You cannot do this as per the reasons mentioned by others above, mainly foreign banks cannot hold mortgages over properties in other countries. If this was possible to do, don't you think many others would be applying overseas for mortgages and loans. And even if it was possible the overseas bank would give you a comparative rate to compete with the rates already offered in Australia (to compensate with the extra risks). If you cannot afford to purchase a property at record low rates of below 5% in Australia, then you may want to re-think your strategy." }, { "docid": "224746", "title": "", "text": "&gt;when by definition, you are being paid less than your labour If that were true then why wouldnt the worker just work for themselves? They would make more or at least the same amount and not have to deal with their bosses bossing them around. The fact is that the worker is made more productive through the use of the entrpeneur's resources and business model structure. If there were no extra benefit to the worker in taking the job then they wouldnt take it, just like if the employer did not recieve an added benefit above and beyond what they were paying the worker, they wouldnt hire them. Extra value is created in the two voluntarily working together. No one is being generous or agreeing to the arrangement out of the goodness of their heart. They are both acting in their self interest and they are both benefitting." }, { "docid": "434201", "title": "", "text": "\"Been here in Japan 12 years mate, and you're right, the investment options here suck. Be very wary of them, they will take all your money in outrageous fees--3% in and 3% out of some \"\"investment\"\" options. It's a scam. Send the money back home and manage it there. I recommend setting up a Vanguard account back in the UK, then you can invest in Vanguard index funds. Vanguard charges no commission for buying and selling their funds when you have a Vanguard account. I have nearly all my money there (Vanguard US), and I use the free Personal Capital online software to understand how to best manage the allocations in my portfolio. Of course you'll lose a bit of money on wire transfer fees, but you'll more than make up for it if in the long-term, and they may also be offset by currency rate anyway (right now the yen is strong, so a good time to use it to buy GBP). Also you may never need to send the money back to Japan unless you plan on retiring here.\"" }, { "docid": "443960", "title": "", "text": "\"Even though this isn't really personal finance related I still feel like there are some misconceptions here that could be addressed. I don't know where you got the phrase \"\"pass-through\"\" insurance from. What you're describing is a self-funded plan. In a self-funded arrangement an employer contracts a third-party-administrator (TPA), usually one of the big health insurance carriers, to use it's provider network, process and adjudicate claims, etc. In addition to the TPA there will be some sort of stop-loss insurance coverage on each participant. Stop-loss coverage usually provides a maximum amount of risk on a given member and on the entire population for a given month and/or year and/or lifetime. The employer's risk is in between the plan deductible and the stop loss coverage (assuming the stop-loss doesn't have a maximum). Almost all of the claim dollars in a given plan will come from very very few people. These costs typically arise out of very unforeseen diagnoses not chronic issues. A cancer patient can easily cost $1,000,000 in a year. Someone's diabetes maintenance medicine or other chronic maintenance will cost no where near what a botched surgery will in a year. If we take a step back there are really four categories of employer insurance. Small group is tightly regulated. Usually plan premiums are filed with a state authority, there is no negotiating, your group's underwriting performance has zero impact on your premiums. Employers have no way of obtaining any medical/claim information on employees. Mid-market is a pooled arrangement. The overall pool has a total increase, and your particular group performs better or worse than the pool which may impact premiums. Employers get very minor claims data, things like the few highest claims, or number of claims over a certain threshold, but no employee specific information. Large-group is a mostly unpooled arrangement. Generally your group receives it's own rating based on its individual underwriting performance. In general the carrier is offloading some risk to a stop-loss carrier and employer's get a fair amount of insight in to claims, though again, not with employee names. Self-funded is obviously self-contained. The employer sets up a claims checking account. The TPA has draft authority on the account. The employee's typically have no idea the plan is self funded, their ID cards will have the carrier logo, and the carrier deals with them just as it would any other member. Generally when a company is this size it has a separate benefits committee, those few people will have some level of insight in to claims performance and stop-loss activity. This committee will have nothing to do with the hiring process. There are some new partially self-funded arrangements, which is just a really low-threshold (and relatively expensive) stop-loss program, that's becoming somewhat popular in the mid-market group size as employers attempt to reduce medical spend. I think when you start thinking on a micro, single employee level, you really lose sight of the big picture. Why would an employer hire this guy who has this disease/chronic problem that costs $50,000 per year? And logically you can get to the conclusion that with a self-funded plan it literally costs the company the money so the company has an incentive not to hire the person. I understand the logic of the argument, but at the self funded level the plan is typically costing north of half a million dollars each month. So a mid-level HR hiring manager 1. isn't aware of specific plan claims or costs and is not part of the benefits executive committee, 2. won't be instructed to screen for health deficiencies because it's against the law, 3. a company generally won't test the water here because $50,000 per year is less than 1% of the company's annual medical expenses, 4. $50,000 is well below the cost to litigate a discrimination law-suit. Really the flaw in your thought process is that $50,000 in annual medical expense is a lot. A harsh child-birth can run in the $250,000 range, so these companies never hire women? Or never hire men who could add a spouse who's in child bearing years? Or never hire women who might have a female spouse who could be in child bearing years? A leukemia diagnosis will ratchet up $1,000,000 in a year. Spend a bit of time in intensive care for $25,000 per day and you're fired? A few thousand bucks on diabetes meds isn't anything relative to the annual cost of your average self-funded plan. The second flaw is that the hiring managers get insight in to specific claims. They don't. Third, you don't hand over medical records on your resume anyway. I typed this out in one single draft and have no intention of editing anything. I just wanted paint a broad picture, I'm sure things can be nit-picked or focused on.\"" }, { "docid": "146281", "title": "", "text": "The Direct Selling Association (DSA) is an autonomous and self-regulatory body that deals with the direct selling business organizations. The Association acts as a bridge between the direct selling industry as well as policy-making bodies of Indian Government. It works for the cause of Direct Selling Industry. The DSA also tries to create a favorable environment for the growth and expansion of direct selling industry." }, { "docid": "164044", "title": "", "text": "\"Assuming no constraints on how much you can move (or how frequently) into and out of your offset mortgage account, the question becomes one of what rate of return you expect from your long-term savings/emergency cash fund. The rate you are getting from the offset mortgage account is known; since it reduces the principal amount owing and thus reduces interest charges, the return is the mortgage rate (though I would not be surprised if the offset mortgage account contract has bells and whistles reducing the effective rate, saying something like 3 pounds reduction of principal for every 5 pounds you put in). So, as a movie character once said, \"\"Do you feel lucky today?\"\" If so, move money from your offset mortgage account to savings, and earn more. If not, move money in the opposite direction. A \"\"guaranteed\"\" 2% return on the offset mortgage account might be better than taking a risk on the vagaries of the stock market, and even the possibility of loss in your long term savings account.\"" }, { "docid": "390744", "title": "", "text": "\"I don't think you've mentioned which State you're in. Here in Ontario, a person who is financially incapable can have their financial responsibility and authority removed, and assigned to a trustee. The trustee might be a responsible next of kin (as her ex, you would appear unsuitable: that being a potential conflict of interest); otherwise, it can be the Public Guardian and Trustee. It that happens, then the trustee handles the money; and handles/makes any contracts on behalf of (in the name of) the incapable person. The incapable person might have income (e.g. spousal support payments) and money (e.g. bank accounts), which the trustee can document in order to demonstrate credit-worthiness (or at least solvency). For the time being, the kids see it as an adventure, but I suspect, it will get old very fast. I hope you have a counsellor to talk with about your personal relationships (I've had or tried several and at least one has been extraordinarily helpful). You're not actually expressing a worry about the children being abused or neglected. :/ Is your motive (for asking) that you want her to have a place, so that the children will like it (being there) better? As long as your kids see it as an adventure, perhaps you can be happy for them. Perhaps (I don't know: depending on the people) too it's a good (or at least a better) thing that they are visiting with friends and relatives; and, a better conversational topic with those people might be how they show your children a good time (instead of your ex's money). One possible way I thought of co-signing is if a portion of child/spousal support goes directly to the landlord. I asked the Child Support Services (who deduct money from my paycheck monthly to pay support to my ex) and they told me that they are not authorized to do this. Perhaps (I don't know) there is some way to do that, if you have your ex's cooperation and a lawyer (and perhaps a judge). You haven't said what portions of your payments are for Child support, versus Spousal support (nor, who has custody, etc). If a large part of the support is for the children, then perhaps the children can rent the place. (/wild idea) Note that, in Ontario, there are two trusteeship decisions to make: 1) financial; and 2) personal care, which includes housing and medical. Someone can retain their own 'self-care' authority even if they're judged financially incapable (or vice versa if there's a personal-care or medical decision which they cannot understand). The technical language is, \"\"Mentally Incapable of Managing Property\"\" This term applies to a person who is unable to understand information that is relevant to making a decision or is unable to appreciate the reasonably foreseeable consequences of a decision or lack of decision about his or her property. Processes for certifying an individual as being mentally incapable of managing property are prescribed in the SDA (Substitute Decisions Act), and in the Mental Health Act.\"\" The Mental Heath Act is for medical emergencies (only); but Ontario has a Substitute Decisions Act as well. An intent of the law is to protect vulnerable people. People may also acquire and/or name their own trustee and/or guardian voluntarily: via a power of attorney, a living will, etc. I don't know: how about offering the landlord a year's rent in advance, or in trust? I guess that 1) a court order can determine/override/guarantee the way in which the child support payments are directed 2) it's easier to get that order/agreement if you and your ex cooperate 3) there are housing specialists in your neighborhood: They can buy housing instead of renting it. Or be given (gifted) housing to live in.\"" }, { "docid": "195113", "title": "", "text": "\"I think you came up with a worthy Masters/PhD research project, it is a great question. This is in Australia so it is difficult for me to have complete perspective. However, I can speak about the US of A. To your first point relatively few people inherit their wealth. According to a brief web search about 38% of billionaires, and 20% of millionaires inherited their wealth. The rest are self-made. Again, in the US, income mobility is very common. Some act like high level earners are just born that way, but studies have shown that a great deal of income mobility exists. I personally know people that have grown up without indoor plumbing, and extremely poor but now earn in the top 5% of wage earners. Quid's points are valid. For example a Starbucks, new I-Phone, and a brake job on your car are somewhat catastrophic if your income is 50K/year, hurts if your income is 100K, and an inconvenience if you make 250K/year. These situations are normal and happen regularly. The first person may have to take a pay day loan to pay for these items, the second credit card interest, the third probably has the money in the bank. All of this exaggerates the effect of an \"\"emergency\"\" on one's net worth. To me there is also a chicken-and-egg effect in wealth building and income. How does one build wealth? By investing wisely, planning ahead, budgeting, delaying gratification, finding opportunities, etc... Now if you take those same skills to your workplace isn't it likely you will receive more responsibility, promotions and raises? I believe so. And this too exaggerates the effect on one's net worth. If investing helps you to earn more, then you will have more to invest. To me one of the untold stories of this graph is not just investing, but first building a stable financial base. Having a sufficient emergency fund, having enough and the right kind of insurance, keeping loans to a minimum. Without doing those things first investments might need to be withdrawn, often at an inopportune time, for emergency purposes. Thanks for asking this!\"" }, { "docid": "158396", "title": "", "text": "\"This is the best tl;dr I could make, [original](https://www.bloomberg.com/news/articles/2017-09-26/mike-novogratz-is-set-for-comeback-with-crytocurrency-hedge-fund) reduced by 92%. (I'm a bot) ***** &gt; Novogratz will put up $150 million of his own money and plans to raise $350 million more by January, mainly from family offices, wealthy individuals and fellow hedge fund managers, said a person familiar with his plans. &gt; For Novogratz, 52, the fund marks a comeback to professional money management after humbling losses at Fortress and almost two years of self-imposed exile from Wall Street. &gt; With a $500 million hedge fund, Novogratz will be able to capture trading opportunities that require more scale, as well as wield influence with developers, entrepreneurs and regulators. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/72ofsc/mike_novogratz_is_forming_a_500mil_crypto_hedge/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~217166 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **Novogratz**^#1 **fund**^#2 **trade**^#3 **bitcoin**^#4 **way**^#5\"" } ]

[ { "docid": "207285", "title": "", "text": "You can set up a Self Managed Super Fund (SMSF) and use it to buy residential investment property, and as Justin has mentioned even borrow to acquire the investment property through the SMSF. However, you cannot hold your home in the SMSF, as this would be classed as an in-house asset, and you are only allowed to hold a maximum of 5% of the total market value of SMSF as in-house assets. Furthermore, as you already own your house, you are not allowed to transfer residential property into a SMSF from a related party, even if done at current market value (you are allowed to transfer business real property from a related party at current market value). Regarding loans, you are not allowed to lend money from your SMSF to a related party as well." } ]

[ { "docid": "338943", "title": "", "text": "Yes you can't simply withdraw your super until you are aged 60 (and that may go up slightly on Budget night 13/05/14). But you can roll it over into a SMSF where you decide where you invest your super funds. However, I would advise against you starting a SMSF at this early age with a very small super fund account. The Admin. and audit fees would eat your super account up in one year. It is recommended that you have at least $300,000 to $400,000 in super fund assets before starting a SMSF to make the fees competitive and efficient. Now if you are with a partner and start a SMSF together, then it is your combined funds that need to be over the $300K mark (a SMSF can have between 1 to 4 members). The cheapest fund I could find was First State Super. The fees are $52 + 0.64% per year (for the High Growth option). So for a balance of $1000 you would pay $58.40 or 5.84% per year. The High Growth Investment Option has returned 18.4% over the last year, 12.7% pa over the last 5 years, and 8.2% pa over the last 10 years (which includes the period covering the GFC). So even with a small balance of $1000 your super investment will still continue to grow. If you could slowly grow your super account to $2000 your fees would be $64.80 or 3.24%, and at $3000 balance your fees would be $71.20 or 2.37%. The great thing about super is the tax advantages. You may be complaining now about fees on a small balance, and yes you should try to minimise these fees, not only when you have a small balance but also when your balance is larger, but the tax advantages available through superannuation will really come into play when you are on a high income paying the tax at or near the highest marginal tax rate. Compare the top marginal tax rate (plus Medicare Levy) at 46.5% compared to the tax rate of 15% on super contributions and investment returns. And it gets better, when you retire and take a pension or lump sum from your super after age 60 you pay zero tax on the income stream or lump sum. and you also pay zero tax on any ongoing investment returns in your super. The benefits of superannuation are numerous, and the best way to reduce your fees for now is to find a fund with lowest fees, try to increase your balance so your percentage fees go down, and try to consolidate all your super funds into the one with the lowest fees, if you have more than one super fund." }, { "docid": "557300", "title": "", "text": "Saving for retirement and actually retiring are 2 different things. It is always a good idea to keep some money away that you can't easily use. This allows you to create a large amount that acts as buffer for rainy day. Most countries have a special account to save for retirements, apart from giving tax benefits and effect of compounding, there are also laws that protect it from getting attached in case of default. For example if you at some point in time default on an obligation, the funds in normal savings account can be attached by court of law. However in certain countries funds in retirement account cannot be attached by court of law for your obligations. Thus always leaving you with funds." }, { "docid": "543874", "title": "", "text": "\"common sentiment that no investor can consistently beat the market on returns. I guess its more like very few investor can beat the market, a vast Majority cannot / do not. What evidence exists for or against this? Obviously we can have a comparison of all investors. If we start taking a look at some of the Actively Managed Funds. Given that Fund Managers are experts compared to common individual investors, if we compare this, we can potentially extend it more generically to others. Most funds beat the markets for few years, as you keep increasing the timeline, i.e. try seeing 10 year 15 year 20 year return; this is easy the data is available, you would realize that no fund consistently beat the index. Few years quite good, few years quite bad. On Average most funds were below market returns especially if one compares on longer terms or 10 - 20 years. Hence the perception Of course we all know Warren Buffet has beat the market by leaps and bounds. After the initial success, people like Warren Buffet develop the power of \"\"Self Fulfilling Prophecy\"\". There would be many other individuals.\"" }, { "docid": "390744", "title": "", "text": "\"I don't think you've mentioned which State you're in. Here in Ontario, a person who is financially incapable can have their financial responsibility and authority removed, and assigned to a trustee. The trustee might be a responsible next of kin (as her ex, you would appear unsuitable: that being a potential conflict of interest); otherwise, it can be the Public Guardian and Trustee. It that happens, then the trustee handles the money; and handles/makes any contracts on behalf of (in the name of) the incapable person. The incapable person might have income (e.g. spousal support payments) and money (e.g. bank accounts), which the trustee can document in order to demonstrate credit-worthiness (or at least solvency). For the time being, the kids see it as an adventure, but I suspect, it will get old very fast. I hope you have a counsellor to talk with about your personal relationships (I've had or tried several and at least one has been extraordinarily helpful). You're not actually expressing a worry about the children being abused or neglected. :/ Is your motive (for asking) that you want her to have a place, so that the children will like it (being there) better? As long as your kids see it as an adventure, perhaps you can be happy for them. Perhaps (I don't know: depending on the people) too it's a good (or at least a better) thing that they are visiting with friends and relatives; and, a better conversational topic with those people might be how they show your children a good time (instead of your ex's money). One possible way I thought of co-signing is if a portion of child/spousal support goes directly to the landlord. I asked the Child Support Services (who deduct money from my paycheck monthly to pay support to my ex) and they told me that they are not authorized to do this. Perhaps (I don't know) there is some way to do that, if you have your ex's cooperation and a lawyer (and perhaps a judge). You haven't said what portions of your payments are for Child support, versus Spousal support (nor, who has custody, etc). If a large part of the support is for the children, then perhaps the children can rent the place. (/wild idea) Note that, in Ontario, there are two trusteeship decisions to make: 1) financial; and 2) personal care, which includes housing and medical. Someone can retain their own 'self-care' authority even if they're judged financially incapable (or vice versa if there's a personal-care or medical decision which they cannot understand). The technical language is, \"\"Mentally Incapable of Managing Property\"\" This term applies to a person who is unable to understand information that is relevant to making a decision or is unable to appreciate the reasonably foreseeable consequences of a decision or lack of decision about his or her property. Processes for certifying an individual as being mentally incapable of managing property are prescribed in the SDA (Substitute Decisions Act), and in the Mental Health Act.\"\" The Mental Heath Act is for medical emergencies (only); but Ontario has a Substitute Decisions Act as well. An intent of the law is to protect vulnerable people. People may also acquire and/or name their own trustee and/or guardian voluntarily: via a power of attorney, a living will, etc. I don't know: how about offering the landlord a year's rent in advance, or in trust? I guess that 1) a court order can determine/override/guarantee the way in which the child support payments are directed 2) it's easier to get that order/agreement if you and your ex cooperate 3) there are housing specialists in your neighborhood: They can buy housing instead of renting it. Or be given (gifted) housing to live in.\"" }, { "docid": "272173", "title": "", "text": "Assuming you are Indian Citizen / Resident for Tax purposes. Your friend in US Citizen / Resident for tax purposes. As you are borrowing these funds and returning, this would NOT be treated as Gift but as Loan. Ensure that you have the right documentation in place. There is no tax when you receive the funds/loan or rebate when you pay back the loan. From India FEMA (Foreign Exchange Management Act) point of view, if you take loan from friends, you cannot by default repatriate funds. You have to take special permission to repatriate the funds out of India." }, { "docid": "277", "title": "", "text": "My super fund and I would say many other funds give you one free switch of strategies per year. Some suggest you should change from high growth option to a more balance option once you are say about 10 to 15 years from retirement, and then change to a more capital guaranteed option a few years from retirement. This is a more passive approach and has benefits as well as disadvantages. The benefit is that there is not much work involved, you just change your investment option based on your life stage, 2 to 3 times during your lifetime. This allows you to take more risk when you are young to aim for higher returns, take a balanced approach with moderate risk and returns during the middle part of your working life, and take less risk with lower returns (above inflation) during the latter part of your working life. A possible disadvantage of this strategy is you may be in the higher risk/ higher growth option during a market correction and then change to a more balanced option just when the market starts to pick up again. So your funds will be hit with large losses whilst the market is in retreat and just when things look to be getting better you change to a more balanced portfolio and miss out on the big gains. A second more active approach would be to track the market and change investment option as the market changes. One approach which shouldn't take much time is to track the index such as the ASX200 (if you investment option is mainly invested in the Australian stock market) with a 200 day Simple Moving Average (SMA). The concept is that if the index crosses above the 200 day SMA the market is bullish and if it crosses below it is bearish. See the chart below: This strategy will work well when the market is trending up or down but not very well when the market is going sideways, as you will be changing from aggressive to balanced and back too often. Possibly a more appropriate option would be a combination of the two. Use the first passive approach to change investment option from aggressive to balanced to capital guaranteed with your life stages, however use the second active approach to time the change. For example, if you were say in your late 40s now and were looking to change from aggressive to balanced in the near future, you could wait until the ASX200 crosses below the 200 day SMA before making the change. This way you could capture the majority of the uptrend (which could go on for years) before changing from the high growth/aggressive option to the balanced option. If you where after more control over your superannuation assets another option open to you is to start a SMSF, however I would recommend having at least $300K to $400K in assets before starting a SMSF, or else the annual costs would be too high as a percentage of your total super assets." }, { "docid": "162630", "title": "", "text": "Firstly if you've formed a limited company you don't need to register as self-employed. You're an employee and shareholder of the company and your taxes will be handled that way. Registering as self-employed is only necessary if you're operating as a sole trader (i.e. without a company). Secondly you absolutely do want to get set-up correctly with HMRC as soon as possible, whether you're a company or a sole trader. Ignoring the legal question your worry about paying taxes when you have no income is groundless - if you're not making any money there won't be any tax to pay. Furthermore it seems likely that the business is currently losing money. Those losses, if correctly recorded, can be carried forward and offset against future profits so not only do you not have to pay tax now, but you can reduce the tax you pay later when the money does start rolling in." }, { "docid": "388057", "title": "", "text": "\"As of right now it looks like you can't issue an ETF at least because the underlying \"\"commodity\"\" isn't regulated. (See Winkelvoss ETF). I suspect you would run into this problem with any 1940 act fund (mutual fund), but it's more a situation of \"\"not approved\"\" rather than illegal, so an MLP hedge fund structure would probably be fine. And some googling finds Iterative Instinct Management's Storj SPV.\"" }, { "docid": "255329", "title": "", "text": "You cannot do this as per the reasons mentioned by others above, mainly foreign banks cannot hold mortgages over properties in other countries. If this was possible to do, don't you think many others would be applying overseas for mortgages and loans. And even if it was possible the overseas bank would give you a comparative rate to compete with the rates already offered in Australia (to compensate with the extra risks). If you cannot afford to purchase a property at record low rates of below 5% in Australia, then you may want to re-think your strategy." }, { "docid": "47795", "title": "", "text": "The long term view you are referring to would be over 30 to 40 years (i.e. your working life). Yes in general you should be going for higher growth options when you are young. As you approach retirement you may change to a more balanced or capital guaranteed option. As the higher growth options will have a larger proportion of funds invested into higher growth assets like shares and property, they will be affected by market movements in these asset classes. So when there is a market crash like with the GFC in 2007/2008 and share prices drop by 40% to 50%, then this will have an effect on your superannuation returns for that year. I would say that if your fund was invested mainly in the Australian stock market over the last 7 years your returns would still be lower than what they were in mid-2007, due to the stock market falls in late 2007 and early 2008. This would mean that for the 7 year time frame your returns would be lower than a balanced or capital guaranteed fund where a majority of funds are invested in bonds and other fixed interest products. However, I would say that for the 5 and possibly the 10 year time frames the returns of the high growth options should have outperformed the balanced and capital guaranteed options. See examples below: First State Super AMP Super Both of these examples show that over a 5 year period or less the more aggressive or high growth options performed better than the more conservative options, and over the 7 year period for First State Super the high growth option performed similar to the more conservative option. Maybe you have been looking at funds with higher fees so in good times when the fund performs well the returns are reduced by excessive fees and when the fund performs badly in not so good time the performance is even worse as the fees are still excessive. Maybe look at industry type funds or retail funds that charge much smaller fees. Also, if a fund has relatively low returns during a period when the market is booming, maybe this is not a good fund to choose. Conversely, it the fund doesn't perform too badly when the market has just crashed, may be it is worth further investigating. You should always try to compare the performance to the market in general and other similar funds. Remember, super should be looked at over a 30 to 40 year time frame, and it is a good idea to get interested in how your fund is performing from an early age, instead of worrying about it only a few years before retirement." }, { "docid": "62966", "title": "", "text": "when investing in index funds Index fund as the name suggests invests in the same proportion of the stocks that make up the index. You can choose a Index Fund that tracks NYSE or S&P etc. You cannot select individual companies. Generally these are passively managed, i.e. just follow the index composition via automated algorithms resulting in lower Fund Manager costs. is it possible to establish an offshore company Yes it is possible and most large organization or High Net-worth individuals do this. Its expensive and complicated for ordinary individuals. One needs and army of International Tax Consultants / International Lawyers / etc but do I have to pay taxes from the capital gains at the end of the year? Yes Canada taxes on world wide income and you would have to pay taxes on gains in Canada. Note depending on your tax residency status in US, you may have to pay tax in US as well." }, { "docid": "200360", "title": "", "text": "\"If anything, the price of an ETF is more tightly coupled to the underlying holdings or assets than a mutual fund, because of the independent creation/destruction mechanism. With a mutual fund, the price is generally set once at the end of each day, and the mutual fund manager has to deal with investments and redemptions at that price. By the time they get to buying or selling the underlying assets, the market may have moved or they may even move the market with those transactions. With an ETF, investment and redemption is handled by independent \"\"authorized participants\"\". They can create new units of the ETF by buying up the underlying assets and delivering them to the ETF manager, and vice versa they can cancel units by requesting the underlying assets from the ETF manager. ETFs trade intraday (i.e. at any time during trading hours) and any time the price diverges too far from the underlying assets, one of the authorized participants has an incentive to make a small profit by creating or destroying units of the ETF, also intraday.\"" }, { "docid": "502242", "title": "", "text": "Get the perfect team to inspect the home before buying, it is a big investment to buy the house in a better place. In that case, we will help you. Now, no need to go anywhere in Australia. The Assured Building Inspections have wonderful experience of the inspection the building, now we are expert in this work. Always, we provide the affordable service for our clients. It is a mandatory procedure for each homeowner, we are a good protection organization inside the Australia. There is lots of inspection service company in Australia, however, they may be not proper certified in this work. It is one among most inspector and trustable corporation. We are specializing the most problems in property inspections and reports. Our impartial opinions, provide our clients with the self assurance and peace of thoughts they need to do properly knowledgeable." }, { "docid": "212394", "title": "", "text": "\"I'll try to answer using your original example. First, let me restate your assumptions, slightly modified: The mutual fund has: Note that I say the \"\"mutual fund has\"\" those gains and losses. That's because they occur inside the mutual fund and not directly to you as a shareholder. I use \"\"realized\"\" gains and losses because the only gains and losses handled this way are those causes by actual asset (stock) sales within the fund (as directed by fund management). Changes in the value of fund holdings that are not sold are not included in this. As a holder of the fund, you learn the values of X, Y, and Z after the end of the year when the fund management reports the values. For gains, you will also typically see the values reported on your 1099-DIV under \"\"capital gains distributions\"\". For example, your 1099-DIV for year 3 will have the value Z for capital gains (besides reporting any ordinary dividends in another box). Your year 1 1099 will have $0 \"\"capital gains distributions\"\" shown because of the rule you highlighted in bold: net realized losses are not distributed. This capital loss however can later be used to the mutual fund holder's tax advantage. The fund's internal accounting carries forward the loss, and uses it to offset later realized gains. Thus your year 2 1099 will have a capital gain distribution of (Y-X), not Y, thus recognizing the loss which occurred. Thus the loss is taken into account. Note that for capital gains you, the holder, pay no tax in year 1, pay tax in year 2 on Y-X, and pay tax in year 3 on Z. All the above is the way it works whether or not you sell the shares immediately after the end of year 3 or you hold the shares for many more years. Whenever you do sell the shares, you will have a gain or loss, but that is different from the fund's realized losses we have been talking about (X, Y, and Z).\"" }, { "docid": "49168", "title": "", "text": "The creation mechanism for ETF's ensures that the value of the underlying stocks do not diverge significantly from the Fund's value. Authorized participants have a strong incentive to arbitrage any pricing differences and create/redeem blocks of stock/etf until the prices are back inline. Contrary to what was stated in a previous answer, this mechanism lowers the cost of management of ETF's when compared to mutual funds that must access the market on a regular basis when any investors enter/exit the fund. The ETF only needs to create/redeem in a wholesale basis, this allows them to operate with management fees that are much lower than those of a mutual fund. Expenses Due to the passive nature of indexed strategies, the internal expenses of most ETFs are considerably lower than those of many mutual funds. Of the more than 900 available ETFs listed on Morningstar in 2010, those with the lowest expense ratios charged about .10%, while those with the highest expenses ran about 1.25%. By comparison, the lowest fund fees range from .01% to more than 10% per year for other funds. (For more on mutual fund feeds, read Stop Paying High Fees.)" }, { "docid": "586851", "title": "", "text": "@JoeTaxpayer gave a great response to your first question. Here are some thoughts on the other two... 2) Transaction fees for mutual funds are tied to the class of shares you're buying and will be the same no matter where you buy them. A-shares have a front-end 'load' (the fee charged), and the lowest expenses, and can be liquidated without any fees. B-shares have no up-front load, but come with a 4-7 year period where they will charge you a fee to liquidate (technically called Contingent Deferred Sales Charge, CDSC), and slightly higher management fees, after which they often will convert to A-shares. C-shares have the highest management fees, and usually a 12- to 18-month period where they will charge a small percentage fee if you liquidate. There are lots of other share classes available, but they are tied to special accounts such as managed accounts and 401-K plans. Not all companies offer all share classes. C-shares are intended for shorter timeframes, eg 2-5 years. A and B shares work best for longer times. Use a B share if you're sure you won't need to take the money out until after the fee period ends. Most fund companies will allow you to exchange funds within the same fund family without charging the CDSC. EDIT: No-load funds don't charge a fee in or out (usually). They are a great option if they are available to you. Most self-service brokerages offer them. Few full-service brokerages offer them. The advantage of a brokerage versus personal accounts at each fund is the brokerage gives you a single view of things and a single statement, and buying and selling is easy and convenient. 3) High turnover rates in bond funds... depending on how actively the portfolio is managed, the fund company may deliver returns as a mix of both interest and capital gains, and the management expenses may be high with a lot of churn in the underlying portfolio. Bond values fall as interest rates rise, so (at least in the USA) be prepared to see the share values of the fund fall in the next few years. The biggest risk of a bond fund is that there is no maturity date, so there is no point in time that you have an assurance that your original investment will be returned to you." }, { "docid": "146281", "title": "", "text": "The Direct Selling Association (DSA) is an autonomous and self-regulatory body that deals with the direct selling business organizations. The Association acts as a bridge between the direct selling industry as well as policy-making bodies of Indian Government. It works for the cause of Direct Selling Industry. The DSA also tries to create a favorable environment for the growth and expansion of direct selling industry." }, { "docid": "234585", "title": "", "text": "RealConnect is a unique independent real estate company which connects residential &amp; commercial property owners &amp; investors to real estate agents and property managers. We operate Australia wide &amp; have registered agents waiting to offer their services from most areas across the country. We have a keen passion to create an easy to use, low cost system to benefit everyone dealing in the real estate industry. We aim to increase profits for property owners as well as real estate agents by lowering the business expenses for the agents and allowing them to offer the same service to property owners for less." }, { "docid": "96423", "title": "", "text": "Loving the discussion. I can't argue that new areas of the economy will open up and allow for some offset for those jobs lost through increasing productivity/efficiency, but I have a hard time believing that they can fully offset, but certainly anything is possible. Do you think that this push toward self employment can happen as fast as losses due to automation, or will there be some lag time? That lag time is where we (as a society) will feel massive pain, which, I argue is at least part of what we've been seeing in the last few years." } ]

[ { "docid": "423403", "title": "", "text": "The more you put down now, the less money you are borrowing. 30yrs of interest adds up. Even paying a small amount at the beginning of the mortgage can turn into a huge savings over the life of the loan. That's why you'll find advice to make extra mortgage payments in the beginning. The question is: Do you have a better use for that money? In particular, do you have any higher-interest debt (higher APR than your mortgage) that needs to be paid off? You generally want to take care of those first. Beyond that can you invest the extra down payment money elsewhere (eg stock market) and get a better return than your mortgage rate? (don't forget about taxes on investment profits). If so, that money will do more good there." } ]

[ { "docid": "106145", "title": "", "text": "If you're looking for some formula, I don't think one exists. People talk about this all the time and give conflicting advice. If there was a proven-accurate formula, they wouldn't be debating it. There are basically 3 reasons to do a home improvement project: (a) Correct a problem so that you prevent on-going damage to your home. For example, have a leaking roof patched or replaced, or exterminate termites. Such a job is worthwhile if the cost of fixing the problem is less than the cost of future damage. In the case of my termite and leaking roof examples, this is almost always worth doing. Lesser maintenance problems might be more debatable. Similarly, some improvements may reduce expenses. Like replacing an old furnace with a newer model may cut your heating bills. Here the question is: how long does it take to repay the investment, compared to other things you might invest your money in. Just to make up numbers: Suppose you find that a new furnace will save you $500 per year. If the new furnace costs $2000, then it will take 4 years to pay for itself. I'd consider that a good investment. If that same $2000 furnace will only cut your heating bills by $100 per year, then it will take 20 years to pay for itself. You'd probably be better off putting the $2000 into the stock market and using the gains to help pay your heating bill. (b) Increase the resale value of your home. If you are paying someone else to do the work, the harsh reality here is: Almost no job will increase the resale value by more than the cost of getting the job done. I've seen many articles over the years citing studies on this. I think most conclude that kitchen remodeling comes closet to paying for itself, and bathrooms come next. New windows are also up there. I don't have studies to prove this, but my guesses would be: Replacing something that is basically nice with a different style will rarely pay for itself. Like, replacing oak cabinets with cherry cabinets. Replacing something that is in terrible shape with something decent is more likely to pay back than replacing something decent with something beautiful. Like if you have an old iron bathtub that's rusting and falling apart, replacing it may pay off. If you have a 5-year-old bathtub that's in good shape but is not premium, top of the line, replacing it with a premium bathtub will probably do very little for resale value. If you can do a lot of the work yourself, the story changes. Many home improvement jobs don't require a lot of materials, but do require a lot of work. If you do the labor, you can often get the job done very cheaply, and it's likely that the increase in resale value will be more than what you spend. For example, most of my house has hardwood floors. Lots of people like pretty hardwood floors. I just restained the floors in two rooms. It cost me, I don't know, maybe $20 or $30 for stain and some brushes. I'm sure if I tried to sell the house tomorrow I'd get my twenty bucks back in higher sale value. Realtors often advise sellers to paint. Again, if you do it yourself, the cost of paint may be a hundred dollars, and it can increase the sale price of the house by thousands. Of course if you do the work yourself, you have to consider the value of your time. (c) To make your home more pleasant to live in. This is totally subjective. You have to make the decision on the same basis that you decide whether anything that is not essential to survival is worth buying. To some people, a bottle of fancy imported wine is worth thousands, even millions, of dollars. Others can't tell the difference between a $10,000 wine and a $15 wine. The thing to ask yourself is, How important is this home improvement to me, compared to other things I could do with the money? Like, suppose you're considering spending $20,000 remodeling your kitchen. What else could you do with $20,000? You could buy a car, go on an elaborate vacation, eat out several times a week for years, retire a little earlier, etc. No one can tell you how much something is worth to you. Any given home improvement may involve a combination of these factors. Like say you're considering that $20,000 kitchen remodeling. Say you somehow find out that this will increase the resale value by $15,000. If the only reason you were considering it was to increase resale value, then it's not worth it -- you'd lose $5,000. But if you also want the nicer kitchen, then it is fair to say, Okay, it will cost me $20,000, but ultimately I'll get $15,000 of that back. So in the long run it will only cost me $5,000. Is having a nicer kitchen worth $5,000 to me? Note, by the way, that resale value only matters if and when you sell the house. If you expect to stay in this house for 20 years, any improvements done are VERY long-term investments. If you live in it until you die, the resale value may matter to your heirs." }, { "docid": "523949", "title": "", "text": "As a general rule, diversification means carrying sufficient amounts in cash equivalents, stocks, bonds, and real estate. An emergency fund should have six months income (conservative) or expenses (less conservative) in some kind of cash equivalent (like a savings account). As you approach retirement, that number should increase. At retirement, it should be something like five years of expenses. At that time, it is no longer an emergency fund, it's your everyday expenses. You can use a pension or social security to offset your effective monthly expenses for the purpose of that fund. You should five years net expenses after income in cash equivalents after retirement. The normal diversification ratio for stocks, bonds, and real estate is something like 60% stocks, 20% bonds, and 20% real estate. You can count the equity in your house as part of the real estate share. For most people, the house will be sufficient diversification into real estate. That said, you should not buy a second home as an investment. Buy the second home if you can afford it and if it makes you happy. Then consider if you want to keep your first home as an investment or just sell it now. Look at your overall ownership to determine if you are overweighted into real estate. Your primary house is not an investment, but it is an ownership. If 90% of your net worth is real estate, then you are probably underinvested in securities like stocks and bonds. 50% should probably be an upper bound, and 20% real estate would be more diversified. If your 401k has an employer match, you should almost certainly put enough in it to get the full match. I prefer a ratio of 70-75% stocks to 25-30% bonds at all ages. This matches the overall market diversification. Rebalance to stay in that range regularly, possibly by investing in the underweight security. Adding real estate to that, my preference would be for real estate to be roughly a quarter of the value of securities. So around 60% stocks, 20% bonds, and 20% real estate. A 50% share for real estate is more aggressive but can work. Along with a house or rental properties, another option for increasing the real estate share is a Real Estate Investment Trust (REIT). These are essentially a mutual fund for real estate. This takes you out of the business of actively managing properties. If you really want to manage rentals, make sure that you list all the expenses. These include: Also be careful that you are able to handle it if things change. Perhaps today there is a tremendous shortage of rental properties and the vacancy rate is close to zero. What happens in a few years when new construction provides more slack? Some kinds of maintenance can't be done with tenants. Also, some kinds of maintenance will scare away new tenants. So just as you are paying out a large amount of money, you also aren't getting rent. You need to be able to handle the loss of income and the large expense at the same time. Don't forget the sales value of your current house. Perhaps you bought when houses were cheaper. Maybe you'd be better off taking the current equity that you have in that house and putting it into your new house's mortgage. Yes, the old mortgage payment may be lower than the rent you could get, but the rent over the next thirty years might be less than what you could get for the house if you sold it. Are you better off with minimal equity in two houses or good equity with one house? I would feel better about this purchase if you were saying that you were doing this in addition to your 401k. Doing this instead of your 401k seems sketchy to me. What will you do if there is another housing crash? With a little bad luck, you could end up underwater on two mortgages and unable to make payments. Or perhaps not underwater on the current house, but not getting much back on a sale either. All that said, maybe it's a good deal. You have more information about it than we do. Just...be careful." }, { "docid": "108330", "title": "", "text": "I get paid a 50 cents more at my second job than my day job, and at the end of the week my take home pay from the latter is $20 higher. Thats a bullshit argument. $5 per hour is a lot of money, especially considering that a lot of people have been living paycheck to paycheck throughout Obamas never ending recovery. What makes a postman's hours $5 more valuable than a FedEx employee? By every measure, FedEx is a more productive and efficient entity than the US Postal Service. So why is the postman worth more? I'll tell you exactly why. The FedEx employee's compensation is needs based. FedEx does a certain amount of business, which requires a certain amount of labor, which commands a certain price in the labor market. FedEx does not pay more for labor than it has to, because FedEx must be an efficient organization to meet its customers price expectations. https://en.m.wikipedia.org/wiki/United_States_Postal_Service The Postman's compensation is arbitrary, set by government officials with no direct accountability to customers. Because they know jack shit about logistics, Congress has mandated that the Postal Service offer services to the public at uniform price and quality. As such, it has continuously failed to manage its budget properly, to the tune of $5 to $10 billion dollar deficiets every year with a total mail volume that has declined 29% between 1998 and 2008. Why does the Postal Service exist? Because it makes your congressman feel good, and he's more than willing to burn your money on the pyre of his sentimentality and false morilization over the massive, arbitrarily created vested interest postal employees have in losing their above average pay hack jobs than for any dedication you percieve he has to the welfare of his constituents. If you want me to run down why I believe our government is not acting in our own personal best interests, the postal service is the perfect place to start." }, { "docid": "496752", "title": "", "text": "As mentioned, the main advantage of a 15-year loan compared to a 30-year loan is that the 15-year loan should come at a discounted rate. All things equal, the main advantage of the 30-year loan is that the payment is lower. A completely different argument from what you are hearing is that if you can get a low interest rate, you should get the longest loan possible. It seem unlikely that interest rates are going to get much lower than they are and it's far more likely that they will get higher. In 15 years, if interest rates are back up around 6% or more (where they were when I bought my first home) and you are 15 years into a 30 year mortgage, you'll being enjoying an interest rate that no one can get. You need to keep in mind that as the loan is paid off, you will earn exactly 0% on the principal you've paid. If for some reason the value of the home drops, you lose that portion of the principal. The only way you can get access to that capital is to sell the house. You (generally) can't sell part of the house to send a kid to college. You can take out another mortgage but it is going to be at the current going rate which is likely higher than current rates. Another thing to consider that over the course of 30 years, inflation is going to make a fixed payment cheaper over time. Let's say you make $60K and you have a monthly payment of $1000 or 20% of your annual income. In 15 years at a 1% annualized wage growth rate, it will be 17% of your income. If you get a few raises or inflation jumps up, it will be a lot more than that. For example, at a 2% annualized growth rate, it's only 15% of your income after 15 years. In places where long-term fixed rates are not available, shorter mortgages are common because of the risk of higher rates later. It's also more common to pay them off early for the same reason. Taking on a higher payment to pay off the loan early only really only helps you if you can get through the entire payment and 15 years is still a long way off. Then if you lose your job then, you only have to worry about taxes and upkeep but that means you can still lose the home. If you instead take the extra money and keep a rainy day fund, you'll have access to that money if you hit a rough patch. If you put all of your extra cash in the house, you'll be forced to sell if you need that capital and it may not be at the best time. You might not even be able to pay off the loan at the current market value. My father took out a 30 year loan and followed the advice of an older coworker to 'buy as much house as possible because inflation will pay for it'. By the end of the loan, he was paying something like $250 a month and the house was worth upwards of $200K. That is, his mortgage payment was less than the payment on a cheap car. It was an insignificant cost compared to his income and he had been able to invest enough to retire in comfort. Of course when he bought it, inflation was above 10% so it's bit different today but the same concepts still apply, just different numbers. I personally would not take anything less than a 30 year loan at current rates unless I planned to retire in 15 years." }, { "docid": "7831", "title": "", "text": "I'd suggest waiting until a bit after you are married. To Eagle1's point, even $23,000 is not a huge sum of money. You didn't make any mention of a desire to buy a home, but if that becomes part of the plan, I'd want every cent of liquidity I can get. I wrote Student Loans and Your First Mortgage to explain why your buying power for the house is lowered by paying that loan. In your case, $5000 is 20% of $25000. For a good 20% down purchase, I'd want those funds available. You also don't mention retirement accounts. Depending on the home purchase timing, I'd start to think about putting aside at least the $5500 per year IRA/Roth IRA maximum." }, { "docid": "75961", "title": "", "text": "\"This is the meat of your potato question. The rephrasing of the question to a lending/real estate executive such as myself, I'd ask, what's the scenario? \"\"I would say you're looking for an Owner Occupied, Super Jumbo Loan with 20% Down or $360K down on the purchase price, $1.8 mil purchase price, Loan Amount is ~$1.45 mil. Fico is strong (assumption). If this is your scenario, please see image. Yellow is important, more debt increases your backend-DTI which is not good for the deal. As long as it's less than 35%, you're okay. Can someone do this loan, the short answer is yes. It's smart that you want to keep more cash on hand. Which is understandable, if the price of the property declines, you've lost your shirt and your down payment, then it will take close to 10 years to recover your down. Consider that you are buying at a peak in real estate prices. Prices can't go up more than they are now. Consider that properties peaked in 2006, cooled in 2007, and crashed in 2008. Properties declined for more than 25-45% in 2008; regardless of your reasons of not wanting to come to the full 40% down, it's a bit smarter to hold on to cash for other investments purposes. Just incase a recession does hit. In the end, if you do the deal-You'll pay more in points, a higher rate compared to the 40% down scenario, the origination fee would increase slightly but you'll keep your money on hand to invest elsewhere, perhaps some units that can help with the cashflow of your home. I've highlighted in yellow what the most important factors that will be affected on a lower down payment. If your debt is low or zero, and income is as high as the scenario, with a fico score of at least 680, you can do the deal all day long. These deals are not uncommon in today's market. Rate will vary. Don't pay attention to the rate, the rate will fluctuate based on many variables, but it's a high figure to give you an idea on total cost and monthly payment for qualification purposes, also to look at the DTI requirement for cash/debt. See Image below:\"" }, { "docid": "271110", "title": "", "text": "\"To add to what other have stated, I recently just decided to purchase a home over renting some more, and I'll throw in some of my thoughts about my decision to buy. I closed a couple of weeks ago. Note that I live in Texas, and that I'm not knowledgeable in real estate other than what I learned from my experiences in the area when I am located. It depends on the market and location. You have to compare what renting will get you for the money vs what buying will get you. For me, buying seemed like a better deal overall when just comparing monthly payments. This is including insurance and taxes. You will need to stay at a house that you buy for at least 5-7 years. You first couple years of payments will go almost entirely towards interest. It takes a while to build up equity. If you can pay more towards a mortgage, do it. You need to have money in the bank already to close. The minimum down payment (at least in my area) is 3.5% for an FHA loan. If you put 20% down, you don't need to pay mortgage insurance, which is essentially throwing money away. You will also have add in closing costs. I ended up purchasing a new construction. My monthly payment went up from $1200 to $1600 (after taxes, insurance, etc.), but the house is bigger, newer, more energy efficient, much closer to my work, in a more expensive area, and in a market that is expected to go up in value. I had all of my closing costs (except for the deposit) taken care of by the lender and builder, so all of my closing costs I paid out of pocket went to the deposit (equity, or the \"\"bank\"\"). If I decide to move and need to sell, then I will get a lot (losing some to selling costs and interest) of the money I have put in to the house back out of it when I do sell, and I have the option to put that money towards another house. To sum it all up, I'm not paying a difference in monthly costs because I bought a house. I had my closing costs taking care of and just had to pay the deposit, which goes to equity. I will have to do maintenance myself, but I don't mind fixing what I can fix, and I have a builder's warranties on most things in the house. To really get a good idea of whether you should rent or buy, you need to talk to a Realtor and compare actual costs. It will be more expensive in the short term, but should save you money in the long term.\"" }, { "docid": "406965", "title": "", "text": "\"Dan's link (he deleted his answer, BTW) is fine, it showed the components of the score FICO offers. Each input has data behind it, a bell curve of the behaviors and risk of the person behind it. For example, we've discussed utilization many time here. The ideal utilization is not 0%, but 1-19%. This does not mean paying interest, or carrying charges from month to month. Say I had just one card with a $10K limit. I'd want to be sure I never ran a bill above $2000. If I did, I'd see a slight drop in my score, and next month, it would go back to normal. In my case, I have enough available credit that going over 20% is rare, and if it happened, I'd pay the bill down before the bill was issued, just make a mid-cycle payment. FICO decided that those who go over 20% have a higher risk of default. And it gets higher as it goes up. Same with every aspect of the score's components. You are comparing US to non US use. In the US, it seems far more common to use our cards. In my family's case, we use very little cash, and run most of our spending through our cards. As far as The David is concerned, one should separate those who carry a balance from those who pay in full. The pay in full users are better off for their habits and responsible card use. In the US, it's not easy to rent a car or book a hotel with no card. Cards offer a cash rebate that adds up fast, and purchase protection from fraudulent vendors. They also offer extended warranty coverage. The David, and others, claim that \"\"studies prove those using cards spend 10-15% more than cash buyers.\"\" This is a proven fact from scientific studies. Only they don't exist. The best I've seen proves that college kids given a $20 bill spend more carefully than those given a $20 credit card. This doesn't extrapolate to a family budget, and never will. But that quote has a way of being repeated as fact. Yes, it's non-sense, thank you for reading and quoting my blog, I recognize the quote. The report also shows accounts that have gone to collection. An electric bill isn't a regularly reported item, it's assumed your lights are on. But if you stop paying the bill and they send your account to a collection agency, you'll see it hit your report. In response to the comment below - Journal of Experimental Psychology: Applied article titled Monopoly Money: The Effect of Payment Coupling and Form on Spending Behavior runs 13 pages but on the first page offers \"\"Do consumers spend differently when using one payment mode relative to another mode? For example, do consumers spend more when they receive $50 in the form of a gift card than in the form of cash? If indeed they do, then why? This research addresses these issues.\"\" $50? A $50 gift card is a nuisance, I try to use it up within hours of getting one. As I stated above, the behavior of a person with such a card doesn't scale to a many-thousand-per-month budget. Such articles, in my opinion, are nonsense, proving nothing. Unfortunately, this is a bit of a tangent to the original question, and if I put up a stand-alone \"\"Is it a fact that people spend more if using a card than cash?\"\" the question would result in being closed as one that's seeking opinions, not facts.\"" }, { "docid": "498881", "title": "", "text": "Paying off your mortgage early being good is a myth. It is great for the chronic overspenders to have their mortgage paid off so when they rack up credit card bills and get behind, well they still hae a place to stay. But for those who are more logical with their money paying off your mortgage early in current conditions makes no sense. You can get a 30 year loan well below 4%. Discounting taxes for your average family you would have a rate floating below 3%. So reasons that paying off your mortgage should be almost LAST (given current low long-term interest rates): The first thing you should do is take care of any high interest debt. I would say that anything more than 7-8%, including all credit card debt should be focus #1. putting money into your retirement savings is #1. You will earn way more than 3% over the long-run. you can earn a higher return in the market. Even with a very conservative portfolio you can clear 5-6%, which will still clear more than 3% after taxes. for those who say you can't be sure about the market... well if the market did bad for 30 years in a row no one will have money and the house will also be worthless. if a disaster happens to your house and you own it, your money is gone. In many cases you would be able to declare bankruptcy and let the bank take the property as is. there are just too many examples but if you are paying off your house early, you lose the flexible/liquid money that you now have tied up in the house. Now the reasons for paying down your mortgage are really easy too: you don't trust your spending habits you want to move up in houses and you want to make sure that you have at least 20% down on future house to skip PMI." }, { "docid": "533132", "title": "", "text": "\"All else being equal, you should look for more volatile (riskier) stocks. Technically, it was all time value - the entire value of an \"\"out of the money\"\" option is time value. What's confusing is that time value is affected by numerous variables, only one of which is time. The reason volatility is the one to look at is that all the rest are likely already intuitive to you, or are too minor an influence to worry about: Current risk-free interest rates and a stock's dividend payout during the life of the option affect the value of the call, but are usually minor infulences. (Higher interest rates makes call values higher, and higher dividend yield makes call values lower.) Longer time to expiration will increase the value of the call, but you're pretty likely already focused on that. The strike price's proximity to the current price affects the call's value - agreeing to sell a stock 5% above current levels will pay more than agreeing to sell it 10% above current levels - but again, this is likely obvious to you. Volatility, or the percent by which the stock is likely to move up or down on a given day, is almost certainly the variable that's not already obvious. Stocks that jump all over the place have higher volatility than those that move more predictably. The reason that options (calls and puts) cost more on higher volatility names is that options' payout is asymmetrical. In the case of calls, the option holder gets all the upside, but none of the downside, other than what they paid for the opotion. If one stock goes up or down $5 every day, and another goes up or down $20 every day and you could pay some fixed amount to get that stock's upside, but not have any exposure to its downside, other than that fixed amount, you'd pay more for the one that pays you $20 or $0 than you would for the one that pays you $5 or $0. That's why higher volatility (meaning larger daily moves) makes optimum prices higher.\"" }, { "docid": "63698", "title": "", "text": "I agree with you that you need to consolidate this debt using a loan. It may be hard to find a bank or credit organization that will give you an unsecured personal loan for that much money. I know of one, called Lending Club (Disclaimer - I'm an investor on this platform. Not trying to advertise, it's just the only place I know of off the top of my head) that facilitates loans like this, but instead of a bank financing the loan, the loan is split up accross hundreds of investors who each contribute a small amount (such as $25). They have rates anywhere between 5-30%, based on your credit profile(s), and I believe they have some loan amounts that go up to the area that you're discussing. Regarding buying the house - The best thing you can do when trying to buy a house is to save up a 20% downpayment, if at all possible. Below this amount, you may be asked to pay for 'PMI' - Private Mortgage Insurance. This is a charge that doesn't go away for quite a while (until you've paid them 20% of the appraised value of the home), where you pay a premium because you didn't have the 20% downpayment for the house. I would suggest you try to eliminate your credit card debt as soon as possible, and would recommend the same for your father. Getting your utilization down and reconsolidating the large debts with a loan will help to reduce interest charges and get you a reasonable, fixed payment. Whether you decide to pay off your own balances using your savings account is up to you; if it were me, personally, I'd do so immediately rather than trying to pay it off over time. But if you lose money to taxes by withdrawing the money from your 'tax free savings account', it may not be a beneficial situation. Treat debt, especially credit card debt, like an emergency at all times, and you'll find yourself in a better place as a result. Credit card debt and balances are and should be temporary, and their rates and fees are structured that way. If, for any reason, you expect that a credit card's balance will remain for an extended period of time, you may want to consider whether it would be advantageous for you to consolidate the debt into a loan, instead." }, { "docid": "25802", "title": "", "text": "It costs them more to make the screens with more pixels. Let's say I usually pay you 10$ for something that cost you 5$ to make. Now I pay you 20$ for something that costs you 18$ to make. Sure you get 20$ instead of 10$, but your profit per item went from 5$ down to 2$. Same thing here, the screens with 4x the pixels costs much more than the original screens. Apple paid slightly more for them, but not enough to keep the profit margin." }, { "docid": "245810", "title": "", "text": "Because it appears you have in the neighborhood of 30 years remianing on your mortgage for the first house, If you can sell it you will likely be better off in the end. While renting has the potential for greater income it is a business. And like any business there are risks, expenses, and work required to make it successful. There will be times where you can not find a renter immediately and will be responsible for making both payments, maintaining both houses, the insurance(which for an owner is higher for a rental property than a domicile), and paying the applicable taxes. You need to look at your best and worst case numbers. If your best case numbers leave you in the hole 300/month then that is not the sort of business you want to run. Your investment should build your savings and retirement funds not deplete them. Further you are more likely to fall between your best and worst case scenerios. So you need to be able to thrive at that level. If something in the middle is going to take you into bankruptcy then sell the property. If you are not willing to put the time into your business that it will need (My rental home took about 10-30 hours a month despite renters being responsible for basic upkeep and maintenance. Finally your plan B: A home with 800k value will have higher costs and higer expenses and maintenance. If the 800k home is the home you and your family needs then by all means go for it. But if it can do just as well in the 450k Home then go there. Pay the home off early by making the payments you would be making for the 800k home. In this way you pay less in total cost of the home and set your self up for the greatest chance of success. Once that home is paid off the break even point for renting goes way down as well. So the rental option could be in the future. I would just aviod it now if possible." }, { "docid": "65835", "title": "", "text": "\"Consider property taxes (school, municipal, county, etc.) summing to 10% of the property value. So each year, another .02N is removed. Assume the property value rises with inflation. Allow for a 5% after inflation return on a 70/30 stock bond mix for N. After inflation return. Let's assume a 20% rate. And let's bump the .05N after inflation to .07N before inflation. Inflation is still taxable. Result Drop in value of investment funds due to purchase. Return after inflation. After-inflation return minus property taxes. Taxes are on the return including inflation, so we'll assume .06N and a 20% rate (may be lower than that, but better safe than sorry). Amount left. If no property, you would have .036N to live on after taxes. But with the property, that drops to .008N. Given the constraints of the problem, .008N could be anywhere from $8k to $80k. So if we ignore housing, can you live on $8k a year? If so, then no problem. If not, then you need to constrain N more or make do with less house. On the bright side, you don't have to pay rent out of the .008N. You still need housing out of the .036N without the house. These formulas should be considered examples. I don't know how much your property taxes might be. Nor do I know how much you'll pay in taxes. Heck, I don't know that you'll average a 5% return after inflation. You may have to put some of the money into cash equivalents with negligible return. But this should allow you to research more what your situation really is. If we set returns to 3.5% after inflation and 2.4% after inflation and taxes, that changes the numbers slightly but importantly. The \"\"no house\"\" number becomes .024N. The \"\"with house\"\" number becomes So that's $24,000 (which needs to include rent) versus -$800 (no rent needed). There is not enough money in that plan to have any remainder to live on in the \"\"with house\"\" option. Given the constraints for N and these assumptions about returns, you would be $800 to $8000 short every year. This continues to assume that property taxes are 10% of the property value annually. Lower property taxes would of course make this better. Higher property taxes would be even less feasible. When comparing to people with homes, remember the option of selling the home. If you sell your .2N home for .2N and buy a .08N condo instead, that's not just .12N more that is invested. You'll also have less tied up with property taxes. It's a lot easier to live on $20k than $8k. Or do a reverse mortgage where the lender pays the property taxes. You'll get some more savings up front, have a place to live while you're alive, and save money annually. There are options with a house that you don't have without one.\"" }, { "docid": "26339", "title": "", "text": "It is easier to get a loan on a rental than a flip, which is a huge advantage to rental properties. Leverage allows you to increase your returns and make more money off appreciation and higher rents. I use ARMs to finance my rental properties that are amortized over 30 years. I have to put 20 percent down, but my portfolio lender lets me get as many loans as I want. Because I put 20 percent down on my rental properties and they still have great cash flow I can buy three times as many properties as I could with cash purchases. Buying more rental properties amplifies the other advantages like cash flow, equity pay down and the tax advantages." }, { "docid": "474173", "title": "", "text": "In USA, if you take a personal loan, you will probably get rates between 8-19%. It is better that you take a loan in India, as home loan rates are about 10.25%(10.15% is the lowest offered by SBI). This might not be part of the answer, but it is safer to hold USD than Indian rupees as India is inflating so much that the value of the rupee is always going lower(See 1970 when you could buy 1 dollar for 7 rupees). There might be price fluctuations where the rupee gains against the dollar, but in the long run, I think the dollar has much more value(Just a personal opinion). And since you are taking a home loan, I am assuming it will be somewhere between 10-20 years. So, you would actually save a lot more on the depreciating rupee, than you would pay interest. Yes, if you can get a home loan in USA at around 4%, it would definitely be worth considering, but I doubt they will do that since they would not know the actual value of the property. Coming to answer your question, getting a personal loan for 75k without keeping any security is highly unlikely. What you can do since you have a good credit score, is get a line of credit for 20-25k as a backup, and use that money to pay your EMI only when absolutely required. That way, you build your credit in the United States, and have a backup for around 2 years in India in case you fail to pay up. Moreover, Line of credits charge you interest only on the amount, you use. Cheers!" }, { "docid": "78176", "title": "", "text": "Take the long term view. Build up the cash. Once you have enough cash in the bank, you don't need a credit score. With 6 months living expenses in the bank after paying 20% down on a small house, he should have no issues getting a reasonably priced mortgage. However, if he waited just a bit longer he might buy the same house outright with cash. When I ran the computations for myself many years ago, it would have taken me half as long to save the money and pay cash for my home as it did for me to take a mortgage and pay it off." }, { "docid": "376146", "title": "", "text": "As the CEO of a company larger than most but certainly much smaller than his, I'd like to say this kind of hyperbolic bullshit is a fine example of what is wrong with discourse in this country. If you get any tax increAse at all you might as well shut down your company? My ass. Now let me be clear - I don't want to pay more taxes, and I don't mean to imply anything of the sort. But grown ass, privileged men pretending to be oppressed and acting like spoiled eight year old brats does nothing constructive. This kind of bullshit shuts down reasonable debate about the way things should be. Here's the real scoop - I would hire more people and buy more inventory and put more into capital investment if I paid less taxes, but I would also bring home more money in my pocket as well. As Americans, we have some huge financial problems, in both the public and private sectors. There are multiple potential solutions, with differing ideas being held by smart people on all sides. We should be attempting to appreciate and learn from one another to reach solutions like responsible goddam adults, not pulling douchey stunts like this to see who can get the most media attention. Secondarily, the media should be ashamed of peddling this nonsense at the expense of society. Tl;dr - fuck this guy and the media he rode in on" }, { "docid": "72021", "title": "", "text": "The fluctuation of interest rates during the next year could easily dwarf the savings this attempt to improve your credit score will have; or the reverse is true. Will the loan improve your score enough to make a difference? It will not change the number of months old your oldest account is. It will increase the breadth of your accounts. Applying for the car loan will result in a short term decrease in the score because of the hard pull. The total impact will be harder to predict. A few points either way will generally not have an impact on your rate. You will also notice the two cores in your question differ by more than 30 points. You can't control which number the lender will use. You also have to realize the number differs every day depending on when they pull it that month. The addition of a car loan, assuming you still have the loan when you buy the house, will not have a major impact on your ability to get afford the home mortgage. The bank cares about two numbers regarding monthly payments: the amount of your mortgage including principal, interest, taxes and insurance; and the amount of all other debt payments: car loan, school loans, credit cards. The PITI number should be no more than 28%-33% of your monthly income; the other payments no more than 10%. If the auto loan payments fit in the 10% window, then the amount of money you can spend each month on the mortgage will not be impacted. If it is too large, then they will want to see a smaller amount of your income to go to PITI. If you buy the car, either by cash or by loan, after you apply for the mortgage they will be concerned because you are impacting directly numbers they are using to evaluate your financial health. I have experienced a delay because the buyer bought a car the week before closing. The biggest impact on your ability to get the loan is the greater than 20% down payment, Assuming you can still do that if you pay cash for the car. Don't deplete your savings to get to the 50% down payment level. Keep money for closing costs, moving expenses, furnishing, plus other emergencies. Make it clear that you can easily cover the 20% level, and are willing to go higher to make the loan numbers work." } ]

[ { "docid": "279329", "title": "", "text": "One big factor that no one has mentioned yet is whether you believe in a deflationary or inflationary future. Right now, we are leaning towards a deflationary environment so it makes sense to pay off more of the debt. (If you make just one extra payment a year, you will have paid off your house 7 years early). However, should this change (depending on government and central bank policy) you may be better off putting down the very minimum. In a year or three from now, you should have a clearer picture. In the meanwhile, here is a recent Business Week article discussing both sides of the argument. http://www.businessweek.com/magazine/content/10_28/b4186004424615.htm" } ]

[ { "docid": "523949", "title": "", "text": "As a general rule, diversification means carrying sufficient amounts in cash equivalents, stocks, bonds, and real estate. An emergency fund should have six months income (conservative) or expenses (less conservative) in some kind of cash equivalent (like a savings account). As you approach retirement, that number should increase. At retirement, it should be something like five years of expenses. At that time, it is no longer an emergency fund, it's your everyday expenses. You can use a pension or social security to offset your effective monthly expenses for the purpose of that fund. You should five years net expenses after income in cash equivalents after retirement. The normal diversification ratio for stocks, bonds, and real estate is something like 60% stocks, 20% bonds, and 20% real estate. You can count the equity in your house as part of the real estate share. For most people, the house will be sufficient diversification into real estate. That said, you should not buy a second home as an investment. Buy the second home if you can afford it and if it makes you happy. Then consider if you want to keep your first home as an investment or just sell it now. Look at your overall ownership to determine if you are overweighted into real estate. Your primary house is not an investment, but it is an ownership. If 90% of your net worth is real estate, then you are probably underinvested in securities like stocks and bonds. 50% should probably be an upper bound, and 20% real estate would be more diversified. If your 401k has an employer match, you should almost certainly put enough in it to get the full match. I prefer a ratio of 70-75% stocks to 25-30% bonds at all ages. This matches the overall market diversification. Rebalance to stay in that range regularly, possibly by investing in the underweight security. Adding real estate to that, my preference would be for real estate to be roughly a quarter of the value of securities. So around 60% stocks, 20% bonds, and 20% real estate. A 50% share for real estate is more aggressive but can work. Along with a house or rental properties, another option for increasing the real estate share is a Real Estate Investment Trust (REIT). These are essentially a mutual fund for real estate. This takes you out of the business of actively managing properties. If you really want to manage rentals, make sure that you list all the expenses. These include: Also be careful that you are able to handle it if things change. Perhaps today there is a tremendous shortage of rental properties and the vacancy rate is close to zero. What happens in a few years when new construction provides more slack? Some kinds of maintenance can't be done with tenants. Also, some kinds of maintenance will scare away new tenants. So just as you are paying out a large amount of money, you also aren't getting rent. You need to be able to handle the loss of income and the large expense at the same time. Don't forget the sales value of your current house. Perhaps you bought when houses were cheaper. Maybe you'd be better off taking the current equity that you have in that house and putting it into your new house's mortgage. Yes, the old mortgage payment may be lower than the rent you could get, but the rent over the next thirty years might be less than what you could get for the house if you sold it. Are you better off with minimal equity in two houses or good equity with one house? I would feel better about this purchase if you were saying that you were doing this in addition to your 401k. Doing this instead of your 401k seems sketchy to me. What will you do if there is another housing crash? With a little bad luck, you could end up underwater on two mortgages and unable to make payments. Or perhaps not underwater on the current house, but not getting much back on a sale either. All that said, maybe it's a good deal. You have more information about it than we do. Just...be careful." }, { "docid": "75961", "title": "", "text": "\"This is the meat of your potato question. The rephrasing of the question to a lending/real estate executive such as myself, I'd ask, what's the scenario? \"\"I would say you're looking for an Owner Occupied, Super Jumbo Loan with 20% Down or $360K down on the purchase price, $1.8 mil purchase price, Loan Amount is ~$1.45 mil. Fico is strong (assumption). If this is your scenario, please see image. Yellow is important, more debt increases your backend-DTI which is not good for the deal. As long as it's less than 35%, you're okay. Can someone do this loan, the short answer is yes. It's smart that you want to keep more cash on hand. Which is understandable, if the price of the property declines, you've lost your shirt and your down payment, then it will take close to 10 years to recover your down. Consider that you are buying at a peak in real estate prices. Prices can't go up more than they are now. Consider that properties peaked in 2006, cooled in 2007, and crashed in 2008. Properties declined for more than 25-45% in 2008; regardless of your reasons of not wanting to come to the full 40% down, it's a bit smarter to hold on to cash for other investments purposes. Just incase a recession does hit. In the end, if you do the deal-You'll pay more in points, a higher rate compared to the 40% down scenario, the origination fee would increase slightly but you'll keep your money on hand to invest elsewhere, perhaps some units that can help with the cashflow of your home. I've highlighted in yellow what the most important factors that will be affected on a lower down payment. If your debt is low or zero, and income is as high as the scenario, with a fico score of at least 680, you can do the deal all day long. These deals are not uncommon in today's market. Rate will vary. Don't pay attention to the rate, the rate will fluctuate based on many variables, but it's a high figure to give you an idea on total cost and monthly payment for qualification purposes, also to look at the DTI requirement for cash/debt. See Image below:\"" }, { "docid": "533132", "title": "", "text": "\"All else being equal, you should look for more volatile (riskier) stocks. Technically, it was all time value - the entire value of an \"\"out of the money\"\" option is time value. What's confusing is that time value is affected by numerous variables, only one of which is time. The reason volatility is the one to look at is that all the rest are likely already intuitive to you, or are too minor an influence to worry about: Current risk-free interest rates and a stock's dividend payout during the life of the option affect the value of the call, but are usually minor infulences. (Higher interest rates makes call values higher, and higher dividend yield makes call values lower.) Longer time to expiration will increase the value of the call, but you're pretty likely already focused on that. The strike price's proximity to the current price affects the call's value - agreeing to sell a stock 5% above current levels will pay more than agreeing to sell it 10% above current levels - but again, this is likely obvious to you. Volatility, or the percent by which the stock is likely to move up or down on a given day, is almost certainly the variable that's not already obvious. Stocks that jump all over the place have higher volatility than those that move more predictably. The reason that options (calls and puts) cost more on higher volatility names is that options' payout is asymmetrical. In the case of calls, the option holder gets all the upside, but none of the downside, other than what they paid for the opotion. If one stock goes up or down $5 every day, and another goes up or down $20 every day and you could pay some fixed amount to get that stock's upside, but not have any exposure to its downside, other than that fixed amount, you'd pay more for the one that pays you $20 or $0 than you would for the one that pays you $5 or $0. That's why higher volatility (meaning larger daily moves) makes optimum prices higher.\"" }, { "docid": "1472", "title": "", "text": "\"From what I've heard in the past, debt can be differentiated between secured debt and unsecured debt. Secured debt is a debt for which something stands good such as a mortgage on your house. You have a debt, but that debt is covered by the value of an asset and if you needed to free yourself of the debt, then you could by selling that asset. This is what is known as \"\"good\"\" debt. Unsecured debt is debt that is incurred where the only thing that is available to pay it back is your income. An example of this is credit card debt where you purchase something that couldn't be sold again to pay off the debt. This is know as \"\"bad\"\" debt. You have to be careful about thinking that house debt is always \"\"good\"\" debt because the house stands good for it though. The problem with that is that the house could go down in value and then suddenly your \"\"good\"\" debt is \"\"bad\"\" debt (or no longer secured). Cars are very risky this way because they go down in value. It is really easy to get a car loan where before long you are upside down. This is the problem with the term \"\"good\"\" debt. The label makes it sound like it is a good idea to have that debt, and the risk associated with having the debt is trivialized and allows yourself to feel good about your financial plan. Perhaps this is why so many houses are in foreclosure right now, people believed the \"\"good\"\" debt myth and thought that it was ok to borrow MORE than the home was worth to get into a house. Thus they turned a secured debt into an unsecured debt and put their residence at risk by levels of debt they couldn't afford. Other advice I've heard and tend to agree with, is that you should only borrow for a house, an education and maybe a car (danger on that last one), being careful to buy a modest house, car etc that is well within your means to repay. So if you do have to borrow for a car, go for basic transportation instead of the $40,000 BMW. Keep you house payment less than 1/4th of your take home pay. Pay off the school loans as quickly as possible. Regardless of the label, \"\"good\"\" \"\"bad\"\" \"\"unsecured\"\" \"\"secured\"\", I think that less debt is better than more debt. There is definitely such a thing as too much \"\"good\"\" debt!\"" }, { "docid": "321877", "title": "", "text": "Having someone else paying you rent is always going to be the better deal financially. The question is, what does $450k buy in the neighborhood in which you want to live, vs $800k? I'm going to assume you can afford either option (buying a $450k home and not selling, or an $800k home and selling your current one) whether someone's paying you rent or not. Let's make up some numbers here; a $450k home, financed 80/20 (360k principal) at 4% for 30 years will cost you about $1720 in P&I payments per year (plus escrows such as RE taxes, PMI, and homeowners insurance where applicable). An $800k home financed 80/20 (640k principal) at 4% for 30yr will give you payments of about $3,055/mo before taxes and insurance. So, the worst case overall is that you buy a 450k home in the new neighborhood and are not, at any given time, collecting rent on the old property. That would (assuming the mortgage terms on both home loans were comparable) cost you $3440/mo and you'd be living in a $450k home in a neighborhood where 450k may not buy a home as nice as the one you moved out of. The question as I stated above is this; assuming you had a reliable tenant in your home for the entire remaining life of the loan on your current home, which is more acceptable to you: buying $450k of home (which might be a downgrade in sqft or amenities) and paying $2020 in P&I, or paying about a grand more ($3055/mo) for a much nicer home in the new location? Strictly from a money perspective, the renter is going to be the best option, IF you get reliable tenancy for the entire life of the mortgage on that house; you'll be paying $2020/mo for 30 years, which is $727,200, to end up with $950k of total home value (plus adjustments for actual home value appreciation/depreciation). That's the only way you'll come out ahead on any mortgage; have someone else pay most of it for you. If you don't rent, the $800k home will cost you $1,099,800, while two $450k homes will cost you $1,454,400. The percentage of home value over total payments for the 800k home would be 72% (you will have paid 137% of the value of the home), while you will have paid 153% of the value of two 450k homes." }, { "docid": "139366", "title": "", "text": "There's a ton of great advice here. It's very challenging to come up with something that hasn't already been suggested. I'm curious to know how many years you have left to pay down the mortgage at the regular rate of payment. If it's more than 15 years, it might be worthwhile to consider refinancing your mortgage to a shorter term (15 years or even 10 years if your income supports it). Rates on fixed-interest mortgages at those terms are down in the 3% range and lower (at least according to bankrate.com). Refinancing to a shorter term would be another way of paying off your home faster (with fewer of those dollars going toward interest payments). If you've got fewer than 15 years left to pay off your mortgage, following any of the other advice you've received here should keep you in great financial shape." }, { "docid": "468104", "title": "", "text": "I'll write this up as a more formal answer, here. I'd suggest looking into a Home Equity Line of Credit, or HELOC. You didn't mention in your question how much equity you have in the home, but assuming at least 20%, you might be able to open a HELOC with a line of $40,000. My experience is that you can do 50% of your equity, but depends on the bank. Here are a few notes that are generally in play with HELOC's (YMMV, so be sure to know the specifics before signing on the line) Doing this, at least when we did 8 years ago, did not subject us to PMI. There are certainly plenty of things to research, but it sounds like you're pretty astute based on how you're evaluating the financial side of this endeavor. There are no guarantees in real estate. Houses could be selling like crazy now, but in 6 months they might not. It certainly sounds like that's a lower risk in your area, but you never know what might happen. If you're taking on this extra line of credit, make sure that it's something you could afford should the worst case scenario happen. Equity loans are also available. This is a more traditional fixed-rate loan rather than line of credit, so you'd be looking at set monthly payments rather than the flexibility of paying interest only when you need to. There's a brief write-up on the differences here. I have also heard of a construction loan, which falls into the same category as the aforementioned options, but I can't speak to today's market on those." }, { "docid": "59147", "title": "", "text": "Answers to this your question break down along a few lines regarding opportunity costs of tying up a significant chunk of your salary and assets in one piece of property, as opposed to other things you'd like to do with your life. The 30 year standard mortgage was invented in the 30's as part of FDR's new deal to make housing affordable to more people, while relieving the strain on the market of foreclosed homes from ~10 year interest only balloon mortgages (sound familiar?). The 30 year term tends to follow the career of the average American of that era, allowing them to pay the house off and live out the remainder of their lives there at a lower cost. Houses are depreciating assets because they wear out over time. Their greatest investment value is a place to live. The appreciation on a home comes from the real estate it sits on and the community the property is located in. Value is determined by desirability of the house and community in their current state, and the supply of property in the area. This value can only be extracted when you sell the home. This partially answers your last question noting that you shouldn't buy a really expensive building for investment value. We've learned in recent years that there are no long term guarantees of property value either, because land and communities can decrease in value due to unemployment, over supply, crime, pollution, etc. Only buy as much home as you will need in the next decade or so, in a place that you will like living over that time period, and don't consider it much of an investment. I will tell you to get a fifteen year fixed rate mortgage since it's readily available at lower rates and has a significantly lower total purchase price than the standard 30 years. The monthly payment difference isn't that great, and anyone who looks at the monthly payment as opposed to the total costs, your priorities and the opportunity costs shouldn't be trusted for financial advice. I don't like debt. There are psychological benefits to being free from the bondage and drain of a long term mortgage on your finances. The biggest argument for paying off your home quickly is freedom to pursue other desires with all of your salary and the assets you have available to you. Some financial advisers will tell you to keep your mortgage costs under 25% of your income, so that you can actually live off the money you make. I would also recommend paying at least enough into your 401k to get the company match and fully funding your Roth IRA. I'd also have an emergency fund to cover at least 6 months of expenses, including this mortgage in case you lose your job. A 15 or 20 year mortgage will give you breathing room to take care of these other priorities, and you can overpay on almost any mortgage to decrease the principal and finish in a shorter time period (make sure to get a mortgage that allows prepayment) . More financially savvy people may tell you to take the 30 year mortgage and invest the difference. Especially with mortgage rates around 4%, this is a very cheap way to increase your purchasing power and total assets. Most people lack the investment prowess and self discipline to make this plan pay off. There are even fewer guarantees regarding markets and investments than property. This also is a way of diversifying your total assets to protect against loss of value in your home. This approach has backfired for thousands of people who are underwater on their homes. This problem is often compounded by job loss forcing you to move, or increasing your commute, making your home less desirable for you. Some people will tell you to maintain the mortgage for the tax credit. This fails a basic math test since you only get about a quarter of the money (depending on your tax rate) that you are paying in interest back from the government. The rest of the money goes to bank at no gain to you. This approach is basically a taxpayer subsidized decrease of your 4% interest payment to a 3% interest payment (assuming you have ~ $5000 in other deductions), and only pays off if you can successfully invest the money at a rate somewhat greater than 3%." }, { "docid": "187590", "title": "", "text": "\"Your question isn't great, but I will attempt to answer this piece as it seems really the root of your personal finance question: I want to convince my wife to make this move because it will save us at least 800 month, but she fails to see how buying a second home is financially sound because we have to lose our savings and we have to pay interest on our second home. And... Her logic is it will take almost 5 years to get back our down payment and we have to pay interest as well. So how can this move help our family financially in the long run? ... Is she right? She is mostly wrong. First, consider that there is no \"\"ROI\"\" really on your down payment. Assuming you are paying what your home would sell for the next day, then your \"\"RIO\"\" is already yours (minus realtor fees). She is talking about cash on hand, not ROI. I will use an example without taking into account risk of home markets going down or other risks to ownership. Example: Let's say you pay $2800 a month in mortgage interest+principle at 5.5% apr and $200 a month in taxes+insurance on a $360k loan ($400k house). In this example let's say the same house if you were to rent it is $3800 a month. Understand the Opportunity Cost of renting (the marginal amount it costs you to NOT buy). So far, your opportunity cost is $800 a month. The principle of your house will be increasing with each payment. In our example, it's about $400 for the first payment, and will increase with each payment made while decreasing the interest payment (Suggest you look at an amortization table for your specific mortgage example). So, you're real number is now $1200 a month opportunity cost. Consider also the fact that the $400 a month is sitting in a savings account of sorts. While most savings accounts give you less than 1% in returns and then charge taxes on that gain, your home may (or may not be) much higher than that and won't charge you taxes on the gains when you sell it (If you live in it for a period of time as defined by the IRS.) Let's assume a conservative long term appreciation rate of 3%. That's $12k a year on a $400k house. So, now you're at $2200 a month opportunity cost. In this example I didn't touch on your tax savings of ownership. I also didn't touch on the maintenance cost of ownership or the maintenance cost of renting (your deposit + other fees) which all should be considered. You may have other costs involved in renting. For instance: The cost of not being able to fully utilize your rental as your own house. This may be an even simpler and more convincing way to explain it: On the $2800 mortgage example, you will be paying around $19k in interest and $2400 on taxes, insurance = $23k per year (number could be way different in your example). That is basically throw away money you're never getting back. On the rental, 100% of your rent at $3800 a month is throw away money you're never getting back. That's $45,600 a year.\"" }, { "docid": "25802", "title": "", "text": "It costs them more to make the screens with more pixels. Let's say I usually pay you 10$ for something that cost you 5$ to make. Now I pay you 20$ for something that costs you 18$ to make. Sure you get 20$ instead of 10$, but your profit per item went from 5$ down to 2$. Same thing here, the screens with 4x the pixels costs much more than the original screens. Apple paid slightly more for them, but not enough to keep the profit margin." }, { "docid": "72021", "title": "", "text": "The fluctuation of interest rates during the next year could easily dwarf the savings this attempt to improve your credit score will have; or the reverse is true. Will the loan improve your score enough to make a difference? It will not change the number of months old your oldest account is. It will increase the breadth of your accounts. Applying for the car loan will result in a short term decrease in the score because of the hard pull. The total impact will be harder to predict. A few points either way will generally not have an impact on your rate. You will also notice the two cores in your question differ by more than 30 points. You can't control which number the lender will use. You also have to realize the number differs every day depending on when they pull it that month. The addition of a car loan, assuming you still have the loan when you buy the house, will not have a major impact on your ability to get afford the home mortgage. The bank cares about two numbers regarding monthly payments: the amount of your mortgage including principal, interest, taxes and insurance; and the amount of all other debt payments: car loan, school loans, credit cards. The PITI number should be no more than 28%-33% of your monthly income; the other payments no more than 10%. If the auto loan payments fit in the 10% window, then the amount of money you can spend each month on the mortgage will not be impacted. If it is too large, then they will want to see a smaller amount of your income to go to PITI. If you buy the car, either by cash or by loan, after you apply for the mortgage they will be concerned because you are impacting directly numbers they are using to evaluate your financial health. I have experienced a delay because the buyer bought a car the week before closing. The biggest impact on your ability to get the loan is the greater than 20% down payment, Assuming you can still do that if you pay cash for the car. Don't deplete your savings to get to the 50% down payment level. Keep money for closing costs, moving expenses, furnishing, plus other emergencies. Make it clear that you can easily cover the 20% level, and are willing to go higher to make the loan numbers work." }, { "docid": "5765", "title": "", "text": "\"And? What's the big deal? For the people who are upset about Netflix not having the Star Wars content, those are more than likely big fans of Star Wars, and said fans, if they consider themselves to big a big Star Wars fan, already own the old and most recent Star Wars movies. Watch, people are going to down vote my post, and it will be from those will most likely are a fan but don't own a copy of the movies or will say, \"\"Why should I have to buy them in order to watch them? I should be able to stream them whenever I want.\"\" Think of the price of buying the movie, let's say $20. You can watch it over and over again. With watching it via stream, you'll have to pay between $15-$20 a month in order to watch it.\"" }, { "docid": "350131", "title": "", "text": "I would definitely pay down the debt first. If it is going to take 15 years to do so, you probably need to allocate more money to paying down debt. Cut expenses by going out to eat less, and keeping spending to the bare necessities. You might even consider getting a second job, just for paying down the debt. If that isn't enough, consider selling off some assets. You should be able to come up with a plan to be debt free (excluding maybe a regular mortgage) within 3-5 years. Once the only debt you have is a home mortgage, then its time to look at putting money towards retirement again. Note, you should not take money out of a 401k or IRA to pay off debt. The costs for doing so are nearly always too great." }, { "docid": "466587", "title": "", "text": "\"Fundamentals: Then remember that you want to put 20% or more down in cash, to avoid PMI, and recalculate with thatmajor chunk taken out of your savings. Many banks offer calculators on their websites that can help you run these numbers and figure out how much house a given mortgage can pay for. Remember that the old advice that you should buy the largest house you can afford, or the newer advice about \"\"starter homes\"\", are both questionable in the current market. =========================== Added: If you're willing to settle for a rule-of-thumb first-approximation ballpark estimate: Maximum mortgage payment: Rule of 28. Your monthly mortgage payment should not exceed 28 percent of your gross monthly income (your income before taxes are taken out). Maximum housing cost: Rule of 32. Your total housing payments (including the mortgage, homeowner’s insurance, and private mortgage insurance [PMI], association fees, and property taxes) should not exceed 32 percent of your gross monthly income. Maximum Total Debt Service: Rule of 40. Your total debt payments, including your housing payment, your auto loan or student loan payments, and minimum credit card payments should not exceed 40 percent of your gross monthly income. As I said, many banks offer web-based tools that will run these numbers for you. These are rules that the lending industy uses for a quick initial screen of an application. They do not guarantee that you in particular can afford that large a loan, just that it isn't so bad that they won't even look at it. Note that this is all in terms of mortgage paymennts, which means it's also affected by what interest rate you can get, how long a mortgage you're willing to take, and how much you can afford to pull out of your savings. Also, as noted, if you can't put 20% down from savings the bank will hit you for PMI. Standard reminder: Unless you explect to live in the same place for five years or more, buying a house is questionable financially. There is nothing wrong with renting; depending on local housing stock it may be cheaper. Houses come with ongoung costs and hassles rental -- even renting a house -- doesn't. Buy a house only when it makes sense both financially and in terms of what you actually need to make your life pleasant. Do not buy a house only because you think it's an investment; real estate can be a profitable business, but thinking of a house as simultaneously both your home and an investment is a good way to get yourself into trouble.\"" }, { "docid": "338606", "title": "", "text": "Before doing anything else: you want a lawyer involved right from the beginning, to make sure that something reasonable happens with the house if one of you dies or leaves. Seriously, you'll both be safer and happier if it's all explicit. How much you should put on the house is not the right question. Houses don't sell instantly, and while you can access some of their stored value by borrowing against them that too can take some time to arrange. You need to have enough operating capital for normal finances, plus an emergency reserve to cover unexpectedly being out of work or sudden medical expenses. There are suggestions for how much that should be in answers to other questions. After that, the question is whether you should really be buying a house at all. It isn't always a better option than renting and (again as discussed in answers to other questions) there are ongoing costs in time and upkeep and taxes and insurance. If you're just thinking about the financials, it may be better to continue to rent and to invest the savings in the market. The time to buy a house is when you have the money and a reliable income, plan not to move for at least five years, really want the advantages of more elbow room and the freedom to alter the place to suit your needs (which will absorb more money)... As far as how much to put down vs. finance: you really want a down payment of at least 20%. Anything less than that, and the bank will insist you pay for mortgage insurance, which is a significant expense. Whether you want to pay more than that out of your savings depends on how low an interest rate you can get (this is a good time in that regard) versus how much return you are getting on your investments, combined with how long you want the mortgage to run and how large a mortgage payment you're comfortable committing to. If you've got a good investment plan in progress and can get a mortgage which charges a lower interest rate than your investments can reasonably be expected to pay you, putting less down and taking a larger mortgage is one of the safer forms of leveraged investing... IF you're comfortable with that. If the larger mortgage hanging over you is going to make you uncomfortable, this might not be a good answer for you. It's a judgement call. I waited until i'd been in out of school about 25 years before I was ready to buy a house. Since i'd been careful with my money over that time, I had enough in investments that I could have bought the house for cash. Or I could have gone the other way and financed 80% of it for maximum leverage. I decided that what I was comfortable with was financing 50%. You'll have to work thru the numbers and decide what you are comfortable with. But I say again, if buying shared property you need a lawyer involved. It may be absolutely the right thing to do ... but you want to make sure everything is fully spelled out... and you'll also want appropriate terms written into your wills. (Being married would carry some automatic assumptions about joint ownership and survivor rights... but even then it's safer to make it all explicit.) Edit: Yes, making a larger down payment may let you negotiate a lower interest rate on the loan. You'll have to find out what each bank is willing to offer you, or work with a mortgage broker who can explore those options for you." }, { "docid": "23533", "title": "", "text": "I think the consensus is that you can't afford a home now and need to build more of a down payment (20% is benchmark, you may also need to pay mortgage insurance if you are below that) and all considered, it takes up too much of your monthly budget. You didn't do anything wrong but as mentioned by Ben, you are missing some monthly and yearly costs with home ownership. I suggest visiting a bank or somewhere like coldwell banker to discuss accurate costs and regulations in your area. I know the feeling of considering paying more now for the very attractive thought of owning a home... in 30 years. After interest, you need to consider that you are paying almost double the initial principle so don't rush for something you can do a year or two down the line as a major commitment. One major point that isn't emphasized in the current answers. You have a large family: Two children, a dog, and a cat. I don't know the kid's ages but given you are in your early twenties and your estimated monthly costs, they are probably very young before the point they really put any stress financially but you need to budget them in exponentially. Some quick figures from experience. Closing costs including inspections, mortgage origination fee, lawyer fees, checking the history of the home for liens, etc, which will set you back minimum 5% depending on the type of purchase (short sales, foreclosures are more expensive because they take longer) Insurance (home and flood) will depend on your zoning but you can expect anywhere between $100-300 a month. For many zones it is mandatory. Also depending on if it's a coop ($800+), condo($500+) or a townhouse-type you will need to pay different levels of monthly maintenance for the groundskeeping as a cooperative fee. at an estimate of a 250K home, all your savings will not be able to cover your closing costs and all 250k will need to be part of your base mortgage. so your base monthly mortgage payment at around 4% will be $1,200 a month. it's too tight. If it was a friend, I would highly suggest against buying in this case to preserve financial flexibility and sanity at such a young age." }, { "docid": "106145", "title": "", "text": "If you're looking for some formula, I don't think one exists. People talk about this all the time and give conflicting advice. If there was a proven-accurate formula, they wouldn't be debating it. There are basically 3 reasons to do a home improvement project: (a) Correct a problem so that you prevent on-going damage to your home. For example, have a leaking roof patched or replaced, or exterminate termites. Such a job is worthwhile if the cost of fixing the problem is less than the cost of future damage. In the case of my termite and leaking roof examples, this is almost always worth doing. Lesser maintenance problems might be more debatable. Similarly, some improvements may reduce expenses. Like replacing an old furnace with a newer model may cut your heating bills. Here the question is: how long does it take to repay the investment, compared to other things you might invest your money in. Just to make up numbers: Suppose you find that a new furnace will save you $500 per year. If the new furnace costs $2000, then it will take 4 years to pay for itself. I'd consider that a good investment. If that same $2000 furnace will only cut your heating bills by $100 per year, then it will take 20 years to pay for itself. You'd probably be better off putting the $2000 into the stock market and using the gains to help pay your heating bill. (b) Increase the resale value of your home. If you are paying someone else to do the work, the harsh reality here is: Almost no job will increase the resale value by more than the cost of getting the job done. I've seen many articles over the years citing studies on this. I think most conclude that kitchen remodeling comes closet to paying for itself, and bathrooms come next. New windows are also up there. I don't have studies to prove this, but my guesses would be: Replacing something that is basically nice with a different style will rarely pay for itself. Like, replacing oak cabinets with cherry cabinets. Replacing something that is in terrible shape with something decent is more likely to pay back than replacing something decent with something beautiful. Like if you have an old iron bathtub that's rusting and falling apart, replacing it may pay off. If you have a 5-year-old bathtub that's in good shape but is not premium, top of the line, replacing it with a premium bathtub will probably do very little for resale value. If you can do a lot of the work yourself, the story changes. Many home improvement jobs don't require a lot of materials, but do require a lot of work. If you do the labor, you can often get the job done very cheaply, and it's likely that the increase in resale value will be more than what you spend. For example, most of my house has hardwood floors. Lots of people like pretty hardwood floors. I just restained the floors in two rooms. It cost me, I don't know, maybe $20 or $30 for stain and some brushes. I'm sure if I tried to sell the house tomorrow I'd get my twenty bucks back in higher sale value. Realtors often advise sellers to paint. Again, if you do it yourself, the cost of paint may be a hundred dollars, and it can increase the sale price of the house by thousands. Of course if you do the work yourself, you have to consider the value of your time. (c) To make your home more pleasant to live in. This is totally subjective. You have to make the decision on the same basis that you decide whether anything that is not essential to survival is worth buying. To some people, a bottle of fancy imported wine is worth thousands, even millions, of dollars. Others can't tell the difference between a $10,000 wine and a $15 wine. The thing to ask yourself is, How important is this home improvement to me, compared to other things I could do with the money? Like, suppose you're considering spending $20,000 remodeling your kitchen. What else could you do with $20,000? You could buy a car, go on an elaborate vacation, eat out several times a week for years, retire a little earlier, etc. No one can tell you how much something is worth to you. Any given home improvement may involve a combination of these factors. Like say you're considering that $20,000 kitchen remodeling. Say you somehow find out that this will increase the resale value by $15,000. If the only reason you were considering it was to increase resale value, then it's not worth it -- you'd lose $5,000. But if you also want the nicer kitchen, then it is fair to say, Okay, it will cost me $20,000, but ultimately I'll get $15,000 of that back. So in the long run it will only cost me $5,000. Is having a nicer kitchen worth $5,000 to me? Note, by the way, that resale value only matters if and when you sell the house. If you expect to stay in this house for 20 years, any improvements done are VERY long-term investments. If you live in it until you die, the resale value may matter to your heirs." }, { "docid": "330229", "title": "", "text": "\"I second DJClayworth's suggestion to wait and save a larger down-payment. I'll also add: It looks like you neglected to consider CMHC insurance in your calculation. When you buy your first home with less than 20% down, the bank will require you to insure the mortgage. CMHC insurance protects the bank if you default – it does not protect you. But such insurance does make a bank feel better about lending money to people it otherwise wouldn't take a chance on. The kicker is you would be responsible for paying the CMHC insurance that's protecting the bank. The premium is usually added on to the amount borrowed, since a buyer requiring CMHC insurance doesn't, by definition, have enough money up front. The standard CMHC premium for a mortgage with 5% down, or as they would say a \"\"95% Loan-to-Value ratio\"\" is 2.75%. Refer to CMHC's table of premiums here. So, if you had a down-payment of $17,000 to borrow a remaining $323,000 from the bank to buy a $340,000 property, the money you owe the bank would be $331,883 due to the added 2.75% CMHC insurance premium. This added $8883, plus interest, obviously makes the case for buying less compelling. Then, are there other closing costs that haven't been fully considered? One more thing I ought to mention: Have you considered saving a larger down-payment by using an RRSP? There's a significant advantage doing it that way: You can save pre-tax dollars for your down-payment. When it comes time to buy, you'd take advantage of the Home Buyer's Plan (HBP) and get a tax-free loan of your own money from your RRSP. You'd have 15 years to put the money back into your RRSP. Last, after saving a larger downpayment, if you're lucky you may find houses not as expensive when you're ready to buy. I acknowledge this is a speculative statement, and there's a chance houses may actually be more expensive, but there is mounting evidence and opinion that real estate is currently over-valued in Canada. Read here, here, and here.\"" }, { "docid": "27268", "title": "", "text": "First of all, realize that buying a home isn't really an investment. It is cheaper to rent. In recent years, people were able to sell their houses for astronomical profits, but that won't be happening much in the future. Additionally, there are many hidden costs of owning a home. Regarding the mortgage interest tax deduction, don't buy a house just to get this. It is like spending $1 to get back some amount of money less than $1. So just keep that in mind. Are you debt free? If not, pay off your other debts before buying a home. I follow the advice of Dave Ramsey, so I'll echo it here. Make sure you have an emergency fund and no debt. At this point I think you are ready to buy a house. When you do, put down as much as you can; above 20% if possible. Then get a 15 year fixed rate mortgage. At this point, start saving for your kid's college (if you believe in that) and paying down your home. Having no mortgage is a dream many people never have. I cannot wait until I have no mortgage. Don't get suckered into getting a high priced loan. Pay down as much of the price of the house as possible up front. This gives you flexibility too. What if you need to sell quickly? Well, you will have equity from the get-go, so this will be much easier. Good luck with your purchase!" } ]

[ { "docid": "27268", "title": "", "text": "First of all, realize that buying a home isn't really an investment. It is cheaper to rent. In recent years, people were able to sell their houses for astronomical profits, but that won't be happening much in the future. Additionally, there are many hidden costs of owning a home. Regarding the mortgage interest tax deduction, don't buy a house just to get this. It is like spending $1 to get back some amount of money less than $1. So just keep that in mind. Are you debt free? If not, pay off your other debts before buying a home. I follow the advice of Dave Ramsey, so I'll echo it here. Make sure you have an emergency fund and no debt. At this point I think you are ready to buy a house. When you do, put down as much as you can; above 20% if possible. Then get a 15 year fixed rate mortgage. At this point, start saving for your kid's college (if you believe in that) and paying down your home. Having no mortgage is a dream many people never have. I cannot wait until I have no mortgage. Don't get suckered into getting a high priced loan. Pay down as much of the price of the house as possible up front. This gives you flexibility too. What if you need to sell quickly? Well, you will have equity from the get-go, so this will be much easier. Good luck with your purchase!" } ]

[ { "docid": "350131", "title": "", "text": "I would definitely pay down the debt first. If it is going to take 15 years to do so, you probably need to allocate more money to paying down debt. Cut expenses by going out to eat less, and keeping spending to the bare necessities. You might even consider getting a second job, just for paying down the debt. If that isn't enough, consider selling off some assets. You should be able to come up with a plan to be debt free (excluding maybe a regular mortgage) within 3-5 years. Once the only debt you have is a home mortgage, then its time to look at putting money towards retirement again. Note, you should not take money out of a 401k or IRA to pay off debt. The costs for doing so are nearly always too great." }, { "docid": "496997", "title": "", "text": "\"The other answers are good, I would just like to add certain points, taking this question together with the previous ones you have asked here. How can a person measure how much to spend on food, car, bills or rent from his salary? Is there a formula to keep in check? Basically, it may well be that your best option would be to move to a smaller apartment or worse location to bring down rent, possibly forget about your own study in the worst case, sell the car and use public transportation, eat as many meals as possible at home, bring boxed lunch from home to work, if this applies, etc -- whatever makes a saving and sense to you. Regarding food, this is the point where it is usually possible to save a very significant amount, if you are prepared to make food at home. Unless you are already doing it, look around for articles such as \"\"living on 20 pounds a week\"\" or so, maybe they will give you ideas you can use (eg. How to eat on 10 pounds a week: shopping list and recipes) -- where you are shopping is crucial here as similar items can differ in price significantly between different chains. If the electricity bill is significant and you are at home a lot, you could try to bring it down by changing all bulbs in your home to LED ones, unless it has already been done. Yes, they can cost 2-3 more than eg. halogen ones, but they use 5-10x less electricity. Forget credit cards, if possible. Use debit cards so you know the money you spend does not get you into more debt. One question you asked here was about exchange rates -- if you work with different currencies a lot, there are several companies such as Revolut or N26, which offer accounts with debit cards that use near FX rates --- in my experiencee I could save around 10-15% on currency conversion EUR/GBP, using Revolut, compared to my local bank rate, for example. I find myself looking at my account every single day and get tensed and sad because almost whenever the money (pay) comes in I freak out that after everything there is nothing for us to enjoy or save. Well, yes. That is nearly the definition of too much debt. The point about going to the extremes of reducing expenses I outlined above, is that the more you can reduce your expenses while struggling with debt, the faster you'll get out of it. It might be hard to adapt, but it will be better, if you can calculate how long it will take to get you back on feet and know that, eg. \"\"in 6 months I can start to think of savings and carefully upgrading my lifestyle back\"\". In turn, the smaller the reduction of expenses, the more prolonged the process -- you might be looking at 2-3 years of insecure/constantly frustrating/risking more debt lifestyle, instead of 6 months of severely reduced one. Alternatively, if things go too bleak, you might consider declaring bankrupcy -- although I am not sure how feasible it is in the UK.\"" }, { "docid": "498881", "title": "", "text": "Paying off your mortgage early being good is a myth. It is great for the chronic overspenders to have their mortgage paid off so when they rack up credit card bills and get behind, well they still hae a place to stay. But for those who are more logical with their money paying off your mortgage early in current conditions makes no sense. You can get a 30 year loan well below 4%. Discounting taxes for your average family you would have a rate floating below 3%. So reasons that paying off your mortgage should be almost LAST (given current low long-term interest rates): The first thing you should do is take care of any high interest debt. I would say that anything more than 7-8%, including all credit card debt should be focus #1. putting money into your retirement savings is #1. You will earn way more than 3% over the long-run. you can earn a higher return in the market. Even with a very conservative portfolio you can clear 5-6%, which will still clear more than 3% after taxes. for those who say you can't be sure about the market... well if the market did bad for 30 years in a row no one will have money and the house will also be worthless. if a disaster happens to your house and you own it, your money is gone. In many cases you would be able to declare bankruptcy and let the bank take the property as is. there are just too many examples but if you are paying off your house early, you lose the flexible/liquid money that you now have tied up in the house. Now the reasons for paying down your mortgage are really easy too: you don't trust your spending habits you want to move up in houses and you want to make sure that you have at least 20% down on future house to skip PMI." }, { "docid": "63690", "title": "", "text": "This is a slightly different reason to any other answer I have seen here about irrationality and how being rationally aware of one's irrationality (in the future or in different circumstances) can lead you to make decisions which on the face of it seem wrong. First of all, why do people sometimes maintain balances on high-interest debt when they have savings? Standard advice on many money-management sites and forums is to withdraw the savings to pay down the debt. However, I think there is a problem with this. Suppose you have $5,000 in a savings account, and a $2,000 credit card balance. You are paying more interest on the credit card than you get from the savings account, and it seems that you should withdraw some money from the savings account, and pay off the cc. However, the difference between the two scenarios, other than the interest you lose by keeping the cc balance, is your motivation for saving. If you have a credit card balance of $2,000, you might be obliged to pay a minimum payment of $100 each month. If you have any extra money, you will be rewarded if you pay more in to the credit card, by seeing the balance go down and understanding that you will soon be free from receiving this awful bill each month. To maintain your savings goal, it's enough to agree with yourself that you won't do any new spending on the cc, or withdraw any savings. Now suppose that you decide to pay off the cc with the savings. There is now nothing 'forcing' you to save $100 each month. When you get to the end of the month, you have to motivate yourself that you will be adding spare cash to your $3,000 savings balance, rather than that you 'have to' pay down your cc. Yes, if you spend the spare cash instead of saving it, you get something in return for it. But it is possible that spending $140 on small-scale discretionary spending (things you don't need) actually gets you less for your money than paying the credit card company $40 interest and saving $100? You might even be tempted to start spending on your credit card again, knowing that you have a 0 balance, and that you 'can always pay it off out of savings'. It's easy to analogize this to a situation with two types of debt. Suppose that you have a $2,000 debt to your parents with no interest and a $2,000 loan at high interest, and you get a $2,000 windfall. Let's assume that your parents don't need the money in a hurry and aren't hassling you to pay them (otherwise you could consider the guilt or the hassle as a form of emotional interest rate). Might it not be better to pay your parents off? If you do, you are likely to keep paying off your loan out of necessity of making the regular payments. In 20 paychecks (or whatever) you might be debt free. If you pay off your loan, you lose the incentive to save. After 20 months you still owe your parents $2,000. I am not saying that this is always what makes sense. Just that it could make sense. Note that this is an opposite to the 'Debt Snowball' method. That method says that it's better to pay off small debts, because that way you have more free cash flow to pay off the larger debts. The above argues that this is a bad idea, because you might spend the increased cash flow on junk. It would be better to keep around as many things as possible which have minimum payments, because it restricts you to paying things rather than gives you the choice of whether to save or spend." }, { "docid": "119351", "title": "", "text": "\"I've heard that the bank may agree to a \"\"one time adjustment\"\" to lower the payments on Mortgage #2 because of paying a very large payment. Is this something that really happens? It's to the banks advantage to reduce the payments in that situation. If they were willing to loan you money previously, they should still be willing. If they keep the payments the same, then you'll pay off the loan faster. Just playing with a spreadsheet, paying off a third of the mortgage amount would eliminate the back half of the payments or reduces payments by around two fifths (leaving off any escrow or insurance). If you can afford the payments, I'd lean towards leaving them at the current level and paying off the loan early. But you know your circumstances better than we do. If you are underfunded elsewhere, shore things up. Fully fund your 401k and IRA. Fill out your emergency fund. Buy that new appliance that you don't quite need yet but will soon. If you are paying PMI, you should reduce the principal down to the point where you no longer have to do so. That's usually more than 20% equity (or less than an 80% loan). There is an argument for investing the remainder in securities (stocks and bonds). If you itemize, you can deduct the interest on your mortgage. And then you can deduct other things, like local and state taxes. If you're getting a higher return from securities than you'd pay on the mortgage, it can be a good investment. Five or ten years from now, when your interest drops closer to the itemization threshold, you can cash out and pay off more of the mortgage than you could now. The problem is that this might not be the best time for that. The Buffett Indicator is currently higher than it was before the 2007-9 market crash. That suggests that stocks aren't the best place for a medium term investment right now. I'd pay down the mortgage. You know the return on that. No matter what happens with the market, it will save you on interest. I'd keep the payments where they are now unless they are straining your budget unduly. Pay off your thirty year mortgage in fifteen years.\"" }, { "docid": "59147", "title": "", "text": "Answers to this your question break down along a few lines regarding opportunity costs of tying up a significant chunk of your salary and assets in one piece of property, as opposed to other things you'd like to do with your life. The 30 year standard mortgage was invented in the 30's as part of FDR's new deal to make housing affordable to more people, while relieving the strain on the market of foreclosed homes from ~10 year interest only balloon mortgages (sound familiar?). The 30 year term tends to follow the career of the average American of that era, allowing them to pay the house off and live out the remainder of their lives there at a lower cost. Houses are depreciating assets because they wear out over time. Their greatest investment value is a place to live. The appreciation on a home comes from the real estate it sits on and the community the property is located in. Value is determined by desirability of the house and community in their current state, and the supply of property in the area. This value can only be extracted when you sell the home. This partially answers your last question noting that you shouldn't buy a really expensive building for investment value. We've learned in recent years that there are no long term guarantees of property value either, because land and communities can decrease in value due to unemployment, over supply, crime, pollution, etc. Only buy as much home as you will need in the next decade or so, in a place that you will like living over that time period, and don't consider it much of an investment. I will tell you to get a fifteen year fixed rate mortgage since it's readily available at lower rates and has a significantly lower total purchase price than the standard 30 years. The monthly payment difference isn't that great, and anyone who looks at the monthly payment as opposed to the total costs, your priorities and the opportunity costs shouldn't be trusted for financial advice. I don't like debt. There are psychological benefits to being free from the bondage and drain of a long term mortgage on your finances. The biggest argument for paying off your home quickly is freedom to pursue other desires with all of your salary and the assets you have available to you. Some financial advisers will tell you to keep your mortgage costs under 25% of your income, so that you can actually live off the money you make. I would also recommend paying at least enough into your 401k to get the company match and fully funding your Roth IRA. I'd also have an emergency fund to cover at least 6 months of expenses, including this mortgage in case you lose your job. A 15 or 20 year mortgage will give you breathing room to take care of these other priorities, and you can overpay on almost any mortgage to decrease the principal and finish in a shorter time period (make sure to get a mortgage that allows prepayment) . More financially savvy people may tell you to take the 30 year mortgage and invest the difference. Especially with mortgage rates around 4%, this is a very cheap way to increase your purchasing power and total assets. Most people lack the investment prowess and self discipline to make this plan pay off. There are even fewer guarantees regarding markets and investments than property. This also is a way of diversifying your total assets to protect against loss of value in your home. This approach has backfired for thousands of people who are underwater on their homes. This problem is often compounded by job loss forcing you to move, or increasing your commute, making your home less desirable for you. Some people will tell you to maintain the mortgage for the tax credit. This fails a basic math test since you only get about a quarter of the money (depending on your tax rate) that you are paying in interest back from the government. The rest of the money goes to bank at no gain to you. This approach is basically a taxpayer subsidized decrease of your 4% interest payment to a 3% interest payment (assuming you have ~ $5000 in other deductions), and only pays off if you can successfully invest the money at a rate somewhat greater than 3%." }, { "docid": "63698", "title": "", "text": "I agree with you that you need to consolidate this debt using a loan. It may be hard to find a bank or credit organization that will give you an unsecured personal loan for that much money. I know of one, called Lending Club (Disclaimer - I'm an investor on this platform. Not trying to advertise, it's just the only place I know of off the top of my head) that facilitates loans like this, but instead of a bank financing the loan, the loan is split up accross hundreds of investors who each contribute a small amount (such as $25). They have rates anywhere between 5-30%, based on your credit profile(s), and I believe they have some loan amounts that go up to the area that you're discussing. Regarding buying the house - The best thing you can do when trying to buy a house is to save up a 20% downpayment, if at all possible. Below this amount, you may be asked to pay for 'PMI' - Private Mortgage Insurance. This is a charge that doesn't go away for quite a while (until you've paid them 20% of the appraised value of the home), where you pay a premium because you didn't have the 20% downpayment for the house. I would suggest you try to eliminate your credit card debt as soon as possible, and would recommend the same for your father. Getting your utilization down and reconsolidating the large debts with a loan will help to reduce interest charges and get you a reasonable, fixed payment. Whether you decide to pay off your own balances using your savings account is up to you; if it were me, personally, I'd do so immediately rather than trying to pay it off over time. But if you lose money to taxes by withdrawing the money from your 'tax free savings account', it may not be a beneficial situation. Treat debt, especially credit card debt, like an emergency at all times, and you'll find yourself in a better place as a result. Credit card debt and balances are and should be temporary, and their rates and fees are structured that way. If, for any reason, you expect that a credit card's balance will remain for an extended period of time, you may want to consider whether it would be advantageous for you to consolidate the debt into a loan, instead." }, { "docid": "90927", "title": "", "text": "Hard to give an answer without knowing more details (interest rates, remaining principle on loans, especially how soon the new roof is needed). Maintaining the value in your home (unless you are planning to walk away from it or short-sell or something) is of paramount importance, and the cost of a leak should it happen can be substantial. If the roof is a few years out, and you have loans with interest rates about oh I'd say around 6%or more then I would pay off those loans and take the money you were paying there and start putting it into a fund to pay for the roof. I am also a huge fan of doing whatever you can to max out your 401K contributions. Money put into a 401K early has a LOT more value than money put in later, and since you don't pay taxes on it, the cost out of your pocket is much lower (eg. at a 20% tax rate it costs you only $80 out of pocket to put $100 into your 401.. (look at that, you just made like 25% return on that $80) Paying off loans is pretty much equivalent to making a risk free return on the money equal to the interest rate on the loan. But to REALLY make that work, what you need to do is in a virtual sense, keep making the loan payment just now pay it to yourself, putting that money into a savings account, or towards your 401K or whatever. If you just torn around and start spending that money, then you are not really getting as much value to paying off the loan early." }, { "docid": "1145", "title": "", "text": "When I was in that boat a few years ago, I went for the car first. My thoughts: If I get the car first, I'm guaranteed to have a car that runs well. That makes it more convenient to commute to any job, or for social functions. I ended up dropping about $20k into a car (paid cash, I don't like being in debt). I chose to buy a really nice car, knowing it will last for many years to come - I'm expecting to not replace it for about 10 years from the purchase. I would urge you to consider paying in full for the car; dumping $20k+ is a lot, and there are plenty of nice cars out there in the $10-20k range that will work just fine for years to come. One benefit of paying in full is that you don't have a portion of your income tied into the car loan. The main reason I chose not to go for the house first had more to do with the difference in commitment. A home mortgage is a 30-year commitment on a large chunk of your income. With the job market and housing markets both currently working against you, it's better to wait until you have a large safety net to fall into. For example, it's always recommended to have several months worth of living expenses in savings. Compared to renting, having 6 or more months of mortgage payments + utilities + insurance + property taxes + other mandatory expenses (see: food, gas) comes out to a significant amount more that you should have saved (for me, I'm looking at a minimum of about $20k in savings just to feel comfortable; YMMV). Also, owning a house always has more maintenance costs than you will predict. Even if it's just replacing a few light bulbs at first, eventually you'll need something major: an appliance will die, your roof will spring a leak, anything (I had both of those happen in the first year, though it could be bad luck). You should make sure that you can afford the increased monthly payments while still well under your income. Once you're locked in to the house, you can still set aside a smaller chunk of your income for a new car 5-10 years down the road. But if you're current car is getting down to it's last legs, you should get that fixed up before you lock yourself in to an uncomfortable situation. Don't be in too much of a hurry to buy a house. The housing market still has a ways to go before it recovers, and there's not a whole lot to help it along. Interest rates may go up, but that will only hurt the housing market, so I don't expect it to change too much for the next several months. With a little bit of sanity, we won't have another outrageous housing bubble for many years, so houses should remain somewhat affordable (interest rates may vary). Also keep in mind that if you pay less that 20% down on the house, you may end up with some form of mortgage interest, which is just extra interest you'll owe each month." }, { "docid": "422820", "title": "", "text": "\"How can one offset exposure created by real-estate purchase? provides a similar discussion. Even if such a product were available in the precise increments you need, the pricing would make it a loser for you. \"\"There's no free lunch\"\" in this case, and the cost to insure against the downside would be disproportional to the true risk. Say you bought a $100K home. At today's valuations, the downside over a given year might be, say, 20%. It might cost you $5000 to 'insure' against that $20K risk. Let me offer an example - The SPY (S&P ETF) is now at $177. A $160 (Dec '14) put costs $7.50. So, if you fear a crash, you can pay 4%, but only get a return if the market falls by over 14%. If it falls 'just' 10%, you lose your premium. With only 5% down, you will get a far better risk-adjusted return by paying down the mortgage to <78% LTV, and requesting PMI, if any, be removed. Even if no PMI, in 5 years, you'll have 20% more equity than otherwise. Over the long term, 5 year's housing inflation would be ~ 15% or so. This process would help insure you are not underwater in that time. Not guarantee, but help.\"" }, { "docid": "523949", "title": "", "text": "As a general rule, diversification means carrying sufficient amounts in cash equivalents, stocks, bonds, and real estate. An emergency fund should have six months income (conservative) or expenses (less conservative) in some kind of cash equivalent (like a savings account). As you approach retirement, that number should increase. At retirement, it should be something like five years of expenses. At that time, it is no longer an emergency fund, it's your everyday expenses. You can use a pension or social security to offset your effective monthly expenses for the purpose of that fund. You should five years net expenses after income in cash equivalents after retirement. The normal diversification ratio for stocks, bonds, and real estate is something like 60% stocks, 20% bonds, and 20% real estate. You can count the equity in your house as part of the real estate share. For most people, the house will be sufficient diversification into real estate. That said, you should not buy a second home as an investment. Buy the second home if you can afford it and if it makes you happy. Then consider if you want to keep your first home as an investment or just sell it now. Look at your overall ownership to determine if you are overweighted into real estate. Your primary house is not an investment, but it is an ownership. If 90% of your net worth is real estate, then you are probably underinvested in securities like stocks and bonds. 50% should probably be an upper bound, and 20% real estate would be more diversified. If your 401k has an employer match, you should almost certainly put enough in it to get the full match. I prefer a ratio of 70-75% stocks to 25-30% bonds at all ages. This matches the overall market diversification. Rebalance to stay in that range regularly, possibly by investing in the underweight security. Adding real estate to that, my preference would be for real estate to be roughly a quarter of the value of securities. So around 60% stocks, 20% bonds, and 20% real estate. A 50% share for real estate is more aggressive but can work. Along with a house or rental properties, another option for increasing the real estate share is a Real Estate Investment Trust (REIT). These are essentially a mutual fund for real estate. This takes you out of the business of actively managing properties. If you really want to manage rentals, make sure that you list all the expenses. These include: Also be careful that you are able to handle it if things change. Perhaps today there is a tremendous shortage of rental properties and the vacancy rate is close to zero. What happens in a few years when new construction provides more slack? Some kinds of maintenance can't be done with tenants. Also, some kinds of maintenance will scare away new tenants. So just as you are paying out a large amount of money, you also aren't getting rent. You need to be able to handle the loss of income and the large expense at the same time. Don't forget the sales value of your current house. Perhaps you bought when houses were cheaper. Maybe you'd be better off taking the current equity that you have in that house and putting it into your new house's mortgage. Yes, the old mortgage payment may be lower than the rent you could get, but the rent over the next thirty years might be less than what you could get for the house if you sold it. Are you better off with minimal equity in two houses or good equity with one house? I would feel better about this purchase if you were saying that you were doing this in addition to your 401k. Doing this instead of your 401k seems sketchy to me. What will you do if there is another housing crash? With a little bad luck, you could end up underwater on two mortgages and unable to make payments. Or perhaps not underwater on the current house, but not getting much back on a sale either. All that said, maybe it's a good deal. You have more information about it than we do. Just...be careful." }, { "docid": "163997", "title": "", "text": "The problem comes when the borrower cannot afford his home. If a borrower buys more home than they can afford, as long as he can sell the house for more than he owes, he's not in a disastrous situation. He can sell the house, pay off the mortgage, and choose more affordable housing instead. If he is upside-down on his home, he doesn't have that option. He's stuck in his home. If he sells it, he will have to come up with extra money to pay off the mortgage (which he doesn't have, because he is in a home he can't afford). It used to be commonplace for banks to issue mortgages for 100% of the value of the home. As long as the home keeps appreciating, everybody is happy. But if the house drops in value and the homeowner finds himself unable to make house payments, both the homeowner and the bank are at risk. Recent regulations in the U.S. have made no-down-payment mortgages less common." }, { "docid": "533132", "title": "", "text": "\"All else being equal, you should look for more volatile (riskier) stocks. Technically, it was all time value - the entire value of an \"\"out of the money\"\" option is time value. What's confusing is that time value is affected by numerous variables, only one of which is time. The reason volatility is the one to look at is that all the rest are likely already intuitive to you, or are too minor an influence to worry about: Current risk-free interest rates and a stock's dividend payout during the life of the option affect the value of the call, but are usually minor infulences. (Higher interest rates makes call values higher, and higher dividend yield makes call values lower.) Longer time to expiration will increase the value of the call, but you're pretty likely already focused on that. The strike price's proximity to the current price affects the call's value - agreeing to sell a stock 5% above current levels will pay more than agreeing to sell it 10% above current levels - but again, this is likely obvious to you. Volatility, or the percent by which the stock is likely to move up or down on a given day, is almost certainly the variable that's not already obvious. Stocks that jump all over the place have higher volatility than those that move more predictably. The reason that options (calls and puts) cost more on higher volatility names is that options' payout is asymmetrical. In the case of calls, the option holder gets all the upside, but none of the downside, other than what they paid for the opotion. If one stock goes up or down $5 every day, and another goes up or down $20 every day and you could pay some fixed amount to get that stock's upside, but not have any exposure to its downside, other than that fixed amount, you'd pay more for the one that pays you $20 or $0 than you would for the one that pays you $5 or $0. That's why higher volatility (meaning larger daily moves) makes optimum prices higher.\"" }, { "docid": "214798", "title": "", "text": "Like @littleadv, I don't consider a mortgage on a primary residence to be a low-risk investment. It is an asset, but one that can be rather illiquid, depending on the nature of the real estate market in your area. There are enough additional costs associated with home-ownership (down-payment, insurance, repairs) relative to more traditional investments to argue against a primary residence being an investment. Your question didn't indicate when and where you bought your home, the type of home (single-family, townhouse, or condo) the nature of your mortgage (fixed-rate or adjustable rate), or your interest rate, but since you're in your mid-20s, I'm guessing you bought after the crash. If that's the case, your odds of making a profit if/when you sell your home are higher than they would be if you bought in the 2006/2007 time-frame. This is no guarantee of course. Given the amount of housing stock still available, housing prices could still fall further. While it is possible to lose money in all sorts of investments, the illiquid nature of real estate makes it a lot more difficult to limit your losses by selling. If preserving principal is your objective, money market funds and treasury inflation protected securities are better choices than your home. The diversification your financial advisor is suggesting is a way to manage risk. Not all investments perform the same way in a given economic climate. When stocks increase in value, bonds tend to decrease (and vice versa). Too much money in a single investment means you could be wiped out in a downturn." }, { "docid": "499977", "title": "", "text": "\"I am not saying it is fair, or that only they get to say \"\"this sucks\"\" I am saying that you should not be envious of them. Also, try to remember that the programs like the one they made use of don't just help that family. Foreclosures drive down property values. Sure it sucks to see them basically get rewarded for an. . . . optimistic gamble shall we say. . . but they are not the only ones that benefited. Their neighbors, some of whom likely are honest people who took a cautious path to home ownership, now will not have their homes decrease in value due to sister. She gets an unfair reward, but it also helps avoid her neighbors getting unfairly dinged. Not to mention that it is safer to have homes occupied, and they tend to be less likely to fall into disrepair. Also, try to remember that every house that does go back to the bank means one more family of renters. Banks tend to sit on homes, often for way way longer than they should, leaving that house empty, while the former tenants try to rent. Pour more renters into the pool while banks sit on unsold vacant homes and landlords can be more picky and charge more for rent. But in the end. . . .man your rent sucks.\"" }, { "docid": "479213", "title": "", "text": "\"Concise answers to your questions: Depends on the loan and the bank; when you \"\"accelerate\"\" repayment of a loan by applying a pre-payment balance to the principal, your monthly payment may be reduced. However, standard practice for most loan types is that the repayment schedule will be accelerated; you'll pay no less each month, but you'll pay it off sooner. I can neither confirm nor deny that an internship counts as job experience in the field for the purpose of mortgage lending. It sounds logical, especially if it were a paid internship (in which case you'd just call it a \"\"job\"\"), but I can't be sure as I don't know of anyone who got a mortgage without accruing the necessary job experience post-graduation. A loan officer will be happy to talk to you and answer specific questions, but if you go in today, with no credit history (the student loan probably hasn't even entered repayment) and a lot of unknowns (an offer can be rescinded, for instance), you are virtually certain to be denied a mortgage. The bank is going to want evidence that you will make good on the debt you have over time. One $10,000 payment on the loan, though significant, is just one payment as far as your credit history (and credit score) is concerned. Now, a few more reality checks: $70k/yr is not what you'll be bringing home. As a single person without dependents, you'll be taxed at the highest possible withholdings rate. Your effective tax rate on $70k, depending on the state in which you live, can be as high as 30% (including all payroll/SS taxes, for a 1099 earner and/or an employee in a state with an income tax), so you're actually only bringing home 42k/yr, or about $1,600/paycheck if you're paid biweekly. To that, add a decent chunk for your group healthcare plan (which, as of 2014, you will be required to buy, or else pay another $2500 - effectively another 3% of gross earnings - in taxes). And even now with your first job, you should be at least trying to save up a decent chunk o' change in a 401k or IRA as a retirement nest egg. That student loan, beginning about 6 months after you leave school, will cost you about $555/mo in monthly payments for the next 10 years (if it's all Stafford loans with a 50/50 split between sub/unsub; that could be as much as $600/mo for all-unsub Stafford, or $700 or more for private loans). If you were going to pay all that back in two years, you're looking at paying a ballpark of $2500/mo leaving just $700 to pay all your bills and expenses each month. With a 3-year payoff plan, you're turning around one of your two paychecks every month to the student loan servicer, which for a bachelor is doable but still rather tight. Your mortgage payment isn't the only payment you will make on your house. If you get an FHA loan with 3.5% down, the lender will demand PMI. The city/county will likely levy a property tax on the assessed value of land and building. The lender may require that you purchase home insurance with minimum acceptable coverage limits and deductibles. All of these will be paid into escrow accounts, managed by your lending bank, from a single check you send them monthly. I pay all of these, in a state (Texas) that gets its primary income from sales and property tax instead of income, and my monthly payment isn't quite double the simple P&I. Once you have the house, you'll want to fill the house. Nice bed: probably $1500 between mattress and frame for a nice big queen you can stretch out on (and have lady friends over). Nice couch: $1000. TV: call it $500. That's probably the bare minimum you'll want to buy to replace what you lived through college with (you'll have somewhere to eat and sleep other than the floor of your new home), and we're already talking almost a month's salary, or payments of up to 10% of your monthly take-home pay over a year on a couple of store credit cards. Plates, cookware, etc just keeps bumping this up. Yes, they're (theoretically) all one-time costs, but they're things you need, and things you may not have if you've been living in dorms and eating in dining halls all through college. The house you buy now is likely to be a \"\"starter\"\", maybe 3bed/2bath and 1600 sqft at the upper end (they sell em as small as 2bd/1bt 1100sqft). It will support a spouse and 2 kids, but by that point you'll be bursting at the seams. What happens if your future spouse had the same idea of buying a house early while rates were low? The cost of buying a house may be as little as 3.5% down and a few hundred more in advance escrow and a couple other fees the seller can't pay for you. The cost of selling the same house is likely to include all the costs you made the seller pay when you bought it, because you'll be selling to someone in the same position you're in now. I didn't know it at the time I bought my house, but I paid about $5,000 to get into it (3.5% down and 6 months' escrow up front), while the sellers paid over $10,000 to get out (the owner got married to another homeowner, and they ended up selling both houses to move out of town; I don't even know what kind of bath they took on the house we weren't involved with). I graduated in 2005. I didn't buy my first house until I was married and pretty much well-settled, in 2011 (and yes, we were looking because mortgage rates were at rock bottom). We really lucked out in terms of a home that, if we want to or have to, we can live in for the rest of our lives (only 1700sqft, but it's officially a 4/2 with a spare room, and a downstairs master suite and nursery/office, so when we're old and decrepit we can pretty much live downstairs). I would seriously recommend that you do the same, even if by doing so you miss out on the absolute best interest rates. Last example: let's say, hypothetically, that you bite at current interest rates, and lock in a rate just above prime at 4%, 3.5% down, seller pays closing, but then in two years you get married, change jobs and have to move. Let's further suppose an alternate reality in which, after two years of living in an apartment, all the same life changes happen and you are now shopping for your first house having been pre-approved at 5%. That one percentage point savings by buying now, on a house in the $200k range, is worth about $120/mo or about $1440/yr off of your P&I payment ($921.42 on a $200,000 home with a 30-year term). Not chump change (over 30 years if you had been that lucky, it's $43000), but it's less than 5% of your take-home pay (month-to-month or annually). However, when you move in two years, the buyer's probably going to want the same deal you got - seller pays closing - because that's the market level you bought in to (low-priced starters for first-time homebuyers). That's a 3% commission for both agents, 1% origination, 0.5%-1% guarantor, and various fixed fees (title etc). Assuming the value of the house hasn't changed, let's call total selling costs 8% of the house value of $200k (which is probably low); that's $16,000 in seller's costs. Again, assuming home value didn't change and that you got an FHA loan requiring only 3.5% down, your down payment ($7k) plus principal paid (about another $7k; 6936.27 to be exact) only covers $14k of those costs. You're now in the hole $2,000, and you still have to come up with your next home's down payment. With all other things being equal, in order to get back to where you were in net worth terms before you bought the house (meaning $7,000 cash in the bank after selling it), you would need to stay in the house for 4 and a half years to accumulate the $16,000 in equity through principal payments. That leaves you with your original $7,000 down payment returned to you in cash, and you're even in accounting terms (which means in finance terms you're behind; that $7,000 invested at 3% historical average rate of inflation would have earned you about $800 in those four years, meaning you need to stick around about 5.5 years before you \"\"break even\"\" in TVM terms). For this reason, I would say that you should be very cautious when buying your first home; it may very well be the last one you'll ever buy. Whether that's because you made good choices or bad is up to you.\"" }, { "docid": "5765", "title": "", "text": "\"And? What's the big deal? For the people who are upset about Netflix not having the Star Wars content, those are more than likely big fans of Star Wars, and said fans, if they consider themselves to big a big Star Wars fan, already own the old and most recent Star Wars movies. Watch, people are going to down vote my post, and it will be from those will most likely are a fan but don't own a copy of the movies or will say, \"\"Why should I have to buy them in order to watch them? I should be able to stream them whenever I want.\"\" Think of the price of buying the movie, let's say $20. You can watch it over and over again. With watching it via stream, you'll have to pay between $15-$20 a month in order to watch it.\"" }, { "docid": "186804", "title": "", "text": "\"I encourage you to think of this home purchase decision as a chance to buy into a community that you want your children to grow up in. Try to find a place where you will be happy for the next 20 years, not just the next 2 or 7 years. In your situation, option 1 seems like a bad idea. It will create an obstacle to having children, instead of establishing a place for them to grow up in. Option 2 is close to \"\"buying a house on a layaway plan\"\". It offers the most financial flexibility. It also could result in the best long-term outcome, because you will buy in an established area, and you will know exactly what quality house you will have. But you and your fiancé need to ask yourselves some hard questions: Are you willing to put up with the mess and hassles of remodelling? Are you good at designing such projects? Can you afford to pay for the projects as they occur? Or if you need to finance them, can you get a HELOC to cover them? Especially if you and your fiancé do much of the work yourselves, break down the projects into small enough pieces that you can quickly finish off whatever you are working on at the time, and be happy living in the resulting space. You do not want to be nagging your husband about an unfinished project \"\"forever\"\" -- or silently resenting that a project never got wrapped up. I posted some suggestions for incrementally finishing a basement on the Home Improvement Stack Exchange. If you are up to the job of option 2, it is less risky than option 3. Option 3 has several risks: You don't know what sort of people will live in the neighborhood 5 - 20 years from now. Will the homes be owner-occupied? Or rentals? Will your neighbors care about raising children well? Or will lots of kids grow up in broken homes? Will the schools be good? Disappointing? Or dangerous? Whereas in an established neighborhood, you can see what the neighborhood is currently like, and how it has been changing. Unless you custom-build (or remodel), you don't control the quality of the construction. Some neighborhoods built by Pulte in the last 10 years were riddled with construction defects. You will be paying up-front for features you don't need yet. You might never need some of them. And some of them might interfere with what you realize later on might be better. In stable markets, new homes (especially ones with lots of \"\"upgrades\"\") often decline in value during the first few years. This is because part of the value is in the \"\"newness\"\" and being \"\"up-to-date\"\" with the latest fads. This part of the value wears off over time. Are the homes \"\"at the edge of town\"\" already within reasonable walking distance of parks, schools, church, grocery stores, et cetera? Might the commute from the \"\"edge of town\"\" to work get worse over the next 5 - 20 years?\"" }, { "docid": "123991", "title": "", "text": "\"Banks are currently a lot less open to 'creative financing' than they were a few years ago, but you may still be able to take advantage of the tactic of splitting the loan into two parts, a smaller 'second mortgage' sometimes called a 'purchase money second' at a slightly higher interest rate for around 15-20% of the value, and the remaining in a conventional mortgage. Since this tactic has been around for a long time, it's not quite in the category of the shenanegans they were pulling a few years back, so has a lot more potential to still be an option. I did this in for my first house in '93 and again in '99 when I moved to a larger home after getting married. It allowed me to get into both houses with less than 20% down and not pay PMI. This way neither loan is above 80% so you don't have to pay PMI. The interest on the second loan will be higher, but usually only a few percent, and is thus usually a fraction of what you were paying for the PMI. (and it's deductible from your taxes) If you've been making your payments on time and have a good credit rating, then you might be able to find someone who would offer you such a deal. You might even be able to get a rate for your primary that is down in the low 4's depending on where rates are today and what your credit rating is like. If you can get the main loan low enough, even if the other is like say 7%, your blended rate may still be right around 5% If you can find a deal like this, it's also great material to use to negotiate with your current lender \"\"either help me get the PMI off this loan or I'm going to refinance.\"\" Then you can compare what they will offer you with what you can get in a refinance and decide what makes the most sense for you. On word of warning, when refinancing, do NOT get sucked into an adjustable rate mortgage. If you are finding life 'tight' right now with house payments and all, the an ARM could be highly seductive since they often offer a very low initial rate.. however then invariably adjust upwards, and you could suddenly find yourself with a monster payment far larger than what you have now. With low rates where they are, getting a conventional fixed rate loan (or loans in the case of the tactic being discussed here) is the way to go.\"" } ]

[ { "docid": "472484", "title": "", "text": "The primary reason to put 20% down on your home is to avoid paying PMI (private mortgage insurance). Anyone who buys a house with a down-payment of under 20% is required to pay for this insurance (which protects the lender in case you default on your loan). PMI is what enables people to buy homes with as little as 3-5% down. I would recommend against paying more than 20%, because having liquidity for emergency funds, or other investments will give you the sort of flexibility that's good to have when the economy isn't so great. Depending on whether the house you purchase is move-in ready or a fixer-upper, having funds set aside for repairs is a good idea as well." } ]

[ { "docid": "45353", "title": "", "text": "You should plan 1-3 months for an emergency fund. Saving 6 months of expenses is recommended by many, but you have a lot of goals to accomplish, and youth is impatient. Early in your life, you have a lot of building (saving) that you need to do. You can find a good car for under $5000. It might take some effort, and you might not get quite the car you want, but if you save for 5-6 months you should have a decent car. My son is a college student and bought a sedan earlier this year for about $4000. Onto the house thing. As you said, at $11,000*2=$22,000 expenses yearly, plus about $10,000 saved, you are making low 30's. Using a common rule of thumb of 25% for housing, you really cannot afford more than about $600-700/month for housing -- you probably want to wait on that first house for awhile. Down payments really should be about 20%, and depending upon the area of the country, a modest house might be $120,000 or $520,000. Even on a $120,000, the 20% down payment would be $24,000. As you have student loans ($20,000), you should put together a plan to pay them off, perhaps allocating half your savings amount to paying down the student loans and half to saving? As you are young, you should have strong salary gains in the first few years, and once you are closer to $40,000/year, you might find the numbers working better for housing. My worry is that you are spending $22,000 out of about $32,000 for living expenses. That you are saving is great, and you are putting aside a good amount. But, you want to target saving 30-40%, if you can." }, { "docid": "274777", "title": "", "text": "\"You know, we really shouldn't be paying $1 for a single track. I mean, if we were being serious about paying artists what they deserve, it should be like $5 per track. The whole \"\"album\"\" model is overrated and obsolete, it was invented for record labels, not artists. And the $1 per track pricing is based on album pricing. Albums should cost a lot more than $20, and tracks should cost a lot more than $1. Musicians spend a significant amount of time on perfecting their craft. I'm not suggesting we each pay them an hourly salary for each song, but a few more bucks per track would not be unreasonable.\"" }, { "docid": "592596", "title": "", "text": "Since I have 10k in my account after down-payment, will I get a good interest rate on the loan? When the bank considers your loan, they will see $70K. Regardless, they will want to see certain amount of savings that would allow you to continue paying your loan in case of an emergency, and $10K might not be enough. I was planning to put down 15%, but I have been told that I should buy something called PMI to satisfy the rest 5% and if I take that my interest will be more and sometimes, bank will not go for anybody who pays less than 20%. Is that true? Yes. After downpayment + closing costs, how much money in the savings accounts, is the bank looking for to say that I am a good buyer? Depends on the bank, my wild guess would be they're looking for several months' worth of loan payments (you should have ~6 months worth of savings for emergencies, regardless of loans)." }, { "docid": "16606", "title": "", "text": "\"Given the state of the economy, and the potential of a rough near future for us recent grads (i.e. on/off work), I would recommend holding off on large purchases while your life is in flux. This includes both a NEW car and purchasing a house. My short answer is: you need a reliable vehicle, so purchase a used car, from a major dealer (yes this will add a fairly high premium, but easier financing), that is 4-5 years old, or more. Barring the major dealer purchase, be sure to get a mechanic to check out a vehicle, many will offer this service for a reasonable payment. As people point out, cars these days will run for another 100k miles. You will NOT have to pay anywhere near $27,000 for this vehicle. You may need to leverage your 10k for a loan if you choose to finance, but it should not be a problem, especially as you seem to imply an established credit history. In addition to this, start saving your money for the house you would like to eventually get. We have no idea where you live, but, picking rough numbers, assuming a 2 year buy period, 20% down, and a $250,000 home, the down payment alone will require you to save ~$2,000/month starting now. Barring either of these options, max out your money to tax sheltered accounts (your Roth IRA, work 401k, or a regular IRA) asap. Obviously, do not deplete your emergency fund, if anything, increase it. 10k can be burned through in a heartbeat. Long Answer: I purchased a brand new car, right out of school, at a reasonable interest rate. Like you, I can afford this vehicle, however, if someone were to come to me today (3.5 years later) and offer me the opportunity to take it back and purchase a 4-5 year used vehicle, at a 4-5 year used car price, albeit at a much higher interest rate (since I financed), it would be about a 0.02 second decision. I like my car, but, I'd like the differential cash savings between it and a reliable used car more. $27,000 is also fairly expensive for a new vehicle, there are many, very nice vehicles, for 21-23k. I still would not consider these priced appropriate to spend your money on them, but they exist. However, you do very much need a reliable vehicle, and I think you should get one. On the home front, your $400 all inclusive rent is insanely cheap. Many people spend more than that on property tax and PMI each year, so anyone who throws the \"\"You're throwing money away!\"\" line at you is blowing smoke to justify their own home purchase. Take the money you would have spent on a mortgage, and squirrel it away. Do your own due diligence and research the home market in your area and decide for yourself if you think home prices have bottomed and will stay there, have further to go, or are going to begin to rise. That is a decision only you can make for yourself. I'd add a section about getting expenses under control, but you said you could save 50% of your takehome pay. This is an order of magnitude above the average. Good job. Try doing 50% for 4 months, then calculate your actual amount. Then try to beat it.\"" }, { "docid": "321877", "title": "", "text": "Having someone else paying you rent is always going to be the better deal financially. The question is, what does $450k buy in the neighborhood in which you want to live, vs $800k? I'm going to assume you can afford either option (buying a $450k home and not selling, or an $800k home and selling your current one) whether someone's paying you rent or not. Let's make up some numbers here; a $450k home, financed 80/20 (360k principal) at 4% for 30 years will cost you about $1720 in P&I payments per year (plus escrows such as RE taxes, PMI, and homeowners insurance where applicable). An $800k home financed 80/20 (640k principal) at 4% for 30yr will give you payments of about $3,055/mo before taxes and insurance. So, the worst case overall is that you buy a 450k home in the new neighborhood and are not, at any given time, collecting rent on the old property. That would (assuming the mortgage terms on both home loans were comparable) cost you $3440/mo and you'd be living in a $450k home in a neighborhood where 450k may not buy a home as nice as the one you moved out of. The question as I stated above is this; assuming you had a reliable tenant in your home for the entire remaining life of the loan on your current home, which is more acceptable to you: buying $450k of home (which might be a downgrade in sqft or amenities) and paying $2020 in P&I, or paying about a grand more ($3055/mo) for a much nicer home in the new location? Strictly from a money perspective, the renter is going to be the best option, IF you get reliable tenancy for the entire life of the mortgage on that house; you'll be paying $2020/mo for 30 years, which is $727,200, to end up with $950k of total home value (plus adjustments for actual home value appreciation/depreciation). That's the only way you'll come out ahead on any mortgage; have someone else pay most of it for you. If you don't rent, the $800k home will cost you $1,099,800, while two $450k homes will cost you $1,454,400. The percentage of home value over total payments for the 800k home would be 72% (you will have paid 137% of the value of the home), while you will have paid 153% of the value of two 450k homes." }, { "docid": "75961", "title": "", "text": "\"This is the meat of your potato question. The rephrasing of the question to a lending/real estate executive such as myself, I'd ask, what's the scenario? \"\"I would say you're looking for an Owner Occupied, Super Jumbo Loan with 20% Down or $360K down on the purchase price, $1.8 mil purchase price, Loan Amount is ~$1.45 mil. Fico is strong (assumption). If this is your scenario, please see image. Yellow is important, more debt increases your backend-DTI which is not good for the deal. As long as it's less than 35%, you're okay. Can someone do this loan, the short answer is yes. It's smart that you want to keep more cash on hand. Which is understandable, if the price of the property declines, you've lost your shirt and your down payment, then it will take close to 10 years to recover your down. Consider that you are buying at a peak in real estate prices. Prices can't go up more than they are now. Consider that properties peaked in 2006, cooled in 2007, and crashed in 2008. Properties declined for more than 25-45% in 2008; regardless of your reasons of not wanting to come to the full 40% down, it's a bit smarter to hold on to cash for other investments purposes. Just incase a recession does hit. In the end, if you do the deal-You'll pay more in points, a higher rate compared to the 40% down scenario, the origination fee would increase slightly but you'll keep your money on hand to invest elsewhere, perhaps some units that can help with the cashflow of your home. I've highlighted in yellow what the most important factors that will be affected on a lower down payment. If your debt is low or zero, and income is as high as the scenario, with a fico score of at least 680, you can do the deal all day long. These deals are not uncommon in today's market. Rate will vary. Don't pay attention to the rate, the rate will fluctuate based on many variables, but it's a high figure to give you an idea on total cost and monthly payment for qualification purposes, also to look at the DTI requirement for cash/debt. See Image below:\"" }, { "docid": "27268", "title": "", "text": "First of all, realize that buying a home isn't really an investment. It is cheaper to rent. In recent years, people were able to sell their houses for astronomical profits, but that won't be happening much in the future. Additionally, there are many hidden costs of owning a home. Regarding the mortgage interest tax deduction, don't buy a house just to get this. It is like spending $1 to get back some amount of money less than $1. So just keep that in mind. Are you debt free? If not, pay off your other debts before buying a home. I follow the advice of Dave Ramsey, so I'll echo it here. Make sure you have an emergency fund and no debt. At this point I think you are ready to buy a house. When you do, put down as much as you can; above 20% if possible. Then get a 15 year fixed rate mortgage. At this point, start saving for your kid's college (if you believe in that) and paying down your home. Having no mortgage is a dream many people never have. I cannot wait until I have no mortgage. Don't get suckered into getting a high priced loan. Pay down as much of the price of the house as possible up front. This gives you flexibility too. What if you need to sell quickly? Well, you will have equity from the get-go, so this will be much easier. Good luck with your purchase!" }, { "docid": "577479", "title": "", "text": "\"I recently moved out from my parents place, after having built up sufficient funds, and gone through these questions myself. I live near Louisville, KY which has a significant effect on my income, cost of living, and cost of housing. Factor that into your decisions. To answer your questions in order: When do I know that I'm financially stable to move out? When you have enough money set aside for all projected expenses for 3-6 months and an emergency fund of 4-10K, depending on how large a safety net you want or need. Note that part of the reason for the emergency fund is as a buffer for the things you won't realize you need until you move out, such as pots or chairs. It also covers things being more expensive than anticipated. Should I wait until both my emergency fund is at least 6 months of pay and my loans in my parents' names is paid off (to free up money)? 6 months of pay is not a good measuring stick. Use months of expenses instead. In general, student loans are a small enough cost per month that you just need to factor them into your costs. When should I factor in the newer car investment? How much should I have set aside for the car? Do the car while you are living at home. This allows you to put more than the minimum payment down each month, and you can get ahead. That looks good on your credit, and allows refinancing later for a lower minimum payment when you move out. Finally, it gives you a \"\"sense\"\" of the monthly cost while you still have leeway to adjust things. Depending on new/used status of the car, set aside around 3-5K for a down payment. That gives you a decent rate, without too much haggling trouble. Should I get an apartment for a couple years before looking for my own house? Not unless you want the flexibility of an apartment. In general, living at home is cheaper. If you intend to eventually buy property in the same area, an apartment is throwing money away. If you want to move every few years, an apartment can, depending on the lease, give you that. How much should I set aside for either investment (apartment vs house)? 10-20K for a down payment, if you live around Louisville, KY. Be very choosy about the price of your house and this gives you the best of everything. The biggest mistake you can make is trying to get into a place too \"\"early\"\". Banks pay attention to the down payment for a good reason. It indicates commitment, care, and an ability to go the distance. In general, a mortgage is 30 years. You won't pay it off for a long time, so plan for that. Is there anything else I should be doing/taking advantage of with my money during this \"\"living at home\"\" period before I finally leave the nest? If there is something you want, now's the time to get it. You can make snap purchases on furniture/motorcycles/games and not hurt yourself. Take vacations, since there is room in the budget. If you've thought about moving to a different state for work, travel there for a weekend/week and see if you even like the place. Look for deals on things you'll need when you move out. Utensils, towels, brooms, furniture, and so forth can be bought cheaply, and you can get quality, but it takes time to find these deals. Pick up activities with monthly expenses. Boxing, dancing, gym memberships, hackerspaces and so forth become much more difficult to fit into the budget later. They also give you a better credit rating for a recurring expense, and allow you to get a \"\"feel\"\" for how things like a monthly utility bill will work. Finally, get involved in various investments. A 401k is only the start, so look at penny stocks, indexed funds, ETFs or other things to diversify with. Check out local businesses, or start something on the side. Experiment, and have fun.\"" }, { "docid": "271110", "title": "", "text": "\"To add to what other have stated, I recently just decided to purchase a home over renting some more, and I'll throw in some of my thoughts about my decision to buy. I closed a couple of weeks ago. Note that I live in Texas, and that I'm not knowledgeable in real estate other than what I learned from my experiences in the area when I am located. It depends on the market and location. You have to compare what renting will get you for the money vs what buying will get you. For me, buying seemed like a better deal overall when just comparing monthly payments. This is including insurance and taxes. You will need to stay at a house that you buy for at least 5-7 years. You first couple years of payments will go almost entirely towards interest. It takes a while to build up equity. If you can pay more towards a mortgage, do it. You need to have money in the bank already to close. The minimum down payment (at least in my area) is 3.5% for an FHA loan. If you put 20% down, you don't need to pay mortgage insurance, which is essentially throwing money away. You will also have add in closing costs. I ended up purchasing a new construction. My monthly payment went up from $1200 to $1600 (after taxes, insurance, etc.), but the house is bigger, newer, more energy efficient, much closer to my work, in a more expensive area, and in a market that is expected to go up in value. I had all of my closing costs (except for the deposit) taken care of by the lender and builder, so all of my closing costs I paid out of pocket went to the deposit (equity, or the \"\"bank\"\"). If I decide to move and need to sell, then I will get a lot (losing some to selling costs and interest) of the money I have put in to the house back out of it when I do sell, and I have the option to put that money towards another house. To sum it all up, I'm not paying a difference in monthly costs because I bought a house. I had my closing costs taking care of and just had to pay the deposit, which goes to equity. I will have to do maintenance myself, but I don't mind fixing what I can fix, and I have a builder's warranties on most things in the house. To really get a good idea of whether you should rent or buy, you need to talk to a Realtor and compare actual costs. It will be more expensive in the short term, but should save you money in the long term.\"" }, { "docid": "60981", "title": "", "text": "So if I understand your plan right, this will be your situation after the house is bought: Total Debt: 645,000 Here's what I would do: Wait until your house sells before buying a new one. That way you can take the equity from that sale and apply it towards the down payment rather than taking a loan on your retirement account. If something happens and your house doesn't sell for as mush as you think it will, you'll lose out on the gains from the amount you borrow, which will more than offset the interest you are paying yourself. AT WORST, pay off the 401(k) loan the instant your sale closes. Take as much of the remaining equity as you can and start paying down student loans. There are several reasons why they are a higher priority than a mortgage - some are mathematical, some are not. Should I look to pay off student loans sooner (even if I refi at a lower rate of 3.5% or so), or the mortgage earlier ... My thoughts are that the student loans follow me for life, but I can always sell and buy another home So you want this baggage for the rest of your life? How liberating will it be when you get that off your back? How much investing are you missing out on because of student loan payments? What happens if you get lose your license? What if you become disabled? Student loans are not bankruptable, but you can always sell the asset behind a mortgage or car loan. They are worse than credit card debt in that sense. You have no tangible asset behind it and no option for forgiveness (unless you decide to practice in a high-need area, but I don't get the sense that that's your path). The difference in interest is generally only a few payment' worth over 15 years. Is the interest amortized the same as a 15 year if I pay a 30 year mortgage in 15 years? Yes, however the temptation to just pay it off over 30 years is still there. How often will you decide that a bigger car payment, or a vacation, or something else is more important? With a 15-year note you lock in a plan and stick to it. Some other options:" }, { "docid": "23533", "title": "", "text": "I think the consensus is that you can't afford a home now and need to build more of a down payment (20% is benchmark, you may also need to pay mortgage insurance if you are below that) and all considered, it takes up too much of your monthly budget. You didn't do anything wrong but as mentioned by Ben, you are missing some monthly and yearly costs with home ownership. I suggest visiting a bank or somewhere like coldwell banker to discuss accurate costs and regulations in your area. I know the feeling of considering paying more now for the very attractive thought of owning a home... in 30 years. After interest, you need to consider that you are paying almost double the initial principle so don't rush for something you can do a year or two down the line as a major commitment. One major point that isn't emphasized in the current answers. You have a large family: Two children, a dog, and a cat. I don't know the kid's ages but given you are in your early twenties and your estimated monthly costs, they are probably very young before the point they really put any stress financially but you need to budget them in exponentially. Some quick figures from experience. Closing costs including inspections, mortgage origination fee, lawyer fees, checking the history of the home for liens, etc, which will set you back minimum 5% depending on the type of purchase (short sales, foreclosures are more expensive because they take longer) Insurance (home and flood) will depend on your zoning but you can expect anywhere between $100-300 a month. For many zones it is mandatory. Also depending on if it's a coop ($800+), condo($500+) or a townhouse-type you will need to pay different levels of monthly maintenance for the groundskeeping as a cooperative fee. at an estimate of a 250K home, all your savings will not be able to cover your closing costs and all 250k will need to be part of your base mortgage. so your base monthly mortgage payment at around 4% will be $1,200 a month. it's too tight. If it was a friend, I would highly suggest against buying in this case to preserve financial flexibility and sanity at such a young age." }, { "docid": "286466", "title": "", "text": "Gosh don't do either! Unless you are fully funding you ROTH accounts and even then I wouldn't do it. Those interest rates are free money. You are giving away the best bargain in the history of home mortgages. Don't you think you can make more than 4% on your money invested? Don't you think in 5 years you will be able to make 4% on bond/cd's/ and other low risk investments? Don't forget money you pay in the 2020's on beyond to your mortgage are inflationary dollars. Do you think that money will be more valuable in the 20's and beyond? I don't. Roths are free money too. Think if you put 11k in there a year how much would you have at the end of it tax free. There is a reason you can only put $5,500 in them, they are too good a deal tax wise to let people put too much in there. Think about this my parents bought their home in 1967 their mortgage was $170 a month. Inflation hits and the interest they are paying at 8%! mind you, it was still a laughable amount of money each month for mortgage payment from 1977 and on. Also I bought a $450,000 house 38 months ago. Instead of putting down 180 I put down 80 I let the other 100k in my investment account and moved 5.5k over to Roth every year. I now have a roth worth $38k and an investment account worth $105k. I made 40k on my money those three years and the 38k is tax free! If you don't believe me call the help line at clarkhoward.com Get over the emotional need to be debt free and make a logical finical choice. I am begging you to think about this. This post could save you tens of thousands of dollars. Let me put it one more way. 100k in debt with 100k in investments is debt free living. Especially when you debt is under 4% and a tax write off." }, { "docid": "294246", "title": "", "text": "I am not a financial expert, but I'm pretty sure that it DOES matter. When you take out a mortgage on a home, you are using the home itself as collateral. If you fail to make payments on that home, and go into foreclosure, the bank takes possession of your home. With that understanding, imagine you borrow $500K for a purchase of a home. If the cost of the home was $1M, the bank will have more confidence they can recover the money they lent you (by selling the home should it go into foreclosure) than they would if the house was only worth $700K. In effect, the larger your down payment, the easier it would be for the bank to recover their money should you go into foreclosure early on. As far as 50% overcoming a low credit score... that's a very open-ended question. There are just too many factors at play to give a simple yes or no answer to that." }, { "docid": "22519", "title": "", "text": "I think we would be good with paying around $1200 monthly mortgage fees (with all other property fees included like tax etc.) You probably can't get a $250k house for $1,200 a month including taxes and insurance. Even at a 4% rate and 20% down, your mortgage payment alone will be $954, and with taxes and insurance on top of that you're going to be over $1,200. You might get a lower rate but even a drop to 3% only lowers the payment $90/month. Getting a cheaper house (which also reduces taxes and insurance) is the best option financially. What to do with the $15k that I have? If you didn't have a mortgage I'd say to keep 3-6 months of living expenses in an emergency fund, so I wouldn't deplete that just to get a mortgage. You're either going to be Since 1) the mortgage payment would be tight and 2) you aren't able to save for a down payment, my recommendation is for you to rent until you can make a 20% down payment and have monthly payment that is 25% of your take-home pay or less. Which means either your income goes up (which you indicate is a possibility) or you look for less house. Ideally that would be on a 15-year note, since you build equity (and reduce interest) much more quickly than a 3-year note, but you can get the same effect by making extra principal payments. Also, very few people stay in their house for 30 years - 5 years is generally considered the cutoff point between renting and buying. Since you're looking at a 10-year horizon it makes sense to buy a house once you can afford it." }, { "docid": "72021", "title": "", "text": "The fluctuation of interest rates during the next year could easily dwarf the savings this attempt to improve your credit score will have; or the reverse is true. Will the loan improve your score enough to make a difference? It will not change the number of months old your oldest account is. It will increase the breadth of your accounts. Applying for the car loan will result in a short term decrease in the score because of the hard pull. The total impact will be harder to predict. A few points either way will generally not have an impact on your rate. You will also notice the two cores in your question differ by more than 30 points. You can't control which number the lender will use. You also have to realize the number differs every day depending on when they pull it that month. The addition of a car loan, assuming you still have the loan when you buy the house, will not have a major impact on your ability to get afford the home mortgage. The bank cares about two numbers regarding monthly payments: the amount of your mortgage including principal, interest, taxes and insurance; and the amount of all other debt payments: car loan, school loans, credit cards. The PITI number should be no more than 28%-33% of your monthly income; the other payments no more than 10%. If the auto loan payments fit in the 10% window, then the amount of money you can spend each month on the mortgage will not be impacted. If it is too large, then they will want to see a smaller amount of your income to go to PITI. If you buy the car, either by cash or by loan, after you apply for the mortgage they will be concerned because you are impacting directly numbers they are using to evaluate your financial health. I have experienced a delay because the buyer bought a car the week before closing. The biggest impact on your ability to get the loan is the greater than 20% down payment, Assuming you can still do that if you pay cash for the car. Don't deplete your savings to get to the 50% down payment level. Keep money for closing costs, moving expenses, furnishing, plus other emergencies. Make it clear that you can easily cover the 20% level, and are willing to go higher to make the loan numbers work." }, { "docid": "352339", "title": "", "text": "It's worthwhile to try and find a better minimum down-payment. When I bought my home, I got an FHA loan, which drastically reduced the minimum down-payment required (I think the minimum is 3% under FHA). Be aware that any down-payment percentage under 20% means that you'll have to pay for private mortgage insurance (PMI) as part of your monthly mortgage. Here's a good definition of it. Part of the challenge you're experiencing may be that banks are only now exercising the due diligence with borrowers for mortgages that they should have been all along. I hope you're successful in finding the right payment. Getting a mortgage to reduce your spending on housing relative to rent is a wise move. In addition to fixing your monthly costs at a consistent level (unlike rent, which can rise for reasons you don't control), the mortgage interest deduction makes for a rather helpful tax benefit." }, { "docid": "330229", "title": "", "text": "\"I second DJClayworth's suggestion to wait and save a larger down-payment. I'll also add: It looks like you neglected to consider CMHC insurance in your calculation. When you buy your first home with less than 20% down, the bank will require you to insure the mortgage. CMHC insurance protects the bank if you default – it does not protect you. But such insurance does make a bank feel better about lending money to people it otherwise wouldn't take a chance on. The kicker is you would be responsible for paying the CMHC insurance that's protecting the bank. The premium is usually added on to the amount borrowed, since a buyer requiring CMHC insurance doesn't, by definition, have enough money up front. The standard CMHC premium for a mortgage with 5% down, or as they would say a \"\"95% Loan-to-Value ratio\"\" is 2.75%. Refer to CMHC's table of premiums here. So, if you had a down-payment of $17,000 to borrow a remaining $323,000 from the bank to buy a $340,000 property, the money you owe the bank would be $331,883 due to the added 2.75% CMHC insurance premium. This added $8883, plus interest, obviously makes the case for buying less compelling. Then, are there other closing costs that haven't been fully considered? One more thing I ought to mention: Have you considered saving a larger down-payment by using an RRSP? There's a significant advantage doing it that way: You can save pre-tax dollars for your down-payment. When it comes time to buy, you'd take advantage of the Home Buyer's Plan (HBP) and get a tax-free loan of your own money from your RRSP. You'd have 15 years to put the money back into your RRSP. Last, after saving a larger downpayment, if you're lucky you may find houses not as expensive when you're ready to buy. I acknowledge this is a speculative statement, and there's a chance houses may actually be more expensive, but there is mounting evidence and opinion that real estate is currently over-valued in Canada. Read here, here, and here.\"" }, { "docid": "420707", "title": "", "text": "It seems very risky have all of your net worth in this one home. If I were to buy the house, I'm not sure I would put that much down, consider 20% and keep cash on hand, in retirement assets, etc. I would look at how much a mortgage, plus interest, taxes, insurance, etc. would cost with 50% down and with 20% down and see how that impacts your cash flow. Renting may make more sense, it's hard to tell without more specifics (NYTimes Rent/Buy calculator is a nice tool), but regardless, I would not want to have so much net worth tied into one asset and so would opt for less money down if I were to buy. Focus on rebuilding some retirement assets." }, { "docid": "25802", "title": "", "text": "It costs them more to make the screens with more pixels. Let's say I usually pay you 10$ for something that cost you 5$ to make. Now I pay you 20$ for something that costs you 18$ to make. Sure you get 20$ instead of 10$, but your profit per item went from 5$ down to 2$. Same thing here, the screens with 4x the pixels costs much more than the original screens. Apple paid slightly more for them, but not enough to keep the profit margin." } ]

[ { "docid": "100483", "title": "", "text": "I'd stick with 20% down. Truth is - we don't know enough about you. Are you single and staying that way? How is your retirement savings doing? As others asked, any other debt? You can put 20% down, take a breath and see how it's going. I did just that, the 20%. We then had a baby, and 5 nanny-years to pay for. When she was gone, all that money went to the mortgage, and after refinancing (with no points no closing) we have 7 years to go. Just under 20 years beginning to end. During that time we've saved for college (just about fully funded) and for retirement (both with matched 401(k) accounts). Remember, if you lose your job, a house with a lower mortgage means nothing when there's still the next payment due. But that cushion of cash can be handy." } ]

[ { "docid": "27268", "title": "", "text": "First of all, realize that buying a home isn't really an investment. It is cheaper to rent. In recent years, people were able to sell their houses for astronomical profits, but that won't be happening much in the future. Additionally, there are many hidden costs of owning a home. Regarding the mortgage interest tax deduction, don't buy a house just to get this. It is like spending $1 to get back some amount of money less than $1. So just keep that in mind. Are you debt free? If not, pay off your other debts before buying a home. I follow the advice of Dave Ramsey, so I'll echo it here. Make sure you have an emergency fund and no debt. At this point I think you are ready to buy a house. When you do, put down as much as you can; above 20% if possible. Then get a 15 year fixed rate mortgage. At this point, start saving for your kid's college (if you believe in that) and paying down your home. Having no mortgage is a dream many people never have. I cannot wait until I have no mortgage. Don't get suckered into getting a high priced loan. Pay down as much of the price of the house as possible up front. This gives you flexibility too. What if you need to sell quickly? Well, you will have equity from the get-go, so this will be much easier. Good luck with your purchase!" }, { "docid": "352339", "title": "", "text": "It's worthwhile to try and find a better minimum down-payment. When I bought my home, I got an FHA loan, which drastically reduced the minimum down-payment required (I think the minimum is 3% under FHA). Be aware that any down-payment percentage under 20% means that you'll have to pay for private mortgage insurance (PMI) as part of your monthly mortgage. Here's a good definition of it. Part of the challenge you're experiencing may be that banks are only now exercising the due diligence with borrowers for mortgages that they should have been all along. I hope you're successful in finding the right payment. Getting a mortgage to reduce your spending on housing relative to rent is a wise move. In addition to fixing your monthly costs at a consistent level (unlike rent, which can rise for reasons you don't control), the mortgage interest deduction makes for a rather helpful tax benefit." }, { "docid": "64456", "title": "", "text": "1) How does owning a home fit into my financial portfolio? Most seem to agree that at best it is a hedge against rent or dollar inflation, and at worst it should be viewed as a liability, and has no place alongside other real investments. Periods of high inflation are generally accompanied with high(er) interest rates. Any home is a liability, as has been pointed out in other answers; it costs money to live in, it costs money to keep in good shape, and it offers you no return unless you sell it for more than you have paid for it in total (in fact, as long as you have an outstanding mortgage, it actually costs you money to own, even when not considering things like property taxes, utilities etc.). The only way to make a home an investment is to rent it out for more than it costs you in total to own, but then you can't live in it instead. 2) How should one view payments on a home mortgage? How are they similar or different to investing in low-risk low-reward investments? Like JoeTaxpayer said in a comment, paying off your mortgage should be considered the same as putting money into a certificate of deposit with a term and return equivalent to your mortgage interest cost (adjusting for tax effects). What is important to remember about paying off a mortgage, besides the simple and not so unimportant fact that it lowers your financial risk over time, is that over time it improves your cash flow. If interest rates don't change (unlikely), then as long as you keep paying the interest vigilantly but don't pay down the principal (assuming that the bank is happy with such an arrangement), your monthly cost remains the same and will do so in perpetuity. You currently have a cash flow that enables you to pay down the principal on the loan, and are putting some fairly significant amount of money towards that end. Now, suppose that you were to lose your job, which means a significant cut in the household income. If this cut means that you can't afford paying down the mortgage at the same rate as before, you can always call the bank and tell them to stop the extra payments until you get your ducks back in the proverbial row. It's also possible, with a long history of paying on time and a loan significantly smaller than what the house would bring in in a sale, that you could renegotiate the loan with an extended term, which depending on the exact terms may lower your monthly cost further. If the size of the loan is largely the same as or perhaps even exceeds the market value of the house, the bank would be a lot more unlikely to cooperate in such a scenario. It's also a good idea to at the very least aim to be free of debt by the time you retire. Even if one assumes that the pension systems will be the same by then as they are now (some don't, but that's a completely different question), you are likely to see a significant cut in cash flow on retirement day. Any fixed expenses which cannot easily be cut if needed are going to become a lot more of a liability when you are actually at least in part living off your savings rather than contributing to them. The earlier you get the mortgage paid off, the earlier you will have the freedom to put into other forms of savings the money which is now going not just to principal but to interest as well. What is important to consider is that paying off a mortgage is a very illiquid form of savings; on the other hand, money in stocks, bonds, various mutual funds, and savings accounts, tends to be highly liquid. It is always a good idea to have some savings in easily accessible form, some of it in very low-risk investments such as a simple interest-bearing savings account or government bonds (despite their low rate of return) before you start to aggressively pay down loans, because (particularly when you own a home) you never know when something might come up that ends up costing a fair chunk of money." }, { "docid": "577479", "title": "", "text": "\"I recently moved out from my parents place, after having built up sufficient funds, and gone through these questions myself. I live near Louisville, KY which has a significant effect on my income, cost of living, and cost of housing. Factor that into your decisions. To answer your questions in order: When do I know that I'm financially stable to move out? When you have enough money set aside for all projected expenses for 3-6 months and an emergency fund of 4-10K, depending on how large a safety net you want or need. Note that part of the reason for the emergency fund is as a buffer for the things you won't realize you need until you move out, such as pots or chairs. It also covers things being more expensive than anticipated. Should I wait until both my emergency fund is at least 6 months of pay and my loans in my parents' names is paid off (to free up money)? 6 months of pay is not a good measuring stick. Use months of expenses instead. In general, student loans are a small enough cost per month that you just need to factor them into your costs. When should I factor in the newer car investment? How much should I have set aside for the car? Do the car while you are living at home. This allows you to put more than the minimum payment down each month, and you can get ahead. That looks good on your credit, and allows refinancing later for a lower minimum payment when you move out. Finally, it gives you a \"\"sense\"\" of the monthly cost while you still have leeway to adjust things. Depending on new/used status of the car, set aside around 3-5K for a down payment. That gives you a decent rate, without too much haggling trouble. Should I get an apartment for a couple years before looking for my own house? Not unless you want the flexibility of an apartment. In general, living at home is cheaper. If you intend to eventually buy property in the same area, an apartment is throwing money away. If you want to move every few years, an apartment can, depending on the lease, give you that. How much should I set aside for either investment (apartment vs house)? 10-20K for a down payment, if you live around Louisville, KY. Be very choosy about the price of your house and this gives you the best of everything. The biggest mistake you can make is trying to get into a place too \"\"early\"\". Banks pay attention to the down payment for a good reason. It indicates commitment, care, and an ability to go the distance. In general, a mortgage is 30 years. You won't pay it off for a long time, so plan for that. Is there anything else I should be doing/taking advantage of with my money during this \"\"living at home\"\" period before I finally leave the nest? If there is something you want, now's the time to get it. You can make snap purchases on furniture/motorcycles/games and not hurt yourself. Take vacations, since there is room in the budget. If you've thought about moving to a different state for work, travel there for a weekend/week and see if you even like the place. Look for deals on things you'll need when you move out. Utensils, towels, brooms, furniture, and so forth can be bought cheaply, and you can get quality, but it takes time to find these deals. Pick up activities with monthly expenses. Boxing, dancing, gym memberships, hackerspaces and so forth become much more difficult to fit into the budget later. They also give you a better credit rating for a recurring expense, and allow you to get a \"\"feel\"\" for how things like a monthly utility bill will work. Finally, get involved in various investments. A 401k is only the start, so look at penny stocks, indexed funds, ETFs or other things to diversify with. Check out local businesses, or start something on the side. Experiment, and have fun.\"" }, { "docid": "25466", "title": "", "text": "Paying interest on a loan costs you money. The tax deduction just reduces that cost, but it's still there. So the only possible reason to borrow more than you have to, e.g. with the interest-only loan, is that you can invest the excess elsewhere and make more money. Can you invest money and make more than 4.5% expected return before tax with a risk level you're comfortable with? If you can invest tax free then the hurdle is (4.5%-the tax deduction instead), e.g. 3.6% if your marginal tax rate is 20%. One possible such investment would be paying down any mortgage on your own home - as you don't get a tax deduction for such a mortgage, overpayments are effectively tax free so 3.6% or whatever is the appropriate hurdle. If you can't do that, then even switching to a principal and interest mortgage at 4.5% would be worthwhile; the principal payments would effectively be an investment in reducing your future interest bill, and that investment is better than anything else you have available. Given that what you actually have on offer is a mortgage with a lower rate of interest, the hurdle for an alternative investment is quite a bit higher than 4.5%; with the interest-only mortgage, you can invest some of the money that would otherwise go to principal elsewhere, but in exchange you are paying a higher interest rate on the rest of your loan balance. You'd need to look at the exact numbers to work out the right hurdle, which would vary depending on your marginal tax rate, the term of the mortgage, and your guess as to where interest rates would go after the 2 year fixed term." }, { "docid": "16606", "title": "", "text": "\"Given the state of the economy, and the potential of a rough near future for us recent grads (i.e. on/off work), I would recommend holding off on large purchases while your life is in flux. This includes both a NEW car and purchasing a house. My short answer is: you need a reliable vehicle, so purchase a used car, from a major dealer (yes this will add a fairly high premium, but easier financing), that is 4-5 years old, or more. Barring the major dealer purchase, be sure to get a mechanic to check out a vehicle, many will offer this service for a reasonable payment. As people point out, cars these days will run for another 100k miles. You will NOT have to pay anywhere near $27,000 for this vehicle. You may need to leverage your 10k for a loan if you choose to finance, but it should not be a problem, especially as you seem to imply an established credit history. In addition to this, start saving your money for the house you would like to eventually get. We have no idea where you live, but, picking rough numbers, assuming a 2 year buy period, 20% down, and a $250,000 home, the down payment alone will require you to save ~$2,000/month starting now. Barring either of these options, max out your money to tax sheltered accounts (your Roth IRA, work 401k, or a regular IRA) asap. Obviously, do not deplete your emergency fund, if anything, increase it. 10k can be burned through in a heartbeat. Long Answer: I purchased a brand new car, right out of school, at a reasonable interest rate. Like you, I can afford this vehicle, however, if someone were to come to me today (3.5 years later) and offer me the opportunity to take it back and purchase a 4-5 year used vehicle, at a 4-5 year used car price, albeit at a much higher interest rate (since I financed), it would be about a 0.02 second decision. I like my car, but, I'd like the differential cash savings between it and a reliable used car more. $27,000 is also fairly expensive for a new vehicle, there are many, very nice vehicles, for 21-23k. I still would not consider these priced appropriate to spend your money on them, but they exist. However, you do very much need a reliable vehicle, and I think you should get one. On the home front, your $400 all inclusive rent is insanely cheap. Many people spend more than that on property tax and PMI each year, so anyone who throws the \"\"You're throwing money away!\"\" line at you is blowing smoke to justify their own home purchase. Take the money you would have spent on a mortgage, and squirrel it away. Do your own due diligence and research the home market in your area and decide for yourself if you think home prices have bottomed and will stay there, have further to go, or are going to begin to rise. That is a decision only you can make for yourself. I'd add a section about getting expenses under control, but you said you could save 50% of your takehome pay. This is an order of magnitude above the average. Good job. Try doing 50% for 4 months, then calculate your actual amount. Then try to beat it.\"" }, { "docid": "514107", "title": "", "text": "I concur that you should probably go with option 1. And that is coming from a guy that refinanced all three of his properties with down to 20% equity 3 years ago to lock in either 4% 30 year fixed or 2.75% 15 year mortgage. And I will not pay them off early because I do think I can do better than that in the market even if inflation is 0% for the next 30 years. Just imagine when the fed stops manipulating tax rates. I could be making more than 4% just in a checking account." }, { "docid": "468104", "title": "", "text": "I'll write this up as a more formal answer, here. I'd suggest looking into a Home Equity Line of Credit, or HELOC. You didn't mention in your question how much equity you have in the home, but assuming at least 20%, you might be able to open a HELOC with a line of $40,000. My experience is that you can do 50% of your equity, but depends on the bank. Here are a few notes that are generally in play with HELOC's (YMMV, so be sure to know the specifics before signing on the line) Doing this, at least when we did 8 years ago, did not subject us to PMI. There are certainly plenty of things to research, but it sounds like you're pretty astute based on how you're evaluating the financial side of this endeavor. There are no guarantees in real estate. Houses could be selling like crazy now, but in 6 months they might not. It certainly sounds like that's a lower risk in your area, but you never know what might happen. If you're taking on this extra line of credit, make sure that it's something you could afford should the worst case scenario happen. Equity loans are also available. This is a more traditional fixed-rate loan rather than line of credit, so you'd be looking at set monthly payments rather than the flexibility of paying interest only when you need to. There's a brief write-up on the differences here. I have also heard of a construction loan, which falls into the same category as the aforementioned options, but I can't speak to today's market on those." }, { "docid": "359579", "title": "", "text": "I am not going to argue the merits of investing in real estate (I am a fan I think it is a great idea when done right). I will assume you have done your due diligence and your numbers are correct, so let's go through your questions point by point. What would be the type of taxes I should expect? NONE. You are a real estate investor and the US government loves you. Everything is tax deductible and odds are your investment properties will actually manage to shelter some of your W2(day job) income and you will pay less taxes on that too. Obviously I am exaggerating slightly find a CPA (certified public accountant) that is familiar with real estate, but here are a few examples. I am not a tax professional but hopefully this gives you an idea of what sort of tax benifits you can expect. How is Insurance cost calculated? Best advice I have call a few insurance firms and ask them. You will need landlord insurance make sure you are covered if a tenant gets hurt or burns down your property. You can expect to pay 15%-20% more for landlord insurance than regular insurance (100$/month is not a bad number to just plug in when running numbers its probably high). Also your lease should require tenants to have renters insurance to help protect you. Have a liability conversation with a lawyer and think about LLCs. How is the house price increase going to act as another source of income? Appreciation can be another source of income but it is not really that useful in your scenario. It is not liquid you will not realize it until you sell the property and then you have to pay capital gains and depreciation recapture on it. There are methods to get access to the gains on the property without paying taxes. This is done by leveraging the property, you get the equity but it is not counted as capital gains since you have to pay it back a mortgage or home equity lines of credit (HELOC) are examples of this. I am not recommending these just making sure you are aware of your options. Please let me know if I am calculating anything wrong but my projection for one year is about $8.4k per house (assuming no maintenance is needed) I would say you estimated profit is on the high side. Not being involved in your market it will be a wild guess but I would expect you to realize cash-flow per house per year of closer to $7,000. Maybe even lower given your inexperience. Some Costs you need to remember to account for: Taxes, Insurance, Vacancy, Repairs, CapEx, Property Management, Utilities, Lawn Care, Snow Removal, HOA Fees. All-in-all expect 50% or your rental income to be spent on the property. If you do well you can be pleasantly surprised." }, { "docid": "60981", "title": "", "text": "So if I understand your plan right, this will be your situation after the house is bought: Total Debt: 645,000 Here's what I would do: Wait until your house sells before buying a new one. That way you can take the equity from that sale and apply it towards the down payment rather than taking a loan on your retirement account. If something happens and your house doesn't sell for as mush as you think it will, you'll lose out on the gains from the amount you borrow, which will more than offset the interest you are paying yourself. AT WORST, pay off the 401(k) loan the instant your sale closes. Take as much of the remaining equity as you can and start paying down student loans. There are several reasons why they are a higher priority than a mortgage - some are mathematical, some are not. Should I look to pay off student loans sooner (even if I refi at a lower rate of 3.5% or so), or the mortgage earlier ... My thoughts are that the student loans follow me for life, but I can always sell and buy another home So you want this baggage for the rest of your life? How liberating will it be when you get that off your back? How much investing are you missing out on because of student loan payments? What happens if you get lose your license? What if you become disabled? Student loans are not bankruptable, but you can always sell the asset behind a mortgage or car loan. They are worse than credit card debt in that sense. You have no tangible asset behind it and no option for forgiveness (unless you decide to practice in a high-need area, but I don't get the sense that that's your path). The difference in interest is generally only a few payment' worth over 15 years. Is the interest amortized the same as a 15 year if I pay a 30 year mortgage in 15 years? Yes, however the temptation to just pay it off over 30 years is still there. How often will you decide that a bigger car payment, or a vacation, or something else is more important? With a 15-year note you lock in a plan and stick to it. Some other options:" }, { "docid": "1145", "title": "", "text": "When I was in that boat a few years ago, I went for the car first. My thoughts: If I get the car first, I'm guaranteed to have a car that runs well. That makes it more convenient to commute to any job, or for social functions. I ended up dropping about $20k into a car (paid cash, I don't like being in debt). I chose to buy a really nice car, knowing it will last for many years to come - I'm expecting to not replace it for about 10 years from the purchase. I would urge you to consider paying in full for the car; dumping $20k+ is a lot, and there are plenty of nice cars out there in the $10-20k range that will work just fine for years to come. One benefit of paying in full is that you don't have a portion of your income tied into the car loan. The main reason I chose not to go for the house first had more to do with the difference in commitment. A home mortgage is a 30-year commitment on a large chunk of your income. With the job market and housing markets both currently working against you, it's better to wait until you have a large safety net to fall into. For example, it's always recommended to have several months worth of living expenses in savings. Compared to renting, having 6 or more months of mortgage payments + utilities + insurance + property taxes + other mandatory expenses (see: food, gas) comes out to a significant amount more that you should have saved (for me, I'm looking at a minimum of about $20k in savings just to feel comfortable; YMMV). Also, owning a house always has more maintenance costs than you will predict. Even if it's just replacing a few light bulbs at first, eventually you'll need something major: an appliance will die, your roof will spring a leak, anything (I had both of those happen in the first year, though it could be bad luck). You should make sure that you can afford the increased monthly payments while still well under your income. Once you're locked in to the house, you can still set aside a smaller chunk of your income for a new car 5-10 years down the road. But if you're current car is getting down to it's last legs, you should get that fixed up before you lock yourself in to an uncomfortable situation. Don't be in too much of a hurry to buy a house. The housing market still has a ways to go before it recovers, and there's not a whole lot to help it along. Interest rates may go up, but that will only hurt the housing market, so I don't expect it to change too much for the next several months. With a little bit of sanity, we won't have another outrageous housing bubble for many years, so houses should remain somewhat affordable (interest rates may vary). Also keep in mind that if you pay less that 20% down on the house, you may end up with some form of mortgage interest, which is just extra interest you'll owe each month." }, { "docid": "475632", "title": "", "text": "In the US you can get a home warranty when you buy a house that will cover major repairs for the first few years of owning a home. The costs vary based on age and the results of the home inspection. Ours cost ~$250 a year. This was put into our closing costs. Unfortunately this market does have some disreputable companies that come im with prices that seem too good to be true. As is usually the case they are. Do research on the company you are getting the home warrenty from to make sure you are dealing with a reputable company that will honor its commitments. By having 20% down you will avoid needing Mortgage insurance which will save you a considerable amout. My PMI cost me about $70 a month. However once you get to 20% equity in your home the pmi drops off. So if you can put down 15% you should be able to get out from under your pmi in a few years if you want to keep that 5% cushion while making extra payments. The question is how much do you feel you need. So far owning a 70 year old home my extra maintence costs have been around 2500 a year. But they seem to be in 1k chunks every 4 or 5 months." }, { "docid": "245810", "title": "", "text": "Because it appears you have in the neighborhood of 30 years remianing on your mortgage for the first house, If you can sell it you will likely be better off in the end. While renting has the potential for greater income it is a business. And like any business there are risks, expenses, and work required to make it successful. There will be times where you can not find a renter immediately and will be responsible for making both payments, maintaining both houses, the insurance(which for an owner is higher for a rental property than a domicile), and paying the applicable taxes. You need to look at your best and worst case numbers. If your best case numbers leave you in the hole 300/month then that is not the sort of business you want to run. Your investment should build your savings and retirement funds not deplete them. Further you are more likely to fall between your best and worst case scenerios. So you need to be able to thrive at that level. If something in the middle is going to take you into bankruptcy then sell the property. If you are not willing to put the time into your business that it will need (My rental home took about 10-30 hours a month despite renters being responsible for basic upkeep and maintenance. Finally your plan B: A home with 800k value will have higher costs and higer expenses and maintenance. If the 800k home is the home you and your family needs then by all means go for it. But if it can do just as well in the 450k Home then go there. Pay the home off early by making the payments you would be making for the 800k home. In this way you pay less in total cost of the home and set your self up for the greatest chance of success. Once that home is paid off the break even point for renting goes way down as well. So the rental option could be in the future. I would just aviod it now if possible." }, { "docid": "75754", "title": "", "text": "She seems to be paying an inordinate amount of money for car payments. $850/month is just too high. She may be able to get by on public transit, depending on where she lives, but if not, she needs to look at selling her car and picking up a cheap second-hand vehicle. Public transit would probably save her $750/month. Going to a cheaper car should still save her $300 - $400/month. Next, phone and cable. These are certainly nice, but they are rarely necessities. I do not have cable t.v., for example. I do have a cell phone, and I do have Internet (a requirement of my job), but no cable t.v. She may be able to save some money there. My guess is that she could save $125/month here, though I may be biased on how much it costs to heat a Canadian home in our cold, cold winters. And, of course, the college payment. $900 - $1000 a month? I understand that she is paying this so that your sister can attend college. That's very nice, but it certainly sounds like your mother cannot afford that. On the other hand, if this is repayment of college expenses already incurred, there may be no choice here. Rent, at $1625/month. I have no idea what that gets you in NJ, but perhaps she could rent out a room. It's not inconceivable that she could bring in $1000/month from doing so, though obviously that's going to very much depend on the real estate/rental market where you live. Alternatively, she could move out and move in with someone else and that should certainly get her share of the rent down to $800 - $1000/month or thereabouts, and most likely cut her utility bills, also. I've identified a number of places where she can save money. No doubt, the budget is tight, but I think she's spending on far more than just bare essentials. One thing that concerns me here is that she appears to have no emergency funds and very little for entertainment, other than cable t.v. If at all possible, she needs to cut her budget down so that she is not living paycheque to paycheque and has money to cover, for example, emergency car repairs. And I'd really like to see her have more than $50/month for expenses (which I'm guessing is entertainment). It may not be possible, of course, but I would most definitely say she should not be paying for your sister's college if this places her in such dire financial risk. Easier said than done, of course. Most certainly, I would not even consider cutting the health insurance, by the way. Another approach would be to look at how her expenses will go down when your sister is done school and perhaps cleared up other expenses. It may be worth borrowing from family and friends, knowing that in a year, her expenses will go down $500/month. That makes her budget manageable. Additionally, the debt repayment presumably will finish at some point. The point I'm trying to make is that, in a year, her budget will be just about manageable, and she may be able to get there with smaller trims in the immediate future." }, { "docid": "500355", "title": "", "text": "\"You can't get a HELOC, to the best of my knowledge, without actually \"\"owning\"\" the house. If you get an 80% mortgage (of the purchase price - not the appraised value, btw), you still need 20% as a down payment. Once you own the home, you can apply for a HELOC ... presuming you have enough equity (eg, the purchase price is $40k less than the appraised value). We haven't looked at the norm, at least where I live, of 5% down for a traditional mortgage and 3.5% for an FHA (which your question touches on). If you can do 5% down, on a $1,000,000 mortgage you need $50,000 on the day of closing. If the home is worth (ie appraises for) $1,250,000, you're getting 20% of the house \"\"for free\"\". Presuming the bank(s) will go for it, you could likely then open a HELOC for as much as $250,000 (again, depending on individual lender rules). tl;dr: If you don't have the money ready on the day of signing (via seasoning, if it is a loan/gift, or because you have been saving), you cannot afford the house. To clarify from comments with the OP, I am in no way speaking to the buyer's ability to afford the monthly payments - this is only about affording the initial costs associated with the home buying process (down payment, closing, whatever else the bank(s) require, etc).\"" }, { "docid": "479213", "title": "", "text": "\"Concise answers to your questions: Depends on the loan and the bank; when you \"\"accelerate\"\" repayment of a loan by applying a pre-payment balance to the principal, your monthly payment may be reduced. However, standard practice for most loan types is that the repayment schedule will be accelerated; you'll pay no less each month, but you'll pay it off sooner. I can neither confirm nor deny that an internship counts as job experience in the field for the purpose of mortgage lending. It sounds logical, especially if it were a paid internship (in which case you'd just call it a \"\"job\"\"), but I can't be sure as I don't know of anyone who got a mortgage without accruing the necessary job experience post-graduation. A loan officer will be happy to talk to you and answer specific questions, but if you go in today, with no credit history (the student loan probably hasn't even entered repayment) and a lot of unknowns (an offer can be rescinded, for instance), you are virtually certain to be denied a mortgage. The bank is going to want evidence that you will make good on the debt you have over time. One $10,000 payment on the loan, though significant, is just one payment as far as your credit history (and credit score) is concerned. Now, a few more reality checks: $70k/yr is not what you'll be bringing home. As a single person without dependents, you'll be taxed at the highest possible withholdings rate. Your effective tax rate on $70k, depending on the state in which you live, can be as high as 30% (including all payroll/SS taxes, for a 1099 earner and/or an employee in a state with an income tax), so you're actually only bringing home 42k/yr, or about $1,600/paycheck if you're paid biweekly. To that, add a decent chunk for your group healthcare plan (which, as of 2014, you will be required to buy, or else pay another $2500 - effectively another 3% of gross earnings - in taxes). And even now with your first job, you should be at least trying to save up a decent chunk o' change in a 401k or IRA as a retirement nest egg. That student loan, beginning about 6 months after you leave school, will cost you about $555/mo in monthly payments for the next 10 years (if it's all Stafford loans with a 50/50 split between sub/unsub; that could be as much as $600/mo for all-unsub Stafford, or $700 or more for private loans). If you were going to pay all that back in two years, you're looking at paying a ballpark of $2500/mo leaving just $700 to pay all your bills and expenses each month. With a 3-year payoff plan, you're turning around one of your two paychecks every month to the student loan servicer, which for a bachelor is doable but still rather tight. Your mortgage payment isn't the only payment you will make on your house. If you get an FHA loan with 3.5% down, the lender will demand PMI. The city/county will likely levy a property tax on the assessed value of land and building. The lender may require that you purchase home insurance with minimum acceptable coverage limits and deductibles. All of these will be paid into escrow accounts, managed by your lending bank, from a single check you send them monthly. I pay all of these, in a state (Texas) that gets its primary income from sales and property tax instead of income, and my monthly payment isn't quite double the simple P&I. Once you have the house, you'll want to fill the house. Nice bed: probably $1500 between mattress and frame for a nice big queen you can stretch out on (and have lady friends over). Nice couch: $1000. TV: call it $500. That's probably the bare minimum you'll want to buy to replace what you lived through college with (you'll have somewhere to eat and sleep other than the floor of your new home), and we're already talking almost a month's salary, or payments of up to 10% of your monthly take-home pay over a year on a couple of store credit cards. Plates, cookware, etc just keeps bumping this up. Yes, they're (theoretically) all one-time costs, but they're things you need, and things you may not have if you've been living in dorms and eating in dining halls all through college. The house you buy now is likely to be a \"\"starter\"\", maybe 3bed/2bath and 1600 sqft at the upper end (they sell em as small as 2bd/1bt 1100sqft). It will support a spouse and 2 kids, but by that point you'll be bursting at the seams. What happens if your future spouse had the same idea of buying a house early while rates were low? The cost of buying a house may be as little as 3.5% down and a few hundred more in advance escrow and a couple other fees the seller can't pay for you. The cost of selling the same house is likely to include all the costs you made the seller pay when you bought it, because you'll be selling to someone in the same position you're in now. I didn't know it at the time I bought my house, but I paid about $5,000 to get into it (3.5% down and 6 months' escrow up front), while the sellers paid over $10,000 to get out (the owner got married to another homeowner, and they ended up selling both houses to move out of town; I don't even know what kind of bath they took on the house we weren't involved with). I graduated in 2005. I didn't buy my first house until I was married and pretty much well-settled, in 2011 (and yes, we were looking because mortgage rates were at rock bottom). We really lucked out in terms of a home that, if we want to or have to, we can live in for the rest of our lives (only 1700sqft, but it's officially a 4/2 with a spare room, and a downstairs master suite and nursery/office, so when we're old and decrepit we can pretty much live downstairs). I would seriously recommend that you do the same, even if by doing so you miss out on the absolute best interest rates. Last example: let's say, hypothetically, that you bite at current interest rates, and lock in a rate just above prime at 4%, 3.5% down, seller pays closing, but then in two years you get married, change jobs and have to move. Let's further suppose an alternate reality in which, after two years of living in an apartment, all the same life changes happen and you are now shopping for your first house having been pre-approved at 5%. That one percentage point savings by buying now, on a house in the $200k range, is worth about $120/mo or about $1440/yr off of your P&I payment ($921.42 on a $200,000 home with a 30-year term). Not chump change (over 30 years if you had been that lucky, it's $43000), but it's less than 5% of your take-home pay (month-to-month or annually). However, when you move in two years, the buyer's probably going to want the same deal you got - seller pays closing - because that's the market level you bought in to (low-priced starters for first-time homebuyers). That's a 3% commission for both agents, 1% origination, 0.5%-1% guarantor, and various fixed fees (title etc). Assuming the value of the house hasn't changed, let's call total selling costs 8% of the house value of $200k (which is probably low); that's $16,000 in seller's costs. Again, assuming home value didn't change and that you got an FHA loan requiring only 3.5% down, your down payment ($7k) plus principal paid (about another $7k; 6936.27 to be exact) only covers $14k of those costs. You're now in the hole $2,000, and you still have to come up with your next home's down payment. With all other things being equal, in order to get back to where you were in net worth terms before you bought the house (meaning $7,000 cash in the bank after selling it), you would need to stay in the house for 4 and a half years to accumulate the $16,000 in equity through principal payments. That leaves you with your original $7,000 down payment returned to you in cash, and you're even in accounting terms (which means in finance terms you're behind; that $7,000 invested at 3% historical average rate of inflation would have earned you about $800 in those four years, meaning you need to stick around about 5.5 years before you \"\"break even\"\" in TVM terms). For this reason, I would say that you should be very cautious when buying your first home; it may very well be the last one you'll ever buy. Whether that's because you made good choices or bad is up to you.\"" }, { "docid": "62625", "title": "", "text": "This article addresses a man who specifically lost his skilled work to outsourcing to India. No one is talking about dishwashing level work here, that's more relevant to ILLEGAL immigration, and the practice of hiring illegal labor off the books by businesses. Jobs that people don't want should pay more. That' supply and demand, the free market. Janitors makes $15-30/ hr, more than easier low wage jobs. Maids make $25-60/hr. Garbage men make $20-60/hr. Illegal people do it for less because they don't have full rights as citizens, and thus have less leverage to negotiate pay. Their pervasiveness gives legal citizens less leverage to negotiate their pay. I think the honest solution to illegal immigration is to seek ways to make legal immigration and naturalization more reasonably accessible while also cracking down on illegal hiring practices. I DONT think the solution is to reserve our less desirable work to a slave class of any sort. I'm not for unions, but the negotiating power and well being of the American labor force should be protected always. If the pay reflects the labor, people will do the work. Blue collar Americans do all sorts of disgusting, difficult, and/or dangerous work as long as it is at a premium. This article is more about the negotiating power of americans lost to corporations taking skilled work and outsourcing it ~~at minimum wage levels of employment~~ (article said $60k or more) to those desperate for a living wage and/or citizenship. How to address that, I don't know. Edit:not min wage, $60k" }, { "docid": "25802", "title": "", "text": "It costs them more to make the screens with more pixels. Let's say I usually pay you 10$ for something that cost you 5$ to make. Now I pay you 20$ for something that costs you 18$ to make. Sure you get 20$ instead of 10$, but your profit per item went from 5$ down to 2$. Same thing here, the screens with 4x the pixels costs much more than the original screens. Apple paid slightly more for them, but not enough to keep the profit margin." }, { "docid": "63690", "title": "", "text": "This is a slightly different reason to any other answer I have seen here about irrationality and how being rationally aware of one's irrationality (in the future or in different circumstances) can lead you to make decisions which on the face of it seem wrong. First of all, why do people sometimes maintain balances on high-interest debt when they have savings? Standard advice on many money-management sites and forums is to withdraw the savings to pay down the debt. However, I think there is a problem with this. Suppose you have $5,000 in a savings account, and a $2,000 credit card balance. You are paying more interest on the credit card than you get from the savings account, and it seems that you should withdraw some money from the savings account, and pay off the cc. However, the difference between the two scenarios, other than the interest you lose by keeping the cc balance, is your motivation for saving. If you have a credit card balance of $2,000, you might be obliged to pay a minimum payment of $100 each month. If you have any extra money, you will be rewarded if you pay more in to the credit card, by seeing the balance go down and understanding that you will soon be free from receiving this awful bill each month. To maintain your savings goal, it's enough to agree with yourself that you won't do any new spending on the cc, or withdraw any savings. Now suppose that you decide to pay off the cc with the savings. There is now nothing 'forcing' you to save $100 each month. When you get to the end of the month, you have to motivate yourself that you will be adding spare cash to your $3,000 savings balance, rather than that you 'have to' pay down your cc. Yes, if you spend the spare cash instead of saving it, you get something in return for it. But it is possible that spending $140 on small-scale discretionary spending (things you don't need) actually gets you less for your money than paying the credit card company $40 interest and saving $100? You might even be tempted to start spending on your credit card again, knowing that you have a 0 balance, and that you 'can always pay it off out of savings'. It's easy to analogize this to a situation with two types of debt. Suppose that you have a $2,000 debt to your parents with no interest and a $2,000 loan at high interest, and you get a $2,000 windfall. Let's assume that your parents don't need the money in a hurry and aren't hassling you to pay them (otherwise you could consider the guilt or the hassle as a form of emotional interest rate). Might it not be better to pay your parents off? If you do, you are likely to keep paying off your loan out of necessity of making the regular payments. In 20 paychecks (or whatever) you might be debt free. If you pay off your loan, you lose the incentive to save. After 20 months you still owe your parents $2,000. I am not saying that this is always what makes sense. Just that it could make sense. Note that this is an opposite to the 'Debt Snowball' method. That method says that it's better to pay off small debts, because that way you have more free cash flow to pay off the larger debts. The above argues that this is a bad idea, because you might spend the increased cash flow on junk. It would be better to keep around as many things as possible which have minimum payments, because it restricts you to paying things rather than gives you the choice of whether to save or spend." } ]

[ { "docid": "469125", "title": "", "text": "Leverage increase returns, but also risks, ie, the least you can pay, the greater the opportunity to profit, but also the greater the chance you will be underwater. Leverage is given by the value of your asset (the house) over the equity you put down. So, for example, if the house is worth 100k and you put down 20k, then the leverage is 5 (another way to look at it is to see that the leverage is the inverse of the margin - or percentage down payment - so 1/0.20 = 5). The return on your investment will be magnified by the amount of your leverage. Suppose the value of your house goes up by 10%. Had you paid your house in full, your return would be 10%, or 10k/100k. However, if you had borrowed 80 dollars and your leverage was 5, as above, a 10% increase in the value of your house means you made a profit of 10k on a 20k investment, a return of 50%, or 10k/20k*100. As I said, your return was magnified by the amount of your leverage, that is, 10% return on the asset times your leverage of 5 = 50%. This is because all the profit of the house price appreciation goes to you, as the value of your debt does not depend on the value of the house. What you borrowed from the bank remains the same, regardless of whether the price of the house changed. The problem is that the amplification mechanism also works in reverse. If the price of the house falls by 10%, it means now you only have 10k equity. If the price falls enough your equity is wiped out and you are underwater, giving you an incentive to default on your loan. In summary, borrowing tends to be a really good deal: heads you win, tails the bank loses (or as happened in the US, the taxpayer loses)." } ]

[ { "docid": "101405", "title": "", "text": "Assuming a good credit score with no issues like bankruptcy they look at 2 ratios: housing related debts and non-housing debts. For you the housing debts are: principal and interest ($1986/month), property taxes ($490/month), Home Insurance ($120/month) and HOA fee ($120/month). Add these up ($2716/month). You want this to be below 28% of your gross, though some lenders use 33%. For you 109K/year is 9083/month or 29.9%. The 20% down payment saves you the PMI payments. Note that the deductions for interest and taxes already hidden in the ratio limits, so don't try to reduce the monthly impact by a expected deduction. Many lenders will require you to give them the money from taxes and insurance each month, they will forward the funds to the government of insurance policy when the bills are due. The 2nd ratio is for the non-housing debts, which you claim to be zero. That should be less than 10%. If they insist on keeping you below 28% you might need a lower rate or bigger down payment. Your current income and budget have allowed you to accumulate significant savings, though you retirement balances seem low. The savings and CD balances show that you could increase your spending each month without severely impacting your financial health. Should you buy, can't be answered because that is an individual choice. Keep in mind that home ownership also includes additional responsibilities that a renter can ask a landlord to fix and pay for. That is the stuff that is impossible to predict." }, { "docid": "244405", "title": "", "text": "\"This is a well worn path and not a bad idea. There are quite a few pitfalls but there are a lot of resources to learn for other people's mistakes. Having a plan and doing your research should help you avoid most of them. Here is some general advice to help get you started on the right foot. Know the market you are investing in. The city should have more than one major employer. The population should be rising and hopefully there are other positive economic indicators. Check the city's and state's chamber of commerce for useful information. You do not want to be stuck holding a bunch of upside down property in Detroit. Accurately calculate expenses. Set aside money for repairs. budget 5% of the rent or 100 a month for repairs if no repairs happen that money goes into the repair fund for the future. Set aside money for capital expenditures if the roof has a 10 years of life left in 10 years you better be ready to replace it same with any major appliances. Your area should have a baseline vacancy rate 5-8% in my area. That says out of a year your property will be vacant for around 6% of the year or 21 days for turnover. You should build that cushion into the budget as well setting aside a portion of the rent to cover that lean period. Some property management will offer \"\"eviction insurance\"\" which is basically them enforcing that savings. Financing maybe difficult a lot of banks like to see 25% down payments on investments. You will also face higher interest rates for investment properties. Banks generally also like to see enough money to cover 6 months worth of expenses in your account for all property. Some banks will not give financing for investment property to someone without 1-2 years of landlord experience. All in all finding money will be hard when you gets started and your terms may be less than ideal. (hopefully make around 3 - 5k a year in profit) If that includes loan pay-down and is not just cash-flow you are probably in the right ballpark. I can find $100-$200 dollars cash-flow a month on single family home in my area. Once loan pay-down is included your numbers are close. It sounds like you have a good attitude and a good plan. A book that I really enjoyed and I think may be useful is \"\"Start Small, Profit Big in Real Estate\"\" by Jay DeCima. I think of it as required reading for do-it-yourself real estate investors. Good luck and happy investing\"" }, { "docid": "514107", "title": "", "text": "I concur that you should probably go with option 1. And that is coming from a guy that refinanced all three of his properties with down to 20% equity 3 years ago to lock in either 4% 30 year fixed or 2.75% 15 year mortgage. And I will not pay them off early because I do think I can do better than that in the market even if inflation is 0% for the next 30 years. Just imagine when the fed stops manipulating tax rates. I could be making more than 4% just in a checking account." }, { "docid": "381938", "title": "", "text": "\"&gt;\"\"You didn't lose your job, you just had temporary employment.\"\" Same as back in the late 1990's (when unemployment was really low) -- a lot of people got jobs they really weren't qualified for; and were paid far more (at least on a scale relative to their co-workers) than they were really worth. The sad thing about that is that they came to *believe* they were truly worth that amount of money. The same with houses. My home (bought in late 2000) increased in \"\"estimated market value\"\" by 75% (i.e. to 175% of it's previous sale price when I bought it) -- and the \"\"bubble\"\" around here wasn't anything like it was in other regions of the US; and of course, now it has (ostensibly) sunk back down to very nearly the price I paid for it. The problem (for a LOT of people) with that is that -- even if they didn't buy during the peak bubble years -- they refinanced or HELOC'd based on that higher estimated value, and so ended up basically removing (and then spending) the lion's share of equity that they had built up in their house. For others, it was much the same as the late 90's employment -- they came to \"\"believe\"\" that their house was worth XX% more -- and they have difficulty \"\"letting go\"\" of that illusory estimated market price. So they are experiencing the \"\"wealth LOSS effect\"\" just as they once experienced a \"\"wealth effect\"\". I was saved from those things because: a) I realized that the price of houses is always \"\"at the margin\"\", and is never guaranteed by what the place cost, or what you have invested in it, or even what the owner or mortgage company *thought* it was worth; rather (when you go to sell) it will be determined by what the buyer(s) want/are capable of paying; b) I was far more concerned with what my \"\"total cost of buying\"\" would be (including all of the interest paid on the mortgage) -- this led me to first of all only buy what I \"\"needed\"\" in a house (i.e. single guy = small place) and secondly to pay the whole thing off ASAP (which I did, *dramatically* lowering the total lifetime cost of the place); And finally and probably MOST IMPORTANTLY (though in part due to \"\"b\"\" above): c) It doesn't really matter to me whether the price goes up or down -- because I know that I will always need a place to live and that (generally speaking, due to overall market conditions) the prices of ALL houses will tend to go up/down together -- and though not necessarily in \"\"lock-step\"\" (there are always factors of neighborhood, local economy, housing trends, etc.); but still, should I desire to move, I will essentially be able to \"\"trade\"\" my house for a similar one in a similar market with only a small (6% to 10%) cost. d) But I also know that if I move \"\"up market\"\" (attempt to move to an area/house that has a relatively higher demand/higher price) that I will then have to pay more or get an even smaller place (smaller home, less land, no garage/shop, etc); yet conversely if I for some reason decide to move \"\"down market\"\" (to an area/house with a relatively lower demand/price) I may be able to either pay less, or to get slightly *more* \"\"house\"\" (additional land, outbuildings, etc). Note: I also took into account \"\"demographic changes\"\" when I bought -- and think I made the right choice (even though it hasn't \"\"played out\"\" yet) -- with the typical household actually becoming *smaller* (divorces, single parents, fewer kids, more retirees wanting to downsize, etc) I figured way back in 2000 that in 15-20-30 years (circa 2015..2045) the big \"\"McMansions\"\" would be aging and in huge oversupply, whereas smaller homes would be in relatively higher demand (and given things like \"\"smart growth planning\"\") probably in lesser supply... and so would be more likely to retain value. Again, this hasn't \"\"played out\"\" yet (though there definitely ARE signs that it is starting), but I am also really not interested in selling... so it's a moot point at present. (And even if I am proved wrong, it will probably merely prove to be the loss of an \"\"upside\"\" and not an actual loss per se.)\"" }, { "docid": "286466", "title": "", "text": "Gosh don't do either! Unless you are fully funding you ROTH accounts and even then I wouldn't do it. Those interest rates are free money. You are giving away the best bargain in the history of home mortgages. Don't you think you can make more than 4% on your money invested? Don't you think in 5 years you will be able to make 4% on bond/cd's/ and other low risk investments? Don't forget money you pay in the 2020's on beyond to your mortgage are inflationary dollars. Do you think that money will be more valuable in the 20's and beyond? I don't. Roths are free money too. Think if you put 11k in there a year how much would you have at the end of it tax free. There is a reason you can only put $5,500 in them, they are too good a deal tax wise to let people put too much in there. Think about this my parents bought their home in 1967 their mortgage was $170 a month. Inflation hits and the interest they are paying at 8%! mind you, it was still a laughable amount of money each month for mortgage payment from 1977 and on. Also I bought a $450,000 house 38 months ago. Instead of putting down 180 I put down 80 I let the other 100k in my investment account and moved 5.5k over to Roth every year. I now have a roth worth $38k and an investment account worth $105k. I made 40k on my money those three years and the 38k is tax free! If you don't believe me call the help line at clarkhoward.com Get over the emotional need to be debt free and make a logical finical choice. I am begging you to think about this. This post could save you tens of thousands of dollars. Let me put it one more way. 100k in debt with 100k in investments is debt free living. Especially when you debt is under 4% and a tax write off." }, { "docid": "475632", "title": "", "text": "In the US you can get a home warranty when you buy a house that will cover major repairs for the first few years of owning a home. The costs vary based on age and the results of the home inspection. Ours cost ~$250 a year. This was put into our closing costs. Unfortunately this market does have some disreputable companies that come im with prices that seem too good to be true. As is usually the case they are. Do research on the company you are getting the home warrenty from to make sure you are dealing with a reputable company that will honor its commitments. By having 20% down you will avoid needing Mortgage insurance which will save you a considerable amout. My PMI cost me about $70 a month. However once you get to 20% equity in your home the pmi drops off. So if you can put down 15% you should be able to get out from under your pmi in a few years if you want to keep that 5% cushion while making extra payments. The question is how much do you feel you need. So far owning a 70 year old home my extra maintence costs have been around 2500 a year. But they seem to be in 1k chunks every 4 or 5 months." }, { "docid": "266649", "title": "", "text": "The simple answer is that you are correct. You should not purchase a house until you are financially stable enough to do so. A house is an asset that you must maintain, and it can be expensive to do so. Over the long term, you will generally save money by purchasing. However, in any given year you may spend much more money than a similar rental situation - even if the rent is higher than your mortgage payment. If you are financially stable with good cash savings or investments plus a 20% down payment, then anytime is a good time to buy if that is part of your financial plan. As of now in 2016, is is safe to assume that mortgage rates would/should not get back to 10%? Does this mean that one should always buy a house ONLy when mortgage rates are low? Is it worth the wait IF the rates are high right now? The mortgage rates are not the primary driver for your purchase decision. That might be like saying you should buy everything on sale at Target... because it's on sale. Don't speculate on future rates. Also, keep in mind that back when rates were high, banks were also giving much better savings/CD rates. That is all connected. Is refinancing an option on the table, if I made a deal at a bad time when rates are high? You need to make sure you get a loan that allows it. Always do a break-even analysis, looking at the money up-front you spend to refi vs the savings-per-year you will get. This should give you how many years until the refi pays for itself. If you don't plan on being in the house that long, don't do it. How can people afford 10% mortgage? Buying a house they can afford, taking into consideration the entire payment+interest. It should be a reasonable amount of your monthly income - generally 25% or less. Note that this is much less than you will be 'approved' for by most lenders. Don't let good rates suck you into a deal you will regret. Make sure you have the margin to purchase and maintain a home. Consider where you want to be living in 5 years. Don't leave so little financial breathing room that any bump will place you at risk of foreclosure. That said, home ownership is great! I highly recommend it." }, { "docid": "1472", "title": "", "text": "\"From what I've heard in the past, debt can be differentiated between secured debt and unsecured debt. Secured debt is a debt for which something stands good such as a mortgage on your house. You have a debt, but that debt is covered by the value of an asset and if you needed to free yourself of the debt, then you could by selling that asset. This is what is known as \"\"good\"\" debt. Unsecured debt is debt that is incurred where the only thing that is available to pay it back is your income. An example of this is credit card debt where you purchase something that couldn't be sold again to pay off the debt. This is know as \"\"bad\"\" debt. You have to be careful about thinking that house debt is always \"\"good\"\" debt because the house stands good for it though. The problem with that is that the house could go down in value and then suddenly your \"\"good\"\" debt is \"\"bad\"\" debt (or no longer secured). Cars are very risky this way because they go down in value. It is really easy to get a car loan where before long you are upside down. This is the problem with the term \"\"good\"\" debt. The label makes it sound like it is a good idea to have that debt, and the risk associated with having the debt is trivialized and allows yourself to feel good about your financial plan. Perhaps this is why so many houses are in foreclosure right now, people believed the \"\"good\"\" debt myth and thought that it was ok to borrow MORE than the home was worth to get into a house. Thus they turned a secured debt into an unsecured debt and put their residence at risk by levels of debt they couldn't afford. Other advice I've heard and tend to agree with, is that you should only borrow for a house, an education and maybe a car (danger on that last one), being careful to buy a modest house, car etc that is well within your means to repay. So if you do have to borrow for a car, go for basic transportation instead of the $40,000 BMW. Keep you house payment less than 1/4th of your take home pay. Pay off the school loans as quickly as possible. Regardless of the label, \"\"good\"\" \"\"bad\"\" \"\"unsecured\"\" \"\"secured\"\", I think that less debt is better than more debt. There is definitely such a thing as too much \"\"good\"\" debt!\"" }, { "docid": "139366", "title": "", "text": "There's a ton of great advice here. It's very challenging to come up with something that hasn't already been suggested. I'm curious to know how many years you have left to pay down the mortgage at the regular rate of payment. If it's more than 15 years, it might be worthwhile to consider refinancing your mortgage to a shorter term (15 years or even 10 years if your income supports it). Rates on fixed-interest mortgages at those terms are down in the 3% range and lower (at least according to bankrate.com). Refinancing to a shorter term would be another way of paying off your home faster (with fewer of those dollars going toward interest payments). If you've got fewer than 15 years left to pay off your mortgage, following any of the other advice you've received here should keep you in great financial shape." }, { "docid": "219042", "title": "", "text": "It is a decent time to purchase real estate despite dsquid's opinion. I feel dsquid is falling for the old economic psychology of what ever direction its going it will continuing in that direction, which is a bad mentality for any investing (up or down). This may not be the bottom, and there is some sign that another dip is coming with in a year or two. But if you purchase now, and focus on a few key factors you may end up on the upside of the swing. First and foremost location matters more then value of the property. When the pent up demand is eventually released (after we get employment moving in the right direction) you will see a land grab. The first and highest valued places are those with nice neighborhoods and good schools as the young families (economically unburdened) start making homes. Second pay attention to valuation in so much as your burden. This means consider taxes and mortgage and terms of mortgage (stay away from variable or balloon rates). When thing go up the interest rates will lead the way. In this time of uncertainty you should make sure you can cover your mortgage payment with ease. Put plenty down (20% being the recommended to avoid mortgage insurance and long term costs) and shoot low on price. If you're handy you may even consider buying something that needs minor work (outdated kitchen or the like). If you shoot lower then your limit, then you'll be comfortable even if things turn sour for you. Ultimately all this hinges on what you want to do with the property. Its a wise time to buy homes today where you will be able to rent them out tomorrow. But the important thing is aim in the middle instead of at your limit (450 is definitely your limit). Remember banks will always tell you that you're able to afford twice as much as you actually should. And keep in mind, no matter how new or nice the home, it will need work at some point and that costs. So you should have that in mind when you consider savings. Based on your information I wouldnt shoot higher then 250-300k. I have friends who make your salary in dividends plus two incomes and they are comfortable in their home at its 250 price. They are able to afford repairs and upgrade regularly and arent threatened by potential tax hikes (though they gripe of course). The one good piece of advice from dsquid IMHO is that you should be ready for the environment to change. Higher interests rates will weigh on your comfort as much as CPI and increased taxes will so plan for them to be much higher and you'll be ahead of the game." }, { "docid": "123991", "title": "", "text": "\"Banks are currently a lot less open to 'creative financing' than they were a few years ago, but you may still be able to take advantage of the tactic of splitting the loan into two parts, a smaller 'second mortgage' sometimes called a 'purchase money second' at a slightly higher interest rate for around 15-20% of the value, and the remaining in a conventional mortgage. Since this tactic has been around for a long time, it's not quite in the category of the shenanegans they were pulling a few years back, so has a lot more potential to still be an option. I did this in for my first house in '93 and again in '99 when I moved to a larger home after getting married. It allowed me to get into both houses with less than 20% down and not pay PMI. This way neither loan is above 80% so you don't have to pay PMI. The interest on the second loan will be higher, but usually only a few percent, and is thus usually a fraction of what you were paying for the PMI. (and it's deductible from your taxes) If you've been making your payments on time and have a good credit rating, then you might be able to find someone who would offer you such a deal. You might even be able to get a rate for your primary that is down in the low 4's depending on where rates are today and what your credit rating is like. If you can get the main loan low enough, even if the other is like say 7%, your blended rate may still be right around 5% If you can find a deal like this, it's also great material to use to negotiate with your current lender \"\"either help me get the PMI off this loan or I'm going to refinance.\"\" Then you can compare what they will offer you with what you can get in a refinance and decide what makes the most sense for you. On word of warning, when refinancing, do NOT get sucked into an adjustable rate mortgage. If you are finding life 'tight' right now with house payments and all, the an ARM could be highly seductive since they often offer a very low initial rate.. however then invariably adjust upwards, and you could suddenly find yourself with a monster payment far larger than what you have now. With low rates where they are, getting a conventional fixed rate loan (or loans in the case of the tactic being discussed here) is the way to go.\"" }, { "docid": "498881", "title": "", "text": "Paying off your mortgage early being good is a myth. It is great for the chronic overspenders to have their mortgage paid off so when they rack up credit card bills and get behind, well they still hae a place to stay. But for those who are more logical with their money paying off your mortgage early in current conditions makes no sense. You can get a 30 year loan well below 4%. Discounting taxes for your average family you would have a rate floating below 3%. So reasons that paying off your mortgage should be almost LAST (given current low long-term interest rates): The first thing you should do is take care of any high interest debt. I would say that anything more than 7-8%, including all credit card debt should be focus #1. putting money into your retirement savings is #1. You will earn way more than 3% over the long-run. you can earn a higher return in the market. Even with a very conservative portfolio you can clear 5-6%, which will still clear more than 3% after taxes. for those who say you can't be sure about the market... well if the market did bad for 30 years in a row no one will have money and the house will also be worthless. if a disaster happens to your house and you own it, your money is gone. In many cases you would be able to declare bankruptcy and let the bank take the property as is. there are just too many examples but if you are paying off your house early, you lose the flexible/liquid money that you now have tied up in the house. Now the reasons for paying down your mortgage are really easy too: you don't trust your spending habits you want to move up in houses and you want to make sure that you have at least 20% down on future house to skip PMI." }, { "docid": "338606", "title": "", "text": "Before doing anything else: you want a lawyer involved right from the beginning, to make sure that something reasonable happens with the house if one of you dies or leaves. Seriously, you'll both be safer and happier if it's all explicit. How much you should put on the house is not the right question. Houses don't sell instantly, and while you can access some of their stored value by borrowing against them that too can take some time to arrange. You need to have enough operating capital for normal finances, plus an emergency reserve to cover unexpectedly being out of work or sudden medical expenses. There are suggestions for how much that should be in answers to other questions. After that, the question is whether you should really be buying a house at all. It isn't always a better option than renting and (again as discussed in answers to other questions) there are ongoing costs in time and upkeep and taxes and insurance. If you're just thinking about the financials, it may be better to continue to rent and to invest the savings in the market. The time to buy a house is when you have the money and a reliable income, plan not to move for at least five years, really want the advantages of more elbow room and the freedom to alter the place to suit your needs (which will absorb more money)... As far as how much to put down vs. finance: you really want a down payment of at least 20%. Anything less than that, and the bank will insist you pay for mortgage insurance, which is a significant expense. Whether you want to pay more than that out of your savings depends on how low an interest rate you can get (this is a good time in that regard) versus how much return you are getting on your investments, combined with how long you want the mortgage to run and how large a mortgage payment you're comfortable committing to. If you've got a good investment plan in progress and can get a mortgage which charges a lower interest rate than your investments can reasonably be expected to pay you, putting less down and taking a larger mortgage is one of the safer forms of leveraged investing... IF you're comfortable with that. If the larger mortgage hanging over you is going to make you uncomfortable, this might not be a good answer for you. It's a judgement call. I waited until i'd been in out of school about 25 years before I was ready to buy a house. Since i'd been careful with my money over that time, I had enough in investments that I could have bought the house for cash. Or I could have gone the other way and financed 80% of it for maximum leverage. I decided that what I was comfortable with was financing 50%. You'll have to work thru the numbers and decide what you are comfortable with. But I say again, if buying shared property you need a lawyer involved. It may be absolutely the right thing to do ... but you want to make sure everything is fully spelled out... and you'll also want appropriate terms written into your wills. (Being married would carry some automatic assumptions about joint ownership and survivor rights... but even then it's safer to make it all explicit.) Edit: Yes, making a larger down payment may let you negotiate a lower interest rate on the loan. You'll have to find out what each bank is willing to offer you, or work with a mortgage broker who can explore those options for you." }, { "docid": "499977", "title": "", "text": "\"I am not saying it is fair, or that only they get to say \"\"this sucks\"\" I am saying that you should not be envious of them. Also, try to remember that the programs like the one they made use of don't just help that family. Foreclosures drive down property values. Sure it sucks to see them basically get rewarded for an. . . . optimistic gamble shall we say. . . but they are not the only ones that benefited. Their neighbors, some of whom likely are honest people who took a cautious path to home ownership, now will not have their homes decrease in value due to sister. She gets an unfair reward, but it also helps avoid her neighbors getting unfairly dinged. Not to mention that it is safer to have homes occupied, and they tend to be less likely to fall into disrepair. Also, try to remember that every house that does go back to the bank means one more family of renters. Banks tend to sit on homes, often for way way longer than they should, leaving that house empty, while the former tenants try to rent. Pour more renters into the pool while banks sit on unsold vacant homes and landlords can be more picky and charge more for rent. But in the end. . . .man your rent sucks.\"" }, { "docid": "583830", "title": "", "text": "Unless that 401K has very low expense ratios on its funds, you should roll it into an IRA and choose funds with low expense ratios. After rolling it over you should not take the 10% penalty and use it to purchase a home. Unless you use that home as an income property, it is unlikely to provide you more than a 1% inflation-adjusted rate of return given historical data. The S&P 500 is about 4% adjusted for inflation. And that money currently in your 401(k) is for your retirement - your future. Don't borrow against your future. Let compound interest do its work on that money. The value of a house is in the rent you aren't paying to live somewhere and there are a lot of costs to consider. That doesn't mean don't buy. It just means buy wisely. If you are currently maxing out your 401(k), you may consider cutting back to save for your down payment. Other than that I wouldn't touch retirement money unless it was a dire financial emergency." }, { "docid": "479213", "title": "", "text": "\"Concise answers to your questions: Depends on the loan and the bank; when you \"\"accelerate\"\" repayment of a loan by applying a pre-payment balance to the principal, your monthly payment may be reduced. However, standard practice for most loan types is that the repayment schedule will be accelerated; you'll pay no less each month, but you'll pay it off sooner. I can neither confirm nor deny that an internship counts as job experience in the field for the purpose of mortgage lending. It sounds logical, especially if it were a paid internship (in which case you'd just call it a \"\"job\"\"), but I can't be sure as I don't know of anyone who got a mortgage without accruing the necessary job experience post-graduation. A loan officer will be happy to talk to you and answer specific questions, but if you go in today, with no credit history (the student loan probably hasn't even entered repayment) and a lot of unknowns (an offer can be rescinded, for instance), you are virtually certain to be denied a mortgage. The bank is going to want evidence that you will make good on the debt you have over time. One $10,000 payment on the loan, though significant, is just one payment as far as your credit history (and credit score) is concerned. Now, a few more reality checks: $70k/yr is not what you'll be bringing home. As a single person without dependents, you'll be taxed at the highest possible withholdings rate. Your effective tax rate on $70k, depending on the state in which you live, can be as high as 30% (including all payroll/SS taxes, for a 1099 earner and/or an employee in a state with an income tax), so you're actually only bringing home 42k/yr, or about $1,600/paycheck if you're paid biweekly. To that, add a decent chunk for your group healthcare plan (which, as of 2014, you will be required to buy, or else pay another $2500 - effectively another 3% of gross earnings - in taxes). And even now with your first job, you should be at least trying to save up a decent chunk o' change in a 401k or IRA as a retirement nest egg. That student loan, beginning about 6 months after you leave school, will cost you about $555/mo in monthly payments for the next 10 years (if it's all Stafford loans with a 50/50 split between sub/unsub; that could be as much as $600/mo for all-unsub Stafford, or $700 or more for private loans). If you were going to pay all that back in two years, you're looking at paying a ballpark of $2500/mo leaving just $700 to pay all your bills and expenses each month. With a 3-year payoff plan, you're turning around one of your two paychecks every month to the student loan servicer, which for a bachelor is doable but still rather tight. Your mortgage payment isn't the only payment you will make on your house. If you get an FHA loan with 3.5% down, the lender will demand PMI. The city/county will likely levy a property tax on the assessed value of land and building. The lender may require that you purchase home insurance with minimum acceptable coverage limits and deductibles. All of these will be paid into escrow accounts, managed by your lending bank, from a single check you send them monthly. I pay all of these, in a state (Texas) that gets its primary income from sales and property tax instead of income, and my monthly payment isn't quite double the simple P&I. Once you have the house, you'll want to fill the house. Nice bed: probably $1500 between mattress and frame for a nice big queen you can stretch out on (and have lady friends over). Nice couch: $1000. TV: call it $500. That's probably the bare minimum you'll want to buy to replace what you lived through college with (you'll have somewhere to eat and sleep other than the floor of your new home), and we're already talking almost a month's salary, or payments of up to 10% of your monthly take-home pay over a year on a couple of store credit cards. Plates, cookware, etc just keeps bumping this up. Yes, they're (theoretically) all one-time costs, but they're things you need, and things you may not have if you've been living in dorms and eating in dining halls all through college. The house you buy now is likely to be a \"\"starter\"\", maybe 3bed/2bath and 1600 sqft at the upper end (they sell em as small as 2bd/1bt 1100sqft). It will support a spouse and 2 kids, but by that point you'll be bursting at the seams. What happens if your future spouse had the same idea of buying a house early while rates were low? The cost of buying a house may be as little as 3.5% down and a few hundred more in advance escrow and a couple other fees the seller can't pay for you. The cost of selling the same house is likely to include all the costs you made the seller pay when you bought it, because you'll be selling to someone in the same position you're in now. I didn't know it at the time I bought my house, but I paid about $5,000 to get into it (3.5% down and 6 months' escrow up front), while the sellers paid over $10,000 to get out (the owner got married to another homeowner, and they ended up selling both houses to move out of town; I don't even know what kind of bath they took on the house we weren't involved with). I graduated in 2005. I didn't buy my first house until I was married and pretty much well-settled, in 2011 (and yes, we were looking because mortgage rates were at rock bottom). We really lucked out in terms of a home that, if we want to or have to, we can live in for the rest of our lives (only 1700sqft, but it's officially a 4/2 with a spare room, and a downstairs master suite and nursery/office, so when we're old and decrepit we can pretty much live downstairs). I would seriously recommend that you do the same, even if by doing so you miss out on the absolute best interest rates. Last example: let's say, hypothetically, that you bite at current interest rates, and lock in a rate just above prime at 4%, 3.5% down, seller pays closing, but then in two years you get married, change jobs and have to move. Let's further suppose an alternate reality in which, after two years of living in an apartment, all the same life changes happen and you are now shopping for your first house having been pre-approved at 5%. That one percentage point savings by buying now, on a house in the $200k range, is worth about $120/mo or about $1440/yr off of your P&I payment ($921.42 on a $200,000 home with a 30-year term). Not chump change (over 30 years if you had been that lucky, it's $43000), but it's less than 5% of your take-home pay (month-to-month or annually). However, when you move in two years, the buyer's probably going to want the same deal you got - seller pays closing - because that's the market level you bought in to (low-priced starters for first-time homebuyers). That's a 3% commission for both agents, 1% origination, 0.5%-1% guarantor, and various fixed fees (title etc). Assuming the value of the house hasn't changed, let's call total selling costs 8% of the house value of $200k (which is probably low); that's $16,000 in seller's costs. Again, assuming home value didn't change and that you got an FHA loan requiring only 3.5% down, your down payment ($7k) plus principal paid (about another $7k; 6936.27 to be exact) only covers $14k of those costs. You're now in the hole $2,000, and you still have to come up with your next home's down payment. With all other things being equal, in order to get back to where you were in net worth terms before you bought the house (meaning $7,000 cash in the bank after selling it), you would need to stay in the house for 4 and a half years to accumulate the $16,000 in equity through principal payments. That leaves you with your original $7,000 down payment returned to you in cash, and you're even in accounting terms (which means in finance terms you're behind; that $7,000 invested at 3% historical average rate of inflation would have earned you about $800 in those four years, meaning you need to stick around about 5.5 years before you \"\"break even\"\" in TVM terms). For this reason, I would say that you should be very cautious when buying your first home; it may very well be the last one you'll ever buy. Whether that's because you made good choices or bad is up to you.\"" }, { "docid": "106145", "title": "", "text": "If you're looking for some formula, I don't think one exists. People talk about this all the time and give conflicting advice. If there was a proven-accurate formula, they wouldn't be debating it. There are basically 3 reasons to do a home improvement project: (a) Correct a problem so that you prevent on-going damage to your home. For example, have a leaking roof patched or replaced, or exterminate termites. Such a job is worthwhile if the cost of fixing the problem is less than the cost of future damage. In the case of my termite and leaking roof examples, this is almost always worth doing. Lesser maintenance problems might be more debatable. Similarly, some improvements may reduce expenses. Like replacing an old furnace with a newer model may cut your heating bills. Here the question is: how long does it take to repay the investment, compared to other things you might invest your money in. Just to make up numbers: Suppose you find that a new furnace will save you $500 per year. If the new furnace costs $2000, then it will take 4 years to pay for itself. I'd consider that a good investment. If that same $2000 furnace will only cut your heating bills by $100 per year, then it will take 20 years to pay for itself. You'd probably be better off putting the $2000 into the stock market and using the gains to help pay your heating bill. (b) Increase the resale value of your home. If you are paying someone else to do the work, the harsh reality here is: Almost no job will increase the resale value by more than the cost of getting the job done. I've seen many articles over the years citing studies on this. I think most conclude that kitchen remodeling comes closet to paying for itself, and bathrooms come next. New windows are also up there. I don't have studies to prove this, but my guesses would be: Replacing something that is basically nice with a different style will rarely pay for itself. Like, replacing oak cabinets with cherry cabinets. Replacing something that is in terrible shape with something decent is more likely to pay back than replacing something decent with something beautiful. Like if you have an old iron bathtub that's rusting and falling apart, replacing it may pay off. If you have a 5-year-old bathtub that's in good shape but is not premium, top of the line, replacing it with a premium bathtub will probably do very little for resale value. If you can do a lot of the work yourself, the story changes. Many home improvement jobs don't require a lot of materials, but do require a lot of work. If you do the labor, you can often get the job done very cheaply, and it's likely that the increase in resale value will be more than what you spend. For example, most of my house has hardwood floors. Lots of people like pretty hardwood floors. I just restained the floors in two rooms. It cost me, I don't know, maybe $20 or $30 for stain and some brushes. I'm sure if I tried to sell the house tomorrow I'd get my twenty bucks back in higher sale value. Realtors often advise sellers to paint. Again, if you do it yourself, the cost of paint may be a hundred dollars, and it can increase the sale price of the house by thousands. Of course if you do the work yourself, you have to consider the value of your time. (c) To make your home more pleasant to live in. This is totally subjective. You have to make the decision on the same basis that you decide whether anything that is not essential to survival is worth buying. To some people, a bottle of fancy imported wine is worth thousands, even millions, of dollars. Others can't tell the difference between a $10,000 wine and a $15 wine. The thing to ask yourself is, How important is this home improvement to me, compared to other things I could do with the money? Like, suppose you're considering spending $20,000 remodeling your kitchen. What else could you do with $20,000? You could buy a car, go on an elaborate vacation, eat out several times a week for years, retire a little earlier, etc. No one can tell you how much something is worth to you. Any given home improvement may involve a combination of these factors. Like say you're considering that $20,000 kitchen remodeling. Say you somehow find out that this will increase the resale value by $15,000. If the only reason you were considering it was to increase resale value, then it's not worth it -- you'd lose $5,000. But if you also want the nicer kitchen, then it is fair to say, Okay, it will cost me $20,000, but ultimately I'll get $15,000 of that back. So in the long run it will only cost me $5,000. Is having a nicer kitchen worth $5,000 to me? Note, by the way, that resale value only matters if and when you sell the house. If you expect to stay in this house for 20 years, any improvements done are VERY long-term investments. If you live in it until you die, the resale value may matter to your heirs." }, { "docid": "420707", "title": "", "text": "It seems very risky have all of your net worth in this one home. If I were to buy the house, I'm not sure I would put that much down, consider 20% and keep cash on hand, in retirement assets, etc. I would look at how much a mortgage, plus interest, taxes, insurance, etc. would cost with 50% down and with 20% down and see how that impacts your cash flow. Renting may make more sense, it's hard to tell without more specifics (NYTimes Rent/Buy calculator is a nice tool), but regardless, I would not want to have so much net worth tied into one asset and so would opt for less money down if I were to buy. Focus on rebuilding some retirement assets." }, { "docid": "23533", "title": "", "text": "I think the consensus is that you can't afford a home now and need to build more of a down payment (20% is benchmark, you may also need to pay mortgage insurance if you are below that) and all considered, it takes up too much of your monthly budget. You didn't do anything wrong but as mentioned by Ben, you are missing some monthly and yearly costs with home ownership. I suggest visiting a bank or somewhere like coldwell banker to discuss accurate costs and regulations in your area. I know the feeling of considering paying more now for the very attractive thought of owning a home... in 30 years. After interest, you need to consider that you are paying almost double the initial principle so don't rush for something you can do a year or two down the line as a major commitment. One major point that isn't emphasized in the current answers. You have a large family: Two children, a dog, and a cat. I don't know the kid's ages but given you are in your early twenties and your estimated monthly costs, they are probably very young before the point they really put any stress financially but you need to budget them in exponentially. Some quick figures from experience. Closing costs including inspections, mortgage origination fee, lawyer fees, checking the history of the home for liens, etc, which will set you back minimum 5% depending on the type of purchase (short sales, foreclosures are more expensive because they take longer) Insurance (home and flood) will depend on your zoning but you can expect anywhere between $100-300 a month. For many zones it is mandatory. Also depending on if it's a coop ($800+), condo($500+) or a townhouse-type you will need to pay different levels of monthly maintenance for the groundskeeping as a cooperative fee. at an estimate of a 250K home, all your savings will not be able to cover your closing costs and all 250k will need to be part of your base mortgage. so your base monthly mortgage payment at around 4% will be $1,200 a month. it's too tight. If it was a friend, I would highly suggest against buying in this case to preserve financial flexibility and sanity at such a young age." } ]

[ { "docid": "4612", "title": "", "text": "A few thoughts off the top of my head: Advantages of more than 20% down: Disadvantages of more than 20% down:" } ]

[ { "docid": "344573", "title": "", "text": "Honestly, the best way to manage this risk is to manage your savings appropriately. Many experts recommend that maintain a reasonably liquid account with 6-9x your minimum monthly expenses for just this occurrence. I know, easier said than done. Right? As for insurance, I can only speak for what is the case in the US. Here, most mortgages will require you to get PMI insurance until you have at least 20% equity in your house. However, that insurance only protects the BANK from losing money if you can't pay. It doesn't save you from foreclosure or ruining your credit. Really, the type of insurance you are talking about is Unemployment insurance which all states in the US make available to workers via deductions from their paycheck. The best advice, I suppose, is to keep your expenses low enough to cover them with an unemployment check until you have accumulated enough savings to get through a rough patch. That may mean buying a less expensive home, or just waiting until you have saved a bigger down payment. If you didn't plan ahead, and you are already in the house, another option might be to extend your mortgage. For example from a 20 to a 30 year to reduce your payments to a manageable level. A more risky option might be to convert to a variable rate loan temporarily, which typically carries a lower interest rate. However, it might be hard to secure a new loan if you don't currently have an income." }, { "docid": "219042", "title": "", "text": "It is a decent time to purchase real estate despite dsquid's opinion. I feel dsquid is falling for the old economic psychology of what ever direction its going it will continuing in that direction, which is a bad mentality for any investing (up or down). This may not be the bottom, and there is some sign that another dip is coming with in a year or two. But if you purchase now, and focus on a few key factors you may end up on the upside of the swing. First and foremost location matters more then value of the property. When the pent up demand is eventually released (after we get employment moving in the right direction) you will see a land grab. The first and highest valued places are those with nice neighborhoods and good schools as the young families (economically unburdened) start making homes. Second pay attention to valuation in so much as your burden. This means consider taxes and mortgage and terms of mortgage (stay away from variable or balloon rates). When thing go up the interest rates will lead the way. In this time of uncertainty you should make sure you can cover your mortgage payment with ease. Put plenty down (20% being the recommended to avoid mortgage insurance and long term costs) and shoot low on price. If you're handy you may even consider buying something that needs minor work (outdated kitchen or the like). If you shoot lower then your limit, then you'll be comfortable even if things turn sour for you. Ultimately all this hinges on what you want to do with the property. Its a wise time to buy homes today where you will be able to rent them out tomorrow. But the important thing is aim in the middle instead of at your limit (450 is definitely your limit). Remember banks will always tell you that you're able to afford twice as much as you actually should. And keep in mind, no matter how new or nice the home, it will need work at some point and that costs. So you should have that in mind when you consider savings. Based on your information I wouldnt shoot higher then 250-300k. I have friends who make your salary in dividends plus two incomes and they are comfortable in their home at its 250 price. They are able to afford repairs and upgrade regularly and arent threatened by potential tax hikes (though they gripe of course). The one good piece of advice from dsquid IMHO is that you should be ready for the environment to change. Higher interests rates will weigh on your comfort as much as CPI and increased taxes will so plan for them to be much higher and you'll be ahead of the game." }, { "docid": "496997", "title": "", "text": "\"The other answers are good, I would just like to add certain points, taking this question together with the previous ones you have asked here. How can a person measure how much to spend on food, car, bills or rent from his salary? Is there a formula to keep in check? Basically, it may well be that your best option would be to move to a smaller apartment or worse location to bring down rent, possibly forget about your own study in the worst case, sell the car and use public transportation, eat as many meals as possible at home, bring boxed lunch from home to work, if this applies, etc -- whatever makes a saving and sense to you. Regarding food, this is the point where it is usually possible to save a very significant amount, if you are prepared to make food at home. Unless you are already doing it, look around for articles such as \"\"living on 20 pounds a week\"\" or so, maybe they will give you ideas you can use (eg. How to eat on 10 pounds a week: shopping list and recipes) -- where you are shopping is crucial here as similar items can differ in price significantly between different chains. If the electricity bill is significant and you are at home a lot, you could try to bring it down by changing all bulbs in your home to LED ones, unless it has already been done. Yes, they can cost 2-3 more than eg. halogen ones, but they use 5-10x less electricity. Forget credit cards, if possible. Use debit cards so you know the money you spend does not get you into more debt. One question you asked here was about exchange rates -- if you work with different currencies a lot, there are several companies such as Revolut or N26, which offer accounts with debit cards that use near FX rates --- in my experiencee I could save around 10-15% on currency conversion EUR/GBP, using Revolut, compared to my local bank rate, for example. I find myself looking at my account every single day and get tensed and sad because almost whenever the money (pay) comes in I freak out that after everything there is nothing for us to enjoy or save. Well, yes. That is nearly the definition of too much debt. The point about going to the extremes of reducing expenses I outlined above, is that the more you can reduce your expenses while struggling with debt, the faster you'll get out of it. It might be hard to adapt, but it will be better, if you can calculate how long it will take to get you back on feet and know that, eg. \"\"in 6 months I can start to think of savings and carefully upgrading my lifestyle back\"\". In turn, the smaller the reduction of expenses, the more prolonged the process -- you might be looking at 2-3 years of insecure/constantly frustrating/risking more debt lifestyle, instead of 6 months of severely reduced one. Alternatively, if things go too bleak, you might consider declaring bankrupcy -- although I am not sure how feasible it is in the UK.\"" }, { "docid": "466587", "title": "", "text": "\"Fundamentals: Then remember that you want to put 20% or more down in cash, to avoid PMI, and recalculate with thatmajor chunk taken out of your savings. Many banks offer calculators on their websites that can help you run these numbers and figure out how much house a given mortgage can pay for. Remember that the old advice that you should buy the largest house you can afford, or the newer advice about \"\"starter homes\"\", are both questionable in the current market. =========================== Added: If you're willing to settle for a rule-of-thumb first-approximation ballpark estimate: Maximum mortgage payment: Rule of 28. Your monthly mortgage payment should not exceed 28 percent of your gross monthly income (your income before taxes are taken out). Maximum housing cost: Rule of 32. Your total housing payments (including the mortgage, homeowner’s insurance, and private mortgage insurance [PMI], association fees, and property taxes) should not exceed 32 percent of your gross monthly income. Maximum Total Debt Service: Rule of 40. Your total debt payments, including your housing payment, your auto loan or student loan payments, and minimum credit card payments should not exceed 40 percent of your gross monthly income. As I said, many banks offer web-based tools that will run these numbers for you. These are rules that the lending industy uses for a quick initial screen of an application. They do not guarantee that you in particular can afford that large a loan, just that it isn't so bad that they won't even look at it. Note that this is all in terms of mortgage paymennts, which means it's also affected by what interest rate you can get, how long a mortgage you're willing to take, and how much you can afford to pull out of your savings. Also, as noted, if you can't put 20% down from savings the bank will hit you for PMI. Standard reminder: Unless you explect to live in the same place for five years or more, buying a house is questionable financially. There is nothing wrong with renting; depending on local housing stock it may be cheaper. Houses come with ongoung costs and hassles rental -- even renting a house -- doesn't. Buy a house only when it makes sense both financially and in terms of what you actually need to make your life pleasant. Do not buy a house only because you think it's an investment; real estate can be a profitable business, but thinking of a house as simultaneously both your home and an investment is a good way to get yourself into trouble.\"" }, { "docid": "108330", "title": "", "text": "I get paid a 50 cents more at my second job than my day job, and at the end of the week my take home pay from the latter is $20 higher. Thats a bullshit argument. $5 per hour is a lot of money, especially considering that a lot of people have been living paycheck to paycheck throughout Obamas never ending recovery. What makes a postman's hours $5 more valuable than a FedEx employee? By every measure, FedEx is a more productive and efficient entity than the US Postal Service. So why is the postman worth more? I'll tell you exactly why. The FedEx employee's compensation is needs based. FedEx does a certain amount of business, which requires a certain amount of labor, which commands a certain price in the labor market. FedEx does not pay more for labor than it has to, because FedEx must be an efficient organization to meet its customers price expectations. https://en.m.wikipedia.org/wiki/United_States_Postal_Service The Postman's compensation is arbitrary, set by government officials with no direct accountability to customers. Because they know jack shit about logistics, Congress has mandated that the Postal Service offer services to the public at uniform price and quality. As such, it has continuously failed to manage its budget properly, to the tune of $5 to $10 billion dollar deficiets every year with a total mail volume that has declined 29% between 1998 and 2008. Why does the Postal Service exist? Because it makes your congressman feel good, and he's more than willing to burn your money on the pyre of his sentimentality and false morilization over the massive, arbitrarily created vested interest postal employees have in losing their above average pay hack jobs than for any dedication you percieve he has to the welfare of his constituents. If you want me to run down why I believe our government is not acting in our own personal best interests, the postal service is the perfect place to start." }, { "docid": "1145", "title": "", "text": "When I was in that boat a few years ago, I went for the car first. My thoughts: If I get the car first, I'm guaranteed to have a car that runs well. That makes it more convenient to commute to any job, or for social functions. I ended up dropping about $20k into a car (paid cash, I don't like being in debt). I chose to buy a really nice car, knowing it will last for many years to come - I'm expecting to not replace it for about 10 years from the purchase. I would urge you to consider paying in full for the car; dumping $20k+ is a lot, and there are plenty of nice cars out there in the $10-20k range that will work just fine for years to come. One benefit of paying in full is that you don't have a portion of your income tied into the car loan. The main reason I chose not to go for the house first had more to do with the difference in commitment. A home mortgage is a 30-year commitment on a large chunk of your income. With the job market and housing markets both currently working against you, it's better to wait until you have a large safety net to fall into. For example, it's always recommended to have several months worth of living expenses in savings. Compared to renting, having 6 or more months of mortgage payments + utilities + insurance + property taxes + other mandatory expenses (see: food, gas) comes out to a significant amount more that you should have saved (for me, I'm looking at a minimum of about $20k in savings just to feel comfortable; YMMV). Also, owning a house always has more maintenance costs than you will predict. Even if it's just replacing a few light bulbs at first, eventually you'll need something major: an appliance will die, your roof will spring a leak, anything (I had both of those happen in the first year, though it could be bad luck). You should make sure that you can afford the increased monthly payments while still well under your income. Once you're locked in to the house, you can still set aside a smaller chunk of your income for a new car 5-10 years down the road. But if you're current car is getting down to it's last legs, you should get that fixed up before you lock yourself in to an uncomfortable situation. Don't be in too much of a hurry to buy a house. The housing market still has a ways to go before it recovers, and there's not a whole lot to help it along. Interest rates may go up, but that will only hurt the housing market, so I don't expect it to change too much for the next several months. With a little bit of sanity, we won't have another outrageous housing bubble for many years, so houses should remain somewhat affordable (interest rates may vary). Also keep in mind that if you pay less that 20% down on the house, you may end up with some form of mortgage interest, which is just extra interest you'll owe each month." }, { "docid": "7831", "title": "", "text": "I'd suggest waiting until a bit after you are married. To Eagle1's point, even $23,000 is not a huge sum of money. You didn't make any mention of a desire to buy a home, but if that becomes part of the plan, I'd want every cent of liquidity I can get. I wrote Student Loans and Your First Mortgage to explain why your buying power for the house is lowered by paying that loan. In your case, $5000 is 20% of $25000. For a good 20% down purchase, I'd want those funds available. You also don't mention retirement accounts. Depending on the home purchase timing, I'd start to think about putting aside at least the $5500 per year IRA/Roth IRA maximum." }, { "docid": "60981", "title": "", "text": "So if I understand your plan right, this will be your situation after the house is bought: Total Debt: 645,000 Here's what I would do: Wait until your house sells before buying a new one. That way you can take the equity from that sale and apply it towards the down payment rather than taking a loan on your retirement account. If something happens and your house doesn't sell for as mush as you think it will, you'll lose out on the gains from the amount you borrow, which will more than offset the interest you are paying yourself. AT WORST, pay off the 401(k) loan the instant your sale closes. Take as much of the remaining equity as you can and start paying down student loans. There are several reasons why they are a higher priority than a mortgage - some are mathematical, some are not. Should I look to pay off student loans sooner (even if I refi at a lower rate of 3.5% or so), or the mortgage earlier ... My thoughts are that the student loans follow me for life, but I can always sell and buy another home So you want this baggage for the rest of your life? How liberating will it be when you get that off your back? How much investing are you missing out on because of student loan payments? What happens if you get lose your license? What if you become disabled? Student loans are not bankruptable, but you can always sell the asset behind a mortgage or car loan. They are worse than credit card debt in that sense. You have no tangible asset behind it and no option for forgiveness (unless you decide to practice in a high-need area, but I don't get the sense that that's your path). The difference in interest is generally only a few payment' worth over 15 years. Is the interest amortized the same as a 15 year if I pay a 30 year mortgage in 15 years? Yes, however the temptation to just pay it off over 30 years is still there. How often will you decide that a bigger car payment, or a vacation, or something else is more important? With a 15-year note you lock in a plan and stick to it. Some other options:" }, { "docid": "496752", "title": "", "text": "As mentioned, the main advantage of a 15-year loan compared to a 30-year loan is that the 15-year loan should come at a discounted rate. All things equal, the main advantage of the 30-year loan is that the payment is lower. A completely different argument from what you are hearing is that if you can get a low interest rate, you should get the longest loan possible. It seem unlikely that interest rates are going to get much lower than they are and it's far more likely that they will get higher. In 15 years, if interest rates are back up around 6% or more (where they were when I bought my first home) and you are 15 years into a 30 year mortgage, you'll being enjoying an interest rate that no one can get. You need to keep in mind that as the loan is paid off, you will earn exactly 0% on the principal you've paid. If for some reason the value of the home drops, you lose that portion of the principal. The only way you can get access to that capital is to sell the house. You (generally) can't sell part of the house to send a kid to college. You can take out another mortgage but it is going to be at the current going rate which is likely higher than current rates. Another thing to consider that over the course of 30 years, inflation is going to make a fixed payment cheaper over time. Let's say you make $60K and you have a monthly payment of $1000 or 20% of your annual income. In 15 years at a 1% annualized wage growth rate, it will be 17% of your income. If you get a few raises or inflation jumps up, it will be a lot more than that. For example, at a 2% annualized growth rate, it's only 15% of your income after 15 years. In places where long-term fixed rates are not available, shorter mortgages are common because of the risk of higher rates later. It's also more common to pay them off early for the same reason. Taking on a higher payment to pay off the loan early only really only helps you if you can get through the entire payment and 15 years is still a long way off. Then if you lose your job then, you only have to worry about taxes and upkeep but that means you can still lose the home. If you instead take the extra money and keep a rainy day fund, you'll have access to that money if you hit a rough patch. If you put all of your extra cash in the house, you'll be forced to sell if you need that capital and it may not be at the best time. You might not even be able to pay off the loan at the current market value. My father took out a 30 year loan and followed the advice of an older coworker to 'buy as much house as possible because inflation will pay for it'. By the end of the loan, he was paying something like $250 a month and the house was worth upwards of $200K. That is, his mortgage payment was less than the payment on a cheap car. It was an insignificant cost compared to his income and he had been able to invest enough to retire in comfort. Of course when he bought it, inflation was above 10% so it's bit different today but the same concepts still apply, just different numbers. I personally would not take anything less than a 30 year loan at current rates unless I planned to retire in 15 years." }, { "docid": "139366", "title": "", "text": "There's a ton of great advice here. It's very challenging to come up with something that hasn't already been suggested. I'm curious to know how many years you have left to pay down the mortgage at the regular rate of payment. If it's more than 15 years, it might be worthwhile to consider refinancing your mortgage to a shorter term (15 years or even 10 years if your income supports it). Rates on fixed-interest mortgages at those terms are down in the 3% range and lower (at least according to bankrate.com). Refinancing to a shorter term would be another way of paying off your home faster (with fewer of those dollars going toward interest payments). If you've got fewer than 15 years left to pay off your mortgage, following any of the other advice you've received here should keep you in great financial shape." }, { "docid": "62625", "title": "", "text": "This article addresses a man who specifically lost his skilled work to outsourcing to India. No one is talking about dishwashing level work here, that's more relevant to ILLEGAL immigration, and the practice of hiring illegal labor off the books by businesses. Jobs that people don't want should pay more. That' supply and demand, the free market. Janitors makes $15-30/ hr, more than easier low wage jobs. Maids make $25-60/hr. Garbage men make $20-60/hr. Illegal people do it for less because they don't have full rights as citizens, and thus have less leverage to negotiate pay. Their pervasiveness gives legal citizens less leverage to negotiate their pay. I think the honest solution to illegal immigration is to seek ways to make legal immigration and naturalization more reasonably accessible while also cracking down on illegal hiring practices. I DONT think the solution is to reserve our less desirable work to a slave class of any sort. I'm not for unions, but the negotiating power and well being of the American labor force should be protected always. If the pay reflects the labor, people will do the work. Blue collar Americans do all sorts of disgusting, difficult, and/or dangerous work as long as it is at a premium. This article is more about the negotiating power of americans lost to corporations taking skilled work and outsourcing it ~~at minimum wage levels of employment~~ (article said $60k or more) to those desperate for a living wage and/or citizenship. How to address that, I don't know. Edit:not min wage, $60k" }, { "docid": "321877", "title": "", "text": "Having someone else paying you rent is always going to be the better deal financially. The question is, what does $450k buy in the neighborhood in which you want to live, vs $800k? I'm going to assume you can afford either option (buying a $450k home and not selling, or an $800k home and selling your current one) whether someone's paying you rent or not. Let's make up some numbers here; a $450k home, financed 80/20 (360k principal) at 4% for 30 years will cost you about $1720 in P&I payments per year (plus escrows such as RE taxes, PMI, and homeowners insurance where applicable). An $800k home financed 80/20 (640k principal) at 4% for 30yr will give you payments of about $3,055/mo before taxes and insurance. So, the worst case overall is that you buy a 450k home in the new neighborhood and are not, at any given time, collecting rent on the old property. That would (assuming the mortgage terms on both home loans were comparable) cost you $3440/mo and you'd be living in a $450k home in a neighborhood where 450k may not buy a home as nice as the one you moved out of. The question as I stated above is this; assuming you had a reliable tenant in your home for the entire remaining life of the loan on your current home, which is more acceptable to you: buying $450k of home (which might be a downgrade in sqft or amenities) and paying $2020 in P&I, or paying about a grand more ($3055/mo) for a much nicer home in the new location? Strictly from a money perspective, the renter is going to be the best option, IF you get reliable tenancy for the entire life of the mortgage on that house; you'll be paying $2020/mo for 30 years, which is $727,200, to end up with $950k of total home value (plus adjustments for actual home value appreciation/depreciation). That's the only way you'll come out ahead on any mortgage; have someone else pay most of it for you. If you don't rent, the $800k home will cost you $1,099,800, while two $450k homes will cost you $1,454,400. The percentage of home value over total payments for the 800k home would be 72% (you will have paid 137% of the value of the home), while you will have paid 153% of the value of two 450k homes." }, { "docid": "25802", "title": "", "text": "It costs them more to make the screens with more pixels. Let's say I usually pay you 10$ for something that cost you 5$ to make. Now I pay you 20$ for something that costs you 18$ to make. Sure you get 20$ instead of 10$, but your profit per item went from 5$ down to 2$. Same thing here, the screens with 4x the pixels costs much more than the original screens. Apple paid slightly more for them, but not enough to keep the profit margin." }, { "docid": "75754", "title": "", "text": "She seems to be paying an inordinate amount of money for car payments. $850/month is just too high. She may be able to get by on public transit, depending on where she lives, but if not, she needs to look at selling her car and picking up a cheap second-hand vehicle. Public transit would probably save her $750/month. Going to a cheaper car should still save her $300 - $400/month. Next, phone and cable. These are certainly nice, but they are rarely necessities. I do not have cable t.v., for example. I do have a cell phone, and I do have Internet (a requirement of my job), but no cable t.v. She may be able to save some money there. My guess is that she could save $125/month here, though I may be biased on how much it costs to heat a Canadian home in our cold, cold winters. And, of course, the college payment. $900 - $1000 a month? I understand that she is paying this so that your sister can attend college. That's very nice, but it certainly sounds like your mother cannot afford that. On the other hand, if this is repayment of college expenses already incurred, there may be no choice here. Rent, at $1625/month. I have no idea what that gets you in NJ, but perhaps she could rent out a room. It's not inconceivable that she could bring in $1000/month from doing so, though obviously that's going to very much depend on the real estate/rental market where you live. Alternatively, she could move out and move in with someone else and that should certainly get her share of the rent down to $800 - $1000/month or thereabouts, and most likely cut her utility bills, also. I've identified a number of places where she can save money. No doubt, the budget is tight, but I think she's spending on far more than just bare essentials. One thing that concerns me here is that she appears to have no emergency funds and very little for entertainment, other than cable t.v. If at all possible, she needs to cut her budget down so that she is not living paycheque to paycheque and has money to cover, for example, emergency car repairs. And I'd really like to see her have more than $50/month for expenses (which I'm guessing is entertainment). It may not be possible, of course, but I would most definitely say she should not be paying for your sister's college if this places her in such dire financial risk. Easier said than done, of course. Most certainly, I would not even consider cutting the health insurance, by the way. Another approach would be to look at how her expenses will go down when your sister is done school and perhaps cleared up other expenses. It may be worth borrowing from family and friends, knowing that in a year, her expenses will go down $500/month. That makes her budget manageable. Additionally, the debt repayment presumably will finish at some point. The point I'm trying to make is that, in a year, her budget will be just about manageable, and she may be able to get there with smaller trims in the immediate future." }, { "docid": "186804", "title": "", "text": "\"I encourage you to think of this home purchase decision as a chance to buy into a community that you want your children to grow up in. Try to find a place where you will be happy for the next 20 years, not just the next 2 or 7 years. In your situation, option 1 seems like a bad idea. It will create an obstacle to having children, instead of establishing a place for them to grow up in. Option 2 is close to \"\"buying a house on a layaway plan\"\". It offers the most financial flexibility. It also could result in the best long-term outcome, because you will buy in an established area, and you will know exactly what quality house you will have. But you and your fiancé need to ask yourselves some hard questions: Are you willing to put up with the mess and hassles of remodelling? Are you good at designing such projects? Can you afford to pay for the projects as they occur? Or if you need to finance them, can you get a HELOC to cover them? Especially if you and your fiancé do much of the work yourselves, break down the projects into small enough pieces that you can quickly finish off whatever you are working on at the time, and be happy living in the resulting space. You do not want to be nagging your husband about an unfinished project \"\"forever\"\" -- or silently resenting that a project never got wrapped up. I posted some suggestions for incrementally finishing a basement on the Home Improvement Stack Exchange. If you are up to the job of option 2, it is less risky than option 3. Option 3 has several risks: You don't know what sort of people will live in the neighborhood 5 - 20 years from now. Will the homes be owner-occupied? Or rentals? Will your neighbors care about raising children well? Or will lots of kids grow up in broken homes? Will the schools be good? Disappointing? Or dangerous? Whereas in an established neighborhood, you can see what the neighborhood is currently like, and how it has been changing. Unless you custom-build (or remodel), you don't control the quality of the construction. Some neighborhoods built by Pulte in the last 10 years were riddled with construction defects. You will be paying up-front for features you don't need yet. You might never need some of them. And some of them might interfere with what you realize later on might be better. In stable markets, new homes (especially ones with lots of \"\"upgrades\"\") often decline in value during the first few years. This is because part of the value is in the \"\"newness\"\" and being \"\"up-to-date\"\" with the latest fads. This part of the value wears off over time. Are the homes \"\"at the edge of town\"\" already within reasonable walking distance of parks, schools, church, grocery stores, et cetera? Might the commute from the \"\"edge of town\"\" to work get worse over the next 5 - 20 years?\"" }, { "docid": "389916", "title": "", "text": "\"First, let me mention that the reasons mentioned this far for renting are excellent ones. But, I disagree. Second, I would like to mention that I'm just a regular Joe, not an accountant, or a realtor. That said, I was in a similar situation not that long ago. I ended up renting, but I wish I hadn't. You should check out the \"\"offers\"\" in your area. You seem like you're willing to compromise on a more standard, or older home. If that is the case and you are willing to \"\"settle\"\" for an older town-home, or something similar, it might be in your best interest to do so. In my area for instance, the urban areas are becoming a bit crowded. This is good news for the people who already own homes in those urban areas, but bad news for people who are looking to rent an apartment (which tend to be located in urban areas) or buy a house in these urban areas. The reason I say that is simple; there is only one thing there will never be more of: land. If people are moving into these areas, and there is limited room to build structures, the demand is going up while the supply is unable to keep up. This means an increase in prices. BUT, this can also be used to your advantage. As the demand for those urban areas goes up, the rural areas around the urban areas are likely to be subsidized. For instance, near me, if you're willing to be 20 minutes from the nearest Walmart and you have a 550+ credit score and a stable income, you're able to acquire a government subsidized loan with 0% down. (I would recommend dropping at least SOMETHING, however, if possible.) Apartments of the size your family is going to require are going to be expensive. People who own apartment buildings are looking to make the most money per square foot. This means most apartment complexes are going to be filled with 1-2 bedroom apartments, but have very few if any 3+ bedroom apartments. (Again, this is my general experience, but it may be different where you're living.) I suspect the apartment your family is going to need is going to end up being very expensive, especially if people are moving into your town. You might consider trying to get a lower-quality house as apposed to a rare and large apartment for a few pretty obvious reasons: Don't misunderstand me, though. A lot of people get infatuated with the idea of being a home owner, and end up getting into something they will never be able to maintain, and if that happens it's something that's going to follow you for the rest of your life. As for your student loans, if you NEED to and you qualify you can apply for hardship. This would mean that you don't have to pay anything, or pay a reduced rate for some arbitrary approved amount of time, or until some arbitrary circumstance is met. However, do not take this lightly. While doing this might not necessarily accrue interest (depending on whether or not your loans were subsidized or unsubsidized and a host of other factors it might actually halt interest) these loans will follow you even into bankruptcy. Meaning if you get your student loans postponed and end up losing the house anyway, you have to make a fresh start with a bankruptcy AND student loans on your back. Furthermore, you can't count your chickens before they hatch, and neither will the banks. A big part of qualifying for a loan is your proof of income. If you haven't had that steady job for 6 months to a year or more, you're going to have a tough time getting a loan. Suppose your wife-to-be DOES start making that income...it's still not going to make a difference to the banks until they can say that it's not just a month long fling. Last, after reading all this I want to tell you that I am BIAS. I happened to miss the opportunity I'm explaining to you now, and that affects what I think you should do in this situation. Weigh the options carefully and objectively. Talk to your fiance. Talk to your friends, parents, anyone who is close with you. Come to an educated decision, rather than the decision that might be more exciting, or the one you WISH you could take. Good luck.\"" }, { "docid": "63698", "title": "", "text": "I agree with you that you need to consolidate this debt using a loan. It may be hard to find a bank or credit organization that will give you an unsecured personal loan for that much money. I know of one, called Lending Club (Disclaimer - I'm an investor on this platform. Not trying to advertise, it's just the only place I know of off the top of my head) that facilitates loans like this, but instead of a bank financing the loan, the loan is split up accross hundreds of investors who each contribute a small amount (such as $25). They have rates anywhere between 5-30%, based on your credit profile(s), and I believe they have some loan amounts that go up to the area that you're discussing. Regarding buying the house - The best thing you can do when trying to buy a house is to save up a 20% downpayment, if at all possible. Below this amount, you may be asked to pay for 'PMI' - Private Mortgage Insurance. This is a charge that doesn't go away for quite a while (until you've paid them 20% of the appraised value of the home), where you pay a premium because you didn't have the 20% downpayment for the house. I would suggest you try to eliminate your credit card debt as soon as possible, and would recommend the same for your father. Getting your utilization down and reconsolidating the large debts with a loan will help to reduce interest charges and get you a reasonable, fixed payment. Whether you decide to pay off your own balances using your savings account is up to you; if it were me, personally, I'd do so immediately rather than trying to pay it off over time. But if you lose money to taxes by withdrawing the money from your 'tax free savings account', it may not be a beneficial situation. Treat debt, especially credit card debt, like an emergency at all times, and you'll find yourself in a better place as a result. Credit card debt and balances are and should be temporary, and their rates and fees are structured that way. If, for any reason, you expect that a credit card's balance will remain for an extended period of time, you may want to consider whether it would be advantageous for you to consolidate the debt into a loan, instead." }, { "docid": "290434", "title": "", "text": "\"If by \"\"investment\"\" you mean something that pays you money that you can spend, then no. But if you view \"\"investment\"\" as something that improves your balance sheet / net worth by reducing debt and reducing how much money you're throwing away in interest each month, then the answer is definitely yes, paying down debt is a good investment to improve your overall financial condition. However, your home mortgage might not be the first place to start looking for pay-downs to save money. Credit cards typically have much higher interest rates than mortgages, so you would save more money by working on eliminating your credit card debt first. I believe Suze Orman said something like: If you found an investment that paid you 25% interest, would you take it? Of course you would! Paying down high interest debt reduces the amount of interest you have to pay next month. Your same amount of income will be able to go farther, do more because you'll be paying less in interest. Pay off your credit card debt first (and keep it off), then pay down your mortgage. A few hundred dollars in extra principal paid in the first few years of a 30 year mortgage can remove years of interest payments from the mortgage term. Whether you plan to keep your home for decades or you plan to move in 10 years, having less debt puts you in a stronger financial position.\"" }, { "docid": "350131", "title": "", "text": "I would definitely pay down the debt first. If it is going to take 15 years to do so, you probably need to allocate more money to paying down debt. Cut expenses by going out to eat less, and keeping spending to the bare necessities. You might even consider getting a second job, just for paying down the debt. If that isn't enough, consider selling off some assets. You should be able to come up with a plan to be debt free (excluding maybe a regular mortgage) within 3-5 years. Once the only debt you have is a home mortgage, then its time to look at putting money towards retirement again. Note, you should not take money out of a 401k or IRA to pay off debt. The costs for doing so are nearly always too great." } ]

[ { "docid": "398856", "title": "", "text": "\"Well, it's directly depositing money in your account, but Direct Deposit is something completely different: https://en.wikipedia.org/wiki/Direct_deposit Direct deposits are most commonly made by businesses in the payment of salaries and wages and for the payment of suppliers' accounts, but the facility can be used for payments for any purpose, such as payment of bills, taxes, and other government charges. Direct deposits are most commonly made by means of electronic funds transfers effected using online, mobile, and telephone banking systems but can also be effected by the physical deposit of money into the payee's bank account. Thus, since the purpose of DD is to eliminate checks, I'd say, \"\"no\"\", depositing cash directly into your account does not count as the requirement for one Direct Deposit within 90 days.\"" } ]

[ { "docid": "389356", "title": "", "text": "Structuring, as noted in another answer, involves breaking up cash transactions to avoid the required reporting limits. There are a couple of important things to note. And, the biggest caveat - there have been many cases of perfectly legitimate transactions that have fallen foul of the reporting requirements. One case springs to mind of a small business that routinely deposited the previous day's receipts as cash, and due to the size of the business, those deposits typically fell in the $9,000-$9,500 range. This business ended up going through a lot of headaches and barely survived. Some don't. A single batch of transactions, if it is only 2 or 3 parts and they are separated by reasonable intervals, is not likely in and of itself to be suspicious. However, any set of such transactions does run the risk of being flagged. In your case, you also run afoul of the Know Your Customer rules, because it's not even you depositing the cash - it's your friend. (Why can your friend not simply write you a check? What is your friend doing with $5k of cash at a time? How do you know he's not generating illegal income and using you to launder it for him?) Were I your bank, you can be very certain I'd be reporting these transactions. Just from this description, this seems questionable to me. IRS seizes millions from law-abiding businesses" }, { "docid": "309538", "title": "", "text": "You can use Norbet's Gambit to convert between USD and CAD either direction. I have never personally done this, but I am planning to convert some CAD to USD soon, so I can invest in USD index funds without paying the typical 2% conversion fee. You must be okay with waiting a few days for the trades to settle, and okay with the fact that the exchange rate will almost certainly change before you sell the shares in the opposite currency. The spread on DLR.TO is about 0.01% - 0.02%, and you also have brokerage commissions and fees. If you use a discount broker the commissions and fees can be quite low. EG. To transfer $5000 USD to CAD using Questrade, you would deposit the USD into a Questrade account and then purchase ~500 units of DLR.U.TO , since it is an ETF there is no commission on the purchase. Then you request that they journal the shares over to DLR.TO and you sell them in CAD (will have about a $5 fee in CAD, and lose about $1 on the spread) and withdraw. The whole thing will have cost you $6 CAD, in lieu of ~$100 you would pay if you did a straightforward conversion with a 2% exchange fee. The difference in fees scales up as the amount you transfer increases. Someone has posted the chat log from when they requested their shares be journaled from DLR.TO to DLR.U.TO here. It looks like it was quite straightforward. Of course there is a time-cost, and the nuisance of signing up for an maintaining an account with a broker if you don't have one already. You can do it on non discount-brokers, but it will only be worth it to do it with a larger amount of money, since the commissions are larger. Note: If you have enough room to hold the CAD amount in your TFSA and will still have that much room at the end of the calendar year, I recommend doing the exchange in a TFSA account. The taxes are minimal unless the exchange rate changes drastically while your trades are settling (from capital gains or losses while waiting a few days for the trades to settle), but they are annoying to calculate, if you do it often. Warning if you do it in a TFSA be sure not to over contribute. Every time you deposit counts as a contribution and your withdrawals don't count against the limit until the next calendar year." }, { "docid": "444107", "title": "", "text": "\"Technically there could be a true cash fund, but the issue is it would need to have some sort of cost associated with it, which would mean it would have negative yield or would charge a fee. In some cases, this might be preferable to having it invested in \"\"cash equivalents,\"\" which as you note are not cash. It is important to note that there is nothing, even cash or physical precious metals, that is considered zero risk. They all just have different risks associated with them, that may be an issue under certain circumstances. In severe deflation, cash is king, and all non-cash asset classes and debt could go down in value. Under severe inflation, cash can become worthless. One respondent mentioned an alternative of stopping contributing to a 401k and depositing money in a bank, but that is not the same as cash either. In recent decades, people have been led to believe that depositing your money in the bank means you hold that in cash at the bank. That is untrue. They hold your deposit on their books and proceed to invest/loan that money, but those investments can turn sour in an economic and financial downturn. The same financial professionals would then remind you that, while this is true, there is the Federal Deposit Insurance Corporation (FDIC) that will make you whole should the bank go under. Unfortunately, if enough banks went under due to lack of reserves, the FDIC may be unable to make depositors whole for lack of reserves. In fact, they were nearing this during the last financial crisis. The sad thing is that the financial industry is bias against offering what you said, because they make money by using your money. Fractional reserve banking. You are essentially holding IOUs from your bank when you have money on deposit with them. Getting back to the original question; you could do some searching and see if there is an institution that would act as a cash depository for physical cash in your IRA. There are IRA-approved ways of holding physical precious metals, which isn't all too different of a concept from holding physical cash. 401k plans are chosen by your company and often have very limited options available, meaning it'd be unlikely you could ever hold physical cash or physical precious metals in your 401k.\"" }, { "docid": "163049", "title": "", "text": "&gt; 1. What exactly happens when I deposit $1000 to the bank? Does it lend to other parties $900 of what I have given them? Yep. &gt; Or it turns my whole deposit into their reserve, then borrows $9000 from the central bank, and lends this sum to their customers? No, the bank can't loan more money than it has in deposits. Note that this does create money because, in this example, the bank loaned someone $900 but it still owes you $1000. &gt; 2. What happens when I'll make final payment on my loan? Is this a different example or are we assuming your original $1000 was loaned to you? Regardless, every time you make a payment on a loan the bank can re-loan that money to someone else. &gt; Does the bank also pay its base to the central bank (+ base interest rate) and keeps only their interests? The central bank has not been involved in this transaction so it doesn't receive anything. &gt; Does the central bank remove from the circulation money it received back? Yes but I think you're switching topics. A central bank's transactions are more about managing the money supply and inflation of a [fiat currency](https://en.wikipedia.org/wiki/Fiat_money#Money_creation_and_regulation). Ideally a central bank trades a bank's paper assets for reserves adding or subtracting to the bank's ability to issue loans." }, { "docid": "396416", "title": "", "text": "The FDIC is pretty confident about them being legit. http://www2.fdic.gov/idasp/main_bankfind.asp (type in Bank Of The Sierra in the name field and search on that) You got to realize how much money they will make if you use them per the agreement. Every credit card / debit transaction gets them some cash. Businesses get between 1 and 5% of each transaction even on debit cards. Then there is a flat fee the merchant pays for accepting the credit card between .25 and .50 per transaction. Even at 12 transactions a month, the bank is looking at making around $6/month. Probably more because who uses a debit card just 12 times a month. It would be convenient for most people to juse use it all the time. Does 4.09% APY beat $6/month? You would have to keep a balance of $2000 plus to cost more than you earn. And if you keep more than $2k in the account, they have other ways to make money off of you. I would also assume they make money on the bill pay and direct deposit side of things, but I can't speak for certain about that. Bottom line is this seems like a good deal to attract customers, they would rather make a bit less profit then BofA to grow their business. They are betting their offer restrictions will change your habits and make you more profitable to them." }, { "docid": "122491", "title": "", "text": "\"Great question. There are several reasons; I'm going to list the few that I can think of off the top of my head right now. First, even if institutional bank holdings in such a term account are covered by deposit insurance (this, as well as the amount covered, varies geographically), the amount covered is generally trivial when seen in the context of bank holdings. An individual might have on the order of $1,000 - $10,000 in such an account; for a bank, that's basically chump change, and you are looking more at numbers in the millions of dollars range. Sometimes a lot more than that. For a large bank, even hundreds of millions of dollars might be a relatively small portion of their holdings. The 2011 Goldman Sachs annual report (I just pulled a big bank out of thin air, here; no affiliation with them that I know of) states that as of December 2011, their excess liquidity was 171,581 million US dollars (over 170 billion dollars), with a bottom line total assets of $923,225 million (a shade under a trillion dollars) book value. Good luck finding a bank that will pay you 4% interest on even a fraction of such an amount. GS' income before tax in 2011 was a shade under 6.2 billion dollars; 4% on 170 billion dollars is 6.8 billion dollars. That is, the interest payments at such a rate on their excess liquidity alone would have cost more than they themselves made in the entire year, which is completely unsustainable. Government bonds are as guaranteed as deposit-insurance-covered bank accounts (it'll be the government that steps in and pays the guaranteed amount, quite possibly issuing bonds to cover the cost), but (assuming the country does not default on its debt, which happens from time to time) you will get back the entire amount plus interest. For a deposit-insured bank account of any kind, you are only guaranteed (to the extent that one can guarantee anything) the maximum amount in the country's bank deposit insurance; I believe in most countries, this is at best on the order of $100,000. If the bank where the money is kept goes bankrupt, for holdings on the order of what banks deal with, you would be extremely lucky to recover even a few percent of the principal. Government bonds are also generally accepted as collateral for the bank's own loans, which can make a difference when you need to raise more money in short order because a large customer decided to withdraw a big pile of cash from their account, maybe to buy stocks or bonds themselves. Government bonds are generally liquid. That is, they aren't just issued by the government, held to maturity while paying interest, and then returned (electronically, these days) in return for their face value in cash. Government bonds are bought and sold on the \"\"secondary market\"\" as well, where they are traded in very much the same way as public company stocks. If banks started simply depositing money with each other, all else aside, then what would happen? Keep in mind that the interest rate is basically the price of money. Supply-and-demand would dictate that if you get a huge inflow of capital, you can lower the interest rate paid on that capital. Banks don't pay high interest (and certainly wouldn't do so to each other) because of their intristic good will; they pay high interest because they cannot secure capital funding at lower rates. This is a large reason why the large banks will generally pay much lower interest rates than smaller niche banks; the larger banks are seen as more reliable in the bond market, so are able to get funding more cheaply by issuing bonds. Individuals will often buy bonds for the perceived safety. Depending on how much money you are dealing with (sold a large house recently?) it is quite possible even for individuals to hit the ceiling on deposit insurance, and for any of a number of reasons they might not feel comfortable putting the money in the stock market. Buying government bonds then becomes a relatively attractive option -- you get a slightly lower return than you might be able to get in a high-interest savings account, but you are virtually guaranteed return of the entire principal if the bond is held to maturity. On the other hand, it might not be the case that you will get the entire principal back if the bank paying the high interest gets into financial trouble or even bankruptcy. Some people have personal or systemic objections toward banks, limiting their willingness to deposit large amounts of money with them. And of course in some cases, such as for example retirement savings, it might not even be possible to simply stash the money in a savings account, in which case bonds of some kind is your only option if you want a purely interest-bearing investment.\"" }, { "docid": "40966", "title": "", "text": "It took me a while to understand the concept, so I'll break it down as best as I can. There are three parts to the accounting equation: Assets = Liabilities + Owner's Equity We'll look at this in two ways 1. As a business owner you invest (say) 10,000 USD into your bank. The entry would be: Debit: Assets: Cash for 10,000 Credit: Owner's Equity: Contributions for 10,000 In this case, you have assets of 10,000 from your deposit, but it is due to owner contributions and not business transactions. Another example (say a sale): Debit: Assets: Cash for 10,000 Credit: Owner's Equity: Sales for 10,000 Debit: Assets: Cash for 10,000 Credit: Liabilities: Deposits for 10,000 Deposits are a banking term to reflect a bank's obligation to return the amount on demand (though the bank has free reign with it, see fractional banking) You will NEVER debit or credit your bank as it is assumed you will be storing your money there, note bank reconciliation. Hope this helps, comment with any more questions." }, { "docid": "213331", "title": "", "text": "\"Your friend probably cannot deposit the check to your U.S. bank account. U.S. banks that I've worked with will not accept a deposit from someone who is not an owner of the account. I don't know why not. If some stranger wants to make unauthorized deposits to my account, why should I object? But that's the common rule. You could endorse the check, your friend could then deposit it to his own account or cash it, and then transfer the money to you in a variety of ways. But I think it would be easier to just deposit the check in your account wherever it is you live. Most banks have no problem with depositing a foreign check. There may be a fairly long delay before you can get access to the money while the check clears through the system. I don't know exactly what you mean by a \"\"prize check\"\", but assuming that this is taxable income, yes, I assume the U.S. government would want their hard-earned share of your money. These days you can pay U.S. taxes on-line if you have a credit card. If you have not already paid U.S. taxes for the year, you should make an \"\"estimated payment\"\". i.e. you can't wait until April 15 of the next year, you have to pay most or all of the taxes you will owe in the calendar year you earned it.\"" }, { "docid": "475541", "title": "", "text": "\"As RonJohn points out, direct deposit is something very different. What's going on here is that they are trying to exclude the \"\"customers\"\" that open the account simply for the premium and then close it again as soon as the terms of the offer have been met. Most people have only one regular source of direct deposit money, either their paycheck or a retirement check. This acts to make it hard for them to simply take the offer and run.\"" }, { "docid": "550939", "title": "", "text": "\"Most folks would loan out money for the purpose of being re-loaned. Depositing money in the bank, is loaning the bank money who will re-loan it. Buying bond based mutual funds is another way that it could be viewed that people are loaning money for the purpose of the money being re-loaned. The reason why banks always have money available for withdrawal, is because of the reserve. Fractional reserve banking in its simplest explanation, is that banks are allowed to take deposits and loan them out so long as they keep a set reserve. If the reserve rate is 10% (it's really much lower), and somebody deposits $100, then the bank is allowed to loan out $90, keeping $10 as a reserve. Now even with a reserve, a bank does run some risk of the deposits being withdrawn faster than the loans are paid back, this is called a run. What protects banks most from this, is that deposits, withdrawals, loans, and loan repayments, all happen at a fairly steady and predictable rate (short term), so banks are able to judge how many loans they should give out. Even when banks do see their reserve depleting, they have options. The first and most common, is simply getting a loan from another bank. The rule with the reserve, is that banks need to meet it at the end of the day, so banks will loan each other money overnight for the purpose of making up for the slight fluctuations that occur in a normal business day. If you have ever heard the Fed talking about the \"\"overnight rate\"\" they are talking about the rate banks loan each other money for the night. Another common way for banks to make up for a deficit in deposits, in a longer term solution,is to sell assets. Fairly rare for a bank to sell actual physical assets, but the loans they hold are assets, and they can sell them to other banks. Most banks will also hold some bonds that are available to sell. The major functions that allow a bank to be profitable would still apply to the OP's idea. The only real difference would be that commercial banks have direct access to the central banks, and the OP's idea would need to have a commercial bank to act as the middle man between the central bank.\"" }, { "docid": "22268", "title": "", "text": "\"They don't actually need to. They accept deposits for historical reasons and because they make money doing so, but there's nothing key to their business that requires them to do so. Here's a decent summary, but I'll explain in great detail below. By making loans, banks create money. This is what we mean when we say the monetary supply is endogenous. (At least if you believe Sir Mervyn King, who used to run England's central bank...) The only real checks on this are regulatory--capitalization requirements and reserve requirements, which impose a sort of tax on a bank's circulating loans. I'll get into that later. Let's start with Why should you believe that story--that loans create deposits? It seems like a bizarre assertion. But it actually matches how banks behave in practice. If you go borrow money from a bank, the loan officer will do many things. She'll want to look at your credit history. She'll want to look at your income and assets. She'll want to look at what kind of collateral or guarantees you're providing that the loan will be repaid. What she will not do is call down to the vaults and make sure that there's enough bills stacked up for them to lend out. Loans are judged based on a profitability function determined by the interest rate and the loan risk. If those add up to \"\"profitable\"\", the bank makes the loan. So the limiting factor on the loans a bank makes are the available creditworthy borrowers--not the bank's stock of cash. Further, the story makes sense because loans are how banks make money. If a bank that was short of money suddenly stopped making loans, it'd be screwed: no new loans = no way to make money to pay back depositors and also keep the lights on = no more bank. And the story is believable because of the way banks make so little effort to solicit commercial deposit business. Oh sure, they used to give you a free toaster if you opened an account; but now it's really quite challenging to find a no-fee checking account that doesn't impose a super-high deposit limit. And the interest paid on savings deposits is asymptotically approaching zero. If banks actually needed your deposits, they'd be making a lot more of effort to get them. I mean, they won't turn up their noses; your deposited allowance is a couple basis points cheaper to the bank than borrowing from the Fed; but banks seem to value small-potatoes depositors more as a source of fees and sales opportunities for services and consumer credit than as a source of cash. (It's a bit different if you get north of seven figures, but smaller depositors aren't really worth the hassle just for their cash.) This is where someone will mention the regulatory requirements of fractional reserve banking: banks are obliged by regulators to keep enough cash on hand to pay out a certain percentage of deposits. Note nothing about loans was said in that statement: this requirement does not serve as a check on the bank making bad loans, because the bank is ultimately liable to all its depositors for the full value of their deposits; it's more making sure they have enough liquidity to prevent bank runs, the self-fulfilling prophecy in which an undercapitalized bank could be forced into bankruptcy. As you noted in your question, banks can always borrow from the Fed at the Fed Discount Rate (or from other banks at the interbank overnight rate, which is a little lower) to meet this requirement. They do have to pledge collateral, but loans themselves are collateral, so this doesn't present much of a problem. In terms of paying off depositors if the bank should collapse (and minimizing the amount of FDIC insurance payout from the government), it's really capital requirements that are actually important. I.E. the bank has to have investors who don't have a right to be paid back and whose investment is on the hook if the bank goes belly-up. But that's just a safeguard for the depositors; it doesn't really have anything to do with loans other than that bad loans are the main reason a bank might go under. Banks, like any other private business, have assets (things of value) and liabilities (obligations to other people). But banking assets and liabilities are counterintuitive. The bank's assets are loans, because they are theoretically recoverable (the principal) and also generate a revenue stream (the interest payments). The money the bank holds in deposits is actually a liability, because it has to pay that money out to depositors on demand, and the deposited money will never (by itself) bring the bank any revenue at all. In fact, it's a drain, because the bank needs to pay interest to its depositors. (Well, they used to anyway.) So what happens when a bank makes a loan? From a balance sheet perspective, strangely enough, the answer is nothing at all. If I grant you a loan, the minute we shake hands and you sign the paperwork, a teller types on a keyboard and money appears in your account. Your account with my bank. My bank has simultaneously created an asset (the loan you now have to repay me) and an equal-sized liability (the funds I loaned you, which are now deposited in your account). I'll make money on the deal, because the interest you owe me is a much higher rate than the interest I pay on your deposits, or the rate I'd have to pay if I need to borrow cash to cover your withdrawal. (I might just have the cash on hand anyway from interest and origination fees and whatnot from previous loans.) From an accounting perspective, nothing has happened to my balance sheet, but suddenly you owe me closing costs and a stream of extraneous interest payments. (Nice work if you can get it...) Okay, so I've exhaustively demonstrated that I don't need to take deposits to make loans. But we live in a world where banks do! Here's a few reasons: You can probably think of more, but at the end of the day, a bank should be designed so that if every single (non-borrowing) depositor withdrew their deposits, the bank wouldn't collapse or cease to exist.\"" }, { "docid": "103748", "title": "", "text": "\"As is so often the case, there is an asterisk next to that 2.5% interest offer. It leads you to a footnote which says: Savings Interest Rate Offer of 2.5% is available between January 1, 2015 and March 31, 2015 on all net new deposits made between January 1, 2015 and March 31, 2015 to a maximum of $250,000.00 per Account registration. You only earn 2.5% interest on deposits made during those three months. Also, on the full offer info page, it says: During the Offer Period, the Bank will calculate Additional Interest on eligible net new deposits and: All interest payments are ineligible for the purposes of calculating Additional Interest and will not be calculated for the purposes of determining eligible daily balances. In other words, any interest paid into an Applicable Account, including Additional Interest, will not be treated as a new deposit for subsequently calculating Additional Interest payments. I couldn't totally parse out all the details of the offer from their legalese, but what it sounds like is you will earn 2.5% interest on money that you deposit into the account during those three months. Any interest you accrue during that time will not count as a deposit in this sense, and so will not earn 2.5% compounded returns. The \"\"During the Offer Period\"\" qualification also makes it sound like this extra interest will only be paid during the three months (presumably at a 2.5% annualized rate, but I can't see where it actually says this). So essentially you are getting a one-time bonus for making deposits during a specific three-month period. The account doesn't really earn 2.5% interest in the normal sense. The long-term interest rate will be what it normally is for their savings accounts, which this page says is 1.05%.\"" }, { "docid": "278846", "title": "", "text": "\"It sounds like you are isolated and in a small town. Without the true ability to bank, perhaps you should move. As an alternative you could do some kind of online banking. Most banks offer the ability to deposit via mobile phone and you could obtain cash by using remote ATMs or writing checks for an amount over your purchase at the grocery store. How are you paid? If via direct deposit, that makes mobile banking even easier. Did your read your premise out loud? Using Game Stop as a bank is just silly. Are you banned from banks because of not paying child support or some other legal obligation? If so just \"\"face the music\"\". I know people that are over 40 and owed a relatively small amount of child support and the result of they lost out on order of magnitudes greater income. It was just a short-sighted move that cost them far more than if they just obeyed the court order. It would be smarter to use a check cashing store, like AmScott, to do your banking. They will cash checks for a fee, issue money orders, or even allow you to pay some bills directly through them. Never, ever use them to cash a hot check or for short term financing but using them or Walmart, or the Grocery store is a much better option than Game Stop.\"" }, { "docid": "311736", "title": "", "text": "You're asking for opinions here, which is kindof against the rules, but I'll give it a try. 1) Does emergency funds and saving money(eg.Money plan to buy a house) should be in same Saving Account? 2) or should each specific saving plan set up in particular Saving Account? No, it doesn't. It's a matter of convenience. I personally find it more convinient to have different stashes for different purposes, but it means extra overhead of keeping an eye on one more account. Fortunately, with on-line access, mint.com and spreadsheets, it's not that big of an overhead. 3) If saved in same Saving Account, how could I manage easily which percentage is planned for which? Excel spreadsheet comes to mind. Banks may have some tools too, for example Wells Fargo (where I'll be closing my account soon), has a nice on-line goals manager that allows you to keep track of your savings per assigned goals (they allow one goal per savings account, but you can have multiple accounts for multiple goals, and it will show the goals and progress pretty nicely). 4) If not saved in same Saving Account, the interest earned would be smaller because they all clutter across multiple Saving Accounts? In some banks interest rates are tiered. But in most on-line savings accounts they're not, and you get the same high rate from the first $1 deposited. So if in the bank where you keep the money they only pay a decent rate if you deposit some big lump of money - just open an account elsewhere. Places to check: American Express FSB, ING Direct, E*Trade savings, Capital One, Ally, and many more." }, { "docid": "476363", "title": "", "text": "\"Many of my friends turn to me for financial advice, and here's what I always tell them because it's super effective for me... 1) I opened an online bank account with Scottrade for which I did not request a card or checks. I set up direct deposit straight to that account. It would be a complicated pain to take money out of that savings. The only time I did so was to buy my house (which was the purpose of the savings) and it involved a wire-transfer and printing of the form to fill out and faxing it in, etc. I have continued to use the account to save for my second house. I basically completely forget that the account is even there or that I am \"\"missing\"\" a large chunk of my money. 2) It is VERY important to actually budget for spending money to continue to spend on impulse items. Basically allow yourself to spend money on yourself but in a controlled way. Decide a specific amount that you want to put in a separate account that is just for you to spend to your hearts content and have it direct deposit. I find, (and Dave Ramsey also encourages this) that when I know how much money I am going to blow, I feel much more in control and it causes me to not get carried away and blow more than I realized. Take this a step further... Decide specifically what you want to buy for yourself, and label the account accordingly. For example, I decided back in March that I wanted to buy an Xbox One for when Star Wars Battlefront comes out this November. I calculated exactly how much money I would need at that time, figured how many paychecks I would receive until then, and did the math to determine exactly how much I need to direct deposit into an account JUST for saving to buy the Xbox and game. I use CapFed, and I can actually rename the account as it is displayed, so I called it \"\"Xbox fund\"\". Seeing that title, a reminder of what I really want\"\" encourages me to not touch it. What is your goal behind wanting to save money better? What are you saving for? Label your account accordingly so you don't just see it as money, but as progress.\"" }, { "docid": "442109", "title": "", "text": "Do you write checks? You are giving your bank account and routing number to anybody you have ever given a check to. Your employer is paying taxes on your behalf, so they need your social security number so they can pay your social security taxes. Account and routing numbers are how deposits are made. If you are concerned, create a free checking account, collect the direct deposit and each payday go to the bank and withdraw your money to put it where you like. Nothing is deposit only because you will want your money back. Finally, you would be shocked at how little it takes to make a draft on your account in the US. Certainly not your SSN, Address, or even your name." }, { "docid": "263648", "title": "", "text": "On my recent visit to the bank, I was told that money coming into the NRE account can only be foreign currency and for NRO accounts, the money can come in local currency but has to be a valid source of income (e.g. rent or investments in India). Yes this is correct as per FMEA regulation in India. Now if we use 3rd party remittances like Remitly or Transferwise etc, they usually covert the foreign currency into local currency like INR and then deposit it. The remittance services are better suited for transferring funds to Normal Savings accounts of your loved ones. Most remittance services would transfer funds using a domestic clearing network [NEFT] and hence the trace that funds originated outside of India is lost. There could be some generic remittance that may have direct tie-up with some banks to do direct transfers. How can we achieve this in either NRE/NRO accounts? If not, what are the other options ? You can do a Wire Transfer [SWIFT] from US to Indian NRE account. You can also use the remittance services [if available] from Banks where you hold NRE Account. For example RemittoIndia from HDFC for an NRE account in HDFC, or Money2India from ICICI for an NRE account in ICICI or QuickRemit from SBI etc. These would preserve the history that funds originated from outside India. Similarly you can also deposit a Foreign Currency Check into Indian Bank Account. The funds would take around month or so to get credited. All other funds can be deposited in NRO account." }, { "docid": "193592", "title": "", "text": "This is a reasonable requirement which many banks probably have. The reason is that after you deposit a check, ACH or direct deposit - they may be reversed after a couple of days (check bounced, payment canceled, etc). If you wire the money out, and then the check by which you got the money gets bounced - the bank is left hanging because money wired out is very hard to return. Wire transfers are generally irreversible unless its a mistake in the wire. After 10 days, these transactions cannot be reversed and the money is bound to remain on the account, so you can wire it out. By the way, it also goes for cashier's checks as well, I had a similar discussion with my banker (don't remember if it was WF or Chase) when I needed one based on a ACH transfer from my savings account elsewhere. They gave me the check, but said that its because I proved that the transfer was from my own account." }, { "docid": "45718", "title": "", "text": "\"I use online banking as much as possible and I think it may help you get closer to your goal. I see you want to know where the money goes and save time so it should work for you like it did for me. I used to charge everything or write checks and then pay a big visa bill. My problem was I never knew exactly how much I spent because neither Visa or check writing are record systems. They just generate transactions records. I made it a goal use online banking to match my spending to the available cash and ended up ok usually 9-10 months out of the year. I started with direct deposit of my paycheck. Each Saturday, I sit down and within a half hour, I've paid the bills for the week and know where I stand for the following week. Any new bill that comes in, I add it to online banking even if it's not a recurring expense. I also pull down cash from the ATM but just enough to allow me to do what I have to do. If it's more than $30 or $40 bucks, I use the debit card so that expense goes right to the online bank statement. My monthly bank statement gives me a single report with everything listed. Mortgage, utilities, car payment, cable bill, phone bill, insurance, newspaper, etc... It does not record these transactions in generic categories; they actually say Verizon or Comcast or Shop Rite. I found this serves as the only report I need to see what's happening with my budget. It may take a while to change to a plan like this one. but you'll now have a system that shows you in a single place where the money goes. Move all bills that are \"\"auto-pay\"\" to the online system and watch your Visa bill go down. The invested time is likely what you're doing now writing checks. Hope this helps.\"" } ]

[ { "docid": "475541", "title": "", "text": "\"As RonJohn points out, direct deposit is something very different. What's going on here is that they are trying to exclude the \"\"customers\"\" that open the account simply for the premium and then close it again as soon as the terms of the offer have been met. Most people have only one regular source of direct deposit money, either their paycheck or a retirement check. This acts to make it hard for them to simply take the offer and run.\"" } ]

[ { "docid": "571198", "title": "", "text": "\"I think you're right that from a pure \"\"expected future value\"\" perspective, it makes sense to pay this loan off as quickly as possible (including not taking the next year's loan). The new student loans with the higher interest rates have changed the balance enough that it's no longer automatically better to keep it going as long as possible. The crucial point in your case, which isn't true for many people, is that you will likely have to pay it off eventually anyway and so in terms of net costs over your lifetime you will do best by paying it off quickly. A few points to set against that, that you might want to consider: Not paying it off is a good hedge against your career not going as well as you expect, e.g. if the economy does badly, you have health problems, you take a career break for any reason. If that happens, you would end up not being forced to pay it off, so will end up gaining from not having done so voluntarily. The money you save in that case could be more valuable to you that the money you would lose if your career does go well. Not paying it off will increase your net cash earlier in life when you are more likely to need it, e.g. for a house deposit. Having more free cash could increase your options, making it possible to buy a house earlier in life. Or it could mean you have a higher deposit when you do buy, reducing the interest rate on the entire mortgage balance. The savings from that could end up being more than the 6% interest on the loan even though when you look at the loan in isolation it seems like a very bad rate.\"" }, { "docid": "255842", "title": "", "text": "In the United States, savings accounts generally have higher interest rates than checking or money market accounts. Part of this is the government restriction on the number of automated transactions per month that can be done on a savings account: this is supposed to allow banks to lengthen the time frame of the cash part of their investments for savings. This limit is why direct deposit of one's paycheck is almost always into a checking or money market account... and why many people have savings accounts, especially with Internet banks, because they pay significantly higher interest rates than brick and mortar banks." }, { "docid": "461943", "title": "", "text": "\"You can technically initiate an ACH transaction (debit or credit) with just the routing number and the account number. As a consumer - most banks will not allow you doing this without some sort of verification of authority. But if you have a direct ACH access (like many billers do) - you can do that and nothing will stop you. You can also print checks with the account/routing info on them and use them. That said - these actions are illegal and reversible. People who do this are usually making \"\"sting\"\" operations where they deposit forged checks and withdraw the money in cash quickly, before the check bounces back as a fake. The loss is then on the bank that allowed them depositing the checks (that's why new accounts usually have much longer holds on deposits than older established ones).\"" }, { "docid": "86273", "title": "", "text": "\"See \"\"Structuring transactions to evade reporting requirement prohibited.\"\" You absolutely run the risk of the accusation of structuring. One can move money via check, direct transfer, etc, all day long, from account to account, and not have a reporting issue. But, cash deposits have a reporting requirement (by the bank) if $10K or over. Very simple, you deposit $5000 today, and $5000 tomorrow. That's structuring, and illegal. Let me offer a pre-emptive \"\"I don't know what frequency of $10000/X deposits triggers this rule. But, like the Supreme Court's, \"\"We have trouble defining porn, but we know it when we see it. And we're happy to have these cases brought to us,\"\" structuring is similarly not 100% definable, else one would shift a bit right.\"\" You did not ask, but your friend runs the risk of gift tax issues, as he's not filing the forms to acknowledge once he's over $14,000.\"" }, { "docid": "586920", "title": "", "text": "\"I'm a bit loathe to offer this response, but some pre-paid credit card vendors offer \"\"direct deposit\"\" to the card. Not surprisingly, Wal-Mart is one of them -- the very first \"\"how to reload\"\" option is direct deposit from an employer: https://www.walmartmoneycard.com/walmart/account/learn-how I think this sort of service encourages bad money habits. People shouldn't have to pay fees to get their own money.\"" }, { "docid": "309538", "title": "", "text": "You can use Norbet's Gambit to convert between USD and CAD either direction. I have never personally done this, but I am planning to convert some CAD to USD soon, so I can invest in USD index funds without paying the typical 2% conversion fee. You must be okay with waiting a few days for the trades to settle, and okay with the fact that the exchange rate will almost certainly change before you sell the shares in the opposite currency. The spread on DLR.TO is about 0.01% - 0.02%, and you also have brokerage commissions and fees. If you use a discount broker the commissions and fees can be quite low. EG. To transfer $5000 USD to CAD using Questrade, you would deposit the USD into a Questrade account and then purchase ~500 units of DLR.U.TO , since it is an ETF there is no commission on the purchase. Then you request that they journal the shares over to DLR.TO and you sell them in CAD (will have about a $5 fee in CAD, and lose about $1 on the spread) and withdraw. The whole thing will have cost you $6 CAD, in lieu of ~$100 you would pay if you did a straightforward conversion with a 2% exchange fee. The difference in fees scales up as the amount you transfer increases. Someone has posted the chat log from when they requested their shares be journaled from DLR.TO to DLR.U.TO here. It looks like it was quite straightforward. Of course there is a time-cost, and the nuisance of signing up for an maintaining an account with a broker if you don't have one already. You can do it on non discount-brokers, but it will only be worth it to do it with a larger amount of money, since the commissions are larger. Note: If you have enough room to hold the CAD amount in your TFSA and will still have that much room at the end of the calendar year, I recommend doing the exchange in a TFSA account. The taxes are minimal unless the exchange rate changes drastically while your trades are settling (from capital gains or losses while waiting a few days for the trades to settle), but they are annoying to calculate, if you do it often. Warning if you do it in a TFSA be sure not to over contribute. Every time you deposit counts as a contribution and your withdrawals don't count against the limit until the next calendar year." }, { "docid": "235055", "title": "", "text": "\"&gt; My issue understanding this is I've been told that banks actually don't hold 10% of the cash and lend the other 90% but instead hold the full 100% in cash and lend 900%. Is this accurate? That's the money multiplier effect being poorly described. You take a loan out, but that loan eventually makes its way to other banks as cash deposits, which then are loaned out, and go to other banks, and loaned, etc., so that the economy is \"\"running\"\" on 10x cash, where 1x is in physical cash, and the other 9x is in this deposit-loan-deposit phenomenon. &gt; The issue I see with it is that it becomes exponential growth that is uncapped. Not true. If there is $1B outstanding \"\"physical\"\" cash (the money supply) with a 10% reserve, then the maximum amount of \"\"money\"\" flowing through is $1B / 10% = $10B. This assumes EVERYTHING legally possible is loaned out or saved in the banking system. As such, it represents a cap. If you have an Excel spreadsheet handy, you can easily model this out in four columns. Label the first row as follows: Deposit, Reserve, Cash Reserve, Loan Amount A2 will be your money supply. For simplicity, put $100. B2, your reserve column, will be 10%. C2 should be =A2 * B2, which will be the cash reserve in the bank. D2 should be A2 - C2, which is the new loan amount extended. A3 should be = D2, as the loans extended from the last step become deposits in the next. B3 = B2. Now, drag the formulas down, say, 500 rows. If you then sum the \"\"deposits\"\" column, it'll total $1,000. The cash reserve will total $100, and the loan amount will be $900. Thus, there is a cap.\"" }, { "docid": "403288", "title": "", "text": "\"Careful, this could be a scam. But if not.... There is no feasible way to turn that into cash without a very good reason that will require your banker to know you, as a depositor, reasonably well. And it sounds like you aren't banked at all. If this is your money, please pay attention - Class in America is defined by financial knowledge. If you are unbanked and lower class, $2M is actually dangerous - read a book called \"\"Money for Nothing\"\" about what happens to lottery winners. Honestly the tendency is for lower-class people to be possessed to keep making lower-class financial decisions, which directly lead them to be broke and bankrupt in months regardless of the size of the windfall. So making decisions differently is literally rehab... No exaggeration. To change your thinking, you'll want to read Suze Orman, John Bogle and Napoleon Hill. For an American who thinks about money the way the upper-middle-class does, $2M in the bank means the end of the 9-5 grind. He will still need to work, but will be able to be much more selective about choosing jobs which are fulfilling. It brings him the utopia we were promised. If you are currently unbanked, you will simply need to get banked to handle a check of this size. Handling this much cash is literally impossible due to the RICO laws designed to stop drug dealing and money laundering. Even if you split it into many small amounts, that itself is structuring which is a felony all its own. So let's get banked. A $2M check is a terrible entré into the banking world because it makes you smell like a criminal or scammer at first introduction. I could deposit one no problem because I have 10 years of history with my bank. But you, you'll need to convince the bank you're the real deal, and give them reason to trust you. Be prepared to that \"\"trust\"\" to include depositing some money... at the least, the bank will want to know you're good for the bad-check fees they suspect will follow. Go to a local bank or savings-and-loan that you trust, the smaller the better, and sit down with a banker. Describe your situation honestly and have him open an account and deposit the check. If your burned your ability to open checking accounts with a ChexSystems mark, you'll need to be more selective about banks and be honest about that to the banker. And wait a month for that check to clear positively, believe me your banker will be watching that. At that point, if you want great bunches of the money out quickly, it'll need to be in the form of a cheque or bank check. Cash ain't gonna happen, nor should it. The reason is, again, the RICO laws. Of course, if you are a criminal or scam victim, none of the above applies, sorry.\"" }, { "docid": "103748", "title": "", "text": "\"As is so often the case, there is an asterisk next to that 2.5% interest offer. It leads you to a footnote which says: Savings Interest Rate Offer of 2.5% is available between January 1, 2015 and March 31, 2015 on all net new deposits made between January 1, 2015 and March 31, 2015 to a maximum of $250,000.00 per Account registration. You only earn 2.5% interest on deposits made during those three months. Also, on the full offer info page, it says: During the Offer Period, the Bank will calculate Additional Interest on eligible net new deposits and: All interest payments are ineligible for the purposes of calculating Additional Interest and will not be calculated for the purposes of determining eligible daily balances. In other words, any interest paid into an Applicable Account, including Additional Interest, will not be treated as a new deposit for subsequently calculating Additional Interest payments. I couldn't totally parse out all the details of the offer from their legalese, but what it sounds like is you will earn 2.5% interest on money that you deposit into the account during those three months. Any interest you accrue during that time will not count as a deposit in this sense, and so will not earn 2.5% compounded returns. The \"\"During the Offer Period\"\" qualification also makes it sound like this extra interest will only be paid during the three months (presumably at a 2.5% annualized rate, but I can't see where it actually says this). So essentially you are getting a one-time bonus for making deposits during a specific three-month period. The account doesn't really earn 2.5% interest in the normal sense. The long-term interest rate will be what it normally is for their savings accounts, which this page says is 1.05%.\"" }, { "docid": "358837", "title": "", "text": "Every bank and credit union in the US has a Deposit Agreement and Disclosures document, Bank of America is no different. Our general policy is to make funds from your cash and check deposits available to you no later than the first business day after the day of your deposit. However, in some cases we place a hold on funds that you deposit by check. A hold results in a delay in the availability of these funds. that sounds great but ... For determining the availability of your deposits, every day is a business day, except Saturdays, Sundays, and federal holidays. If you make a deposit on a business day that we are open at one of our financial centers before 2:00 p.m. local time, or at one of our ATMs before 5:00 p.m. local time in the state where we maintain your account, we consider that day to be the day of your deposit. However, if you make a deposit after such times, or on a day when we are not open or that is not a business day, we consider that the deposit was made on the next business day we are open. Some locations have different cutoff times. so if you deposit a check on Friday afternoon, the funds are generally available on Tuesday. but not always... In some cases, we will not make all of the funds that you deposit by check available to you by the first business day after the day of your deposit. Depending on the type of check that you deposit, funds may not be available until the second business day after the day of your deposit. The first $200 of your deposits, however, may be available no later than the first business day after the day of your deposit. If we are not going to make all of the funds from your deposit available by the first business day after the day of your deposit, we generally notify you at the time you make your deposit. We also tell you when the funds will be available. Ok what happens when the funds are available... In many cases, we make funds from your deposited checks available to you sooner than we are able to collect the checks. This means that, from time to time, a deposited check may be returned unpaid after we made the funds available to you. Please keep in mind that even though we make funds from a deposited check available to you and you withdraw the funds, you are still responsible for problems with the deposit. If a check you deposited is returned to us unpaid for any reason, you will have to repay us and we may charge your account for the amount of the check, even if doing so overdraws your account. Fidelity has a similar document: Each check deposited is promptly credited to your account. However, the money may not be available until up to six business days later, and we may decline to honor any debit that is applied against the money before the deposited check has cleared. If a deposited check does not clear, the deposit will be removed from your account, and you are responsible for returning any interest you received on it. I would think that the longer holding period for Fidelity is due to the fact that they want to wait long enough to make sure that the number of times they have to undo investments due to the funds not clearing is nearly zero." }, { "docid": "122491", "title": "", "text": "\"Great question. There are several reasons; I'm going to list the few that I can think of off the top of my head right now. First, even if institutional bank holdings in such a term account are covered by deposit insurance (this, as well as the amount covered, varies geographically), the amount covered is generally trivial when seen in the context of bank holdings. An individual might have on the order of $1,000 - $10,000 in such an account; for a bank, that's basically chump change, and you are looking more at numbers in the millions of dollars range. Sometimes a lot more than that. For a large bank, even hundreds of millions of dollars might be a relatively small portion of their holdings. The 2011 Goldman Sachs annual report (I just pulled a big bank out of thin air, here; no affiliation with them that I know of) states that as of December 2011, their excess liquidity was 171,581 million US dollars (over 170 billion dollars), with a bottom line total assets of $923,225 million (a shade under a trillion dollars) book value. Good luck finding a bank that will pay you 4% interest on even a fraction of such an amount. GS' income before tax in 2011 was a shade under 6.2 billion dollars; 4% on 170 billion dollars is 6.8 billion dollars. That is, the interest payments at such a rate on their excess liquidity alone would have cost more than they themselves made in the entire year, which is completely unsustainable. Government bonds are as guaranteed as deposit-insurance-covered bank accounts (it'll be the government that steps in and pays the guaranteed amount, quite possibly issuing bonds to cover the cost), but (assuming the country does not default on its debt, which happens from time to time) you will get back the entire amount plus interest. For a deposit-insured bank account of any kind, you are only guaranteed (to the extent that one can guarantee anything) the maximum amount in the country's bank deposit insurance; I believe in most countries, this is at best on the order of $100,000. If the bank where the money is kept goes bankrupt, for holdings on the order of what banks deal with, you would be extremely lucky to recover even a few percent of the principal. Government bonds are also generally accepted as collateral for the bank's own loans, which can make a difference when you need to raise more money in short order because a large customer decided to withdraw a big pile of cash from their account, maybe to buy stocks or bonds themselves. Government bonds are generally liquid. That is, they aren't just issued by the government, held to maturity while paying interest, and then returned (electronically, these days) in return for their face value in cash. Government bonds are bought and sold on the \"\"secondary market\"\" as well, where they are traded in very much the same way as public company stocks. If banks started simply depositing money with each other, all else aside, then what would happen? Keep in mind that the interest rate is basically the price of money. Supply-and-demand would dictate that if you get a huge inflow of capital, you can lower the interest rate paid on that capital. Banks don't pay high interest (and certainly wouldn't do so to each other) because of their intristic good will; they pay high interest because they cannot secure capital funding at lower rates. This is a large reason why the large banks will generally pay much lower interest rates than smaller niche banks; the larger banks are seen as more reliable in the bond market, so are able to get funding more cheaply by issuing bonds. Individuals will often buy bonds for the perceived safety. Depending on how much money you are dealing with (sold a large house recently?) it is quite possible even for individuals to hit the ceiling on deposit insurance, and for any of a number of reasons they might not feel comfortable putting the money in the stock market. Buying government bonds then becomes a relatively attractive option -- you get a slightly lower return than you might be able to get in a high-interest savings account, but you are virtually guaranteed return of the entire principal if the bond is held to maturity. On the other hand, it might not be the case that you will get the entire principal back if the bank paying the high interest gets into financial trouble or even bankruptcy. Some people have personal or systemic objections toward banks, limiting their willingness to deposit large amounts of money with them. And of course in some cases, such as for example retirement savings, it might not even be possible to simply stash the money in a savings account, in which case bonds of some kind is your only option if you want a purely interest-bearing investment.\"" }, { "docid": "163049", "title": "", "text": "&gt; 1. What exactly happens when I deposit $1000 to the bank? Does it lend to other parties $900 of what I have given them? Yep. &gt; Or it turns my whole deposit into their reserve, then borrows $9000 from the central bank, and lends this sum to their customers? No, the bank can't loan more money than it has in deposits. Note that this does create money because, in this example, the bank loaned someone $900 but it still owes you $1000. &gt; 2. What happens when I'll make final payment on my loan? Is this a different example or are we assuming your original $1000 was loaned to you? Regardless, every time you make a payment on a loan the bank can re-loan that money to someone else. &gt; Does the bank also pay its base to the central bank (+ base interest rate) and keeps only their interests? The central bank has not been involved in this transaction so it doesn't receive anything. &gt; Does the central bank remove from the circulation money it received back? Yes but I think you're switching topics. A central bank's transactions are more about managing the money supply and inflation of a [fiat currency](https://en.wikipedia.org/wiki/Fiat_money#Money_creation_and_regulation). Ideally a central bank trades a bank's paper assets for reserves adding or subtracting to the bank's ability to issue loans." }, { "docid": "518896", "title": "", "text": "How does compounding of annual interest work? answers this question. It's not simple compound interest. It's a time value of money calculation similar to mortgage calculations. Only the cash flow is the other way, a 'deposit' instead of 'payment'. When using a finance calculator such as the TI-BA35 (Note, it's no longer manufactured, but you can find secondhand. It was the first electronic device I ever loved. Seriously) you enter PV (present value) FV (future value) Int (the interest rate) nPer (number of periods) PMT (payment). For a mortgage, there's a PV, but FV = $0. For you, it's reversed. PMT on this model is a positive number, for you it's negative, the amount you deposit. You also need to account for the fact that a mortgage is paid on day 31, but you start deposits on Day 1. See the other answer (I linked at start) for the equations." }, { "docid": "6426", "title": "", "text": "With reference to the UK: Structured deposits should not be confused with structured products. Structured deposits are often, quite simple deposit accounts. You place your money into what is essentially a deposit account, and are therefore guaranteed not to lose your capital as with any other deposit account. The attraction is that you could earn more than you would in a normal deposit account, often around double, due to indirect exposure to the markets. Another benefit is that structured deposits can form part of your annual cash ISA allowance, so the returns can be tax free. These products are popular with those who have savings which they are happy to deposit away for between 3 and 6 years, and are looking for better rates of return than standard cash ISAs or savings accounts. The main drawback is that you may not receive anything other than your original deposit. That poses a minimal risk if your savings are earning less than 1% currently. See my article at financialandrew.blogspot.co.uk/2013/03/fed-up-with-low-returns-from-cash-isas.html for a more rounded overview of the structured deposits." }, { "docid": "540937", "title": "", "text": "\"The money is not subject to tax because it was deposited. You can deposit money as much as you like, that's not what is triggering the tax. What is triggering the tax is the sale itself, and it has already happened. If your friend is taxed for capital gains under the Spanish tax law - then this money is already taxable, and not paying the tax due is tax evasion. Depositing the money may indeed trigger an investigation that will lead to evasion charges, but it would not be the depositing the money that was against the law. Not depositing the money doesn't mean you will avoid investigation, it just means that the authorities may learn about it in a different way and charge you with additional crimes while at it (money laundering, fraud, whatever). Keeping large amounts of cash brings additional complications and dangers. The more people knowing about it (and they will, as you spend it), the higher chances are for you to \"\"split\"\" it with some robber or thief. I suggest talking to a licensed tax accountant in Spain about whether the sale of the flat is taxable in Spain or not. If it is - pay the taxes due and be done with that.\"" }, { "docid": "52441", "title": "", "text": "In banks and institutions where you could look at the money supply of M1 which is the physical currency in circulation compared to M2 which would be all the deposits that tend to be valued much more. http://www.federalreserve.gov/releases/h6/current/ would be the link where as of Nov. 2014 the figures are M1 - 2,849.8 M2 - 11,588.7 Footnotes from that: M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler's checks of nonbank issuers; (3) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted M1 is constructed by summing currency, traveler's checks, demand deposits, and OCDs, each seasonally adjusted separately. M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000), less individual retirement account (IRA) and Keogh balances at depository institutions; and (3) balances in retail money market mutual funds, less IRA and Keogh balances at money market mutual funds. Seasonally adjusted M2 is constructed by summing savings deposits, small-denomination time deposits, and retail money funds, each seasonally adjusted separately, and adding this result to seasonally adjusted M1. Where M1 sounds like the physical money outside the banks and M2 is the money inside the banks. Did you mean something more specific here? http://en.wikipedia.org/wiki/Gross_domestic_product would be a link about GDP in terms of economic output that has more than a few pieces to it that I'm sure whole courses in college are devoted to understanding this measurement." }, { "docid": "426559", "title": "", "text": "Could someone please explain to me how interest rates work? I like to think of interest rates as the price of money. It is specified as a percentage paid per unit of time (for example, 3%/year). To figure out how much interest money you get (or have to pay) for a given amount and time, multiply the amount with the interest rate and then divide by the time divided by the interest rate's specified time. That sounds awfully complicated, so let's look at a simple example instead. You deposit $1,000 at a fixed interest rate of 2% per year, for two and a half years, where the interest is paid at the end of the term. This means that you earn $1,000 * 2% = $20 per year in interest. Multiply this by [2.5 years] / [year] = 2.5, and you will have received $20 * 2.5 = $50 in interest over 2.5 years. If the interest is paid yearly, this gets slightly more complicated, but the principle is the same. Now imagine that you deposit $5,000 at a fixed 3% per year, for half a year. Again, the interest is paid at the end of the term. You now earn $5,000 * 3% [per year] * [[0.5 years] / [year]] = $75 in interest over six months. Variable interest rates makes this a little more complicated, but it is exactly the same thing in principle: calculate the interest paid for each period (taking any compounding into account), then add up all periods to get the total amount of interest paid over time. It also works the same way if you take out a loan rather than depositing money. Tax effects (capitals gains taxes or interest expense deductions) may make the actual amount paid or received different, but that does not change the fundamental aspect of how to calculate interest. Do CD's make more money with higher interest rates, or is it the other way around? Usually fixed interest rate instruments such as certificates of deposit, or loans with fixed rates, pay a higher interest rate for longer terms. This is because it is harder to judge credit risk in a longer term, so whoever gives the loan usually wants a premium for the additional risk. So a 6-month CD will normally pay a smaller percentage interest per year than a five-year CD. Note that this is not always the case; the technical term for when this does not hold is inverted yield curve. Interest rates are almost always formally specified in terms of percent per year, which makes it easy to compare rates. If you buy a $100 6-month CD paying 1% (I told you these were only examples :)) and then reinvest the money at the end of the term in another 6-month CD also paying 1%, the total amount paid will be ($100 * 1 + (1% * 6/12)) = $100.50 for the first term, then ($100.50 * 1 + (1% * 6/12)) = $101.0025 at the end of the second term. As you can see, the compounding of the interest makes this return slightly more than a single $100 12-month CD ($100 * 1 + 1% = $101), but unless you are dealing with large amounts of money, the difference is small enough to be negligible. If you were to put $100 in a 2% one-year CD, you'd get back $102 at the end of the year. Put the same amount in a 5% one-year CD, and you get back $105. So yes, higher interest rates means more interest money paid, for loans as well as deposits. Keep in mind that loans and deposits really are essentially the same thing, and interest calculations work the same way for both. The interest rate of a normal certificate of deposit does not change if the variable interest rates change, but rather is locked in when the money is deposited (or the CD is bought, whichever way you prefer to look at it)." }, { "docid": "278846", "title": "", "text": "\"It sounds like you are isolated and in a small town. Without the true ability to bank, perhaps you should move. As an alternative you could do some kind of online banking. Most banks offer the ability to deposit via mobile phone and you could obtain cash by using remote ATMs or writing checks for an amount over your purchase at the grocery store. How are you paid? If via direct deposit, that makes mobile banking even easier. Did your read your premise out loud? Using Game Stop as a bank is just silly. Are you banned from banks because of not paying child support or some other legal obligation? If so just \"\"face the music\"\". I know people that are over 40 and owed a relatively small amount of child support and the result of they lost out on order of magnitudes greater income. It was just a short-sighted move that cost them far more than if they just obeyed the court order. It would be smarter to use a check cashing store, like AmScott, to do your banking. They will cash checks for a fee, issue money orders, or even allow you to pay some bills directly through them. Never, ever use them to cash a hot check or for short term financing but using them or Walmart, or the Grocery store is a much better option than Game Stop.\"" }, { "docid": "313158", "title": "", "text": "\"There will be no police involved. The police do not care. Only the feds care, and they only care about large amounts (over $100,000). What will happen is that the teller will deposit the money like nothing is unusual, but the amount will trigger a \"\"Suspicious Transaction Report\"\" to be filed by the bank. This information goes to the US Treasury and is then circulated by the Treasury to basically every agency in the government: the Department of Defense, the FBI, the NSA, the CIA, the DEA, the IRS, etc. What happens next depends on your relationship with your bank and the personality of the bank. In my case I have made large cash transactions at two different banks, one that I had a long relationship with, and another that I had a long-standing but dormant account. The long-term one was a high end savings bank in a city. The dormant one was one of those bozo retail banks (think \"\"Citizens\"\" or \"\"Bank of America\"\") in a suburb. The long-term bank ignored my first deposit, but after I made some more including one over $50,000 in cash they summoned me via a letter. I went in, talked to the branch manager and explained why I was making the deposits. He said \"\"That sounds plausible.\"\" and that was the end of the interview. It is unlikely that they transferred the information. They probably just wrote it down. They did this because they have \"\"know your customer\"\" regulations and they wanted to be able to prove that they did \"\"due diligence\"\" in case anybody asked about it later. The suburban bank never asked any questions, but they did file the STRs. In general, there is no way to know if the bank will interview you or not. It depends on a lot of different factors. The basic factors are: how much money is it, are you doing a lot of business normally, and how well does the bank know you. If you refuse to answer the bank's questions to their satisfaction, it is a 100% chance that they will close your account. They can also file higher level reports that flag your activity as \"\"highly suspicious\"\" as opposed to just the normal \"\"suspicious\"\". As long as it is a bank employee, you should have no serious concerns unless the guy seems strange and asks really pointed questions. If you have any question whether the \"\"employee\"\" is legitimate, just verify that he/she is a bank employee. Obviously if the feds visit you, you should say nothing. The chance of this happening is 1 in a million.\"" } ]

[ { "docid": "231727", "title": "", "text": "I know someone around there, who might be able to collect it for me.Would I still be able to cash it out in the other country? Or can he/she cash it out for me? Unlikely. Unless they deposit it into a US bank account in your name. You can cash US checks in almost any decent bank anywhere in the world, but it may cost you some and will probably take 2-3 weeks. Since the amount is won in the US, how would I pay the taxes? , since its earned over there. You would file a tax return with the IRS and send them a payment. You can buy drafts in US dollars almost anywhere in the world." } ]

[ { "docid": "521070", "title": "", "text": "For those who don't know, credit card checks are blank checks that your credit card company sends you. When you fill them out and spend them, you are taking a cash advance on your credit card account. You should be aware that taking a cash advance on your credit card normally has extra fees and finance charges above what you have with regular credit card transactions. That having been said, when you take one of these to your bank and try to deposit them, it is entirely up to bank policy how long they will make you wait to use these funds. They want to be sure that it is a legitimate check and that it will be honored. If your teller doesn't know the answer to that question, you'll need to find someone at the bank who does. If you don't like the answer they give you, you'll need to find another bank. I would think that if the credit card is from Chase, and you are trying to deposit a credit card check into a Chase checking account, they should be able to do that instantly. However, bank policy doesn't always make sense." }, { "docid": "281246", "title": "", "text": "In addition to the money-laundering, lifestyle, income tax, etc issues discussed already in other answers, one other matter that might concern the bank is whether that cash you are bringing in to deposit is genuine currency or (some or all of) the bills are counterfeit and you are using this mechanism to get them into circulation. Even if you withdraw a very large amount in cash from your bank, step out the door and come back just a few minutes later saying that you have changed your mind and want to put that money back into your account, there is still the question as to whether the cash you have brought back is exactly the same as you took out or a substitution was made in the interim. I once needed a bank draft for $1000 and went to my bank to get it, taking with me a check made out to Cash for $1003 (the bank's fee was $3). The bank would not give me a bank draft in exchange for the check, or if I cashed the check right then and there and paid for the bank draft using the cash that the teller had just handed me. I had to tear up the check, write another one payable to the bank, and then I got my bank draft. As JoeTaxpayer says, it is a matter of paper trail. Additional matter added in edit: According to Wikipedia, because of the Bank Secrecy Act of 1970, Many banks will no longer sell negotiable instruments when they are purchased with cash, requiring the purchase to be withdrawn from an account at that institution. which was exactly my experience. Furthermore, even the banks that will still sell you a cashier's check or money order for cash must keep a Monetary Instrument Log (MIL) that records all such cash transactions for amounts between $3000 and $10,000, keep the records for at least five years, and produce it upon request of a bank examiner or auditor (and presumably upon subpoena by a district attorney or divorce lawyer). Cash transactions of $10,000 or over are, of course, reported to the IRS on Currency Transaction Reports. In short, a paper trail exists for some time even for cash transactions quite a bit smaller than $10,000." }, { "docid": "351340", "title": "", "text": "In my opinion, every person, regardless of his or her situation, should be keeping track of their personal finances. In addition, I believe that everyone, regardless of their situation, should have some sort of budget/spending plan. For many people, it is tempting to ignore the details of their finances and not worry about it. After all, the bank knows how much money I have, right? I get a statement from them each month that shows what I have spent, and I can always go to the bank's website and find out how much money I have, right? Unfortunately, this type of thinking can lead to several different problems. Overspending. In olden days, it was difficult to spend more money than you had. Most purchases were made in cash, so if your wallet had cash in it, you could spend it, and when your wallet was empty, you were required to stop spending. In this age of credit and electronic transactions, this is no longer the case. It is extremely easy to spend money that you don't yet have, and find yourself in debt. Debt, of course, leads to interest charges and future burdens. Unpreparedness for the future. Without a plan, it is difficult to know if you have saved up enough for large future expenses. Will you have enough money to pay the water bill that only shows up once every three months or the property tax bill that only shows up once a year? Will you have enough money to pay to fix your car when it breaks? Will you have enough money to replace your car when it is time? How about helping out your kids with college tuition, or funding your retirement? Without a plan, all of these are very difficult to manage without proper accounting. Anxiety. Not having a clear picture of your finances can lead to anxiety. This can happen whether or not you are actually overspending, and whether or not you have enough saved up to cover future expenses, because you simply don't know if you have adequately covered your situation or not. Making a plan and doing the accounting necessary to ensure you are following your plan can take the worry out of your finances. Fear of spending. There was an interesting question from a user last year who was not at all in trouble with his finances, yet was always afraid to spend any money, because he didn't have a budget/spending plan in place. If you spend money on a vacation, are you putting your property tax bill in jeopardy? With a good budget in place, you can know for sure whether or not you will have enough money to pay your future expenses and can spend on something else today. This can all be done with or without the aid of software, but like many things, a computer makes the job easier. A good personal finance program will do two things: Keeps track of your spending and balances, apart from your bank. The bank can only show you things that have cleared the bank. If you set up future payments (outside of the bank), or you write a check that has not been cashed yet, or you spend money on a credit card and have not paid the bill yet, these will not be reflected in your bank balance online. However, if you manually enter these things into your own personal finance program, you can see how much money you actually have available to spend. Lets you plan for future spending. The spending plan, or budget, lets you assign a job to every dollar that you own. By doing this, you won't spend rent money at the bar, and you won't spend the car insurance money on a vacation. I've written before about the details on how some of these software packages work. To answer your question about double-entry accounting: Some software packages do use true double-entry accounting (GnuCash, Ledger) and some do not (YNAB, EveryDollar, Mvelopes). In my opinion, double-entry accounting is an unnecessary complication for personal finances. If you don't already know what double-entry accounting is, stick with one of the simpler solutions." }, { "docid": "561123", "title": "", "text": "\"While you would probably not use your ATM card to buy a $1M worth mansion, I've heard urban legends about people who bought a house on a credit card. While can't say its reliable, I wouldn't be surprised that some have actual factual basis. I myself had put a car down-payment on my credit card, and had I paid the sticker price, the dealer would definitely have no problem with putting the whole car on the credit card (and my limits would allow it, even for a luxury brand). The instruments are the same. There's nothing special you need to have to pay a million dollars. You just write a lot of zeroes on your check, but you don't need a special check for that. Large amounts of money are transferred electronically (wire-transfers), which is also something that \"\"regular\"\" people do once or twice in their lives. What might be different is the way these purchases are financed. Rich people are not necessarily rich with cash. Most likely, they're rich with equity: own something that's worth a lot. In this case, instead of a mortgage secured by the house, they can take a loan secured by the stocks they own. This way, they don't actually cash out of the investment, yet get cash from its value. It is similarly to what we, regular mortals, do with our equity in primary residence and HELOCs. So it is not at all uncommon that a billionaire will in fact have tons of money owed in loans. Why? Because the billions owned are owned through stock valuation, and the cash used is basically a loan secured by these stocks. It might happen that the stocks securing the loans become worthless, and that will definitely be a problem both to the (now ex-)billionaire and the bank. But until then, they can get cash from their investment without cashing out and without paying taxes. And if they're lucky enough to die before they need to repay the loans - they saved tons on money on taxes.\"" }, { "docid": "359713", "title": "", "text": "\"Based on past case law, a check made payable to qualified charity and delivered (e.g., placed in the mail on 12/31 would count as delivered as it is out of the hands of the donor) would fall under the \"\"constructive receipt doctrine\"\". However, for non-charitable gifts (e.g., gifts to family members) it is the date the check is cashed (honored by the receiving bank). This is important as the annual gift exclusion is just that \"\"Annual\"\". Therefore, if I gift my child $14,000 by writing a check on 12/31/2014 but they deposit it on 1/3/2015 then I have used my annual gift exclusion for 2015 and not 2014. This means I could not gift them anything further in 2015. BTW the annual gift amount is for ALL gifts cash and non-cash. Most people don't seem to realize this. If I give $14,000 of cash to my child and then also give them Christmas gifts with a value of $1,000 I have exceeded my annual gift exclusion to that child. Usually there are ways around this issue as I can give $14,000 to each and every person I want and if married my spouse can do the same. This allows us to give $14,000 from each of us to each child plus $14,000 from each of us to their spouse if married and $14,000 from each of us to each of their children if they have any.\"" }, { "docid": "69434", "title": "", "text": "\"When you buy a house, the real estate agent or title company normally draws up a big sheet with all the costs and payments involved. There are typically two columns: one for amounts paid to or paid by the seller, and another for amounts paid to or paid by the buyer. Who is responsible for what is a legal question: this is pretty fixed. But it's very common for the seller to agree to pay some portion of the buyer's closing costs. In any house sale I've ever been involved in, whether as buyer or seller, nobody bothers to say which costs the seller is agreeing to pay. Rather, the seller just agrees to a number. Then somewhere on the sheet of costs there will be a line that says \"\"closing costs paid by seller\"\" or some such wording, and then it shows a minus to the seller and a plus to the buyer. (Or something equivalent, depending on how the sheet is organized.) The amount is negotiated. When you make an offer, you'll say whatever numbers you are prepared to offer, like \"\"I offer to pay $100,000 for the house, seller to pay $3,000 of closing costs\"\". And whatever other conditions, seller to repair the leak in the roof, whatever. It makes sense for the seller to pick up some share of the closing costs, because the seller normally walks away with cash in hand while the buyer is struggling to come up with enough cash to make a down payment and pay all the closing costs, i.e. the seller probably can afford to give up some cash while the buyer may be struggling to come up with cash. The only costs I can think of that I've had before closing day are, (a) Earnest money. (b) Inspection. (c) Credit check or application fee to bank. Earnest money is applied to the purchase price at closing, so it's pretty much a moot point. The application fee is a potential deal-breaker. I've never heard of a seller agreeing to pay this, but I guess they could. But if you can't get the loan, you probably won't buy the house, so the seller would be out money for nothing. Everything else is normally paid on closing day. They total up all the costs and all the money floating around and at the end the seller gets one check that is the net of everything and the buyer writes one check that is the net of everything, and the realtor or title company deals with getting the money to the right people. So there's normally no issue of paying things as they come up. You do it all at once.\"" }, { "docid": "453641", "title": "", "text": "\"My revised, bottom-line advice: offer to send a 2nd payment (preferably in the form of money order or cashier's check) for the difference you are agreeing to pay. I cannot imagine any reason why they would object to this - there is no fee to cash a check, there's less risk of error, and less work involved. Alternatively, offer to send a new check only once the other has been returned. Don't issue one more full-amount check while the other is still outstanding. There is a good reason not to accept partial payment by them, which is that accepting a partial payment of a debt comes with a varieties of strings attached depending on the nature of the debt (such as with evictions, court processes may need to be restarted, etc). They likely want to avoid such a situation - but this does not provide any support for why they can't just take a second payment and then cash it all at once as a single, full settlement of the debt. In a perfect world, you could skip all the non-sense by simply having your bank put a stop-payment on the old check before sending a new one. Unfortunately, this might not work with 100% accuracy - but in your case if the \"\"partial payment\"\" is a significant amount of money to you, I'd go ahead and spend the $20-40 to put in the order now as an extra safety on them not doing what they claim, if for some incredibly stupid reason you can't handle this with a 2nd payment instead of one single full one. It turns out banks have lots of surprising and stupid rules, like stop payments on a check expiring in 6 months (and they may even cash stale checks over a year old), no guarantee of a stop being successful, etc. The real rule is: they might cash the check unless you close the account. Sigh - this is one of many reasons I never, ever use checks. I am not aware of any law that requires a check to be physically returned if requested, or proof or destruction provided, or anything like that. It's a large part of the reason why we have the ability to stop payment on a check, and so void it through the bank without having any physical access to the check - but this process is spotty and imperfect, and cannot be relied upon. You can request them to do whatever you like, like void it and send it back, or destroy it, and they can just refuse - or say they'll do it and then just not do it, and you have no real useful recourse. The main goal should be to avoid losing money if someone \"\"accidentally\"\" (or intentionally) cashes both checks. So you can ask, or demand (refuse to pay until they return the check), etc - and they can respond more or less any way they want. As a final piece of future advice, consider no longer using checks for purposes like this. Switch to using something like a cashier's check or money order offered by your bank, which (by their very nature) takes the money out of your account immediately, severs all ongoing connection to your bank account, and is effectively like cash with the added benefit of a paper trail. Keep the stub and and receipt from the cashier's check/money order, in case it is lost or they claim they didn't get the money.\"" }, { "docid": "289177", "title": "", "text": "\"Some reasons I take low-interest loans are: Leverage. If the loan's rate is low enough, then I can invest the cash in something fairly low-risk, and make more money than I pay in interest. The interest rate has to be pretty low, say below 4% or so. My auto loan is low enough and my home loan is low enough if you count the tax deduction. Obviously you have to invest in something riskier than cash here, though. And consider taxes, which lower the rate you're paying on a home loan, but also lower the returns you're getting on any bonds you invest in. Liquidity and flexibility. If I have N thousands in cash instead of tied up in my house, then I could use that money to survive many months of unemployment for example, or handle any other emergency. But if you become unemployed or have some other emergency, it will be too late to get a home loan. Credit rating. It's good to use some credit, just so you can get more if you need it. But this isn't a reason to take a particular loan, just a reason to have some kind of credit card or loan. Budgeting. When budgeting, it's best to think of expenses such as cars and houses in terms of a monthly cost, so you can see how they nudge out or allow other spending. (When negotiating with a car dealer, of course, use total cost so you don't get screwed by him messing with interest rates.) I wouldn't take a loan just to ease the budgeting (you can always manually \"\"amortize\"\") but it's a nice side effect. For credit cards, there are more buyer protections and you get a nice transaction log (again useful in budgeting). Also you don't have to carry around cash, or worry about your checking account balance. So credit cards are just convenient. But even though my card has a very low rate, it isn't low enough that I want to keep a balance month-to-month, so I don't use credit cards to actually borrow money.\"" }, { "docid": "50000", "title": "", "text": "\"What is a good bank to use for storing my pay? Preferrably one that has free student accounts. Can I save money from my paychecks directly to a Canadian bank Otherwise, can I connect my bank account to my Canadian account online? Any (almost...) bank in the US has free college checking accounts. If the bank you entered doesn't - exit, and step into the one next door which most likely will. The big names - Wells Fargo, Bank Of America, Chase, Bank of the West, Union Bank, Citi etc - all have it. Also, check your local credit union. Do I need any ID to open a bank account? I have Canadian citizenship and a J-1 visa Bring your passport and a student card/driving license (usually 2 ID's required). What form of money should I take with me? Cash? Should I apply for a debit card? Can I use my Canadian credit card for purchasing anything in the states? (Canadian dollar is stronger than US dollar currently, so this could be to my advantage?) There's some fuss going on about debit cards right now. Some big banks (Bank of America, notably) decided to charge fees for using it. Check it, most of the banks are not charging fees, and as far as I know none of the credit unions are charging. So same thing - if they charge fees for debit card - step out and move on to the next one down the street. Using debit card is pretty convenient, cash is useful for small amount and in places that don't accept cards. If you're asking about how to move money from Canada - check with your local (Canadian) bank about the conversion rates and fees for transfers, check cashing, ATM, card swipes, etc - and see which one is best for you. When I moved large amounts of money across the border, I chose wire transfer because it was the cheapest, but for small amounts many times during the period of your stay it may be more expensive. You can definitely use your Canadian credit/debit card in the States, you'll be charged some fee by your credit card company, and of course the conversion rate. How much tax does I have to pay at the end of my internship? Let's assume one is earning $5,000 per month plus a one time $5,000 housing stipend, all before taxes. Will I be taxed again by the Canadian government? $5K for internship? Wow... You need to talk to a tax specialist, there's probably some treaty between the US and Canada on that, and keep in mind that the State of California taxes your income as well. What are some other tips I can use to save money in the California? California is a very big place. If you live in SF - you'll save a lot by using the MUNI, if your internship is in LA - consider buying an old clunker if you want to go somewhere. If you're in SD - just enjoy the weather, you won't get it in Canada. You'll probably want a \"\"pay as you go\"\" wireless phone plan. If your Canadian phone is unlocked GSM - you can go to any AT&T or T-Mobile store and get a pre-paid SIM for free. Otherwise, get a prepaid phone at any groceries store. It will definitely be cheaper than paying roaming charges to your Canadian provider. You can look at my blog (I'm writing from California), I accumulated a bunch of saving tips there over the years I'm writing it.\"" }, { "docid": "346042", "title": "", "text": "When you pay cash for a car, you don't always necessarily need to pay cash. You just aren't using credit or a loan is all. A few options you have are: Obviously no dealer expects anyone to just have the cash laying around for a car worth a few thousand dollars, nor would you bother going to your bank or credit union for the cash. You can simply get a cashier's check made out for the amount. Note that dealers may not accept personal checks as they may bounce. After negotiations at the dealer, you would explain you're paying cash, likely pay a deposit (depending on the price of the car, but $500 would probably be enough. Again, the deposit can be a check or bank deposit), and then come back later on with a cashier's check, or deposit into a bank account. You would be able to do this later that day or within a few days, but since you've purchased a new car you would probably want to return ASAP!" }, { "docid": "286942", "title": "", "text": "In order for you to send me check for $10 you would have to know my banking details. You would have to know the bank number and the account number. Giving you this information does put my funds at risk. While you would know this for a small circle of friends you wouldn't know this for everybody. My parents have 19 grand kids. They would have to know the banking account information for all 19. While my parents can be trusted with this information their grand children would have to make sure that they had the updated information. Instead they just mail them a check or give them a check on their birthday or other special occasion. Most of the time that money needs to be transferred it is not important that it immediately be converted to cash. The question you referenced is about how the Unbanked function: The unbanked are adults who do not have their own bank accounts. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available. These people need check cashing places to get money. They don't have a bank account. There is no place for you to electronically send money. Every source of income for them has to start as cash, or be converted to cash. All spending they do is by cash. If they need to pay by check they convert cash to a money order for a fee." }, { "docid": "504989", "title": "", "text": "\"First I would like to say, do not pay credit card companies in an attempt to improve your credit rating. In my opinion it's not worth the cash and not fair for the consumer. There are many great resources online that give advice on how to improve your credit score. You can even simulate what would happen to your score if you did \"\"this\"\". Credit Karma - will give you your TransUnion credit score for free and offers a simulation calculator. If you only have one credit card, I would start off by applying for another simply because $700 is such a small limit and to pay a $30 annual fee seems outrageous. Try applying with the bank where you hold your savings or checking account they are more likely to approve your application since they have a working relationship with you. All in all I would not go out of my way and spend money I would not have spent otherwise just to increase my credit score, to me this practice is counter intuitive. You are allowed a free credit report from each bureau, once annually, you can get this from www.annualcreditreport.com, this won't include your credit score but it will let you see what banks see when they run your credit report. In addition you should check it over for any errors or possible identity theft. If there are errors you need to file a claim with the credit agency IMMEDIATELY. (edit from JoeT - with 3 agencies to choose from, you can alternate during the year to pull a different report every 4 months. A couple, every 2.) Here are some resources you can read up on: Improve your FICO Credit Score Top 5 Credit Misconceptions 9 fast fixes for your credit scores\"" }, { "docid": "215180", "title": "", "text": "First and foremost you should do more research on credit cards and what everything means. As expressed by others the balance transfer fee is not what you think it is. Credit cards can be great, they can also quickly erode your credit score and your standing. So understanding the basics is VERY important. The credit card that is right for you should have the following criteria. The first two points should be straight forward, you should not have to pay a CC company for the privilege to use their card. They should pay you through perks and rewards. It should also be a CC that can be used for what you need it for. If you travel internationally a lot and the CC you choose only works within the US then what good is it? The third point is where you need to ask yourself what you do a lot and if a CC can offer rewards through travel miles, or cash back or other bonuses based on your lifestyle. The transfer fee is not what you think it is, people who already are carrying debt on another credit card and would like to transfer that debt to another credit card would be interested in finding a fee or a low %. People do this to get a batter rate or to get away from a bad credit card. If one charges 28% and another charges 13%, well it makes sense to transfer existing debt over to the 13% provided they don't crush you on fees. Since you have no credit card debt (assumption based on the fact you want to build your credit), you should ask yourself for what purpose and how often do you plan to use the credit card. Would this card be just for emergencies, and wont be used on daily purchases then a credit card that offers 3% cash back on gasoline purchases is not for you. If you however love to travel and plan to use your credit card for a lot of purchases OR have a few large purchases (insurance, tuition etc.) then get a credit card that provides rewards like miles. It really comes down to you and your situation. There are numerous websites dedicated to the best credit card for any situation. The final thing I will say is what I mentioned at the beginning, its important, CC's can be a tool to establish and improve your credit worthiness, they can also be a tool to destroy your credit worthiness, so be careful and make smart choices on what you use your card for. A credit score is like a mountain, it requires a slow and steady discipline to reach the top, but one misstep and that credit score can tumble quickly." }, { "docid": "49796", "title": "", "text": "I would not take any action with the check (neither return it nor cash it), but instead contact the bank. We live in the modern era where you can call someone on the phone or email them, and get nearly instant feedback. Use this to your advantage. Find out why they refunded you the money twice: was it an error on their part (in which case you just tear up the check or return it to them and be done with it)? Is it possible you're wrong about it being twice refunded (maybe the first check didn't go through properly or was only for half the amount, and you're just wrong)? Maybe they had some sort of guarantee that they failed to live up to and are correctly refunding you double your money. Probably the first, of course. But you should call them and ask, and verify what they want you to do, before you take any action - particularly one that costs you money. And certainly don't just cash the check; if it is a mistake, they'll be asking for that money back later, with interest, and be within their rights to do so." }, { "docid": "85144", "title": "", "text": "I would go to the bank and just express the concern that the check sent to you might not fully clear. You don't want to spend it until you're sure it cleared. I'd ask for a manager to tell you when it will clear, then confirm after that date that it's cleared, with the same guy. Perhaps someone in the industry can explain how long the bank has before deciding the check is bad. 10 days? 2 weeks? Really, it should either clear or bounce by the second night. I'd not risk doing this for anyone. Anyone I know personally can cash their own check, and I'd not get involved with anyone I don't know on a financial matter like this. EDIT - See Littleadv comment below. Good checks clear fast, a forged check has time for the victim to go to the bank and challenge the signature and cashing of the check. The victim can have 60 days to do this. That's the issue, I am wrong, the bank manager couldn't confirm the check was good so soon." }, { "docid": "462036", "title": "", "text": "\"This may be a bit advanced now, but once you start really working and get a place, I think this will apply more... Do I set up a bank account now? Yes. There is no reason not to. As an adult you will be using this much more than you think. Assuming you have a little money, you can walk in to any bank almost any day of the week and set up an account with them in very little time. Note that they may require you to be 18 if your parents won't be with you on the account. Otherwise, just ask any bank representative to help you do this. Just to be clear, if you can get a credit union account over a typical bank account, this is a great idea. Credit unions provide exactly the same financial services as a normal bank, but typically have variety of advantages over banks. Bank Account Parts Bank accounts typically have two parts, a checking account and a savings account. Your checking account typically is what you use for most day-to-day transactions and your savings account is generally used for, well, saving money. Having a bank account often gives you the following advantages: They give you an ability to store money without having large amounts of cash on hand. Once you start working regularly, you'll find you won't want to keep ~$600+ cash every two weeks in your wallet or apartment. They help you pay bills. When you set up your bank account, you will likely be able to get a Visa debit card which will process like a regular credit card but simply deduct funds from your checking account. You can use this card online to pay utilities (i.e. electricity and water), general bills (e.g. your cell phone and cable), purchase items (ex. at Amazon) or use it in stores to pay in lieu of cash. Be aware -- some banks will give you an ATM-only card before they send you the Visa debit card in the mail. This ATM-only card can only be used at ATMs as it's name implies. Similarly, if you can invest about ~$200 to build your credit, you can often get a deposit secured credit card attached to your account (basically a credit card where the bank keeps your money in case you can't pay your bill). If you treat this card with responsibility, you can eventually transition to an unsecured credit card. They save you hassles when cashing your check. If you don't have a bank where you can cash your check (e.g. you don't have an account), you will likely be charged check cashing fees (usually by places such as grocery stores or payday loan chains, or even other banks). Furthermore, if your check is over a certain amount, some places may refuse to cash your check period and a bank may be your only option. They give you a way to receive money electronically. The most common example of this is direct deposit. Many employers will send your money directly to your bank account instead of requiring you to cash a check. If they are prompt, this money gets to you faster and saves you trouble (on payday, you'll just receive a pay stub detailing your wages and the amount deposited rather than a check). Also, since you asked about taxes, you should know that when you do eventually file with the IRS, they have an option to receive your tax refund electronically as well (e.g. direct deposit into your bank account) and that can literally save you months in some cases depending on when you file your return and how many paper checks they have to process. Does it cost money to setup? It depends. Some banks have special offers, some don't. Most places will set up an account for free, but may require a minimum deposit to open the account (typically $50-$100). The Visa debit card mentioned above generally comes free. If you want a secured credit card as above, you will want about an additional $200 (so $250 - $300 total). Note that this is absolutely NOT required. You can exclusively use the Visa debit card above if you wish. Bank Account Fees Any fees charged when you have a bank account are usually minor anymore. Regardless, the bank will hand you a whole bunch of paperwork (mostly in legalese) detailing exactly how your account works. That said, the bank person helping set things up will cover what you need to know about keeping the account in plain English. The most common types of fee associated with a bank account are monthly maintenance fees and overdraft fees, but these aren't always necessarily charged. Likewise, there may be some other fees associated with the account but these vary from bank to bank. Monthly Maintenance Fees To give some examples... Overdraft Fees Overdraft fees are typically charged when you attempt to spend more money than you have in your bank account and the bank has to cover these charges. Overdraft fees typically apply to using paper checks (which it is unlikely you will be using), but not always. That said, it is very unlikely you will be charged overdraft fees for three reasons: Many banks have done away with these fees in lieu of other ways of generating revenue. Banks that still charge these fees usually have \"\"overdraft protection\"\" options for a little more money a month, effectively negating the possibility you will be charged these fees. The ability to deduct an amount of money from your checking account is now typically checked electronically before the payment is authorized. That is, using a Visa debit card, the card balance is checked immediately, and even when using paper check, most retailers have check scanning machines that do roughly the same thing. On a personal note, the bank that I have allows my account to be deducted below my checking account balance only if the payment is requested electronically (e.g. someone who has my card information charges me for a monthly service). In this case, the funds are simply listed in the negative and deducted from any amount I deposit till the proper amount is repaid (e.g. if I'm at -$25 dollars due to a charge when my account balance was $0 and then I deposit $100, my available balance will then be $75, not $100). Finally, per the comment by @Thebluefish, while I minimize the likelihood you will be charged overdraft fees, it is good to check into the exact circumstances under which you might be charged unexpectedly by your bank. Read the documentation they give you carefully, including any mailed updates, and you'll reduce the chance of receiving a nasty surprise. For reference, here are some of the fees charged by Bank of America. What about taxes? When you begin working, an employer will usually have you fill out a tax form such as a W-4 Employee's Withholding Allowance Certificate so that your employer can withhold the correct federal income tax from your wages. If they don't, then it is your responsibility to calculate and file your own income taxes (if you are self-employed, an independent contractor or paid under the table). If your employer is reputable, they will send you additional information (generally in February) you need to properly file your taxes prior to April 15th (the IRS tax deadline for most people). This additional information will likely be some variation of a W-2 Wage and Tax Statement or possibly a Form 1099-MISC. Do I have to worry about money in my bank account? Unless you have a significant amount in your bank savings account earning interest (see \"\"Should I save for the future?\"\" below), you won't have to pay any sort of tax on money in your bank account. If you do earn enough taxable interest, the bank will send you the proper forms to file your taxes. How do I file taxes? While it won't apply till next year, you will likely be able to fill out a Form 1040EZ Income Tax Return for Single and Joint Filers With No Dependents, as long as you don't have any kids in the meantime. ;-) You will either mail in the paper form (available at your local IRS office, post office, public library, etc.) or file electronically. There will be a lot of information on how to do this when the time comes, so don't worry about details just yet. Assuming your all paid up on your taxes (very likely unless you get a good paying job and take a lot of deductions throughout the year on your W-4), you'll probably get money back from the IRS when you file your tax return. As I mentioned above, if you have a bank account, you can opt to have your refund money returned electronically and get it much sooner than if you didn't have a bank account (again, possibly saving you literal months of waiting). Should I save for my future? If so, how much? Any good articles? Yes, you should save for the future, and start as soon as possible. It's outside the scope of this answer, but listen to your Economics professor talk about compound interest. In short, the later you start saving, the less money you have when you retire. Not that it makes much difference now, but you have to think that over 45 years of working (age 20-65), you likely have to have enough money for another 20+ years of not working (65-85+). So if you want $25,000 a year for retirement, you need to make ~$50,000 - $75,000 a year between your job and any financial instruments you have (savings account, stocks, bonds, CDs, mutual funds, IRAs, job retirement benefits, etc.) Where you should stick money your money is a complicated question which you can investigate at length as you get older. Personally, though, I would recommend some combination of IRA (Individual Retirement Account), long term mutual funds, and some sort of savings bonds. There is a metric ton of information regarding financial planning, but you can always read something like Investing For Dummies or you can try the Motley Fool's How To Invest (online and highly recommended). But I'm Only 17... So what should you do now? Budget. Sounds dumb, but just look at your basic expenses and total them all up (rent, utilities, phone, cable, food, gas, other costs) and divide by two. Out of each paycheck, this is how much money you need to save not to go into debt. Try to save a little each month. $50 - $100 a month is a good starting amount if you can swing it. You can always try to save more later. Invest early. You may not get great returns, but you don't need much money to start investing. Often you can get started with as little as $20 - $100. You'll have to do research but it is possible. Put money in your savings account. Checking accounts do not typically earn interest but money in savings accounts often do (that is, the bank will actually add money to your savings assuming you leave it in there long enough). Unfortunately, this rate of interest is only about 3.5% on average, which for most people means they don't get rich off it. You have to have a significant amount of money ($5,000+) to see even modest improvements in your savings account balance each month. But still, you may eventually get there. Get into the habit of putting money places that make you money in the long run. Don't go into debt. Don't get payday loans, pawn items, or abuse credit cards. Besides wrecking your credit, even a small amount of debt ($500+) can be very hard to break out of if you don't have a great paying job and can even make you homeless (no rent means no apartment). Remember, be financially responsible -- but assuming your parents aren't totally tight with money, don't be afraid to ask for cash when you really need it. This is a much better option than borrowing from some place that charges outrageous interest or making your payments late. Have an emergency account. As already mentioned in another excellent answer, you need to have money to \"\"smooth things out\"\" when you encounter unexpected events (your employer has trouble with your check, you have to pay for some sort of repair bill, you use more gas in your car in a month than normal, etc.) Anywhere from $200 - $2000+ should do it, but ideally you should have at least enough to cover a month of basic expenses. Build good credit. Avoid the temptation to get a lot of credit cards, even if stores and banks are dying to give them to you. You really only need one to build good credit (preferably a secured one from your bank, as mentioned above). Never charge more than you can pay off in a single month. Charging, then paying that amount off before the due date on your next statement, will help your credit immensely. Likewise, pay attention to your rent, utilities and monthly services (cell phone, cable, etc.). Even though these seem like options you can put off (\"\"Oh my electric bill is only $40? I'll pay that next month...\"\") late payments on all of these can negatively affect your credit score, which you will need later to get good loans and buy a house. Get health insurance. Now that the Affordable Care Act (ACA a.k.a Obamacare) has been enacted, it is now simpler to get health insurance, and it is actually required you have some. Hopefully, your employer will offer health coverage, you can find reasonably priced coverage on your own, or you live in a state with a health exchange. Even if you can't otherwise get/afford insurance, you may qualify for some sort of state coverage depending on income. If you don't have some sort of health insurance (private or otherwise), the IRS can potentially fine you when you file your taxes. Not to be too scary, but the fine as currently proposed is jumping up to about $700 for individuals in 2016 or so. So... even if you don't grab health insurance (which you absolutely should), you need to save about $60 a month, even if just for the fine. This answer turned out a bit longer than intended, but hopefully it will help you a little bit. Welcome to the wonderful world of adult financial responsibility. :-)\"" }, { "docid": "72189", "title": "", "text": "Why do people talk about stock that pay high dividends? Traditionally people who buy dividend stocks are looking for income from their investments. Most dividend stock companies pay out dividends every quarter ( every 90 days). If set up properly an investor can receive a dividend check every month, every week or as often as they have enough money to stagger the ex-dates. There is a difference in high $$ amount of the dividend and the yield. A $1/share dividend payout may sound good up front, but... how much is that stock costing you? If the stock cost you $100/share, then you are getting 1% yield. If the stock cost you $10/share, you are getting 10% yield. There are a lot of factors that come into play when investing in dividend stocks for cash flow. Keep in mind why are you investing in the first place. Growth or cash flow. Arrange your investing around your major investment goals. Don't chase big dollar dividend checks, do your research and follow a proven investment plan to reach your goals safely." }, { "docid": "444543", "title": "", "text": "Debit cards can be riskier than credit cards. That's why I personally avoid debit cards unless I have a very good reason to go that direction (e.g. HSA accounts). To explain the risk, consider what happens if someone steals the card or number and starts using it: Credit card: You get a big bill, which you dispute and eventually get dismissed. Debit card: Your bank account balance drops, you don't have access to cash, and your checks start bouncing and you rack up bounced check charges with your bank and stores where you write checks. Eventually, you convince the bank it was fraud and they refund the money to your account. The big difference is that while it is going on you are out the money with a debit card, and with a credit card the BANK is out the money. The above scenario happened to my brother and it wasn't pretty. He was having to borrow money to pay his rent and groceries while the bank sorted it out." }, { "docid": "500403", "title": "", "text": "Not illegal. With respect to littleadv response, the printing of a check isn't illegal. I can order checks from cheap check printers, and they have no relationship to any bank, so long as they have my routing number and checking account number, they print. Years ago (25+) I wrote my account details on a shirt in protest to owing the IRS money, and my bank cashed it. They charged a penalty of some nominal amount, $20 or so for 'non-standard check format' or something like that. But, in fact, stupid young person rants aside, you may write a check out by hand on a piece of paper and it should clear. The missing factor is the magnetic ink. But, I often see a regular check with a strip taped to the bottom when the mag strip fails, proving that bad ink will not prevent a check from clearing. So long as the person trying to send you the funds isn't going to dispute the transaction (and the check is made out to you, so I suppose they couldn't even do that) this process should be simple. I see little to no risk so long as the image isn't intercepted along the way." } ]

[ { "docid": "213331", "title": "", "text": "\"Your friend probably cannot deposit the check to your U.S. bank account. U.S. banks that I've worked with will not accept a deposit from someone who is not an owner of the account. I don't know why not. If some stranger wants to make unauthorized deposits to my account, why should I object? But that's the common rule. You could endorse the check, your friend could then deposit it to his own account or cash it, and then transfer the money to you in a variety of ways. But I think it would be easier to just deposit the check in your account wherever it is you live. Most banks have no problem with depositing a foreign check. There may be a fairly long delay before you can get access to the money while the check clears through the system. I don't know exactly what you mean by a \"\"prize check\"\", but assuming that this is taxable income, yes, I assume the U.S. government would want their hard-earned share of your money. These days you can pay U.S. taxes on-line if you have a credit card. If you have not already paid U.S. taxes for the year, you should make an \"\"estimated payment\"\". i.e. you can't wait until April 15 of the next year, you have to pay most or all of the taxes you will owe in the calendar year you earned it.\"" } ]

[ { "docid": "533933", "title": "", "text": "My view is from the Netherlands, a EU country. Con: Credit cards are more risky. If someone finds your card, they can use it for online purchases without knowing any PIN, just by entering the card number, expiration date, and security code on the back. Worse, sometimes that information is stored in databases, and those get stolen by hackers! Also, you can have agreed to do periodic payments on some website and forgot about them, stopped using the service, and be surprised about the charge later. Debit cards usually need some kind of device that requires your PIN to do online payments (the ones I have in the Netherlands do, anyway), and automated periodic payments are authorized at your bank where you can get an overview of the currently active ones. Con: Banks get a percentage of each credit card payment. Unlike debit cards where companies usually pay a tiny fixed fee for each transaction (of, say, half a cent), credit card payments usually cost them a percentage and it comes to much more, a significant part of the profit margin. I feel this is just wrong. Con: automatic monthly payment can come at an unexpected moment With debit cards, the amount is withdrawn immediately and if the money isn't there, you get an error message allowing you to pay some other way (credit card after all, other bank account, cash, etc). When a recent monthly payment from my credit card was due to be charged from my bank account recently, someone else had been paid from it earlier that day and the money wasn't there. So I had to pay interest, on something I bought weeks ago... Pro: Credit cards apparently have some kind of insurance. I've never used this and don't know how it works, but apparently you can get your money back easily after fraudulent charges. Pro: Credit cards can be more easily used internationally for online purchases I don't know how it is with Visa or MC-issued debit cards, but many US sites accept only cards that have number/expiration date/security code and thus my normal bank account debit card isn't useable. Conclusion: definitely have one, but only use it when absolutely necessary." }, { "docid": "570415", "title": "", "text": "\"So either scenario has about $10K upfront costs (either realtor/selling expenses or fixing up for rental). Furthermore, I'm sure that the buyers would want you to fix all these things anyway, or reduce the price accordingly, but let's ignore this. Let's also ignore the remaining mortgage, since it looks like you can comfortably pay it off. Assuming 10% property management and 10% average vacancy (check your market), and rental price at $1000 - you end up with these numbers: I took very conservative estimates both on the rent (lower than you expect) and the maintenance expense (although on average over the years ,since you need to have some reserves, this is probably quite reasonable). You end up with 2.7% ROI, which is not a lot for a rental. The rule of thumb your wife mentioned (1% of cash equity) is indeed usually for ROI of leveraged rental purchase. However, if rental prices in your area are rising, as it sounds like they are, you may end up there quite soon anyway. The downside is that the money is locked in. If you're confident in your ability to rent and are not loosing the tax benefit of selling since it sounds like you've not appreciated, you may take out some cash through a cash-out refi. To keep cash-flow near-0, you need to cash out so that the payments would be at or less than the $3200/year (i.e.: $266/month). That would make about $50K at 30/yr fixed 5% loan. What's best is up to you to decide, of course. Check whether \"\"you can always sell\"\" holds for you. I.e.: how stable is the market, what happens if one or two large employers disappear, etc.\"" }, { "docid": "119416", "title": "", "text": "\"I think you misunderstand the purpose of the liability account. I would suggest you review the standard accounting model, but to give you a brief overview: Income and expenses are money coming into and out of your possession. They are the pipes flowing into and out of your \"\"box\"\". Inside your box, you have assets (bank, savings, cash, etc) and liabilities (credit cards, unpaid debts, etc). Money can flow into and out of either asset or liability accounts, for example: deposit a payment (income to asset), buy office supplies with cash (asset to expense), pay a bill with credit card (liability to expense), customer pays one of your debts directly (income to liability). Paying off a debt with an asset does not affect your overall net worth, so paying a check to your credit card bill (asset to liability) doesn't decrease your total balance, it merely moves the value from one bucket to another. Now to your question: Mandatory payments, such as taxes or insurance (or for that matter, utilities, rent, food- all things that \"\"must\"\" be bought occasionally) are not liabilities, instead they are all expenses. They might be paid FROM a liability account, if they are paid on credit for example, but the money still flows from liability to expense. In my own records I have Expense:Taxes and Expense:Insurance, with sub-accounts in each. Where the money comes from depends entirely on how I pay my bills, whether from cash or banks (asset) or whether it's a charge (liability). Sometimes you receive payments back from an insurance company. I find that rather than treating insurance premiums as a positive balance in a liability (with eventual payments as debits to the liability account), it is better to treat any payment from the insurance as income. Hope that helps!\"" }, { "docid": "451692", "title": "", "text": "I can't immediately think of a reason to keep your paycheck and spending account separate, unless it be because you want to keep your savings in a money market or savings account and you deposit your paycheck into a checking account. However, I do have one reason from my experience to keep the bulk of your savings away from accounts that you transfer stuff out of. I used to keep all my cash savings in an account from which I transferred money into my brokerage account (my paycheck was also deposited there). A couple of years back a state that I haven't lived in since I was a child took $40,000 out of my account. The broker mistakenly told the state I lived there and the state made some mistakes about how much tax I would owe. Without either one telling me, the state helped themselves to my checking account to cover the bill. When I called, both acknowledged that they were wrong, but it still took a long time (many months) and lots of letters and threats (I was close to paying a lawyer) before they returned my money. It was worse because this was my savings for a down payment on a home and having it taken and not returned affected my ability to buy the house I wanted. If I hadn't had my money in that account, they would have tried to garnish my wages, and would have immediately stopped their attempt once they found out they were in the wrong. Now I keep cash savings in an account that I never pay taxes out of and do not use to transfer money directly to any broker or anyone who might give my account number to an inept government." }, { "docid": "561123", "title": "", "text": "\"While you would probably not use your ATM card to buy a $1M worth mansion, I've heard urban legends about people who bought a house on a credit card. While can't say its reliable, I wouldn't be surprised that some have actual factual basis. I myself had put a car down-payment on my credit card, and had I paid the sticker price, the dealer would definitely have no problem with putting the whole car on the credit card (and my limits would allow it, even for a luxury brand). The instruments are the same. There's nothing special you need to have to pay a million dollars. You just write a lot of zeroes on your check, but you don't need a special check for that. Large amounts of money are transferred electronically (wire-transfers), which is also something that \"\"regular\"\" people do once or twice in their lives. What might be different is the way these purchases are financed. Rich people are not necessarily rich with cash. Most likely, they're rich with equity: own something that's worth a lot. In this case, instead of a mortgage secured by the house, they can take a loan secured by the stocks they own. This way, they don't actually cash out of the investment, yet get cash from its value. It is similarly to what we, regular mortals, do with our equity in primary residence and HELOCs. So it is not at all uncommon that a billionaire will in fact have tons of money owed in loans. Why? Because the billions owned are owned through stock valuation, and the cash used is basically a loan secured by these stocks. It might happen that the stocks securing the loans become worthless, and that will definitely be a problem both to the (now ex-)billionaire and the bank. But until then, they can get cash from their investment without cashing out and without paying taxes. And if they're lucky enough to die before they need to repay the loans - they saved tons on money on taxes.\"" }, { "docid": "188167", "title": "", "text": "\"Do not use a shared bank account. One of you can cash/deposit the check in your personal account and then either pay the others in the group cash or write them a check. You open yourself up to many, many problems sharing a bank account and/or money. Treat it like a business as far as income goes, but I would not recommend any type of formal business, LLC, partnership, sole proprietorship, etc. For federal taxes, you just keep track of how much \"\"you\"\" personally are paid and report that at the end of the year as income, most likely on a 1040EZ 1040SE, along with any other income you have.\"" }, { "docid": "444543", "title": "", "text": "Debit cards can be riskier than credit cards. That's why I personally avoid debit cards unless I have a very good reason to go that direction (e.g. HSA accounts). To explain the risk, consider what happens if someone steals the card or number and starts using it: Credit card: You get a big bill, which you dispute and eventually get dismissed. Debit card: Your bank account balance drops, you don't have access to cash, and your checks start bouncing and you rack up bounced check charges with your bank and stores where you write checks. Eventually, you convince the bank it was fraud and they refund the money to your account. The big difference is that while it is going on you are out the money with a debit card, and with a credit card the BANK is out the money. The above scenario happened to my brother and it wasn't pretty. He was having to borrow money to pay his rent and groceries while the bank sorted it out." }, { "docid": "44594", "title": "", "text": "\"First off, you generally want to park your emergency fund somewhere that is \"\"safe\"\", meaning something that is not subject to market fluctuations. Your emergency fund is something you need to be able to count on when times are tough! That rules out things like stock market investments. Secondly, you need to think about how quickly you will need access to the money. If you have an emergency, odds are you don't want to be waiting around for weeks/months/years for the money to become available. This rules out most fixed-term investments (Bonds, traditional CDs, etc). If you are concerned that you will need near-instant access to your emergency money, then you probably want to keep it in a Savings or Money Market Account at the same bank as your checking account. Most banks will let you transfer money between local accounts instantly. Unfortunately, your local bank probably has pitiful interest rates for the Savings/MMA, far below the inflation rate. This means your money will slowly lose value over time. Be prepared to keep contributing to it! For most people, being able to draw the cash from your fund within a few days (<1 week) is sufficient. Worst case, you charge something on your credit card, and then pay down the card when the emergency fund withdrawal arrives. If \"\"money within a few days\"\" is okay for you, there are a few options: Money Market (Mutual) Funds (not to be confused with a Money Market Account) - This is the traditional place to keep an emergency fund. These are investment funds you can buy with a brokerage account. An example of such a fund would be Fidelity Cash Reserves. MMFs are not FDIC insured, so they are not exactly zero risk. However, they are considered extremely safe. They almost never go down in value (only a few times in the past few decades), and when they have, the fund manager or the Federal Govt stepped in to restore the value. They usually offer slightly better return than a local savings account, and are available in taxable and non-taxable varieties. Online High-Yield Savings or Money Market Account - These are a relatively new invention. It's basically a the same thing as what your local bank offers, but it's online-only. No local branch means low overhead, so they offer higher interest rates (2.0% vs 0.5% for your local bank). Some of them used to be over 5% before the economy tanked. Like your local bank, it is FDIC insured. One bit of caution: Some of these accounts have become \"\"gimmicky\"\" lately. They have started to do things like promo rates for a few months, only offering the high interest rate on the first few $K deposited, limiting the amount that can be withdrawn, etc. Be sure to read the details before you open an account! No-Penalty CDs - Certificates of Deposit usually offer a better rate than a Savings Account, but your money is locked up until the CD term is up (e.g. 36 months). If you need to cash out before then, you pay a penalty. Some banks have begun to offer CDs that you can cash out with no penalty at all. These can offer better rates than the savings account. Make sure it really is no-penalty though. Also watch what your options are for slowly adding money over time. This can be an issue if you want to deposit $100 from every paycheck. Rewards Checking Accounts - These are checking accounts that will pay a relatively high interest rate (3% or more) provided you generate enough activity. Most of them will have requirements like you must have direct deposit setup with them, and you must do a minimum number of debit card transactions from the account per month. If you can stay on top of the requirements, these can be a great deal. If you don't stay on top of it, your interest rate usually drops back to something pitiful, though. Personally, we use the Online High-Yield Savings Account for our emergency fund. I'm not going to make a specific recommendation as to which bank to use. The best deal changes almost week to week. Instead, I will say to check out Bankrate.com for a list of savings accounts and CDs that you can sort. The Bank Deals blog is a good place to follow rate changes.\"" }, { "docid": "108739", "title": "", "text": "You can pay with a cashiers check or personal check. You can even pay cash, or combine payment methods. However, in the USA if you give the dealership $10,000 or more in actual cash, they will be required to fill out a form 8300 with the IRS." }, { "docid": "215180", "title": "", "text": "First and foremost you should do more research on credit cards and what everything means. As expressed by others the balance transfer fee is not what you think it is. Credit cards can be great, they can also quickly erode your credit score and your standing. So understanding the basics is VERY important. The credit card that is right for you should have the following criteria. The first two points should be straight forward, you should not have to pay a CC company for the privilege to use their card. They should pay you through perks and rewards. It should also be a CC that can be used for what you need it for. If you travel internationally a lot and the CC you choose only works within the US then what good is it? The third point is where you need to ask yourself what you do a lot and if a CC can offer rewards through travel miles, or cash back or other bonuses based on your lifestyle. The transfer fee is not what you think it is, people who already are carrying debt on another credit card and would like to transfer that debt to another credit card would be interested in finding a fee or a low %. People do this to get a batter rate or to get away from a bad credit card. If one charges 28% and another charges 13%, well it makes sense to transfer existing debt over to the 13% provided they don't crush you on fees. Since you have no credit card debt (assumption based on the fact you want to build your credit), you should ask yourself for what purpose and how often do you plan to use the credit card. Would this card be just for emergencies, and wont be used on daily purchases then a credit card that offers 3% cash back on gasoline purchases is not for you. If you however love to travel and plan to use your credit card for a lot of purchases OR have a few large purchases (insurance, tuition etc.) then get a credit card that provides rewards like miles. It really comes down to you and your situation. There are numerous websites dedicated to the best credit card for any situation. The final thing I will say is what I mentioned at the beginning, its important, CC's can be a tool to establish and improve your credit worthiness, they can also be a tool to destroy your credit worthiness, so be careful and make smart choices on what you use your card for. A credit score is like a mountain, it requires a slow and steady discipline to reach the top, but one misstep and that credit score can tumble quickly." }, { "docid": "346042", "title": "", "text": "When you pay cash for a car, you don't always necessarily need to pay cash. You just aren't using credit or a loan is all. A few options you have are: Obviously no dealer expects anyone to just have the cash laying around for a car worth a few thousand dollars, nor would you bother going to your bank or credit union for the cash. You can simply get a cashier's check made out for the amount. Note that dealers may not accept personal checks as they may bounce. After negotiations at the dealer, you would explain you're paying cash, likely pay a deposit (depending on the price of the car, but $500 would probably be enough. Again, the deposit can be a check or bank deposit), and then come back later on with a cashier's check, or deposit into a bank account. You would be able to do this later that day or within a few days, but since you've purchased a new car you would probably want to return ASAP!" }, { "docid": "589859", "title": "", "text": "A central bank typically introduces new money into the system by printing new money to purchase items from member banks. The central bank can purchase whatever it chooses. It typically purchases government bonds but the Federal Reserve purchased mortgage-backed-securities (MBS) during the 2008 panic since the FED was the only one willing to pay full price for MBS after the crash of 2008. The bank, upon receipt of the new money, can loan the money out. A minimum reserve ratio specifies how much money the bank has to keep on hand. A reserve ratio of 10% means the bank must have $10 for every $100 in loans. As an example, let's say the FED prints up some new money to purchase some office desks from a member bank. It prints $10,000 to purchase some desks. The bank receives $10,000. It can create up to $100,000 in loans without exceeding the 10% minimum reserve ratio requirement. How would it do so? A customer would come to the bank asking for a $100,000 loan. The bank would create an account for the customer and credit $100,000 to the customer's account. There is a problem, however. The customer borrowed the money to buy a boat so the customer writes a check for $100,000 to the boat company. The boat company attempts to deposit the $100,000 check into the boat company's bank. The boat company's bank will ask the originating bank for $100,000 in cash. The originating bank only has $10,000 in cash on hand so this demand will immediately bankrupt the originating bank. So what actually happens? The originating bank actually only loans out reserves * (1 - minimum reserve ratio) so it can meet demands for the loans it originates. In our example the bank that received the initial $10,000 from the FED will only loan out $10,000 * (1-0.1) = $9,000. This allows the bank to cover checks written by the person who borrowed the $9,000. The reserve ratio for the bank is now $1,000/$9,000 which is 11% and is over the minimum reserve requirement. The borrower makes a purchase with the borrowed $9,000 and the seller deposits the $9,000 in his bank. The bank that receives that $9,000 now has an additional $9,000 in reserves which it will use to create loans of $9,000 * (1 - 0.1) = $8100. This continual fractional reserve money creation process will continue across the entire banking system resulting in $100,000 of new money created from $10,000. This process is explained very well here." }, { "docid": "163904", "title": "", "text": "\"The answers here are all correct. This is 100% scam, beyond any reasonable doubt. Don't fall for it. However, I felt it valuable to explain what would happen were you to fall for this. It's not all that hard to understand, but it involves understanding some of the time delays that exist in modern banking today. The most important thing to understand is that depositing a check does not actually put dollars in your account, even though it appears to. A check is not legal tender for debts public and private. It's a piece of paper known as a \"\"bill of exchange.\"\" It's an authorization for a payee (you), to request that their bank pay you the amount on the check. A transaction made with a check does not actually draw to a close until your bank and their bank communicate and cause the actual transfer of funds to take place. This process is called \"\"clearing\"\" the check. Despite living in the modern times, this process is slow. It can take 7-10 days to clear a check (especially if it is an international bank). This is not good for the banking business. You can imagine how difficult it would be to tell a poor client, who is living paycheck to paycheck, that he can't have his pay until the check clears a week later. Banks have an interest in hiding this annoying feature of the modern banking system, so they do. When you deposit a check, the bank will typically advance you the money (an interest free loan, in effect) while the check \"\"floats\"\" (i.e. until it clears). This creates the illusion that the money is actually in your account for most intents and purposes. (presumably a bank would distinguish between the floating check and a cleared check if you tried to close out your account, but otherwise it looks and feels like the money is in your hands). Of course, if the check is dishonored (because the payer had insufficient funds, or the account simply did not exist), your bank will not get the money. At this moment, they will cancel any advances you received and notify you that the check bounced. Again, this happens 7-10 days later. The general pattern of this scam is that they will pay you by a method which clears slowly, like a check. They will then ask you to withdraw the money using a faster clearing method (like a wire transfer or withdrawing the cash). Typically they will be encouraging you to move quickly (they are on a timetable... when their check bounces, the game is up!) At this time, it will appear as though the account has a positive balance, but in fact it has a negative balance plus an advance on the check. This looks great until 7-10 days later, when the check bounces. At that time, the bank will cancel the advance, and reality will set in. You will now have an open bank account, legally opened by you in your own name, which is deeply in debt. Meanwhile, the scammer walks away with all the money that you sent them (which cleared quickly). There are many variants which can hide the details. Some can play games with check kiting to try to make your first check clear (then try to rope you in for a more painful hit). Some will change the instruments they use (checks are the easy ones, so they're simply most common). Don't try to think \"\"maybe this one is legit.\"\" These scammers literally make a living off of making shady transactions look legit. Things I would recommend looking out for:\"" }, { "docid": "49796", "title": "", "text": "I would not take any action with the check (neither return it nor cash it), but instead contact the bank. We live in the modern era where you can call someone on the phone or email them, and get nearly instant feedback. Use this to your advantage. Find out why they refunded you the money twice: was it an error on their part (in which case you just tear up the check or return it to them and be done with it)? Is it possible you're wrong about it being twice refunded (maybe the first check didn't go through properly or was only for half the amount, and you're just wrong)? Maybe they had some sort of guarantee that they failed to live up to and are correctly refunding you double your money. Probably the first, of course. But you should call them and ask, and verify what they want you to do, before you take any action - particularly one that costs you money. And certainly don't just cash the check; if it is a mistake, they'll be asking for that money back later, with interest, and be within their rights to do so." }, { "docid": "185104", "title": "", "text": "The United States Federal Reserve has decided that interest rates should be low. (They think it may help the economy. The details matter little here though.) It will enforce this low rate by buying Treasury bonds at this very low interest rate. (Bonds are future money, so this means they pay a lot of money up front, for very little interest in the future. The Fed will pay more than anyone who offers less money up front, so they can set the price as long as they're willing to buy.) At the end of the day, Treasury bonds pay nearly no interest. Since there's little money to be made with Treasuries, people who want better-than-zero returns will bid up the current-price of any other bonds or similar loan-like instruments to get what whatever rate of return that they can. There's really no more than one price for money; you can think of the price of those bonds as basically (Treasury rate + some modifier based on the risk) percent. I realize thinking about bond prices is weird and different than other prices (you're measuring future-money using present-money and it's easy to be confused) and assure you it ultimately makes sense :) Anyway. Your savings account money has to compete with everyone else willing to lend money to banks. Everyone-else lends money for peanuts, so you get peanuts on your savings account too. Your banking is probably worth more to your bank on account of your check-card payment processing fees (collected from the merchant) than from the money they make lending out your savings (notice how many places have promotional rates if you make your direct deposits or use your check card to make a purchase N times a month). In Europe, it's similar, except you've got a different central bank. If Europe's bank operated radically differently for an extended period of time, you'd expect to see a difference in the exchange rates which would ultimately make the returns from investing in those currencies pretty similar as well. Such a change may show up domestically as inflation in the country with the loose-money policy, and internationally as weakness against other currencies. There's really only one price for money around the entire world. Any difference boils down to a difference in (perceived) risk." }, { "docid": "289177", "title": "", "text": "\"Some reasons I take low-interest loans are: Leverage. If the loan's rate is low enough, then I can invest the cash in something fairly low-risk, and make more money than I pay in interest. The interest rate has to be pretty low, say below 4% or so. My auto loan is low enough and my home loan is low enough if you count the tax deduction. Obviously you have to invest in something riskier than cash here, though. And consider taxes, which lower the rate you're paying on a home loan, but also lower the returns you're getting on any bonds you invest in. Liquidity and flexibility. If I have N thousands in cash instead of tied up in my house, then I could use that money to survive many months of unemployment for example, or handle any other emergency. But if you become unemployed or have some other emergency, it will be too late to get a home loan. Credit rating. It's good to use some credit, just so you can get more if you need it. But this isn't a reason to take a particular loan, just a reason to have some kind of credit card or loan. Budgeting. When budgeting, it's best to think of expenses such as cars and houses in terms of a monthly cost, so you can see how they nudge out or allow other spending. (When negotiating with a car dealer, of course, use total cost so you don't get screwed by him messing with interest rates.) I wouldn't take a loan just to ease the budgeting (you can always manually \"\"amortize\"\") but it's a nice side effect. For credit cards, there are more buyer protections and you get a nice transaction log (again useful in budgeting). Also you don't have to carry around cash, or worry about your checking account balance. So credit cards are just convenient. But even though my card has a very low rate, it isn't low enough that I want to keep a balance month-to-month, so I don't use credit cards to actually borrow money.\"" }, { "docid": "286942", "title": "", "text": "In order for you to send me check for $10 you would have to know my banking details. You would have to know the bank number and the account number. Giving you this information does put my funds at risk. While you would know this for a small circle of friends you wouldn't know this for everybody. My parents have 19 grand kids. They would have to know the banking account information for all 19. While my parents can be trusted with this information their grand children would have to make sure that they had the updated information. Instead they just mail them a check or give them a check on their birthday or other special occasion. Most of the time that money needs to be transferred it is not important that it immediately be converted to cash. The question you referenced is about how the Unbanked function: The unbanked are adults who do not have their own bank accounts. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available. These people need check cashing places to get money. They don't have a bank account. There is no place for you to electronically send money. Every source of income for them has to start as cash, or be converted to cash. All spending they do is by cash. If they need to pay by check they convert cash to a money order for a fee." }, { "docid": "292051", "title": "", "text": "\"Your first and second paragraphs are two different cases. Moving money between a checking account and a savings account will credit Cash and debit Cash, making a GL transaction unnecessary, unless the amounts in the two bank accounts are tracked as two separate GL accounts. You might have account 1001 (Cash-Checking) and account 1002 (Cash-Savings). In that case, a movement of money between these two accounts should be tracked by a transaction between the GL accounts; credit checking, debit savings. It won't affect your balance sheet, but depending on your definition of liquidity of assets it might affect working capital on your statement of cash flows (if you consider the savings account \"\"illiquid\"\" then money moved to it is a decrease in working capital). Basically, what you are creating with your \"\"store credit\"\" accounts for each client is an \"\"unearned revenue\"\" account. When clients pay you cash for work you haven't done yet, or you refund money for a return as \"\"store credit\"\" instead of cash, the credit is a liability account, balancing an increase in cash, inventory, or an expense (if you're giving credit for free, perhaps due to a mistake on your part, you would debit a \"\"Store Credit Expense\"\" account). This can be split out client-by-client in the GL if you wish, avoiding the need for a holding account. The way you want to do it, you'd have a \"\"Client Holding\"\" account. It must be unique in the GL and to the client, and yes, it is a liability account. To transfer to holding, you simply debit Unearned Revenue and credit Client Holding, logging the transaction as \"\"transfer of client store credit\"\" or similar (moving liability to liability; balance sheet doesn't change). Then, as you sell goods or services to the client, you debit Accounts Receivable and credit Revenue, then to record the payment you credit AR and debit Client Holding (up to its current credit balance, after which the client pays you Cash and you debit that, or the client still owes you). To zero out a remaining balance on the Holding account, debit Client Holding and credit Unearned Revenue. I don't think the Holding account, the way you want to use it, is a good idea. If you want to track each customer's store credit balance with a GL account, then create specialized Unearned Revenue accounts for each client who gets a store credit, named for the client and containing their balance (zero or otherwise). If you don't care about it at the GL level, then pool it in one Unearned Revenue account (have one Store Credit account if you must), and track individual amounts off the books.\"" }, { "docid": "240074", "title": "", "text": "\"(This answer is based on the US banking system; if that isn't where you are, please edit appropriately.) There are probably two places the thief could go to cash the check: Your bank The issuer's bank Third-party banks are unlikely to want to cash a check drawn on a different bank for a payee who isn't their customer. So notifying both of these banks would be a good start. Also, hopefully the thief does not look like you and won't be able to pass using your ID. The thief will also have to forge your endorsement on the check - if he goes to your bank, they can check it against your signature which they have on file, and hopefully it won't match. (The issuer's bank wouldn't notice that, of course, so read on.) Even if the check is cashed, you should ultimately be okay, as I understand it. The issuer of the check still owes you the money; he can't prove he's paid you until he has the cancelled check (or its image) showing your valid endorsement. So he needs to give you another check, eventually. (This assumes the check was payment for a debt of some kind; if it was a gift or some other sort of voluntary payment, he could at this point change his mind and decide not to pay you after all.) The issuer should be okay too. If the check is cashed and debited from his account, he should go to his bank and tell them the endorsement is forged. They may ask you to sign something where you state under penalty of perjury that the signature isn't yours. Then they will re-credit his account, so that he can pay you again. (Normally the bank that cashed the check will be on the hook for the loss; it was their responsibility to make sure they were paying the rightful payee, and they failed in that responsibility. Various procedural issues can shift that liability between banks, but ultimately it shouldn't be either customer who suffers unless someone did something really negligent, like not reporting the theft for months.) Obviously this would all be much simpler if the issuer can call his bank right away and stop payment. This can be done over the phone or online, so \"\"out of town\"\" shouldn't be an issue unless he is out in the woods or something. If he can talk to you, he can talk to them.\"" } ]

[ { "docid": "110848", "title": "", "text": "This question was asked three years ago, but now that it's 2017 there is actually a relatively easy, cheap and fast solution to at least the first half of your question. To cash the check: I've done this a half dozen times while abroad (from the US) without any problems." } ]

[ { "docid": "451692", "title": "", "text": "I can't immediately think of a reason to keep your paycheck and spending account separate, unless it be because you want to keep your savings in a money market or savings account and you deposit your paycheck into a checking account. However, I do have one reason from my experience to keep the bulk of your savings away from accounts that you transfer stuff out of. I used to keep all my cash savings in an account from which I transferred money into my brokerage account (my paycheck was also deposited there). A couple of years back a state that I haven't lived in since I was a child took $40,000 out of my account. The broker mistakenly told the state I lived there and the state made some mistakes about how much tax I would owe. Without either one telling me, the state helped themselves to my checking account to cover the bill. When I called, both acknowledged that they were wrong, but it still took a long time (many months) and lots of letters and threats (I was close to paying a lawyer) before they returned my money. It was worse because this was my savings for a down payment on a home and having it taken and not returned affected my ability to buy the house I wanted. If I hadn't had my money in that account, they would have tried to garnish my wages, and would have immediately stopped their attempt once they found out they were in the wrong. Now I keep cash savings in an account that I never pay taxes out of and do not use to transfer money directly to any broker or anyone who might give my account number to an inept government." }, { "docid": "119416", "title": "", "text": "\"I think you misunderstand the purpose of the liability account. I would suggest you review the standard accounting model, but to give you a brief overview: Income and expenses are money coming into and out of your possession. They are the pipes flowing into and out of your \"\"box\"\". Inside your box, you have assets (bank, savings, cash, etc) and liabilities (credit cards, unpaid debts, etc). Money can flow into and out of either asset or liability accounts, for example: deposit a payment (income to asset), buy office supplies with cash (asset to expense), pay a bill with credit card (liability to expense), customer pays one of your debts directly (income to liability). Paying off a debt with an asset does not affect your overall net worth, so paying a check to your credit card bill (asset to liability) doesn't decrease your total balance, it merely moves the value from one bucket to another. Now to your question: Mandatory payments, such as taxes or insurance (or for that matter, utilities, rent, food- all things that \"\"must\"\" be bought occasionally) are not liabilities, instead they are all expenses. They might be paid FROM a liability account, if they are paid on credit for example, but the money still flows from liability to expense. In my own records I have Expense:Taxes and Expense:Insurance, with sub-accounts in each. Where the money comes from depends entirely on how I pay my bills, whether from cash or banks (asset) or whether it's a charge (liability). Sometimes you receive payments back from an insurance company. I find that rather than treating insurance premiums as a positive balance in a liability (with eventual payments as debits to the liability account), it is better to treat any payment from the insurance as income. Hope that helps!\"" }, { "docid": "471872", "title": "", "text": "\"There are benefits associated with a cash only business (the link states a few). However checks made out to \"\"cash\"\" don't reap those benefits listed. For anyone on SE to say your barber hides revenue from the IRS would just be speculation. With that said there are a great number of disadvantages for a cash only business. And from my experience, a business that goes out of their way to take cash only can be a little suspicious. Luckily you are not committing any crimes or fraud by paying her cash.\"" }, { "docid": "72189", "title": "", "text": "Why do people talk about stock that pay high dividends? Traditionally people who buy dividend stocks are looking for income from their investments. Most dividend stock companies pay out dividends every quarter ( every 90 days). If set up properly an investor can receive a dividend check every month, every week or as often as they have enough money to stagger the ex-dates. There is a difference in high $$ amount of the dividend and the yield. A $1/share dividend payout may sound good up front, but... how much is that stock costing you? If the stock cost you $100/share, then you are getting 1% yield. If the stock cost you $10/share, you are getting 10% yield. There are a lot of factors that come into play when investing in dividend stocks for cash flow. Keep in mind why are you investing in the first place. Growth or cash flow. Arrange your investing around your major investment goals. Don't chase big dollar dividend checks, do your research and follow a proven investment plan to reach your goals safely." }, { "docid": "294097", "title": "", "text": "If it is your primary residence and you lived there continuously and for more than 2 years out of the last 5 - then you can exclude the gain under the IRC Sec. 121. In this case, you'll pay no taxes on your gain. If the property has been a rental or you haven't lived there long enough, the rules become more complicated but you may still be able to exclude some portion of the gain, even all of it, depends on the situation. So it doesn't look like 1031 exchange is good for you here, you don't want to carry excluded gain - you want to recognize it and get the tax benefit. However, refinancing after purchase with cash-out money affects the deductability of the loan interest. You can only deduct interest on money used to buy, not cash-out portion. I believe there's a period (60 days IIRC) during which you can do the cash-out refinance and still count it as purchase money, but check with a licensed tax advier (EA/CPA licensed in your State)." }, { "docid": "286942", "title": "", "text": "In order for you to send me check for $10 you would have to know my banking details. You would have to know the bank number and the account number. Giving you this information does put my funds at risk. While you would know this for a small circle of friends you wouldn't know this for everybody. My parents have 19 grand kids. They would have to know the banking account information for all 19. While my parents can be trusted with this information their grand children would have to make sure that they had the updated information. Instead they just mail them a check or give them a check on their birthday or other special occasion. Most of the time that money needs to be transferred it is not important that it immediately be converted to cash. The question you referenced is about how the Unbanked function: The unbanked are adults who do not have their own bank accounts. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available. These people need check cashing places to get money. They don't have a bank account. There is no place for you to electronically send money. Every source of income for them has to start as cash, or be converted to cash. All spending they do is by cash. If they need to pay by check they convert cash to a money order for a fee." }, { "docid": "444543", "title": "", "text": "Debit cards can be riskier than credit cards. That's why I personally avoid debit cards unless I have a very good reason to go that direction (e.g. HSA accounts). To explain the risk, consider what happens if someone steals the card or number and starts using it: Credit card: You get a big bill, which you dispute and eventually get dismissed. Debit card: Your bank account balance drops, you don't have access to cash, and your checks start bouncing and you rack up bounced check charges with your bank and stores where you write checks. Eventually, you convince the bank it was fraud and they refund the money to your account. The big difference is that while it is going on you are out the money with a debit card, and with a credit card the BANK is out the money. The above scenario happened to my brother and it wasn't pretty. He was having to borrow money to pay his rent and groceries while the bank sorted it out." }, { "docid": "116992", "title": "", "text": "\"There are several tactics you might employ to help the situation. You have two options, one is to increase your income, the other is to reduce your expenditure. Paying off debt will also help but that may not apply to you. Most people find it easier to reduce expenditure, so I will explain that first of all. Then make sure you track your actual expenditure agains the budget, check it daily and make sure it is accurate, if you spend some money you didn't budget for then mark that down and make sure you budget for it going forward. Most people are surprised at how much they are actually spending, especially on trivial things like coffee, lunch at work etc. You will then find you can start to reduce this expenditure, maybe by bringing lunch to work, skipping coffee every other day etc. By doing a budget you can reduce your expenditure and hopefully have some money left over to save - put a line in your budget marked savings (ideally on the day you get paid so you don't spend it)! If you ned to save $x by Y date then work out how much that works out in a month and put that into your budget, if you haven't got enough spare to do that then onto stage 2 With regards to increasing income, the obvious way is to do some overtime at work - can you do that? Alternatively you can get a part-time job, maybe a hobby that pays money? I personally enjoy building web-sites as a hobby and I get about $20 a month from advertising on those, it's not much but it adds up over time. Finally how to actually save, what methods are there? Lots of options here, personally I buy shares with my savings, making sure I pick stocks that are currently cheap - this is quite risky and may not suit you but it works for me as I don't sell the shares until I actually need the money. Other options are regular savings accounts that pay a bonus after you've had the money in for (usually) 12 months etc. They tend to pay a bonus at the end so you are incentivised to not touch your cash but you can get it out if you really need it. You can also work out how much \"\"spare\"\" cash you have monthly and then give yourself an \"\"allowance\"\" each month that you can spend on impulse items, but make sure you stick to that. Good luck!\"" }, { "docid": "322417", "title": "", "text": "\"Yes, they are, and you've experienced why. Generally speaking, stocks that pay dividends will be better investments than stocks that don't. Here's why: 1) They're actually making money. They can finagle balance sheets and news releases, but cash is cash, it tells no lies. They can't fake it. 2) There's less good they can do with that money than they say. When a business you own is making money, they can do two things with it: reinvest it into the company, or hand it over to you. All companies must reinvest to some degree, but only a few companies worth owning can find profitable ways of reinvesting all of it. Having to hand you, the owner, some of the earnings helps keep that money from leaking away on such \"\"necessities\"\" like corporate jets, expensive printer paper, or ill-conceived corporate buyouts. 3) It helps you not freak out. Markets go up, and markets go down. If you own a good company that's giving you a nice check every three months, it's a lot easier to not panic sell in a downturn. After all, they're handing you a nice check every three months, and checks are cash, and cash tells no lies. You know they're still a good company, and you can ride it out. 4) It helps others not freak out. See #3. That applies to everyone. That, in turn means market downturns weigh less heavily on companies paying solid dividends than on those that do not. 5) It gives you some of the reward of investing in good companies, without having to sell those companies. If you've got a piece of a good, solid, profitable, growing company, why on earth would you want to sell it? But you'd like to see some rewards from making that wise investment, wouldn't you? 6) Dividends can grow. Solid, growing companies produce more and more earnings. Which means they can hand you more and more cash via the dividend. Which means that if, say, they reliably raise dividends 10%/year, that measly 3% dividend turns into a 6% dividend seven years later (on your initial investment). At year 14, it's 12%. Year 21, 24%. See where this is going? Companies like that do exist, google \"\"Dividend Aristocrats\"\". 7) Dividends make growth less important. If you owned a company that paid you a 10% dividend every year, but never grew an inch, would you care? How about 5%, and it grows only slowly? You invest in companies, not dividends. You invest in companies to make money. Dividends are a useful tool when you invest -- to gauge company value, to smooth your ride, and to give you some of the profit of the business you own. They are, however, only part of the total return from investing -- as you found out.\"" }, { "docid": "85144", "title": "", "text": "I would go to the bank and just express the concern that the check sent to you might not fully clear. You don't want to spend it until you're sure it cleared. I'd ask for a manager to tell you when it will clear, then confirm after that date that it's cleared, with the same guy. Perhaps someone in the industry can explain how long the bank has before deciding the check is bad. 10 days? 2 weeks? Really, it should either clear or bounce by the second night. I'd not risk doing this for anyone. Anyone I know personally can cash their own check, and I'd not get involved with anyone I don't know on a financial matter like this. EDIT - See Littleadv comment below. Good checks clear fast, a forged check has time for the victim to go to the bank and challenge the signature and cashing of the check. The victim can have 60 days to do this. That's the issue, I am wrong, the bank manager couldn't confirm the check was good so soon." }, { "docid": "308380", "title": "", "text": "It depends how you do it. If you roll it from your 401k directly to a Roth then you will have to pay the taxes. The contributions to the 401k are tax deferred. Meaning you do not owe taxes on the money until you collect it. Roth contributions are post tax but the gains are not taxed so long as they are disbursed under acceptable conditions according to the regulations. If you roll it directly from the 401k to a regular tax deferred IRA you should be able to do that with out penalties or taxes. You will still have to pay the taxes at disbursement. If you have the money disbursed to you directly then you will have to pay the penalties, fees, and taxes. Your contributions to an IRA will then be subject to limitations based on the IRA. It will literally be exactly like you are taking money from your pocket to invest in the IRA. Your company should give you the option of a rollover check. This check will be made out to you but it will not be able to be deposited in a regular account or cashed. It will only be redeemable for deposit into a retirement account that meets the regulatory requirements of the 401k rollover criteria. I believe the check I received a few years ago was only good for 60 days. I recall that after 60 days that check was void and I would receive a standard disbursement and would be subject to fees and penalties. I am not sure if that was the policy of T.Rowe Price or if that is part of the regulation." }, { "docid": "69434", "title": "", "text": "\"When you buy a house, the real estate agent or title company normally draws up a big sheet with all the costs and payments involved. There are typically two columns: one for amounts paid to or paid by the seller, and another for amounts paid to or paid by the buyer. Who is responsible for what is a legal question: this is pretty fixed. But it's very common for the seller to agree to pay some portion of the buyer's closing costs. In any house sale I've ever been involved in, whether as buyer or seller, nobody bothers to say which costs the seller is agreeing to pay. Rather, the seller just agrees to a number. Then somewhere on the sheet of costs there will be a line that says \"\"closing costs paid by seller\"\" or some such wording, and then it shows a minus to the seller and a plus to the buyer. (Or something equivalent, depending on how the sheet is organized.) The amount is negotiated. When you make an offer, you'll say whatever numbers you are prepared to offer, like \"\"I offer to pay $100,000 for the house, seller to pay $3,000 of closing costs\"\". And whatever other conditions, seller to repair the leak in the roof, whatever. It makes sense for the seller to pick up some share of the closing costs, because the seller normally walks away with cash in hand while the buyer is struggling to come up with enough cash to make a down payment and pay all the closing costs, i.e. the seller probably can afford to give up some cash while the buyer may be struggling to come up with cash. The only costs I can think of that I've had before closing day are, (a) Earnest money. (b) Inspection. (c) Credit check or application fee to bank. Earnest money is applied to the purchase price at closing, so it's pretty much a moot point. The application fee is a potential deal-breaker. I've never heard of a seller agreeing to pay this, but I guess they could. But if you can't get the loan, you probably won't buy the house, so the seller would be out money for nothing. Everything else is normally paid on closing day. They total up all the costs and all the money floating around and at the end the seller gets one check that is the net of everything and the buyer writes one check that is the net of everything, and the realtor or title company deals with getting the money to the right people. So there's normally no issue of paying things as they come up. You do it all at once.\"" }, { "docid": "276831", "title": "", "text": "\"Instead of getting into complex economic theories, here are the few places I can tell you where the cash has disappeared to: 1. Apple - holding over 100b cash in their vault more than any banks have in their reserves in the world and more than enough to pay off all of the debts of the U.S. 2. Real Estates.........in developing countries, that is :p. You may keep hearing how real estates are de-valuing in the U.S., but in developing countries like the BRICs, they are going higher. Think Hong Kong, Tokyo, Beijing, Shanghai, etc. Yes, it's a proven bubble there. If you have access to their regional news, just listen to how many people in Asia have to borrow from loan sharks to keep their finances afloat. 3. Gold - go see for yourself on goldprice.org, that's where the wealthy individuals put their cash in the so-called \"\"safe haven\"\" next to shotguns. Yes, it's ridiculous and is totally out of anyone's league beyond basic things like air, water, and food. 4. Commodities (gas, food, basic materials) - enough said, check out your local gas pumps and grocery stores.\"" }, { "docid": "50000", "title": "", "text": "\"What is a good bank to use for storing my pay? Preferrably one that has free student accounts. Can I save money from my paychecks directly to a Canadian bank Otherwise, can I connect my bank account to my Canadian account online? Any (almost...) bank in the US has free college checking accounts. If the bank you entered doesn't - exit, and step into the one next door which most likely will. The big names - Wells Fargo, Bank Of America, Chase, Bank of the West, Union Bank, Citi etc - all have it. Also, check your local credit union. Do I need any ID to open a bank account? I have Canadian citizenship and a J-1 visa Bring your passport and a student card/driving license (usually 2 ID's required). What form of money should I take with me? Cash? Should I apply for a debit card? Can I use my Canadian credit card for purchasing anything in the states? (Canadian dollar is stronger than US dollar currently, so this could be to my advantage?) There's some fuss going on about debit cards right now. Some big banks (Bank of America, notably) decided to charge fees for using it. Check it, most of the banks are not charging fees, and as far as I know none of the credit unions are charging. So same thing - if they charge fees for debit card - step out and move on to the next one down the street. Using debit card is pretty convenient, cash is useful for small amount and in places that don't accept cards. If you're asking about how to move money from Canada - check with your local (Canadian) bank about the conversion rates and fees for transfers, check cashing, ATM, card swipes, etc - and see which one is best for you. When I moved large amounts of money across the border, I chose wire transfer because it was the cheapest, but for small amounts many times during the period of your stay it may be more expensive. You can definitely use your Canadian credit/debit card in the States, you'll be charged some fee by your credit card company, and of course the conversion rate. How much tax does I have to pay at the end of my internship? Let's assume one is earning $5,000 per month plus a one time $5,000 housing stipend, all before taxes. Will I be taxed again by the Canadian government? $5K for internship? Wow... You need to talk to a tax specialist, there's probably some treaty between the US and Canada on that, and keep in mind that the State of California taxes your income as well. What are some other tips I can use to save money in the California? California is a very big place. If you live in SF - you'll save a lot by using the MUNI, if your internship is in LA - consider buying an old clunker if you want to go somewhere. If you're in SD - just enjoy the weather, you won't get it in Canada. You'll probably want a \"\"pay as you go\"\" wireless phone plan. If your Canadian phone is unlocked GSM - you can go to any AT&T or T-Mobile store and get a pre-paid SIM for free. Otherwise, get a prepaid phone at any groceries store. It will definitely be cheaper than paying roaming charges to your Canadian provider. You can look at my blog (I'm writing from California), I accumulated a bunch of saving tips there over the years I'm writing it.\"" }, { "docid": "492506", "title": "", "text": "\"Taking examples from this loosely Googled page: http://www.fundlibrary.com/features/columns/page.asp?id=14406 If you find, or calculate, the standard deviation (volatility) of the returns from your various investment classes you will find they range from low-risk (low volatility), such as Cash, to high-risk (high volatility), such as Strategic Growth. The risk rating (volatility) is a good indicator of how reactive to market conditions your investment is likely to be. As you can see below, from mid-2010 to mid-2011 the High Risk index performed really well, but it was also most reactive when the market subsequently turned down. The medium risk indices performed the best over the chart period, 2010 to 2013, but it could have turned out different. Generally, you choose your investment according to your \"\"risk appetite\"\" - how much you're willing to risk. You might play safe with, say, 30% cash, 60% medium risk, 10% high risk. (Then again, are you paying someone to manage cash, which you might be able to do for free in a bank?) Assuming, for a moment, European (3.) and Intnl Equity Tracker (9.) had the same medium risk profile, then holding 50% & 50% would also add some currency diversification, which is usually advisable. However, the main choice is down to risk appetite. To address your specific question: \"\"my main interest for now is between Stockmarket Growth and Strategic Growth\"\", first thing to do is check their volatilities. For a further level of sophistication you can check how they are correlated against each other. If they are inversely correlated, i.e. one goes up when the other goes down, then holding some of each could be a good diversification. FYI: An Introduction to Investment Theory The historical returns are important too, but the investment classes your pension fund is offering will probably be reasonably aligned on a risk-return basis. You should check though. I.e. do they line up on a plot of 3 year Return vs Volatility? e.g. the line through SA Cash - SA Bonds - Vol Target 20 - SA Equity. Source\"" }, { "docid": "376499", "title": "", "text": "The two banks involved may have different policies about honoring the check. It might not be written on the check. Your bank may decide that the stale check has to be treated differently and will withhold funds for a longer period of time before giving you access to the money. They will give time for the first bank to refuse to honor the check. They may be concerned about insufficient funds, the age of the check, and the fact that the original account could have been closed. If you are concerned about the age of the check. You could go to your bank in person, instead of using deposit by ATM, scanner, or smart phone. This allows you to talk to a knowledgeable person. And if they are going to treat the check differently or reject the check, they can let you know right away. The audit may not have been concerned about the fact that the check hadn't been cashed because when they did the audit the check was still considered fresh. Some companies will contact you eventually to reissue the check so you they can get the liability off their books. If the bank does refuse the check contact the company to see how you can get a replacement check issued. They may want proof the check can't be cashed so they don't have to worry about paying you twice." }, { "docid": "346042", "title": "", "text": "When you pay cash for a car, you don't always necessarily need to pay cash. You just aren't using credit or a loan is all. A few options you have are: Obviously no dealer expects anyone to just have the cash laying around for a car worth a few thousand dollars, nor would you bother going to your bank or credit union for the cash. You can simply get a cashier's check made out for the amount. Note that dealers may not accept personal checks as they may bounce. After negotiations at the dealer, you would explain you're paying cash, likely pay a deposit (depending on the price of the car, but $500 would probably be enough. Again, the deposit can be a check or bank deposit), and then come back later on with a cashier's check, or deposit into a bank account. You would be able to do this later that day or within a few days, but since you've purchased a new car you would probably want to return ASAP!" }, { "docid": "299928", "title": "", "text": "I checked my account right before lunch because i was still thinking about what i wanted to do for my B-day. I had just got paid and my account was $30 and change. I had also just written my rent check as well. Some ass hat used my card and withdrew $300 at like 5 different atms(i'm assuming because they had different POS ID numbers) within like 5min. i didn't even know you could withdraw that much cash at once. Needless to say i looked like a bum infront of my landlord who gave me the sure that's why your check bounced look and 1 shitty birthday sitting at home eating top ramen. And since it was cash i had to wait almost 2 weeks (seems like months when you have no cash and a dwindling supply of instant and canned foods) for the bank to replace my cash. Yeah worst b-day ever. edit. oh and no i had no idea when they did it or how or where but the guy on the phone at the bank basically told me that it's happening a lot lately and asked my permission to file charges which i of course said yes to." }, { "docid": "258423", "title": "", "text": "\"What I've found works best when working on my personal budget is to track my income and spending two different ways: bank accounts and budget categories. Here is what I mean: When I deposit my paycheck, I do two things with it: It goes into my checking account, so the balance of my checking account goes up by the amount of my paycheck. I also \"\"deposit\"\" the money from my checking account into my various budget category balances. This is separate from my bank account balances. Some of my paycheck money goes into my groceries category, some goes into clothing, some into car fuel, entertainment, mortgage, phone, etc. Some goes into longer range bills that only happen once or twice a year, such as car insurance, life insurance, property tax, etc. Some goes into savings goals of ours, such as car replacement, vacation, furniture, etc. Every dollar that we have in a bank account or in cash in our wallets is also accounted for in a budget category. If you add up the balances of our bank accounts and cash, and you add up the balances of our budget categories, they add up to the same number. When we make a purchase, this also gets accounted for twice: The appropriate bank account (or cash wallet) balance gets reduced by the purchase amount. The appropriate budget category gets reduced by the purchase amount. In this way, we don't really need to worry about having separate bank accounts for different purposes. We don't need to put our savings goal money in a separate bank account from our grocery money, if we don't want to. The budget category accounting keeps track of how much money is allocated to each purpose. Now, the budget category amounts are not spent yet; the money in them is still in our bank account, and we can move money around in the categories, if we change our mind on how to allocate them. For example, if we don't spend all of our gas money for the month, we can either keep that money in the gas category, or we can move it to a different category, such as the car replacement category or the vacation category. If the phone bill is more than we expect, we can move money around from a different category to cover it. Now, back to your question: We allocate some money from each paycheck into our furniture category. But the money is not really spent until we actually buy some furniture. When we do, the furniture category balance and bank account balance both go down by the amount of the purchase. All of this can be kept track of on the computer in a spreadsheet. However, it's not easy to keep track of so many categories and bank balances. An easier solution is custom budgeting software designed for this purpose. I use and recommend YNAB.\"" } ]

[ { "docid": "342212", "title": "", "text": "I've been a landlord and also a tenant. I have been able to deposit money in an account, where I have the account number, and/or a deposit slip. In a foreign bank you can deposit by a machine if in the bank or someone is there for you and knows the account number. With regards to cashing a check in another country, it is up to the bank and the time is at least 14 to 21 business days, with a fee is added. As of a winning check, since its in your name, if you are in another country sign the check, for deposit only with a deposit slip and send it to your out of country bank by FedEx - you will have a tracking number, where as regular mail it might get there in 3 months. I hope by now you came to your solution." } ]

[ { "docid": "215180", "title": "", "text": "First and foremost you should do more research on credit cards and what everything means. As expressed by others the balance transfer fee is not what you think it is. Credit cards can be great, they can also quickly erode your credit score and your standing. So understanding the basics is VERY important. The credit card that is right for you should have the following criteria. The first two points should be straight forward, you should not have to pay a CC company for the privilege to use their card. They should pay you through perks and rewards. It should also be a CC that can be used for what you need it for. If you travel internationally a lot and the CC you choose only works within the US then what good is it? The third point is where you need to ask yourself what you do a lot and if a CC can offer rewards through travel miles, or cash back or other bonuses based on your lifestyle. The transfer fee is not what you think it is, people who already are carrying debt on another credit card and would like to transfer that debt to another credit card would be interested in finding a fee or a low %. People do this to get a batter rate or to get away from a bad credit card. If one charges 28% and another charges 13%, well it makes sense to transfer existing debt over to the 13% provided they don't crush you on fees. Since you have no credit card debt (assumption based on the fact you want to build your credit), you should ask yourself for what purpose and how often do you plan to use the credit card. Would this card be just for emergencies, and wont be used on daily purchases then a credit card that offers 3% cash back on gasoline purchases is not for you. If you however love to travel and plan to use your credit card for a lot of purchases OR have a few large purchases (insurance, tuition etc.) then get a credit card that provides rewards like miles. It really comes down to you and your situation. There are numerous websites dedicated to the best credit card for any situation. The final thing I will say is what I mentioned at the beginning, its important, CC's can be a tool to establish and improve your credit worthiness, they can also be a tool to destroy your credit worthiness, so be careful and make smart choices on what you use your card for. A credit score is like a mountain, it requires a slow and steady discipline to reach the top, but one misstep and that credit score can tumble quickly." }, { "docid": "281246", "title": "", "text": "In addition to the money-laundering, lifestyle, income tax, etc issues discussed already in other answers, one other matter that might concern the bank is whether that cash you are bringing in to deposit is genuine currency or (some or all of) the bills are counterfeit and you are using this mechanism to get them into circulation. Even if you withdraw a very large amount in cash from your bank, step out the door and come back just a few minutes later saying that you have changed your mind and want to put that money back into your account, there is still the question as to whether the cash you have brought back is exactly the same as you took out or a substitution was made in the interim. I once needed a bank draft for $1000 and went to my bank to get it, taking with me a check made out to Cash for $1003 (the bank's fee was $3). The bank would not give me a bank draft in exchange for the check, or if I cashed the check right then and there and paid for the bank draft using the cash that the teller had just handed me. I had to tear up the check, write another one payable to the bank, and then I got my bank draft. As JoeTaxpayer says, it is a matter of paper trail. Additional matter added in edit: According to Wikipedia, because of the Bank Secrecy Act of 1970, Many banks will no longer sell negotiable instruments when they are purchased with cash, requiring the purchase to be withdrawn from an account at that institution. which was exactly my experience. Furthermore, even the banks that will still sell you a cashier's check or money order for cash must keep a Monetary Instrument Log (MIL) that records all such cash transactions for amounts between $3000 and $10,000, keep the records for at least five years, and produce it upon request of a bank examiner or auditor (and presumably upon subpoena by a district attorney or divorce lawyer). Cash transactions of $10,000 or over are, of course, reported to the IRS on Currency Transaction Reports. In short, a paper trail exists for some time even for cash transactions quite a bit smaller than $10,000." }, { "docid": "376499", "title": "", "text": "The two banks involved may have different policies about honoring the check. It might not be written on the check. Your bank may decide that the stale check has to be treated differently and will withhold funds for a longer period of time before giving you access to the money. They will give time for the first bank to refuse to honor the check. They may be concerned about insufficient funds, the age of the check, and the fact that the original account could have been closed. If you are concerned about the age of the check. You could go to your bank in person, instead of using deposit by ATM, scanner, or smart phone. This allows you to talk to a knowledgeable person. And if they are going to treat the check differently or reject the check, they can let you know right away. The audit may not have been concerned about the fact that the check hadn't been cashed because when they did the audit the check was still considered fresh. Some companies will contact you eventually to reissue the check so you they can get the liability off their books. If the bank does refuse the check contact the company to see how you can get a replacement check issued. They may want proof the check can't be cashed so they don't have to worry about paying you twice." }, { "docid": "240074", "title": "", "text": "\"(This answer is based on the US banking system; if that isn't where you are, please edit appropriately.) There are probably two places the thief could go to cash the check: Your bank The issuer's bank Third-party banks are unlikely to want to cash a check drawn on a different bank for a payee who isn't their customer. So notifying both of these banks would be a good start. Also, hopefully the thief does not look like you and won't be able to pass using your ID. The thief will also have to forge your endorsement on the check - if he goes to your bank, they can check it against your signature which they have on file, and hopefully it won't match. (The issuer's bank wouldn't notice that, of course, so read on.) Even if the check is cashed, you should ultimately be okay, as I understand it. The issuer of the check still owes you the money; he can't prove he's paid you until he has the cancelled check (or its image) showing your valid endorsement. So he needs to give you another check, eventually. (This assumes the check was payment for a debt of some kind; if it was a gift or some other sort of voluntary payment, he could at this point change his mind and decide not to pay you after all.) The issuer should be okay too. If the check is cashed and debited from his account, he should go to his bank and tell them the endorsement is forged. They may ask you to sign something where you state under penalty of perjury that the signature isn't yours. Then they will re-credit his account, so that he can pay you again. (Normally the bank that cashed the check will be on the hook for the loss; it was their responsibility to make sure they were paying the rightful payee, and they failed in that responsibility. Various procedural issues can shift that liability between banks, but ultimately it shouldn't be either customer who suffers unless someone did something really negligent, like not reporting the theft for months.) Obviously this would all be much simpler if the issuer can call his bank right away and stop payment. This can be done over the phone or online, so \"\"out of town\"\" shouldn't be an issue unless he is out in the woods or something. If he can talk to you, he can talk to them.\"" }, { "docid": "248697", "title": "", "text": "Maybe there's more to this story, because as written, your sister seems, well, a little irrational. Is it possible that the bank will try to cheat you and demand that you pay a loan again that you've already paid off? Or maybe not deliberately cheat you, but make a mistake and lose track of the fact that you paid? Sure, it's POSSIBLE. But if you're going to agonize about that, what about all the other possible ways that someone could cheat you? What if you go to a store, hand over your cash for the purchase, and then the clerk insists that you never gave him any cash? What if you buy a car and it turns out to be stolen? What if you buy insurance and when you have a claim the insurance company refuses to pay? What if someone you've never met or even heard of before suddenly claims that you are the father of her baby and demands child support? Etc etc. Realistically, banks are fanatical about record-keeping. Their business is pretty much all about record-keeping. Mistakes like this are very rare. And a big business like a bank is unlikely to blatantly cheat you. They can and do make millions of dollars legally. Why should they break the law and risk paying huge fines and going to prison for a few hundred dollars? They may give you a lousy deal, like charge you outrageous overdraft fees and pay piddling interest on your deposit, but they're not going to lie about how much you owe. They just don't. I suggest that you not live your life in fear of all the might-be's. Take reasonable steps to protect yourself and get on with it. Read contracts before you sign, even if the other person gets impatient while you sit there reading. ESPECIALLY if the other person insists that you sign without reading. When you pay off a loan, you should get a piece of paper from the bank saying the loan has been paid. Stuff this piece of paper in a filing cabinet and keep it for years and years. Get a copy of your credit report periodically and make sure that there are no errors on it, like incorrect loan balances. I check mine once every year or two. Some people advise checking it every couple of months. It all depends how nervous you are and how much time you want to spend on it. Then get on with your life. Has your sister had some bad experience with loans in the past? Or has she never borrowed money and she's just confused about how it works? That's why I wonder if there's more to the story, if there's some basis for her fears." }, { "docid": "201561", "title": "", "text": "You could use Bitcoin. Bitcoin is THE fee-killer. I haven't used US and China exchanges, but you can connect your US bank account to Coinbase, buy bitcoins, transfer to BTCChina, and sell for CNY. There are many other options to convert from and to Bitcoins, but Coinbase seems to be most practical and most widely used in the US and BTCChina is the largest and probably most trusted exchange in China. You can also use LocalBitocoins for both buying and selling, but people on LocalBitcoins typically charge larger fees than exchanges, though this may vary. Please read a bit about Bitcoin before using it, and be aware of the risks. It's still very new (but revolutionary and very easy and fast to move internationally). Try with a small amount first to check it out. Your electronic wallet can be stolen, and you're exposed to certain risks of exchanges shutting down or government/banks stepping over their boundaries. One nice thing is that you probably won't be affected by volatility as you won't be holding bitcoins for long. Also be aware that the Chinese don't like capital leaving China and there is a possibility that China government will introduce further regulations on exchanges (though they have stated that buying, selling and owning bitcoins is legal). You're doing the opposite, importing money into China, but you'll probably feel it in one way or the other. P.S. Approximate fast fee calculation: Coinbase has 1% transaction fee + $0.15 bank fee. Bitcoin transfer is free or in some cases with minimal 0.0001 BTC fee (a bit less than $0.01 currently). BTCChina has 0.3% trading fee and 0.5% CNY withdrawal fee. As you can see, the main fees are exchange fees, but still less than 3% and if you find a good exchange combination with low fees you're golden, or might even make money on transaction if BTC price rises. Also check this Reddit thread - there are alternative China exchanges with lower fees. P.P.S. Found this blog post, maybe a bit outdated, but probably with better calculation than mine as it takes into account exchange prices." }, { "docid": "299928", "title": "", "text": "I checked my account right before lunch because i was still thinking about what i wanted to do for my B-day. I had just got paid and my account was $30 and change. I had also just written my rent check as well. Some ass hat used my card and withdrew $300 at like 5 different atms(i'm assuming because they had different POS ID numbers) within like 5min. i didn't even know you could withdraw that much cash at once. Needless to say i looked like a bum infront of my landlord who gave me the sure that's why your check bounced look and 1 shitty birthday sitting at home eating top ramen. And since it was cash i had to wait almost 2 weeks (seems like months when you have no cash and a dwindling supply of instant and canned foods) for the bank to replace my cash. Yeah worst b-day ever. edit. oh and no i had no idea when they did it or how or where but the guy on the phone at the bank basically told me that it's happening a lot lately and asked my permission to file charges which i of course said yes to." }, { "docid": "119416", "title": "", "text": "\"I think you misunderstand the purpose of the liability account. I would suggest you review the standard accounting model, but to give you a brief overview: Income and expenses are money coming into and out of your possession. They are the pipes flowing into and out of your \"\"box\"\". Inside your box, you have assets (bank, savings, cash, etc) and liabilities (credit cards, unpaid debts, etc). Money can flow into and out of either asset or liability accounts, for example: deposit a payment (income to asset), buy office supplies with cash (asset to expense), pay a bill with credit card (liability to expense), customer pays one of your debts directly (income to liability). Paying off a debt with an asset does not affect your overall net worth, so paying a check to your credit card bill (asset to liability) doesn't decrease your total balance, it merely moves the value from one bucket to another. Now to your question: Mandatory payments, such as taxes or insurance (or for that matter, utilities, rent, food- all things that \"\"must\"\" be bought occasionally) are not liabilities, instead they are all expenses. They might be paid FROM a liability account, if they are paid on credit for example, but the money still flows from liability to expense. In my own records I have Expense:Taxes and Expense:Insurance, with sub-accounts in each. Where the money comes from depends entirely on how I pay my bills, whether from cash or banks (asset) or whether it's a charge (liability). Sometimes you receive payments back from an insurance company. I find that rather than treating insurance premiums as a positive balance in a liability (with eventual payments as debits to the liability account), it is better to treat any payment from the insurance as income. Hope that helps!\"" }, { "docid": "86716", "title": "", "text": "\"Others have commented on the various studies. If, as JoeTaxpayer says, this one particular study he mentions does not really exist, there are plenty of others. (And in that case: Did someone blatantly lie to prove a bogus point? Or did someone just get the name of the organization that did the study wrong, like it was really somebody called \"\"B&D\"\", they read it as \"\"D&B\"\" because they'd heard of Dun & Bradstreet but not of whoever B&D is. Of course if they got the organization wrong maybe they got important details of the study wrong. Whatever.) But let me add one logical point that I think is irrefutable: If you always buy with cash, there is no way that you can spend more than you have. When you run out of cash, you have no choice but to stop spending. But when you buy with a credit card, you can easily spend more than you have money in the bank to pay. Even if it is true that most credit card users are responsible, there will always be some who are not, and credit cards make it easy to get in trouble. I speak from experience. I once learned that my wife had run up $20,000 in credit card debt without my knowledge. When she divorced me, I got stuck with the credit card debt. To this day I have no idea what she spent the money on. And I've known several people over the years who have gone bankrupt with credit card debt. Even if you're responsible, it's easy to lose track with credit cards. If you use cash, when you take out your wallet to buy something you can quickly see whether there's a lot of money left or not so much. With credit, you can forget that you made the big purchase. More likely, you can fail to add up the modest purchases. It's easy to say, \"\"Oh, that's just $100, I can cover that.\"\" But then there's $100 here and $100 there and it can add up. (Or depending on your income level, maybe it's $10 here and $10 there and it's out of hand, or maybe it's $10,000.) It's easier today when you can go on-line and check the balance on your credit card. But even at that, well just this past month when I got one bill I was surprised at how big it was. I went through the items and they were all legitimate, they just ... added up. Don't cry for me, I could afford it. But I had failed to pay attention to what I was spending and I let things get a little out of hand. I'm a pretty responsible person and I don't do that often. I can easily imagine someone paying less attention and getting into serious trouble.\"" }, { "docid": "492506", "title": "", "text": "\"Taking examples from this loosely Googled page: http://www.fundlibrary.com/features/columns/page.asp?id=14406 If you find, or calculate, the standard deviation (volatility) of the returns from your various investment classes you will find they range from low-risk (low volatility), such as Cash, to high-risk (high volatility), such as Strategic Growth. The risk rating (volatility) is a good indicator of how reactive to market conditions your investment is likely to be. As you can see below, from mid-2010 to mid-2011 the High Risk index performed really well, but it was also most reactive when the market subsequently turned down. The medium risk indices performed the best over the chart period, 2010 to 2013, but it could have turned out different. Generally, you choose your investment according to your \"\"risk appetite\"\" - how much you're willing to risk. You might play safe with, say, 30% cash, 60% medium risk, 10% high risk. (Then again, are you paying someone to manage cash, which you might be able to do for free in a bank?) Assuming, for a moment, European (3.) and Intnl Equity Tracker (9.) had the same medium risk profile, then holding 50% & 50% would also add some currency diversification, which is usually advisable. However, the main choice is down to risk appetite. To address your specific question: \"\"my main interest for now is between Stockmarket Growth and Strategic Growth\"\", first thing to do is check their volatilities. For a further level of sophistication you can check how they are correlated against each other. If they are inversely correlated, i.e. one goes up when the other goes down, then holding some of each could be a good diversification. FYI: An Introduction to Investment Theory The historical returns are important too, but the investment classes your pension fund is offering will probably be reasonably aligned on a risk-return basis. You should check though. I.e. do they line up on a plot of 3 year Return vs Volatility? e.g. the line through SA Cash - SA Bonds - Vol Target 20 - SA Equity. Source\"" }, { "docid": "294097", "title": "", "text": "If it is your primary residence and you lived there continuously and for more than 2 years out of the last 5 - then you can exclude the gain under the IRC Sec. 121. In this case, you'll pay no taxes on your gain. If the property has been a rental or you haven't lived there long enough, the rules become more complicated but you may still be able to exclude some portion of the gain, even all of it, depends on the situation. So it doesn't look like 1031 exchange is good for you here, you don't want to carry excluded gain - you want to recognize it and get the tax benefit. However, refinancing after purchase with cash-out money affects the deductability of the loan interest. You can only deduct interest on money used to buy, not cash-out portion. I believe there's a period (60 days IIRC) during which you can do the cash-out refinance and still count it as purchase money, but check with a licensed tax advier (EA/CPA licensed in your State)." }, { "docid": "78367", "title": "", "text": "There are two or three issues here. One is, how quickly can you get cash out of your investments? If you had an unexpected expense, if you suddenly needed more cash than you have on hand, how long would it take to get money out of your Scott Trade account or wherever it is? I have a TD Ameritrade account which is pretty similar, and it just takes a couple of days to get money out. I'm hard pressed to think of a time when I literally needed a bunch of cash TODAY with no advance warning. What sudden bills is one likely to have? A medical bill, perhaps. But hey, just a few weeks ago I had to go to the emergency room with a medical problem, and it's not like they demanded cash on the table before they'd help me. I just got the bill, maybe 3 weeks after the event. I've never decided to move and then actually moved 2 days later. These things take SOME planning. Etc. Second, how much risk are you willing to tolerate? If you have your money in the stock market, the market could go down just as you need the cash. That's not even a worst case scenario, extreme scenario. After all, if the economy gets bad, the stock market could go down, and the same fact could result in your employer laying you off. That said, you could reduce this risk by keeping some of your money in a low-risk investment, like some high-quality bonds. Third, you want to have cash to cover the more modest, routine expenses. Like make sure you always have enough cash on hand to pay the rent or mortgage, buy food, and so on. And fourth, you want to keep a cushion against bookkeeping mistakes. I've had twice in my life that I've overdrawn a checking account, not because I was broke, but because I messed up my records and thought I had more money in the account than I really did. It's impossible to give exact numbers without knowing a lot about your income and expenses. But for myself: I keep a cushion of $1,000 to $1,5000 in my checking account, on top of all regular bills that I know I'll have to pay in the next month, to cover modest unexpected expenses and mistakes. I pay most of my bills by credit card for convenience --and pay the balance in full when I get the bill so I don't pay interest -- so I don't need a lot of cushion. I used to keep 2 to 3 months pay in an account invested in bonds and very safe stocks, something that wouldn't lose much value even in bad times. Since my daughter started college I've run this down to less than 1 months pay, and instead of replacing that money I'm instead putting my spare money into more general stocks, which is admittedly riskier. So between the two accounts I have a little over 2 months pay, which I think is low, but as I say, I'm trying to get my kids through college so I've run down my savings some. I think if I had more than 6 months pay in easily-liquidated assets, then unless I expected to need a bunch of cash for something, buying a new house or some such, I'd be transferring that to a retirement account with tax advantages." }, { "docid": "72189", "title": "", "text": "Why do people talk about stock that pay high dividends? Traditionally people who buy dividend stocks are looking for income from their investments. Most dividend stock companies pay out dividends every quarter ( every 90 days). If set up properly an investor can receive a dividend check every month, every week or as often as they have enough money to stagger the ex-dates. There is a difference in high $$ amount of the dividend and the yield. A $1/share dividend payout may sound good up front, but... how much is that stock costing you? If the stock cost you $100/share, then you are getting 1% yield. If the stock cost you $10/share, you are getting 10% yield. There are a lot of factors that come into play when investing in dividend stocks for cash flow. Keep in mind why are you investing in the first place. Growth or cash flow. Arrange your investing around your major investment goals. Don't chase big dollar dividend checks, do your research and follow a proven investment plan to reach your goals safely." }, { "docid": "521070", "title": "", "text": "For those who don't know, credit card checks are blank checks that your credit card company sends you. When you fill them out and spend them, you are taking a cash advance on your credit card account. You should be aware that taking a cash advance on your credit card normally has extra fees and finance charges above what you have with regular credit card transactions. That having been said, when you take one of these to your bank and try to deposit them, it is entirely up to bank policy how long they will make you wait to use these funds. They want to be sure that it is a legitimate check and that it will be honored. If your teller doesn't know the answer to that question, you'll need to find someone at the bank who does. If you don't like the answer they give you, you'll need to find another bank. I would think that if the credit card is from Chase, and you are trying to deposit a credit card check into a Chase checking account, they should be able to do that instantly. However, bank policy doesn't always make sense." }, { "docid": "351340", "title": "", "text": "In my opinion, every person, regardless of his or her situation, should be keeping track of their personal finances. In addition, I believe that everyone, regardless of their situation, should have some sort of budget/spending plan. For many people, it is tempting to ignore the details of their finances and not worry about it. After all, the bank knows how much money I have, right? I get a statement from them each month that shows what I have spent, and I can always go to the bank's website and find out how much money I have, right? Unfortunately, this type of thinking can lead to several different problems. Overspending. In olden days, it was difficult to spend more money than you had. Most purchases were made in cash, so if your wallet had cash in it, you could spend it, and when your wallet was empty, you were required to stop spending. In this age of credit and electronic transactions, this is no longer the case. It is extremely easy to spend money that you don't yet have, and find yourself in debt. Debt, of course, leads to interest charges and future burdens. Unpreparedness for the future. Without a plan, it is difficult to know if you have saved up enough for large future expenses. Will you have enough money to pay the water bill that only shows up once every three months or the property tax bill that only shows up once a year? Will you have enough money to pay to fix your car when it breaks? Will you have enough money to replace your car when it is time? How about helping out your kids with college tuition, or funding your retirement? Without a plan, all of these are very difficult to manage without proper accounting. Anxiety. Not having a clear picture of your finances can lead to anxiety. This can happen whether or not you are actually overspending, and whether or not you have enough saved up to cover future expenses, because you simply don't know if you have adequately covered your situation or not. Making a plan and doing the accounting necessary to ensure you are following your plan can take the worry out of your finances. Fear of spending. There was an interesting question from a user last year who was not at all in trouble with his finances, yet was always afraid to spend any money, because he didn't have a budget/spending plan in place. If you spend money on a vacation, are you putting your property tax bill in jeopardy? With a good budget in place, you can know for sure whether or not you will have enough money to pay your future expenses and can spend on something else today. This can all be done with or without the aid of software, but like many things, a computer makes the job easier. A good personal finance program will do two things: Keeps track of your spending and balances, apart from your bank. The bank can only show you things that have cleared the bank. If you set up future payments (outside of the bank), or you write a check that has not been cashed yet, or you spend money on a credit card and have not paid the bill yet, these will not be reflected in your bank balance online. However, if you manually enter these things into your own personal finance program, you can see how much money you actually have available to spend. Lets you plan for future spending. The spending plan, or budget, lets you assign a job to every dollar that you own. By doing this, you won't spend rent money at the bar, and you won't spend the car insurance money on a vacation. I've written before about the details on how some of these software packages work. To answer your question about double-entry accounting: Some software packages do use true double-entry accounting (GnuCash, Ledger) and some do not (YNAB, EveryDollar, Mvelopes). In my opinion, double-entry accounting is an unnecessary complication for personal finances. If you don't already know what double-entry accounting is, stick with one of the simpler solutions." }, { "docid": "308380", "title": "", "text": "It depends how you do it. If you roll it from your 401k directly to a Roth then you will have to pay the taxes. The contributions to the 401k are tax deferred. Meaning you do not owe taxes on the money until you collect it. Roth contributions are post tax but the gains are not taxed so long as they are disbursed under acceptable conditions according to the regulations. If you roll it directly from the 401k to a regular tax deferred IRA you should be able to do that with out penalties or taxes. You will still have to pay the taxes at disbursement. If you have the money disbursed to you directly then you will have to pay the penalties, fees, and taxes. Your contributions to an IRA will then be subject to limitations based on the IRA. It will literally be exactly like you are taking money from your pocket to invest in the IRA. Your company should give you the option of a rollover check. This check will be made out to you but it will not be able to be deposited in a regular account or cashed. It will only be redeemable for deposit into a retirement account that meets the regulatory requirements of the 401k rollover criteria. I believe the check I received a few years ago was only good for 60 days. I recall that after 60 days that check was void and I would receive a standard disbursement and would be subject to fees and penalties. I am not sure if that was the policy of T.Rowe Price or if that is part of the regulation." }, { "docid": "425994", "title": "", "text": "Eventually you are going to need some sort of real credit history. It is possible that you will be able to evade this if you never buy a house, or if you pay cash for any house/condo/car/boat/etc that you buy. Even employers check credit history these days. I wouldn't be surprised if some medical professionals such as surgeons check it also. Obviously if you have a mortgage and car loan this doesn't apply, but I'd be curious how you acquired those unless you have substantial income and/or assets. Combine this with the fact that certain things like renting a car essentially require a credit card (because they need to put a hold on more money than they are actually going to take out of your card, so they can take that money if you don't bring the car back), and I think you should have a credit card unless you and your wife are individuals with zero impulse control, which sounds highly improbable. If your concern is the financial liability of the credit line, just keep the credit line low." }, { "docid": "85144", "title": "", "text": "I would go to the bank and just express the concern that the check sent to you might not fully clear. You don't want to spend it until you're sure it cleared. I'd ask for a manager to tell you when it will clear, then confirm after that date that it's cleared, with the same guy. Perhaps someone in the industry can explain how long the bank has before deciding the check is bad. 10 days? 2 weeks? Really, it should either clear or bounce by the second night. I'd not risk doing this for anyone. Anyone I know personally can cash their own check, and I'd not get involved with anyone I don't know on a financial matter like this. EDIT - See Littleadv comment below. Good checks clear fast, a forged check has time for the victim to go to the bank and challenge the signature and cashing of the check. The victim can have 60 days to do this. That's the issue, I am wrong, the bank manager couldn't confirm the check was good so soon." }, { "docid": "182866", "title": "", "text": "\"When I deposit my paycheck in CapOne I have an email before I am out of the app that they received my check. I have access to some portion of the cash now and the rest the next business day, however they put things in order to NOT overdraft me. For instance, if I am overdrawn $150 but the charge is \"\"pending\"\", putting the check in they will deposit the check before posting the charge that would overdraft me. Plus I can use Apple Pay with it. My local CUs have app deposit, but it takes DAYS for a deposit to just show up. Plus, no Apple Pay.\"" } ]

[ { "docid": "233732", "title": "", "text": "One possibility would be to invest in a crude oil ETF (or maybe technically they're an ETP), which should be easily accessible through any stock trading platform. In theory, the value of these investments is directly tied to the oil price. There's a list of such ETFs and some comments here. But see also here about some of the problems with such things in practice, and some other products aiming to avoid those issues. Personally I find the idea of putting all my savings into such a vehicle absolutely horrifying; I wouldn't contemplate having more than a small percentage of a much more well diversified portfolio invested in something like that myself, and IMHO it's a completely unsuitable investment for a novice investor. I strongly suggest you read up on topics like portfolio construction and asset allocation (nice introductory article here and here, although maybe UK oriented; US SEC has some dry info here) before proceeding further and putting your savings at risk." } ]

[ { "docid": "571487", "title": "", "text": "\"It is my opinion that part of having a successful long-term relationship is being committed to the other person's success and well-being. This commitment is a form of investment in and of itself. The returns are typically non-monetary, so it's important to understand what money actually is. Money is a token people exchange for favors. If I go to a deli and ask for a sandwich. I give them tokens for the favor of having received a sandwich. The people at the deli then exchange those tokens for other favors, and that's the entire economy: people doing favors for other people in exchange for tokens that represent more favors. Sometimes being invested in your spouse is giving them a back rub when they've had a hard day. The investment pays off when you have a hard day and they give you a back rub. Sometimes being invested in your spouse is taking them to a masseuse for a professional massage. The investment pays off when they get two tickets to that thing you love. At the small scale it's easy to mostly ignore minor monetary discrepancies. At the large scale (which I think £50k is plenty large enough given your listed net worth) it becomes harder to tell if the opportunity cost will be worth making that investment. It pretty much comes down to: Will the quality-of-life improvements from that investment be better than the quality-of-life improvements you receive from investing that money elsewhere? As far as answering your actual question of: How should I proceed? There isn't a one-size fits all answer to this. It comes down to decisions you have to make, such as: * in theory it's easy to say that everyone should be able to trust their spouse, but in practice there are a lot of people who are very bad at handling money. It can be worthwhile in some instances to keep your spouse at an arms length from your finances for their own good, such as if your spouse has a gambling addiction. With all of that said, it sounds like you're living in a £1.5m house rent-free. How much of an opportunity cost is that to your wife? Has she been freely investing in your well-being with no explicit expectation of being repaid? This can be your chance to provide a return on her investment. If it were me, I'd make the investment in my spouse, and consider it \"\"rent\"\" while enjoying the improvements to my quality of life that come with it.\"" }, { "docid": "110367", "title": "", "text": "I'm an Aussie and I purchased 5 of these properties from 2008 to 2010. I was looking for positive cash flow on properties for not too much upfront investment. The USA property market made sense because of the high Aussie $$ at the time, the depressed property market in the US and the expensive market here. I used an investment web-site that allowed me to screen properties by yield and after eliminating outliers, went for the city with the highest consistent yield performance. I settled on Toledo, Ohio as it had the highest yields and was severely impacted by the housing crisis. I bought my first property for $18K US which was a little over $17K AUD. The property was a duplex in great condition in a reasonable location. Monthly rentals $US900 and rents guaranteed and direct deposited into my bank account every month by section 8. Taxes $900 a year and $450 a year for water. Total return around $US8,000. My second property was a short sale in a reasonable area. The asking was $US8K and was a single family in good condition already tenanted. I went through the steps with the bank and after a few months, was the proud owner of another tenanted, positive cash flow property returning $600 a month gross. Taxes of $600 a year and water about the same. $US6K NET a year on a property that cost $AUD8K Third and fourth were two single family dwellings in good areas. These both cost $US14K each and returned $US700 a month each. $US28K for two properties that gross around $US15K a year. My fifth property was a tax foreclosure of a guy with 2 kids whose wife had left him and whose friend had stolen the money to repay the property taxes. He was basically on the bones of his butt and was staring down the barrel of being homeless with two kids. The property was in great condition in a reasonable part of town. The property cost me $4K. I signed up the previous owner in a land contract to buy his house back for $US30K. Payments over 10 years at 7% came out to around $US333 per month. I made him an offer whereby if he acted as my property manager, i would forgo the land contract payments and pay him a percentage of the rents in exchange for his services. I would also pay for any work he did on the properties. He jumped at it. Seven years later, we're still working together and he keeps the properties humming. Right now the AUD is around 80c US and looks like falling to around 65c by June 2015. Rental income in Aussie $$ is around $2750 every month. This month (Jan 2015) I have transferred my property manager's house back to him with a quit claim deed and sold the remaining houses for $US100K After taxes and commission I expect to receive in the vicinity of AUD$120K Which is pretty good for a $AUD53K investment. I've also received around $30K in rent a year. I'm of the belief I should be buying when everybody else is selling and selling when everybody else is buying. I'm on the look-out for my next positive cash flow investment and I'm thinking maybe an emerging market smashed by the oil shock. I wish you all happiness and success in your investment. Take care. VR" }, { "docid": "95390", "title": "", "text": "\"Where are you from? The Netherlands has tax treaties with different countries that may offer you some additional options. The Netherlands calculates a maximum tax free contribution to your pension each year based on your income. If you contributed less than you were allowed to (pensioengat), you can invest the difference between your actual and allowed contributions in special retirement investments that usually offer tax advantages. A gap like this can be due to getting a bonus or a raise. After looking around, the investments available are either a special savings account (banksparen) or an annuity (lijfrente). Your allowed contributions to both will be tax deductible and the investment itself is excluded from wealth tax (box 3 taxes). I also see Aegon offering an \"\"investment annuity\"\" that lets you invest in any of 7 of their mutual funds until a certain date at which time you liquidate and use the proceeds to fund an annuity. With the Dutch retirement options, wou will not in general get the same freedom of choice or low costs associated with IRAs in the US. I'm not sure about ISAs in the UK. It's also important to check any tax agreements between countries to ensure your chosen investment vehicle gets the tax advantaged treatment in your home country as it does in the Netherlands. For US citizens, this is important even when living abroad. For others, it is important if you return to your home country and still have this investment. If you are a US citizen, you have an additional option. The US / Dutch tax treaty allows you to make these contributions to preexisting (i.e. you had these before moving to NL) retirement accounts in the US like an IRA. Note that in practice it may be difficult to contribute to an existing Roth IRA because you would need to have earned income after the foreign income tax deduction but less than the maximum income for a Roth contribution.\"" }, { "docid": "420046", "title": "", "text": "You should be worried. You have made the mistake of entering an investment on the recommendation of family/friend. The last think you should do is make another mistake of just leaving it and hoping it will go up again. Your stock has dropped 37.6% from its high of $74.50. That means it has to go up over 60% just to reach the high of $74.50. You are correct this may never happen or if it does it could take a long, long time to get up to its previous highs. What is the company doing to turn its fortunes around? Take a look at some other examples: QAN.AX - Qantas Airways This stock reached a high of around $6 in late 2007 after a nice uptrend over a year and a half, it then dropped drastically at the start of the GFC, and has since kept falling and is now priced at just $1.15. QAN reported its first ever loss earlier this year, but its problems were evident much earlier. AAPL - Apple Inc. AAPL reach a high of just over $700 in September 2013, then dropped to around $400 and has recovered a bit to about $525 (still 25% below its highs) and looks to be at the start of another downtrend. How long will it take AAPL to get back to $700, more than 33% from its current price? TEN.AX - Ten Network Holdings Limited TEN reached a high of $4.26 in late 2004 after a nice uptrend during 2004. It then started a steep journey downwards and is still going down. It is now priced at just $0.25, a whopping 94% below its high. It will have to increase by 1600% just to reach its high of $4.26 (which I think will never happen). Can a stock come back from a drastic downtrend? Yes it can. It doesn't always happen, but a company can turn around and can reach and even surpass it previous highs. The question is how and when will this happen? How long will you keep your capital tied up in a stock that is going nowhere and has every chance of going further down? The most important thing with any investment is to protect your current capital. If you lose all your capital you cannot make any new investments until you build up more capital. That is why it is so important to have a risk management strategy and decide what is your get out point if things go against you before you get into any new investment. Have a stop loss. I would get out of your investment before you lose more capital. If you had set a stop loss at 20% off the stock's last highs, you would have gotten out at about $59.60, 28% higher than the current share price of $46.50. If you do further analysis on this company and find that it is improving its prospects and the stock price breaks up through its current ranging band, then you can always buy back in. However, do you still want to be in the stock if it breaks the range band on the downside? In this case who knows how low it can continue to go. N.B. This is my opinion, as others would have theirs, and what I would do in your current situation with this stock." }, { "docid": "198298", "title": "", "text": "\"&gt; Lets say Bob was spending 60k in Indy, saving 20k/yr. &gt; Total San Jose / mid-valley COL: 15k + 15k + 11k + 65k + 42k = 130k. **You've just demonstrated my point, and then some.** That's even factoring in the reduce QOL you've given \"\"Bob\"\". &gt; I'm sorry if I upset you The brazen ignorance is annoying, not upsetting. You're spreading misinformation because apparently you've forgotten how to read. The poster threw out a number of 120k in San Fran. I said this was like 60k somewhere else. You called that bullshit, and now you just showed that 60k living costs in \"\"Indy\"\" are equal to 130k in San Fran with a lower quality of life. QED.\"" }, { "docid": "257703", "title": "", "text": "\"How can I avoid this, so we are taxed as if we are making the $60k/yr that we want to receive? You can't. In the US the income is taxed when received, not when used. If you receive 1M this year, taking out 60K doesn't mean the other 940K \"\"weren't received\"\". They were, and are taxable. Create a pension fund in the corporation, feed it all profits, and pay out $60k/yr of \"\"pension\"\". I doubt that the corporation could deduct a million a year in pension funding. You cannot do that. You can only deposit to a pension plan up to 100% of your salary, and no more than $50K total (maybe a little more this year, its adjusted to inflation). Buy a million dollars in \"\"business equipment\"\" of some sort each year to get a deduction, then sell it over time to fund a $60k/yr salary. I doubt such a vehicle exists. If there's no real business purpose, it will be disallowed and you'll be penalized. Your only purpose is tax avoidance, meaning you're trying to shift income using your business to avoid paying taxes - that's illegal. Do crazy Section 79 life insurance schemes to tax-defer the income. The law caps this so I can only deduct < $100k of the $1 million annually, and there are other problems with this approach.\\ Yes. Wouldn't go there. Added: From what I understand, this is a term life insurance plan sponsored by the employer for the employee. This is not a deferral of income, but rather a deduction: instead of paying your term life insurance with your own after tax money, your employer pays with their pre-tax. It has a limit of $50K per employee, and is only available for employees. There are non-discrimination limitations that may affect your ability to use it, but I don't see how it is at all helpful for you. It gives you a deduction, but its money spent, not money in your pocket. End added. Do some tax avoidance like Facebook does with its Double Irish trick, storing the income in some foreign subsidiary and drawing $60k/yr in salary to be taxed at $60k/yr rates. This is probably cost-prohibitive for a $1MM/yr company. You're not Facebook. What works with a billion, will not work with a million. Keep in mind that you're a one-man business, things that huge corporations like Google or Facebook can get away with are a no-no for a sole-proprietor (even if incorporated). Bottom line you'll probably have to pay the taxes. Get a good tax professional to help you identify as much deductions as possible, and if you can plan income ahead - plan it better.\"" }, { "docid": "85214", "title": "", "text": "I'm the contrarian in the crowd. I think credit scores and debt are the closest thing to evil incarnate. You're in good company. The absence of a credit score simply means the agencies have insufficient data in their behavioral model to determine how profitable your business would be to the bank. The higher your score, the more likely the bank is to make a profit from your loan. IMHO, you're better off building up cash and investment reserves than a credit history. With sufficient reserves, you will be able to shop around for a bank that will give you a good rate, if you ever do need a loan. You'll be surprised at how quickly you get in a position where you don't need a loan if you save and invest wisely. I used to have a (high) credit score, and I was miserable about it because there were always bills due. I gave up debt 14 years ago, paid the last debt 7 years ago, and have never. been happier. Raising kids without debt (or credit score) is much more fun than with debt." }, { "docid": "207368", "title": "", "text": "\"There is no simple answer to that, because no one knows exactly what the probability distribution of S&P 500 returns is. Here is a sketch of one possible way to proceed. Don't forget step 4! The problem is that the stock market is full of surprises, so this kind of \"\"backtesting\"\" can only reliably tell you about what already happened, not what will happen in the future. People argue about how much you can learn from this kind of analysis. However, it is at the least a clearly defined and objective process. I wouldn't advise investing your whole nest egg in anything based just on this, but I do think that it is relevant information.\"" }, { "docid": "140738", "title": "", "text": "\"At 50 years old, and a dozen years or so from retirement, I am close to 100% in equities in my retirement accounts. Most financial planners would say this is way too risky, which sort of addresses your question. I seek high return rather than protection of principal. If I was you at 22, I would mainly look at high returns rather than protection of principal. The short answer is, that even if your investments drop by half, you have plenty of time to recover. But onto the long answer. You sort of have to imagine yourself close to retirement age, and what that would look like. If you are contributing at 22, I would say that it is likely that you end up with 3 million (in today's dollars). Will you have low or high monthly expenses? Will you have other sources of income such as rental properties? Let's say you rental income that comes close to covering your monthly expenses, but is short about 12K per year. You have a couple of options: So in the end let's say you are ready to retire with about 60K in cash above your emergency fund. You have the ability to live off that cash for 5 years. You can replenish that fund from equity investments at opportune times. Its also likely you equity investments will grow a lot more than your expenses and any emergencies. There really is no need to have a significant amount out of equities. In the case cited, real estate serves as your cash investment. Now one can fret and say \"\"how will I know I have all of that when I am ready to retire\"\"? The answer is simple: structure your life now so it looks that way in the future. You are off to a good start. Right now your job is to build your investments in your 401K (which you are doing) and get good at budgeting. The rest will follow. After that your next step is to buy your first home. Good work on looking to plan for your future.\"" }, { "docid": "492366", "title": "", "text": "\"I see three areas of concern for your budget: This is way high. I am not sure how much of a house you live in, but the total of these two numbers should be around 25% not 41%. I am a person that considers giving an important part of wealth building, and gives to my local church. But as one other person has rightly said, this amount is irresponsible. I am okay at 12%, but would like to see you at 10% until you are in a little better shape. That is pretty vague for a significant portion of your income. What makes up that other category? You are doing pretty darn good financially, although I would like to see some contributions to investments. I think you are kind of failing there. Your debt management is spot on. That is okay, we can all get better at some stuff. There needs to be some numbers behind these percentages. The bottom line is if you make an average household income, say around 55K, you are going to struggle with or without children. If you guys make about 110K, and your wife makes 50% of your income, and she quits work to take care of the kidlets, then you will be in that \"\"boat\"\". Having said all that I find 37% of your income as questionable. At least 5% of that should be invested, so we are kind of like at 32%. That is a significant amount of money.\"" }, { "docid": "402216", "title": "", "text": "\"Generally if you are using FIFO (first in, first out) accounting, you will need to match the transactions based on the number of shares. In your example, at the beginning of day 6, you had two lots of shares, 100 @ 50 and 10 @ 52. On that day you sold 50 shares, and using FIFO, you sold 50 shares of the first lot. This leaves you with 50 @ 50 and 10 @ 52, and a taxable capital gain on the 50 shares you sold. Note that commissions incurred buying the shares increase your basis, and commissions incurred selling the shares decrease your proceeds. So if you spent $10 per trade, your basis on the 100 @ 50 lot was $5010, and the proceeds on your 50 @ 60 sale were $2990. In this example you sold half of the lot, so your basis for the sale was half of $5010 or $2505, so your capital gain is $2990 - 2505 = $485. The sales you describe are also \"\"wash sales\"\", in that you sold stock and bought back an equivalent stock within 30 days. Generally this is only relevant if one of the sales was at a loss but you will need to account for this in your code. You can look up the definition of wash sale, it starts to get complex. If you are writing code to handle this in any generic situation you will also have to handle stock splits, spin-offs, mergers, etc. which change the number of shares you own and their cost basis. I have implemented this myself and I have written about 25-30 custom routines, one for each kind of transaction that I've encountered. The structure of these deals is limited only by the imagination of investment bankers so I think it is impossible to write a single generic algorithm that handles them all, instead I have a framework that I update each quarter as new transactions occur.\"" }, { "docid": "100683", "title": "", "text": "\"For the vast majority, \"\"buying\"\" a house via a mortgage is not an investment. I use quotes around buying because from a technical perspective you don't own anything until you've paid it off; this is often an important point that people forget. It's highly unlikely you'll make more on it than the amount you put into it (interest, repairs, etc). Even with relatively low interest rates. The people who successfully invest in homes are those that use actual cash (not borrowed) to buy a home at well below market value. They then clean it up and make enough repairs to make it marketable and sell it shortly there after. Sometimes these people get hosed if the housing market tumbles to the point that the home is now worth less than the amount they put into it. This is especially problematic if they used bank loans to get the process going. They were actually the hardest hit when the housing bubble popped several years ago. Well, them and the people who bought on interest only loans or had balloon payments. Whereas the people who use a mortgage are essentially treating it like a bank account with a negative interest rate. For example, $180k loan on a 30 yr fixed at 4% will mean a total payout of around $310k, excluding normal repairs like roofs, carpet, etc. Due to how mortgage's work, most of the interest is collected during the first half of the loan period. So selling it within 2 to 5 years is usually problematic unless the local housing market has really skyrocketed. Housing markets move up and down all the time due to a hundred different things completely out of your control. It might be a regional depression, weather events, failed large businesses, failed city/local governments, etc. It could go up because businesses moved in, a new highway is built, state/local taxes decline, etc. My point is, homes are not long term investments. They can be short term ones, but only in limited circumstances and there is a high degree of risk involved. So don't let that be a driving point of your decision. Instead you need to focus on other factors. Such as: what is really going on with the house you are currently in? Why would they lose it? Can you help out, and, should you help out? If things are precarious, it might make more sense to sell that home now and everyone move into separate locations, possibly different rentals or apartments. If they are foreclosed on then they will be in a world of financial hurt for a long time. If we ignore your parents situation, then one piece of advice I would give you is this: Rent the cheapest apartment you can find that is still a \"\"safe\"\" place to live in. Put every dollar you can into some type of savings/investment that will actually grow. Stay there for 5+ years, then go pay cash for a nice home. Making $75k a year while single means that you don't need much to live on. In other words, live extremely cheap now so you can enjoy a fantastic living experience later that is free from financial fear. You should be able to put $30k+ per year aside going this route. edit: A bit of support data for those that somehow think buying a home on a mortgage is somehow a good investment: Robert Shiller, who won a Nobel prize in economics and who predicted the bursting of the housing bubble, has shown that a house is not a good investment. Why? First, home prices (adjusted for inflation) have been virtually unchanged for the past 100 years. (link 1, link 2) Second, after you add in the costs of maintenance alone then those costs plus what you've paid for the home will exceed what you get out of it. Adding in the cost of a mortgage could easily double or even triple the price you paid which makes things even worse. Maintenance costs include things like a new roof, carpet/flooring, water heater, appliances, etc. Yes, a home might cost you $100k and you might sell it for $200k after 15 years. However during that time you'll likely replace the roof ($10k to $20k), replace appliances ($2k to $5k), water heater ($1k), carpet/flooring ($5k to $20k), paint ($3k to $6k), and mortgage related costs (~$60k - assuming 30 yr fixed @4%). So your \"\"costs\"\" are between $180k and $200k just on those items. There are many more that could easily escalate the costs further. Like a fence ($5k+), air conditioner ($5k+), windows, etc. The above is assuming the home actually appreciates in value faster than inflation: which they historically haven't over the long term. So you have to consider all of the costs ultimately paid to purchase and maintain the home vs the costs of renting during the same time period. Point is: do your research and be realistic about it. Buying a home is a huge financial risk.\"" }, { "docid": "93897", "title": "", "text": "I don't think the two are particularly linked. While Brick is right in that the price of oil is denominated in dollars, I don't think that's responsible for most of the movement here. Oil has been weak for intrinsic reasons related to oil: supply/demand imbalance, largely. (Oil also was way over-priced back when it was > $100 a barrel; a lot of that was due to worries about instability in the Middle East.) The dollar has been strong for other, separate intrinsic reasons. The American economy has had a stronger rebound than Europe or Asia; while we were hit hard in the 2008 recession, we rebounded pretty quickly from a whole-economy point of view (we still have a lot of weaknesses in terms of long-term unemployment, but that doesn't seem to be hurting our productivity much). Pick another time period, and you won't necessarily see the same matching path (and I would even say that those paths don't match particularly well). Marketwatch covered this for example; other sites show similar things. There is a weak correlation, but only in the short term, or for specific reasons." }, { "docid": "350365", "title": "", "text": "\"Uncertainty has very far reaching effects. Oil is up ~100% since February and down ~40% from it's 52 week high (and down even more on a longer timeline). It's not exactly a stable investment vehicle and moves a few percent each day on basically nothing. A lot of securities will be bouncing around for the next couple weeks at least while folks remain uncertain about what the \"\"brexit\"\" will actually mean.\"" }, { "docid": "315930", "title": "", "text": "Here is some good advice, read your UCO prospectus. It seems to hold 20% of it's value ($600MM out of $3B) via 13800 of the Apr 21st 2015 contracts. (expiring in 30 days) Those will be rolled very quickly into the May contracts at a significant loss of NAV. (based on current oil futures chains) Meaning if crude oil stays exactly the same price, you'd still lose 1% (5% spread loss * .20% the percentage of NAV based off futures contracts) on the roll each month. Their other $2.4Billion is held in swaptions or cash, unsure how to rate that exposure. All I know is those 13,800 contracts are in contango danger during roll week for the next few months (IMO). I wonder if there is a website that tracks inflows and outflows to see if they match up with before and after the roll periods. http://www.proshares.com/funds/uco_daily_holdings.html How Oil ETFs Work Many oil ETFs invest in oil futures contracts. An oil futures contract is a commitment to buy a given amount of crude oil at a given price on a particular date in the future. Since the purpose of oil ETFs is only to serve as an investment vehicle to track the price of oil, the creators of the fund have no interest in stockpiling actual oil. Therefore, oil ETFs such as USO periodically “roll over” their futures contracts by selling the contracts that are approaching expiration and buying contracts that expire farther into the future. The Contango Problem While this process of continually rolling over futures contracts may seem like a great way to track the price of crude oil, there’s a practical problem with the method: contango. The rollover method would work perfectly if oil funds could sell their expiring contracts for the exact same price that they pay for the futures contracts they buy each month. However, in reality, it’s often true that oil futures contracts get more expensive the farther their expiration date is in the future. That means that every time the oil ETFs roll over their contracts, they lose the difference in value between the contracts they sell and the contracts they buy. That’s why funds like USO, which invests only in WTI light, sweet crude oil futures contracts, don’t directly track the performance of the WTI crude oil spot price. http://www.etftrends.com/2015/01/positioning-for-an-oil-etf-rebound-watch-for-contango/ Due to these reasons, I'd deem UCO for swing trading, not for 'investing' (buy-and-hold). Maybe later I'll remember why one shouldn't buy and hold leveraged vehicles (leverage slippage/decay). Do you have an exit price in mind ? or are you buy and hold ?" }, { "docid": "102698", "title": "", "text": "\"Anthony Russell - I agree with JohnFx. Petroleum is used in making many things such as asphalt, road oil, plastic, jet fuel, etc. It's also used in some forms of electricity generation, and some electric cars use gasoline as a backup form of energy, petrol is also used in electricity generation outside of cars. Source can be found here. But to answer your question of why shares of electric car companies are not always negatively related to one another deals with supply and demand. If investors feel positively about petroleum and petroleum related prospects, then they are going to buy or attempt to buy shares of \"\"X\"\" petrol company. This will cause the price of \"\"X\"\", petrol company to rise, ceteris paribus. Just because the price of petroleum is high doesn't mean investors are going to buy shares of an electric car company. Petrol prices could be high, but numerous electric car companies could be doing poorly, now, with that being said you could argue that sales of electric cars may go up when petrol prices are high, but there are numerous factors that come into play here. I think it would be a good idea to do some more research if you are planning on investing. Also, remember, after a company goes public they no longer set the price of the shares of their stock. The price of company \"\"X\"\" shares are determined by supply and demand, which is inherently determined by investors attitudes and expectations, ultimately defined by past company performance, expectations of future performance, earnings, etc.. It could be that when the market is doing well - it's a good sign of other macroeconomic variables (employment, GDP, incomes, etc) and all these factors power how often individuals travel, vacation, etc. It also has to deal with the economy of the country producing the oil, when you have OPEC countries selling petrol to the U.S. it is likely much cheaper per barrel than domestic produced and refined petrol because of the labor laws, etc. So a strong economy may be somewhat correlated with oil prices and a strong market, but it's not necessarily the case that strong oil prices drive the economy..I think this is a great research topic that cannot be answered in one post.. Check this article here. From here you can track down what research the Fed of Cleveland has done concerning this. My advice to you is to not believe everything your peers tell you, but to research everything your peers tell you. With just a few clicks you can figure out the legitimacy of many things to at least some degree.\"" }, { "docid": "189265", "title": "", "text": "\"If I had to guess, I think Chipotle's queso is the way it is because Chipotle is trying to maintain their \"\"wholesome, quality ingredients\"\" approach to queso. But that's the problem: naturally made cheeses don't melt into liquids. If anyone has worked in the pizza business for any period of time, then they might know at least one thing about cheese: melted cheese has a very high oil content. Mix your cheese with a shit load of oil and it can melt beautifully. Want your cheese to stay in a liquid state at a lower temperature? Add more oil. So if you want to maintain wholesome, arguably healthy ingredients and make queso at the same time, then you've got a problem because it's damn hard to make liquid cheese without having it be the worst thing imaginable for your health. After trying Chipotle's queso last week, I guessed that they were trying to make a not-so-miserable-for-your-health version of queso, so they made a queso without all of the added oil. But that's the problem: oil is fucking delicious. Pretty much anything that is high in fats (like oil) or sugars tastes amazing. The higher the fat and/or sugar content, the better it tastes, but also the worse it is for your health, generally. So Chipotle has a queso that isn't godawful for your health, but it also tastes like it. I applaud Chipotle's willingness to experiment with new products and try new things, but I'm projecting that this queso won't have mass appeal because it doesn't taste great. A group of us bought a cup of it, and we didn't finish it. Sorry, Chipotle. I like the effort; but if I want chips &amp; queso, my ass is rollin' across the street to Q'doba to get some of that terrible-for-my-health, zero-nutritional-value, yellow-oil-cheese-product deliciousness.\"" }, { "docid": "575074", "title": "", "text": "\"To begin, I'm not sure you understand what COL refers to. It's what you spend, not what you bring in. Let's say Bob makes 60k in some midwest town, but spends 30k for living. If his salary and his cost of living both increase at the same rate, let's say they both double, this means Bob now makes 120k but spends 60k. He now saves double what he would have before. That 30k extra saved is 30k extra saved. His purchasing power has now gone greatly up, especially in respect to housing outside of an expensive area like the valley. For one, let me clear this up - SF, the city itself, is expensive. I'm talking more generally about the bay area, and silicon valley as a whole. Most tech jobs from the big tech companies that we think of as \"\"the bay\"\" are not in SF. they are in mountain view, Sunnyvale, and that area. So this might explain some of our disagreements. Most people who work for large tech companies understand they have a decision to make - live in the city proper, pay a lot more than the greater valley, use transit into work (all of the giants have regular shuttles in), but get to love a more \"\"hip\"\" life, or be more conservative in the valley, where rental prices are on par with NYC. In talking to a lot of people who work for the big companies, they know this. Younger folks who want to live the city life pay the premium, but by far and wide they live outside of it, where it is closer to work, and they take the rail up for weekends out with buddies. I'm still not sure where you are getting a doubling of the COL in the valley versus outside. Yes, housing as a single item is going to be a person's largest expense. But all the rest of their expenses are not going to see a similar increase. It's also important to remember that saving 10% of 60 v 10% of 120 is significantly different. Lots of people take jobs in the valley, are able to save vastly larger amounts of cash, and then leave. In my calculations I evaluated the COL markup to be ~30% for the valley for a 200k job. That is, I spend maybe 50k of my earning on all living expenses in the Midwest (in a downtown, nice area), and would expect I'd pay about 70k for the same standard in the valley. But I'd be saving a shitton more. I've done the math, I'm not here to argue with someone who just googled SF cost of living searching for the answers I want. I've talked to actual people out there. I appreciate your passion for this, but your 100% increase in COL estimate is simply wrong. But then again, it depends on how you live and where you live in your current situation. I live in a large midwest city, actually in the city itself.\"" }, { "docid": "158520", "title": "", "text": "There are different perspectives from which to calculate the gain, but the way I think it should be done is with respect to the risk you've assumed in the original position, which the simplistic calculation doesn't factor in. There's a good explanation about calculating the return from a short sale at Investopedia. Here's the part that I consider most relevant: [...] When calculating the return of a short sale, you need to compare the amount the trader gets to keep to the initial amount of the liability. Had the trade in our example turned against you, you (as the short seller) would owe not only the initial proceeds amount but also the excess amount, and this would come out of your pocket. [...] Refer to the source link for the full explanation. Update: As you can see from the other answers and comments, it is a more complex a Q&A than it may first appear. I subsequently found this interesting paper which discusses the difficulty of rate of return with respect to short sales and other atypical trades: Excerpt: [...] The problem causing this almost uniform omission of a percentage return on short sales, options (especially writing), and futures, it may be speculated, is that the nigh-well universal and conventional definition of rate of return involving an initial cash outflow followed by a later cash inflow does not appear to fit these investment situations. None of the investment finance texts nor general finance texts, undergraduate or graduate, have formally or explicitly shown how to resolve this predicament or how to justify the calculations they actually use. [...]" } ]

[ { "docid": "501384", "title": "", "text": "\"This is only a partial answer to your question #1. If you have a conservative approach to savings (and, actually, even if you don't), you should not invest all of your money in any single industry or product. If you want to invest some money in oil, okay, but don't overdo it. If your larger goal is to invest the money in a manner that is less risky but still more lucrative than a savings account, you should read up on personal finance and investing to get a sense of what options are available. A commonly-recommended option is to invest in low-cost index funds that mirror the performance of the stock market as a whole. The question of \"\"how should I invest\"\" is very broad, but you can find lots of starting points in other questions on this site, by googling, or by visiting your local library.\"" } ]

[ { "docid": "417446", "title": "", "text": "\"I'm going to discuss this, in general, as specific investment advice isn't allowed here. What type of account is the $60K in now? I mean - Is it in a 401(k), IRA or regular account/CD/money market? You are still working? Does your company offer any kind of matched 401(k)? If so, take advantage of that right up the level they'll match. If not, are you currently depositing to pretax IRAs? You can't just deposit that $60K into an IRA if it isn't already, but you can put $11k/yr ($5 for you, $6K for hubby if you make $11K or more this year.) Now, disclaimer, I am anti-annuity. Like many who are pro or con on issues, this is my nature. The one type of annuity I actually like is the Immediate Annuity. The link is not for an end company, it shows quotes from many and is meant as an example. Today, a 65 yr old man can get $600/mo with a $100K purchase. This is 7.2%, in an economy in which rates are sub 3%. You give up principal in exchange for this higher annual return. This is a viable solution for the just-retired person whose money will run out when looking at a 4-5% withdrawal but 1% CD rate. In general, these products are no more complex that what I just described, unlike annuities sold to younger fold which combine high fees with returns that are so complex to describe that most agents can't keep their story straight. Aside from the immediate flavor, all other annuities are partial sold (there's a quote among finance folk - \"\"annuities are sold, not bought\"\") based on their tax deferral features. I don't suspect you are in a tax bracket where that feature has any value to you. At 48/54, with at least 10 years ahead of you, I'd research 'diversification' and 'asset allocation'. Even $60K is enough to proper invest these funds until you retire and then decide what's right for you. Beginners' Guide to Asset Allocation, Diversification, and Rebalancing is an interesting introduction, and it's written by the SEC, so your tax dollars paid for it. Some months ago, I wrote Diversifying to Reduce Risk, which falls short of a complete discussion of asset allocation, but it does illustrate the power of being in a stock/bond mix. The ups and downs were reduced significantly compared to the all stock portfolio. (for follow up or to help others reply to you, a bit more detail on the current investments, and how you are devastated, eg was there a huge loss from what you had a few years ago?) Edit - The original poster hasn't returned. Posted the question and left. It's unfortunate as this was someone who would benefit from the dialog, and the answers here can help others in a similar position, but I feel more discussion is in order for the OP. Last, I caught a downvote on my reply today. I take no offense, but curious which part of my answer the DVer disagreed with.\"" }, { "docid": "420046", "title": "", "text": "You should be worried. You have made the mistake of entering an investment on the recommendation of family/friend. The last think you should do is make another mistake of just leaving it and hoping it will go up again. Your stock has dropped 37.6% from its high of $74.50. That means it has to go up over 60% just to reach the high of $74.50. You are correct this may never happen or if it does it could take a long, long time to get up to its previous highs. What is the company doing to turn its fortunes around? Take a look at some other examples: QAN.AX - Qantas Airways This stock reached a high of around $6 in late 2007 after a nice uptrend over a year and a half, it then dropped drastically at the start of the GFC, and has since kept falling and is now priced at just $1.15. QAN reported its first ever loss earlier this year, but its problems were evident much earlier. AAPL - Apple Inc. AAPL reach a high of just over $700 in September 2013, then dropped to around $400 and has recovered a bit to about $525 (still 25% below its highs) and looks to be at the start of another downtrend. How long will it take AAPL to get back to $700, more than 33% from its current price? TEN.AX - Ten Network Holdings Limited TEN reached a high of $4.26 in late 2004 after a nice uptrend during 2004. It then started a steep journey downwards and is still going down. It is now priced at just $0.25, a whopping 94% below its high. It will have to increase by 1600% just to reach its high of $4.26 (which I think will never happen). Can a stock come back from a drastic downtrend? Yes it can. It doesn't always happen, but a company can turn around and can reach and even surpass it previous highs. The question is how and when will this happen? How long will you keep your capital tied up in a stock that is going nowhere and has every chance of going further down? The most important thing with any investment is to protect your current capital. If you lose all your capital you cannot make any new investments until you build up more capital. That is why it is so important to have a risk management strategy and decide what is your get out point if things go against you before you get into any new investment. Have a stop loss. I would get out of your investment before you lose more capital. If you had set a stop loss at 20% off the stock's last highs, you would have gotten out at about $59.60, 28% higher than the current share price of $46.50. If you do further analysis on this company and find that it is improving its prospects and the stock price breaks up through its current ranging band, then you can always buy back in. However, do you still want to be in the stock if it breaks the range band on the downside? In this case who knows how low it can continue to go. N.B. This is my opinion, as others would have theirs, and what I would do in your current situation with this stock." }, { "docid": "516818", "title": "", "text": "FTA: “Yet this new study notes that subsidies aren’t simply cash being handed to oil companies. Subsidies often come in the form of tax breaks, which is just one of the many ways oil companies receive government handouts.” Tax breaks are not subsidies. The taxpayer pay absolutely nothing to the oil companies when a tax break is applied. The taxpayers are actually net recipients from the drilling activity. If the existence of a tax break is a requirement for oil drilling profitability, then elimination of the tax break would eliminate drilling. The taxpayers are choosing between zero additional tax revenue without tax breaks or some tax revenue with tax breaks so drilling can proceed. The article’s point about export ports being subsidized by the taxpayer is a distraction. The VAST majority of oil produced in the US is consumed in the US. All that oil is drilled, transported, refined, transported again, then sold to consumers in an end-to-end supply chain built on a vast sum of private capital." }, { "docid": "591705", "title": "", "text": "I would focus first on maxing out your RRSPs (or 401k) each year, and once you've done that, try to put another 10% of your income away into unregistered long term growth savings. Let's say you're 30 and you've been doing that since you graduated 7 years ago, and maybe you averaged 8% p.a. return and an average of $50k per year salary (as a round number). I would say you should have 60k to 120k in straight up investments around age 30. If that's the case, you're probably well on your way to a very comfortable retirement." }, { "docid": "496211", "title": "", "text": "A simple example - When looking at oil trading in different locations first I have some back of the envelop adjustments for the grade of oil, then look at storage costs (irrelevant in the case of electricity) and transport costs between two locations to see if physical players are actively arbing the spread. No strong views on reading material in this specific area - Google, google scholar and amazon all have relevant material. When it comes to your current problem, here are some questions to think about: 1. Is the power generated from the same commodity at location A and location W? 2. How has the spread changed in the past? Has trading location W actively hedged the worst cases of prices moves in location A? 3. Is it feasible to trade the commodity that location A generates the majority of its power from/how does that compare to electricity trading at location W as a hedge? 4. If hedging is really desirable, are you sure you can't do an illiquid over the counter hedge at location A? Paying a little bit more in the bid/ask for the hedge could be more desirable than trying to jump into a market you yourselves don't quite understand. 5. If your consultants come back with just some hedge ratios without discussing what drives the spreads between the two locations and where the spreads are currently be skeptical." }, { "docid": "178896", "title": "", "text": "Don't worry about Buffett. I have a feeling this will be like Wells Fargo in the 90s where Buffett will make 1000% his investment by the end of the next decade. You can hate them all you want, but does anybody really think that Bank of America is going away? This is like when BP supposed caused a trillion of dollars in damage, and the market cap fell something like 140 billion. In the end, it's probably only going to cost them $20 billion. Life is already going on for the oil spill. Bank of America will get some more hate for a while. They'll get tons of lawsuits, but they'll probably settle for something like $30 billion (one year's earnings). In two or three years, you'll have a company earning $30 billion that is current valued at $50 billion. It's been 4 years since the bubble burst in 2007. Most of the crappy loans are gone already (either defaulted/written off or if they have been paying for 4 years then they are not really crappy at all). There are 4 years worth of prime loans on the books. In 2007, people assumed the somewhat opaque book of loans (mostly subprime) is worth 100 cents on the dollar. Today, people are assuming that the somewhat opaque book of loans (mostly prime) is worth 0 cents on the dollar. Just look around Reddit and see what people are saying about the banks' financial condition, even though they never read any SEC filings or analyst reports. I think (and apparently Buffett also thinks) that the book is worth something between 0 and 100, likely in the upper end." }, { "docid": "490630", "title": "", "text": "Perhaps an example will help make it more clear. Any given year: Revenue: 200K, profit 60K You get 40K in profit, plus any salary, he gets 20K Next year you attract the attention of a competitor and they offer and you accept to sell. You would get 100% of the proceeds. This is kind of a bad deal for him as you could easily play accounting tricks to diminish the company's profits and reduce his pay. For the given example, you could pay yourself a 60K bonus and reduce the profit to zero and eliminate his compensation. There should probably be a revenue metric included in his compensation. Edit: It is really nice to hear you have a desire to treat this person fairly. Honesty in business is necessary for long term success. I would simply make his salary dependent upon the revenue he generates. For example, lets say you can make a widget for 4 and you expect to sell them for 10. Your profit would be 6, and with the suggested split he would receive $2, you $4. Instead I would have him receive like 15% of the revenue generated This allows for some discounts for bulk items and covers the cost of processing sales. It also allows him to share revenue with his staff. Alternatively you could also do a split. Perhaps 7.5% of revenue and 10% of profit." }, { "docid": "350365", "title": "", "text": "\"Uncertainty has very far reaching effects. Oil is up ~100% since February and down ~40% from it's 52 week high (and down even more on a longer timeline). It's not exactly a stable investment vehicle and moves a few percent each day on basically nothing. A lot of securities will be bouncing around for the next couple weeks at least while folks remain uncertain about what the \"\"brexit\"\" will actually mean.\"" }, { "docid": "85214", "title": "", "text": "I'm the contrarian in the crowd. I think credit scores and debt are the closest thing to evil incarnate. You're in good company. The absence of a credit score simply means the agencies have insufficient data in their behavioral model to determine how profitable your business would be to the bank. The higher your score, the more likely the bank is to make a profit from your loan. IMHO, you're better off building up cash and investment reserves than a credit history. With sufficient reserves, you will be able to shop around for a bank that will give you a good rate, if you ever do need a loan. You'll be surprised at how quickly you get in a position where you don't need a loan if you save and invest wisely. I used to have a (high) credit score, and I was miserable about it because there were always bills due. I gave up debt 14 years ago, paid the last debt 7 years ago, and have never. been happier. Raising kids without debt (or credit score) is much more fun than with debt." }, { "docid": "189265", "title": "", "text": "\"If I had to guess, I think Chipotle's queso is the way it is because Chipotle is trying to maintain their \"\"wholesome, quality ingredients\"\" approach to queso. But that's the problem: naturally made cheeses don't melt into liquids. If anyone has worked in the pizza business for any period of time, then they might know at least one thing about cheese: melted cheese has a very high oil content. Mix your cheese with a shit load of oil and it can melt beautifully. Want your cheese to stay in a liquid state at a lower temperature? Add more oil. So if you want to maintain wholesome, arguably healthy ingredients and make queso at the same time, then you've got a problem because it's damn hard to make liquid cheese without having it be the worst thing imaginable for your health. After trying Chipotle's queso last week, I guessed that they were trying to make a not-so-miserable-for-your-health version of queso, so they made a queso without all of the added oil. But that's the problem: oil is fucking delicious. Pretty much anything that is high in fats (like oil) or sugars tastes amazing. The higher the fat and/or sugar content, the better it tastes, but also the worse it is for your health, generally. So Chipotle has a queso that isn't godawful for your health, but it also tastes like it. I applaud Chipotle's willingness to experiment with new products and try new things, but I'm projecting that this queso won't have mass appeal because it doesn't taste great. A group of us bought a cup of it, and we didn't finish it. Sorry, Chipotle. I like the effort; but if I want chips &amp; queso, my ass is rollin' across the street to Q'doba to get some of that terrible-for-my-health, zero-nutritional-value, yellow-oil-cheese-product deliciousness.\"" }, { "docid": "406377", "title": "", "text": "I know I came a little late to this discussion but let me give you my opinion. I think that purchasing the BMW is a terrible investment for obvious reasons. Once you drive the car off the dealer's lot the car loses anywhere from 5-10k in value immediately. Its a terrible investment and something that you will regret in the future. However, whether you buy it now or you hold off we all know you are eventually still going to get it. I graduated college and was in a similar situation as the one you are now. I started making 60k after college and leased a brand new BMW. Like I said it was a terrible investment, but I do not regret it for one day. Ive had so much fun in that car that I can't even begin to explain. We only live once and you don't want to be one of those guys that looks back and says I should've this I should've that, JUST DO IT. We all know it won't be possible when you have a wife and kids so just splurge now and be responsible later LOL." }, { "docid": "138994", "title": "", "text": "\"&gt; Thank you for the wealth of information! Sure, I hope my opinions are food for thought. &gt; 1) Does that basically translate to \"\"less tax on poor/wealthy...to promote entrepreneurship? No, your typical entrepreneur is a smart, disgruntled employee who thinks they have a better way to do a job. If you want more entrepreneurs, you should do things to help them succeed in a new company and minimize the risk. Some ways to do this: * Create a government agency that offers programs that help new companies. Guidance and funding are obvious candidates. Advertising for small local business would help too. One of the most important would be getting complementing talent together because a start-up needs the talents of at least four different people to have a good chance of succeeding. * Establish guaranteed health care. A 40-something with a wife and kids may have a great idea but can't risk to leave his family with no health insurance for the two years it would take to get his idea off the ground. * Better enforce anti-trust law. I believe small companies are stifled by big companies because the latter control too much of the market. If you want competitive markets you need to either break-up or handcuff and monitor the big players. * Create a better safety net. It is a lot easier to go on your own if you know at least you won't starve. &gt; 2) Rich using money to grow their own wealth. But wouldn't that mean as a byproduct, jobs will be made? In theory, yes, but I believe in practice the opposite happens. Big companies can make significantly more money hoarding their market share rather than branching into new markets. Here's a true story of my last company with names changed: Company A makes widgets. Company B makes bookkeeping software for tracking widgets and is very successful, controlling a majority of the market. Company A buys Company B at an inflated price. The government allows the sale on the condition that Company A does not use Company B's information on the widget market to gain an unfair advantage. Company A agrees and the buyout takes place. Company A then approaches all of Company B's customers and says, \"\"Let us look at the data on your bookkeeping software and we will give you a 5% discount.\"\" Most customers agree so Company A now has all the data controlled by Company B but this is not illegal because they got it from Company B's customers, not company B. Company A proceeds to undercut the market because it now knows exactly how much their competitors widgets sell for. Company A now controls a majority of the widget market and their market share continues to grow rapidly. By the way [here is that Bloomberg article I described earlier about repatriation being about buyouts](https://www.bloomberg.com/gadfly/articles/2017-05-08/theory-of-tax-repatriation-is-better-than-the-reality). &gt;&gt; Take home money is used for investment. It isn't. &gt; 3) I don't think I understand this one at all. Will you rephrase it for me? The argument is that we need to tax corporations less so they can invest more. Here's the problem -- investments are not taxed. A corporation's tax is a percentage of their gross income minus their expenses. Investment is an expense. Therefore the more they invest, the lower their tax bill. If you want companies to invest more, raise their tax rate. &gt; 4) I did hear from my professor and the educational videos he had shown us that the capital tax is one of the highest among the other OECD nations. I need to walk back what I said earlier. The US corporate tax rate is one of the highest. Does that mean US corporations pay the most tax? Well, [it's complicated](http://www.npr.org/2017/08/07/541797699/fact-check-does-the-u-s-have-the-highest-corporate-tax-rate-in-the-world). &gt; ...why can't we just close loop-holes instead of choosing to slash capital tax? Note that those go in opposite directions. Closing loopholes would make companies pay more. Slashing capital tax would have them pay less. Perhaps doing both would be revenue neutral. I would be in support of that because I suspect loopholes benefit big companies a lot more than small ones because they have the resources to find and exploit those loopholes. That said, people in power have been talking for 20 years about \"\"closing the loopholes\"\". They never do. [CGP Gray has an excellent video explaining why these loopholes are not going anywhere anytime soon](https://www.youtube.com/watch?v=rStL7niR7gs). &gt; 5) I think it's in each company's best interest to further their own agenda, and that agenda usually means bad for the majority. Yes, that's a much better way of saying what I meant. &gt; Thank you in advance for your time. Sure, thanks for thinking, asking questions, and making up your own mind.\"" }, { "docid": "488638", "title": "", "text": "\"Really this is no different from any kind of large lump sum and having a mortgage. There are probably many questions and answers on this subject. It really doesn't matter that the proceeds were the result of a sale, an inheritance would not change the answer. I think it is important to note that the proceeds will not eliminate the house 2 mortgage. A high level choice of investment one makes is between equity (such as stock) and debt investments (such as bonds and mortgages). You are in a unique case of being able to invest in your own mortgage with no investment fee. This may tip the scales in favor of paying down the mortgage. It is difficult to answer in your specific case as we don't know the rest of your finances. Do you have a sizable 401K that is heavily invested in stocks? Do you have the need for a college fund? Do you have an emergency fund? Do you have a desire to own several homes generating income property? If it was me I'd do the following in order, skipping steps I may have already completed: I've heard that the bank may agree to a \"\"one time adjustment\"\" to lower the payments on Mortgage #2 because of paying a very large payment. Is this something that really happens? I really kind of hate this attitude. Your goal is to get rid of the mortgage in a timely manner. Doing such makes paying for kids college a snap, reduces the income one might need in retirement, basically eliminates the need for life insurance, and gives one a whole lot of money to have fun with.\"" }, { "docid": "254500", "title": "", "text": "I'm leaning more towards trading it in can anyone give me some pointers on how to get the best deal? Information is key to getting the best deal possible. That is why I would strongly suggest getting a second opinion on the repairs. A misfire could be caused by many things. From cheap (bad spark plugs or cables) to mid-range cost (timing is off) to expensive (not getting proper compression in the cylinders due to mechanical issues that could require an engine rebuild). Also, car diagnostics is not an exact science, so it is definitely worth checking with another mechanic. You trust the first place you took it too, which is great. You taking it to another place does not represent a lack of trust, it represents knowing that humans are fallible and car repair diagnostics are not perfect either. Once you have quotes from 2 or 3 places for the repair work, you are in a much better position to negotiate. The next step is to see how much it will cost to replace the thing. Get actual quotes for trade-in from dealers, and you must disclose the engine troubles to them when getting this quote. $8,000 minus this amount is how much you are under water. Add that to the price of the car you would like to purchase to know how much of a loan you will have to take out (minus any downpayment). The next thing to consider is how you manage your risk from there. Your new car will be under-water too. Can you even get a loan? Will you need additional collateral or gap insurance to get the loan? What happens if you get in an accident the next day and total this car? Once you have all of this information, you are ready to really start thinking about the decision to be made. Things to consider: How reliable has the HHR been up to now? You don't want to put $3,500 into it now only to have to spend a few grand more in a month to replace the transmission. It is hard for us to know this as we don't know how long you have had it, what troubles you have had in the past, how well you have taken care of it (regular oil changes and maintenance). Keshlam is right about asking mechanics to check for other problems and scheduled maintenance that has not been done (e.g., timing belts replaced). Once you have made your decision, remember that everything is negotiable if you are wiling to walk away. If you decide to keep the car, try to get a better deal on the repairs by checking out other repair shops. If you decide to buy another car and get rid of this one, both the sale price of the new car and the trade-in price of the HHR are negotiable. Shop around and put in the work to buy something that will last a at a good price." }, { "docid": "183861", "title": "", "text": "\"That's actually a great question. I'm not really sure how much they're pumping into that sector yet, but I know Exxon and a few others are very interested in what renewable energy avenues they can take advantage of. This article is a little old, but gives a good overview (there are many others like it). I think a lot is still in the \"\"testing\"\" phase right now though. https://www.theguardian.com/business/2016/may/21/oil-majors-investments-renewable-energy-solar-wind\"" }, { "docid": "51715", "title": "", "text": "\"Theory of Levered Investing Borrowing in order to increase investment exposure is a time-honored and legitimate activity. It's the optimal way to increase your exposure, according to finance theory (which assumes you get a good interest rate...more on this later). In your case it may or may not be a good idea. Based on the information in your post, I believe that in your case it is not a good idea. Consider the following concerns. Risk In finance, reward comes with risk and in no other way. Investing borrowed money means there is a good (not small) chance that you will lose enough money that you will need to pull significant wealth from your own savings in order to make up the difference. If you are in a position to do this and OK with that possibility, then proceed to to the next concern. If losing a lot of money means financial calamity for you, then this is a bad idea. You haven't described your financial situation so I don't know in which camp you fall. If the idea of losing, say, $100K means complete financial failure for you, then the strategy you have described simply has too much risk. Make no mistake, just because the market makes money on average does not mean it will make money, or as much money as you expect, over your horizon. It may lose money, perhaps a lot of money. Make sure this idea is very clear in your mind before taking action. Rewards Your post implies that you think you can reliably get 10%-12% on an investment. This is not the case. There are many years in which a reasonable portfolio makes this much or more, but on average you will earn less. No ones knows the true long-term market risk premium, but it is definitely less than 10%. A better guess would be 6.5% plus whatever the risk-free rate is (currently about 0%). Buying \"\"riskier\"\" investments means deviating from the optimal portfolio, meaning you took on more risk than is justified by how much extra money you expect to make. I never encourage people to invest based on optimistic or unrealistic goals. If anything, you should be conservative about how you expect things to go. And remember, these are averages. Any portfolio that earns 10%-12% also has a very good chance of losing 25% or more. People who sell or give advice on investments frequently get you charged up by pointing at times and investments that have done very well. Unfortunately, we never know whether the investments and time period in which we are investing will be a good one, a bad one, or an unexciting one. The reality of investing is...well, more realistic than what you have described. Costs I can't imagine how you could borrow that much money and only have an annual payment of $2000 as you imply--that must be a mistake. No individual borrows at a rate significantly below 1%. It sounds like it's not a collateralized loan of any kind, so unless you are some kind of prime-loan customer, your interest rate will be significant. Subtract whatever rate you actually pay from 6.5% to get a rough idea of how much you will make if things go as well as they do on average. You will pay the interest whether times are good or bad. If your rate is typical of noncollateralized personal loans, there's a good chance you will lose money on average using the strategy you have described. If you are OK with taking risk with a negative expected return, consider a trip to Las Vegas. It's more exciting. Ethics I'm not one to make people feel guilty for doing things that are legal but of questionable morality. If that's the case and you are OK with it, more power to you. I'm not sure under what pretense you expect to obtain the money, but it sounds like you might be crossing legal lines and committing actual crimes (like fraud). Make sure to check on whether what you intend is a white lie or something that can get you thrown in prison. For example, if you are proposing obtaining a subsidized education loan and using it for speculation, I could easily see you spending serious time in prison and permanently ruining your life, even if your plan works out. A judge and 12 of your peers are not going to think welfare fraud is a harmless twist of the truth. Summary I've said a lot of negative things here. This is because I have to guess about your financial situation and it sounds like you may have unrealistic expectations of the safety and generosity of investing. Quite frankly, people for whom borrowing $250K is no big deal don't normally come and ask about it on StackExchange and they definitely don't tend to lie in order to get loans. Also $18K a year doesn't change their quality of life. However, I don't know. If $250K is small relative to your wealth and you need a good way to increase your exposure to the market risk premium, then borrowing and investing may well be a good idea.\"" }, { "docid": "341148", "title": "", "text": "I say, before investing your real capital into the Stock Market, play around on the virtual stock exchange game. It let's you invest with virtual capital and you can gain experience with the stock market. I wouldn't start investing in stock until I'm sure I can cover losses though. If you do intend to invest stocks so early in your career, then you should learn how to read SEC filings (not necessary, but helpful in understanding how investors think) such as 8-K/10-K/10-Q documents so you can predict profitability and growth of companies you invest in. Once you become a veteran of the stock market game, you probably won't need to read the SEC filings into too much detail - especially if you have a diverse portfolio. Good Luck. The one takeaway from this message would probably be: Stop! and play around on virtual stocks before immersing yourself in the real thing." }, { "docid": "194669", "title": "", "text": "\"While you want it to grow faster than inflation, there are things like I-bonds that can carry some inflation protection with them for an idea that may make sense for part of this. There are now some more details and I'd think this seems alright initially though I would suggest considering having some kind of on-going plan to handle periodically seeing how much more to invest here and what kind of taxes will this generate for you as taxable accounts can carry a mix of dividends, interest and capital gains that you may have to pay even though you didn't see the gain yourself. Keep in mind that if you do go with a big-name investment bank, this could well add more fees as well as other stuff. Lehman Brothers was a big name investment bank once upon a time and they went broke. While you may want to be hands-off, I'd still suggest having some kind of timeline for how often are your investments to be reviewed and things re-allocated. Each quarter, semi-annually, or annual? There isn't so much a right or wrong answer here as much as I'd point out that one should be aware of the trade-offs in each case. If you take annual and wonder each week how it is doing, then something a bit more frequent may make sense. On the other hand, some people may well \"\"set it and forget it\"\" which can work as long as there is something to know about where to go if something does go broke. As these are managed investments, the SIPC check I'd make may not hold though this would be the equivalent of FDIC for deposits when dealing with securities. The REIT can be useful for diversification, sure. You do realize that there may be some interesting taxes for you in the next few years given the nature of a REIT investment, right? The \"\"Return of Capital\"\" that a REIT may pass through as a REIT to maintain its tax status must distribute 90% of its net income each year that can be quite a off shoot of funds. Where would those proceeds be invested? This isn't mentioned in your post and thus I'm curious as if the REIT passes out a dividend yield of say 5% then this is $2,000/year that could go somewhere.\"" }, { "docid": "564957", "title": "", "text": "I think you are right. I hear people all the time with horror stories about futures and trading horror stories in general. I want to learn about this market, but I don't want to go in without some education on the matter. I watched their video on options on futures, but the valuation method needs a bit more explaining to be (beta, gamma, etc.). I get the basic idea of options on futures, but I need to formulate a strategy, and that is where study would come in. I have wanted to play around with a few strategies I had in my head for regular options, and by the time I get the grasp of it, I might be able to trade options on futures. I guess my biggest thing with options on futures is not to be sophisticated, but more so I can have access to new markets. On the topic of options though, I do think there is some strategies that could boost my returns a bit on my existing strategies. I think selling various options (selling call options on weak dividend stocks stuck as bulk shipper or mortgage reits and as of late oil trusts or selling put options on some stronger oil reits or other stronger dividend stocks). The only problem is I don't know if the premium would be enough to make it worth while with the weak dividend stocks. So either way, even if you are only earning a conservative 9% on dividends, if you add in another 4% for premium, you could be making 13% off of one trade, and could repeat the process (assuming the target stayed weak or strong)." } ]

[ { "docid": "60175", "title": "", "text": "If you've decided to ignore the sound advice re: oil company stocks, and you want something directly linked to the price of oil, do the following: Understand that oil producers would like avoid the risk of a price drop, and oil consumers (refiners, electric utilities, etc.) would like to avoid the risk of a price rise. Understand that you are about to assume their risk." } ]

[ { "docid": "180592", "title": "", "text": "\"Primerica's primary value proposition is that switching from whole or universal life to term life, and investing the difference is a good idea for most people. However, there are a number of other important factors to consider when purchasing life insurance, and I would also be wary of anyone claiming that one product will be the \"\"best\"\" for you under all circumstances. Best Insurance? Without getting into a much larger discussion on how to pick insurance companies or products, here are a few things that concern me about Primerica: They have a \"\"captive\"\" sales force, meaning their agents sell only Primerica products. This means that they are not shopping around for the best deal for you. Given how much prices on term life have changed in recent years, I would highly recommend taking the time to get alternate quotes online or from an independent broker who will shop around for you. Their staff are primarily part-time employees. I am not saying they are incompetent or don't care, just that you are more likely to be working with someone for whom insurance is not their primary line of work. If you have substantial reason to believe that you may someday need whole life, their products may not suit you well. Primerica does not offer whole life as far as I am aware, which also means that you cannot convert your term life policy through them to whole life should you need to do so. For example, if you experience an accident, are disabled, or have a significant change in your health status in the future and do not have access to a group life policy, you may be unable to renew your individual policy. Above Average Returns? I am also highly skeptical about this claim. The only possible context in which I could find this valid would be if they mean that your returns on average will be better if you invest in the stock market directly as compared to the returns you would get from the \"\"cash value\"\" portion of a life insurance product such as universal life, as those types of products generally have very high fees. Can you clarify if this is the claim that was made, or if they are promising returns above those of the general stock market? If it is the latter, run! Only a handful of superstar investors (think Warren Buffet, Peter Lynch, and Bill Gross) have ever consistently outperformed the stock market as a whole, and typically only for a limited period of time. In either case, I would have the same concerns here as stated in reasons #1 and #2 above. Even more so than with insurance, if you need investment advice, I'd recommend working with someone who is fully dedicated to that type of work, such as a fee-only financial planner (http://www.napfa.org/ is a good place to find one). Once you know how you want to invest, I would again recommend shopping around for a reputable but inexpensive broker and compare their fees with Primerica's. Kudos on having a healthy level of skepticism and listening to your gut. Also, remember that if you are not interested in their offer, you don't have to prove them wrong - you can simply say \"\"no thank you.\"\" Best of luck!\"" }, { "docid": "417446", "title": "", "text": "\"I'm going to discuss this, in general, as specific investment advice isn't allowed here. What type of account is the $60K in now? I mean - Is it in a 401(k), IRA or regular account/CD/money market? You are still working? Does your company offer any kind of matched 401(k)? If so, take advantage of that right up the level they'll match. If not, are you currently depositing to pretax IRAs? You can't just deposit that $60K into an IRA if it isn't already, but you can put $11k/yr ($5 for you, $6K for hubby if you make $11K or more this year.) Now, disclaimer, I am anti-annuity. Like many who are pro or con on issues, this is my nature. The one type of annuity I actually like is the Immediate Annuity. The link is not for an end company, it shows quotes from many and is meant as an example. Today, a 65 yr old man can get $600/mo with a $100K purchase. This is 7.2%, in an economy in which rates are sub 3%. You give up principal in exchange for this higher annual return. This is a viable solution for the just-retired person whose money will run out when looking at a 4-5% withdrawal but 1% CD rate. In general, these products are no more complex that what I just described, unlike annuities sold to younger fold which combine high fees with returns that are so complex to describe that most agents can't keep their story straight. Aside from the immediate flavor, all other annuities are partial sold (there's a quote among finance folk - \"\"annuities are sold, not bought\"\") based on their tax deferral features. I don't suspect you are in a tax bracket where that feature has any value to you. At 48/54, with at least 10 years ahead of you, I'd research 'diversification' and 'asset allocation'. Even $60K is enough to proper invest these funds until you retire and then decide what's right for you. Beginners' Guide to Asset Allocation, Diversification, and Rebalancing is an interesting introduction, and it's written by the SEC, so your tax dollars paid for it. Some months ago, I wrote Diversifying to Reduce Risk, which falls short of a complete discussion of asset allocation, but it does illustrate the power of being in a stock/bond mix. The ups and downs were reduced significantly compared to the all stock portfolio. (for follow up or to help others reply to you, a bit more detail on the current investments, and how you are devastated, eg was there a huge loss from what you had a few years ago?) Edit - The original poster hasn't returned. Posted the question and left. It's unfortunate as this was someone who would benefit from the dialog, and the answers here can help others in a similar position, but I feel more discussion is in order for the OP. Last, I caught a downvote on my reply today. I take no offense, but curious which part of my answer the DVer disagreed with.\"" }, { "docid": "471490", "title": "", "text": "They aren't all rich on average. And oil and gas is actually now only about 25% of the economy in the UAE (incredibly!). There are good reasons why it felt that way, though: The UAE and a number of other oil-rich nations all realize that they need to diversify away from oil revenues. International investment and tourism are the main ways in which they hope to attract capital (free trade/full foreign ownership/no-tax zones, World Cup, etc.). Business and government are often one and the same or working closely together, and they are extremely savvy about cultivating your experience in their company, and want to make sure they are doing everything in their power to get you to like and spend money in their country. Essentially, you are visiting their version of Las Vegas. Additionally, they have taken on massive debt to create those kinds of cities and experiences. According to the World Bank and the CIA (see here), the per capita GDP of the UAE on a Purchasing Price Parity basis is about 18% higher than in the US. Since much of the oil wealth is controlled by the state, it is not certain how evenly that income is distributed (World Bank and CIA statistics do not provide R/P or Gini data for UAE, while it is provided for most nations)." }, { "docid": "512265", "title": "", "text": "&gt; ever eat paper? Yeah, of course, plenty of times. Not (usually) intentionally, but sometimes a wrapper will get stuck, etc. Also, it's a good way to get rid of something if you don't have a lighter. More so when I was a kid and messing around with 'secret notes' and the like but.. ..yeah, I've eaten paper. Granted, I've probably eaten gold as well, and there are some benefits or health values of gold.. .. within the pseudoscientific / alt-health crowd.. ..not sure I buy into those but. ..it has some value. But, nothing like paper. Obviously there are different materials used for making paper.. ... lots of barks have a value from a health perspective, a relative nutritional value. Growing the tree, depending on the type, can provide fruit, building materials, etc.. ..with the pulp providing a paper value. So, multiple benefits can come from paper.. ...and, that's just the post-harvest aspect.. well, the case of fruit I guess not. but, there's the environmental benefits of trees and such as well; habitats for wild life, wind breaks, carbon sequestration. soil health, etc. Multiple benefits, and that's just from tree-based paper. If you expand it out to something like, say, hemp paper? well, there's the oil.. ... which can be used for fuel production, various other uses, and, most especially, the health benefits and consumption from it.. ...while the remaining fibers can be used for construction... be it compressed bricks, hempcrete (which has excellent values in strength, durability, insulation, weight-to-strength *ratio*, etc. And, again, the health benefits of hemp oil... ...argued to be the single 'thing' you can consume solely (+ water) and get 100% of the nutrients you need.. ...in mixed ratios and obviously it isn't as great as other things in concentrations, but.. ..it's extremely nutritious. Also, the plant is really good for the soil, again, habitats, sequesters carbon, helps to pull toxins and such *out* of the soil for bioremediation. Is quick to grow, grows densely, is durable, has minimal inputs needed, hardy, ... all around a great crop. and, again, the health benefits of its oil are *combined* with its paper making capabilities. .... and, good strong paper too. has a great weight, feel, durable, can/will last a really long time if properly handled.. ..and has much wider variance *in* 'proper handling' than tree-based paper. Solid product. You should look into it, ... here, I'll give you some links to help you out. * [9 Health Benefits of Hemp Oil That You Should Know](http://www.zliving.com/wellness/natural-remedies/9-health-benefits-of-hemp-oil-that-you-should-know) * [10 Incredible Benefits of Hemp Oil](http://herb.co/2016/10/17/incredible-benefits-hemp-oil/) * [12 Ways Using Hemp Seed Oil Will Improve Your Health &amp; Your Life](http://www.naturallivingideas.com/hemp-seed-oil/) A bit sensationalistic in the headlines... and, well, as to be expected I suppose, but regardless, pretty great stuff! ..and, again, that's just the oil. The post-oil-extraction pulp can still go on to be used for the more-applicable-to-conversation paper. But, since USD's seem to be the main focus... ...though other countries are progressively (or more-progressively I suppose) utilizing even *more* durable plastic in their notes.. ..but, for USD, still paper.. and, as such, the more durable cotton paper. Now, comparing cotton to hemp is really... .. [hemp wins nearly every time](https://www.davidwolfe.com/hemp-vs-cotton/) but... cotton is cotton and, recent headline and social controversy of cotton flower decorations aside.. cotton is cotton. Most everything that I'm wearing right now is made of cotton. It's a nice fabric. Durable, flexible, soft, etc. Good stuff. Not the easiest to work with but, clearly not something the world is in short supply of. but, that doesn't really address your point though exactly.. Like hemp, you can get cotton oil (or cotton seed oil to be more specific) from the plant while also getting the fibers that you'd need for paper production. It's a bit of a 'mixed back' and definitely *not* as straight forward as hemp's purported health benefits (and I didn't even *get* into the CBD oil stuff that hemp can provide)... . * [15 Benefits of Cottonseed Oil](http://www.searchhomeremedy.com/15-best-benefits-of-cotton-seed-oil/) * [7 Amazing Benefits &amp; Uses of Cottonseed Oil](https://www.organicfacts.net/health-benefits/oils/cottonseed-oil.html) * [10 Best Benefits of Cotton Seed Oil](http://www.stylecraze.com/articles/best-benefits-of-cotton-seed-oil/#gref) but, from there, things start to turn a little south, and weren't necessarily all that 'great' to begin with.... * [Is Cottonseed Oil Okay?](https://www.drweil.com/diet-nutrition/nutrition/is-cottonseed-oil-okay/) * [3 Best and Worst Oils For Your Health](https://www.bonappetit.com/trends/article/3-best-and-worst-oils-for-your-health) So, I suppose my point is... if I even really have a singular one... is that paper, regardless of source, has at least *some* sort of nutritional value.. or could anyway. As well, the crops used to produce the paper have the capability of ranging from some medicinal qualities all the way up to a seemingly really beneficial quantity of nutrients and compounds. At worst, the crops provide a habitat for various organisms. The problem with gold and paper currency is that, in the end, they're both inherently valued by the civilization that deems them valuable. I mean, take the quantity of gold in reserves around the world. Cross that with the industrial uses of gold (of which there are many) and, in turn, cross that with the artistic value of it. It's price isn't based on its use... it's based on similar principals *as* fiat (paper... and, increasingly, plastic) currency: society's perception that it has value. Gold has many properties that are excellent for many applications... superior to most (all?) in certain cases. ...but, that's not why it's valued at its current price. ..again, it's valued at its current price because of perceived value. Even from an artistic perspective, the amount of gold used in the Palace of Versailles... for the paint and such, was 'minuscule' given how much of the palace is covered in gold. It was something like just a few ounces because the layering is so thin. Point: if 'the look of gold' was all that people were going for they could easily just use another metal coated in a very thin layer of gold and.. externally, the appearance would be the same effect and the weight could theoretically be even lighter (or heavier). But, people want *more* than 'just the look'. They feel that the gold itself has a value beyond just the 'look'.. ..and, for all intents &amp; purposes, it *does*. but *only* because they and other people choose to perceive it as having such. I've traded gold (profitably) for over 20 years. I understand the arguments very well.. ..but, vs food? In the end, the gold is a means not an end." }, { "docid": "440231", "title": "", "text": "\"Moving oil trade out of dollars into yuan will take right now between $600 billion and $800 billion worth of transactions out of the dollar… When this happens, the US dollar should drop to about 50% of it's current value and at that point, the US century will be over. What happens after that is anybodies guess but I expect that the US will have to either use it's military to shore up the dollar in exactly the same way they did when the invaded Iraq to prevent the sale of oil in Juan OR the US will blink and it's expensive military around the world will have to be clawed back. Simply put, the US will no longer be the world's policeman\"\".\"" }, { "docid": "326329", "title": "", "text": "In the US we have social security taxes, where for a full time employee the company pays half and the employee pays half. When you work as a business, what we call 1099 for the form that the wages are reported on, then the contractor pays the full amount of social security tax. There are times when a contractor can negotiate a higher rate because the company does not have to pay that tax. However, most of the time the company just prefers to negotiate the rate based on your value. If you are a 60K year guy, then that is what they will pay you. From the company's perspective it does not matter what your tax rate is, only the value you can bring to the company. If you can add about 180K to the bottom line, then they will be happy to pay you 60K, and you should be happy to get it. Here in the US a contractor can expect to make about 7.5% more of an equivalent employee because of the social security tax savings to the company. However, not all companies are willing to provide that in compensation. Some companies see the legal and administrative costs of employees as normal, and the same costs with contractors as extra so they don't perceive a cost savings. There are other things that would preclude employers from giving the bump although it is logical to do so. First you will really have to feel out your employer for the attitude on the subject. Then I would make a logical case if they are open to providing extra compensation in return for tax savings. If I am an employee at 60K, you would also have to pay the government 18K. How about you pay me 75K as a contractor instead? That would be a great deal for all in the US." }, { "docid": "110367", "title": "", "text": "I'm an Aussie and I purchased 5 of these properties from 2008 to 2010. I was looking for positive cash flow on properties for not too much upfront investment. The USA property market made sense because of the high Aussie $$ at the time, the depressed property market in the US and the expensive market here. I used an investment web-site that allowed me to screen properties by yield and after eliminating outliers, went for the city with the highest consistent yield performance. I settled on Toledo, Ohio as it had the highest yields and was severely impacted by the housing crisis. I bought my first property for $18K US which was a little over $17K AUD. The property was a duplex in great condition in a reasonable location. Monthly rentals $US900 and rents guaranteed and direct deposited into my bank account every month by section 8. Taxes $900 a year and $450 a year for water. Total return around $US8,000. My second property was a short sale in a reasonable area. The asking was $US8K and was a single family in good condition already tenanted. I went through the steps with the bank and after a few months, was the proud owner of another tenanted, positive cash flow property returning $600 a month gross. Taxes of $600 a year and water about the same. $US6K NET a year on a property that cost $AUD8K Third and fourth were two single family dwellings in good areas. These both cost $US14K each and returned $US700 a month each. $US28K for two properties that gross around $US15K a year. My fifth property was a tax foreclosure of a guy with 2 kids whose wife had left him and whose friend had stolen the money to repay the property taxes. He was basically on the bones of his butt and was staring down the barrel of being homeless with two kids. The property was in great condition in a reasonable part of town. The property cost me $4K. I signed up the previous owner in a land contract to buy his house back for $US30K. Payments over 10 years at 7% came out to around $US333 per month. I made him an offer whereby if he acted as my property manager, i would forgo the land contract payments and pay him a percentage of the rents in exchange for his services. I would also pay for any work he did on the properties. He jumped at it. Seven years later, we're still working together and he keeps the properties humming. Right now the AUD is around 80c US and looks like falling to around 65c by June 2015. Rental income in Aussie $$ is around $2750 every month. This month (Jan 2015) I have transferred my property manager's house back to him with a quit claim deed and sold the remaining houses for $US100K After taxes and commission I expect to receive in the vicinity of AUD$120K Which is pretty good for a $AUD53K investment. I've also received around $30K in rent a year. I'm of the belief I should be buying when everybody else is selling and selling when everybody else is buying. I'm on the look-out for my next positive cash flow investment and I'm thinking maybe an emerging market smashed by the oil shock. I wish you all happiness and success in your investment. Take care. VR" }, { "docid": "100721", "title": "", "text": "a) Nothing would support this company going back to $.50 per share b) Fundamentally the market for this sectors has been obliterated and the fundamentals don't look like they will improve. Similar companies experience what this one is and will be going through, they borrow the hilt and hope they can pump enough oil and sell the oil at a high price. Oil goes below, WAYYY below the price they can sell it at and even break even, so they are burning cash until they declare bankruptcy. This company is not an exception. So here is what to look at on their balance sheet: assets and liabilities. Liabilities are debt. Their debt is over 50% of their assets, that debt has interest and there is NO WAY they are making a profit. Their website's last financial statement is from September 30th.. LOL, so they haven't even released a quarterly financial statement in two quarters straight, so have they released anything? Given what we know about the dire state of the entire oil drilling industry, lets see if these guys are the exception to the rule (spoiler; they aren't) February 15th, 2015 http://www.marketwatch.com/story/strategic-oil-gas-ltd-provides-operations-update-2015-02-19-16173591 The Company prudently elected to stop the winter Muskeg drilling program in order to preserve capital. So now they aren't even getting new assets to resale, they aren't making any money from that operation, their debt still has interest payments though. Approximately 700 Boe/d of production has been shut-in by suspending operations at Bistcho, Cameron Hills and Larne, which are not economic at current commodity prices. Predictable. Also, you should notice from their actual financial statements (from 6 months ago, lol) (when the price of oil was over 100% higher than it is today, lol), this company already wasn't a good performer. They have been financing themselves by doing private placements, by issuing shares to investors that are not you, and diluting the share value of ALL OTHER SHAREHOLDERS. Dead in the water. I got this from skimming their financial report, without even being familiar with how canadian companies report. Its just bad news. You shouldn't be married to this investment." }, { "docid": "595427", "title": "", "text": "\"It sounds like the kinds of planners you're talking to might be a poor fit, because they are essentially salespersons selling investments for a commission. Some thoughts on finding a financial planner The good kind of financial planner is going to be able to do a comprehensive plan - look at your whole life, goals, and non-investment issues such as insurance. You should expect to get a document with a Monte Carlo simulation showing your odds of success if you stick to the plan; for investments, you should expect to see a recommended asset allocation and an emphasis on low-cost no-commission (commission is \"\"load\"\") funds. See some of the other questions from past posts, for example What exactly can a financial advisor do for me, and is it worth the money? A good place to start for a planner might be http://napfa.org ; there's also a franchise of planners providing hourly advice called the Garrett Planning Network, I helped my mom hire someone from them and she was very happy, though I do think your results would depend mostly on the individual rather than the franchise. Anyway see http://www.garrettplanningnetwork.com/map.html , they do require planners to be fee-only and working on their CFP credential. You should really look for the Certified Financial Planner (CFP) credential. There are a lot of credentials out there, but many of them mean very little, and others might be hard to get but not mean the right thing. Some other meaningful ones include Chartered Financial Analyst (CFA) which would be a solid investment expert, though not necessarily someone knowledgeable in financial planning generally; and IRS Enrolled Agent, which means someone who knows a lot about taxes. A CPA (accountant) would also be pretty meaningful. A law degree (and estate law know-how) is very relevant to many planning situations, too. Some not-very-meaningful certifications include Certified Mutual Fund Specialist (which isn't bogus, but it's much easier to get than CFP or CFA); Registered Investment Adviser (RIA) which mostly means the person is supposed to understand securities fraud laws, but doesn't mean they know a lot about financial planning. There are some pretty bogus certifications out there, many have \"\"retirement\"\" or \"\"senior\"\" in the name. A good question for any planner is \"\"Are you a fiduciary?\"\" which means are they legally required to act in your interests and not their own. Most sales-oriented advisors are not fiduciaries; they wouldn't charge you a big sales commission if they were, and they are not \"\"on your side\"\" legally speaking. It's a good idea to check with your state regulators or the SEC to confirm that your advisor is registered and ask if they have had any complaints. (Small advisors usually register with the state and larger ones with the federal SEC). If they are registered, they may still be a salesperson who isn't acting in your interests, but at least they are following the law. You can also see if they've been in trouble in the past. When looking for a planner, one firm I found had a professional looking web site and didn't seem sketchy at all, but the state said they were not properly registered and not in compliance. Other ideas A good book is: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 it's very approachable and you'd feel more confident talking to someone maybe with more background information. For companies to work with, stick to the ones that are very consumer-friendly and sell no-load funds. Vanguard is probably the one you'll hear about most. But T. Rowe Price, Fidelity, USAA are some other good names. Fidelity is a bit of a mixture, with some cheap consumer-friendly investments and other products that are less so. Avoid companies that are all about charging commission: pretty much anyone selling an annuity is probably bad news. Annuities have some valid uses but mostly they are a bad deal. Not knowing your specific situation in any detail, it's very likely that 60k is not nearly enough, and that making the right investment choices will make only a small difference. You could invest poorly and maybe end up with 50K when you retire, or invest well and maybe end up with 80-90k. But your goal is probably more like a million dollars, or more, and most of that will come from future savings. This is what a planner can help you figure out in detail. It's virtually certain that any planner who is for real, and not a ripoff salesperson, will talk a lot about how much you need to save and so forth, not just about choosing investments. Don't be afraid to pay for a planner. It's well worth it to pay someone a thousand dollars for a really thorough, fiduciary plan with your interests foremost. The \"\"free\"\" planners who get a commission are going to get a whole lot more than a thousand dollars out of you, even though you won't write a check directly. Be sure to convert those mutual fund expense ratios and sales commissions into actual dollar amounts! To summarize: find someone you're paying, not someone getting a commission; look for that CFP credential showing they passed a demanding exam; maybe read a quick and easy book like the one I mentioned just so you know what the advisor is talking about; and don't rush into anything! And btw, I think you ought to be fine with a solid plan. You and your husband have time remaining to work with. Good luck.\"" }, { "docid": "496211", "title": "", "text": "A simple example - When looking at oil trading in different locations first I have some back of the envelop adjustments for the grade of oil, then look at storage costs (irrelevant in the case of electricity) and transport costs between two locations to see if physical players are actively arbing the spread. No strong views on reading material in this specific area - Google, google scholar and amazon all have relevant material. When it comes to your current problem, here are some questions to think about: 1. Is the power generated from the same commodity at location A and location W? 2. How has the spread changed in the past? Has trading location W actively hedged the worst cases of prices moves in location A? 3. Is it feasible to trade the commodity that location A generates the majority of its power from/how does that compare to electricity trading at location W as a hedge? 4. If hedging is really desirable, are you sure you can't do an illiquid over the counter hedge at location A? Paying a little bit more in the bid/ask for the hedge could be more desirable than trying to jump into a market you yourselves don't quite understand. 5. If your consultants come back with just some hedge ratios without discussing what drives the spreads between the two locations and where the spreads are currently be skeptical." }, { "docid": "95390", "title": "", "text": "\"Where are you from? The Netherlands has tax treaties with different countries that may offer you some additional options. The Netherlands calculates a maximum tax free contribution to your pension each year based on your income. If you contributed less than you were allowed to (pensioengat), you can invest the difference between your actual and allowed contributions in special retirement investments that usually offer tax advantages. A gap like this can be due to getting a bonus or a raise. After looking around, the investments available are either a special savings account (banksparen) or an annuity (lijfrente). Your allowed contributions to both will be tax deductible and the investment itself is excluded from wealth tax (box 3 taxes). I also see Aegon offering an \"\"investment annuity\"\" that lets you invest in any of 7 of their mutual funds until a certain date at which time you liquidate and use the proceeds to fund an annuity. With the Dutch retirement options, wou will not in general get the same freedom of choice or low costs associated with IRAs in the US. I'm not sure about ISAs in the UK. It's also important to check any tax agreements between countries to ensure your chosen investment vehicle gets the tax advantaged treatment in your home country as it does in the Netherlands. For US citizens, this is important even when living abroad. For others, it is important if you return to your home country and still have this investment. If you are a US citizen, you have an additional option. The US / Dutch tax treaty allows you to make these contributions to preexisting (i.e. you had these before moving to NL) retirement accounts in the US like an IRA. Note that in practice it may be difficult to contribute to an existing Roth IRA because you would need to have earned income after the foreign income tax deduction but less than the maximum income for a Roth contribution.\"" }, { "docid": "516818", "title": "", "text": "FTA: “Yet this new study notes that subsidies aren’t simply cash being handed to oil companies. Subsidies often come in the form of tax breaks, which is just one of the many ways oil companies receive government handouts.” Tax breaks are not subsidies. The taxpayer pay absolutely nothing to the oil companies when a tax break is applied. The taxpayers are actually net recipients from the drilling activity. If the existence of a tax break is a requirement for oil drilling profitability, then elimination of the tax break would eliminate drilling. The taxpayers are choosing between zero additional tax revenue without tax breaks or some tax revenue with tax breaks so drilling can proceed. The article’s point about export ports being subsidized by the taxpayer is a distraction. The VAST majority of oil produced in the US is consumed in the US. All that oil is drilled, transported, refined, transported again, then sold to consumers in an end-to-end supply chain built on a vast sum of private capital." }, { "docid": "21605", "title": "", "text": "I agree with the article, but one thing I wonder about: how much is driving suppressed because of the relative high price of gasoline and the relative lack of fuel efficiency in cars? In other words, are we going to put more cars on the road and drive on average more km per yr per if we have a sort of quantum leap in fuel efficiency? Not necessarily a bad thing, but perhaps something that makes achieving foreign oil independence a bit harder than we might think." }, { "docid": "435883", "title": "", "text": "I am not a tax professional, only an investment professional, so please take the following with a grain of salt and simply as informational guidance, not a personal recommendation or solicitation to buy/sell any security or as personal tax or investment advice. As Ross mentioned, you need to consult a tax advisor for a final answer concerning your friend's personal circumstances. In my experience advising hundreds of clients (and working directly with their tax advisors) the cost basis is used to calculate tax gain or loss on ordinary investments in the US. It appears to me that the Edward Jones description is correct. This has also been the case for me personally in the US with a variety of securities--stocks, options, futures, bonds, mutual funds, and exchange traded funds. From the IRS: https://www.irs.gov/uac/about-form-1099b Form 1099-B, Proceeds From Broker and Barter Exchange Transactions A broker or barter exchange must file this form for each person: Edward Jones should be able to produce a 1099b documenting the gains/losses of any investments. If the 1099b document is confusing, they might have a gain/loss report that more clearly delineates proceeds, capital returns, dividends, and other items related to the purchase and sale of securities." }, { "docid": "207368", "title": "", "text": "\"There is no simple answer to that, because no one knows exactly what the probability distribution of S&P 500 returns is. Here is a sketch of one possible way to proceed. Don't forget step 4! The problem is that the stock market is full of surprises, so this kind of \"\"backtesting\"\" can only reliably tell you about what already happened, not what will happen in the future. People argue about how much you can learn from this kind of analysis. However, it is at the least a clearly defined and objective process. I wouldn't advise investing your whole nest egg in anything based just on this, but I do think that it is relevant information.\"" }, { "docid": "70243", "title": "", "text": "\"You can't get started investing. There are preliminary steps that must be taken prior to beginning to invest: Only once these things are complete can you think about investing. Doing so before hand will only likely lose money in the long run. Figure these steps will take about 2.5 years. So you are 2.5 years from investing. Read now: The Total Money Makeover. It is full of inspiring stories of people that were able to turn things around financially. This is good because it is easy to get discouraged and believe all kind of toxic beliefs about money: The little guy can't get ahead, I always will have a car payment, Its too late, etc... They are all false. Part of the book's resources are budgeting forms and hints on budgeting. Read later: John Bogle on Investing and Bogle on Mutual Funds One additional Item: About you calling yourself a \"\"dummy\"\". Building personal wealth is less about knowledge and more about behavior. The reason you don't have a positive net worth is because of how you behaved, not knowledge. Even sticking a small amount in a savings account each paycheck and not spending it would have allowed you to have a positive net worth at this point in your life. Only by changing behavior can you start to build wealth, investing is only a small component.\"" }, { "docid": "420046", "title": "", "text": "You should be worried. You have made the mistake of entering an investment on the recommendation of family/friend. The last think you should do is make another mistake of just leaving it and hoping it will go up again. Your stock has dropped 37.6% from its high of $74.50. That means it has to go up over 60% just to reach the high of $74.50. You are correct this may never happen or if it does it could take a long, long time to get up to its previous highs. What is the company doing to turn its fortunes around? Take a look at some other examples: QAN.AX - Qantas Airways This stock reached a high of around $6 in late 2007 after a nice uptrend over a year and a half, it then dropped drastically at the start of the GFC, and has since kept falling and is now priced at just $1.15. QAN reported its first ever loss earlier this year, but its problems were evident much earlier. AAPL - Apple Inc. AAPL reach a high of just over $700 in September 2013, then dropped to around $400 and has recovered a bit to about $525 (still 25% below its highs) and looks to be at the start of another downtrend. How long will it take AAPL to get back to $700, more than 33% from its current price? TEN.AX - Ten Network Holdings Limited TEN reached a high of $4.26 in late 2004 after a nice uptrend during 2004. It then started a steep journey downwards and is still going down. It is now priced at just $0.25, a whopping 94% below its high. It will have to increase by 1600% just to reach its high of $4.26 (which I think will never happen). Can a stock come back from a drastic downtrend? Yes it can. It doesn't always happen, but a company can turn around and can reach and even surpass it previous highs. The question is how and when will this happen? How long will you keep your capital tied up in a stock that is going nowhere and has every chance of going further down? The most important thing with any investment is to protect your current capital. If you lose all your capital you cannot make any new investments until you build up more capital. That is why it is so important to have a risk management strategy and decide what is your get out point if things go against you before you get into any new investment. Have a stop loss. I would get out of your investment before you lose more capital. If you had set a stop loss at 20% off the stock's last highs, you would have gotten out at about $59.60, 28% higher than the current share price of $46.50. If you do further analysis on this company and find that it is improving its prospects and the stock price breaks up through its current ranging band, then you can always buy back in. However, do you still want to be in the stock if it breaks the range band on the downside? In this case who knows how low it can continue to go. N.B. This is my opinion, as others would have theirs, and what I would do in your current situation with this stock." }, { "docid": "195191", "title": "", "text": "Something to consider is how do you want to handle fractional shares. Most open-end funds can easily go to fractional shares to that if you want to invest $500 in a fund each month, it is a relatively easy transaction where some shares will be fractional and handled easily. An ETF may not always work that way unless you go through something like Sharebuilder that would allow the fractional shares as if the ETF is trading at $150/share, you could buy 3 shares but still have $50 that you want to invest but can't as stocks trade in whole share numbers usually. This is without adding brokerage commissions. Depending on the broker, re-investing dividends may or may not be that simple as fractional shares could be a problem since those 3 shares aren't likely to have enough of a dividend to equal another share being bought with the proceeds. If you want the flexibility of stop and limit orders then the ETF may make more sense while the open-end fund is simply to invest whole dollar amounts that then lead to fractional shares. Don't forget to factor in minimums and other stuff as VFIAX may have a bit of a minimum to it as well as possible fees that could be annoying as I remember VFINX having some account maintenance fees that were a bit irksome back in the day that may still be around in some cases so be sure to read the fine print on things." }, { "docid": "555521", "title": "", "text": "Fake stock market trading may teach you about trading, which isn't necessarily the same thing as investing. I think you need to understand how things work and how to read financial news and statistics before you start trading. Otherwise, you're just going to get frustrated when you mysteriously win and lose funny money. I'd suggest a few things: Also, don't get into individual stocks until you have at least $5k to invest -- focus on saving and use ETFs or mutual funds. You should always invest in around a half dozen diversified stocks at a time, and doing that with less than $1,000 a stock will make it impossible to trade and make money -- If a $100 stock position goes up 20%, you haven't cleared enough to pay your brokerage fees." } ]

[ { "docid": "295864", "title": "", "text": "Royalty trusts track oil prices (they're a pure play on ownership of a portfolio of mineral rights and do not otherwise have the operations that the oil companies themselves have). Many publicly traded ones listed at the embedded wikipedia link. Oil tankers are having a bang up business right now as described in the article, but that's because of the low prices and flood of product from the middle east. The article notes that inventories are near capacity, so terminals and pipelines may be in for a few good years, though these do not directly track oil price. However, as a way to bet on oil or oil services, many terminals and pipelines are organized as publicly traded master limited partnerships or MLPs, often spun out of a major oil company for tax reasons, allowing fine-grained investment in specific assets." } ]

[ { "docid": "21605", "title": "", "text": "I agree with the article, but one thing I wonder about: how much is driving suppressed because of the relative high price of gasoline and the relative lack of fuel efficiency in cars? In other words, are we going to put more cars on the road and drive on average more km per yr per if we have a sort of quantum leap in fuel efficiency? Not necessarily a bad thing, but perhaps something that makes achieving foreign oil independence a bit harder than we might think." }, { "docid": "134893", "title": "", "text": "Those are valid, but I think you will see banks move into fintech, as they already have, and they are also moving into blockchain. One thing that banks have, is money, and that allows them to move into new spaces in the economy even if they are late to the party. When you have institutions that have been around for more than a century, they don’t just go away. I think you start to see trading revenue comeback, eventually. The passive versus active investing is a cycle. As more and more people jump into passive investments, it will inevitably change the market because suddenly everything becomes more correlated. Once there is enough volatility to scare people out of their passive investments, then the indices are going to fall. Then you’ll start seeing how active investing is better and people start to move back. Passive investing is good when everything is up, but on the downside active investing (if you have the right managers) will outperform. Once this occurs, you will start to see more volatility in the markets again, and a return to active management, until inevitably people start to move back to passive again." }, { "docid": "402216", "title": "", "text": "\"Generally if you are using FIFO (first in, first out) accounting, you will need to match the transactions based on the number of shares. In your example, at the beginning of day 6, you had two lots of shares, 100 @ 50 and 10 @ 52. On that day you sold 50 shares, and using FIFO, you sold 50 shares of the first lot. This leaves you with 50 @ 50 and 10 @ 52, and a taxable capital gain on the 50 shares you sold. Note that commissions incurred buying the shares increase your basis, and commissions incurred selling the shares decrease your proceeds. So if you spent $10 per trade, your basis on the 100 @ 50 lot was $5010, and the proceeds on your 50 @ 60 sale were $2990. In this example you sold half of the lot, so your basis for the sale was half of $5010 or $2505, so your capital gain is $2990 - 2505 = $485. The sales you describe are also \"\"wash sales\"\", in that you sold stock and bought back an equivalent stock within 30 days. Generally this is only relevant if one of the sales was at a loss but you will need to account for this in your code. You can look up the definition of wash sale, it starts to get complex. If you are writing code to handle this in any generic situation you will also have to handle stock splits, spin-offs, mergers, etc. which change the number of shares you own and their cost basis. I have implemented this myself and I have written about 25-30 custom routines, one for each kind of transaction that I've encountered. The structure of these deals is limited only by the imagination of investment bankers so I think it is impossible to write a single generic algorithm that handles them all, instead I have a framework that I update each quarter as new transactions occur.\"" }, { "docid": "512265", "title": "", "text": "&gt; ever eat paper? Yeah, of course, plenty of times. Not (usually) intentionally, but sometimes a wrapper will get stuck, etc. Also, it's a good way to get rid of something if you don't have a lighter. More so when I was a kid and messing around with 'secret notes' and the like but.. ..yeah, I've eaten paper. Granted, I've probably eaten gold as well, and there are some benefits or health values of gold.. .. within the pseudoscientific / alt-health crowd.. ..not sure I buy into those but. ..it has some value. But, nothing like paper. Obviously there are different materials used for making paper.. ... lots of barks have a value from a health perspective, a relative nutritional value. Growing the tree, depending on the type, can provide fruit, building materials, etc.. ..with the pulp providing a paper value. So, multiple benefits can come from paper.. ...and, that's just the post-harvest aspect.. well, the case of fruit I guess not. but, there's the environmental benefits of trees and such as well; habitats for wild life, wind breaks, carbon sequestration. soil health, etc. Multiple benefits, and that's just from tree-based paper. If you expand it out to something like, say, hemp paper? well, there's the oil.. ... which can be used for fuel production, various other uses, and, most especially, the health benefits and consumption from it.. ...while the remaining fibers can be used for construction... be it compressed bricks, hempcrete (which has excellent values in strength, durability, insulation, weight-to-strength *ratio*, etc. And, again, the health benefits of hemp oil... ...argued to be the single 'thing' you can consume solely (+ water) and get 100% of the nutrients you need.. ...in mixed ratios and obviously it isn't as great as other things in concentrations, but.. ..it's extremely nutritious. Also, the plant is really good for the soil, again, habitats, sequesters carbon, helps to pull toxins and such *out* of the soil for bioremediation. Is quick to grow, grows densely, is durable, has minimal inputs needed, hardy, ... all around a great crop. and, again, the health benefits of its oil are *combined* with its paper making capabilities. .... and, good strong paper too. has a great weight, feel, durable, can/will last a really long time if properly handled.. ..and has much wider variance *in* 'proper handling' than tree-based paper. Solid product. You should look into it, ... here, I'll give you some links to help you out. * [9 Health Benefits of Hemp Oil That You Should Know](http://www.zliving.com/wellness/natural-remedies/9-health-benefits-of-hemp-oil-that-you-should-know) * [10 Incredible Benefits of Hemp Oil](http://herb.co/2016/10/17/incredible-benefits-hemp-oil/) * [12 Ways Using Hemp Seed Oil Will Improve Your Health &amp; Your Life](http://www.naturallivingideas.com/hemp-seed-oil/) A bit sensationalistic in the headlines... and, well, as to be expected I suppose, but regardless, pretty great stuff! ..and, again, that's just the oil. The post-oil-extraction pulp can still go on to be used for the more-applicable-to-conversation paper. But, since USD's seem to be the main focus... ...though other countries are progressively (or more-progressively I suppose) utilizing even *more* durable plastic in their notes.. ..but, for USD, still paper.. and, as such, the more durable cotton paper. Now, comparing cotton to hemp is really... .. [hemp wins nearly every time](https://www.davidwolfe.com/hemp-vs-cotton/) but... cotton is cotton and, recent headline and social controversy of cotton flower decorations aside.. cotton is cotton. Most everything that I'm wearing right now is made of cotton. It's a nice fabric. Durable, flexible, soft, etc. Good stuff. Not the easiest to work with but, clearly not something the world is in short supply of. but, that doesn't really address your point though exactly.. Like hemp, you can get cotton oil (or cotton seed oil to be more specific) from the plant while also getting the fibers that you'd need for paper production. It's a bit of a 'mixed back' and definitely *not* as straight forward as hemp's purported health benefits (and I didn't even *get* into the CBD oil stuff that hemp can provide)... . * [15 Benefits of Cottonseed Oil](http://www.searchhomeremedy.com/15-best-benefits-of-cotton-seed-oil/) * [7 Amazing Benefits &amp; Uses of Cottonseed Oil](https://www.organicfacts.net/health-benefits/oils/cottonseed-oil.html) * [10 Best Benefits of Cotton Seed Oil](http://www.stylecraze.com/articles/best-benefits-of-cotton-seed-oil/#gref) but, from there, things start to turn a little south, and weren't necessarily all that 'great' to begin with.... * [Is Cottonseed Oil Okay?](https://www.drweil.com/diet-nutrition/nutrition/is-cottonseed-oil-okay/) * [3 Best and Worst Oils For Your Health](https://www.bonappetit.com/trends/article/3-best-and-worst-oils-for-your-health) So, I suppose my point is... if I even really have a singular one... is that paper, regardless of source, has at least *some* sort of nutritional value.. or could anyway. As well, the crops used to produce the paper have the capability of ranging from some medicinal qualities all the way up to a seemingly really beneficial quantity of nutrients and compounds. At worst, the crops provide a habitat for various organisms. The problem with gold and paper currency is that, in the end, they're both inherently valued by the civilization that deems them valuable. I mean, take the quantity of gold in reserves around the world. Cross that with the industrial uses of gold (of which there are many) and, in turn, cross that with the artistic value of it. It's price isn't based on its use... it's based on similar principals *as* fiat (paper... and, increasingly, plastic) currency: society's perception that it has value. Gold has many properties that are excellent for many applications... superior to most (all?) in certain cases. ...but, that's not why it's valued at its current price. ..again, it's valued at its current price because of perceived value. Even from an artistic perspective, the amount of gold used in the Palace of Versailles... for the paint and such, was 'minuscule' given how much of the palace is covered in gold. It was something like just a few ounces because the layering is so thin. Point: if 'the look of gold' was all that people were going for they could easily just use another metal coated in a very thin layer of gold and.. externally, the appearance would be the same effect and the weight could theoretically be even lighter (or heavier). But, people want *more* than 'just the look'. They feel that the gold itself has a value beyond just the 'look'.. ..and, for all intents &amp; purposes, it *does*. but *only* because they and other people choose to perceive it as having such. I've traded gold (profitably) for over 20 years. I understand the arguments very well.. ..but, vs food? In the end, the gold is a means not an end." }, { "docid": "110367", "title": "", "text": "I'm an Aussie and I purchased 5 of these properties from 2008 to 2010. I was looking for positive cash flow on properties for not too much upfront investment. The USA property market made sense because of the high Aussie $$ at the time, the depressed property market in the US and the expensive market here. I used an investment web-site that allowed me to screen properties by yield and after eliminating outliers, went for the city with the highest consistent yield performance. I settled on Toledo, Ohio as it had the highest yields and was severely impacted by the housing crisis. I bought my first property for $18K US which was a little over $17K AUD. The property was a duplex in great condition in a reasonable location. Monthly rentals $US900 and rents guaranteed and direct deposited into my bank account every month by section 8. Taxes $900 a year and $450 a year for water. Total return around $US8,000. My second property was a short sale in a reasonable area. The asking was $US8K and was a single family in good condition already tenanted. I went through the steps with the bank and after a few months, was the proud owner of another tenanted, positive cash flow property returning $600 a month gross. Taxes of $600 a year and water about the same. $US6K NET a year on a property that cost $AUD8K Third and fourth were two single family dwellings in good areas. These both cost $US14K each and returned $US700 a month each. $US28K for two properties that gross around $US15K a year. My fifth property was a tax foreclosure of a guy with 2 kids whose wife had left him and whose friend had stolen the money to repay the property taxes. He was basically on the bones of his butt and was staring down the barrel of being homeless with two kids. The property was in great condition in a reasonable part of town. The property cost me $4K. I signed up the previous owner in a land contract to buy his house back for $US30K. Payments over 10 years at 7% came out to around $US333 per month. I made him an offer whereby if he acted as my property manager, i would forgo the land contract payments and pay him a percentage of the rents in exchange for his services. I would also pay for any work he did on the properties. He jumped at it. Seven years later, we're still working together and he keeps the properties humming. Right now the AUD is around 80c US and looks like falling to around 65c by June 2015. Rental income in Aussie $$ is around $2750 every month. This month (Jan 2015) I have transferred my property manager's house back to him with a quit claim deed and sold the remaining houses for $US100K After taxes and commission I expect to receive in the vicinity of AUD$120K Which is pretty good for a $AUD53K investment. I've also received around $30K in rent a year. I'm of the belief I should be buying when everybody else is selling and selling when everybody else is buying. I'm on the look-out for my next positive cash flow investment and I'm thinking maybe an emerging market smashed by the oil shock. I wish you all happiness and success in your investment. Take care. VR" }, { "docid": "180592", "title": "", "text": "\"Primerica's primary value proposition is that switching from whole or universal life to term life, and investing the difference is a good idea for most people. However, there are a number of other important factors to consider when purchasing life insurance, and I would also be wary of anyone claiming that one product will be the \"\"best\"\" for you under all circumstances. Best Insurance? Without getting into a much larger discussion on how to pick insurance companies or products, here are a few things that concern me about Primerica: They have a \"\"captive\"\" sales force, meaning their agents sell only Primerica products. This means that they are not shopping around for the best deal for you. Given how much prices on term life have changed in recent years, I would highly recommend taking the time to get alternate quotes online or from an independent broker who will shop around for you. Their staff are primarily part-time employees. I am not saying they are incompetent or don't care, just that you are more likely to be working with someone for whom insurance is not their primary line of work. If you have substantial reason to believe that you may someday need whole life, their products may not suit you well. Primerica does not offer whole life as far as I am aware, which also means that you cannot convert your term life policy through them to whole life should you need to do so. For example, if you experience an accident, are disabled, or have a significant change in your health status in the future and do not have access to a group life policy, you may be unable to renew your individual policy. Above Average Returns? I am also highly skeptical about this claim. The only possible context in which I could find this valid would be if they mean that your returns on average will be better if you invest in the stock market directly as compared to the returns you would get from the \"\"cash value\"\" portion of a life insurance product such as universal life, as those types of products generally have very high fees. Can you clarify if this is the claim that was made, or if they are promising returns above those of the general stock market? If it is the latter, run! Only a handful of superstar investors (think Warren Buffet, Peter Lynch, and Bill Gross) have ever consistently outperformed the stock market as a whole, and typically only for a limited period of time. In either case, I would have the same concerns here as stated in reasons #1 and #2 above. Even more so than with insurance, if you need investment advice, I'd recommend working with someone who is fully dedicated to that type of work, such as a fee-only financial planner (http://www.napfa.org/ is a good place to find one). Once you know how you want to invest, I would again recommend shopping around for a reputable but inexpensive broker and compare their fees with Primerica's. Kudos on having a healthy level of skepticism and listening to your gut. Also, remember that if you are not interested in their offer, you don't have to prove them wrong - you can simply say \"\"no thank you.\"\" Best of luck!\"" }, { "docid": "492366", "title": "", "text": "\"I see three areas of concern for your budget: This is way high. I am not sure how much of a house you live in, but the total of these two numbers should be around 25% not 41%. I am a person that considers giving an important part of wealth building, and gives to my local church. But as one other person has rightly said, this amount is irresponsible. I am okay at 12%, but would like to see you at 10% until you are in a little better shape. That is pretty vague for a significant portion of your income. What makes up that other category? You are doing pretty darn good financially, although I would like to see some contributions to investments. I think you are kind of failing there. Your debt management is spot on. That is okay, we can all get better at some stuff. There needs to be some numbers behind these percentages. The bottom line is if you make an average household income, say around 55K, you are going to struggle with or without children. If you guys make about 110K, and your wife makes 50% of your income, and she quits work to take care of the kidlets, then you will be in that \"\"boat\"\". Having said all that I find 37% of your income as questionable. At least 5% of that should be invested, so we are kind of like at 32%. That is a significant amount of money.\"" }, { "docid": "564957", "title": "", "text": "I think you are right. I hear people all the time with horror stories about futures and trading horror stories in general. I want to learn about this market, but I don't want to go in without some education on the matter. I watched their video on options on futures, but the valuation method needs a bit more explaining to be (beta, gamma, etc.). I get the basic idea of options on futures, but I need to formulate a strategy, and that is where study would come in. I have wanted to play around with a few strategies I had in my head for regular options, and by the time I get the grasp of it, I might be able to trade options on futures. I guess my biggest thing with options on futures is not to be sophisticated, but more so I can have access to new markets. On the topic of options though, I do think there is some strategies that could boost my returns a bit on my existing strategies. I think selling various options (selling call options on weak dividend stocks stuck as bulk shipper or mortgage reits and as of late oil trusts or selling put options on some stronger oil reits or other stronger dividend stocks). The only problem is I don't know if the premium would be enough to make it worth while with the weak dividend stocks. So either way, even if you are only earning a conservative 9% on dividends, if you add in another 4% for premium, you could be making 13% off of one trade, and could repeat the process (assuming the target stayed weak or strong)." }, { "docid": "102698", "title": "", "text": "\"Anthony Russell - I agree with JohnFx. Petroleum is used in making many things such as asphalt, road oil, plastic, jet fuel, etc. It's also used in some forms of electricity generation, and some electric cars use gasoline as a backup form of energy, petrol is also used in electricity generation outside of cars. Source can be found here. But to answer your question of why shares of electric car companies are not always negatively related to one another deals with supply and demand. If investors feel positively about petroleum and petroleum related prospects, then they are going to buy or attempt to buy shares of \"\"X\"\" petrol company. This will cause the price of \"\"X\"\", petrol company to rise, ceteris paribus. Just because the price of petroleum is high doesn't mean investors are going to buy shares of an electric car company. Petrol prices could be high, but numerous electric car companies could be doing poorly, now, with that being said you could argue that sales of electric cars may go up when petrol prices are high, but there are numerous factors that come into play here. I think it would be a good idea to do some more research if you are planning on investing. Also, remember, after a company goes public they no longer set the price of the shares of their stock. The price of company \"\"X\"\" shares are determined by supply and demand, which is inherently determined by investors attitudes and expectations, ultimately defined by past company performance, expectations of future performance, earnings, etc.. It could be that when the market is doing well - it's a good sign of other macroeconomic variables (employment, GDP, incomes, etc) and all these factors power how often individuals travel, vacation, etc. It also has to deal with the economy of the country producing the oil, when you have OPEC countries selling petrol to the U.S. it is likely much cheaper per barrel than domestic produced and refined petrol because of the labor laws, etc. So a strong economy may be somewhat correlated with oil prices and a strong market, but it's not necessarily the case that strong oil prices drive the economy..I think this is a great research topic that cannot be answered in one post.. Check this article here. From here you can track down what research the Fed of Cleveland has done concerning this. My advice to you is to not believe everything your peers tell you, but to research everything your peers tell you. With just a few clicks you can figure out the legitimacy of many things to at least some degree.\"" }, { "docid": "516818", "title": "", "text": "FTA: “Yet this new study notes that subsidies aren’t simply cash being handed to oil companies. Subsidies often come in the form of tax breaks, which is just one of the many ways oil companies receive government handouts.” Tax breaks are not subsidies. The taxpayer pay absolutely nothing to the oil companies when a tax break is applied. The taxpayers are actually net recipients from the drilling activity. If the existence of a tax break is a requirement for oil drilling profitability, then elimination of the tax break would eliminate drilling. The taxpayers are choosing between zero additional tax revenue without tax breaks or some tax revenue with tax breaks so drilling can proceed. The article’s point about export ports being subsidized by the taxpayer is a distraction. The VAST majority of oil produced in the US is consumed in the US. All that oil is drilled, transported, refined, transported again, then sold to consumers in an end-to-end supply chain built on a vast sum of private capital." }, { "docid": "27081", "title": "", "text": "Different risks require different hedges. You won't find a single hedge that will protect you against any risk. The best way to think about this is who would benefit if those events occurred? Those are the people you want to invest in. So if a war broke out, who would benefit? Defense contractors. Security companies. You get the idea. You also need to think about if you really need to hedge against those things now or not. For example, I wouldn't bother to hedge against global warming or peak oil. It's not like one morning you're going to wake up, turn on CNNfn and see that the stock market is down 500 points because global warming or peak oil just hit. These are things that happen gradually and you can react to them gradually as they happen." }, { "docid": "100721", "title": "", "text": "a) Nothing would support this company going back to $.50 per share b) Fundamentally the market for this sectors has been obliterated and the fundamentals don't look like they will improve. Similar companies experience what this one is and will be going through, they borrow the hilt and hope they can pump enough oil and sell the oil at a high price. Oil goes below, WAYYY below the price they can sell it at and even break even, so they are burning cash until they declare bankruptcy. This company is not an exception. So here is what to look at on their balance sheet: assets and liabilities. Liabilities are debt. Their debt is over 50% of their assets, that debt has interest and there is NO WAY they are making a profit. Their website's last financial statement is from September 30th.. LOL, so they haven't even released a quarterly financial statement in two quarters straight, so have they released anything? Given what we know about the dire state of the entire oil drilling industry, lets see if these guys are the exception to the rule (spoiler; they aren't) February 15th, 2015 http://www.marketwatch.com/story/strategic-oil-gas-ltd-provides-operations-update-2015-02-19-16173591 The Company prudently elected to stop the winter Muskeg drilling program in order to preserve capital. So now they aren't even getting new assets to resale, they aren't making any money from that operation, their debt still has interest payments though. Approximately 700 Boe/d of production has been shut-in by suspending operations at Bistcho, Cameron Hills and Larne, which are not economic at current commodity prices. Predictable. Also, you should notice from their actual financial statements (from 6 months ago, lol) (when the price of oil was over 100% higher than it is today, lol), this company already wasn't a good performer. They have been financing themselves by doing private placements, by issuing shares to investors that are not you, and diluting the share value of ALL OTHER SHAREHOLDERS. Dead in the water. I got this from skimming their financial report, without even being familiar with how canadian companies report. Its just bad news. You shouldn't be married to this investment." }, { "docid": "189265", "title": "", "text": "\"If I had to guess, I think Chipotle's queso is the way it is because Chipotle is trying to maintain their \"\"wholesome, quality ingredients\"\" approach to queso. But that's the problem: naturally made cheeses don't melt into liquids. If anyone has worked in the pizza business for any period of time, then they might know at least one thing about cheese: melted cheese has a very high oil content. Mix your cheese with a shit load of oil and it can melt beautifully. Want your cheese to stay in a liquid state at a lower temperature? Add more oil. So if you want to maintain wholesome, arguably healthy ingredients and make queso at the same time, then you've got a problem because it's damn hard to make liquid cheese without having it be the worst thing imaginable for your health. After trying Chipotle's queso last week, I guessed that they were trying to make a not-so-miserable-for-your-health version of queso, so they made a queso without all of the added oil. But that's the problem: oil is fucking delicious. Pretty much anything that is high in fats (like oil) or sugars tastes amazing. The higher the fat and/or sugar content, the better it tastes, but also the worse it is for your health, generally. So Chipotle has a queso that isn't godawful for your health, but it also tastes like it. I applaud Chipotle's willingness to experiment with new products and try new things, but I'm projecting that this queso won't have mass appeal because it doesn't taste great. A group of us bought a cup of it, and we didn't finish it. Sorry, Chipotle. I like the effort; but if I want chips &amp; queso, my ass is rollin' across the street to Q'doba to get some of that terrible-for-my-health, zero-nutritional-value, yellow-oil-cheese-product deliciousness.\"" }, { "docid": "254500", "title": "", "text": "I'm leaning more towards trading it in can anyone give me some pointers on how to get the best deal? Information is key to getting the best deal possible. That is why I would strongly suggest getting a second opinion on the repairs. A misfire could be caused by many things. From cheap (bad spark plugs or cables) to mid-range cost (timing is off) to expensive (not getting proper compression in the cylinders due to mechanical issues that could require an engine rebuild). Also, car diagnostics is not an exact science, so it is definitely worth checking with another mechanic. You trust the first place you took it too, which is great. You taking it to another place does not represent a lack of trust, it represents knowing that humans are fallible and car repair diagnostics are not perfect either. Once you have quotes from 2 or 3 places for the repair work, you are in a much better position to negotiate. The next step is to see how much it will cost to replace the thing. Get actual quotes for trade-in from dealers, and you must disclose the engine troubles to them when getting this quote. $8,000 minus this amount is how much you are under water. Add that to the price of the car you would like to purchase to know how much of a loan you will have to take out (minus any downpayment). The next thing to consider is how you manage your risk from there. Your new car will be under-water too. Can you even get a loan? Will you need additional collateral or gap insurance to get the loan? What happens if you get in an accident the next day and total this car? Once you have all of this information, you are ready to really start thinking about the decision to be made. Things to consider: How reliable has the HHR been up to now? You don't want to put $3,500 into it now only to have to spend a few grand more in a month to replace the transmission. It is hard for us to know this as we don't know how long you have had it, what troubles you have had in the past, how well you have taken care of it (regular oil changes and maintenance). Keshlam is right about asking mechanics to check for other problems and scheduled maintenance that has not been done (e.g., timing belts replaced). Once you have made your decision, remember that everything is negotiable if you are wiling to walk away. If you decide to keep the car, try to get a better deal on the repairs by checking out other repair shops. If you decide to buy another car and get rid of this one, both the sale price of the new car and the trade-in price of the HHR are negotiable. Shop around and put in the work to buy something that will last a at a good price." }, { "docid": "6384", "title": "", "text": "\"This is the best tl;dr I could make, [original](https://www.reuters.com/article/us-opec-oil-shale-analysis-idUSKBN18M1Q4) reduced by 87%. (I'm a bot) ***** &gt; The history of the relationship between OPEC and the U.S. shale oil industry has evolved a great deal since the cartel discovered it had a surprise rival emerging in a core market for its oil around five years ago. &gt; WARNING FOR SHALE. By the same token, some U.S. shale leaders may also want a better insight into OPEC thinking and help OPEC understand that shale is not a flash in the pan. &gt; &amp;quot;OPEC looks at shale and it scoffs,&amp;quot; said Dave Purcell of Tudor, Pickering, Holt &amp; Co, a U.S. shale investment bank that attended the OPEC meeting for the first time. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6el278/opec_continues_to_underestimate_the_invisible_hand/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~133771 tl;drs so far.\"\") | [Theory](http://np.reddit.com/r/autotldr/comments/31bfht/theory_autotldr_concept/) | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **OPEC**^#1 **shale**^#2 **oil**^#3 **U.S.**^#4 **minister**^#5\"" }, { "docid": "595427", "title": "", "text": "\"It sounds like the kinds of planners you're talking to might be a poor fit, because they are essentially salespersons selling investments for a commission. Some thoughts on finding a financial planner The good kind of financial planner is going to be able to do a comprehensive plan - look at your whole life, goals, and non-investment issues such as insurance. You should expect to get a document with a Monte Carlo simulation showing your odds of success if you stick to the plan; for investments, you should expect to see a recommended asset allocation and an emphasis on low-cost no-commission (commission is \"\"load\"\") funds. See some of the other questions from past posts, for example What exactly can a financial advisor do for me, and is it worth the money? A good place to start for a planner might be http://napfa.org ; there's also a franchise of planners providing hourly advice called the Garrett Planning Network, I helped my mom hire someone from them and she was very happy, though I do think your results would depend mostly on the individual rather than the franchise. Anyway see http://www.garrettplanningnetwork.com/map.html , they do require planners to be fee-only and working on their CFP credential. You should really look for the Certified Financial Planner (CFP) credential. There are a lot of credentials out there, but many of them mean very little, and others might be hard to get but not mean the right thing. Some other meaningful ones include Chartered Financial Analyst (CFA) which would be a solid investment expert, though not necessarily someone knowledgeable in financial planning generally; and IRS Enrolled Agent, which means someone who knows a lot about taxes. A CPA (accountant) would also be pretty meaningful. A law degree (and estate law know-how) is very relevant to many planning situations, too. Some not-very-meaningful certifications include Certified Mutual Fund Specialist (which isn't bogus, but it's much easier to get than CFP or CFA); Registered Investment Adviser (RIA) which mostly means the person is supposed to understand securities fraud laws, but doesn't mean they know a lot about financial planning. There are some pretty bogus certifications out there, many have \"\"retirement\"\" or \"\"senior\"\" in the name. A good question for any planner is \"\"Are you a fiduciary?\"\" which means are they legally required to act in your interests and not their own. Most sales-oriented advisors are not fiduciaries; they wouldn't charge you a big sales commission if they were, and they are not \"\"on your side\"\" legally speaking. It's a good idea to check with your state regulators or the SEC to confirm that your advisor is registered and ask if they have had any complaints. (Small advisors usually register with the state and larger ones with the federal SEC). If they are registered, they may still be a salesperson who isn't acting in your interests, but at least they are following the law. You can also see if they've been in trouble in the past. When looking for a planner, one firm I found had a professional looking web site and didn't seem sketchy at all, but the state said they were not properly registered and not in compliance. Other ideas A good book is: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 it's very approachable and you'd feel more confident talking to someone maybe with more background information. For companies to work with, stick to the ones that are very consumer-friendly and sell no-load funds. Vanguard is probably the one you'll hear about most. But T. Rowe Price, Fidelity, USAA are some other good names. Fidelity is a bit of a mixture, with some cheap consumer-friendly investments and other products that are less so. Avoid companies that are all about charging commission: pretty much anyone selling an annuity is probably bad news. Annuities have some valid uses but mostly they are a bad deal. Not knowing your specific situation in any detail, it's very likely that 60k is not nearly enough, and that making the right investment choices will make only a small difference. You could invest poorly and maybe end up with 50K when you retire, or invest well and maybe end up with 80-90k. But your goal is probably more like a million dollars, or more, and most of that will come from future savings. This is what a planner can help you figure out in detail. It's virtually certain that any planner who is for real, and not a ripoff salesperson, will talk a lot about how much you need to save and so forth, not just about choosing investments. Don't be afraid to pay for a planner. It's well worth it to pay someone a thousand dollars for a really thorough, fiduciary plan with your interests foremost. The \"\"free\"\" planners who get a commission are going to get a whole lot more than a thousand dollars out of you, even though you won't write a check directly. Be sure to convert those mutual fund expense ratios and sales commissions into actual dollar amounts! To summarize: find someone you're paying, not someone getting a commission; look for that CFP credential showing they passed a demanding exam; maybe read a quick and easy book like the one I mentioned just so you know what the advisor is talking about; and don't rush into anything! And btw, I think you ought to be fine with a solid plan. You and your husband have time remaining to work with. Good luck.\"" }, { "docid": "571487", "title": "", "text": "\"It is my opinion that part of having a successful long-term relationship is being committed to the other person's success and well-being. This commitment is a form of investment in and of itself. The returns are typically non-monetary, so it's important to understand what money actually is. Money is a token people exchange for favors. If I go to a deli and ask for a sandwich. I give them tokens for the favor of having received a sandwich. The people at the deli then exchange those tokens for other favors, and that's the entire economy: people doing favors for other people in exchange for tokens that represent more favors. Sometimes being invested in your spouse is giving them a back rub when they've had a hard day. The investment pays off when you have a hard day and they give you a back rub. Sometimes being invested in your spouse is taking them to a masseuse for a professional massage. The investment pays off when they get two tickets to that thing you love. At the small scale it's easy to mostly ignore minor monetary discrepancies. At the large scale (which I think £50k is plenty large enough given your listed net worth) it becomes harder to tell if the opportunity cost will be worth making that investment. It pretty much comes down to: Will the quality-of-life improvements from that investment be better than the quality-of-life improvements you receive from investing that money elsewhere? As far as answering your actual question of: How should I proceed? There isn't a one-size fits all answer to this. It comes down to decisions you have to make, such as: * in theory it's easy to say that everyone should be able to trust their spouse, but in practice there are a lot of people who are very bad at handling money. It can be worthwhile in some instances to keep your spouse at an arms length from your finances for their own good, such as if your spouse has a gambling addiction. With all of that said, it sounds like you're living in a £1.5m house rent-free. How much of an opportunity cost is that to your wife? Has she been freely investing in your well-being with no explicit expectation of being repaid? This can be your chance to provide a return on her investment. If it were me, I'd make the investment in my spouse, and consider it \"\"rent\"\" while enjoying the improvements to my quality of life that come with it.\"" }, { "docid": "85214", "title": "", "text": "I'm the contrarian in the crowd. I think credit scores and debt are the closest thing to evil incarnate. You're in good company. The absence of a credit score simply means the agencies have insufficient data in their behavioral model to determine how profitable your business would be to the bank. The higher your score, the more likely the bank is to make a profit from your loan. IMHO, you're better off building up cash and investment reserves than a credit history. With sufficient reserves, you will be able to shop around for a bank that will give you a good rate, if you ever do need a loan. You'll be surprised at how quickly you get in a position where you don't need a loan if you save and invest wisely. I used to have a (high) credit score, and I was miserable about it because there were always bills due. I gave up debt 14 years ago, paid the last debt 7 years ago, and have never. been happier. Raising kids without debt (or credit score) is much more fun than with debt." }, { "docid": "267067", "title": "", "text": "In the US this is considered a sale, and the proceeds will be taxed as if you've sold the stocks in any other way. The decision about the treatment (capital, ordinary, etc) is dependent on what kind of stock that is, how you acquired it, how long have you held it, etc. If it is a regular stock that you bought as an investment and held it for more than a year - then it will likely to be a capital gain treatment. However, this is only relevant for the US taxation. Since you're a UK person, you should also check how it is handled in the UK, which may or may not be different." } ]

[ { "docid": "533791", "title": "", "text": "Regarding transferring a residential investment property into your SMSF, no you cannot do it. You cannot transfer residential property into your SMSF from a related party. You can only transfer Business Real Property (that is commercial or industrial property) into a SMSF from a related party. You can buy new residential property inside your SMSF, and you can also borrow within the fund (using a non-recourse loan) to help you buy it, or you could buy it as tenants-in-common with your SMSF (that is you own say 50% in your own name and 50% under the SMSF). Regarding self-managing the investment properties held in your SMSF, yes you can, but you should make sure all your paperwork is in order (all your t's crossed and your i's dotted). You can even charge your SMSF for managing the properties, but this should be at market rates (not more)." } ]

[ { "docid": "465819", "title": "", "text": "\"My advice would be to invest that 50k in 25% batches across 4 different money markets. Batch 1: Lend using a peer-to-peer account - 12.5k The interest rates offered by banks aren't that appealing to investors anymore, at least in the UK. Peer to peer lending brokers such as ZOPA provide 5% to 6% annual returns if you're willing to hold on to your investment for a couple of years. Despite your pre-conceptions, these investments are relatively safe (although not guaranteed - I must stress this). Zopa state on their website that they haven't lost any money provided from their investors since the company's inception 10 years ago, and have a Safeguard trust that will be used to pay out investors if a large number of borrowers defaulted. I'm not sure if this service is available in Australia but aim for an interest rate of 5-6% with a trusted peer-to-peer lender that has a strong track record. Batch 2: The stock market - 12.5k An obvious choice. This is by far the most exciting way to grow your money. The next question arising from this will likely be \"\"how do I pick stocks?\"\". This 12.5k needs to be further divided into 5 or so different stocks. My strategy for picking stock at the current time will be to have 20% of your holdings in blue-chip companies with a strong track record of performance, and ideally, a dividend that is paid bi-anually/quarterly. Another type of stock that you should invest in should be companies that are relatively newly listed on the stock market, but have monopolistic qualities - that is - that they are the biggest, best, and only provider of their new and unique service. Examples of this would be Tesla, Worldpay, and Just-eat. Moreover, I'd advise another type of stock you should purchase be a 'sin stock' to hedge against bad economic times (if they arise). A sin stock is one associated with sin, i.e. cigarette manufacturers, alcohol suppliers, providers of gambling products. These often perform good while the economy is doing well, but even better when the economy experiences a 2007-2008, and 2001-dotcom type of meltdown. Finally, another category I'd advise would be large-cap energy provider companies such as Exxon Mobil, BP, Duke Energy - primarily because these are currently cheaper than they were a few months ago - and the demand for energy is likely to grow with the population (which is definitely growing rapidly). Batch 3: Funds - 12.5k Having some of your money in Funds is really a no-brainer. A managed fund is traditionally a collection of stocks that have been selected within a particular market. At this time, I'd advise at least 20% of the 12.5k in Emerging market funds (as the prices are ridiculously low having fallen about 60% - unless China/Brazil/India just self destruct or get nuked they will slowly grow again within the next 5 years - I imagine quite high returns can be had in this type of funds). The rest of your funds should be high dividend payers - but I'll let you do your own research. Batch 4: Property - 12.5k The property market is too good to not get into, but let's be honest you're not going to be able to buy a flat/house/apartment for 12.5k. The idea therefore would be to find a crowd-funding platform that allows you to own a part of a property (alongside other owners). The UK has platforms such as Property Partner that are great for this and I'm sure Australia also has some such platforms. Invest in the capital city in areas as close to the city's center as possible, as that's unlikely to change - barring some kind of economic collapse or an asteroid strike. I think the above methods of investing provide the following: 1) Diversified portfolio of investments 2) Hedging against difficult economic times should they occur And the only way you'll lose out with diversification such as this is if the whole economic system collapses or all-out nuclear war (although I think your investments will be the least of your worries in a nuclear war). Anyway, this is the method of investing I've chosen for myself and you can see my reasoning above. Feel free to ask me if you have any questions.\"" }, { "docid": "211713", "title": "", "text": "The best way to invest in college for your kid is to buy an investment property and rent it out. You might think I am really crazy to ask you to you to buy a real estate property when everyone is running from real estate. Go where others are running away from it. Look where others are not looking. Find out the need for a decent rental property in your city or county and start following the real estate market to understand the real activities including the rental market. I would say follow it for 6 months before jumping in with any investment. And manage your property with good tenants until your kid is ready to go to college. By the time your kid is ready for college, the property would have been paid off by the rents and you can sell the property to send your kid to college." }, { "docid": "221747", "title": "", "text": "One can have a self-directed IRA. This is not like a Schwab, eTrade, etc IRA. It has a special type of custodian that knows how to manage it. I became aware of such an account as a way to purchase a rental property. There were two issues. The type of property I looked at wasn't anything a bank was willing to finance. And the rules regarding self dealing added a potential layer of expense as I technically could not perform the simplest of things for the property. For you, the obstacle looks like self-dealing. Any IRA can only be funded with cash or transfer/conversion from another IRA/401(k). I don't know how you would get the intelligent property into the IRA in the first place. Once you own a patent, or anything else, you can't sell it into the IRA. It's at times like this that member littleadv would suggest this is the time to talk to a pro before you do anything hazardous to your wealth." }, { "docid": "292991", "title": "", "text": "As mentioned in the other answer, you can't invest all of your money in one slightly risky place, and to receive a significant return on your investment, you must take on a reasonable amount of risk, and must manage that risk by diversifying your portfolio of investments. Unfortunately, answers to this question will be somewhat opinion and experience-based. I have two suggestions, however both involve risk, which you will likely experience in any situation. Peer to Peer Lending In my own situation, I've placed a large sum of money into peer-to-peer lending sites, such as LendingClub. LendingClub specifically advertises that 98% of its user base that invests in 100 notes or more of relatively equal size receive positive returns, and I'm sure you'll see similar statements in other similarly established vendors in this area. Historical averages in this industry can be between 5-7%, you may be able to perform above or below this average. The returns on peer to peer lending investments are paid out fairly frequently, as each loan you invest in on the site pays back into your account every time the recipient of the loan makes a payment. If you invest in small amounts / fractions of several hundred loans, you're receiving several small payments throughout the month on various dates. You can withdraw any money you have received back that hasn't been invested, or money you have in the account that hasn't been invested, at any time for personal spending. However, this involves various risks, which have to be considered (Such as someone you've loaned money to on the site defaulting). Rental Property / Property itself I'm also considering purchasing a very cheap home, and renting it out to tenants for passive income. This is something I would consider a possibility for you. On this front, you have the savings to do the same. It would be possible for you to afford the 20% downpayment on a very low cost home (Say, $100,000 or less up to $200,000 depending on your area), but you'd need to be able to pay for the monthly mortgage payment until you had a tenant, and would need to be able to afford any on-going maintenance, however ideally you'd factor that into the amount you charged tenants. You could very likely get a mortgage for a place, and have a tenant that pays you rent that exceeds the amount you pay for the mortgage and any maintenance costs, earning you a profit and therefore passive income. However, rental properties involve risks in that you might have trouble finding tenants or keeping tenants or keeping the property in good shape, and it's possible the property value could decrease. One could also generalize that property is a somewhat 'safe' investment, in that property values tend to increase over time, and while you may not significantly over-run inflation's increase, you may be able to get more value out of the property by renting it out in the mean time. Additional Note on Credit You mention you have a credit card payment that you're making, to build credit. I'd like to place here, for your reference, that you do not need to carry a balance to build credit. Having active accounts and ensuring you don't miss payments builds your history. To be more specific, your history is based off of many different aspects, such as: I'm sure I missed a couple of things on this front, you should be able to find this information with some research. Wanted to make sure you weren't carrying a balance simply due to the common myth that you must do so to build credit. Summary The items mentioned above are suggestions, but whatever you choose to invest in, you should carefully spread out / diversify your portfolio across a variety of different areas. It would not be advisable to stick to just one investment method (Say, either of the two above) and not also invest in stocks / bonds or other types of investments as well. You can certainly decide what percentage of your portfolio you want to invest in different areas (for instance X% of assets in Stocks/bonds, Y% in real-estate, etc), but it does make the most sense to not have all of your eggs in one basket." }, { "docid": "366685", "title": "", "text": "Whole life insurance accumulates a cash value on a pre-tax basis. With a paid-up policy, you make payments until a particular age (usually 65 or 70), at which point you are insured for the rest of your life or a very old age like 120. You can also access this pool of money via loans while you are still alive, but you reduce your benefit until you repay the loans. This may be advantageous if you have a high net worth. Also, if you own a business or farm, a permanent policy may be desirable if the transfer of your property to heirs is likely to generate alot of transactional costs like taxes. Nowadays there are probably better ways to do that too. Whole life/universal life is a waste of money 95%+ of the time. An example, my wife and I were recently offered open-enrollment (no medical exam) insurance policies our employers in New York. We're in our early 30's. I bought a term policy paying about $400k which costs $19/mo. My wife was offered a permanent policy that pays $100k which costs $83/mo, and would have a cash value of $35k at age 65. If you invested the $60/mo difference between those policies and earned 5%/year with 30% taxes on the gains, you'd have over $40k with 4x more coverage." }, { "docid": "90789", "title": "", "text": "Good answer. I set up an S-Corp on my own, but I intend to transfer our intellectual property to an LLC at a later date. I would say hiring an attorney to draft an operating agreement is a must and worth the expense." }, { "docid": "72578", "title": "", "text": "\"You are in your mid 30's and have 250,000 to put aside for investments- that is a fantastic position to be in. First, let's evaluate all the options you listed. Option 1 I could buy two studio apartments in the center of a European capital city and rent out one apartment on short-term rental and live in the other. Occasionally I could Airbnb the apartment I live in to allow me to travel more (one of my life goals). To say \"\"European capital city\"\" is such a massive generalization, I would disregard this point based on that alone. Athens is a European capital city and so is Berlin but they have very different economies at this point. Let's put that aside for now. You have to beware of the following costs when using property as an investment (this list is non-exhaustive): The positive: you have someone paying the mortgage or allowing you to recoup what you paid for the apartment. But can you guarantee an ROI of 10-15% ? Far from it. If investing in real estate yielded guaranteed results, everyone would do it. This is where we go back to my initial point about \"\"European capital city\"\" being a massive generalization. Option 2 Take a loan at very low interest rate (probably 2-2.5% fixed for 15 years) and buy something a little nicer and bigger. This would be incase I decide to have a family in say, 5 years time. I would need to service the loan at up to EUR 800 / USD 1100 per month. If your life plan is taking you down the path of having a family and needed the larger space for your family, then you need the space to live in and you shouldn't be looking at it as an investment that will give you at least 10% returns. Buying property you intend to live in is as much a life choice as it is an investment. You will treat the property much different from the way something you rent out gets treated. It means you'll be in a better position when you decide to sell but don't go in to this because you think a return is guaranteed. Do it if you think it is what you need to achieve your life goals. Option 3 Buy bonds and shares. But I haven't the faintest idea about how to do that and/or manage a portfolio. If I was to go down that route how do I proceed with some confidence I won't lose all the money? Let's say you are 35 years old. The general rule is that 100 minus your age is what you should put in to equities and the rest in something more conservative. Consider this: This strategy is long term and the finer details are beyond the scope of an answer like this. You have quite some money to invest so you would get preferential treatment at many financial institutions. I want to address your point of having a goal of 10-15% return. Since you mentioned Europe, take a look at this chart for FTSE 100 (one of the more prominent indexes in Europe). You can do the math- the return is no where close to your goals. My objective in mentioning this: your goals might warrant going to much riskier markets (emerging markets). Again, it is beyond the scope of this answer.\"" }, { "docid": "231227", "title": "", "text": "The most important thing is to keep in mind the deadline. If you want to have it count for 2016, you need to open the account and transfer the funds by tax day. Don't wait until the last day to do it, or you could run out of time. Setting up the initial account, and them verifying your information and transferring the money could take a few days. First decide how much of a lump sum you want to invest initially. This will determine some of your options because the mutual fund will have a minimum initial investment. Many of the funds will allow subsequent investments to be smaller. The beauty of a IRA or Roth IRA is that if the fund you want is out of reach for this initial investment in a few years you can transfer the money into another fund or even another fund family without having to worry about tax issues. Now decide on your risk level and you time horizon. Because you said you are student and you want a Roth IRA, it is assumed that you will not need this money for 4+ decades; so you can and should be willing to be a little more risky. As NathanL said an index fund is a great idea. Many also advise an aged based fund. My kids found that when they made their initial investments the age based funds were the only one with a low enough initial investment for their first few years. Then pick a fund family based on the general low fees, and a large mix of options. The best thing is that in a few years as you have more money and more options, you can adjust your choices." }, { "docid": "46345", "title": "", "text": "Given your clarification that you re only intending to use cryptocurrency as a capital asset & a long term investment vehicle, and not as a business day trading or trading for others, I would say this definitely is NOT illegal. The tax man says cryptocurrency is property. The IRS made this clear in Notice 2014-21. As long as you report it every time you do transfer it and an income loss/gain is triggered, I see nothing wrong here." }, { "docid": "252505", "title": "", "text": "There are mechanisms for determining how valuable a property is without resorting to artificial government valuations that can rise/drop in relation to the local economy. The most interesting I'm aware of is to force a sale of a property for X times the tax the person is paying. So for instance if I value my home/business property at 100K and the forced-sale-factor is 100x then I would pay at **least** 1k/year for taxes maybe a bit more just to be safe. This also solves the imminent domain issue. That is a bit science-fictiony though. In reality using an average of similar recent sales, while imperfect, is good enough. &gt;Diversification is important in all kinds of investments. I agree but governments can always raise rates or cut services or borrow in hard times, in general the property values should track fairly closely other forms of economic activity." }, { "docid": "105011", "title": "", "text": "What is my best bet with the 401K? I know very little about retirement plans and don't plan to ever touch this money until I retire but could this money be of better use somewhere else? You can roll over a 401k into an IRA. This lets you invest in other funds and stocks that were not available with your 401k plan. Fidelity and Vanguard are 2 huge companies that offer a number of investment opportunities. When I left an employer that had the 401k plan with Fidelity, I was able to rollover the investments and leave them in the existing mutual funds (several of the funds have been closed to new investors for years). Usually, when leaving an employer, I have the funds transferred directly to the place my IRA is at - this avoids tax penalties and potential pitfalls. The student loans.... pay them off in one shot? If the interest is higher than you could earn in a savings account, then it is smarter to pay them off at once. My student loans are 1.8%, so I can earn more money in my mutual funds. I'm suspicious and think something hinky is going to happen with the fiscal cliff negotiations, so I'm going to be paying off my student loans in early 2013. Disclaimer: I have IRA accounts with both Fidelity and Vanguard. My current 401k plan is with Vanguard." }, { "docid": "259476", "title": "", "text": "\"I transfer all their funds to my bank account Are they paying tax on that transfer? Gifts under $14,000 are excluded from taxation in the US, but they're going going to have a hard time arguing that it is a gift (since they expect it back). The taxes are almost certainly going to exceed the amount you can make from your investments in the short term, and if they aren't paid then your \"\"clients\"\" are going to be in hot water with the IRS. You need to have something set up that establishes you as merely managing the funds, and not receiving them personally as a transfer. The other answers have good suggestions.\"" }, { "docid": "417981", "title": "", "text": "\"While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, \"\"necessary and ordinary\"\" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say \"\"no\"\" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (\"\"pleasure\"\") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is \"\"business\"\" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the \"\"necessary and ordinary\"\" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA).\"" }, { "docid": "101764", "title": "", "text": "\"When you give a gift to another person or receive a gift from another person there is no impact on your taxes. You do not have to report certain amounts in your income, including the following: ... -most gifts and inheritances; http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/nttxd-eng.html If you give a gift to a charity or similar organization you can reduce your taxes. It is my recollection that when a family member gives a large amount of money to a child, tax on the income that money earns (typically interest) should be paid by the giver, not the child, but I can't find any publications to that effect on the CRA Site. There is a bit of language about \"\"Gifts\"\" from an employer that are really employment income: Gifts and other voluntary payments 1.3 The term gift is not defined in the Act. In common law jurisdictions, the courts have said that a bona fide gift exists when: •There is a voluntary transfer of property, •A donor freely disposes of his or her property to a donee, and •The donee confers no right, privilege, material benefit, or advantage on the donor or on a person designated by the donor. 1.4 Whether a transfer of property has been made voluntarily is a question of fact. In order for a transfer to be considered voluntary, there must be no obligation to make such a transfer. Amounts received as gifts, that is, voluntary transfers without consideration and which cannot be attributed to an income-earning source, are not subject to tax in the hands of the recipient. 1.5 However, sometimes individuals receive a voluntary payment or other valuable transfer or benefit by virtue of an office or employment from an employer, or from some other person. In such cases, the amount of the payment or the value of the transfer or benefit is generally included in employment income pursuant to subsection 5(1) or paragraph 6(1)(a). (See also Guide T4130, Employers’ Guide - Taxable Benefits and Allowances.) Similarly, voluntary payments (or other transfers or benefits) received by virtue of a profession or in the course of carrying on a business are taxable receipts. http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s3/f9/s3-f9-c1-eng.html#N10244 If the people in question are adults who are not related to each other and don't have a business or employment relationship, then you should find that regardless of the amount of the gift, neither giver nor recipient will have a tax consequence.\"" }, { "docid": "503742", "title": "", "text": "\"I have been a landlord in Texas for just over 3 years now. I still feel like a novice, but I will give you the benefit of my experience. If you are relying on rental properties for current income versus a long term return you are going to have to do a good job at shopping for bargains to get monthly cash flow versus equity growth that is locked up in the property until you sell it. If you want to pull a lot of cash out of a property on a regular basis you probably are going to have to get into flipping them, which is decidedly not passive investing. Also, it is easy to underestimate the expenses associated with rental properties. Texas is pretty landlord friendly legally, however it does have higher than usual property taxes, which will eat into your return. Also, you need to factor in maintenance, vacancy, tenant turnover costs, etc. It can add up to a lot more than you would expect. If you are handy and can do a lot of repairs yourself you can increase your return, but that makes it less of a passive investment. The two most common rules I have heard for initially evaluating whether an investment property is likely to be cash flow positive are the 1% and 50% rules. The 1% rule says the expected monthly rent needs to be 1% or greater of the purchase price of the house. So your hypothetical $150K/$10K scenario doesn't pass that test. Some people say this rule is 2% for new landlords, but in my experience you'd have to get lucky in Texas to find a house priced that competitively that didn't need a lot of work to get rents that high. The 50% rule says that the rent needs to be double your mortgage payment to account for expenses. You also have to factor in the hassle of dealing with tenants, the following are not going to happen when you own a mutual fund, but are almost inevitable if you are a landlord long enough: For whatever reason you have to go to court and evict a tenant. A tenant that probably lost their job, or had major medical issues. The nicest tenant you ever met with the cutest kids in the world that you are threatening to make homeless. Every fiber of your being wants to cut them some slack, but you have a mortgage to pay and can't set an expectation that paying the rent on time is a suggestion not a rule. or the tenant, who seemed nice at first, but now considers you \"\"the man\"\" decides to fight the eviction and won't move out. You have to go through a court process, then eventually get the Sheriff to come out and forcibly remove them from the property, which they are treating like crap because they are mad at you. All the while not paying rent or letting you re-let the place. The tenant isn't maintaining the lawn and the HOA is getting on your butt about it. Do you pay someone to mow the grass for them and then try to squeeze the money out of the tenant who \"\"never agreed to pay for that\"\"? You rent to a college kid who has never lived on their own and has adopted you as their new parent figure. \"\"The light in the closet went out, can you come replace the bulb?\"\" Tenants flat out lying to your face. \"\"Of course I don't have any pets that I didn't pay the deposit for!\"\" (Pics all over facebook of their kids playing with a dog in the \"\"pet-free\"\" house)\"" }, { "docid": "597679", "title": "", "text": "\"Leverage here is referring to \"\"financial leverage\"\". This is the practice of \"\"levering\"\" [ie increasing, like the use of a lever to increase the amount of weight you can lift] the value of your investment by taking on debt. For example: if you have 100k in cash, you can buy a 100k rental property. Assume the property makes 10k a year, net of expenses [10%]. Now assume the bank will also give you a 100k mortgage, at 3%. You could take the mortgage, plus your cash, and buy a 200k rental property. This would earn you 20k from the rental property, less 3k a year in interest costs [the 3%]. Your total income would be 17k, and since you only used 100k of your own money, your rate of return would now be 17% instead of 10%. This is financial leveraging. Note that this increases your risk, because if your investment fails not only have you lost your own money, you now need to pay back the bank. \"\"Beta riders\"\" appears to be negative commentary on investors who use Beta to calculate the value of a particular stock, without regard to other quantitative factors. Therefore \"\"leveraged beta riders\"\" are those who take on additional risk [by taking on debt to invest], and invest in a manner that the author would perhaps considered \"\"blindly\"\" following Beta. However, I have never seen this term before, and it appears tainted by the author's views on Quants. A \"\"quant process driven discipline\"\" appears to be positive commentary on investors who use detailed quantitative analysis to develop rules which they rigorously follow to invest. I have never seen this exact phrasing before, and like the above, it appears tainted by the author's views on Quants. I am not providing any opinion on whether \"\"beta riding\"\" or \"\"quant processes\"\" are good or bad things; this is just my attempt to interpret the quote as you presented it. Note that I did not go to the article to get context, so perhaps something else in the article could skew the language to mean something other than what I have presented.\"" }, { "docid": "108486", "title": "", "text": "\"Note: I am making a USA-assumption here; keep in mind this answer doesn't necessarily apply to all countries (or even states in the USA). You asked two questions: I'm looking to buy a property. I do not want to take a risk on this property. Its sole purpose is to provide me with a place to live. How would I go about hedging against increasing interest rates, to counter the increasing mortgage costs? To counter increasing interest rates, obtaining a fixed interest rate on a mortgage is the answer, if that's available. As far as costs for a mortgage, that depends, as mortgages are tied to the value of the property/home. If you want a place to live, a piece of property, and want to hedge against possible rising interest rates, a fixed mortgage would work for these goals. Ideally I'd like to not lose money on my property, seeing as I will be borrowing 95% of the property's value. So, I'd like to hedge against interest rates and falling property prices in order to have a risk neutral position on my property. Now we have a different issue. For instance, if someone had opened a fixed mortgage on a home for $500,000, and the housing value plummeted 50% (or more), the person may still have a fixed interest rate protecting the person from higher rates, but that doesn't protect the property value. In addition to that, if the person needed to move for a job, that person would face a difficult choice: move and sell at a loss, or move and rent and face some complications. Renting is generally a good idea for people who (1) have not determined if they'll be in an area for more than 5-10 years, (2) want the flexibility to move if their living costs rises (which may be an issue if they lose wages), (3) don't want to pay property taxes (varies by state), homeowner's insurance, or maintenance costs, (4) enjoy regular negotiation (something which renters can do before re-signing a lease or looking for a new place to live). Again, other conditions can apply to people who favor renting, such as someone might enjoy living in one room out of a house rather than a full apartment or a person who likes a \"\"change of scenes\"\" and moves from one apartment to another for a fresh perspective, but these are smaller exceptions. But with renting, you have nothing to re-sell and no financial asset so far as a property is concerned (thus why some real estate agents refer to it as \"\"throwing away money\"\" which isn't necessarily true, but one should be aware that the money they invest in renting doesn't go into an asset that can be re-sold).\"" }, { "docid": "502267", "title": "", "text": "\"I don't believe it makes a difference at the federal level -- if you file taxes jointly, gains, losses, and dividends appear on the joint tax account. If you file separately, I assume the tax implications only appear on the owner's tax return. Then the benefits might outweigh the costs, but only if you correctly predict market behavior and the behavior of your positions. For example, lets say you lose 30k in the market in one year, and your spouse makes 30k. If you're filing jointly, the loss washes out the gain, and you have no net taxes on the investment. If you're filing separately, you can claim 3k in loss (the remaining 27k in loss is banked to future tax years), but your spouse pays taxes on 30k in gain. Where things get more interesting is at the state level. I live in a \"\"community property state,\"\" where it doesn't matter whether you have separate accounts or not. If I use \"\"community money\"\" to purchase a stock and make a million bucks, that million bucks is shared by the two of us, whether the account is in my name our in our name. income during the marriage is considered community property. However property you bring into the marriage is not. And inheritances are not community property -- until co-mingled. Not sure how it works in other states. I grew up in what's called an \"\"equitable property state.\"\"\"" }, { "docid": "88539", "title": "", "text": "There are two significant drawbacks to this type of transfer. They were the reasons why I kept my American 401(k) as-is and started funding my Canadian RRSP from zero balance. 1. Taxes - a large chunk of your 401(k) will be lost to taxes. There is probably no way to transfer the funds without making a 401(k)/IRA withdrawal, which will incur the US federal tax and the 10% early-withdrawal penalty. When the money went into the 401(k), you got a tax deduction in the US and the tax break is supposed be repaid later when you make a withdrawal (that's basically how tax deferral works). It's unlikely that any country will let you take a deduction first and send the payback to a foreign country. The withdrawal amount may also be taxable in Canada (Canadians generally pay taxes on their global income and that includes pensions and distributions from foreign retirement plans). Foreign tax credit will apply of course, to eliminate double taxation, but it's of little help if your marginal Canadian tax rate is higher than your average US tax rate. 2. Expenses. Your RRSP will have to be invested in something and mutual fund management expenses are generally higher in Canada than in the US. For example, my employer-sponsored RRSP has a Standard & Poor's stock index fund that charges 1.5% and that is considered low-cost. It also offers a number of managed funds with expenses in excess of 2% that I simply ignore. You can probably invest your American 401(k)/IRA in mutual funds more efficiently." } ]

[ { "docid": "367360", "title": "", "text": "Carnegie Mellon University (CMU) and the University of Pittsburgh (Pitt) have different end of term dates but by less than a month. Both have summer sessions, but most students do not stay over the summer. You can rent over the summer, but prices fall by a lot. Thirty to forty thousand students leave over the summer between the two. Only ten to twenty thousand remain throughout the year and not all of those are in Oakland (the neighborhood in Pittsburgh where the universities are located). So many of the landlords in Oakland have the same problem. Your competitors will cut their rates to try to get some rent for the summer months. This also means that you have to handle eight, nine, and three month leases rather than year long and certainly not multiyear leases. You're right that you don't have to buy the latest appliances or the best finishes, but you still have to replace broken windows and doors. Also, the appliances and plumbing need to mostly work. The furnace needs to produce heat and distribute it. If there is mold or mildew, you will have to take care of it. You can't rely on the students doing so. So you have to thoroughly clean the premises between tenants. Students may leave over winter break. If there are problems, the pipes may freeze and burst, etc. Since they're not there, they won't let you know when things break. Students drop out during the term and move out. You probably won't be able to replace them when that happens. If you have three people in two bedrooms, two of them may be in a romantic relationship. Romantic relationships among twenty-year olds end frequently. Your three people drops back to two. Your recourse in that case is to evict the remaining tenants and sue for breach of contract. But if you do that, you may not replace the tenants until a new term starts. Better might be to sue the one who left and accept the lower rent from the other two. But you likely won't get the entire rent amount for the remainder of the lease. Suing an impoverished student is not the road to riches. Pittsburgh is expected to have a 6.1% increase in house prices which almost all of it is going to be pure profit. I don't know specifically about Pittsburgh, but in the national market, housing prices are about where they were in 2004. Prices were flat to increasing from 2004 to 2007 and then fell sharply from 2007 to 2009, were flat to decreasing from 2009 to 2012, and have increased the last few years. Price to rent ratios are as high now as in 2003 and higher than they were the twenty years before that. Maybe prices do increase. Or maybe we hit a new 20% decrease. I would not rely on this for profit. It's great if you get it, but unreliable. I wouldn't rely on estimates for middle class homes to apply to what are essentially slum apartments. A 6% average may be a 15% increase in one place and a 3% decrease in another. The nice homes with the new appliances and the fancy finishes may get the 15% increase. The rundown houses in a block where students party past 2 AM may get no increase. Both the city of Pittsburgh and the county of Allegheny charge property taxes. Schools and libraries charge separate taxes. The city provides a worksheet that estimates $2860 in taxes on a $125,000 property. It doesn't sound like you would be eligible for homestead or senior tax relief. Realtors should be able to tell you the current assessment and taxes on the properties that they are selling you. You should be able to call a local insurance agent to find out what kinds of insurance are available to landlords. There is also renter's insurance which is paid by the tenant. Some landlords require that tenants show proof of insurance before renting. Not sure how common that is in student housing." } ]

[ { "docid": "91405", "title": "", "text": "The real estate industry today is highly exploitative, you're right, but there are currently nothing stopping rents from rising. The major controls in place are are primarily supply constraints, which would lower prices if removed by allowing small, entrepreneurial developers and builders to create new housing more easily. There's also nothing to stop institutional investors from buying up all the housing right now, but those investors are generally not looking for high growth, they're looking for stable returns. Apartment buildings are viewed as similar to blue chip stock portfolios in that regard. Low growth, but also low risk. The reason capitalism wouldn't lead to monopoly is that it takes work both to gain resources, and to retain them, and the most reliable way to retain them is to reinvest them in the economy. Investment permits new businesses to grow, and new industries to form. It's precisely because the economy isn't limited to a fixed size that wealth of one group doesn't require to poverty of others. New value creation is the core of the theory, and nearly every living person has at least some capital (their body and mind) to begin employing toward value creation. I recommend reading Henry Hazlitt's Economics in One Lesson if you'd like to understand the theory behind why and how free market capitalism is supposed to work." }, { "docid": "320442", "title": "", "text": "\"The way to resolve your dilemma is to consult the price-to-rent ratio of the property. According to smartasset.com: The price-to-rent ratio is a measure of the relative affordability of renting and buying in a given housing market. It is calculated as the ratio of home prices to annual rental rates. So, for example, in a real estate market where, on average, a home worth $200,000 could rent for $1000 a month, the price-rent ratio is 16.67. That’s determined using the formula: $200,000 ÷ (12 x $1,000). Smartasset.com also goes on to give a table comparing different cities' price-to-rent ratio and then claim that the average price-to-rent ratio is currently 19.21. If your price-to-rent ratio is lower than 19.21, then, yes, your rents are more expensive than the average house. Smartasset.com claims that a high price-to-rent ratio is an argument in favor of tenants \"\"renting\"\" properties while a low price-to-rent ratio favors people \"\"buying\"\" (either to live in the property or to just rent it out to other people). So let's apply the price-to-rent ratio formula towards the properties you just quoted. There's a specific house I could buy for 190 (perhaps even less) that rents for exactly 2000 / month. 190K/(2000 * 12) = 7.92 There's a house for sale asking 400 (been on the market 2 yrs! could probably get for 350) which rents for 2800 /month. (400K)/(2800*12) = 11.90 (350K)/(2800*12) = 10.42 One can quite easily today buy a house for 180k-270k that would rent out for 1700-2100 / month. Lower Bound: (180K)/(1700*12) = 8.82 Upper Bound: (270K)/(2100*12) = 10.71 Even so, the rental returns here seem \"\"ridiculously high\"\" to me based on other markets I've noticed. Considering how the average price-to-rent ratio is 19.21, and your price-to-rent ratio ranges from 7.92 to 11.90, you are indeed correct. They are indeed \"\"ridiculously high\"\". Qualification: I was involved in real estate, and used the price-to-rent ratio to determine how long it would take to \"\"recover\"\" a person's investment in the property. Keep in mind that it's not the only thing I care about, and obviously the price-to-rent ratio tends to downplay expenses involved in actually owning properties and trying to deal with periods of vacancy. There's also the problem of taking into account demand as well. According to smartasset.com, Detroit, MI has the lowest price-to-rent ratio (with 6.27), which should suggest that people should buy properties immediately in this city. But that's probably more of a sign of people not wanting to move to Detroit and bid up the prices of properties. EDIT: I should also say that just because the properties are \"\"ridiculously expensive\"\" right now doesn't mean you should expect your rents to decrease. Rather, if rents keep staying at their current level, I'd predict that the property values will slowly increase in the future, thereby raising the price-to-rent ratio to 'non-ridiculous' mode.\"" }, { "docid": "422712", "title": "", "text": "\"The flaw in your reasoning is that you are assuming that renting a house is easy and automatic. Who is going to manage the property? Your parents? What are you going to do if the tenants burn the place down, start having drug parties there, or secretly have 6 cats who piss everywhere so noone will ever want to rent it again? What are you going to do when the house goes unrented for a year and you have to pay a year's worth of mortgage payments with no rental income? What are you going to do when some deadbeat decides to stop paying the rent, but won't move out, and when you try to evict him, he goes to court to stop you? You going to fly to NJ to make the court appearances? Unless you sell your existing house, or your parents buy you out, then you need to stay. You should not attempt to own two houses at once with one of the houses located not where you are at. That will not turn out well. Also, just as an aside, 30-year mortgages are not an \"\"investment\"\"; they are a way to lose money. Usually people get them because they want a big beautiful house that they cannot afford, so they borrow the money. That is not \"\"investing\"\", that is wasting money to live in luxurious circumstances. If you want to become wealthy, buy a property you can afford, not something that you have to string out payments for 30 years.\"" }, { "docid": "167943", "title": "", "text": "is it a smart thing for an entry level employee with a basic pay to buy a property on debt ? This is opinion based and can't be conclusively answered by others. Only you can make the choice. Their reasoning is that, since I am paying for their house rent right now(I have been doing this ever since I got into graduate school), I could divert it to pay for the loan while getting a property in return If I understand this, you are currently NRI [as you are working in Japan], you would like to take a home loan in India and buy a property in India. In the current scenario, the EMI towards home loan do not equate to the Rent as property prices have gone up in most places. In 2002 - 2007, there was a time of low interest rates and low property prices, that along with tax breaks made it cheaper to buy than rent. Also note that since you are NRI, you do not get any income tax rebate on interest paid. If you buy please ensure that all the EMI's are paid from NRE account. This would in future help you repatriate funds out of India, if you plan to sell the house. But I am scared of getting into debt so early in my career. If I commit myself like that, it might make me less courageous in making career changes till I finish paying off that debt. This is a valid concern, if you need to pursue further studies, or take a break for a change in career, it would make it difficult. Also note there are additional costs of buying a house, apart from EMI, there property tax, if you staying in society, a monthly maintenance etc." }, { "docid": "439566", "title": "", "text": "You said 2 things that made me think you are one of the rare young couples barely making it but should attempt to buy rather than rent anyway.... Around my area, renting a place is about equivalent to just paying a monthly mortgage of a 30yr 3.5% APR of a home priced at around $250,500. and... Our ideal price range would be $100,000-160,000 with a 25-30yr mortgage at 3.5 - 5.4% The other answers suggesting that you should rent and the reasons given were excellent ones but because of those 2 points you made, this tells me that you would be willing to live in a much much more basic house if you owned rather than rented. Many renters rent rather than buy because they want a really nice place for their money and are willing to spend what it takes to get a nice place, but not you. If you buy, you would be willing to take a place worth half or even less than half what you would get if you rented. That tells me you might accept a place that needs a little work. Perhaps you and/or your fiancée have some skills needed to do a little of the work yourself. I hope you decide to buy rather than rent if you can swing it, and instead of taking a 2nd job, spend all your spare time working on your little investment. It's possible that by the time you're done fixing that house up some, through your own creative efforts or through the help you might get from your friends, you could end up with a $250,000 house, own it, and reap all the great benefits of owning rather than renting...or...better yet, sell that place for a nice profit, then turn around and buy the next one already fixed up with your newly acquired great credit to help you with the new mortgage, and ready for you to move in and enjoy. It's how my wife and I got started (only we didn't have the benefit of historically low interest rates) and if we can do it, I believe you can too. Here are a couple tips that might help out....1) Don't spend a lot of money to fix the place...try to find the time to do the simpler tasks yourself. If you don't have the skills, you can learn them on youtube or by picking the brains of all the great willing people working at your local discount home project superstore. 2) Cosmetics go a long way towards increasing the value of a house. a) needs paint and b) needs carpet but not a) major structural damage and b) needs roof. Regarding some of your other points... HOA, hopefully if you buy in a formal community, the HOA should be less than $200. If it's more than that, it might be harder to do as I suggest. Closing Costs, probably more like 4 - 5% Taxes, monthly if included in mortgage, normally quarterly or semi-annually if not Utilities...you're budgeting quite high for that. Depending on your area, you might only spend an average of $200/month, maybe even less. Insurance...see answer for taxes Regular maintenance, $1K a year might be about right but we better include irregular also, which comes up more often than you might think when owning, let's say $2 - $3 a year. Unexpected costs. Expect the unexpected but if the place needs a new roof or something big like that, then you didn't do your homework before buying." }, { "docid": "542024", "title": "", "text": "Will buying a flat which generates $250 rent per month be a good decision? Whether investing in real estate is a good decision or not depends on many things, including the current and future supply/demand for rental units in your particular area. There are many questions on this site about this topic, and another answer to this question which already addresses many risks associated with owning property (though there are also benefits to consider). I just want to focus on this point you raised: I personally think yes, because rent adjusts with inflation and the rise in the price of the property is another benefit. Could this help me become financially independent in the long run since inflation is getting adjusted in it? In my opinion, the fact that rental income general adjusts with 'inflation' is a hedge against some types of economic risk, not an absolute increase in value. First, consider buying a house to live in, instead of to rent: If you pay off your mortgage before your retire, then you have reduced your cost of accommodations to only utilities, property taxes, and repairs. This gives you a (relatively) known, fixed requirement of cash outflows. If the value of property goes up by the time you retire - it doesn't cost you anything extra, because you already own your house. If the value of property goes down by the time you retire, then you don't save anything, because you already own your house. If you instead rent your whole life, and save money each month (instead of paying off a mortgage), then when you retire, you will have a larger amount of savings which you can use to pay your monthly rental costs each month. By the time you retire, your cost of accommodations will be the market price for rent at that time. If the value of property goes up by the time you retire - you will have to pay more on rent. If the value of property goes down by the time you retire, you will save money on rent. You will have larger savings, but your cash outflow will be a little bit less certain, because you don't know what the market price for rent will be. You can see that, because you need to put a roof over your own head, just by existing you bear risk of the cost of property rising. So, buying your own home can be a hedge against that risk. This is called a 'natural hedge', where two competing risks can mitigate each-other just by existing. This doesn't mean buying a house is always the right thing to do, it is just one piece of the puzzle to comparing the two alternatives [see many other threads on buying vs renting on this site, or on google]. Now, consider buying a house to rent out to other people: In the extreme scenario, assume that you do everything you can to buy as much property as possible. Maybe by the time you retire, you own a small apartment building with 11 units, where you live in one of them (as an example), and you have no other savings. Before, owning your own home was, among other pros and cons, a natural hedge against the risk of your own personal cost of accommodations going up. But now, the risk of your many rental units is far greater than the risk of your own personal accommodations. That is, if rent goes up by $100 after you retire, your rental income goes up by $1,000, and your personal cost of accommodations only goes up by $100. If rent goes down by $50 after you retire, your rental income goes down by $500, and your personal cost of accommodations only goes down by $50. You can see that only investing in rental properties puts you at great risk of fluctuations in the rental market. This risk is larger than if you simply bought your own home, because at least in that case, you are guaranteeing your cost of accommodations, which you know you will need to pay one way or another. This is why most investment advice suggests that you diversify your investment portfolio. That means buying some stocks, some bonds, etc.. If you invest to heavily in a single thing, then you bear huge risks for that particular market. In the case of property, each investment is so large that you are often 'undiversified' if you invest heavily in it (you can't just buy a house $100 at a time, like you could a stock or bond). Of course, my above examples are very simplified. I am only trying to suggest the underlying principle, not the full complexities of the real estate market. Note also that there are many types of investments which typically adjust with inflation / cost of living; real estate is only one of them." }, { "docid": "581026", "title": "", "text": "I did this about 8 years ago with a buddy in Chicago for the reasons specified in the original post. As other posters have suggested, we discussed a lot of the same questions listed above, figured out the possible scenarios, and then had a lawyer draw up a contract. We bought a 3 bedroom house, and rented out the 3rd bedroom. Overall, it was a great experience. We both built equity while having a renter pay a third of the mortgage. Plus the property tax and interest on the loan were tax deductible. Compared with renting an apartment, it made us a lot more money. In the end, we sold the house, and split the profits. Assuming you have the personalities to make it work, I say go for it." }, { "docid": "339921", "title": "", "text": "\"What you charge them depends on what kind of use you want them to have of the house. Your use of the term \"\"roommate\"\" implies you're imagining, well, a roommate-type situation where everyone has full access to all common areas. This is the usual situation when multiple people jointly rent a house that none of them owns. In this situation all the roommates are essentially equals. But if you own the house and are renting it out, you can do whatever you want. A lot of people would not look for \"\"roommates\"\" but for \"\"lodgers\"\" or \"\"tenants\"\" --- you rent one room to a person, and you decide what the terms are for their use of the rest of the house. That means you get to decide if/when they use the kitchen, if/when they get to use your dishes, what they can do in the back yard, etc. In this situation the roommates are not your equals. You own the property and you set the terms for everyone else. (To clarify after reading the other answer: by \"\"not your equals\"\" I don't mean to imply that renters aren't equal as human beings to the landlord or should be treated as lowly peasants or anything like that. I just mean that they need not have equal decision-making powers with regard to the housing itself.) I would say the big difference is the social dynamic: personally, I wouldn't feel comfortable renting out rooms to \"\"roommates\"\" unless I was quite sure I would get along with them --- basically, the kind of people I would actually rent with, not just rent to. If you do rent roommate-style, and everyone has essentially equal access to all the facilities of the house, I'd say it's reasonable to split all house expenses roughly equally (with perhaps some adjustments for differences in amenities, like if one person has a larger bedroom than others). If you rent tenant-style, where you're not expecting them to be your buddies, the best way to determine a reasonable rent is to find other people renting similar rooms and see how much they're charging. Craigslist is a great way to do that; you can also ask around to people you know.\"" }, { "docid": "198007", "title": "", "text": "\"Generally, when you own something - you can give it as a collateral for a secured loan. That's how car loans work and that's how mortgages work. Your \"\"equity\"\" in the asset is the current fair value of the asset minus all your obligations secured by it. So if you own a property free and clear, you have 100% of its fair market value as your equity. When you mortgage your property, banks will usually use some percentage loan-to-value to ensure they're not giving you more than your equity now or in a foreseeable future. Depending on the type and length of the loan, the LTV percentage varies between 65% and 95%. Before the market crash in 2008 you could even get more than 100% LTV, but not anymore. For investment the LTV will typically be lower than for primary residence, and the rates higher. I don't want to confuse you with down-payments and deposits as it doesn't matter (unless you're in Australia, apparently). So, as an example, assume you have an apartment you rent out, which you own free and clear. Lets assume its current FMV is $100K. You go to a bank and mortgage the apartment for a loan (get a loan secured by that apartment) at 65% LTV (typical for condos for investment). You got yourself $65K to buy another unit free and clear. You now have 2 apartments with FMV $165K, your equity $100K and your liability $65K. Mortgaging the new unit at the same 65% LTV will yield you another $42K loan - you may buy a third unit with this money. Your equity remains constant when you take the loan and invest it in the new purchase, but the FMV of your assets grows, as does the liability secured by them. But while the mortgage has fixed interest rate (usually, not always), the assets appreciate at different rates. Now, lets be optimistic and assume, for the sake of simplicity of the example, that in 2 years, your $100K condo is worth $200K. Voila, you can take another $65K loan on it. The cycle goes on. That's how your grandfather did it.\"" }, { "docid": "347773", "title": "", "text": "If you are splitting rent, it is not income because you are reducing the amount of space you have available to you and reducing your rent, it's the same as if you moved to a smaller apartment. You can't claim a deduction for rent paid, so there really are no tax implications in this arrangement. If you own a house and someone helps pay the mortgage, that does become a rental situation if the other party has no ownership stake in the house. Could you find other ways to disguise it, like having your brother pay utilities or buy groceries? Sure, but I think it's technically taxable income by the letter of the law. I also don't think the IRS is going to come after you for trading a place to sleep for groceries/cable." }, { "docid": "307426", "title": "", "text": "You can't calculate how many houses it will take. To do so you would have to know how much you can charge in rent compared to how much is costs to run that particular location. If the desirability of that location changes, so does the ability to rent the place, and so does the amount you can charge. It is possible to create a business in real estate that would allow you to generate retirement income. But you would be focusing all your income in your retirement years on one segment of the entire investment universe. The diversification would have to come from spreading the money through different types of real estate: condo, apartments, houses, commercial, warehouse, light industrial. You would even have to decide whether you want them all in one micro-market, or spread throughout a larger market, or an even wider area diversification. As your empire grew and you approached retirement age you would have to decide if you wanted to liquidate your investments to minimize risk. The long leases that provides stability of income would make it hard to sell quickly if the market in one area started to weaken." }, { "docid": "260695", "title": "", "text": "\"&gt;Wrong. Between Ford (1914) and FDR's Fair Labor Standards Act (1938) the middle class formed. Unions forming from textile plants pushed for what became the FLSA. That's more the working class, but we're just splitting hairs now. &gt;The right has been conned into wanting to dismantle all of that even though the only people who would benefit are the top 1%. A free market wouldn't stop unions, in fact it would give them more freedom. &gt;This is why the rest of us call you dupes or dummies. No, you do that because you're a condescending asshole. &gt;A \"\"slow down\"\" is no shortage. You said it generally as well. There's no overall housing shortage. Actually the example I gave you showed that allowing the construction of new apartments reduced rent increases as more demand is met. As far as actual vacant houses go, Seattle is actively stopping people from living in them, and giving permits to destroy them. You could solve the homeless problem in Seattle by getting govt out of the way.\"" }, { "docid": "540539", "title": "", "text": "\"Sure, it's irresponsible for an executor to take actions which endanger the estate. But what about passivity or inaction? Put it another way. Is it the obligation of the executor to avoid making revenue for the estate? Think about it - what a silly idea! Consider a 12-unit apartment building full of rent paying tenants. A tenant gives notice and leaves. So do 4 more. With only 7/12 tenants, the building stops being a revenue center and becomes a massive money pit. Is that acceptable? Heck no! Realistically this will be managed by a property management company, and of course they'll seek new tenants, not stopping merely because the owner died. This situation is not different; the same fiscal logic applies. The counter-argument is usually along the lines of \"\"stuff might happen if you rent it out\"\"... true. But the stuff that happens to abandoned houses is much worse, and much more likely: squatters, teen \"\"urban explorers\"\", pot growers, copper thieves, winter pipe freeze flooding and wrecking interiors, etc. Don't take my word on it -- ask your insurer for the cost of insuring an abandoned house vs. a rented one. Renting brings a chunk of cash that comes in from tenants - $12,000/year on a $1000/mo. rental. And that will barely pay the bills if you have a young mortgage on a freshly purchased house at recent market rates. But on an old mortgage, renting is like printing money. That money propagates first to the estate (presumably it is holding back a \"\"fix the roof\"\" emergency fund), and then to the beneficiaries. It means getting annual checks from the estate, instead of constantly being dunned for another repair. But I don't care about making revenue (outside of putting back a kitty to replace the roof). Even if it was net zero, it means the maintenance is being done. This being the point. It is keeping the house in good repair, occupied, insured, and professionally managed -- fit and ready for the bequest's purpose: occupancy of an aunt. What's the alternative? Move an aunt into a house that's been 10 years abandoned? Realistically the heirs are going to get tired/bored of maintaining the place at a total cash loss, maintenance will slip, and you'll be moving them into a neglected house with some serious issues. That betrays the bequest, and it's not fair to the aunts. Rental is a very responsible thing to do. The executor shouldn't fail to do it merely out of passivity. If you decide not to do it, there needs to be a viable alternative to funding the home's decent upkeep. (I don't think there is one). Excluding a revenue-producing asset from the economy is an expensive thing to do.\"" }, { "docid": "401899", "title": "", "text": "\"I don't know much about New Zealand, but here are just some general thoughts on things to consider. The big difference between buying a house and investing in stocks or the like is that it is fairly easy to invest in a diversified array of stocks (via a mutual fund), but if you buy a house, you are investing in a single piece of property, so everything depends on what happens with that specific property. This in itself is a reason many people don't invest in real estate. Shares of a given company or mutual fund are fungible: if you buy into a mutual fund, you know you're getting the same thing everyone else in the fund is getting. But every piece of real estate is unique, so figuring out how much a property is worth is less of an exact science. Also, buying real estate means you have to maintain it and manage it (or pay someone else to do so). It's a lot more work to accurately assess the income potential of a property, and then maintain and manage the property over years, than it is to just buy some stocks and hold them. Another difficulty is, if and when you do decide to sell the property, doing so again involves work. With stocks you can pretty much sell them whenever you want (although you may take a loss). With a house you have to find someone willing to buy it, which can take time. So a big factor to consider is the amount of effort you're prepared to put into your investment. You mention that your parents could manage the property for you, but presumably you will still have to pay for maintenance and do some managing work yourself (at least discussing things with them and making decisions). Also, if you own the property for a long time your parents will eventually become too old to take care of it, at which point you'll have to rethink the management aspect. So that's sort of the psychological side of things. As for the financial, you don't mention selling the house at any point. If you never sell it, the only gain you get from it is the rent it brings in. So the main factor to consider when deciding whether to buy it as a rental is how much you can rent it for. This is going to be largely determined by where it is located. So from the perspective of making an investment the big question --- which you don't address in the info you provided --- is: how much can you rent this house for, and how much will you be able to rent it for in the future? There is no way to know this for sure, and the only way to get even a rough sense of it is to talk with someone who knows the local real estate market well (e.g., a broker, appraiser, or landlord). If the property is in an \"\"up-and-coming\"\" area (i.e., more people are going to move there in the future), rents could skyrocket; if it's in a backwater, rents could remain stagnant indefinitely. Basically, if you're going to buy a piece of real estate as a long-term investment, you need to know a lot about that property in order to make any kind of comparison with another investment vehicle like a mutual fund. If you already live in the area you may know some things already (like how much you might be able to rent it for). Even so, though, you should try to get some advice from trustworthy people who know the local real estate situation.\"" }, { "docid": "71424", "title": "", "text": "Let me add a few thoughts that have not been mentioned so far in the other answers. Note that for the decision of buying vs. renting a home i.e. for personal use, not for renting out there's a rule of thumb that if the price for buying is more than 20 year's (cold) rents it is considered rather expensive. I don't know how localized this rule of thumb is, but I know it for Germany which is apparently the OP's country, too. There are obviously differences between buying a house/flat for yourself and in order to rent it out. As others have said, maintenance is a major factor for house owners - and here a lot depends on how much of that you do yourself (i.e. do you have the possibility to trade working hours for costs - which is closely related to financial risk exposure, e.g. increasing income by cutting costs as you do maintenance work yourself if you loose your day-time job?). This plays a crucial role for landlords I know (they're all small-scale landlords, and most of them do put in substantial work themselves): I know quite a number of people who rent out flats in the house where they actually live. Some of the houses were built with flats and the owner lives in one of the flats, another rather typical setup is that people built their house in the way that a smaller flat can easily be separated and let once the kids moved out (note also that the legal situation for the landlord is easier in that special case). I also know someone who owns a house several 100 km away from where they live and they say they intentionally ask a rent somewhat below the market price for that (nice) kind of flat so that they have lots of applicants at the same time and tenants don't move out as finding a new tenant is lots of work and costly because of the distance. My personal conclusion from those points is that as an investment (i.e. not for immediate or future personal use) I'd say that the exact circumstances are very important: if you are (stably) based in a region where the buying-to-rental-price ratio is favorable, you have the necessary time and are able to do maintenance work yourself and there is a chance to buy a suitable house closeby then why not. If this is not the case, some other form of investing in real estate may be better. On the other hand, investing in further real estate closeby where you live in your own house means increased lump risk - you miss diversification into regions where the value of real estate may develop very differently. There is one important psychological point that may play a role with the observed relation between being rich and being landlord. First of all, remember that the median wealth (without pensions) for Germany is about 51 k€, and someone owning a morgage-free 150 k€ flat and nothing else is somewhere in the 7th decile of wealth. To put it the other way round: the question whether to invest 150 k€ into becoming a landlord is of practical relevance only for rich (in terms of wealth) people. Also, asking this question is typically only relevant for people who already own the home they live in as buying for personal use will typically have a better return than buying in order to rent. But already people who buy for personal use are on average wealthier (or at least on the track to become more wealthy in case of fresh home owners) than people who rent. This is attributed to personal characteristics and the fact that the downpayment of the mortgage enforces saving behaviour (which is typically kept up once the house is paid, and is anyways found to be more pronounced than for non-house-owners). In contrast, many people who decide never to buy a home fall short of their initial savings/investment plans (e.g. putting the 150 k€ into an ETF for the next 21 years) and in the end spend considerably more money - and this group of people rarely invests into directly becoming a landlord. Assuming that you can read German, here's a relevant newspaper article and a related press release." }, { "docid": "531497", "title": "", "text": "So your point is that you know a guy that isn't good with money and has made some not great life decisions, thus **ALL** people that work low skilled jobs (even at the minimum wage level) are thus bad with their money and not cut out to own a house? Really... is that your argument? Correlation is not causation. Just because someone works a low skilled job and is bad with money, life decisions, and shouldn't own a house does not mean that working low skilled jobs are the root of those problems. &gt;That being said, the initial argument is as bogus as yours. I have a 2 bed 1 bath apartment for rent for $500 right now inside 610 loop in Houston TX. It's 10-15 minutes from downtown. And rent here in the Seattle area is way higher than all of that. Yes, rent is different where you live. It still doesn't mean people in my area should have to live in a shack because you pay $500 in Houston. Honestly, that should be an incentive for companies to move to Houston to reduce costs due to cost of living difference, which is why companies are leaving California. But if you are here in Seattle, or another city, there should be the expectation that your workers can afford to pay rent somewhere in the area. Also, just curious, do you pay any of your employees only the minimum wage?" }, { "docid": "53814", "title": "", "text": "lets sat If I buy a house on company's name, It will declared as expense and will deduct from profit. but I am not sure If I can rent it out as a IT LTD company. that's my questions. Buying a house is not an expense, it is a transfer of assets. The house itself, is an asset. So if you have $100,000 in cash, buy a house for $35,000, your total assets will remain the same ($100,000), but your asset mix will be different (instead of $100,000 in cash, you now have $65,000 in cash, and $35,000 in property). You can expense the costs associated with buying the house (e.g. taxes, interest, legal fees), but the house itself stays on the asset side of your balance sheet. To refine the example above, if you buy the house for $35,000, and pay $5,000 in misc fees related to purchasing the house, your assets are now $95,000 ($60,000 in cash, $35,000 in house): the $5,000 reduction is from the actual fees associated with the purchase. It is these fees that lower your profit. Being not familiar with UK rules, in Canada and the US, and likely the UK, you would then depreciate the house over its useful life. The depreciation expense is deducted from your annual net income. If you rent out the house, what you can do is expense any maintenance fees, taxes, etc., on the house itself. This expense will count as a negative towards the rental income, lowering your effective taxable income from the rental. E.g. rent out a flat at $1,000/month, but your property taxes are $3,500/year, so your net income for tax purposes (i.e. your taxable income in this case) is $12,000-$3,500=$8,500." }, { "docid": "451849", "title": "", "text": "\"The general answer is: \"\"it depends on how long you want to live there\"\". Here is a good calculator to figure it out: http://www.nytimes.com/interactive/business/buy-rent-calculator.html Basically, if you plan to move in a few years, then renting makes more sense. It is a lot easier to move from an apartment when your lease is up versus selling a house, which can be subject to fluctuations in the real-estate market. As an example, during the real estate bubble, a lot of \"\"young professional\"\" types bought condos and town homes instead of renting. Now these people are married with kids, need to move somewhere bigger, but they can't get rid of their old place because they can't sell it for what they still owe. If these people had rented for a few years, they would be in a better position financially. (Many people fell for the mantra \"\"If you are renting, you are throwing your money away\"\", without looking at the long-term implications.) However, your question is a little unique, because you mentioned renting for the rest of your life, and putting the savings into an investment, which is a cool idea. (Thinking outside the box, I like it.) I'm going to assume you mean \"\"rent the same place for many years\"\" versus \"\"moving around the country every few years\"\". If you are staying in one place for a long time, I am going to say that buying a house is probably a better option. Here's why: So what about investing? Let's look at some numbers: So, based on the above, I say that buying a house is the way to go (as long as you plan to live in the same place for several years). However, if you could find a better investment than the Dow, or if mortgage interest rates change drastically, things could tip in another direction. Addendum: CrimsonX brought up a good point about the costs of owning a house (upkeep and property taxes), which I didn't mention above. However, I don't think they change my answer. If you rent, you are still paying those costs. They are just hidden from you. Your landlord pays the contractor or the tax man, and then you pay the landlord as part of your rent.\"" }, { "docid": "155358", "title": "", "text": "You would have to find someone in the other state who wanted to swap. This is conceivable but difficult if you want the houses to be the same value. How do you find the one person who lives in the right place now and wants to move to the right area? The normal way this situation is handled is to simply put your house on the market. At the same time, you find a new house in the new location. You arrange for a new mortgage for the new house and make purchase contingent on selling the old house. Your buyer pays off your mortgage and gives you a bit left over that you use as a downpayment on the new house. Note that you take a loss on closing costs when you do this. This is why if you are in the position where you move frequently, you may be better off renting. Sometimes an employer will help with this, paying for a long term hotel or short term rental. This can give you more room to sell and buy the houses. If you have to move right now, immediately, not in a few months when your housing situation is fixed, consider double renting. You rent out your mortgaged house to someone and pay rent on a new place. You may put some of your stuff in storage until you get into your permanent place. The downside is that it can be harder to sell a house with a tenant until you are close to the end of the lease. And of course, you are probably not in the best position to get or pay good rent. Your situation restricts your options. You might get stuck in this situation for a year so as to get the time that you need to line up a buyer. Of course, you may get lucky and find someone who wants your old house as an investment property. Such a person won't be bothered by a tenant. But they usually want a good price. After all, they want to make money off it. There are those operations that advertise that they buy ugly houses. They want a good deal. You'll probably take a bath. But they can buy quickly, so you can move on quickly. No waiting until they find a buyer. And I'm not saying that you can't do a swap like you want. I'm just saying that you may find it difficult to find a swapping partner. Perhaps an investment person would be up for it. They take your house in trade for their house, letting you stay in their house until they can fix up your old house and either rent it or sell it. The problem is that it may be hard to find such an investor who can handle a house where you are and has a house where you need to be. I don't have a good suggestion for finding a swapping partner other than calling a lot of realtors and asking for suggestions. Maybe a bit of online checking for properties where the owner's business is managing the sale." } ]

[ { "docid": "414692", "title": "", "text": "I’m not an expert on the VISA/US tax or insurance, but you're making enough mistakes in terms of all the associated costs involved in owning and renting houses/apartments that this already looks potentially unwise at this stage of your investment career. Renting cheap properties/to students involves the property constantly being trashed, often being empty and requiring extremely close management (which you either have to pay someone a lot to do, or do yourself and lose other potential earning time. If doing yourself you will also make lots of mistakes in the vetting/managing/marketing process etc at first as this is a complex art in itself). Costs on this type of rental can often get as high as 25% a year depending exactly how lucky you get even if you do it all yourself, and will typically be in the 5-15% range every year once everything you have to constantly maintain, replace and redecorate is totalled up. That's all pre what you could be earning in a job etc, so if you could earn a decent clip elsewhere in the same time also have to deduct that lost potential. Send it all to third parties (so all upkeep by hired contractors, all renting by an agency) you will be lucky to even break even off ~15k a year per property rents to students. You’re not seeming to price in any transaction costs, which usually run at ~5% a time for both entrance and exit. Thats between half and one years rent gone from the ten per property on these numbers. Sell before ten is up its even more. On point three, rounding projections in house price rises to one decimal place is total gibberish – no one who actually has experience investing their own money well ever makes or relies on claims like this. No idea on Pittsburgh market but sound projections of likely asset changes is always a ranged and imprecise figure that cannot (and shouldn’t) be counted on for much. Even if it was, it’s also completely unattainable in property because you have to spend so much money on upkeep: post costs and changes in size/standard, house values generally roughly track inflation. Have a look at this chart and play around with some reasonable yearly upkeep numbers and you will see what I mean. Renting property is an absolute graveyard for inexperienced investors and if you don't know the stuff above already (and it's less than 10% of what you need to know to do this profitably vs other uses of your time), you will nearly always be better off investing the money in more passive investments like diversified bonds, REITs and Stock." } ]

[ { "docid": "389916", "title": "", "text": "\"First, let me mention that the reasons mentioned this far for renting are excellent ones. But, I disagree. Second, I would like to mention that I'm just a regular Joe, not an accountant, or a realtor. That said, I was in a similar situation not that long ago. I ended up renting, but I wish I hadn't. You should check out the \"\"offers\"\" in your area. You seem like you're willing to compromise on a more standard, or older home. If that is the case and you are willing to \"\"settle\"\" for an older town-home, or something similar, it might be in your best interest to do so. In my area for instance, the urban areas are becoming a bit crowded. This is good news for the people who already own homes in those urban areas, but bad news for people who are looking to rent an apartment (which tend to be located in urban areas) or buy a house in these urban areas. The reason I say that is simple; there is only one thing there will never be more of: land. If people are moving into these areas, and there is limited room to build structures, the demand is going up while the supply is unable to keep up. This means an increase in prices. BUT, this can also be used to your advantage. As the demand for those urban areas goes up, the rural areas around the urban areas are likely to be subsidized. For instance, near me, if you're willing to be 20 minutes from the nearest Walmart and you have a 550+ credit score and a stable income, you're able to acquire a government subsidized loan with 0% down. (I would recommend dropping at least SOMETHING, however, if possible.) Apartments of the size your family is going to require are going to be expensive. People who own apartment buildings are looking to make the most money per square foot. This means most apartment complexes are going to be filled with 1-2 bedroom apartments, but have very few if any 3+ bedroom apartments. (Again, this is my general experience, but it may be different where you're living.) I suspect the apartment your family is going to need is going to end up being very expensive, especially if people are moving into your town. You might consider trying to get a lower-quality house as apposed to a rare and large apartment for a few pretty obvious reasons: Don't misunderstand me, though. A lot of people get infatuated with the idea of being a home owner, and end up getting into something they will never be able to maintain, and if that happens it's something that's going to follow you for the rest of your life. As for your student loans, if you NEED to and you qualify you can apply for hardship. This would mean that you don't have to pay anything, or pay a reduced rate for some arbitrary approved amount of time, or until some arbitrary circumstance is met. However, do not take this lightly. While doing this might not necessarily accrue interest (depending on whether or not your loans were subsidized or unsubsidized and a host of other factors it might actually halt interest) these loans will follow you even into bankruptcy. Meaning if you get your student loans postponed and end up losing the house anyway, you have to make a fresh start with a bankruptcy AND student loans on your back. Furthermore, you can't count your chickens before they hatch, and neither will the banks. A big part of qualifying for a loan is your proof of income. If you haven't had that steady job for 6 months to a year or more, you're going to have a tough time getting a loan. Suppose your wife-to-be DOES start making that income...it's still not going to make a difference to the banks until they can say that it's not just a month long fling. Last, after reading all this I want to tell you that I am BIAS. I happened to miss the opportunity I'm explaining to you now, and that affects what I think you should do in this situation. Weigh the options carefully and objectively. Talk to your fiance. Talk to your friends, parents, anyone who is close with you. Come to an educated decision, rather than the decision that might be more exciting, or the one you WISH you could take. Good luck.\"" }, { "docid": "390447", "title": "", "text": "\"Pre-edit, Pete mentioned that he feels real estate agents would (a) like you to buy as much house as you afford, and (b) would love to show you three houses and have you choose one. As a real estate agent myself, I believe his warnings were understated. As with any industry, there are good and bad people. Agents are paid to move houses. If the median US home is under $200K, and commissions average say 5%, the $10,000 to be gained is split between the buyer brokerage and selling agent. The $5000 to each is then shared with 'the house.' So, this sale would net me $2500, gross. Move one a week, and the income is great, one per month, not so much. Tire kickers will waste an agent's time for a potential decision to wait another year and continue renting. Their obligation is to tell you the truth, but not to offer financial advice. Remember the mortgage crisis? It seems the banks and brokers aren't watching out for you either. They will tell you what they'll lend you, but not what you can afford. These numbers are worlds apart. I strongly recommend a 20% downpayment. The FHA PMI calculator shows that a 90% LTV (i.e. a 10% downpayment) for a $100K house will cost you $1200/yr in PMI. Think about this. For the $10,000 that you didn't put down, you are paying an extra $1200 each year. This is on top of the interest, so even at 5%, that last $10,000 is costing nearly 17%. If you can't raise that $10K (or whatever 10% is on that house) in cheaper funds, you should hold off. Using the 401(k) loan for this purpose is appropriate, yet emotionally charged. As if suck loans are written by the devil himself. \"\"Buy the biggest house you can\"\"? No. I have a better idea. Buy the smallest place you can tolerate. I have a living room (in addition to family room) that has been used 3 times in 20 years. A dining room we actually use. Twice per year. When your house is 50% too big, you pay 50% more property tax, more utility bills, and more maintenance. Closing costs, commission, etc, isn't cheap, but the lifetime cost of living in a too-big house is a money pit.\"" }, { "docid": "325564", "title": "", "text": "\"Real estate ownership doesn't work the same way in China as it does in the West. Some significant difference I see: * China doesn't have property tax, so empty apartments are treated as assets by individuals, no tax liability. * A lot of people buy 2nd/3rd home and not rent them out. Their purpose feels more like buying preferred stock - ownership with expectation of neighborhood (~company) would prosper, but no direct contribution to the neighborhood (~no voting in the company) * Local governments raise funds by developing landing into real estate. * Local government would collectivize old real estate for redevelopment, usually at some reasonable rate (tho less equitable in some \"\"corrupt\"\" areas) * Ownership is not permanent. It is on paper 50-70 years depending on the place. Not saying there aren't problems with this system, just that signals that would cause US real estate to collapse might not do the same for China. I do want to see someone run some social behavioral model about how those differences would play out. Source: my family owns 2 apartments in a 2nd-tier Chinese city.\"" }, { "docid": "354785", "title": "", "text": "As pointed out in a comment, it would be more natural to get a regular mortgage on the second house, which is essentially using the second house as collateral for its own loan. If you are to use the first house, either mortgage it or get a home equity line of credit on it and use that money to buy the second house. The relative merits of the options may depend in part on where you live, whether or not you live in the homes, and the relative cost of the two properties. For example, in the US, first and second homes get preferred tax treatment in addition to rates that are typically better than commercial loans (including mortgages for investment properties). If you're going to get a better rate and pay less taxes on one option and not on the others, that's definitely something to weigh." }, { "docid": "167943", "title": "", "text": "is it a smart thing for an entry level employee with a basic pay to buy a property on debt ? This is opinion based and can't be conclusively answered by others. Only you can make the choice. Their reasoning is that, since I am paying for their house rent right now(I have been doing this ever since I got into graduate school), I could divert it to pay for the loan while getting a property in return If I understand this, you are currently NRI [as you are working in Japan], you would like to take a home loan in India and buy a property in India. In the current scenario, the EMI towards home loan do not equate to the Rent as property prices have gone up in most places. In 2002 - 2007, there was a time of low interest rates and low property prices, that along with tax breaks made it cheaper to buy than rent. Also note that since you are NRI, you do not get any income tax rebate on interest paid. If you buy please ensure that all the EMI's are paid from NRE account. This would in future help you repatriate funds out of India, if you plan to sell the house. But I am scared of getting into debt so early in my career. If I commit myself like that, it might make me less courageous in making career changes till I finish paying off that debt. This is a valid concern, if you need to pursue further studies, or take a break for a change in career, it would make it difficult. Also note there are additional costs of buying a house, apart from EMI, there property tax, if you staying in society, a monthly maintenance etc." }, { "docid": "462532", "title": "", "text": "'Rent to own' is not a precise, single agreement. It can be whatever the seller and you agree to. It's a unique seller that would agree to this. Keep in mind, most sellers are needing to get their money in full to buy their next house. You might find an investor willing to work with you, but only for an inflated price, interest rate, or both. The ideal seller would be underwater (owing more than the value of the home) but needing to move. In which case, they are hoping to find someone to buy them some time to get situated in their new house before moving forward with you and the bank to arrange a sale. At its simplest, you might pay a premium on your rent to fix the price, giving you the option to buy during a particular period at that price. It can be a much higher premium where you are renting and paying extra until you hit 20%, at which point you agree to finance the balance either with a bank loan or through the seller. Buying a home you will live in is a personal decision. With no numbers offered, it's not like we can tell you if it's a wise purchase." }, { "docid": "71424", "title": "", "text": "Let me add a few thoughts that have not been mentioned so far in the other answers. Note that for the decision of buying vs. renting a home i.e. for personal use, not for renting out there's a rule of thumb that if the price for buying is more than 20 year's (cold) rents it is considered rather expensive. I don't know how localized this rule of thumb is, but I know it for Germany which is apparently the OP's country, too. There are obviously differences between buying a house/flat for yourself and in order to rent it out. As others have said, maintenance is a major factor for house owners - and here a lot depends on how much of that you do yourself (i.e. do you have the possibility to trade working hours for costs - which is closely related to financial risk exposure, e.g. increasing income by cutting costs as you do maintenance work yourself if you loose your day-time job?). This plays a crucial role for landlords I know (they're all small-scale landlords, and most of them do put in substantial work themselves): I know quite a number of people who rent out flats in the house where they actually live. Some of the houses were built with flats and the owner lives in one of the flats, another rather typical setup is that people built their house in the way that a smaller flat can easily be separated and let once the kids moved out (note also that the legal situation for the landlord is easier in that special case). I also know someone who owns a house several 100 km away from where they live and they say they intentionally ask a rent somewhat below the market price for that (nice) kind of flat so that they have lots of applicants at the same time and tenants don't move out as finding a new tenant is lots of work and costly because of the distance. My personal conclusion from those points is that as an investment (i.e. not for immediate or future personal use) I'd say that the exact circumstances are very important: if you are (stably) based in a region where the buying-to-rental-price ratio is favorable, you have the necessary time and are able to do maintenance work yourself and there is a chance to buy a suitable house closeby then why not. If this is not the case, some other form of investing in real estate may be better. On the other hand, investing in further real estate closeby where you live in your own house means increased lump risk - you miss diversification into regions where the value of real estate may develop very differently. There is one important psychological point that may play a role with the observed relation between being rich and being landlord. First of all, remember that the median wealth (without pensions) for Germany is about 51 k€, and someone owning a morgage-free 150 k€ flat and nothing else is somewhere in the 7th decile of wealth. To put it the other way round: the question whether to invest 150 k€ into becoming a landlord is of practical relevance only for rich (in terms of wealth) people. Also, asking this question is typically only relevant for people who already own the home they live in as buying for personal use will typically have a better return than buying in order to rent. But already people who buy for personal use are on average wealthier (or at least on the track to become more wealthy in case of fresh home owners) than people who rent. This is attributed to personal characteristics and the fact that the downpayment of the mortgage enforces saving behaviour (which is typically kept up once the house is paid, and is anyways found to be more pronounced than for non-house-owners). In contrast, many people who decide never to buy a home fall short of their initial savings/investment plans (e.g. putting the 150 k€ into an ETF for the next 21 years) and in the end spend considerably more money - and this group of people rarely invests into directly becoming a landlord. Assuming that you can read German, here's a relevant newspaper article and a related press release." }, { "docid": "293083", "title": "", "text": "Your calculations are good as far as they go, but there are lots of other factors and pros and cons to each decision. Yes, you should certainly compare the monthly rent to what your mortgage payments would be, as you have done. Yes, you should consider how long you might live there. If you do move out, how difficult will it be to sell the house, given market conditions in your area? If you try to rent it, how difficult is it to find a tenant, and what rent could you expect to receive? Speaking of moving out and renting the place: Who will manage the property and do maintenance? Would you still be close enough to do this yourself? Would you be willing and able to spend the time? Or would you have to hire someone? Also, what if the tenant does not pay the rent? How difficult is it to evict someone in your area? Speaking from personal experience, I own a rental property in Ohio, and the law says you can evict someone with 3 days notice. But in practice they don't just leave, so then you have to take them to court. It takes months to get a court date and months longer before the police actually show up to order them out of the house. And you have to pay the lawyer and court fees. In that time they're living in your property rent free. In my case one tenant also totally trashed the place and stole everything that wasn't nailed down -- I had to spend $13,000 on repairs to a house worth a fraction of what you're talking about. Being a landlord is NOT just a matter of sitting back and collecting rent checks: there's a fair amount of work and a lot of risk. What do you have to pay the realtor, and what other closing costs would you have to pay? Where I live, realtors typically charge 6 to 7%. You may also have to pay for an appraisal, title search, and bunch of other little fees. Mortgage interest is deductible on your federal income taxes. Rent is not. If you own and something needs to be repaired, you have to pay for it. If you rent, the landlord has to pay for it. If you own, you can do pretty much what you like with the property -- subject to zoning ordinances and building codes and maybe homeowners association rules, but you should have a pretty good amount of leeway. If you want to install ceiling fans or remodel the kitchen or add a deck, it's up to you. If you're renting, it's up to the landlord to decide what you can do to the property. And if he agrees to let you do some upgrade, when you're done, it belongs to him. With a condo, you are not usually responsible for exterior maintenance, like mowing the lawn and trimming the bushes and washing the outer walls. With a house, you are. You might pay someone to do this, which adds to the cost, or you might do it yourself, which takes time. Insurance on a condo or aparment is much less than insurance on a house. In my area, anyway. You should investigate those costs. If you buy, eventually you own the place and don't have to pay a mortgage any more. If you rent, you continue to pay forever. (Even if you don't live in the same house forever, as long as you don't take a terrible loss when you sell you should then have some money left over to apply to the next house, so you are still building equity.) Some of these pros and cons are easily quantifiable. Others are probabilities, like how likely is it that your water heater will fail?, and how long is it likely to take to find a buyer if you want to sell? And others are pretty subjective." }, { "docid": "532667", "title": "", "text": "\"The house that sells for $200,000 might rent for a range of monthly numbers. 3% would be $6000/yr or $500/mo. This is absurdly low, and favors renting, not buying. 9% is $1500/mo in which case buying the house to live in or rent out (as a landlord) is the better choice. At this level \"\"paying rent\"\" should be avoided. I'm simply explaining the author's view, not advocating it. A quote from the article - annual rent / purchase price = 3% means do not buy, prices are too high annual rent / purchase price = 6% means borderline annual rent / purchase price = 9% means ok to buy, prices are reasonable Edit to respond to Chuck's comment - Mortgage rates for qualified applicants are pretty tight from low to high, the 30 year is about 4.4% and the 15, 3.45%. Of course, a number of factors might mean paying more, but this is the average rate. And it changes over time. But the rent and purchase price in a given area will be different. Very different based on location. See what you'd pay for 2000 sq feet in Manhattan vs a nice town in the Mid-West. One can imagine a 'heat' map, when an area might show an $800 rent on a house selling for $40,000 as a \"\"4.16\"\" (The home price divided by annual rent) and another area as a \"\"20\"\", where the $200K house might rent for $1667/mo. It's not homogeneous through the US. As I said, I'm not taking a position, just discussing how the author formulated his approach. The author makes some assertions that can be debatable, e.g. that low rates are a bad time to buy because they already pushed the price too high. In my opinion, the US has had the crash, but the rates are still low. Buying is a personal decision, and the own/rent ratios are only one tool to be added to a list of factors in making the decision. Of course the article, as written, does the math based on the rates at time of publication (4%/30years). And the ratio of income to mortgage one can afford is tied to the current rate. The $60K couple, at 4%, can afford just over a $260K mortgage, but at 6%, $208K, and 8%, $170K. The struggle isn't with the payment, but the downpayment. The analysis isn't too different for a purchase to invest. If the rent exceeds 1% of the home price, an investor should be able to turn a profit after expenses.\"" }, { "docid": "58433", "title": "", "text": "Another factor not mentioned are the rent prices in the area you are looking to live. I'd recommend buying a house of which the total monthly costs (mortgage, insurance, repairs, etc) are equal to or less than renting a house in the same area. If you can't find a property for sale that meets this requirement, you might actually be better off keep on renting, at least for a while, because you risk paying too much for your living expenses. A second point is, if possible, to buy when the mortgage interest rates are low, and then go for a mortgage with fixed interest and fixed repayments. While such a mortgage will be more more expensive than one with variable interest, and house prices are higher when mortgage rates are lower, future inflation is almost a certainty. And if your interest rate was fixed, and you are confident that you'll be able to negotiate salary raises in pace with the inflation, then inflation will gradually whittle down the rate between the mortgage payment and your income. Conversely, if interest rates are historically high, with no lowering in sight, then a variable loan might be more interesting. And do shop around for mortgages, there are many banks out there, the competition between them is heavy, and many banks, especially the smaller banks, will often be willing to give you a mortgage at better conditions than their competitors." }, { "docid": "560710", "title": "", "text": "\"The New York Times offer a remarkably detailed Buy vs Rent calculator. You enter - From all of this, it advises the break-even rent, when monetarily, it's equal. I'd suggest you keep a few things in mind when using such a tool. Logic, common sense, and a Nobel prize winner named Robert Shiller all indicate that housing will follow inflation over the long term. Short term, even 20 years, the graphs will hint at something else, but the real long term, the cost of housing can't exceed inflation. The other major point I'd add is that I see you wrote \"\"We rent a nice house.\"\" Most often, people are looking to buy what they feel they can't easily rent. Whether it's the yard, room number or sizes, etc. This also leads to the purchase of too big a house. You can find that you can afford the extra bedroom, family room in addition to living room, etc, and then buy a house 50% bigger than what you need or planned on. In my opinion, getting the smallest house you can imagine living in, no bigger than what you live in now, and plan to get on a faster than 30 year repayment. Even with transaction costs, in 10 years, you'll have saved enough to make the bump up to a larger house if you wish.\"" }, { "docid": "155358", "title": "", "text": "You would have to find someone in the other state who wanted to swap. This is conceivable but difficult if you want the houses to be the same value. How do you find the one person who lives in the right place now and wants to move to the right area? The normal way this situation is handled is to simply put your house on the market. At the same time, you find a new house in the new location. You arrange for a new mortgage for the new house and make purchase contingent on selling the old house. Your buyer pays off your mortgage and gives you a bit left over that you use as a downpayment on the new house. Note that you take a loss on closing costs when you do this. This is why if you are in the position where you move frequently, you may be better off renting. Sometimes an employer will help with this, paying for a long term hotel or short term rental. This can give you more room to sell and buy the houses. If you have to move right now, immediately, not in a few months when your housing situation is fixed, consider double renting. You rent out your mortgaged house to someone and pay rent on a new place. You may put some of your stuff in storage until you get into your permanent place. The downside is that it can be harder to sell a house with a tenant until you are close to the end of the lease. And of course, you are probably not in the best position to get or pay good rent. Your situation restricts your options. You might get stuck in this situation for a year so as to get the time that you need to line up a buyer. Of course, you may get lucky and find someone who wants your old house as an investment property. Such a person won't be bothered by a tenant. But they usually want a good price. After all, they want to make money off it. There are those operations that advertise that they buy ugly houses. They want a good deal. You'll probably take a bath. But they can buy quickly, so you can move on quickly. No waiting until they find a buyer. And I'm not saying that you can't do a swap like you want. I'm just saying that you may find it difficult to find a swapping partner. Perhaps an investment person would be up for it. They take your house in trade for their house, letting you stay in their house until they can fix up your old house and either rent it or sell it. The problem is that it may be hard to find such an investor who can handle a house where you are and has a house where you need to be. I don't have a good suggestion for finding a swapping partner other than calling a lot of realtors and asking for suggestions. Maybe a bit of online checking for properties where the owner's business is managing the sale." }, { "docid": "507806", "title": "", "text": "\"Interestingly enough, \"\"strategic default\"\" seems to be more common than one might think in California and there is actually a lot of information available on it, to include a calculator that breaks down the numbers for you (although affiliated with a law office). Speaking from a purely financial standpoint, walking away only makes sense if it puts you in a better financial position than you were before while you had the mortgage. If you look at the downsides of walking away: The issues with the credit rating are will known but you need to take into account any open lines of credit you currently have as well as any need you might have to open a line of credit in the future. If you currently have credit cards, will the rates go up after the hit? On the housing side of things, you mortgage payment is currently a known quantity that will not change for the duration of the mortgage unless you do something to change it. However, it is fairly rare for rents to not change between years and if you want an apartment or house similar to what you currently have, you might find that the rent will fluctuate quite a bit between years and in the long run the rent might run higher than your current mortgage payment. Likewise, in the shorter term, if the landlord runs a credit check they might adjust what the rent is (or deny you the apartment) on the basis of the black mark on your history for reasons that other have mentioned. Another item to take into account is if you need to get a job in the future. Depending upon what you do for a living this might be a non-issue; however, if you are in a position of trust, walking away from a mortgage payment will reflect negatively upon your character unless you have a very good reason for it. This can lead to a loss of employment opportunities. Next, if you walk away from the mortgage you are walking away from the current value of the home and any future value that the home might have. If you like where you are living and aren't planning on moving to another part of the country, you are gambling that the market will not recover or that you would reach parity with what you owe by the time you need to sell the house. If you do plan on staying where you are and the house is in good repair, then in the long run you might be giving up quite a bit of money by walking away. These are a lot of factors to take into account though so its really hard to say one way or another if a strategic default is a good idea. In the long run you might come out ahead but knowing when that date is can be difficult to calculate. Likewise, in the long run it might adversely affect you and you might come to regret the decision. If the payments themselves are a bit too high, perhaps you can refinance or negotiate with the bank for a lower payment? If you get a better rate but keep your monthly payments the same then you might reach parity with the mortgage much faster which would also be to your advantage.\"" }, { "docid": "296168", "title": "", "text": "Unfortunately many millenials are stuck in this housing catch 22 where (for various reasons) they can't save up enough money to buy a home and since so many of them can't buy homes, they have to rent, which raises rent prices, which makes it even more difficult to save up for a home." }, { "docid": "367360", "title": "", "text": "Carnegie Mellon University (CMU) and the University of Pittsburgh (Pitt) have different end of term dates but by less than a month. Both have summer sessions, but most students do not stay over the summer. You can rent over the summer, but prices fall by a lot. Thirty to forty thousand students leave over the summer between the two. Only ten to twenty thousand remain throughout the year and not all of those are in Oakland (the neighborhood in Pittsburgh where the universities are located). So many of the landlords in Oakland have the same problem. Your competitors will cut their rates to try to get some rent for the summer months. This also means that you have to handle eight, nine, and three month leases rather than year long and certainly not multiyear leases. You're right that you don't have to buy the latest appliances or the best finishes, but you still have to replace broken windows and doors. Also, the appliances and plumbing need to mostly work. The furnace needs to produce heat and distribute it. If there is mold or mildew, you will have to take care of it. You can't rely on the students doing so. So you have to thoroughly clean the premises between tenants. Students may leave over winter break. If there are problems, the pipes may freeze and burst, etc. Since they're not there, they won't let you know when things break. Students drop out during the term and move out. You probably won't be able to replace them when that happens. If you have three people in two bedrooms, two of them may be in a romantic relationship. Romantic relationships among twenty-year olds end frequently. Your three people drops back to two. Your recourse in that case is to evict the remaining tenants and sue for breach of contract. But if you do that, you may not replace the tenants until a new term starts. Better might be to sue the one who left and accept the lower rent from the other two. But you likely won't get the entire rent amount for the remainder of the lease. Suing an impoverished student is not the road to riches. Pittsburgh is expected to have a 6.1% increase in house prices which almost all of it is going to be pure profit. I don't know specifically about Pittsburgh, but in the national market, housing prices are about where they were in 2004. Prices were flat to increasing from 2004 to 2007 and then fell sharply from 2007 to 2009, were flat to decreasing from 2009 to 2012, and have increased the last few years. Price to rent ratios are as high now as in 2003 and higher than they were the twenty years before that. Maybe prices do increase. Or maybe we hit a new 20% decrease. I would not rely on this for profit. It's great if you get it, but unreliable. I wouldn't rely on estimates for middle class homes to apply to what are essentially slum apartments. A 6% average may be a 15% increase in one place and a 3% decrease in another. The nice homes with the new appliances and the fancy finishes may get the 15% increase. The rundown houses in a block where students party past 2 AM may get no increase. Both the city of Pittsburgh and the county of Allegheny charge property taxes. Schools and libraries charge separate taxes. The city provides a worksheet that estimates $2860 in taxes on a $125,000 property. It doesn't sound like you would be eligible for homestead or senior tax relief. Realtors should be able to tell you the current assessment and taxes on the properties that they are selling you. You should be able to call a local insurance agent to find out what kinds of insurance are available to landlords. There is also renter's insurance which is paid by the tenant. Some landlords require that tenants show proof of insurance before renting. Not sure how common that is in student housing." }, { "docid": "377488", "title": "", "text": "The Central Banks sets various rate for lending to Banks and Paying interest to Banks on excess funds. Apart from these the Central Banks also sets various other ratios that either create more liquidity or remove liquidity from Market. The CPI is just one input to the Central Bank to determine rate, is not the only deciding criteria. The CPI does not take into account the house price or the cost of renting in the basket of goods. One of the reasons could be that CPI contains basic essentials and also the fact that it should be easily mesurable over the period of time. For example Retail Price of a particular item is easily mesurable. The rent is not easily mesurable." }, { "docid": "376221", "title": "", "text": "&gt; Owning an expensive home Why do people seem to think owning a home is expensive? Not everyone that owns a home is rich, or has an expensive home. Home ownership has many more benefits to renting, and the government should absolutely encourage it. It encourages people to take ownership in a community and brings down housing costs for everyone. People don't only rent apartments in high rises, you understand that, right? People rent two flats, houses, cabins, mansions, condos. Your view and knowledge of this is narrow at best." }, { "docid": "339921", "title": "", "text": "\"What you charge them depends on what kind of use you want them to have of the house. Your use of the term \"\"roommate\"\" implies you're imagining, well, a roommate-type situation where everyone has full access to all common areas. This is the usual situation when multiple people jointly rent a house that none of them owns. In this situation all the roommates are essentially equals. But if you own the house and are renting it out, you can do whatever you want. A lot of people would not look for \"\"roommates\"\" but for \"\"lodgers\"\" or \"\"tenants\"\" --- you rent one room to a person, and you decide what the terms are for their use of the rest of the house. That means you get to decide if/when they use the kitchen, if/when they get to use your dishes, what they can do in the back yard, etc. In this situation the roommates are not your equals. You own the property and you set the terms for everyone else. (To clarify after reading the other answer: by \"\"not your equals\"\" I don't mean to imply that renters aren't equal as human beings to the landlord or should be treated as lowly peasants or anything like that. I just mean that they need not have equal decision-making powers with regard to the housing itself.) I would say the big difference is the social dynamic: personally, I wouldn't feel comfortable renting out rooms to \"\"roommates\"\" unless I was quite sure I would get along with them --- basically, the kind of people I would actually rent with, not just rent to. If you do rent roommate-style, and everyone has essentially equal access to all the facilities of the house, I'd say it's reasonable to split all house expenses roughly equally (with perhaps some adjustments for differences in amenities, like if one person has a larger bedroom than others). If you rent tenant-style, where you're not expecting them to be your buddies, the best way to determine a reasonable rent is to find other people renting similar rooms and see how much they're charging. Craigslist is a great way to do that; you can also ask around to people you know.\"" }, { "docid": "105340", "title": "", "text": "\"This is the best tl;dr I could make, [original](https://qz.com/1029925/if-youre-renting-a-city-apartment-without-a-car-16-of-your-rent-pays-for-parking-you-dont-need/) reduced by 76%. (I'm a bot) ***** &gt; Since the 1940s, many US cities introduced minimum parking rules: for every new unit of housing, developers must also build a certain number of parking spaces. &gt; Parking should be thought of as an equity issue, argues researchers Gregory Pierce and C.J. Gabbe in the journal Housing Policy Debate, Why? The average price of building a garage parking space is passed on to people whether they own a car or not, and distort the true demand for urban parking. &gt; &amp;quot;The lack of rental housing without bundled parking imposes a steep cost on carless renters-commonly the lowest income households-who may be paying for parking that they do not need or want,&amp;quot; write the authors. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6o5ro3/if_youre_renting_a_city_apartment_without_a_car/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~170156 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **Parking**^#1 **housing**^#2 **price**^#3 **car**^#4 **new**^#5\"" } ]

[ { "docid": "359579", "title": "", "text": "I am not going to argue the merits of investing in real estate (I am a fan I think it is a great idea when done right). I will assume you have done your due diligence and your numbers are correct, so let's go through your questions point by point. What would be the type of taxes I should expect? NONE. You are a real estate investor and the US government loves you. Everything is tax deductible and odds are your investment properties will actually manage to shelter some of your W2(day job) income and you will pay less taxes on that too. Obviously I am exaggerating slightly find a CPA (certified public accountant) that is familiar with real estate, but here are a few examples. I am not a tax professional but hopefully this gives you an idea of what sort of tax benifits you can expect. How is Insurance cost calculated? Best advice I have call a few insurance firms and ask them. You will need landlord insurance make sure you are covered if a tenant gets hurt or burns down your property. You can expect to pay 15%-20% more for landlord insurance than regular insurance (100$/month is not a bad number to just plug in when running numbers its probably high). Also your lease should require tenants to have renters insurance to help protect you. Have a liability conversation with a lawyer and think about LLCs. How is the house price increase going to act as another source of income? Appreciation can be another source of income but it is not really that useful in your scenario. It is not liquid you will not realize it until you sell the property and then you have to pay capital gains and depreciation recapture on it. There are methods to get access to the gains on the property without paying taxes. This is done by leveraging the property, you get the equity but it is not counted as capital gains since you have to pay it back a mortgage or home equity lines of credit (HELOC) are examples of this. I am not recommending these just making sure you are aware of your options. Please let me know if I am calculating anything wrong but my projection for one year is about $8.4k per house (assuming no maintenance is needed) I would say you estimated profit is on the high side. Not being involved in your market it will be a wild guess but I would expect you to realize cash-flow per house per year of closer to $7,000. Maybe even lower given your inexperience. Some Costs you need to remember to account for: Taxes, Insurance, Vacancy, Repairs, CapEx, Property Management, Utilities, Lawn Care, Snow Removal, HOA Fees. All-in-all expect 50% or your rental income to be spent on the property. If you do well you can be pleasantly surprised." } ]

[ { "docid": "296906", "title": "", "text": "I'm going to take a different path than the other answers: Given how low interest rates are (depending on your credit), buying a house may be a great strategy. However, I would not put more than 20% down. Putting more than 20% down unnecessarily ties up cash that could be used more productively elsewhere. You need to figure out your cash flow situation both for the near term, and for the long term. For the short term, you probably won't need to help your kids with tuition. They will likely be able to get a combination of grants, scholarships, and loans that will cover the cost. However, the loans are generally not low interest, and that is a huge amount of debt for someone so young. If you want to help pay your kids tuition, you should at least guestimate/budget that amount now. For the long term, without any retirement savings, you may be hurting in a couple decades. Since you also don't have a home, your living situation may be a problem. Buying a home today may be the prudent move, because that will hopefully be an appreciating asset, and, with a 30 year mortgage, you'll own it outright by 75, which takes a big strain off of retirement costs. $1400 a month in bills (apart from rent/mortgage) with no kids in the house (is this correct?) sounds high. I would also recommend looking at your basic expenses and seeing what you can do without if you are cash strapped." }, { "docid": "354785", "title": "", "text": "As pointed out in a comment, it would be more natural to get a regular mortgage on the second house, which is essentially using the second house as collateral for its own loan. If you are to use the first house, either mortgage it or get a home equity line of credit on it and use that money to buy the second house. The relative merits of the options may depend in part on where you live, whether or not you live in the homes, and the relative cost of the two properties. For example, in the US, first and second homes get preferred tax treatment in addition to rates that are typically better than commercial loans (including mortgages for investment properties). If you're going to get a better rate and pay less taxes on one option and not on the others, that's definitely something to weigh." }, { "docid": "53814", "title": "", "text": "lets sat If I buy a house on company's name, It will declared as expense and will deduct from profit. but I am not sure If I can rent it out as a IT LTD company. that's my questions. Buying a house is not an expense, it is a transfer of assets. The house itself, is an asset. So if you have $100,000 in cash, buy a house for $35,000, your total assets will remain the same ($100,000), but your asset mix will be different (instead of $100,000 in cash, you now have $65,000 in cash, and $35,000 in property). You can expense the costs associated with buying the house (e.g. taxes, interest, legal fees), but the house itself stays on the asset side of your balance sheet. To refine the example above, if you buy the house for $35,000, and pay $5,000 in misc fees related to purchasing the house, your assets are now $95,000 ($60,000 in cash, $35,000 in house): the $5,000 reduction is from the actual fees associated with the purchase. It is these fees that lower your profit. Being not familiar with UK rules, in Canada and the US, and likely the UK, you would then depreciate the house over its useful life. The depreciation expense is deducted from your annual net income. If you rent out the house, what you can do is expense any maintenance fees, taxes, etc., on the house itself. This expense will count as a negative towards the rental income, lowering your effective taxable income from the rental. E.g. rent out a flat at $1,000/month, but your property taxes are $3,500/year, so your net income for tax purposes (i.e. your taxable income in this case) is $12,000-$3,500=$8,500." }, { "docid": "411875", "title": "", "text": "Onix Advisors is a leading home rental platform provides luxury houses, apartments and flat for rent and sale in Bangalore. Visit our website to browse the 100% verified listing of properties and home. Get in touch with us for further details!" }, { "docid": "296168", "title": "", "text": "Unfortunately many millenials are stuck in this housing catch 22 where (for various reasons) they can't save up enough money to buy a home and since so many of them can't buy homes, they have to rent, which raises rent prices, which makes it even more difficult to save up for a home." }, { "docid": "54231", "title": "", "text": "The simplest way to handle this is for you to rent the apartment and sublet to the girlfriend and friend. I'd split the utilities evenly, one-third from each. The reason for this is that each of you contribute evenly to generating the utility bills. It's not like your income makes the water cost more for you. Utilities are driven by usage. Dividing them other than equally is likely to lead to more problems than it solves. Also, it seems unlikely that a different apartment would use significantly different water, electricity, or internet. Those are driven by the appliances rather than the size or location of the apartment. Only pay more for the utilities if you want something that they don't. For example, maybe you want HBO, etc. It would be reasonable for you to pay the entire premium if that's a luxury that they simply wouldn't buy. I'd also divide the groceries evenly if you share and share alike. If you eat separate meals, you can buy separate groceries. If the rent can't be split evenly but you could afford it alone, then you can just sign up for it. If you break up with the girlfriend and/or the friend moves out, you're still fine. You have your fancy apartment and can afford it. The bigger problem comes if you can't afford the apartment without both the girlfriend and friend contributing. If so, you should probably avoid this situation. It's fragile. Any person leaving would put you in a financially untenable position. You can look for a new tenant to replace your friend, but you can't exactly rely on getting a new move-in girlfriend on demand. Neither the girlfriend nor the friend can afford to be on the main lease. In case of emergency or tragedy, they couldn't replace you as a tenant. That's why they should sublet. Then their obligation is to you, not to the landlord. How much apartment would the girlfriend and friend get if you weren't involved? What rents would they pay? That's probably how much rent they should pay for this apartment. You want a better apartment (or a better location)? That's on you. You should only do this if you want to do it. If you want to share apartments with the girlfriend and friend, then do so. Work out something equitable. If you plan on moving in together to reduce your costs, then you don't sound like you are compatible. Obviously there are reasons to move in with the girlfriend aside from costs. Why can't the friend get his or her own place? The added rent probably won't do more than pay for the added room (you could get a one bedroom without the friend). That points to an alternative way of calculating the friend's contribution: the difference between a two bedroom and a one bedroom apartment. That's the additional cost of the bigger apartment. If the friend can't afford that, then this might not be a good idea. Make sure that you can afford the apartment if one or both of the friend and girlfriend move out. You can eventually replace the friend as the tenant but don't rely on doing the same with the girlfriend. Share utilities evenly. Possibly groceries too. The friend should pay at least the added cost of the additional bedroom. Don't expect either to pay more in the new apartment than they would pay without you. You should be the only one on the main lease; sublet to them." }, { "docid": "109828", "title": "", "text": "\"She can't afford the house she's living in either. A $2,200 payment is about a $400K to well over half a million dollar home depending on her interest rate. Her housing costs should be at most 30% of her take home income, which is about $1,020 and would ***ONLY*** allow her to be able to afford to share a multi-bedroom apartment in Santa Cruz. Homes start in the $400K Range in that areas and go into the (tens of) millions of dollars. The $700/ month loan issue is bad but that house is going to be the final nail in the coffin the moment home repairs need to be done and she can't afford to do them. Personally I gave up trying to make the housing situation work out here in the Bay Area. My rent is jumping from $2,300 to $2,600 next month right over the hill in Santa Clara. I decided to buy a decent, modest, house in a great city the Midwest. Mortgage before property taxes and insurance is only $1,100. Out here in California it would be valued at an $800K to $900K home easily with close to a $5,500 mortgage payment. No thanks. If anything these articles are a good example of people playing fast and loose with their personal finances. The woman in the article is simply living beyond her means. Credit lets you pretend that you're of larger means than you really are for only so long. I made the choice to fund my retirement and pay off a home, rather than sunshine and close proximity to the beach. As the woman in the article mentioned: &gt;\"\"I will be working *for as long as I'm employable*. I will never be able to retire, At her age it may not be very long until she finds herself unemployable. She's right about never retiring, she spent her retirement living some place she couldn't afford to live, while obtaining an education she couldn't afford to pay for.\"" }, { "docid": "100683", "title": "", "text": "\"For the vast majority, \"\"buying\"\" a house via a mortgage is not an investment. I use quotes around buying because from a technical perspective you don't own anything until you've paid it off; this is often an important point that people forget. It's highly unlikely you'll make more on it than the amount you put into it (interest, repairs, etc). Even with relatively low interest rates. The people who successfully invest in homes are those that use actual cash (not borrowed) to buy a home at well below market value. They then clean it up and make enough repairs to make it marketable and sell it shortly there after. Sometimes these people get hosed if the housing market tumbles to the point that the home is now worth less than the amount they put into it. This is especially problematic if they used bank loans to get the process going. They were actually the hardest hit when the housing bubble popped several years ago. Well, them and the people who bought on interest only loans or had balloon payments. Whereas the people who use a mortgage are essentially treating it like a bank account with a negative interest rate. For example, $180k loan on a 30 yr fixed at 4% will mean a total payout of around $310k, excluding normal repairs like roofs, carpet, etc. Due to how mortgage's work, most of the interest is collected during the first half of the loan period. So selling it within 2 to 5 years is usually problematic unless the local housing market has really skyrocketed. Housing markets move up and down all the time due to a hundred different things completely out of your control. It might be a regional depression, weather events, failed large businesses, failed city/local governments, etc. It could go up because businesses moved in, a new highway is built, state/local taxes decline, etc. My point is, homes are not long term investments. They can be short term ones, but only in limited circumstances and there is a high degree of risk involved. So don't let that be a driving point of your decision. Instead you need to focus on other factors. Such as: what is really going on with the house you are currently in? Why would they lose it? Can you help out, and, should you help out? If things are precarious, it might make more sense to sell that home now and everyone move into separate locations, possibly different rentals or apartments. If they are foreclosed on then they will be in a world of financial hurt for a long time. If we ignore your parents situation, then one piece of advice I would give you is this: Rent the cheapest apartment you can find that is still a \"\"safe\"\" place to live in. Put every dollar you can into some type of savings/investment that will actually grow. Stay there for 5+ years, then go pay cash for a nice home. Making $75k a year while single means that you don't need much to live on. In other words, live extremely cheap now so you can enjoy a fantastic living experience later that is free from financial fear. You should be able to put $30k+ per year aside going this route. edit: A bit of support data for those that somehow think buying a home on a mortgage is somehow a good investment: Robert Shiller, who won a Nobel prize in economics and who predicted the bursting of the housing bubble, has shown that a house is not a good investment. Why? First, home prices (adjusted for inflation) have been virtually unchanged for the past 100 years. (link 1, link 2) Second, after you add in the costs of maintenance alone then those costs plus what you've paid for the home will exceed what you get out of it. Adding in the cost of a mortgage could easily double or even triple the price you paid which makes things even worse. Maintenance costs include things like a new roof, carpet/flooring, water heater, appliances, etc. Yes, a home might cost you $100k and you might sell it for $200k after 15 years. However during that time you'll likely replace the roof ($10k to $20k), replace appliances ($2k to $5k), water heater ($1k), carpet/flooring ($5k to $20k), paint ($3k to $6k), and mortgage related costs (~$60k - assuming 30 yr fixed @4%). So your \"\"costs\"\" are between $180k and $200k just on those items. There are many more that could easily escalate the costs further. Like a fence ($5k+), air conditioner ($5k+), windows, etc. The above is assuming the home actually appreciates in value faster than inflation: which they historically haven't over the long term. So you have to consider all of the costs ultimately paid to purchase and maintain the home vs the costs of renting during the same time period. Point is: do your research and be realistic about it. Buying a home is a huge financial risk.\"" }, { "docid": "320442", "title": "", "text": "\"The way to resolve your dilemma is to consult the price-to-rent ratio of the property. According to smartasset.com: The price-to-rent ratio is a measure of the relative affordability of renting and buying in a given housing market. It is calculated as the ratio of home prices to annual rental rates. So, for example, in a real estate market where, on average, a home worth $200,000 could rent for $1000 a month, the price-rent ratio is 16.67. That’s determined using the formula: $200,000 ÷ (12 x $1,000). Smartasset.com also goes on to give a table comparing different cities' price-to-rent ratio and then claim that the average price-to-rent ratio is currently 19.21. If your price-to-rent ratio is lower than 19.21, then, yes, your rents are more expensive than the average house. Smartasset.com claims that a high price-to-rent ratio is an argument in favor of tenants \"\"renting\"\" properties while a low price-to-rent ratio favors people \"\"buying\"\" (either to live in the property or to just rent it out to other people). So let's apply the price-to-rent ratio formula towards the properties you just quoted. There's a specific house I could buy for 190 (perhaps even less) that rents for exactly 2000 / month. 190K/(2000 * 12) = 7.92 There's a house for sale asking 400 (been on the market 2 yrs! could probably get for 350) which rents for 2800 /month. (400K)/(2800*12) = 11.90 (350K)/(2800*12) = 10.42 One can quite easily today buy a house for 180k-270k that would rent out for 1700-2100 / month. Lower Bound: (180K)/(1700*12) = 8.82 Upper Bound: (270K)/(2100*12) = 10.71 Even so, the rental returns here seem \"\"ridiculously high\"\" to me based on other markets I've noticed. Considering how the average price-to-rent ratio is 19.21, and your price-to-rent ratio ranges from 7.92 to 11.90, you are indeed correct. They are indeed \"\"ridiculously high\"\". Qualification: I was involved in real estate, and used the price-to-rent ratio to determine how long it would take to \"\"recover\"\" a person's investment in the property. Keep in mind that it's not the only thing I care about, and obviously the price-to-rent ratio tends to downplay expenses involved in actually owning properties and trying to deal with periods of vacancy. There's also the problem of taking into account demand as well. According to smartasset.com, Detroit, MI has the lowest price-to-rent ratio (with 6.27), which should suggest that people should buy properties immediately in this city. But that's probably more of a sign of people not wanting to move to Detroit and bid up the prices of properties. EDIT: I should also say that just because the properties are \"\"ridiculously expensive\"\" right now doesn't mean you should expect your rents to decrease. Rather, if rents keep staying at their current level, I'd predict that the property values will slowly increase in the future, thereby raising the price-to-rent ratio to 'non-ridiculous' mode.\"" }, { "docid": "155358", "title": "", "text": "You would have to find someone in the other state who wanted to swap. This is conceivable but difficult if you want the houses to be the same value. How do you find the one person who lives in the right place now and wants to move to the right area? The normal way this situation is handled is to simply put your house on the market. At the same time, you find a new house in the new location. You arrange for a new mortgage for the new house and make purchase contingent on selling the old house. Your buyer pays off your mortgage and gives you a bit left over that you use as a downpayment on the new house. Note that you take a loss on closing costs when you do this. This is why if you are in the position where you move frequently, you may be better off renting. Sometimes an employer will help with this, paying for a long term hotel or short term rental. This can give you more room to sell and buy the houses. If you have to move right now, immediately, not in a few months when your housing situation is fixed, consider double renting. You rent out your mortgaged house to someone and pay rent on a new place. You may put some of your stuff in storage until you get into your permanent place. The downside is that it can be harder to sell a house with a tenant until you are close to the end of the lease. And of course, you are probably not in the best position to get or pay good rent. Your situation restricts your options. You might get stuck in this situation for a year so as to get the time that you need to line up a buyer. Of course, you may get lucky and find someone who wants your old house as an investment property. Such a person won't be bothered by a tenant. But they usually want a good price. After all, they want to make money off it. There are those operations that advertise that they buy ugly houses. They want a good deal. You'll probably take a bath. But they can buy quickly, so you can move on quickly. No waiting until they find a buyer. And I'm not saying that you can't do a swap like you want. I'm just saying that you may find it difficult to find a swapping partner. Perhaps an investment person would be up for it. They take your house in trade for their house, letting you stay in their house until they can fix up your old house and either rent it or sell it. The problem is that it may be hard to find such an investor who can handle a house where you are and has a house where you need to be. I don't have a good suggestion for finding a swapping partner other than calling a lot of realtors and asking for suggestions. Maybe a bit of online checking for properties where the owner's business is managing the sale." }, { "docid": "444477", "title": "", "text": "The problem is, you are trying to qualify for a loan that has a 25% down payment using money you don't have, which defeats the purpose of having a down payment. The best thing to do is have your parents buy the house for you. You then rent the house from them where your rent is equal to the mortgage + x. Your parents then put x into savings account for you and then once you have 25% in that account, they gift it to you and you purchase the house from them using that 25% as the downpayment for the mortgage." }, { "docid": "84441", "title": "", "text": "\"Average rent rates will typically rise and fall, and are market-dependent just like real estate. In the short term, a collapse in housing like the one we saw in 2008 can induce a spike in rental costs as people walk away or get foreclosed on, and move back into apartments. That then tends to self-adjust, as the people who had been in the apartments find a deal on a foreclosed house and move out. However, one thing I've seen to be near-constant in the apartment business is that a landlord will offer you a deal to get in, then increase the rent on you from year to year until you get fed up and move. This is a big reason I didn't have the same address for two years in a row until I bought my house. The landlord is basically betting that you won't want to deal with the hassle of moving, and so will pay the higher rent rate, even if, when you do the math, it makes more sense to move even to maintain the same rent rate. Eventually though, you do get fed up, look around, find the next good deal, and move, \"\"resetting\"\" your rent rate. I have never, not once in my life, seen or heard of any landlord offering a drop in rent as a \"\"loyalty\"\" move to keep you from going somewhere else. It's considered part of the game; retailers will price match, but most service providers (landlords, but also utility providers) expect a large amount of \"\"churn\"\" in their customer base as people shop around. It averages out.\"" }, { "docid": "123013", "title": "", "text": "On paper the whole 6 months living costs sounds (and is) great, but in real life there are a lot of things that you need to consider. For example, my first car was constantly falling apart and was an SUV that got 16MPG. I have to travel for work (about 300 miles per week) so getting a sedan that averages close to 40MPG saves me more in gas and maintenance than the monthly payment for the new car costs. When our apartment lease was up, the new monthly rent would have been $1685 per month, we got a 30 year mortgage with a monthly payment of $1372. So buying a house actually let us put aside more each month. We have just under 3 months of living expenses set aside (1 month in liquid assets, 2 months in a brokerage account) and I worry about it. I wish we had a better buffer, but in our case the house and car made more sense as an early investment compared to just squirreling away all our savings. Also, do you have any debt? Paying off debt (student loans, credit card debt, etc.) should often take top priority. Have some rainy day funds, of course, but pay down debts, and then create a personal financial plan for what works best in your situation. That would be my suggestion." }, { "docid": "542024", "title": "", "text": "Will buying a flat which generates $250 rent per month be a good decision? Whether investing in real estate is a good decision or not depends on many things, including the current and future supply/demand for rental units in your particular area. There are many questions on this site about this topic, and another answer to this question which already addresses many risks associated with owning property (though there are also benefits to consider). I just want to focus on this point you raised: I personally think yes, because rent adjusts with inflation and the rise in the price of the property is another benefit. Could this help me become financially independent in the long run since inflation is getting adjusted in it? In my opinion, the fact that rental income general adjusts with 'inflation' is a hedge against some types of economic risk, not an absolute increase in value. First, consider buying a house to live in, instead of to rent: If you pay off your mortgage before your retire, then you have reduced your cost of accommodations to only utilities, property taxes, and repairs. This gives you a (relatively) known, fixed requirement of cash outflows. If the value of property goes up by the time you retire - it doesn't cost you anything extra, because you already own your house. If the value of property goes down by the time you retire, then you don't save anything, because you already own your house. If you instead rent your whole life, and save money each month (instead of paying off a mortgage), then when you retire, you will have a larger amount of savings which you can use to pay your monthly rental costs each month. By the time you retire, your cost of accommodations will be the market price for rent at that time. If the value of property goes up by the time you retire - you will have to pay more on rent. If the value of property goes down by the time you retire, you will save money on rent. You will have larger savings, but your cash outflow will be a little bit less certain, because you don't know what the market price for rent will be. You can see that, because you need to put a roof over your own head, just by existing you bear risk of the cost of property rising. So, buying your own home can be a hedge against that risk. This is called a 'natural hedge', where two competing risks can mitigate each-other just by existing. This doesn't mean buying a house is always the right thing to do, it is just one piece of the puzzle to comparing the two alternatives [see many other threads on buying vs renting on this site, or on google]. Now, consider buying a house to rent out to other people: In the extreme scenario, assume that you do everything you can to buy as much property as possible. Maybe by the time you retire, you own a small apartment building with 11 units, where you live in one of them (as an example), and you have no other savings. Before, owning your own home was, among other pros and cons, a natural hedge against the risk of your own personal cost of accommodations going up. But now, the risk of your many rental units is far greater than the risk of your own personal accommodations. That is, if rent goes up by $100 after you retire, your rental income goes up by $1,000, and your personal cost of accommodations only goes up by $100. If rent goes down by $50 after you retire, your rental income goes down by $500, and your personal cost of accommodations only goes down by $50. You can see that only investing in rental properties puts you at great risk of fluctuations in the rental market. This risk is larger than if you simply bought your own home, because at least in that case, you are guaranteeing your cost of accommodations, which you know you will need to pay one way or another. This is why most investment advice suggests that you diversify your investment portfolio. That means buying some stocks, some bonds, etc.. If you invest to heavily in a single thing, then you bear huge risks for that particular market. In the case of property, each investment is so large that you are often 'undiversified' if you invest heavily in it (you can't just buy a house $100 at a time, like you could a stock or bond). Of course, my above examples are very simplified. I am only trying to suggest the underlying principle, not the full complexities of the real estate market. Note also that there are many types of investments which typically adjust with inflation / cost of living; real estate is only one of them." }, { "docid": "309231", "title": "", "text": "&gt;Landlords vs slumlords - somehow I doubt if the author lives in a real slum with a landlord that provides substandard housing. Why call a landlord a derogatory name for providing you a place to live&gt;? Because my apartment needed 5 repairs in the first four months of renting. Because my landlord claims to be a nonprofit university (MIT owns large portions of Cambridge) when it's time to pay property taxes but increased the rent 27% over the rent from 3 years ago when they rented the apartment to me. Because renting out housing stock as old as this by doing the minimal necessary repairs to get it back on the market every year is basically just economic rent-seeking on the value of living in this city." }, { "docid": "257303", "title": "", "text": "\"You will need to see a tax expert. Your edited question includes the line For the short term, we will be \"\"renting\"\" it to my wife's grandmother at a deep discount. According to the instructions for schedule E If you rented out a dwelling unit that you also used for personal purposes during the year, you may not be able to deduct all the expenses for the rental part. “Dwelling unit” (unit) means a house, apartment, condominium, or similar property. For each property listed on line 1a, report the number of days in the year each property was rented at fair rental value and the number of days of personal use. A day of personal use is any day, or part of a day, that the unit was used by: I have no idea how this will work for Schedule C.\"" }, { "docid": "453656", "title": "", "text": "you are discounting the cash used, the discount rate for cash should be whatever you determine is your risk premium over the risk free rate not the equity growth rate. if equity growth rate is above your determined required return the equity investment is wealth destroying and if it is above that then it is wealth increasing. The difficulty I see is that the scenario is all wrong, what you are really after is a rent vs buy decision. Do I take this money and rent a place or do I buy a house? In either case you could invest the remainder after paying your rent/mortgage in the equity market no? So what really matters is the difference in cost between renting and buying. Let (EGR)=equity growth rate Rent = rent M = Mortgage payment I = income HA = home value appreciation Now the question is is renting or buying a better decision two scenarios, renting first PMT =(I - rent) I/y = (EGR) N =Time horizon in years FV= Gain from cf left after paying rent then discount to present day at your required rate of return to find present value now scenario for buying, this is more complicated because you are investing two different cf streams at different rates and have to calculate both and add them together. 1) CF 1 the mortgage payments buy you equity in the house which appreciates (hopefully) but can be extremely volatile. This is the cf stream scenario one doesnt have, when renting the rent payments poof disappear forever and you earn nothing on them 2) The income left after mortgage payment which can be invested at the market rate measured the same way as above. **This is extremely simplistic and doesnt take into account expected maintenance, property taxes and other costs intrinsic to the investment. It also doesnt take into account the lost down payment setting you well behind the renter. TL DR: It is complicated but you determine the required return(discount rate) based on the perceived risk of the investment and your particular views and it doesnt matter what expected growth rates are since any investment with an expected growth rate below your required rate is wealth destroying since you are paying for something which returns cash flows too small for its risk level. If you use growth rates as discount rates then all your investments will net to zero" }, { "docid": "430764", "title": "", "text": "\"Bad areas are tough to value as a owner-occupied property, because the business model for being a slumlord is to rent apartments in absentia, usually to tenants receiving goverment subsidies such as Section 8 vouchers. The vouchers are based on a prevailing rent, which are often on par with nice suburban apartment complexes due to how that \"\"prevailing\"\" rate is calculated. So the value of the house is really an annuity calculation. You figure out the potential rental cash flow and apply whatever your local market premium is. The point is, doing an apples to apples comparison is going to be tough, and justifying the cost of repairs that aren't remediating health and safety issues probably won't be recoverable from a home valuation standpoint. A buyer would probably rip out your central air conditioner and sell it! If I were in your shoes, I'd look at the time horizon that you think you're going to be there and amortize the cost over that period. Assuming your mortgage is small and you're staying for about 5 years, spending $10k costs you about $170 a month. Your reward is a modern A/C and heating system. Compare that cost to the cost of moving and your desires and see if it's worth it to you.\"" }, { "docid": "163724", "title": "", "text": "\"Based on the information you gave, there are dozens if not hundreds of possible theories one could spin about the rental market. Sure, it's possible that there are no listings because rental units on this street are quickly snapped up. On the other hand, it's also possible that there are no listings because almost all the buildings on the street have been abandoned and, aside from this one property that someone is tying to sell you, the rest of the street is inhabited only by wild dogs and/or drug dealers. Or maybe the street is mostly owner-occupied, i.e. the properties are not being rented to anyone. Or maybe it's a commercial district. Or maybe craigslist isn't popular with people who own property on this street for whatever reason. Maybe Syracuse has a city ordinance that says property must be advertised in the newspaper and not on websites, for all I know. Or maybe you missed it because nobody in Syracuse calls it \"\"housing for rent\"\", they all call it \"\"apartments for rent\"\" or \"\"houses for rent\"\" or some local phrase. Or ... or ... or. Before I bought a property, I'd do more research than one search on one web site. Have you visited the property? I don't know how much you're preparing to invest, I have no idea what property prices are in Syracuse, but I'd guess it's at least tens of thousands of dollars. Surely worth making the drive to Syracuse to check it out before buying.\"" } ]

[ { "docid": "85229", "title": "", "text": "Insurance - get estimate from an insurance agent who works with policies for commercial real estate. See comments below regarding incorporation. Taxes - if this was basic income for a simple LLC, estimating 25-40% and adjusting over time might work. Rental property is a whole different prospect. Financial experts who specialize in rental properties would be a good source of advice, and worth the cost. See below regarding incorporating. Real estate appreciation - not something you can count on for developed property. Appreciation used to be almost guaranteed to at least keep up with inflation. Now property values are not even guaranteed to go up. Never have been but the general rule was improved real estate in good repair appreciated in price. Even if property values increase over time, rental properties depreciate. In fact, for rental properties, you can claim a certain rate of depreciation over time as an expense on taxes. This depreciation could mean selling for less than you paid for the property after a number of years, and owing capital gains taxes, since you would owe the difference between the depreciated value and the sale price. Related to taxes are local codes. Some areas require you to have a property management license to handle buildings with more than a certain number of units. If you are going to own rental properties, you should protect your private financial life by incorporating. Form a company. The company will own the property and hire any maintenance people or property managers or security staff or any similar employment activities. The company takes out the insurance and pays taxes. The company can pay you a salary. So, bottom line, you can have the company pay all the expenses and take all the risks. Then, assuming there's any money left after expenses, the company can pay you a manager's salary. That way if the worst happens and a tenant breaks their hip in the shower and sues you for ONE MILLION DOLLARS and wins, the company folds and you walk away. You might even consider two companies. One to own the property and lease it to a property management company. The property management company can then go bankrupt in case of some sort of liability issue, in which case you still keep the property, form a new management company, repaint and rename the property and move on. TL;DR: Get insurance advice from insurance agent before you buy. Same for taxes from an accountant. Get trained as a property manager if your local codes require it (might be a good idea anyway). Incorporate and have the company take all the risks." } ]

[ { "docid": "255414", "title": "", "text": "Buying a house may save you money compared with renting, depending on the area and specifics of the transaction (including the purchase price, interest rates, comparable rent, etc.). In addition, buying a house may provide you with intangibles that fit your lifestyle goals (permanence in a community, ability to renovate, pride of ownership, etc.). These factors have been discussed in other answers here and in other questions. However there is one other way I think potential home buyers should consider the financial impact of home ownership: Buying a house provides you with a natural 'hedge' against possible future changes in your cost of living. Assume the following: If these two items are true, then buying a home allows you to guarantee today that your monthly living expenses will be mostly* fixed, as long as you live in that community. In 2 years, if there is an explosion of new residents in your community and housing costs skyrocket - doesn't affect you, your mortgage payment [or if you paid cash, the lack of mortgage payment] is fixed. In 3 years, if there are 20 new apartment buildings built beside you and housing costs plummet - doesn't affect you, your mortgage payment is fixed. If you know that you want to live in a particular place 20 years from now, then buying a house in that area today may be a way of ensuring that you can afford to live there in the future. *Remember that while your mortgage payment will be fixed, other costs of home ownership will be variable. See below. You may or may not save money compared with rent over the period you live in your house, but by putting your money into a house, you have protected yourself against catastrophic rent increases. What is the cost of hedging yourself against this risk? (A) The known costs of ownership [closing costs on purchase, mortgage interest, property tax, condo fees, home insurance, etc.]; (B) The unknown costs of ownership [annual and periodic maintenance, closing costs on a future sale, etc.]; (C) The potential earnings lost on your down payment / mortgage principal payments [whether it is low-risk interest or higher risk equity]; (D) You may have reduced savings for a long period of time which would limit your ability to cover emergencies (such as medical costs, unexpected unemployment, etc.) (E) You may have a reduced ability to look for a better job based on being locked into a particular location (though I have assumed above that you want to live in a particular community for an extended period of time, that desire may change); and (F) You can't reap the benefits of a rental market that decreases in real dollars, if that happens in your market over time. In short, purchasing a home should be a lifestyle-motivated decision. It financially reduces some the fluctuation in your long-term living costs, with the trade-off of committed principal dollars and additional ownership risks including limited mobility." }, { "docid": "596111", "title": "", "text": "\"If I were you, I would rent. Wait to buy a home. Here is why: When you say that renting is equal in cost to a 30-year mortgage, you are failing to consider several aspects. See this recent answer for a list of things that need to be considered when comparing buying and renting. You have no down payment. Between the two of you, you have $14,000, but this money is needed for both your emergency fund and your fiancée's schooling. In your words: \"\"we can’t reeaallllly afford a home.\"\" A home is a big financial commitment. If you buy a home before you are financially ready, it will be continuous trouble. If you need a cosigner, you aren't ready to buy a home. I would absolutely advise whoever you are thinking about cosigning for you not to do so. It puts them legally on the hook for a house that you can't yet afford. You aren't married yet. You should never buy something as big as a home with someone you aren't married to; there are just too many things that can go wrong. (See comments for more explanation.) Wait until you are married before you buy. Your income is low right now. And that is okay for now; you've been able to avoid the credit card debt that so many people fall into. However, you do have student loans to pay, and taking on a huge new debt right now would be potentially disastrous for you. Your family income will eventually increase when your fiancée gets her degree and gets a job, and at that time, you will be in a much better situation to consider buying a house. You need to move \"\"ASAP.\"\" Buying a house when you are in a hurry is a generally a bad idea. When you look for a home, you need to take some time looking so you aren't rushed into a bad deal that you will regret. Even if you decide you want to buy, you should first find a place to rent; then you can take your time finding the right house. To answer your question about escrow: When you own a house, two of the required expenses that you will have besides the mortgage payment are property taxes and homeowner's insurance. These are large payments that are only due once a year. The bank holding the mortgage wants to make sure that they get paid. So to help you budget for these expenses and to ensure that these expenses are paid, the bank will add these to your monthly mortgage payment, and set them aside in a savings account (called an escrow account). Then when these bills come due once a year, they are paid for out of the escrow account.\"" }, { "docid": "451849", "title": "", "text": "\"The general answer is: \"\"it depends on how long you want to live there\"\". Here is a good calculator to figure it out: http://www.nytimes.com/interactive/business/buy-rent-calculator.html Basically, if you plan to move in a few years, then renting makes more sense. It is a lot easier to move from an apartment when your lease is up versus selling a house, which can be subject to fluctuations in the real-estate market. As an example, during the real estate bubble, a lot of \"\"young professional\"\" types bought condos and town homes instead of renting. Now these people are married with kids, need to move somewhere bigger, but they can't get rid of their old place because they can't sell it for what they still owe. If these people had rented for a few years, they would be in a better position financially. (Many people fell for the mantra \"\"If you are renting, you are throwing your money away\"\", without looking at the long-term implications.) However, your question is a little unique, because you mentioned renting for the rest of your life, and putting the savings into an investment, which is a cool idea. (Thinking outside the box, I like it.) I'm going to assume you mean \"\"rent the same place for many years\"\" versus \"\"moving around the country every few years\"\". If you are staying in one place for a long time, I am going to say that buying a house is probably a better option. Here's why: So what about investing? Let's look at some numbers: So, based on the above, I say that buying a house is the way to go (as long as you plan to live in the same place for several years). However, if you could find a better investment than the Dow, or if mortgage interest rates change drastically, things could tip in another direction. Addendum: CrimsonX brought up a good point about the costs of owning a house (upkeep and property taxes), which I didn't mention above. However, I don't think they change my answer. If you rent, you are still paying those costs. They are just hidden from you. Your landlord pays the contractor or the tax man, and then you pay the landlord as part of your rent.\"" }, { "docid": "215712", "title": "", "text": "\"Expenses: IMO, The best way to deal with this situation is by treating you staying at her house as flatting/renting a room as @Pseudonym stated he does with his partner in the comments of another answer. This means you pay X amount of dollars a week to her as rent which she can most likely choose to put it towards house insurance, interest, repayments, repairs and improvements etc etc. From there you split your \"\"living\"\" expenses 50/50. Living expenses include stuff like telephone, internet, utility bills, food, contents insurance etc. Renting Income: Then the earnings/losses you make from renting your apartment out are yours alone. After all if your place gets trashed by a tenant with a meth lab, she won't and shouldn't have to pay the ridiculous amounts of money required to get it fixed up. Determining the rent to pay: Not Ideal, but an easy method: Use your place's renting value as a indicator/market research example to determine how much rent you would pay to her (however since you are only a half resident at her place you would only pay half). Ideal: Your place would have a different renting value to hers, so do some research together and find a median renting value of her house based on similar houses or ask her how much she wants you to pay in rent since after all the owner of the house has final say on the renting value. You \"\"might\"\" want to consider that you staying with her is a more secure tenancy as she knows you won't wreak her place, but the same cannot be said for the tenant you have in your place. (Post in the comments if you think this last sentence should be removed, I'm on the fence about it but it seems relevant.) Disclaimer: Remember you are considering a long-term relationship with her don't get too picky and don't let it get personal/emotional when deciding the renting amounts.\"" }, { "docid": "198007", "title": "", "text": "\"Generally, when you own something - you can give it as a collateral for a secured loan. That's how car loans work and that's how mortgages work. Your \"\"equity\"\" in the asset is the current fair value of the asset minus all your obligations secured by it. So if you own a property free and clear, you have 100% of its fair market value as your equity. When you mortgage your property, banks will usually use some percentage loan-to-value to ensure they're not giving you more than your equity now or in a foreseeable future. Depending on the type and length of the loan, the LTV percentage varies between 65% and 95%. Before the market crash in 2008 you could even get more than 100% LTV, but not anymore. For investment the LTV will typically be lower than for primary residence, and the rates higher. I don't want to confuse you with down-payments and deposits as it doesn't matter (unless you're in Australia, apparently). So, as an example, assume you have an apartment you rent out, which you own free and clear. Lets assume its current FMV is $100K. You go to a bank and mortgage the apartment for a loan (get a loan secured by that apartment) at 65% LTV (typical for condos for investment). You got yourself $65K to buy another unit free and clear. You now have 2 apartments with FMV $165K, your equity $100K and your liability $65K. Mortgaging the new unit at the same 65% LTV will yield you another $42K loan - you may buy a third unit with this money. Your equity remains constant when you take the loan and invest it in the new purchase, but the FMV of your assets grows, as does the liability secured by them. But while the mortgage has fixed interest rate (usually, not always), the assets appreciate at different rates. Now, lets be optimistic and assume, for the sake of simplicity of the example, that in 2 years, your $100K condo is worth $200K. Voila, you can take another $65K loan on it. The cycle goes on. That's how your grandfather did it.\"" }, { "docid": "100683", "title": "", "text": "\"For the vast majority, \"\"buying\"\" a house via a mortgage is not an investment. I use quotes around buying because from a technical perspective you don't own anything until you've paid it off; this is often an important point that people forget. It's highly unlikely you'll make more on it than the amount you put into it (interest, repairs, etc). Even with relatively low interest rates. The people who successfully invest in homes are those that use actual cash (not borrowed) to buy a home at well below market value. They then clean it up and make enough repairs to make it marketable and sell it shortly there after. Sometimes these people get hosed if the housing market tumbles to the point that the home is now worth less than the amount they put into it. This is especially problematic if they used bank loans to get the process going. They were actually the hardest hit when the housing bubble popped several years ago. Well, them and the people who bought on interest only loans or had balloon payments. Whereas the people who use a mortgage are essentially treating it like a bank account with a negative interest rate. For example, $180k loan on a 30 yr fixed at 4% will mean a total payout of around $310k, excluding normal repairs like roofs, carpet, etc. Due to how mortgage's work, most of the interest is collected during the first half of the loan period. So selling it within 2 to 5 years is usually problematic unless the local housing market has really skyrocketed. Housing markets move up and down all the time due to a hundred different things completely out of your control. It might be a regional depression, weather events, failed large businesses, failed city/local governments, etc. It could go up because businesses moved in, a new highway is built, state/local taxes decline, etc. My point is, homes are not long term investments. They can be short term ones, but only in limited circumstances and there is a high degree of risk involved. So don't let that be a driving point of your decision. Instead you need to focus on other factors. Such as: what is really going on with the house you are currently in? Why would they lose it? Can you help out, and, should you help out? If things are precarious, it might make more sense to sell that home now and everyone move into separate locations, possibly different rentals or apartments. If they are foreclosed on then they will be in a world of financial hurt for a long time. If we ignore your parents situation, then one piece of advice I would give you is this: Rent the cheapest apartment you can find that is still a \"\"safe\"\" place to live in. Put every dollar you can into some type of savings/investment that will actually grow. Stay there for 5+ years, then go pay cash for a nice home. Making $75k a year while single means that you don't need much to live on. In other words, live extremely cheap now so you can enjoy a fantastic living experience later that is free from financial fear. You should be able to put $30k+ per year aside going this route. edit: A bit of support data for those that somehow think buying a home on a mortgage is somehow a good investment: Robert Shiller, who won a Nobel prize in economics and who predicted the bursting of the housing bubble, has shown that a house is not a good investment. Why? First, home prices (adjusted for inflation) have been virtually unchanged for the past 100 years. (link 1, link 2) Second, after you add in the costs of maintenance alone then those costs plus what you've paid for the home will exceed what you get out of it. Adding in the cost of a mortgage could easily double or even triple the price you paid which makes things even worse. Maintenance costs include things like a new roof, carpet/flooring, water heater, appliances, etc. Yes, a home might cost you $100k and you might sell it for $200k after 15 years. However during that time you'll likely replace the roof ($10k to $20k), replace appliances ($2k to $5k), water heater ($1k), carpet/flooring ($5k to $20k), paint ($3k to $6k), and mortgage related costs (~$60k - assuming 30 yr fixed @4%). So your \"\"costs\"\" are between $180k and $200k just on those items. There are many more that could easily escalate the costs further. Like a fence ($5k+), air conditioner ($5k+), windows, etc. The above is assuming the home actually appreciates in value faster than inflation: which they historically haven't over the long term. So you have to consider all of the costs ultimately paid to purchase and maintain the home vs the costs of renting during the same time period. Point is: do your research and be realistic about it. Buying a home is a huge financial risk.\"" }, { "docid": "462532", "title": "", "text": "'Rent to own' is not a precise, single agreement. It can be whatever the seller and you agree to. It's a unique seller that would agree to this. Keep in mind, most sellers are needing to get their money in full to buy their next house. You might find an investor willing to work with you, but only for an inflated price, interest rate, or both. The ideal seller would be underwater (owing more than the value of the home) but needing to move. In which case, they are hoping to find someone to buy them some time to get situated in their new house before moving forward with you and the bank to arrange a sale. At its simplest, you might pay a premium on your rent to fix the price, giving you the option to buy during a particular period at that price. It can be a much higher premium where you are renting and paying extra until you hit 20%, at which point you agree to finance the balance either with a bank loan or through the seller. Buying a home you will live in is a personal decision. With no numbers offered, it's not like we can tell you if it's a wise purchase." }, { "docid": "560710", "title": "", "text": "\"The New York Times offer a remarkably detailed Buy vs Rent calculator. You enter - From all of this, it advises the break-even rent, when monetarily, it's equal. I'd suggest you keep a few things in mind when using such a tool. Logic, common sense, and a Nobel prize winner named Robert Shiller all indicate that housing will follow inflation over the long term. Short term, even 20 years, the graphs will hint at something else, but the real long term, the cost of housing can't exceed inflation. The other major point I'd add is that I see you wrote \"\"We rent a nice house.\"\" Most often, people are looking to buy what they feel they can't easily rent. Whether it's the yard, room number or sizes, etc. This also leads to the purchase of too big a house. You can find that you can afford the extra bedroom, family room in addition to living room, etc, and then buy a house 50% bigger than what you need or planned on. In my opinion, getting the smallest house you can imagine living in, no bigger than what you live in now, and plan to get on a faster than 30 year repayment. Even with transaction costs, in 10 years, you'll have saved enough to make the bump up to a larger house if you wish.\"" }, { "docid": "296906", "title": "", "text": "I'm going to take a different path than the other answers: Given how low interest rates are (depending on your credit), buying a house may be a great strategy. However, I would not put more than 20% down. Putting more than 20% down unnecessarily ties up cash that could be used more productively elsewhere. You need to figure out your cash flow situation both for the near term, and for the long term. For the short term, you probably won't need to help your kids with tuition. They will likely be able to get a combination of grants, scholarships, and loans that will cover the cost. However, the loans are generally not low interest, and that is a huge amount of debt for someone so young. If you want to help pay your kids tuition, you should at least guestimate/budget that amount now. For the long term, without any retirement savings, you may be hurting in a couple decades. Since you also don't have a home, your living situation may be a problem. Buying a home today may be the prudent move, because that will hopefully be an appreciating asset, and, with a 30 year mortgage, you'll own it outright by 75, which takes a big strain off of retirement costs. $1400 a month in bills (apart from rent/mortgage) with no kids in the house (is this correct?) sounds high. I would also recommend looking at your basic expenses and seeing what you can do without if you are cash strapped." }, { "docid": "260695", "title": "", "text": "\"&gt;Wrong. Between Ford (1914) and FDR's Fair Labor Standards Act (1938) the middle class formed. Unions forming from textile plants pushed for what became the FLSA. That's more the working class, but we're just splitting hairs now. &gt;The right has been conned into wanting to dismantle all of that even though the only people who would benefit are the top 1%. A free market wouldn't stop unions, in fact it would give them more freedom. &gt;This is why the rest of us call you dupes or dummies. No, you do that because you're a condescending asshole. &gt;A \"\"slow down\"\" is no shortage. You said it generally as well. There's no overall housing shortage. Actually the example I gave you showed that allowing the construction of new apartments reduced rent increases as more demand is met. As far as actual vacant houses go, Seattle is actively stopping people from living in them, and giving permits to destroy them. You could solve the homeless problem in Seattle by getting govt out of the way.\"" }, { "docid": "296168", "title": "", "text": "Unfortunately many millenials are stuck in this housing catch 22 where (for various reasons) they can't save up enough money to buy a home and since so many of them can't buy homes, they have to rent, which raises rent prices, which makes it even more difficult to save up for a home." }, { "docid": "389916", "title": "", "text": "\"First, let me mention that the reasons mentioned this far for renting are excellent ones. But, I disagree. Second, I would like to mention that I'm just a regular Joe, not an accountant, or a realtor. That said, I was in a similar situation not that long ago. I ended up renting, but I wish I hadn't. You should check out the \"\"offers\"\" in your area. You seem like you're willing to compromise on a more standard, or older home. If that is the case and you are willing to \"\"settle\"\" for an older town-home, or something similar, it might be in your best interest to do so. In my area for instance, the urban areas are becoming a bit crowded. This is good news for the people who already own homes in those urban areas, but bad news for people who are looking to rent an apartment (which tend to be located in urban areas) or buy a house in these urban areas. The reason I say that is simple; there is only one thing there will never be more of: land. If people are moving into these areas, and there is limited room to build structures, the demand is going up while the supply is unable to keep up. This means an increase in prices. BUT, this can also be used to your advantage. As the demand for those urban areas goes up, the rural areas around the urban areas are likely to be subsidized. For instance, near me, if you're willing to be 20 minutes from the nearest Walmart and you have a 550+ credit score and a stable income, you're able to acquire a government subsidized loan with 0% down. (I would recommend dropping at least SOMETHING, however, if possible.) Apartments of the size your family is going to require are going to be expensive. People who own apartment buildings are looking to make the most money per square foot. This means most apartment complexes are going to be filled with 1-2 bedroom apartments, but have very few if any 3+ bedroom apartments. (Again, this is my general experience, but it may be different where you're living.) I suspect the apartment your family is going to need is going to end up being very expensive, especially if people are moving into your town. You might consider trying to get a lower-quality house as apposed to a rare and large apartment for a few pretty obvious reasons: Don't misunderstand me, though. A lot of people get infatuated with the idea of being a home owner, and end up getting into something they will never be able to maintain, and if that happens it's something that's going to follow you for the rest of your life. As for your student loans, if you NEED to and you qualify you can apply for hardship. This would mean that you don't have to pay anything, or pay a reduced rate for some arbitrary approved amount of time, or until some arbitrary circumstance is met. However, do not take this lightly. While doing this might not necessarily accrue interest (depending on whether or not your loans were subsidized or unsubsidized and a host of other factors it might actually halt interest) these loans will follow you even into bankruptcy. Meaning if you get your student loans postponed and end up losing the house anyway, you have to make a fresh start with a bankruptcy AND student loans on your back. Furthermore, you can't count your chickens before they hatch, and neither will the banks. A big part of qualifying for a loan is your proof of income. If you haven't had that steady job for 6 months to a year or more, you're going to have a tough time getting a loan. Suppose your wife-to-be DOES start making that income...it's still not going to make a difference to the banks until they can say that it's not just a month long fling. Last, after reading all this I want to tell you that I am BIAS. I happened to miss the opportunity I'm explaining to you now, and that affects what I think you should do in this situation. Weigh the options carefully and objectively. Talk to your fiance. Talk to your friends, parents, anyone who is close with you. Come to an educated decision, rather than the decision that might be more exciting, or the one you WISH you could take. Good luck.\"" }, { "docid": "443852", "title": "", "text": "\"Short answer: NO. Do NOT buy a house. Houses are a \"\"luxury\"\" good (see Why is a house not an investment?). Although the experience of the early 2000s seemed to convince most people otherwise, houses are not an investment. Historically, it has usually been cheaper to rent, because owning a house has non-pecuniary benefits such as the ability to change things around to exactly the way you like them. Consult a rent vs. buy calculator for your area to see if your area is exceptional. I also would not rely on the mortgage interest deduction for the long term, as it seems increasingly likely the Federal government will do away with it at some point. The first thing you must do is eliminate your credit card and other debts. Try to delay paying your lawyers and anyone else who is not charging you interest (or threatening to harm you in other ways) as long as possible. Save enough money to maintain your current standard of living for 6 months should you lose your job, then put the rest in your 401(k). Another word of advice: learn to live with less. Your kids do not need separate bedrooms. Hopefully one day the time will come when you can afford a larger house, but it should not be your highest priority. You and your kids will all be worse off in the end should you have unexpected financial difficulties and you have overextended yourself to buy a house. Now that your credit score is up, see if you can renegotiate your credit card loans or negotiate a new loan with lower interest.\"" }, { "docid": "376221", "title": "", "text": "&gt; Owning an expensive home Why do people seem to think owning a home is expensive? Not everyone that owns a home is rich, or has an expensive home. Home ownership has many more benefits to renting, and the government should absolutely encourage it. It encourages people to take ownership in a community and brings down housing costs for everyone. People don't only rent apartments in high rises, you understand that, right? People rent two flats, houses, cabins, mansions, condos. Your view and knowledge of this is narrow at best." }, { "docid": "532667", "title": "", "text": "\"The house that sells for $200,000 might rent for a range of monthly numbers. 3% would be $6000/yr or $500/mo. This is absurdly low, and favors renting, not buying. 9% is $1500/mo in which case buying the house to live in or rent out (as a landlord) is the better choice. At this level \"\"paying rent\"\" should be avoided. I'm simply explaining the author's view, not advocating it. A quote from the article - annual rent / purchase price = 3% means do not buy, prices are too high annual rent / purchase price = 6% means borderline annual rent / purchase price = 9% means ok to buy, prices are reasonable Edit to respond to Chuck's comment - Mortgage rates for qualified applicants are pretty tight from low to high, the 30 year is about 4.4% and the 15, 3.45%. Of course, a number of factors might mean paying more, but this is the average rate. And it changes over time. But the rent and purchase price in a given area will be different. Very different based on location. See what you'd pay for 2000 sq feet in Manhattan vs a nice town in the Mid-West. One can imagine a 'heat' map, when an area might show an $800 rent on a house selling for $40,000 as a \"\"4.16\"\" (The home price divided by annual rent) and another area as a \"\"20\"\", where the $200K house might rent for $1667/mo. It's not homogeneous through the US. As I said, I'm not taking a position, just discussing how the author formulated his approach. The author makes some assertions that can be debatable, e.g. that low rates are a bad time to buy because they already pushed the price too high. In my opinion, the US has had the crash, but the rates are still low. Buying is a personal decision, and the own/rent ratios are only one tool to be added to a list of factors in making the decision. Of course the article, as written, does the math based on the rates at time of publication (4%/30years). And the ratio of income to mortgage one can afford is tied to the current rate. The $60K couple, at 4%, can afford just over a $260K mortgage, but at 6%, $208K, and 8%, $170K. The struggle isn't with the payment, but the downpayment. The analysis isn't too different for a purchase to invest. If the rent exceeds 1% of the home price, an investor should be able to turn a profit after expenses.\"" }, { "docid": "580292", "title": "", "text": "No. This logic is dangerous. The apples to apples comparison between renting and buying should be between similar living arrangements. One can't (legitimately) compare living in a 600 sq ft studio to a 3500 sq ft house. With the proposal you offer, one should get the largest mortgage they qualify for, but that can result in a house far too big for their needs. Borrowing to buy just what you need makes sense. Borrowing to buy a house with rooms you may never visit, not a great idea. By the way, do the numbers. The 30 year rate is 4%. You'd need a $250,000 mortgage to get $10,000 in interest the first year, that's a $312,000 house given an 80% loan. On a median income, do you think it makes sense to buy a house twice the US median? Last, a portion of the tax savings is 'lost' to the fact that you have a standard deduction of nearly $6,000 in 2012. So that huge mortgage gets you an extra $4000 in write-off, and $600 back in taxes. Don't ever let the Tax Tail wag the Investing Dog, or in this case the House Dog. Edit - the investment return on real estate is a hot topic. I think it's fair to say that long term one must include the rental value of the house in calculating returns. In the case of buying of way-too-big house, you are not getting the return, it's the same as renting a four bedroom, but leaving three empty. If I can go on a bit - I own a rental, it's worth $200K and after condo fee and property tax, I get $10K/yr. A 5% return, plus whatever appreciation. Now, if I lived there, I'd correctly claim that part of my return is the rental value, the rent I don't pay elsewhere, so the return to me is the potential growth as well as saved rent. But if the condo rents for $1200, and I'd otherwise live in a $600 apartment with less space, the return to me is lost. In my personal case, in fact, I bought a too big house. Not too big for our paycheck, the cost and therefore the mortgage were well below what the bank qualified us for. Too big for the need. I paid for two rooms we really don't use." }, { "docid": "17651", "title": "", "text": "Of course there's nobody selling houses because everybody and their mother is renting them out and using Airbnb to make every room or floor into another source of income. And when large corporations are doing the same, nobody is selling, then who is buying? Well whoever can afford it as prices go up and as urban areas grow. Meanwhile interest rates are high and possibly going higher making it difficult for anybody to get in without large amounts of cash. Who will have this cash? People who make money on their current real estate, who are currently renting them out, and want to buy more to rent out." }, { "docid": "384819", "title": "", "text": "This is of course a perfectly normal thing to happen. People trade up to a bigger house every day. When you've found a bigger house you want to move to and a buyer for your existing one, you arrange 'closing dates' for both i.e. the date on which the sale actually happens. Usually you make them very close, either on the same day or with an overlap of a few weeks. You use the equity (i.e. the difference between the house value and the mortgage) in the old house as the down payment on the new house. You can't of course use the part of the old house that is mortgaged. If the day you buy the new and sell the old is the same, your banks and lawyers do everything for you on that day. If there is an overlap then you need something called 'bridge financing' to cover the period when you own two houses. Banks are used to doing this, and it's not really that expensive when you take into account all the other costs of moving house. Talk to them for details. As a side note, it is generally reckoned not to be worth buying a house if you only intended to live there one or two years. The costs involved in the process of buying, selling and moving usually outweigh any gains in house value. You may find yourself with a higher down payment if you rent for a year or two and save up a down payment for your 'bigger' house instead." }, { "docid": "91405", "title": "", "text": "The real estate industry today is highly exploitative, you're right, but there are currently nothing stopping rents from rising. The major controls in place are are primarily supply constraints, which would lower prices if removed by allowing small, entrepreneurial developers and builders to create new housing more easily. There's also nothing to stop institutional investors from buying up all the housing right now, but those investors are generally not looking for high growth, they're looking for stable returns. Apartment buildings are viewed as similar to blue chip stock portfolios in that regard. Low growth, but also low risk. The reason capitalism wouldn't lead to monopoly is that it takes work both to gain resources, and to retain them, and the most reliable way to retain them is to reinvest them in the economy. Investment permits new businesses to grow, and new industries to form. It's precisely because the economy isn't limited to a fixed size that wealth of one group doesn't require to poverty of others. New value creation is the core of the theory, and nearly every living person has at least some capital (their body and mind) to begin employing toward value creation. I recommend reading Henry Hazlitt's Economics in One Lesson if you'd like to understand the theory behind why and how free market capitalism is supposed to work." } ]

[ { "docid": "454810", "title": "", "text": "Hitting the 25% marginal rate does not mean all of your earnings are taxed at 25%, only those that exceed the top of the 15% bracket. You can deduct any expenses for upgrading or repairing your apartments, those are subtracted from the earnings before tax is calculated as income, so you will probably stay in a lower marginal rate. Property tax will hit you annually, and capital gains tax will hit you when you sell them at the end. If you already have experience with this business in your home country, then this sounds like a good option for you. The only caution that I would give you is to find an accountant to help you with your taxes and pay for a consultation before you get started so that you know what to track that will help him/her minimize your tax bill." } ]

[ { "docid": "198007", "title": "", "text": "\"Generally, when you own something - you can give it as a collateral for a secured loan. That's how car loans work and that's how mortgages work. Your \"\"equity\"\" in the asset is the current fair value of the asset minus all your obligations secured by it. So if you own a property free and clear, you have 100% of its fair market value as your equity. When you mortgage your property, banks will usually use some percentage loan-to-value to ensure they're not giving you more than your equity now or in a foreseeable future. Depending on the type and length of the loan, the LTV percentage varies between 65% and 95%. Before the market crash in 2008 you could even get more than 100% LTV, but not anymore. For investment the LTV will typically be lower than for primary residence, and the rates higher. I don't want to confuse you with down-payments and deposits as it doesn't matter (unless you're in Australia, apparently). So, as an example, assume you have an apartment you rent out, which you own free and clear. Lets assume its current FMV is $100K. You go to a bank and mortgage the apartment for a loan (get a loan secured by that apartment) at 65% LTV (typical for condos for investment). You got yourself $65K to buy another unit free and clear. You now have 2 apartments with FMV $165K, your equity $100K and your liability $65K. Mortgaging the new unit at the same 65% LTV will yield you another $42K loan - you may buy a third unit with this money. Your equity remains constant when you take the loan and invest it in the new purchase, but the FMV of your assets grows, as does the liability secured by them. But while the mortgage has fixed interest rate (usually, not always), the assets appreciate at different rates. Now, lets be optimistic and assume, for the sake of simplicity of the example, that in 2 years, your $100K condo is worth $200K. Voila, you can take another $65K loan on it. The cycle goes on. That's how your grandfather did it.\"" }, { "docid": "384819", "title": "", "text": "This is of course a perfectly normal thing to happen. People trade up to a bigger house every day. When you've found a bigger house you want to move to and a buyer for your existing one, you arrange 'closing dates' for both i.e. the date on which the sale actually happens. Usually you make them very close, either on the same day or with an overlap of a few weeks. You use the equity (i.e. the difference between the house value and the mortgage) in the old house as the down payment on the new house. You can't of course use the part of the old house that is mortgaged. If the day you buy the new and sell the old is the same, your banks and lawyers do everything for you on that day. If there is an overlap then you need something called 'bridge financing' to cover the period when you own two houses. Banks are used to doing this, and it's not really that expensive when you take into account all the other costs of moving house. Talk to them for details. As a side note, it is generally reckoned not to be worth buying a house if you only intended to live there one or two years. The costs involved in the process of buying, selling and moving usually outweigh any gains in house value. You may find yourself with a higher down payment if you rent for a year or two and save up a down payment for your 'bigger' house instead." }, { "docid": "422712", "title": "", "text": "\"The flaw in your reasoning is that you are assuming that renting a house is easy and automatic. Who is going to manage the property? Your parents? What are you going to do if the tenants burn the place down, start having drug parties there, or secretly have 6 cats who piss everywhere so noone will ever want to rent it again? What are you going to do when the house goes unrented for a year and you have to pay a year's worth of mortgage payments with no rental income? What are you going to do when some deadbeat decides to stop paying the rent, but won't move out, and when you try to evict him, he goes to court to stop you? You going to fly to NJ to make the court appearances? Unless you sell your existing house, or your parents buy you out, then you need to stay. You should not attempt to own two houses at once with one of the houses located not where you are at. That will not turn out well. Also, just as an aside, 30-year mortgages are not an \"\"investment\"\"; they are a way to lose money. Usually people get them because they want a big beautiful house that they cannot afford, so they borrow the money. That is not \"\"investing\"\", that is wasting money to live in luxurious circumstances. If you want to become wealthy, buy a property you can afford, not something that you have to string out payments for 30 years.\"" }, { "docid": "580292", "title": "", "text": "No. This logic is dangerous. The apples to apples comparison between renting and buying should be between similar living arrangements. One can't (legitimately) compare living in a 600 sq ft studio to a 3500 sq ft house. With the proposal you offer, one should get the largest mortgage they qualify for, but that can result in a house far too big for their needs. Borrowing to buy just what you need makes sense. Borrowing to buy a house with rooms you may never visit, not a great idea. By the way, do the numbers. The 30 year rate is 4%. You'd need a $250,000 mortgage to get $10,000 in interest the first year, that's a $312,000 house given an 80% loan. On a median income, do you think it makes sense to buy a house twice the US median? Last, a portion of the tax savings is 'lost' to the fact that you have a standard deduction of nearly $6,000 in 2012. So that huge mortgage gets you an extra $4000 in write-off, and $600 back in taxes. Don't ever let the Tax Tail wag the Investing Dog, or in this case the House Dog. Edit - the investment return on real estate is a hot topic. I think it's fair to say that long term one must include the rental value of the house in calculating returns. In the case of buying of way-too-big house, you are not getting the return, it's the same as renting a four bedroom, but leaving three empty. If I can go on a bit - I own a rental, it's worth $200K and after condo fee and property tax, I get $10K/yr. A 5% return, plus whatever appreciation. Now, if I lived there, I'd correctly claim that part of my return is the rental value, the rent I don't pay elsewhere, so the return to me is the potential growth as well as saved rent. But if the condo rents for $1200, and I'd otherwise live in a $600 apartment with less space, the return to me is lost. In my personal case, in fact, I bought a too big house. Not too big for our paycheck, the cost and therefore the mortgage were well below what the bank qualified us for. Too big for the need. I paid for two rooms we really don't use." }, { "docid": "573265", "title": "", "text": "The are a couple of explanations that I can think of; though for determining exactly what is different you will want to print out both returns and compare them line by line to see how they differ. If the company grossed up your income to account for the taxes on housing (possibly by paying the additional withholding), you may be just benefiting from them estimating your tax rate. This can especially be the case if your only work was the three month internship. They would have to assume your salary was for the entire year. There is an earned income tax credit for low wage earners that you may have qualified for (it would depend your specific circumstances if you meet the criteria). But that credit for a range of income actually pays out more the more you earn (to encourage working that extra hour instead of reducing benefit because you had another hour of employment). As for the housing subsidy itself, while the value is quite high the IRS considers that to be a taxable benefit that the employer provided you and so it needs to be added to your W-2 wages. $8k a month seems quite high, but I don't know the quality of the apartment you were provided and what the going rates are in the area. Given that you said you worked for a major tech company, I can imagine that you might have been working in an area with high rents. If the employer did gross up your paycheck so as to cover your taxes, that $24k would also include that extra tax payment (e.g. if the employer paid $8k in additional taxes for you, then the housing cost that they directly paid were $16k)." }, { "docid": "279713", "title": "", "text": "\"Not at all impossible. What you need is Fundamental Analysis and Relationship with your investment. If you are just buying shares - not sure you can have those. I will provide examples from my personal experience: My mother has barely high school education. When she saw house and land prices in Bulgaria, she thought it's impossibly cheap. We lived on rent in Israel, our horrible apartment was worth $1M and it was horrible. We could never imagine buying it because we were middle class at best. My mother insisted that we all sell whatever we have and buy land and houses in Bulgaria. One house, for example, went from $20k to EUR150k between 2001 and 2007. But we knew Bulgaria, we knew how to buy, we knew lawyers, we knew builders. The company I currently work for. When I joined, share prices were around 240 (2006). They are now (2015) at 1500. I didn't buy because I was repaying mortgage (at 5%). I am very sorry I didn't. Everybody knew 240 is not a real share price for our company - an established (+30 years) software company with piles of cash. We were not a hot startup, outsiders didn't invest. Many developers and finance people WHO WORK IN THE COMPANY made a fortune. Again: relationship, knowledge! I bought a house in the UK in 2012 - everyone knew house prices were about to go up. I was lucky I had a friend who was a surveyor, he told me: \"\"buy now or lose money\"\". I bought a little house for 200k, it is now worth 260k. Not double, but pretty good money! My point is: take your investment personally. Don't just dump money into something. Once you are an insider, your risk will be almost mitigated and you could buy where you see an opportunity and sell when you feel you are near the maximal real worth of your investment. It's not hard to analyse, it's hard to make a commitment.\"" }, { "docid": "596111", "title": "", "text": "\"If I were you, I would rent. Wait to buy a home. Here is why: When you say that renting is equal in cost to a 30-year mortgage, you are failing to consider several aspects. See this recent answer for a list of things that need to be considered when comparing buying and renting. You have no down payment. Between the two of you, you have $14,000, but this money is needed for both your emergency fund and your fiancée's schooling. In your words: \"\"we can’t reeaallllly afford a home.\"\" A home is a big financial commitment. If you buy a home before you are financially ready, it will be continuous trouble. If you need a cosigner, you aren't ready to buy a home. I would absolutely advise whoever you are thinking about cosigning for you not to do so. It puts them legally on the hook for a house that you can't yet afford. You aren't married yet. You should never buy something as big as a home with someone you aren't married to; there are just too many things that can go wrong. (See comments for more explanation.) Wait until you are married before you buy. Your income is low right now. And that is okay for now; you've been able to avoid the credit card debt that so many people fall into. However, you do have student loans to pay, and taking on a huge new debt right now would be potentially disastrous for you. Your family income will eventually increase when your fiancée gets her degree and gets a job, and at that time, you will be in a much better situation to consider buying a house. You need to move \"\"ASAP.\"\" Buying a house when you are in a hurry is a generally a bad idea. When you look for a home, you need to take some time looking so you aren't rushed into a bad deal that you will regret. Even if you decide you want to buy, you should first find a place to rent; then you can take your time finding the right house. To answer your question about escrow: When you own a house, two of the required expenses that you will have besides the mortgage payment are property taxes and homeowner's insurance. These are large payments that are only due once a year. The bank holding the mortgage wants to make sure that they get paid. So to help you budget for these expenses and to ensure that these expenses are paid, the bank will add these to your monthly mortgage payment, and set them aside in a savings account (called an escrow account). Then when these bills come due once a year, they are paid for out of the escrow account.\"" }, { "docid": "354785", "title": "", "text": "As pointed out in a comment, it would be more natural to get a regular mortgage on the second house, which is essentially using the second house as collateral for its own loan. If you are to use the first house, either mortgage it or get a home equity line of credit on it and use that money to buy the second house. The relative merits of the options may depend in part on where you live, whether or not you live in the homes, and the relative cost of the two properties. For example, in the US, first and second homes get preferred tax treatment in addition to rates that are typically better than commercial loans (including mortgages for investment properties). If you're going to get a better rate and pay less taxes on one option and not on the others, that's definitely something to weigh." }, { "docid": "560710", "title": "", "text": "\"The New York Times offer a remarkably detailed Buy vs Rent calculator. You enter - From all of this, it advises the break-even rent, when monetarily, it's equal. I'd suggest you keep a few things in mind when using such a tool. Logic, common sense, and a Nobel prize winner named Robert Shiller all indicate that housing will follow inflation over the long term. Short term, even 20 years, the graphs will hint at something else, but the real long term, the cost of housing can't exceed inflation. The other major point I'd add is that I see you wrote \"\"We rent a nice house.\"\" Most often, people are looking to buy what they feel they can't easily rent. Whether it's the yard, room number or sizes, etc. This also leads to the purchase of too big a house. You can find that you can afford the extra bedroom, family room in addition to living room, etc, and then buy a house 50% bigger than what you need or planned on. In my opinion, getting the smallest house you can imagine living in, no bigger than what you live in now, and plan to get on a faster than 30 year repayment. Even with transaction costs, in 10 years, you'll have saved enough to make the bump up to a larger house if you wish.\"" }, { "docid": "401899", "title": "", "text": "\"I don't know much about New Zealand, but here are just some general thoughts on things to consider. The big difference between buying a house and investing in stocks or the like is that it is fairly easy to invest in a diversified array of stocks (via a mutual fund), but if you buy a house, you are investing in a single piece of property, so everything depends on what happens with that specific property. This in itself is a reason many people don't invest in real estate. Shares of a given company or mutual fund are fungible: if you buy into a mutual fund, you know you're getting the same thing everyone else in the fund is getting. But every piece of real estate is unique, so figuring out how much a property is worth is less of an exact science. Also, buying real estate means you have to maintain it and manage it (or pay someone else to do so). It's a lot more work to accurately assess the income potential of a property, and then maintain and manage the property over years, than it is to just buy some stocks and hold them. Another difficulty is, if and when you do decide to sell the property, doing so again involves work. With stocks you can pretty much sell them whenever you want (although you may take a loss). With a house you have to find someone willing to buy it, which can take time. So a big factor to consider is the amount of effort you're prepared to put into your investment. You mention that your parents could manage the property for you, but presumably you will still have to pay for maintenance and do some managing work yourself (at least discussing things with them and making decisions). Also, if you own the property for a long time your parents will eventually become too old to take care of it, at which point you'll have to rethink the management aspect. So that's sort of the psychological side of things. As for the financial, you don't mention selling the house at any point. If you never sell it, the only gain you get from it is the rent it brings in. So the main factor to consider when deciding whether to buy it as a rental is how much you can rent it for. This is going to be largely determined by where it is located. So from the perspective of making an investment the big question --- which you don't address in the info you provided --- is: how much can you rent this house for, and how much will you be able to rent it for in the future? There is no way to know this for sure, and the only way to get even a rough sense of it is to talk with someone who knows the local real estate market well (e.g., a broker, appraiser, or landlord). If the property is in an \"\"up-and-coming\"\" area (i.e., more people are going to move there in the future), rents could skyrocket; if it's in a backwater, rents could remain stagnant indefinitely. Basically, if you're going to buy a piece of real estate as a long-term investment, you need to know a lot about that property in order to make any kind of comparison with another investment vehicle like a mutual fund. If you already live in the area you may know some things already (like how much you might be able to rent it for). Even so, though, you should try to get some advice from trustworthy people who know the local real estate situation.\"" }, { "docid": "498236", "title": "", "text": "\"I disagree. I believe money should be invested, not spent. Investing is something you should do as early as possible, even (especially) before incurring personal debt, such as cars, houses, student loans, etc. As Warren Buffet says, delaying investment until you are all paid up, is like saving sex for your old age. Remember that you are considering an investment, not another expense. The only consideration is whether or not the property will be cashflow-positive, i.e. \"\"does it make more in rent than it costs to maintain?\"\". If it is, buy it. You can use the income to pay off those debts faster, and at the end you will still have the income stream. Second, it makes no sense to use all your cash when the bank is willing to lend you money. There is nothing wrong with debt, as long as it is attached to an asset, i.e. something that makes more money than it costs. If you have that much cash, buy several apartment buildings, hire a management company, and retire.\"" }, { "docid": "102081", "title": "", "text": "You can look at buying a house as being a long term investment in not paying rent. In the short time there are costs to buying (legal, taxes, etc). This depends on only buying house of the size/location you need e.g. no better then what you would have rented. House buying tent to work out best when there is high inflation, as the rent you would otherwise be paying goes up with inflation – provided you can live with the short term pain of high interest rates." }, { "docid": "105707", "title": "", "text": "\"I often say \"\"don't let the tax tail wag the investing dog.\"\" I need to change that phrase a bit to \"\"don't let the tax tail wag the mortgage dog.\"\" Getting a tax deduction on a 4% mortgage basically results (assuming you already itemize) in an effective 3% rate mortgage. The best way to avoid tax is save pretax in a 401(k), IRA, or both. You are 57, and been through a tough time. You're helping your daughter through college, which is an expense, and admirable kindness to her. But all this means you won't start saving $10K/yr until age 59. The last thing I'd do is buy a bigger home and take on a mortgage. Unless you told me the house you want has an in-law apartment that will bring in a high rent, or can be used to rent rooms and be a money maker, I'd not do this. No matter how small the mortgage, your property tax bill will go up, and there would be a mortgage to pay. Even a tiny mortgage payment, $400, is nearly half that $10K potential annual savings plan. Your income is now excellent. Can your wife do anything to get hers to a higher level? In your situation, I'd save every cent I can.\"" }, { "docid": "540539", "title": "", "text": "\"Sure, it's irresponsible for an executor to take actions which endanger the estate. But what about passivity or inaction? Put it another way. Is it the obligation of the executor to avoid making revenue for the estate? Think about it - what a silly idea! Consider a 12-unit apartment building full of rent paying tenants. A tenant gives notice and leaves. So do 4 more. With only 7/12 tenants, the building stops being a revenue center and becomes a massive money pit. Is that acceptable? Heck no! Realistically this will be managed by a property management company, and of course they'll seek new tenants, not stopping merely because the owner died. This situation is not different; the same fiscal logic applies. The counter-argument is usually along the lines of \"\"stuff might happen if you rent it out\"\"... true. But the stuff that happens to abandoned houses is much worse, and much more likely: squatters, teen \"\"urban explorers\"\", pot growers, copper thieves, winter pipe freeze flooding and wrecking interiors, etc. Don't take my word on it -- ask your insurer for the cost of insuring an abandoned house vs. a rented one. Renting brings a chunk of cash that comes in from tenants - $12,000/year on a $1000/mo. rental. And that will barely pay the bills if you have a young mortgage on a freshly purchased house at recent market rates. But on an old mortgage, renting is like printing money. That money propagates first to the estate (presumably it is holding back a \"\"fix the roof\"\" emergency fund), and then to the beneficiaries. It means getting annual checks from the estate, instead of constantly being dunned for another repair. But I don't care about making revenue (outside of putting back a kitty to replace the roof). Even if it was net zero, it means the maintenance is being done. This being the point. It is keeping the house in good repair, occupied, insured, and professionally managed -- fit and ready for the bequest's purpose: occupancy of an aunt. What's the alternative? Move an aunt into a house that's been 10 years abandoned? Realistically the heirs are going to get tired/bored of maintaining the place at a total cash loss, maintenance will slip, and you'll be moving them into a neglected house with some serious issues. That betrays the bequest, and it's not fair to the aunts. Rental is a very responsible thing to do. The executor shouldn't fail to do it merely out of passivity. If you decide not to do it, there needs to be a viable alternative to funding the home's decent upkeep. (I don't think there is one). Excluding a revenue-producing asset from the economy is an expensive thing to do.\"" }, { "docid": "380753", "title": "", "text": "The below assessment is for primary residences as opposed to income properties. The truth is that with the exception of a housing bubble, the value of a house might outpace inflation by one or two percent. According to the US Census, the price of a new home per square foot only went up 4.42% between 1963 and 2008, where as inflation was 4.4%. Since home sizes increased, the price of a new home overall outpaced inflation by 1% at 5.4% (source). According to Case-Shiller, inflation adjusted prices increased a measly .4% from 1890-2004 (see graph here). On the other hand your down payment money and the interest towards owning that home might be in a mutual fund earning you north of eight percent. If you don't put down enough of a down payment to avoid PMI, you'll be literally throwing away money to get yourself in a home that could also be making money. Upgrades to your home that increase its value - unless you have crazy do-it-yourself skills and get good deals on the materials - usually don't return 100% on an investment. The best tend to be around 80%. On top of the fact that your money is going towards an asset that isn't giving you much of a return, a house has costs that a rental simply doesn't have (or rather, it does have them, but they are wrapped into your rent) - closing costs as a buyer, realtor fees and closing costs as a seller, maintenance costs, and constantly escalating property taxes are examples of things that renters deal with only in an indirect sense. NYT columnist David Leonhart says all this more eloquently than I ever could in: There's an interactive calculator at the NYT that helps you apply Leonhart's criteria to your own area. None of this is to say that home ownership is a bad decision for all people at all times. I'm looking to buy myself, but I'm not buying as an investment. For example, I would never think that it was OK to stop funding my retirement because my house will eventually fund it for me. Instead I'm buying because home ownership brings other values than money that a rental apartment would never give me and a rental home would cost more than the same home purchase (given 10 years)." }, { "docid": "581026", "title": "", "text": "I did this about 8 years ago with a buddy in Chicago for the reasons specified in the original post. As other posters have suggested, we discussed a lot of the same questions listed above, figured out the possible scenarios, and then had a lawyer draw up a contract. We bought a 3 bedroom house, and rented out the 3rd bedroom. Overall, it was a great experience. We both built equity while having a renter pay a third of the mortgage. Plus the property tax and interest on the loan were tax deductible. Compared with renting an apartment, it made us a lot more money. In the end, we sold the house, and split the profits. Assuming you have the personalities to make it work, I say go for it." }, { "docid": "155358", "title": "", "text": "You would have to find someone in the other state who wanted to swap. This is conceivable but difficult if you want the houses to be the same value. How do you find the one person who lives in the right place now and wants to move to the right area? The normal way this situation is handled is to simply put your house on the market. At the same time, you find a new house in the new location. You arrange for a new mortgage for the new house and make purchase contingent on selling the old house. Your buyer pays off your mortgage and gives you a bit left over that you use as a downpayment on the new house. Note that you take a loss on closing costs when you do this. This is why if you are in the position where you move frequently, you may be better off renting. Sometimes an employer will help with this, paying for a long term hotel or short term rental. This can give you more room to sell and buy the houses. If you have to move right now, immediately, not in a few months when your housing situation is fixed, consider double renting. You rent out your mortgaged house to someone and pay rent on a new place. You may put some of your stuff in storage until you get into your permanent place. The downside is that it can be harder to sell a house with a tenant until you are close to the end of the lease. And of course, you are probably not in the best position to get or pay good rent. Your situation restricts your options. You might get stuck in this situation for a year so as to get the time that you need to line up a buyer. Of course, you may get lucky and find someone who wants your old house as an investment property. Such a person won't be bothered by a tenant. But they usually want a good price. After all, they want to make money off it. There are those operations that advertise that they buy ugly houses. They want a good deal. You'll probably take a bath. But they can buy quickly, so you can move on quickly. No waiting until they find a buyer. And I'm not saying that you can't do a swap like you want. I'm just saying that you may find it difficult to find a swapping partner. Perhaps an investment person would be up for it. They take your house in trade for their house, letting you stay in their house until they can fix up your old house and either rent it or sell it. The problem is that it may be hard to find such an investor who can handle a house where you are and has a house where you need to be. I don't have a good suggestion for finding a swapping partner other than calling a lot of realtors and asking for suggestions. Maybe a bit of online checking for properties where the owner's business is managing the sale." }, { "docid": "339921", "title": "", "text": "\"What you charge them depends on what kind of use you want them to have of the house. Your use of the term \"\"roommate\"\" implies you're imagining, well, a roommate-type situation where everyone has full access to all common areas. This is the usual situation when multiple people jointly rent a house that none of them owns. In this situation all the roommates are essentially equals. But if you own the house and are renting it out, you can do whatever you want. A lot of people would not look for \"\"roommates\"\" but for \"\"lodgers\"\" or \"\"tenants\"\" --- you rent one room to a person, and you decide what the terms are for their use of the rest of the house. That means you get to decide if/when they use the kitchen, if/when they get to use your dishes, what they can do in the back yard, etc. In this situation the roommates are not your equals. You own the property and you set the terms for everyone else. (To clarify after reading the other answer: by \"\"not your equals\"\" I don't mean to imply that renters aren't equal as human beings to the landlord or should be treated as lowly peasants or anything like that. I just mean that they need not have equal decision-making powers with regard to the housing itself.) I would say the big difference is the social dynamic: personally, I wouldn't feel comfortable renting out rooms to \"\"roommates\"\" unless I was quite sure I would get along with them --- basically, the kind of people I would actually rent with, not just rent to. If you do rent roommate-style, and everyone has essentially equal access to all the facilities of the house, I'd say it's reasonable to split all house expenses roughly equally (with perhaps some adjustments for differences in amenities, like if one person has a larger bedroom than others). If you rent tenant-style, where you're not expecting them to be your buddies, the best way to determine a reasonable rent is to find other people renting similar rooms and see how much they're charging. Craigslist is a great way to do that; you can also ask around to people you know.\"" }, { "docid": "460401", "title": "", "text": "\"You could debate the \"\"why\"\"s of tax policy endlessly. There are lots of things in tax law that I think are bad ideas, and probably a few here and there that I think are good ideas. I am well aware that there are things that I think are good ideas that others think are bad ideas and vice versa. To your specific point: I suppose you could say that having a place to live is a necessity. But most people do not live in the absolute minimum necessary to give them a place to sleep and protection from the weather. You could survive with a one-room apartment with a bed on one side and a toilet and some minimal cooking facilities on the other. Most people have considerably more than that. At some point that's luxury and not necessity. And if you want to push it, you COULD live in a cardboard box under a bridge, you don't NEED a house or apartment to survive. Personally I think it's absurd that as a home-owner I get a deduction for my mortgage interest, while if someone were to rent an identical house with a monthly rental equal to exactly the same amount that I am paying on my mortgage, he would receive no deduction. The stated goal of that one was to encourage home ownership. But people who own homes are generally richer than those who rent, so the net result is that the poor are paying higher taxes to help subsidize the homes of the rich. And then the rich congratulate themselves on how they are giving these tax breaks to help make housing more affordable for poor people. To reiterate @keshlam, tax laws only makes sense when understood politically. Yes, some people have fine ideas about what is fair and just. Others simply want tax breaks that benefit their business or people with tough financial situations that just happen by chance to resemble their own. Many of the people with noble ideas have little concept of what the implications of the policies they push are. Many of the ideas that some people view as worthy and noble, others view as frivolous, counter-productive, or even evil. Then you mash all these competing groups and interest together and see what comes out.\"" } ]

[ { "docid": "31117", "title": "", "text": "If you didn't receive the money in 2012 or have constructive receipt you really can't claim the income. If the company is going to give you a 1099 for the work they aren't going to give you one until next year and if you claim it this year you will have a hard time explaining the income difference. On the other hand if this isn't miscellaneous income, but rather self employment income and expenses you should be able to claim the expenses in 2012 and if you have a loss that would carry over to 2013. Note it is possible to use an accrual basis if you are running a business (which would allow you to do this), but it is more complex than the cash accounting individual tax payers use." } ]

[ { "docid": "19165", "title": "", "text": "\"1. **[National Suicide Prevention Lifeline, http://www.suicidepreventionlifeline.org](http://www.suicidepreventionlifeline.org \"\"National Suicide Prevention Lifeline, 1-800-273-8255\"\")** **Call toll-free in the United States: 1-800-273-8255** **Chat: [http://www.suicidepreventionlifeline.org/GetHelp/LifelineChat.aspx](http://www.suicidepreventionlifeline.org/GetHelp/LifelineChat.aspx)** 2. \"\"[For long-unemployed, hiring bias rears its head](http://www.seattlepi.com/news/article/For-long-unemployed-hiring-bias-rears-its-head-3428844.php)\"\" by Stephen Singer, published on 23 March 2012: http://www.seattlepi.com/news/article/For-long-unemployed-hiring-bias-rears-its-head-3428844.php 3. \"\"[The Anxiety of Unemployment](http://opinionator.blogs.nytimes.com/2012/05/21/control/)\"\" by Dominick Brocato and DW Gibson, published on 21 May 2012: http://opinionator.blogs.nytimes.com/2012/05/21/control/ 4. \"\"[Long-term unemployment crisis rolls on](http://money.cnn.com/2012/06/11/news/economy/long-term-unemployment/index.htm)\"\" by Charles Riley, published on 11 June 2012: http://money.cnn.com/2012/06/11/news/economy/long-term-unemployment/index.htm 5. \"\"[Philadelphia Woman, 73, Says Age Has Kept Her Unemployed for Two Years](http://abcnews.go.com/Business/73-year-philadelphia-woman-testifies-age-discrimination-job/story?id=16352837&amp;singlePage=true)\"\" by Susanna Kim, published on 16 May 2012: http://abcnews.go.com/Business/73-year-philadelphia-woman-testifies-age-discrimination-job/story?id=16352837&amp;singlePage=true 6. \"\"[The Human Disaster of Unemployment](http://www.nytimes.com/2012/05/13/opinion/sunday/the-human-disaster-of-unemployment.html?pagewanted=all)\"\" by Dean Baker and Kevin Hassett, published on 12 May 2012: http://www.nytimes.com/2012/05/13/opinion/sunday/the-human-disaster-of-unemployment.html?pagewanted=all\"" }, { "docid": "296571", "title": "", "text": "\"It's likely impossible to determine why premiums are increasing in a meaningful way; not only is the interrelationship between the various data points very complex, but some of the increases are likely due to decisions by people who do not and will not publicly post what they decided and why. However, it is possible to compare health insurance premium increases over time to see if the increases in employer-sponsored health insurance premiums are comparable or not to the pre-ACA timeframe. Since the ACA phased in over a few years, we can compare the period 2008-2010 \"\"pre-ACA\"\" and 2013-2015 \"\"post-ACA\"\", ignoring 2011-2012 as being unclearly affected by the ACA phase-in. For this, I will look at single coverage premiums only for the purpose of simplifying the analysis. I found a good table of 2008-2010 premiums from the NCSL; they list the following: Kaiser Permanente had a good list for 2013-2015 here: From 2008-2010, the average growth was around 6% per year. From 2013-2015, the growth averaged about 3%. In both of these cases we are comparing total premiums (sum of employer and employee contributions). So, from a data-driven look, it seems that the premium growth is lower post-ACA than pre-ACA, so it's unlikely that the ACA could be accused of causing increased premium growth. Of course, this is US-wide average, and on a state-by-state basis there may well be significant differences that may or may not be related to the ACA. One thing that is covered on the NCSL page linked above that is interesting: while the premium growth has slowed significantly (about 50% of the growth pre-ACA), health insurance premiums are a higher proportion of employee's wages, and that growth is continuing - because wage growth has not kept pace with inflation post-2008 recession. Employee contributions also may be higher post-recession; many companies reduced their contribution percentage (as my then employer did, for example). Finally, increases in the ACA plans are also commonly overstated. They largely are in line with employer plans or even less. In 2015, premiums were basically flat, decreasing slightly in fact - see the KFF analysis here. 2016 saw a 3.6% by this methodology (see the 2016 analysis). It's very easy to cherrypick examples that are favorable to any interpretation from the data, though; there are such big swings as a result of the different conditions in the marketplaces that it's easy to pick a few that have high swings and claim the ACA has massive premium increases, or pick a few that have low swings and claim it's reducing costs.\"" }, { "docid": "113632", "title": "", "text": "First, you need to see if you actually qualify as a dependent under IRS rules; in short: While there may be exceptions to the cohabitation rule, I am not sure what those could be. The takeaway is that if your parent is wishing to claim you as a dependent, they must be responsible for supporting the majority of your living expenses (e.g. food and shelter). If this is the case, then the next question is to look at how the impact of the exemptions play out. In your situation, I would guess that your mother is correct: your taxable income is likely to be so low that if you do not take an exemption for yourself, you probably would still have zero or minimal tax liability; but if you mother claims you as a dependent, she will be able to take a deduction. In the case of your grants and loans, the loans should not be taxable income since these need to be repaid (presumably, with future earnings). Federal grants may be taxable--basically, the portion of the grant that is used solely for paying educational expenses toward a specific degree (tuition and books) is non-taxable, but the remainder may be subject to tax. As for tax credits, you would need to see how much you would get and how they would apply to you. The bottom line is, there are too many variables to say for certain what the best approach would be, so both your and your mother's returns must be prepared under each scenario (you as her dependent, versus you claiming a personal exemption)." }, { "docid": "314383", "title": "", "text": "Though I did answer the linked question, I thought to quote parts of this article. Source: The RRSP advantage, by David Hodges, February 6th 2015 [John] Storjohann ['the 58-year-old Calgary project manager'] is keenly aware of the two main advantages of RRSPs: the tax refund when you make a contribution, and the tax-deferred growth until you make withdrawals in retirement. These make RRSPs ideal for those who expect to be in a lower tax bracket when they stop working—which will be the case for most Canadians. For those in the highest tax bracket today, the RRSP is a no-brainer. That’s why Storjohann’s always surprised when he meets people pulling in good incomes who think TFSAs stack up better than RRSPs. “People just don’t understand how these accounts work.” This is the most common objection to RRSPs: people simply hate the idea of paying taxes on the withdrawals. Money taken out of a TFSA, by contrast, is tax-free, which sounds far more appealing. But that logic ignores the fact that you receive a tax refund when you put money in an RRSP, while TFSA contributions are made with after-tax dollars. So for the Fosters and other Canadians weighing this decision, it comes down to whether it’s better to pay tax now or later. And that’s not an easy question to answer. Both Hamilton and Kirzner say that anyone earning more than $50,000 is usually better off prioritizing RRSPs over TFSAs. While both accounts allow your investments to grow tax-free, the tax refund makes the RRSP more attractive for high-income earners. ... That, in a nutshell, is what makes RRSPs better than TFSAs for higher earners: Not only are you taxed on your money years later, but because you’re in a lower bracket when you retire, you’ll pay less tax too. When your income is between $35,000 and $50,000, the long-term tax differences between RRSPs and TFSAs become negligible, says Malcolm Hamilton. In that salary range, “just being able to put money aside in either an RRSP or a TFSA is great.” But RRSPs can still be a better choice for reasons that don’t involve tax deferral or refunds. In his new book, Wealthing Like Rabbits, author Robert Brown makes the case for favouring RRSPs over TFSAs most of the time because the former usually means less temptation to access your retirement savings early. Footnote: This 2012 CBC.ca article intelligibly explains RRSPs, free of jargon." }, { "docid": "144302", "title": "", "text": "One of the links showed: Specifically, for 2013, your child can contribute the lesser of: her earned income for the year or $5,500. This is correct. And while I have no issue with fool.com in general, I am a strong believer that when one cites numbers like this, the article should also state the year involved. As I quoted above. Littleadv's answer was pretty comprehensive. All I'd add is that for a child who is likely in the zero bracket for earned income, the Roth is preferable. Last, not to nit-pick, but the deposit does not need to be their money. My daughter earned $2300 in 2012, her $2000 Roth deposit can be from my gift to her. Or from any source. No paper trail as to the source of income is required, only that the income exist. On re-reading I see I left out - the deposits can be spread over as many accounts as you wish, and the total is for IRA/Roth IRA total. It's silly to take small sums and create multiple accounts. Until the value is above a certain level, just find the one broker who can cover what you want to invest in." }, { "docid": "333755", "title": "", "text": "\"There are many different methods for a corporation to get money, but they mostly fall into three categories: earnings, debt and equity. Earnings would be just the corporation's accumulation of cash due to the operation of its business. Perhaps if cash was needed for a particular reason immediately, a business may consider selling a division or group of assets to another party, and using the proceeds for a different part of the business. Debt is money that (to put it simply) the corporation legally must repay to the lender, likely with periodic interest payments. Apart from the interest payments (if any) and the principal (original amount leant), the lender has no additional rights to the value of the company. There are, basically, 2 types of corporate debt: bank debt, and bonds. Bank debt is just the corporation taking on a loan from a bank. Bonds are offered to the public - ie: you could potentially buy a \"\"Tesla Bond\"\", where you give Tesla $1k, and they give you a stated interest rate over time, and principal repayments according to a schedule. Which type of debt a corporation uses will depend mostly on the high cost of offering a public bond, the relationships with current banks, and the interest rates the corporation thinks it can get from either method. Equity [or, shares] is money that the corporation (to put it simply) likely does not have a legal obligation to repay, until the corporation is liquidated (sold at the end of its life) and all debt has already been repaid. But when the corporation is liquidated, the shareholders have a legal right to the entire value of the company, after those debts have been paid. So equity holders have higher risk than debt holders, but they also can share in higher reward. That is why stock prices are so volatile - the value of each share fluctuates based on the perceived value of the entire company. Some equity may be offered with specific rules about dividend payments - maybe they are required [a 'preferred' share likely has a stated dividend rate almost like a bond, but also likely has a limited value it can ever receive back from the corporation], maybe they are at the discretion of the board of directors, maybe they will never happen. There are 2 broad ways for a corporation to get money from equity: a private offering, or a public offering. A private offering could be a small mom and pop store asking their neighbors to invest 5k so they can repair their business's roof, or it could be an 'Angel Investor' [think Shark Tank] contributing significant value and maybe even taking control of the company. Perhaps shares would be offered to all current shareholders first. A public offering would be one where shares would be offered up to the public on the stock exchange, so that anyone could subscribe to them. Why a corporation would use any of these different methods depends on the price it feels it could get from them, and also perhaps whether there are benefits to having different shareholders involved in the business [ie: an Angel investor would likely be involved in the business to protect his/her investment, and that leadership may be what the corporation actually needs, as much or more than money]. Whether a corporation chooses to gain cash from earnings, debt, or equity depends on many factors, including but not limited to: (1) what assets / earnings potential it currently has; (2) the cost of acquiring the cash [ie: the high cost of undergoing a public offering vs the lower cost of increasing a bank loan]; and (3) the ongoing costs of that cash to both the corporation and ultimately the other shareholders - ie: a 3% interest rate on debt vs a 6% dividend rate on preferred shares vs a 5% dividend rate on common shares [which would also share in the net value of the company with the other current shareholders]. In summary: Earnings would be generally preferred, but if the company needs cash immediately, that may not be suitable. Debt is generally cheap to acquire and interest rates are generally lower than required dividend rates. Equity is often expensive to acquire and maintain [either through dividend payments or by reduction of net value attributable to other current shareholders], but may be required if a new venture is risky. ie: a bank/bondholder may not want to lend money for a new tech idea because it is too risky to just get interest from - they want access to the potential earnings as well, through equity.\"" }, { "docid": "133644", "title": "", "text": "Is this an employee stock purchase plan (ESPP)? If so, and there is no required holding period, selling right away is essentially a guaranteed bonus with minimal risk. One caveat is that sometimes it takes a while to actually receive the shares at your brokerage, and in the meantime your company may have an earnings report that could cause the share price to drop. If your discount is only 5%, for example, a bad earnings report could easily wipe that out. The only other cons I can think of is ESPP contributions being withheld from you for months (albeit for a virtually guaranteed return), and it complicates your taxes a bit. On the flip side, another pro is that after you sell the shares, you are more likely to invest that money rather than spend it." }, { "docid": "424893", "title": "", "text": "\"Donate buttons are meaningless with regards to taxes. This is payment for something you provided, and you cannot claim that you've received a gift. Any money you receive in this way is payment for your software. Remember, for gifts - no consideration should have been provided to the donor. Anything for which a consideration was provided - cannot be a gift. In your case the consideration is the software, and it's value is the amount you were paid. Since every person can decide how much to pay you on his own - any payment is for the software, not a gift. Any money you get is taxable to you, and you cannot claim it as \"\"gifts\"\" without exposing yourself to risks of making fraudulent claims. Consult a licensed tax adviser (EA/CPA licensed in your State) for a qualified tax advice.\"" }, { "docid": "316230", "title": "", "text": "Talk about coincidence, we just recieved letters from our bank saying that our interest only loans will be going up by 0.46% and if we want to keep our lower rate we will need to change early to P&I. Now our Interest only periods end in 6 months to about 16 months anyway. We have decided to change to P&I early and save on our interest expenses. Why? Because the main purpose of investing is to make money not to save on tax. Even if you are on the highest marginal tax rate for every extra dollar of expenses you spend and claim as a deduction you will only get about 50 cents back through tax savings. If you are on the lowest marginal tax rate your tax savings will reduce to less than 20 cents for every extra dollar spent. If you are investing in order to save on tax you may be investing for the wrong reasons. Your primary reason for investing should be to make money, for wealth creation. A good reason to stay with an Interest only loan for an investment property would be if you require the extra cash flow you would receive compared with an I&P loan." }, { "docid": "245974", "title": "", "text": "Two points You don't really get the full 10,000 annual interest as tax free income. Well you do, but you would have gotten a substantial amount of that anyway as the standard deduction. ...From the IRS.... Standard deduction The standard deduction for married couples filing a joint return is at $11,900 for 2012. The standard deduction for single individuals and married couples filing separate returns is $5,950 for 2012. The standard deduction for heads of household increases by $50 to $8,700 for 2012. so If you were married it wouldn't even make sense to claim the 10,000 mortgage interest deduction as the standard one is larger. It can make sense to do what you are talking about, but ultimately you have to decide what the effective interest rate on your mortgage is and if you can afford it. For instance. I might have a 5% mortgage. If I am in a 20% tax bracket it effectively is a 4% mortgage to me. Even though I am saving tax money I am still paying effectively 4%. Ultimately the variables are too complex to generalize any hard and fast rules, but it often times does make sense. (You should also be aware that there has been some talk of eliminating or phasing out the mortgage interest deduction as a way to close the deficit and reduce the debt.)" }, { "docid": "586772", "title": "", "text": "Citizens of India who are not residents to India (have NRI status) are not entitled to have ordinary savings accounts in India. If you have such accounts (e.g. left them behind to support your family while you are abroad), they need to be converted to NRO (NonResident Ordinary) accounts as soon as possible. Your bank will have forms for completion of this process. Any interest that these accounts earn will be taxable income to you in India, and possibly in the U.K. too, though tax treaties (or Double Taxation Avoidance Agreements) generally allow you to claim credit for taxes paid to other countries. Now, with regard to your question, NRIs are entitled to make deposits into NRO accounts as well as NRE (NonResident External) accounts. The differences are that money deposited into an NRE account, though converted to Indian Rupees, can be converted back very easily to foreign currency if need be. However, the re-conversion is at the exchange rate then in effect, and you may well lose that 10% interest earned because of a change in exchange rate. Devaluation of the Indian Rupee as occurred several times in the past 70 years. Once upon a time, it was essentially impossible to take money in an NRO account and convert it to foreign currency, but under the new recently introduced schemes, money in an NRO account can also be converted to foreign currencies, but it needs certification by a CA, and various forms to be filled out, and thus is more hassle. interest earned by the money in an NRE account is not taxable income in India, but is taxable income in the U.K. There is no taxable event (neither in U.K. nor in India) when you change an ordinary savings account held in India into an NRO account, or when you deposit money from abroad into an NRE or NRO account in an Indian bank. What is taxable is the interest that you receive from the Indian bank. In the case of an NRO account, what is deposited into your NRO account is the interest earned less the (Indian) income tax (usually 20%) deducted at the source (TDS) and sent to the Income Tax Authority on your behalf. In the case of an NRE account, the full amount of interest earned is deposited into the NRE account -- no TDS whatsoever. It is your responsibility to declare these amounts to the U.K. income tax authority (HM Revenue?) and pay any taxes due. Finally, you say that you recently moved to the U.K. for a job. If this is a temporary job and you might be back in India very soon, all the above might not be applicable to you since you would not be classified as an NRI at all." }, { "docid": "45090", "title": "", "text": "It might not be leniency for first time payers, but they do have programs, some federal some local, that help the poor and elderly complete their tax forms. There are also programs that allow the poor to file electronically for free. For most people the first time they file their taxes they are using the EZ form. Which is rather easy to do, even without the use of either web based or PC based software. The software tools all ask enough questions on the EZ forms to allow the user to know with confidence when their life choices have made it advantageous to use the more complex forms. The web versions of the software allow the taxpayer to start for free, thus reducing their initial investment for the software to zero. Because the first time filer is frequently a teenager the parents are generally responsible for proving that initial guidance. The biggest risk for a young taxpayer might be that the first year that itemizing deductions might be advantageous. They might never consider it, so they over pay. Or they discover in April that if they had only kept a receipt from a charity six months ago they could deduct the donation, so they are tempted to claim the donation without proof. Regarding leniency and assistance there is an interesting tax credit. The Earned Income Tax Credit. it gives a Tax credit to the working poor. They alert people that they need to Check Your Eligibility for the Earned Income Tax Credit They know that significant numbers of taxpayers fail to claim it. EITC can be a boost for workers who earned $50,270 or less in 2012. Yet the IRS estimates that one out of five eligible taxpayers fails to claim their EITC each year. The IRS wants everyone who is eligible for the credit to get the credit that they’ve earned. The rules for getting the credit are simple, all the information needed to claim it is already on the basic tax forms, but you have to know that you need a separate form to get the credit. But instead of making the credit automatic they say: If you use IRS e-file to prepare and file your tax return, the software will guide you and not let you forget this important step. E-file does the work and figures your EITC for you! and then : With IRS Free File, you can claim EITC by using brand name tax preparation software to prepare and e-file your tax return for free. It's available exclusively at IRS.gov/freefile. Free help preparing your return to claim your EITC is also available at one of thousands of Volunteer Income Tax Assistance sites around the country. To find the volunteer site nearest to you, use the VITA locator tool on IRS.gov. But if you don't use free file you might never know about the form. Apparently it escapes 20% of the people who could claim it." }, { "docid": "225511", "title": "", "text": "\"I know nothing about this stuff. Am I in trouble? You might be. If you don't file your return the IRS may \"\"make up\"\" one for you based on the (partial) information they have. Then they'll assess taxes and penalties and will go after you to pay those. Will I be hit with interest/penalties? You may if any money is owed. You may also lose the refund if you wait for too long (3 years after the due date). You may also be hit with the penalties for non-filing/late filing by your State. Not owing to IRS doesn't mean you also don't owe to the State - you can get hit with interest and late payment penalties there too. He has all my paperwork (I probably have copies... somewhere...) Should I go somewhere else and start fresh? He must return all the original paperwork you gave him. He can be disbarred if he doesn't. If you did 2013 yourself - what was significantly different in 2012 that you couldn't do yourself? If nothing - then just do it yourself and be done with it. You can buy 2012 preparation software at very deep discounts now. Otherwise - yes, go somewhere else. Busy season is over and it shouldn't be difficult to find another preparer/EA/CPA to do the work for you.\"" }, { "docid": "316045", "title": "", "text": "\"Useless statistic. From the article: \"\"The four-week moving average of claims, a less-volatile measure, climbed to 377,750, the highest in a month, from 376,000. The number of people continuing to collect jobless benefits increased 34,000 in the week ended May 26 to 3.29 million. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs. Those who’ve used up their traditional benefits and are now collecting emergency and extended payments slumped by almost 105,000 in the week ended May 19 to 2.83 million.\"\"\"" }, { "docid": "390733", "title": "", "text": "\"When I left the UK four years ago, free banking is still an option and I'm pretty sure it still is. Therefore, you have chosen to have a bank account with a 5.00/month charge. In return for this charge, you will be eligible to receive certain benefits. For example; reduced borrowing costs, discounted mortgage rates, free overdraft on small amounts, \"\"rewards\"\" for paying household bills by direct debit, and things of this sort. Amongst these benefits may be preferential savings rates. However, from HMRC's point of view it will be the extra perks you are paying for with your monthly charge. You have chosen to pay for the account and HMRC is not interested in how you choose to spend your money, only in the money you earn. While I agree with you that it does have an element of unfairness, the problem is how would you divide the cost amongst the various benefits.\"" }, { "docid": "552180", "title": "", "text": "If she selects 2012 and contributes $500, she will have contributed the maximum allowable amount for 2012, and has the option of contributing the maximum amount for 2013 as well (if she chooses to do so). If she does not max out her contribution for 2012 by April 15, 2013, that opportunity is lost, though she continues to have the option of contributing the maximum amount for 2013. Whether contributing the maximum allowable amount to a Roth IRA is a good thing or bad thing is something about which unreasonable people might differ. Edit: @JBKing's answer makes a very good point that I will elaborate on and incorporate into this answer. Eligibility to make a contribution for 2012 is presumably a given at this point (there is at least $5000 in earned income and AGI is not too large (see Pub 950 for details)), but eligibility to make a contribution for 2013 is as yet undetermined. If the 2013 AGI turns out to be more than the limit so that the OP's sister cannot contribute to a Roth IRA for 2013, that contribution for 2013 made today will have to be withdrawn or re-characterized as a non-deductible contribution to a Traditional IRA for 2013. To the best of my knowledge, it will not be possible to re-characterize it as a Roth IRA contribution for 2012 at that point in time. So the opportunity to add $500 to the Roth IRA will be irretrievably lost. As JoeTaxpayer says, why not keep options open by making a full contribution for 2012 while the opportunity is there? In this sense, I think there is a downside to choosing 2013 instead of 2012 for that $500 contribution." }, { "docid": "35709", "title": "", "text": "\"I'm sure that I can find enough people who would disagree with you on what you'd consider a decent movie to invalidate that argument. edit: [2012](http://en.wikipedia.org/wiki/2012_(film\\)). \"\" It received generally mixed to negative reviews from critics and its wordwide theatrical revenue reached approximately $769 million.\"\" There was no shortage of bad movies, nor was their any shortage of bad movies that made millions. Indeed, one of the true signs of the coming apocalypse isn’t contained in the Mayan calendar but in the fact that \"\"2012\"\" made a ziggurat of money.\"\"\"" }, { "docid": "276934", "title": "", "text": "You can claim VAT back if you are VAT registered. You MUST be VAT registered if your turnover is more than £82,000. You MAY register if your turnover is less. However, you can only claim back as much VAT as you actually received, and you can only claim VAT back on purchases that were made for your business, not for private use. And you need to remember that if you are VAT registered, you MUST charge VAT on every income. If you mostly trade with private customers, it means that your prices all just went up by 20%, so it's not a good idea." }, { "docid": "519798", "title": "", "text": "\"Not at all. The Millionaire Next Door offers a book full of anecdotes on couples that earned money and saved their way to being millionaires. I believe about 1/3 or so had businesses, but the rest were employed and simply saved wisely. $3860/yr saved for 40 years at 8% will return $1M. Adjust the numbers to hit a million sooner or reach a higher goal. The Author might be accused of survey bias. This is the phenomenon of studying the final results without looking at the pool of people years prior. Little Adv' is correct that while 1/3 of millionaires may have gotten that way by starting a business, that says nothing about how many businesses need to start to find the one millionaire that resulted. I view the book more as a lesson of \"\"spend beneath your means\"\" and focus on his anecdotes of the dual income couples who saved their way to this status. If you are in no rush, get this book from your library and spend the few hours to read it. In response to my Friend Dilip's comment, MoneyChimp offers a good look at compound growth (for the S&P) over time. The 40 years ending 2012, which obviously include the 'lost decade,' returned a CAGR of 9.78%. Not to be confused with the average 11.43%. When I pull the numbers for each year's return and apply an annual $3860 deposit, the 40 years ends with $2.2M. A 1% fee, or 1% lower return resulted in $1.6M. If 8% isn't conservative, of course you can run the numbers you wish. The 40 years contained both a lost decade and two great ones. Will the 3 decades post-lost average to get the Quad-Decade period to 8%+? I don't know.\"" } ]

[ { "docid": "521996", "title": "", "text": "\"Good for you! At your age, you should definitely consider investing some of your hard-earned and un-needed money in stocks with the long-term goal of having your retirement funded. The time horizon that you'd have would be vastly superior to that of millions of others, who will wait until their thirties or even forties to begin investing in stocks, giving your compound interest prospects the extra time anyone needs for a spectacular vertical incline in your later years. Make sure to sign up to automatically re-invest the dividend payouts of your stocks, please. (If you don't already know how being young and investing well in your early years is more powerful than starting out ten to twenty years later, do a little research on \"\"Compound Interest\"\"). Make sure you monitor your investments. Being young means you have time to correct your investments (sell and buy other assets) if the businesses you initially selected are no longer good investments.\"" } ]

[ { "docid": "539680", "title": "", "text": "\"There is no rule-of-thumb that fits every person and every situation. However, the reasons why this advice is generally applicable to most people are simple. Why it is good to be more aggressive when you are young The stock market has historically gone up, on average, over the long term. However, on its way up, it has ups and downs. If you won't need your investment returns for many years to come, you can afford to put a large portion of your investment into the volatile stock market, because you have plenty of time for the market to recover from temporary downturns. Why it is good to be more conservative when you are older Over a short-term period, there is no certainty that the stock market will go up. When you are in retirement, most people withdraw/sell their investments for income. (And once you reach a certain age, you are required to withdraw some of your retirement savings.) If the market is in a temporary downturn, you would be forced to \"\"sell low,\"\" losing a significant portion of your investment. Exceptions Of course, there are exceptions to these guidelines. If you are a young person who can't help but watch your investments closely and gets depressed when seeing the value go down during a market downturn, perhaps you should move some of your investment out of stocks. It will cost you money in the long term, but may help you sleep at night. If you are retired, but have more saved than you could possibly need, you can afford to risk more in the stock market. On average, you'll come out ahead, and if a downturn happens when you need to sell, it won't affect your overall situation much.\"" }, { "docid": "96110", "title": "", "text": "If you're sure you want to go the high risk route: You could consider hot stocks or even bonds for companies/countries with lower credit ratings and higher risk. I think an underrated cost of investing is the tax penalties that you pay when you win if you aren't using a tax advantaged account. For your speculating account, you might want to open a self-directed IRA so that you can get access to more of the high risk options that you crave without the tax liability if any of those have a big payout. You want your high-growth money to be in a Roth, because it would be a shame to strike it rich while you're young and then have to pay taxes on it when you're older. If you choose not to make these investments in a tax-advantaged account, try to hold your stocks for a year so you only get taxed at capital gains rates instead of as ordinary income. If you choose to work for a startup, buy your stock options as they vest so that if the company goes public or sells privately, you will have owned those stocks long enough to qualify for capital gains. If you want my actual advice about what I think you should do: I would increase your 401k percentage to at least 10% with or without a match, and keep that in low cost index funds while you're young, but moving some of those investments over to bonds as you get closer to retirement and your risk tolerance declines. Assuming you're not in the 25% tax bracket, all of your money should be in a Roth 401k or IRA because you can withdraw it without being taxed when you retire. The more money you put into those accounts now while you are young, the more time it all has to grow. The real risk of chasing the high-risk returns is that when you bet wrong it will set you back far enough that you will lose the advantage that comes from investing the money while you're young. You're going to have up and down years with your self-selected investments, why not just keep plugging money into the S&P which has its ups and downs, but has always trended up over time?" }, { "docid": "329757", "title": "", "text": "First, look at the local housing market, and the price to rent ratios. If you are comfortable that a house can be had for near to the cost of renting, and are not still dropping is price, then focus on the down-payment. I don't imagine housing prices to start picking up any time soon, so you don't be too rushed. If you feel like you have a longer time to save before you want to buy, I would focus as much money as I can into a retirement account while still saving for a down payment. Since you are young, you really want your retirement accounts working for you as soon as possible. You should not be investing in 3% stable funds, but the stock market index funds. Retirement is for 40 years in the future. Using funds for a down-payment from a retirement account should be a last resort. Remember this money is to provide you security later in life, not to get you into a house. When you take out money and put it into a house, it will not be appreciating nearly as fast. It is easy to say you will save later, but the money you save early in life will make up 50% or more of your funds when you retire. That is why it is critical to save for retirement as soon as possible." }, { "docid": "485243", "title": "", "text": "Many people have provided very good answers to this question and all the answers provide sound advice and justification. Below are some of my thoughts on the questions that you have put forward. 1) The investment manager question: The returns on your capital for a half year has been quite low; having said that, some investments do take more than half year to show some growth. You could try talking to your investment manager and ask where your money has been deployed and why the returns are low. If there are no real explanation given forth (which would be more likely as you have mentioned your investment manager does not like to discuss your money with you) you should conside Xolorus & Pete's advice and forthwith take all your money from investment manager and park it in the bank till you figure out what to do next with it. 2) Finances are not my forte: At 22 finance is nobodies forte, it takes longer than that; however having said that, how do you know finance is actually not your forte? Being a computer science graduate you would be more than comfortable with the mathematics required for finance. You may not have looked seriously at finance till now (I assume by your statement). Once way to be certain about this would be self learning, some good books have been refered above and there are online information, courses and articles on the Internet, for example here. You could give some spare time and explore if finance interests you or not. 3) If finance interests you: Then consider the 30K as your seed fund and take a small portion of it say 2K and try out your hand at investing on your own in the instruments that you feel most comfortable and see how you fare, you are young enough to take the risk. Rest of the money you could put in other low risk instruments (that you have identified through self study) 4) If finance does not interest you: The probably you are better off with an investment manager, as observed above, it will take some time for you to identify him/her 5) On returns: As mentioned above different instruments produce returns differently, however, one question that is universally asked is how much return on an invetment shoule one expect (you were expecting more than $12 on your investment). It is a difficult question to answer as invetment returns and investment needs depend on a persons financial goals and risk taking profile. One way to have some measure is to take 15-20 years CAGR of the stock index return and reduce it by 2-3%, that is (in many cases, not all) a reasonable return expectation in medium-long term." }, { "docid": "51445", "title": "", "text": "There's no formula for how much is the ideal amount to spend on entertainment and fun. As JoeTaxpayer says, it's all about balance. Maybe relative costs are different in France than in the US where I live, but here, housing and the things that go with it -- electricity, heat, insurance, maybe a few other miscellaneous items -- are usually a huge portion of a young person's expenses. If you don't mind living with your parents -- and they don't mind having you -- you can save a lot of money. There are lots of things you can do for fun that don't cost a lot of money. If your idea of fun is collecting fancy cars and making round-the-world trips, yes, that can get expensive fast. When I was in my 20s, my entertainment mostly consisted of going to movies, amusement parks, and occasional concerts; and playing computer games. Those aren't super expensive as long as you don't do them every day. And keeping my car running, which saved money over buying a new car. These days I'm in a situation analogous to yours: I'm getting older, and so I'm trying to build up a retirement account so I can retire comfortably. So I have to balance how much I put away for retirement with spending on fun things now. I have certain targets, and so I budget that I will put this amount away for retirement every month, and my spending money is what I have left. I think that's better than, spend whatever I want on fun, and then put what's left toward retirement. The latter plan is probably a fast route to debt." }, { "docid": "321619", "title": "", "text": "This is assuming that you are now making some amount X per month which is more than the income you used to have as a student. (Otherwise, the question seems rather moot.) All figures should be net amounts (after taxes). First, figure out what the difference in your cost of living is. That is, housing, electricity, utilities, the basics that you need to have to have a place in which to live. I'm not considering food costs here unless they were subsidized while you were studying. Basically, you want to figure out how much you now have to spend extra per month for basic sustenance. Then, figure out how much more you are now making, compared to when you were a student. Subtract the sustenance extra from this to get your net pay increase. After that is when it gets trickier. Basically, you want to set aside or invest as much of the pay increase as possible, but you probably have other expenses now that you didn't before and which you cannot really do that much about. This mights be particular types of clothes, commute fares (car keepup, gas, bus pass, ...), or something entirely different. Anyway, decide on a savings goal, as a percentage of your net pay increase compared to when you were a student. This might be 5%, 10% or (if you are really ambitious) 50% or more. Whichever number you pick, make sure it's reasonable giving your living expenses, and keep in mind that anything is better than nothing. Find a financial institution that offers a high-interest savings account, preferably one with free withdrawals, and sign up for one. Each and every time you get paid, figure out how much to save based on the percentage you determined (if your regular case is that you get the same payment each time, you can simply set up an automated bank transfer), put that in the savings account and, for the moment, forget about that money. Try your best to live only on the remainder, but if you realize that you set aside too much, don't be afraid to tap into the savings account. Adjust your future deposits accordingly and try to find a good balance. At the end of each month, deposit whatever remains in your regular account into your savings account, and if that is a sizable amount of money, consider raising your savings goal a little. The ultimate goal should be that you don't need to tap into your savings except for truly exceptional situations, but still keep enough money outside of the savings account to cater to some of your wants. Yes, bank interest rates these days are often pretty dismal, and you will probably be lucky to find a savings account that (especially after taxes) will even keep up with inflation. But to start with, what you should be focusing on is not to make money in terms of real value appreciation, but simply figuring out how much money you really need to sustain a working life for yourself and then walking that walk. Eventually (this may take anywhere from a couple of months to a year or more), you should have settled pretty well on an amount that you feel comfortable with setting aside each month and just letting be. By that time, you should have a decently sized nest egg already, which will help you get over rough spots, and can start thinking about other forms of investing some of what you are setting aside. Whenever you get a net pay raise of any kind (gross pay raise, lower taxes, bonus, whichever), increase your savings goal by a portion of that raise. Maybe give yourself 60% of the raise and bank the remaining 40%. That way, you are (hopefully!) always increasing the amount of money that you are setting aside, while also reaping some benefits right away. One major upside of this approach is that, if you lose your job, not only will you have that nest egg, you will also be used to living on less. So you will have more money in the bank and less monthly expenses, which puts you in a significantly better position than if you had only one of those, let alone neither." }, { "docid": "187356", "title": "", "text": "&gt; To get a well paying job requires a degree these days. Not if you're willing to do some manual labor. The skilled trades are experiencing a shortage of young workers. They pay pretty well. Well enough to save for college. &gt; Not everyone has the money to pay for college without a loan. Does that mean they shouldn't be able to get a well paying job? The unfortunate reality of the world is that life, sometimes, isn't fair. To be fair, I needed student loans to get through school. I didn't choose to major in art history or underwater basket weaving though. After a year of majoring in mathematics, I realized the dire economic decision I was making and chose to pursue engineering instead." }, { "docid": "166109", "title": "", "text": "Nope I live in Orange County. I get to put away some savings no lie but even still it's not like I'm driving a Tesla or BMW. No student loans that are out of control although I did pay off my education loans a bit fast but I only got stuck with those after dropping out and being unemployed for over a year. Learned to code and it helped a lot. Afterwards I had a bit of a personal fall out with drug and alcohol abuse when someone close to me passed away and since lifted myself up but it's not been easy because rent for a 1bedroom 600 sqft is around 1200-1500 here. After taxes I'm taking home maybe 2,2k plus car payment insurance personal insurance since I own my own business and being young and single means I get raped by taxes for whatever reason." }, { "docid": "6339", "title": "", "text": "Should I use the profit to pay down student loans or just roll it into my next house in order to have a lower mortgage amount? Calculate the amount of interest in each scenario, where the two scenarios are: Use extra cash to pay down student loans, take out a full mortgage. Use extra cash to make a big down payment on the next house, keep paying down student loans at normal rate. In both scenarios the student loan rate will stay the same. However in the second scenario you may get a lower interest rate from making a larger down payment. So then calculate the total interest resulting from each scenario: student loan rateXremaining student loan balance=student loan interest new mortgage rateXnew mortgage balance=mortgage interest scenario 1 interest = student loan interest+mortgage interest student loan rateXstudent loan balance = student loan interest new mortgage rate with large down paymentXnew mortgage balance after large down payment = mortgage interest scenario 2 interest = student loan interest+mortgage interest Whichever scenario's interest is lower will save money." }, { "docid": "442896", "title": "", "text": "A friend tweeted a similar question regarding student loans, and I responded with Student Loans and Your First Mortgage. The punchline is that you need to be aware of the 28/36 ratios in a bank qualifying you for your mortgage. Even though you have a house, you may not be aware of this. Simply put, 28% of gross monthly income can be used to qualify for your house burden, loan, taxes, etc. 36% for total debt. So the student loan may fit in that 8% gap, and paying it all off reduces the cash you have without helping you borrow more money. 3-5 years is short term, and to that part of the question, this money should not be invested in anything at risk. A 3 year treasury or CD would be it, in my opinion." }, { "docid": "133487", "title": "", "text": "\"You can't get much better advice for a young investor than from Warren Buffet. And his advice for investors young and old, is \"\"Put 10% of the cash in short‑term government bonds, and 90% in a very low‑cost S&P 500 index fund.\"\" Or as he said at a different time, \"\"Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees\"\". You are not going to beat the market. So just save as much money as you can, and invest it in something like a Vanguard no-load, low-cost mutual fund. Picking individual stocks is fun, but treat it as fun. Never put in more money than you would waste on fun. Then any upside is pure gravy.\"" }, { "docid": "590833", "title": "", "text": "From what I understand (I never had an RESP but would consider one for a future child), with the right type of withdrawal, you can use the RESP money for anything education related. Basically, know that the RESP is considered to have three compartments within it: (1) your contributions, (2) contributions from the government through the Canada Education Savings Grant (CESG), and (3) the return on the investment, or accumulated earnings. The government contributes an extra 20% on top of your contributions annually by way of the CESG, up to a $500 max. Tuition As you noted, official tuition fees, reported on a fee slip, is where one large chunk of the RESP will go. This will be pulled out of your original contributions and is known as a Post-Secondary Education (PSE) Withdrawal. Different RESP administrators (bank, discount brokerage, etc) determine what sort of proof of enrolment would be required, but it ought to be similar between them and different educational institutions. This withdrawal is not taxable by either you or the student, since the contributions were made with after-tax dollars. Educational Assistance Payments (EAPs) EAPs are for other expenses that the student would incur by being at university. In the first 13 weeks of studies, you can request up to $5000 in EAP withdrawals (full-time studies, $2500 for par-time), after which there is no limit. Each EAP payment is made up of the CESG and accumulated earnings portions of the RESP, whose proportions are determined based on the EAP amount. This is considered taxable income for the student, or beneficiary, in the year the EAP withdrawal is made. It gets a bit fuzzy here, from my understanding. The student would ostensibly be able to purchase anything that they could rationalize as education-related, and I'm not sure what sort of proof different banks would need. Maybe just the confirmation of enrolment is enough. This is the part of my post that should directly answer your question which, using this terminology, boils down to what sorts of expenses can I use the EAP withdrawals for? To this, from what I've read out there, I would say that you could probably purchase anything. From the student's point of view, they are enrolled in a qualifying education institution, and if they don't spend the money on education-related purchases, money required for those purchases will have to come from somewhere else anyway. Other withdrawals Any other type of withdrawal is like walking through a minefield. You can withdraw the original contributions without paying tax on them, but you would need to pay back the corresponding CESG back to the government. Other types of withdrawals would be taxable and may incur a 20% penalty. I don't have any more details on that. As I mentioned, this is from what I've read and looked into for future RESP purposes. A new concept that has popped up is RESP vs TFSA. The TFSA provides the same tax shelter (after-tax dollar contributions, no tax on the gains), but also allows for no tax on the withdrawals. To add to that, the TFSA withdrawals are tax-free as well. The main benefit that the RESP offers that the TFSA doesn't is the CESG. My current opinion (and I could be wrong) is that you should contribute $2500 annually to the RESP in order to get the $500 max CESG, and anything else that you'd like to contribute should go in a TFSA. But I digress. Hopefully my long-winded response makes some sense. Enjoy." }, { "docid": "422704", "title": "", "text": "As the other answers indicate, if you look only at the clear mathematical formulas regarding your debts and their interest rates, then you'll see that it's better (less expensive) to pay off your student debt first. However, you must also take into account the value of your car, as it is an asset. The older your car gets, the less it's worth. The more your car gets used and worn out, the less it's worth. Cars depreciate at about 15% per year on average. However, you're continuing to pay the same amount of money to keep a decreasingly valuable asset. Now, you also have to include the fact that you may be required to carry full-coverage car insurance, versus liability insurance. This can represent an increase in spending if you'd prefer to have liability only. With insurance in the picture, you should also be thinking about the possibility that something could happen to your vehicle that causes it to be worth less than you owe, or just worthless. If such an event happens, then you may have more difficulty acquiring a replacement vehicle. I, personally, don't find the increase in total interest paid on student loans to offset the other consideration regarding the value of a car. I'm in a similar situation as you (except your values are all about double what mine are). The peace of mind I gain from being able to pay off the car more quickly, and use that money towards loans or whatever I want, is worth the interest I'll earn by not putting that money into the student loans instead. I also prefer the idea of being able to more easily use my vehicle as a trade in, in case I need to get a different vehicle to better suit my family size." }, { "docid": "44574", "title": "", "text": "\"I agree with Grade 'Eh' Bacon's answer, but there are a couple of ideas that are relevant to your particular situation: If I were you, I would invest at least half of the cash in growth ETFs because you're young enough that market variability doesn't affect you and long term growth is important. The rest should be invested in safer investments (value and dividend ETFs, bonds, cash) so that you have something to live off in the near term. You said you wanted to invest ethically. The keyword to search is \"\"socially responsible ETFs\"\". There are many, and if this is important to you, you'll have to read their prospectus to find one that matches your ethics. Since you're American, the way I understand it, you need to file taxes on income; selling stocks at a gain is income. You want to make sure that as your stocks appreciate, you sell some every year and immediately rebuy them so that you pay a small tax bill every year rather than one huge tax bill 20 years from now. Claiming about $20600 of capital gains every year would be tax free assuming you are not earning any other money. I would claim a bit more in years where you make a lot. You can mitigate your long term capital gains tax exposure by opening a Roth IRA and maxing that out. Capital gains in the Roth IRA are not taxable. Even if you don't have income from working, you can have some income if you invest in stocks that pay dividends, which would allow you to contribute to a Roth IRA. You should figure where you're going to be living because you will want to minimize the currency risk of having your money in USD while you're living abroad. If the exchange rate were to change by a lot, you might find yourself a lot poorer. There are various hedging strategies, but the easiest one is to invest some of your money in securities of the country you'll be living in. You should look into how you'll be converting money into the foreign currency. There are sometimes way of minimizing the spread when converting large amounts of money, e.g., Norbert's gambit. Shaving off 1.5% when exchanging $100k saves $1500.\"" }, { "docid": "172778", "title": "", "text": "The amount of money you have should be enough for you to live a safe but somewhat restricted life if you never worked again - but it could set you up for just about any sort of financial goal (short of island buying) if you do just about any amount of work. The basic math for some financial rules of thumb to keep in mind: If your money is invested in very low-risk ways, such as a money market fund, you might earn, say, 3% in interest every year. That's $36k. But, if you withdraw that $36k every year, then every year you have the same principal amount invested. And a dollar tomorrow can't buy as much as a dollar today, because of inflation. If we assume for simplicity that inflation is 1% every year, then you need to contribute an additional $12k to your principal balance every year, just so that it has the same buying power next year. This leaves you with a net $24k of interest income that you can freely spend every year, for the rest of your life, without ever touching your principal balance. If your money is invested more broadly, including equity investments [stocks], you might earn, say, 7% every year. Some years you might lose money on your investments, and would need to draw down your principal balance to pay your bills. Some years you might do quite well - but would need to remain conservative and not withdraw your 'excess' earnings every year, because you will need that 'excess' to make up for the bad years. This would leave you with about $74k of income every year before inflation, and about $62k after inflation. But, you would be taking on more risk by doing this. If you work enough to pay your daily bills, and leave your investments alone to earn 7% on average annually, then in just 10 years your money would have doubled to ~ $2.4 Million dollars. This assumes that you never save another penny, and spend everything you make. It's a level of financial security that means you could retire at a drop of the hat. And if don't start working for 20 years [which you might need to do if you spend in excess of your means and your money dries up], then the same will not be true - starting work at 45 with no savings would put you at a much greater disadvantage for financial security. Every year that you work enough to pay your bills before 'retirement' could increase your nest egg by 7% [though again, there is risk here], but only if you do it now, while you have a nest egg to invest. Now in terms of what you should do with that money, you need to ask yourself: what are your financial goals? You should think about this long and hard (and renew that discussion with yourself periodically, as your goals will change over time). You say university isn't an option - but what other ways might you want to 'invest in yourself'? Would you want to go on 'sabbatical'-type learning trips? Take a trade or learn a skill? Start a business? Do you want to live in the same place for 30 years [and thus maybe you should lock-down your housing costs by buying a house] or do you want to travel around the world, never staying in the same place twice [in which case you will need to figure out how to live cheaply and flexibly, without signing unnecessary leases]. If you want to live in the middle of nowhere eating ramen noodles and watching tv, you could do that without lifting a finger ever again. But every other financial goal you might have should be factored into your budget and work plan. And because you do have such a large degree of financial security, you have a lot of options that could be very appealing - every low paying but desirable/hard-to-get job is open to you. You can pursue your interests, even if they barely pay minimum wage, and doing so may help you ease into your new life easier than simply retiring at such a young age [when most of your peers will be heavy into their careers]. So, that is my strongest piece of advice - work now, while you're young and have motivation, so that you can dial back later. This will be much easier than the other way around. As for where you should invest your money in, look on this site for investing questions, and ultimately with that amount of money - I suggest you hire a paid advisor, who works based on an hourly consultation fee, rather than a % management fee. They can give you much more directed advice than the internet (though you should learn it yourself as well, because that will give you the best piece of mind that you aren't being taken advantage of)." }, { "docid": "189678", "title": "", "text": "\"Remember that risk should correlate with returns, in an investment. This means that the more risk you take on, the more return you should be receiving, in an efficient marketplace. That's why putting your money in a savings account might earn you <1% interest right now, but putting money in the stock market averages ~7% returns over time. You should be very careful not to use the word 'interest' when you mean 'returns'. In your post, you are calling capital gains (the increase in value of owned property) 'interest'. This may be understating in your head the level of risk associated with property ownership. In the case of the bank, they are not in the business of home construction. Rather than take that risk themselves, they would rather finance many projects being done by construction companies that know the business. The bank has a high degree of certainty of getting its money back, because its mortgages are protected by the value of the property. Part of the benefit of an efficient marketplace is that risk gets 'bought' by individuals who want it. This means that people with a low-risk tolerance (such as banks, people on fixed incomes, seniors, etc.) can avoid risk, and people with a high risk tolerance (stock investors, young people with high income, etc.) can take on that risk for higher average returns. The bank's reasoning should remind you of the risk associated with property ownership: increases in value are not a sure thing. If you do not understand the risk of your investment, you cannot be certain that you are being well compensated for that risk. Note also that most countries place regulations on their banks that limit the amount of their funds that can be placed in 'higher risk' asset classes. Typically, this something along the lines of \"\"If someone places a deposit with your bank, you can only invest that deposit in a low-risk debt-based asset [ie: you can take money deposited by customer A and use it to finance a mortgage for customer B]\"\". This is done in an attempt to prevent collapse of the financial sector, if risky investments start failing.\"" }, { "docid": "547087", "title": "", "text": "You are faced with a dilemma. If you use a 529 plan to fund your education, the short timeline of a few years will limit your returns that are tax free. Most people who use a 529 plan either purchase years of tuition via lump sum, when the child is young; or they put aside money on a regular basis that will grow tax deferred/tax free. Some states do give a tax break when the contribution is made by a state taxpayer into a plan run by the state. The long term plans generally use a risk profile that starts off heavily weighted in stock when the child is young, and becomes more fixed income as the child reaches their high school years. The idea is to protect the fund from big losses when there is no time to recover. If you choose the plan with the least risk the issue is that the amount of gains that are being protected from federal tax is small. If you pick a more aggressive plan the risk is that the losses could be larger than the state tax savings. Look at some of the other tax breaks for tuition to see if you qualify Credits An education credit helps with the cost of higher education by reducing the amount of tax owed on your tax return. If the credit reduces your tax to less than zero, you may get a refund. There are two education credits available: the American Opportunity Tax Credit and the Lifetime Learning Credit. Who Can Claim an Education Credit? There are additional rules for each credit, but you must meet all three of the following for either credit: If you’re eligible to claim the lifetime learning credit and are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. You can't claim the AOTC if you were a nonresident alien for any part of the tax year unless you elect to be treated as a resident alien for federal tax purposes. For more information about AOTC and foreign students, visit American Opportunity Tax Credit - Information for Foreign Students. Deductions Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or your dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education. The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. This deduction, reported on Form 8917, Tuition and Fees Deduction, is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). This deduction may be beneficial to you if, for example, you cannot take the lifetime learning credit because your income is too high. You may be able to take one of the education credits for your education expenses instead of a tuition and fees deduction. You can choose the one that will give you the lower tax." }, { "docid": "355341", "title": "", "text": "I started my account with $500 so I know where you're coming from. For the words of caution, in about 2009 we entered a pretty significant bull market. During this period you could basically buy almost any big name company and do pretty well for yourself. So don't be too cocky about your ability to pick winners in the middle of a bull market. Over the last few years you'd have to try pretty hard to consistently pick losers. I absolutely think you should put real money in the game when you have this sort of interest. However, at your $400-600 level broker fees will eat any sort of active trading or short term profit you could muster. Stock trading is not a great way to make money in the short term. If you're looking to save for something specific you should put that money in a zero risk savings account. You should do more research on brokers. Find the lowest possible trade commission at an organization where you can meet the account opening minimum. A $10 commission is 11% more than a $9 commission." }, { "docid": "8266", "title": "", "text": "You aren't in trouble yet, but you are certainly on a trajectory to be later. The longer you wait the more painful it will be because you won't have the benefit of time for your money to grow. You may think you will have more disposable income at some point later when things are paid off, but trust me you wont. When college tuition kicks in for that kid, you are going to LAUGH at those student loan amounts as paltry. The wording of your question was confusing because you say in one place that you have no savings, but in another you claim to be putting away around $5k/year. The important point is how much you have saved at this point and how much you are putting in going forward. Some rules of thumb from Fidelity: (Based on your scenario) Take a look at your retirement account. Are you on track for that? It doesn't sound like it. Can you get away with your current plan? Sure, lots of people do, but unless you die young, hit the jackpot in the stock market or lottery, you are probably going to have to live WELL below your current standard of living to make that happen." } ]

[ { "docid": "328691", "title": "", "text": "It really is dependent upon your goals. What are your short term needs? Do you need a car/clothing/high cost apartment/equipment when you start your career? For those kinds of things, a savings account might be best as you will need to have quick access to cash. Many have said that people need two careers, the one they work in and being an investor. You can start on that second career now. Open up some small accounts to get the feel for investing. This can be index funds, or something more specialized. I would put money earmarked for a home purchase in funds with a lower beta (fluctuation) and some in index funds. You probably would want to get a feel for what and where you will actually be doing in your career prior to making a leap into a home purchase. So figure you have about 5 years. That gives you time to ride out the waves in the market. BTW, good job on your financial situation. You are set up to succeed." } ]

[ { "docid": "140189", "title": "", "text": "\"If I don't need this money for decades, meaning I can ride out periodical market crashes, why would I invest in bonds instead of funds that track broad stock market indexes? You wouldn't. But you can never be 100% sure that you really won't need the money for decades. Also, even if you don't need it for decades, you can never be 100% certain that the market will not be way down at the time, decades in the future, when you do need the money. The amount of your portfolio you allocate to bonds (relative to stocks) can be seen as a measure of your desire to guard against that uncertainty. I don't think it's accurate to say that \"\"the general consensus is that your portfolio should at least be 25% in bonds\"\". For a young investor with high risk tolerance, many would recommend less than that. For instance, this page from T. Rowe Price suggests no more than 10% bonds for those in their 20s or 30s. Basically you would put money into bonds rather than stocks to reduce the volatility of your portfolio. If you care only about maximizing return and don't care about volatility, then you don't have to invest in bonds. But you probably actually do care about volatility, even if you don't think you do. You might not care enough to put 25% in bonds, but you might care enough to put 10% in bonds.\"" }, { "docid": "547087", "title": "", "text": "You are faced with a dilemma. If you use a 529 plan to fund your education, the short timeline of a few years will limit your returns that are tax free. Most people who use a 529 plan either purchase years of tuition via lump sum, when the child is young; or they put aside money on a regular basis that will grow tax deferred/tax free. Some states do give a tax break when the contribution is made by a state taxpayer into a plan run by the state. The long term plans generally use a risk profile that starts off heavily weighted in stock when the child is young, and becomes more fixed income as the child reaches their high school years. The idea is to protect the fund from big losses when there is no time to recover. If you choose the plan with the least risk the issue is that the amount of gains that are being protected from federal tax is small. If you pick a more aggressive plan the risk is that the losses could be larger than the state tax savings. Look at some of the other tax breaks for tuition to see if you qualify Credits An education credit helps with the cost of higher education by reducing the amount of tax owed on your tax return. If the credit reduces your tax to less than zero, you may get a refund. There are two education credits available: the American Opportunity Tax Credit and the Lifetime Learning Credit. Who Can Claim an Education Credit? There are additional rules for each credit, but you must meet all three of the following for either credit: If you’re eligible to claim the lifetime learning credit and are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. You can't claim the AOTC if you were a nonresident alien for any part of the tax year unless you elect to be treated as a resident alien for federal tax purposes. For more information about AOTC and foreign students, visit American Opportunity Tax Credit - Information for Foreign Students. Deductions Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or your dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education. The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. This deduction, reported on Form 8917, Tuition and Fees Deduction, is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). This deduction may be beneficial to you if, for example, you cannot take the lifetime learning credit because your income is too high. You may be able to take one of the education credits for your education expenses instead of a tuition and fees deduction. You can choose the one that will give you the lower tax." }, { "docid": "27625", "title": "", "text": "This is assuming your student loans are Federal Stafford Loans Don't pay off your student loans as soon as possible. They're very low interest and paying them monthly will help your credit. What you will want to do is as soon as the grace period expires, call up whoever is handling your account and ask them to reduce the monthly since you're not making much. Then just pay the minimum amount, pay your living expenses, bank some of it, and if you have a month where you came out ahead consider putting the difference towards the student loan. Can also drop any tax return you get into the student loan debt. The whole pay off your student loans fast is important. When you have the extra put it towards it, but the extra. Its also much, much more important if you made the mistake of taking out Private Loans or have 50k, 80k, 120k in student loan debt. Since you only have a ~14k I'm going with it being a Stafford Loan. Reduce the monthly, pay on time, live within/below your means... and you'll be just fine." }, { "docid": "583040", "title": "", "text": "The short answer is that you can use student loans for living expenses. Joe provides a nice taxonomy of loans. I would just add that some loans are not only guaranteed, but also subsidized. Essentially the Government buys down the rate of the loan. The mechanics are that a financial aid package might consist of grants, work study (job), subsidized, and guaranteed loans. One can turn down one or more of the elements of the package. All will be limited in some form. The work study will have a maximum number of hours and generally has low pay. Many find better deals working in the businesses surrounding the college or starting their own services type business. The grants rarely cover the full cost of tuition and books. The loans will both be limited in amount. It mainly depends on what you qualify for, and generally speaking the lower the income the more aid one qualifies for. Now some students use all their grant, all their loan money and buy things that are not necessary. For example are you going to live in the $450/month dorm, or the new fancy apartments that are running $800/month? Are you going to use the student loan money to buy a car? Will it be a new BMW or a 8 year old Camary? I see this first hand as I live near a large university. The pubs are filled with college students, not working, but drinking and eating every night. Many of them drive very fancy cars. The most onerous example of this is students at the military academies. Attendees have their books and tuition completely paid for. They also receive a stipend, and more money can be earned over the summer. They also all qualify for a 35K student loan in their junior year. Just about every kid, takes this loan. Most of those use the money to buy a car. I know a young lady who did exactly that, and so did many of her friends. So kids with a starting pay of 45K also start life with a 35K. Buying a nice car in the military is especially silly as they cannot drive it while deployed and they are very likely to be deployed. At least, however, they are guaranteed a starting job with a nice starting pay, and upward potential. College kids who behave similarly might not have it as good. Will they even find work? Will the job have the ability to move up? How much security is in the job? One might say that this does not apply to engineers and such, but I am working with a fellow with a computer science degree who cannot find a job and has not worked in the past 6 months. This even though the market is super hot right now for computer engineers. So, in a word, be very careful what you borrow." }, { "docid": "187356", "title": "", "text": "&gt; To get a well paying job requires a degree these days. Not if you're willing to do some manual labor. The skilled trades are experiencing a shortage of young workers. They pay pretty well. Well enough to save for college. &gt; Not everyone has the money to pay for college without a loan. Does that mean they shouldn't be able to get a well paying job? The unfortunate reality of the world is that life, sometimes, isn't fair. To be fair, I needed student loans to get through school. I didn't choose to major in art history or underwater basket weaving though. After a year of majoring in mathematics, I realized the dire economic decision I was making and chose to pursue engineering instead." }, { "docid": "423754", "title": "", "text": "\"I don't think you have your head in the right space - you seem to be thinking of these lifecycle funds like they're an annuity or a pension, but they're not. They're an investment. Specifically, they're a mutual fund that will invest in a collection of other mutual funds, which in turn invest in stock and bonds. Stocks go up, and stocks go down. Bonds go up, and bonds go down. How much you'll have in this fund next year is unknowable, much less 32 years from now. What you can know, is that saving regularly over the next 32 years and investing it in a reasonable, and diversified way in a tax sheltered account like that Roth will mean you have a nice chunk of change sitting there when you retire. The lifecycle funds exist to help you with that \"\"reasonable\"\" and \"\"diversified\"\" bit.They're meant to be one stop shopping for a retirement portfolio. They put your money into a diversified portfolio, then \"\"age\"\" the portfolio allocations over time to make it go from a high risk, (potentially) high reward allocation now to a lower risk, lower reward portfolio as you approach retirement. The idea is is that you want to shoot for making lots of money now, but when you're older, you want to focus more on keeping the money you have. Incidentally, kudos for getting into seriously saving for retirement when you're young. One of the biggest positive effects you can have on how much you retire with is simply time. The more time your money can sit there, the better. At 26, if you're putting away 10 percent into a Roth, you're doing just fine. If that 5k is more than 10 percent, you'll do better than fine. (That's a rule of thumb, but it's based on a lot of things I've read where people have gamed out various scenarios, as well as my own, cruder calculations I've done in the past)\"" }, { "docid": "329757", "title": "", "text": "First, look at the local housing market, and the price to rent ratios. If you are comfortable that a house can be had for near to the cost of renting, and are not still dropping is price, then focus on the down-payment. I don't imagine housing prices to start picking up any time soon, so you don't be too rushed. If you feel like you have a longer time to save before you want to buy, I would focus as much money as I can into a retirement account while still saving for a down payment. Since you are young, you really want your retirement accounts working for you as soon as possible. You should not be investing in 3% stable funds, but the stock market index funds. Retirement is for 40 years in the future. Using funds for a down-payment from a retirement account should be a last resort. Remember this money is to provide you security later in life, not to get you into a house. When you take out money and put it into a house, it will not be appreciating nearly as fast. It is easy to say you will save later, but the money you save early in life will make up 50% or more of your funds when you retire. That is why it is critical to save for retirement as soon as possible." }, { "docid": "55841", "title": "", "text": "\"I posted a comment in another answer and it seems to be approved by others, so I have converted this into an answer. If you're talking about young adults who just graduated college and worked through it. I would recommend you tell them to keep the same budget as what they were living on before they got a full-time job. This way, as far as their spending habits go, nothing changes since they only have a $500 budget (random figure) and everything else goes into savings and investments. If as a student you made $500/month and you suddenly get $2000/month, that's a lot of money you get to blow on drinks. Now, if you put $500 in savings (until 6-12 month of living expenses), $500 in investments for the long run and $500 in vacation funds or \"\"big expenses\"\" funds (Ideally with a cap and dump the extra in investments). That's $18,000/yr you are saving. At this stage in your life, you have not gotten used to spending that extra $18,000/yr. Don't touch the side money except for the vacation fund when you want to treat yourself. Your friends will call you cheap, but that's not your problem. Take that head start and build that down payment on your dream house. The way I set it up, is (in this case) I have automatics every day after my paychecks come in for the set amounts. I never see it, but I need to make sure I have the money in there. Note: Numbers are there for the sake of simplicity. Adjust accordingly. PS: This is anecdotal evidence that has worked for me. Parents taught me this philosophy and it has worked wonders for me. This is the extent of my financial wisdom.\"" }, { "docid": "400714", "title": "", "text": "First, congratulations on even thinking about investing while you are still young! Before you start investing, I'd suggest you pay off your cc balance if you have any. The logic is simple: if you invest and make say 8% in the market but keep paying 14% on your cc balance, you aren't really saving. Have a good supply of emergency fund that is liquid (high yielding savings bank like a credit union. I can recommend Alliant). Start small with investing. Educate yourself on the markets before getting in. Ignorance can be expensive. Learn about IRA (opening an IRA and investing in the markets have (good)tax implications. I didn't do this when I was young and I regret that now) Learn what is 'wash sales' and 'tax loss harvesting' before putting money in the market. Don't start out by investing in individual stocks. Learn about indexing. What I've give you are pointers. Google (shameless plug: you can read my blog, where I do touch upon most of these topics) for the terms I've mentioned. That'll steer you in the right direction. Good luck and stay prosperous!" }, { "docid": "353186", "title": "", "text": "Should I use the money to pay off student loans and future grad expenses for me? Yes. The main drawback to student loans is that they cannot be gotten rid of except by paying them off (other than extreme circumstances such as death or complete disability). A mortgage, car loan, or other collateralized loans can be dealt with by selling the underlying collateral. Credit card loans can be discharged in bankruptcy. Stop borrowing for college, pay for it in cash, then decide what to do with the rest. Make sure you have a comfortable amount saved for emergencies in a completely liquid account (not a retirement account or CDs), and continue to pay off with the rest. You might also consider putting some away for your kids' college, so I want to get my older son into a private middle school for 2 years. They have a hardy endowment and may offer us a decent need based scholarship if we look worthy on paper I have a hard time getting behind this plan with a 238K mortgage. If you want to apply for scholarships that's great - but don't finagle your finances to look like you're poor when you have a quarter-million-dollar house. If you want to save some for private school then do that out of what you have. Otherwise either rearrange your priorities so you can afford it or private school might not be in the cards for you. That said- while it was a blessing to be able to pay off the second mortgage and credit cards, your hesitancy to pay off the student loans makes me wonder if you will start living within your means after the loans are paid off. My concern is that your current spending levels that got you in this much debt in the first place will put you back in debt in the near future, and you won't have another inheritance to help pull you out. I know that wasn't your question, but I felt like I needed to add that to my answer as well." }, { "docid": "422704", "title": "", "text": "As the other answers indicate, if you look only at the clear mathematical formulas regarding your debts and their interest rates, then you'll see that it's better (less expensive) to pay off your student debt first. However, you must also take into account the value of your car, as it is an asset. The older your car gets, the less it's worth. The more your car gets used and worn out, the less it's worth. Cars depreciate at about 15% per year on average. However, you're continuing to pay the same amount of money to keep a decreasingly valuable asset. Now, you also have to include the fact that you may be required to carry full-coverage car insurance, versus liability insurance. This can represent an increase in spending if you'd prefer to have liability only. With insurance in the picture, you should also be thinking about the possibility that something could happen to your vehicle that causes it to be worth less than you owe, or just worthless. If such an event happens, then you may have more difficulty acquiring a replacement vehicle. I, personally, don't find the increase in total interest paid on student loans to offset the other consideration regarding the value of a car. I'm in a similar situation as you (except your values are all about double what mine are). The peace of mind I gain from being able to pay off the car more quickly, and use that money towards loans or whatever I want, is worth the interest I'll earn by not putting that money into the student loans instead. I also prefer the idea of being able to more easily use my vehicle as a trade in, in case I need to get a different vehicle to better suit my family size." }, { "docid": "545759", "title": "", "text": "There are lots of sub-parts to your question. Let's takle them one at a time. Should I worry about an IRA at this age? Absolutely! Or at least some form of retirement account. When you are young is the BEST time to start putting money into a retirement account because you have so much time for it to grow. Compounding interest is a magical thing. Even if you can only afford to put a very small amount in the account, do it! You will have to put a heck of a lot less money into the account over your working career if you start now. Is there a certain amount you need for the IRA deduction? No. Essentially with a traditional IRA you can just subtract the amount you deposited (up to the contribution limit) from your income when calculating your taxes. What kind of IRA should I get? I suggest a ROTH IRA, but be warned that with that kind you get the tax breaks when you retire, not now. If you think taxes will be higher in 40 years or so, then the Roth is a clear winner. Traditional IRA: Tax deduction this year for contribution; investment plus gains are taxed as income when you take the money out at retirement. Roth IRA: Investment amount is taxed in the year you put it in; no taxes on investment amount or gains when you take it out at retirement. Given the long horizon that you will be investing, the money is likely going to at least double. So the total amount you are taxed on over your lifetime would probably be less with the ROTH even if tax rates remain the same. Is the 401K a better option? If they offer a match (most do) then it is a no-brainer, the employer 401K always comes out on top because they are basically paying you extra to put money into savings. If there is no match, I suggest a Roth because company 401K plans usually have hidden fees that are much higher than you are going to pay for setting up your own IRA or Roth IRA with a broker." }, { "docid": "345403", "title": "", "text": "\"Congratulations. The first savings goal should be an emergency fund. Think of this not as an investment, but as insurance against life's woes. They happen and having this kind of money earmarked allows one to invest without needing to withdraw at an inopportune time. This should go into a \"\"high interest\"\" savings account or money market account. Figure three to six months of expenses. The next goal should be retirement savings. In the US this is typically done through 401K or if your company does not offer one, either a ROTH IRA or Traditional IRA. The goal should be about 15% of your income. You should favor a 401k match over just about anything else, and then a ROTH over that. The key to transforming from a broke college student into a person with a real job, and disposable income, is a budget. Otherwise you might just end up as a broke person with a real job (not fun). Part of your budget should include savings, spending, and giving. All three areas are the key to building wealth. Once you have all of those taking care of the real fun begins. That is you have an emergency fund, you are putting 15% to retirement, you are spending some on yourself, and giving to a charity of your choice. Then you can dream some with any money left over (after expenses of course). Do you want to retire early? Invest more for retirement. Looking to buy a home or own a bunch of rental property? Start educating yourself and invest for that. Are you passionate about a certain charity? Give more and save some money to take time off in order to volunteer for that charity. All that and more can be yours. Budgeting is a key concept, and the younger you start the easier it gets. While the financiers will disagree with me, you cannot really invest if you are borrowing money. Keep debt to zero or just on a primary residence. I can tell you from personal experience that I did not started building wealth until I made a firm commitment to being out of debt. Buy cars for cash and never pay credit card interest. Pay off student loans as soon as possible. For some reason the idea of giving to charity invokes rancor. A cursory study of millionaires will indicate some surprising facts: most of them are self made, most of them behave differently than pop culture, and among other things most of them are generous givers. Building wealth is about behavior. Giving to charity is part of that behavior. Its my own theory that giving does almost no good for the recipient, but a great amount of good for the giver. This may seem difficult to believe, but I ask that you try it.\"" }, { "docid": "452837", "title": "", "text": "\"My grandma left a 50K inheritance You don't make clear where in the inheritance process you are. I actually know of one case where the executor (a family member, not a professional) distributed the inheritance before paying the estate taxes. Long story short, the heirs had to pay back part of the inheritance. So the first thing that I would do is verify that the estate is closed and all the taxes paid. If the executor is a professional, just call and ask. If a family member, you may want to approach it more obliquely. Or not. The important thing is not to start spending that money until you're sure that you have it. One good thing is that my husband is in grad school and will be done in 2019 and will then make about 75K/yr with his degree profession. Be a bit careful about relying on this. Outside the student loans, you should build other expenses around the assumption that he won't find a job immediately after grad school. For example, we could be in a recession in 2019. We'll be about due by then. Paying off the $5k \"\"other debt\"\" is probably a no brainer. Chances are that you're paying double-digit interest. Just kill it. Unless the car loan is zero-interest, you probably want to get rid of that loan too. I would tend to agree that the car seems expensive for your income, but I'm not sure that the amount that you could recover by selling it justifies the loss of value. Hopefully it's in good shape and will last for years without significant maintenance. Consider putting $2k (your monthly income) in your checking account. Instead of paying for things paycheck-to-paycheck, this should allow you to buy things on schedule, without having to wait for the money to appear in your account. Put the remainder into an emergency account. Set aside $12k (50% of your annual income/expenses) for real emergencies like a medical emergency or job loss. The other $16k you can use the same way you use the $5k other debt borrowing now, for small emergencies. E.g. a car repair. Make a budget and stick to it. The elimination of the car loan should free up enough monthly income to support a reasonable budget. If it seems like it isn't, then you are spending too much money for your income. Don't forget to explicitly budget for entertainment and vacations. It's easy to overspend there. If you don't make a budget, you'll just find yourself back to your paycheck-to-paycheck existence. That sounds like it is frustrating for you. Budget so that you know how much money you really need to live.\"" }, { "docid": "589131", "title": "", "text": "Revealing and insightful article. I saw my Father work as a senior manager in the News industry where the top brass had no experience in the core of the business and saw the friction it caused with him and other Journalists. As an MBA student it's important for me to remember to put myself in other's shoes. Assuming I ever work in a business where management doesn't have the same core background as the operational employees." }, { "docid": "115741", "title": "", "text": "We don't have a good answer for how to start investing in poland. We do have good answers for the more general case, which should also work in Poland. E.g. Best way to start investing, for a young person just starting their career? This answer provides a checklist of things to do. Let's see how you're doing: Match on work pension plan. You don't mention this. May not apply in Poland, but ask around in case it does. Given your income, you should be doing this if it's available. Emergency savings. You have plenty. Either six months of spending or six months of income. Make sure that you maintain this. Don't let us talk you into putting all your money in better long term investments. High interest debt. You don't have any. Keep up the good work. Avoid PMI on mortgage. As I understand it, you don't have a mortgage. If you did, you should probably pay it off. Not sure if PMI is an issue in Poland. Roth IRA. Not sure if this is an issue in Poland. A personal retirement account in the US. Additional 401k. A reminder to max out whatever your work pension plan allows. The name here is specific to the United States. You should be doing this in whatever form is available. After that, I disagree with the options. I also disagree with the order a bit, but the basic idea is sound: one time opportunities; emergency savings; eliminate debt; maximize retirement savings. Check with a tax accountant so as not to make easily avoidable tax mistakes. You can use some of the additional money for things like real estate or a business. Try to keep under 20% for each. But if you don't want to worry about that kind of stuff, it's not that important. There's a certain amount of effort to maintain either of those options. If you don't want to put in the effort to do that, it makes sense not to do this. If you have additional money split the bulk of it between stock and bond index funds. You want to maintain a mix between about 70/30 and 75/25 stocks to bonds. The index funds should be based on broad indexes. They probably should be European wide for the most part, although for stocks you might put 10% or so in a Polish fund and another 15% in a true international fund. Think over your retirement plans. Where do you want to live? In your current apartment? In a different apartment in the same city? In one of the places where you inherited property? Somewhere else entirely? Also, do you like to vacation in that same place? Consider buying a place in the appropriate location now (or keeping the one you have if it's one of the inherited properties). You can always rent it out until then. Many realtors are willing to handle the details for you. If the place that you want to retire also works for vacations, consider short term rentals of a place that you buy. Then you can reserve your vacation times while having rentals pay for maintenance the rest of the year. As to the stuff that you have now: Look that over and see if you want any of it. You also might check if there are any other family members that might be interested. E.g. cousins, aunts, uncles, etc. If not, you can probably sell it to a professional company that handles estate sales. Make sure that they clear out any junk along with the valuable stuff. Consider keeping furniture for now. Sometimes it can help sell a property. You might check if you want to drive either of them. If not, the same applies, check family first. Otherwise, someone will buy them, perhaps on consignment (they sell for a commission rather than buying and reselling). There's no hurry to sell these. Think over whether you might want them. Consider if they hold any sentimental value to you or someone else. If not, sell them. If there's any difficulty finding a buyer, consider renting them out. You can also rent them out if you want time to make a decision. Don't leave them empty too long. There's maintenance that may need done, e.g. heat to keep water from freezing in the pipes. That's easy, just invest that. I wouldn't get in too much of a hurry to donate to charity. You can always do that later. And try to donate anonymously if you can. Donating often leads to spam, where they try to get you to donate more." }, { "docid": "551849", "title": "", "text": "\"I think your question is pretty wise, and the comments indicate that you understand the magnitude of the situation. First off, there could be nothing that your friend could do. Step parent relationships can be strained and this could make it worse, add the age of the girl and grief and he could make this a lot worse then it potentially is. She may spend it all to spite step-dad. Secondly, there is a need to understand by all involved that personal finance is about 75-90% behavior. Very high income people can wind up bankrupt, and lower income people can end up wealthy. The difference between two people's success or failure often boils down to behavior. Thirdly, I think you understand that there needs to be a \"\"why\"\", not only a \"\"what\"\" to do. I think that is the real tricky part. There has to be a teaching component along with an okay this is what you should do. Finding a person will be difficult. First off there is not a lot of money involved. Good financial advisers handle much larger cash positions and this young lady will probably need to spend some of it down. Secondly most FAs are willing to provide a cookie cutter solution to the problem at hand. This will likely leave a bad taste in the daughter's mouth. If it was me, I would encourage two things: Both of those things buy time. If she comes out of this with an education in a career field with a 50-60K starting salary, a nice used car, and no student loans that would be okay. I would venture to say mom would be happy. If she is very savvy, she might be able to come out of this with a down payment on a place of her own; or, if she has education all locked up perhaps purchasing a home for mostly cash. In the interim period a search for a good teaching FA could occur. Finding such a person could also help you and your friend in addition to the daughter. Now my own step-daughter and I have a good financial relationship. There are other areas where our relationship can be strained but as far as finances we relate well. We took Financial Peace University ($100 offered through many local churches) together when she was at the tender age of 16. The story of \"\"Ben and Arthur\"\" really spoke to her and we have had many subsequent conversations on the matter. That may work in this case. A youTube video on part of the lesson.\"" }, { "docid": "336144", "title": "", "text": "\"Why it is good to be risky The reason why it is good to be risky is because risky investments can result in higher returns on your money. The problem with being risky, is there is a chance you can lose money. However, in the long term you can usually benefit from higher returns even if you have a few slip ups. Let me show you an example: These two lines are based off of placing $2,000 in a retirement fund at age of 20 and then at age of 25 start investing $6,500 a year (based off of a salary of $65,000 with a company that will 1 to 1 match up to 5% IRA contribution, presumably someone with a Master's should be able to get this) and then being able to increase your contribution amount by $150 a year as your salary begins to increase as well. The blue line assumes that all of this money that you are putting in a retirement account has a fixed 3% interest (compounded yearly for simplicity sake) every year until you retire. The red line is earning a 12% interest rate while you are 20 years old and then decreasing by 0.5% per year until you retire. Since this is using more risky investments when you are younger, I have even gone ahead and included losing 20% of your money when you are 24, another 20% when you are 29, and then again another 20% when you are 34. As you can see, even with losing 20% of your money 3 different times, you still end up with more money then you would have had if you stuck with a more conservative investment plan. If I change this to 50% each 3 times, you will still come out about equal to a more conservative investment. Now, I do have these 3 loses placed at a younger age when there is less to lose, but this is to be expected since you are being more risky when you are young. When you are closer to retirement you have less of a chance of losing money since you will be investing more conservatively. Why it is OK to be risky when you are young but not old Lets say you loose 20% of your $2,000 when you are young, you have 30-40 years to make that back. That's roughly $1 a month extra that you are having to come up with. So, if you have a risky investment go bad when you are young, you have plenty of time to account for it before you retire. Now lets say you have $1,000,000 when you are 5 years from retiring and loose 20% of it, you have to come up with an extra $3,333 a month if you want to retire on time. So, if you have a risky investment go bad when you are close to retiring, you will most likely have to work for many more years just to be able to recover from your loses. What to invest in This is a little bit more difficult question to answer. If there was one \"\"right\"\" way to invest your money, every one would be doing that one \"\"right\"\" way and would result in it not turning out to be that good of investment. What you need to do is come up with a plan for yourself. My biggest advice that I can give is to be careful with fees. Some places will charge a fixed dollar amount per trade, while others might charge a fixed dollar amount per month, while even others might charge a percentage of your investment. With only having $2,000 to invest, a large fee might make it difficult to make money.\"" }, { "docid": "430123", "title": "", "text": "\"Frankly, I was just listing off reasons that I and others might be pissed off at our landlords. Yeah, I've lived in student-focused housing too, and student rentals suck balls. Hell, that's the reason I wound up in the \"\"upscale\"\" city of Cambridge instead of living in the \"\"cheaper\"\" young-people areas of Allston or Brighton: because those places have had their rents pushed up by students *way* beyond what it's worth paying for a tiny, near-windowless, roach-infested hole built in the 1940s with rats running free in the streets. And yeah, I understand that those places suck so bad because many students are shitty tenants. But my real point was: my landlord doesn't provide me a place to live, he charges me ever-increasing rent for a place to live that he didn't build, maintains to the minimum required by the lease, and doesn't ever upgrade.\"" } ]

[ { "docid": "527776", "title": "", "text": "For tax purposes you will need to file as an employee (T4 slips and tax withheld automatically), but also as an entrepreneur. I had the same situation myself last year. Employee and self-employed is a publication from Revenue Canada that will help you. You need to fill out the statement of business activity form and keep detailed records of all your deductible expenses. Make photocopies and keep them 7 years. May I suggest you take an accountant to file your income tax form. More expensive but makes you less susceptible to receive Revenue Canada inspectors for a check-in. If you can read french, you can use this simple spreadsheet for your expenses. Your accountant will be happy." } ]

[ { "docid": "97548", "title": "", "text": "In Singapore, this is sufficiently common that the Singapore IRS has a page on their website dedicated to informing employers of how to properly pay this under Responsibilites of an Employer. Specifically, tax paid by employer is taxable income for the employee (as it's really the employee's responsibility), so they must pay tax for that tax. A tax-on-tax is computed for the tax paid, which also would be owed by the employer if they were paying the full tax rate for the employee. As a clarification, this is not the employer being truly responsible for the employee's income; this is the employer compensating the employee further to offset their taxable income. This is effectively a fringe benefit, although it may be particularly useful in countries where either tax evasion is common (and thus an employer must compete with employers willing to pay under the table) or where employers are competing with others in nearby countries with lower tax rates. It is not the same thing as the employer making your income nontaxable, though, and has implications for your tax filing. Significantly, it is likely that if you have additional income beyond income from that employer, it is likely to be taxed at your highest tax rate, as the employer will likely calculate the tax due based on their income being the only income you have in that year. *Edit based on emphasis in question: I'm not from Singapore nor am I a lawyer, but based on my reading of the IRAS website, it looks like you do not have to file if you have no other source of income, because they have a No-Filing Service which takes income information from your employer automatically and generates a tax bill, which presumably would be fully paid in your case. This only aplies if you have no other sources of income, however; you still have to file if you have other sources of income since your employer would not know about them. If you are eligible for this service, you should get a letter informing you as such. They also have a tool to check your filing status on their website." }, { "docid": "206597", "title": "", "text": "The rebate amount is a non-qualified distribution: IRS Pub 969 describes how the HSA works: Reporting Distributions on Your Return How you report your distributions depends on whether or not you use the distribution for qualified medical expenses (defined earlier). If you use a distribution from your HSA for qualified medical expenses, you do not pay tax on the distribution but you have to report the distribution on Form 8889. However, the distribution of an excess contribution taken out after the due date, including extensions, of your return is subject to tax even if used for qualified medical expenses. Follow the instructions for the form and file it with your Form 1040 or Form 1040NR. If you do not use a distribution from your HSA for qualified medical expenses, you must pay tax on the distribution. Report the amount on Form 8889 and file it with your Form 1040 or Form 1040NR. If you have a taxable HSA distribution, include it in the total on Form 1040 or Form 1040NR, line 21, and enter “HSA” and the amount on the dotted line next to line 21. You may have to pay an additional 20% tax on your taxable distribution. I looked at several plans regarding how to handle mistaken distributions: example A What if I accidentally use my HSA Visa debit card for a non-qualified expense? To fix this problem, just bring that same amount into any local branch and tell us it was a Mistaken Distribution. We can then put the funds back into your HSA and correct the problem. example B You’re allowed to correct mistaken HSA withdrawals when there is clear and convincing evidence that amounts were distributed from an HSA because of a mistake of fact due to reasonable cause. You can correct the mistake by repaying the withdrawal no later than April 15 following the first year that you knew or should have known that the withdrawal was a mistake. When a correction is made, the mistaken withdrawal does not have to be included in gross income or be subject to the 6 percent additional tax, and the repayment does not count as an excess contribution. If an error is made by SelectAccount in its role as the administrator, SelectAccount will be responsible for taking appropriate corrective action. Check with your plan trustee on their procedure to fix the mistaken withdrawal." }, { "docid": "593197", "title": "", "text": "\"Can the companies from USA give job to me (I am from New Zealand)? Job as being employee - may be tricky. This depends on the labor laws in New Zealand, but most likely will trigger \"\"nexus\"\" clause and will force the employer to register in the country, which most won't want to do. Instead you can be hired as a contractor (i.e.: being self-employed, from NZ legal perspective). If so, what are the legal documents i have to provide to the USA for any taxes? If you're employed as a contractor, you'll need to provide form W8-BEN to your US employer on which you'll have to certify your tax status. Unless you're a US citizen/green card holder, you're probably a non-US person for tax purposes, and as such will not be paying any tax in the US as long as you work in New Zealand. If you travel to the US for work, things may become tricky, and tax treaties may be needed. Will I have to pay tax to New Zealand Government? Most likely, as a self-employed. Check how this works locally. As for recommendations, since these are highly subjective opinions that may change over time, they're considered off-topic here. Check on Yelp, Google, or any local NZ professional review site.\"" }, { "docid": "107068", "title": "", "text": "I'm also a UK, Ltd company contractor that has pondered the same topic. I afraid, however, that I don't understand the maths in the original question. Mortgage interest is flat for the term of the mortgage rather than compounded, so, ignoring the tapering at the end of the lifespan of the mortgage, I get the amount of interest to something like £9,300 (7500 x 0.05 x 25). Does this make the decision any easier for you? As you point out, the total cost of this overpayment from your company account is £12,500. Using the above figure, it would take over 13 years to recoup the £5,000 difference (at £375 interest a year). I used to be of the same opinion that the mortgage should be paid off at all costs first. But now I'm coming round to the American way of thinking; £12,500 invested in a pension with a 5% yield will easily outstrip the interest saved by making the over payment - 12500 x 1.05 ^ 25 = £43,300 - over 250% better off (£43,300 / (£9,300 + £7,500)). I now make no mortgage overpayments at all and instead pay all the money into my pension. This (amongst other things) keeps me below the upper earnings tax threshold, so I'm only paying corporation tax for the money I'm drawing as dividends. There's a massive caveat to this though; I'm 49. I should be able to draw the tax free element of my pension pot in six years time and pay my mortgage off and it's quite unlikely that the government will be changing pensions policy in that time (but drawing 25% tax free has been a feature of pensions for quite some time). I can then chose to keep working or retire. If my pension is still doing well (9% ish pa at the moment), I could chose to not pay my mortgage off at all. In the next twenty or so years, however, all this could change. In your position I would do a bit of both. Make a regular overpayment to pay down your mortgage (even a small amount that you'll barely notice will make quite a difference to the end date of your mortgage - £100 a month will take years off). I didn't start paying properly into my pension until fairly recently and so If you're not already, I'd also make quite substantial, regular payments into one now, directly from your company, 15-17.5% of your gross drawings. Leaving it until later will only make it more painful. Then when you get to retirement age, no matter what, you'll have a decent pension pot. An actuary I worked with pointed out that if you pay something into a pension, when you retire you should have some sort of pot; if you pay nothing, you are absolutely guaranteed to have nothing. And finally, if you haven't already, fix your mortgage. We're three years into a five year fix. The variable rate we were going to be transferred to was 3.99%. We fixed, not because of wanting any sense of security, but because the fixed rate was 2.59% with no fee. There are much better rates than that about now. Rates are starting to rise, so it's a good time." }, { "docid": "336272", "title": "", "text": "1) Document that you held the bitcoins for more than one year. This should not be particularly difficult. Since you haven't moved the bitcoins, you hold the key to an address that has held them for more than one year. While this isn't absolute proof, it should be sufficient. 2) Since you can't document how you bought them easily, you can just assume a tax basis of zero. This will mean you will pay microscopically more in taxes, but don't worry about it. 3) Sign up with an exchange that can handle your sales. Coinbase will work if you want to sell it slowly. Gemini will work if you want to sell more quickly. 4) Get a decent, secure bitcoin wallet. Transfer the bitcoins to the exchange only as you're selling them. Make you first sale fairly small just in case something goes wrong. 5) Keep meticulous notes about each sale -- the date of the sale, the number of bitcoins you sold, and the number of dollars you got. 6) Make sure to keep enough money for taxes. In Michigan, 24.3% would be the highest possible tax rate you might have to pay if you sold a lot or had high income otherwise. 7) Either get a professional to file your taxes for you or learn how to correctly report long-term capital gains. You must report each individual sale. You may get audited or investigated, but there's nothing to find. The bitcoins have been in stasis for a long time, and it's completely plausible that you bought them and held them. If you can find any proof you bought them (such as a transfer to an exchange) that would be great, but it's not essential. Many people have this same story and unless you're connected to something illegal, you probably don't have anything to worry about. Congratulations! So thats my question, what steps do I need to take to declare this money and obtain it without getting arrested / investigated? There's nothing special you need to do other than keep very good documentation. When you file your taxes, you will need to declare each sale. (This answer assumes that you didn't have a lot of income last year and significantly less income this year. If that's the case, you may have to pay estimated taxes to avoid a penalty. But that penalty is very small and will be calculated by the IRS for you automatically. So I wouldn't worry about it.) You may wish to read up on gift taxes to understand how they work. You won't owe any, but you may need to file paperwork with the IRS if you give large gifts (over $14,000) to people and you will use up some of your lifetime exemption. Keep records of any gifts you give." }, { "docid": "406656", "title": "", "text": "\"My late answer is: Be aware of the difference of being a contractor and being an employee. I am not sure of the laws in Canada, but in the United States lots of small companies like to hire people as \"\"contractors\"\" but make them work under rules that fall into employee. The business is trying to avoid paying payroll taxes, which is fine, but make sure you know your rights and responsibilities as a contractor vs employee. You can check with your state's Bureau of Labor and Industry in the US, but I am sure wherever you are from there is a government agency to do the same thing.\"" }, { "docid": "541705", "title": "", "text": "I'm not a tax expert, but I think you mean Form 4562, right? If you acquire the laptop in the year for which you're filing taxes, then it is just that simple. (At least according to my reading of 4562 instructions, and my history of accepted tax returns where I've done this for my own business.) If, however, you acquired the laptop in a previous year and have already depreciated it previously (with the plan to spread over several years), there is more complexity I believe -- you may limited in how you could accelerate the remaining depreciation." }, { "docid": "576985", "title": "", "text": "How long you need to keep tax records will depend on jurisdiction. In general, if you discard records in a period of time less than your tax authority recommends, it may create audit problems down the road. ie: if you make a deduction supported by business expense receipts, and you discard those receipts next year, then you won't be able to defend the deduction if your tax authority audits you in 3 years. Generally, how long you keep records would depend on: (a) how much time your tax authority has to audit you; and (b) how long after you file your return you are allowed to make your own amendments. In your case (US-based), the IRS has straight-forward documentation about how long it expects you to keep records: https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records Period of Limitations that apply to income tax returns Keep records for 3 years if situations (4), (5), and (6) below do not apply to you. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return. Keep records indefinitely if you do not file a return. Keep records indefinitely if you file a fraudulent return. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. Note that the above are the minimum periods to keep records; for your own purposes you may want to keep them for longer periods than that. For example, you may be in a position to discover that you would like to refile a prior tax return, because you forgot to claim a tax credit that was available to you. If you would have been eligible to refile in that period but no longer have documentation, you are out of luck." }, { "docid": "46737", "title": "", "text": "\"If you file the long-form Form 2210 in which you have to figure out exactly how much you should have had withheld (or paid via quarterly payments of estimated tax), you might be able to reduce the underpayment penalty somewhat, or possibly eliminate it entirely. This often happens because some of your income comes late in the year (e.g. dividend and capital gain distributions from stock mutual funds) and possibly because some of your itemized deductions come early (e.g. real estate tax bills due April 1, charitable deductions early in the year because of New Year resolutions to be more philanthropic) etc. It takes a fair amount of effort to gather up the information you need for this (money management programs help), and it is easy to make mistakes while filling out the form. I strongly recommend use of a \"\"deluxe\"\" or \"\"premier\"\" version of a tax program - basic versions might not include Form 2210 or have only the short version of it. I also seem to remember something to the effect that the long form 2210 must be filed with the tax return and cannot be filed as part of an amended return, and if so, the above advice would be applicable to future years only. But you might be able to fill out the form and appeal to the IRS that you owe a reduced penalty, or don't owe a penalty at all, and that your only mistake was not filing the long form 2210 with your tax return and so please can you be forgiven this once? In any case, I strongly recommend paying the underpayment penalty ASAP because it is increasing day by day due to interest being charged. If the IRS agrees to your eloquent appeal, they will refund the overpayment.\"" }, { "docid": "305065", "title": "", "text": "First, I try to keep electronic records (with appropriate backups) whenever it seems feasible: utility bills, credit card statements, bank statements, etc. This greatly cuts down on storage space, and are kept forever. For hard copy records, it depends on the transaction. I try to balance filing time and recover time, by how likely it is that I will need to access a record in the future. I'm much less likely to need the receipt for this mornings coffee at Starbucks than I am to need the utility bill for my rental property (100%, come tax time). For instance, by default I file my credit card receipts, that don't get filed elsewhere, by year with all cards kept together, and cull them after 5-7 years. I keep all of the credit card receipts, just because it is less effort for me than making a decision about what to keep and what to discard. I put them in an accordion file by month of charge, and keep two, for the current year and previous years. At the beginning of each year, I get rid of the receipts in the oldest file and reuse it. Anything that needs to be kept longer that a couple of years gets filed separately. Certain records are kept together. For example, car repair/maintenance receipts are filed by vehicle and kept for the life of the vehicle (could be useful when its sold, to provide the repair history). All receipts for the rental property are kept together, organized by account. I'll keep these until the property is sold. All tax related receipts that don't have a specific file are kept together, by year, along with the tax return." }, { "docid": "130934", "title": "", "text": "Do I pay tax to the US and then also pay it in India for my income, or does my American partner, who holds 15% of the monthly income, pay tax in the US for his income? Of course you do, what kind of question is this? You have income earned in the US by a US entity, and the entity is taxed. Since LLC is a disregarded entity - the tax shifts to you personally. You should file form 1040NR. You should also talk to a tax professional who's proficient in the Indo-US tax treaty, since it may affect your situation." }, { "docid": "496959", "title": "", "text": "As others have said, make sure you can and do file your taxes on a cash basis (not accrual). It sounds like it's very unlikely the company is going to issue you a 1099 for invoices they never paid you. So you just file last year's taxes based on your income, which is the money you actually received. If they do pay you later, in the new year, you'll include that income on next year's tax return, and you would expect a 1099 at that time. Side note: not getting paid is unfortunately common for consultants and contractors. Take the first unpaid invoice and sue them in small claims court. After you win (and collect!), tell them you'll sue them for each unpaid invoice in turn until they pay you in full. (You might need to break up the lawsuits like that to remain under the small claims limit.)" }, { "docid": "457338", "title": "", "text": "Based on these dates in your question: Going back over my records, I was able to recall the following: Maryland realized recently that on the 2009 Federal 1040 Form you stated that on December 31 2009 you liven in Maryland. They are wondering where the state tax form is. DC, MD and VA due to reciprocity collect income tax based on where you live not where you work. So when you moved in August 2009 and again in August 2010 you needed to file new state versions of the W4. The fact you did or didn't submit to your employer a correct state W-4 is not directly related, because you would owe the tax regardless. The W-4 just makes sure that something close to the correct amounts are withheld and sent to the appropriate state capital. I seem to remember something about not having to pay Maryland state taxes since I not only lived in the state for less than 6 months but also did not work in the state. The reciprocity between DC, MD and VA says that Maryland gets the money because that is where you lived. The last time I had to do a part year the law was that they would forgive a half a month. In other words if you move in late December or early January you could ignore that small time period and avoid having to file in two states. In some cases people argue that some short term moves were never meant to be permanent. You might be able to claim that except the fact that your 2009 federal tax form you most likely claimed you lived in Maryland. The next issue is time and money. If Maryland says you owe them money for that time period, and if they still have the ability to force you to pay it; This is where the issue of correct state W-4 comes in. If the money during the period you lived in Maryland was sent to Virginia, you should have had that money refunded by Richmond in the spring of 2010. But if there was no W-4 filed with your employer that would mean that Maryland didn't get any money for 2009. If you didn't tell Richmond you moved in 2009 they may not have refunded everything because they thought you lived there all year. Because of the time that has passed it may be too late to fix your Virginia filing, so they may not refund you excess payment to them. Maryland is interested in calculating how much you should have paid them in 2009. They are only looking at what you told the feds you made, and they may be assuming that you lived there the whole year. But until you file correctly that have no ability to calculate what you really owe. You need professional advice. You need to know what they can and can't collect. You also need to know what you can and can't get back from Richmond. And since it also may impact your filings for 2010 you will want to get that resolved at the same time." }, { "docid": "139501", "title": "", "text": "\"There are a few sites out there that can give you some reasoning behind the request. LegalZoom, for instance. To quote the LZ doc in case the link dies: Employee vs. Independent Contractor If a worker is an employee, the employer is responsible for paying Social Security, unemployment insurance, Medicare, and possibly other costs like workers' compensation insurance for the employee; at the end of the tax year, the employer is responsible for compiling all necessary payroll reports, including W-2 forms. If a worker is an independent contractor, the employer is not responsible for any of the above taxes or payments, and the only added paperwork is the issuing of a 1099 to the independent contractor at the end of the tax year, if he or she has made more than $600 with the employer. As Kent suggested, you should speak with an attorney (really you need one if setting up an LLC). There are a lot of companies out there these days that try to classify people as contractors rather than full-time employees as it gets them out of paying benefits and dealing with taxes. This is being heavily cracked down on, and several \"\"contractor\"\" employees are winning lawsuits to get full-time status. If you are truly acting as a contractor, then setting up an LLC can help with a few items such as taxes and protection on certain business aspects (see comments below regarding this). It's easy and relatively cheap (cost me about $250 with extra legal advice tacked on). If you are reporting directly to a manager with the company, or really working in any way that isn't consistent with the definition of a contractor, then I'd turn down the offer and ask to be made a FT employee. Additional information: https://www.sba.gov/content/hire-contractor-or-employee\"" }, { "docid": "84310", "title": "", "text": "After that I moved to the Middle East on March 23rd, 2015 As an NRI, one should not hold any Savings account. Please have this converted to NRO Account. Additionally it is advised that you open an NRE account. Both these can be done remotely. If I transfer money from here to a non NRE/NRO account then is it taxable? Assuming its income earned when you are NRI, it is not taxable. However if there is audit enquiry you would need to have sufficient proof to back that this income is earned during your period as NRI and hence not taxable. As indicate above, holding a savings account when you are NRI is a breach of FEMA regulation. I have been getting mail from myITreturns.com to file income tax returns. Since I am considered as NRI, do I have to fill any non return form online? If there is a source of income in India, interest on savings account etc, it is taxable and you would need to file appropriate returns. Even if you have zero income, it is safe to file a NIL return. For the year 2014 do I have to file income tax returns? For the financial year 1st April 2014 to 31st March 2015, you are still a resident Indian for tax purposes. You should have filed the return by June 2015 if there was tax due, else by March 2016. If you have not done so, please do this ASAP and regularise it." }, { "docid": "395726", "title": "", "text": "Do you have a regular job, where you work for somebody else and they pay you a salary? If so, they should be deducting estimated taxes from your paychecks and sending them in to the government. How much they deduct depends on your salary and what you put down on your W-4. Assuming you filled that out accurately, they will withhold an amount that should closely match the taxes you would owe if you took the standard deduction, have no income besides this job, and no unusual deductions. If that's the case, come next April 15 you will probably get a small refund. If you own a small business or are an independent contractor, then you have to estimate the taxes you will owe and make quarterly payments. If you're worried that the amount they're withholding doesn't sound right, then as GradeEhBacon says, get a copy of last year's tax forms (or this year's if they're out by now) -- paper or electronic -- fill them out by estimating what your total income will be for the year, etc, and see what the tax comes out to be." }, { "docid": "318260", "title": "", "text": "\"Besides money and time lost, it is pretty clear that most tax advisors are not well versed in non-resident taxes. It seems that their main clients are either US residents or H1B workers (who are required to file as residents). I share your pain on this one. In fact, even for H1B/green card holders or Americans with income/property abroad vast majority of advisers will make mistakes (which may become quite costly). IRS licensing exams for EA/RTRP do not include a single question on non-resident taxation or potential issues, let alone handling treaties. Same goes for the AICPA unified CPA exam (the REG portion of which, in part, deals with taxes). I'm familiar with the recent versions of both exams and I am very disappointed and frustrated by that lack of knowledge requirement in such a crucial area (I am not a licensed tax preparer now though). That said, the issue is very complicated. I went through several advisers until I found the one I can trust to know her stuff, and while at it happened to learn quite a lot about the US tax code (which doesn't make me sleep any better by the least). It is my understanding that preparing a US tax return for a foreign person without a mistake is impossible, but the question is how big is the mistake you're going to make. I had returns prepared by solo working advisers where I found mistakes as ridiculous as arithmetic calculation errors (fired after two seasons), and by big-4 firms where I found mistakes that cost me quite a lot (although by the time I figured that they cost me significant amounts, it was too late to sue or change; fired after 2 seasons as well). As you can see, it is relevant to me as well, and I do not do my own tax returns. I usually ask for the conservative interpretations from my adviser, IRS is very aggressive on enforcement and the penalties, especially on foreigners are draconian (I do not know if it ever went through a judicial review, as I believe some of these penalties are unconstitutional under the 8th amendment, but that's my personal opinion). Bottom line - its hard to find a decent tax adviser, and that's why the good ones are expensive. You get what you pay for. How do I go about locating a CPA/EA who is well versed in non-resident taxes located in the Los Angeles area (Orange County area is not too far away either) These professionals are usually active in large metropolitan areas with a lot of foreigners. You should be able to find decent professionals in LA/OC, SF Bay, Seattle, New York, Boston, and other cities and metropolises attracting foreigners. Also, look for those working in the area of a major university. Specific points: If I find none, can I work with a quaified person who lives in a different state and have him file my taxes on my behalf (electronically or via scans going back and forth) Yes. But that person my have a problem representing you in California (in case you're audited), unless he's an EA (licensed by the Federal government, can practice everywhere) or is licensed as a CPA or Attorney by the State of California. Is there a central registry of such quaified people I can view (preferably with reviews) - akin to \"\"yellow pages\"\" IRS is planning on opening one some time this year, but until then - not really. There are some commercial sites claiming to have that, but they're using the FOIA access to the IRS and states' listings, and may not have updated information. They definitely don't have updated license statuses (or any license statuses) or language/experience information. Wouldn't trust them.\"" }, { "docid": "506108", "title": "", "text": "\"LLC is, as far as I know, just a US thing, so I'm assuming that you are in the USA. Update for clarification: other countries do have similar concepts, but I'm not aware of any country that uses the term LLC, nor any other country that uses the single-member LLC that is disregarded for income tax purposes that I'm referring to here (and that I assume the recruiter also was talking about). Further, LLCs vary by state. I only have experience with California, so some things may not apply the same way elsewhere. Also, if you are located in one state but the client is elsewhere, things can get more complex. First, let's get one thing out of the way: do you want to be a contractor, or an employee? Both have advantage, and especially in the higher-income areas, contractor can be more beneficial for you. Make sure that if you are a contractor, your rate must be considerably higher than as employee, to make up for the benefits you give up, as well as the FICA taxes and your expense of maintaining an LLC (in California, it costs at least $800/year, plus legal advice, accounting, and various other fees etc.). On the other hand, oftentimes, the benefits as an employee aren't actually worth all that much when you are in high income brackets. Do pay attention to health insurance - that may be a valuable benefit, or it may have such high deductibles that you would be better off getting your own or paying the penalty for going uninsured. Instead of a 401(k), you can set up an IRA (update or various other options), and you can also replace all the other benefits. If you decide that being an employee is the way to go, stop here. If you decide that being a contractor is a better deal for you, then it is indeed a good idea to set up an LLC. You actually have three fundamental options: work as an individual (the legal term is \"\"sole proprietorship\"\"), form a single-member LLC disregarded for income tax purposes, or various other forms of incorporation. Of these, I would argue that the single-member LLC combines the best of both worlds: taxation is almost the same as for sole proprietorship, the paperwork is minimal (a lot less than any other form of incorporation), but it provides many of the main benefits of incorporating. There are several advantages. First, as others have already pointed out, the IRS and Department of Labor scrutinize contractor relationships carefully, because of companies that abused this status on a massive scale (Uber and now-defunct Homejoy, for instance, but also FedEx and other old-economy companies). One of the 20 criteria they use is whether you are incorporated or not. Basically, it adds to your legal credibility as a contractor. Another benefit is legal protection. If your client (or somebody else) sues \"\"you\"\", they can usually only sue the legal entity they are doing business with. Which is the LLC. Your personal assets are safe from judgments. That's why Donald Trump is still a billionaire despite his famous four bankruptcies (which I believe were corporate, not personal, bankrupcies). Update for clarification Some people argue that you are still liable for your personal actions. You should consult with a lawyer about the details, but most business liabilities don't arise from such acts. Another commenter suggested an E&O policy - a very good idea, but not a substitute for an LLC. An LLC does require some minimal paperwork - you need to set up a separate bank account, and you will need a professional accounting system (not an Excel spreadsheet). But if you are a single member LLC, the paperwork is really not a huge deal - you don't need to file a separate federal tax return. Your income will be treated as if it was personal income (the technical term is that the LLC is disregarded for IRS tax purposes). California still does require a separate tax return, but that's only two pages or so, and unless you make a large amount, the tax is always $800. That small amount of paperwork is probably why your recruiter recommended the LLC, rather than other forms of incorporation. So if you want to be a contractor, then it sounds like your recruiter gave you good advice. If you want to be an employee, don't do it. A couple more points, not directly related to the question, but hopefully generally helpful: If you are a contractor (whether as sole proprietor or through an LLC), in most cities you need a business license. Not only that, but you may even need a separate business license in every city you do business (for instance, in the city where your client is located, even if you don't live there). Business licenses can range from \"\"not needed\"\" to a few dollars to a few hundred dollars. In some cities, the business license fee may also depend on your income. And finally, one interesting drawback of a disregarded LLC vs. sole proprietorship as a contractor has to do with the W-9 form and your Social Security Number. Generally, when you work for somebody and receive more than $600/year, they need to ask you for your Social Security Number, using form W-9. That is always a bit of a concern because of identity theft. The IRS also recognizes a second number, the EIN (Employer Identification Number). This is basically like an SSN for corporations. You can also apply for one if you are a sole proprietor. This is a HUGE benefit because you can use the EIN in place of your SSN on the W-9. Instant identity theft protection. HOWEVER, if you have a disregarded LLC, the IRS says that you MUST use your SSN; you cannot use your EIN! Update: The source for that information is the W-9 instructions; it specifically only excludes LLCs.\"" }, { "docid": "59686", "title": "", "text": "You're doing business in the US and derive income from the US, so I'd say that yes, you should file a non-resident tax return in the US. And in Connecticut, as well, since that's where you're conducting business (via your domestic LLC registered there). Since you paid more than $600 to your contractor, you're probably also supposed to send a 1099 to him on that account on behalf of your LLC (which is you, essentially, if you're the only member)." } ]

[ { "docid": "82744", "title": "", "text": "As someone that has run a nonprofit, my 2 cents: First: thank you for giving and for being conscientious about wanting to make things as easy as possible. The best method is the one you'll actually do. If there is a chance that you will end up not donating by check because you don't have a stamp, you forget, etc. go ahead and do it online. A donation with a fee is better than an intention without one. We had one case where a potential donor decided to give, but was so worried about the processing fee that they wanted to write a check. We followed up 3 times on the pledge, spent time following up with the pledge's connection that wanted to see if it came through, and in the end they never sent the check. Their pledge wound up costing us staff time and money as we tried to make their giving easy. If you are as likely to give, size matters. My rule of thumb is that if you are giving $1 up to about a hundred dollars, the fee (which most nonprofits can get to about 3% or 3.5%) is about the same as the added staff time opening the check, adding an extra to the deposit slip, etc. But as soon as you are giving a couple hundred dollars and especially if you are giving in the thousands, it is definitely better to do it by check. Most banks don't charge an extra deposit fee at the scale of most nonprofits, and we probably have some run to the bank happening in the next day or two. Really your thank you note should be the same whether online or by check (even though you'll get the auto-thank you online), so that time difference shouldn't really play into it. The donation will be appreciated either way. While I cringe a bit if I see a $1,500 donation come through online knowing that the check would be cheaper, that is far outweighed by the thankfulness that someone thought of us and made it happen." } ]

[ { "docid": "380786", "title": "", "text": "\"There's a lot of personal preference and personal circumstance that goes into these decisions. I think that for a person starting out, what's below is a good system. People with greater needs probably aren't reading this question looking for an answer. How many bank accounts should I have and what kinds, and how much (percentage-wise) of my income should I put into each one? You should probably have one checking account and one savings / money market account. If you're total savings are too low to avoid fees on two accounts, then just the checking account at the beginning. Keep the checking account balance high enough to cover your actual debits plus a little buffer. Put the rest in savings. Multiple bank accounts beyond the basics or using multiple banks can be appropriate for some people in some circumstances. Those people, for the most part, will have a specific reason for needing them and maybe enough experience at that point to know how many and where to get them. (Else they ask specific questions in the context of their situation.) I did see a comment about partners - If you're married / in long-term relationship, you might replicate the above for each side of the marriage / partnership. That's a personal decision between you and your partner that's more about your philosophy in the relationship then about finance specifically. Then from there, how do I portion them out into budgets and savings? I personally don't believe that there is any generic answer for this question. Others may post answers with their own rules of thumb. You need to budget based on a realistic assessment of your own income and necessary costs. Then if you have money some savings. Include a minimal level of entertainment in \"\"necessary costs\"\" because most people cannot work constantly. Beyond that minimal level, additional entertainment comes after necessary costs and basic savings. Savings should be tied to your long term goals in addition to you current constraints. Should I use credit cards for spending to reap benefits? No. Use credit cards for the convenience of them, if you want, but pay the full balance each month and don't overdo it. If you lack discipline on your spending, then you might consider avoiding credit cards completely.\"" }, { "docid": "526106", "title": "", "text": "\"It is called \"\"Credit card installments\"\" or \"\"Equal pay installments\"\", and I am not aware of them being widely used in the USA. While in other countries they are supported by banks directly (right?), in US you may find this option only in some big stores like home improvement stores, car dealerships, cell phone operators (so that you can buy a new phone) etc. Some stores allow 0% financing for, say, 12 months which is not exactly the same as installments but close, if you have discipline to pay $250 each month and not wait for 12 months to end. Splitting the big payment in parts means that the seller gets money in parts as well, and it adds risks of customer default, introduces debt collection possibility etc. That's why it's usually up to the merchants to support it - bank does not care in this case, from the bank point of view the store just charges the same card another $250 every month. In other countries banks support this option directly, I think, taking over or dividing the risk with the merchants. This has not happened in US. There is a company SplitIt which automates installments if stores want to support it but again, it means stores need to agree to it. Here is a simple article describing how credit cards work: https://www.usbank.com/credit-cards/how-credit-cards-work.html In general, if you move to US, you are unlikely to be able to get a regular credit card because you will not have any \"\"credit history\"\" which is a system designed to track each customer ability to get & pay off debt. The easiest way to build the history - request \"\"secured credit card\"\", which means you have to give the bank money up front and then they will give you a credit card with a credit limit equal to that amount. It's like a \"\"practice credit card\"\". You use it for 6-12 months and the bank will report your usage to credit bureaus, establishing your \"\"credit score\"\". After that you should be able to get your money back and convert your secured card into a regular credit card. Credit history can be also built by paying rent and utilities but that requires companies who collect money to report the payments to credit bureaus and very few do that. As anything else in US, there are some businesses which help to solve this problem for extra money.\"" }, { "docid": "452540", "title": "", "text": "If the checking account is in a FDIC insured bank or a NCUA insured Credit Union then you don't have to worry about what happens if the bank goes out of business. In the past the government has made sure that any disruption was minimal. The fraud issue can cause a bigger problem. If they get a hold of your debit card, they can drain your account. Yes the bank gives you fraud protection so that the most you can lose is $50 or $500; many even make your liability $0 if you report it in a timely manor. But there generally is a delay in getting the money put back in your account. One way to minimize the problem is to open a savings account,it also has the FDIC and NCUA coverage . The account may even earn a little interest. If you don't allow the bank to automatically provide an overdraft transfer from savings to checking account, then the most they can temporarily steal is your checking account balance. Getting a credit card can provide additional protection. It also limits your total losses if there is fraud. The bill is only paid once a month so if they steal the card or the number, they won't be able to drain the money in the bank account. The credit card, if used wisely can also start to build a positive credit file so that in a few years you can get a loan for a car or a place to live. Of course if they steal your entire wallet with both the credit and the debit card..." }, { "docid": "250166", "title": "", "text": "Definitely push for a check, they may not do anything nefarious with your credit card number however someone else may be able to read the email before it gets to its final destination. It's never safe to give out credit card number in a less than secure interface. Also, if this is a well known company, then the person interacting with you should know better than to ask for your information through email." }, { "docid": "299030", "title": "", "text": "There are lots of things to consider in addition to your questions. The rules changed in the US recently. I think you mean you will save more money. Your interest rate isn't likely to go up, but your principle will, so you will earn more interest income than before. I would wager it won't be a significant amount however. You can certainly earn a reward, either cash back, points, miles or something else. BUT the sticking point with earning things with your card is harder than before. Due to rules changes, merchants can now recuperate the fees they pay for accepting your credit card. Rewards cards have a higher fee than non-rewards cards (because banks aren't in charities). So now, depending on the merchant's choice, you could see a higher cost paying with a credit card (or a debit card) and that cost could wipe out your reward. And if your card has a fee, it has always been true that you need to evaluate the annual fee to confirm the benefit is more than paying for the fee. Additional advantages to credit cards" }, { "docid": "219033", "title": "", "text": "It is possible to not use checks in the US. I personally use a credit card for almost everything and often have no cash in my wallet at all. I never carry checks with me. If we wanted to, we could pay all of our monthly bills without checks as well, and many people do this. 30 years ago, grocery stores didn't generally accept credit cards, so it was cash or check, though most other kinds of stores and restaurants did. Now, the only stores that I have encountered in years that do not accept credit cards are a local chicken restaurant, and the warehouse-shopping store Costco. (Costco accepts its own credit card, but not Mastercard or Visa.) Still, we do pay the majority of our monthly bills via check, and it would not be shocking to see someone paying for groceries with a check. I can't name the last time I saw someone write a check at a store exactly, but I've never seen any cashier or other patrons wonder what a check-writer was trying to do. Large transactions, like buying a car or house, would still use checks -- probably cashier's or certified checks and not personal checks, though." }, { "docid": "321199", "title": "", "text": "\"When you buy something with your credit card, the store pays a fee to the credit card company, typically a base fee of 15 to 50 cents plus 2 to 3% of the purchase. At least, that's what it was a few years back when I had a tiny business and I wanted to accept credit cards. Big chain stores pay less because they are \"\"buying in bulk\"\" and have negotiating power. Just because you aren't paying interest doesn't mean the credit card company isn't making money off of you. In fact if you pay your monthly bill promptly, they're probably making MORE off of you, because they're collecting 2 or 3% for a month or less, instead of the 1 to 2% per month that they can charge in interest. The only situation I know where you can get money from a credit card company for free is when they offer \"\"convenience checks\"\" or a balance transfer with no up-front fee. I get such an offer every now and then. I presume the credit card company does that for the same reason that stores give out free samples: they hope that if you try the card, you'll continue using it. To them, it's a marketing cost, no different than the cost of putting an ad on television.\"" }, { "docid": "495962", "title": "", "text": "The first thing I would try is to take out a loan from a local credit union. If you don't know of any that you're eligible for, start looking at the National Credit Union Administration's Credit Union Locator. You should be able to get a good rate since your credit is so good. If for whatever reason you can't get the credit union loan, I would open another credit card. Try hard to get the loan though, because using a credit card will most likely be significantly more expensive. If you can't cover your cash-only expenses with cash you already have, make sure that you can get cash from the card. For example, one of my cards regularly sends me checks that I could write to myself to get cash, but be careful with this strategy. Usually the interest is much higher than normal purchases. Either way, until you've paid off this emergency debt and built up an emergency fund of 3-6 months of expenses, cut your expenses as much as possible. This Experian article has some good tips:" }, { "docid": "327366", "title": "", "text": "There is one massive catch in this which I found out when I went to Nationwide to ask for a loan. I've got a credit card which they kept increasing my credit limit, it's now at something ridiculous - nearly £10,000 but they keep increasing it. I never use that card, when I went to Nationwide though they said they couldn't give me a loan because I had £10,000 credit already and if I reduced this credit this would affect my credit rating and they could potentially give me a loan. I then realised what MBNA had craftily done. I have two cards with this bank, one with really low interest and the other with really high interest (and a high credit limit) - even though the other card has a zero balance loan companies still see it as money I could potentially go and spend, it doesn't matter to them that I've not spent any money on that card in about 12 months, to them it's the fact that they could give me a loan and then I could go and spend another £10,000 on that card (as you can see extremely risky). Of course this means that what MBNA are craftily doing is giving me such a high credit, knowing full well that I'm not going to use it, but it also prevents their competitors from offering me a loan, even at a lower rate, because I've already got too much credit available. So yes there is a catch to giving you a high credit limit on your cards and it's to prevent you from either leaving that bank or getting a lower interest rate loan out to clear the debt." }, { "docid": "547835", "title": "", "text": "For those who are looking to improve credit for the sake of being able to obtain future credit on better terms, I think a rewards credit card is the best way to do that. I recommend that you only use as many cards as you need to gain the best rewards. I have one card that gives 6% back on grocery purchases, and I have another card that gives 4% back on [petrol] and 2% back on dining out. Both of those cards give only 1% back on all other purchases, so I use a third card that gives 1.5% back across the board for my other purchases. I pay all of the cards in full each month. If there was a card that didn't give me an advantage in making my purchases, I wouldn't own it. I'm generally frugal, so I know that there is no psychological disadvantage to paying with a card. You have to consider your own spending discipline when deciding whether paying with cards is an advantage for you. In the end, you should only use debt when you can pay low interest rates (or as in the case of the cards above, no interest at all). In the case of the low interest debt, it should be allowing you to make an investment that will pay you more by having it sooner than the cost of interest. You might need a car to get to work, but you probably don't need a new car. Borrow as little as you can and repay your loans as quickly as you can. Debt can be a tool for your advantage, but only if used wisely. Don't be lured in by the temptation of something new and shiny now that you can pay for later." }, { "docid": "323310", "title": "", "text": "&gt; Try it! Deposit a check or buy with a credit card and scribble something unrelated as a signature! The deposit or credit card transaction will go through. About that you are correct, however during any sort of forensic investigation they are going to ask to see a signature receipt if one is available. &gt; For decades, retailers never compared signatures on credit cards to the person's signature. No that isn't true. Retailers are required by many card processing vendors to send in a signed receipt. This is changing, because employees are lazy, and retailers don't care about their customers at all so they don't bother enforcing any standards on their minimum wage register jockeys. However many of them are still required to send signed receipts in. When I was younger I worked at a store that would not get paid by the bank if it did not send in a signed receipt for every transaction. Go on, try walking away without signing your credit card receipt at stores where they present it for signature, and see what happens. &gt; I know what I am talking about because I deal with credit cards a lot, professionally, in IT. You and everyone else. Big deal. Different credit card processors have different requirements for their customers (merchants). &gt; The credit card companies don't really care. I think the real lesson here is **nobody cares**. Not the banks, not the credit card companies, and not the merchants. The only thing any of them give a fuck about is keeping the money flowing, especially into their own wallets, and if that means customers get ripped off sometimes because of inadequate protections, so what. My only point is, if I have one at all, **merchants _should_ care** about protecting the customer, and **customers _should_ care** about what protections are in place to prevent fraud. **PIN numbers are fine** as an authentication method, **but they should be completely shielded from view** by people standing in line or cameras overhead." }, { "docid": "585890", "title": "", "text": "You are in luck, I have an ANZ credit card as well. I have just checked my paper statement with online, and was able to find a matching online statement in less than a minute. You simply click on your credit card account from the list of accounts. Under Date Range it will have the Current incomplete statement period. You simply click on the down arrow and select the last complete date range ending sometime in late April (depending on your credit card cycle). You then press on View next to the drop down box. This should provide you with a list of purchases and payment/credits for that period, followed by a line with your Credit Limit, Available Funds and Closing Balance. The line below that then shows your Due Date, and Overdue/Overlimit, the Minimum Payment and Amount Due Now If you are after paying only the minimum amount then you pay this amount by the due date (you will be charged interest if you only pay this amount). If, on the otherhand, you wish to avoid paying any interest then you need to pay the full Closing Balance before the due date. You should also be able to get electronic statements sent to your email address." }, { "docid": "386668", "title": "", "text": "These are the things to focus on... do not put yourself in debt with a car, there are other better solutions. 1) Get a credit card (Unless you already have one) -Research this and get the best cash back or points card you can get at the best rate. - Start with buying gas and groceries every month do not run the balance up. - Pay the card off every single month. (THIS IS IMPORTANT) - Never carry a balance above 25% of your credit limit. - Every 8 months or so call your credit card company and ask for a credit line increase. They should be able to do this WITHOUT pulling your credit you are only looking for the automatic increment that they can automatically approve. This will help increase your available credit and will help keep your credit utilization low. Only do this is you are successfully doing the other bullet points above. 2) Pay all of your bills on time, this includes everything from water, electricity, phone bill, etc. never be late. Setup automatic payments if you can. 3) Minimize the number of hard credit inquiries. -This is particularly important when you are looking for your mortgage lender. Do not let them pull your credit automatically. You should be able to provide them your credit score and other information and get quotes from those lenders. Do not let them tell you then can't do this... they can. 4)Strategically plan when you close a credit line, closing them will do two things, lower your credit limit often times increasing your credit utilization, and it may hurt your average age of credit. Open one credit card and keep it forever. *Note: Credit Karma is a great tool, you should check your score monthly and see how your efforts are influencing your score. I also like Citi credit cards because they will provide you monthly with your FICO Score which Credit Karma will only provide TransUnion and Equifax. This is educational information and you should consider talking to a banker/lender who can also give you more detailed instructions on how to get your credit improved so that they can approve you for a loan. Many people can get their score above 720 in 1-2 years time going from no credit doing the steps described above. It does take time be patient and don't fall for gimmicks." }, { "docid": "509650", "title": "", "text": "\"While I agree with Ben a lot I feel like his answer is really poor here. You do not call a number to give your credit card information out for a refund. That is ridiculous. Just from his answer - he has had 5 cases of fraud lately - you should know that you shouldn't follow this advice. I personally don't ever give my credit card number over the phone, unless it is the very very very last resort. It is not just about money and safety but it is about time. Every time that you give your number out over the phone there is a chance that the employee on the other end (by either scam or legitimate business) will use or sell your info. So you need to determine if the time saved by doing a transaction over the phone is worth hours/days of your time if your card has a fraud issue. And note that fraud sometimes is easily negated, but if done smartly can be hard to prove via a quick call or email to card company. What should you do? Tell company that you will simply get the refund through your credit card company. And if we go back to time element... You fill out form on card website. Card company goes back to vendor and says - \"\"Why are you asking for card numbers via email?\"\" Card company either cancels vendor contract or more likely helps them understand the technology available so they don't have to do this. Therefore that quick form that you filled out will now keep this company from bugging you again. By going through their archaic \"\"systems\"\" you are enabling their behavior.\"" }, { "docid": "336468", "title": "", "text": "\"For a newly registered business, you'll be using your \"\"personal\"\" credit score to get the credit. You will need to sign for the credit card personally so that if your business goes under, they still get paid. Your idea of opening a business card to increase your credit score is not a sound one. Business plastic might not show up on your personal credit history. While some issuers report business accounts on a consumer's personal credit history, others don't. This cuts both ways. Some entrepreneurs want business cards on their personal reports, believing those nice high limits and good payment histories will boost their scores. Other small business owners, especially those who keep high running balances, know that including that credit line could potentially lower their personal credit scores even if they pay off the cards in full every month. There is one instance in which the card will show up on your personal credit history: if you go into default. You're not entitled to a positive mark, \"\"but if you get a negative mark, it will go on your personal report,\"\" Frank says. And some further information related to evaluating a business for a credit card: If an issuer is evaluating you for a business card, the company should be asking about your business, says Frank. In addition, there \"\"should be something on the application that indicates it's for business use,\"\" he says. Bottom line: If it's a business card, expect that the issuer will want at least some information pertaining to your business. There is additional underwriting for small business cards, says Alfonso. In addition to personal salary and credit scores, business owners \"\"can share financials with us, and we evaluate the entire business financial background in order to give them larger lines,\"\" she says. Anticipate that the issuer will check your personal credit, too. \"\"The vast majority of business cards are based on a personal credit score,\"\" says Frank. In addition, many issuers ask entrepreneurs to personally guarantee the accounts. That means even if the businesses go bust, the owners promise to repay the debts. Source\"" }, { "docid": "262895", "title": "", "text": "If it was me, I'd wait until/if you get contacted again by the collection agency. Once you do, I'd offer to settle for less. Perhaps 1000-1250 to start, and I would not go any higher than 2K. Get it in writing that this settles your debt in full, and do not give them direct access to your checking account. You can pay them by certified check or with a prepaid credit card or something. If you do the latter, throw that prepaid card away, and never use it again. You may also try to get them to agree that you do not owe the full 5K, and again get that in writing. Otherwise, you will be 1099'd for the difference between it and the amount you settle and therefore it will be treated as income. I'd stick 2k in a bank account for a while, perhaps two years, and you are free to use the remaining 3K to meet other goals. After two years, I would check my credit and see if it is still in the report. You might also choose to dispute the collection and see what happens there. If it is successful it will come off your report. Prior to a big credit decision (aka buying a home), I would check on the status of this collection. Only at that time would I contact that collection agency and again try to settle. If I contacted them, I would start the negotiations around 500 or so." }, { "docid": "435825", "title": "", "text": "Things are generally fine. A credit balance is not a horrible thing. The argument against maintaining a credit balance is that you are essentially loaning the credit card issuer money at 0% interest. You probably have alternative investments that would pay better interest, so it's usually better to park your money there. All that said, it's unlikely that the interest on whatever balance you have is enough to be more than pennies. The way that a credit card works, you run up a balance in one period. Then there is a grace period. If you don't pay off the balance during the grace period, they start charging you interest. You also may have a minimum payment to make. If you don't make that payment, they'll charge you a late fee. The typical period to rack up charges is from the first to the last day of a month. The typical grace period is through the 20th or 25th of the next month. Your card may be different. So check the documentation (user agreement) for your card if you want the real data. It sounds like you paid off some purchases while you were still in the period where you rack up charges. While those purchases were posted to the account, they may not be counted in the balance calculation. If your credit balance exactly matches the payment you made, that's probably what happened. It's also possible that you overpaid the balance. If your credit balance is just a small amount, that's probably what happened. If you really want to be sure, you should call the credit card issuer and ask them. At best we can tell you how it normally works. Since this is your first month, you could just wait for your first bill and respond to that. So long as you pay off the entire balance shown there by the deadline, everything should be fine. Don't wait until the last day to pay. It's usually best to pay a week or so early so as to leave time for the mail to deliver the check and for them to process it. You can wait longer for an online payment, but a few business days early to give you a chance to handle potential problems is still good." }, { "docid": "46433", "title": "", "text": "Most merchants (also in Europe) are reasonable, and typically are willing to work with you. credit card companies ask if you tried to work with the merchant first, so although they do not enforce it, it should be the first try. I recommend to give it a try and contact them first. If it doesn't work, you can always go to the credit card company and have the charge reversed. None of this has any effect on your credit score (except if you do nothing and then don't pay your credit card bill). For the future: when a transaction supposedly 'doesn't go through', have them write this on the receipt and give it to you. Only then pay cash. I am travelling 100+ days a year in Europe, using my US credit cards all the time, and there were never any issues - this is not a common problem." }, { "docid": "421803", "title": "", "text": "If it is a well known company that wants to give you a refund, I would not worry about giving them your credit card number. However, I would never type my credit card number into an e-mail message. E-mail messages are very insecure, and can be read by many people along its way to the destination. They also can be archived in many places, meaning that your number will continue to be posted out there for someone to grab in the future. If you need to give this company your credit card number, do it over the phone. Having said that, ultimately you are not generally responsible for fraudulent charges if your card number is stolen and misused. I've had so many fraudulent charges, despite my being relatively careful with my number, that I don't really worry much anymore about losing my number. I just check my statement for false charges, and when they happen, the bank cancels the charge and issues me a new number. It has happened to either my wife or I maybe 5 times over the last two years." } ]

[ { "docid": "161667", "title": "", "text": "This kind of questions keeps repeating itself on this site and the answer is generally it doesn't matter. As you said yourself, there are costs either way, and these costs are comparable. Generally, merchant fees differ tremendously between the different kinds of merchants, and while gas stations and video rentals may pay up to 5% and even more, charitable organizations and community services are usually not considered as high fraud risk operation and are charged much lower fees. Either way, paying employees, managing cash/check deposits or paying merchant fees is part of the charity operational expenses. Together with maintaining offices, postal office boxes, office supplies, postage expenses and formal stationary and envelopes needed for physical donations handling. I would guess that if the charity's majority of donations come on-line as credit card/paypal payments - check handling will be more expensive. So I suggest you take the route you consider majority of donors pay - that would be the cheapest for them to handle. I would guess, credit cards being the most convenient - would be the way to go." } ]

[ { "docid": "495962", "title": "", "text": "The first thing I would try is to take out a loan from a local credit union. If you don't know of any that you're eligible for, start looking at the National Credit Union Administration's Credit Union Locator. You should be able to get a good rate since your credit is so good. If for whatever reason you can't get the credit union loan, I would open another credit card. Try hard to get the loan though, because using a credit card will most likely be significantly more expensive. If you can't cover your cash-only expenses with cash you already have, make sure that you can get cash from the card. For example, one of my cards regularly sends me checks that I could write to myself to get cash, but be careful with this strategy. Usually the interest is much higher than normal purchases. Either way, until you've paid off this emergency debt and built up an emergency fund of 3-6 months of expenses, cut your expenses as much as possible. This Experian article has some good tips:" }, { "docid": "189889", "title": "", "text": "Each ATM, the machine, belongs to one or more networks. Those networks work with multiple types of cards. Each card belongs to one or more networks. The overlap of the networks the machine belongs to, and the card belongs to determines if the card works and what fees and limits apply. In general if the credit card belongs to one of the major networks (VISA, Master Card, American Express and Discover) you shouldn't have a problem finding a ATM that will give you a cash advance, or even a cash advance without an ATM Fee. Each credit card network should have a web interface to show you where the ATMs are that will work with the card. If it is a store credit card it still might belong to one of the major networks. If the bank that issues the card is local you can probably get a cash advance at the bank branch. Use the website to see if the ATM/Branch locations are convenient for you. The actual limits are a function of the card type, and the credit limit that you have been approved for. In my experience the maximum amount of cash advance outstanding is half the credit limit, but you need to check with your card. Keep in mind unless you have a special offer from the credit card company expect that there will be a fee charged by the credit card company for the cash advance, this is in addition to a fee charged by the ATM. Also remember that interest starts to accumulate on day one of the cash advance. It isn't like a regular purchase that might not be charged interest until the cycle closes and the payment is due. The documentation from the credit card company will describe all the fees and limits." }, { "docid": "294128", "title": "", "text": "\"&gt; Every credit card has a space on the back for a signature. And for decades, retailers would check the signature on your ID ... This worked for a long time, until retailers ... For decades, retailers never compared signatures on credit cards to the person's signature. Impractical and not even worth it as anyone can copy a signature on a card. Neither do banks bother to check for signature. They don't even have a \"\"signature on-file\"\" anymore. Try it! Deposit a check or buy with a credit card and scribble something unrelated as a signature! The deposit or credit card transaction will go through. I guarantee you that! **Please try it! Let me know if it did not work!** I know what I am talking about because I deal with credit cards a lot, professionally, in IT. The only sure thing is to ask for a PIN. But, alas, credit cards use a chip, so if I steall your card, I can buy with it with no problems. But not if I still your ATM card - I don't know your PIN. The PIN is in your head and I can't get it. The credit card companies don't really care.\"" }, { "docid": "456887", "title": "", "text": "&gt;&gt; Hey! Do you mind giving your credit card to the waiter... &gt; I'm not especially fond of that, but it's easy to report fraud to the bank and most of the time the bank will reverse the charges. No kidding! Of course, even I give credit cards to waiters. What do I care? **As you said, you are not liable to any fraud on your credit card.** None at all!!!! It's only Merchant, not the credit card company, that pay the price for fraud... **and you pay higher prices to cover for losses from fraud.** &gt; The PIN situation is different because a mugging is life-threatening. Nonsense! Mugging at the ATM is so rare, each ATM has a camera. **In any case, I am not talking about using PIN to withdraw money!** I am talking about PIN to authorize charges on a credit card or ATM card. &gt;&gt; We already determined that nobody even care about signatures or check them. &gt; You can't use a stolen card at an ATM with a signature. Huh? You totally got it wrong what I said, or, you argue for the sake of argument. **I am saying that cards that require you to enter a PIN cannot be used used when stolen or copied. Yes or no?** **On the other hand, cards that require signature can be used when stolen or copied because signature is a worthless method to validate the charge. Yes or no?** LASTLY, my Costco credit card has a picture of me on it. **Question for you, since for some reason you argue so much against PINs: Wouldn't a picture on the card better than a signature?** Yes or no? Do you see? There are so many ways to make this system so much more secure and fraud proof... but, ON PURPOSE, the credit card companies don't want that... because they are not liable for fraud. Simple as that." }, { "docid": "143593", "title": "", "text": "the best thing to do is file bankrupt. your credit will be shot for 7 to 10 years. however usually 3 years after the bankrupt people will give you small lines of credit. then you rebuild on the small credit lines. and never get into a bad loan again you learn from mistakes. there is no shame in a mistake if you learned from it. I rebuilt my credit by using fingerhut. small credit limit on a cap 1 credit card 300 dollars unsecured card. personal loan of 1500 dollars to buy a old clunk for a car as I did not want to have five years of car payments. you can also get a secured credit card. and build credit with that. the bank will explain how to build credit using your own money. also you should know a lot of banks like your bankrupt stat. because they no you cant file for several more years. meaning if you don't pay your loan they can garnish you and you cant file bankrupt. you can get a new car loan with good interest rate. by taking 5000 dollars of your 15000 dollars savings down on the new loan. making your new car loan have better payments cheaper and better interest. and get a secured credit card of 2000 to build towards a unsecured credit card. keep all your new credit tabs small and pay on time.i would not use all your nest egg savings. that is not smart. get a lawyer and file. stay in school you will have a fresh start and you learned about upside down loans. don't listen to people trying to tell you bankruptsy is bad. it in a lot of ways gives you the upper hand in a no win debt or debts." }, { "docid": "372107", "title": "", "text": "In some case the customer wants the name to be cryptic or misleading. They don't want to advertise the true nature of the business they visited. In other cases the transaction may be reported through another business. A few years ago the local PTA was having a silent auction as a fundraiser. A local business allowed the PTA to use their credit card reader to process transactions over a certain amount. Of course when the credit card statement arrived it looked like you spent $500 at the florist. I have seen PayPal listed when donating to some small charities. I have noted another case where confusion can occur. I used a debit card to buy a soda from a vending machine: the name and location were the name of the vending machine company and the location of their main office. It didn't say soda machine city A. It said Joe's vending company city B. In most cases the business and the credit card company want to make it easy to identify the transactions to keep the cost of research and charge backs to a minimum." }, { "docid": "321199", "title": "", "text": "\"When you buy something with your credit card, the store pays a fee to the credit card company, typically a base fee of 15 to 50 cents plus 2 to 3% of the purchase. At least, that's what it was a few years back when I had a tiny business and I wanted to accept credit cards. Big chain stores pay less because they are \"\"buying in bulk\"\" and have negotiating power. Just because you aren't paying interest doesn't mean the credit card company isn't making money off of you. In fact if you pay your monthly bill promptly, they're probably making MORE off of you, because they're collecting 2 or 3% for a month or less, instead of the 1 to 2% per month that they can charge in interest. The only situation I know where you can get money from a credit card company for free is when they offer \"\"convenience checks\"\" or a balance transfer with no up-front fee. I get such an offer every now and then. I presume the credit card company does that for the same reason that stores give out free samples: they hope that if you try the card, you'll continue using it. To them, it's a marketing cost, no different than the cost of putting an ad on television.\"" }, { "docid": "599684", "title": "", "text": "\"What they are doing is wrong. The IRS and the state might not be happy with what they are doing. One thing you can ask for them to do is to give you a credit card for business and travel expenses. You will still have to submit receipts for expenses, but it will also make it clear to the IRS that these checks are not income. Keep the pay stubs for the year, or the pdf files if they don't give you a physical stub. Pay attention to the YTD numbers on each stub to make sure they aren't sneaking in the expenses as income. If they continue to do this, ask about ownership of the items purchased, since you will be paying the tax shouldn't you own it? You can in the future tell them \"\"I was going to buy X like the customer wanted, but I just bought a new washer at home and their wasn't enough room on the credit card. Maybe next month\"\"\"" }, { "docid": "219033", "title": "", "text": "It is possible to not use checks in the US. I personally use a credit card for almost everything and often have no cash in my wallet at all. I never carry checks with me. If we wanted to, we could pay all of our monthly bills without checks as well, and many people do this. 30 years ago, grocery stores didn't generally accept credit cards, so it was cash or check, though most other kinds of stores and restaurants did. Now, the only stores that I have encountered in years that do not accept credit cards are a local chicken restaurant, and the warehouse-shopping store Costco. (Costco accepts its own credit card, but not Mastercard or Visa.) Still, we do pay the majority of our monthly bills via check, and it would not be shocking to see someone paying for groceries with a check. I can't name the last time I saw someone write a check at a store exactly, but I've never seen any cashier or other patrons wonder what a check-writer was trying to do. Large transactions, like buying a car or house, would still use checks -- probably cashier's or certified checks and not personal checks, though." }, { "docid": "297241", "title": "", "text": "\"In the normal course of events, you should receive a separate check for the amount of the purchase, and that amount should not be included in your wages as shown on your W-2 statement. If the amount is included on your paycheck, it should still be listed separately as a non-taxable item, not as part of wages paid. In other words, the IRS should not even be aware that this money was paid to you, there is no need to list the amount anywhere on your income tax return, and if you are paranoid about the matter, staple the stub attached to the reimbursement to a copy of your bank statement showing that you deposited the money into your account and save it in your file of tax papers for the year, just in case the IRS audits you and requires you to document every deposit in your checking account. The amount is a business expense that is deductible on your employer's tax return, and your employer is also required to keep documentation that the employee expense reimbursement plan is running as per IRS rules (i.e., the employer is not slipping money to you \"\"under the table\"\" as a reimbursement instead of paying you wages and thus avoiding the employer's share of FICA taxes etc) and that is why your employer needs the store receipt, not a hand-written note from you, to show the IRS if the IRS asks. You said you paid with \"\"your own cash\"\" but in case this was not meant literally and you paid via credit card or debit card or check, then any mileage award, or points, or cash back for credit card use are yours to keep tax-free, and any interest charges (if you are carrying a revolving balance or paid through your HELOC) or overdraft or bounced check fees are yours to pay.\"" }, { "docid": "180673", "title": "", "text": "I don't think there's any law against having lots of bank accounts. But what are you really gaining? Every new account is a paperwork hassle. Every new account is another target for con men who might steal your information and write bad checks or make phony credit card purchases in your name. Yes, it's not unreasonable to have a credit card or two that you keep for emergencies. I'd advise anyone with running up debts while having no idea how you will pay them off. But to say that you might keep some credit available so that if you have a legitimate emergency -- like, say, your car breaks down and you don't have the cash to fix it and you can't get to work without it -- you have some a fallback. But do you really need ten credit cards for that sort of thing? And how much credit are they giving you on each card? I don't know how the banks work this, but I'd think if they're rational, they'd consider your total credit before giving you more. I have three credit cards that I use regularly -- two personal and one business. And I find that a real pain to keep track of, to make sure that I keep each one paid by the due date and to keep a handle on how much I owe and so forth. I can't imagine trying to deal with ten. I suppose you could just stuff all these cards in a drawer and only use them in case of emergency." }, { "docid": "170248", "title": "", "text": "\"If you were making that large of a payment (via a cashiers check or other withdrawal means from a cash account) to a credit card, would the payment generate a Cash Transaction Report? Probably, yes. If it does require the bank to make a CTR, then is there any harm in that or anything to be concerned about (like that transaction appearing suspicious, personal reporting implications, etc.)? Are there any other reasons why one might want to make sure payments to a credit card are broken up made* in amounts smaller than $10K? You should be concerned if you cannot explain the source of the money (legally...). If you withdrew cash from your own account and paid your credit card with it, in case of questions asked you can show the account statement with the matching withdrawal, and you're done. The point in this report is to point at people who move around large amounts of cash. Usually, people pay credit cards with checks or ACH transactions, but if you want cash - it's your right, as long as the cash was obtained legally. But if you're paying your credit cards off with the cash you got as a bribe or by selling cocaine on the streets, then you should be worried. By the way, breaking into smaller payments may not save you from being reported to the money laundering detection agencies. The report is per transaction, not per payment, so if the credit card statement is $11K and you pay $5K and $6K - the transaction is still $11K. Also, the bank can file a report even if it is not required (it was clarified in the other answer to the same question you're referring to), if the clerk thinks the transaction is suspicious. This leaves the decision on filing a report solely on the banks \"\"common sense\"\" and internal policies which you don't know. So even paying $10 in cash may trigger a report if the bank suspects wrongdoing.\"" }, { "docid": "394928", "title": "", "text": "This depends on if you're talking Secured credit card, or prepaid debit card. There is no separate category for secured credit cards in the IIN list; however, it is possible some of them are classified as debit cards (despite not being debit cards). You may want to check with the issuer to verify this (and you can check the IIN, or the first 6 digits of the card number, in the list I link to above to verify). However, prepaid debit cards are debit cards, and are less likely to be accepted for travel, rental car, hotel, etc. types of charges (where a hold, similar to a deposit, is charged to the account). This is one of the major differences between a prepaid card, such as the kind you top up at the grocer, and a secured credit card, where you deposit some money but separately pay back the amount you charge on the card (as a regular card). Secured cards are classified as credit cards, while prepaid cards are debit cards. As mhoran notes, it's possible your credit limit could be too low to allow a hotel, airline, or rental agency to allow a transaction, but otherwise it should be fine." }, { "docid": "307767", "title": "", "text": "I would like to establish credit history - have heard it's useful to gain employment and makes it easy to rent an apartment? Higher credit scores will make it easier with landlords, that's true. As to employment - they do background checks, which means that they usually won't like bad things, but won't care about the good things or no things (they'll know you're a foreigner anyway). Is it safe to assume that this implies I have no history whatsoever? Probably, but you can verify pulling through AnnualCreditReport, don't go around giving your personal information everywhere. Is taking out a secured loan the only way for me? No, but it's one of the easiest. Better would be getting a secured Credit Card, not loan. For loan you'll have to pay interest, for a credit card (assuming you pay off all your purchases immediately) you will only pay the credit card fees (for secured credit cards they charge ~$20-100 yearly fees, so do shop around, the prices vary a lot!). If you're using it wisely, after a year it will be converted to a regular credit card and the collateral will be returned to you with interest (which is actually very competitive, last I heard it was around 2%, twice as much as the online savings accounts). As to a secured loan - you'll be paying 4% to CU for your own money. Doesn't make any sense at all for me. For credit cards you'll at least get some value for your money - convenience, additional fraud protection, etc. The end result will be the same. Usually the credit starts to build up after ~6-12 months (that's why after a year your secured CC will be converted to a regular one). Make sure to have the statement balance in the range of 10-30% of your credit limit, to get the best results. Would it make much better sense to wait till I get a job (then I would have a fixed monthly salary and can apply for a regular CC directly) You can apply, but you'll probably be rejected. As I mentioned in another answer elsewhere, the system in the US is such that you're unable to get credit if you don't already have credit. Which is kindof a magic circle, which you can break with the secured credit card as the least costly solution." }, { "docid": "502366", "title": "", "text": "\"Credit cards have three important advantages. None of them are for day-to-day borrowing of money. Safety - Credit cards have better fraud protection than checks or cash, and better than most debit/check cards. If you buy something with a credit card, you also get the issuer's (think Visa) assurances that your will get the product you paid for, or your money back. At almost any time, if a product you buy is not what you expect, you can work with the issuer, even if the store says \"\"screw you\"\". Security - Credit cards are almost universally accepted as a \"\"security\"\" against damages to the vendor. Hotels, car rentals, boat rentals etc. will accept a credit card as a means of securing their interests. Without that, you may have to make huge deposits, or not be able to rent at all. For example, in my area (touristy) you can not rent a car on debit or cash. You must use a credit card. Around here most hotel rooms require a credit card as well. This is different from area to area, but credit cards are nearly universally accepted. Emergencies - If you're using your credit card properly, then you have some extra padding when stuff goes wrong. For example, it may be cheaper to place a bill on a credit card for a couple months while you recover from a car accident, than to deplete your bank account and have to pay fees. Bonus - Some cards have perks, like miles, points, or cash back. Some can be very beneficial. You need to be careful about the rules with these bonuses. For example, some cards only give you points if you carry a balance. Some only give miles if you shop at certain stores. But if you have a good one, these can be pretty fantastic. A 3% cash back on purchases can make a large difference over time.\"" }, { "docid": "69938", "title": "", "text": "If your credit is good, you should immediately attempt to refinance your high rate credit cards by transferring the balance to credit cards with lower interest rates.You might want to check at your local credit union, credit unions can offer great rates. Use the $4000 to pay off whatever is left on the high rate cards. If your credit is bad, I suggest you call your credit card company and try to negotiate with them. If they consider you a risk they might settle your account for fraction of what you own if you can send payment immediately. Don't tell them you have money, just tell them your are trying to get your finances under control and see what they can offer you. This will damage your credit score but will get you out of depth much sooner and save you money in the long term. Also keep in mind that if they do settle, they'll close your account. That way, you leverage the $4000 and use it as a tool to get concessions from the bank." }, { "docid": "428689", "title": "", "text": "Is my understanding okay ? If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt. Which is where the credit card company can add fees so you pay more and they make more money. Don't forget that in the credit case, you are borrowing money rather than using your own. Another thing that bothers me is that the credit card apparently has a rather low credit limit. If I wanted to buy something that costs $2500 but only have a credit limit of $1500, can I make a preemptive wire from my check account to the VISA account to avoid facing the limit ? If so, what is the point for the customer of having two accounts (and two cards for that matter...) ? If you were the credit card company, do you believe people should be given large limits first? There are prepaid credit cards where you could put a dollar amount on and it would reject if the balance gets low enough. Iridium Prepaid MasterCard would be an example here that I received one last year as I was involved in the floods in my area and needed access to government assistance which was given this way. Part of the point of building up a credit history is that this is part of how one can get the credit limits increased on cards so that one can have a higher limit after demonstrating that they will pay it back and otherwise the system could be abused. There may be a risk that if you prepay onto a credit card and then want to take back the money that there may be fees involved in the transaction. Generally, with credit cards the company makes money on the fees involved for transactions which may come from merchants or yourself as a cash advance on a credit card will be charged interest right away while if you buy merchandise in a store there may not be the interest charged right away." }, { "docid": "299030", "title": "", "text": "There are lots of things to consider in addition to your questions. The rules changed in the US recently. I think you mean you will save more money. Your interest rate isn't likely to go up, but your principle will, so you will earn more interest income than before. I would wager it won't be a significant amount however. You can certainly earn a reward, either cash back, points, miles or something else. BUT the sticking point with earning things with your card is harder than before. Due to rules changes, merchants can now recuperate the fees they pay for accepting your credit card. Rewards cards have a higher fee than non-rewards cards (because banks aren't in charities). So now, depending on the merchant's choice, you could see a higher cost paying with a credit card (or a debit card) and that cost could wipe out your reward. And if your card has a fee, it has always been true that you need to evaluate the annual fee to confirm the benefit is more than paying for the fee. Additional advantages to credit cards" }, { "docid": "520998", "title": "", "text": "I would go speak to the bank manager. With Wells, you have to make sure it is the bank manager and not a service manager or something you are talking to (I learned that a few months ago). Tell her/him exactly what happened in detail and that you want the credit card closed and the credit inquiry removed from your credit report. Further, say that once all of that is done, you will decide whether to continue banking with them and whether any legal action is appropriate. If they give you any kind of push back, I'd get advice from a lawyer. The truth is they did open an account against your expressed wishes and it required them to check your credit so it does constitute fraud unless they can produce a signed document saying you agreed to the card. Edit: I just saw that this happened about a year ago. It may have been easier if you had done something at the time and may be more difficult if you've used the card in the meantime." } ]

[ { "docid": "46381", "title": "", "text": "\"The definite answer if you want to give a larger amount of money is: Ask the charity. Just drop them a mail with something like: Dear Sirs, I've decided to donate you $1,000,000 because I like what you do. Could you please tell me which option is more convenient and less costly for you? I can do either an online debit/credit card payment, send you a check by mail, or make a bank transfer [cross out whichever you can't do]. I'm looking forward to hearing from you. Yours faithfully, Even if you give \"\"just\"\" $2,000, it's surely enough to be worth for them writing you a reply and clarifying whichever way they prefer, so you don't waste neither their time nor the money this way.\"" } ]

[ { "docid": "435825", "title": "", "text": "Things are generally fine. A credit balance is not a horrible thing. The argument against maintaining a credit balance is that you are essentially loaning the credit card issuer money at 0% interest. You probably have alternative investments that would pay better interest, so it's usually better to park your money there. All that said, it's unlikely that the interest on whatever balance you have is enough to be more than pennies. The way that a credit card works, you run up a balance in one period. Then there is a grace period. If you don't pay off the balance during the grace period, they start charging you interest. You also may have a minimum payment to make. If you don't make that payment, they'll charge you a late fee. The typical period to rack up charges is from the first to the last day of a month. The typical grace period is through the 20th or 25th of the next month. Your card may be different. So check the documentation (user agreement) for your card if you want the real data. It sounds like you paid off some purchases while you were still in the period where you rack up charges. While those purchases were posted to the account, they may not be counted in the balance calculation. If your credit balance exactly matches the payment you made, that's probably what happened. It's also possible that you overpaid the balance. If your credit balance is just a small amount, that's probably what happened. If you really want to be sure, you should call the credit card issuer and ask them. At best we can tell you how it normally works. Since this is your first month, you could just wait for your first bill and respond to that. So long as you pay off the entire balance shown there by the deadline, everything should be fine. Don't wait until the last day to pay. It's usually best to pay a week or so early so as to leave time for the mail to deliver the check and for them to process it. You can wait longer for an online payment, but a few business days early to give you a chance to handle potential problems is still good." }, { "docid": "305954", "title": "", "text": "\"There is no way to stop any merchant from setting a recurring charge flag on a purchase. According to the following article, Mastercard and Visa encourages merchants to use this feature and even give them a better rate. I have found it impossible to stop these unauthorized transactions. The article sites that the merchant is allowed to march the charges across expired cards to find a good card that you might have as well as the article states they can cross banks to find you if you have the same type of card. Virtual account numbers will not protect you. Sorry but the only solution I have found is to close the account with the bank and move to a different type of card, mastercard to visa, or vice versa. This will only protect you for one move ,because if you have to do this again. Merchants that you thought were forgotten even years later will find you and post a charge legally. Virtual numbers from Mastercard or Visa won't stop them. I believe this is the number one reason for credit card fraud for consumers. There is no reason for a merchant to let anyone off the hook when the credit card company will side with them. The article below does state that Mastercard does have a \"\"stop recurring payment\"\" flag. Apparently no CSR tht I have talked to knows about it when I have asked to get a problem fixed. I have found that the only way to stop these charges from happening is to close all my visa and mastercard credit cards, pay with a check that you write and mail or a PayPal one time payment that is sent to pay for an invoice. Recurring Credit-Card Charges May Irk Consumers\"" }, { "docid": "321199", "title": "", "text": "\"When you buy something with your credit card, the store pays a fee to the credit card company, typically a base fee of 15 to 50 cents plus 2 to 3% of the purchase. At least, that's what it was a few years back when I had a tiny business and I wanted to accept credit cards. Big chain stores pay less because they are \"\"buying in bulk\"\" and have negotiating power. Just because you aren't paying interest doesn't mean the credit card company isn't making money off of you. In fact if you pay your monthly bill promptly, they're probably making MORE off of you, because they're collecting 2 or 3% for a month or less, instead of the 1 to 2% per month that they can charge in interest. The only situation I know where you can get money from a credit card company for free is when they offer \"\"convenience checks\"\" or a balance transfer with no up-front fee. I get such an offer every now and then. I presume the credit card company does that for the same reason that stores give out free samples: they hope that if you try the card, you'll continue using it. To them, it's a marketing cost, no different than the cost of putting an ad on television.\"" }, { "docid": "317934", "title": "", "text": "By handicap - I believe we should have a very simple safety net bimonthly check to help their guardians pay for their housing/food/healthcare. We should aim for this to be as small as possible while still covering everything and have the majority of pay be from charity. Lack of skills - nothing. They need to learn skills to survive just like everyone else. If you steal from the skillful to give to them there will be no incentive to learn skills and we will have less productive people in the country which leads to more poverty and lower standard of livings. It's also not moral to steal from one able person to give to another." }, { "docid": "108001", "title": "", "text": "It used to be quite easy for students to get credit cards. When I was in college in the early 1980s, credit card companies set up tables in the student center and offered low-limit cards along with free t-shirts on an almost daily schedule. The Credit CARD Act of 2009 made this much more difficult for banks. If you have a bank or credit union account, the first thing I would do is talk to them about getting a card. Some banks offer a VISA Student Card specifically for college students. My daughter was able to get one when she turned 18, just before starting college. The credit limit is very low ($200 for freshmen, increasing each year until the limit is $500 during senior year). After graduation, it converts to a regular VISA account with a limit that depends on post-graduation income and the now established 4 years of credit history. The VISA web site has a list of banks offering this type of card. Now I will give you the same unsolicited advice I gave my daughter, and the same advice I think most others here would give you. For building credit, this kind of card is excellent, but you should still use it very sparingly, and pay off the balance every month. Make it a hard rule to never pay interest on a credit card bill. I told her to charge perhaps one or two purchases totaling no more than $25-$50 each month, and pay them off as soon as the statement arrives. This is much easier if you have a deposit account at the same bank, since you will be able to pay the bill instantly on line. Have your employer direct deposit your paychecks into that bank account, if at all possible." }, { "docid": "316652", "title": "", "text": "I stopped using pre-authorized payments for things like telephone etc., because it made it more possible/likely for a fraudulent charge to sneak by. But if there is an occasion for choosing pre-authorized payments (like charities, and places of exact fixed price) I use my credit card because then I also get points. Furthermore, I reason (perhaps wrongly) that if there is intermediary step between actual money (bank account) and the source of the bill then it gives me better chance of catching irregularities and hence a little safer. I am sure other members here will laugh my naivety, but there you have it." }, { "docid": "323310", "title": "", "text": "&gt; Try it! Deposit a check or buy with a credit card and scribble something unrelated as a signature! The deposit or credit card transaction will go through. About that you are correct, however during any sort of forensic investigation they are going to ask to see a signature receipt if one is available. &gt; For decades, retailers never compared signatures on credit cards to the person's signature. No that isn't true. Retailers are required by many card processing vendors to send in a signed receipt. This is changing, because employees are lazy, and retailers don't care about their customers at all so they don't bother enforcing any standards on their minimum wage register jockeys. However many of them are still required to send signed receipts in. When I was younger I worked at a store that would not get paid by the bank if it did not send in a signed receipt for every transaction. Go on, try walking away without signing your credit card receipt at stores where they present it for signature, and see what happens. &gt; I know what I am talking about because I deal with credit cards a lot, professionally, in IT. You and everyone else. Big deal. Different credit card processors have different requirements for their customers (merchants). &gt; The credit card companies don't really care. I think the real lesson here is **nobody cares**. Not the banks, not the credit card companies, and not the merchants. The only thing any of them give a fuck about is keeping the money flowing, especially into their own wallets, and if that means customers get ripped off sometimes because of inadequate protections, so what. My only point is, if I have one at all, **merchants _should_ care** about protecting the customer, and **customers _should_ care** about what protections are in place to prevent fraud. **PIN numbers are fine** as an authentication method, **but they should be completely shielded from view** by people standing in line or cameras overhead." }, { "docid": "264631", "title": "", "text": "\"Transferring the balance of a credit card is what they call moving your debt from one credit card to another credit card or loan. A debit card, however, is not debt. It is a card that is tied to a checking account with money in it. You can't transfer debt to your checking account. If you have enough money in your checking account to cover the balance of your credit card, you can pay it off. That is a really good thing to do, because the balance on your credit card is costing you a lot in interest charges each month. Were you perhaps thinking of \"\"transferring a balance\"\" from your debit card's checking account to a new credit card, where you would then have a new debt on the credit card, and extra cash in your debit card's checking account? This is possible with most credit cards, and is usually called a cash advance. However, just to caution you, cash advances typically have high interest rates. Often you will see promotions where they will offer low (or no) interest rate for a short time, but this is just a trick to entice you to borrow extra, knowing that if you need the money now, you'll most likely still need it in 6 months when the promotion expires. I don't recommend it.\"" }, { "docid": "495962", "title": "", "text": "The first thing I would try is to take out a loan from a local credit union. If you don't know of any that you're eligible for, start looking at the National Credit Union Administration's Credit Union Locator. You should be able to get a good rate since your credit is so good. If for whatever reason you can't get the credit union loan, I would open another credit card. Try hard to get the loan though, because using a credit card will most likely be significantly more expensive. If you can't cover your cash-only expenses with cash you already have, make sure that you can get cash from the card. For example, one of my cards regularly sends me checks that I could write to myself to get cash, but be careful with this strategy. Usually the interest is much higher than normal purchases. Either way, until you've paid off this emergency debt and built up an emergency fund of 3-6 months of expenses, cut your expenses as much as possible. This Experian article has some good tips:" }, { "docid": "11082", "title": "", "text": "\"You have what is called in the biz a \"\"thin file\"\". Check with a Credit Union. They will get you a secured card or maybe a straight credit card. They usually will graduate you from a secured card to a real credit card in 12-18 months. Then you are on your way. You should also sign up for Creditkarma to get your credit report updated every week. They make their money on referring people to credit card companies so you might be able to kill two birds with one stone.\"" }, { "docid": "478807", "title": "", "text": "\"What you are describing sounds a lot like the way we handle our household budget. This is possible, but quite difficult to do with an Excel spreadsheet. It is much easier to do with dedicated budgeting software designed for this purpose. When choosing personal budgeting software, I've found that the available packages fall in two broad categories: Some packages take what I would call a proactive approach: You enter in your bank account balances, and assign your money into spending categories. When you deposit your paycheck, you do the same thing: you add this money to your spending categories. Then when you spend money, you assign it to a spending category, and the software keeps track of your category balances. At any time, you can see both your bank balances and your spending category balances. If you need to spend money in a category that doesn't have any more money, you'll need to move money from a different category into that one. This approach is sometimes called the envelope system, because it resembles a digital version of putting your cash into different envelopes with different purposes. A few examples of software in this category are You Need a Budget (YNAB), Mvelopes, and EveryDollar. Other packages take more of a reactive approach: You don't bother assigning a job to the money already in your bank account. Instead, you just enter your monthly income and put together a spending plan. As you spend money, you assign the transactions to a spending category, and at the end of the month, you can see what you actually spent vs. what your plan was, and try to adjust your next budget accordingly. Software that takes this approach includes Quicken and Mint.com. I use and recommend the proactive approach, and it sounds from your question like this is the approach that you are looking for. I've used several different budgeting software packages, and my personal recommendation is for YNAB, the software that we currently use. I don't want this post to sound too much like a commercial, but I believe it will do everything you are looking for. One of the great things about the proactive approach, in my opinion, is how credit card accounts are handled. Since your spending category balances only include real money actually sitting in an account (not projected income for the month), when you spend money out of a category with your credit card, the software deducts the money from the spending category immediately, as it is already spent. The credit card balance goes negative. When the credit card bill comes and you pay it, this is handled in the software as an account transfer from your checking account to your credit card account. The money in the checking account is already set aside for the purpose of paying your credit card bill. Dedicated budgeting software generally has a reconcile feature that makes verifying your bank statements very easy. You just enter the date of your bank statement and the balance, and then the software shows you a list of the transactions that fall in those dates. You can check each one against the transactions on the statement, editing the ones that aren't right and adding any that are missing from the software. After everything checks out, the software marks the transactions as verified, so you can easily see what has cleared and what hasn't. Let me give you an example to clarify, in response to your comment. This example is specific to YNAB, but other software using the same approach would work in a similar way. Let's say that you have a checking account and a credit card account. Your checking account, named CHECKING, has $2,000 in it currently. Your credit card currently has nothing charged on it, because you've just paid your bill and haven't used it yet this billing period. YNAB reports the balance of your credit card account (we'll call this account CREDITCARD), as $0. Every dollar in CHECKING is assigned to a category. For example, you've got $200 in \"\"groceries\"\", $100 in \"\"fast food\"\", $300 in \"\"rent\"\", $50 in \"\"phone\"\", $500 in \"\"emergency fund\"\", etc. If you add up the balance of all of your categories, you'll get $2,000. Let's say that you've written a check to the grocery store for $100. When you enter this in YNAB, you tell it the name of the store, the account that you paid with (CHECKING), and the category that the expense belongs to (groceries). The \"\"groceries\"\" category balance will go down from $200 to $100, and the CHECKING account balance will go down from $2,000 to $1,900. Now, let's say that you've spent $10 on fast food with your credit card. When you enter this in YNAB, you tell it the name of the restaurant, the account that you paid with (CREDITCARD), and the category that the expense belongs to (fast food). YNAB will lower the \"\"fast food\"\" category balance from $100 to $90, and your CREDITCARD account balance will go from $0 to $-10. At this point, if you add up all the category balances, you'll get $1,890. And if you add up your account balances, you'll also get $1,890, because CHECKING has $1,900 and CREDITCARD has $-10. If you get your checking account bank statement at this time, the account balance of $1,900 should match the statement and you'll see the payment to the grocery store, assuming the check has cleared. And if the credit card bill comes now, you'll see the fast food purchase and the balance of $-10. When you write a check to pay this credit card bill, you enter this in YNAB as an account transfer of $10 from CHECKING to CREDITCARD. This transfer does not affect any of your category balances; they remain the same. But now your CHECKING account balance is down to $1,890, and CREDITCARD is back to $0. This works just as well whether you have one checking account and one credit card, or 2 checking accounts, 2 savings accounts, and 3 credit cards. When you want to spend some money, you look at your category balance. If there is money in there, then the money is available to spend somewhere in one of your accounts. Then you pick an account you want to pay with, and, looking at the account balance, if there isn't enough money in that account to pay it, you just need to move some money from another account into that one, or pick a different account. When you pay for an expense with a credit card, the money gets deducted from the category balances immediately, and is no longer available to spend on something else.\"" }, { "docid": "246896", "title": "", "text": "There is no central government signature database. (at least not in the US, and at least not yet) For debit and credit card transactions, the merchant may check the signature on your reciept against the signature on back of the card. This is intended to verify that you didn't steal the card. So, if you want to change the signature on the back of the card, all you need to do is get a new card and re-sign it. Your card has an expiration date. When that happens, you will get a new card to re-sign. If your card expires soon, you can just wait. If you are impatient, you can call your bank and ask for a new card. If they give you a lot of grief about issuing a new card (it is an unusual request), you can tell them you lost your card and need a new one. In that case they will typically disable the old card and issue a new one with a new account number. Note that if you want to change how you sign your name, there are some other places you should also update: Also, keep in mind that people's signatures naturally drift over time. This fact is generally understood and accepted by people who check signatures." }, { "docid": "336468", "title": "", "text": "\"For a newly registered business, you'll be using your \"\"personal\"\" credit score to get the credit. You will need to sign for the credit card personally so that if your business goes under, they still get paid. Your idea of opening a business card to increase your credit score is not a sound one. Business plastic might not show up on your personal credit history. While some issuers report business accounts on a consumer's personal credit history, others don't. This cuts both ways. Some entrepreneurs want business cards on their personal reports, believing those nice high limits and good payment histories will boost their scores. Other small business owners, especially those who keep high running balances, know that including that credit line could potentially lower their personal credit scores even if they pay off the cards in full every month. There is one instance in which the card will show up on your personal credit history: if you go into default. You're not entitled to a positive mark, \"\"but if you get a negative mark, it will go on your personal report,\"\" Frank says. And some further information related to evaluating a business for a credit card: If an issuer is evaluating you for a business card, the company should be asking about your business, says Frank. In addition, there \"\"should be something on the application that indicates it's for business use,\"\" he says. Bottom line: If it's a business card, expect that the issuer will want at least some information pertaining to your business. There is additional underwriting for small business cards, says Alfonso. In addition to personal salary and credit scores, business owners \"\"can share financials with us, and we evaluate the entire business financial background in order to give them larger lines,\"\" she says. Anticipate that the issuer will check your personal credit, too. \"\"The vast majority of business cards are based on a personal credit score,\"\" says Frank. In addition, many issuers ask entrepreneurs to personally guarantee the accounts. That means even if the businesses go bust, the owners promise to repay the debts. Source\"" }, { "docid": "93271", "title": "", "text": "If we're including psychological considerations, then the question becomes much more complicated: will having a higher available credit increase the temptation to spend? Will eliminating 100% of a small debt provide more positive reinforcement than paying off 15% of a larger debt? Etc. If we're looking at the pure financial impact, the question is simpler. The only advantage I see to prioritizing the lower interest card is the float: when you buy something on a credit card, interest is often calculated for that purchase starting at the beginning of the next billing cycle, rather than immediately from the purchase date. I'm not clear on what policies credit card companies have on giving float for credit cards with a carried balance, so you should look into what your card's policy is. Other than than, paying off the higher interest rate card is better than paying off the lower interest rate. On top of that, you should look into whether you qualify for any of the following options (presented from best to worst):" }, { "docid": "264271", "title": "", "text": "This might be blasphemy in the context of an audience that may be most focused on the gift itself, but you should be donating in a manner that helps advance the landscape, as well as your particular favourite charity. Almost 90% of businesses are in the process of trying to move away from issuing and receiving checks, and several countries in the world have already stopped using them. Checks are inefficient, costly and in a resource constrained environment like that facing most charities, create an opportunity cost that is even higher than the manual processing cost that flows directly. As donors, we need to think about scale in a manner that many individual charities don't. Send your donation via ACH!" }, { "docid": "85252", "title": "", "text": "\"In this answer, I won't elaborate on the possibilities of fraud (or pure human error), because something can always go wrong. I will, however, explain why I think you should always keep receipts. When the (monthly or so) time comes to pay your credit card bill, your credit card company sends you a list of transactions. That list has two primary purposes, both of which I would consider equally important: While for the former item, a receipt is not necessary (though it certainly does not hurt showing the receipt along with the bill to provide further proof that the payment was indeed connected to that bill), the latter point does require you to store the receipts so you can check, item-by-item, whether each of the sums is correct (and matched with a receipt at all). So, unless you can actually memorize all the credit card transactions you did throughout the past one or two months, the receipts are the most convenient way of keeping that information until the bill arrives. Yes, your credit card company probably has some safeguards in place to reveal fraud, which might kick in in time (the criteria are mostly heuristical, it seems, with credit cards or legitimate transactions here getting blocked every now and then simply because some travelling of the actual owner was misinterpreted as theft). However, it is your money, it is your responsibility to discover any issues with the bill, just as you would check the monthly transaction list from your bank account line by line. Ultimately, that is why you sign the vendor copy of the receipt when buying something offline; if you discover an issue in your list of transactions, you have to notify your credit card company that you dispute one of the charges, and then the charging vendor has to show that they have your signature for the respective transaction. So, to summarize: Do keep your receipts, use them to check the list of transactions before paying your credit card bill. EDIT: The receipt often cannot be replaced with the bill from the vendor. The bill is useful for seeing how the sum charged by the respective vendor was created, but in turn, such bills often do not contain any payment information, or (when payment was concluded before the bill was printed, as sometimes happens in pre-paid scenarios such as hotel booking) nondescript remarks such as \"\"- PAYMENT RECEIVED -\"\", without any further indication of which one of your credit cards, debit cards, bank accounts, stored value cards, or cash was used.\"" }, { "docid": "170248", "title": "", "text": "\"If you were making that large of a payment (via a cashiers check or other withdrawal means from a cash account) to a credit card, would the payment generate a Cash Transaction Report? Probably, yes. If it does require the bank to make a CTR, then is there any harm in that or anything to be concerned about (like that transaction appearing suspicious, personal reporting implications, etc.)? Are there any other reasons why one might want to make sure payments to a credit card are broken up made* in amounts smaller than $10K? You should be concerned if you cannot explain the source of the money (legally...). If you withdrew cash from your own account and paid your credit card with it, in case of questions asked you can show the account statement with the matching withdrawal, and you're done. The point in this report is to point at people who move around large amounts of cash. Usually, people pay credit cards with checks or ACH transactions, but if you want cash - it's your right, as long as the cash was obtained legally. But if you're paying your credit cards off with the cash you got as a bribe or by selling cocaine on the streets, then you should be worried. By the way, breaking into smaller payments may not save you from being reported to the money laundering detection agencies. The report is per transaction, not per payment, so if the credit card statement is $11K and you pay $5K and $6K - the transaction is still $11K. Also, the bank can file a report even if it is not required (it was clarified in the other answer to the same question you're referring to), if the clerk thinks the transaction is suspicious. This leaves the decision on filing a report solely on the banks \"\"common sense\"\" and internal policies which you don't know. So even paying $10 in cash may trigger a report if the bank suspects wrongdoing.\"" }, { "docid": "304669", "title": "", "text": "&gt; If a crook standing behind me in line seems me enter my pin Easy to prevent with a cover over your fingers. Hey! Do you mind giving your credit card to the waiter... who takes it to the back of the restaurant... gods knows what he does with YOUR credit card. writing down the number... scanning it... copying it... I am sure the waiter has a clean background... never ever ex-criminals get hired as waiters... high standards for waiters... and then the waiter give the card back to you so you can tip him? Don't forget to sign the receipt... so the waiter also have your most recent signature. Or, do you prefer the card in your hand, while you scan it and then enter a PIN on a mobile device you hold in your hand? How much fraud with ATM cards versus credit cards? &gt; If he sees me sign my name he's less likely to do that. We already determined that nobody even care about signatures or check them. Have you EVER have a case that your signature was questioned? No? Well, try an experiment in the next week: always sign with a totally new and made-up signature. Then, let me know if even one transaction was rejected." }, { "docid": "111466", "title": "", "text": "When you start living in US, it doesn't actually matter what was your Credit history in another country. Your Credit History in US is tied to your SSN (Social Security Number), which will be awarded once you are in the country legally and apply for it. Getting an SSN also doesn't guarantee you nothing and you have to build your credit history slowly. Opening a Checking or Savings account will not help you in building a credit history. You need to have some type of Credit Account (credit card, car loan, mortgage etc.) linked to your SSN to start building your credit history. When you are new to US, you probably won't find any bank that will give you a Credit Card as you have no Credit history. One alternative is to apply for a secured credit card. A secured credit card is one you get by putting money or paying money to a bank and open a Credit Card against that money, thereby the bank can be secure that they won't lose any money. Once you have that, you can use that to build up your credit history slowly and once you have a good credit history and score, apply for regular Credit Card or apply for a car loan, mortgage etc. When I came to US 8 years ago, my Credit History was nothing, even though I had pretty good balance and credit history back in my country. I applied for secured credit card by paying $500 to a bank ( which got acquired by CapitalOne ), got it approved and used it for everything, for three years. I applied for other cards in the mean time but got rejected every time. Finally got approved for a regular credit card after three years and in one year added a mortgage and car loan, which helped me to get a decent score now. And Yes, a good Credit Score is important and essential for renting an apartment, leasing a car, getting a Credit Card etc. but normally your employer can always arrange for an apartment given your situation or you need to share apartment with someone else. You can rent a car without and credit score, but need a valid US / International Drivers license and a Credit Card :-) Best option will be to open a secured credit card and start building your credit. When your wife and family arrives, they also will be assigned individual SSN and can start building their credit history themselves. Please keep in mind that Credit Score and Credit History is always individual here..." } ]

[ { "docid": "390089", "title": "", "text": "In the US, if it's a large donation to a tax-exempt organization (401c3 or equivalent), you may want to consider giving appreciated equities (stocks, bonds, mutual fund shares which are now worth more than you paid for them). You get to claim the deduction's value at the time you transfer it to their account, and you avoid capital gains tax. They would pay the capital-gains tax when they redeem it for cash... but if exempt, they get the full value and the tax is completely avoided. Effectively, your donation costs you less for the same impact. It does take a bit of work to coordinate this with the receiving organization, and there may be brokerage fees, so it probably isn't worth doing for small sums.)Transfers within the same brokerage house may avoid those feee.) So again, you should talk to the charity about what's best. But for larger donations, where larger probably starts at a few thou, it can save you a nice chunk of change." } ]

[ { "docid": "290714", "title": "", "text": "Pulling money out of a credit card is generally a bad idea. You'll be hit with interest from day 1, and some credit cards have cash advance fees on top of that. If you are really desperate for running up an automatic charge on your credit card to maintain use, then you have a few options: Personally, the charity route makes the most sense to me. You can probably set up an automatic donation of less than 5 quid, and it may be tax deductible to boot. Plus, you're helping an organization that (hopefully) is doing some good in the world." }, { "docid": "423569", "title": "", "text": "I wouldn't worry about his credit score. The hit from a credit inquiry is not that big and it's absolutely worth it in the long run. I suggest you sign him up for a free budgeting app (just google budgeting app) that will help him not only take control of his spending but also help him with his loans. Transferring debt comes with a few caveats: His credit score is bad so I don't know if he'll be able to get 0% loan, but even if he gets 6% - 8% that will save him money; just don't forget about the transfer fee. If he has checking/savings account it's worth talking to that bank first - they might be able to give him a better deal for being their customer. Also if he tells them his story and credit score they might be able to give him an idea what they can offer him without doing a credit check. Another option is to become a member of a local credit union - they have great rates on loans / credit cards. Credit card or personal loan doesn't matter much, whatever he can get. With his credit score I doubt he'll be able to get a good rate at Chase or one of the other big credit card companies. Good luck." }, { "docid": "304669", "title": "", "text": "&gt; If a crook standing behind me in line seems me enter my pin Easy to prevent with a cover over your fingers. Hey! Do you mind giving your credit card to the waiter... who takes it to the back of the restaurant... gods knows what he does with YOUR credit card. writing down the number... scanning it... copying it... I am sure the waiter has a clean background... never ever ex-criminals get hired as waiters... high standards for waiters... and then the waiter give the card back to you so you can tip him? Don't forget to sign the receipt... so the waiter also have your most recent signature. Or, do you prefer the card in your hand, while you scan it and then enter a PIN on a mobile device you hold in your hand? How much fraud with ATM cards versus credit cards? &gt; If he sees me sign my name he's less likely to do that. We already determined that nobody even care about signatures or check them. Have you EVER have a case that your signature was questioned? No? Well, try an experiment in the next week: always sign with a totally new and made-up signature. Then, let me know if even one transaction was rejected." }, { "docid": "435825", "title": "", "text": "Things are generally fine. A credit balance is not a horrible thing. The argument against maintaining a credit balance is that you are essentially loaning the credit card issuer money at 0% interest. You probably have alternative investments that would pay better interest, so it's usually better to park your money there. All that said, it's unlikely that the interest on whatever balance you have is enough to be more than pennies. The way that a credit card works, you run up a balance in one period. Then there is a grace period. If you don't pay off the balance during the grace period, they start charging you interest. You also may have a minimum payment to make. If you don't make that payment, they'll charge you a late fee. The typical period to rack up charges is from the first to the last day of a month. The typical grace period is through the 20th or 25th of the next month. Your card may be different. So check the documentation (user agreement) for your card if you want the real data. It sounds like you paid off some purchases while you were still in the period where you rack up charges. While those purchases were posted to the account, they may not be counted in the balance calculation. If your credit balance exactly matches the payment you made, that's probably what happened. It's also possible that you overpaid the balance. If your credit balance is just a small amount, that's probably what happened. If you really want to be sure, you should call the credit card issuer and ask them. At best we can tell you how it normally works. Since this is your first month, you could just wait for your first bill and respond to that. So long as you pay off the entire balance shown there by the deadline, everything should be fine. Don't wait until the last day to pay. It's usually best to pay a week or so early so as to leave time for the mail to deliver the check and for them to process it. You can wait longer for an online payment, but a few business days early to give you a chance to handle potential problems is still good." }, { "docid": "299030", "title": "", "text": "There are lots of things to consider in addition to your questions. The rules changed in the US recently. I think you mean you will save more money. Your interest rate isn't likely to go up, but your principle will, so you will earn more interest income than before. I would wager it won't be a significant amount however. You can certainly earn a reward, either cash back, points, miles or something else. BUT the sticking point with earning things with your card is harder than before. Due to rules changes, merchants can now recuperate the fees they pay for accepting your credit card. Rewards cards have a higher fee than non-rewards cards (because banks aren't in charities). So now, depending on the merchant's choice, you could see a higher cost paying with a credit card (or a debit card) and that cost could wipe out your reward. And if your card has a fee, it has always been true that you need to evaluate the annual fee to confirm the benefit is more than paying for the fee. Additional advantages to credit cards" }, { "docid": "264932", "title": "", "text": "\"I linked my bank account (by making a transfer from bank account to Paypal) without linking a card. This should not give Paypal any rights to do anything with my bank account - transfer that I made to link it was exactly the same as any other outgoing transfer from my bank account. On attempting to pay more that resides in my Paypal balance I get To pay for this purchase right now, link a debit or credit card to your PayPal account. message. Paypal is not mentioning it but one may also transfer money to Paypal account form bank to solve this problem. Note, that one may give allow Paypal to access bank account - maybe linking a card will allow this? Paypal encourages linking card but without any description of consequences so I never checked this. It is also possible that Paypal gained access to your bank balance in other way - for example in Poland it just asked for logins and passwords to bank accounts (yes, using \"\"Add money instantly using Trustly\"\" in Poland really requires sharing full login credentials to bank account - what among other things breaks typical bank contract) source for \"\"Paypal attempts phishing\"\": https://niebezpiecznik.pl/post/uwaga-uzytkownicy-paypala-nie-korzystajcie-z-najnowszej-funkcji-tego-serwisu/\"" }, { "docid": "380786", "title": "", "text": "\"There's a lot of personal preference and personal circumstance that goes into these decisions. I think that for a person starting out, what's below is a good system. People with greater needs probably aren't reading this question looking for an answer. How many bank accounts should I have and what kinds, and how much (percentage-wise) of my income should I put into each one? You should probably have one checking account and one savings / money market account. If you're total savings are too low to avoid fees on two accounts, then just the checking account at the beginning. Keep the checking account balance high enough to cover your actual debits plus a little buffer. Put the rest in savings. Multiple bank accounts beyond the basics or using multiple banks can be appropriate for some people in some circumstances. Those people, for the most part, will have a specific reason for needing them and maybe enough experience at that point to know how many and where to get them. (Else they ask specific questions in the context of their situation.) I did see a comment about partners - If you're married / in long-term relationship, you might replicate the above for each side of the marriage / partnership. That's a personal decision between you and your partner that's more about your philosophy in the relationship then about finance specifically. Then from there, how do I portion them out into budgets and savings? I personally don't believe that there is any generic answer for this question. Others may post answers with their own rules of thumb. You need to budget based on a realistic assessment of your own income and necessary costs. Then if you have money some savings. Include a minimal level of entertainment in \"\"necessary costs\"\" because most people cannot work constantly. Beyond that minimal level, additional entertainment comes after necessary costs and basic savings. Savings should be tied to your long term goals in addition to you current constraints. Should I use credit cards for spending to reap benefits? No. Use credit cards for the convenience of them, if you want, but pay the full balance each month and don't overdo it. If you lack discipline on your spending, then you might consider avoiding credit cards completely.\"" }, { "docid": "246896", "title": "", "text": "There is no central government signature database. (at least not in the US, and at least not yet) For debit and credit card transactions, the merchant may check the signature on your reciept against the signature on back of the card. This is intended to verify that you didn't steal the card. So, if you want to change the signature on the back of the card, all you need to do is get a new card and re-sign it. Your card has an expiration date. When that happens, you will get a new card to re-sign. If your card expires soon, you can just wait. If you are impatient, you can call your bank and ask for a new card. If they give you a lot of grief about issuing a new card (it is an unusual request), you can tell them you lost your card and need a new one. In that case they will typically disable the old card and issue a new one with a new account number. Note that if you want to change how you sign your name, there are some other places you should also update: Also, keep in mind that people's signatures naturally drift over time. This fact is generally understood and accepted by people who check signatures." }, { "docid": "547835", "title": "", "text": "For those who are looking to improve credit for the sake of being able to obtain future credit on better terms, I think a rewards credit card is the best way to do that. I recommend that you only use as many cards as you need to gain the best rewards. I have one card that gives 6% back on grocery purchases, and I have another card that gives 4% back on [petrol] and 2% back on dining out. Both of those cards give only 1% back on all other purchases, so I use a third card that gives 1.5% back across the board for my other purchases. I pay all of the cards in full each month. If there was a card that didn't give me an advantage in making my purchases, I wouldn't own it. I'm generally frugal, so I know that there is no psychological disadvantage to paying with a card. You have to consider your own spending discipline when deciding whether paying with cards is an advantage for you. In the end, you should only use debt when you can pay low interest rates (or as in the case of the cards above, no interest at all). In the case of the low interest debt, it should be allowing you to make an investment that will pay you more by having it sooner than the cost of interest. You might need a car to get to work, but you probably don't need a new car. Borrow as little as you can and repay your loans as quickly as you can. Debt can be a tool for your advantage, but only if used wisely. Don't be lured in by the temptation of something new and shiny now that you can pay for later." }, { "docid": "302823", "title": "", "text": "\"Here's another rational reason: Discount. This typically works only in smaller stores, where you're talking directly to the owners, but it is sometimes possible to negotiate a few percent off the price when paying by check, since otherwise they'd have to give a few percent to the credit card company. (Occasionally the sales reps at larger stores have the authority to cut this deal, but it's far less common.) Not worth worrying about on small items, but if you're making a large purchase (a bedroom suite, for example) it can pay for lunch. And sometimes the store's willing to give you more discount than that, simply because with checks they don't have to worry about chargebacks or some of the other weirdnesses that can occur in credit card processing. Another reason: Nobody's very likely to steal you check number and try to write themselves a second check or otherwise use it without authorization. It's just too easy to steal credit card info these days to make printing checks worth the effort. But, in the end, the real answer is that there's no rational reason not to use checks. So it takes you a few seconds more to complete the transaction. What were you going to do with those seconds that makes them valuable? Especially if they're seconds that the store is spending bagging your purchase, so there's no lost time... and the effort really isn't all that different from signing the credit card authorization. Quoting Dean Inge: \"\"There are two kinds of fool. One says 'this is old, and therefore good.' The other says 'this is new, and therefore better.'\"\"\"" }, { "docid": "502366", "title": "", "text": "\"Credit cards have three important advantages. None of them are for day-to-day borrowing of money. Safety - Credit cards have better fraud protection than checks or cash, and better than most debit/check cards. If you buy something with a credit card, you also get the issuer's (think Visa) assurances that your will get the product you paid for, or your money back. At almost any time, if a product you buy is not what you expect, you can work with the issuer, even if the store says \"\"screw you\"\". Security - Credit cards are almost universally accepted as a \"\"security\"\" against damages to the vendor. Hotels, car rentals, boat rentals etc. will accept a credit card as a means of securing their interests. Without that, you may have to make huge deposits, or not be able to rent at all. For example, in my area (touristy) you can not rent a car on debit or cash. You must use a credit card. Around here most hotel rooms require a credit card as well. This is different from area to area, but credit cards are nearly universally accepted. Emergencies - If you're using your credit card properly, then you have some extra padding when stuff goes wrong. For example, it may be cheaper to place a bill on a credit card for a couple months while you recover from a car accident, than to deplete your bank account and have to pay fees. Bonus - Some cards have perks, like miles, points, or cash back. Some can be very beneficial. You need to be careful about the rules with these bonuses. For example, some cards only give you points if you carry a balance. Some only give miles if you shop at certain stores. But if you have a good one, these can be pretty fantastic. A 3% cash back on purchases can make a large difference over time.\"" }, { "docid": "111466", "title": "", "text": "When you start living in US, it doesn't actually matter what was your Credit history in another country. Your Credit History in US is tied to your SSN (Social Security Number), which will be awarded once you are in the country legally and apply for it. Getting an SSN also doesn't guarantee you nothing and you have to build your credit history slowly. Opening a Checking or Savings account will not help you in building a credit history. You need to have some type of Credit Account (credit card, car loan, mortgage etc.) linked to your SSN to start building your credit history. When you are new to US, you probably won't find any bank that will give you a Credit Card as you have no Credit history. One alternative is to apply for a secured credit card. A secured credit card is one you get by putting money or paying money to a bank and open a Credit Card against that money, thereby the bank can be secure that they won't lose any money. Once you have that, you can use that to build up your credit history slowly and once you have a good credit history and score, apply for regular Credit Card or apply for a car loan, mortgage etc. When I came to US 8 years ago, my Credit History was nothing, even though I had pretty good balance and credit history back in my country. I applied for secured credit card by paying $500 to a bank ( which got acquired by CapitalOne ), got it approved and used it for everything, for three years. I applied for other cards in the mean time but got rejected every time. Finally got approved for a regular credit card after three years and in one year added a mortgage and car loan, which helped me to get a decent score now. And Yes, a good Credit Score is important and essential for renting an apartment, leasing a car, getting a Credit Card etc. but normally your employer can always arrange for an apartment given your situation or you need to share apartment with someone else. You can rent a car without and credit score, but need a valid US / International Drivers license and a Credit Card :-) Best option will be to open a secured credit card and start building your credit. When your wife and family arrives, they also will be assigned individual SSN and can start building their credit history themselves. Please keep in mind that Credit Score and Credit History is always individual here..." }, { "docid": "321199", "title": "", "text": "\"When you buy something with your credit card, the store pays a fee to the credit card company, typically a base fee of 15 to 50 cents plus 2 to 3% of the purchase. At least, that's what it was a few years back when I had a tiny business and I wanted to accept credit cards. Big chain stores pay less because they are \"\"buying in bulk\"\" and have negotiating power. Just because you aren't paying interest doesn't mean the credit card company isn't making money off of you. In fact if you pay your monthly bill promptly, they're probably making MORE off of you, because they're collecting 2 or 3% for a month or less, instead of the 1 to 2% per month that they can charge in interest. The only situation I know where you can get money from a credit card company for free is when they offer \"\"convenience checks\"\" or a balance transfer with no up-front fee. I get such an offer every now and then. I presume the credit card company does that for the same reason that stores give out free samples: they hope that if you try the card, you'll continue using it. To them, it's a marketing cost, no different than the cost of putting an ad on television.\"" }, { "docid": "407870", "title": "", "text": "1.Charges or Fee: These are only applicable if you buy something use Credit Card and do not payback in time. Otherwise if you just have a Credit Card, most of them are free. There are some that charge annual fee. You will know when you apply for a card. 2a. Depoist Money [Voucher]: You can deposit money on your card account by check, or online transfer or by visiting the Bank Branch. I am not sure what Voucher you are talking about. You will have to find that out from the company that issued the voucher. 2b. Withdraw from ATM: Withdrwals are charged typically 5%, plus fixed Rs 50. Plus interest if you have not paid back in time. Are you are having excess money, there will be no interest charge. Check with the card on the exact charges. 3.Excess transfer to Bank: The excess can be transferred to Bank account by making a request to the Card Company and giving out the details. The Card Company would have a defined timeline for this. Most of the Banks that issue cards have a policy not to keep excess deposits longer. What you are trying to do it not a routine transaction and depends what you are trying to achieve." }, { "docid": "357113", "title": "", "text": "Is your credit card spending on things outside the categories listed in your question? I generally don't put credit card expenditures in their own category of spending because I'm buying things like gas and groceries, etc. I track all spending whether from my checking account (bill autopay) or credit card account as spending in budget categories, and I just transfer money from my checking account to my credit card account to cover anything that was spent there during the previous month." }, { "docid": "264271", "title": "", "text": "This might be blasphemy in the context of an audience that may be most focused on the gift itself, but you should be donating in a manner that helps advance the landscape, as well as your particular favourite charity. Almost 90% of businesses are in the process of trying to move away from issuing and receiving checks, and several countries in the world have already stopped using them. Checks are inefficient, costly and in a resource constrained environment like that facing most charities, create an opportunity cost that is even higher than the manual processing cost that flows directly. As donors, we need to think about scale in a manner that many individual charities don't. Send your donation via ACH!" }, { "docid": "289768", "title": "", "text": "PayPal is free for buyers, taking their profit from the sellers -- in much the same way that credit cards take a percentage from the seller (though they will also charge you interest if you don't pay off the entire balance every month). As far as I know, there's nothing that keeps a vendor from having a different price for PayPal customers than cash customers... but that would show up in the number displayed by PayPal before you authorize the purchase, so if you're paying attention it shouldn't be possible to sneak it by you. PayPal has several modes of operation. I'm not aware of one where they hold your balance. Normally you either give them your credit card info, or you give them information about (one of your) bank account(s) and authorize them to do electronic funds transfer from and to that account on your behalf. I've always stuck with the credit card approach; I trust PayPal but I don't trust them that far, on principle. If I was going to link them to an account, it would be a small account I'd create for that purpose, NOT my main savings/checking accounts! (Hm. Actually, I do have one account which normally floats around $500 -- it's the one I dump accumulated pocket change into -- and I could use that. If I ever feel a need to do so.) PayPal does reduce the risk of credit card numbers being abused, by reducing how many people you've given the number to. Depending on what kinds of purchases you make, that may be a security advantage. It certainly doesn't hurt. Personally I have no problem with giving my card number directly to a serious business, but on eBay or sites of that sort where I'm dealing with individuals who are complete strangers I do like the isolation that PayPal provides. In other words, eBay is exactly the environment where I DO use PayPal. After all, that's exactly what PayPal was created for." }, { "docid": "599684", "title": "", "text": "\"What they are doing is wrong. The IRS and the state might not be happy with what they are doing. One thing you can ask for them to do is to give you a credit card for business and travel expenses. You will still have to submit receipts for expenses, but it will also make it clear to the IRS that these checks are not income. Keep the pay stubs for the year, or the pdf files if they don't give you a physical stub. Pay attention to the YTD numbers on each stub to make sure they aren't sneaking in the expenses as income. If they continue to do this, ask about ownership of the items purchased, since you will be paying the tax shouldn't you own it? You can in the future tell them \"\"I was going to buy X like the customer wanted, but I just bought a new washer at home and their wasn't enough room on the credit card. Maybe next month\"\"\"" }, { "docid": "297241", "title": "", "text": "\"In the normal course of events, you should receive a separate check for the amount of the purchase, and that amount should not be included in your wages as shown on your W-2 statement. If the amount is included on your paycheck, it should still be listed separately as a non-taxable item, not as part of wages paid. In other words, the IRS should not even be aware that this money was paid to you, there is no need to list the amount anywhere on your income tax return, and if you are paranoid about the matter, staple the stub attached to the reimbursement to a copy of your bank statement showing that you deposited the money into your account and save it in your file of tax papers for the year, just in case the IRS audits you and requires you to document every deposit in your checking account. The amount is a business expense that is deductible on your employer's tax return, and your employer is also required to keep documentation that the employee expense reimbursement plan is running as per IRS rules (i.e., the employer is not slipping money to you \"\"under the table\"\" as a reimbursement instead of paying you wages and thus avoiding the employer's share of FICA taxes etc) and that is why your employer needs the store receipt, not a hand-written note from you, to show the IRS if the IRS asks. You said you paid with \"\"your own cash\"\" but in case this was not meant literally and you paid via credit card or debit card or check, then any mileage award, or points, or cash back for credit card use are yours to keep tax-free, and any interest charges (if you are carrying a revolving balance or paid through your HELOC) or overdraft or bounced check fees are yours to pay.\"" } ]

[ { "docid": "264271", "title": "", "text": "This might be blasphemy in the context of an audience that may be most focused on the gift itself, but you should be donating in a manner that helps advance the landscape, as well as your particular favourite charity. Almost 90% of businesses are in the process of trying to move away from issuing and receiving checks, and several countries in the world have already stopped using them. Checks are inefficient, costly and in a resource constrained environment like that facing most charities, create an opportunity cost that is even higher than the manual processing cost that flows directly. As donors, we need to think about scale in a manner that many individual charities don't. Send your donation via ACH!" } ]

[ { "docid": "50000", "title": "", "text": "\"What is a good bank to use for storing my pay? Preferrably one that has free student accounts. Can I save money from my paychecks directly to a Canadian bank Otherwise, can I connect my bank account to my Canadian account online? Any (almost...) bank in the US has free college checking accounts. If the bank you entered doesn't - exit, and step into the one next door which most likely will. The big names - Wells Fargo, Bank Of America, Chase, Bank of the West, Union Bank, Citi etc - all have it. Also, check your local credit union. Do I need any ID to open a bank account? I have Canadian citizenship and a J-1 visa Bring your passport and a student card/driving license (usually 2 ID's required). What form of money should I take with me? Cash? Should I apply for a debit card? Can I use my Canadian credit card for purchasing anything in the states? (Canadian dollar is stronger than US dollar currently, so this could be to my advantage?) There's some fuss going on about debit cards right now. Some big banks (Bank of America, notably) decided to charge fees for using it. Check it, most of the banks are not charging fees, and as far as I know none of the credit unions are charging. So same thing - if they charge fees for debit card - step out and move on to the next one down the street. Using debit card is pretty convenient, cash is useful for small amount and in places that don't accept cards. If you're asking about how to move money from Canada - check with your local (Canadian) bank about the conversion rates and fees for transfers, check cashing, ATM, card swipes, etc - and see which one is best for you. When I moved large amounts of money across the border, I chose wire transfer because it was the cheapest, but for small amounts many times during the period of your stay it may be more expensive. You can definitely use your Canadian credit/debit card in the States, you'll be charged some fee by your credit card company, and of course the conversion rate. How much tax does I have to pay at the end of my internship? Let's assume one is earning $5,000 per month plus a one time $5,000 housing stipend, all before taxes. Will I be taxed again by the Canadian government? $5K for internship? Wow... You need to talk to a tax specialist, there's probably some treaty between the US and Canada on that, and keep in mind that the State of California taxes your income as well. What are some other tips I can use to save money in the California? California is a very big place. If you live in SF - you'll save a lot by using the MUNI, if your internship is in LA - consider buying an old clunker if you want to go somewhere. If you're in SD - just enjoy the weather, you won't get it in Canada. You'll probably want a \"\"pay as you go\"\" wireless phone plan. If your Canadian phone is unlocked GSM - you can go to any AT&T or T-Mobile store and get a pre-paid SIM for free. Otherwise, get a prepaid phone at any groceries store. It will definitely be cheaper than paying roaming charges to your Canadian provider. You can look at my blog (I'm writing from California), I accumulated a bunch of saving tips there over the years I'm writing it.\"" }, { "docid": "591704", "title": "", "text": "\"simplicity and roi are often at odds. the simplest plan that also supports a reasonable investment return would have 3 accounts: if you want to get better returns on your investments, things can get much more complicated. here are some optional accounts to consider: besides the mechanics of money flowing between accounts, a budget helps you understand and control your spending. while there are many methods for this (e.g. envelopes of cash, separate accounts for various types of expenses), the simplest might be using mint.com. just be sure to put all your spending on a credit or debit card, and you can see your spending by category when you log into mint. it can take a bit to get it set up, and your bank needs to be compatible, but it can give you a really good picture of where your money is going. once you know that, you can start making decisions like \"\"i should spend less on coffee\"\", or \"\"i should go to the zoo more\"\", based on how much things cost vs how much you enjoy them. if you feel like your spending is out of control, then you can set yourself hard limits on certain kinds of spending, but usually just watching and influencing your own choices is enough. notes: if you have a spouse or partner, you should each maintain your own separate accounts. there are many reasons for this including simplicity and roi, besides the obvious. if you feel you must have a joint account, be sure to clearly define how it should be used (e.g. only for paying the utilities) and funded (x$ per month each). particularly with your house, do not do joint ownership. one of you should be a renter and the other a landlord. some of these statements assume you are in the usa. on a personal note, i have about 20 credit cards, 2 checking accounts, 2 ira's, 2 brokerage accounts, and 3 401k's. but i consider myself a personal finance hobbyist, and spend an absurd amount of time chasing financial deals and tax breaks.\"" }, { "docid": "386668", "title": "", "text": "These are the things to focus on... do not put yourself in debt with a car, there are other better solutions. 1) Get a credit card (Unless you already have one) -Research this and get the best cash back or points card you can get at the best rate. - Start with buying gas and groceries every month do not run the balance up. - Pay the card off every single month. (THIS IS IMPORTANT) - Never carry a balance above 25% of your credit limit. - Every 8 months or so call your credit card company and ask for a credit line increase. They should be able to do this WITHOUT pulling your credit you are only looking for the automatic increment that they can automatically approve. This will help increase your available credit and will help keep your credit utilization low. Only do this is you are successfully doing the other bullet points above. 2) Pay all of your bills on time, this includes everything from water, electricity, phone bill, etc. never be late. Setup automatic payments if you can. 3) Minimize the number of hard credit inquiries. -This is particularly important when you are looking for your mortgage lender. Do not let them pull your credit automatically. You should be able to provide them your credit score and other information and get quotes from those lenders. Do not let them tell you then can't do this... they can. 4)Strategically plan when you close a credit line, closing them will do two things, lower your credit limit often times increasing your credit utilization, and it may hurt your average age of credit. Open one credit card and keep it forever. *Note: Credit Karma is a great tool, you should check your score monthly and see how your efforts are influencing your score. I also like Citi credit cards because they will provide you monthly with your FICO Score which Credit Karma will only provide TransUnion and Equifax. This is educational information and you should consider talking to a banker/lender who can also give you more detailed instructions on how to get your credit improved so that they can approve you for a loan. Many people can get their score above 720 in 1-2 years time going from no credit doing the steps described above. It does take time be patient and don't fall for gimmicks." }, { "docid": "380786", "title": "", "text": "\"There's a lot of personal preference and personal circumstance that goes into these decisions. I think that for a person starting out, what's below is a good system. People with greater needs probably aren't reading this question looking for an answer. How many bank accounts should I have and what kinds, and how much (percentage-wise) of my income should I put into each one? You should probably have one checking account and one savings / money market account. If you're total savings are too low to avoid fees on two accounts, then just the checking account at the beginning. Keep the checking account balance high enough to cover your actual debits plus a little buffer. Put the rest in savings. Multiple bank accounts beyond the basics or using multiple banks can be appropriate for some people in some circumstances. Those people, for the most part, will have a specific reason for needing them and maybe enough experience at that point to know how many and where to get them. (Else they ask specific questions in the context of their situation.) I did see a comment about partners - If you're married / in long-term relationship, you might replicate the above for each side of the marriage / partnership. That's a personal decision between you and your partner that's more about your philosophy in the relationship then about finance specifically. Then from there, how do I portion them out into budgets and savings? I personally don't believe that there is any generic answer for this question. Others may post answers with their own rules of thumb. You need to budget based on a realistic assessment of your own income and necessary costs. Then if you have money some savings. Include a minimal level of entertainment in \"\"necessary costs\"\" because most people cannot work constantly. Beyond that minimal level, additional entertainment comes after necessary costs and basic savings. Savings should be tied to your long term goals in addition to you current constraints. Should I use credit cards for spending to reap benefits? No. Use credit cards for the convenience of them, if you want, but pay the full balance each month and don't overdo it. If you lack discipline on your spending, then you might consider avoiding credit cards completely.\"" }, { "docid": "509075", "title": "", "text": "I have a CapitalOne credit card, and every two or three weeks, CapitalOne Bank sends me checks that can be used almost anywhere (including a deposit into my own checking account if I wish, or to pay taxes or utility bills etc)). The amount thus borrowed is counted as a balance transfer (as if I were paying off another credit-card balance) and it will be charged 0% interest for a year. The catch is that unless I pay off the next monthly statement in full by the due date, I will be charged interest on all new purchases from the day that they post to the account till the day they are paid off. No more grace period etc. All this will continue until that loan amount is paid off in full. So, I either would have to (i) pay off all the purchases made this month plus the minimum monthly payment shown on the next monthly statement and give up use of the card till that 0% balance is all repaid, or (ii) pay interest on new purchases. It might be worth checking on the CapitalOne Credit Card site if such an offer is available to you. If so, get a check from them, pay off the invoice using that check (actually, I would strongly recommend depositing the money in your local bank and writing them your personal check for the amount to be paid), and then pay off next month's bill in full, etc." }, { "docid": "2018", "title": "", "text": "\"As i see it, with a debit card, they are taken kinda out of the game. They are not lending money, it seems really bad for them. Not exactly. It is true that they're not lending money, but they charge a hefty commission from the retailers for each swipe which is pure profit with almost no risk. One of the proposals considered (or maybe approved already, don't know) in Congress is to cap that hefty commission, which will really make the debit cards merely a service for the checking account holder, rather than a profit maker for the bank. On the other hand, it's definitely good for individuals. I disagree with that. Debit cards are easier to use than checks, but they provide much less protection than credit cards. Here's what I had to say on this a while ago, and seems like the community agrees. But, why do we really need a credit history to buy some of the more expensive stuff Because the system is broken. It rewards people in debt by giving them more opportunities to get into even more debts, while people who owe nothing to noone cannot get a credit when they do need one. With the current system the potential creditor can only asses the risk of someone who has debt already, they have no way of assessing risks of someone with no debts. To me, all this credit card system seems like an awfully nice way to make loads of money, backed by governments as well. Well, credit cards have nothing to do with it. It's the credit scores system that is broken. If we replace the \"\"card\"\" with \"\"score\"\" in your question - then yes, you're thinking correctly. That of course is true for the US, in other countries I have no knowledge on how the creditors assess the risks.\"" }, { "docid": "456887", "title": "", "text": "&gt;&gt; Hey! Do you mind giving your credit card to the waiter... &gt; I'm not especially fond of that, but it's easy to report fraud to the bank and most of the time the bank will reverse the charges. No kidding! Of course, even I give credit cards to waiters. What do I care? **As you said, you are not liable to any fraud on your credit card.** None at all!!!! It's only Merchant, not the credit card company, that pay the price for fraud... **and you pay higher prices to cover for losses from fraud.** &gt; The PIN situation is different because a mugging is life-threatening. Nonsense! Mugging at the ATM is so rare, each ATM has a camera. **In any case, I am not talking about using PIN to withdraw money!** I am talking about PIN to authorize charges on a credit card or ATM card. &gt;&gt; We already determined that nobody even care about signatures or check them. &gt; You can't use a stolen card at an ATM with a signature. Huh? You totally got it wrong what I said, or, you argue for the sake of argument. **I am saying that cards that require you to enter a PIN cannot be used used when stolen or copied. Yes or no?** **On the other hand, cards that require signature can be used when stolen or copied because signature is a worthless method to validate the charge. Yes or no?** LASTLY, my Costco credit card has a picture of me on it. **Question for you, since for some reason you argue so much against PINs: Wouldn't a picture on the card better than a signature?** Yes or no? Do you see? There are so many ways to make this system so much more secure and fraud proof... but, ON PURPOSE, the credit card companies don't want that... because they are not liable for fraud. Simple as that." }, { "docid": "143593", "title": "", "text": "the best thing to do is file bankrupt. your credit will be shot for 7 to 10 years. however usually 3 years after the bankrupt people will give you small lines of credit. then you rebuild on the small credit lines. and never get into a bad loan again you learn from mistakes. there is no shame in a mistake if you learned from it. I rebuilt my credit by using fingerhut. small credit limit on a cap 1 credit card 300 dollars unsecured card. personal loan of 1500 dollars to buy a old clunk for a car as I did not want to have five years of car payments. you can also get a secured credit card. and build credit with that. the bank will explain how to build credit using your own money. also you should know a lot of banks like your bankrupt stat. because they no you cant file for several more years. meaning if you don't pay your loan they can garnish you and you cant file bankrupt. you can get a new car loan with good interest rate. by taking 5000 dollars of your 15000 dollars savings down on the new loan. making your new car loan have better payments cheaper and better interest. and get a secured credit card of 2000 to build towards a unsecured credit card. keep all your new credit tabs small and pay on time.i would not use all your nest egg savings. that is not smart. get a lawyer and file. stay in school you will have a fresh start and you learned about upside down loans. don't listen to people trying to tell you bankruptsy is bad. it in a lot of ways gives you the upper hand in a no win debt or debts." }, { "docid": "336468", "title": "", "text": "\"For a newly registered business, you'll be using your \"\"personal\"\" credit score to get the credit. You will need to sign for the credit card personally so that if your business goes under, they still get paid. Your idea of opening a business card to increase your credit score is not a sound one. Business plastic might not show up on your personal credit history. While some issuers report business accounts on a consumer's personal credit history, others don't. This cuts both ways. Some entrepreneurs want business cards on their personal reports, believing those nice high limits and good payment histories will boost their scores. Other small business owners, especially those who keep high running balances, know that including that credit line could potentially lower their personal credit scores even if they pay off the cards in full every month. There is one instance in which the card will show up on your personal credit history: if you go into default. You're not entitled to a positive mark, \"\"but if you get a negative mark, it will go on your personal report,\"\" Frank says. And some further information related to evaluating a business for a credit card: If an issuer is evaluating you for a business card, the company should be asking about your business, says Frank. In addition, there \"\"should be something on the application that indicates it's for business use,\"\" he says. Bottom line: If it's a business card, expect that the issuer will want at least some information pertaining to your business. There is additional underwriting for small business cards, says Alfonso. In addition to personal salary and credit scores, business owners \"\"can share financials with us, and we evaluate the entire business financial background in order to give them larger lines,\"\" she says. Anticipate that the issuer will check your personal credit, too. \"\"The vast majority of business cards are based on a personal credit score,\"\" says Frank. In addition, many issuers ask entrepreneurs to personally guarantee the accounts. That means even if the businesses go bust, the owners promise to repay the debts. Source\"" }, { "docid": "305954", "title": "", "text": "\"There is no way to stop any merchant from setting a recurring charge flag on a purchase. According to the following article, Mastercard and Visa encourages merchants to use this feature and even give them a better rate. I have found it impossible to stop these unauthorized transactions. The article sites that the merchant is allowed to march the charges across expired cards to find a good card that you might have as well as the article states they can cross banks to find you if you have the same type of card. Virtual account numbers will not protect you. Sorry but the only solution I have found is to close the account with the bank and move to a different type of card, mastercard to visa, or vice versa. This will only protect you for one move ,because if you have to do this again. Merchants that you thought were forgotten even years later will find you and post a charge legally. Virtual numbers from Mastercard or Visa won't stop them. I believe this is the number one reason for credit card fraud for consumers. There is no reason for a merchant to let anyone off the hook when the credit card company will side with them. The article below does state that Mastercard does have a \"\"stop recurring payment\"\" flag. Apparently no CSR tht I have talked to knows about it when I have asked to get a problem fixed. I have found that the only way to stop these charges from happening is to close all my visa and mastercard credit cards, pay with a check that you write and mail or a PayPal one time payment that is sent to pay for an invoice. Recurring Credit-Card Charges May Irk Consumers\"" }, { "docid": "219033", "title": "", "text": "It is possible to not use checks in the US. I personally use a credit card for almost everything and often have no cash in my wallet at all. I never carry checks with me. If we wanted to, we could pay all of our monthly bills without checks as well, and many people do this. 30 years ago, grocery stores didn't generally accept credit cards, so it was cash or check, though most other kinds of stores and restaurants did. Now, the only stores that I have encountered in years that do not accept credit cards are a local chicken restaurant, and the warehouse-shopping store Costco. (Costco accepts its own credit card, but not Mastercard or Visa.) Still, we do pay the majority of our monthly bills via check, and it would not be shocking to see someone paying for groceries with a check. I can't name the last time I saw someone write a check at a store exactly, but I've never seen any cashier or other patrons wonder what a check-writer was trying to do. Large transactions, like buying a car or house, would still use checks -- probably cashier's or certified checks and not personal checks, though." }, { "docid": "264932", "title": "", "text": "\"I linked my bank account (by making a transfer from bank account to Paypal) without linking a card. This should not give Paypal any rights to do anything with my bank account - transfer that I made to link it was exactly the same as any other outgoing transfer from my bank account. On attempting to pay more that resides in my Paypal balance I get To pay for this purchase right now, link a debit or credit card to your PayPal account. message. Paypal is not mentioning it but one may also transfer money to Paypal account form bank to solve this problem. Note, that one may give allow Paypal to access bank account - maybe linking a card will allow this? Paypal encourages linking card but without any description of consequences so I never checked this. It is also possible that Paypal gained access to your bank balance in other way - for example in Poland it just asked for logins and passwords to bank accounts (yes, using \"\"Add money instantly using Trustly\"\" in Poland really requires sharing full login credentials to bank account - what among other things breaks typical bank contract) source for \"\"Paypal attempts phishing\"\": https://niebezpiecznik.pl/post/uwaga-uzytkownicy-paypala-nie-korzystajcie-z-najnowszej-funkcji-tego-serwisu/\"" }, { "docid": "408124", "title": "", "text": "When you start at a new job here in the U.S., the default means of payment is usually a paper check. Most folks will quickly set up direct deposit so that their employer deposits their paycheck directly into their personal bank account - the incentive to do so is that you receive your funds faster than if you deposit a paper check. Even if you set up direct deposit on your first day on the job, you may still receive your first paycheck as a paper check simply because the wheels of payroll processing turn slowly at some (large) companies. A counter example is a self-employed contractor - perhaps a carpenter or house painter. These folks are paid by their customers, homeowners and such. Many larger, well established contracters now accept credit card payments from customers, but smaller independents may be reluctant to set up a credit card merchant account to accept payment by card because of all the fees that are associated with accepting credit card payments. 3% transaction fees and monthly service fees can be scary to any businessman who already has very thin profit margins. In such cases, these contractors prefer to be paid by check or in cash for the simple reason that there are no fees deducted from cash payments. There are a few folks here who don't trust direct deposit, or more specifically, don't trust their employer to perform the deposit correctly and on time. Some feel uncomfortable giving their bank info to their employer, fearing someone at the company could steal money from their account. In my experience, the folks who prefer a paper paycheck are often the same folks who rush to the bank on payday to redeem their paychecks for cash. They may have a bank account (helps with check cashing) but they prefer to carry cash. I operate in a manner similar to you - I use a debit card or credit card (I only have one of each) for nearly all transactions in daily life, I use electronic payments through my bank to pay my regular bills and mortgage, and I receive my paycheck by direct deposit. There have been periods where I haven't written or received paper checks for so long that I have to hunt for where I put my checkbook! Even though I use a debit card for most store purchases, the bank account behind that debit card is actually a checking account according to the bank. Again, the system defaults to paper checks and you have the option of going electronic as well. Before we judge anyone who doesn't use direct deposit or who prefers to be paid in cold hard cash, consider that direct deposit is a luxury of stability. Steady job, home, etc. Direct deposit doesn't make sense for a contractor or day laborer who expect to work for a different person each day or week. I don't think this is all that unique to the US. There are people in every city and country who don't have long-term employment with a single employer and therefore prefer cash or paper check over electronic payments. I'd be willing to bet that this applies to the majority of people on the planet, actually." }, { "docid": "541391", "title": "", "text": "The signature actually harks back to the days before every business checked every transaction online. When charge cards were introduced modems didn't exist. Nowadays, stolen credit cards are usually reported within 24 hours and the card won't work. Businesses that face low fraud rates don't bother checking. They probably figure that a certain percentage of charges get charged back because the cardholder claims that they didn't make them, and the credit card company usually just passes the cost on to the merchant, so it's really the merchant who should be worried about fraud since he or she is going to pay for it. The real question for the merchant is whether checking signatures actually reduces charge backs. If the credit card is stolen, how hard would it be for thieves to practice the signature on the card a few times until they can reproduce it well enough to fool someone? Businesses that face high fraud rates are often more careful. In New York City, try buying some Nikes on 34th Street, and you'll get your signature checked, your driver's license checked, and they'll call up your 5th grade social studies teacher." }, { "docid": "250166", "title": "", "text": "Definitely push for a check, they may not do anything nefarious with your credit card number however someone else may be able to read the email before it gets to its final destination. It's never safe to give out credit card number in a less than secure interface. Also, if this is a well known company, then the person interacting with you should know better than to ask for your information through email." }, { "docid": "11082", "title": "", "text": "\"You have what is called in the biz a \"\"thin file\"\". Check with a Credit Union. They will get you a secured card or maybe a straight credit card. They usually will graduate you from a secured card to a real credit card in 12-18 months. Then you are on your way. You should also sign up for Creditkarma to get your credit report updated every week. They make their money on referring people to credit card companies so you might be able to kill two birds with one stone.\"" }, { "docid": "316652", "title": "", "text": "I stopped using pre-authorized payments for things like telephone etc., because it made it more possible/likely for a fraudulent charge to sneak by. But if there is an occasion for choosing pre-authorized payments (like charities, and places of exact fixed price) I use my credit card because then I also get points. Furthermore, I reason (perhaps wrongly) that if there is intermediary step between actual money (bank account) and the source of the bill then it gives me better chance of catching irregularities and hence a little safer. I am sure other members here will laugh my naivety, but there you have it." }, { "docid": "490100", "title": "", "text": "\"The preferred accounts are designed to hope you do one of several things: Pay one day late. Then charge you all the deferred interest. Many people think If they put $X a month aside, then pay just before the 6 months, 12 moths or no-payment before 2014 period ends then I will be able to afford the computer, carpet, or furniture. The interest rate they will charge you if you are late will be buried in the fine print. But expect it to be very high. Pay on time, but now that you have a card with their logo on it. So now you feel that you should buy the accessories from them. They hope that you become a long time customer. They want to make money on your next computer also. Their \"\"Bill Me Later\"\" option on that site as essentially the same as the preferred account. In the end you will have another line of credit. They will do a credit check. The impact, both positive and negative, on your credit picture is discussed in other questions. Because two of the three options you mentioned in your question (cash, debit card) imply that you have enough cash to buy the computer today, there is no reason to get another credit card to finance the purchase. The delayed payment with the preferred account, will save you about 10 dollars (2000 * 1% interest * 0.5 years). The choice of store might save you more money, though with Apple there are fewer places to get legitimate discounts. Here are your options: How to get the limit increased: You can ask for a temporary increase in the credit limit, or you can ask for a permanent one. Some credit cards can do this online, others require you to talk to them. If they are going to agree to this, it can be done in a few minutes. Some individuals on this site have even been able to send the check to the credit card company before completing the purchase, thus \"\"increasing\"\" their credit limit. YMMV. I have no idea if it works. A good reason to use the existing credit card, instead of the debit card is if the credit card is a rewards card. The extra money or points can be very nice. Just make sure you pay it back before the bill is due. In fact you can send the money to the credit card company the same day the computer arrives in the mail. Having the transaction on the credit card can also get you purchase protection, and some cards automatically extend the warranty.\"" }, { "docid": "124341", "title": "", "text": "You should check with the Office of Student Affairs (or equivalent) at your University to see if you can accept Credit Cards. Many will only allow you to accept student organization dues paid in cash, check, or money order. Many universities will also provide your organization with basic operating funds, if you request it. Your first point of contact should be your faculty adviser, though. Your best bet would be to just use cash. Learn where the nearest ATMs are. If you are set on using credit cards, set up a PayPal account and just use it to reimburse the person who fronts the money (cover the markup). Everyone will have to have a PayPal account set up, linked to their credit card. You can avoid fees by using a bank account. If you're so inclined, you can set up a Business account and have a PayPal Debit Card, but you'll want to check with your adviser / University by-laws to see if you're allowed. Don't expect any of these to work as website implementations. As you're a University group, you will undoubtedly be meeting in person such that an exchange of cash/check/money order would be trivial In short, you'll need to check into the rules of your University. Credit cards generally carry processing fees, charged to the merchant, which (on its own) carries some tax implications." } ]

[ { "docid": "302409", "title": "", "text": "\"Despite the unmarried status, you need to see a lawyer. Essentially you have a business with this person owning a home as the asset, and a mortgage for which you are responsible for. A lawyer needs to examine any paperwork you have and with knowledge of your particular jurisdiction's laws can advise you on the proper course of action. You paint a really ugly picture of this guy. I bet you are correct that he is kind of a horrible person. \"\"Tough love\"\" time: You willingly entered into a long term contract with this person. Why would you do such a thing? Perhaps some self reflection and counseling is in order. This is probably more important than worrying about your credit. All that being said, it is good of you to want to break ties with this person. You can rebuild. All will be good if you concentrate on the right things.\"" } ]

[ { "docid": "405412", "title": "", "text": "Since you are using the percentage method to determine the home/business use split, I would think that under most circumstances the distance driven to get your car from the dealership to home, and from home to mechanic and back would be less than 1% of the total miles driven. This is an acceptable rounding error. When refueling, I typically do that on my way to another destination and therefore it's not something I count separately. If your miles driven to attend to repair/refueling tasks are more than 1% of the total miles driven, split them as you feel comfortable in your above examples. I'd calculate the B/P percentages as total miles less maintenance miles, then apply that split to maintenance miles as well." }, { "docid": "144109", "title": "", "text": "\"Yes, it can be done. See \"\"Scenario 4\"\" at Isolating 401(k) basis - Fairmark.com. Though that article is primarily about getting after-tax 401(k) money into a Roth IRA, Scenario 4 applies to the scenario you are asking about. At a high level you do exactly what you say -- transfer the pre-tax money from your trad IRAs to a 401(k) (btw, a solo 401(k) will work for this also -- doesn't have to be your employer's -- but then you need to be eligible to set up a solo 401(k)). This is allowed because qualified plans can't accept after after-tax traditional IRA money, so the transfer overrides the usual pro rata rules and \"\"strains\"\" the basis out and leaves it in the trad IRA. However, there's a mismatch between the intent of Congress (as indicated by the Joint Committee on Taxation report on the law) and the actual text of the law as detailed in the Fairmark article which while it doesn't stop you from doing this adds a couple of hoops to jump through if you want to be in total compliance with the law.\"" }, { "docid": "59116", "title": "", "text": "Equity means having ownership, and I think that's a REALLY bad idea in the scenario that you described. If you stay together, there's really no upside to either of you in this scheme. If you break-up then you'll have a terrible mess, especially if the break-up goes badly. If she's really building equity, you're going to be faced with several hard questions: If this went bad at the end, it might be worse than a divorce in some sense since at least in the divorce you have established law to sort out the issues. You'll be on your own here without a formal contract. (Marriage being a special case of a contract for our purposes here.) If she wants to share costs (which seems perfectly fair) then agree to rent and a split on utilities. If you really insist on going down the path that you described, I think that you'll need some sort of contract, which probably involves a lawyer. Anything short of that could not be considered having equity at all and will be completely unenforceable in the event of a bad break-up. (There is some notion of a verbal contract, but that's very hard to prove and subject to misunderstanding and misremembering.) Aside from all of these potential problems in event of a break-up, you would probably also be violating the terms of your mortgage, if you have one. From the bank's perspective, you are selling the property that is the collateral for that loan, which you're almost surely not allowed to do." }, { "docid": "544663", "title": "", "text": "\"This is more of a long comment but may answer user's situation too. I have dealt with joint mortgages before in 3 states in the US. Basically in all three states if one party wants to sell, the home goes up for sale. This can be voluntary or it can go up via auction (not a great choice). In 2 of the 3 states the first person to respond to the court about the property, the other party pays all legal fees. Yes you read this right. In one case I had an ex who was on my mortgage, she had no money invested in the house ($0 down and still in college with no job). [If she wasn't on the mortgage I wouldn't have gotten loan - old days of dumb rules] When we split her lawyer was using the house as a way to extort other money from me. Knowing the state's laws I already filed a petition for the property but put it on hold with the clerk. Meaning that no one else could file but if someone tried mine would no longer be on hold. My ex literally spent thousands of dollars on this attorney and they wanted to sell the house and get half the money from the house. So sale price minus loan amount divided between us. This is the law in almost every state if there is no formal contract. I was laughing because she wanted what would be maybe 50-75K for paying no rent, no money down, and me paying for her college. Finally I broke her attorney down (I didn't lawyer up but had many friends who were lawyers advising). After I told her lawyer she wasn't getting anything - might have said it in not a nice way - her lawyer gave me her break down. To paraphrase she said, \"\"We are going to file now. My assistant is in the court clerk's office. You can tell the court whatever you want. Maybe they will give you a greater percentage since you put the money down and paid for everything but you are taking that chance. But you will pay for your lawyer and you will need one. And you will pay for me the entire time. And this will be a lengthy process. You would be better served to pay my client half now.\"\" Her office was about 2 blocks from court. I laughed at her and simply told her to have her assistant do whatever she wanted. I then left to go to clerk's office to take the hold off. She had beat me to the office (I moved my car out of her garage). By the time I got there she was outside yelling at her assistant, throwing a hissy fit, and papers were flying everywhere. We \"\"settled\"\" the next day. She got nothing other than the things she had already stolen from me. If I wouldn't have known about this loophole my ex would have gotten or cost me through attorney's fees around 40-50K for basically hiring a lawyer. My ex didn't really have any money so I am pretty sure lawyer was getting a percent. Moral of the story: In any contract like this you always want to be the one bringing in the least amount of money. There are no laws that I know of in any country where the person with the least amount on a contract will come out worse (%-wise). Like I said in the US the best case scenario that I know of for joint property is that the court pays out the stakeholder all of their contributions then it splits things 50/50. This is given no formal contract that the court upholds. Don't even get me started with hiring attorneys because I have seen the courts throw out so many property contracts it isn't even funny. One piece of advice on a contract if you do one. Make it open and about percentages. Party A contributes 50K, Party B 10K, Party A will pay this % of mortgage and maintenance and will get this % when home is sold. I have found the more specific things are the more loopholes for getting out of them. There are goofy ass laws everywhere that make no sense. Why would the person first filing get their lawyers paid for??? The court systems in almost all countries can have their comical corners. You will never be able to write a contract that covers everything. If the shower handle breaks, who pays for it? There is just too many one-off things with a house. You are in essence getting in a relationship with this person. I hear others say it is a business transaction. NO. You are living with this person. There is no way to make it purely business. For you to be happy with this outcome both of you must remain somewhat friends and at the very least civil with each other. To add on to the previous point, the biggest risk is this other person's character and state of mind. They are putting in the most money so you don't exactly have a huge money risk. You do have a time and a time-cost risk. Your time or the money you do have in this may be tied up in trying to get your money out or house sold. A jerk could basically say that you get nothing, and make you traverse the court system for a couple years to get a few thousand back. And that isn't the worst case scenario. Always know your worst case scenario. Yours is this dude is in love with you. When he figures out 2-3 years later after making you feel uncomfortable the entire time that you are not in love with him, he starts going nuts. So he systematically destroys your house. Your house worth plummets, you want out, you can't sell the house for price of loan, lenders foreclose or look to sue you, you pay \"\"double rent\"\" because you can't live with the guy, and you have to push a scooter to get to work. That is just the worst case scenario. Would I do this if I were 25 and had no family? Yea, why not if I trusted the other person and was friends with them? If it were just a co-worker? That is really iffy with me. Edit: Author said he will not be living with the person. So wording can be changed to say \"\"potentially\"\" in front of living with him in my examples.\"" }, { "docid": "435830", "title": "", "text": "\"Please Note: Before taking any steps towards a transaction involving possible capital gains tax exclusions, please consult your CPA, attorney or tax advisor. I am not a CPA or Tax Advisor. Since you have only lived in it 11 months, you don't meet the \"\"use test\"\" for full exclusion. However, even if you haven't lived in it that long, you may be able to exclude some of the gains due to a \"\"unforeseen circumstance\"\", not just because you wanted to move. You say you are \"\"ready for a change\"\" and so that means it's an arbitrary decision, not a forced one. To calculate the partial exclusion, take the number of months you lived there before the sale and divide it by 24. (11/24 = 0.45). So for an unmarried person, you can exclude up to $250,000. Multiply that by .45 and you get $112,500. If your profit after everything is taken out is only $35,000 then you can exclude that from capital gains because it is less than $112,500. All that being said, you will need documentation in case you get audited. For more information, see IRS Publication 551, Basis of Assets, and look for the section on real property. See also this IRS Tax Topic on Sale of Your Home\"" }, { "docid": "497547", "title": "", "text": "\"One reason I have heard (beside to keep you paying rent) is the cost of maintenance and improvements. If you hire someone else to do all the work for you, then it may very well be the case, though it is not as bad as a car. Many factors come into play: If you are lucky, you may end up with a lot that is worth more than the house on it in a few decades' time. Personally, I feel that renting is sometimes better than owning depending on the local market. That said, when you own a home, it is yours. You do have to weigh in such factors as being tied down to a certain location to some extent. However, only the police can barge in -- under certain circumstances -- where as a landlord can come in whenever they feel like, given proper notice or an \"\"emergency.\"\" Not to mention that if someone slams a door so hard that it reverberates through the entire place, you can actually deal with it. The point of this last bit is the question of home ownership vs renting is rather subjective. Objectively, the costs associated with home ownership are the drags that may make it a bad investment. However, it is not like car ownership, which is quite honestly rarely an invesment.\"" }, { "docid": "35117", "title": "", "text": "Myself and my partner do things a little differently to most. We split accommodation and utilities payments by net income proportion to ensure that we both have the same amount of spending money. For example; The really important bit is net income. We take off a whole bunch of payments, e.g; Our contributions go into a joint account and the rest is our money to spend. The upshot is that we both get to enjoy the same minimum quality of life because we both get the same amount to spend at the bar." }, { "docid": "53092", "title": "", "text": "First, let me say that you have to take everything your agent says with a grain of salt. Freakonomics had a great article that discussed the math behind the motivation of the real estate agent. It described the home seller, trying to get, say $400K. On a 6% commission, the $24K is destined to be split between seller realtor office and buyer's realtor's office. The selling agent gets $6,000 (or so) in the end. As a seller, if I settle for $380K, my realtor is only out $300, netting $5700. But $20K lower sale price, and I just lost nearly $19K after commission is paid. The agent would have the natural goal of volume, not extracting the last dollar from the buyer. Gaining back the last $20K to the seller will cost the realtor far more than $300 in her time, keeping the house on the market and waiting for the better offer. Sellers might use down payment as one way to estimate the probability of the financing falling through, but it's a rough estimate at best because, in the case of bank financing, the bank needs the same time to run through the paperwork for a 3% down or a 20% down. It's just as easy for the buyer to qualify or not qualify for one loan or the other. There are young couples with great incomes and no debt, who blow away the required ratios for proposed debt to income, but haven't saved up the otherwise huge 20% downpayment. Then there are those who have saved for years, even having 30% to put down, but their income is still not going to qualify them. The offer will be contingent on the financing, regardless. It will show that you are putting $XX dollars as a downpayment, and the final transaction is contingent on your bank approving you." }, { "docid": "78409", "title": "", "text": "10 people live in country X in 10 separate households, 5 own their homes and the others rent unrelated property. Home ownership = 50% 10 people live in Country Y in 5 seperate households, 5 own their homes while the others rent from them. Home ownership = 50% One day, person 1 leaves his rented spot in one of the homes to opt for a new home elsewhere. Home ownership = 50%. It doesn't work out, so he moves back in with mom and dad. Home ownership = 50% Where am I making a mistake?" }, { "docid": "394226", "title": "", "text": "Theoretically, yes, you can only buy or sell whole shares (which is why you still have .16 shares in your account; you can't sell that fraction on the open market). This is especially true for voting stock; stock which gives you voting rights in company decisions makes each stock one vote, so effectively whomever controls the majority of one stock gets that vote. However, various stock management policies on the part of the shareholder, brokerage firm or the issuing company can result in you owning fractional shares. Perhaps the most common is a retirement account or other forward-planning account. In such situations, it's the dollar amount that counts; when you deposit money you expect the money to be invested in your chosen mix of mutual funds and other instruments. If the whole-shares rule were absolute, and you wanted to own, for instance, Berkshire Hathaway stock, and you were contributing a few hundred a month, it could take you your entire career of your contributions sitting in a money-market account (essentially earning nothing) before you could buy even one share. You are virtually guaranteed in such situations to end up owning fractions of shares in an investment account. In these situations, it's usually the fund manager's firm that actually holds title to the full share (part of a pool they maintain for exactly this situation), and your fractional ownership percentage is handled purely with accounting; they give you your percentage of the dividends when they're paid out, and marginal additional investments increase your actual holdings of the share until you own the whole thing. If you divest, the firm sells the share of which you owned a fraction (or just holds onto it for the next guy fractionally investing in the stock; no need to pay unnecessary broker fees) and pays you that fraction of the sale price. Another is dividend reinvestment; the company may indicate that instead of paying a cash dividend, they will pay a stock dividend, or you yourself may indicate to the broker that you want your dividends given to you as shares of stock, which the broker will acquire from the market and place in your account. Other common situations include stock splits that aren't X-for-1. Companies often aren't looking to halve their stock price by offering a two-for-one split; they may think a smaller figure like 50% or even smaller is preferable, to fine tune their stock price (and thus P/E ratio and EPS figures) similar to industry competitors or to companies with similar market capitalization. In such situations they can offer a split that's X-for-Y with X>Y, like a 3-for-2, 5-for-3 or similar. These are relatively uncommon, but they do happen; Home Depot's first stock split, in 1987, was a 3-for-2. Other ratios are rare, and MSFT has only ever been split 2-for-1. So, it's most likely that you ended up with the extra sixth of a share through dividend reinvestment or a broker policy allowing fractional-share investment." }, { "docid": "543634", "title": "", "text": "When I worked for a few years in Ontario, there was Paternity Leave. I didn't pay much attention to how it worked, but I think the parents could split the leave up among themselves as they saw fit. So when my manager Phil had a kid, his wife took off for the first few months, and when she was ready to go back to work, he took off for the remaining few months. Which is really how it should be in America. What if the woman is the one with the higher salary? It might make more sense for the couple to have the man take the majority of the leave, minus some time for physical recovery and the early bonding." }, { "docid": "319159", "title": "", "text": "Ultimately the bank will have first call on the house and you will be the only one on the hook directly to the bank if you don't make the mortgage payments. There's nothing you can do to avoid that if you can't get a joint mortgage. What you could do is make a side agreement that your girlfriend would be entitled to half the equity in the house, and would be required to make half the payments (via you). You could perhaps also add that she would be part responsible for helping you clear any arrears. But in the end it'd just be a deal between you and her. She wouldn't have any direct rights over the house and she wouldn't be at risk of the bank pursuing her if you don't pay the mortgage. You'd probably also need legal advice to make it watertight, but you could also not worry about that too much and just write it all down as formally as possible. It really depends if you're just trying to improve your feelings about the process or whether you really want something that you could both rely on in the event of a later split. I don't think getting married would make any make any real difference day-to-day. In law, with rare exceptions, the finances of spouses are independent from each other. However in the longer term, being married would mean your now-wife would have a stronger legal claim on half the equity in the house in the event of you splitting up." }, { "docid": "395551", "title": "", "text": "Which will make previously unviable things viable, which will in turn drive up the price of oil. Not to deny your point but it does omit some key facts. edit: And comparing home prices isn't really fair, I can't split your home up into barrels and ship it anywhere in any meaningful way though your price comparison is reasonable the rest of it is 'meh' at best." }, { "docid": "168453", "title": "", "text": "i would recommend that you establish a landlord/tenant relationship instead of joint ownership (ie 100% ownership stake for one of you vs 0% for the other). it is much cleaner and simpler. basically, one of you can propose a monthly rent amount and the other one can chose to be either renter or landlord. alternatively, you can both write down a secret rental price offer assuming you are the landlord, then pick the landlord who wrote down the smaller rental price. if neither of you can afford the down payment, then you can consider the renter's contribution an unsecured loan (at an agreed interest rate and payment schedule). if you must have both names on the financing, then i would recommend you sell the property (or refinance under a single name) as quickly as possible when the relationship ends (if not before), pay the renter back any remaining balance on the loan and leave the landlord with the resulting equity (or debt). in any case, if you expect the unsecured loan to outlive your relationship, then you are either buying a house you can't afford, or partnering on it with someone you shouldn't." }, { "docid": "124368", "title": "", "text": "You can argue that cash dividend is a kind of split as well by this logic. The stock price on ex-dividend gets a hit coincidental with the dividend to be paid, so one can argue that the investor has the same cash value on the day the dividend was paid as if it wouldn't be paid at all. However, for the company to distribute stocks instead of cash may be advantageous if they have low cash reserves but significant amount of treasury stocks, and the stocks are of high liquidity. It is also a way for the company to release treasury stocks without diluting the current shareholders and creating taxable income to the company, that's an important factor to consider. This is in fact the real answer to your question. The main difference between split and stock dividend is that in split, the stock distributions proportions don't change. With stock dividend - they do. While the outstanding share proportions do not change, total proportions do, because of the treasury stocks being distributed. So company has less stocks in its vaults, but everyone else still has the same proportions of ownership. Compare this to split: company's treasury stocks would be split as well, and it would continue essentially sitting on the same proportion of stocks. That shift of treasury stocks to the outside shareholders - this is what makes it a dividend." }, { "docid": "44110", "title": "", "text": "I bought my first car on eBay. I took a bus to go pick it up two states away with a cashier's check. I was in college and had enough money with me to buy a couple table of gas and a couple cheap meals, but not enough for a bus ride home. The guy selling the car showed up at the bus station and gave me the keys. The car was in excellent shape. As you can imagine, this was around 2002 or so. Can you imagine trying that now? Oh, Amazon was actually founded before eBay. They were just a bookstore, of course." }, { "docid": "89872", "title": "", "text": "\"Personally I would advise only buying what you can afford without borrowing money, even if it means living in a tent. Financially, that is the best move. If you are determined to borrow money to buy a house, the person with income should buy it as sole owner. Split ownership will create a nightmare if any problems develop in the relationship. Split ownership has the advantage that it doubles the tax-free appreciation deduction from $250,000 to $500,000, but in your case my sense is that that is not a sufficient reason to risk dual ownership. Do not charge your \"\"partner\"\" rent. That is crazy.\"" }, { "docid": "384924", "title": "", "text": "\"The first issue you'll find is that if you aren't going to immediately live in the house as a primary residence, this property counts as a \"\"second home\"\" or \"\"investment property\"\". You'll generally pay a higher interest rate, have a larger down payment, and qualify for less government-backed programs/incentives/subsidies than you would otherwise. The lending criteria on such properties is always more strict - and generally more costly - than an equivalent primary residence. Lenders won't really care that in 10 years you or your parents plan to move in - you can't be held to that, so they'll generally ignore that plan entirely. On a related note, you should be aware that insurance for the property will also generally cost more, but you'd need to get quotes to determine if that is at all significant in your situation. You'll need to talk with a few potential lenders, but from a first read it sounds like it would be best \"\"storied\"\" like so: you and your parents want to buy a 2nd home or vacation home, which you'll share the use of (vacations, etc, and being converted to a primary residence later). It'll need to be clear what plan to use the property for - if you intend to rent out the home in the interim years then instead make that clear and state it will be an investment home; if it is what you are planning it might make it easier, as expected rent for the property will be considered. Saying you want a mortgage for a home no one will live in for a decade probably isn't a good idea, as a general plan anyway. Either way, this can be called a \"\"joint mortgage\"\". When I was a loan officer we didn't use that term, but it's basically just a mortgage application with multiple people on it, all of whom are combined together to qualify for the loan. Everyone's income, debts, assets, and credit get included, which can work or one person's situation can cause the whole thing to collapse. From your description I think this could work for you, and one option is to set it up where only one of the parents is on the application if the other parent has problematic credit situation. Note that his possibility is often restricted by local law, so it may not be an option for you in your jurisdiction, but worth being aware of. An alternative is you just buy the property and the parents gift you the down payment, and you list them as beneficiaries in will/trust in case something happens to you before they retire, but I don't know if that would make any sense in your situation. This is a single applicant mortgage, and it means only you are considered as buying it, which sometimes is the only option depending on your parents current financial situation. It's usually something you try if the other option doesn't work, but it's a fallback plan. Some lenders will allow guarantors (co-signers in US parlance), but this will vary by lender and locale - often what they actually want is a joint mortgage, not really a guarantor/cosigner. Finally, you'll need to plan for what happens if things don't go as planned, regardless of what happens. What if your income changes, if either of your parents become deceased in advance of retirement, if they get a divorced from each other, or if either/both become ill or disabled and need assisted care? Planning for such unpleasant possibilities (even if they seem crazy and not going to happen in your mind right now) can save you all a tremendous amount of heart ache later on when the unexpected (including things I didn't mention) pops up.\"" }, { "docid": "28083", "title": "", "text": "Depending on jurisdiction, the fact that you made some payments might give you an ownership share in the house in your own right. What share would be a complex question because you might need to consider both the mortgage payments made and maintenance. Your sister might also be able to argue that she was entitled to some recompense for the risk she describes of co-signing, and that's something that would be very hard to quantify, but clearly you would also be entitled to similar recompense in respect of that, as you also co-signed. For the share your mother owned, the normal rules of inheritance apply and by default that would be a 50-50 split as JoeTaxpayer said. You imply that the loan is still outstanding, so all of this only applies to the equity previously built up in the house prior to your mother's death. If you are the only one making the ongoing payments, I would expect any further equity built up to belong solely to you, but again the jurisdiction and the fact that your sister's name is on the deeds could affect this. If you can't resolve this amicably, you might need to get a court involved and it's possible that the cost of doing so would outweigh the eventual benefit to you." } ]

[ { "docid": "95116", "title": "", "text": "Because you're not married, its a partnership agreement, and unless there's a written contract, either the two of you agree on how to handle the home, or it's off to court you go. If you were both supposed to pay for the home, and he failed to for a a while, that would put him in breach of contract which I would think gives you a good position in court. On the other hand, if you are at all concerned about your safety from this louse, remember, he knows exactly where the house is." } ]

[ { "docid": "270844", "title": "", "text": "\"Disclaimer: I am a law student, not a lawyer, and don't claim to have a legal opinion one way or another. My answer is intended to provide a few potentially relevant examples from case law in order to make the point that you should be cautious (and seek proper advice if you think that caution is warranted). Nor am I claiming that the facts in these cases are the same as yours; merely that they highlight the flexible approach that the courts take in such cases, and the fact that this area of law is complicated. I don't think it is sensible to just assume that there is no way that your girlfriend could acquire property rights as a rent paying tenant if arranged on an informal basis with no evidence of the intention of the arrangement. One of the answers mentions a bill which is intended to give non-married partners more rights than they have presently. But the existence of that bill doesn't prove the absence of any existing law, it merely suggests a possible legal position that might exist in the future. A worst-case assumption should also be made here, since you're considering the possibility of what can go wrong. So let's say for the sake of the argument that you have a horrible break up and your girlfriend is willing to be dishonest about what the intentions were regarding the flat (e.g. will claim that she understood the arrangement to be that she would acquire ownership rights in exchange for paying two thirds of the monthly mortgage repayment). Grant v Edwards [1986] Ch 638 - Defendant had property in the name of himself and his brother. Claimant paid nothing towards the purchase price or towards mortgage payments, but paid various outgoings and expenses. The court found a constructive trust in favor of the claimant, who received a 50% beneficial interest in the property. Abbot v Abbot [2007] UKPC 53, [2008] 1 FLR 1451 - Defendant's mother gifted land to a couple with the intention that it be used as a matrimonial home. However it was only put into the defendant's name. The mortgage was paid from a joint account. The claimant was awarded a 50% share. Thompson v Hurst [2012] EWCA Civ 1752, [2014] 1 FLR 238 - Defendant was a council tenant. Later, she formed a relationship with the claimant. They subsequently decided to buy the house from the council, but it was done in the defendant's name. The defendant had paid all the rent while a tenant, and all the mortgage payments while an owner, as well as all utility bills. The claimant sometimes contributed towards the council tax and varying amounts towards general household expenses (housekeeping, children, etc.). During some periods he paid nothing at all, and at other times he did work around the house. Claimant awarded 10% ownership. Aspden v Elvy [2012] EWHC 1387 (Ch), [2012] 2 FCR 435 - The defendant purchased a property in her sole name 10 years after the couple had separated. The claimant helped her convert the property into a house. He did much of the manual work himself, lent his machinery, and contributed financially to the costs. He was awarded a 25% share. Leeds Building Society v York [2015] EWCA Civ 72, [2015] HLR 26 (p 532) - Miss York and Mr York had a dysfunctional and abusive relationship and lived together from 1976 until his death in 2009. In 1983 Mr York bought a house with a mortgage. He paid the monthly mortgage repayments and other outgoings. At varous times Miss York contributed her earnings towards household expenses, but the judge held that this did \"\"not amount to much\"\" over the 33 year period, albeit it had helped Mr York being able to afford the purchase in the first place. She also cooked all the family meals and cared for the daughter. She was awarded a 25% share. Conclusion: Don't make assumptions, consider posting a question on https://law.stackexchange.com/ , consider legal advice, and consider having a formal contract in place which states the exact intentions of the parties. It is a general principle of these kinds of cases that the parties need to have intended for the person lacking legal title to acquire a beneficial interest, and proof to the contrary should make such a claim likely to fail. Alternatively, decide that the risk is low and that it's not worth worrying about. But make a considered decision either way.\"" }, { "docid": "380753", "title": "", "text": "The below assessment is for primary residences as opposed to income properties. The truth is that with the exception of a housing bubble, the value of a house might outpace inflation by one or two percent. According to the US Census, the price of a new home per square foot only went up 4.42% between 1963 and 2008, where as inflation was 4.4%. Since home sizes increased, the price of a new home overall outpaced inflation by 1% at 5.4% (source). According to Case-Shiller, inflation adjusted prices increased a measly .4% from 1890-2004 (see graph here). On the other hand your down payment money and the interest towards owning that home might be in a mutual fund earning you north of eight percent. If you don't put down enough of a down payment to avoid PMI, you'll be literally throwing away money to get yourself in a home that could also be making money. Upgrades to your home that increase its value - unless you have crazy do-it-yourself skills and get good deals on the materials - usually don't return 100% on an investment. The best tend to be around 80%. On top of the fact that your money is going towards an asset that isn't giving you much of a return, a house has costs that a rental simply doesn't have (or rather, it does have them, but they are wrapped into your rent) - closing costs as a buyer, realtor fees and closing costs as a seller, maintenance costs, and constantly escalating property taxes are examples of things that renters deal with only in an indirect sense. NYT columnist David Leonhart says all this more eloquently than I ever could in: There's an interactive calculator at the NYT that helps you apply Leonhart's criteria to your own area. None of this is to say that home ownership is a bad decision for all people at all times. I'm looking to buy myself, but I'm not buying as an investment. For example, I would never think that it was OK to stop funding my retirement because my house will eventually fund it for me. Instead I'm buying because home ownership brings other values than money that a rental apartment would never give me and a rental home would cost more than the same home purchase (given 10 years)." }, { "docid": "338454", "title": "", "text": "NEVER and I do mean **NEVER** split a business ownership 50/50. -- Make it 51/49 or whatever you want but never go 50/50 as if there is ever a disagreement You have the power to over rule. If you go 50/50 you will potentially get stuck in a legal battle which you do not want." }, { "docid": "563562", "title": "", "text": "Pulling out of your way to get to the gas station does not take 0 seconds, and playing on your phone is likely not what you were going to do anyway. When you're on your way to work and you need to get there in a certain amount of time and decide you need gas, you need to leave earlier to get there on time. Or when you're on your way home and all you want to do is get home after a long day, you're sitting in your car at a gross gas station instead of being at home. You know this is the case, but you're trying to make up glib rationalizations for your complacency. And you're speaking out of ignorance since you haven't experienced both ownership cases, whereas those who have experienced both ownership cases will say that EV charging is by large margin a more pleasurable experience. But by all means, keep cutting off your nose to spite your face. Spend more time filling up, more money, send that money to terrorists, give yourself poorer health, do all of those things, just so you don't have to admit to someone on the internet that maybe they've exposed you to a new way of thinking about transportation. That'll teach 'em." }, { "docid": "89872", "title": "", "text": "\"Personally I would advise only buying what you can afford without borrowing money, even if it means living in a tent. Financially, that is the best move. If you are determined to borrow money to buy a house, the person with income should buy it as sole owner. Split ownership will create a nightmare if any problems develop in the relationship. Split ownership has the advantage that it doubles the tax-free appreciation deduction from $250,000 to $500,000, but in your case my sense is that that is not a sufficient reason to risk dual ownership. Do not charge your \"\"partner\"\" rent. That is crazy.\"" }, { "docid": "384924", "title": "", "text": "\"The first issue you'll find is that if you aren't going to immediately live in the house as a primary residence, this property counts as a \"\"second home\"\" or \"\"investment property\"\". You'll generally pay a higher interest rate, have a larger down payment, and qualify for less government-backed programs/incentives/subsidies than you would otherwise. The lending criteria on such properties is always more strict - and generally more costly - than an equivalent primary residence. Lenders won't really care that in 10 years you or your parents plan to move in - you can't be held to that, so they'll generally ignore that plan entirely. On a related note, you should be aware that insurance for the property will also generally cost more, but you'd need to get quotes to determine if that is at all significant in your situation. You'll need to talk with a few potential lenders, but from a first read it sounds like it would be best \"\"storied\"\" like so: you and your parents want to buy a 2nd home or vacation home, which you'll share the use of (vacations, etc, and being converted to a primary residence later). It'll need to be clear what plan to use the property for - if you intend to rent out the home in the interim years then instead make that clear and state it will be an investment home; if it is what you are planning it might make it easier, as expected rent for the property will be considered. Saying you want a mortgage for a home no one will live in for a decade probably isn't a good idea, as a general plan anyway. Either way, this can be called a \"\"joint mortgage\"\". When I was a loan officer we didn't use that term, but it's basically just a mortgage application with multiple people on it, all of whom are combined together to qualify for the loan. Everyone's income, debts, assets, and credit get included, which can work or one person's situation can cause the whole thing to collapse. From your description I think this could work for you, and one option is to set it up where only one of the parents is on the application if the other parent has problematic credit situation. Note that his possibility is often restricted by local law, so it may not be an option for you in your jurisdiction, but worth being aware of. An alternative is you just buy the property and the parents gift you the down payment, and you list them as beneficiaries in will/trust in case something happens to you before they retire, but I don't know if that would make any sense in your situation. This is a single applicant mortgage, and it means only you are considered as buying it, which sometimes is the only option depending on your parents current financial situation. It's usually something you try if the other option doesn't work, but it's a fallback plan. Some lenders will allow guarantors (co-signers in US parlance), but this will vary by lender and locale - often what they actually want is a joint mortgage, not really a guarantor/cosigner. Finally, you'll need to plan for what happens if things don't go as planned, regardless of what happens. What if your income changes, if either of your parents become deceased in advance of retirement, if they get a divorced from each other, or if either/both become ill or disabled and need assisted care? Planning for such unpleasant possibilities (even if they seem crazy and not going to happen in your mind right now) can save you all a tremendous amount of heart ache later on when the unexpected (including things I didn't mention) pops up.\"" }, { "docid": "285745", "title": "", "text": "\"Its best to seek a lawyer, but it is unlikely you can force him to pay. You probably know couples, that are in some part of the divorce process, that have trouble obtaining court ordered payments. In your case you have less of a legal standing (exception: if you have children together). As far as the house goes, the two of you entered into some sort of business arrangement and it will be difficult to \"\"force\"\" him to pay. One thing that works for you is that he has excellent credit. If he is interested in keeping a high credit rating he will ensure that no payments are late on the home. Your question suggests that the two of you are not getting along very well right now, and that needs to stop. The best financial decision you can make right now is to get along with him. It seems that the two of you have not officially broken up. If you do decide to depart ways, do so as amicably as possible. You will have to work to get the home in your name only, and him off the deed. This benefits both of you as you will have sole control of the house and this ill advised business decision can end. He will have the home off his credit and will not be responsible if you miss a payment and can also buy a home or whatever of his own. Good luck and do your best to work this out. Seeking peace will cost you a lot less money in the long run. Fighting in court cost a lot of money. Giving in to semi-reasonable demands are far cheaper then fighting. Here is an example. Lets say he normally contributes $500 to the mortgage, and he decides to move out. I would ask him to contribute $200 until you can get his name off the loan, say 6 months at the most. After that you will put the house up for sale if you cannot obtain a mortgage in your own name and will split any profits.\"" }, { "docid": "467868", "title": "", "text": "\"The rent payment is in principle taxable. However, you should be able to take advantage of the \"\"rent a room\"\" scheme, and the proposed rent falls well under the £7,500/year tax threshold for that. So no tax will be actually payable and you don't have to formally declare it as long as you stay below that threshold. You should also be fairly well legally protected in case you do split up in future and you want to remove her. As you would be living there too, she would just be a lodger, not a tenant (technically, an \"\"excluded occupier\"\"). If you did want her to leave you would only need to give reasonable notice and wouldn't need a formal court order if you needed to force her to go. As JBentley points out, there have been court cases where domestic partners contributing to household expenses while the other partner paid the mortgage have later been able to claim that this implied joint ownership. This was on the basis of a \"\"constructive trust\"\" being implicitly setup by the way they arranged their finances. In your case, if there's a clear intention, formalised in writing, for the money to be treated as rent rather than a contribution towards purchasing the property, I think it should make it very hard to claim the contrary later. I would also suggest you be clear about whether the rent includes a share of the utility bills, and that things like groceries would be handled separately and split 50:50 or whatever. As pointed out in a comment, there are template agreements for lodgers you could use a starting point (e.g. this one), but it's likely you'd need to customise it to your circumstances. Another point made in another answer is that there's potential upcoming legislation to give some rights to cohabiting partners. In the current draft, those would kick in after three years or having children. If the bill does come into effect, you'd also be able to sign an opt out, but only after getting legal advice, and it would still be possible (though presumably hard) to persuade a court to overturn an opt out. Overall that does create a small risk to you, but not one that comes directly from your girlfriend paying rent. It's likely that if you are both on an equal financial footing and had always kept your finances separate, that there wouldn't be any award made anyway. And you can't run your entire life on hypothetical risks.\"" }, { "docid": "544663", "title": "", "text": "\"This is more of a long comment but may answer user's situation too. I have dealt with joint mortgages before in 3 states in the US. Basically in all three states if one party wants to sell, the home goes up for sale. This can be voluntary or it can go up via auction (not a great choice). In 2 of the 3 states the first person to respond to the court about the property, the other party pays all legal fees. Yes you read this right. In one case I had an ex who was on my mortgage, she had no money invested in the house ($0 down and still in college with no job). [If she wasn't on the mortgage I wouldn't have gotten loan - old days of dumb rules] When we split her lawyer was using the house as a way to extort other money from me. Knowing the state's laws I already filed a petition for the property but put it on hold with the clerk. Meaning that no one else could file but if someone tried mine would no longer be on hold. My ex literally spent thousands of dollars on this attorney and they wanted to sell the house and get half the money from the house. So sale price minus loan amount divided between us. This is the law in almost every state if there is no formal contract. I was laughing because she wanted what would be maybe 50-75K for paying no rent, no money down, and me paying for her college. Finally I broke her attorney down (I didn't lawyer up but had many friends who were lawyers advising). After I told her lawyer she wasn't getting anything - might have said it in not a nice way - her lawyer gave me her break down. To paraphrase she said, \"\"We are going to file now. My assistant is in the court clerk's office. You can tell the court whatever you want. Maybe they will give you a greater percentage since you put the money down and paid for everything but you are taking that chance. But you will pay for your lawyer and you will need one. And you will pay for me the entire time. And this will be a lengthy process. You would be better served to pay my client half now.\"\" Her office was about 2 blocks from court. I laughed at her and simply told her to have her assistant do whatever she wanted. I then left to go to clerk's office to take the hold off. She had beat me to the office (I moved my car out of her garage). By the time I got there she was outside yelling at her assistant, throwing a hissy fit, and papers were flying everywhere. We \"\"settled\"\" the next day. She got nothing other than the things she had already stolen from me. If I wouldn't have known about this loophole my ex would have gotten or cost me through attorney's fees around 40-50K for basically hiring a lawyer. My ex didn't really have any money so I am pretty sure lawyer was getting a percent. Moral of the story: In any contract like this you always want to be the one bringing in the least amount of money. There are no laws that I know of in any country where the person with the least amount on a contract will come out worse (%-wise). Like I said in the US the best case scenario that I know of for joint property is that the court pays out the stakeholder all of their contributions then it splits things 50/50. This is given no formal contract that the court upholds. Don't even get me started with hiring attorneys because I have seen the courts throw out so many property contracts it isn't even funny. One piece of advice on a contract if you do one. Make it open and about percentages. Party A contributes 50K, Party B 10K, Party A will pay this % of mortgage and maintenance and will get this % when home is sold. I have found the more specific things are the more loopholes for getting out of them. There are goofy ass laws everywhere that make no sense. Why would the person first filing get their lawyers paid for??? The court systems in almost all countries can have their comical corners. You will never be able to write a contract that covers everything. If the shower handle breaks, who pays for it? There is just too many one-off things with a house. You are in essence getting in a relationship with this person. I hear others say it is a business transaction. NO. You are living with this person. There is no way to make it purely business. For you to be happy with this outcome both of you must remain somewhat friends and at the very least civil with each other. To add on to the previous point, the biggest risk is this other person's character and state of mind. They are putting in the most money so you don't exactly have a huge money risk. You do have a time and a time-cost risk. Your time or the money you do have in this may be tied up in trying to get your money out or house sold. A jerk could basically say that you get nothing, and make you traverse the court system for a couple years to get a few thousand back. And that isn't the worst case scenario. Always know your worst case scenario. Yours is this dude is in love with you. When he figures out 2-3 years later after making you feel uncomfortable the entire time that you are not in love with him, he starts going nuts. So he systematically destroys your house. Your house worth plummets, you want out, you can't sell the house for price of loan, lenders foreclose or look to sue you, you pay \"\"double rent\"\" because you can't live with the guy, and you have to push a scooter to get to work. That is just the worst case scenario. Would I do this if I were 25 and had no family? Yea, why not if I trusted the other person and was friends with them? If it were just a co-worker? That is really iffy with me. Edit: Author said he will not be living with the person. So wording can be changed to say \"\"potentially\"\" in front of living with him in my examples.\"" }, { "docid": "337286", "title": "", "text": "\"We’re buying the home right over $200,000 so that means he will only need to put down (as a ‘gift’) roughly $7000. I'm with the others, don't call this a gift unless it is a gift. I'd have him check with the bank that previously refused him a mortgage if putting both of you on a mortgage would allay their concerns. Your cash flow would be paying the mortgage payment and if you failed to do so, then they could fall back on his. That may make more sense to them, even if they would deny each of you a loan on your own. This works for them because either of you is responsible for the whole loan. It works for him because he was already willing to be responsible for the whole loan. And your alternative plan makes you responsible for the whole loan, so this is just as good for you. At what percentage would you suggest splitting ownership and future expenses? Typically a cash/financing partnership would be 50/50, but since it’s only a 3.5% down-payment instead of 20% is that still fair? Surprisingly enough, a 3.5% down-payment that accumulates is about half the equity of a 20% down-payment. So your suggestion of a 25%-75% split makes sense if 20% would give a 50%-50% split. I expected it to be considerably lower. The way that I calculated it was to have his share increase by his equity share of the \"\"rent\"\" which I set to the principal plus interest payment for a thirty year loan. With a 20% down-payment, this would give him 84% equity. With 3.5%, about 40% equity. I'm not sure why 84% equity should be the equivalent of a 50% share, but it may be a side effect of other expenses. Perhaps taking property taxes out would reduce the equity share. Note that if you increase the down-payment to 20%, your mortgage payment will drop substantially. The difference in interest between 3.5% and 20% equity is a couple hundred dollars. Also, you'll be able to eliminate any PMI payment at 20%. It could be argued that if he pays a third of the monthly mortgage payment, that that would give him the same 50% equity stake on a 3.5% down-payment as he would get with a 20% down-payment. The problem there is that then he is effectively subsidizing your monthly payment. If he were to stop doing that for some reason, you'd have what is effectively a 50% increase in your rent. It would be safer for you to handle the monthly payment while he handles the down-payment. If you couldn't pay the mortgage, it sounds like he is in a position to buy out your equity, rent the property, and take over the mortgage payment. If he stopped being able to pay his third of the mortgage, it's not evident that you'd be able to pick up the slack from him much less buy him out. And it's unlikely that you'd find someone else willing to replace him under those terms. But your brother could construct things such that in the face of tragedy, you'd inherit his equity in the house. If you're making the entire mortgage payment, that's a stable situation. He's not at risk because he could take over the mortgage if necessary. You're not at risk because you inherit his equity share and can afford the monthly payment. So even in the face of tragedy, things can go on. And that's important, as otherwise you could lose your equity in the house.\"" }, { "docid": "124368", "title": "", "text": "You can argue that cash dividend is a kind of split as well by this logic. The stock price on ex-dividend gets a hit coincidental with the dividend to be paid, so one can argue that the investor has the same cash value on the day the dividend was paid as if it wouldn't be paid at all. However, for the company to distribute stocks instead of cash may be advantageous if they have low cash reserves but significant amount of treasury stocks, and the stocks are of high liquidity. It is also a way for the company to release treasury stocks without diluting the current shareholders and creating taxable income to the company, that's an important factor to consider. This is in fact the real answer to your question. The main difference between split and stock dividend is that in split, the stock distributions proportions don't change. With stock dividend - they do. While the outstanding share proportions do not change, total proportions do, because of the treasury stocks being distributed. So company has less stocks in its vaults, but everyone else still has the same proportions of ownership. Compare this to split: company's treasury stocks would be split as well, and it would continue essentially sitting on the same proportion of stocks. That shift of treasury stocks to the outside shareholders - this is what makes it a dividend." }, { "docid": "128698", "title": "", "text": "As a new graduate, aside from the fact that you seem to have the extra $193/mo to pay more towards your loan, we don't know anything else. I wrote a lengthy article on this in response to a friend who had a loan, but was also pondering a home purchase in the future. Student Loans and Your First Mortgage discusses the math behind one's ability to put a downpayment on a house vs having that monthly cash to pay towards the mortgage. In your case, the question is whether, in 5 years, the $8500 would be best spent as a home down payment or to pay off the 6.8% loan. If you specifically had plans toward home ownership, the timing of that plan would affect my answer here, as I discuss in the article. The right answer to your question can only come by knowing far more of your personal situation. Meanwhile, the plan comes at a cost. Your plan will get rid of the loan in about 5 years, but if you simply double up the payments, advising the servicing company to apply the extra to principal, it would drop to just a couple month over over 4. As you read more about personal finance, you'll find a lot of different views. Some people are fixated on having zero debt, others will focus on liquidity. In the end, you need to understand each approach and decide what's right for you." }, { "docid": "155648", "title": "", "text": "\"If you business is incorporated, it's up to the two of you how to do it. Typically, you will have the company write cheques (or make transfers, whatever) to each of the humans: If you want to say that each of you gets a salary of 80% of the revenue you bring in, and then tweak things with bonuses, you can. If one of you is contributing more to marketing and awareness and less to revenue, then you may prefer to pay you each the same even though the revenue you bring are different. It's up to you - it's quite literally your business. When you're not incorporated, then for tax purposes you split the income and the expenses according to your ownership share. If that doesn't seem fair to you, then a partnership is probably not as useful to you as being incorporated. In general, it's better to be incorporated once you're past any initial phase in which the business is losing money for tax purposes (acquiring depreciable assets) and the partners have taxable income from elsewhere (day jobs, or at least income from the earlier part of the year before starting the business.) I would recommend that the \"\"partnership\"\" phase of the business be very short. Get incorporated and get a shareholder agreement.\"" }, { "docid": "365715", "title": "", "text": "If it is US, you need to take tax implications into account. Profit taken from sale of your home is taxable. One approach would be to take the tax hit, pay down the student loans, rent, and focus any extra that you can on paying off the student loans quickly. The tax is on realized gains when you sell the property. I think that any equity under the original purchase price is taxed at a lower rate (or zero). Consult a tax pro in your area. Do not blindly assume buying is better than renting. Run the numbers. Rent Vs buy is not a question with a single answer. It depends greatly on the real estate market where you are, and to a lesser extent on your personal situation. Be sure to include maintenance and HOA fees, if any, on the ownership side. Breakeven time on a new roof or a new HVAC unit or an HOA assessment can be years, tipping the scales towards renting. Include the opportunity cost by including the rate of return on the 100k on the renting side (or subtracting it on the ownership side). Be sure to include the tax implications on the ownership side, especially taxes on any profits from the sale. If the numbers say ownership in your area is better, then try for as small of a mortgage as you can get in a growing area. Assuming that the numbers add up to buying: buy small and live frugally, focus on increasing discretionary spending, and using it to pay down debt and then build wealth. If they add up to renting, same thing but rent small." }, { "docid": "78409", "title": "", "text": "10 people live in country X in 10 separate households, 5 own their homes and the others rent unrelated property. Home ownership = 50% 10 people live in Country Y in 5 seperate households, 5 own their homes while the others rent from them. Home ownership = 50% One day, person 1 leaves his rented spot in one of the homes to opt for a new home elsewhere. Home ownership = 50%. It doesn't work out, so he moves back in with mom and dad. Home ownership = 50% Where am I making a mistake?" }, { "docid": "250837", "title": "", "text": "\"&gt;I think you mean: 60% of all mortgages on homes in Nevada are underwater. Not every home has a mortgage, so it's not 60% of the homes, it's 60% of the mortgages. Spot on. In the US typically somewhere around 30% to 40% of homes have no mortgage at all (i.e. 100% equity by the owners). So... *IF Nevada follows the US average* (which it may not, having a lot of new developments) then 60% of 60%/70% would be somewhere between 36% to 42% of homes. That of course, is still HUGE -- if even 10% of homes in a locale are \"\"distressed\"\" sales, it is enough to drive prices down. But another caveat is that just because a place is \"\"underwater\"\" does not mean that it has a HIGH negative equity -- point of fact is that ANY home bought with an LTV mortgage or a really low down payment (i.e. 0% to 10% down payment) is probably underwater from day one and remains pretty close to that for the first couple of years. Why? Because typical realtor fees are around 6%, and closing costs are easily another couple of percent, add in that with a self-amortizing loan that very little equity is built up in the first few years, and any loss for aging and owner \"\"cash out\"\" equity can easily be near zero or negative. (That's one of the reasons you shouldn't buy unless you are planning on living somewhere for at least 5 years, because it takes that long to \"\"recoup\"\" the realtor &amp; closing costs -- ergo the whole \"\"flipping\"\" phenom is in and of itself a sign that a market is in a speculative bubble.)\"" }, { "docid": "476632", "title": "", "text": "\"Rob - I'm sorry your first visit here has been unpleasant. What you are asking for is beyond the capability of most software. If you look at Fairmark.com, you find the standard deduction for married filing joint is $12,200 in 2012, and $12,400 in 2013. I offer this anecdote to share a 'deduction' story - The first year I did my MIL's taxes, I had to explain that she didn't have enough deductions to itemize. Every year since, she hands me a file full of paper substantiating medical deductions that don't exceed 7.5% of her income. In turn, I give her two folders back, one with the 5 or so documents I needed, and the rest labeled \"\"trash\"\". Fewer than 30% of filers itemize. And a good portion of those that do, have no question that's the right thing to do. e.g. my property tax is more than the $12K, so anything else I have that's a deduction adds right to the number. It's really just those people who are at the edge that are likely frustrated. I wrote an article regarding Standard Deduction vs Itemizing, in which I describe a method of pulling in one's deductible expenses into Odd years, reducing the number in Even years, to allow a bi-annual itemization. If this is your situation, you'll find the concept interesting. You also ask about filing status. Think on this for a minute. After pulling in our W2s (TurboTax imports the data right from ADP), I do the same for our stock info. The stock info, and all Schedule A deductions aren't assigned a name. So any effort to split them in search of savings by using Married Filing Separate, would first require splitting these up. TurboTax has a 'what-if' worksheet for this function, but when the 'marriage penalty' was lifted years ago, the change in status had no value. Items that phaseout over certain income levels are often lost to the separate filer anyway. When I got married, I found my real estate losses each year could not be taken, they accumulated until I either sold, or until our income dropped when the Mrs retired. So, while is respect your desire for these magic dials within the software, I think it's fair to say they would provide little value to most people. If this thread stays open, I'd be curious if anyone can cite an example where filing separately actually benefits the couple.\"" }, { "docid": "593698", "title": "", "text": "SPY is up 29% YTD. If you are 100% S&P and not up 28.9% plus your deposits, I'd be concerned — check your fund's management fees. Are you calling a top? Proper asset allocation would adjust holding on a regular basis. At the simplest level, say 70% S&P 30% short term/bond fund. It's time to re-adjust to the mix that's right for you, and not market-time. If 2014 sees a huge drop, the re-allocation to 70/30 buys back in at a lower price. If up again, a bit gets shifted out. Last, it makes sense for your deposits to match your allocation split, to lessen the divergence from your target numbers. Note: Asset allocation is a bit more complex than I just described. A good thing to research a bit. (Happy to see someone edit a couple good references here, especially if they aren't looking to offer a full response.) Here are a few choice questions on this site that are related to asset allocation:" }, { "docid": "53092", "title": "", "text": "First, let me say that you have to take everything your agent says with a grain of salt. Freakonomics had a great article that discussed the math behind the motivation of the real estate agent. It described the home seller, trying to get, say $400K. On a 6% commission, the $24K is destined to be split between seller realtor office and buyer's realtor's office. The selling agent gets $6,000 (or so) in the end. As a seller, if I settle for $380K, my realtor is only out $300, netting $5700. But $20K lower sale price, and I just lost nearly $19K after commission is paid. The agent would have the natural goal of volume, not extracting the last dollar from the buyer. Gaining back the last $20K to the seller will cost the realtor far more than $300 in her time, keeping the house on the market and waiting for the better offer. Sellers might use down payment as one way to estimate the probability of the financing falling through, but it's a rough estimate at best because, in the case of bank financing, the bank needs the same time to run through the paperwork for a 3% down or a 20% down. It's just as easy for the buyer to qualify or not qualify for one loan or the other. There are young couples with great incomes and no debt, who blow away the required ratios for proposed debt to income, but haven't saved up the otherwise huge 20% downpayment. Then there are those who have saved for years, even having 30% to put down, but their income is still not going to qualify them. The offer will be contingent on the financing, regardless. It will show that you are putting $XX dollars as a downpayment, and the final transaction is contingent on your bank approving you." } ]

[ { "docid": "242124", "title": "", "text": "\"Unquestionably I think the priority should be funding retirement through ROTH/IRA/401K over HSA extra. Obviously you need to fund your HSA for reasonable and expected medical expenses. Also there is some floor to your more traditional retirement funding. Beyond that what does one do with excess dollars? Given the lack of flexibility and fees, it seems clear to do ROTH IRA and 401K. Beyond that what then? You may want to decide to \"\"take some money home\"\" and pay taxes on it. Do you have a desire to own rental property or start/purchase a business? Upgrade your home? etc... If all those things are taken care of, only then would I put money into an HSA. YMMV but most people, maxing a ROTH IRA alone, will have plenty of money for retirement given a reasonable rate of return.\"" } ]

[ { "docid": "491053", "title": "", "text": "Yes, anything that lowers your MAGI will help you avoid the cliff, and all above the line deductions like HSA/IRA contributions do so. I'd prioritize maxing HSA contributions over maxing IRA contributions, but that's another topic. Here's a good article on avoiding the cliff, but you've already got it figured correctly: Stay Off the Obamacare ACA Premium Subsidy Cliff Here's what goes into MAGI for ACA purposes (from healthcare.gov): Your MAGI is the total of the following for each member of your household who’s required to file a tax return: You mentioned traditional IRA, and that's important since Roth IRA contributions do not lower AGI." }, { "docid": "103093", "title": "", "text": "Staying with your numbers - a 7% long term return will have a tax of 15% (today's long term cap gain tax) resulting in a post tax of 5.95%. On the other hand, even if the student loan interest remains deductible, it's subject to phaseout and a really successful grad will quickly lose the deduction. There's a similar debate regarding mortgage debt. When I've commented on my 3.5% mortgage costing 2.5% post tax, there's no consensus agreeing that this loan should remain as long as possible in favor of investing in the market for its long term growth. And in this case the advantage is a full 3.45%/yr. While I've made my decision, Ben's points remain, the market return isn't guaranteed, while that monthly loan payment is fixed and due each month. In the big picture, I'd prioritize to make deposits to the 401(k) up to the match, if offered, pay down any higher interest debt such as credit cards, build an emergency account, and then make extra payments to the student loan. Keep in mind, also - if buying a house is an important goal, the savings toward the downpayment might take priority. Student Loans and Your First Mortgage is an article I wrote which describes the interaction between that loan debt and your mortgage borrowing ability. It's worth understanding the process as paying off the S/L too soon can impact that home purchase." }, { "docid": "382325", "title": "", "text": "\"I also talked to the IRS yesterday to get a few of my own questions answered, and I asked a few of these while I was at it (as I didn't know the answers for sure either, even after reading IRS pub 969). To answer your specific questions: I would, however, like to confirm a few things: You are allowed to have multiple HSA accounts. My company forces me to use a specific bank if they are going to be make contributions. However, I would like to move this money to a higher-risk/higher-yield account. You are allowed to withdraw money to reimburse any past payments that were made after the HSA is opened – perhaps years later. This would allow me to accumulate interest on the money and then get reimbursed later. You can transfer money between HSAs, etc. and the money will still cover any payments since the first HSA was opened? I am currently unmarried and without children. An HSA can be made to pay for any dependent or spouse medical bills as well. I am currently signed up with an HSA that is marked as \"\"individual\"\" or something. I assume that once I get married, I should have no issues using this money from the past on my wife and kids? Note that I am not a certified tax professional and you should not rely on this information for your own tax decisions, but should investigate or contact the IRS yourself.\"" }, { "docid": "371176", "title": "", "text": "First, you need to understand the difference in discussing types of investments and types of accounts. Certificate of Deposits (CDs), money market accounts, mutual funds, and stocks are all examples of types of investments. 401(k), IRA, Roth IRA, and taxable accounts are all examples of types of accounts. In general, those are separate decisions to make. You can invest in any type of investment inside any type of account. So your question really has two different parts: Tax-advantaged retirement accounts vs. Standard taxable accounts FDIC-insured CDs vs. at-risk investments (such as stock mutual funds) Retirement accounts are special accounts allowed by the federal government that allow you to delay (or, in some cases, completely avoid) paying taxes on your investment. The trade-off for these accounts is that, in general, you cannot access any of the money that you put into these accounts until you get to retirement age without paying a steep penalty. These accounts exist to encourage citizens to save for their own retirement. Examples of retirement accounts include 401(k) and IRAs. Standard taxable accounts have no tax advantages, but no restrictions, either. You can put money in and take money out whenever you like. However, anything that your investment earns is taxable each year. Inside any of these accounts, you can invest in FDIC-insured bank accounts, such as savings accounts or CDs, or you can invest in any number of non-insured investments, including money market accounts, bonds, mutual funds, stocks, precious metals, etc. Something you need to understand about investing in general is that your potential returns are directly related to the amount of risk that you take on. Investing in an insured investment, which is guaranteed by the government to never lose its value, will result in the lowest potential investment returns that you can get. Interest-bearing savings accounts are currently paying less than 1% interest. A CD will get you a slightly higher interest rate in exchange for you agreeing not to withdraw your money for a period of time. However, it takes a long time for your investments to grow with these investments. If you are earning 1%, it takes 72 years for your investment to double. If you are willing to take some risk, you can earn much more with your investments. Bonds are often considered quite safe; with a bond, you loan money to a government or corporation, and they pay you back with interest. The risk comes from the possibility that the government or corporation won't pay you back, so it is important to choose a bond from an entity that you trust. Stocks are shares in for-profit companies. Your potential investment gain is unlimited, but it is risky, as stocks can go down in value, and companies can close. However, it is important to note that if you take the largest 500 stocks together (S&P 500), the average value has consistently gone up over the long term. In the last 35 years, this average value has gone up about 11%. At this rate, your investment would double in less than 7 years. To avoid the risk of picking a losing stock, you can invest in a mutual fund, which is a collection of stocks, bonds, or other investments. The idea is that you can, with one investment, invest in many stocks, essentially earning the average performance of all the stocks. There is still risk, as the market can be down as a whole, but you are insulated from any one stock being bad because you are diversified. If you are investing for something in the long-term future, such as retirement, stock mutual funds provide a good rate of return at an acceptably-low level of risk, in my opinion." }, { "docid": "413955", "title": "", "text": "To add to @michael's solid answer, I would suggest sitting down and analyzing what your priorities are about paying off the student loan debt versus investing that money immediately. (Regardless, the first thing you should do is, as michael suggested, pay off the credit card debt) Since it looks like you will be having some new expenses coming up soon (rent, possibly a new car), as part of that prioritization you should calculate what your rent (and associated bills) will cost you on a monthly basis (including saving a bit each month!) and see if you can afford to pay everything without incurring new debt. I'd recommend trying to come up with several scenarios to see how cheaply you can live (roommates, maybe you can figure out a way to go without a car, etc). If, for whatever reason, you find you can't afford everything, then I would suggest taking a portion of your inheritance to at least pay off enough of your student loans so that you can afford all of your costs per month, and then save or invest the rest. (You can invest all you like, but if you don't live within your means, it won't do you any good.) Finally -- be aware that you may have other factors that come into play that may override financial considerations. I found myself in a situation similar to yours, and in my case, I chose to pay off my debts, not because it necessarily made the best financial sense, but that because of those other considerations, paying off that debt meant I had a significant level of stress removed from my life, and a lot more peace of mind." }, { "docid": "426227", "title": "", "text": "It's pretty simple. The 10% is any savings for retirement. Preferably, it's in a retirement account, but that's not mandatory. It's great that you save for a vacation, computer, house deposit,etc, but that's not what these articles are referencing. Edit (in response to the running comments on @BrenBarn's answer) The mortgage issue is worth further discussion. I'm saving toward a home purchase, it may be $50K saved. But that's not money for retirement, the house savings never is. I get the $200K mortgage, my balance sheet is net neutral (less fees, closing costs, of course) but my retirement savings again is unchanged. I put $10K toward principal, the balance sheet again is $10K better, but retirement account, unchanged. Last, I pay off the mortgage. Retirement account unchanged. But, my retirement budget requirement is $1000/mo less (The mortgage payment), and my 'number' drops by $300K or so. (This is based on the 4% rule. To withdraw $1000/mo requires $300K in retirement assets.) It may seem pedantic, but there's an important distinction to be made here. It's easy to distinguish retirement savings from all other wise financial transactions. Paying debt off is wise but not retirement savings. Any actions that reduce your ongoing expenses? Clearly, wise. And it reduces the number needed to cover your retirement budget, but it's distinct from 'retirement savings.' For those that enjoy the intellectual exercise of insisting there's always a grey area, I'll give it to you. The family with 3 kids, in the $1.2M 5 bedroom house. The parents know they will move into their paid off summer house upon retiring, and sell this family house. In his wisdom, hubby has planned for the mortgage to be paid in full well ahead of retirement, and for purposes of planning, only view the house as worth $900K. The house does have a relationship to the retirement savings. But the action of planning for Alice's retirement (the maid they will no longer need once they move) is not savings, but rather, an adjustment down in their retirement budget. I think you'll find most conflicts regarding this issue resolved by understanding this distinction." }, { "docid": "128107", "title": "", "text": "\"You can (and definitely should) withdraw any part of the contribution that will put you over the contribution limit. You can (and should if you need to) withdraw to repay any medical payments you made from outside the account. You can (but should avoid at all costs) withdraw (distribute) from the HSA for non-medical reasons. Here's the IRS publication which covers this: https://www.irs.gov/publications/p969 Here's the bit about distributions that covers what you're trying to do: You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. You don’t have to make distributions from your HSA each year. It is better to pay from your checking and reimburse than to over-fund the HSA. Best route forward is to reduce your contributions for the rest of the year, especially if continuing them will cause excess contributions. Another nasty gotcha: Excess contributions. You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. Excess contributions aren’t deductible. Excess contributions made by your employer are included in your gross income. If the excess contribution isn’t included in box 1 of Form W-2, you must report the excess as \"\"Other income\"\" on your tax return. Generally, you must pay a 6% excise tax on excess contributions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. The excise tax applies to each tax year the excess contribution remains in the account. You may withdraw some or all of the excess contributions and avoid paying the excise tax on the amount withdrawn if you meet the following conditions. •You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made. •You withdraw any income earned on the withdrawn contributions and include the earnings in \"\"Other income\"\" on your tax return for the year you withdraw the contributions and earnings. If you will not be over your maximum contribution, let the contribution ride. Make sure your HSA balance is divided between cash, stock fund, bond fund. Much like your 401k. Because the part that you don't spend on medical expenses this year can be spent in future years' medical expenses, and if you have anything left when you retire you can spend it on whatever you want. And the funds, including growth, are not taxed until you distribute them. Bottom line: if the funds will not cause excess contribution, leave them in. Otherwise, take them out as soon as possible.\"" }, { "docid": "578699", "title": "", "text": "It's in your interest to pay down these loans (just like any debt) at an accelerated rate, so long as you prioritize it appropriately and don't jeopardize your financial situation. What are your plans for the $50k? Is it a downpayment on a house? Are you already saving for retirement? At what rate are you saving each year? These are all important questions. There is nothing wrong with using some of the $50k to make a dent in your loans, but overpaying a debt at 6% should not be your first priority. Save for retirement, pay off credit cards, make sure you have an emergency fund of between 6-12 months living expenses (depending on your comfort level as well as how stable you think your job is, and how much you could downsize if need be). Then, tackle extra loan payments. Unfortunately 6% is about what you would expect to get in the market these days, so you can't necessarily make more money investing your remaining cash on hand as compared to putting it towards your loans. And you could always make less. Personally, I would divide the $50k as follows. Insert your own numbers/circumstances :) Of the ~$30k that remains..." }, { "docid": "59124", "title": "", "text": "\"HSAs as they exist today allow a person to contribute tax deductible money (like a traditional IRA) to a savings account. The funds in the savings account can be spent tax free for qualified expenses. If the money is invested it also grows tax free. This means a discount on your cash health expenses of the amount you would have paid in taxes, which given your relative's income isn't likely to be very much. As HSAs exist today they must be paired to a qualified High Deductible Health Plan (HDHP). Many plans have a deductible that meets or exceeds the level set by the regulations but many plans waive the deductible for things like X-Rays; waiving the deductible causes most \"\"high deductible\"\" plans to not qualify for HSA accounts. There are other qualified HSA expenses like Long Term Care (LTC) insurance premiums that can also be spent tax and penalty free from HSA funds. At age 60 with low income an HSA serves little purpose because the tax savings is so marginal and an HDHP is required. That does not however mean that the scope of HSA availability should not be expanded. Just because this is not a silver bullet for everyone does not mean it is of no use to anyone.\"" }, { "docid": "303082", "title": "", "text": "\"I suppose I should update this with what I ended up using some of my HSA funds for... dental work! I'm in my mid-20's and it came time for my wisdom teeth to be removed. While my dental insurance covered the procedure, I had to pay out of pocket for the fancy \"\"conscious sedation\"\" ($325 to make me nice and relaxed, versus plain Novocaine and nervously holding my mouth open, while I get my teeth ripped out). Luckily, I had my HSA to cover it. Also, I may need braces... :\\ Most dental insurance won't cover the cost of orthodontics 100%, so that's another costly, common, and easily-overlooked expense a younger person may have that spare HSA funds can cover.\"" }, { "docid": "484424", "title": "", "text": "Generally, the HSA is self-reported. The bank/financial provider will allow you to withdraw/spend whatever you want from your HSA. They report to the IRS the total that you withdrew for the year (your gross distributions) on a 1099-SA form. At tax time, you use a form 8889 to report this number of your gross distributions, and how much of it was used for medical expenses. Ideally, all of it was used for medical expenses. If it was not all for medical expenses, there will be extra taxes/penalties due. Different HSAs work differently, but for mine, which is held at a credit union, I can get money out several ways. I have an HSA checkbook and an HSA debit card that I can use anywhere. I can also transfer money out of my HSA into my regular checking account to reimburse myself for an expense, or even stop in at the teller window and take out cash. The credit union doesn't need to see any receipts for any of this. They don't care if I'm spending it at the doctor's office or the casino. It is up to me to make sure I'm spending the money in accordance to the law and that everything is reported correctly on my tax return. Nothing is verified unless you get audited. You definitely should keep documentation on the expenses, because if you are audited, you need to be prepared to account for every withdrawal. Make sure you are very familiar with the rules on eligible medical expenses, so you know what is allowed and what is not. IRS Publication 502 has all the details on what is allowed. As far as how it gets counted towards your deductible, you need to make sure that all of your medical bills get sent to your health insurance, even if you will eventually have to pay for it. For example, let's say you go to the doctor, and the bill is $150. Even if you know that the deductible is not met yet and you will be responsible for the entire $150, make sure the doctor's office submits the bill to your insurance. The insurance company will inform the doctor's office that you are responsible for all of it, but they will apply the amount towards your deductible." }, { "docid": "57188", "title": "", "text": "Firstly, make sure annual income exceeds annual expenses. The difference is what you have available for saving. Secondly, you should have tiers of savings. From most to least liquid (and least to most rewarding): The core of personal finance is managing the flow of money between these tiers to balance maximizing return on savings with budget constraints. For example, insurance effectively allows society to move money from savings to stocks and bonds. And a savings account lets the bank loan out a bit of your money to people buying assets like homes. Note that the above set of accounts is just a template from which you should customize. You might want to add in an FSA or HSA, extra loan payments, or taxable brokerage accounts, depending on your cash flow, debt, and tax situation." }, { "docid": "433371", "title": "", "text": "BrenBarn did a great job explaining your options so I won't rehash any of that. I know you said that you don't want to save for retirement yet, but I'm going to risk answering that you should anyway. Specifically, I think you should consider a Roth IRA. When it comes to tax advantaged retirement accounts, once the contribution period for a tax year ends, there's no way to make up for it. For example in 2015 you may contribute up to $5,500 to your IRA. You can make those contributions up until tax day of the following year (April 15th, 2016). After that, you cannot contribute money towards 2015 again. So each year that goes by, you're losing out on some potential to contribute. As for why I think a Roth IRA specifically could work well for you: I'm advocating this because I think it's a good balance. You put away some money in a retirement account now, when it will have the most impact on your future retirement assets, taking advantage of a time you will never have again. At a low cost custodian like Vanguard, you can open an IRA with as little as $1,000 to start and choose from excellent fund options that meet your risk requirements. If you end up deciding that you really want that money for a car or a house or beer money, you can withdraw any of the contributions without fear of penalty or additional tax. But if you decide you don't really need to take that money back out, you've contributed to your retirement for a tax year you likely wouldn't have otherwise, and wouldn't be able to make up for later when you have more than enough to max out an IRA each year. I also want to stress that you should have a liquid emergency fund (in a savings or checking account) to deal with unexpected emergencies before funding something like this. But after that, if you have no specific goal for your savings and you don't know for sure you'll actually need to spend it in the near future, funding a Roth IRA is worth considering in my opinion." }, { "docid": "441518", "title": "", "text": "\"A good question -- there are many good tactical points in other answers but I wanted to emphasize two strategic points to think about in your \"\"5-year plan\"\", both of which involve around diversification: Expense allocation: You have several potential expenses. Actually, expenses isn't the right word, it's more like \"\"applications\"\". Think of the money you have as a resource that you can \"\"pour\"\" (because money has liquidity!) into multiple \"\"buckets\"\" depending on time horizon and risk tolerance. An ultra-short-term cushion for extreme emergencies -- e.g. things go really wrong -- this should be something you can access at a moment's notice from a bank account. For example, your car has been towed and they need cash. A short-term cushion for emergencies -- something bad happens and you need the money in a few days or weeks. (A CD ladder is good for this -- it pays better interest and you can get the money out quick with a minimal penalty.) A long-term savings cushion -- you might want to make a down payment on a house or a car, but you know it's some years off. For this, an investment account is good; there are quite a few index funds out there which have very low expenses and will get you a better return than CDs / savings account, with some risk tolerance. Retirement savings -- $1 now can be worth a huge amount of money to you in 40 years if you invest it wisely. Here's where the IRA (or 401K if you get a job) comes in. You need to put these in this order of priority. Put enough money in your short-term cushions to be 99% confident you have enough. Then with the remainder, put most of it in an investment account but some of it in a retirement account. The thing to realize is that you need to make the retirement account off-limits, so you don't want to put too much money there, but the earlier you can get started in a retirement account, the better. I'm 38, and I started both an investment and a retirement account at age 24. They're now to the point where I save more income, on average, from the returns in my investments, than I can save from my salary. But I wish I had started a few years earlier. Income: You need to come up with some idea of what your range of net income (after living expenses) is likely to be over the next five years, so that you can make decisions about your savings allocation. Are you in good health or bad? Are you single or do you have a family? Are you working towards law school or medical school, and need to borrow money? Are you planning on getting a job with a dependable salary, or do you plan on being self-employed, where there is more uncertainty in your income? These are all factors that will help you decide how important short-term and long term savings are to your 5-year plan. In short, there is no one place you should put your money. But be smart about it and you'll give yourself a good head start in your personal finances. Good luck!\"" }, { "docid": "593962", "title": "", "text": "In my opinion, the fee is criminal. There are ETFs available to the public that have expenses as low as .05%. The index fund VIIIX an institution level fund available to large 401(k) plans charges .02%. I'll pay a total of under 1% over the next 50 years, Consider that at retirement, the safe withdrawal rate has been thought to be 4%, and today this is considered risky, perhaps too high. Do you think it's fair, in any sense of the word to lose 30% of that withdrawal? Another angle for you - In my working years, I spent most of those years at either the 25% or 28% federal bracket taxable income. I should spend my retirement at 15% marginal rate. On average, the purpose of my 401(k) was to save me (and my wife) 10-13% in tax from deposit to withdrawal. How long does it take for an annual 1.1% excess fee to negate that 10% savings? If one spends their working life paying that rate, they will lose half their wealth to those managing their money. PBS aired a show in its Frontline series titled The Retirement Gamble, it offers a sobering look at how such fees are a killer to your wealth." }, { "docid": "388145", "title": "", "text": "Yes, absolutely. The HSA, when used for medical expenses, allows you to essentially pay for your medical expenses tax free. Even if you don't have extra room in your budget, you can fund the HSA as you incur medical expenses, then withdraw money to pay the expenses, and you'll see an immediate tax benefit at tax time. However, let's say that you have plenty of room in your budget and you don't have a lot of medical expenses. You already contribute the maximum to your 401(k) or IRA, and you want to do more. The HSA acts like a retirement account in this case, allowing you to contribute before-tax money and let it grow untaxed. The HSA does have a huge benefit that no other retirement account has. If you choose not to reimburse yourself for medical expenses, but you keep track of the unreimbursed expenses you incur, then you can reimburse yourself for these expenses at any point in the future completely tax free. Essentially, your contributions are treated like a traditional IRA, but your withdrawals are treated like a Roth IRA, and can be done at any age. If you don't acquire enough medical expenses, you can still withdraw whatever is left at age 65 and those withdrawals will be taxed like a traditional IRA. The HSA provides for tax-free contributions and growth if used for medical expenses, and tax-deferred growth if withdrawn after age 65 without medical expenses." }, { "docid": "352794", "title": "", "text": "\"First of all, one thing that is very important: Match is always better than no match. So, you should definitely use that match on your HSA if you've already maxed out the company match on your 401(k). In fact, for most people there won't be much reason to invest in your 401(k) above the company match at all. If, for example, your company matches only up to 5%, and you want to invest 15% of income into retirement, you ought to open an IRA instead (Roth or standard depending on your situation) and put the extra 10% in there. Beyond that, you're right, HSA's (the accounts themselves) have all the benefits of a 401(k). I wouldn't invest there for retirement instead an IRA, though. There is just no reason. The only built-in downside of an HSA is the HDHP attachment, which may be undesirable to some employees or in certain situations. If you want to get down to raw dollar figures and your company is offering both a standard health plan and a HDHP+HSA, the calculation will be dependent on the premiums and benefits of each and your projected costs of your health care (which is always a crystal ball estimation anyway). Those costs and benefits can vary wildly, from a completely obvious choice on either the HDHP or standard plan, or pretty much a wash where you decide based on your comfort level with a high deductible. To illustrate... Standard plan: Your company might offer a standard plan that costs you $100 out of pocket for an individual. That means you pay a minimum of $1200 a year for health care. Most plans will have copays (a flat amount like $15 you pay for standard doctor consultations), a deductible (you pay 100% of fees up to this, co-pays don't count), a percentage you pay beyond the deductible (20% is typical), and a maximum (like $1000 per individual per year - beyond this, up to a \"\"lifetime\"\" maximum benefit of like $2 million, you won't be charged anything). In a standard plan where you have no expenses, you might pay $1200 a year plus a couple co-pays, for a total of $1230. In a bad year with surgery, you might max out, so $1200 + $30 + $1000 = $2230. HDHP/HSA: These plans are very different. You might still pay a premium, I.E. $30 a month. They will still have a deductible and maximum, but they might be the same amount. You will probably not have copays (I didn't when I had one, but I could be wrong), which means a standard doctor visit will cost more like $80-100. In a good year, this will mean that you pocket $500 from your company, but pay back $360 in premiums. A couple doctor visits would mean there's only $300 left in your account at the end of the year. But, that's still a net cost of only $60, compared to $1230. Big win! In a bad year, you would end up out of pocket the max (say $2000) plus premiums, minus the $500, for a total of $1860. In this case, still better than the standard plan. The important difference will come in an in-between year. You will reach the max quicker on an HDHP than you will on a standard plan. With a family, where all of these numbers are higher, and you have more people to be getting sick/injured this might make the standard plan a better benefit. However, since whatever you build up in an HSA account stays with you forever, while you're single and have only your own health to be concerned about, that is probably a good choice. When you have a family, things might change and you switch to a standard plan, but you still have that war-chest to offset copays and hospital visits in future years. I was forced onto an HSA for 2 years with a smaller company. They had a really good contribution, $2500 if I remember right, and we saved up big time. Later, when my wife was pregnant, we were on a low-deductible standard plan and paid all our fees out of the HSA. It worked out great. I say, as long as the averaged yearly expected costs make sense after doing calculations illustrated above, go for it!\"" }, { "docid": "71360", "title": "", "text": "As long as your total doesn't exceed the per-year limit, you should be able to deposit after-tax money into your Health Savings Account. Contact the HSA administrator for details. Note that unless your employer sets this up, you'd be sending them after-tax money, which goes in the same category as other non-reimbursed health expenses, so you may not get any immediate tax savings by doing this vs. just spending the money out of pocket. However, once there us enough reserve money in your HSA for you to invest it in the same way a 401k can be invested, it will grow tax-free. So if you're putting in significantly more than you expect to withdraw any time soon, this may still be a worthwhile thing to do. Definitely talk to HR about whether you can still get it set up pre-tax... though most employers don't allow midyear changes unless there has been a significant change in your family (new wife, new kids, that sort of thing)." }, { "docid": "585688", "title": "", "text": "Liquidity. That's the issue. You rent, and that's not bad. No new roof, boiler, etc. But, you have a car? Your savings is a guarantee that you'll not have to charge a $2000 transmission on an 18% credit card. You job may be secure, but employment (aside from self employment) is never 100% guaranteed. With $3000 income per month, I'd not prepay the student loan until I had at least $9000 in savings. We don't know your country, although we don't have fortnights in the US, so if you are in the US, you have a non-US background. Either way, if your employer offers any kind of matching retirement deposits, I'd prioritize that. Never leave that matched money on the table. You are off to a great start, this relatively low student loan debt shouldn't keep you awake at night." } ]

[ { "docid": "388646", "title": "", "text": "\"You would want to prioritize Roth and retirement over HSA. As the HSA is only for health and dental expenses, which you will always have, overfunding it will put you in a bit of a pickle for all of the life involved. For example, even if you or a loved one develop a strange & expensive ailment, the HSA will only cover the medical costs, but not any travel to specialists, hotel stays, home alterations, special vehicles, or lifestyle alterations (food, clothing). However, you will eventually stop working even if you are healthy throughout your life. I would suggest that you treat the HSA as a part of your overall emergency fund, giving it a cap the same as you would normal non-retirement savings. Since you stated you have three young children, small and large medical expenses (such as braces, trips to the emergency room) are something that are almost guaranteed, thus having fairly large amount in the HSA would be very beneficial throughout their time with you. Once the children have left however, if you still have an overwhelming balance in your HSA, you may not want to add anymore to the HSA. Setting a cap for the HSA based off a certain number of years of deductible payments for medication would be a good place to start. Roth accounts, whether it be within your company's 401k plan or the IRAs for yourself and your spouse, are single-handedly the best location for your money for long-term savings. Roth money grows tax-free, is immune to Required Minimum Distribution provisions, and will avoid estate escrow when going to one's beneficiaries. Even if you tap into the funds prior to age 59 1/2, you would only pay taxes on any investment growth, in addition to the 10% early withdrawal penalty. If you have established Roth IRA accounts and have an AGI that disallows you to further contribute to them, there is still a provision to get Roth funds contributed via conversion through what is commonly called a \"\"back door\"\" Roth.\"" } ]

[ { "docid": "148976", "title": "", "text": "I think JohnFx's answer is pretty much the right thing to do. I'd just like to suggest that the budget doesn't have to be fixed. It sounds like you aren't completely sure what an acceptable lifestyle costs for you, and it might feel like a budget locks you into a spending pattern that could end up being unfulfilling, or keep you in debt longer than necessary. To reduce that risk, you could start with a very easy level of contributions, then every month see if you can spend $10-$50 less without sacrificing in the lifestyle department. And eventually if you feel like you're missing out, you can stick with the previous month's budget. You might avoid depriving yourself by starting with something easy, but I think if you make an effort to save money, you'll more likely be surprised how much you can improve your lifestyle while spending less. I like a lot of the advice on Mr. Money Mustache and Early Retirement Extreme, and I'd recommend the introductory sections of both blogs if you ever hit a block at some level of contribution. And one minor (highly situational) comment: You mentioned having less to save if you contribute more, but if you have high interest loans, paying them down early can be (pretty much) a guaranteed very high ROI. So while you might want to prioritize an emergency fund and maybe an employer match first, most saving will probably be less useful than extra contributions." }, { "docid": "57188", "title": "", "text": "Firstly, make sure annual income exceeds annual expenses. The difference is what you have available for saving. Secondly, you should have tiers of savings. From most to least liquid (and least to most rewarding): The core of personal finance is managing the flow of money between these tiers to balance maximizing return on savings with budget constraints. For example, insurance effectively allows society to move money from savings to stocks and bonds. And a savings account lets the bank loan out a bit of your money to people buying assets like homes. Note that the above set of accounts is just a template from which you should customize. You might want to add in an FSA or HSA, extra loan payments, or taxable brokerage accounts, depending on your cash flow, debt, and tax situation." }, { "docid": "583640", "title": "", "text": "It depends on how much you save, how much your savings earns each year. You can model it with a very simple spreadsheet: Formula view: You can change this simple model with any other assumptions you wish to make and model. This spreadsheet presumes that you only make $50,000/year, never get a raise, that your savings earns 6% per year and that the market never has a crash like 2008. The article never states the assumptions that the author has made, and therefore we can't honestly determine how truthful the author is. I recommend the book Engineering Your Retirement as it has more detailed models and goes into more details about what you should expect. I wrote a slightly more detailed post that showed a spreadsheet that is basically what I use at home to track my retirement savings." }, { "docid": "584241", "title": "", "text": "\"As others have mentioned, you avoid \"\"payroll taxes\"\" (Medicaid, Social Security, etc) by using pre-tax money rather than post-tax money. However, there is one benefit to getting your own privately held one: you can choose the service provider. A previous employer's HSA charged $4/month, and did not allow me to invest in any funds unless I had over $4k in my account. However, a single year's maximum contribution is less than $4k, so it was stuck in a money market account perpetually. The tax saving probably is larger than both your monthly fees and your investment gains, but the HSA provider's rules are another (fairly-opaque) consideration.\"" }, { "docid": "345403", "title": "", "text": "\"Congratulations. The first savings goal should be an emergency fund. Think of this not as an investment, but as insurance against life's woes. They happen and having this kind of money earmarked allows one to invest without needing to withdraw at an inopportune time. This should go into a \"\"high interest\"\" savings account or money market account. Figure three to six months of expenses. The next goal should be retirement savings. In the US this is typically done through 401K or if your company does not offer one, either a ROTH IRA or Traditional IRA. The goal should be about 15% of your income. You should favor a 401k match over just about anything else, and then a ROTH over that. The key to transforming from a broke college student into a person with a real job, and disposable income, is a budget. Otherwise you might just end up as a broke person with a real job (not fun). Part of your budget should include savings, spending, and giving. All three areas are the key to building wealth. Once you have all of those taking care of the real fun begins. That is you have an emergency fund, you are putting 15% to retirement, you are spending some on yourself, and giving to a charity of your choice. Then you can dream some with any money left over (after expenses of course). Do you want to retire early? Invest more for retirement. Looking to buy a home or own a bunch of rental property? Start educating yourself and invest for that. Are you passionate about a certain charity? Give more and save some money to take time off in order to volunteer for that charity. All that and more can be yours. Budgeting is a key concept, and the younger you start the easier it gets. While the financiers will disagree with me, you cannot really invest if you are borrowing money. Keep debt to zero or just on a primary residence. I can tell you from personal experience that I did not started building wealth until I made a firm commitment to being out of debt. Buy cars for cash and never pay credit card interest. Pay off student loans as soon as possible. For some reason the idea of giving to charity invokes rancor. A cursory study of millionaires will indicate some surprising facts: most of them are self made, most of them behave differently than pop culture, and among other things most of them are generous givers. Building wealth is about behavior. Giving to charity is part of that behavior. Its my own theory that giving does almost no good for the recipient, but a great amount of good for the giver. This may seem difficult to believe, but I ask that you try it.\"" }, { "docid": "406324", "title": "", "text": "Based on your comment that you do not itemize your deductions, I think that's probably the next step for you to consider. Many of the suggestions that we would give require that you itemize. If you are not familiar with the potential deductions it would probably be worth your while to visit with a local tax professional and discuss your expenses including what changes you could make to minimize your tax bill. Ultimately becoming eligible for the 401(k) if possible will allow you access to the biggest avenue for reducing tax liability. It sounds like you are already prioritizing and saving for retirement through your IRA, but most earners in the 25% bracket can't put the recommended 15% into savings (with tax advantages) through an IRA." }, { "docid": "578699", "title": "", "text": "It's in your interest to pay down these loans (just like any debt) at an accelerated rate, so long as you prioritize it appropriately and don't jeopardize your financial situation. What are your plans for the $50k? Is it a downpayment on a house? Are you already saving for retirement? At what rate are you saving each year? These are all important questions. There is nothing wrong with using some of the $50k to make a dent in your loans, but overpaying a debt at 6% should not be your first priority. Save for retirement, pay off credit cards, make sure you have an emergency fund of between 6-12 months living expenses (depending on your comfort level as well as how stable you think your job is, and how much you could downsize if need be). Then, tackle extra loan payments. Unfortunately 6% is about what you would expect to get in the market these days, so you can't necessarily make more money investing your remaining cash on hand as compared to putting it towards your loans. And you could always make less. Personally, I would divide the $50k as follows. Insert your own numbers/circumstances :) Of the ~$30k that remains..." }, { "docid": "484424", "title": "", "text": "Generally, the HSA is self-reported. The bank/financial provider will allow you to withdraw/spend whatever you want from your HSA. They report to the IRS the total that you withdrew for the year (your gross distributions) on a 1099-SA form. At tax time, you use a form 8889 to report this number of your gross distributions, and how much of it was used for medical expenses. Ideally, all of it was used for medical expenses. If it was not all for medical expenses, there will be extra taxes/penalties due. Different HSAs work differently, but for mine, which is held at a credit union, I can get money out several ways. I have an HSA checkbook and an HSA debit card that I can use anywhere. I can also transfer money out of my HSA into my regular checking account to reimburse myself for an expense, or even stop in at the teller window and take out cash. The credit union doesn't need to see any receipts for any of this. They don't care if I'm spending it at the doctor's office or the casino. It is up to me to make sure I'm spending the money in accordance to the law and that everything is reported correctly on my tax return. Nothing is verified unless you get audited. You definitely should keep documentation on the expenses, because if you are audited, you need to be prepared to account for every withdrawal. Make sure you are very familiar with the rules on eligible medical expenses, so you know what is allowed and what is not. IRS Publication 502 has all the details on what is allowed. As far as how it gets counted towards your deductible, you need to make sure that all of your medical bills get sent to your health insurance, even if you will eventually have to pay for it. For example, let's say you go to the doctor, and the bill is $150. Even if you know that the deductible is not met yet and you will be responsible for the entire $150, make sure the doctor's office submits the bill to your insurance. The insurance company will inform the doctor's office that you are responsible for all of it, but they will apply the amount towards your deductible." }, { "docid": "413955", "title": "", "text": "To add to @michael's solid answer, I would suggest sitting down and analyzing what your priorities are about paying off the student loan debt versus investing that money immediately. (Regardless, the first thing you should do is, as michael suggested, pay off the credit card debt) Since it looks like you will be having some new expenses coming up soon (rent, possibly a new car), as part of that prioritization you should calculate what your rent (and associated bills) will cost you on a monthly basis (including saving a bit each month!) and see if you can afford to pay everything without incurring new debt. I'd recommend trying to come up with several scenarios to see how cheaply you can live (roommates, maybe you can figure out a way to go without a car, etc). If, for whatever reason, you find you can't afford everything, then I would suggest taking a portion of your inheritance to at least pay off enough of your student loans so that you can afford all of your costs per month, and then save or invest the rest. (You can invest all you like, but if you don't live within your means, it won't do you any good.) Finally -- be aware that you may have other factors that come into play that may override financial considerations. I found myself in a situation similar to yours, and in my case, I chose to pay off my debts, not because it necessarily made the best financial sense, but that because of those other considerations, paying off that debt meant I had a significant level of stress removed from my life, and a lot more peace of mind." }, { "docid": "27671", "title": "", "text": "\"For an RRSP, you do not have to pay taxes on money or investments until you withdraw the money. If you do not reinvest the dividends but instead, take them out as cash, that would be withdrawing the money. For mutual funds, you would normally reinvest the dividends if holding the investment inside an RRSP. For stocks, I believe the dividends would end up sitting in the cash part of your RRSP account (and you'd probably use the money to buy more stocks, though would not be required to do so). Either way, you do not pay tax on this investment income unless you withdraw it from your RRSP. For example, you invest $10,000 inside your RRSP. You get the tax benefit from doing so. You get dividends of $1,000 (hey, it was a good year), and use these to buy more stock. As the money never left your RRSP account, you are considered to have invested only your initial $10,000. If instead, you withdraw the $1,000 in dividends, you are taxed on $1000 income. TFSA are slightly more complicated. You don't get a tax benefit from your initial contribution, but then do not pay tax when you withdraw from the TFSA. Your investment income is still tax-free, and you are (generally) much more limited in how much you can contribute. For example, you invest $10,000 inside your TFSA. You get dividends of $1,000, and use these to buy more stock. Your total contributions to your TFSA remains at $10,000 as the money never left your account. You could instead withdraw the $1000 from your TFSA and would not pay tax on it. In the next calendar year (or later) after the withdrawal, you could \"\"repay\"\" the $1000 you took out without suffering an overcontribution penalty. This makes TFSA an excellent place to park emergency funds, as you can withdraw and subsequently replace the investment while continuing to get the tax benefits on your investment income. RRSPs are better for retirement or for the home buyers plan. In general, you should not be withdrawing money from either your TFSA or RRSP, except in emergencies, when retiring, or when purchasing a home. I prefer indexed mutual funds or money market accounts for both my RRSP and TFSA rather than individual stocks, but that's up to you.\"" }, { "docid": "198371", "title": "", "text": "An important risk is that the government may decide to change the rules. For example, prior to 2011, over the counter drugs like aspirin, Tylenol, Nyquil, etc. were eligible expenses. You could use your HSA money to buy as much as you wanted. Beginning in 2011, those rules changed. Now, if you want to spend your HSA money on Tylenol, you need a prescription for it. The value of HSA dollars was diminished in the sense that the universe of eligible expenses was diminished. No one knows what the HSA rules will be in the future. What will be eligible expenses? Who will be eligible providers? What kind of compliance paperwork will be required? What kind of fees will be imposed? Personally, I'm a great believer in HSAs. I've saved in one for years. But remember that the government makes the rules regarding their use. They've changed the rules to the detriment of HSA owners at least once; I won't be surprised if it continues." }, { "docid": "489480", "title": "", "text": "You will find lots of rules of thumb but there is no universal truth to how much you should save. There are factors you DO need to consider though: you should start as early as possible to set money aside for retirement. You should then use a retirement calculator to at least get an understanding of the amount you need to set aside each month to achieve the desired retirement income; your default should be not to spend money and only spend money when you must. Leisure, travel and eating out should come last after you have saved up; you should have funds for different terms. For example, my wife and I have an emergency fund for unexpected expenses or losses in income. The rule of thumb here generally is to have 3-6 months of salary saved up. A longer term fund should be created for larger expenses like buying a car or preparing the cashdown on a property. Finally, the retirement fund which should cover your needs after you have retired." }, { "docid": "447353", "title": "", "text": "\"I think that people only use the phrase \"\"only spend what you can afford to lose\"\" when they are talking about the most risky or speculative investments, or even gambling. When talking about gambling, the following quote is a bottom line: The speculative investment that brought me to this question via google is how much should I invest in Bitcoin? I was tempted to put in 10% of my investments, not including the 6 month safety fund and not including equity in my home. Now thinking about this question, it seems that it depends on your income as a percentage of your investment income (which should grow in proportion to the whole over time). For example: Early stage of career, not much investment income: 20% Mid career: 5% Mid-late career, moving to more safe investments: 5% Late career, retirement: 1% Another way to calculate would be as a percentage of the amount you put into retirement savings per year. Maybe 10% of this figure when you're young and 1% nearer to retirement.\"" }, { "docid": "233394", "title": "", "text": "\"Paying someone to look after your money always costs something - it doesn't matter whether you're inside a pension or not. Fees are highest for \"\"actively managed\"\" funds and lowest for passively managed funds or things where you choose the investments directly - but in the latter case you might pay out a lot in dealing fees. Typically pensions will have some small additional costs on top of that, but those are hugely outweighed by the tax advantages - payments into a pension are made from gross salary (subject to an annual limit), and growth inside the pension is tax free. You do pay income tax when you take the money out though - but by then your marginal tax rate may well have dropped. If you want to control your own investments within a pension you can do this, subject to choosing the right provider - you don't have to be invested in the stockmarket at all (my own pension isn't at the moment). I wrote an answer to another question a while ago which briefly summarises the options As far as an annuity goes, it's not as simple as the company taking the money you saved when you die. The point of an annuity is that you can't predict when you'll die. Simplifying massively, suppose the average life expectancy when you retire is 20 years and you have 100K saved, and ignore inflation and interest for now. Then on average you should have 5K/year available - but since you don't know when you'll die if you just spend your money at that rate you might run out after 20 years but still be alive needing money. Annuities provide a way of pooling that risk - in exchange for losing what's left if you die \"\"early\"\", you keep getting paid beyond what you put in if you die \"\"late\"\". Your suggestion of taking the dividends from an index tracker fund - or indeed the income from any other investment - is fine, but the income will be substantially less than an annuity bought with the same money because you won't be using up any capital, whereas an annuity implicitly does that. Depending on the type of investment, it might also be substantially more risky. Overall, you only need to secure the income you actually need/want to live on. Beyond that level, keeping your money outside the pension system makes some sense, though this might change with the new rules referred to in other answers that mean you don't have to buy an annuity if you have enough guaranteed income anyway. In any case, I strongly suggest you focus first on ensuring you have enough to live on in retirement before you worry about leaving an inheritance. As far as setting up a trust goes, you might be able to do that, but it would be quite expensive and the government tends to view trusts as tax avoidance schemes so you may well fall foul of future changes in the rules.\"" }, { "docid": "518266", "title": "", "text": "FASFA financial aid formulas determine 'expected family contribution'. For example my alma mater now has a 'list price of over $65k/year. The average student today actually pays $42k/year after grants. Students with rich parents pay more than that. Students with poor parents pay less than that. Lets say list prices for my kids colleges average $110k/year while they are in school. If we 'only' make $200k then based on our income alone, EFC would start in the low $50ks per year. If we have $1M saved in taxable accounts, 529s, rental properties, etc, then we also have to pay 5.64% of the value of those every year for the eight years my kids will be attending - an *extra* $56.4k/year every year for 8 years. If that $1M is in assets that don't count such as retirement accounts and equity in primary residence, then it doesn't increase the price my kids are billed. That's a pretty big incentive to put everything I can in home equity, Roth IRA, Spousal Roth IRA, traditional 401k, after-tax 401k, and HSA. If I could afford to save more I'd switch from traditional to Roth 401k and pre-pay retirement taxes at a higher marginal rate rather than have the savings on the side subjected to the college wealth/income taxes which are effectively a much higher difference between the 25% (now) and 15% (later) federal tax brackets. Profile and consensus formulas have slightly different percentages and count some home equity if you have an expensive house, but the general idea is the same." }, { "docid": "98727", "title": "", "text": "This is referred to as an HSA Mistaken Distribution. An HSA mistaken distribution occurs when you take a distribution and later find out that it is not for a qualified medical expense. For example, this could occur if you accidentally pay for a restaurant dinner with your HSA debit card. It can also occur if you take a distribution to pay for a medical expense, but then are later reimbursed by insurance. This is discussed in the instructions for IRS forms 1099-SA and 5498-SA. (Note: these forms are submitted by the HSA bank, not the consumer, so the instructions are addressed to them.) HSA mistaken distributions. If amounts were distributed during the year from an HSA because of a mistake of fact due to reasonable cause, the account beneficiary may repay the mistaken distribution no later than April 15 following the first year the account beneficiary knew or should have known the distribution was a mistake. For example, the account beneficiary reasonably, but mistakenly, believed that an expense was a qualified medical expense and was reimbursed for that expense from the HSA. The account beneficiary then repays the mistaken distribution to the HSA. You have until April 15 in the year following the refund to repay the HSA and avoid the extra tax and penalty that should be paid if you were to keep the distribution that was not ultimately used for medical expenses. When you send the money to the HSA bank, you need to explicitly tell them that it is a mistaken distribution repayment, so that they can report it to the IRS correctly and it will not affect your contribution limits." }, { "docid": "1134", "title": "", "text": "The HSA money is yours to keep. You can't add new money into the account and get a tax deduction for the new money, but you can spend the old money on medical expenses. First log into the website for the HSA and see if you have money left. This can be important because if there is still money left they might be charging you a monthly fee. You should have gotten a letter from the old company or the administrator when you left the High deductible insurance plan. This would have told you your options regarding the spending or transferring of old funds. HSA related numbers would have appeared on your W2, and you should have a 1099-SA from the administrator. It is likely that there is a copy of the 1099 on the administrators website. The numbers you enter on the tax forms depends on how much you contributed from your paycheck, how much your company contributed, and how much you sent (if any) from other sources besides payroll deduction. You will also have to know how much money was withdrawn from the HSA and how much was used for medical purposes. The last month rule is for those people who start in the middle of the year. If you start partway through the year you are allowed to make the maximum contribution if you still have it at the end of the year, and you expect to keep it. The Last Month Rule The Last Month Rule states that if you are covered by an HSA eligible health plan on the first day of the last month of a given year, you are considered an eligible individual for the entire year. In turn, you can then contribute to the HSA for that full year. If you are covered by an HDHP on Dec 1st of a given year, you may contribute the maximum for that year. For example, you could begin coverage and open up my HSA in November of a given year. Come December 1st, you are covered and per the Last Month Rule, considered an eligible employee for that full year. That allows you to contribute up to that year’s contribution limit, even waiting a few months to make a prior year contribution if you like. Back up the truck and load up the HSA! However, there is a catch. The Testing Period The Testing Period states if you use the Last Month Rule, you must remain an eligible individual (covered by HDHP) for the following 12 months. If you fail to remain an eligible individual (change insurance plans, lose insurance plan, receive other health coverage) any “extra” contributions you made as a result of the Last Month Rule will be taxed and penalized. If you contribute per the Last Month Rule and end your HDHP insurance within 1 year, you will have to pay tax on any excess contributions you were allowed to make and pay a 10% penalty. In this case, “excess” contributions are determined by the contribution limit / 12 months, compared to your time eligible." }, { "docid": "303082", "title": "", "text": "\"I suppose I should update this with what I ended up using some of my HSA funds for... dental work! I'm in my mid-20's and it came time for my wisdom teeth to be removed. While my dental insurance covered the procedure, I had to pay out of pocket for the fancy \"\"conscious sedation\"\" ($325 to make me nice and relaxed, versus plain Novocaine and nervously holding my mouth open, while I get my teeth ripped out). Luckily, I had my HSA to cover it. Also, I may need braces... :\\ Most dental insurance won't cover the cost of orthodontics 100%, so that's another costly, common, and easily-overlooked expense a younger person may have that spare HSA funds can cover.\"" }, { "docid": "433371", "title": "", "text": "BrenBarn did a great job explaining your options so I won't rehash any of that. I know you said that you don't want to save for retirement yet, but I'm going to risk answering that you should anyway. Specifically, I think you should consider a Roth IRA. When it comes to tax advantaged retirement accounts, once the contribution period for a tax year ends, there's no way to make up for it. For example in 2015 you may contribute up to $5,500 to your IRA. You can make those contributions up until tax day of the following year (April 15th, 2016). After that, you cannot contribute money towards 2015 again. So each year that goes by, you're losing out on some potential to contribute. As for why I think a Roth IRA specifically could work well for you: I'm advocating this because I think it's a good balance. You put away some money in a retirement account now, when it will have the most impact on your future retirement assets, taking advantage of a time you will never have again. At a low cost custodian like Vanguard, you can open an IRA with as little as $1,000 to start and choose from excellent fund options that meet your risk requirements. If you end up deciding that you really want that money for a car or a house or beer money, you can withdraw any of the contributions without fear of penalty or additional tax. But if you decide you don't really need to take that money back out, you've contributed to your retirement for a tax year you likely wouldn't have otherwise, and wouldn't be able to make up for later when you have more than enough to max out an IRA each year. I also want to stress that you should have a liquid emergency fund (in a savings or checking account) to deal with unexpected emergencies before funding something like this. But after that, if you have no specific goal for your savings and you don't know for sure you'll actually need to spend it in the near future, funding a Roth IRA is worth considering in my opinion." } ]

[ { "docid": "419319", "title": "", "text": "My understanding (I am not a lawyer or tax expert) is that you are not allowed to work for free, but you can pay yourself minimum wage for the hours worked. There are probably National Insurance implications as well but I don't know. The main thing is, though, that if HMRC think that you've set up this system as a tax avoidance scheme then they're allowed to tax you as though all the income had been yours in the first place. If you are considering such a setup I would strongly advise you to hire a qualified small business accountant who will be familiar with the rules and will be able to advise you on what is and is not possible / sensible. Falling outside the rules (even inadvertently) leaves you liable to a lot of hassle and potentially fines etc." } ]

[ { "docid": "93157", "title": "", "text": "\"TLDR: You will probably need to move to a different employer to get the raise you want/need/deserve. Some employers, in the US, punish longevity through a number of practices. My wife worked as a nurse for about 20 years. During that time she had many employers, leveraging raises with job changes. She quit nursing about 6 years ago and was being paid $38/hour at the time. She had a friend that worked in the same system for 18 years. They had the same position in the same hospital that friend's current rate of pay: $26/hour. You probably don't want to be that person. Given your Stack Overflow participation, I would assume you are some type of web developer. I would recommend updating your resume, and moving for a 20% increase or more. You'll get it as it is a great time to be a web developer. Spending on IT tends to go in cycles, and right now budgets are very healthy for hiring new talent. While your current company might not have enough money in the budget to give you a raise, they would not hesitate hiring someone with your skills at 95K if they had an opening. Its common, but frustrating to all that are involved except the bean counters that looks at people like us as commodities. Think about this: both sides of the table agree that you deserve a 5K raise. But lets say next year only 3k is in the budget. So you are out the 5k you should have been given this year, plus the 2k that you won't get, plus whatever raise was fair for you next year. That is a lot of money! Time to go! Don't bother on holding onto any illusions of a counter offer by your current employer. There will be too much resentment. Shake the dust off your feet and move on. Edit: Some naysayers will cite short work histories as problems for future employment. It could happen in a small number of shops, but short work histories are common in technology that recruiters rarely bat an eye. If they do, as with any objection, it is up to you to sell yourself. In Cracking the Code Interview the author cites that no one is really expecting you to stay beyond 5 years. Something like this would work just fine: \"\"I left Acme because there were indications of poor financial health. Given the hot market at the time I was able to find a new position without the worry of pending layoffs.\"\" If you are a contractor six month assignments are the norm. Also many technology resumes have overlapping assignments. Its what happens when someone is in demand.\"" }, { "docid": "473292", "title": "", "text": "\"Personally, I avoid making business deals with friends and relatives. There's just too much of a possibility that things can go wrong. Let's assume that you're honest people and you have no intention of cheating your mother-in-law. Still, all sorts of things could happen that could make it difficult for you to repay the loan. You could lose your job. You could get some big medical expense. Etc. Then what happens? Then your financial problems become family problems. There's a strong temptation when people borrow from relatives to make paying the loan the lowest priority in their budget. \"\"I know I promised to pay \\$X per month, but things are really tight right now and Mom should understand.\"\" Maybe she does understand and can manage without it. But maybe not. And then it becomes a family fight. \"\"You promised you'd pay it back.\"\" \"\"And we will, we're having a hard time right now. Can't you just give us a break?\"\" Etc. Or she might have some extra expense, and say, \"\"Hey, can't you pay a little more this month? I really need some extra cash.\"\" \"\"I'm sorry, we're struggling just to make the regular payments, we can't.\"\" \"\"Well I was willing to loan you all this money. The least you could do is pay me back when I need it.\"\" Etc. You can end up ruining family relationships over money. Your wife can find herself in the position of having to choose whether to side with her mother or her husband. Etc. I'm sure plenty of people do things like this and it works out just great. But there are big risks. And by the way, apparently this was your idea, not your mother-in-laws. I wonder what her reaction is. Is she eager to help out her daughter and son-in-law and had nothing in particular to do with the money anyway? Or is she feeling very imposed on? It's one thing to ask relatives to let you borrow their car for the weekend. Asking someone to loan you $50,000 is a very big request. If one of my kids asked me to loan them $50,000 from my retirement fund, I'd consider that a very presumptuous request. (Unless they needed the money for life-saving surgery for my grandchild or some such.)\"" }, { "docid": "442441", "title": "", "text": "It was easy to get my first job out of college, but I had pretty direct experience from working at a job during college. To give more specific detail, my first job was doing marketing on the digital side (CRM, website, analytics, etc.). I was able to apply what I learned in economics (multivariate testing) to marketing. So, while there was a little learning curve with the marketing side of things, working with CRM in the past and understanding how to apply my economics degree to marketing allowed me to get the job. Like I said, you can do anything with an econ degree." }, { "docid": "528518", "title": "", "text": "Buy and hold doesn't have an exact definition, as far as I know. In my opinion, it's offered as a contrast to those who trade too frequently, or panic every time the market drops 2%. For the general market, e.g. your S&P index holdings. You sell to rebalance to your desired asset allocation. As a personal example, at 50, I was full up invested, 95%+ in stocks. When my wife and I were retired (i.e. let go from company, but with no need to go back to work) I started shifting to get to a more sane allocation, 80/20. The ideal mix may be closer to 60/40. Also, there are times the market as a whole is overvalued as measure by P/E and/or CAPE, made popular by Nobel Prize winning Robert Shiller. During these times, an allocation shift might make sense. For the individual stocks, you had best have a strategy when you buy. Why did you buy XYZ? Because they had promise, decent company with a good outlook for their product? Now that they are up 300%, can they keep gaining share or expand their market? Sometimes you can keep raising the bar, and keep a company long term, really long. Other times, the reason you bought no longer applies, they are at or above the valuation you hoped to achieve. Note - I noticed from another question, the OP is in the UK. I answer this my from US centric view, but it should still apply to OP in general. The question was not tagged UK when I replied." }, { "docid": "506991", "title": "", "text": "This would be my suggestion: I would approach the problem thinking about the loss of monthly income you (as a couple) will be facing due to your wife's change to a part time job and divide that loss between the two of you. This means that if she goes from 2200 to 1100 monthly, you'd be losing 1100 per month. To share this loss, you could repay your wife your part of the loss (550) so both of you are 550 euro down. However, this 550 loss is a bigger burden for your wife than it is for you, so this amount could be adjusted to make up for this inequality. To make calculations simple and avoid developing a complicated model, you could give the 800 euro above your 3k to your wife for as long as she has to work part time." }, { "docid": "547388", "title": "", "text": "I used LawDepot to do this. It worked well for my simple case, though you are limited in the number of people you can name, for example, to inherit a share of your estate. And as Frazell Thomas pointed out, you do need to have your signature witnessed. I would certainly use LawDepot again for a simple will, though I suspect my next will is going to be complicated enough that I'll actually have to use an attorney. Note that a significant life change such as getting married may invalidate any current will. This is certainly the case in my jurisdiction, but this may not necessarily be true for you. Note that if you die without a will, your estate will be divided up in a deterministic manner. My wife died recently and as her immediate next of kin and with no children, I was therefore entirely esponsible for her estate. Had we had children, the children would have received $40,000 each, the rest coming to me. This will depend greatly on your jurisdiction, and I'm not sure what happens if the estate is insufficient. I bring this up simply because both my wife and I were happy with the other handling the estate, and a will would not have made dealing with her death significantly easier." }, { "docid": "45819", "title": "", "text": "Make sure you have sufficient insurance. Luckily, my wife and I had insurance on our mortgage, and term life insurance on both of us. Statistically speaking, insurance is a poor investment. However, when my wife was killed 263 days after our wedding, I was very happy to have it. Note that it took almost five months to pay out, though this was partly due to a Canada Post strike earlier this year; as such, you'll need sufficient emergency funds. I was able to continue working (just about), but still needed approximately $30,000. $10,000 within 24 hours, another $10,000 within 7 days, and the remainder sometime later, to cover funeral expenses. You may also want to consider a will. Neither of us had one as we both had made the decision that we were fine with the other partner receiving the entire estate. If you are not happy with this, or if your situation is more complex, you'll need a will." }, { "docid": "277179", "title": "", "text": "This is the same as any case where income is variable. How do you deal with the months where expected cash flows are lower than projected? When I got married, my wife was in the habit of allocating money to be spent in the current month from income accrued during the previous month. This is slightly complicated because we account for taxes (and benefit expenses) withheld in the current months' paychecks as current expenses, but we allocate the gross income from that check to the following month for spending. The benefit of spending only money made during the previous month is that income shocks are less shocking. I was working for a start-up and they missed payroll that normally arrived on the first of the month. Most of my co-workers were calling the bank in a panic to avoid over-draft fees with their mortgage payments, but my mortgage payment was already covered. Similarly, when the same start-up had a reduction in force on the first day of a new quarter, I didn't have to pull any money from savings during the 3 weeks I was unemployed. In the end, you're going to have to allocate money to the budget based on the actual income--which is lower than your expectations. What part of the budget should fairly be reduced is a question you and your wife will have to figure out." }, { "docid": "577370", "title": "", "text": "\"Yes and no. Any great idea, excluding new technologies/discoveries, usually involves a trade-off. Good ideas taken to their extremes usually are pathological. I've generally worked in the open communication environment Musk describes for most of my career for 25 years and I've seen where it works and where it doesn't, and what Musk's email misses is where it doesn't work. It is a good *starting point*. For one thing, there need to be filters. A VP, Director, Senior Manager, CEO, or other higher up cannot deal with 1000 emails per day for ideas, criticisms, etc. He does mention avoiding \"\"chit chat\"\", but employees with \"\"good ideas\"\" for technology or business do not see their suggestions as \"\"chit chat\"\". Most actual *good* ideas from juniors are too low level for senior management, such as different platforms, coding methods, etc. Most ideas that senior management are needed, like company direction, organization, etc., require a sophisticated knowledge and experience of business, contracts, etc. Most of the junior ideas I've seen, including my own, were bad ideas that came from lack of experience in business. Or take some new HR policy. Imagine the thousands of direct responses of people straight to HR on the policy. That would grind things to a halt. The whole purpose of direct managers and supervisors is to filter information down, up, and sideways so that other people can do their jobs. You don't want to have high-value people (knowledge, experience, specialties) spending their day dealing with emails and other people's ideas. You want them providing that value to the business. So you need filters -- people who can recognize the good from the bad and pass on the bad. That could be direct managers at the employee's side, or it could be administrative help at the department's side. Either way, it's necessary to be efficient. Then there's the problem of including all stakeholders. If you are junior and work out a solution to a problem with a junior in another problem, but in implementing it you break a whole system (which I've seen happen), you've just caused a lot of harm to the organization. Neither of you may fully understand the implications of your solution on other things. People with responsibility for those things need to be included in the discussion and take responsibility for any implementation. I hate bureaucracy and sometimes it can be a major inefficiency and roadblock for getting simple and obvious things done. But bureaucracy can also improve efficiency and value and a lack of it can be pathological. I've seen marketing and sales people continually take engineers off of important development work in order to build demos for potential new clients, all of which failed to materialize. Why? Because the marketing and sales people were chasing *leads* for contracts without any review of the technical solution, the ideal one, what the solution to the customer needs *really* involves. What was needed to improve efficiency was a \"\"bureaucratic\"\" process that reviewed the market opportunities with the technical offerings of the company and either reject opportunities early on or plan and schedule how best to chase the leads. In my experience, what works best in most cases is open communication but clear guidelines (a) on what is appropriate or not to go direct, (b) that the communications are about ideas only and coming up with solutions, and (c) that actions or implementations require bringing the \"\"chain of command\"\" into the loop for comment or objection before doing anything. Complaining to management isn't usually of much value and doesn't change much. But, identifying the problem (that is part of the complaint), identifying a workable solution with stakeholders, and asking for permission via the chain of command is usually a good way to get things done without creating the problems of a free-for-all.\"" }, { "docid": "481793", "title": "", "text": "I moved from contributing 10% to maxing as my salary rose over the course of three years after graduation. Because of my raises, my monthly take home still increased, so it was a pretty painless way to increase my 401(k) contribution and also avoid lifestyle inflation. That said, I would not do it if you have any credit card debt, school loans, or an auto loan. Pay that off first. Then work on maxing the 401(k). Personally I rate owning a home behind that, but that's partially because I'm in an area where the rent ratios are barely on the side of buying, so I don't find buying to be a pressing matter. One thing to investigate is if your company offers a Roth 401(k) option. It's a nice option where you can go Roth without worrying about income limits. My personal experience does not include a Roth IRA because when I still qualified for one I didn't know much about them, and now that I know about them I have the happy issue of not qualifying." }, { "docid": "59687", "title": "", "text": "\"For the person being hired this is a tricky situation. Specially with the new laws. There is no real magic number that can be applied as a lot will depend on what benefits you want, and what is actually available. This will really shift the spectrum quite a bit. Under the affordibal care act, everyone has to have insurance or pay a ?fine? (were really not sure what to call this yet) but there are two provisions that really mess with the numbers you look at as an employee. First, the cost of heath care has skyrocketed. So the same benefits that you had 5 years ago now cost maybe 10-15 times as much as they used to. This gets swept under the rug a bit because the \"\"main costs\"\" of insurance has only increased a tiny amount. What this actually comes down to is does your new ACA approved heath plan cover exactly the benefits you need, or does it cut corners. Sorry this is complicated, and I don't mean it to come off as a speech against the ACA so I will give an example. My wife has RA, she really has it under control with the help of her RA doctor. This is not something she ever wants to change. Because she has had RA from the age of 15, and because it's degenerative, she doesn't want to spend 5 years working with a new doctor to get to the same place she is with her current doctor. In addition, the main drugs she takes for RA are not covered under any ACA plan, nor are the \"\"substitutions\"\" that her doctor makes (we are trying to have kids so she has to be off the main meds, and a couple of the things this doctor has tried has been meds that reduce inflammation, are pregnancy safe, but are not for the treatment of RA) You now have to take into effect rather the cost of health insurance + the cost of the things now not covered by the heath insurance + the out of pocket expenses is worth the insurance. Second the ACA has set up provisions to straight up trick those people that have lower income and are not paying close attention. When shopping for insurance, they get quotes like \"\"$50 a month\"\" or \"\"$100 a month\"\". The truth is that the remainder of the actual cost is deducted from their tax returns. This takes consideration, because if you thing your paying $50 a month for insurance but your really paying $650 then you need to make sure your doing your math right. Finally, you need to understand how messed up things are right now in the US with heath care. Largely this goes unreported. I'm not really sure why. But in order to do this I will have to give examples. For my wife to see a specialist (her RA doctor) the co-pay is $75. So she goes to the doctor, he charges her $75 and bills the insurance $200. The insurance pays the doctor $50. With out insurance, the visit costs $50. At first you want to blame the doctor for cheating the system, but the doctor has to pay for hours of labor to get the $50 back from the insurance company. From the doctors perspective it's cheaper to take the $50 then it is to charge the insurance company. And by charging the insurance company he has no control over the cost of the co pay. He essentially has to charge more to make the same money and the patient gets the shaft in the process. Another example, I got strep throat last year. I went to the walk in clinic, paid $75, saw the doctor got my Z-Pack for $15, went home crawled in bed and got better. My wife (who still had separate insurance from before the marriage) got strep throat (imagen that) went to the same clinic, they charged her $200 for the visit ($50 co-pay) and $250 for the z-pack ($3 co-pay). The insurance paid the clinic $90 for the visit and $3 for the drugs. Again the patient is left out in this scenario. In this case it worked better for my wife, unless you account for the fact that to get that coverage she had to pay $650/month. My point is that when comparing costs of heathcare with insurance, and without out insurance, its often times much cheaper for the practices to have you self pay then it is for them to go through the loops of trying to insurance to make them whole. This creates two rates. Self pay rates and Insured rates. When your trying to figure out the cost of not having insurance then you need to use the self pay rates. These can be vastly different. So as an employee you need to figure out your cost of heath care with insurance, and your cost of heath care without insurance. Then user those numbers when your trying to negotiate a salary. The problem is that there is no magic number to use for this because the cost will very a lot. For us, it was cheaper to not have insurance. Even with a pre-existing condition that takes constant attention, it's just better if we set aside $500 a month then it is to try to pay $750 a month. That might not hold true for everyone. For some people or conditions it may be better to pay the $750 then to try to handle it themselves. So for my negotiations I would go with x+$6,000 without insurance or x+$4,500 with insurance. Now as an employer it's a lot simpler. Usually you have a \"\"group plan\"\" that offers you a pretty straight $x per year per person or $y per year per family. So you can offer exactly that. Salary - $x or Salary - $y. AS a starting point. However this is where negotiations start. If your offering me $50,500 and insurance, I would rather just have $57,000 and no insurance. Of course your real cost is only $55,000 cause you don't care about my heath care costs only about insurance costs. So you try to negotiate down towards $55,000 and no insurance. But that's not good enough for me. So I either go else where and you loose talent, or I accept $50,500 and insurance (or somewhere in between).\"" }, { "docid": "67968", "title": "", "text": "As someone who works on the sell side, I can tell you you're partially right. Yes, we do make money off of trades (so just getting people to trade gets the company money) but we do try to be right. We like to look at overall trends with growth projections and earnings estimates, and (as long as the analyst isn't a bad one) will try to get the right answer. Often, we try to present different angles to the research and aren't afraid to go out on a limb--so that you'll read it. We like being right though. The reason we like to be right and make people understand that we know what is going on is simple: a company won't respect research if it's bullshit. And that goes for trading and buy side firms, but also from the companies involved in the research. For an investment bank, a large chunk (often over 50%) of revenue comes from M&amp;A deals, and often a company will choose to do a deal with companies they know will give a good value-that come's from their first experience with the company-equity research. So yes, we don't like to beat up on companies, but we do want to be right. If the analyst has that bad a rate of success, he's probably pretty bad or you're looking at an industry where nobody saw some huge shift coming. Edit: Oh, and analysts can't buy or sell any company in their sector (I think this is industry-wide, not just my firm)" }, { "docid": "150968", "title": "", "text": "There's a company in my town that is notorious for refusing to hire people over 35. They prefer to hire 20-somethings, work them them to exhaustion, and then dump them by the side of the road, career-wise, with the 20-something clutching a good reference letter in their hand if they're lucky. I would love to work 3 days a week. In truth, as a Veteran with chronic pain I sleep so lousy, and I'm so poorly integrated socially, that work is the primary place where I interact with people, so I keep on with it because the alternative is me sitting at home listening to my neighbour's dog howling the song of the damned for hours, or hearing their blaring telly as they drink themselves into a stupor and then leave the damned thing on all night after they eventually pass out. I really thought retirement age would be better, but I closed on this place and I'm stuck here for a while." }, { "docid": "436331", "title": "", "text": "I suggest rolling it over to the 401(k) with your new employer. Particularly if they match any percentage of your contribution, it would be in your interest to take as much of that money as possible. When it comes to borrowing money from your 401(k), it looks like the issues AbraCadaver mentioned only apply if you don't pay back the money (http://www.kiplinger.com/article/real-estate/T010-C000-S002-borrowing-from-your-retirement-plan-to-buy-a-home.html). The reasonable argument against taking money out of your 401(k) to buy a home is that it leaves a dent in your retirement nest egg (and its earning power) during key earning years. On the plus side for borrowing from your 401(k), it's very low interest--and it's interest you're paying back to yourself over a 5-year period. At its current value, the most you could borrow from your 401(k) is $35K. If you're fortunate in where you live, that could be most or all of the downpayment. In my own experience, my wife borrowed against her 401(k) balance for the earnest money when we purchased a new home. Fortunately for us, an investor snapped up my previous home within 4 days of us listing it, so she was able to pay back her loan in full right away." }, { "docid": "5840", "title": "", "text": "One thing to look into is if there is an extra fee for covering a spouse under you plan, if she is covered under her own employer's plan. I know that my wife's company charges around $100-$200 a year if I was to be covered under her plan, since I am eligible for the coverage where I work. As far as tax issues, there shouldn't be any. I think the choice comes down to the coverage offered by both plans." }, { "docid": "248962", "title": "", "text": "\"What is your biggest wealth building tool? Income. If you \"\"nerf\"\" your income with payments to banks, cable, credit card debt, car payments, and lattes then you are naturally handicapping your wealth building. It is sort of like trying to drive home a nail holding a hammer right underneath the head. Normal is broke, don't be normal. Normal obtains student loans while getting an education. You don't have to. You can work part time, or even full time and get a degree. As an example, here is one way to do it in Florida. Get a job working fast food and get your associates degree using a community college that are cheap. Then apply for the state troopers. Go away for about 5 months, earning an income the whole time. You automatically graduate with a job that pays for state schools. Take the next three years (or more if you want an advanced degree) to get your bachelors. Then start your desirable career. What is better to have \"\"wasted\"\" approx 1.5 years being a state trooper, or to have a student loan payment for 20 years? There is not even pressure to obtain employment right after graduation. BTW, I know someone who is doing exactly what I outlined. Every commercial you watch is geared toward getting you to sign on the line that is dotted, often going into debt to do so. Car commercials will tell you that you are a bad mom or not a real man if you don't drive the 2015 whatever. Think differently, throw out your numbers and shoot for zero debt. EDIT: OP, I have a MS in Comp Sci, and started one in finance. My wife also has a masters. We had debt. We paid that crap off. Work like a fiend and do the same. My wife's was significant. She planned on having her employer pay it off for each year she worked there. (Like 20% each year or something.) Guess what, that did not work out! She went to work somewhere else! Live like you are still in college and use all that extra money to get rid of your debt. Student loans are consumer debt.\"" }, { "docid": "206672", "title": "", "text": "Not at all, I fully understand you. I am in this industry and understand how these products work. I dont do these type per say but our product has a high enough interest rate that my clients all are going to do this themselves. Hell, I am going to do it with mine and my wifes policies too. Its a very nice form of passive retirement income on top of 401k, ira's etc." }, { "docid": "377571", "title": "", "text": "(My wife works for an insurance broker in the US, so take that grain of salt with my answer) Disability insurance covers your income should you be unable to work. Some disability will be paid before social security (so you get both incomes) and some will be paid after (so your insurance will fill whatever gap SS leaves) Everybody in the US gets Social Security, which has a disability provision you can use. The additional disability insurance is a good idea for people with a family who will rely on your income for the future, or even for yourself should you work in a dangerous position. My family has it, and we consider it essential for our well being, but I consider insurance on many things a necessity not a luxury. (except pet insurance, I find that to be a luxury.)" }, { "docid": "475912", "title": "", "text": "\"I feel for your situation. I'm in a similar boat with \"\"high\"\" income yet little left over at the end of the month. My wife and I are steadily making major adjustments to fix that. While reading your story, one thing that jumped out at me is that 3.5 years is not really a long time. So, the moment those credit cards are paid off (and other debts for that matter), DO NOT let that $1,400 return into your finances! Tuck it away someplace else and forget about it, as if it doesn't exist. You're already in the habit of doing without. Keep the habit. Save the money. From the first day that my wife recently took a new job, we put 25% of her paycheck into a checking account that's hard to access. It goes right in, direct deposit, and we never even see it. To this day, we don't even know the exact dollar amount going in... ...the crazy part is, we don't miss it as much as I thought we would! In fact, I just got a raise and I'm going to start forwarding the pay difference into that account, as well. At the end of the day, we all make our spending choices based on how much money is available. It never fails: with more income comes more \"\"worthwhile\"\" expenses. My advice in a nutshell: Over the next few years, whenever your income increases, don't change your habits to match! That's our plan. Slowly but surely, it's working... (I Hope that helps in some way)\"" } ]

[ { "docid": "318491", "title": "", "text": "\"In the US, you'd run the risk of being accused of fraud if this weren't set up properly. It would only be proper if your wife could show that she were involved, acting as your agent, bookkeeper, etc. Even so, to suggest that your time is billed at one rate but you are only paid a tiny fraction of that is still a high risk alert. I believe the expression \"\"if it quacks like a duck...\"\" is pretty universal. If not, I'll edit in a clarification. note -I know OP is in UK, but I imagine tax collection is pretty similar in this regard.\"" } ]

[ { "docid": "341909", "title": "", "text": "You are going to miss way more work than you expect. Especially so if both parents are working. My wife and I both work and during the first couple of winters we couldn't average two weeks of uninterrupted work. You get sick, the kid gets sick, school / daycare holidays. You stay home and if you job isn't cool with it, it can be a problem." }, { "docid": "221295", "title": "", "text": "\"If I was in your shoes I would have some term insurance, and it is pretty darn cheap at your age. Your wife is dependent upon your income, and it will take sometime to transition from non-working to working. As she could probably get a job doing anything, it will probably take many years to build up to the lifestyle she is accustomed. She may never be able to obtain your salary. While she could spend down the amount you two have saved up for retirement, tax will have to be paid on any non-ROTH contributions. The decisions for this have to be made within a year of death and are not easy. I would not want to put my spouse through this. Plus some day she would have to retire. If she spends down a significant portion of the savings you have built, well that will need to be replenished and you probably know time is not on one's side when it comes to compounding. Do you have to have 10x-15x times your earnings in insurance? No. Do you need to do a 20 year level term, No. Perhaps a 10 year level term for like 5x your income. Just something to \"\"bridge the gap\"\". If you live, you will be much better off financially, and could probably drop the coverage. If you don't you will not leave her sad and with difficult financial decisions; just sad.\"" }, { "docid": "59687", "title": "", "text": "\"For the person being hired this is a tricky situation. Specially with the new laws. There is no real magic number that can be applied as a lot will depend on what benefits you want, and what is actually available. This will really shift the spectrum quite a bit. Under the affordibal care act, everyone has to have insurance or pay a ?fine? (were really not sure what to call this yet) but there are two provisions that really mess with the numbers you look at as an employee. First, the cost of heath care has skyrocketed. So the same benefits that you had 5 years ago now cost maybe 10-15 times as much as they used to. This gets swept under the rug a bit because the \"\"main costs\"\" of insurance has only increased a tiny amount. What this actually comes down to is does your new ACA approved heath plan cover exactly the benefits you need, or does it cut corners. Sorry this is complicated, and I don't mean it to come off as a speech against the ACA so I will give an example. My wife has RA, she really has it under control with the help of her RA doctor. This is not something she ever wants to change. Because she has had RA from the age of 15, and because it's degenerative, she doesn't want to spend 5 years working with a new doctor to get to the same place she is with her current doctor. In addition, the main drugs she takes for RA are not covered under any ACA plan, nor are the \"\"substitutions\"\" that her doctor makes (we are trying to have kids so she has to be off the main meds, and a couple of the things this doctor has tried has been meds that reduce inflammation, are pregnancy safe, but are not for the treatment of RA) You now have to take into effect rather the cost of health insurance + the cost of the things now not covered by the heath insurance + the out of pocket expenses is worth the insurance. Second the ACA has set up provisions to straight up trick those people that have lower income and are not paying close attention. When shopping for insurance, they get quotes like \"\"$50 a month\"\" or \"\"$100 a month\"\". The truth is that the remainder of the actual cost is deducted from their tax returns. This takes consideration, because if you thing your paying $50 a month for insurance but your really paying $650 then you need to make sure your doing your math right. Finally, you need to understand how messed up things are right now in the US with heath care. Largely this goes unreported. I'm not really sure why. But in order to do this I will have to give examples. For my wife to see a specialist (her RA doctor) the co-pay is $75. So she goes to the doctor, he charges her $75 and bills the insurance $200. The insurance pays the doctor $50. With out insurance, the visit costs $50. At first you want to blame the doctor for cheating the system, but the doctor has to pay for hours of labor to get the $50 back from the insurance company. From the doctors perspective it's cheaper to take the $50 then it is to charge the insurance company. And by charging the insurance company he has no control over the cost of the co pay. He essentially has to charge more to make the same money and the patient gets the shaft in the process. Another example, I got strep throat last year. I went to the walk in clinic, paid $75, saw the doctor got my Z-Pack for $15, went home crawled in bed and got better. My wife (who still had separate insurance from before the marriage) got strep throat (imagen that) went to the same clinic, they charged her $200 for the visit ($50 co-pay) and $250 for the z-pack ($3 co-pay). The insurance paid the clinic $90 for the visit and $3 for the drugs. Again the patient is left out in this scenario. In this case it worked better for my wife, unless you account for the fact that to get that coverage she had to pay $650/month. My point is that when comparing costs of heathcare with insurance, and without out insurance, its often times much cheaper for the practices to have you self pay then it is for them to go through the loops of trying to insurance to make them whole. This creates two rates. Self pay rates and Insured rates. When your trying to figure out the cost of not having insurance then you need to use the self pay rates. These can be vastly different. So as an employee you need to figure out your cost of heath care with insurance, and your cost of heath care without insurance. Then user those numbers when your trying to negotiate a salary. The problem is that there is no magic number to use for this because the cost will very a lot. For us, it was cheaper to not have insurance. Even with a pre-existing condition that takes constant attention, it's just better if we set aside $500 a month then it is to try to pay $750 a month. That might not hold true for everyone. For some people or conditions it may be better to pay the $750 then to try to handle it themselves. So for my negotiations I would go with x+$6,000 without insurance or x+$4,500 with insurance. Now as an employer it's a lot simpler. Usually you have a \"\"group plan\"\" that offers you a pretty straight $x per year per person or $y per year per family. So you can offer exactly that. Salary - $x or Salary - $y. AS a starting point. However this is where negotiations start. If your offering me $50,500 and insurance, I would rather just have $57,000 and no insurance. Of course your real cost is only $55,000 cause you don't care about my heath care costs only about insurance costs. So you try to negotiate down towards $55,000 and no insurance. But that's not good enough for me. So I either go else where and you loose talent, or I accept $50,500 and insurance (or somewhere in between).\"" }, { "docid": "131831", "title": "", "text": "\"It is indeed, mostly because the various factors you need to take into account will change depending on the company. An Australian mining co funding a new settlement or harbor has nothing in common with a small European packaging company looking to acquire a competitor, except they both need to raise money. As far as I know, to become \"\"proficient\"\" in that field, the only way is to go through heaps of case studies, which won't be found easily outside of the financial world (sell side research, conversation with experienced buy side analysts/PMs/traders or sell side cap markets pros). It is niche knowledge with a narrow focus and a high potential for value added, hence, not really widely shared. The good news though is that it isn't really that complex, it just takes (lots of) work and being in the right place (internship or entry level position in a market or M&amp;A oriented bank).\"" }, { "docid": "499871", "title": "", "text": "I keep visiting Dubai Not sure what kind of work it is, assuming it regular job. For the period mentioned above I was out of India for more than 182 days, If you were out of India for more than 182 days in a given financial year then you would NRI for tax purposes. till date I have not transferred any money from Dubai to my India account. Whether you have transferred the money or not is not relevant for tax purposes. Your status [NRI / Resident] is relevant. Do I need to declare the income I have earned in Dubai? No you are not required to as your status is NRI. You are required to file a return on the income [Salary/Interest/gains/etc] accruing in India. Do I need to change my residential status ? Not sure where you are wanting to change this. Will the income I have earned in Dubai is taxable ? As you are NRI, the income earned outside of India is not taxable in India. From a tax point of view, it does not matter whether you keep the funds in Dubai or transfer it back to India. Edit: The Income Tax rules are not very clear if your wife can claim for her father-in-law. Best consult a CA. For quite a few regulations, Wife's father-in-law are treated at par with father." }, { "docid": "168444", "title": "", "text": "I understand where you're coming from but you're mostly just quoting the plaintiff's attorney. That's not going to be the source of unbiased information. Furthermore, I don't trust general news sources when it comes to complex financial reporting. I don't really even trust business journals as they are mostly filled with j degrees without real experience. Bankruptcy cases can get very complex and unpredictable because judge's have significant leeway; you really need to read the case opinion to see what really went down. I work in finance and deal with bankruptcies on a semi-regular case. I am on the buy side (the side that would be screwed in cases like this) so my inherent bias goes your way against poor management. If this guy actually moved assets from company 1 to company 2 at a non-arms length transaction then that is misconduct and assets can be recovered from company 2 usually. If Learning Annex was pari passu with Robert and he pulled dividends out to himself, that is misconduct that will be punished by a bankruptcy court. If he did these things they are not smart business practices, and will be punished. Your condescension does not help your case. I most likely know far more about this topic than you, as I have seen the nuances corporate bankruptcies take on in the real world. I just don't trust grossly oversimplified reporting in a case that is ongoing." }, { "docid": "442441", "title": "", "text": "It was easy to get my first job out of college, but I had pretty direct experience from working at a job during college. To give more specific detail, my first job was doing marketing on the digital side (CRM, website, analytics, etc.). I was able to apply what I learned in economics (multivariate testing) to marketing. So, while there was a little learning curve with the marketing side of things, working with CRM in the past and understanding how to apply my economics degree to marketing allowed me to get the job. Like I said, you can do anything with an econ degree." }, { "docid": "37632", "title": "", "text": "I'm a plaintiffs attorney in Texas. I've read both sides of the issue and my conclusion is shaded by: when one side speaks, who benefits and what's their motive? Insurance companies lie and deceive and delay and deny. All day. After September 1 comes and goes, you'll hear nothing more from the insurance side because they've officially beat the clock." }, { "docid": "449543", "title": "", "text": "The straight math might favor leaving it, but I'd personally prefer to have it in my control in an IRA. My own employer offered a buyout on the pension program, and the choice between a nice lump sum vs some fixed number 20 years hence was a simple one for me. Both my wife and I (same company) took the lump sum, and never regretted it." }, { "docid": "487179", "title": "", "text": "\"You are asking about a common, simple practice of holding the mortgage when selling a house you own outright. Typically called seller financing. Say I am 70 and wish to downsize. The money I sell my house for will likely be in the bank at today's awful rates. Now, a buyer likes my house, and has 20% down, but due to some medical bills for his deceased wife, he and his new wife are struggling to get financing. I offer to let them pay me as if I were the bank. We agree on the rate, I have a lien on the house just as a bank would, and my mortgage with them requires the usual fire, theft, vandalism insurance. When I die, my heirs will get the income, or the buyer can pay in full after I'm gone. In response to comment \"\"how do you do that? What's the paperwork?\"\" Fellow member @littleadv has often posted \"\"You need to hire a professional.\"\" Not because the top members here can't offer great, accurate advice. But because a small mistake on the part of the DIY attempt can be far more costly than the relative cost of a pro. In real estate (where I am an agent) you can skip the agent to hook up buyer/seller, but always use the pro for legal work, in this case a real estate attorney. I'd personally avoid the general family lawyer, going with the specialist here.\"" }, { "docid": "271266", "title": "", "text": "\"If you're single, the only solution I'm aware of, assuming you are truly getting a 1099-misc and not a W-2 (and don't have a W-2 option available, like TAing), is to save in a nondeductible account for now. Then, when you later do have a job, use that nondeductible account (in part) to fund your retirement accounts. Particularly the first few years (if you're a \"\"young\"\" grad student in particular), you'll probably be low enough on the income side that you can fit this in - in particular if you've got a 401k or 403b plan at work; make your from-salary contributions there, and make deductible IRA or Roth IRA contributions from your in-school savings. If you're not single, or even if you are single but have a child, you have a few other options. Spouses who don't have earned income, but have a spouse who does, can set up a Spousal IRA. You can then, combined, save up to your spouse's total earned income (or the usual per-person maximums). So if you are married and your wife/husband works, you can essentially count his/her earned income towards your earned income. Second, if you have a child, consider setting up a 529 plan for them. You're probably going to want to do this anyway, right? You can even do this for a niece or nephew, if you're feeling generous.\"" }, { "docid": "18355", "title": "", "text": "\"Your questions seek answers to specifics, but I feel that you may need more general help. There are two things, I feel, that you need to learn about in the general category of personal finance. Your asking questions about investing, but it is not as important, IMHO, as how you manage your day-to-day operations. For example, you should first learn to budget. In personal finance often times \"\"living on a budget\"\" equates to poor, or low income. That is hardly the case. A budget is a plan on how to spend money. It should be refreshed each and every month and your income should equal your expenses. You might have in your budget a $1200 trip into the city to see a concert, hardly what a low income person should have in theirs. Secondly you need to be deliberate about debt management. For some, they feel that having a car payment and having student loans are a necessary part of life and argue that paying them off is foolish as you can earn more from investments. Others argue for zero debt. I fall in the later. Using and carrying a balance on high interest CCs and having high leases or car payments are just dumb. They are also easy to wander into unless you are deliberate. Third you need to prepare for emergencies. Engineers still get laid off and hurt where they are unable to work. They get sued. Having the proper insurance and sufficient reserves in the bank help prevent debt. Now you can start looking into investments. Start off slow and deliberate with investing. Put some in your company 401K or open some mutual funds on the side. You can read about them and talk with advisers, for free, at Fidelity and Vanguard. Read books from the library. Most of all don't get caught up in too much hype. Things like Forex, options, life insurance, gold/silver, are not investments. They are tools for sales people to make fat commissions off the ignorant. You are fortunate in that Engineers are very likely to retire wealthy. They are part of the second largest demographic of first generation rich. The first is small business owners. To start out I would read Millionaire Next Door and Stop Acting Rich. For a debt free approach to life, check out Financial Peace University (FPU) by Dave Ramsey (video course). His lesson on insurance is excellent. I am an engineer, and my wife a project manager we found FPU life changing and regretted not getting on board sooner. Along these lines we have had some turmoil, recently, that became little more than an inconvenience because we were prepared.\"" }, { "docid": "297288", "title": "", "text": "\"Thirty thousand in credit card debt is a \"\"big elephant to eat\"\" so to speak. But you do it by taking a bite at a time. One positive is that you do not want to borrow from your 401K. Doing so is a horrible idea. The first question you have to ask yourself and understand, is how you accumulated 30K in credit card debt in the first place? Most people get there by running up a relatively small amount, say 5K, and playing the zero transfer game a few times. Then add in a late payment, and a negative event or two (like the car breaking down or a trip to the emergency room) and poof a large amount of credit card debt. Obviously, I have no idea if this is how you got there, and providing some insight might help. Also, your age, approximate income, and other debts might also help provide more insight. I assume you are still working and under age 59.5 as you are talking about borrowing from your 401K. Where I come from is that my wife (then girlfriend) found ourselves under stifling debt a few years ago. When we married, we became very intentional and focused on ridding ourselves of debt and now sit completely debt free (including the house). During our debt payoff time, we lived off of less than 25% of our salary. We both took extra jobs when we were able. Intensity was our key. If I were you, I would not refi the house. There are costs associated with this and why would you put more debt on your home? I might cash out the annuity provided that there are no negative tax consequences and depending on how much you can get for it. Numbers are the key here. However, I feel like doing so will not retire this debt. The first thing you need to do is get on a written budget. A game plan for spending and stick to it. If you are married, your spouse has to be part of this process. The budget has to be fresh each month, and each month you and your wife should meet. To deviate from the budget, you will also need to have a meeting. My wife and I still do this despite being debt free and enjoying very healthy incomes. Secondly, it is about cutting expenses. Cable: off. No eating out or vacations. Cut back on cell phone plans, only basic clothing. Gift giving is of the $5 variety and only for those very close to you. Forget lattes, etc. Depending on your income I would cut 401K contributions to zero or only up to the company match (if your household income is above 150K/year). Third, it is about earning more. Ebay, deliver pizzas, cut grass, overtime, whatever. All extra dollars go to credit card balance reduction. At a minimum, you should find an extra $1000/month; however, I would shoot for 2K. If you can find 2K, you will be done with this in 13 months. I know the math doesn't work out for that, but once you get momentum, you find more. How good will it feel to be out from under this oppression next March? I know you can do this without cashing in the annuity or refinancing. Do you believe it?\"" }, { "docid": "294376", "title": "", "text": "I'm talking about the seed industry, not industry in general. As I said, I don't know how it is at other stations in the U.S., but here even the most poorly educated field workers without a G.E.D. or the ability to speak English get better starting wages than Costco offers. The work is hard and requires attention to detail and knowledge, but they train on the job. As for educated employees, after 10 years my wife makes 6 figures with a masters degree. From the inside looking out the seed industry has done wonders for our world, both economically and agriculturally. Food is (too?) cheap and plentiful because of the work done by these companies, just like inexpensive smart phones have become the norm because of the work of tech companies. Do you want to go back to an LCD flip phone? Likewise, would you like to go back to when we harvested 25 bushels of corn per acre when today we harvest more than 140? That's 6 times as much food from the same acre of land." }, { "docid": "150968", "title": "", "text": "There's a company in my town that is notorious for refusing to hire people over 35. They prefer to hire 20-somethings, work them them to exhaustion, and then dump them by the side of the road, career-wise, with the 20-something clutching a good reference letter in their hand if they're lucky. I would love to work 3 days a week. In truth, as a Veteran with chronic pain I sleep so lousy, and I'm so poorly integrated socially, that work is the primary place where I interact with people, so I keep on with it because the alternative is me sitting at home listening to my neighbour's dog howling the song of the damned for hours, or hearing their blaring telly as they drink themselves into a stupor and then leave the damned thing on all night after they eventually pass out. I really thought retirement age would be better, but I closed on this place and I'm stuck here for a while." }, { "docid": "127347", "title": "", "text": "From your comment: My salary through 7/31 could pass for an annual salary for the industry. I suppose that’s relevant? That information would certainly be relevant if you were the owner since the beginning of the year. If that were the case then I would say you'd be fine skipping the salary for the rest of the year. It would be equivalent to simply front-loading your salary. However, since you didn't own any part of the company during the time you received the salary, I believe you should think of that salary as if it came from an entirely different company. This means that during the 5 months you owned the company you will have taken $0 in salary, and I believe that would not be reasonable if this job is your main source of income. As a side note, regarding this statement you made: During this time, I'd like to avoid the employer half of FICA taxes incurred by paying myself through payroll. You'd actually be avoiding both the employer and employee portion of FICA, since both sides of FICA are paid for employee compensation. FICA is not paid by either side on company profits." }, { "docid": "448262", "title": "", "text": "It really depends on what part of finance you go into and where. As others mention, investment banking can be a grinder. When I was working for a large global financial institution in consumer lending, average for most people was probably 45 - 50 hours / week. But my last year there I spent about 65 hours / week but it was largely due to my position and regulatory compliance pressures. Now I consult for financial institutions. I'm gone from my family 3 - 5 nights a week but love both the work and my firm. When I'm home, I'm home and get to focus on my family. In the past, I would be so tired from the week that I wouldn't want to do much on the weekends. Now I spend my weekends devoted 100% to my family and friends. My wife and I are sure that the total number of quality hours I spend with my kids per week has actually increased now. Also, there has been some mention here about going outside the US - from my limited experience, financial firms within Europe are far more interested in employee experience than domestic ones." }, { "docid": "500238", "title": "", "text": "\"Your wife is probably not going to be able to get a policy until all tests are complete and the doctors give her a clean bill of health. A change in your health could make your premiums 50% to 75% higher than they would be if you applied for a policy in perfect health. Health history is one of the biggest factor in calculating an LTCi premium. The average age for purchasing a policy is 59. Including all rate increases, the average long-term care insurance premium is $1,591 per year, based on my calculations from a 2015 National Association of Insurance Commissioners report with 2014 data. Because of new consumer protections designed to prevent rate increases, policies purchased today do cost more than older policies. In 2015, the average premium for a new policy was $2,532 per year, according to a LIMRA survey of most companies selling long-term care insurance. (Couples can get discounts as high as 30 percent when purchasing policies at the same time.) Do NOT work with just a local insurance agent who sells many different types of insurance. ONLY work with an insurance agent who specializes in LTC insurance and that represents at least 7 of the top companies. There are probably a couple of hundred agents in the country that specialize in LTC, are independent agents representing a lot of companies AND have a lot of experience. Interview at least 3 different agents. Get quotes from every agent you speak with and ask each of them their opinion about which policy you should get. Go with the agent who seems the most knowledgeable and professional. Do NOT buy LTC insurance from a \"\"financial advisor\"\". They are usually limited to offering only a few companies (because of their broker/dealer arrangements) and they rarely understand LTC underwriting. Do NOT buy LTC insurance from the company you get auto insurance or home insurance with. And do NOT buy a policy just because your retirement association or alumni association recommends it. SHOP around. In your wife's case it would probably be wise to apply to more than one company at the same time in case one of them denies her application. Here is an article I wrote for NextAvenue.org (a website owned by PBS) which answers some of the most common misconceptions about LTC insurance: An Insurance Agent’s Case for Buying Long-Term Care Insurance.\"" }, { "docid": "277179", "title": "", "text": "This is the same as any case where income is variable. How do you deal with the months where expected cash flows are lower than projected? When I got married, my wife was in the habit of allocating money to be spent in the current month from income accrued during the previous month. This is slightly complicated because we account for taxes (and benefit expenses) withheld in the current months' paychecks as current expenses, but we allocate the gross income from that check to the following month for spending. The benefit of spending only money made during the previous month is that income shocks are less shocking. I was working for a start-up and they missed payroll that normally arrived on the first of the month. Most of my co-workers were calling the bank in a panic to avoid over-draft fees with their mortgage payments, but my mortgage payment was already covered. Similarly, when the same start-up had a reduction in force on the first day of a new quarter, I didn't have to pull any money from savings during the 3 weeks I was unemployed. In the end, you're going to have to allocate money to the budget based on the actual income--which is lower than your expectations. What part of the budget should fairly be reduced is a question you and your wife will have to figure out." } ]

[ { "docid": "569145", "title": "", "text": "Depending on how much freelance work we're talking about you could set up a limited company, with you and your wife as directors. By invoicing all your work through the limited company (which could have many other benefits for you, an accountant/advisor would... well, advise...) it's the company earning the money, not you or her personally. You can then pay your wife up to £10,000 per year (as of writing this) without income tax kicking in. You would probably have to pay yourself a small amount to minimise exposure to HMRC's snooping, but possibly not... as far as I'm aware the rules do not state anything about working for free, for yourself - and I wouldn't worry about the ethics, you're already paying plenty into HMRC's bank account through your day job! Some good information here if you're interested: https://www.whitefieldtax.co.uk/web/psc-guide/pscguide-how-does-it-all-work-in-practice-salaries-and-dividends/" } ]

[ { "docid": "269380", "title": "", "text": "If commuting is a big budget item, then can you: A side job is one way to make extra money, but I'd suggest a home business. If your wife substitute teaches, I bet she writes fairly well, and in any case you can. Write a personal finance blog or just a site with articles. Focus on surviving and thriving with child(ren) in a one-income Christian household in the suburbs of Philadelphia. Or if you have a hobby that stokes your furnace, write about that. Heck, do both. The content just stays there and gets traffic day after day that you can monetize. My main suggestion would be to start this now because it's not overnight money. But in the long run it can turn into a nice, fairly passive income. The big advantage of this is that mommy gets to stay home with the kids and build up a decent business. The cost is $10/year for the domain (per domain) and maybe $10/month for hosting. Or, if some other legitimate work-at-home business presents itself, go with that. I suggest blogging because it's what I know, but everyone's an expert in something unique." }, { "docid": "442441", "title": "", "text": "It was easy to get my first job out of college, but I had pretty direct experience from working at a job during college. To give more specific detail, my first job was doing marketing on the digital side (CRM, website, analytics, etc.). I was able to apply what I learned in economics (multivariate testing) to marketing. So, while there was a little learning curve with the marketing side of things, working with CRM in the past and understanding how to apply my economics degree to marketing allowed me to get the job. Like I said, you can do anything with an econ degree." }, { "docid": "37632", "title": "", "text": "I'm a plaintiffs attorney in Texas. I've read both sides of the issue and my conclusion is shaded by: when one side speaks, who benefits and what's their motive? Insurance companies lie and deceive and delay and deny. All day. After September 1 comes and goes, you'll hear nothing more from the insurance side because they've officially beat the clock." }, { "docid": "500238", "title": "", "text": "\"Your wife is probably not going to be able to get a policy until all tests are complete and the doctors give her a clean bill of health. A change in your health could make your premiums 50% to 75% higher than they would be if you applied for a policy in perfect health. Health history is one of the biggest factor in calculating an LTCi premium. The average age for purchasing a policy is 59. Including all rate increases, the average long-term care insurance premium is $1,591 per year, based on my calculations from a 2015 National Association of Insurance Commissioners report with 2014 data. Because of new consumer protections designed to prevent rate increases, policies purchased today do cost more than older policies. In 2015, the average premium for a new policy was $2,532 per year, according to a LIMRA survey of most companies selling long-term care insurance. (Couples can get discounts as high as 30 percent when purchasing policies at the same time.) Do NOT work with just a local insurance agent who sells many different types of insurance. ONLY work with an insurance agent who specializes in LTC insurance and that represents at least 7 of the top companies. There are probably a couple of hundred agents in the country that specialize in LTC, are independent agents representing a lot of companies AND have a lot of experience. Interview at least 3 different agents. Get quotes from every agent you speak with and ask each of them their opinion about which policy you should get. Go with the agent who seems the most knowledgeable and professional. Do NOT buy LTC insurance from a \"\"financial advisor\"\". They are usually limited to offering only a few companies (because of their broker/dealer arrangements) and they rarely understand LTC underwriting. Do NOT buy LTC insurance from the company you get auto insurance or home insurance with. And do NOT buy a policy just because your retirement association or alumni association recommends it. SHOP around. In your wife's case it would probably be wise to apply to more than one company at the same time in case one of them denies her application. Here is an article I wrote for NextAvenue.org (a website owned by PBS) which answers some of the most common misconceptions about LTC insurance: An Insurance Agent’s Case for Buying Long-Term Care Insurance.\"" }, { "docid": "377571", "title": "", "text": "(My wife works for an insurance broker in the US, so take that grain of salt with my answer) Disability insurance covers your income should you be unable to work. Some disability will be paid before social security (so you get both incomes) and some will be paid after (so your insurance will fill whatever gap SS leaves) Everybody in the US gets Social Security, which has a disability provision you can use. The additional disability insurance is a good idea for people with a family who will rely on your income for the future, or even for yourself should you work in a dangerous position. My family has it, and we consider it essential for our well being, but I consider insurance on many things a necessity not a luxury. (except pet insurance, I find that to be a luxury.)" }, { "docid": "337952", "title": "", "text": "Most basic tip: Don't go to the grocery store hungry. What we do to minimize food waste: On Sunday when my wife and I go grocery shopping, we figure out what meals we are going to have for dinner that week, and we only buy what we need for those meals. We also try to decide in advance what night(s) we are going out for dinner. For example, we know we have to take the in-laws out for dinner on Wednesday, so we don't buy a dinner for that night. As part of our weekly planning, we figure out the lunches we will take to work based on our dinners. For example, if we plan to make a big pot of pasta for dinner one night, we know we'll have leftovers for lunch, so we won't buy a lunch for the following day. Basically, we try to match our food purchasing to our food consumption. During the week, we generally try to cook the dinner that uses the most perishable items first. If we buy seafood, that will be Monday night's dinner. The frozen pizza can wait until the end of the week. My wife an I both have to deal with the occasional unexpected late night at work, which can mess up our cooking plans. As a result, it is not uncommon for us to be too tired to cook, so we skip a dinner. It is less wasteful to do that with something frozen/preserved. Also, we try to consider cooking time vs our work schedule. We don't pick a complex dinner for a night that we know in advance will be a long work day." }, { "docid": "299566", "title": "", "text": "\"If you ask ten different couples what they do, depending on a variety of factors, you'll get anywhere between two and ten different answers. One personal finance blogger that I read swears by the fact that he and his wife keep their finances totally separate. His wife has her own retirement account, he has his. His wife has her own checking and savings, he has his. They pay fifty-fifty for expenses and each buy their own \"\"toys\"\" from their own accounts. He views this as valuable for allowing them to have their own personal finance styles, as his wife is a very conservative investor and he is more generous. My spouse and I have mostly combined finances, and view all of our money as joint (even though there are a smattering of accounts between us with just one name on them as holdovers from before we were married). Almost all of our purchasing decisions except regular groceries are joint. I couldn't imagine it any other way. It leaves us both comfortable with our financial situation and forces us to be on the same page with regards to our lifestyle decisions. There's also the ideological view that since we believe marriage united us, we try to live that out. That's just us, though. We don't want to force it on others. Some couples find a balance between joint accounts and his and her fun money stashes. You might find yet another arrangement that works for you, such as the one you already described. What's going to be important is that you realize that all couples have the same six basic arguments, finances being one of them. The trick is in how you disagree. If you can respectfully and thoughtfully discuss your finances together to find the way that has the least friction for you, you're doing well. Some amount of friction is not just normal, it's almost guaranteed.\"" }, { "docid": "574575", "title": "", "text": "My son is in a similar situation where he is 21 and in college. My wife and I claimed him as a dependant on our taxes last year. He had still been able to get some student loans as a dependant as well as scholarships. I have told him that we will not cosign on a loan for him. It isn't because we don't like our son, it is simply because too many unexpected things can happen. He has been working multiple jobs which is one thing I would suggest as well as donating plasma for extra money to have a social life. As an electrical engineering major he doesn't have much time to be social. He cuts rent by having roommates and does most of his own cooking to help with food costs. The main thing he does to keep his costs under control is attends a school that isn't outrageously expensive. An expensive school does not offer as much benefit for an undergrad degree as it might for a graduate degree. Another option is to look for a job that had some sort of tuition assistance. Another option along that same line is look into military service either active duty or reserves as there is tuition help to be found there. There are options that don't involve debt. As a side note my son used a student loan last year however, this coming year he has his budget figured out and he will not be needing one at all." }, { "docid": "294376", "title": "", "text": "I'm talking about the seed industry, not industry in general. As I said, I don't know how it is at other stations in the U.S., but here even the most poorly educated field workers without a G.E.D. or the ability to speak English get better starting wages than Costco offers. The work is hard and requires attention to detail and knowledge, but they train on the job. As for educated employees, after 10 years my wife makes 6 figures with a masters degree. From the inside looking out the seed industry has done wonders for our world, both economically and agriculturally. Food is (too?) cheap and plentiful because of the work done by these companies, just like inexpensive smart phones have become the norm because of the work of tech companies. Do you want to go back to an LCD flip phone? Likewise, would you like to go back to when we harvested 25 bushels of corn per acre when today we harvest more than 140? That's 6 times as much food from the same acre of land." }, { "docid": "471569", "title": "", "text": "\"I was reading this and then looked for uppies/downies because I thought I'd written it... I don't want to \"\"manage\"\" or be an executive. I just want to be respected for my work and really good at what I do (which I am). After that, I want to get paid for the work I do. I'm a workaholic because I love what I do. I love tackling challenges and solving problems. My hobby *is* my job, so banging away at something on the weekend while my wife is in school is just fine with me. And as an hourly consultant, I'm perfectly happy getting paid doing it. I also like the subtle pressure to actually produce things - it helps keep me focused. (I actually annotate what I've accomplished each day on my time sheet, which I think makes everyone happy) I'm working about the same hours I worked on my last gig. But I've just about doubled my pay.\"" }, { "docid": "200211", "title": "", "text": "You actually have a few options. First, you can do a share split and then sell an equal number of shares from both you and your wife to maintain parity. Second, you can have the company issue additional shares/convert shares and then have the company sell the appropriate percentage to the third party while the rest is distributed to you and your wife. Third, you can have the company issue a separate class of stock. For example there are companies that have voting stock and non-voting stock. Depending on your goal, you could just issue non-voting stock and sell that. Best bet is to contact a lawyer who specializes in this type of work and have them recommend a course of action. One caveat that has not been mentioned is that what/how you do this will also depend on the type of corporation that you have created." }, { "docid": "271266", "title": "", "text": "\"If you're single, the only solution I'm aware of, assuming you are truly getting a 1099-misc and not a W-2 (and don't have a W-2 option available, like TAing), is to save in a nondeductible account for now. Then, when you later do have a job, use that nondeductible account (in part) to fund your retirement accounts. Particularly the first few years (if you're a \"\"young\"\" grad student in particular), you'll probably be low enough on the income side that you can fit this in - in particular if you've got a 401k or 403b plan at work; make your from-salary contributions there, and make deductible IRA or Roth IRA contributions from your in-school savings. If you're not single, or even if you are single but have a child, you have a few other options. Spouses who don't have earned income, but have a spouse who does, can set up a Spousal IRA. You can then, combined, save up to your spouse's total earned income (or the usual per-person maximums). So if you are married and your wife/husband works, you can essentially count his/her earned income towards your earned income. Second, if you have a child, consider setting up a 529 plan for them. You're probably going to want to do this anyway, right? You can even do this for a niece or nephew, if you're feeling generous.\"" }, { "docid": "431010", "title": "", "text": "\"To take a different tack from qdot - it is advice. Maybe good, maybe bad. In the early 1990s I did exactly what you are intending to do and was stunned at the expenses involved in maintaining the company - primarily the accounting costs. This would have all been different if I'd been making a lot more money out of the situation, but the work was on the side, a few hours a week here and there, and I closed the \"\"business\"\" after just one year. Probably broke even on the deal, but certainly did not come out in front. I'd also strongly recommend you take a look at issues like basic book keeping, claiming VAT, setting up corporate bank accounts, and the like. Whether it is \"\"not a lot of work\"\" is purely a personal thing - some folks breeze through it all, some hate it. Time Is Money. My 0.02.\"" }, { "docid": "402", "title": "", "text": "\"the truth from the 'horse mouth\"\" - and no he's NOT alt-right, as he's painted by political interests from all sides.... Well, updates and flashnews: 1. Google pontificating on diversity and women's equality: Sergei Brin divorced after cheating on his high achieving brilliant wife with a junior staffer. Guess who left the company after it was found out? 2. Eric Schmidt - rumour has it he likes to \"\"party\"\" - a lot! Good that Google \"\"leadership\"\" is keeping silent on this issue. 2. Diversity and equality.....https://www.theguardian.com/technology/2017/aug/08/google-women-discrimination-class-action-lawsuit So they are definitely NOT putting their money where their mouth is.... Alt-right are not nice, and often come across as plain stupid. At least they don't reek of this putrid Tartuffe-esque hypocrisy like they left wing counterparts.\"" }, { "docid": "269401", "title": "", "text": "\"I can only share with you my happened with my wife and I. First, and foremost, if you think you need to protect your assets for some reason then do so. Be open and honest about it. If we get a divorce, X stays with me, and Y stays with you. This seems silly, even when your doing it, but it's important. You can speak with a lawyer about this stuff as you need to, but get it in writing. Now I know this seems like planning for failure, but if you feel that foo is important to you, and you want to retain ownership of foo no mater what, then you have to do this step. It also works both ways. You can use, with some limitations, this to insulate your new family unit from your personal risks. For example, my business is mine. If we break up it stays mine. The income is shared, but the business is mine. This creates a barrier that if someone from 10 years ago sues my business, then my wife is protected from that. Keep in mind, different countries different rules. Next, and this is my advise. Give up on \"\"his and hers\"\" everything. It's just \"\"ours\"\". Together you make 5400€ decide how to spend 5400€ together. Pick your goals together. The pot is 5400€. End of line. It doesn't matter how much from one person or how much from another (unless your talking about mitigating losses from sick days or injuries or leave etc.). All that matters is that you make 5400€. Start your budgeting there. Next setup an equal allowance. That is money, set aside for non-sense reasons. I like to buy video games, my wife likes to buy books. This is not for vacation, or stuff together, but just little, tiny stuff you can do for your self, without asking \"\"permission\"\". The number should be small, and equal. Maybe 50€. Finally setup a budget. House Stuff 200€, Car stuff 400€. etc. etc. then it doesn't matter who bought the house stuff. You only have to coordinate so that you don't both buy house stuff. After some time (took us around 6 months) you will find out how this works and you can add on some rules. For example, I don't go to Best Buy alone. I will spend too much on \"\"house stuff\"\". My wife doesn't like to make the budget, so I handle that, then we go over it. Things like that.\"" }, { "docid": "18355", "title": "", "text": "\"Your questions seek answers to specifics, but I feel that you may need more general help. There are two things, I feel, that you need to learn about in the general category of personal finance. Your asking questions about investing, but it is not as important, IMHO, as how you manage your day-to-day operations. For example, you should first learn to budget. In personal finance often times \"\"living on a budget\"\" equates to poor, or low income. That is hardly the case. A budget is a plan on how to spend money. It should be refreshed each and every month and your income should equal your expenses. You might have in your budget a $1200 trip into the city to see a concert, hardly what a low income person should have in theirs. Secondly you need to be deliberate about debt management. For some, they feel that having a car payment and having student loans are a necessary part of life and argue that paying them off is foolish as you can earn more from investments. Others argue for zero debt. I fall in the later. Using and carrying a balance on high interest CCs and having high leases or car payments are just dumb. They are also easy to wander into unless you are deliberate. Third you need to prepare for emergencies. Engineers still get laid off and hurt where they are unable to work. They get sued. Having the proper insurance and sufficient reserves in the bank help prevent debt. Now you can start looking into investments. Start off slow and deliberate with investing. Put some in your company 401K or open some mutual funds on the side. You can read about them and talk with advisers, for free, at Fidelity and Vanguard. Read books from the library. Most of all don't get caught up in too much hype. Things like Forex, options, life insurance, gold/silver, are not investments. They are tools for sales people to make fat commissions off the ignorant. You are fortunate in that Engineers are very likely to retire wealthy. They are part of the second largest demographic of first generation rich. The first is small business owners. To start out I would read Millionaire Next Door and Stop Acting Rich. For a debt free approach to life, check out Financial Peace University (FPU) by Dave Ramsey (video course). His lesson on insurance is excellent. I am an engineer, and my wife a project manager we found FPU life changing and regretted not getting on board sooner. Along these lines we have had some turmoil, recently, that became little more than an inconvenience because we were prepared.\"" }, { "docid": "532259", "title": "", "text": "Can I transfer these money to India in my saving account? What will be tax implication to me? Yes you can. Whether you transfer to India or not does not change your tax obligation. If I understand correctly you are being paid an allowance in UK to cover your expense. If you are saving; then the saving portion is treated as income and you have to self declare this and pay tax according to you tax bracket. Can I transfer these money to my wife's account as a gift? What will be tax implication to me and my wife? There is no tax obligation to your wife. The tax obligation remain same to you as in first point. What if i transfer these money as loan refund to my friend? What will be tax implication for these to me and my friend? If there is proper paper trial to show your friend loaned you a sum at zero percentage and you have paid back; amounts are not to large; then there is no tax obligation to your friend. The tax obligation remains same to you as in point 1." }, { "docid": "244303", "title": "", "text": "\"I made an investing mistake many (eight?) years ago. Specifically, I invested a very large sum of money in a certain triple leveraged ETF (the asset has not yet been sold, but the value has decreased to maybe one 8th or 5th of the original amount). I thought the risk involved was the volatility--I didn't realize that due to the nature of the asset the value would be constantly decreasing towards zero! Anyhow, my question is what to do next? I would advise you to sell it ASAP. You didn't mention what ETF it is, but chances are you will continue to lose money. The complicating factor is that I have since moved out of the United States and am living abroad (i.e. Japan). I am permanent resident of my host country, I have a steady salary that is paid by a company incorporated in my host country, and pay taxes to the host government. I file a tax return to the U.S. Government each year, but all my income is excluded so I do not pay any taxes. In this way, I do not think that I can write anything off on my U.S. tax return. Also, I have absolutely no idea if I would be able to write off any losses on my Japanese tax return (I've entrusted all the family tax issues to my wife). Would this be possible? I can't answer this question but you seem to be looking for information on \"\"cross-border tax harvesting\"\". If Google doesn't yield useful results, I'd suggest you talk to an accountant who is familiar with the relevant tax codes. Are there any other available options (that would not involve having to tell my wife about the loss, which would be inevitable if I were to go the tax write-off route in Japan)? This is off topic but you should probably have an honest conversation with your wife regardless. If I continue to hold onto this asset the value will decrease lower and lower. Any suggestions as to what to do? See above: close your position ASAP For more information on the pitfalls of leveraged ETFs (FINRA) What happens if I hold longer than one trading day? While there may be trading and hedging strategies that justify holding these investments longer than a day, buy-and-hold investors with an intermediate or long-term time horizon should carefully consider whether these ETFs are appropriate for their portfolio. As discussed above, because leveraged and inverse ETFs reset each day, their performance can quickly diverge from the performance of the underlying index or benchmark. In other words, it is possible that you could suffer significant losses even if the long-term performance of the index showed a gain.\"" }, { "docid": "475912", "title": "", "text": "\"I feel for your situation. I'm in a similar boat with \"\"high\"\" income yet little left over at the end of the month. My wife and I are steadily making major adjustments to fix that. While reading your story, one thing that jumped out at me is that 3.5 years is not really a long time. So, the moment those credit cards are paid off (and other debts for that matter), DO NOT let that $1,400 return into your finances! Tuck it away someplace else and forget about it, as if it doesn't exist. You're already in the habit of doing without. Keep the habit. Save the money. From the first day that my wife recently took a new job, we put 25% of her paycheck into a checking account that's hard to access. It goes right in, direct deposit, and we never even see it. To this day, we don't even know the exact dollar amount going in... ...the crazy part is, we don't miss it as much as I thought we would! In fact, I just got a raise and I'm going to start forwarding the pay difference into that account, as well. At the end of the day, we all make our spending choices based on how much money is available. It never fails: with more income comes more \"\"worthwhile\"\" expenses. My advice in a nutshell: Over the next few years, whenever your income increases, don't change your habits to match! That's our plan. Slowly but surely, it's working... (I Hope that helps in some way)\"" } ]

[ { "docid": "127838", "title": "", "text": "Saving for college you have a couple of options. 529 plans are probably the best bet for most people wanting to save for their kids college education. You can put a lot of money away ~$300k and you may get a state tax deduction. The downside is if you're kid doesn't go to college you may end up eating the 10% penalty. State specific prepaid tuition plans. The upside is you know roughly the return you are going to get on your money. The downside is your kid has to go to a state school in the state you prepaid or there are likely withdrawal penalties. For the most part these really aren't that great of a deal any more. ESAs are also an option but they only allow you to contribute $2k/year, but you have more investment options than with the 529 plans. Traditional and ROTH IRA accounts can also be used to pay for higher education. I wouldn't recommend this route in general but if you maxed out your 401k and weren't using your IRA contribution limits you could put extra money here and get more or really different flexibility than you can with a 529 account. I doubt IRA's will ever be asked for on a FAFSA which might be helpful. Another option is to save the money in a regular brokerage account. You would have more flexibility, but lower returns after taxes. One advantage to this route is if you think your kid might be borderline for financial aid a year or two before he starts college you could move this money into another investment that doesn't matter for financial aid purposes. A few words of caution, make sure you save for retirement before saving for your kids college. He can always get loans to pay for school but no one is going to give you a loan to pay for your retirement. Also be cautious with the amount of money you give your adult child, studies have shown that the more money that parents give their adult children the less successful they are compared to their peers." } ]

[ { "docid": "238058", "title": "", "text": "Have you ever been so poor as to be destitute? Not just someone with a hard scrabble life but someone with no options? I come from a third world country and was so poor that sometimes, I went hungry for days and on others, had nothing more than a banana to eat. My parents pawned all their meager savings to ensure I got a good education and was supporting my parents straight out of college. I am one of the lucky ones who got away but I had plenty of hard-working, honest and talented friends who are stuck. You need to walk in the shoes of these people. It is not always so simple. There are quite a few youth who while away their time on Reddit, games, hanging out on the corners of streets and so on but for every such person, there is a Dad or a Mom with a medical condition, a child whose parents are uneducated and too poor to teach their children at home, people who are too ill physically or mentally to work and having large medical bills and families that are barely surviving. Yet, they have chosen the hard, honest life over one of crime and petty theft. These people deserve our respect, even when we disagree with them. I am an extreme libertarian who thinks all government programs should be abolished but I respect the liberal viewpoint. Churches and charity are not always the answer. Many times, it is also one of chance and station in life. Edit - Pardon the lack of structure. This thread touched a raw nerve, even as I leave my old life behind and move towards a brighter future. Edit - Need to add for posterity that I came to the US as a skilled worker and legal immigrant, having been invited due to my skills in a particular field." }, { "docid": "354551", "title": "", "text": "I wouldn't recommend trying to chase a good return on this money. I'd just put it into a savings account of some sort. If you can get a better interest rate with an online account, then feel free to do that. I'd recommend using this money to pay for as much of college out of pocket as you can. The more student loans you can avoid, the better. As @John Bensin said, trying to make money in the stock market in such a short time is too risky. For this money, you want to preserve the principal to pay for school, or to pay down your loans when you get out. If you find you have more money than you need to finish paying for school, then I'd suggest setting some aside for an emergency fund, setting aside enough to pay your loans off when you're out of school, saving for future purchases (house, car, etc), and then start investing (maybe for retirement in a Roth IRA or something like that)." }, { "docid": "538282", "title": "", "text": "If you plan on holding the money for 15 years, until your daughter turns 21, then advanced algebra tells me she is 6 years old. I think the real question is, what do you intend for your daughter to get out of this? If you want her to get a real return on her money, Mike Haskel has laid out the information to get you started deciding on that. But at 6, is part of the goal also teaching her about financial stewardship, principles of saving, etc.? If so, consider the following: When the money was physically held in the piggy bank, your daughter had theoretical control over it. She was exercising restraint, for delayed gratification (even if she did not really understand that yet, and even if she really didn't understand money / didn't know what she would do with it). By taking this money and putting it away for her, you are taking her out of the decision making - unless you plan on giving her access to the account, letting her decide when to take it out. Still, you could talk her through what you're doing, and ask her how she feels about it. But perhaps she is too young to understand what committing the money away until 21 really means. And if, for example, she wants to buy a bike when she is 10, do you want her to see the fruits of her saved money? Finally, consider that if you (or you & your daughter, depending on whether you want her to help in the decision) decide to put the money in a financial institution in some manner, the risk you are taking on may need to be part of the lesson for her. If you want to teach the general principles of saving, then putting it in bonds/CD's/Savings etc., may be sufficient, even if inflation lowers the value of the money. If you want to teach principles of investing, then perhaps consider waiting until she can understand why you are doing that. To a kid, I think the principles of saving & delayed gratification can be taught, but the principles of assuming risk for greater reward, is a bit more complex." }, { "docid": "53200", "title": "", "text": "\"In my opinion, you can't save too much for retirement. An extra $3120/yr invested at 8% for 30 years would give you $353K more at retirement. If your \"\"good amount in my 401k\"\" is a hint that you don't want us to go in that direction, then how about saving for the child's college education? 15 years' savings, again at 8% will return $85K, which feels like a low number even in today's dollars, 15 years of college inflation and it won't be much at all. Not sure why there's guilt around spending it. If one has no debt, good retirement savings level, and no pressing need to save for something else, enjoying one's money is an earned reward. Even so, if you want a riskless 'investment' just prepay the mortgage. You'll see an effective return of the mortgage rate, 4%(?) or so, vs the .001% banks are paying. Of course, this creates a monthly windfall once the mortgage is paid off, but it buys you time to make this ultimate decision. In the end, I'd respond that similar to Who can truly afford luxury cars?, one should produce a budget. I don't mean a set of constraints to limit spending in certain categories, but rather, a look back at where the money went last year and even the year before that. What will emerge are the things that are normal, the utility bills, tax bill, mortgage, etc, as well as the discretionary spending. If all your current saving is on track, the investment may be in experiences, not financial products.\"" }, { "docid": "87160", "title": "", "text": "\"You have a few correlated questions here: Yes you can. There are only a few investment strategies that require a minimum contribution and those aren't ones that would get a blanket recommendation anyway. Investing in bonds or stocks is perfectly possible with limited funds. You're never too young to start. The power of interest means that the more time you give your money to grow, the larger your eventual gains will be (provided your investment is beating inflation). If your financial situation allows it, it makes sense to invest money you don't need immediately, which brings us to: This is the one you have to look at most. You're young but have a nice chunk of cash in a savings account. That money won't grow much and you could be losing purchasing power to inflation but on the other hand that money also isn't at risk. While there are dozens of investment options1 the two main ones to look at are: bonds: these are fixed income, which means they're fairly safe, but the downside is that you need to lock up your money for a long time to get a better interest rate than a savings account index funds that track the market: these are basically another form of stock where each share represents fractions of shares of other companies that are tracked on an index such as the S&P 500 or Nasdaq. These are much riskier and more volatile, which is why you should look at this as a long-term investment as well because given enough time these are expected to trend upwards. Look into index funds further to understand why. But this isn't so much about what you should invest in, but more about the fact that an investment, almost by definition, means putting money away for a long period of time. So the real question remains: how much can you afford to put away? For that you need to look at your individual situation and your plans for the future. Do you need that money to pay for expenses in the coming years? Do you want to save it up for college? Do you want to invest and leave it untouched to inspire you to keep saving? Do you want to save for retirement? (I'm not sure if you can start saving via IRAs and the like at your age but it's worth looking into.) Or do you want to spend it on a dream holiday or a car? There are arguments to be made for every one of those. Most people will tell you to keep such a \"\"low\"\" sum in a savings account as an emergency fund but that also depends on whether you have a safety net (i.e. parents) and how reliable they are. Most people will also tell you that your long-term money should be in the stock market in the form of a balanced portfolio of index funds. But I won't tell you what to do since you need to look at your own options and decide for yourself what makes sense for you. You're off to a great start if you're thinking about this at your age and I'd encourage you to take that interest further and look into educating yourself on the investments options and funds that are available to you and decide on a financial plan. Involving your parents in that is sensible, not in the least because your post-high school plans will be the most important variable in said plan. To recap my first point and answer your main question, if you've decided that you want to invest and you've established a specific budget, the size of that investment budget should not factor into what you invest it in. 1 - For the record: penny stocks are not an investment. They're an expensive form of gambling.\"" }, { "docid": "315212", "title": "", "text": "In addition to the other answers, here's a proper strategy that implements your idea: If the options are priced properly they should account for future dividend payments, so all other things aside, a put option that is currently at the money should be in the money after the dividend, and hence more expensive than a put option that is out of the money today but at the money after the dividend has been paid. The unprotected futures (if priced correctly) should account for dividend payments based on the dividend history and, since maturing after the payment, should earn you (you sell them) less money because you deliver the physical after the dividend has been paid. The protected ones should reflect the expected total return value of the stock at the time of maturity (i.e. the dividend is mentally calculated into the price), and any dividend payments that happen on the way will be debited from your cash (and credited to the counterparty). Now that's the strategy that leaves you with nearly no risk (the only risk you bear is that the dividend isn't as high as you expected). But for that comfort you have to pay premiums. So to see if you're smarter than the market, subtract all the costs for the hedging instruments from your envisaged dividend yield and see if your still better than the lending rate. If so, do the trade." }, { "docid": "213066", "title": "", "text": "Other answers here cover some of the basics, but this is also a great time to start establishing a credit history and developing good financial habits to carry throughout your life. In addition to opening a free checking account with the local credit union, establish an overdraft line of credit on that account. Never close this account or this line of credit as it will work to increase the average age of your accounts when you apply for credit later in life. If you are disciplined with your use of credit cards, you may also want to apply for a low limit credit card through the same credit union for the same purpose as above. Never carry a balance on this card, but make minor purchases with it each month, never more than 20% of the balance, maybe just buy gas with it. Start tracking all of your spending and make a monthly budget. There are a lot of online tools that make this very easy. Establishing the habit now will help you make informed financial decisions in the future. Open a Roth IRA and put at least 10% of your money away for retirement. In the future your income may increase enough to put you in the 25% tax bracket. If that ever happens, open a Regular IRA and put the money there instead. Also when you have employers that offer 401k matching do the same thing with a Roth 401k account. Keep your money invested in a low cost index fund." }, { "docid": "83346", "title": "", "text": "\"For practical purposes, I would strongly suggest that you do create a separate account for each business you may have that is used only for business purposes, and use it for all of your business income and expenses. This will allow you to get an accurate picture of whether you are making money or not, what your full expenses really are, how much of your personal money you have put into the business, and is an easy way to keep business taxes separate. You will also be able to get a fairly quick read on what your profits are without doing much accounting by looking at the account balance less future taxes and expenses, and less any personal money you've put into the account. Check out this thread from Paypal about setting up a \"\"child\"\" account that is linked to your personal account and can be set up to autosweep payments into your main account, should you like. You will still be able to see transactions for each child account. NOTE: Do be careful to make sure you are reserving the proper amount out of any profits your startup may have for taxes - you don't want to mix this with personal money and then later find out that you owe taxes and have to scramble to come up with the money if you have already spent it This is one of the main reasons to segregate your startup's revenues and profits in the business account. For those using \"\"brick and mortar\"\" banking services rather than a service like Paypal: You likely do not need a business checking account if you are a startup. Most likely, you can simply open a second personal account with your bank in your name, and name it \"\"John Doe DBA Company Name\"\" (DBA = Doing Business As). This way, you can pay expenses and accept payments in the name of your startup. Check with your banker for additional details (localized information).\"" }, { "docid": "118762", "title": "", "text": "I doubt that this exists, but it could theoretically. After all, a share is kind of an option to a company's future success, and so a call is already a second level on indirection. The better approach would be to 'create your own Put-Puts', by investing less money (A) in the Put you wanted to invest into, and put the smaller rest (B) in the share itself or a Call. That way, if the original Put is successful, at max (B) is lost, and if it is unsuccessful, the loss on (A) is covered by a gain on (B). Potentially, if you do the math, you can reach a mathematical equivalent situation to a Put-Put by buying the right amount and kind of Calls. However, we know already that buying a Put and a Call is a poor strategy, so that would mean a Put-Put would also be a poor strategy." }, { "docid": "39376", "title": "", "text": "Kudos to you on having money in a retirement account as early as after college. Many people don't start investing towards retirement until far to late and compound interest makes a major difference in those early years. Ideally, neither withdraw nor borrow from these accounts. Withdrawing from your 403b will incur a 10% penalty unless you are over the minimum age on top of the normal tax on that income. With a 401K loan you're putting yourself at risk if you run into a situation where you can't pay the loan back of incurring the same penalties as an early withdrawal. This article covers the concerns well. In general, you want to view your retirement money as untouchable until the distributions need to start coming in retirement. It's your future in there. Of course, this doesn't help the short term cash need. Do you have money in an emergency fund somewhere? Could a relative loan you money? Can you move to a less expensive place in advance and squirrel away some of what would have been your rent cash? Can you cut back to bare necessities and do the same? Do you have some nice stuff sitting around that you could sell to make up that needed cash? Will your current employer pay out unused vacation or are you getting any severance from this situation? Will you qualify for unemployment? I other words, think about what you would do to get the money if your retirement accounts weren't there. Then do that - as long as it's legal and doesn't involve running up debt on high interest lines of credit - instead of borrowing against your future." }, { "docid": "20420", "title": "", "text": "Jurisdictions will vary but I can imagine calculation methods for child support where the raise could become significant in the present with long future ramifications as well, even if the job is temporary or the parent wanted to step away from working full-time to attend school. The timing of the raise might coincide with disclosure of income to an ex-spouse or to the court related and it might be preferable to postpone the increase. Of course the court would probably frown on declining the raise for only these reasons. If it found out it might impute the higher income anyway. And I'm not suggesting that people dodge responsibility for their kids. We've all seen those cases where child support is not particularly equitable between the two parties and/or the kids do not necessarily benefit by the transfer of money. I wouldn't blame a parent for thoughtfully and unselfishly considering this type of second-order effect and consulting an attorney as with so many other financial implications of divorce. Regardless of personal moral objections it's certainly an answer to the question in technical terms that somebody somewhere has taken into account." }, { "docid": "344041", "title": "", "text": "I can't say specifically about charities to help Greece. If someone on here has specific knowledge, please chime in. The only shortcut I know to tell if a charity is legitimate is to consult one of the ratings/watchdog type groups that monitor charities. For example, for explicitly Christian charities, there's a group called the Evangelical Council for Financial Accountability. To be a member in good standing a charity has to meet a bunch of criteria, like having an independent board of directors, i.e. you can't start a charity, make yourself the president and your brother-in-law the vice president and you're not answerable to anyone else; their fund-raising and administrative costs can't be more than a certain percentage of total income, etc. There are similar groups with similar standards for more general charities. I'm not naming any of those groups because there's a potential catch: How reputable is the group that rates other people's reputations? And I don't want to recommend someone without knowing. Years ago I came across a news story about an organization that rated colleges, and that had given one particular college their top rating. But, the news story said, investigators found that that one college was the ONLY college they ever gave a rating to, and that their address was the same as the college's address. It turned out, of course, that the college was a scam. The other method is to take some time to investigate the charity. For starters, get a copy of their annual report or their newsletter. If they're total frauds, often they don't have an annual report or a newsletter. Of course a fraud could make up beautiful flyers describing all the wonderful work they do, with pictures of people they helped and detailed case histories, and it's all complete fiction. But that's more work than most con men go to. I've gotten lots of pleas for contributions from people who call on the phone or come to my door or send an email. If the message does not have a logo, a mailing address and phone number, reasonably coherent English, and a fair amount of text describing what they do, I don't give them anything. They COULD be a new start up that hasn't had time to prepare these things. They COULD believe that pretty flyers are a waste of money and they want to put all their resources into helping the needy. But more likely it's a scam that somebody through together in his basement. Of course the best thing is if you personally know people who are officers in the organization. (Well, assuming you personally know them AND you know that they are honest people. If you know the president and you know he's a sleazy con man, you might want to stay away from that group.) See if you can find information about the charity in the news or on-line. If they're being investigated for fraud by the Justice Department, you might want to avoid them. Etc. Maybe you've thought this through, but you also might want to think about exactly who in Greece you want to help, and what your philosophy of charity is. Do you want to help people who lost their jobs because of the economic problems there and who are now unemployed? Do you want to donate to the government to help them balance the budget? Do you want to help support an orphanage or a homeless shelter, or give money directly to needy people? Etc. And one piece of unsolicited advice: Unless you have millions to give -- and I'm assuming you don't as you said your first gift would be $50 -- I'd pick one or two charities and give regularly to them. I think you can do more good by giving $X per month to a single charity than to give to a different charity every month. You make more difference." }, { "docid": "390484", "title": "", "text": "Another suggestion I heard on the radio was to give the child the difference between the name brand they want, and the store brand they settle on. Then that money can be accumulated as savings. Saving money is as important a feature of the family economy as earning money. Be careful with what you have a child do for reward vs what you have them do as a responsibility. Don't set a dangerous precedent that certain work does not need to be done unless compensation is on the table. You might have a child who relies on external motivations only to do things, which can make school work and future employment hard. I would instead have my child do yard work, but while doing it explain opportunity costs of doing the work yourself vs hiring out. I would show my kid how saving money earns interest, and how that is essentially free money." }, { "docid": "220834", "title": "", "text": "Any time you are optimizing a portfolio, the right horizon to use for computing the statistics you will use for optimization (expected return, covariance, etc.) will be the same as your rebalance/trading frequency. If you expect your trading strategy to trade once a day, you should use daily data for optimization. Ditto for monthly or quarterly. If at all possible you should use statistics across the board that are computed at the same frequency as your trading. Regarding currency pricing, I see no reason you can't take the reported prices and convert them to whatever currency you want using that day's foriegn exchange rate. Foreign exchange rates are available for free at the Fed and elsewhere. Converting prices from one currency to another is not rocket science. Since you are contemplating putting actual money behind this, note that using data to compute statistics is less reliable for lower statistical moments. The mean (expected return) is the first moment, so using historical returns is extremely unreliable at predicting future returns. The variances and covariances are second moments, they are better. Skewness and kurtosis, yet better. The fact that the expected return can't reliably be estimated from past returns is the major downfall of the Markowitz method (resulting portfolios are often very crazy and will depend critically on the data period you use to set them up). There are approaches to fixing this, such as Black-Litterman's (1992) method, but they get complicated fast." }, { "docid": "504940", "title": "", "text": "Are you sure the question even makes sense? In the present-day world economy, it's unlikely that someone young who just started working has the means to put away any significant amount of money as savings, and attempting to do so might actually preclude making the financial choices that actually lead to stability - things like purchasing [the right types and amounts of] insurance, buying outright rather than using credit to compensate for the fact that you committed to keep some portion of your income as savings, spending money in ways that enrich your experience and expand your professional opportunities, etc. There's also the ethical question of how viable/sustainable saving is. The mechanism by which saving ensures financial stability is by everyone hoarding enough resources to deal with some level of worst-case scenario that might happen in their future. This worked for past generations in the US because we had massive amounts (relative to the population) of (stolen) natural resources, infrastructure built on enslaved labor, etc. It doesn't scale with modern changes the world is undergoing and it inherently only works for some people when it's not working for others. From my perspective, much more valuable financial skills for the next generation are:" }, { "docid": "116599", "title": "", "text": "Well the article did mention that if you continually beat your bookmaker you're likely to get rejected in future which is hilarious, but personally I have actually bet on sports and I've found that it's a fairly easy game to win at if you don't go for bets with huge odds and I don't think I've ever placed a bet where after I lost and said 'what the hell just happened'. I only really bet on rugby and soccer though, so team sports may be a bit less prone to corruption from the bookmakers. I'm not saying I think this is a safe way to do business though, I don't think day trading is either. I think they are both speculation. I just think that sports betting has a lot more for a speculator to work with before they develop a strategy. For instance, I always bet on New Zealand winning a rugby game, their players line up as the top in their respective positions and their game strategy essentially has the rules of the game exploited to the maximum. All of the data on this team based on their past performance is actually applicable to their future performance, skilled players usually continue to be so up till a certain age, skilled coaches who stay in their position mean no variation in team strategy. That makes me feel confident that even though New Zealand might lose a game here or there, that they will continue to be winners, and even though the gains on their wins aren't much, consistently winning with them over time builds up to a nice bit of profit. With day trading in the stock market, so much of the variation in prices is due to non accounting fundamentals, and even though historical data can be useful we know that investor sentiment, secret information, and a myriad of other factors mean that unless you are extremely experienced or have a natural eye for reading markets that most traders will lose. I know developing strategies do work for some people, but I think I've seen it said on this sub a couple times that 'trading strategies work - until they don't.' I only speak as a uni student who has limited research beyond Bloomberg articles etc... but from what I can tell, the majority of day traders lose money eventually, and even with AI, the profits are only noteable when the capital input is extremely high. Sports events can't really be swung by the confidence of supporters, and yes corruption is rampant in sports as with every industry, but at least the data you have tells a fairly good story about where the bets will head in the future." }, { "docid": "31182", "title": "", "text": "A trust is a financial arrangement to put aside money over a period of time (typically years), for a specific purpose to benefit someone. Two purposes of trusts are 1) providing for retirement and 2) providing for a child or minor. There are three parties to a trust: 1) A grantor, the person who establishes and funds a trust. 2) A beneficiary, a person who receives the benefits. 3) a trustee, someone who acts in a fiduciary capacity between the grantor and beneficiary. No one person can be all three parties. A single person can be two of out those three parties. A RETIREMENT trust is something like an IRA (individual retirement account). Here, a person can be both the grantor (contributor) to the IRA, and the beneficiary (a withdrawer after retirement). But you need a bank or a broker to act as a fiduciary, and to handle the reporting to the IRS (Internal Revenue Service). Pension plans have employers as grantors, employees as beneficiaries, and (usually) a third party as trustee. A MINORS' trust can be established under a Gift to the Minors' Act, or other trust mechanisms, such as a Generation Skipping Trust. Here, a parent may be both grantor and trustee (although usually a third party is a trustee). A sum of money is put aside over a period of years for the benefit of a minor, for a college education, or for the minor's attaining a certain age: a minimum of 18, sometimes 21, possibly 25 or even older, depending on when the grantor feels that the minor is responsible enough to handle the money." }, { "docid": "472739", "title": "", "text": "\"He's paying the interest and you're paying the principal. If you're making minimum monthly payments, you'll still be doing the same thing 25-30 years from now. I think Parker's advice was very, very good, but I'd like to add to it a little of my own. Whatever dollar amount your son is sending to you as payment, encourage him to continue doing that. Only instead of paying you, have him put that money into a savings plan of some kind. You mentioned that he's struggling now, yet able to come up with approximately (my best guess) $200/mo. I guarantee you that if he puts that $200/mo back into his pocket, he'll still be struggling every month yet have nothing to show for it. My suggestion changes nothing in his daily life, yet gives him $2400 at the end of every year. I was in a somewhat similiar situation as your son, only to the tune of $13,000. About 20 years ago, I got a loan and bought a new truck in which to use to go back and forth to work every day. The first 5 months the payments to the bank went as planned. Then my wife announces that \"\"we're\"\" pregnant. So my parents figured it would be best to just pay off my loan to the bank, avoiding any further interest charges, and take that truck payment and put it away for a rainy day. At 33 y/o, with my first child on the way, I finally started saving some of my money. It was good advice on their part because the rainy days came! They never asked me to pay them back, however I did offer. I've been tucking away $300-400/mo in the bank every month since then because I just got into the habit. Good thing I did too. In the past 10 years I've had to bury both of my parents, one sister and two wives and I'll tell ya, one thing that was comforting was the fact that I had the money. The little truck I bought 20 years ago is now my son's. It has around 260,000 miles on it now. When he trades it in for a newer vehicle, I will probably loan him the money and have him make payments to me rather than the bank. I, too, am not one to pay interest if I can help it. If he defaults, he's my son. I just won't buy him another vehicle! Or maybe he'll get into the same habit of saving money the same way I did. Like JohnFx said, money loaned to family should be regarded as a gift, otherwise you'll end up losing your money AND your family member! Hope some of this helps you make your decision.\"" }, { "docid": "264400", "title": "", "text": "\"&gt;&gt; I propose to make the requirements for finish high school and college degrees much much higher, as it was in the past. &gt; Not gonna happen. Totally agree with you! What I was proposing is what SHOULD be done. &gt; waiting for disadvantaged kids to get higher scores will not happen until they get accepted into college. Even then! Almost all disadvantaged kids, smart or not smart, the diploma they get is almost worthless. The diploma will not give them much advantage or improve their situation. The diploma barely even helps very smart kids from rich advantaged homes. Actually, if in the past, no matter who you knew, no matter your family background, a diploma will almost always GUARANTEE a secure and advantaged life. &gt; If you force schools to gain their income from future students earnings they will have high concern for kids that have a good P/E ratio. It will also stop the loan industry from putting these kids into debt. In theory, you are correct. In practice, many many problems to implement. For starters, this makes college a very risky business because it's very hard to predict future income of its students, even the very smart and accomplished students. And I will give you a related example: colleges teach Computer Science (Programming) to many kids today, but the profession is about to die due AI and automation + outsourcing. This was unexpected 1-2 years ago. Barely economists can predict the economy, so you want colleges to predict income based on what is taught? &gt; The downside is that it may turn colleges into trade techs, Actually, colleges are already trade techs because, today, almost all students study just(!) for the hope to get a job. In the past, you studied to become a scholar and wise, and then pick some kind of a job of your interest where being generally smart and knowledgeable is needed. BOTTOM LINE: Since you and I know that nothing will be done, no higher standards and no future-income based tuition, here's what what's happening with my son, which is what happened with me, which is still happening in Germany. No, I am not German, but I come from a German culture - my parents are of German descent, but I was born and raised in Israel. It's called \"\"Master and Apprentice\"\". I have been working since I was 13, with computers, and if you consider my age (55), when I was 13, no PCs with internet, and only punch cards were used to access a computer. My parents did not push me... it was me who felt the need to work, while I was studying (just like my father had that need when he was young). My son, 13 today, but since he was 10, the apple does not fall far from the tree, found work (he's not even allowed to work by law) and is making money. He's right now teaching, administering and designing Minecraft \"\"worlds\"\" and applications. **Hands on experience, especially taught from a Master is better than any Diploma!!!!** He will probably go to some so-so college to get a piece of paper called \"\"Diploma\"\" WHILE he will continue working in whatever he's interested. He will be successful like I am (not trying to brag). I never pushed him, but I explained to you some realities of the world. LAST WORD: actually, most Masters, real Masters, are desperate to teach, for free, their knowledge, vision and know. And the system does not allow them to do that, to protect the colleges and universities. Only in Medicine, it's still happens. Think about it!!!!!\"" } ]

[ { "docid": "512096", "title": "", "text": "\"(Congratulations on the little one on the way.) I'd recommend saving outside of tax-advantaged accounts. Pay your taxes and be done with them. I'd recommend putting your old-age fund first before shelling out a lot of money for college. I'd recommend not shelling out a lot of money for college. Ideally, none. There are ways today to get a four-year degree for $15,000. Not $15,000 per year. $15,000 total. Check here. (This isn't an affiliate link.) They can pay for this themselves! I'd recommend making sure you hold the hammer. Don't let them party on your nickel. I'd recommend teaching your kids to \"\"fish\"\" as soon as possible. Help them start a business. They could be millionaires by the time they're teenagers. Then they can make their own money. You won't have to give them a dime.\"" } ]

[ { "docid": "538282", "title": "", "text": "If you plan on holding the money for 15 years, until your daughter turns 21, then advanced algebra tells me she is 6 years old. I think the real question is, what do you intend for your daughter to get out of this? If you want her to get a real return on her money, Mike Haskel has laid out the information to get you started deciding on that. But at 6, is part of the goal also teaching her about financial stewardship, principles of saving, etc.? If so, consider the following: When the money was physically held in the piggy bank, your daughter had theoretical control over it. She was exercising restraint, for delayed gratification (even if she did not really understand that yet, and even if she really didn't understand money / didn't know what she would do with it). By taking this money and putting it away for her, you are taking her out of the decision making - unless you plan on giving her access to the account, letting her decide when to take it out. Still, you could talk her through what you're doing, and ask her how she feels about it. But perhaps she is too young to understand what committing the money away until 21 really means. And if, for example, she wants to buy a bike when she is 10, do you want her to see the fruits of her saved money? Finally, consider that if you (or you & your daughter, depending on whether you want her to help in the decision) decide to put the money in a financial institution in some manner, the risk you are taking on may need to be part of the lesson for her. If you want to teach the general principles of saving, then putting it in bonds/CD's/Savings etc., may be sufficient, even if inflation lowers the value of the money. If you want to teach principles of investing, then perhaps consider waiting until she can understand why you are doing that. To a kid, I think the principles of saving & delayed gratification can be taught, but the principles of assuming risk for greater reward, is a bit more complex." }, { "docid": "368315", "title": "", "text": "\"I think the problem is that you've made a math error. This child would not be costing you 300 per month, it will be costing you 1400 per month. 1100 of this is in a donation of salable hours rather than cash, but helpfully you have a number right there as to how much someone is willing to pay for these hours so the math is still doable. So, if you are indeed splitting your expenses fifty-fifty, you should chip 1100 into the pot to match your wife's contribution. It would make the most sense, I think, to have your part of this contribution cover some of your mutual expenses, and if any is left over, save it up for the day that your child would cost more than that 300 in a month - when you need extra clothes, or have to replace something they destroyed, or want to pay for extra opportunities (camps, educational games, lessons), or a a savings that can be used for major future expenses (higher education, first car, milestone celebrations, safety net when starting out). Of course, if your family is indeed a priority, you might consider making an equal investment in your family - say, half your income (1800) to match half her time going into the building of the family. After all, the decision to start a family should be an investment of time and value, not just a minimum bid for expenses. And again, any extra can be spent on mutual expenses, saved up for future costs, or left as your child's \"\"savings\"\" for major expenses or safety net. I suppose I should mention that you perhaps could get away with covering half her contribution (550 per month, on the face of it), as that should also \"\"balance\"\" out the monthly expenses. Even this much would be enough to put her back into the green on her covering her own costs. Of course, in this case you might want to take into account that while she's working 38,5 hours per week now, running a household is, I've heard, more closely equivalent to a 60-hour week, plus or minus being \"\"on call\"\" for a further 100 hours a week. Trying to calculate the absolute minimum payment on your part to match the investment of hours on hers is likely to be a bit more tricky than just matching the salable hours not worked, if you're set on income ratios and splitting costs \"\"as they are\"\". Also, you might want to rethink your criteria for sharing income completely or what makes certain divisions of costs \"\"unfair\"\". You mention one reason it would be unfair is that you have a \"\"more stressful job\"\" - well, your job may well be more stressful than her job now, but it is likely to be less so than raising a child (her new job). As for investment of time and energy for your education entitling you to a larger amount of pay, again, raising a child is likely to be a larger investment of time, money, and anxiety than your education, but her pay (or even share of the costs) doesn't seem to be balanced in response. I'm not gonna tell you what is fair, that's for you to work out, just suggesting you really think it through before deciding what would be fair or not.\"" }, { "docid": "427044", "title": "", "text": "You absolutely can be put in jail in America for debt... if that debt is to a government or government agency (like a municipal government). If you have unpaid court costs, fines, etc., it's common practice in most municipalities to issue an arrest warrant for those, even if non-payment is due to being indigent. In a lot of cases, even if you show up to explain why you can't pay or make a partial payment on the due date, you'll be arrested and jailed until a judge is available to hear your explanation, if one isn't available right when you go in. What's supposed to happen is that if you're indigent (can't pay), a judge will hear your explanation and, provided it's determined that you're indigent, make adjustments to what you owe (cancel or reduce the amount, extend the due date, setup a payment plan, etc.) and send you on your way. It bears mentioning that even in cases where the system works like it should, there's still a very real chance of being put in jail, which isn't harmless - people can and do lose their jobs while they're sitting in jail waiting to plead indigence to a judge. And of course, what's supposed to happen isn't what always does. The police shootings of the past couple years in Missouri have shone some light in a lot of dark corners down there, where there are, in fact, de-facto debtor prisons in many municipalities. In addition to civil rights groups filing suit over this in many Missouri municipalities, the US Department of Justice has filed suit against the city of Ferguson over their municipal practices (including their use of the courts and jails to generate municipal revenue). Some forms of private debt (like child support) also fall under this umbrella where an arrest warrant will be issued for failure to pay for any reason, and this was determined to be a factor in the Walter Scott shooting - Walter Scott ran to avoid being put in jail over child support debt, and losing his job while in jail. The New York Times highlighted his case in an article titled: Skip Child Support. Go to Jail. Lose Job. Repeat. Rodney Scott said that he sometimes thought his brother did not do everything he could to catch up, but that Walter seemed to consider it a hopeless cause. He recalled seeing his brother plead to a judge that he just did not make enough money. “He asked the judge, ‘How am I supposed to live?’ ” Mr. Scott said. “And the judge said something like, ‘That’s your problem. You figure it out.’ ”" }, { "docid": "574374", "title": "", "text": "The question is how does $16,000/year for 6.5 years fit into your budget. Or to put it another way, what won't you be spending that money on? Housing, food, vacations, retirement fund, investments (though you can invest your car fund in the meantime), building a hefty emergency fund, kids college funds, saving for a down payment on a home, charity, etc... are all other places that money could go. I don't know what your needs are today let alone 6.5 years into the future, but I'd encourage you to consider all your financial goals and evaluate where this expense would fit. It seems your plan is to save up to the total cost of the car and then buy it in cash. That's a valid strategy, but it means you'll have no car (unless you already own one) for 6.5 years. Do you need a car? If so, what will you drive in the meantime (and even if you already own another car outright, you'll have gas and maintenance expenses)? If you don't need a car, then $100,000 is a rather extravagant purchase for something we just established you don't need. Would you be happier having this expensive car in 6.5 years, or having a series of less expensive cars starting now? Or buying a used model of the expensive car sooner? Or having no car at all? Also, a lot can change in 6.5 years. Cars will evolve and there'll be different models and options available. Maybe your salary will have doubled, or maybe you'll be unemployed. You could be living in a different city, have a different commute, and maybe you'll need a minivan to haul kids around or live in a place with bad winters and want a 4-wheel-drive. You'll also need to be prepared for the additional expenses that generally come with expensive cars, such as higher insurance and maintenance rates, and parking could be costly if you live in an expensive city. The other option, of course, if the car is truly something you need, want, and can afford, would be to save up a sizable down payment and finance the rest so you can get the car sooner. Finally, there's nothing wrong with saving your money for 6.5 years, building up that fund, and then reevaluating what makes the most sense for you at that time. Maybe it will the car, maybe something else, but the nice thing about having savings is that it gives you more options." }, { "docid": "390484", "title": "", "text": "Another suggestion I heard on the radio was to give the child the difference between the name brand they want, and the store brand they settle on. Then that money can be accumulated as savings. Saving money is as important a feature of the family economy as earning money. Be careful with what you have a child do for reward vs what you have them do as a responsibility. Don't set a dangerous precedent that certain work does not need to be done unless compensation is on the table. You might have a child who relies on external motivations only to do things, which can make school work and future employment hard. I would instead have my child do yard work, but while doing it explain opportunity costs of doing the work yourself vs hiring out. I would show my kid how saving money earns interest, and how that is essentially free money." }, { "docid": "423513", "title": "", "text": "If you are looking for a simple formula or buying order / strategy to guarantee a lower buying price, unfortunately this does not exist. Otherwise, all investors would employ this strategy and the financial markets would no longer have an validity (aka arbitrage). Buying any investment contains a certain level of risk (other than US treasuries of course). Having said that, there are many option buying strategies that can employed to help increase your ROR or hedge an existing position. Most of these strategies are based a predicted future direction of a stock on the investor's part. For example, you hold the Ford stock and feel they are releasing their earnings report next week. You feel that they will not meet investors' expectations. You don't want to sell your shares but what you can do is buy put options. If the stock does indeed go down then you make money on your put options. Here is a document on options. It is moderately technical but very good if you want a good introduction on the subject. The strategy that I described above is on pg 33. http://www.m-x.ca/f_publications_en/en.guide.options.pdf" }, { "docid": "95415", "title": "", "text": "\"You may look into covered calls. In short, selling the option instead of buying it ... playing the house. One can do this on the \"\"buying side\"\" too, e.g. let's say you like company XYZ. If you sell the put, and it goes up, you make money. If XYZ goes down by expiration, you still made the money on the put, and now own the stock - the one you like, at a lower price. Now, you can immediately sell calls on XYZ. If it doesn't go up, you make money. If it does goes up, you get called out, and you make even more money (probably selling the call a little above current price, or where it was \"\"put\"\" to you at). The greatest risk is very large declines, and so one needs to do some research on the company to see if they are decent -- e.g. have good earnings, not over-valued P/E, etc. For larger declines, one has to sell the call further out. Note there are now stocks that have weekly options as well as monthly options. You just have to calculate the rate of return you will get, realizing that underneath the first put, you need enough money available should the stock be \"\"put\"\" to you. An additional, associated strategy, is starting by selling the put at a higher than current market limit price. Then, over a couple days, generally lowering the limit, if it isn't reached in the stock's fluctuation. I.e. if the stock drops in the next few days, you might sell the put on a dip. Same deal if the stock finally is \"\"put\"\" to you. Then you can start by selling the call at a higher limit price, gradually bringing it down if you aren't successful -- i.e. the stock doesn't reach it on an upswing. My friend is highly successful with this strategy. Good luck\"" }, { "docid": "256983", "title": "", "text": "\"Here are the top hitters in my (recent) experience, in highest-first order: Child Care By far the biggest potential cost is childcare, whether this be a full-time nursery/kindergarten, child minder, live-in Nanny/Au-pair or just paying a baby sitter when parents need a night off. This needs careful thought. In London, full-time nursery school (6 months to 4 years old) varies from 500 UKP to 2000 UKP per month, and the amount you pay does not guarantee the quality of the care/education. If you have relatives nearby, these costs can likely be reduced, but you'd really need to pay the relatives somehow - meals, bling, holidays, a new bathroom, etc. Loss of Earnings Whether the mother goes on maternity leave, or the father gives up his job to be a 'house husband', the family income is going to be affected for a period of time. You can plan for this by researching what government or company benefits the mother or father will get and for how long. I suggest dividing this amount evenly across the whole period that the stay-at-home parent will be off, rather than trying to calculate \"\"2 months' full pay, 2 months' half pay, 2 month's no pay\"\", because if you get into a pattern of high spending in the first two months, what will happen for the next 4 months. You also need to consider short-notice time off work when anybody is poorly. I suggest reserving some of your vacation time for unexpectedly-have-to-look-after-the-family time. When children start daycare/nursery, the germs cross-pollinate, so you get some really nasty strains of coughs, colds, diarrhoea and 'flu in the house, which could cause the primary carer to be unable to do their caring without (your) help. Bigger Car If you can't get a baby seat into your car because it doesn't have the proper fittings or doesn't have rear seats, you'll likely need to change your car. There are plenty of cars that are bigger in terms of people space without being more expensive, but it'll cost to change. Insurances If you have health insurance (e.g. US), you're going to have a proportional increase. Call your provider for details. Bear in mind that children have more illnesses and accidents than middle-age parents, so it could be a shock. Some parents take out life insurance to provide for their childrens' financial future in case of the worst happening. This can be around 50 UKP/65 USD per month, but it all depends on the lump sum you're insuring for. Equipment As a new parent, you think you need an incredible amount of equipment such as Changing Station, Cot/Crib, 'Moses Basket', Carry-Chair, Car Seat, Travel Cot/Crib, Feeding Chair, Changing Mat, Baby Bath, etc. When you bring a new baby home, you really only need a wipe-clean changing mat and somewhere safe for baby to sleep. You can buy anything else as you need it. In fact, it gives you more perspective to go shopping once you've had the baby. Whatever you buy, keep the receipt and don't open it until you need it. Much easier to take back the, e.g. portable baby bottle warmer, if you didn't open it because baby is breast-fed. When they become bigger (2 months plus), you'll need a Cot/Crib. Invest in an adjustable cot-bed - it's a bit larger than a regular Cot/Crib and the floor lowers as they get bigger, so you only need one for the first 2.5 to 3 years. Food If baby will have formula, there are baby-milk formula calculators on the web - in summary one box of quality formula is ~9 UKP/12 USD and this lasts around 4 days if fully formula-fed. Once they're onto food, you need to factor in baby food options. You can either make your own by side-lining some of the adult meal and blending it, then putting it into individual plastic containers. This takes effort, so not everyone has the energy. Alternatively, you're going to have to buy baby food in jars, packets or boxes for 3 meals a day and there'll be little snacks in-between. Baby snacks are strangely expensive, so recommend fruit. Budget for 5 UKP/7 USD per day until they're eating a small portion of the family meal. Clothes A new baby really only needs vests, all-in-one suits, blankets for warmth. You can go mad buying cute outfits, but they get limited use as a new baby grows really quickly. If you've a lot of family/friends and you have a tradition of some kind of \"\"good luck\"\" party ('baby shower'), then you can find that you end up being given lots of things. If you don't know the sex of the baby, ask people to get you a gift receipt if possible such that you don't get blue clothes for a girl. It may not bother you, but its' a pain when people say \"\"Katie is a strange name for a boy?\"\" just because your little girl has blue booties. Child-proofing Your Home This really does not have to cost a lot. Some people go mad putting soft corners on all the hard edges, covering the electrical sockets and generally sanitizing the whole home. It's up to you, but if there's a room full of sharp/poisonous things like a kitchen or utility room, you might want to put a 15 UKP/20 USD baby gate on that room. Putting the breakable or sharp things up high, or stored away in the attic is a sensible move too.\"" }, { "docid": "21903", "title": "", "text": "The value of money is not only in the earning and saving of it but also in the discipline in spending it. Any approach to teaching children about money must ensure a balance between the two otherwise they will either become fearful of spending (and so never actually learn that money is but a tool and can be enjoyed) or irresponsible (spending with abandon with all that concomitant misery): Teaching kids about money is a wonderful opportunity to instil discipline and values. Any strategy must be structured to suite the child's age and abilities as well. Trying to teach compound interest to too young a child will just become needlessly confusing and worrying for them. Hope this gives a few ideas." }, { "docid": "414429", "title": "", "text": "\"Uniform Transfer to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA) accounts in the United States are accounts that belong to your child, but you can deposit money into. When the child attains his/her majority, the money becomes theirs to spend however they wish. Prior to attaining their majority, a custodian must sign off on withdrawals. Now, they are not foolproof; legally, you can withdraw money if it is spent on the child's behalf, so that can be gamed. What you can do to protect against that is to make another person the custodian (or, perhaps make them joint custodians with yourself, requiring both signatures for withdrawals). UTMA/UGMA accounts do not have to be bank savings accounts; for example, both of my children have accounts at Vanguard which are effectively their college savings accounts. They're invested in various ETFs and similar kinds of investments; you're welcome to choose from a wide variety of options depending on risk tolerance. Typically these accounts have relatively small fees, particularly if you have a reasonable minimum balance (I think USD$10k is a common minimum for avoiding larger fees). If you are looking for something even more secure than a UGMA or UTMA account, you can set up a trust. These have several major differences over the UGMA/UTMA accounts: Some of course consider the second point an advantage, some a disadvantage - we (and Grandma) prefer to let our children make their own choices re: college, while others may not prefer that. Also worth noting as a difference - and concern to think about - in these two. A UGMA or UTMA account that generates income may have taxable events - interest or dividend income. If that's over a relatively low threshhold, about $1050 this year, those earnings will be taxed (on the child's own tax return). If it's over $2100 (this year), those earnings will be taxed at the parents' tax rate (\"\"kiddie tax\"\"). Trusts are slightly different; trusts themselves are taxed, and have their own tax returns. If you do set one of those up, the lawyer who helps you do so should inform you of the tax implications and either hook you up with an accountant or point you to resources to handle the taxes yourself.\"" }, { "docid": "564957", "title": "", "text": "I think you are right. I hear people all the time with horror stories about futures and trading horror stories in general. I want to learn about this market, but I don't want to go in without some education on the matter. I watched their video on options on futures, but the valuation method needs a bit more explaining to be (beta, gamma, etc.). I get the basic idea of options on futures, but I need to formulate a strategy, and that is where study would come in. I have wanted to play around with a few strategies I had in my head for regular options, and by the time I get the grasp of it, I might be able to trade options on futures. I guess my biggest thing with options on futures is not to be sophisticated, but more so I can have access to new markets. On the topic of options though, I do think there is some strategies that could boost my returns a bit on my existing strategies. I think selling various options (selling call options on weak dividend stocks stuck as bulk shipper or mortgage reits and as of late oil trusts or selling put options on some stronger oil reits or other stronger dividend stocks). The only problem is I don't know if the premium would be enough to make it worth while with the weak dividend stocks. So either way, even if you are only earning a conservative 9% on dividends, if you add in another 4% for premium, you could be making 13% off of one trade, and could repeat the process (assuming the target stayed weak or strong)." }, { "docid": "380557", "title": "", "text": "\"Create one account. You can change the beneficiary of the plan (even to nephews, nieces, yourself or your wife) as many times as you need so long as you are spending the money on valid educational expenses. Are you 100% sure both of your kids are going to college? If you aren't really 100% sure, a single account that you can move between them is the best bet. Also, having recently looked in 529 plans, here are some things you have probably already thought about. Look up good 529 plans here: http://www.clarkhoward.com/news/education/preparing-for-college/clarks-529-guide/nFZS/ EDIT: I don't think you can worry about fairly dividing the money up. I can see your wanting to be fair but what is more important, school or fairly dividing the money? A 529 is money only for school. Assuming your kids aren't the same age and won't go to the same school, their expenses will likely be different. The younger kid will benefit from more interest from a longer investment, but suffer from having higher costs. So if you want to insure both kids got $50K (for example) from you by the time it is all said and done, I think you would have to make that up from your own pocket. If only one child goes to school, any money you give the other for starting their own business couldn't come from the 529 without big tax penalties. Depending on your position and finances you could state something like \"\"I will cover your college expenses up to $50K\"\" and then that is that. Just monitor your 529 and shoot for having $100K in the account by the time they are both college age. That runs a risk though, because if one child doesn't go to school your money is locked up for a while or will have tax issues.\"" }, { "docid": "504940", "title": "", "text": "Are you sure the question even makes sense? In the present-day world economy, it's unlikely that someone young who just started working has the means to put away any significant amount of money as savings, and attempting to do so might actually preclude making the financial choices that actually lead to stability - things like purchasing [the right types and amounts of] insurance, buying outright rather than using credit to compensate for the fact that you committed to keep some portion of your income as savings, spending money in ways that enrich your experience and expand your professional opportunities, etc. There's also the ethical question of how viable/sustainable saving is. The mechanism by which saving ensures financial stability is by everyone hoarding enough resources to deal with some level of worst-case scenario that might happen in their future. This worked for past generations in the US because we had massive amounts (relative to the population) of (stolen) natural resources, infrastructure built on enslaved labor, etc. It doesn't scale with modern changes the world is undergoing and it inherently only works for some people when it's not working for others. From my perspective, much more valuable financial skills for the next generation are:" }, { "docid": "325587", "title": "", "text": "\"The more I think about this the more I think you are actually better off letting it go to collections. At least then you would be able to agree an affordable repayment schedule based on your real budget, and having a big dent in your credit score because it's gone to collections doesn't actually put you in any worse position (in terms of acquiring credit in the future) than you are now. Whoever is the creditor on your original loan is (IMO) quite unreasonable demanding a payment in full on a given date, especially given that you say you've only been made aware of this debt recently. The courts are usually much more reasonable about this sort of thing and recognise that a payment plan over several years with an affordable monthly payment is MUCH more likely to actually get the creditor their money back than any other strategy. They will also recognise and appreciate that you have made significant efforts to obtain the money. I'm also worried about your statement about how panicked and \"\"ready to give up\"\" you are. Is there someone you can talk to? Around here (UK) we have debt counselling bureaus - they can't help with money for the actual debt itself, but they can help you with strategies for dealing with debt and will explain all parts of the process to you, what your rights and responsibilities are if it does go to court, etc. If you have something similar I suggest you contact them, even just to speak to someone and find out that this isn't the end of the world. It's a sucky situation but in a few years you'll be able to look back and at least laugh wryly at it.\"" }, { "docid": "471019", "title": "", "text": "Since this post was migrated from Parenting, my reply was in the context where it appeared to be misrepresenting facts to make a point. I've edited it to be more concise to my main point. In my opinion, the best way to save for your childs future is to get rid of as much of your own debt as possible. Starting today. For the average American, a car is 6-10%. Most people have at least a couple credit cards, ranging from 10-25% (no crap). College loans can be all over the map (5-15%) as can be signature (8-15%) or secured bank loans (4-8%). Try to stop living within your credit and live within your means. Yeah it will suck to not go to movies or shop for cute things at Kohl's, but only today. First, incur no more debt. Then, the easiest way I found to pay things off is to use your tax returns and reduce your cable service (both potentially $Ks per year) to pay off a big debt like a car or student loan. You just gave yourself an immediate raise of whatever your payment is. If you think long term (we're talking about long-term savings for a childs college) there are things you can do to pay off debt and save money without having to take up a 2nd job... but you have to think in terms of years, not months. Is this kind of thing pie in the sky? Yes and no, but it takes a plan and diligence. For example, we have no TV service (internet only service redirected an additional $100/mo to the wifes lone credit card) and we used '12 taxes to pay off the last 4k on the car. We did the same thing on our van last year. It takes willpower to not cheat, but that's only really necessary for the first year-ish... well before that point you'll be used to the Atkins Diet on your wallet and will have no desire to cheat. It doesn't really hurt your quality of life (do you really NEED 5 HBO channels?) and it sets everyone up for success down the line. The moral of the story is that by paying down your debt today, you're taking steps to reduce long haul expenditures. A stable household economy is a tremendous foundation for raising children and can set you up to be more able to deal with the costs of higher ed." }, { "docid": "74283", "title": "", "text": "May I suggest putting it in a Roth IRA ($5,500 per year. Right now you can contribute to both 2015 and 2016 so that's $11K.)? Based on your description it sounds like your tax rate is very low, so it is awesome to put it away now and avoid taxes later on any gains you make on it. You can use Roth IRA money to pay for college, a home, or retirement. Within your Roth IRA, any of the investment options mentioned here will work. For example, CD's or money market accounts if you just want it to grow in a pretty much savings-account-like manner. You could also buy diversified mutual funds or have some fun buying individual stocks with some of it. I'm sorry to say that in the current market conditions you are not going to find a completely safe, cash-like investment or account that makes your money grow substantially. To do that you have to bear risk by buying risky stuff like stocks." }, { "docid": "20420", "title": "", "text": "Jurisdictions will vary but I can imagine calculation methods for child support where the raise could become significant in the present with long future ramifications as well, even if the job is temporary or the parent wanted to step away from working full-time to attend school. The timing of the raise might coincide with disclosure of income to an ex-spouse or to the court related and it might be preferable to postpone the increase. Of course the court would probably frown on declining the raise for only these reasons. If it found out it might impute the higher income anyway. And I'm not suggesting that people dodge responsibility for their kids. We've all seen those cases where child support is not particularly equitable between the two parties and/or the kids do not necessarily benefit by the transfer of money. I wouldn't blame a parent for thoughtfully and unselfishly considering this type of second-order effect and consulting an attorney as with so many other financial implications of divorce. Regardless of personal moral objections it's certainly an answer to the question in technical terms that somebody somewhere has taken into account." }, { "docid": "238058", "title": "", "text": "Have you ever been so poor as to be destitute? Not just someone with a hard scrabble life but someone with no options? I come from a third world country and was so poor that sometimes, I went hungry for days and on others, had nothing more than a banana to eat. My parents pawned all their meager savings to ensure I got a good education and was supporting my parents straight out of college. I am one of the lucky ones who got away but I had plenty of hard-working, honest and talented friends who are stuck. You need to walk in the shoes of these people. It is not always so simple. There are quite a few youth who while away their time on Reddit, games, hanging out on the corners of streets and so on but for every such person, there is a Dad or a Mom with a medical condition, a child whose parents are uneducated and too poor to teach their children at home, people who are too ill physically or mentally to work and having large medical bills and families that are barely surviving. Yet, they have chosen the hard, honest life over one of crime and petty theft. These people deserve our respect, even when we disagree with them. I am an extreme libertarian who thinks all government programs should be abolished but I respect the liberal viewpoint. Churches and charity are not always the answer. Many times, it is also one of chance and station in life. Edit - Pardon the lack of structure. This thread touched a raw nerve, even as I leave my old life behind and move towards a brighter future. Edit - Need to add for posterity that I came to the US as a skilled worker and legal immigrant, having been invited due to my skills in a particular field." }, { "docid": "382386", "title": "", "text": "529 College Savings Plans exist, which allow for tax-free savings for educational expenses, but I think you expect to go back to school too quickly for them to be worth the hassle. (They're more designed for saving for college for your kids.) Other than an IRA, you don't have many options for tax-advantaged accounts. In addition, since you plan to return to school, you should keep money around for that. Don't put that money in anything too volatile or hard to access. Since you don't plan on doing anything with the 80k in CDs right now, you can get away with higher risk with that money." } ]

[ { "docid": "269851", "title": "", "text": "Being in the same situation, and considering that money doesn't need to be available until 2025, I just buy stocks. I plan to progressively switch to safer options as time passes." } ]

[ { "docid": "70668", "title": "", "text": "\"I will answer the question from the back: who can NOT afford luxury cars? Those whose parents paid for their college education, cannot afford luxury cars, but buy them anyway. Why? I have what may seem a rather shocking proposition related to the point of not saving for kids' college: parents do NOT owe children a college education. Why should they? Did your parents fund your college? Or did you get it through a mix of Pell grants, loans, and work? If they did, then you owe them $ back for it, adjusted for inflation. If they did not, well then why do you feel your children deserve more than you deserved when you were a child? You do not owe your children a college education. They owe it to themselves. Gifts do not set one up for success, they set one up for dependence. I will add one more hypothesis: financial discipline is best learned through one's own experiences. When an 18+ year old adult gets a very large amount of money as a gift every year for several years (in the form of paid tuition), does that teach them frugality and responsibility? My proposition is that those who get a free ride on their parents' backs are not well served in terms of becoming disciplined budgeters. They become the subjects of the question in this post: those why buy cars and houses they cannot afford, and pay for vacations with credit cards. We reap what we sow as a society. Of course, college is only one case in point, but a very illustrative one. The bigger point is that financial discipline can only be developed when there are opportunities to develop it. Such opportunities arise under one important condition: financial independence. What does buying children cars for their high-school graduation, buying them 4 years of college tuition, and buying them who knows what else (study abroad trips, airfare, apartment leases, textbooks, etc. etc.) teach? Does it teach independence or dependence? It can certainly (at least that's what you hope for) teach them to appreciate when others do super nice things for them. But does free money instill financial responsibility? Try to ask kids whose parents paid for their college WHY they did it. \"\"Because my parents want me to succeed\"\" is probably the best you can hope for. Now ask them, But do your parents OWE you a college education? \"\"Why yes, I guess they do.\"\" Why? \"\"Well, I guess because they told me they do. They said they owe it to me to set me up for success in life.\"\" Now think about this: Do people who become financially successful achieve that success because someone owed something to them? Or because they recognized that nobody owes them anything, and took it upon themselves to create that success for themselves? These are not very comfortable topics to consider, especially for those of you who have either already sunk many tens of thousands of dollars into your childrens' college education. Or for those who have been living very frugally and mindfully for the past 10-15 years driven by the goal of doing so. But I want to open this can of worms because I believe fundamentally it may be creating more problems than it is solving. I am sure there are some historical and cultural explanations for the ASSUMPTION that has at some point formed in the American society that parents owe their children a college education. But as with most social conventions, it is merely an idea -- a shared belief. It has become so ingrained in conversations at work parties and family reunions that it seems that many of those who are ardent advocates of the idea of paying for their childrens' education no longer even understand why they feel that way. They simply go with the flow of social expectations, unwilling or unable to question either the premises behind these expectations, or the long-term consequences and results of such expectations. With this comment I want to point to the connection between the free financial gifts that parents give to their (adult!) children, and the level of financial discipline of these young adults, their spending habits, sense of entitlement, and sense of responsibility over their financial decisions. The statistics of the U.S. savings rate, average credit card debt, foreclosures, and bankruptcy indeed tell a troubling story. My point is that these trends don't just happen because of lots of TV advertising and the proverbial Jones's. These trends happen because of a lack of financial education, discipline, and experience with balancing one's own checkbook. Perhaps we need to think more deeply about the consequences of our socially motivated decisions as parents, and what is really in our children's best interests -- not while they are in college, but while they live the rest of their lives after college. Finally, to all the 18+ y.o. adult 'children' who are reeling from the traumatic experience of not having their parents pay for their college (while some of their friends parents TOTALLY did!), I have this perspective to offer: Like you are now, your parents are adults. Their money is theirs to spend, because it was theirs to earn. You are under no obligation to pay for your parents' retirement (not that you were going to). Similarly your parents have no obligation to pay for your college. They can spend their money on absolutely whatever they want: be it a likeside cottage, vacations, a Corvette, or slots in the casino. How they spend their money is their concern only, and has nothing to do with your adult needs (such as college education). If your parents mismanage their finances and go bankrupt, it is their obligation to get themselves back in the black -- not yours. If you have the means and may be so inclined, you may help them; if you do not or are not, fair enough. Regardless of what you do, they will still love you as their child no less. Similarly, if your parents have the means and are so inclined, they may help you; if they do not or are not, fair enough. Regardless of what they do, you are to love them as your parents no less. Your task as an adult is to focus on how you will meet your own financial needs, not to dwell on which of your needs were not met by people whose finances should well be completely separate from yours at this point in life. For an adult, to harbor an expectation of receiving something of value for free is misguided: it betrays unjustified, illusory entitlement. It is the expectation of someone who is clueless as to the value of money measured by the effort and time needed to earn it. When adults want to acquire stuff or services, they have to pay for these things with their own money. That's how adults live. When adults want to get a massage or take a ride in a cab, are they traumatized by their parents' unfulfilled obligation to pay for these services? No -- they realize that it's their own responsibility to take care of these needs. They either need to earn the money to pay for these things, or buy them on credit and pay off the debt later. Education is a type of service, just like a massage or a cab ride. It is a service that you decide you need to get, in order to do xyz (become smarter, get a better paying job, join a profession, etc.). Therefore as with any other service, the primary responsibility for paying for this service is yours. You have 3 options (or their combination): work now so that you can earn the money to pay for this service later; work part-time while you are receiving this service; acquire the service on credit and work later to pay it off. That's it. This is called the real world. The better you can deal with it, the more successful you will become in it. Good luck!\"" }, { "docid": "213066", "title": "", "text": "Other answers here cover some of the basics, but this is also a great time to start establishing a credit history and developing good financial habits to carry throughout your life. In addition to opening a free checking account with the local credit union, establish an overdraft line of credit on that account. Never close this account or this line of credit as it will work to increase the average age of your accounts when you apply for credit later in life. If you are disciplined with your use of credit cards, you may also want to apply for a low limit credit card through the same credit union for the same purpose as above. Never carry a balance on this card, but make minor purchases with it each month, never more than 20% of the balance, maybe just buy gas with it. Start tracking all of your spending and make a monthly budget. There are a lot of online tools that make this very easy. Establishing the habit now will help you make informed financial decisions in the future. Open a Roth IRA and put at least 10% of your money away for retirement. In the future your income may increase enough to put you in the 25% tax bracket. If that ever happens, open a Regular IRA and put the money there instead. Also when you have employers that offer 401k matching do the same thing with a Roth 401k account. Keep your money invested in a low cost index fund." }, { "docid": "193463", "title": "", "text": "\"Of course. \"\"Best\"\" is a subjective term. However relying on the resources of the larger institutions by pooling with them will definitely reduce your own burden with regards to the research and keeping track. So yes, investing in mutual funds and ETFs is a very sound strategy. It would be better to diversify, and not to invest all your money in one fund, or in one industry/area. That said, there are more than enough individuals who do their own research and stock picking and invest, with various degrees of success, in individual securities. Some also employe more advanced strategies such as leveraging, options, futures, margins, etc. These advance strategies come at a greater risk, but may bring a greater rewards as well. So the answer to the question in the subject line is YES. For all the rest - there's no one right or wrong answer, it depends greatly on your abilities, time, risk tolerance, cash available to invest, etc etc.\"" }, { "docid": "241099", "title": "", "text": "If there are no dependents, there is no need for life insurance. You mention getting insurance when it is not needed, to protect you against some future risk. If you have a policy and a disease crops up that would normally make you un-insurable, you can keep your insurance for the rest of the term. The cost for this would be very high. You would have to have a term that would last decades to cover you until some future child is out of college. If you never have somebody that depends on you for income, there never is a need for life insurance." }, { "docid": "256983", "title": "", "text": "\"Here are the top hitters in my (recent) experience, in highest-first order: Child Care By far the biggest potential cost is childcare, whether this be a full-time nursery/kindergarten, child minder, live-in Nanny/Au-pair or just paying a baby sitter when parents need a night off. This needs careful thought. In London, full-time nursery school (6 months to 4 years old) varies from 500 UKP to 2000 UKP per month, and the amount you pay does not guarantee the quality of the care/education. If you have relatives nearby, these costs can likely be reduced, but you'd really need to pay the relatives somehow - meals, bling, holidays, a new bathroom, etc. Loss of Earnings Whether the mother goes on maternity leave, or the father gives up his job to be a 'house husband', the family income is going to be affected for a period of time. You can plan for this by researching what government or company benefits the mother or father will get and for how long. I suggest dividing this amount evenly across the whole period that the stay-at-home parent will be off, rather than trying to calculate \"\"2 months' full pay, 2 months' half pay, 2 month's no pay\"\", because if you get into a pattern of high spending in the first two months, what will happen for the next 4 months. You also need to consider short-notice time off work when anybody is poorly. I suggest reserving some of your vacation time for unexpectedly-have-to-look-after-the-family time. When children start daycare/nursery, the germs cross-pollinate, so you get some really nasty strains of coughs, colds, diarrhoea and 'flu in the house, which could cause the primary carer to be unable to do their caring without (your) help. Bigger Car If you can't get a baby seat into your car because it doesn't have the proper fittings or doesn't have rear seats, you'll likely need to change your car. There are plenty of cars that are bigger in terms of people space without being more expensive, but it'll cost to change. Insurances If you have health insurance (e.g. US), you're going to have a proportional increase. Call your provider for details. Bear in mind that children have more illnesses and accidents than middle-age parents, so it could be a shock. Some parents take out life insurance to provide for their childrens' financial future in case of the worst happening. This can be around 50 UKP/65 USD per month, but it all depends on the lump sum you're insuring for. Equipment As a new parent, you think you need an incredible amount of equipment such as Changing Station, Cot/Crib, 'Moses Basket', Carry-Chair, Car Seat, Travel Cot/Crib, Feeding Chair, Changing Mat, Baby Bath, etc. When you bring a new baby home, you really only need a wipe-clean changing mat and somewhere safe for baby to sleep. You can buy anything else as you need it. In fact, it gives you more perspective to go shopping once you've had the baby. Whatever you buy, keep the receipt and don't open it until you need it. Much easier to take back the, e.g. portable baby bottle warmer, if you didn't open it because baby is breast-fed. When they become bigger (2 months plus), you'll need a Cot/Crib. Invest in an adjustable cot-bed - it's a bit larger than a regular Cot/Crib and the floor lowers as they get bigger, so you only need one for the first 2.5 to 3 years. Food If baby will have formula, there are baby-milk formula calculators on the web - in summary one box of quality formula is ~9 UKP/12 USD and this lasts around 4 days if fully formula-fed. Once they're onto food, you need to factor in baby food options. You can either make your own by side-lining some of the adult meal and blending it, then putting it into individual plastic containers. This takes effort, so not everyone has the energy. Alternatively, you're going to have to buy baby food in jars, packets or boxes for 3 meals a day and there'll be little snacks in-between. Baby snacks are strangely expensive, so recommend fruit. Budget for 5 UKP/7 USD per day until they're eating a small portion of the family meal. Clothes A new baby really only needs vests, all-in-one suits, blankets for warmth. You can go mad buying cute outfits, but they get limited use as a new baby grows really quickly. If you've a lot of family/friends and you have a tradition of some kind of \"\"good luck\"\" party ('baby shower'), then you can find that you end up being given lots of things. If you don't know the sex of the baby, ask people to get you a gift receipt if possible such that you don't get blue clothes for a girl. It may not bother you, but its' a pain when people say \"\"Katie is a strange name for a boy?\"\" just because your little girl has blue booties. Child-proofing Your Home This really does not have to cost a lot. Some people go mad putting soft corners on all the hard edges, covering the electrical sockets and generally sanitizing the whole home. It's up to you, but if there's a room full of sharp/poisonous things like a kitchen or utility room, you might want to put a 15 UKP/20 USD baby gate on that room. Putting the breakable or sharp things up high, or stored away in the attic is a sensible move too.\"" }, { "docid": "83346", "title": "", "text": "\"For practical purposes, I would strongly suggest that you do create a separate account for each business you may have that is used only for business purposes, and use it for all of your business income and expenses. This will allow you to get an accurate picture of whether you are making money or not, what your full expenses really are, how much of your personal money you have put into the business, and is an easy way to keep business taxes separate. You will also be able to get a fairly quick read on what your profits are without doing much accounting by looking at the account balance less future taxes and expenses, and less any personal money you've put into the account. Check out this thread from Paypal about setting up a \"\"child\"\" account that is linked to your personal account and can be set up to autosweep payments into your main account, should you like. You will still be able to see transactions for each child account. NOTE: Do be careful to make sure you are reserving the proper amount out of any profits your startup may have for taxes - you don't want to mix this with personal money and then later find out that you owe taxes and have to scramble to come up with the money if you have already spent it This is one of the main reasons to segregate your startup's revenues and profits in the business account. For those using \"\"brick and mortar\"\" banking services rather than a service like Paypal: You likely do not need a business checking account if you are a startup. Most likely, you can simply open a second personal account with your bank in your name, and name it \"\"John Doe DBA Company Name\"\" (DBA = Doing Business As). This way, you can pay expenses and accept payments in the name of your startup. Check with your banker for additional details (localized information).\"" }, { "docid": "303432", "title": "", "text": "\"As soon as you specify FDIC you immediately eliminate what most people would call investing. The word you use in the title \"\"Parking\"\" is really appropriate. You want to preserve the value. Therefore bank or credit union deposits into either a high yield account or a Certificate of Deposit are the way to go. Because you are not planning on a lot of transactions you should also look at some of the online only banks, of course only those with FDIC coverage. The money may need to be available over the next 2-5 years to cover college tuition If needing it for college tuition is a high probability you could consider putting some of the money in your state's 529 plan. Many states give you a tax deduction for contributions. You need to check how much is the maximum you can contribute in a year. There may be a maximum for your state. Also gift tax provisions have to be considered. You will also want to understand what is the amount you will need to cover tuition and other eligible expenses. There is a big difference between living at home and going to a state school, and going out of state. The good news is that if you have gains and you use the money for permissible expenses, the gains are tax free. Most states have a plan that becomes more conservative as the child gets closer to college, therefore the chance of losses will be low. The plan is trying to avoid having a large drop in value just a the kid hits their late teens, exactly what you are looking for.\"" }, { "docid": "325587", "title": "", "text": "\"The more I think about this the more I think you are actually better off letting it go to collections. At least then you would be able to agree an affordable repayment schedule based on your real budget, and having a big dent in your credit score because it's gone to collections doesn't actually put you in any worse position (in terms of acquiring credit in the future) than you are now. Whoever is the creditor on your original loan is (IMO) quite unreasonable demanding a payment in full on a given date, especially given that you say you've only been made aware of this debt recently. The courts are usually much more reasonable about this sort of thing and recognise that a payment plan over several years with an affordable monthly payment is MUCH more likely to actually get the creditor their money back than any other strategy. They will also recognise and appreciate that you have made significant efforts to obtain the money. I'm also worried about your statement about how panicked and \"\"ready to give up\"\" you are. Is there someone you can talk to? Around here (UK) we have debt counselling bureaus - they can't help with money for the actual debt itself, but they can help you with strategies for dealing with debt and will explain all parts of the process to you, what your rights and responsibilities are if it does go to court, etc. If you have something similar I suggest you contact them, even just to speak to someone and find out that this isn't the end of the world. It's a sucky situation but in a few years you'll be able to look back and at least laugh wryly at it.\"" }, { "docid": "427044", "title": "", "text": "You absolutely can be put in jail in America for debt... if that debt is to a government or government agency (like a municipal government). If you have unpaid court costs, fines, etc., it's common practice in most municipalities to issue an arrest warrant for those, even if non-payment is due to being indigent. In a lot of cases, even if you show up to explain why you can't pay or make a partial payment on the due date, you'll be arrested and jailed until a judge is available to hear your explanation, if one isn't available right when you go in. What's supposed to happen is that if you're indigent (can't pay), a judge will hear your explanation and, provided it's determined that you're indigent, make adjustments to what you owe (cancel or reduce the amount, extend the due date, setup a payment plan, etc.) and send you on your way. It bears mentioning that even in cases where the system works like it should, there's still a very real chance of being put in jail, which isn't harmless - people can and do lose their jobs while they're sitting in jail waiting to plead indigence to a judge. And of course, what's supposed to happen isn't what always does. The police shootings of the past couple years in Missouri have shone some light in a lot of dark corners down there, where there are, in fact, de-facto debtor prisons in many municipalities. In addition to civil rights groups filing suit over this in many Missouri municipalities, the US Department of Justice has filed suit against the city of Ferguson over their municipal practices (including their use of the courts and jails to generate municipal revenue). Some forms of private debt (like child support) also fall under this umbrella where an arrest warrant will be issued for failure to pay for any reason, and this was determined to be a factor in the Walter Scott shooting - Walter Scott ran to avoid being put in jail over child support debt, and losing his job while in jail. The New York Times highlighted his case in an article titled: Skip Child Support. Go to Jail. Lose Job. Repeat. Rodney Scott said that he sometimes thought his brother did not do everything he could to catch up, but that Walter seemed to consider it a hopeless cause. He recalled seeing his brother plead to a judge that he just did not make enough money. “He asked the judge, ‘How am I supposed to live?’ ” Mr. Scott said. “And the judge said something like, ‘That’s your problem. You figure it out.’ ”" }, { "docid": "382386", "title": "", "text": "529 College Savings Plans exist, which allow for tax-free savings for educational expenses, but I think you expect to go back to school too quickly for them to be worth the hassle. (They're more designed for saving for college for your kids.) Other than an IRA, you don't have many options for tax-advantaged accounts. In addition, since you plan to return to school, you should keep money around for that. Don't put that money in anything too volatile or hard to access. Since you don't plan on doing anything with the 80k in CDs right now, you can get away with higher risk with that money." }, { "docid": "559371", "title": "", "text": "\"Can I teach children an invaluable skill for free and provide a website or PayPal link for anyone who appreciates the result of my gift to their child and wishes to gift me money (or maybe they don’t have a child but believe in my revolutionary contribution to the future) as they see fit, up to $10K? Two immediately obvious problems with this strategy: What about when you receive gifts from people who aren't in the US? You have to declare, and pay taxes on, foreign gifts. It seems to me that these may not be gifts because they are given in connection with the service you provided rather than from \"\"detached and disinterested generosity\"\" as required to make the gift tax exempt. (See Commisioner v. Duberstein -- gift given to thank associate for a sales lead did not arise from detached generosity. See Stanton v. United States -- gift given in appreciation of services rendered may or may not be a gift for tax purposes. See also Bogardus v. Commissioner -- gifts inspired by past service can be tax exempt.)\"" }, { "docid": "31182", "title": "", "text": "A trust is a financial arrangement to put aside money over a period of time (typically years), for a specific purpose to benefit someone. Two purposes of trusts are 1) providing for retirement and 2) providing for a child or minor. There are three parties to a trust: 1) A grantor, the person who establishes and funds a trust. 2) A beneficiary, a person who receives the benefits. 3) a trustee, someone who acts in a fiduciary capacity between the grantor and beneficiary. No one person can be all three parties. A single person can be two of out those three parties. A RETIREMENT trust is something like an IRA (individual retirement account). Here, a person can be both the grantor (contributor) to the IRA, and the beneficiary (a withdrawer after retirement). But you need a bank or a broker to act as a fiduciary, and to handle the reporting to the IRS (Internal Revenue Service). Pension plans have employers as grantors, employees as beneficiaries, and (usually) a third party as trustee. A MINORS' trust can be established under a Gift to the Minors' Act, or other trust mechanisms, such as a Generation Skipping Trust. Here, a parent may be both grantor and trustee (although usually a third party is a trustee). A sum of money is put aside over a period of years for the benefit of a minor, for a college education, or for the minor's attaining a certain age: a minimum of 18, sometimes 21, possibly 25 or even older, depending on when the grantor feels that the minor is responsible enough to handle the money." }, { "docid": "564957", "title": "", "text": "I think you are right. I hear people all the time with horror stories about futures and trading horror stories in general. I want to learn about this market, but I don't want to go in without some education on the matter. I watched their video on options on futures, but the valuation method needs a bit more explaining to be (beta, gamma, etc.). I get the basic idea of options on futures, but I need to formulate a strategy, and that is where study would come in. I have wanted to play around with a few strategies I had in my head for regular options, and by the time I get the grasp of it, I might be able to trade options on futures. I guess my biggest thing with options on futures is not to be sophisticated, but more so I can have access to new markets. On the topic of options though, I do think there is some strategies that could boost my returns a bit on my existing strategies. I think selling various options (selling call options on weak dividend stocks stuck as bulk shipper or mortgage reits and as of late oil trusts or selling put options on some stronger oil reits or other stronger dividend stocks). The only problem is I don't know if the premium would be enough to make it worth while with the weak dividend stocks. So either way, even if you are only earning a conservative 9% on dividends, if you add in another 4% for premium, you could be making 13% off of one trade, and could repeat the process (assuming the target stayed weak or strong)." }, { "docid": "520116", "title": "", "text": "\"I have a mildly exceptional relationship with Social Security. When I was eight years old my father died, leaving nothing but a mountain of debt and an apartment full of trinkets. My mother received Social Security Survivor benefits checks in lieu of his child support payments, which kept me fed and clothed until I graduated high school. She also worked, sometimes multiple jobs, and did what she could to provide health and stability. I consider myself privileged even though we were often financially ... Disadvantaged. When I graduated high school and the checks from Social Security ended, I went on to college, financed a good portion of it, but also received a lot of scholarships and aid along the way. As I near 30, I still wear enough student debt equivalent of a new, mid-class sedan, but I am financially solvent, work a good job, and can afford my own rent, child support, actual child costs, and regular living expenses. While I can still ferret away some of my income into my 401(k), I still need to save for my child's education. I still need to save up for a home. I still have to save up for – and often spend for - a more immediate future. I do not anticipate Social Security being available to in any meaningful sense of the word, when I retire. But I \"\"already got mine\"\" in a sense, and I consider my SSI deductions to be contributions back into the system that kept me fed, kept me healthy, an kept me teachable. I preferred the notion that Social Security didn't become available until someone had exceeded their life expectancy. I preferred the notion that Social Security should never need to be used by anyone. I would much rather the safetynet never be depended upon. But the contributions were much appreciated all the same, and I can now appreciate how those contributions need to be a bit more randomized, more spread across the populace. I am pretty sure this is enough to have people shrieking a me that I'm done kind of socialist. All I know is that I miss that 4% from my paychecks (and I'll miss the full 6% when the \"\"holiday\"\" ends) but that it might help someone thrive, like it did me. My only regret is that the safety net is squandered on old people.\"" }, { "docid": "86481", "title": "", "text": "The software he is talking about readjusts your portfolio weights back to your original allocation on a semi-constant basis. Basically it's designed to replace the stereotypical, lazy financial advisor. Your second point is quite valid though... One such example for anyone reading who has a young child is a coverdell ESA which allows you to put pretax income into an investment fund and withdraw tax free to spend on anything education related including the primary and secondary level (ie books, Supplies, field trips, tutoring, etc.). Basically money youd probably spend anyway, but this way you skip out on some taxes." }, { "docid": "314252", "title": "", "text": "\"A financial planner can help with investments, insurance, estate planning, budgeting, retirement planning, saving for college, tax planning/prep, and other money topics. One way to get a sense is to look at this Certified Financial Planner topic list. Another idea is to look at this book (my favorite I've read) which covers roughly a similar topic list in a concise form: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 It could not hurt at all to read that before deciding to visit a planner, so you have baseline knowledge. By the way, look for the CFP certification which is a generalist certification. A CFP might also have a deeper cert in certain topics or connect you with someone who does. For example: You really want a generalist (CFP) who may have an additional credential as well. The idea is to holistically look at what you're trying to accomplish and all finance-related areas. Especially because there may be tradeoffs. The CFP would then refer you to or work with lawyers, accountants, etc. Importantly, some advisors are fiduciaries (must act in your interests) and some are not. In particular many stockbrokers are neither qualified planners (no CFP or equivalent) nor are they fiduciaries. Stay away. There are several models for paying a financial planner, including: There's an organization called NAPFA (napfa.org) for fiduciary non-commission-based planners. Membership there is a good thing to look for since it's a third party that defines what fee-only means and requires the no-commissions/fiduciary standard. Finally, the alternative I ended up choosing was to just take the CFP course myself. You can do it online via correspondence course, it costs about the same as 1 year of professional advice. I also took the exam, just to be sure I learned the stuff. This is the \"\"extreme DIY\"\" approach but it is cheaper over time and you know you are not going to defraud yourself. You still might do things that are counterproductive and not in your interests, but you know that already probably ;-) Anyway I think it's equivalent to about a quarter's worth of work at a decent college, or so. There are about 6 textbooks to dig through. You won't be an experienced expert at the end, but you'll know a lot. To get an actual CFP cert, you need 3 years experience on top of the courses and the exam - I haven't done that, just the book learning. Someone who puts \"\"CFP\"\" after their name will have the 3 years on top of the training. Some editorial: many planners emphasize investing, and many people looking for planners (or books on finance) emphasize investing. This is a big mistake, in my view. Investing is more or less a commodity and you just need someone who won't screw it up, overcharge, and/or lose your money on something idiotic or inappropriate. Some people are in plain-bad and inappropriate investments, don't get me wrong. But once you fix that and just get into anything decent, your biggest planning concerns are probably elsewhere. On investments, I'd look for a planner to just get you out of overpriced annuities and expensive mutual funds you may have been sold (anything you were sold by a salesperson is probably crap). And look for them to help you decide how much to invest, and how much in stocks vs. bonds. Those are the most important investment decisions.\"" }, { "docid": "504940", "title": "", "text": "Are you sure the question even makes sense? In the present-day world economy, it's unlikely that someone young who just started working has the means to put away any significant amount of money as savings, and attempting to do so might actually preclude making the financial choices that actually lead to stability - things like purchasing [the right types and amounts of] insurance, buying outright rather than using credit to compensate for the fact that you committed to keep some portion of your income as savings, spending money in ways that enrich your experience and expand your professional opportunities, etc. There's also the ethical question of how viable/sustainable saving is. The mechanism by which saving ensures financial stability is by everyone hoarding enough resources to deal with some level of worst-case scenario that might happen in their future. This worked for past generations in the US because we had massive amounts (relative to the population) of (stolen) natural resources, infrastructure built on enslaved labor, etc. It doesn't scale with modern changes the world is undergoing and it inherently only works for some people when it's not working for others. From my perspective, much more valuable financial skills for the next generation are:" }, { "docid": "357008", "title": "", "text": "When you apply for the mortgage expect that the lender will want your sister to sign a form explaining that that is a gift, otherwise the lender might be concerned that it is a loan. Be careful about the gifting of the money to a minor. You could run into an issue if the money isn't spent on something that benefits the child. The IRS does get concerned about using money transfers between child and parent to get around tax issues. Other than that you don't have a tax issue. If the gifting is done correctly your sister can gift $14,000 to you and your spouse each year. If your child has a large expenses in the near future: tuition, braces... Your sister could transfer funds to the child to pay for those items, thus freeing up some of your funds for the house." }, { "docid": "76903", "title": "", "text": "I'm not sure if they're less risky. Maybe I'm being naive, but I feel they're less manipulated. I wouldn't say I have any hard resources other than dicking around on cmegroup,com. I pay a ton for my daily newsletters so I can't just start forwarding those. I tend to stay away from strategy books, but Mark Fisher's The Logical Trader is decent. Futures I feel are more of an experience than strategy trade. Especially the spreads. This is where systems come to die." } ]

[ { "docid": "403137", "title": "", "text": "Saving for school is [fundamentally] no different than saving for any other major purchase: in addition to some of the great answers already provided, here are a couple other thoughts: Just to have the [simplified] numbers handy: If you can increase that to $2000/yr, after 18 years: One final thought - I would personally avoid the 529 plans because if your child decides to not go to school (eg goes in the Coast Guard, decides to be a farmer, enters the Peace Corps, etc), you're penalized on withdrawal, whereas with any other savings/investment methodology, you won't have those penalties." } ]

[ { "docid": "466950", "title": "", "text": "\"Having savings only in your home currency is relatively 'low risk' compared with other types of 'low diversification'. This is because, in a simple case, your future cash outflows will be in your home currency, so if the GBP fluctuates in value, it will (theoretically) still buy you the same goods at home. In this way, keeping your savings in the same currency as your future expenditures creates a natural hedge against currency fluctuation. This gets complicated for goods imported from other countries, where base price fluctuates based on a foreign currency, or for situations where you expect to incur significant foreign currency expenditures (retirement elsewhere, etc.). In such cases, you no longer have certainty that your future expenditures will be based on the GBP, and saving money in other currencies may make more sense. In many circumstances, 'diversification' of the currency of your savings may actually increase your risk, not decrease it. Be sure you are doing this for a specific reason, with a specific strategy, and not just to generally 'spread your money around'. Even in case of a Brexit, consider: what would you do with a bank account full of USD? If the answer is \"\"Convert it back to GBP when needed (in 6 months, 5 years, 30, etc.), to buy British goods\"\", then I wouldn't call this a way to reduce your risk. Instead, I would call it a type of investment, with its own set of risks associated.\"" }, { "docid": "236732", "title": "", "text": "\"The 529 plan does outline your scenarios. There are stipulations for providing the funds should the child get the scholarship. If the child decides not to go into further education (vocational and community schools count), the money can be withdrawn with a 10% penalty and taxes paid on interest earnings. Taxes wouldn't have to be paid for contributions as taxes were already paid on that money by the gift giver. The 529 could also be transferred to another child in the family (including grandchildren). Here's an excerpt from www.savingforcollege.com: You'll never lose all of your savings. A 529 plan offers tax-free earnings and tax-free withdrawals as long as the money is used to pay for college. If you end up taking a non-qualified withdrawal, you'll incur income tax as well as a 10% penalty - but only on the earnings portion of the withdrawal. Since your contributions were made with after-tax money, they will never be taxed or penalized. You can avoid the penalty if you get a scholarship. There are a few special exceptions to the 10% penalty rule, including when the beneficiary becomes incapacitated, attends a U.S. Military Academy or gets a scholarship. In the case of a scholarship, non-qualified withdrawals up to the amount of the tax-free scholarship can be taken out penalty-free, but you'll have to pay income tax on the earnings. As Savingforcollege.com founder Joe Hurley likes to say, \"\"the scholarships have turned your tax-free 529 investment into a tax-deferred 529 investment\"\". Note, a 529 is ideal for the sum of money you are looking at. A proper trust, set up by a lawyer, will cost as much as $2000 to set up, and would require an annual tax return, both unnecessary burdens. To make matters worse, the trust counts as the child's asset where financial aid is concerned. The 529 counts, but to a much lesser extent.\"" }, { "docid": "20420", "title": "", "text": "Jurisdictions will vary but I can imagine calculation methods for child support where the raise could become significant in the present with long future ramifications as well, even if the job is temporary or the parent wanted to step away from working full-time to attend school. The timing of the raise might coincide with disclosure of income to an ex-spouse or to the court related and it might be preferable to postpone the increase. Of course the court would probably frown on declining the raise for only these reasons. If it found out it might impute the higher income anyway. And I'm not suggesting that people dodge responsibility for their kids. We've all seen those cases where child support is not particularly equitable between the two parties and/or the kids do not necessarily benefit by the transfer of money. I wouldn't blame a parent for thoughtfully and unselfishly considering this type of second-order effect and consulting an attorney as with so many other financial implications of divorce. Regardless of personal moral objections it's certainly an answer to the question in technical terms that somebody somewhere has taken into account." }, { "docid": "264400", "title": "", "text": "\"&gt;&gt; I propose to make the requirements for finish high school and college degrees much much higher, as it was in the past. &gt; Not gonna happen. Totally agree with you! What I was proposing is what SHOULD be done. &gt; waiting for disadvantaged kids to get higher scores will not happen until they get accepted into college. Even then! Almost all disadvantaged kids, smart or not smart, the diploma they get is almost worthless. The diploma will not give them much advantage or improve their situation. The diploma barely even helps very smart kids from rich advantaged homes. Actually, if in the past, no matter who you knew, no matter your family background, a diploma will almost always GUARANTEE a secure and advantaged life. &gt; If you force schools to gain their income from future students earnings they will have high concern for kids that have a good P/E ratio. It will also stop the loan industry from putting these kids into debt. In theory, you are correct. In practice, many many problems to implement. For starters, this makes college a very risky business because it's very hard to predict future income of its students, even the very smart and accomplished students. And I will give you a related example: colleges teach Computer Science (Programming) to many kids today, but the profession is about to die due AI and automation + outsourcing. This was unexpected 1-2 years ago. Barely economists can predict the economy, so you want colleges to predict income based on what is taught? &gt; The downside is that it may turn colleges into trade techs, Actually, colleges are already trade techs because, today, almost all students study just(!) for the hope to get a job. In the past, you studied to become a scholar and wise, and then pick some kind of a job of your interest where being generally smart and knowledgeable is needed. BOTTOM LINE: Since you and I know that nothing will be done, no higher standards and no future-income based tuition, here's what what's happening with my son, which is what happened with me, which is still happening in Germany. No, I am not German, but I come from a German culture - my parents are of German descent, but I was born and raised in Israel. It's called \"\"Master and Apprentice\"\". I have been working since I was 13, with computers, and if you consider my age (55), when I was 13, no PCs with internet, and only punch cards were used to access a computer. My parents did not push me... it was me who felt the need to work, while I was studying (just like my father had that need when he was young). My son, 13 today, but since he was 10, the apple does not fall far from the tree, found work (he's not even allowed to work by law) and is making money. He's right now teaching, administering and designing Minecraft \"\"worlds\"\" and applications. **Hands on experience, especially taught from a Master is better than any Diploma!!!!** He will probably go to some so-so college to get a piece of paper called \"\"Diploma\"\" WHILE he will continue working in whatever he's interested. He will be successful like I am (not trying to brag). I never pushed him, but I explained to you some realities of the world. LAST WORD: actually, most Masters, real Masters, are desperate to teach, for free, their knowledge, vision and know. And the system does not allow them to do that, to protect the colleges and universities. Only in Medicine, it's still happens. Think about it!!!!!\"" }, { "docid": "258704", "title": "", "text": "I'm not expert here, but a method used by quite a few people I went to school with was to save as much as possible before starting and continue to save as you go. Better explained, if you are able to save a years worth of tuition, or in a better case, save even more, you can pay as you, or in this case your child, attend(s) classes, and continue to add money to that account. If your child can hold down a part-time job during school, as many college students do, they can even help by saving some money into that account, and it can allow them to exit college free and clear of any loans, or at least mostly clear, should you fall a little short. It's not the best option, but given a short time frame, it can work, and I've seen it work." }, { "docid": "164559", "title": "", "text": "You should invest in that with the best possible outcome. Right now that is in yourself. Your greatest wealth building tool, at this point, is your future income. As such anything you can do to increase your earnings potential. For some that might mean getting an engineering degree, for others it might mean starting a small business. For some it is both obtaining a college degree and learning about business. A secondary thing to learn about would be personal finance. I would hold off on stocks, at this time, until you get your first real job and you have an emergency fund in place. Penny stocks are worthless, forget about them. Bonds have their place, but not at this point in your life. Saving up for college and obtaining a quality education, debt free, should be your top priority. Saving up for emergencies is a secondary priority, but only after you have more than enough money to fund your college education. You can start thinking about retirement, but you need a career to help fund your savings plan. Put that off until you have such a career. Investing in stocks, at this juncture, is a bit foolish. Start a career first. Any job you take now should be seen as a step towards a larger goal and should not define who you are." }, { "docid": "66376", "title": "", "text": "I'd try to (gently) point out to your husband that what he thinks he wants to do now and what he might want to do in 20 or 30 years are not necessarily the same thing. When I was 40 I was thinking that I would work until I died. Now I'm 58 and have health problems and I'm counting down the days until I can retire. Even if your husband is absolutely certain that he will not change his mind about retiring in the next 20+ years, maybe something will happen that puts things beyond his control. Like medical problems, or simply getting too old to be able to work. Is he sure that he will be able to continue to put in 40 hour weeks when he's 80? 90? 100? Just because you put money away for retirement doesn't mean that you are required to retire. If you put money away, and when the time comes you don't want to retire, great! Now you can collect the profits on your investments in addition to collecting your salary and live very well. Or have a nice nest egg to leave to your children. Putting money away for retirement gives you options. Retirement doesn't necessarily mean sitting around the house doing nothing until you waste away and die of boredom. My parents were busier after they retired then when they were working. They spent a lot of time on charity work, visiting people in the hospital, working with their church, that sort of thing. Some people start businesses. As they have retirement income coming in, they don't have to worry about the business earning enough to provide a living, so they can do something they want to do because they think it's fun or contributes to society or whatever. Etc." }, { "docid": "572566", "title": "", "text": "\"&gt; I don't even have words for this. I'm not surprised. The \"\"you don't get to tell me what I can do with my money\"\" talking point has been hammered into American brains. You would agree with most Americans that if the parents are in serious debt and pass away then the debt should not pass on to the child, yes? It makes sense because why should the child have to pay for his parent's failures? So why do you believe that debts shouldn't transfer but credits should? If a child shouldn't get stuck with a parent's failures then shouldn't a child also not benefit from the parent's successes?\"" }, { "docid": "471019", "title": "", "text": "Since this post was migrated from Parenting, my reply was in the context where it appeared to be misrepresenting facts to make a point. I've edited it to be more concise to my main point. In my opinion, the best way to save for your childs future is to get rid of as much of your own debt as possible. Starting today. For the average American, a car is 6-10%. Most people have at least a couple credit cards, ranging from 10-25% (no crap). College loans can be all over the map (5-15%) as can be signature (8-15%) or secured bank loans (4-8%). Try to stop living within your credit and live within your means. Yeah it will suck to not go to movies or shop for cute things at Kohl's, but only today. First, incur no more debt. Then, the easiest way I found to pay things off is to use your tax returns and reduce your cable service (both potentially $Ks per year) to pay off a big debt like a car or student loan. You just gave yourself an immediate raise of whatever your payment is. If you think long term (we're talking about long-term savings for a childs college) there are things you can do to pay off debt and save money without having to take up a 2nd job... but you have to think in terms of years, not months. Is this kind of thing pie in the sky? Yes and no, but it takes a plan and diligence. For example, we have no TV service (internet only service redirected an additional $100/mo to the wifes lone credit card) and we used '12 taxes to pay off the last 4k on the car. We did the same thing on our van last year. It takes willpower to not cheat, but that's only really necessary for the first year-ish... well before that point you'll be used to the Atkins Diet on your wallet and will have no desire to cheat. It doesn't really hurt your quality of life (do you really NEED 5 HBO channels?) and it sets everyone up for success down the line. The moral of the story is that by paying down your debt today, you're taking steps to reduce long haul expenditures. A stable household economy is a tremendous foundation for raising children and can set you up to be more able to deal with the costs of higher ed." }, { "docid": "116599", "title": "", "text": "Well the article did mention that if you continually beat your bookmaker you're likely to get rejected in future which is hilarious, but personally I have actually bet on sports and I've found that it's a fairly easy game to win at if you don't go for bets with huge odds and I don't think I've ever placed a bet where after I lost and said 'what the hell just happened'. I only really bet on rugby and soccer though, so team sports may be a bit less prone to corruption from the bookmakers. I'm not saying I think this is a safe way to do business though, I don't think day trading is either. I think they are both speculation. I just think that sports betting has a lot more for a speculator to work with before they develop a strategy. For instance, I always bet on New Zealand winning a rugby game, their players line up as the top in their respective positions and their game strategy essentially has the rules of the game exploited to the maximum. All of the data on this team based on their past performance is actually applicable to their future performance, skilled players usually continue to be so up till a certain age, skilled coaches who stay in their position mean no variation in team strategy. That makes me feel confident that even though New Zealand might lose a game here or there, that they will continue to be winners, and even though the gains on their wins aren't much, consistently winning with them over time builds up to a nice bit of profit. With day trading in the stock market, so much of the variation in prices is due to non accounting fundamentals, and even though historical data can be useful we know that investor sentiment, secret information, and a myriad of other factors mean that unless you are extremely experienced or have a natural eye for reading markets that most traders will lose. I know developing strategies do work for some people, but I think I've seen it said on this sub a couple times that 'trading strategies work - until they don't.' I only speak as a uni student who has limited research beyond Bloomberg articles etc... but from what I can tell, the majority of day traders lose money eventually, and even with AI, the profits are only noteable when the capital input is extremely high. Sports events can't really be swung by the confidence of supporters, and yes corruption is rampant in sports as with every industry, but at least the data you have tells a fairly good story about where the bets will head in the future." }, { "docid": "241099", "title": "", "text": "If there are no dependents, there is no need for life insurance. You mention getting insurance when it is not needed, to protect you against some future risk. If you have a policy and a disease crops up that would normally make you un-insurable, you can keep your insurance for the rest of the term. The cost for this would be very high. You would have to have a term that would last decades to cover you until some future child is out of college. If you never have somebody that depends on you for income, there never is a need for life insurance." }, { "docid": "329269", "title": "", "text": "&gt; But achieving that growth is difficult as China and other countries have pursued aggressive export strategies and **the U.S. has lost manufacturing skills and suppliers after shifting production overseas**. (Emphasis mine) And they're doing the exact same thing in almost every possible field: legal and accounting services, [medical services](http://www.outsource2india.com/services/healthcare.asp) and, of course, the outsourcing poster child- software. Even hardware development is moving overseas. That's one high-paying and specialized field. The US (and other western countries) are training their competition and weakening their future strength in some very important areas." }, { "docid": "472739", "title": "", "text": "\"He's paying the interest and you're paying the principal. If you're making minimum monthly payments, you'll still be doing the same thing 25-30 years from now. I think Parker's advice was very, very good, but I'd like to add to it a little of my own. Whatever dollar amount your son is sending to you as payment, encourage him to continue doing that. Only instead of paying you, have him put that money into a savings plan of some kind. You mentioned that he's struggling now, yet able to come up with approximately (my best guess) $200/mo. I guarantee you that if he puts that $200/mo back into his pocket, he'll still be struggling every month yet have nothing to show for it. My suggestion changes nothing in his daily life, yet gives him $2400 at the end of every year. I was in a somewhat similiar situation as your son, only to the tune of $13,000. About 20 years ago, I got a loan and bought a new truck in which to use to go back and forth to work every day. The first 5 months the payments to the bank went as planned. Then my wife announces that \"\"we're\"\" pregnant. So my parents figured it would be best to just pay off my loan to the bank, avoiding any further interest charges, and take that truck payment and put it away for a rainy day. At 33 y/o, with my first child on the way, I finally started saving some of my money. It was good advice on their part because the rainy days came! They never asked me to pay them back, however I did offer. I've been tucking away $300-400/mo in the bank every month since then because I just got into the habit. Good thing I did too. In the past 10 years I've had to bury both of my parents, one sister and two wives and I'll tell ya, one thing that was comforting was the fact that I had the money. The little truck I bought 20 years ago is now my son's. It has around 260,000 miles on it now. When he trades it in for a newer vehicle, I will probably loan him the money and have him make payments to me rather than the bank. I, too, am not one to pay interest if I can help it. If he defaults, he's my son. I just won't buy him another vehicle! Or maybe he'll get into the same habit of saving money the same way I did. Like JohnFx said, money loaned to family should be regarded as a gift, otherwise you'll end up losing your money AND your family member! Hope some of this helps you make your decision.\"" }, { "docid": "432850", "title": "", "text": "\"given your time frame I'm not sure if investing in a 529 is your best option. If you're investing in a 529 you may have to deal with market volatility and the amount you invest over the course of three years could be worth less than what you had initially invested when it comes to your child's college education. The main idea of starting a plan like a 529 is the time-frame for your investments to grow. You also have the option of \"\"pre-paying\"\" your child's college, but that has restrictions. Most of the state sponsored pre-pay plans limit you to state schools if that wasn't obvious. Also, the current political situation is tricky, and may influence the cost of education in ~3-4 years, but I'm not sure this is the proper place for that discussion. Also, as far as the viability of these, it depends state-by-state. I live in Illinois and don't think I would count on a payout given our current financial situation. You could, however, look into paying tuition now for a state school and it will be risk free in terms of inflation, but again, it's hard to anticipate the political scope of this. They also have private pre-pay plans, but that would limit your child's university options just as the state pre-pay. Check out this investopedia article on 529 plans, it's basic but will give you a high level overview. Bankrate has an overview as well.\"" }, { "docid": "454287", "title": "", "text": "\"None of what I say is advice directed to you. It is how I would continue to analyse the situation you have, were it mine. First off, I prefer to work in certainties more than possibilities. Saying that, paying down the mortgage makes sense as I can calculate the amount I will save. I also believe that rate rises are coming in the future, based on the talk from the BofE, so any money I pay off now means guaranteed less interest to pay in the future. Also, the lower my loan-to-value ratio, the better/lower interest rates I can receive in the mortgage market. If I do not want to work until retirement age, it'd be nice to have as few bills as possible in the decade or so prior to retirement age. I could then do early-retirement or part-time work in the run-up to retirement. I could use my savings to fund life until retirement pays out. I'd be aiming to put 15% of my gross income into \"\"future investing\"\" - using ISAs to build up a savings pot, taking advantage of retirement products. That way all the money is not tied to a normal retirement age before it can accessed. And it's not touchable by future greedy Government taxation... Any income leftover above the 15%, I'd be throwing at the mortgage - taking advantage of the 10% overpay window, remortgaging as LTV comes down. In theory, overpaid mortgage equity is money that could still be accessed (provided house prices don't decline and remortgaging is a possibility). So, in short, I'd follow a plan along these lines of logic. 1) Make sure I have 4-6 months of living expenses as a Rainy Day Fund. Insulate myself from fluctuations in my financial situation. 2) Put away 15% of annual gross income towards \"\"future saving\"\". ISAs first, pension second. 3) Overpay the mortgage and look to remortgage as LTV drops. When LTV nears 60%, look to lock in to a longer-term fix. eg. 2 year fixes at 90% LTV, 5 year fixes at 60%. 4) Reassess steps 2 & 3 as life happens, circumstances change, work fluctuates, etc. 5) Once the mortgage is paid off, build as much wealth as possible - ISAs first, then non-tax efficient savings products. Aim for keeping expenses down and raising my savings % rate as much as possible. [Your analysis was thorough and shows you are thinking through consequences. Never forget to factor in the risk of carrying debt. Having no/low debt as you get older means there's more income left to build wealth. Ignore the American view of carrying debt for life and trusting investments to outperform the debt. You have to pay monthly to keep that debt around - and it ain't a pet!]\"" }, { "docid": "220834", "title": "", "text": "Any time you are optimizing a portfolio, the right horizon to use for computing the statistics you will use for optimization (expected return, covariance, etc.) will be the same as your rebalance/trading frequency. If you expect your trading strategy to trade once a day, you should use daily data for optimization. Ditto for monthly or quarterly. If at all possible you should use statistics across the board that are computed at the same frequency as your trading. Regarding currency pricing, I see no reason you can't take the reported prices and convert them to whatever currency you want using that day's foriegn exchange rate. Foreign exchange rates are available for free at the Fed and elsewhere. Converting prices from one currency to another is not rocket science. Since you are contemplating putting actual money behind this, note that using data to compute statistics is less reliable for lower statistical moments. The mean (expected return) is the first moment, so using historical returns is extremely unreliable at predicting future returns. The variances and covariances are second moments, they are better. Skewness and kurtosis, yet better. The fact that the expected return can't reliably be estimated from past returns is the major downfall of the Markowitz method (resulting portfolios are often very crazy and will depend critically on the data period you use to set them up). There are approaches to fixing this, such as Black-Litterman's (1992) method, but they get complicated fast." }, { "docid": "314252", "title": "", "text": "\"A financial planner can help with investments, insurance, estate planning, budgeting, retirement planning, saving for college, tax planning/prep, and other money topics. One way to get a sense is to look at this Certified Financial Planner topic list. Another idea is to look at this book (my favorite I've read) which covers roughly a similar topic list in a concise form: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 It could not hurt at all to read that before deciding to visit a planner, so you have baseline knowledge. By the way, look for the CFP certification which is a generalist certification. A CFP might also have a deeper cert in certain topics or connect you with someone who does. For example: You really want a generalist (CFP) who may have an additional credential as well. The idea is to holistically look at what you're trying to accomplish and all finance-related areas. Especially because there may be tradeoffs. The CFP would then refer you to or work with lawyers, accountants, etc. Importantly, some advisors are fiduciaries (must act in your interests) and some are not. In particular many stockbrokers are neither qualified planners (no CFP or equivalent) nor are they fiduciaries. Stay away. There are several models for paying a financial planner, including: There's an organization called NAPFA (napfa.org) for fiduciary non-commission-based planners. Membership there is a good thing to look for since it's a third party that defines what fee-only means and requires the no-commissions/fiduciary standard. Finally, the alternative I ended up choosing was to just take the CFP course myself. You can do it online via correspondence course, it costs about the same as 1 year of professional advice. I also took the exam, just to be sure I learned the stuff. This is the \"\"extreme DIY\"\" approach but it is cheaper over time and you know you are not going to defraud yourself. You still might do things that are counterproductive and not in your interests, but you know that already probably ;-) Anyway I think it's equivalent to about a quarter's worth of work at a decent college, or so. There are about 6 textbooks to dig through. You won't be an experienced expert at the end, but you'll know a lot. To get an actual CFP cert, you need 3 years experience on top of the courses and the exam - I haven't done that, just the book learning. Someone who puts \"\"CFP\"\" after their name will have the 3 years on top of the training. Some editorial: many planners emphasize investing, and many people looking for planners (or books on finance) emphasize investing. This is a big mistake, in my view. Investing is more or less a commodity and you just need someone who won't screw it up, overcharge, and/or lose your money on something idiotic or inappropriate. Some people are in plain-bad and inappropriate investments, don't get me wrong. But once you fix that and just get into anything decent, your biggest planning concerns are probably elsewhere. On investments, I'd look for a planner to just get you out of overpriced annuities and expensive mutual funds you may have been sold (anything you were sold by a salesperson is probably crap). And look for them to help you decide how much to invest, and how much in stocks vs. bonds. Those are the most important investment decisions.\"" }, { "docid": "21626", "title": "", "text": "I personally do not buy any those so-call forecasts - look no further than the economic forecasts by those experts with PhDs over the last decade or so. Truth is there are too many factors that affects the tuition fees that far down the road (think inflation, cost of living, the method for which the education is being delivered, anticipated salary for the teachers, the ratio of schools and students, your children's ability to obtain scholarship money, and etc). Put in what you can afford for RESP - I put in $2000 annually per child to take maximum advantage of the 20% government matching. And be prepare to augment that with additional fund in 18 years. I am prepared to take on significant loans if my children both decided and qualified for graduated studies in specialized fields in a prestige universities - I have had met people with graduate degrees from Harvard and Cambridge and the obscure sum they (or their parents) paid on tuition are about as good investment as I have ever seen. Education is one of the best gifts any parent could give to their child." }, { "docid": "315212", "title": "", "text": "In addition to the other answers, here's a proper strategy that implements your idea: If the options are priced properly they should account for future dividend payments, so all other things aside, a put option that is currently at the money should be in the money after the dividend, and hence more expensive than a put option that is out of the money today but at the money after the dividend has been paid. The unprotected futures (if priced correctly) should account for dividend payments based on the dividend history and, since maturing after the payment, should earn you (you sell them) less money because you deliver the physical after the dividend has been paid. The protected ones should reflect the expected total return value of the stock at the time of maturity (i.e. the dividend is mentally calculated into the price), and any dividend payments that happen on the way will be debited from your cash (and credited to the counterparty). Now that's the strategy that leaves you with nearly no risk (the only risk you bear is that the dividend isn't as high as you expected). But for that comfort you have to pay premiums. So to see if you're smarter than the market, subtract all the costs for the hedging instruments from your envisaged dividend yield and see if your still better than the lending rate. If so, do the trade." } ]

[ { "docid": "568473", "title": "", "text": "\"Others have given some good answers. I'd just like to chime in with one more option: treasury I-series bonds. They're linked to an inflation component, so they won't lose value (in theory). You can file tax returns for your children \"\"paying\"\" taxes (usually 0) on the interest while they're minors, so they appreciate tax-free until they're 18. Some of my relatives have given my children money, and I've invested it this way. Alternatively, you can buy the I-bonds in your own name. Then if you cash them out for your kids' education, the interest is tax-free; but if you cash them out for your own use, you do have to pay taxes on the interest.\"" } ]

[ { "docid": "332749", "title": "", "text": "I'd suggest you keep putting money in your savings account and start investing after you land that first big job. As another answer mentioned, unless you're fortunate enough to have all of your tuition and living expenses paid for, an emergency fund is an invaluable tool for a college student. And the bigger the better. Your laptop gets stolen or your car's air conditioner (or heater) dies -- both of these things happened to me in college -- and it would have been a much bigger deal for me if I didn't have some money tucked away." }, { "docid": "148541", "title": "", "text": "\"Your only real alternative is something like T-Bills via your broker or TreasuryDirect or short-term bond funds like the Vanguard Short-Term Investment-Grade Fund. The problem with this strategy is that these options are different animals than a money market. You're either going to subject yourself to principal risk or lose the flexibility of withdrawing the money. A better strategy IMO is to look at your overall portfolio and what you actually want. If you have $100k in a money market, and you are not going to need $100k in cash for the forseeable future -- you are \"\"paying\"\" (via the low yield) for flexibility that you don't need. If get your money into an appropriately diversified portfolio, you'll end up with a more optimal return. If the money involved is relatively small, doing nothing is a real option as well. $5,000 at 0.5% yields $25, and a 5% return yields only $250. If you need that money soon to pay tuition, use for living expenses, etc, it's not worth the trouble.\"" }, { "docid": "489179", "title": "", "text": "\"It doesn't really make sense to worry about the details of \"\"what counts as saving\"\" unless you also move beyond a simplistic rule of thumb like \"\"save 10% of your income\"\". That said, most of the sources I see pushing rules of thumb like that are talking about saving for retirement. That is, you need to sock that money away so you will be able to spend it after you retire. (This CNN page is one example.) On that theory, it only \"\"counts\"\" if you put it away and don't touch it until you retire, so things like car and computer funds would not count as saving. Another thing you'll see some people say (e.g., this Nerdwallet article) is to use 20% of your income for \"\"financial priorities\"\". This would include retirement saving, but also things like paying off debt and saving for a down payment on a house. Saving for a small purchase in the near future would not usually be considered \"\"saving\"\" at all, since you're not going to keep the money. If you put $5 in your wallet tonight so you can buy a hamburger for lunch tomorrow, you wouldn't call that saving; likewise setting aside a few hundred dollars for a new computer wouldn't \"\"count\"\" as saving under most definitions. (Some people might \"\"count\"\" saving for something like a house, since that is a long-term plan and the house, unlike a computer, may rise in value after you buy it. But you wouldn't want to fully count the house as part of your retirement savings unless you're willing to sell it and live off the proceeds.) However, none of these rules will help that much if your goal is, as you say at the end of your question, to \"\"know if I need to save more than what I actually am saving currently\"\". Saving 10% of your income won't magically ensure that you're saving \"\"enough\"\". To assess whether you personally are saving \"\"enough\"\", you need to actually start running some numbers on how much money you personally will need in retirement. This will depend on any number of factors, including where you live, what sources of retirement income you might have besides savings (e.g., pensions), etc. In short, to know if you're saving enough, you can't listen to the generic stuff that \"\"everyone says\"\"; you need to consider your own situation in a deliberate, focused way.\"" }, { "docid": "315212", "title": "", "text": "In addition to the other answers, here's a proper strategy that implements your idea: If the options are priced properly they should account for future dividend payments, so all other things aside, a put option that is currently at the money should be in the money after the dividend, and hence more expensive than a put option that is out of the money today but at the money after the dividend has been paid. The unprotected futures (if priced correctly) should account for dividend payments based on the dividend history and, since maturing after the payment, should earn you (you sell them) less money because you deliver the physical after the dividend has been paid. The protected ones should reflect the expected total return value of the stock at the time of maturity (i.e. the dividend is mentally calculated into the price), and any dividend payments that happen on the way will be debited from your cash (and credited to the counterparty). Now that's the strategy that leaves you with nearly no risk (the only risk you bear is that the dividend isn't as high as you expected). But for that comfort you have to pay premiums. So to see if you're smarter than the market, subtract all the costs for the hedging instruments from your envisaged dividend yield and see if your still better than the lending rate. If so, do the trade." }, { "docid": "83764", "title": "", "text": "\"? You have no idea what school I am talking about. In my hometown, a child getting accepted into U of Illinois was one of the proudest moments in a parents life. I didn't get accepted into UI, but eventually I got accepted into a respectable school. I deal with people like that other commenter all the time. It's an epidemic. Why would I care to read his rude comments on Afghanistan when I have read books on the subject and been in the theater? What, realistically, am I missing by engaging with him and putting up with his attitude? And then there's you. A brief view of your history shows me your school, your program, your lavish vacation, your frequent flyer tier as a freshman in college... Honestly, I'm excruciatingly jealous. So I hope you forgive me for my \"\"waving\"\" my pedigree of trying to be the first person in my broke-ass farm family to actually get a degree, but then getting beat out by my little sister because my mom could afford her college while I had to find a way to have Uncle Sam pay for mine.\"" }, { "docid": "343518", "title": "", "text": "\"This is clearly a scam, and you should stay away from it. Anyone reading this knew that from the title alone - and it seems that you know it too. Don't \"\"test\"\" whether something is a scam by putting your own money in it. That is exactly how these scammers make money, and how you lose it. How their scam works is irrelevant. The simple fact is that there is no way you can safely earn 20% return over the course of a year, let alone in 1 day*. You know this is true. Don't bother trying to figure out what makes it true in this case. There is no free lunch. Best case scenario, this is a hyper-risky investment strategy [on the level of putting your money down at a roulette wheel]. Worst case scenario, they simply steal your money. Either way, you won't come out ahead. Although I agree with others that this is likely a Ponzi scheme, that doesn't really matter. What matters is, there is no way they can guarantee those returns. Just go to a casino and throw your money away yourself, if you want that level of risk. *For reference, if you invested $100 for a year, earning 20% returns every day, you would have 6 million trillion trillion dollars by the end of the year. that's $6,637,026,647,624,450,000,000,000,000,000. that number doesn't even make sense. It's more money than exists on earth. So why would they need your $100?\"" }, { "docid": "333004", "title": "", "text": "First of all kudos to you for seeing the value in saving at a young age. There are several different things you can mean by this and I'm not sure which is accurate so I am going to address the first two that I thought of. If you are selling your investments because you need the money (emergency expenses, saved enough for a short term goal, whatever the reason) then this may not be the best solution for your savings. Investing in mutual funds, ETFs, stocks, 401k, IRA, etc are typically for longer term goals such as a goal that is 10+ years away (maybe buying a home, paying for college for your children, retirement, etc). If you are selling your investments because you believe that another investment is performing better and you want to get in on that one instead what I would suggest is leaving the money you have invested where it is and starting future investments in the new fund/ETF you are interested in. For example if you have $2000 invested in fund X and now you do some research and fund Q looks more appealing that is great, start investing in fund Q with your next deposit. Any research you do will be based on past results, there is nothing that guarantees that fund Q will continue doing better than the fund X you already have. Trying to time the market rarely ends well for the investor. I would encourage you to continue saving money a bit at a time just like you have been doing. Avoid selling your investments until it is time to sell them for whatever goal you intended them for. Set aside some cash to cover any unexpected expenses so you won't have to sell your investments to cover the costs, even at 18 unplanned things happen." }, { "docid": "20420", "title": "", "text": "Jurisdictions will vary but I can imagine calculation methods for child support where the raise could become significant in the present with long future ramifications as well, even if the job is temporary or the parent wanted to step away from working full-time to attend school. The timing of the raise might coincide with disclosure of income to an ex-spouse or to the court related and it might be preferable to postpone the increase. Of course the court would probably frown on declining the raise for only these reasons. If it found out it might impute the higher income anyway. And I'm not suggesting that people dodge responsibility for their kids. We've all seen those cases where child support is not particularly equitable between the two parties and/or the kids do not necessarily benefit by the transfer of money. I wouldn't blame a parent for thoughtfully and unselfishly considering this type of second-order effect and consulting an attorney as with so many other financial implications of divorce. Regardless of personal moral objections it's certainly an answer to the question in technical terms that somebody somewhere has taken into account." }, { "docid": "382386", "title": "", "text": "529 College Savings Plans exist, which allow for tax-free savings for educational expenses, but I think you expect to go back to school too quickly for them to be worth the hassle. (They're more designed for saving for college for your kids.) Other than an IRA, you don't have many options for tax-advantaged accounts. In addition, since you plan to return to school, you should keep money around for that. Don't put that money in anything too volatile or hard to access. Since you don't plan on doing anything with the 80k in CDs right now, you can get away with higher risk with that money." }, { "docid": "361821", "title": "", "text": "If the child is a dependent the question is moot. It is accepted that the parent will pay for some, most, or all of the tuition. There is no tax issue for a current student. The payment of tuition helps them qualify as a dependent. There is no need to transfer the money to the child's account; it can be sent directly to the school. If the money is to be used in the future there are accounts such as 529s pre-paid accounts, and Coverdell savings accounts that can be used. All have pluses and minuses, all can impact taxes, and all can impact financial aid calculations." }, { "docid": "193463", "title": "", "text": "\"Of course. \"\"Best\"\" is a subjective term. However relying on the resources of the larger institutions by pooling with them will definitely reduce your own burden with regards to the research and keeping track. So yes, investing in mutual funds and ETFs is a very sound strategy. It would be better to diversify, and not to invest all your money in one fund, or in one industry/area. That said, there are more than enough individuals who do their own research and stock picking and invest, with various degrees of success, in individual securities. Some also employe more advanced strategies such as leveraging, options, futures, margins, etc. These advance strategies come at a greater risk, but may bring a greater rewards as well. So the answer to the question in the subject line is YES. For all the rest - there's no one right or wrong answer, it depends greatly on your abilities, time, risk tolerance, cash available to invest, etc etc.\"" }, { "docid": "325587", "title": "", "text": "\"The more I think about this the more I think you are actually better off letting it go to collections. At least then you would be able to agree an affordable repayment schedule based on your real budget, and having a big dent in your credit score because it's gone to collections doesn't actually put you in any worse position (in terms of acquiring credit in the future) than you are now. Whoever is the creditor on your original loan is (IMO) quite unreasonable demanding a payment in full on a given date, especially given that you say you've only been made aware of this debt recently. The courts are usually much more reasonable about this sort of thing and recognise that a payment plan over several years with an affordable monthly payment is MUCH more likely to actually get the creditor their money back than any other strategy. They will also recognise and appreciate that you have made significant efforts to obtain the money. I'm also worried about your statement about how panicked and \"\"ready to give up\"\" you are. Is there someone you can talk to? Around here (UK) we have debt counselling bureaus - they can't help with money for the actual debt itself, but they can help you with strategies for dealing with debt and will explain all parts of the process to you, what your rights and responsibilities are if it does go to court, etc. If you have something similar I suggest you contact them, even just to speak to someone and find out that this isn't the end of the world. It's a sucky situation but in a few years you'll be able to look back and at least laugh wryly at it.\"" }, { "docid": "86481", "title": "", "text": "The software he is talking about readjusts your portfolio weights back to your original allocation on a semi-constant basis. Basically it's designed to replace the stereotypical, lazy financial advisor. Your second point is quite valid though... One such example for anyone reading who has a young child is a coverdell ESA which allows you to put pretax income into an investment fund and withdraw tax free to spend on anything education related including the primary and secondary level (ie books, Supplies, field trips, tutoring, etc.). Basically money youd probably spend anyway, but this way you skip out on some taxes." }, { "docid": "468831", "title": "", "text": "First of all, you should absolutely put money into savings until you have at least a 6 month cushion, and preferably longer. It doesn't matter if you get 0% interest in your savings and have a high interest rate mortgage, the cushion is still more important. Once you have a nice emergency fund, you can then consider the question of whether to pay more towards the mortgage if the numbers make sense. However, in my opinion, it's not just a straight comparison of interest rates. In other words, if your savings account gives you 1% and your mortgage is 5%, that's still not an automatic win for the mortgage. The reason is that by putting the money into your mortgage, you're locking it up and can't access it. To me, money in the hand is worth a lot more than money that's yours on paper but not easily accessible. I don't know the math well enough, but you don't really need the math. Just keep in mind that you have to weight the present value of putting that money into savings vs the future value of putting it into your mortgage and paying less interest at some point in the future. Do the math and see how much you will save by paying the mortgage down faster, but also keep in mind that future money is worth less than present money. A LOT less if you suddenly have an emergency or decide on a major purchase and need the money, but then have to jump through hoops to get to it. To me, you need to save a considerable amount by paying down the mortgage, and also understand that your money is getting locked away, for it to make sense." }, { "docid": "471019", "title": "", "text": "Since this post was migrated from Parenting, my reply was in the context where it appeared to be misrepresenting facts to make a point. I've edited it to be more concise to my main point. In my opinion, the best way to save for your childs future is to get rid of as much of your own debt as possible. Starting today. For the average American, a car is 6-10%. Most people have at least a couple credit cards, ranging from 10-25% (no crap). College loans can be all over the map (5-15%) as can be signature (8-15%) or secured bank loans (4-8%). Try to stop living within your credit and live within your means. Yeah it will suck to not go to movies or shop for cute things at Kohl's, but only today. First, incur no more debt. Then, the easiest way I found to pay things off is to use your tax returns and reduce your cable service (both potentially $Ks per year) to pay off a big debt like a car or student loan. You just gave yourself an immediate raise of whatever your payment is. If you think long term (we're talking about long-term savings for a childs college) there are things you can do to pay off debt and save money without having to take up a 2nd job... but you have to think in terms of years, not months. Is this kind of thing pie in the sky? Yes and no, but it takes a plan and diligence. For example, we have no TV service (internet only service redirected an additional $100/mo to the wifes lone credit card) and we used '12 taxes to pay off the last 4k on the car. We did the same thing on our van last year. It takes willpower to not cheat, but that's only really necessary for the first year-ish... well before that point you'll be used to the Atkins Diet on your wallet and will have no desire to cheat. It doesn't really hurt your quality of life (do you really NEED 5 HBO channels?) and it sets everyone up for success down the line. The moral of the story is that by paying down your debt today, you're taking steps to reduce long haul expenditures. A stable household economy is a tremendous foundation for raising children and can set you up to be more able to deal with the costs of higher ed." }, { "docid": "427044", "title": "", "text": "You absolutely can be put in jail in America for debt... if that debt is to a government or government agency (like a municipal government). If you have unpaid court costs, fines, etc., it's common practice in most municipalities to issue an arrest warrant for those, even if non-payment is due to being indigent. In a lot of cases, even if you show up to explain why you can't pay or make a partial payment on the due date, you'll be arrested and jailed until a judge is available to hear your explanation, if one isn't available right when you go in. What's supposed to happen is that if you're indigent (can't pay), a judge will hear your explanation and, provided it's determined that you're indigent, make adjustments to what you owe (cancel or reduce the amount, extend the due date, setup a payment plan, etc.) and send you on your way. It bears mentioning that even in cases where the system works like it should, there's still a very real chance of being put in jail, which isn't harmless - people can and do lose their jobs while they're sitting in jail waiting to plead indigence to a judge. And of course, what's supposed to happen isn't what always does. The police shootings of the past couple years in Missouri have shone some light in a lot of dark corners down there, where there are, in fact, de-facto debtor prisons in many municipalities. In addition to civil rights groups filing suit over this in many Missouri municipalities, the US Department of Justice has filed suit against the city of Ferguson over their municipal practices (including their use of the courts and jails to generate municipal revenue). Some forms of private debt (like child support) also fall under this umbrella where an arrest warrant will be issued for failure to pay for any reason, and this was determined to be a factor in the Walter Scott shooting - Walter Scott ran to avoid being put in jail over child support debt, and losing his job while in jail. The New York Times highlighted his case in an article titled: Skip Child Support. Go to Jail. Lose Job. Repeat. Rodney Scott said that he sometimes thought his brother did not do everything he could to catch up, but that Walter seemed to consider it a hopeless cause. He recalled seeing his brother plead to a judge that he just did not make enough money. “He asked the judge, ‘How am I supposed to live?’ ” Mr. Scott said. “And the judge said something like, ‘That’s your problem. You figure it out.’ ”" }, { "docid": "348878", "title": "", "text": "\"You sound like you're well educated, well spoken, and resourceful, so I'm going to assume that you are somewhere in the neighborhood of top 5% material. That means you can pretty much do anything you want to if you put enough effort into it. There are two types of people in this world: those who run the world and those who live comfortably in it (and, of course, everyone else, but they are irrelevant to the discussion). Who do you want to be? I've been around a lot of wildly successful people, and they have two consistent traits: connections and freedom. First, everyone always told me that \"\"it's not what you know, it's who you know\"\", but I never appreciated it until after college. The world runs on connections. The more connections you have, and the more successful they are, the more successful you will be. Second, the more freedom you have, the more opportunity you will have to take chances, which is how you become wildly successful. Freedom comes from not being in debt (first) and having money (second). Why do you think Harvard grads are the guys that end up having so much money and power? It's probably because they grew up in a rich family which provided them money (freedom) and a wide social circle of rich people (connections). So you're not rich. What to do? Well, the easiest way to get into that group is to go to college with them. And that means you need to get into Harvard or another Ivy League. Stanford if you want to be an engineer. College will be where you will make your most intense and long-lasting friendships. That roommate at Harvard that you went on the crazy four-day road trip with may someday be CEO of a company... and when he needs a CIO, you can be damn sure you'll be at the top of the list if you're qualified. But Harvard costs a lot of money...which means you'll be in debt, a lot, when you get out of college. You'll have lots of rich, important friends(connections), but you'll be deeply in debt (no freedom). Most of these type of people end up becoming consultants at big firms because they pay well. You'll live a comfortable life and pay off your student loans in five or 10 years. Then you'll continue to live comfortably, but at that point you'll be too old to take huge chances and too comfortable to change things (or perhaps you'll have a big mortgage = no freedom). With a heavy debt load, it's almost impossible to, say, join an early stage startup and really be able to take huge chances. You can do it, maybe. Or, as an alternate option, you can do what I did. Go to a cheap state school and graduate with no debt. That puts you on the other side of the fence: freedom, but no connections. Then, in order to be successful, you have to figure out how to get connections. Goldman Sachs won't hire you, and everyone you meet is going to automatically assume you're mediocre because of where you went to college. At this point, your only option is to take big chances. Move to New York or San Francisco, offer to work for free as an intern somewhere or something. It can be done, and it's really not too hard, you just have to have lots of spending restraint because the little money you have has to go a long way. So what are the other options? Well, some people are recommending that you think about not going to college at all. That will certainly save you money and give you a four year head start on whatever you decide to do (freedom), but you'll forever be branded as that guy without a college degree. Think my second option above but just two or three times worse. You won't even get that free internship, and you'll be that weird guy at dinner parties who can\"\"t answer the first question \"\"So, where did you go to college?\"\". It doesn't matter if you're self-taught; life isn't a meritocracy. If you're very good, you'll end up getting a nice cushy job pushing ones and zeros. A nice cushy golden handcuff job. Well, you could go to community college. They're certainly cheap. You can spend very little money so you'll end up with fairly good freedom. I might add, though, that community colleges teach trades, and not high-level things like management and complex architecture. You'll be behind technically, but not as bad as if you didn't go at all. How about connections? Your fellow students will probably lack ambition, money, and connections. They'll be candidates for entry-level wage slave jobs at Fortune 500 companies after they graduate. If they get lucky, they'll work up to middle management. There's no alumni association, and there's certainly no \"\"DeVry Club\"\" in downtown Boston. At New York and Silicon Valley dinner parties, having a community college degree is almost as bad as having nothing at all. Indeed, the entire value of the community college degree will be what you learn, and you'll be learning at the speed and level of your classmates. My advice? If you get into an Ivy League school, go and hope you get some grants to help you out. The debt will suck, but you'll be well positioned for the future. Otherwise, go to a cheap second-tier school where you can get a large scholarship. There are also lots of third-party scholarships that are out there on the Internet you can get. I got a couple from local organizations. Don't work during college. Focus on expanding your network instead; the future value of a minimum wage job while you're trying to go through school is practically zero.\"" }, { "docid": "53200", "title": "", "text": "\"In my opinion, you can't save too much for retirement. An extra $3120/yr invested at 8% for 30 years would give you $353K more at retirement. If your \"\"good amount in my 401k\"\" is a hint that you don't want us to go in that direction, then how about saving for the child's college education? 15 years' savings, again at 8% will return $85K, which feels like a low number even in today's dollars, 15 years of college inflation and it won't be much at all. Not sure why there's guilt around spending it. If one has no debt, good retirement savings level, and no pressing need to save for something else, enjoying one's money is an earned reward. Even so, if you want a riskless 'investment' just prepay the mortgage. You'll see an effective return of the mortgage rate, 4%(?) or so, vs the .001% banks are paying. Of course, this creates a monthly windfall once the mortgage is paid off, but it buys you time to make this ultimate decision. In the end, I'd respond that similar to Who can truly afford luxury cars?, one should produce a budget. I don't mean a set of constraints to limit spending in certain categories, but rather, a look back at where the money went last year and even the year before that. What will emerge are the things that are normal, the utility bills, tax bill, mortgage, etc, as well as the discretionary spending. If all your current saving is on track, the investment may be in experiences, not financial products.\"" }, { "docid": "256983", "title": "", "text": "\"Here are the top hitters in my (recent) experience, in highest-first order: Child Care By far the biggest potential cost is childcare, whether this be a full-time nursery/kindergarten, child minder, live-in Nanny/Au-pair or just paying a baby sitter when parents need a night off. This needs careful thought. In London, full-time nursery school (6 months to 4 years old) varies from 500 UKP to 2000 UKP per month, and the amount you pay does not guarantee the quality of the care/education. If you have relatives nearby, these costs can likely be reduced, but you'd really need to pay the relatives somehow - meals, bling, holidays, a new bathroom, etc. Loss of Earnings Whether the mother goes on maternity leave, or the father gives up his job to be a 'house husband', the family income is going to be affected for a period of time. You can plan for this by researching what government or company benefits the mother or father will get and for how long. I suggest dividing this amount evenly across the whole period that the stay-at-home parent will be off, rather than trying to calculate \"\"2 months' full pay, 2 months' half pay, 2 month's no pay\"\", because if you get into a pattern of high spending in the first two months, what will happen for the next 4 months. You also need to consider short-notice time off work when anybody is poorly. I suggest reserving some of your vacation time for unexpectedly-have-to-look-after-the-family time. When children start daycare/nursery, the germs cross-pollinate, so you get some really nasty strains of coughs, colds, diarrhoea and 'flu in the house, which could cause the primary carer to be unable to do their caring without (your) help. Bigger Car If you can't get a baby seat into your car because it doesn't have the proper fittings or doesn't have rear seats, you'll likely need to change your car. There are plenty of cars that are bigger in terms of people space without being more expensive, but it'll cost to change. Insurances If you have health insurance (e.g. US), you're going to have a proportional increase. Call your provider for details. Bear in mind that children have more illnesses and accidents than middle-age parents, so it could be a shock. Some parents take out life insurance to provide for their childrens' financial future in case of the worst happening. This can be around 50 UKP/65 USD per month, but it all depends on the lump sum you're insuring for. Equipment As a new parent, you think you need an incredible amount of equipment such as Changing Station, Cot/Crib, 'Moses Basket', Carry-Chair, Car Seat, Travel Cot/Crib, Feeding Chair, Changing Mat, Baby Bath, etc. When you bring a new baby home, you really only need a wipe-clean changing mat and somewhere safe for baby to sleep. You can buy anything else as you need it. In fact, it gives you more perspective to go shopping once you've had the baby. Whatever you buy, keep the receipt and don't open it until you need it. Much easier to take back the, e.g. portable baby bottle warmer, if you didn't open it because baby is breast-fed. When they become bigger (2 months plus), you'll need a Cot/Crib. Invest in an adjustable cot-bed - it's a bit larger than a regular Cot/Crib and the floor lowers as they get bigger, so you only need one for the first 2.5 to 3 years. Food If baby will have formula, there are baby-milk formula calculators on the web - in summary one box of quality formula is ~9 UKP/12 USD and this lasts around 4 days if fully formula-fed. Once they're onto food, you need to factor in baby food options. You can either make your own by side-lining some of the adult meal and blending it, then putting it into individual plastic containers. This takes effort, so not everyone has the energy. Alternatively, you're going to have to buy baby food in jars, packets or boxes for 3 meals a day and there'll be little snacks in-between. Baby snacks are strangely expensive, so recommend fruit. Budget for 5 UKP/7 USD per day until they're eating a small portion of the family meal. Clothes A new baby really only needs vests, all-in-one suits, blankets for warmth. You can go mad buying cute outfits, but they get limited use as a new baby grows really quickly. If you've a lot of family/friends and you have a tradition of some kind of \"\"good luck\"\" party ('baby shower'), then you can find that you end up being given lots of things. If you don't know the sex of the baby, ask people to get you a gift receipt if possible such that you don't get blue clothes for a girl. It may not bother you, but its' a pain when people say \"\"Katie is a strange name for a boy?\"\" just because your little girl has blue booties. Child-proofing Your Home This really does not have to cost a lot. Some people go mad putting soft corners on all the hard edges, covering the electrical sockets and generally sanitizing the whole home. It's up to you, but if there's a room full of sharp/poisonous things like a kitchen or utility room, you might want to put a 15 UKP/20 USD baby gate on that room. Putting the breakable or sharp things up high, or stored away in the attic is a sensible move too.\"" } ]

[ { "docid": "328300", "title": "", "text": "I know this is a little off the wall but I bought a rental property for my son's tuition. The tenants pay down the mortgage for the next 12 years and it (hopefully) also appreciates in value. Worst case scenario is I come out with a rental and a kid with no education. He doesn't go then there's no skin off my back." } ]

[ { "docid": "55985", "title": "", "text": "Generally, you need something that goes up over time during periods of index decline, but otherwise holds some value. Historically, people tend to use gold for that purpose. But with gold also set up for possible declines, that raises questions. Silver has dropped a bit more than gold in terms of percentages. If you think the downward motion will be in the form of sudden jumps, you can look at putting some of your money in puts away from the current price, but you can easily wind up paying too much for this protection. In the case of a deflation, most things lose value vs. money, and you want all cash. These things might already be obvious. I don't think there is a clear answer to your question. But if the future were clear, the present market could possibly anticipate and adjust... one reason the future of the market always seems a bit murky." }, { "docid": "367391", "title": "", "text": "\"Strategy would be my top factor. While this may be implied, I do think it helps to have an idea of what is causing the buy and sell signals in speculating as I'd rather follow a strategy than try to figure things out completely from scratch that doesn't quite make sense to me. There are generally a couple of different schools of analysis that may be worth passing along: Fundamental Analysis:Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and management. When analyzing a stock, futures contract, or currency using fundamental analysis there are two basic approaches one can use; bottom up analysis and top down analysis. The term is used to distinguish such analysis from other types of investment analysis, such as quantitative analysis and technical analysis. Technical Analysis:In finance, technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the same tools of technical analysis, which, being an aspect of active management, stands in contradiction to much of modern portfolio theory. The efficacy of both technical and fundamental analysis is disputed by the efficient-market hypothesis which states that stock market prices are essentially unpredictable. There are tools like \"\"Stock Screeners\"\" that will let you filter based on various criteria to use each analysis in a mix. There are various strategies one could use. Wikipedia under Stock Speculator lists: \"\"Several different types of stock trading strategies or approaches exist including day trading, trend following, market making, scalping (trading), momentum trading, trading the news, and arbitrage.\"\" Thus, I'd advise research what approach are you wanting to use as the \"\"Make it up as we go along losing real money all the way\"\" wouldn't be my suggested approach. There is something to be said for there being numerous columnists and newsletter peddlers if you want other ideas but I would suggest having a strategy before putting one's toe in the water.\"" }, { "docid": "559371", "title": "", "text": "\"Can I teach children an invaluable skill for free and provide a website or PayPal link for anyone who appreciates the result of my gift to their child and wishes to gift me money (or maybe they don’t have a child but believe in my revolutionary contribution to the future) as they see fit, up to $10K? Two immediately obvious problems with this strategy: What about when you receive gifts from people who aren't in the US? You have to declare, and pay taxes on, foreign gifts. It seems to me that these may not be gifts because they are given in connection with the service you provided rather than from \"\"detached and disinterested generosity\"\" as required to make the gift tax exempt. (See Commisioner v. Duberstein -- gift given to thank associate for a sales lead did not arise from detached generosity. See Stanton v. United States -- gift given in appreciation of services rendered may or may not be a gift for tax purposes. See also Bogardus v. Commissioner -- gifts inspired by past service can be tax exempt.)\"" }, { "docid": "83346", "title": "", "text": "\"For practical purposes, I would strongly suggest that you do create a separate account for each business you may have that is used only for business purposes, and use it for all of your business income and expenses. This will allow you to get an accurate picture of whether you are making money or not, what your full expenses really are, how much of your personal money you have put into the business, and is an easy way to keep business taxes separate. You will also be able to get a fairly quick read on what your profits are without doing much accounting by looking at the account balance less future taxes and expenses, and less any personal money you've put into the account. Check out this thread from Paypal about setting up a \"\"child\"\" account that is linked to your personal account and can be set up to autosweep payments into your main account, should you like. You will still be able to see transactions for each child account. NOTE: Do be careful to make sure you are reserving the proper amount out of any profits your startup may have for taxes - you don't want to mix this with personal money and then later find out that you owe taxes and have to scramble to come up with the money if you have already spent it This is one of the main reasons to segregate your startup's revenues and profits in the business account. For those using \"\"brick and mortar\"\" banking services rather than a service like Paypal: You likely do not need a business checking account if you are a startup. Most likely, you can simply open a second personal account with your bank in your name, and name it \"\"John Doe DBA Company Name\"\" (DBA = Doing Business As). This way, you can pay expenses and accept payments in the name of your startup. Check with your banker for additional details (localized information).\"" }, { "docid": "31182", "title": "", "text": "A trust is a financial arrangement to put aside money over a period of time (typically years), for a specific purpose to benefit someone. Two purposes of trusts are 1) providing for retirement and 2) providing for a child or minor. There are three parties to a trust: 1) A grantor, the person who establishes and funds a trust. 2) A beneficiary, a person who receives the benefits. 3) a trustee, someone who acts in a fiduciary capacity between the grantor and beneficiary. No one person can be all three parties. A single person can be two of out those three parties. A RETIREMENT trust is something like an IRA (individual retirement account). Here, a person can be both the grantor (contributor) to the IRA, and the beneficiary (a withdrawer after retirement). But you need a bank or a broker to act as a fiduciary, and to handle the reporting to the IRS (Internal Revenue Service). Pension plans have employers as grantors, employees as beneficiaries, and (usually) a third party as trustee. A MINORS' trust can be established under a Gift to the Minors' Act, or other trust mechanisms, such as a Generation Skipping Trust. Here, a parent may be both grantor and trustee (although usually a third party is a trustee). A sum of money is put aside over a period of years for the benefit of a minor, for a college education, or for the minor's attaining a certain age: a minimum of 18, sometimes 21, possibly 25 or even older, depending on when the grantor feels that the minor is responsible enough to handle the money." }, { "docid": "427044", "title": "", "text": "You absolutely can be put in jail in America for debt... if that debt is to a government or government agency (like a municipal government). If you have unpaid court costs, fines, etc., it's common practice in most municipalities to issue an arrest warrant for those, even if non-payment is due to being indigent. In a lot of cases, even if you show up to explain why you can't pay or make a partial payment on the due date, you'll be arrested and jailed until a judge is available to hear your explanation, if one isn't available right when you go in. What's supposed to happen is that if you're indigent (can't pay), a judge will hear your explanation and, provided it's determined that you're indigent, make adjustments to what you owe (cancel or reduce the amount, extend the due date, setup a payment plan, etc.) and send you on your way. It bears mentioning that even in cases where the system works like it should, there's still a very real chance of being put in jail, which isn't harmless - people can and do lose their jobs while they're sitting in jail waiting to plead indigence to a judge. And of course, what's supposed to happen isn't what always does. The police shootings of the past couple years in Missouri have shone some light in a lot of dark corners down there, where there are, in fact, de-facto debtor prisons in many municipalities. In addition to civil rights groups filing suit over this in many Missouri municipalities, the US Department of Justice has filed suit against the city of Ferguson over their municipal practices (including their use of the courts and jails to generate municipal revenue). Some forms of private debt (like child support) also fall under this umbrella where an arrest warrant will be issued for failure to pay for any reason, and this was determined to be a factor in the Walter Scott shooting - Walter Scott ran to avoid being put in jail over child support debt, and losing his job while in jail. The New York Times highlighted his case in an article titled: Skip Child Support. Go to Jail. Lose Job. Repeat. Rodney Scott said that he sometimes thought his brother did not do everything he could to catch up, but that Walter seemed to consider it a hopeless cause. He recalled seeing his brother plead to a judge that he just did not make enough money. “He asked the judge, ‘How am I supposed to live?’ ” Mr. Scott said. “And the judge said something like, ‘That’s your problem. You figure it out.’ ”" }, { "docid": "454287", "title": "", "text": "\"None of what I say is advice directed to you. It is how I would continue to analyse the situation you have, were it mine. First off, I prefer to work in certainties more than possibilities. Saying that, paying down the mortgage makes sense as I can calculate the amount I will save. I also believe that rate rises are coming in the future, based on the talk from the BofE, so any money I pay off now means guaranteed less interest to pay in the future. Also, the lower my loan-to-value ratio, the better/lower interest rates I can receive in the mortgage market. If I do not want to work until retirement age, it'd be nice to have as few bills as possible in the decade or so prior to retirement age. I could then do early-retirement or part-time work in the run-up to retirement. I could use my savings to fund life until retirement pays out. I'd be aiming to put 15% of my gross income into \"\"future investing\"\" - using ISAs to build up a savings pot, taking advantage of retirement products. That way all the money is not tied to a normal retirement age before it can accessed. And it's not touchable by future greedy Government taxation... Any income leftover above the 15%, I'd be throwing at the mortgage - taking advantage of the 10% overpay window, remortgaging as LTV comes down. In theory, overpaid mortgage equity is money that could still be accessed (provided house prices don't decline and remortgaging is a possibility). So, in short, I'd follow a plan along these lines of logic. 1) Make sure I have 4-6 months of living expenses as a Rainy Day Fund. Insulate myself from fluctuations in my financial situation. 2) Put away 15% of annual gross income towards \"\"future saving\"\". ISAs first, pension second. 3) Overpay the mortgage and look to remortgage as LTV drops. When LTV nears 60%, look to lock in to a longer-term fix. eg. 2 year fixes at 90% LTV, 5 year fixes at 60%. 4) Reassess steps 2 & 3 as life happens, circumstances change, work fluctuates, etc. 5) Once the mortgage is paid off, build as much wealth as possible - ISAs first, then non-tax efficient savings products. Aim for keeping expenses down and raising my savings % rate as much as possible. [Your analysis was thorough and shows you are thinking through consequences. Never forget to factor in the risk of carrying debt. Having no/low debt as you get older means there's more income left to build wealth. Ignore the American view of carrying debt for life and trusting investments to outperform the debt. You have to pay monthly to keep that debt around - and it ain't a pet!]\"" }, { "docid": "213066", "title": "", "text": "Other answers here cover some of the basics, but this is also a great time to start establishing a credit history and developing good financial habits to carry throughout your life. In addition to opening a free checking account with the local credit union, establish an overdraft line of credit on that account. Never close this account or this line of credit as it will work to increase the average age of your accounts when you apply for credit later in life. If you are disciplined with your use of credit cards, you may also want to apply for a low limit credit card through the same credit union for the same purpose as above. Never carry a balance on this card, but make minor purchases with it each month, never more than 20% of the balance, maybe just buy gas with it. Start tracking all of your spending and make a monthly budget. There are a lot of online tools that make this very easy. Establishing the habit now will help you make informed financial decisions in the future. Open a Roth IRA and put at least 10% of your money away for retirement. In the future your income may increase enough to put you in the 25% tax bracket. If that ever happens, open a Regular IRA and put the money there instead. Also when you have employers that offer 401k matching do the same thing with a Roth 401k account. Keep your money invested in a low cost index fund." }, { "docid": "256983", "title": "", "text": "\"Here are the top hitters in my (recent) experience, in highest-first order: Child Care By far the biggest potential cost is childcare, whether this be a full-time nursery/kindergarten, child minder, live-in Nanny/Au-pair or just paying a baby sitter when parents need a night off. This needs careful thought. In London, full-time nursery school (6 months to 4 years old) varies from 500 UKP to 2000 UKP per month, and the amount you pay does not guarantee the quality of the care/education. If you have relatives nearby, these costs can likely be reduced, but you'd really need to pay the relatives somehow - meals, bling, holidays, a new bathroom, etc. Loss of Earnings Whether the mother goes on maternity leave, or the father gives up his job to be a 'house husband', the family income is going to be affected for a period of time. You can plan for this by researching what government or company benefits the mother or father will get and for how long. I suggest dividing this amount evenly across the whole period that the stay-at-home parent will be off, rather than trying to calculate \"\"2 months' full pay, 2 months' half pay, 2 month's no pay\"\", because if you get into a pattern of high spending in the first two months, what will happen for the next 4 months. You also need to consider short-notice time off work when anybody is poorly. I suggest reserving some of your vacation time for unexpectedly-have-to-look-after-the-family time. When children start daycare/nursery, the germs cross-pollinate, so you get some really nasty strains of coughs, colds, diarrhoea and 'flu in the house, which could cause the primary carer to be unable to do their caring without (your) help. Bigger Car If you can't get a baby seat into your car because it doesn't have the proper fittings or doesn't have rear seats, you'll likely need to change your car. There are plenty of cars that are bigger in terms of people space without being more expensive, but it'll cost to change. Insurances If you have health insurance (e.g. US), you're going to have a proportional increase. Call your provider for details. Bear in mind that children have more illnesses and accidents than middle-age parents, so it could be a shock. Some parents take out life insurance to provide for their childrens' financial future in case of the worst happening. This can be around 50 UKP/65 USD per month, but it all depends on the lump sum you're insuring for. Equipment As a new parent, you think you need an incredible amount of equipment such as Changing Station, Cot/Crib, 'Moses Basket', Carry-Chair, Car Seat, Travel Cot/Crib, Feeding Chair, Changing Mat, Baby Bath, etc. When you bring a new baby home, you really only need a wipe-clean changing mat and somewhere safe for baby to sleep. You can buy anything else as you need it. In fact, it gives you more perspective to go shopping once you've had the baby. Whatever you buy, keep the receipt and don't open it until you need it. Much easier to take back the, e.g. portable baby bottle warmer, if you didn't open it because baby is breast-fed. When they become bigger (2 months plus), you'll need a Cot/Crib. Invest in an adjustable cot-bed - it's a bit larger than a regular Cot/Crib and the floor lowers as they get bigger, so you only need one for the first 2.5 to 3 years. Food If baby will have formula, there are baby-milk formula calculators on the web - in summary one box of quality formula is ~9 UKP/12 USD and this lasts around 4 days if fully formula-fed. Once they're onto food, you need to factor in baby food options. You can either make your own by side-lining some of the adult meal and blending it, then putting it into individual plastic containers. This takes effort, so not everyone has the energy. Alternatively, you're going to have to buy baby food in jars, packets or boxes for 3 meals a day and there'll be little snacks in-between. Baby snacks are strangely expensive, so recommend fruit. Budget for 5 UKP/7 USD per day until they're eating a small portion of the family meal. Clothes A new baby really only needs vests, all-in-one suits, blankets for warmth. You can go mad buying cute outfits, but they get limited use as a new baby grows really quickly. If you've a lot of family/friends and you have a tradition of some kind of \"\"good luck\"\" party ('baby shower'), then you can find that you end up being given lots of things. If you don't know the sex of the baby, ask people to get you a gift receipt if possible such that you don't get blue clothes for a girl. It may not bother you, but its' a pain when people say \"\"Katie is a strange name for a boy?\"\" just because your little girl has blue booties. Child-proofing Your Home This really does not have to cost a lot. Some people go mad putting soft corners on all the hard edges, covering the electrical sockets and generally sanitizing the whole home. It's up to you, but if there's a room full of sharp/poisonous things like a kitchen or utility room, you might want to put a 15 UKP/20 USD baby gate on that room. Putting the breakable or sharp things up high, or stored away in the attic is a sensible move too.\"" }, { "docid": "53003", "title": "", "text": "&gt; That power is going to shift to Europe and East Asia where education isn't treated as a commodity. In those countries, not everyone gets into college. So for those that do, the degree is worth something. The concept of blocking a child from going to college because their grades are just average, is foreign to US culture. Then these average students get a mountain of debt, and a degree that won't take them anywhere. As a foreigner in the US, it feels cruel to me. But in my country, only the top 30-40% of high school students academically can gain entry to college. All others must look for a different path (community college, trades, etc)." }, { "docid": "339955", "title": "", "text": "I don't know of any financial account that offers that kind of protection. I'm going to echo @Brick and say that if you need that level of restrictions on the money, you should talk to a lawyer. Your only option may be to setup a trust. If you are willing to go with a lower level of restrictions on the account, a 529 plan could do the job. A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It will be in your daughters name, and has the benefit of being tax advantaged, unless its used for non educational expenses. Since your daughter is a minor, there would have to be a custodian for the account that manages it on her behalf. The penalty for using it for non educational expenses might suffice to keep the custodian from draining the account, and I believe the custodian has a fiduciary duty to the account holder, which would open them up to lawsuits if the custodian did act in a way that was detrimental to your child." }, { "docid": "466950", "title": "", "text": "\"Having savings only in your home currency is relatively 'low risk' compared with other types of 'low diversification'. This is because, in a simple case, your future cash outflows will be in your home currency, so if the GBP fluctuates in value, it will (theoretically) still buy you the same goods at home. In this way, keeping your savings in the same currency as your future expenditures creates a natural hedge against currency fluctuation. This gets complicated for goods imported from other countries, where base price fluctuates based on a foreign currency, or for situations where you expect to incur significant foreign currency expenditures (retirement elsewhere, etc.). In such cases, you no longer have certainty that your future expenditures will be based on the GBP, and saving money in other currencies may make more sense. In many circumstances, 'diversification' of the currency of your savings may actually increase your risk, not decrease it. Be sure you are doing this for a specific reason, with a specific strategy, and not just to generally 'spread your money around'. Even in case of a Brexit, consider: what would you do with a bank account full of USD? If the answer is \"\"Convert it back to GBP when needed (in 6 months, 5 years, 30, etc.), to buy British goods\"\", then I wouldn't call this a way to reduce your risk. Instead, I would call it a type of investment, with its own set of risks associated.\"" }, { "docid": "76903", "title": "", "text": "I'm not sure if they're less risky. Maybe I'm being naive, but I feel they're less manipulated. I wouldn't say I have any hard resources other than dicking around on cmegroup,com. I pay a ton for my daily newsletters so I can't just start forwarding those. I tend to stay away from strategy books, but Mark Fisher's The Logical Trader is decent. Futures I feel are more of an experience than strategy trade. Especially the spreads. This is where systems come to die." }, { "docid": "333004", "title": "", "text": "First of all kudos to you for seeing the value in saving at a young age. There are several different things you can mean by this and I'm not sure which is accurate so I am going to address the first two that I thought of. If you are selling your investments because you need the money (emergency expenses, saved enough for a short term goal, whatever the reason) then this may not be the best solution for your savings. Investing in mutual funds, ETFs, stocks, 401k, IRA, etc are typically for longer term goals such as a goal that is 10+ years away (maybe buying a home, paying for college for your children, retirement, etc). If you are selling your investments because you believe that another investment is performing better and you want to get in on that one instead what I would suggest is leaving the money you have invested where it is and starting future investments in the new fund/ETF you are interested in. For example if you have $2000 invested in fund X and now you do some research and fund Q looks more appealing that is great, start investing in fund Q with your next deposit. Any research you do will be based on past results, there is nothing that guarantees that fund Q will continue doing better than the fund X you already have. Trying to time the market rarely ends well for the investor. I would encourage you to continue saving money a bit at a time just like you have been doing. Avoid selling your investments until it is time to sell them for whatever goal you intended them for. Set aside some cash to cover any unexpected expenses so you won't have to sell your investments to cover the costs, even at 18 unplanned things happen." }, { "docid": "303432", "title": "", "text": "\"As soon as you specify FDIC you immediately eliminate what most people would call investing. The word you use in the title \"\"Parking\"\" is really appropriate. You want to preserve the value. Therefore bank or credit union deposits into either a high yield account or a Certificate of Deposit are the way to go. Because you are not planning on a lot of transactions you should also look at some of the online only banks, of course only those with FDIC coverage. The money may need to be available over the next 2-5 years to cover college tuition If needing it for college tuition is a high probability you could consider putting some of the money in your state's 529 plan. Many states give you a tax deduction for contributions. You need to check how much is the maximum you can contribute in a year. There may be a maximum for your state. Also gift tax provisions have to be considered. You will also want to understand what is the amount you will need to cover tuition and other eligible expenses. There is a big difference between living at home and going to a state school, and going out of state. The good news is that if you have gains and you use the money for permissible expenses, the gains are tax free. Most states have a plan that becomes more conservative as the child gets closer to college, therefore the chance of losses will be low. The plan is trying to avoid having a large drop in value just a the kid hits their late teens, exactly what you are looking for.\"" }, { "docid": "593705", "title": "", "text": "This is a big and complex topic, but it's one I think people get wrong a lot. There's a lot of ways to treat a child's pocket money: Tell a kid that they're getting $10/week allowance. Help them keep it safe, but don't give them access to it: Put it in a drawer in your office, or a piggie bank on a high shelf. Encourage them to save up for a big purchase. Help them decide what to spend it on. When they find something they want, talk it over with them to make sure it's right for them. This seems like a good approach, because it encourages thrift, long term thinking, savings, and other important elements of real life. But it's a TERRIBLE idea. All it does is make the child think of it as if it wasn't really their money. The child gets no benefits from this, and will certainly not learn anything about savings. Give the kid $10/week. Full stop. This seems like a bad idea, because the kid is just going to waste it. Which they will. :) That's the point! There's NO way to learn except by experience. Try and shift control of discretionary spending to the child as and when appropriate. Give them some money for clothes, or a present for their birthday, and let them spend it. If they're going to be spending all day at some event, give them money for lunch. And if they misspend it - tough! No kid is going to starve in one day because the spend their lunch money at a video arcade, but they will learn a valuable lesson. :) You have to be careful here of two mistakes. First, only do this for truly discretionary spending. If your kid needs clothes for school, then you better make sure they actually buy it. Second, make sure that you don't end up filling in the gaps. What you're teaching here is opportunity costs, and that won't work if your child gets to have his cake and eat it too. (Or go to the movies and STILL get that new Xbox game.) Have them get a job. And, it should go without saying, give them control of the money. It's incredibly tempting to force them to save, be responsible, etc. But all this does is force them to look responsible...for as long as their under your thumb. Nothing will impart the lessons about why being responsible is important like being irresponsible. And it's sure as hell better to learn that lesson with some paper route money when your 14 than with your rent money when your 24..." }, { "docid": "220834", "title": "", "text": "Any time you are optimizing a portfolio, the right horizon to use for computing the statistics you will use for optimization (expected return, covariance, etc.) will be the same as your rebalance/trading frequency. If you expect your trading strategy to trade once a day, you should use daily data for optimization. Ditto for monthly or quarterly. If at all possible you should use statistics across the board that are computed at the same frequency as your trading. Regarding currency pricing, I see no reason you can't take the reported prices and convert them to whatever currency you want using that day's foriegn exchange rate. Foreign exchange rates are available for free at the Fed and elsewhere. Converting prices from one currency to another is not rocket science. Since you are contemplating putting actual money behind this, note that using data to compute statistics is less reliable for lower statistical moments. The mean (expected return) is the first moment, so using historical returns is extremely unreliable at predicting future returns. The variances and covariances are second moments, they are better. Skewness and kurtosis, yet better. The fact that the expected return can't reliably be estimated from past returns is the major downfall of the Markowitz method (resulting portfolios are often very crazy and will depend critically on the data period you use to set them up). There are approaches to fixing this, such as Black-Litterman's (1992) method, but they get complicated fast." }, { "docid": "21903", "title": "", "text": "The value of money is not only in the earning and saving of it but also in the discipline in spending it. Any approach to teaching children about money must ensure a balance between the two otherwise they will either become fearful of spending (and so never actually learn that money is but a tool and can be enjoyed) or irresponsible (spending with abandon with all that concomitant misery): Teaching kids about money is a wonderful opportunity to instil discipline and values. Any strategy must be structured to suite the child's age and abilities as well. Trying to teach compound interest to too young a child will just become needlessly confusing and worrying for them. Hope this gives a few ideas." }, { "docid": "414429", "title": "", "text": "\"Uniform Transfer to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA) accounts in the United States are accounts that belong to your child, but you can deposit money into. When the child attains his/her majority, the money becomes theirs to spend however they wish. Prior to attaining their majority, a custodian must sign off on withdrawals. Now, they are not foolproof; legally, you can withdraw money if it is spent on the child's behalf, so that can be gamed. What you can do to protect against that is to make another person the custodian (or, perhaps make them joint custodians with yourself, requiring both signatures for withdrawals). UTMA/UGMA accounts do not have to be bank savings accounts; for example, both of my children have accounts at Vanguard which are effectively their college savings accounts. They're invested in various ETFs and similar kinds of investments; you're welcome to choose from a wide variety of options depending on risk tolerance. Typically these accounts have relatively small fees, particularly if you have a reasonable minimum balance (I think USD$10k is a common minimum for avoiding larger fees). If you are looking for something even more secure than a UGMA or UTMA account, you can set up a trust. These have several major differences over the UGMA/UTMA accounts: Some of course consider the second point an advantage, some a disadvantage - we (and Grandma) prefer to let our children make their own choices re: college, while others may not prefer that. Also worth noting as a difference - and concern to think about - in these two. A UGMA or UTMA account that generates income may have taxable events - interest or dividend income. If that's over a relatively low threshhold, about $1050 this year, those earnings will be taxed (on the child's own tax return). If it's over $2100 (this year), those earnings will be taxed at the parents' tax rate (\"\"kiddie tax\"\"). Trusts are slightly different; trusts themselves are taxed, and have their own tax returns. If you do set one of those up, the lawyer who helps you do so should inform you of the tax implications and either hook you up with an accountant or point you to resources to handle the taxes yourself.\"" } ]

[ { "docid": "231688", "title": "", "text": "With bad credit but good income, I would simply save a large down payment. You're much more likely to get a mortgage with 25% down and a history of recently saving that 25% to show." } ]

[ { "docid": "500261", "title": "", "text": "FICO is a financial services company, whose customers are financial services companies. Their products are for the benefit of their customers, not consumers. The purpose of the credit score system is two-fold. First, the credit score is intended to make it easy for lending institutions (FICO's customers) to assess the risk of loans that they make. This is probably based on science, although the FICO studies and even the FICO score formula are proprietary secrets. The second purpose of the credit score is to incentivize consumers into borrowing money. And they have done a great job of that. If you think you might need a loan in the future, perhaps a mortgage or a car loan, you need a credit score. And the only way to get a credit score is to start borrowing money now that you don't need. Yes, someone with a good income and a long history of paying utility bills on time would be a great credit risk for a mortgage. However, that person will have no credit score, and therefore be declared by FICO as a bad credit risk. On the other hand, someone with a low income, who struggles, but succeeds, to make the minimum payment on their credit card, would have a better credit score. The advice offered to the first person is start borrowing money now, even though you don't need it. I'm not anti-credit card. I use a credit card responsibly, paying it off in full every month. I use it for the convenience. I don't worry at all about my credit score, but I've been told it is great. However, there are some people that cannot use a credit card responsibly. The temptation is too great. Perhaps they are like problem gamblers, I don't know. But FICO and the financial services industry have created a system that makes a credit card a necessity in many ways. These are the people that get hurt in the current system." }, { "docid": "205772", "title": "", "text": "The main problem is that everyone graduates from high-school, almost everyone gets accepted to college and almost nobody who put minimum efforts fails college classes. I know that! I was an adjunct professor and was told I can't fail my students except in extreme cases. In the past, to graduate from high school was a hard accomplishment. Getting accepted to college was a hard accomplishment. Surviving the first year in college was an accomplishment and getting a degree was an accomplishment. Those accomplishments in the past gave you excellent benefits! Benefits of assured respected jobs, income, security, and being the exception. An example: in the past, to be a teller in the bank, you did not have to finish high-school, just be good in basic math. Today: a teller in the bank, one of the lowest paying jobs you can find, requires a Bachelor degree. Does the bachelor degree worth it? **Basically, higher education became an industry, that accept as many people as possible, charge them as much as it can, give degrees to undeserving people, and those degrees are almost worthless. You can't do much with a Bachelor degree!** The solution is to make the standards for high school and college much higher. Everything will fall into place then. Fewer students who are actually interested in studies and are qualified for their studies will mean better teaching, lower costs, and much better benefits for those deserve those benefits. Chances of this happening? Big big zero. Actually, the chances of even lower standards for colleges and schools are 100%. So, for my son, I explained to him to not invest much in an excellent and expensive college for [worthless] degrees. Instead, while he studies, work in the area he is interested in and learn from the masters he works with. My son is 13, but since being 11, he works (yes, he makes money) with some computer system he's interested in. Personally, I worked since I was 13, study and worked all the time, got my Bachelor and Masters, and I am doing extremely well. I get paid for what I know, which Zero of it came from my studies and money I spent in those studies." }, { "docid": "87150", "title": "", "text": "To point #1: We are moving but I don't know If I can afford the rent as the family grows I would start by looking at your debt-to-income ratio. In the US, most banks look at this for mortgage purposes, but it also gives you a general idea of what monthly mortgage payments will be comfortable given your particular financial situation. Think of it this way, if a bank is unwilling to lend you money because of a high debt-to-income level, this indicates that you have very little leeway with regard to your budget. So a lower number indicates that you will have more flexibility and comfort with meeting your rent/mortgage obligations when unforeseen bills pop up. The article below indicates having < 43% DTI is ideal (in the US). Here's a link to a debt to income calculator and some extra info (I suggest finding one aimed at the UK market): WellsFargo debt to income calculator Why is the 43% debt to income ratio important? Point #2: How can a person measure how much to spend on food, car, bills or rent from his salary? Is there a formula to keep in check? Other answers have addressed how to make a budget, so I will not repeat that. However, here's another angle with regards to spending/saving. This article recommends 50/30/20: According to the popular 50/30/20 rule, you should reserve 50 percent of your budget for essentials like rent and food, 30 percent for discretionary spending, and at least 20 percent for savings. Read more at: https://www.moneyunder30.com/how-much-should-you-save-every-month-2 In the real world, these goals may not be realistic, and different people have different ideas about how aggressive to be with regards to savings. However, you can get a general idea and adapt for your particular needs. Point 3: I find myself looking at my account every single day and get tensed and sad because almost whenever the money (pay) comes in I freak out that after everything there is nothing for us to enjoy or save." }, { "docid": "407401", "title": "", "text": "First step, pull a copy of your credit report, and score. You should monitor that score and do what you can to bring it up. Your chances are far better if (a) you first save a sizable downpayment, and (b) go with a local bank that doesn't just write the mortgage and sell it. Better still, go to that local bank and inquire about REO (real estate owned by the bank) property. These are properties they foreclosed on and depending how they are carrying them, you might find decent opportunities. As a matter of logic, a local bank that owns these specific properties (as compared to debt pools where big banks have piles of paper owned fractionally) are more willing to get a new owner in and paying a new loan. Congrats on the new, higher, income. I'd suggest you first build the emergency fund before the downpayment fund. Let us know how it goes." }, { "docid": "440522", "title": "", "text": "Understandably, it appears as if one must construct the flows oneself because of the work involved to include every loan variation. First, it would be best to distinguish between cash and accrued, otherwise known as the economic, costs. The cash cost is, as you've identified, the payment. This is a reality for cash management, and it's wise that you wish to track it. However, by accruals, the only economic cost involved in the payment is the interest. The reason is because the rest of the payment flows from one form of asset to another, so if out of a $1,000 payment, $100 is principal repayment, you have merely traded $100 of cash for $100 of house. The cash costs will be accounted for on the cash flow statement while the accrued or economic costs will be accounted on the income statement. It appears as if you've accounted for this properly. However, for the resolution that you desire, the accounts must first flow through the income statement followed next instead of directly from assets to liabilities. This is where you can get a sense of the true costs of the home. To get better accrual resolution, credit cash and debit mortgage interest expense & principal repayment. Book the mortgage interest expense on the income statement and then cancel the principal repayment account with the loan account. The principal repayment should not be treated as an expense; however, the cash payment that pays down the mortgage balance should be booked so that it will appear on the cash flow statement. Because you weren't doing this before, and you were debiting the entire payment off of the loan, you should probably notice your booked loan account diverging from the actual. This proper booking will resolve that. When you are comfortable with booking the payments, you can book unrealized gains and losses by marking the house to market in this statement to get a better understanding of your financial position. The cash flow statement with proper bookings should show how the cash has flowed, so if it is according to standards, household operations should show a positive flow from labor/investments less the amount of interest expense while financing will show a negative flow from principal repayment. Investing due to the home should show no change due to mortgage payments because the house has already been acquired, thus there was a large outflow when cash was paid to acquire the home. The program should give some way to classify accounts so that they are either operational, investing, or financing. All income & expenses are operational. All investments such as equities, credit assets, and the home are investing. All liabilities are financing. To book the installment payment $X which consists of $Y in interest and $Z in principal: To resolve the reduction in principal: As long as the accounts are properly classified, GnuCash probably does the rest for you, but if not, to resolve the expense: Finally, net income is resolved: My guess is that GnuCash derives the cash flow statement indirectly, but you can do the entry by simply: In this case, it happily resembles the first accrued entry, but with cash, that's all that is necessary by the direct method." }, { "docid": "60981", "title": "", "text": "So if I understand your plan right, this will be your situation after the house is bought: Total Debt: 645,000 Here's what I would do: Wait until your house sells before buying a new one. That way you can take the equity from that sale and apply it towards the down payment rather than taking a loan on your retirement account. If something happens and your house doesn't sell for as mush as you think it will, you'll lose out on the gains from the amount you borrow, which will more than offset the interest you are paying yourself. AT WORST, pay off the 401(k) loan the instant your sale closes. Take as much of the remaining equity as you can and start paying down student loans. There are several reasons why they are a higher priority than a mortgage - some are mathematical, some are not. Should I look to pay off student loans sooner (even if I refi at a lower rate of 3.5% or so), or the mortgage earlier ... My thoughts are that the student loans follow me for life, but I can always sell and buy another home So you want this baggage for the rest of your life? How liberating will it be when you get that off your back? How much investing are you missing out on because of student loan payments? What happens if you get lose your license? What if you become disabled? Student loans are not bankruptable, but you can always sell the asset behind a mortgage or car loan. They are worse than credit card debt in that sense. You have no tangible asset behind it and no option for forgiveness (unless you decide to practice in a high-need area, but I don't get the sense that that's your path). The difference in interest is generally only a few payment' worth over 15 years. Is the interest amortized the same as a 15 year if I pay a 30 year mortgage in 15 years? Yes, however the temptation to just pay it off over 30 years is still there. How often will you decide that a bigger car payment, or a vacation, or something else is more important? With a 15-year note you lock in a plan and stick to it. Some other options:" }, { "docid": "138679", "title": "", "text": "While I agree with the existing bulk of comments and answers that you can't tell the lender the $7k is a gift, I do think you might have luck finding a mortgage broker who can help you get a loan as a group. (You might consider as an LLC or other form of corporation if no one will take you otherwise.) That is, each of you will be an owner of the house and appear on the mortgage. IIRC, as long as the downpayment only comes from the collective group, and the income-to-debt ratio of the group as a whole is acceptable, and the strongest credit rating of the group is good, you should be able to find a loan. (You may need a formal ownership agreement to get this accepted by the lender.) That said, I don't know if your income will trump your brother's situation (presumably high debt ratio or lower than 100% multiplier on his income dues to its source), but it will certainly help. As to how to structure the deal for fairness, I think whatever the two of you agree to and put down in writing is fine. If you each think you're helping the other, than a 50/50 split on profits at the sale of the property seems reasonable to me. I'd recommend that you actually include in your write up a defined maximum period for ownership (e.g. 5yr, or 10yr, etc,) and explain how things will be resolved if one side doesn't want to sell at that point but the other side does. Just remember that whatever percentages you agree to as ownership won't effect the lender's view of payment requirements. The lender will consider each member of the group fully and independently responsible for the loan. That is, if something happens to your brother, or he just flakes out on you, you will be on the hook for 100% of the loan. And vice-versa. Your write up ought to document what happens if one of you flakes out on paying agreed upon amounts, but still expects there ownership share at the time of sale. That said, if you're trying to be mathematically fair about apportioning ownership, you could do something like the below to try and factor in the various issues into the money flow: The above has the benefit that you can start with a different ownership split (34/66, 25/75, etc.) if one of you wants to own more of the property." }, { "docid": "122807", "title": "", "text": "\"I actually had a similar situation when I tried to buy my house. I paid off all my loans and was proud of my \"\"debt free\"\" status. I had no car note, no student loans... absolutely no debt, but I did have a bank-issued credit card. (USAA, not Chase, but I assume the same may apply). When I tried to get a home loan they told me I had \"\"absolutely no information on my credit report.\"\" AKA I had no credit. The mortgage lender had no idea what was going on, nor did I or anybody else. It took a lot of research before I realized that the credit bureaus use a formula for the credit rating that involves a lot of things, but if you haven't had a current line of credit reported to the agency in over a year (maybe it was longer, I didn't have anything for 3 years) you aren't going to have a credit score. Because I was \"\"debt free\"\" I was also credit report free and eventually the credit bureaus had nothing to go on, and my score disappeared. The bank-issued credit card was on my credit report, but they didn't report monthly balances so the bureaus couldn't use it to determine if I was paying off the card or if I even had a balance on it. It was essentially not doing my credit any favors, despite what I had thought. In short, based on the fact that you have no debt in her name, and you have taken on all debt in your own name, its very plausible that she has no credit rating anymore. It won't take long to get it back. Once you have ANYTHING on your credit that's actually reported the formula can kick back in and look at credit history as well as current credit and she'll be fine.\"" }, { "docid": "462612", "title": "", "text": "You don't say what kinds of mutual funds, or what bonds. You don't say how old you are. You seem to have enough cushion to strike out on your own comfortably. This is good. Compared with Vanguard's management fees, the fees you're paying are pretty high. The bottom line of what to invest in rests with you. If you outsource it, it's still your money. The managers get paid whether you make money or not. You have lots of other options: real estate from a distressed seller, commodities, currencies, websites, or other things where you have a knowledge advantage. For the time being, though, if you're concerned about your main income stream, I wouldn't get terribly risky with your money. Cash is just peachy in that case." }, { "docid": "30343", "title": "", "text": "\"You've asked a number of questions. I can answer a few. I've quoted your question before each answer. What are the ins and outs of a foreigner like myself buying rental property in Canada? This is a pretty broad question which can address location, finances, basic suggestions etc. Here's some things to consider: Provincial considerations: Some ins and outs will depend on what province you are considering and what area in that Province. If you plan on owning in Montreal, for example, that's in the province of Quebec and that means you (or someone) will need to be able to operate in the French language. There are other things that might be different from province to province. See stat info below. Canadian vs. US Dollar: Now might be a great time to buy property in Canada since the Canada dollar is weak right now. To give you an idea, at a non-cash rate of 1.2846, a little over $76,000 US will get you over $100k Canadian. That's using the currency converter at rbcroyalbank.com. Taxes for non-resident rental property owners: According to the T4144 Income Tax Guide for Electing Under Section 216 – 2015: \"\"When you receive rental income from real or immovable property in Canada, the payer, such as the tenant or a property manager, has to withhold non-resident tax at the rate of 25% on the gross rental income paid or credited to you. The payer has to pay us the tax on or before the 15th day of the month following the month the rental income is paid or credited to you.\"\" If you prefer to send a separate Canadian tax return, you can choose to elect under section 216 of the Income Tax Act. A benefit of this way is that \"\"electing under section 216 allows you to pay tax on your net Canadian-source rental income instead of on the gross amount. If the non-resident tax withheld by the payer is more than the amount of tax payable calculated on your section 216 return, [they] will refund the excess to you.\"\" You can find this guide at Canada Revenue's site: http://www.cra-arc.gc.ca/E/pub/tg/t4144/README.html Stats: A good place for stats is the Canada Mortgage and Housing Corporation (CMHC). So, if you are interesting in vacancy rates for example, you can see a table that will show you that the vacancy rate in Ontario is 2.3% and in British Columbia it's 1.5%. However, in New Brunswick it's 8%. The rate for metropolitan areas across Canada is 2.8%. If you want to see or download this table showing the vacancy rates by province and also by metropolitan areas, go to the Canada Mortgage and Housing Corporation site http://www.cmhc.ca/housingmarketinformation/. You can get all sorts of housing information, reports and market information there. I've done well with Condos/Town-homes and would be interested in the same thing over there. Is it pretty much all the same? See the stat site mentioned above to get market info about condos, etc. What are the down payment requirements? For non-owner occupied properties, the down payment is at least 20%. Update in response to comments about being double taxed: Regarding being taxed on income received from the property, if you claim the foreign tax credit you will not be double taxed. According to the IRS, \"\"The foreign tax credit intends to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the United States and the foreign country from which the income is derived.\"\" (from IRS Topic 856 - Foreign Tax Credit) About property taxes: From my understanding, these would not be claimed for the foreign tax credit but can be deducted as business expenses. There are various exceptions and stipulations based on your circumstance, so you need to read Publication 856 - Foreign Tax Credit for Individuals. Here's an excerpt: \"\"In most cases, only foreign income taxes qualify for the foreign tax credit. Other taxes, such as foreign real and personal property taxes, do not qualify. But you may be able to deduct these other taxes even if you claim the foreign tax credit for foreign income taxes. In most cases, you can deduct these other taxes only if they are expenses incurred in a trade or business or in the production of in­come. However, you can deduct foreign real property taxes that are not trade or business ex­penses as an itemized deduction on Sched­ule A (Form 1040).\"\" Disclaimers: Sources: IRS Topic 514 Foreign Tax Credit and Publication 856 Foreign Tax Credit for Individuals\"" }, { "docid": "239611", "title": "", "text": "\"The most important thing in my view is flexibility, to avoid running into problems. One useful thing in the UK would be an arranged overdraft. You go to your bank, and they'll agree that you can overdraw your account by a certain number of pounds, depending on your income etc. It will cost you a very high interest rate, but only for each day where you are overdrawn. So paying a bill two days before your salary comes in isn't too bad. Obviously avoid using the overdraft if you can, having an overdraft while not using it is free. It's meant for an emergency; being regularly overdrawn is expensive. But once it is arranged with your bank, an arranged overdraft is much much cheaper than bouncing cheques etc. and possibly high fees for overdrawing your account. And it takes the pressure of you. Now things to need before you get a loan (again, UK): The real interest rate that you are paying is called APR. That's the number that counts, and that cannot be manipulated. No \"\"payday loans\"\" to avoid getting yourself into deep, deep trouble. No loan sharks, obviously. If you buy things with \"\"interest free credit\"\", that's (a) included in the price, so you pay more, and (b) if you miss paying by one day they'll hit you with huge interest payments, and some will try this intentionally. Interest rate depends on loan amount. I once had to borrow 20% more than I needed because it reduced the interest rate by half... The 20% went straight into a savings account. Credit cards and overdrafts are much more expensive than loans. Mortgage is again cheaper than a loan usually. Make sure that you only use money from sources that charge the least amount. Make sure you pay back regularly so cheap sources stay available to you. Just do yourself a favour and if at all possible, spend less instead of getting a loan.\"" }, { "docid": "364802", "title": "", "text": "\"In your shoes, I would pay off the mortgage with the after tax investments and be done. You have different goals than I do in that you want to keep the debt. So, I would start calling mortgage brokers and asking for someone who does \"\"manual underwriting\"\". Manual underwriting essentially means they use common sense and look at your situation for what it is instead of saying \"\"income=10K means disapprove mortgage\"\". It may be that your situation is different enough from mortgage guidelines that you can't now get a conforming mortgage (i.e. one that is readily re-sellable to another mortgage holder). If that is the case, you can look for a small bank or credit union that would be interested in adding your loan to their portfolio and not reselling it.\"" }, { "docid": "65461", "title": "", "text": "First, let me fill in the gaps on your situation, based on the numbers you've given so far. I estimate that your student loan balance (principal) is $21,600. With the variable rate loan option that you've presented, the maximum interest rate you could be charged would be 11.5%, which would bring your monthly payment up to that $382 number you gave in the comments. Your thoughts are correct about the advantage to paying this loan off sooner. If you are planning on paying off this loan sooner, the interest rate on the variable rate loan has less opportunity to climb. One thing to be cautious of with the comparison, though: The $1200 difference between the two options is only valid if your rate does not increase. If the rate does increase, of course, the difference would be less, or it could even go the other way. So keep in mind that the $1200 savings is only a theoretical maximum; you won't actually see that much savings with the variable rate option. Before making a decision, you need to find out more about the terms of this variable rate loan: How often can your rate go up? What is the loan rate based on? I'm not as familiar with student loan variable rate loans, but there are other variable rate loans I am familiar with: With a typical adjustable rate home mortgage, the rate is locked for a certain number of years (perhaps 5 years). After that, the bank might be allowed to raise the rate once every period of months (perhaps once every year). There will be a limit to how much the rate can rise on each increase (perhaps 1.0%), and there will be a maximum rate that could be charged over the life of the loan (perhaps 12%). The interest rate on your mortgage can adjust up, inside of those parameters. (The actual formula used to adjust will be found in the fine print of your mortgage contract.) However, the bank knows that if they let your rate get too high above the current market rates, you will refinance to a different bank. So the mortgage is typically structured so that it will raise your rate somewhat, but it won't usually get too far above the market rate. If you knew ahead of time that you would have the house paid off in 5 years, or that you would be selling the house before the 5 years is over, you could confidently take the adjustable rate mortgage. Credit cards, on the other hand, also typically have variable rates. These rates can change every month, but they are usually calculated on some formula determined ahead of time. For example, on my credit card, the interest rate is the published Prime Rate plus 13.65%. On my last statement, it said the rate was 17.15%. (Of course, because I pay my balance in full each month, I don't pay any interest. The rate could go up to 50%, for all I care.) As I said, I don't know what determines the rate on your variable rate student loan option, and I don't know what the limits are. If it climbs up to 11.5%, that is obviously ridiculously high. I recommend that you try to pay off this student loan as soon as you possibly can; however, if you are not planning on paying off this student loan early, you need to try to determine how likely the rate is to climb if you want to pick the variable rate option." }, { "docid": "423628", "title": "", "text": "A: Rollover the cash from the previous account into the new one a low-cost IRA like Vanguard. This, and only this. Because your mortgage is, less than 4%, while your retirement plan will earn 7% over the long term. I have no 'retirement' plans because Because you're 28. and essentially will be happy working until I die Unless circumstances change. but as far as I see it this is not such a bad deal because it is like paying taxes on income. (Principal says I will lose up to 30%) You're ignoring the 10% early withdrawal penalty. I am wise with my money for the most part Then don't piss away $3,000 just for a temporary feel good. I earn a high salary in a tech job. As a result of being under 20%, I am paying mortgage insurance of about $300/mo. So -- after building up an Emergency Fund -- throw as much as possible of your high salary against your mortgage to get rid of the PMI." }, { "docid": "122908", "title": "", "text": "\"There's a significant difference between \"\"discount\"\" and \"\"surcharge\"\". For starters - legal difference. If you have a list price of $X - that's the price you're committed to sell regardless of the payment method. So it doesn't matter if I pay with cash or credit - I'll pay $X. However, it costs you more when I pay with credit - so you want to pass that cost on me. You charge me surcharge - an addition to the price. In some States in the US and in some other countries - that is against the law. You cannot add on top of the listed price any amount regardless of the payment method. However, you can say that the list price is $X, which includes the assumed credit card surcharge of $Y. And then you give discount of $Y to anyone not paying with credit card. The list price is still $X, regardless of the payment method. You don't have to give the discount, the discount is your cost of doing business. But that would be legal in some places (not all!) that forbid credit card surcharge. So the main difference from legal perspective is that you're not allowed to add to the list price, but you're allowed to discount from it. Regarding taxes - exemption/deduction is not a penalty for negative. Exemption/deduction is an implementation of a social policy. For example, it is for the public benefit for everyone to own a house. So the Congress comes up with a deduction of mortgage interest. However, you're not penalized if you don't own a house by paying higher taxes. Your tax rate doesn't change. You just don't get to deduct something that you might be able to deduct had you owned a house with a mortgage. This is, again - a discount of a list price, not a surcharge. You're not penalized if you don't have a house or don't have a mortgage, but if you do - you get a break. The author you're quoting claims that bottom line would be the same as if you considered the absence of a deduction as a penalty. But that's not true, because even if you do have a mortgage you may not be able to deduct it because your income is too high, the mortgage is for too much, or your mortgage is not on the primary residence. So mere existence of the mortgage doesn't directly correlate to the existence of the deduction. Similarly with credit card surcharges - you may get a cash discount, but you may get the similar amount of money back even if you use a credit card. Not as a cash discount but rather as rewards, cash-backs or points. However, if there's no cash discount, you won't be getting these if you're paying cash. So again - you're not penalized for having a credit card by not getting a discount, because you may still get it in a different way - and if you don't, you still may end up not getting it. So the quote is a rather simplistic and negative view and more of an opinion than stating a fact.\"" }, { "docid": "379023", "title": "", "text": "EDIT: new ideas based on the full story. I wouldn't worry about the price history. While it is certainly true that some buyers might try to leverage that information against you, the bottom line is the price is the price. Both the buyer and the seller have to agree. If the initial listing was too high, then lower the price. If that isn't low enough, then readjust down. I see no harm in moving the price down over time repeatedly. In fact, I thin that is a good tactic to getting the most for the house. If you happen to have the luxury of time, then keep lowering that price until it sells. Don't fret how that behavior appears. You can lower the price as often as you like until it sells. I am not a real estate agent, and I am a terrible negotiator, but I would lower the price every quarter until it sells. You can't go down to fast (a buyer might wait you out) and you can't wait to long as you stated. Also, if you house is priced inline with the neighborhood, you can at least get offers and negotiate. Buy asking for such a premium (25%) folks might not even make an offer. You simply need to decide what is more important, the selling price or the time frame in getting it sold. If you house doesn't sell because the market doesn't support your price, then consider keeping it as a rental. You can do it yourself, or if you are not interested in that (large) amount of work, then hire a rental management company to do it for a fee. Renting a home is hard work and requires attention to detail, a good amount of your time and much labor. If you just need to wait a couple of years before selling, renting it can be a good option to cover your costs while you wait for the market to reach you. You should get advice on how to handle the money, how to rent it, how to deal with renters, and the the laws are in your jurisdiction. Rent it out to a trusted friend or family member for a steal of a deal. They save money, and you get the luxury of time waiting for the sale. With a real estate lawyer you hire, get a contract for a lease option or owner finance deal on the house. Sometimes you can expand the market of people looking to buy your house. If you have a willing purchaser will bad credit, you can be doing them a favor and solving your own issue. It costs money and you will make less on the sale, but it could be better than nothing. Take heed, there is a reason some people cannot get a traditional loan on their own. Before you extend your good name or credit think about it. It is another hassle for sure. This won't help if you have to pay off a mortgage, but you could donate it. This is another tricky deal that you really need to speak with a lawyer who specialize in charitable giving. There are tax benefits, but I would make any kind of a deal where tax deductions are the only benefit. This is common enough these days. If you are unable to pay for the mortgage, it benefits you and the bank to get into a short sale arrangement. They bank gets probably more money than if they have to foreclose (and they save money on legal fees) and you can get rid of the obligation. You will do a deed in lieu or the short sale depending on how the market it and what the house can be sold for. You and the bank will have to work it out. This will ruin for a credit for a while, and you will not likely qualify to get a new mortgage for at least a few years. You can stop paying your mortgage, tell the bank and they will foreclose. This is going to ruin your credit for a long time as well as disqualify you from mortgages in the near future. Don't do this. If you are planning a foreclosure, take the time to contact your bank and arrange a short sale or a deed in lieu. There isn't really any excuse to go into foreclosure if you are having problems. Talk to the bank and work out a deal." }, { "docid": "220032", "title": "", "text": "So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence." }, { "docid": "591163", "title": "", "text": "Lenders pay attention to where your down payment money comes from. If they see a large transfer of money into your bank account within about a year before your purchase, this WILL cause an issue for you. Down payments are not just there to make the principal smaller; they are primarily used as an underwriting data-point to assess your quality as a borrower. If you take the money as loan, it will count against your credit worthiness. If you take the money as a gift, it will raise some other red flags. All of this is done for a reason: if you can't get a down payment, you are a higher credit risk (poor discipline, lack of consistent income), even if you can (currently) pay the monthly cost of a mortgage. (PS - The cost of home ownership is much higher than the monthly mortgage payment.) Will all this mean you WON'T get a loan? Of course not. You can almost always get SOME loan. But it will likely be at a higher rate than you otherwise would qualify for if you just waited a little bit and saved money for a down payment. (Another option: cheaper house.) EDIT: The below comments provide examples where gifts were/are NOT a problem. My experience from buying a house just a few years ago (and my several friends who bought house in the same period, some with family gifts and some without) is that it IS an issue. Your best bet is to TALK, IN PERSON with an actual mortgage broker in your area who can go through the options with you, and the downsides to various approaches." }, { "docid": "93872", "title": "", "text": "Contrary to what many people think, credit card companies pass nearly all fraud costs via purchased goods onto the merchant who sells them. As a result, they stand a very high chance of getting the money from a fraudulent purchase of a specific purchased item back, as they just chargeback the merchant who has to stomach the cost. This is not the case for cash transactions obviously, where as soon as the money leaves the ATM fraudulently it is as good as gone. As a result, the risk profile of the two types of transaction is wildly different, and the credit limits of each reflect this." } ]

[ { "docid": "180192", "title": "", "text": "I also am paying roughly twice as much in rent as a mortgage payment would be on the type of house I have been looking at, so I'd really like to purchase a house if possible. Sounds like I need to rain on your parade a bit: there's a lot more to owning a house than the mortgage. Property tax, insurance, PMI, and maintenance are things that throw this off. You'll also be paying more interest than normal given your recent credit history. It's still possible that buying is better than renting, but one really should run the detailed math on this. For example, looking at houses around where I live, insurance, property tax and special assessments over the course of a year roughly equal the mortgage payments annually. You probably won't be able to get a loan just yet. If you've just started your new job it will take a while to build a documentable income history sufficient for lenders. But take heart! As you take the next year to save up a down payment / build up an emergency fund you'll discover that credit score improves with time. However, it's crucial that you don't do anything to mess with the score. Pay all your bills on time. Don't take out a car loan. Don't close your old revolving accounts. But most of all, don't worry. Rent hurts (I rent too) but in many parts of the US owning hurts more, as your property values fall. A house down the street from my dear old mother has been on the market for several months at a price 33 percent lower than her most recent appraisals. I'm comfortable waiting until markets stabilize / start rising before jumping on real estate." } ]

[ { "docid": "403318", "title": "", "text": "&gt; I feel the same way about your arguments, but I still try to respond to the content of your arguments rather than my assumptions about them. You're right, I went ad hominem. Apologies. &gt; Then I guess we have fundamentally different ideas about what is freedom and what is not. You seem to think that forcing someone to negotiate with a party, against their will, is not a violation of any of their rights. We have the same goal, and that's to have a society that results the maximum quality of life for the most amount of people. However, being a pragmatist, this is where I usually fail to find common ground with the libertarian view point. What should be a right and what should be restricted by law is totally subjective. So since any law can be seen as a violation of someone's rights, the argument that a law is wrong simply because it does so is invalid. To me a demonstration that the benefits outweigh the costs is a more powerful argument, though it should probably be shown that there is a significant margin between the two, otherwise I'd have to air on the side of individual rights. We don't have the right to advertise sugar pills as a cure for cancer, we don't have the right to drive our cars after 10 beers, we don't the right to sit on a park bench and start masturbating...we don't have these rights because the cost to our society is greater than the benefits (maybe these aren't the greatest examples but you get the idea). So as for making an employer send a couple representatives to a bargaining table being a violation of their rights, yes it is, but this is such a small cost compared to the benefit of diminishing the chance of work stoppages that have a rippling effect on the economy and the resulting unrest created when people feel like they have no hope [(read the introduction to the NLRA)](https://www.nlrb.gov/national-labor-relations-act) I'd also argue that the NLRA protects more rights than it takes away - mainly the rights of free association and speech. I could raise the issues of unions contributing to a more democratic and socially just society, but I'm guessing that'd fall on deaf ears. In general though, I think you give the idea of a union too much credit. Do you know how hard it is to get colleagues to start seeing one another as having shared interests? It ain't easy, that's for sure. &gt; The solution is to let the process of economic development run its course until child labor is not necessary. You may very well be right about this, but a child working a mundane job instead of building their mind, diminishes the life of one not strong enough yet to determine their own course, is just so terribly wrong. So I just have a hard time accepting this, especially living in a world where there is such with such a huge wealth disparity. &gt; A union is not a self-interested party. A union represents self-interested parties, who are not directly affected by the destruction of their industry 30 years into the future, since they would have retired by then. Unions are generally made up of the socially conscious type - no one gets into organizing for the money. I can't say for certain if this challenges your point, however I don't exactly see the difference between the unionist who is going to retire and the CEO is going to retire and the shareholders who can pull out when put their money elsewhere when it suits them. &gt; Many of the laws and union-backed agreements that ended up destroying many of America's industries took decades to have their full effect. It wasn't a case of a law being passed, and the next year, the industry going bankrupt. Examples needed where the industries were actually bankrupted, not just moved overseas to increase profits because workers will settle for less. &gt; Why should employers pay out the most they can afford, and why should laws be passed to force employers to do so? The only reason people invest is to profit. If all profits had to be paid to employees, there would be no incentive to invest, and therefore no increase in capital/productivity. I never said that employers should be paying out all they can afford, and you setting up this straw man only reiterates my point that these discussions with libertarian types all too often come down to this zero-sum game, where an increase in working conditions will trigger bankruptcy, which I think stems from a belief that supply-side economics is keeping standards the highest they can possibly be. If a company has an operating income of $1 bil, what is giving a 5% pay raise to workers going to do, except make that operating income slightly less? I suppose it'd be better if that money were invested back into the company...but wait, aren't people a resource to invest in? And one that offers a high rate of return? Take the the lock-out of ConEd workers in NYC for example: ConEd's profits were over 2 billion when their previous contract was signed, and a few years later when their contract expired the profits were still that high. What did ConEd do? They came to the table with an offer that slashed their benefits tremendously, and locked-out all the workers when the union rejected it. How can the case be made that ConEd couldn't afford to give workers what they already had? Has their value all of a sudden dropped? I don't think so. This is just greed, and doesn't contribute to a healthy society." }, { "docid": "298776", "title": "", "text": "Similar to what Adam F says above, except instead of just transfering the amount you spend on the credit card into the high interest account, why not keep the majority of your funds (apart from a small amount, say a couple of hundred for emergencies) in the high interest account until the credit card needs to be paid off. Even better, if you have a mortgage with an 100% offset account keep all your funds in this, and pay off your credit card in full from it on or before the due date. Being a 100% offset to your mortgage interest rate you will be saving at a higher rate than a high interest rate savings account, and you will be able to do all your normal banking from it unlike a high interest account which you usually have to link to an additional account to deposit and withdrawl money to and from. If you are to use a credit card keep these simple rules in mind: Hope this has helped, Regards Victor" }, { "docid": "125722", "title": "", "text": "A huge part of the problem is that low income people have been very heavily marketed to by the online and for profit colleges because they were eligible for financial aid (mainly loans) and were seen ONLY as a straw through which to suck money out of the government by these “schools”. Because they were only interested in the money, there was no attempt to qualify students in many of these schools or provide any support to them. When students dropped out their “counselors” would keep signing them up for classes that they didn’t know about or attend. Because a lot of the schools are bullshit schools with either no reputation or a poor one, even those who finished were largely not able to get the high paying jobs they were promised in order to lure them in. This goes for low income students, especially ones whose families have no previous experience with post high school education, across the board, and all of this group is far more likely to default (because they were basically ripped off, got nothing useful from these bogus schools and were often outright defrauded, and do not have the income they were told they would have when agreeing to the loans) but because there is a higher percentage of minorities among this group they are more likely to be defaulters. But our unforgiving student loan system doesn’t differentiate between loans for real eduacation and loans for these rip off “schools” so you are still 100% on the hook regardless. Even if they signed you up for several more semesters’ worth of classes after you “withdrew”. It’s a lot like the mortgage collapse—desperate to keep making money, the lenders targeted increasingly less qualified people who were also naive about the entire system and sold them terrible loans (sometimes talking them out of more reasonable options) and then when the whole thing starts to fail, it’s all “because the government made the banks give mortgages to poor black people”. The institutions suck up the money and leave bewildered poor people holding the bag, now even poorer with nothing to show for the debt they will literally be digging out of forever. The Obama administration FINALLY took some steps to control the predatory for-profit institutions and try to sort out who had been ripped off vs people who had genuinely received any useful education, but of course the new Sec of Education is doing her best to roll all that back. And most of the victims aren’t teens either. They are adults with kids who were trying to do something to better themselves and their lives and got screwed over. Some of these middle aged people will literally be having their Social Security garnished to pay for these loans. It’s disgusting, and even more so to say it’s all affirmative action." }, { "docid": "526577", "title": "", "text": "If you're tending toward stocks because you have a long time horizon, you're looking at them for the right reasons. I'm twice your age. I have a mortgage -- two of them, actually! -- a wife, and a six-year-old. I can't really justify being terribly risky with my money because I have others depending on my income. You're nineteen. Unless you've gotten a really early start on life and already have a family, you can take on a lot more risk than stocks. You have time to try things (income things) that I wish I would have tried at that age, like starting a business. The only thing that would push me to do that now would be losing my job, and that wouldn't be the rush I'd like. That's not to say that you can't make a lot of money with stocks, but if that's what you're looking to do, really dig in and research them. You have the time. Whether the tide makes all boats rise or sink is a matter of timing the economy, but some of the companies will ride the waves. It takes time to find those more often than not. Which blue chips are likely to ride the waves? I have no clue. But I'm not invested in them at the moment, so it doesn't matter. :)" }, { "docid": "360139", "title": "", "text": "\"The mortgage broker makes money from the mortgage originator, and from closing fees. All the broker does is the grunt work, mostly paperwork and credit record evaluation. But there's a lot of it. They make their money by navigating the morass of regulations (federal, state, local) and finding you the best mortgage from the mortgage lender(s) they represent. They don't have any capital involved in the deal. Just sweat equity. Mortgage originator is the one who put up the capital for you to borrow. They're the ones who get most of the payments you send in. They sell the mortgage if they receive what they consider an equitable offer. Keep in mind that the mortgage, from the lender's point of view, is made up of three parts. The capital expenditure, the collateral, and the cashflow. The present value of the cashflow at the rate of the loan is greater than the capital expenditure. Any offer between those two numbers is 'in the money' for them, and the next owner, assuming no default. But the collateral makes up for the chance of default, to an extent. There's also a mortgage servicing company in many cases. This doesn't have to be the current holder of the loan. Study \"\"the time value of money\"\", and pay close attention to the parts about present value, future value, and cash flow and how to compare these.\"" }, { "docid": "279534", "title": "", "text": "Utilization is near real-time. What that means is that what is reported is what is taken in terms of debt-to-income (DTI) ratios. When a mortgage broker pulls your credit, they will pull the latest balances with the minimum payments. This is what is taken to determine DTI along with your gross monthly income. If you do not pay your account in full before the statement date, then you more than likely will have to wait an additional statement cycle before it reports to the credit bureaus. Therefore, your utilization is dynamic and the history of your utilization month-to-month is not recorded forever. Only the current balance. What is maintained and reported is your payment history. So you want to never be late if you want to be approved anytime soon for a mortgage. A lower DTI will not help your interest rate. As long as you stay away from the maximum DTI for the mortgage vehicle you are attempting to be approved for (VA, FHA, Conventional, etc), then your DTI should not be a concern. If you are borderline at the time of underwriting, you can take the opportunity and pay off the balances. The mortgage company can then do what is called a credit supplement which entails contacting those lenders where you have proven you have a zero balance and manually input the zero balance cards, that have not yet reported to the bureaus, in your final application to the mortgage company for underwriting approval." }, { "docid": "140049", "title": "", "text": "A Credit Default Swap is a derivative, a financial contract with a value dependent upon another asset. A CDS, in essence, is exactly what it sounds like a swap upon default. The typical arrangement is that a holder of non-risk free credit enters into an arrangement with a counterparty to pay the counterparty a portion of the income received from the non-risk free credit in exchange for being able to force the counterparty to deliver risk free credit if the non-risk free credit defaults. Banks use this mechanism to reduce the risk of the loans they produce while packaging them to be resold to investors. Banks will typically buy CDSes on mortgages and corporate bonds, paying part of the income from interest payments received, to have the right to force counterparties, typically hedge funds and insurance companies, to swap national Treasuries upon the event that the mortgages or corporates default. The banks receive less income yet are able to take on more inventory to sell to investors so that more loans can be made to borrowers, households and corporations. Hedge funds typically take on more complex arrangements while insurance companies sell CDSes because they are usually overflowing with risk-free assets yet are starved for income." }, { "docid": "359579", "title": "", "text": "I am not going to argue the merits of investing in real estate (I am a fan I think it is a great idea when done right). I will assume you have done your due diligence and your numbers are correct, so let's go through your questions point by point. What would be the type of taxes I should expect? NONE. You are a real estate investor and the US government loves you. Everything is tax deductible and odds are your investment properties will actually manage to shelter some of your W2(day job) income and you will pay less taxes on that too. Obviously I am exaggerating slightly find a CPA (certified public accountant) that is familiar with real estate, but here are a few examples. I am not a tax professional but hopefully this gives you an idea of what sort of tax benifits you can expect. How is Insurance cost calculated? Best advice I have call a few insurance firms and ask them. You will need landlord insurance make sure you are covered if a tenant gets hurt or burns down your property. You can expect to pay 15%-20% more for landlord insurance than regular insurance (100$/month is not a bad number to just plug in when running numbers its probably high). Also your lease should require tenants to have renters insurance to help protect you. Have a liability conversation with a lawyer and think about LLCs. How is the house price increase going to act as another source of income? Appreciation can be another source of income but it is not really that useful in your scenario. It is not liquid you will not realize it until you sell the property and then you have to pay capital gains and depreciation recapture on it. There are methods to get access to the gains on the property without paying taxes. This is done by leveraging the property, you get the equity but it is not counted as capital gains since you have to pay it back a mortgage or home equity lines of credit (HELOC) are examples of this. I am not recommending these just making sure you are aware of your options. Please let me know if I am calculating anything wrong but my projection for one year is about $8.4k per house (assuming no maintenance is needed) I would say you estimated profit is on the high side. Not being involved in your market it will be a wild guess but I would expect you to realize cash-flow per house per year of closer to $7,000. Maybe even lower given your inexperience. Some Costs you need to remember to account for: Taxes, Insurance, Vacancy, Repairs, CapEx, Property Management, Utilities, Lawn Care, Snow Removal, HOA Fees. All-in-all expect 50% or your rental income to be spent on the property. If you do well you can be pleasantly surprised." }, { "docid": "223166", "title": "", "text": "It sounds like you may need to look into the different types of personal loans that are available to you. Typically, they are in 2 categories: secured vs unsecured. A personal loan is usually of the unsecured variety, meaning that the bank is loaning you money with no collateral to use if you default. These loans will have much higher interest rates than a secured loan. A prime example of a secured loan would be a mortgage or an equity line of credit. If you want an unsecured personal loan to use towards making those improvements, then whether or not you receive the loan will depend on your credit rating and income status. As Aganju stated, these loans don't really care what the money is used for. Because it's not your property that you're fixing up, you won't be able to get a secured loan against that property. If your mother took out a loan against her home (like a second mortgage), she may be able to get a significantly lower interest rate than what you'll get with an unsecured loan. She could also look into a renovation/remodeling loan, which would require information regarding the work being done such as costs and how it will improve the value of the property. If she used an equity line of credit instead, then they don't typically care what the money will be used for as it's just a credit line against the equity she's already built into her mortgage payments over the years." }, { "docid": "278626", "title": "", "text": "At the area where I live (Finland), banks typically charge a lot more for additional mortgage credit taken after purchasing the house. So, if you are planning to purchase a house, and pay it with a mortgage, you get a very good rate, but if you pay back the mortgage and then realize you need additional credit, you get a much worse rate. So, if this is applicable to your area as well, I would simply buy stocks after you have paid enough of the mortgage that it is only 50% of the house price or so. This is especially good advice if you are young. Also, if your mortgage is a fixed rate and not an adjustable rate mortgage, you probably have a very low permanent interest rate on it as interest rates are low currently (adjustable rate mortgages will also have a low rate but it will surely go up). Some people say there's a bubble currently in the stock market, but actually the bubble is in the bond market. Stocks are expensive because the other alternatives (bonds) are expensive as well. Paying back your mortgage is equivalent to investing money in bonds. I don't invest in bonds at the current ridiculously low interest rates; I merely invest in stocks and have a small cash reserve that will become even smaller as I discover new investment opportunities. I could pay back a significant percentage (about 50%) of the loans I have by selling my stocks and using my cash reserves. I don't do that; I invest in stocks instead, and am planning to increase my exposure to the stock market at a healthy pace. Also, consider the fact that mortgage is cheap credit. If you need additional credit for consumption due to e.g. becoming suddenly unemployed, you will get it only at very expensive rates, if at all. If you're very near the retirement age (I'm not), this advice may not be applicable to you. Edit: and oh, if your mortgage is fixed rate, and interest rates have come down, the bank will require you to pay the opportunity cost of the unpaid interests. So, you may need to pay more than you owe the bank. Edit2: let's assume the bank offered you a 4% fixed rate for a 10-year loan, which you agreed to. Now let's also assume interest rates of new agreements have come down to 2%. It would be a loss to the bank to pay back the amount of the loan (because the bank cannot get 4% by offering somebody else a new loan, only 2%), unless you paid also 10 years * (4% - 2%) * amount = 20% * amount of lost interest income. At least where I live, in fixed rate loans, one needs to pay back the bank this opportunity cost of unpaid interests." }, { "docid": "427206", "title": "", "text": "Pay off your highest-interest debt first: credit card, car, maybe even mortgage. Pay minimums on all else. Student loans are typically low interest, so pay off anything else first, but double-check your rate of course. Even if you have no other debt, you may still want to hang on to your savings instead of paying down your student loans if getting rid of your savings causes you to accrue debt. For example, if you have a low income and no savings, you may accrue credit card debt (high interest). Or you may want to buy a car with cash instead of getting a loan. Even if this is not an issue, consider what you can do with your savings that others who lack them cannot do. You can put it into mutual funds, which may offer higher rate of return (albeit with risk) than your student loan interest. Or you may pay a down payment on a home. The very low interest rates of student loans are, to a person with savings, essentially a source of cheap money that doesn't need to be justified to a bank. You can use it as seed money to start a business, as funds for travel, for living expenses while in the Peace Corps, or whatever else. But if you pay down that principal, you bind yourself. In short, pay down your student loans when there is no better use for the money." }, { "docid": "440522", "title": "", "text": "Understandably, it appears as if one must construct the flows oneself because of the work involved to include every loan variation. First, it would be best to distinguish between cash and accrued, otherwise known as the economic, costs. The cash cost is, as you've identified, the payment. This is a reality for cash management, and it's wise that you wish to track it. However, by accruals, the only economic cost involved in the payment is the interest. The reason is because the rest of the payment flows from one form of asset to another, so if out of a $1,000 payment, $100 is principal repayment, you have merely traded $100 of cash for $100 of house. The cash costs will be accounted for on the cash flow statement while the accrued or economic costs will be accounted on the income statement. It appears as if you've accounted for this properly. However, for the resolution that you desire, the accounts must first flow through the income statement followed next instead of directly from assets to liabilities. This is where you can get a sense of the true costs of the home. To get better accrual resolution, credit cash and debit mortgage interest expense & principal repayment. Book the mortgage interest expense on the income statement and then cancel the principal repayment account with the loan account. The principal repayment should not be treated as an expense; however, the cash payment that pays down the mortgage balance should be booked so that it will appear on the cash flow statement. Because you weren't doing this before, and you were debiting the entire payment off of the loan, you should probably notice your booked loan account diverging from the actual. This proper booking will resolve that. When you are comfortable with booking the payments, you can book unrealized gains and losses by marking the house to market in this statement to get a better understanding of your financial position. The cash flow statement with proper bookings should show how the cash has flowed, so if it is according to standards, household operations should show a positive flow from labor/investments less the amount of interest expense while financing will show a negative flow from principal repayment. Investing due to the home should show no change due to mortgage payments because the house has already been acquired, thus there was a large outflow when cash was paid to acquire the home. The program should give some way to classify accounts so that they are either operational, investing, or financing. All income & expenses are operational. All investments such as equities, credit assets, and the home are investing. All liabilities are financing. To book the installment payment $X which consists of $Y in interest and $Z in principal: To resolve the reduction in principal: As long as the accounts are properly classified, GnuCash probably does the rest for you, but if not, to resolve the expense: Finally, net income is resolved: My guess is that GnuCash derives the cash flow statement indirectly, but you can do the entry by simply: In this case, it happily resembles the first accrued entry, but with cash, that's all that is necessary by the direct method." }, { "docid": "364802", "title": "", "text": "\"In your shoes, I would pay off the mortgage with the after tax investments and be done. You have different goals than I do in that you want to keep the debt. So, I would start calling mortgage brokers and asking for someone who does \"\"manual underwriting\"\". Manual underwriting essentially means they use common sense and look at your situation for what it is instead of saying \"\"income=10K means disapprove mortgage\"\". It may be that your situation is different enough from mortgage guidelines that you can't now get a conforming mortgage (i.e. one that is readily re-sellable to another mortgage holder). If that is the case, you can look for a small bank or credit union that would be interested in adding your loan to their portfolio and not reselling it.\"" }, { "docid": "101555", "title": "", "text": "\"The government program to keep the unemployed from gaming the system that they mention isn't really what the article is about. Most of their complaints are about internships, apprenticeships, and unpaid overtime for salaried employees. The sectors that are most notorious for these sort of things are those that are often over-saturated with qualified candidates. I work in graphic design. The for-profit colleges in the US churn out graphic design graduates is disgustingly high numbers. It's an easy program to sign people up for because is sounds fun. \"\"Art is fun, computers are fun. Make it a career!\"\" However there really aren't that many graphic design positions available. Lots of unemployed or underemployed graphic designers means that more of them are willing to work for cheap or free to beef up their resumes. Cheap freelance options means companies are getting rid of in-house designers. Those of us that are left can no longer earn what we're worth but to keep doing what we love we have to suck it up and work the long unpaid hours for less pay. similar things are taking place in a lot of sought after professions like finance, law, advertising, public relations, government, and various non-profits. It's not terribly ethical, but it's hard to blame employers for not paying interns then they're salivating for a chance to run coffee just to get a foot in the door. TL;DR: People want their long term career choice worse than they want to get paid immediately.\"" }, { "docid": "426215", "title": "", "text": "\"Understand your own risk tolerance and discipline. From Moneychimp we can see different market results - This is a 15 year span, containing what was arguably one of the most awful decades going. A full 10 year period with a negative return. Yet, the 15 year return was a 6.65% CAGR. You'd net 5.65% after long term cap gains. Your mortgage is likely costing ~4% or 3% after tax (This is not applicable to my Canadian friends, I understand you don't deduct interest). In my not so humble opinion, I'd pay off the highest rate debts first (unlike The David followers who are happy to pay off tens of thousands of dollars in 0% interest debt before the large 18% debt) and invest at the highest rate I'd get long term. The problem is knowing when to flip from one to the other. Here's food for thought - The David insists on his use of the 12% long term market return. The last 100 years have had an average 11.96% return, but you can't spend average, the CAGR, the real compound rate was 10.06%. Why would he recommend paying off a sub 3% loan while using 12% for his long term planning (All my David remarks are not applicable to Canadian members, you all probably know better than to listen to US entertainers)? I am retired, and put my money where my mouth is. The $200K I still owe on my mortgage is offset by over $400K in my 401(k). The money went in at 25%/28% pretax, has grown over these past 20 years, and comes out at 15% to pay my mortgage each month. No regrets. Anyone starting out now, and taking a 30 year mortgage, but putting the delta to a 15 year mortgage payment into their 401(k) is nearly certain to have far more in the retirement account 15 years hence than their remaining balance on the loan, even after taxes are considered. Even more if this money helps them to get the full matching, which too many miss. All that said, keep in mind, the market is likely to see a correction or two in the next 15 years, one of which may be painful. If that would keep you up at night, don't listen to me. If a fixed return of 4% seems more appealing than a 10% return with a 15% standard deviation, pay the mortgage first. Last - if you have a paid off house but no job, the town still wants its property tax, and the utilities still need to be paid. If you lose your job with $400K in your 401(k)/IRA but have a $200K mortgage, you have a lot of time to find a new job or sell the house with little pressure from the debt collectors. (To answer the question in advance - \"\"Joe, at what mortgage rate do you pay it off first?\"\" Good question. I'd deposit to my 401(k) to grab matching deposits first, and then if the mortgage was anywhere north of 6%, prioritize that. This would keep my chances at near 100% of coming out ahead.)\"" }, { "docid": "476068", "title": "", "text": "\"I doubt you will get an answer equal to \"\"You can't save when you have debt\"\". Because most mortgages are for decades, very few people would be able to save for retirement if they had to wait to be mortgage free. The difficulty in saving occurs when the interest rate is very high (18% or more) and the interest is not deductible. Such as with credit cards. The minimum payment for your mortgage is 30% of your income. If that doesn't include taxes and homeowners insurance in the 30%, then for the United States that would be considered too large. While the general plan to pay down the mortgage is a good idea, make sure that you are able to handle the minimum payments before starting to increase the payments. Try the minimum for a year or two before getting aggressive The calculation is based on the interest rate of the mortgage, the interest rate of the savings account, and the potential tax deduction of the mortgage and the tax rate on the earned interest. Putting extra money into a mortgage, but missing out on matching retirement money would also have to be figured into the calculation. Make sure you do save for retirement , kids education, and emergencies. Unless your country has a complex system where the money can flow in and out of the mortgage, then once you put extra money into the mortgage you can't get it back when the car dies. The nice thing about putting extra money into a mortgage is that you can do it either in an organized way, or only when you feel comfortable. So it is not urgent for you to commit to a plan immediately. One thing to avoid is a plan that charges you a fee to add extra money, or charges a fee to switch to a bi-weekly mortgage. While your ideas is good, these plans should never cost any money to start, and may be a scam if a 3rd party gets between you and the lender.\"" }, { "docid": "309279", "title": "", "text": "From my experience using PayPal for selling products on eBay (and for the last two, experiences of a friend)... Can paypal get money from my Bank Account without my authorization. This is assuming they have transferred the funds to me. They can't pull money from your bank account without your authorization. They will, however, take the money from your PayPal account if it's still there, or leave you with a negative balance if you've already withdrawn. They will do this as soon as there is a claim against you and will only release the funds if the investigation ends in your favor. Any money received would first be used to satisfy the negative balance. What actions can paypal takes against me if charge back amount is very high and I don't agree / pay them. They will send it to a collections agency. Is there any case it is going to effect my bank account, i.e. is there any chance paypal can block my bank account in India. They will block you from using PayPal. If you try to sign up again with a different bank account or credit card and they recognize you as the account holder, they will block that account as well." }, { "docid": "324948", "title": "", "text": "You'll have much more flexibility and peace of mind if your expenses are based on your current income and that income increases in the future. It's great that you aren't comfortable with spending more, you don't want to end up in the position you just removed yourself from. That said, you don't just ignore planned income altogether. Personally, my wife and I feel best knowing that I have the essentials covered with my income, and that her income primarily helps us put away more for retirement, home renovations, and vacations, because she likely won't work for a long while if we have kids. How you plan depends on your wife's career aspirations and prospects, if your wife has high income potential and you don't plan to buy until after she resumes work, then it may suit you to plan on her income too. You'll have to balance the certainty and amount of her income with your goals. If you're trying to make up ground on savings/retirement, then a less expensive house seems wise anyway. It's a much easier problem to decide what to do with excess funds than feeling trapped/stressed by a high mortgage payment." }, { "docid": "227485", "title": "", "text": "No, it is never impossible to get credit so long as there are no price controls or quotas. In most of the United States, the impetus for housing is so strong that it's one sector of credit that has nearly no price regulation, price in this case being interest rates. Corporate banks will not touch you now because Dodd-Frank now makes them liable to you and investors if you default on the mortgage. Also, Fannie & Freddie, who ultimately finance most mortgages in the US now require banks to buy back loans if they fail, so banks are only financing the most creditworthy. All is not lost because markets are like rivers if not fully dammed: they find a way through. In your case, you can get a fully-financed mortgage if you're willing to pay interest rates probably double what you could otherwise get in the market with good credit. If the foreclosure process is quick and benefits the lender more in your state, the interest rate will be even lower. Your creditors will most likely be individuals you find at mortgage investment clubs and religious institutions. If you shop around, you'll be surprised at how low a rate you might get. Also, since the cost of your prospective home is so low, it's very easy for an investor flush with cash and few investments to take a flier on a mother committed to her children who only needs $50,000. The FHA has been vastly expanded, and since your individual credit is clean, there may be a chance to get financing through it, but be prepared for red tape." } ]

[ { "docid": "407401", "title": "", "text": "First step, pull a copy of your credit report, and score. You should monitor that score and do what you can to bring it up. Your chances are far better if (a) you first save a sizable downpayment, and (b) go with a local bank that doesn't just write the mortgage and sell it. Better still, go to that local bank and inquire about REO (real estate owned by the bank) property. These are properties they foreclosed on and depending how they are carrying them, you might find decent opportunities. As a matter of logic, a local bank that owns these specific properties (as compared to debt pools where big banks have piles of paper owned fractionally) are more willing to get a new owner in and paying a new loan. Congrats on the new, higher, income. I'd suggest you first build the emergency fund before the downpayment fund. Let us know how it goes." } ]

[ { "docid": "403318", "title": "", "text": "&gt; I feel the same way about your arguments, but I still try to respond to the content of your arguments rather than my assumptions about them. You're right, I went ad hominem. Apologies. &gt; Then I guess we have fundamentally different ideas about what is freedom and what is not. You seem to think that forcing someone to negotiate with a party, against their will, is not a violation of any of their rights. We have the same goal, and that's to have a society that results the maximum quality of life for the most amount of people. However, being a pragmatist, this is where I usually fail to find common ground with the libertarian view point. What should be a right and what should be restricted by law is totally subjective. So since any law can be seen as a violation of someone's rights, the argument that a law is wrong simply because it does so is invalid. To me a demonstration that the benefits outweigh the costs is a more powerful argument, though it should probably be shown that there is a significant margin between the two, otherwise I'd have to air on the side of individual rights. We don't have the right to advertise sugar pills as a cure for cancer, we don't have the right to drive our cars after 10 beers, we don't the right to sit on a park bench and start masturbating...we don't have these rights because the cost to our society is greater than the benefits (maybe these aren't the greatest examples but you get the idea). So as for making an employer send a couple representatives to a bargaining table being a violation of their rights, yes it is, but this is such a small cost compared to the benefit of diminishing the chance of work stoppages that have a rippling effect on the economy and the resulting unrest created when people feel like they have no hope [(read the introduction to the NLRA)](https://www.nlrb.gov/national-labor-relations-act) I'd also argue that the NLRA protects more rights than it takes away - mainly the rights of free association and speech. I could raise the issues of unions contributing to a more democratic and socially just society, but I'm guessing that'd fall on deaf ears. In general though, I think you give the idea of a union too much credit. Do you know how hard it is to get colleagues to start seeing one another as having shared interests? It ain't easy, that's for sure. &gt; The solution is to let the process of economic development run its course until child labor is not necessary. You may very well be right about this, but a child working a mundane job instead of building their mind, diminishes the life of one not strong enough yet to determine their own course, is just so terribly wrong. So I just have a hard time accepting this, especially living in a world where there is such with such a huge wealth disparity. &gt; A union is not a self-interested party. A union represents self-interested parties, who are not directly affected by the destruction of their industry 30 years into the future, since they would have retired by then. Unions are generally made up of the socially conscious type - no one gets into organizing for the money. I can't say for certain if this challenges your point, however I don't exactly see the difference between the unionist who is going to retire and the CEO is going to retire and the shareholders who can pull out when put their money elsewhere when it suits them. &gt; Many of the laws and union-backed agreements that ended up destroying many of America's industries took decades to have their full effect. It wasn't a case of a law being passed, and the next year, the industry going bankrupt. Examples needed where the industries were actually bankrupted, not just moved overseas to increase profits because workers will settle for less. &gt; Why should employers pay out the most they can afford, and why should laws be passed to force employers to do so? The only reason people invest is to profit. If all profits had to be paid to employees, there would be no incentive to invest, and therefore no increase in capital/productivity. I never said that employers should be paying out all they can afford, and you setting up this straw man only reiterates my point that these discussions with libertarian types all too often come down to this zero-sum game, where an increase in working conditions will trigger bankruptcy, which I think stems from a belief that supply-side economics is keeping standards the highest they can possibly be. If a company has an operating income of $1 bil, what is giving a 5% pay raise to workers going to do, except make that operating income slightly less? I suppose it'd be better if that money were invested back into the company...but wait, aren't people a resource to invest in? And one that offers a high rate of return? Take the the lock-out of ConEd workers in NYC for example: ConEd's profits were over 2 billion when their previous contract was signed, and a few years later when their contract expired the profits were still that high. What did ConEd do? They came to the table with an offer that slashed their benefits tremendously, and locked-out all the workers when the union rejected it. How can the case be made that ConEd couldn't afford to give workers what they already had? Has their value all of a sudden dropped? I don't think so. This is just greed, and doesn't contribute to a healthy society." }, { "docid": "220032", "title": "", "text": "So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence." }, { "docid": "293624", "title": "", "text": "\"Jack \"\"The Mortgage Professor\"\" Guttentag provides a thorough analysis of a similar-sounding system: In addition, I had the feeling that customers of Mortgage Relief should have gotten a spreadsheet for their $45, and wondered why they hadn’t? So I set out to develop a spreadsheet of my own that could quantify the benefits – if there were any. The major question I wanted the spreadsheet to answer was, how large is the benefit of using the Mortgage Relief scheme if you don’t have any surplus income but only just enough to make the scheduled payment? This is the critical question because we know that if you use surplus income to make extra payments to principal, you pay down the mortgage more quickly. This is so whether you apply the income directly to the mortgage, as most borrowers do, or whether you follow the Mortgage Relief procedure where you use a credit line to pay down the mortgage and current income to pay down the credit line. I spent much of my air time between Philadelphia and San Francisco on this project, and finally gave it up. Once I removed surplus income from the equation, I could not find a way to make the Mortgage Relief scheme work. You may also want to read related articles by Guttentag:\"" }, { "docid": "423628", "title": "", "text": "A: Rollover the cash from the previous account into the new one a low-cost IRA like Vanguard. This, and only this. Because your mortgage is, less than 4%, while your retirement plan will earn 7% over the long term. I have no 'retirement' plans because Because you're 28. and essentially will be happy working until I die Unless circumstances change. but as far as I see it this is not such a bad deal because it is like paying taxes on income. (Principal says I will lose up to 30%) You're ignoring the 10% early withdrawal penalty. I am wise with my money for the most part Then don't piss away $3,000 just for a temporary feel good. I earn a high salary in a tech job. As a result of being under 20%, I am paying mortgage insurance of about $300/mo. So -- after building up an Emergency Fund -- throw as much as possible of your high salary against your mortgage to get rid of the PMI." }, { "docid": "568454", "title": "", "text": "I would recommend not paying it off early for 2 key reasons: If you are a resident of the U.S. you get tax deductibility of mortgage interest, which as pointed out in previous posts, reduces the effective interest rate on your mortgage, never in your life will you ever be allowed to obtain such high leverage at such a low rates. You can probably get higher returns with not much risk. @JoeTaxpayer mentioned various statistics regarding returns when investing in equities. Even though they are a decent bet over the long term, you can get an even better risk reward tradeoff by considering municipal bonds. If you are in the U.S. and invest in the municipal bonds of your state, the interest income will be both federal and state tax-free. In other words, if you were making 3.5% investing in equities, your after tax returns would be significantly less depending on your tax bracket whereas investment-grade municipal bond ETFs will yield probably the same or higher and have no tax. They are also significantly less volatile. Even though they have default risk, the risk is small since most of these bonds are backed by future tax obligations, or other income streams derived from hard assets such as tolls or property. Furthermore, an ETF will have a portfolio of these bonds which will also dampen the impact of any individual defaults. In essence, you are getting paid this spread for simply having access to credit, take advantage of it while you can." }, { "docid": "364802", "title": "", "text": "\"In your shoes, I would pay off the mortgage with the after tax investments and be done. You have different goals than I do in that you want to keep the debt. So, I would start calling mortgage brokers and asking for someone who does \"\"manual underwriting\"\". Manual underwriting essentially means they use common sense and look at your situation for what it is instead of saying \"\"income=10K means disapprove mortgage\"\". It may be that your situation is different enough from mortgage guidelines that you can't now get a conforming mortgage (i.e. one that is readily re-sellable to another mortgage holder). If that is the case, you can look for a small bank or credit union that would be interested in adding your loan to their portfolio and not reselling it.\"" }, { "docid": "378359", "title": "", "text": "\"My understanding is that credit card companies are allowed to accept retirement income as part of the income that would qualify you for credit. The Consumer Finance Protection Bureau issued a final rule amendment to Regulation Z (the regulations around Truth in Lending Act) in 2013 in response to some of the tightening of credit that resulted from the Credit CARD Act of 2009. The final rule allows for credit issuers to \"\"consider income and assets to which such consumers have a reasonable expectation of access.\"\" (Page 1) On page 75, it outlines some examples: Other sources of income include interest or dividends, retirement benefits, public assistance, alimony, child support, and separate maintenance payments.... Current or reasonably expected income also includes income that is being deposited regularly into an account on which the consumer is an accountholder (e.g., an individual deposit account or joint account). Assets include, for example, savings accounts and investments. Fannie Mae explicitly mentions IRA distributions in its Documentation Requirements on mortgage applications. For them, they require that the income be \"\"expected to continue for at least three years after the date of the mortgage application.\"\" Lenders can reject or lower your credit limit for just about any reason that they want, but it seems appropriate for you to include your retirement distributions in your income for credit applications.\"" }, { "docid": "310120", "title": "", "text": "You probably won't get a mortgage. UDSA has a 41% ratio of monthly debt to monthly income limit, and a score of 660 or better. A 250,000 mortgage at current rates for 30 year mortgage is about $1560/mo. (included in this figure is the 1% mortgage insurance premium, the .4% annual fee, the current rate for a 660 credit rating, the 2% points fee added at the front of the mortgage, typical closing cost added to transaction, and the .5% fee for over-mortgage insurance for the first 3 years since your mortgage will be higher than the value of the house due to these additional fees) Credit card payments = $120 ($60 times 2) Car payments = $542 ($271 for your car, $271 for the car you will be getting) Student loan = $50/month Child Support = $500/month Total = $2772/month Your income per month is 82000/12 = $6833/month $2772/$6833 = 40.6%... This is awfully close to the limit, so they likely would also look at your ability to save. Not seeing savings in the above example, I assume it is low. USDA site One mortgage help site breaks down some of the requirements into layman's language. Not knowing your exact location (county/state) and how many children you have, it is hard to be sure whether you make too much to qualify. This link shows the income limits by number of people in the house and the county/state. There are few places in which you could be living that would qualify you to any of their programs unless you have a several children. As others have posted, I suggest you get your debt down." }, { "docid": "39676", "title": "", "text": "Awesome, you are a math guy. Very good for you. In theory, what you are proposing, should work out great as the math works out great. However have you taken a economics or finance coursework? The math that they do in these class will leave a most math guys uncomfortable with the imprecision even when one is comfortable with chaos theory. Personal finance is worse. If it were about math things like reverse mortgages, payday lenders, and advances on one income tax returns would not exist. The risk derived from the situation you describe is one born out of behavior. Sometimes it is beyond control of the person attempting your scheme. Suppose one of these happen: In my opinion the market is risky enough without borrowing money in order to invest. Its one thing to not pay extra principle to a mortgage in order to put that money in play in the market, it is another thing to do what you are suggesting. While their may be late fees associated with a mortgage payment, a fixed rate mortgage will not change if you late on payment(s). On these balance transfer CC schemes they will jack your rate up for any excuse possible. I read an article that the most common way to end up with a 23%+ credit card was to start out with a 0% balance transfer. One thing that is often overlooked is that the transfer fee paid jacks up the stated rate of the card. In the end, get out of consumer debt, have an emergency fund, then start investing. Building a firm financial foundation is the best way to go about it. Without one it will be difficult to make headway. With one your net worth will increase faster then you imagined possible." }, { "docid": "507806", "title": "", "text": "\"Interestingly enough, \"\"strategic default\"\" seems to be more common than one might think in California and there is actually a lot of information available on it, to include a calculator that breaks down the numbers for you (although affiliated with a law office). Speaking from a purely financial standpoint, walking away only makes sense if it puts you in a better financial position than you were before while you had the mortgage. If you look at the downsides of walking away: The issues with the credit rating are will known but you need to take into account any open lines of credit you currently have as well as any need you might have to open a line of credit in the future. If you currently have credit cards, will the rates go up after the hit? On the housing side of things, you mortgage payment is currently a known quantity that will not change for the duration of the mortgage unless you do something to change it. However, it is fairly rare for rents to not change between years and if you want an apartment or house similar to what you currently have, you might find that the rent will fluctuate quite a bit between years and in the long run the rent might run higher than your current mortgage payment. Likewise, in the shorter term, if the landlord runs a credit check they might adjust what the rent is (or deny you the apartment) on the basis of the black mark on your history for reasons that other have mentioned. Another item to take into account is if you need to get a job in the future. Depending upon what you do for a living this might be a non-issue; however, if you are in a position of trust, walking away from a mortgage payment will reflect negatively upon your character unless you have a very good reason for it. This can lead to a loss of employment opportunities. Next, if you walk away from the mortgage you are walking away from the current value of the home and any future value that the home might have. If you like where you are living and aren't planning on moving to another part of the country, you are gambling that the market will not recover or that you would reach parity with what you owe by the time you need to sell the house. If you do plan on staying where you are and the house is in good repair, then in the long run you might be giving up quite a bit of money by walking away. These are a lot of factors to take into account though so its really hard to say one way or another if a strategic default is a good idea. In the long run you might come out ahead but knowing when that date is can be difficult to calculate. Likewise, in the long run it might adversely affect you and you might come to regret the decision. If the payments themselves are a bit too high, perhaps you can refinance or negotiate with the bank for a lower payment? If you get a better rate but keep your monthly payments the same then you might reach parity with the mortgage much faster which would also be to your advantage.\"" }, { "docid": "294167", "title": "", "text": "You did borrow money for the downpayment. When you apply for a mortgage loan on your new home, you will be required to list all your assets and all your liabilities. You must disclose the first mortgage as well as the second mortgage on your current condo as well as the monthly payment on each of these loans. If you took out the second mortgage five years ago, you can truthfully say that you have not taken out any loans within the past year to get cash for the down payment when you apply for a mortgage for purchasing your new house. But, what the lender will be looking at is: Can the applicants' current income support monthly payments of $1000 for the first mortgage on the condo plus $300 for the second mortgage on the condo plus $1500 for the proposed mortgage on the new house? You might argue that you will be selling that condo soon, or will be renting it out and that the rental income will cover the mortgage payments on the condo, but will the lender give much credence to this? The condo may not sell easily, you might not be able to find a tenant right away, or be able to rent the condo at a high enough rental to cover the costs etc. If you simply save money from your current extra cash flow and use that to make the down payment, the lender will be pondering the question Can the applicants' current income support monthly payments of $1000 for the mortgage on the condo plus $1500 for the proposed mortgage on the new house? Which deal will the lender be happier with? If you are uncomfortable saving your extra cash flow in a savings account or CD or investing it in stocks and/or bonds until you need the money for the down-payment on your new house, put that money in a sock under your mattress (and don't smoke in bed!)" }, { "docid": "389750", "title": "", "text": "I'm a bond trader and we stayed away from this Tesla deal. Tesla is cash flow negative which is a terrible sign for a bond investor and is still relatively young and changing constantly. When assessing fixed income investments you want steady predictable cash flows and positive credit metrics. Tesla has none of that despite the run up in the stock. Even after taking all of these things into consideration the yields aren't even very high reflecting a compression in the amount of spread to treasuries investors are asking for taking on the risk in this kind of name. It speaks to an overvalued high yield market in general. Ford on the other hand is a mature business with much more favorable credit metrics (debt interest coverage, consistent management, a credit history of borrowing and repaying their loans, etc.). All of these things are reflected in the yield that investors require when buying bonds." }, { "docid": "239611", "title": "", "text": "\"The most important thing in my view is flexibility, to avoid running into problems. One useful thing in the UK would be an arranged overdraft. You go to your bank, and they'll agree that you can overdraw your account by a certain number of pounds, depending on your income etc. It will cost you a very high interest rate, but only for each day where you are overdrawn. So paying a bill two days before your salary comes in isn't too bad. Obviously avoid using the overdraft if you can, having an overdraft while not using it is free. It's meant for an emergency; being regularly overdrawn is expensive. But once it is arranged with your bank, an arranged overdraft is much much cheaper than bouncing cheques etc. and possibly high fees for overdrawing your account. And it takes the pressure of you. Now things to need before you get a loan (again, UK): The real interest rate that you are paying is called APR. That's the number that counts, and that cannot be manipulated. No \"\"payday loans\"\" to avoid getting yourself into deep, deep trouble. No loan sharks, obviously. If you buy things with \"\"interest free credit\"\", that's (a) included in the price, so you pay more, and (b) if you miss paying by one day they'll hit you with huge interest payments, and some will try this intentionally. Interest rate depends on loan amount. I once had to borrow 20% more than I needed because it reduced the interest rate by half... The 20% went straight into a savings account. Credit cards and overdrafts are much more expensive than loans. Mortgage is again cheaper than a loan usually. Make sure that you only use money from sources that charge the least amount. Make sure you pay back regularly so cheap sources stay available to you. Just do yourself a favour and if at all possible, spend less instead of getting a loan.\"" }, { "docid": "288701", "title": "", "text": "Yes, there are times when co-signing is the right choice. One is when you know more about the person than the loan issuer does. Consider a young person who has just started working in a volatile field, the kind of job where you can be told on Friday that you only get one shift next week but things might pick up the week after, and who makes maybe $12 an hour in that job. You've done the math and with 40 hour weeks they can easily afford the loan. Furthermore, you know this person well and you know that after a few weeks of not enough shifts, they've got the gumption to go out and find a second job or a different job that will give them 40 hours or more a week. And you know that they have some savings they could use to ensure that no payments will be missed even on low-wage weeks. You can cosign for this person, say for a car loan to get them a car they can drive to that job, knowing that they aren't going to walk away and just stop making the payments. The loan issuer doesn't know any of that. Or consider a young person with poor credit but good income who has recently decided to get smart about money, has written out a budget and a plan to rehabilitate their credit, and who you know will work passionately to make every payment and get the credit score up to a place where they can buy a house or whatever their goal is. Again, you can cosign for this person to make that happen, because you know something the lender doesn't. Or consider a middle aged person who's had some very hard knocks: laid off in a plant closing perhaps, marriage failure, lost all their house equity when the market collapsed, that sort of thing. They have a chance to start over again somewhere else and you have a chance to help. Again you know this isn't someone who is going to mismanage their money and walk away from the payments and leave you holding the bag. If you would give the person the money anyway (say, a car for your newly graduated child) then cosigning instead gives them more of a sense of accomplishment, since they paid for it, and gives them a great credit rating too. If you would not give the person the entire loan amount, but would make their payments for many months or even a year (say, your brother's mortgage for the house where he lives with a sick wife and 3 small children), then cosigning is only making official what you would have done anyway. Arrange with the borrower that if they can't make their payments any more, you will backstop them AND the item (car, house, whatever) is going up for sale to cover your losses. If you don't think you could enforce that just from the strength of the relationship, reconsider co-signing. Then sign what you need to sign and step away from it. It's their loan, not yours. You want them to pay it and to manage it and to leave you out of it until it's all paid off and they thank you for your help. If things go south, you will have to pay, and it may take a while for you to sell the item or otherwise stop the paying, so you do need to be very confident that the borrower is going to make every single payment on time. My point is just that you can have that confidence, based on personal knowledge of character, employment situation, savings and other resources, in a way that a lender really cannot." }, { "docid": "358196", "title": "", "text": "One significant reason it makes sense for filing to be the default is home ownership rates. I think far more so than investment income, Americans own homes: as there is a significant mortgage interest deduction, between that and investments a large number of Americans would have to file (about a third of Americans get the mortgage interest tax deduction, and a large chunk of the richest don't qualify but would have to file for investments anyway). We also have a very complicated tax code, with nearly everyone getting some kind of deduction. Earned Income Tax Credit for the working poor (folks making, say, $30k for a family of 4 with a full-time job get several thousand dollars in refundable credits, for example), the Student Loan interest deduction, the above mortgage deduction, almost everyone gets something. Finally, your employer may not know about your family situation. As we have tax credits and deductions for families based on number of children, for example, it's possible your employer doesn't know about those (if you don't get health insurance on their behalf, they may well not know). Start reporting things like that separately... and you end up with about as much work as filing is now." }, { "docid": "595029", "title": "", "text": "This is an all too common problem and is not easy to resolve. Divorce agreements do not alter prior mortgage contracts. Most importantly, the bank is not required, and will not normally, remove the girlfriend from the mortgage even if she quitclaimed it to her Ex. If he has abandoned the property there is a good chance he will not make any more future payments. She should be prepared to make the payments if he doesn't or expect her credit to continue to deteriorate rapidly. She needs to contact her divorce attorney to review their mutual obligations. A court can issue orders to try to force the Ex to fulfill the divorce agreement. However, a court cannot impose a change to the mortgage obligations the borrowers made to the bank. Focus on this. It's far more important than adding her to a car loan or credit card. Sorry for the bad news. As for the car loan, it's best to leave her off the loan. You will get better terms without her as a joint owner. You can add her as an additional driver for insurance purposes. Adding her to your credit cards will help her credit but not a lot if the mortgage goes to default or foreclosure." }, { "docid": "279534", "title": "", "text": "Utilization is near real-time. What that means is that what is reported is what is taken in terms of debt-to-income (DTI) ratios. When a mortgage broker pulls your credit, they will pull the latest balances with the minimum payments. This is what is taken to determine DTI along with your gross monthly income. If you do not pay your account in full before the statement date, then you more than likely will have to wait an additional statement cycle before it reports to the credit bureaus. Therefore, your utilization is dynamic and the history of your utilization month-to-month is not recorded forever. Only the current balance. What is maintained and reported is your payment history. So you want to never be late if you want to be approved anytime soon for a mortgage. A lower DTI will not help your interest rate. As long as you stay away from the maximum DTI for the mortgage vehicle you are attempting to be approved for (VA, FHA, Conventional, etc), then your DTI should not be a concern. If you are borderline at the time of underwriting, you can take the opportunity and pay off the balances. The mortgage company can then do what is called a credit supplement which entails contacting those lenders where you have proven you have a zero balance and manually input the zero balance cards, that have not yet reported to the bureaus, in your final application to the mortgage company for underwriting approval." }, { "docid": "54322", "title": "", "text": "First, you need to be aware that the credit score reported by Mint is Equifax Credit Score. Equifax Credit Score, like FICO, Vantagescore, and others, is based on a proprietary formula that is not publicly available. Every score is calculated with a different formula, and can vary from each other widely. Lenders almost exclusively only use FICO scores, so the score number you have is likely different than the score lenders will use. Second, understand that the advice you see from places like Mint and Credit Karma will almost always tell you that you don't have enough credit card accounts. The reason for this is that they make their money by referring customers to credit card applications. They have a financial interest in telling you that you need more credit cards. Finally, realize that credit score is just a number, and is only useful for a limited number of things. Higher is better to a point, and after that, you get no benefit from increasing your score. My advice to you is this: Don't stress out about your credit score, especially a free score reported by Credit Karma or Mint. If you really have a desire to find out your score, you can pay FICO to get your actual score, but it's not cheap. You can also sometimes get your FICO score by applying for a loan and asking the lender. I last saw my FICO scores (there were three, one from each credit bureau) when I applied for a mortgage a couple of years ago, and the mortgage rep gave them to me for free. But honestly, knowing your score doesn't do much for you, as the best way to increase it is to simply make your payments on time and wait. Don't give in to bad conventional advice from places that are funded by the financial services industry. The thing that makes your credit score go up is a long history of paying your bills on time. Despite what you commonly read about credit scores, I'm not convinced that you can radically boost your scores by having lots of open credit card accounts. At the time I applied for my last mortgage, I only had 2 open credit cards (still true), and the oldest open account was about 1.5 years old. The average of my 3 scores was just over 800. But I've been paying my bills on time for at least 20 years now. Only get credit cards that you actually want, and close the ones you don't want." }, { "docid": "290831", "title": "", "text": "The catch is that you're doing a form of leveraged investing. In other words, you're gambling on the stock market using money that you've borrowed. While it's not as dangerous as say, getting money from a loan shark to play blackjack in Vegas, there is always the chance that markets can collapse and your investment's value will drop rapidly. The amount of risk really depends on what specific investments you choose and how diversified they are - if you buy only Canadian stocks then you're at risk of losing a lot if something happened to our economy. But if your Canadian equities only amount to 3.6% of your total (which is Canada's share of the world market), and you're holding stocks in many different countries then the diversification will reduce your overall risk. The reason I mention that is because many people using the Smith Maneuver are only buying Canadian high-yield dividend stocks, so that they can use the dividends to accelerate the Smith Maneuver process (use the dividends to pay down the mortgage, then borrow more and invest it). They prefer Canadian equities because of preferential tax treatment of the dividend income (in non-registered accounts). But if something happened to those Canadian companies, they stand to lose much of the investment value and suddenly they have the extra debt (the amount borrowed from a HELOC, or from a re-advanceable mortgage) without enough value in the investments to offset it. This could mean that they will not be able to pay off the mortgage by the time they retire!" } ]

[ { "docid": "323406", "title": "", "text": "\"The bottom line, is that you are doing the right thing now: correcting your past indiscretions. Get those collections taken care of, then start saving for a down payment. Of course, during this time, you should pay your bills early or on time. During that time your credit will improve dramatically. I bet that this will not be an issue once you have your down payment saved, so the point is moot. However, with outstanding collections it is very unlikely you will get a loan. In my own case, I had to pay a collection, that I did not owe, in order to obtain a mortgage. It was for a small amount and the loan officer told me that \"\"it is the cost of doing business\"\". Ship $150 and my loan when through free and clear.\"" } ]

[ { "docid": "125722", "title": "", "text": "A huge part of the problem is that low income people have been very heavily marketed to by the online and for profit colleges because they were eligible for financial aid (mainly loans) and were seen ONLY as a straw through which to suck money out of the government by these “schools”. Because they were only interested in the money, there was no attempt to qualify students in many of these schools or provide any support to them. When students dropped out their “counselors” would keep signing them up for classes that they didn’t know about or attend. Because a lot of the schools are bullshit schools with either no reputation or a poor one, even those who finished were largely not able to get the high paying jobs they were promised in order to lure them in. This goes for low income students, especially ones whose families have no previous experience with post high school education, across the board, and all of this group is far more likely to default (because they were basically ripped off, got nothing useful from these bogus schools and were often outright defrauded, and do not have the income they were told they would have when agreeing to the loans) but because there is a higher percentage of minorities among this group they are more likely to be defaulters. But our unforgiving student loan system doesn’t differentiate between loans for real eduacation and loans for these rip off “schools” so you are still 100% on the hook regardless. Even if they signed you up for several more semesters’ worth of classes after you “withdrew”. It’s a lot like the mortgage collapse—desperate to keep making money, the lenders targeted increasingly less qualified people who were also naive about the entire system and sold them terrible loans (sometimes talking them out of more reasonable options) and then when the whole thing starts to fail, it’s all “because the government made the banks give mortgages to poor black people”. The institutions suck up the money and leave bewildered poor people holding the bag, now even poorer with nothing to show for the debt they will literally be digging out of forever. The Obama administration FINALLY took some steps to control the predatory for-profit institutions and try to sort out who had been ripped off vs people who had genuinely received any useful education, but of course the new Sec of Education is doing her best to roll all that back. And most of the victims aren’t teens either. They are adults with kids who were trying to do something to better themselves and their lives and got screwed over. Some of these middle aged people will literally be having their Social Security garnished to pay for these loans. It’s disgusting, and even more so to say it’s all affirmative action." }, { "docid": "28074", "title": "", "text": "\"As anecdotal experience, we have a credit account in my name as offered by bank's marketing before I could qualify by common rules for newcomers (I have an account there for years so they knew my history and reliability dynamics I guess), and my wife is subscribed as a secondary user to the same credit account with a separate card. So we share the same limits (e.g. max month usage/overdraft) and benefits (bank's discounts and bonuses when usage passes certain thresholds - and it's easier to gain these points together than alone) so in the end maintenance of the card costs zero or close to that on most months, while the card is in a program to get discounts from hundreds of shops and even offers a free or discounted airport lounge access in some places :) But the bonus program is just that - benefits come and go as global economics changes; e.g. we had free car assistance available for a couple of years but it is gone since last tariff update. Generally it is beneficial for us to do all transactions including rent etc. via these two credit cards to the same account, and then recharge its overdraft as salaries come in - we have an \"\"up to 50 days\"\" cooloff period (till 20th of next calendar month) with no penalties on having taken the loans - but if we ever did overstretch that, then tens of yearly percents would kick in. Using the card(s) for daily ops, there is a play on building up the credit history as well: while we don't really need the loans to get from month to month, it helps build an image in the face of credit organizations, which can help secure e.g. favorable mortgage rates (and other contract conditions) which are out of pocket money range :) I'd say it is not only a \"\"we against the system\"\" sort of game though, as it sort of trains our own financial discipline - every month we have (a chance) to go over our spendings to see what we did, and so we more regularly think about it in the end - so the bank probably benefits from dealing with more-educated less-random customers when it comes to the bigger loans. Regarding internet, we tend to trust more to a debit card which we populate with pocket money sufficient for upcoming or already placed (blocked) transactions. After all, a malicious shop can not sip off thousands of credit money - but only as much as you've pre-allocated there on debit.\"" }, { "docid": "359579", "title": "", "text": "I am not going to argue the merits of investing in real estate (I am a fan I think it is a great idea when done right). I will assume you have done your due diligence and your numbers are correct, so let's go through your questions point by point. What would be the type of taxes I should expect? NONE. You are a real estate investor and the US government loves you. Everything is tax deductible and odds are your investment properties will actually manage to shelter some of your W2(day job) income and you will pay less taxes on that too. Obviously I am exaggerating slightly find a CPA (certified public accountant) that is familiar with real estate, but here are a few examples. I am not a tax professional but hopefully this gives you an idea of what sort of tax benifits you can expect. How is Insurance cost calculated? Best advice I have call a few insurance firms and ask them. You will need landlord insurance make sure you are covered if a tenant gets hurt or burns down your property. You can expect to pay 15%-20% more for landlord insurance than regular insurance (100$/month is not a bad number to just plug in when running numbers its probably high). Also your lease should require tenants to have renters insurance to help protect you. Have a liability conversation with a lawyer and think about LLCs. How is the house price increase going to act as another source of income? Appreciation can be another source of income but it is not really that useful in your scenario. It is not liquid you will not realize it until you sell the property and then you have to pay capital gains and depreciation recapture on it. There are methods to get access to the gains on the property without paying taxes. This is done by leveraging the property, you get the equity but it is not counted as capital gains since you have to pay it back a mortgage or home equity lines of credit (HELOC) are examples of this. I am not recommending these just making sure you are aware of your options. Please let me know if I am calculating anything wrong but my projection for one year is about $8.4k per house (assuming no maintenance is needed) I would say you estimated profit is on the high side. Not being involved in your market it will be a wild guess but I would expect you to realize cash-flow per house per year of closer to $7,000. Maybe even lower given your inexperience. Some Costs you need to remember to account for: Taxes, Insurance, Vacancy, Repairs, CapEx, Property Management, Utilities, Lawn Care, Snow Removal, HOA Fees. All-in-all expect 50% or your rental income to be spent on the property. If you do well you can be pleasantly surprised." }, { "docid": "122908", "title": "", "text": "\"There's a significant difference between \"\"discount\"\" and \"\"surcharge\"\". For starters - legal difference. If you have a list price of $X - that's the price you're committed to sell regardless of the payment method. So it doesn't matter if I pay with cash or credit - I'll pay $X. However, it costs you more when I pay with credit - so you want to pass that cost on me. You charge me surcharge - an addition to the price. In some States in the US and in some other countries - that is against the law. You cannot add on top of the listed price any amount regardless of the payment method. However, you can say that the list price is $X, which includes the assumed credit card surcharge of $Y. And then you give discount of $Y to anyone not paying with credit card. The list price is still $X, regardless of the payment method. You don't have to give the discount, the discount is your cost of doing business. But that would be legal in some places (not all!) that forbid credit card surcharge. So the main difference from legal perspective is that you're not allowed to add to the list price, but you're allowed to discount from it. Regarding taxes - exemption/deduction is not a penalty for negative. Exemption/deduction is an implementation of a social policy. For example, it is for the public benefit for everyone to own a house. So the Congress comes up with a deduction of mortgage interest. However, you're not penalized if you don't own a house by paying higher taxes. Your tax rate doesn't change. You just don't get to deduct something that you might be able to deduct had you owned a house with a mortgage. This is, again - a discount of a list price, not a surcharge. You're not penalized if you don't have a house or don't have a mortgage, but if you do - you get a break. The author you're quoting claims that bottom line would be the same as if you considered the absence of a deduction as a penalty. But that's not true, because even if you do have a mortgage you may not be able to deduct it because your income is too high, the mortgage is for too much, or your mortgage is not on the primary residence. So mere existence of the mortgage doesn't directly correlate to the existence of the deduction. Similarly with credit card surcharges - you may get a cash discount, but you may get the similar amount of money back even if you use a credit card. Not as a cash discount but rather as rewards, cash-backs or points. However, if there's no cash discount, you won't be getting these if you're paying cash. So again - you're not penalized for having a credit card by not getting a discount, because you may still get it in a different way - and if you don't, you still may end up not getting it. So the quote is a rather simplistic and negative view and more of an opinion than stating a fact.\"" }, { "docid": "101555", "title": "", "text": "\"The government program to keep the unemployed from gaming the system that they mention isn't really what the article is about. Most of their complaints are about internships, apprenticeships, and unpaid overtime for salaried employees. The sectors that are most notorious for these sort of things are those that are often over-saturated with qualified candidates. I work in graphic design. The for-profit colleges in the US churn out graphic design graduates is disgustingly high numbers. It's an easy program to sign people up for because is sounds fun. \"\"Art is fun, computers are fun. Make it a career!\"\" However there really aren't that many graphic design positions available. Lots of unemployed or underemployed graphic designers means that more of them are willing to work for cheap or free to beef up their resumes. Cheap freelance options means companies are getting rid of in-house designers. Those of us that are left can no longer earn what we're worth but to keep doing what we love we have to suck it up and work the long unpaid hours for less pay. similar things are taking place in a lot of sought after professions like finance, law, advertising, public relations, government, and various non-profits. It's not terribly ethical, but it's hard to blame employers for not paying interns then they're salivating for a chance to run coffee just to get a foot in the door. TL;DR: People want their long term career choice worse than they want to get paid immediately.\"" }, { "docid": "8000", "title": "", "text": "If you have any non-mortgage debt – e.g. a credit card, a line of credit, a student loan, or a car loan – then I would pay that down first. The interest being paid on that kind of borrowed money likely exceeds what you could expect to earn in reasonable investments. If you don't have any non-mortgage debt, and your mortgage is large (e.g. thinking about it keeps you up at night, sometimes :-) then go for the the extra mortgage payment. Also go for the mortgage if you're paying at a relatively high interest rate compared to what you could expect from investments. If your mortgage is small (e.g. it's going to be paid off in a few years) and at a relatively low interest rate, then I would choose the RRSP or TFSA. Unless you're in the top income tax bracket, I would favor the TFSA over RRSP – TFSAs were only introduced this year and any balance there already is likely tiny compared to the RRSP. For retirement, I'm aiming to have equal amounts of RRSP and TFSA money. One option you haven't mentioned is an RESP. If you have children under the age of 18, your bonus could also be used to make next year's RESP contribution and qualify for the 20% matching Canada Education Savings Grant (CESG) from the government." }, { "docid": "16563", "title": "", "text": "\"Your lack of numbers makes the question a difficult read. What I'm hearing is \"\"I want a house requiring a mortgage 8X my income.\"\" This alone is enough to suggest it's a bad deal. On a personal note, when my wife and I bought our house, it was 2.5X our income. 20% down, so the mortgage was exactly 2X income. And my wife was convinced we were in over our heads. The use of a partner who will take a portion of the profit is interesting, but doesn't change the fact that you are proposing to live in a house that costs far too much for you. If you are determined to buy such a house, I'd suggest you do it with the plan to rent out a room or two to roommates. If you are living in an area where the cost of buying is so high, the demand for rentals is likely high as well. Absent a plan to bring ion more income, I see no good coming from this. Heed the warnings posted in the other two answers as well.\"" }, { "docid": "310120", "title": "", "text": "You probably won't get a mortgage. UDSA has a 41% ratio of monthly debt to monthly income limit, and a score of 660 or better. A 250,000 mortgage at current rates for 30 year mortgage is about $1560/mo. (included in this figure is the 1% mortgage insurance premium, the .4% annual fee, the current rate for a 660 credit rating, the 2% points fee added at the front of the mortgage, typical closing cost added to transaction, and the .5% fee for over-mortgage insurance for the first 3 years since your mortgage will be higher than the value of the house due to these additional fees) Credit card payments = $120 ($60 times 2) Car payments = $542 ($271 for your car, $271 for the car you will be getting) Student loan = $50/month Child Support = $500/month Total = $2772/month Your income per month is 82000/12 = $6833/month $2772/$6833 = 40.6%... This is awfully close to the limit, so they likely would also look at your ability to save. Not seeing savings in the above example, I assume it is low. USDA site One mortgage help site breaks down some of the requirements into layman's language. Not knowing your exact location (county/state) and how many children you have, it is hard to be sure whether you make too much to qualify. This link shows the income limits by number of people in the house and the county/state. There are few places in which you could be living that would qualify you to any of their programs unless you have a several children. As others have posted, I suggest you get your debt down." }, { "docid": "65461", "title": "", "text": "First, let me fill in the gaps on your situation, based on the numbers you've given so far. I estimate that your student loan balance (principal) is $21,600. With the variable rate loan option that you've presented, the maximum interest rate you could be charged would be 11.5%, which would bring your monthly payment up to that $382 number you gave in the comments. Your thoughts are correct about the advantage to paying this loan off sooner. If you are planning on paying off this loan sooner, the interest rate on the variable rate loan has less opportunity to climb. One thing to be cautious of with the comparison, though: The $1200 difference between the two options is only valid if your rate does not increase. If the rate does increase, of course, the difference would be less, or it could even go the other way. So keep in mind that the $1200 savings is only a theoretical maximum; you won't actually see that much savings with the variable rate option. Before making a decision, you need to find out more about the terms of this variable rate loan: How often can your rate go up? What is the loan rate based on? I'm not as familiar with student loan variable rate loans, but there are other variable rate loans I am familiar with: With a typical adjustable rate home mortgage, the rate is locked for a certain number of years (perhaps 5 years). After that, the bank might be allowed to raise the rate once every period of months (perhaps once every year). There will be a limit to how much the rate can rise on each increase (perhaps 1.0%), and there will be a maximum rate that could be charged over the life of the loan (perhaps 12%). The interest rate on your mortgage can adjust up, inside of those parameters. (The actual formula used to adjust will be found in the fine print of your mortgage contract.) However, the bank knows that if they let your rate get too high above the current market rates, you will refinance to a different bank. So the mortgage is typically structured so that it will raise your rate somewhat, but it won't usually get too far above the market rate. If you knew ahead of time that you would have the house paid off in 5 years, or that you would be selling the house before the 5 years is over, you could confidently take the adjustable rate mortgage. Credit cards, on the other hand, also typically have variable rates. These rates can change every month, but they are usually calculated on some formula determined ahead of time. For example, on my credit card, the interest rate is the published Prime Rate plus 13.65%. On my last statement, it said the rate was 17.15%. (Of course, because I pay my balance in full each month, I don't pay any interest. The rate could go up to 50%, for all I care.) As I said, I don't know what determines the rate on your variable rate student loan option, and I don't know what the limits are. If it climbs up to 11.5%, that is obviously ridiculously high. I recommend that you try to pay off this student loan as soon as you possibly can; however, if you are not planning on paying off this student loan early, you need to try to determine how likely the rate is to climb if you want to pick the variable rate option." }, { "docid": "324948", "title": "", "text": "You'll have much more flexibility and peace of mind if your expenses are based on your current income and that income increases in the future. It's great that you aren't comfortable with spending more, you don't want to end up in the position you just removed yourself from. That said, you don't just ignore planned income altogether. Personally, my wife and I feel best knowing that I have the essentials covered with my income, and that her income primarily helps us put away more for retirement, home renovations, and vacations, because she likely won't work for a long while if we have kids. How you plan depends on your wife's career aspirations and prospects, if your wife has high income potential and you don't plan to buy until after she resumes work, then it may suit you to plan on her income too. You'll have to balance the certainty and amount of her income with your goals. If you're trying to make up ground on savings/retirement, then a less expensive house seems wise anyway. It's a much easier problem to decide what to do with excess funds than feeling trapped/stressed by a high mortgage payment." }, { "docid": "476068", "title": "", "text": "\"I doubt you will get an answer equal to \"\"You can't save when you have debt\"\". Because most mortgages are for decades, very few people would be able to save for retirement if they had to wait to be mortgage free. The difficulty in saving occurs when the interest rate is very high (18% or more) and the interest is not deductible. Such as with credit cards. The minimum payment for your mortgage is 30% of your income. If that doesn't include taxes and homeowners insurance in the 30%, then for the United States that would be considered too large. While the general plan to pay down the mortgage is a good idea, make sure that you are able to handle the minimum payments before starting to increase the payments. Try the minimum for a year or two before getting aggressive The calculation is based on the interest rate of the mortgage, the interest rate of the savings account, and the potential tax deduction of the mortgage and the tax rate on the earned interest. Putting extra money into a mortgage, but missing out on matching retirement money would also have to be figured into the calculation. Make sure you do save for retirement , kids education, and emergencies. Unless your country has a complex system where the money can flow in and out of the mortgage, then once you put extra money into the mortgage you can't get it back when the car dies. The nice thing about putting extra money into a mortgage is that you can do it either in an organized way, or only when you feel comfortable. So it is not urgent for you to commit to a plan immediately. One thing to avoid is a plan that charges you a fee to add extra money, or charges a fee to switch to a bi-weekly mortgage. While your ideas is good, these plans should never cost any money to start, and may be a scam if a 3rd party gets between you and the lender.\"" }, { "docid": "288701", "title": "", "text": "Yes, there are times when co-signing is the right choice. One is when you know more about the person than the loan issuer does. Consider a young person who has just started working in a volatile field, the kind of job where you can be told on Friday that you only get one shift next week but things might pick up the week after, and who makes maybe $12 an hour in that job. You've done the math and with 40 hour weeks they can easily afford the loan. Furthermore, you know this person well and you know that after a few weeks of not enough shifts, they've got the gumption to go out and find a second job or a different job that will give them 40 hours or more a week. And you know that they have some savings they could use to ensure that no payments will be missed even on low-wage weeks. You can cosign for this person, say for a car loan to get them a car they can drive to that job, knowing that they aren't going to walk away and just stop making the payments. The loan issuer doesn't know any of that. Or consider a young person with poor credit but good income who has recently decided to get smart about money, has written out a budget and a plan to rehabilitate their credit, and who you know will work passionately to make every payment and get the credit score up to a place where they can buy a house or whatever their goal is. Again, you can cosign for this person to make that happen, because you know something the lender doesn't. Or consider a middle aged person who's had some very hard knocks: laid off in a plant closing perhaps, marriage failure, lost all their house equity when the market collapsed, that sort of thing. They have a chance to start over again somewhere else and you have a chance to help. Again you know this isn't someone who is going to mismanage their money and walk away from the payments and leave you holding the bag. If you would give the person the money anyway (say, a car for your newly graduated child) then cosigning instead gives them more of a sense of accomplishment, since they paid for it, and gives them a great credit rating too. If you would not give the person the entire loan amount, but would make their payments for many months or even a year (say, your brother's mortgage for the house where he lives with a sick wife and 3 small children), then cosigning is only making official what you would have done anyway. Arrange with the borrower that if they can't make their payments any more, you will backstop them AND the item (car, house, whatever) is going up for sale to cover your losses. If you don't think you could enforce that just from the strength of the relationship, reconsider co-signing. Then sign what you need to sign and step away from it. It's their loan, not yours. You want them to pay it and to manage it and to leave you out of it until it's all paid off and they thank you for your help. If things go south, you will have to pay, and it may take a while for you to sell the item or otherwise stop the paying, so you do need to be very confident that the borrower is going to make every single payment on time. My point is just that you can have that confidence, based on personal knowledge of character, employment situation, savings and other resources, in a way that a lender really cannot." }, { "docid": "403318", "title": "", "text": "&gt; I feel the same way about your arguments, but I still try to respond to the content of your arguments rather than my assumptions about them. You're right, I went ad hominem. Apologies. &gt; Then I guess we have fundamentally different ideas about what is freedom and what is not. You seem to think that forcing someone to negotiate with a party, against their will, is not a violation of any of their rights. We have the same goal, and that's to have a society that results the maximum quality of life for the most amount of people. However, being a pragmatist, this is where I usually fail to find common ground with the libertarian view point. What should be a right and what should be restricted by law is totally subjective. So since any law can be seen as a violation of someone's rights, the argument that a law is wrong simply because it does so is invalid. To me a demonstration that the benefits outweigh the costs is a more powerful argument, though it should probably be shown that there is a significant margin between the two, otherwise I'd have to air on the side of individual rights. We don't have the right to advertise sugar pills as a cure for cancer, we don't have the right to drive our cars after 10 beers, we don't the right to sit on a park bench and start masturbating...we don't have these rights because the cost to our society is greater than the benefits (maybe these aren't the greatest examples but you get the idea). So as for making an employer send a couple representatives to a bargaining table being a violation of their rights, yes it is, but this is such a small cost compared to the benefit of diminishing the chance of work stoppages that have a rippling effect on the economy and the resulting unrest created when people feel like they have no hope [(read the introduction to the NLRA)](https://www.nlrb.gov/national-labor-relations-act) I'd also argue that the NLRA protects more rights than it takes away - mainly the rights of free association and speech. I could raise the issues of unions contributing to a more democratic and socially just society, but I'm guessing that'd fall on deaf ears. In general though, I think you give the idea of a union too much credit. Do you know how hard it is to get colleagues to start seeing one another as having shared interests? It ain't easy, that's for sure. &gt; The solution is to let the process of economic development run its course until child labor is not necessary. You may very well be right about this, but a child working a mundane job instead of building their mind, diminishes the life of one not strong enough yet to determine their own course, is just so terribly wrong. So I just have a hard time accepting this, especially living in a world where there is such with such a huge wealth disparity. &gt; A union is not a self-interested party. A union represents self-interested parties, who are not directly affected by the destruction of their industry 30 years into the future, since they would have retired by then. Unions are generally made up of the socially conscious type - no one gets into organizing for the money. I can't say for certain if this challenges your point, however I don't exactly see the difference between the unionist who is going to retire and the CEO is going to retire and the shareholders who can pull out when put their money elsewhere when it suits them. &gt; Many of the laws and union-backed agreements that ended up destroying many of America's industries took decades to have their full effect. It wasn't a case of a law being passed, and the next year, the industry going bankrupt. Examples needed where the industries were actually bankrupted, not just moved overseas to increase profits because workers will settle for less. &gt; Why should employers pay out the most they can afford, and why should laws be passed to force employers to do so? The only reason people invest is to profit. If all profits had to be paid to employees, there would be no incentive to invest, and therefore no increase in capital/productivity. I never said that employers should be paying out all they can afford, and you setting up this straw man only reiterates my point that these discussions with libertarian types all too often come down to this zero-sum game, where an increase in working conditions will trigger bankruptcy, which I think stems from a belief that supply-side economics is keeping standards the highest they can possibly be. If a company has an operating income of $1 bil, what is giving a 5% pay raise to workers going to do, except make that operating income slightly less? I suppose it'd be better if that money were invested back into the company...but wait, aren't people a resource to invest in? And one that offers a high rate of return? Take the the lock-out of ConEd workers in NYC for example: ConEd's profits were over 2 billion when their previous contract was signed, and a few years later when their contract expired the profits were still that high. What did ConEd do? They came to the table with an offer that slashed their benefits tremendously, and locked-out all the workers when the union rejected it. How can the case be made that ConEd couldn't afford to give workers what they already had? Has their value all of a sudden dropped? I don't think so. This is just greed, and doesn't contribute to a healthy society." }, { "docid": "230297", "title": "", "text": "\"tl;dr: Your best course of action is probably to do a soft pull (check your own credit) and provide that to the lender for an unofficial pre-approval to get the ball rolling. The long of it: The loan officer is mostly correct, and I have recent personal evidence that corroborates that. A few months ago I looked into refinancing a mortgage on a rental property, and I allowed 3 different lenders to do a hard inquiry within 1 week of each other. I saw all 3 inquires appear on reports from each of the 3 credit bureaus (EQ/TU/EX), but it was only counted as a single inquiry in my score factors. But as you have suggested, this breaks down when you know that you won't be purchasing right away, because then you will have multiple hard inquiries at least a few months apart which could possibly have a (minor) negative impact on your score. However minor it is, you might as well try to avoid it if you can. I have played around with the simulator on myfico.com, and have found inquiries to have the following effect on your credit score using the FICO Score 8 model: With one inquiry, your scores will adjust as such: Two inquiries: Three inquiries: Here's a helpful quote from the simulator notes: \"\"Credit inquiries remain on your credit report for 2 years, but FICO Scores only consider credit inquiries from the past 12 months.\"\" Of course, take that with a grain of salt, as myfico provides the following disclaimer: The Simulator is provided for informational purposes only and should not be expected to provide accurate predictions in all situations. Consequently, we make no promise or guarantee with regard to the Simulator. Having said all that, in your situation, if you know with certainty that you will not be purchasing right away, then I would recommend doing a soft pull to get your scores now (check your credit yourself), and see if the lender will use those numbers to estimate your pre-approval. One possible downside of this is the lender may not be able to give you an official pre-approval letter based on your soft pull. I wouldn't worry too much about that though since if you are suddenly ready to purchase you could just tell them to go ahead with the hard pull so they can furnish an official pre-approval letter. Interesting Side Note: Last month I applied for a new mortgage and my score was about 40 points lower than it was 3 months ago. At first I thought this was due to my recent refinancing of property and the credit inquiries that came along with it, but then I noticed that one of my business credit cards had recently accrued a high balance. It just so happens that this particular business CC reports to my personal credit report (most likely in error but I never bothered to do anything about it). I immediately paid that CC off in full, and checked my credit 20 days later after it had reported, and my score shot back up by over 30 points. I called my lender and instructed them to re-pull my credit (hard inquiry), which they did, and this pushed me back up into the best mortgage rate category. Yes, I purposely requested another hard pull, but it shouldn't affect my score since it was within 45 days, and that maneuver will save me thousands in the long run.\"" }, { "docid": "54322", "title": "", "text": "First, you need to be aware that the credit score reported by Mint is Equifax Credit Score. Equifax Credit Score, like FICO, Vantagescore, and others, is based on a proprietary formula that is not publicly available. Every score is calculated with a different formula, and can vary from each other widely. Lenders almost exclusively only use FICO scores, so the score number you have is likely different than the score lenders will use. Second, understand that the advice you see from places like Mint and Credit Karma will almost always tell you that you don't have enough credit card accounts. The reason for this is that they make their money by referring customers to credit card applications. They have a financial interest in telling you that you need more credit cards. Finally, realize that credit score is just a number, and is only useful for a limited number of things. Higher is better to a point, and after that, you get no benefit from increasing your score. My advice to you is this: Don't stress out about your credit score, especially a free score reported by Credit Karma or Mint. If you really have a desire to find out your score, you can pay FICO to get your actual score, but it's not cheap. You can also sometimes get your FICO score by applying for a loan and asking the lender. I last saw my FICO scores (there were three, one from each credit bureau) when I applied for a mortgage a couple of years ago, and the mortgage rep gave them to me for free. But honestly, knowing your score doesn't do much for you, as the best way to increase it is to simply make your payments on time and wait. Don't give in to bad conventional advice from places that are funded by the financial services industry. The thing that makes your credit score go up is a long history of paying your bills on time. Despite what you commonly read about credit scores, I'm not convinced that you can radically boost your scores by having lots of open credit card accounts. At the time I applied for my last mortgage, I only had 2 open credit cards (still true), and the oldest open account was about 1.5 years old. The average of my 3 scores was just over 800. But I've been paying my bills on time for at least 20 years now. Only get credit cards that you actually want, and close the ones you don't want." }, { "docid": "256228", "title": "", "text": "\"The gift issue, as explained to me by the mortgage officer at our credit union, is that they look at the average balance of your checking/savings accounts of the 3-6 months prior to mortgage issuance date. They look at the average balance to make sure you are financially stable beyond what your income and credit score indicate. With an average balance of $2500, the bank will (reasonably) presume you CANNOT make a $10k down payment. By not \"\"using\"\" the $10k gift-from-dad, you're showing the bank that you're more financially stable than if it came in and went right back out: that looks like you're a free spender, and it will cast doubt on your willingness/ability to repay the loan. Presuming your average balances are already \"\"ok\"\", the best way to utilize the gift-from-dad is in one of the following manners, in my opinion:\"" }, { "docid": "12329", "title": "", "text": "Your mortgage represents a negative cash flow of $X for N months. The typical mortgage prepayment doesn't reduce your next payment, but does reduce the length of the mortgage. If you look at the amortization table of a 30 year loan, you might see a payment of $1000 but only $50 going to principal. So if on day one you send an extra $51 or so to the bank, you find that in 30 years you just saved that $1000 payment. In effect, it was a long term bond or CD, yielding the post tax rate of the mortgage. Say your loan were 7%. At 7%, money doubles every 10 years or so. 30 years is 3 doubles or 8X. If I were to offer you $1000 and ask for $7500 in 30 years, you might accept it, with an agreement to buy me out if you refinanced. For me, that would be an investment. Just like buying a bond. In fact, there is a real return, as you see the cash flow at the end. The payments 'not made' are your payback. Those who insist it's not an investment are correct in the strict sense of the word's definition, but pedantic for the fact in practice, the prepayment is a choice to be considered alongside other investment choices. When I have a mortgage, I am the mortgagor, the bank, the mortgagee. Same as a company issuing a bond, the Bank holds my bond and I'm making payments to them. They hold my bond as an investment. There is no question of that. In fact, they package these and sell them as CMOs, groups of mortgages. A pre-payment is me buying back the last coupon on my mortgage. I fail to see the distinction between me 'buying back' $10K in future coupons on my own loan or me investing $10K in someone else's loans. The real question for me is whether this makes sense when rates are so low. At 4%, I'd say it's a matter of prioritizing any high rate debt and any other investments that might yield more. But even so, it's an investment yielding 4%. Over the years, I've developed the priorities of where to put new money - The priorities are debatable. I have my opinion, and my reasons to back them up. In general, it's a balance between risk and return. In my opinion, there's something wrong with ignoring a dollar for dollar match on the 401(k) in most circumstances. Others seem to prefer being 100% debt free before saving at all. There's a balance that might be different for each individual. As I started, the mortgage is a fixed return, with no chance to just get it back if needed. If your cash savings is pretty high, and the choice is a .001% CD or prepay a 4% mortgage, I'd use some funds to pay it down. But not to the point you have no liquid reserves." }, { "docid": "164801", "title": "", "text": "\"I live in the UK so it's a little different but generally you'd have one account (a current account) which would have a Visa/MasterCard debit card associated before working and any high street bank (don't know what the US equivalent would be, but big banks such as HSBC/Santander) will offer you a savings account which pays a v small amount of interest as well as bonds as all sorts. From what I know most people have their salary paid into their current account (which would be the spending account with a card associated) and would transfer a set amount to a savings account. Personally, I have a current account and a few different saving accounts (which do not have cards associated). One savings account has incoming transfers/money received and I can use online banking to transfer that to my current account \"\"instantly\"\" (at least I've done it standing at ATM's and the money is there seconds later - but again this is the UK, not US). This way, my primary current account never has more than £10-15 in it, whenever I know I need money I'll transfer it from the instant access account. This has saved me before when I've been called by my bank for transactions a few £100 each which would have been authorised I kept all my money in my current account. If you don't have money (and dont have an overdraft!) what are they meant to do with it? The other savings account I had setup so that I could not transfer money out without going into a branch with ID/etc, less to stop someone stealing my money and more to be physically unable to waste money on a Friday if I don't arrive at the bank before 4/5PM, so saves a lot of time. US banking is a nightmare, I don't imagine any of this will translate well and I think if you had your salary paid into your savings on a Friday and missed the bank with no online banking facilities/transfers that aren't instant you'd be in a lot of trouble. If the whole \"\"current + instant access savings account\"\" thing doesn't work to well, I'm sure a credit/charge (!!!) card will work instead of a separate current account. Spend everything on that (within reason and what you can pay back/afford to pay stupid interest on) on a card with a 0% purchase rate and pay it back using an account you're paid into but is never used for expenses, some credit cards might even reward you for this type of thing but again, credit can be dangerous. A older retired relative of mine has all of his money in one account, refuses a debit card from the bank every time he is offered (he has a card, but it isn't a visa/mastercard, it's purely used for authentication in branch) and keeps that in a safe indoors! Spends everything he needs on his credit card and writes them a sort of cheque (goes into the bank with ID and signs it) for the full balance when his statement arrives. No online banking! No chance of him getting key logged any time soon. tldr; the idea of separating the accounts your money goes in (salary wise) and goes out (spending) isn't a bad idea. that is if wire transfers don't take 3-5 days where you are aha.\"" }, { "docid": "292982", "title": "", "text": "For most, it's usually $30 to initially freeze ($10 x 3 major credit bureaus) then $30 in the future to unfreeze for a certain time frame each time you need a credit check, ie applying for a credit card, mortgage, auto lease. It may well be worth it to avoid thousands of dollars of losses from identity theft but still doesn't seem low cost to me. Looked into it but will take my chances. Equifax is super sketchy to not make at least their own freezing service free for life given their huge screwup. $20 for every credit check for the rest of my life would have been more reasonable but still a decent amount of money." } ]

[ { "docid": "341399", "title": "", "text": "A possibility could be real estate brokerage firms such as Realogy or Prudential. Although a brokerage commission is linked to the sale prices it is more directly impacted by sales volume. If volume is maintained or goes up a real estate brokerage firm can actually profit rather handsomely in an up market or a down market. If sales volume does go up another option would be other service markets for real estate such as real estate information and marketing websites and sources i.e. http://www.trulia.com. Furthermore one can go and make a broad generalization such as since real estate no longer requires the same quantity of construction material other industries sensitive to the price of those commodities should technically have a lower cost of doing business. But be careful in the US much of the wealth an average american has is in their home. In this case this means that the economy as a whole takes a dive due to consumer uncertainty. In which case safe havens could benefit, may be things like Proctor & Gamble, gold, or treasuries. Side Note: You can always short builders or someone who loses if the housing market declines, this will make your investment higher as a result of the security going lower." } ]

[ { "docid": "179073", "title": "", "text": "Foreign stocks have two extra sources of risk attached to them; exchange rate and political. Exchange rate risk is obvious; if I buy a stock in a foreign currency and there is a currency movement that makes that investment worth less I lose money no matter what the stock does. This can be offset using exchange rate swaps. (This is ceteris paribus, of course; changes in exchange rate can give a comparative advantage to international and exporting companies that will improve the fundamentals and so increase the price of the stock relative to a local firm. The economics of the firms in particular are not explored in this answer as it would get too complicated and long if I did.) Political risk relates not only to the problems surrounding international politics such as a country deciding that foreign nationals may no longer own shares in their national industries or deciding to seize foreign nationals' assets as happens in some areas. Your home country may also decide to apply sanctions to the country in which you are invested thus making it impossible to get your money back even though the foreign country will allow you to redeem them or sell. Diplomatic relations and trade agreements tend to be difficult. There are further problems in lack of understanding of foreign countries' laws, tax code, customs etc. relating to investments and the necessity to find legal representation in a country you may never have visited if there are issues. There is also a hidden risk in that, as an individual investor, you are not likely to be reading the local financial news for that country regularly enough to spot company specific issues arising. By the time these issues get into international media its far too late as all of the local investors have sold out of their positions already. The risks are probably no different if you have the time to monitor international relations and the foreign country's news, and have FX swaps in place to counteract FX risk as the funds and investment banks do but as an individual investor the time required is not feasible." }, { "docid": "247313", "title": "", "text": "\"There are two primary reasons shares are sold short: (1) to speculate that a stock's price will decline and (2) to hedge some other related financial exposure. The first is acknowledged by the question. The second reason may be done for taxes (shorting \"\"against the box\"\" was once permitted for tax purposes), for arbitrage positions such as merger arbitrage and situations when an outright sale of stock is not permitted, such as owning restricted stock such as employer-granted shares. Why would a shareholder lend the investor the shares? The investor loaning his stock out to short-sellers earns interest on those shares that the borrower pays. It is not unusual for the annualized cost of borrowing stock to be double digits when there is high demand for heavily shorted shares. This benefit is however not available to all investors.\"" }, { "docid": "262925", "title": "", "text": "\"It is important to first understand that true causation of share price may not relate to historical correlation. Just like with scientific experiments, correlation does not imply causation. But we use stock price correlation to attempt to infer causation, where it is reasonable to do so. And to do that you need to understand that prices change for many reasons; some company specific, some industry specific, some market specific. Companies in the same industry may correlate when that industry goes up or down; companies with the same market may correlate when that market goes up or down. In general, in most industries, it is reasonable to assume that competitor companies have stocks which strongly correlate (positively) with each-other to the extent that they do the same thing. For a simple example, consider three resource companies: \"\"Oil Ltd.\"\" [100% of its assets relate to Oil]; \"\"Oil and Iron Inc.\"\" [50% of its value relates to Oil, 50% to Iron]; and \"\"Iron and Copper Ltd.\"\" [50% of its value relates to Iron, 50% to Copper]. For each of these companies, there are many things which affect value, but one could naively simplify things by saying \"\"value of a resource company is defined by the expected future volume of goods mined/drilled * the expected resource price, less all fixed and variable costs\"\". So, one major thing that impacts resource companies is simply the current & projected price of those resources. This means that if the price of Oil goes up or down, it will partially affect the value of the two Oil companies above - but how much it affects each company will depend on the volume of Oil it drills, and the timeline that it expects to get that Oil. For example, maybe Oil and Iron Ltd. has no currently producing Oil rigs, but it has just made massive investments which expect to drill Oil in 2 years - and the market expects Oil prices to return to a high value in 2 years. In that case, a drop in Oil would impact Oil Inc. severely, but perhaps it wouldn't impact Oil and Iron Ltd. as much. In this case, for the particular share price movement related to the price of Oil, the two companies would not be correlated. Iron and Copper Ltd. would be unaffected by the price of Oil [this is a simplification; Oil prices impact many areas of the economy], and therefore there would be no correlation at all between this company's shares. It is also likely that competitors face similar markets. If consumer spending goes down, then perhaps the stock of most consumer product companies would go down as well. There would be outliers, because specific companies may still succeed in a falling market, but in generally, there would be a lot of correlation between two companies with the same market. In the case that you list, Sony vs Samsung, there would be some factors that correlate positively, and some that correlate negatively. A clean example would be Blackberry stock vs Apple stock - because Apple's success had specifically negative ramifications for Blackberry. And yet, other tech company competitors also succeeded in the same time period, meaning they did not correlate negatively with Apple.\"" }, { "docid": "422467", "title": "", "text": "The problem with rate of return calculation on short positions is, that the commonly used approach assumes an initial investment creating a cash outflow. If we want to apply this approach to short selling, we should look at the trade from another perspective. We buy money and pay for this money with stock. Our investment to buy 50$ in your example is 1 share. When closing the short position, we effectively sell back our money (50$) and receive 2 shares. Our profit on this position is obviously 1 share. Setting this in relation to our investment of 1 share yields a performance of 100% in reality, we do not sell back the entire cash but only the amount needed to get back our investment of 1 share. This is actually comparable to a purchase of stock which we only partially close to get back our invested cash amount and keep the remaining shares as our profit" }, { "docid": "286141", "title": "", "text": "This would clear out a lot more. 1) Leverage is the act of taking on debt in lieu of the equity you hold. Not always related to firms, it applies to personal situations too. When you take a loan, you get a certain %age of the loan, the bank establishes your equity by looking at your past financial records and then decides the amount it is going to lend, deciding on the safest leverage. In the current action leverage is the whole act of borrowing yen and profiting from it. The leverage factor mentions the amount of leverage happening. 10000 yen being borrowed with an equity of 1000 yen. 2) Commercial banks: 10 to 1 -> They don't deal in complicated investments, derivatives except for hedging, and are under stricter controls of the government. They have to have certain amount of liquidity and can loan out the rest for business. Investment banks: 30 to 1 -> Their main idea is making money and trade heavily. Their deposits are limited by the amount clients have deposited. And as their main motive is to get maximum returns from the available amount, they trade heavily. Derivatives, one of the instruments, are structured on underlyings and sometimes in multiple layers which build up quite a bit of leverage. And all of the trades happen on margins. You don't invest $10k to buy $10k of a traded stock. You put in, maybe $500 to take up the position and borrow the rest of the amount per se. It improves liquidity in the markets and increases efficiency. Else you could do only with what you have. So these margins add up to the leverage the bank is taking on." }, { "docid": "495717", "title": "", "text": "\"Sorry in advance, but this will be long. Also, it sounds like your friend is a tool. I hope this \"\"friend\"\" is not also your financial advisor... they would be encouraging you to make a very poor investment decision. They also don't know how to do financial math. For what it's worth, I am not wrong. I have correctly answered a set of changing questions as you have asked them... Your friend is answering based on a third, completely different investment model, which you proposed in the edit to your last post. If that's what you meant all along, then you should have been more clear in the questions you were asking. Please let me layout the following: How the previous questions//investment proposals were built How to analyze this current proposal What your other option is Why the other option is best in a 'real world' market The First Question My understanding of the initial proposal was to take out a $10,000 loan, invest the proceeds, and expect to not have any money of your own tied up in this. Because that OP did not specify that this is an interest-only loan (you still haven't in any of your questions), the bank will require you to make payments back to them each month that include principal and interest. Your \"\"friend\"\" is talking about the total interest paid being the only cost of a loan. While that is (almost) true, regardless of what your friend says, significantly more cash is involved in making sure that all the payments are made on time---unless you set up an interest-only loan. But with the set up laid out in this post, and with the assumptions I specified there, the principal payments must be included because the borrower has to pay back the bank and isn't not tying up any of their own money. In that case, my initial analysis is correct--your breakeven is in the low teens for an annual required return. The Second Proposal Your second proposal... before any edits... refined things a little bit, to try to capture the any possible returns by not selling something. As I indicated there, (with what was an exaggerating assumption), the lack of clarity makes for an outlandish required return. The Second Proposal...with edits, or the one proposed above I will get to the one proposed above in a second, but first let me highlight a few problems with your friend's analysis. Simple interest: the only place (in the US at least) that will lend with simple interest is student loans. Any loan that you actually take out will be compound interest. Not an interest only loan: your \"\"friend\"\" is not calculating interest correctly. Since this isn't an interest-only loan, the principal balance will reduce every time you make a payment, by ~$320-$340 each month. This substantially reduces the total interest paid, to $272.79 over the total 24 months. \"\"Returns\"\": I don't know what country, or what business your friend works in, but \"\"returns\"\" are a very ambiguous concept. Investopedia defines returns as gains or losses. (I wish I could inhabit the lala land that your friend lives in when returns are always positive). TheFreeDictionary.com defines a return for finance as \"\"The change in the value of a portfolio over an evaluation period, including any distributions made from the portfolio during that period.\"\" When you have not made it clear that any other money is being used in this investment plan (as was the case in scheme #1 and scheme #2a,) the loan still has to be paid. So, clearly the principal must be included in the return calculations. How to evaluate this proposed investment scheme Key dimensions: Loan ($8,000 ... 24 months ... 0.27% monthly rate... monthly compounding... no loan origination fees) Monthly payment (PMT in Excel yields $344.70). Investment capital (starting = $8,000) Monthly Return (Investment yields... we hope it's positive!) Your monthly contribution from your salary Taxes = 10%. Transaction Fees = $20 Go and lookup how to build an amortization table for a loan in Excel. Your life will be infinitely better for it. Now, you get this loan set up and invested into something... (it costs $20 to buy the assets). So you've got $7980 chugging away earning interest. I calculate that your break even, with you paying in $344.70 of your own money each month is 1.81% annually, or 3.42% over the 24 month life of this scheme. That is using monthly compound interest for the payments, because that's what the real world would use, and using monthly compounding of the investments' returns. Your total interest expense would be $272.79. This seems feasible. But let's talk about what your other option is, given that you're ready to spend $344.70 each month on an investment. Your other option I understand the appeal of getting $8,000... right away... to invest in something. But the risk behind this is that if the market goes down (and markets do) you're stuck paying a fixed amount for your loan that is now worth less money. Your other option is to take your $344.70, and invest it step-by-step. (You would want to skip a month or two buying assets in the market, so that you can lessen transaction costs). This has two advantages: (1) you save yourself $272 in interest. (2) When the market goes down, you still win. With this strategy, you still win when the market goes down because of what is commonly called \"\"dollar cost averaging\"\". When the market is up, your investments are also up. When the market goes down, your previous investments decrease in value but you can invest new money at the lower rates. Why the step-by-step, invest your own money strategy is better At low rates (when you're looking for your break-even), the step-by-step model outperforms the loan. At higher rates of return (~4% + per year), you get the benefit of having the borrowed money earning more gains. In fact, for every continuous (meaning set... not changing month-to-month) interest rate that you can dream up that is greater than about 4% per year, the borrowed money earns more. At 10% per year, the borrowed money will earn about $500 more over the 2 years than your step by step investment would. BUT I recognize that you might feel like the market will always go up. That's what everyone thinks. And that's alright. But have one really bad month, or a couple of just-not-great-months, and your fixed 'loan' portfolio will underperform. Have a few really bad months, and your portfolio could be substantially reduced in value... but you would still be paying the same amount for it each month. And if that happened (say your assets declined -3% in 3 of the 24 months...) You'd be losing money relative to the step-by-step portfolio.\"" }, { "docid": "309387", "title": "", "text": "The risk-reward relation depends on what you are changing. In the most cases people ask about, it is not linear but I will give examples of both. Nonlinear case 1: As you diversify your portfolio, the firm-specific risks of various stocks cancel each other out without necessarily affecting the expected return of the portfolio. Reduction in risk without any loss in returns--very nonlinear. Nonlinear case 2: If you are changing the weights in your portfolio to move along the efficient frontier, then you the risk-reward relation is a hyperbola, which is nonlinear. Nonlinear case 3: If you are changing the weights in your portfolio to move away from the efficient frontier, then you increase risk without adding a fully compensatory amount of return. There could be many paths along the risk-reward plane, but generally it will not be linear in the sense that it will not be on the same line as your initial, efficient, portfolio and your savings account. Linear case 1: The most common sense in which we think of the risk-reward relation being linear is when the thing you are changing is the size of your investment. If you take money out of savings to put in your fully diversified portfolio without changing the relative weights, your expected returns will increase linearly. Linear case 2: If you believe the CAPM, then the expected return of an asset stock is linearly proportional to the market risk of the firm. If you could change the market risk of a single asset without changing anything else, then you would linearly change its expected return. The general rule about the risk/reward relation is this: If you are changing the size of your investment, the relation is linear. If you are changing its composition, the relation is nonlinear" }, { "docid": "79378", "title": "", "text": "\"1) Don't buy a house as an investment. Buy a house because you've reached the point in your life where you don't expect to move in the next five years and you'd prefer to own a house (with its advantages/disadvantages) than to rent (with its advantages/disadvantages). Thinking of houses primarily as investments is what caused the housing bubble, crash, and Great Recession. 2) Before buying a house for cash, look at the available mortgage interest rates versus market rate of return. Owning the house outright is slightly lower stress, but using the house as the basis for a \"\"leveraged investment\"\" may be financially wiser. (I compromised; I paid 50% down and took a mortgage for the other 50%.) 3) 1 year is short-term. Your money doesn't belong in the market if you're going to need it in the short term. If you really intend to pull it back out that soon, I'd stick with CD/money-market kinds of instruments. 4) Remember that while a house is illiquid, it is possible to take out home equity loans... so money you put into a house isn't completely inaccessible. You just can't move elsewhere as easily.\"" }, { "docid": "177442", "title": "", "text": "\"I invested in single family homes and made ok. Houses can be an investment. (though the OP seems to equate \"\"house\"\" with primary residence) Just like any other investment buying houses has risks. I would not treat your primary residence or a vacation home as an investment. That is asking for trouble, but for many many years it was safe to assume that you would make a good return on it, and many people did. If you evaluate the numbers for purchase price, rental market, etc and find that rentals or flipping is worth your exposure then by all means, do it. But treating your primary residence as an investment apparently is what that comment means. Just like the stock market, many people have gotten wealthy on homes and there are lots of people who lost their shirts.\"" }, { "docid": "41052", "title": "", "text": "I agree with Joe that you seem to have your stuff together. However I can't disagree more otherwise. You are getting a loan at such a cheap rate that it would be almost impossible to not substantially beat that rate over the next 15-20 years. You paying off your home early might give you warm fuzzy feeling but would make me queezy. This is a MONEY website. Make money. For our purposes let's say your home is worth 500k, you can get a fixed rate loan at 3% over 30 years, and you can earn 7% on your investments per year. Note that I have earned 12% on mine the past 15 years so I am being pretty conservative. So let's not get into your other stuff because that is fine. Let's focus just on that 500k - your house. Interest only Loan for the whole thing- The flip side is you pay off your house. Your house could be worth 400K in 30 years. Probably not but neighborhood could decline, house not kept up, or whatever. Your house is not a risk-free investment. And it fluctuate in many areas more than the stock market. But let's just say your area stays OK or normal. In 30 years you can expect your house to be worth somewhere between 700k to 1.5 million. Let's just say you did GREAT with your house. Guess what? At 1.5 million selling price you still lost 1.5 million because of your decision plus sunk your money into a less liquid option. Let the bank take the risk on your house price. The warm fuzzy feeling will be there when you realize you could rebuy your house two times over in 6-7 years. Note: I know my example doesn't use your exact numbers. I am just showing what your true cost is of making a decision in the most extreme way. I am guessing you have great credit and might be able to find an all interest loan at 3%. So not doing this is costing you 1.5 million over 30 years. Given a lower home price after 30 years or a higher rate of return this easily be much more. IF you earned 12% over the 30 year period you would be costing yourself 16 million - do the math. Now you are talking about doing something in-between. Which means you will basically have the same risk factors with less return." }, { "docid": "289", "title": "", "text": "\"So you're basically saying that average market fluctuations have an affect on individual stocks, because individual stocks are often priced in relation to the growth of the market as a whole? Also, what kinds of investments would be considered \"\"risk free\"\" in this nomenclature?\"" }, { "docid": "76283", "title": "", "text": "House as investment is not a good idea. Besides the obvious calculations don't forget the property tax, home maintenance costs and time, insurance costs, etc. There are a lot of hidden drains on the investment value of the house; most especially the time that you have to invest in maintaining it. On the other hand, if you plan on staying in the area, having children, pets or like do home improvements, landscaping, gardening, auto repair, wood/metal shopping then a house might be useful to you. Also consider the housing market where you are. This gets a bit more difficult to calculate but if you have a high-demand rental market then the house might make sense as an investment if you can rent it out for more than your monthly cost (including all of those factors above). But being a landlord is not for everyone. Again more of your time invested into the house, you have to be prepared to go months without renting it, you may have to deal with crazy people that will totally trash your house and threaten you if you complain, and you may need to part with some of the rent to a management company if you need their skills or time. It sounds like you are just not that interested right now. That's fine. Don't rush. Invest your money some other way (i.e.: the stock market). More than likely when you are ready for a house, or to bail your family out of trouble (if that's what you choose to do), you'll have even more assets to do either with." }, { "docid": "352894", "title": "", "text": "\"Offtopic, but what do you think of the idea of the stock market being a \"\"ponzi scheme\"\"? I've had this same idea that [Mark Cuban reiterated well by writing](http://blogmaverick.com/2008/09/08/talking-stocks-and-money/): &gt;Ive said a lot of this before. The stock market is by definition a ponzi scheme. As long as money keeps on coming in, then there is someone to take the stocks from the sellers. If the amount of money coming in is reduced, the stocks, indexes, et al go down. What if, for who knows whatever reason, the amount of money going into stocks declined significantly ? Who would buy stock from the sellers. I mean goodness gracious, you could see something disastrous happen. Like the Nasdaq dropping from 5000, to under 2000 in just a few years. Its happened before, it can happen again. &gt; &gt;Which is exactly why we get all these nonsensical commercials from brokerages. To keep the money coming in . I wish someone would index the amount of money spent on marketing by mutual funds and brokerages to the Nasdaq and Dow and see if it correlates. &gt; &gt;Money inflows drives the business. We can get all the economic data we ever dreamed of getting, but if money inflows declined significantly for an extended period of time, then every rule of thumb would go out the window until money started flowing in. Yes it would flow in eventually as prices dropped. From big investors like me who wouldnt have gotten hurt by a huge market decline and could come in and buy huge chunks, or companies outright. &gt; &gt;You ? You probably would be like Charles Ponzi’s customers. You wouldnt be able to get your money out of the fund when it went down, and by the time you did, it would be too late. You would have been crushed. &gt; &gt;Ive said it before, a stock that doesnt pay dividends is valued like a baseball card. Just whatever you can sell it for. The concept that you own “your share” of the company is a joke. You are completely at the whim of the CEO and board who will dilute you on a daily basis with stock options, then try to buy back stock to cover it up and push up the price, rewarding the shareholders who get out, rather than those that continue to hold the shares. Meaning you. &gt; &gt;Have you ever seen Warren Buffet talk about buying 100 shares of anything k shares ? or does he take control of , or purchase a material percentage of a company ? &gt; &gt;If you have enough money to have influence , take control or buy it outright, then the stock market can work for you. Thats why I buy stock in public companies that relate to my other business entities. When i pick up the phone and call the CEO of a company i own shares in, they call me back very quickly. When I ask if there are business opportunities that make sense for the company and another company of mine to work together, I wont always get the business, but I will always get a meeting. If Im smart about the investments I make, the more important returns come from the relationships with the companies than the action of the stock. &gt; &gt;If the best you can do is buy shares that are going to be continuously diluted, then you are merely a sucker. There is a good chance that the shares you bought came from shares an insider who got stock options. You just helped dilute yourself with your first share purchase. &gt; &gt;The wealthy can make the stockmarket work for them. Individuals buying shares of stock in non dividend paying stocks… they work for the stockmarket. &gt; &gt;I know Ive painted a pretty bleak picture. &gt; &gt;The stockmarket isnt going away. Would it shock me if the whole thing collapsed ? yes. it would. Its just too engrained in our way of life in the USA. What would change my mind is if a better investment vehicle came along. &gt; &gt;The stockmarket used to be about investing capital in companies that came public or did secondary offerings. That money was used to create amazing businesses and return dividends back to people who truly were investors. There once was a day where most companies paid dividends higher than the interest rates on their bonds. Why ? Because stocks are inherently more risky. If a company goes belly up, bondholders collect first, shareholders usually last. People could buy and hold stocks, and get paid real cash money for being a shareholder in the company at rates far higher than the divident yields we see today. If the company did well, the dividends went up. Investors who held, actually got all their money back in dividends at some point and the rest was gravy. The good ole days. &gt; &gt;But that changed when mutual funds came along and started marketing the concept of growth as a way to attract investors. &gt; &gt;Its not inconceivable that the old mindset could comeback. That a new market of stocks could be created where companies didnt continuously dilute shareholders by issuing stock and options to themselves. Where earnings were earned for the same reason they are in private companies, to not only fund growth, but also provide cash back to investors. Now if that market existed today. Where I could buy 100 shares of stock, and even if it represented just 1/100000 of ownership in the company, I could have confidence that year after year, I would still own 1/100000th of that company, and if that company generated earnings , I would have at least some of that money returned to me. Well then, that wouldnt be a ponzi scheme. That would be a true market of stocks, and I would be happy to recommend to anyone to be careful, but buying stocks in that market could be something worth considering if your appetite for risk canhandle it.\"" }, { "docid": "123718", "title": "", "text": "You're being too hard on yourself. You've managed to save quite a bit, which is more than most people ever do. You're in a wonderful position, actually -- you have savings and time! You don't mention how long you want/need to continue working, but I'll assume 20 years or so? You don't have to invest it all at once. Like Pete B says, index funds (just read what Mr. Buffett said in recent news: he'd tell his widow to invest in the S&P 500 Index and not Berkshire Hathaway!) should be a decent percentage. You can also pick a target fund from any of the major investment firms (fees are higher than an Index, but it will take care of any asset allocation decisions). Put some in each. Also look at retirement accounts to take advantage of tax-deferred or tax-free growth, but that's another question and country-specific. In any case, don't even blink when the market goes down. And it will go down. If you're still working, earning, and saving, it'll just be another opportunity to buy more at lower prices. As for the house, no reason you can't invest and save for a house. Invest some for the long term and set aside the rest for the house in 1-5 years. If you don't think you'll ever really buy the house, though, invest the majority of it for the long-term: I have a feeling from the tone of your question that you tend to put off the big financial decisions. So if you won't really buy the house, just admit it to yourself now!" }, { "docid": "475418", "title": "", "text": "\"Great question! A Yield Curve is a plot of the yields for different maturities of debt. This can be for any debt, but the most common used when discussing yield curves is the debt of the Federal Government. The yield curve is observed by its slope. A curve with a positive slope (up and to the right) or a steepening curve, i.e. one that's becoming more positively sloped or less negatively sloped, may indicate several different situations. The Kansas City Federal Reserve has a nice paper that summarizes various economic theories about the yield curve, and even though it's a bit dated, the theories are still valid. I'll summarize the major points here. A positively sloped yield curve can indicate expectations of inflation in the future. The longer a security has before it matures, the more opportunities it has to be affected by changes in inflation, so if investors expect inflation to occur in the future, they may demand higher yields on longer-term securities to compensate them for the additional inflationary risk. A steepening yield curve may indicate that investors are increasing their expectations of future inflation. A positively sloped yield curve may also reflect expectations of deprecation in the dollar. The publication linked before states that depreciation of the dollar may have increased the perceived risk of future exchange rate changes and discouraged purchases of long-term Treasury securities by Japanese and other foreign investors, forcing the yields on these securities higher. Supply shocks, e.g. decreases in oil prices that lead to decreased production, may cause the yield curve to steepen because they affect short-term inflation expectations significantly more than long-term inflation. For example, a decrease in oil prices may decrease short-term inflation expectations, so short-term nominal interest rates decline. Investors usually assume that long-term inflation is governed more by fundamental macroeconomic factors than short-term factors like commodity price swings, so this price shock may lead short-term yields to decrease but leave long-term relatively unaffected, thus steepening the yield curve. Even if inflation expectations remain unchanged, the yield curve can still change. The supply of and demand for money affects the \"\"required real rate,\"\" i.e. the price of credit, loans, etc. The supply comes from private savings, money coming from abroad, and growth in the money supply, while demand comes from private investors and the government. The paper summarizes the effects on real rates by saying Lower private saving, declines in the real money supply, and reduced capital inflows decrease the supply of funds and raise the required real rate. A larger government deficit and stronger private investment raise the required real rate by increasing the demand for funds. The upward pressure on future real interest rates contributes to the yield curve's positive slope, and a steepening yield curve could indicate an increasing government deficit, declines in private savings, or reduced capital coming in from abroad (for example, because of a recession in Europe that reduces their demand for US imports). an easing of monetary policy when is economy is already producing near its capacity ... would initially expand the real money supply, lowering required short-term real interest rates. With long-term real interest rates unchanged, the yield curve would steepen. Lower interest rates in turn would stimulate domestic spending, putting upward pressure on prices. This upward price pressure would probably increase expected inflation, and as the first bullet point describes, this can cause long-term nominal interest rates to rise. The combination of the decline in short-term rates and the rise in long-term rates steepens the yield curve. Similarly, an inverted yield curve or a positively sloped yield curve that is becoming less steep may indicate the reverse of some or all of the above situations. For example, a rise in oil prices may increase expectations of short-term inflation, so investors demand higher interest rates on short-term debt. Because long-term inflation expectations are governed more by fundamental macroeconomic factors than short-term swings in commodity prices, long-term expectations may not rise nearly as much as short term expectations, which leads to a yield curve that is becoming less steep or even negatively sloped. Forecasting based on the curve slope is not an exact science, just one of many indicators used. Note - Yield Curve was not yet defined here and was key to my answer for What is the \"\"Bernanke Twist\"\" and \"\"Operation Twist\"\"? What exactly does it do? So I took the liberty of ask/answer.\"" }, { "docid": "156180", "title": "", "text": "\"This is the best tl;dr I could make, [original](https://promarket.org/rise-market-power-decline-labors-share/) reduced by 90%. (I'm a bot) ***** &gt; A new paper argues that the decline of both the labor and capital shares, as well as the decline in low-skilled wages and other economic trends, have been aided by a significant increase in markups and market power. &gt; A new paper by Jan De Loecker and Jan Eeckhout echoes these results, arguing that the decline of both the labor and capital shares, as well as the decline in low-skilled wages and other economic trends, have been aided by a significant increase in markups and market power. &gt; In recent years, a growing body of literature has linked the rise of market power to several adverse economic trends, such as the decline in new business start-ups, diminishing competition, and rising income inequality. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6u9l6e/the_rise_of_market_power_and_the_decline_of/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~192969 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **Markup**^#1 **Loecker**^#2 **market**^#3 **increase**^#4 **decline**^#5\"" }, { "docid": "93890", "title": "", "text": "\"The main difference between a bull market and a bear market is due the \"\"the leverage effect\"\". http://www.princeton.edu/~yacine/leverage.pdf The leverage effect refers to the observed tendency of an asset’s volatility to be negatively correlated with the asset’s returns. Typically, rising asset prices are accompanied by declining volatility, and vice versa. The term “leverage” refers to one possible economic interpretation of this phenomenon, developed in Black (1976) and Christie (1982): as asset prices decline, companies become mechanically more leveraged since the relative value of their debt rises relative to that of their equity. As a result, it is natural to expect that their stock becomes riskier, hence more volatile. More volatile assets in a bear market are not such good investments as less volatile assets in a bull market.\"" }, { "docid": "62360", "title": "", "text": "\"Market makers, traders, and value investors would be who I'd suspect for buying the stock that is declining. Some companies stocks can come down considerably which could make some speculators buy the stock at the lower price thinking it may bounce back soon. \"\"Short sellers\"\" are out to sell borrowed stocks that if the stock is in free fall, unless the person that shorted wants to close the position, they would let it ride. Worthless stocks are a bit of a special case and quite different than the crash of 1929 where various blue chip stocks like those of the Dow Jones Industrials had severe declines. Thus, the companies going down would be like Apple, Coca-Cola and other large companies that people would be shocked to see come down so much yet there are some examples in recent history if one remembers Enron or Worldcom. Stocks getting delisted tend to cause some selling and there are some speculators may buy the stock believing that the shares may be worth something only to lose the money possibly as one could look at the bankrupt cases of airlines and car companies to study some recent cases here. Circuit breakers are worth noting as these are cases when trading may be halted because of a big swing in prices that it is believed stopping the market may cause things to settle down.\"" }, { "docid": "219563", "title": "", "text": "I'm normally not a fan of partitioning investment money into buckets but your case may be the clearest case for it I've seen in awhile. Your income and saving is good and you have two clearly defined goals of retirement saving and saving for a house each with very different time frames ~30 years and 3-5 years respectively. For medium term money, like saving for a house, just building up cash is not actually a bad idea. This minimizes the chance that a market crash will happen at the same time you need to withdraw the money. However, given you have the means to take more risk a generally smarter scheme would be to invest much of the money in a broad liquid bond funds with a somewhat lower percentage in stocks and then reduce the amount of stock each year as you get closer even moving some into cash. This gives reasonable positive expected return while lowering the risk of having to sell during a crisis as the time to purchase gets shorter and shorter. The retirement money should be invested for the long term as usual. A majority in low-fee index stock funds/etfs is the standard advice for good reason." } ]

[ { "docid": "273282", "title": "", "text": "\"During the actual decline, there's very little money to be made and a lot to lose. When housing prices tank, everybody loses; the banks are exposed to higher risk of mortgage defaults, insurers start having to pay out more for \"\"gas leaks\"\" claiming over-leveraged homes, realtors starve because their commissions go down (even as foreclosures put more homes on the market) and people faced with financial uncertainty will stay put in their current homes instead of moving elsewhere. And homebuilders and contractors go broke because nobody wants to spend cash on a new home or major reno that looks like a losing investment. There can be some bright spots. Smaller hardware stores will make money as people do relatively small DIY projects to improve the condition of their current home. The larger stores get this business too, but it tends to be more than offset by the loss of contractor business (FAR more lucrative, and something the ACEs and True-Values don't really get in on). Of course the \"\"grave-robbers\"\" do well; gold buyers, auctioneers, pawn shops, repo firms; these guys eat well when other people are defaulting on loans or have to sell their stuff for fast cash. Most of these businesses are not publicly traded. One thing that was seen was increased revenues at discount retailers like Wal-Mart, Dollar General etc. When things are bad, people in the middle class who had avoided these stores for image or morality reasons learn to swallow their pride and buy discount store brands for half the price of national brand names. That lessens the blow felt by the discount retailers as overall consumer spending decreases; the pie shrinks, but the discount retailers get a bigger slice of the mandatory spending on food, clothing, etc (and the higher-level retailers get it in the shorts). When the pie starts to grow again as consumer spending picks back up, the discount retailers retain their percentage for a while, as the fickle middle class can afford to buy more from the discount retailer but can't yet afford to take their business back to the shopping mall stores. This produces a flatter, \"\"offset\"\" price graph for discount retailers through the business cycle; they don't lose as early or as much as everyone else in a major downturn, and they turn it around sooner while everyone else may still be on the way down, but as everything gets better for everyone on the upswing it's less great for the discount guys, as they start losing customers and their dollars to competitors with better stuff, even as the ones they keep spend more. This doesn't generally manifest as a true negative correlation, but it can be a good hedge. The number one money-making investment in a tanking economy is gold. When things go down the crapper, everyone wants gold, so if you see the train wreck coming far enough in advance, you can make a big move to gold and really make some money off that investment. For instance, when the first whispers about ARM adjustments and mass defaults reached the public consciousness in mid-2005, gold bullion jumped from about $400 to over $700 in a nine-month period. It cooled off again in 06-07 but only to about $600/oz, and then in late 07 it steadily climbed to peak at $1000/oz; even if you got in late, an investment of $1000 in July '07 in \"\"bulk\"\" gold would have netted you $650 in one year; that's a 65% APY. Then the economy hit bottom and a lot of investors ditched gold for investments they thought would pull back out of their holes quickly; For just a little while in '08 gold was down to $700 again. Then came all the government reports; unemployment not budging, home prices still declining, a lot of banks still hiding just how bad their position was. If you had seen that it was going to be bad, bad, bad, like a lot of now-billionaire hedge fund investors did, a $1000 investment in gold in July 05, and then cashing out at the tops of the peaks and buying back in at the major troughs, would be worth almost $4000 today. That's a 400% return over 7 years, or an annual average yield of 57%. There simply hasn't been anything like that in the last 7 years.\"" } ]

[ { "docid": "274945", "title": "", "text": "Investors hungry for returns are piling back into securities once tarnished by the financial crisis. Complex structured investments developed a bad reputation during the credit crunch. Ten years later, investors seeking yield are overcoming their skepticism and buying into securities that rely on financial engineering to juice returns. Volumes of CLOs, or collateralized loan obligations, hit a record $247 billion in the first nine months of the year, according to data from J.P. Morgan Chase JPM 1.59%▲ &amp; Co. Fueled by a wave of refinancings and nearly $100 billion in new deals, that far outpaces their recent full-year high of $151 billion in 2014 and the precrisis peak of $136 billion in 2006. The CLO boom is the latest sign of the ferocious hunt for yield permeating markets. Stellar performance over the past year has made CLOs increasingly hard to ignore for investors like insurance companies and pension funds. CLOs carve up a portfolio of bank loans to highly indebted companies into slices of securities with different levels of risk. The securities at the bottom of the CLO stack offer the highest potential source of returns, but they are also the first to absorb losses if there are defaults in the underlying loan portfolio. The more senior slices offer lower returns but are more insulated from losses. CLOs are often lumped together with other alphabet-soup acronyms of the financial crisis, such as more toxic CDOs, or collateralized debt obligations. But CLOs actually weathered the financial crisis well: Investors who bought at the top of the market in 2007 suffered paper losses, but there were no defaults at all for the highest-rated securities. That track record has helped boost CLOs’ appeal for investors with lingering concerns over scooping up more complex investments. . Taking off / Global CLO volumes “The demand for things like CLOs….is extraordinary,” said Rick Rieder, chief investment officer for global fixed income at BlackRock Inc. CLOs are one of the largest demand sources for the leveraged loan market, which has also been booming this year. Volumes of leveraged loans, often used by private-equity firms to fund buyouts, are on track to surpass their 2007 record, according to LCD, a unit of S&amp;P Global Market Intelligence. At the same time, investors have voiced concerns about companies’ rising leverage level, and weaker creditor protections. Within a CLO are different risk profiles: Investors in the most senior, AAA-rated piece of debt get paid first and are the most insulated from losses if defaults rise in the underlying loan portfolio. They also receive the skinniest returns. Slices of debt further down receive higher returns, but will suffer losses if defaults spike. At the bottom sits the equity tranche, the first loss-absorber and last to get paid, but the highest potential source of returns. A 2014 report from Standard &amp; Poor’s Ratings Services stated that AAA-rated and AA-rated CLO tranches incurred no losses at all between 1994 and 2013. Loss rates for lower-rated tranches, meanwhile, were low—just 1.1% for B-rated securities over that period. . Flying High / Market returns since J.P. Morgan recommended buying CLOs last July That doesn’t prevent some conservative investors from conflating the CLOs with the now-infamous CDOs, many of which were linked to subprime mortgages and spread and amplified losses in the U.S. housing market. One breed of CDOs are on a comeback path of their own, with more investors returning to them during an aging bull market. Many people were “burnt by these acronyms from the crisis,” said Zak Summerscale, head of credit fund management for Europe and Asia Pacific at Intermediate Capital Group . He is currently recommending that clients buy senior CLO tranches over investment-grade bonds. CLOs, like other types of securitizations, have been subject to greater regulation since the financial crisis. That includes forcing funds that manage a CLO to retain 5% of the securities, in an effort to align incentives with investors. That has “attracted additional capital into the market,” said Mike Rosenberg, a principal at alternative investment manager Tetragon. Assets under management in the “loan participation” sector—a proxy for funds that invest in CLOs—have grown 21% this year to $206 billion, according to Thomson Reuters Lipper. The pickup in CLOs has been a boon to banks weathering declines in trading revenues in the current low-volatility environment. Revenue from CLO-related activity at the top 12 global investment banks more than doubled over the first half of 2017 from a year earlier to almost $1 billion, according to financial consultancy Coalition. CLO investors have been handsomely rewarded in recent months. J.P. Morgan strategist Rishad Ahluwalia recommended clients buy CLOs last July as he thought they looked too cheap. Between then and the end of September, BB-rated CLO tranches returned 25.4%, compared with a 25.2% return for the technology-oriented Nasdaq stock index, according to his calculations. “CLOs have been an absolute home run,” said Mr. Ahluwalia, though he added such chunky returns aren’t repeatable. Analysts say CLOs got beaten down last year following a series of troubles in the underlying loan market, including distress in the energy sector. Some analysts think the strong rally in CLO tranches since then should give investors pause; others think the market has further to run. Renaud Champion, head of credit strategies at Paris-based hedge fund La Française Investment Solutions, likes AAA-rated CLO tranches but with a twist: leverage. Mr. Champion says he buys senior European CLO tranches and borrows money against them to increase the size of his position between five and 10 times. That can amplify gains—and losses—significantly. “The difference between now and a year ago is the availability of leverage,” he said. Bankers say only a small proportion of CLO buyers use leverage and emphasize that trades are subject to daily margin calls. That means investors have to post cash to cover mark-to-market losses on a position, which in turn limits how much they are willing to borrow. “The leverage in the system today is a fraction compared to precrisis,” said J.P. Morgan’s Mr. Ahluwalia. Write to Christopher Whittall at [email protected] Appeared in the October 23, 2017, print edition as 'Crisis-Era Securities Regain Investors’ Favor.'" }, { "docid": "299327", "title": "", "text": "\"I read the book, and I'm willing to believe you'd have a good chance of beating the market with this strategy - it is a reasonable, rational, and mechanical investment discipline. I doubt it's overplayed and overused to the point that it won't ever work again. But only IF you stick to it, and doing so would be very hard (behaviorally). Which is probably why it isn't overplayed and overused already. This strategy makes you place trades in companies you often won't have heard of, with volatile prices. The best way to use the strategy would be to try to get it automated somehow and avoid looking at the individual stocks, I bet, to take your behavior out of it. There may well be some risk factors in this strategy that you don't have in an S&P 500 fund, and those could explain some of the higher returns; for example, a basket of sketchier companies could be more vulnerable to economic events. The strategy won't beat the market every year, either, so that can test your behavior. Strategies tend to work and then stop working (as the book even mentions). This is related to whether other investors are piling in to the strategy and pushing up prices, in part. But also, outside events can just happen to line up poorly for a given strategy; for example a bunch of the \"\"fundamental index\"\" ETFs that looked at dividend yield launched right before all the high-dividend financials cratered. Investing in high-dividend stocks probably is and was a reasonable strategy in general, but it wasn't a great strategy for a couple years there. Anytime you don't buy the whole market, you risk both positive and negative deviations from it. Here's maybe a bigger-picture point, though. I happen to think \"\"beating the market\"\" is a big old distraction for individual investors; what you really want is predictable, adequate returns, who cares if the market returns 20% as long as your returns are adequate, and who cares if you beat the market by 5% if the market cratered 40%. So I'm not a huge fan of investment books that are structured around the topic of beating the market. Whether it's index fund advocates saying \"\"you can't beat the market so buy the index\"\" or Greenblatt saying \"\"here's how to beat the market with this strategy,\"\" it's still all about beating the market. And to me, beating the market is just irrelevant. Nobody ever bought their food in retirement because they did or did not beat the market. To me, beating the market is a game for the kind of actively-managed mutual fund that has a 90%-plus R-squared correlation with the index; often called an \"\"index hugger,\"\" these funds are just trying to eke out a little bit better result than the market, and often get a little bit worse result, and overall are a lot of effort with no purpose. Just get the index fund rather than these. If you're getting active management involved, I'd rather see a big deviation from the index, and I'd like that deviation to be related to risk control: hedging, or pulling back to cash when valuations get rich, or avoiding companies without a \"\"moat\"\" and margin of safety, or whatever kind of risk control, but something. In a fund like this, you aren't trying to beat the market, you're trying to increase the chances of adequate returns - you're optimizing for predictability. I'm not sure the magic formula is the best way to do that, focused as it is on beating the market rather than on risk control. Sorry for the extra digression but I hope I answered the question a bit, too. ;-)\"" }, { "docid": "351025", "title": "", "text": "\"https://www.fool.com/investing/general/2013/07/30/2-types-of-risk-2-types-of-bubbles.aspx (mirror): The Wall Street Journal reviews: What Mr. Bernstein calls \"\"shallow risk\"\" is a temporary drop in an asset's market price; decades ago, the great investment analyst Benjamin Graham referred to such an interim decline as \"\"quotational loss.\"\" \"\"Deep risk,\"\" on the other hand, is an irretrievable real loss of capital, meaning that after inflation you won't recover for decades -- if ever. So quotational loss = loss not explained by change of actual value of a firm.\"" }, { "docid": "571327", "title": "", "text": "\"This is the best tl;dr I could make, [original](http://www.imf.org/en/Publications/WP/Issues/2017/07/18/A-Crude-Shock-Explaining-the-Impact-of-the-2014-16-Oil-Price-Decline-Across-Exporters-44966) reduced by 62%. (I'm a bot) ***** &gt; The decline in oil prices in 2014-16 was one of the sharpest in history, and put to test the resilience of oil exporters. &gt; We examine the degree to which economic fundamentals entering the oil price decline explain the impact on economic growth across oil exporting economies, and derive policy implications as to what factors help to mitigate the negative eects. &gt; Within this group of countries, the impact of the shock is not found to be related to the size of oil exports, or the share of oil in scal revenue or economic activity. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6o5byg/imfa_crude_shock_explaining_the_impact_of_the/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~170095 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **oil**^#1 **export**^#2 **IMF**^#3 **view**^#4 **economic**^#5\"" }, { "docid": "177442", "title": "", "text": "\"I invested in single family homes and made ok. Houses can be an investment. (though the OP seems to equate \"\"house\"\" with primary residence) Just like any other investment buying houses has risks. I would not treat your primary residence or a vacation home as an investment. That is asking for trouble, but for many many years it was safe to assume that you would make a good return on it, and many people did. If you evaluate the numbers for purchase price, rental market, etc and find that rentals or flipping is worth your exposure then by all means, do it. But treating your primary residence as an investment apparently is what that comment means. Just like the stock market, many people have gotten wealthy on homes and there are lots of people who lost their shirts.\"" }, { "docid": "322893", "title": "", "text": "Pennsylvania allowing gambling now also put a decent dent in the business. Not necessarily the overnight resort stay but the people who used to do day trips frequently are now going to Parx, Valley Forge or Sugar House. Revel in particular would not allow bus trips to drop off there, which for a long time was a staple in AC's economy. That has declined due to what I mentioned above, but to flat out not allow hundreds of old people coming on a bus from the city and suburbs helped to their decline." }, { "docid": "15606", "title": "", "text": "You are not the person or entity against whom the crime was committed, so the Casualty Loss (theft) deduction doesn't apply here. You should report this as a Capital Loss, the same way all of the Enron shareholders did in their 2001 tax returns. Your cost basis is whatever you originally paid for the shares. The final value is presumably zero. You can declare a maximum capital loss of $3000, so if your net capital loss for the year is greater than that, you'll have to carry over the remainder to the following years. IRS publication 547 states: Decline in market value of stock. You can't deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. You report a capital loss on Schedule D (Form 1040). For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Pub. 550." }, { "docid": "286141", "title": "", "text": "This would clear out a lot more. 1) Leverage is the act of taking on debt in lieu of the equity you hold. Not always related to firms, it applies to personal situations too. When you take a loan, you get a certain %age of the loan, the bank establishes your equity by looking at your past financial records and then decides the amount it is going to lend, deciding on the safest leverage. In the current action leverage is the whole act of borrowing yen and profiting from it. The leverage factor mentions the amount of leverage happening. 10000 yen being borrowed with an equity of 1000 yen. 2) Commercial banks: 10 to 1 -> They don't deal in complicated investments, derivatives except for hedging, and are under stricter controls of the government. They have to have certain amount of liquidity and can loan out the rest for business. Investment banks: 30 to 1 -> Their main idea is making money and trade heavily. Their deposits are limited by the amount clients have deposited. And as their main motive is to get maximum returns from the available amount, they trade heavily. Derivatives, one of the instruments, are structured on underlyings and sometimes in multiple layers which build up quite a bit of leverage. And all of the trades happen on margins. You don't invest $10k to buy $10k of a traded stock. You put in, maybe $500 to take up the position and borrow the rest of the amount per se. It improves liquidity in the markets and increases efficiency. Else you could do only with what you have. So these margins add up to the leverage the bank is taking on." }, { "docid": "289", "title": "", "text": "\"So you're basically saying that average market fluctuations have an affect on individual stocks, because individual stocks are often priced in relation to the growth of the market as a whole? Also, what kinds of investments would be considered \"\"risk free\"\" in this nomenclature?\"" }, { "docid": "224695", "title": "", "text": "\"Below is just a little information on this topic from my small unique book \"\"The small stock trader\"\": The most significant non-company-specific factor affecting stock price is the market sentiment, while the most significant company-specific factor is the earning power of the company. Perhaps it would be safe to say that technical analysis is more related to psychology/emotions, while fundamental analysis is more related to reason – that is why it is said that fundamental analysis tells you what to trade and technical analysis tells you when to trade. Thus, many stock traders use technical analysis as a timing tool for their entry and exit points. Technical analysis is more suitable for short-term trading and works best with large caps, for stock prices of large caps are more correlated with the general market, while small caps are more affected by company-specific news and speculation…: Perhaps small stock traders should not waste a lot of time on fundamental analysis; avoid overanalyzing the financial position, market position, and management of the focus companies. It is difficult to make wise trading decisions based only on fundamental analysis (company-specific news accounts for only about 25 percent of stock price fluctuations). There are only a few important figures and ratios to look at, such as: perhaps also: Furthermore, single ratios and figures do not tell much, so it is wise to use a few ratios and figures in combination. You should look at their trends and also compare them with the company’s main competitors and the industry average. Preferably, you want to see trend improvements in these above-mentioned figures and ratios, or at least some stability when the times are tough. Despite all the exotic names found in technical analysis, simply put, it is the study of supply and demand for the stock, in order to predict and follow the trend. Many stock traders claim stock price just represents the current supply and demand for that stock and moves to the greater side of the forces of supply and demand. If you focus on a few simple small caps, perhaps you should just use the basic principles of technical analysis, such as: I have no doubt that there are different ways to make money in the stock market. Some may succeed purely on the basis of technical analysis, some purely due to fundamental analysis, and others from a combination of these two like most of the great stock traders have done (Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, William O’Neil, and Steven Cohen). It is just a matter of finding out what best fits your personality. I hope the above little information from my small unique book was a little helpful! Mika (author of \"\"The small stock trader\"\")\"" }, { "docid": "118065", "title": "", "text": "You can expect about a 7% return when investing in the general market if your horizon is ten years or more. The market fluctuates, which means that you should be absolutely fine with losing 10% or more of your invested money during this period. You say yourself that: I have been setting aside money (...) into a savings account earmarked for that purpose (repairs/maintenance) so that I don't have to take out loans. It's obvious from your question that the purpose of this money is not savings, this is money that you are already investing, not in stocks or bonds but in your house. While this money sits around, of course you could put it into the market and hope that it grows. It all depends on your horizon, which in your case sounds like about 1 year. Is that long enough to be fairly sure you will make a profit? From what I've written so far, hopefully you can gather that the answer is no. If you choose to invest $6,000 but you need that money back in one year, you need to be aware of the risk that you'll instead end up with $5,400 or even less. Your options are then to: If you're asking for personal advice, my opinion would be this: you're already investing in your house. The housing market, like most markets, fluctuate. Whether you like it or not, you're already a victim (or benefactor) of this value fluctuation. The difference is that a house is something you'll live in for a long time (probably), that will give you daily joy in a way stocks and bonds won't. Of course, saving up money and investing them is always a good idea anyway. You should still save a small amount every month and put it into low/medium risk bonds, in my opinion." }, { "docid": "145458", "title": "", "text": "If you are investing for 10 years, then you just keep buying at whatever price the fund is at. This is called dollar-cost averaging. If the fund is declining in value from when you first bought it, then when you buy more, the AVERAGE price you bought in at is now lower. So therefore your losses are lower AND when it goes back up you will make more. Even if it continues to decline in value then you keep adding more money in periodically, eventually your position will be so large that on the first uptick you will have a huge percent gain. Anyway this is only suggested because you are in it for 10 years. Other people's investment goals vary." }, { "docid": "409334", "title": "", "text": "\"There are a few different ways you can look at this. You can't really take money out of the economy, as it can't \"\"leave society\"\" and the economy is the interaction of society. One example kind of close to this was a multi-millionaire died without an heir with millions in his bank account. The bank will continue to use the funds, but the money itself won't be spent. Some people saw this as a \"\"waste\"\", like value was lost, but really all it does (hoarding money or even burning it) is change the money supply. That being said there are two approaches to looking at capitalism as a *balanced* ecosystem. One is Keynesianism, which focuses on demand. The other is Marxism, which focuses on more internal mechanisms of capitalism. Both are concerned with inequality. With high inequality, those with capital tend to have more reinvestment as a percentage of income/wealth. With a return on investment this will increase inequality. The Keynesian issue is that this will lower demand, creating imbalance in the economy and long-term problems to function. The answer was more redistribution and higher labor wages. For Marxists, they believe that capitalism generates endless \"\"capital accumulation\"\", not because of a demand component, but because of labor theory of value. That wealth and value is not determined by the market, but at exploitation of labor. On this critical side you have critiques of the fetishism of market value. With high inequality you have money \"\"leaving the system\"\" in what some call waste--something not socially useful. Baran and Sweezy in \"\"Monopoly Capital\"\" talk about this in the form of things like military spending, and, I think, advertisement. But it can also relate to the generation of \"\"wealth\"\" (opposed to income). Things that don't hold inherent value, like art, becomes investment. You can't say it is \"\"taken out of \"\" the economy, but the value itself is generated by those who can purchase it. Though, I believe this value fetishism is more an outcome of the contradictions, rather than the cause. What it does contribute to contradictions, however, is the rise of speculation. Rather than consumption or productive investment, accumulation will increasingly become speculative. Real estate is usually the primary example. Many people buy houses, condos, or land, not for use, but for the expectation that the value will go up. When bad enough this can reshape the market, so for people who aren't investing their rent/living cost increases. This likewise happens with stocks and other financial investments. Again, it can't really \"\"leave the economy\"\", but it makes it more difficult for the \"\"traditional\"\" or productive and labor economy to operate.\"" }, { "docid": "361442", "title": "", "text": "From my Capital Markets and Institutions assignment on 2007 - 2008 Financial Crisis The subprime financial crisis that emerged in the summer of 2007 is much too intricate and interwoven to place the blame solely on one organisation or group of individuals. Each actor involved is responsible for and party to—in varying degrees—the events that transpired. Mortgage brokers (individuals) • First line of contact between an originator and a borrower • Out to get theirs; greedy • Disregard for borrowers, only want to originate as many mortgages as possible • Engaged in controversial practices – confusing, pressuring, lying to borrowers in order to secure a mortgage • Took advantage of 2/28 mortgages in order to collect new origination fees • Offered piggyback mortgages requiring no money down Mortgage originators (organisations) • Began lending to subprime borrowers during the 1990s – done through brokers to whom they paid a commission • Largely supplanted loans made by the FHA through traditional lenders • Many originators acquired by large investment banks • Cashed in on and espoused the “American dream” of home ownership • Different interest rates charged to borrowers • Use of statistical software and credit scores to evaluate borrowers • Popularised 2/28 mortgages • Allowed borrowers to take out mortgages with little or no documentation • Rapidly increased $ amount of mortgages issued • In charge of servicing mortgages issued – making reasonable efforts to collect principal and interest, able to foreclose on properties when delinquent • Profited from massive fees (late and other) added when loans were delinquent • First firms to suffer from the increase in foreclosures Investment banks • Often acquired mortgage originators to gain yet another revenue stream • Responsible for creating CDO entities, often registered in tax havens • CDOs took on large positions in MBSs and created subordinate obligations, also CDOs • CDO entities held assets of other CDOs, creating a complex interwoven situation • CDOs were also involved with positions in other securities • IB-controlled hedge funds often hedged risks through buying highly-rated MBSs • CDOs holding long-term debt were funded through the short-term commercial paper market – high ratings secured through IB lines of credit • Also pioneered SIVs – relied on highly-rated CP market; lines of credit combined with investor equity allowed IBs to keep SIVs off B/S • IBs heavily invested in MBSs/CDOs began to run into liquidity problems • Required capital investment to remain operational – often found abroad (e.g. Abu Dhabi, Chinese, Singaporean governments) • Largely responsible for the monetary policy pursued by the Fed during 2007/2008 • Conduct raised questions as to the regulation of the entire financial industry • Contrast with their responsibility for much innovation and engineering in the financial services industry Credit ratings agencies • Party to major conflicts of interest • Overwhelmingly gave AAA ratings to MBSs • Agencies loosened their rating criteria and perhaps over-rated MBSs in an effort to gain more business from originators • Agencies also rated the debt of institutions that held positions in MBSs • CDOs holding MBSs obtained high ratings as well – statistical models used indicated them to be safe • Based high ratings in the commercial paper market on IB lines of credit – obliged the IBs in order to gain more business • Agency downgrades of MBSs/CDOs resulted in large IB losses, setting in motion further developments • Ratings became less useful as the MBS market froze up, with even AAA-rated MBSs struggling to find a market • Previously championed as an alternative to government intervention in the market • Role of ratings agencies heavily questioned in aftermath • Also questioned was how ratings in general should be used • RAs deflected claims that they acted irresponsibly during the subprime boom • Criticised for the large proportion of AAA-ratings given to MBSs o Argued that historical defaults on MBSs were lower than similar corporate bonds • Conflicts inherent in having issuers pay for ratings o Committees that assigned ratings were separate from negotiations regarding fees • Emphasized benefits of giving all investors free access to ratings rather than them paying for them • Wave of downgrades in 2nd half of 2007 a result of unexpectedly poor performance of subprime mortgages originated in 2006 o Attributed to: laxer underwriting standards, declines in housing prices, more restrictive borrowing standards that prevented borrowers from refinancing Investors • Backbone of many institutions – shareholders • Owned stock in IBs and GSEs, two major players in subprime crisis • Driving force behind institutions taking on riskier investments (e.g. MBSs) • Unwilling to inject more capital/equity into firms required them to turn elsewhere for aid • Worries that the crisis could spread to other markets (e.g. credit cards) added to worries • Grouped with IBs in being seen as responsible for the crisis o US government would not allow higher sale price for Bear Stearns to avoid appearance of bailing out investors" }, { "docid": "565691", "title": "", "text": "The assumption that house value appreciates 5% per year is unrealistic. Over the very long term, real house prices has stayed approximately constant. A house that is 10 years old today is 11 years old a year after, so this phenomenon of real house prices staying constant applies only to the market as a whole and not to an individual house, unless the individual house is maintained well. One house is an extremely poorly diversified investment. What if the house you buy turns out to have a mold problem? You can lose your investment almost overnight. In contrast to this, it is extremely unlikely that the same could happen on a well-diversified stock portfolio (although it can happen on an individual stock). Thus, if non-leveraged stock portfolio has a nominal return of 8% over the long term, I would demand higher return, say 10%, from a non-leveraged investment to an individual house because of the greater risks. If you have the ability to diversify your real estate investments, a portfolio of diversified real estate investments is safer than a diversified stock portfolio, so I would demand a nominal return of 6% over the long term from such a diversified portfolio. To decide if it's better to buy a house or to live in rental property, you need to gather all of the costs of both options (including the opportunity cost of the capital which you could otherwise invest elsewhere). The real return of buying a house instead of renting it comes from the fact that you do not need to pay rent, not from the fact that house prices tend to appreciate (which they won't do more than inflation over a very long term). For my case, I live in Finland in a special case of near-rental property where you pay 15% of the building cost when moving in (and get the 15% payment back when moving out) and then pay a monthly rent that is lower than the market rent. The property is subsidized by government-provided loans. I have calculated that for my case, living in this property makes more sense than purchasing a market-priced house, but your situation may be different." }, { "docid": "302448", "title": "", "text": "$23,000 Student Loans at 4% This represents guaranteed loss. Paying this off quickly is a conservative move, while your other investments may easily surpass 4% return, they are not guaranteed. Should I just keep my money in my savings account since I want to keep my money available? Or are there other options I have that are not necessarily long term may provide better returns? This all depends on your plans, if you're just trying to keep cash in anticipation of the next big dip, you might strike gold, but you could just as easily miss out on significant market gains while waiting. People have a poor track record of predicting market down-turns. If you are concerned about how exposed to market risk you are in your current positions, then you may be more comfortable with a larger cash position. Savings/CDs are low-interest, but much lower risk. If you currently have no savings (you titled the section savings, but they all look like retirement/investment accounts), then I would recommend focusing on that first, getting a healthy emergency fund saved up, and budgeting for your car/house purchases. There's no way to know if you'd be better off investing everything or piling up cash in the short-term. You have to decide how much risk you are comfortable with and act accordingly." }, { "docid": "537711", "title": "", "text": "\"Before going into specific investments, I think it would be a good idea to assess how \"\"free\"\" is that $5000. How much do you have to rely on it in emergency? You always want to buy low and sell high. However, if you need to make unplanned withdraw from an investment, you risk unfavorable market conditions at the time when you need the money, and lose money that way. One common suggestion is to keep 3-6 months living expense in checking/saving/very, very liquid/short term investments. After that, you can invest the rest in more profitable ventures. Assuming that you are all set in that regard, next consideration is whether you have any goal for the money besides generating the maximum return. Is this for retirement, buying a house/apartment a few year down the road, graduate school, emergency cash store for the time between graduation and getting a job, or traveling a year in Europe after graduation? There are myriad of other possible goals. Knowing that you get a better idea of the time frame involved in the investment, and what you need to do with your money. If this is for retirement, you just need to generate the highest possible return for 40-50 years, while minimize taxes when you have to withdraw that money (there are more nuanced concerns, but large idea-wise that's what you need to do). If you want it for a trip to an exotic location in 2 year, then your primary goal will be to preserve the value of your capital, while assessing whether you need to manage foreign-exchange risk. The time frame also rule in or rule out certain types of investments. If you are planning to use the money to purchase a house in 5 years, IRAs probably would not be what you are looking for. If you are planning to retirement, short term CD would not be the most effective way. After figuring out a bit of what you are trying to do with the money, I think how you want to invest it will be much more clear to you. In case of retirement, people seem to generally recommend no load index funds, and mid-cap growth funds. Nothing is really off the table, since your investment time frame is so long, and you can tolerate risk. You might also be interested to check out https://www.wealthfront.com/ (I have no relation with them). A friend recommended it to me, and I think their pitch make sense. In other cases, it really is case dependent, and there might have more than one solution to any case. There is just one more potential investment venture that people you might not immediately thinking of, and that might be of interest to you. That is to use the $5000 as your own budget to build/maintain connections with people and network. Use it to take professors out to a meal to pick their brain, travel to keep in touch with old friends, network with potential future employers and peers to improve job prospect, or get opportunities to meet interesting people. I hope this helps.\"" }, { "docid": "93890", "title": "", "text": "\"The main difference between a bull market and a bear market is due the \"\"the leverage effect\"\". http://www.princeton.edu/~yacine/leverage.pdf The leverage effect refers to the observed tendency of an asset’s volatility to be negatively correlated with the asset’s returns. Typically, rising asset prices are accompanied by declining volatility, and vice versa. The term “leverage” refers to one possible economic interpretation of this phenomenon, developed in Black (1976) and Christie (1982): as asset prices decline, companies become mechanically more leveraged since the relative value of their debt rises relative to that of their equity. As a result, it is natural to expect that their stock becomes riskier, hence more volatile. More volatile assets in a bear market are not such good investments as less volatile assets in a bull market.\"" }, { "docid": "148844", "title": "", "text": "Minimum wage has only went up $2 in twenty years while housing, gas and education has tripled. Also, the US is the only developed country where people go bankrupt trying to pay medical bills - I know, I am Portuguese finishing my studies here. I never paid more than $100 in anything relating to healthcare. Anything. My first month here, I got sick and stayed at the hospital for about a week. $50k in medical bills. The fact that we have people defending this greedy and vile society in which people work their entire lives to afford so little, be so miserable, fat and depressed is troubling. I would pick twenty other countries before I picked the US to live in. I had no idea you were so backward thinking, so mean and cynical to each other. Like that one Icelandic woman on Michael Moore's documentary said, you have serious problems of compassion. You don't care if your neighbor succeeds or not. That's a sick society in decline. You're just not aware of it. If you work full time, I don't care what the job is, you should be able to live a life with dignity." } ]

[ { "docid": "571430", "title": "", "text": "It also depends on where you work. If you move your home and your job then the date you establish residency in the new state is the key date. All income before that date is considered income for state 1, and all income on or after that date is income for state 2. If there is a big difference in income you will want to clearly establish residency because it impacts your wallet. If they had the same rates moving wouldn't impact your wallet, but it would impact each state. So make sure when going from high tax state to low tax state that you register your vehicles, register to vote, get a new drivers license... It becomes more complex if you move your home but not your job. In that case where you work might be the deciding factor. Same states have agreed that where you live is the deciding factor; in other cases it is not. For Virginia, Maryland, and DC you pay based on where you live if the two states involved are DC, MD, VA. But if you Live in Delaware and work in Virginia Virginia wants a cut of your income tax. So before you move you need to research reciprocity for the two states. From Massachusetts information for Nonresident and Part-Year Resident Income, Exemptions, Deductions and Credits Massachusetts gross income includes items of income derived from sources within Massachusetts. This includes income: a few questions later: Massachusetts residents and part-year residents are allowed a credit for taxes due to any other jurisdiction. The credit is available only on income reported and taxed on a Massachusetts return. Nonresidents may not claim the taxes paid to other jurisdiction credit on their Massachusetts Form 1-NR/PY. The credit is allowed for income taxes paid to: The credit is not allowed for: taxes paid to the U.S. government or a foreign country other than Canada; city or local tax; and interest and penalty paid to another jurisdiction. The computation is based on comparing the Massachusetts income tax on income reported to the other jurisdiction to the actual tax paid to the other jurisdiction; the credit is limited to the smaller of these two numbers. The other jurisdiction credit is a line item on the tax form but you must calculate it on the worksheet in the instruction booklet and also enter the credit information on the Schedule OJC. So if you move your house to New Hampshire, but continue to work in Massachusetts you will owe income tax to Massachusetts for that income even after you move and establish residency in New Hampshire." } ]

[ { "docid": "371094", "title": "", "text": "This is a common occurrence, I know people who moved and then only remember the next spring during tax season that they never filed a new state version of a W-4. Which means for 3 or 4 months in the new year money is sent to the wrong state capital, and way too much was sent the previous year. In the spring of 2016 you should have filed a non-resident tax form with Michigan. On that form you would specify your total income numbers, your Michigan income numbers, and your other-state income numbers; with Michigan + other equal to total. That should have resulted in getting all the state taxes that were sent to Michigan returned. It is possible that the online software is unable to complete the non-resident tax form. Not all forms and situations can be addressed by the software. So you may need to fill out paper forms. You should be able to find what you need on the state of Michigan website for 2015 Taxes. A quick read shows that you will probably need the Michigan 1040, schedule 1 and Schedule NR You may run into an issue if your license, car registration, voter registration, and other documentation point to you being a resident for the part of the year you earned that income. That means you will have to submit Form 3799 Statement to Determine State of Domicile You want to do this soon because there are deadlines that limit how far back you can files taxes. The state may also get tax information from the IRS and could decide that all your income from 2015 should have applied to them, so they will be sending you a tax bill plus penalties for failure to file." }, { "docid": "548299", "title": "", "text": "\"Can I use the foreign earned income exclusion in my situation? Only partially, since the days you spent in the US should be excluded. You'll have to prorate your exclusion limit, and only apply it to the income earned while not in the US. If not, how should I go about this to avoid being doubly taxed for 2014? The amounts you cannot exclude are taxable in the US, and you can use a portion of your Norwegian tax to offset the US tax liability. Use form 1116 for that. Form 1116 with form 2555 on the same return will require some arithmetic exercises, but there are worksheets for that in the instructions. In addition, US-Norwegian treaty may come into play, so check that out. It may help you reduce the tax liability in the US or claim credit on the US taxes in Norway. It seems that Norway has a bilateral tax treaty with the US, that, if I'm reading it correctly, seems to indicate that \"\"visiting researchers to universities\"\" (which really seems like I would qualify as) should not be taxed by either country for the duration of their stay. The relevant portion of the treaty is Article 16. Article 16(2)(b) allows you $5000 exemption for up to a year stay in the US for your salary from the Norwegian school. You will still be taxed in Norway. To claim the treaty benefit you need to attach form 8833 to your tax return, and deduct the appropriate amount on line 21 of your form 1040. However, since you're a US citizen, that article doesn't apply to you (See the \"\"savings clause\"\" in the Article 22). I didn't even give a thought to state taxes; those should only apply to income sourced from the state I lived in, right (AKA $0)? I don't know what State you were in, so hard to say, but yes - the State you were in is the one to tax you. Note that the tax treaty between Norway and the US is between Norway and the Federal government, and doesn't apply to States. So the income you earned while in the US will be taxable by the State you were at, and you'll need to file a \"\"non-resident\"\" return there (if that State has income taxes - not all do).\"" }, { "docid": "240066", "title": "", "text": "I'm not sure why you think that it matters that the distribution goes to an S-Corp vs an individual tax payer. You seem to think it has any relevance to your question, but it doesn't. It only confuses your readers. The situation is like this: LLC X is deriving income in State #2. It has two members (I and S) residents of State #1. Members I and S pay all their taxes to State #1, and don't pay taxes to State #2. State #2 audited member I and that member now needs to pay back taxes and penalties to State #2 on income derived from that State. Your question: Does that mean that member S should be worried, since that member was essentially doing the exact same thing as member I? My answer: Yes." }, { "docid": "237514", "title": "", "text": "\"There are very few circumstances where forming an out of state entity is beneficial, but a website is within these circumstances in certain instances. Businesses with no physical operations do not need to care what jurisdiction they are registered in: your home state, a better united state or non-united state. The \"\"limited liability\"\" does it's job. If you are storing inventory or purchasing offices to compliment your online business, you need to register in the state those are located in. An online business is an example of a business with no physical presence. All states want you to register your LLC in the state that you live in, but this is where you need to read that state's laws. What are the consequences of not registering? There might be none, there might be many. In New York, for example, there are no consequences for not registering (and registering in new york - especially the city - is likely the most expensive in the USA). If your LLC needs to represent itself in court, New York provides retroactive foreign registrations and business licenses. So basically, despite saying that you need to pay over $1000 to form your LLC \"\"or else\"\", the reality is that you get the local limited liability protection in courts whenever you actually need it. Check your local state laws, but more times than not it is analogous to asking a barber if you need a haircut, the representative is always going to say \"\"yes, you do\"\" while the law, and associated case law, reveals that you don't. The federal government doesn't care what state your form an LLC or partnership in. Banks don't care what state you form an LLC or partnership in. The United States post office doesn't care. Making an app? The Apple iTunes store doesn't care. So that covers all the applicable authorities you need to consider. Now just go with the cheapest. In the US alone there are 50 states and several territories, all with their own fee structures, so you just have to do your research. Despite conflicting with another answer, Wyoming is still relevant, because it is cheap and has a mature system and laws around business entity formation. http://www.incorp.com has agents in every state, but there are registered agents everywhere, you can even call the Secretary of State in each state for a list of registered agents. Get an employer ID number yourself after the business entity is formed, it takes less than 5 minutes. All of this is also contingent on how your LLC or partnership distributes funds. If your LLC is not acting like a pass through entity to you and your partner,but instead holding its own profits like a corporation, then again none of this matters. You need to form it within the state you live and do foreign registrations in states where it has any physical presence, as it has becomes its own tax person in those states. This is relevant because you said you were trying to do something with a friend.\"" }, { "docid": "66262", "title": "", "text": "According to the Colorado form CY104PN, Colorado taxes income earned while working in or being a resident of the State of Colorado. Assuming you never set foot in the State of Colorado, I read it as if you will only be liable to pay taxes in the State of New York (on all of your income, of course). You can get a more reliable opinion from a Colorado-licensed CPA." }, { "docid": "284805", "title": "", "text": "\"Others have given a lot of advice about how to invest, but as a former expat I wanted to throw this in: US citizens living and investing overseas can VERY easily run afoul of the IRS. Laws and regulations designed to prevent offshore tax havens can also make it very difficult for expats to do effective investing and estate planning. Among other things, watch out for: US citizens owe US income tax on world income regardless of where they live or earn money FBAR reporting requirements affect foreign accounts valued over $10k The IRS penalizes (often heavily) certain types of financial accounts. Tax-sheltered accounts (for education, retirement, etc.) are in the crosshairs, and anything the IRS deems a \"\"foreign-controlled trust\"\" is especially bad. Heavy taxes on investment not purchased from a US stock exchange Some US states will demand income taxes from former residents (including expats) who cannot prove residency in a different US state. I believe California is neutral in that regard, at least. I am neither a lawyer nor an accountant nor a financial advisor, so please take the above only as a starting point so you know what sorts of questions to ask the relevant experts.\"" }, { "docid": "226600", "title": "", "text": "If you're a Canadian resident then yes, it is taxable to you. The islands don't have income taxes on income earned there, but your country does. If you lose your Canadian residency and move to live in these islands, then the answer may change." }, { "docid": "385102", "title": "", "text": "Let's define better the situation and then analyze it: Start with: End with: Process: So B has the same amount of money, just in a different bank account, but A and C changed states. A now doesn't have money, and C does, as the result of the transaction between A, B and C. The gift tax issue I see is the transfer of money from A (you) to C (your brother). If you're a US tax resident then you have $14K exemption from gift tax per person per year. £20K is more than that, so it will be subject to the tax. The fact that a third person was involved as an intermediary is irrelevant - for the purpose of gift tax there's no distinction between using a bank for transfers or a private party. Keep in mind that paying tuition directly to the institution on behalf of your brother may help you mitigate your gift tax liability - tuition payment made on behalf of your brother is exempt from gift tax. But it has to be made directly to the institution, it cannot pass through your brother." }, { "docid": "593153", "title": "", "text": "Smartphone? GPS? If you have really absurd rules, your enforcers might require you to put up several signs to notify others about your policing of absurd acts like possessing dried plants in public, or whatever. Humans, being smart and reactive (not passive) animals, will naturally gravitate towards the most reasonable rules and perhaps change their own to match the prevailing norms, because those who had absurd rules would not be dealt with much. Perhaps package deliveries would not be allowed to any house that allows murder, rape, theft... and nobody would want to do any business with someone who allowed violent crimes. They'd be ostracized. If humans can establish a complex internet system, complete with tubes and kitten pics, we can establish a way to let every property owner establish their own rules and then innovate from there with social and trade consequences for those who have stupid rules. The basic premise is that, if you own your own house, you should have control over it, but you must pay the consequences if your rules make others not want to come or do any business with you. No monopoly should be able to apply their own rules against you. A texan like George Bush should have no power over a New York City resident, and vice versa." }, { "docid": "341220", "title": "", "text": "\"No, there are no issues. When you form the corp in DE, you pick a business there to serve as your \"\"agent\"\" (essentially someone who knows to get in contact with you). The \"\"agent\"\" will notify you about taxes and any mail you get, but besides the fee they charge you for being the agent, you should file all the taxes directly with DE (franchise tax is easy to file on the web) instead of going through the agent and paying a surcharge. When your LLC files taxes, you'll do so in DE and then the LLC will issue you a federal and state K1. You'll file taxes where you reside and use the federal K1, but I think you might have to file DE state taxes (unsure about this part, feel free to edit or comment and I'll correct).\"" }, { "docid": "318260", "title": "", "text": "\"Besides money and time lost, it is pretty clear that most tax advisors are not well versed in non-resident taxes. It seems that their main clients are either US residents or H1B workers (who are required to file as residents). I share your pain on this one. In fact, even for H1B/green card holders or Americans with income/property abroad vast majority of advisers will make mistakes (which may become quite costly). IRS licensing exams for EA/RTRP do not include a single question on non-resident taxation or potential issues, let alone handling treaties. Same goes for the AICPA unified CPA exam (the REG portion of which, in part, deals with taxes). I'm familiar with the recent versions of both exams and I am very disappointed and frustrated by that lack of knowledge requirement in such a crucial area (I am not a licensed tax preparer now though). That said, the issue is very complicated. I went through several advisers until I found the one I can trust to know her stuff, and while at it happened to learn quite a lot about the US tax code (which doesn't make me sleep any better by the least). It is my understanding that preparing a US tax return for a foreign person without a mistake is impossible, but the question is how big is the mistake you're going to make. I had returns prepared by solo working advisers where I found mistakes as ridiculous as arithmetic calculation errors (fired after two seasons), and by big-4 firms where I found mistakes that cost me quite a lot (although by the time I figured that they cost me significant amounts, it was too late to sue or change; fired after 2 seasons as well). As you can see, it is relevant to me as well, and I do not do my own tax returns. I usually ask for the conservative interpretations from my adviser, IRS is very aggressive on enforcement and the penalties, especially on foreigners are draconian (I do not know if it ever went through a judicial review, as I believe some of these penalties are unconstitutional under the 8th amendment, but that's my personal opinion). Bottom line - its hard to find a decent tax adviser, and that's why the good ones are expensive. You get what you pay for. How do I go about locating a CPA/EA who is well versed in non-resident taxes located in the Los Angeles area (Orange County area is not too far away either) These professionals are usually active in large metropolitan areas with a lot of foreigners. You should be able to find decent professionals in LA/OC, SF Bay, Seattle, New York, Boston, and other cities and metropolises attracting foreigners. Also, look for those working in the area of a major university. Specific points: If I find none, can I work with a quaified person who lives in a different state and have him file my taxes on my behalf (electronically or via scans going back and forth) Yes. But that person my have a problem representing you in California (in case you're audited), unless he's an EA (licensed by the Federal government, can practice everywhere) or is licensed as a CPA or Attorney by the State of California. Is there a central registry of such quaified people I can view (preferably with reviews) - akin to \"\"yellow pages\"\" IRS is planning on opening one some time this year, but until then - not really. There are some commercial sites claiming to have that, but they're using the FOIA access to the IRS and states' listings, and may not have updated information. They definitely don't have updated license statuses (or any license statuses) or language/experience information. Wouldn't trust them.\"" }, { "docid": "294123", "title": "", "text": "Having 401k or HSA is not income and doesn't trigger filing requirements. Withdrawing from 401k or HSA does. Also, in some States, HSA gains are taxed as investment income, so if you have gains in an HSA and you're a resident of such a State - you'll need to file a State tax return and pay taxes on the gains." }, { "docid": "79552", "title": "", "text": "I was able to find several references that claim that the Indo-US treaty provision is limited to five years: Here it says this (on page 20): Generally the treaty exemption for students is limited to the first five calendar years that the international student is in the U.S. However there is no set time limit for students from Belgium, Bulgaria, China, The Netherlands, and Pakistan. However, I couldn't find any specific time limit neither in the treaty nor in the technical explanation. The explanation says: Thus, for example, an Indian resident who visits the United States as a student and becomes a U.S. resident according to the Code, other than by virtue of acquiring a green card, would continue to be exempt from U.S. tax in accordance with this Article so long as he is not a U.S. citizen and does not acquire immigrant status in the United States. The saving clause does apply to U.S. citizens and immigrants. However, the treaty explicitly says this: The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken. The reason for this last paragraph is to ensure that you don't artificially prolong your student status, and the 5 year limit may come out of the interpretation of this specific paragraph. Similar paragraph exists in the US-China treaty, and the explanation for that treaty says this: These exemptions may be claimed only for the period reasonably necessary to complete the education or training. In some cases, the course of study or training may last less than year. For most undergraduate college or university degrees the appropriate period will be four years. For some advanced degrees, such as in medicine, the required period may be longer, e.g., seven years. Based on this, it is my personal impression that if you're an undergraduate student and studying the same degree (and not, for example, finished your BA, and started your MS) - you are no longer eligible for the treaty benefit. But I suggest you ask a professional (EA/CPA licensed in your State) for a more reliable tax advice on the matter. I'm not a tax professional and this is not a tax advice." }, { "docid": "248651", "title": "", "text": "Many states have a simple method for assessing income tax on nonresidents. If you have $X income in State A where you claim nonresident status and $Y income overall, then you owe State A a fraction (X/Y) of the income tax that would have been due on $Y income had you been a resident of State A. In other words, compute the state income tax on $Y as per State A rules, and send us (X/Y) of that amount. If you are a resident of State B, then State B will tax you on $Y but give you some credit for taxes paid to State A. Thus, you might be required to file a State A income tax return regardless of how small $X is. As a practical matter, many commercial real-estate investments are set up as limited partnerships in which most of the annual taxable income is a small amount of portfolio income (usually interest income that you report on Schedule B of Form 1040), and the annual bottom line is lots of passive losses which the limited partners report (but do not get to deduct) on the Federal return. As a result, State A is unlikely to come after you for the tax on, say, $100 of interest income each year because it will cost them more to go after you than they will recover from you. But, when the real estate is sold, there will (hopefully) be a big capital gain, most of which will be sheltered from Federal tax since the passive losses finally get to be deducted. At this point, State A is not only owed a lot of money (it knows nothing of your passive losses etc) but, after it processes the income tax return that you filed for that year, it will likely demand that you file income tax returns for previous years as well." }, { "docid": "454563", "title": "", "text": "If you are tax-resident in the US, then you must report income from sources within and without the United States. Your foreign income generally must be reported to the IRS. You will generally be eligible for a credit for foreign income taxes paid, via Form 1116. The question of the stock transfer is more complicated, but revolves around the beneficial owner. If the stocks are yours but held by your brother, it is possible that you are the beneficial owner and you will have to report any income. There is no tax for bringing the money into the US. As a US tax resident, you are already subject to income tax on the gain from the sale in India. However, if the investment is held by a separate entity in India, which is not a US domestic entity or tax resident, then there is a separate analysis. Paying a dividend to you of the sale proceeds (or part of the proceeds) would be taxable. Your sale of the entity containing the investments would be taxable. There are look-through provisions if the entity is insufficiently foreign (de facto US, such as a Subpart-F CFC). There are ways to structure that transaction that are not taxable, such as making it a bona fide loan (which is enforceable and you must pay back on reasonable terms). But if you are holding property directly, not through a foreign separate entity, then the sale triggers US tax; the transfer into the US is not meaningful for your taxes, except for reporting foreign accounts. Please review Publication 519 for general information on taxation of resident aliens." }, { "docid": "294738", "title": "", "text": "Residents pay tax on all of the income they receive during the calendar year from all sources, so you'll at least need to file and pay New York state income taxes on this money regardless. I can't answer whether you'll need to file and pay Colorado state income tax on this money as well. Generally speaking, you need to file a return for each state in which you live, receive income, or have business interests. If you are required to file a Colorado state income tax return, however, you can claim a credit for taxes paid to another state on your New York state income tax return using form IT-112-R (see the form and instructions)." }, { "docid": "438666", "title": "", "text": "When you sell your primary residence, you are required to capitalize any loss or gain at that point; you do not carry over your loss or gain (as you might in an investment property). As such, the timing of the purchase of the next house is not relevant in this discussion: you gained however much you gained already. This changed from the other (rollover) method in 1997 (see this bankrate article for more details.) However, as discussed in IRS Tax Topic 701, you can exclude up to $250,000 (single or filing separately) or $500,000 (married filing jointly) of gain if it is your primary residence and meets a few requirements (mostly, that you owned it for at least 2 years in the past 5 years, and similarly used it as your main home for at least 2 years of the past 5 years). So given you reported 25% gain, as long as your house is under a million dollars or so, you're fine (and if it's over a million dollars, you probably should be paying a CPA for this stuff). For California state tax, it looks like it is the same (see this Turbotax forum answer for a good explanation and links to this California Franchise Tax Board guide which confirms it: For sale or exchanges after May 6, 1997, federal law allows an exclusion of gain on the sale of a personal residence in the amount of $250,000 ($500,000 if married filing jointly). The taxpayer must have owned and occupied the residence as a principal residence for at least 2 of the 5 years before the sale. California conforms to this provision. However, California taxpayers who served in the Peace Corps during the 5 year period ending on the date of the sale may reduce the 2 year period by the period of service, not to exceed 18 months." }, { "docid": "397832", "title": "", "text": "Yeah several from bankrate.com: Seven U.S. states currently don't have an income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. And residents of New Hampshire andTennessee are also spared from handing over an extra chunk of their paycheck on April 15, though they do pay tax on dividends and income from investments. It's safe to assume where Amazon will move will need to be a tax Haven or at least get massive multi billion dollar tax breaks like New Jersey has proposed. They aren't opening a second location as much as they are moving out of the high min wage high tax rates state they are currently operating in." }, { "docid": "43508", "title": "", "text": "\"The examples you provide in the question are completely irrelevant. It doesn't matter where the brokerage is or where is the company you own stocks in. For a fairly standard case of an non-resident alien international student living full time in the US - your capital gains are US sourced. Let me quote the following text a couple of paragraphs down the line you quoted on the same page: Gain or loss from the sale or exchange of personal property generally has its source in the United States if the alien has a tax home in the United States. The key factor in determining if an individual is a U.S. resident for purposes of the sourcing of capital gains is whether the alien's \"\"tax home\"\" has shifted to the United States. If an alien does not have a tax home in the United States, then the alien’s U.S. source capital gains would be treated as foreign-source and thus nontaxable. In general, under the \"\"tax home\"\" rules, a person who is away (or who intends to be away) from his tax home for longer than 1 year has shifted tax homes to his new location upon his arrival in that new location. See Chapter 1 of Publication 463, Travel, Entertainment, Gift, and Car Expenses I'll assume you've read this and just want an explanation on what it means. What it means is that if you move to the US for a significant period of time (expected length of 1 year or more), your tax home is assumed to have shifted to the US and the capital gains are sourced to the US from the start of your move. For example: you are a foreign diplomat, and your 4-year assignment started in May. Year-end - you're not US tax resident (diplomats exempt), but you've stayed in the US for more than 183 days, and since your assignment is longer than 1 year - your tax home is now in the US. You'll pay the 30% flat tax. Another example: You're a foreign airline pilot, coming to the US every other day flying the airline aircraft. You end up staying in the US 184 days, but your tax home hasn't shifted, nor you're a US tax resident - you don't pay the flat tax. Keep in mind, that tax treaties may alter the situation since in many cases they also cover the capital gains situation for non-residents.\"" } ]

[ { "docid": "265866", "title": "", "text": "I did the reverse several years ago, moving from NH to MA. You will need to file Form 1-NR/PY for 2017, reporting MA income as a part-year residence. I assume you will need to report the April capital gain on your MA tax return, as you incurred the gain while a MA resident. (I am not a lawyer or tax professional, so I don't want to state anything about this as a fact, but I would be very surprised if moving after you incurred the gain would have any affect on where you report it.)" } ]

[ { "docid": "60281", "title": "", "text": "It's not so much about time but about intent. If your intent is to move there permanently, it would be when you arrive in the state for the purposes of living there (i.e. not from a while before that when you went to check a place out or for an interview). I believe that most (if not all) states expect you to get a Driver's License from that state within 30-days of moving there. Something like a Driver's License or State ID would be proof of your residency. These things vary greatly from state to state, so you'd have to research particular states. Or find someone who's done that already. A bit of searching, specifically for Texas, brought me to this forum thread: If you / he wish to establish residency here -- here being Texas -- get a Texas Driver's License and Voter Registration here. Government issued ID with a Texas address is pretty much bulletproof defense against being found to be a resident of elsewhere. Your battle, if there is one, will not be with Texas, but with your present home of record state and/or local government if there are income taxes associated with having been a resident there during the tax year. Which brings up the other question: You would need to make sure that California does not have some provision that would cause you issues. (This isn't so much a case of income from a company in the state as it about capital gains, but it is still prudent to check.)" }, { "docid": "352266", "title": "", "text": "Canada doesn't tax non-residents on income earned/incurred outside of Canada. So, your sister should start with this page to determine the residency status. If she is indeed determined to be non-resident - she should look here to see her obligations. If all she earns she earns outside of Canada - her obligations will be very little, if at all. This is similar to almost any other country in the world, with the notable exception of the United States of America. US citizens are taxed regardless of their residency status, everywhere in the world on worldwide income (unless tax treaty says otherwise)." }, { "docid": "270396", "title": "", "text": "Quick, move to the state where the ticket was bought. Set up a resident and then claim the prize. Then, move back home, if you want. IMO But both states will still try to make a claim for the tax money, if you give them a reason to try. They have nothing else to do, but look for revenue." }, { "docid": "493872", "title": "", "text": "As a resident of New York State you will, in addition to the Federal income tax handled by the IRS, be responsible for state and local income taxes. For New York the state tax forms are also used to determine your New York city tax. If HR was either not aware of the local tax requirement for New York or you filled out the New York State version of the W-4 incorrectly you may have had too little tax withheld for New York state. The refund from the IRS is not dependent on the refund/owe status for state and local taxes. It is possible that your state taxes are fine but that you owe taxes to the city. That tax you owe to the city will reduce the refund from the state and may require you to pay money to New York. Of course if you do itemize, what you pay to the state and city may result in deductions on your federal form. If you owe back taxes to the state or local government this could result in the IRS seizing a federal refund, but that doesn't happen right away." }, { "docid": "411043", "title": "", "text": "Although I am not a tax professional, and in this case you would be better off with a professional advice, my understanding (at least of Arizona, New York and California individual tax regulations that I've been dealing with) is that you only pay taxes in the state in which you're domiciled. Lottery winnings are payed by States/State-run corporations and as such sourced to the State that pays it. Buying a ticket in SC links you to the lottery run in that State, even if you live in another. You'll be claiming your winnings in SC, not in NC, and the winnings will be sourced to SC, not NC. As such SC will be taxing them. NC will be taxing them as well, since you're NC resident." }, { "docid": "232282", "title": "", "text": "This question came up again (Living in Florida working remotely - NY employer withholds NYS taxes - Correct or Incorrect?) and the poster on the new version didn't find the existing answers to be adequate, so I'm adding a new answer. NYS will tax this income if the arrangement is for the convenience of the employee. If the arrangement is necessary to complete the work, then you should have no NYS tax. New York state taxes all New York-source salary and wage income of nonresident employees when the arrangement is for convenience rather than by necessity (Laws of New York, § 601(e), 20 NYCRR 132.18). Source: http://www.journalofaccountancy.com/issues/2009/jun/20091371.html Similar text can also be found here: http://www.koscpa.com/newsletter-article/state-tax-consequences-telecommuting/ The NYS tax document governing this situation seems to be TSB-M-06(5)I. I looked at this page from NYS that was mentioned in the answer by @littleadv. That language does at first glance seem to lead to a different answer, but the ruling in the tax memo seems to say that if you're out of state only for your convenience then the services were performed in NYS for NYS tax purpose. From the memo: However, any allowance claimed for days worked outside New York State must be based upon the performance of services which of necessity, as distinguished from convenience, obligate the employee to out-of- state duties in the service of his employer." }, { "docid": "382623", "title": "", "text": "It makes no difference (to the UK) what country a bank account is in. What matters is whether you are resident in the UK or not while employed locally in a foreign country. You're taxed on where you are tax resident (which could be either country, both, or neither), not where the money is earned or banked. You can assume, with modern exchange of information agreements, that all money you put in bank accounts anywhere in the world will eventually be known to the UK authorities. The rules for when you are a UK tax resident changed recently, there is now a statutory test for residence (pdf). The rules are complex, but in general if you are outside the UK for less than one full tax year you're still resident, and in many cases where you're gone longer than that you may still be, depending on the length of your trips back to the UK and the ties you have there. So a 6-month winter job in Thailand teaching English as a foreign language will be subject to UK tax if you come back after, even if you leave all the money there or in a third country. If you pay local tax as well there are agreements between countries to avoid double taxation, but these do vary. What you do about National Insurance payments while gone for a short time is another complex area." }, { "docid": "276411", "title": "", "text": "This is a complicated question that relies on the US-India Tax Treaty to determine whether the income is taxable to the US or to India. The relevant provision is likely Article 15 on Personal Services. http://www.irs.gov/pub/irs-trty/india.pdf It seems plausible that your business is personal services, but that's a fact-driven question based on your business model. If the online training is 'personal services' provided by you from India, then it is likely foreign source income under the treaty. The 'fixed base' and '90 days' provisions in Article 15 would not apply to an India resident working solely outside the US. The question is whether your US LLC was a US taxpayer. If the LLC was a taxpayer, then it has an obligation to pay US tax on any worldwide income and it also arguably disqualifies you from Article 15 (which applies to individuals and firms of individuals, but not companies). If you were the sole owner of the US LLC, and you did not make a Form 8832 election to be treated as subject to entity taxation, then the LLC was a disregarded entity. If you had other owners, and did not make an election, then you are a partnership and I suspect but cannot conclude that the treaty analysis is still valid. So this is fact-dependent, but you may be exempt from US tax under the tax treaty. However, you may have still had an obligation to file Forms 1099 for your worker. You can also late-file Forms 1099 reporting the nonemployee compensation paid to your worker. Note that this may have tax consequences on the worker if the worker failed to report the income in those years." }, { "docid": "102287", "title": "", "text": "\"I'm assuming that by saying \"\"I'm a US resident now\"\" you're referring to the residency determination for tax purposes. Should I file a return in the US even though there is no income here ? Yes. US taxes its residents for tax purposes (which is not the same as residents for immigration or other purposes) on worldwide income. If yes, do I get credits for the taxes I paid in India. What form would I need to submit for the same ? I am assuming this form has to be issued by IT Dept in India or the employer in India ? The IRS doesn't require you to submit your Indian tax return with your US tax return, however they may ask for it later if your US tax return comes under examination. Generally, you claim foreign tax credits using form 1116 attached to your tax return. Specifically for India there may also be some clause in the Indo-US tax treaty that might be relevant to you. Treaty claims are made using form 8833 attached to your tax return, and I suggest having a professional (EA/CPA licensed in your State) prepare such a return. Although no stock transactions were done last year, should I still declare the value of total stocks I own ? If so what is an approx. tax rate or the maximum tax rate. Yes, this is done using form 8938 attached to your tax return and also form 114 (FBAR) filed separately with FinCEN. Pay attention: the forms are very similar with regard to the information you provide on them, but they go to different agencies and have different filing requirements and penalties for non-compliance. As to tax rates - that depends on the types of stocks and how you decide to treat them. Generally, the tax rate for PFIC is very high, so that if any of your stocks are classified as PFIC - you'd better talk to a professional tax adviser (EA/CPA licensed in your State) about how to deal with them. Non-PFIC stocks are dealt with the same as if they were in the US, unless you match certain criteria described in the instructions to form 5471 (then a different set of rules apply, talk to a licensed tax adviser). I will be transferring most of my stock to my father this year, will this need to be declared ? Yes, using form 709. Gift tax may be due. Talk to a licensed tax adviser (EA/CPA licensed in your State). I have an apartment in India this year, will this need to be declared or only when I sell the same later on ? If there's no income from it - then no (assuming you own it directly in your own name, for indirect ownership - yes, you do), but when you sell you will have to declare the sale and pay tax on the gains. Again, treaty may come into play, talk to a tax adviser. Also, be aware of Section 121 exclusion which may make it more beneficial for you to sell earlier.\"" }, { "docid": "535357", "title": "", "text": "A 529 plan is set up in a specific beneficiary's name but the money can be rolled over or transferred into another 529 plan in the same beneficiary's name, or the beneficiary can be changed by the owner of the account. I mistakenly believed that the new beneficiary could be anyone else, but as mhoran_psprep has pointed out in the comment below, the new beneficiary must be related to the previous one in specific ways as detailed in Publication 970 2011, Tax Benefits for Education in order for the change to occur without any tax consequences. So my original statement that distributions can be used for anyone's educational expense without tax consequences was incorrect; if the new beneficiary is not related to the original beneficiary, tax consequences will indeed occur. Note also that unlike IRAs where the entire amount can be withdrawn by the owner without incurring a 10% penalty after a certain period or after reaching a certain age, distributions from a 529 plan for nonqualified expenses (including as a special case a withdrawal of funds by the owner) will incur the 10% penalty tax regardless of when this occurs. The problem with UGMA accounts is that you have to turn the money over to the beneficiary when that beneficiary becomes an adult (18 years old in most cases) regardless of your current opinion of that beneficiary, and the beneficiary is free to use the money to buy a motorcycle with it if she chooses instead of using it for her education. In this sense, I agree with mhoran_psprep's answer that it is best to put away the money in an ordinary account without seeking tax benefits, and deal with the matter as you see fit when the niece is filling out her college paperwork." }, { "docid": "97083", "title": "", "text": "\"especially considering it has a mortgage on it (technically a home equity loan on my primary residence). I'm not following. Does it have a mortgage on it, or your primary residence (a different property) was used as a security for the loan? If it is HELOC from a different property - then it is really your business what to do with it. You can spend it all on casinos in Vegas for all that the bank cares. Is this a complicated transaction? Any gotchas I should be aware of before embarking on it? Obviously you should talk to an attorney and a tax adviser. But here's my two cents: Don't fall for the \"\"incorporate in Nevada/Delaware/Wyoming/Some other lie\"\" trap. You must register in the State where you live, and in the State where the property is. Incorporating in any other State will just add complexity and costs, and will not save you anything whatsoever. 2.1 State Taxes - some States tax LLCs. For example, in California you'll pay at least $800 a year just for the right of doing business. If you live in California or the property is in California - you will pay this if you decide to set up an LLC. 2.2 Income taxes - make sure to not elect to tax your LLC as a corporation. The default for LLC is \"\"disregarded\"\" status and it will be taxed for income tax purposes as your person. I.e.: IRS doesn't care and doesn't know about it (and most States, as well). If you actively select to tax it as a corporation (there's such an option) - it will cost you very dearly. So don't, and if someone suggest such a thing to you - run away from that person as fast as you can. Mortgages - it is very hard to get a mortgage when the property is under the LLC. If you already have a mortgage on that property (the property is the one securing the loan) - it may get called once you transfer it into LLC, since from bank's perspective that would be transferring ownership. Local taxes - transferring into LLC may trigger a new tax assessment. If you just bought the property - that will probably not matter much. If it appreciated - you may get hit with higher property taxes. There are also many little things - once you're a LLC and not individual you'll have to open a business bank account, will probably need a new insurance policy, etc etc. These don't add much to costs and are more of an occasional nuisance.\"" }, { "docid": "382558", "title": "", "text": "\"Short Answer: You're going to end up paying taxes on it. Despite the home being your primary residence, you don't meet the ownership test, and it isn't noted that you have had a change in employment, health, or other unforeseen circumstances that are \"\"forcing\"\" you to sell. Otherwise, you could qualify for a reduced maximum exclusion that might allow you to walk away without owing taxes, or with a reduced tax bill. You can't even do a 1031 exchange to re-invest into a new primary residence. You should check with a tax professional to see what adjustments you can make to the cost basis of the property to minimize your reported net profits. During the 5-year period prior to the sale, you must have: These periods do not necessarily have to coincide (You don't to live in it as your main house for 2 consecutive years, just 2 years worth of time of the last 5).\"" }, { "docid": "478408", "title": "", "text": "\"My employer decided to pay my salary in India after I submit a form W-8BEN. This means that the wages / salary is deemed accrued for work from India. Hence your employer need not withhold and pay taxes on this wage in US. Is this payment taxable in the States since I am staying outside of States? Should I declare this income to IRS in case if I go back to the States later this year? No tax is due as the work is done outside on US. If you go back this would be similar to as you had gone first. Depending on your \"\"tax residency status\"\" you would have to declare all assets. If my US employer wires my US salary to my NRE account is that taxable in India? This is still taxable in India. It is advised that you have the funds transferred into a regular savings account. Please note you have to pay taxes in advance as per prescribed due dates in Sept, Dec, March. how does the Indian tax man identify if it is a taxable income and not just the regular remittance. This question is off topic here. Whether income taxes finds out about this is irrelevant. By law one is required to pay taxes on income earned in India.\"" }, { "docid": "29817", "title": "", "text": "\"You may be considered a resident for tax purposes. To meet the substantial presence test, you must have been physically present in the United States on at least: 31 days during the current year, and 183 days during the 3 year period that includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count: All of the days you were present in the current year, and One-third of the days you were present in the first year before the current year, and One-sixth of the days you were present in the second year before the current year. If you are exempt, I'd check that ending your residence in Germany doesn't violate terms of the visa, in which case you'd lose your exempt status. If you are certain that you can maintain your exempt status, then the income would definitively not be taxed by the US as it is not effectively connected income: You are considered to be engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant on an \"\"F,\"\" \"\"J,\"\" \"\"M,\"\" or \"\"Q\"\" visa. The taxable part of any U.S. source scholarship or fellowship grant received by a nonimmigrant in \"\"F,\"\" \"\"J,\"\" \"\"M,\"\" or \"\"Q\"\" status is treated as effectively connected with a trade or business in the United States. and your scholarship is sourced from outside the US: Generally, the source of scholarships, fellowship grants, grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. I would look into this from a German perspective. If they have a rule similiar to the US for scholarships, then you will still be counted as a resident there.\"" }, { "docid": "457455", "title": "", "text": "It essentially works the same. Some states don't have any income taxes at all (like Florida or Wyoming), some only tax income derived in the state, and some tax worldwide income (like New York or California), similarly to the Federal income taxes. However, if you're living abroad (i.e.: you're a citizen or resident of a foreign country and you live there), you're not considered resident by most of the states (check with your state for specific definitions) for most, if not all, the time of your residency abroad. In such case - you don't pay state taxes, only Federal. You have to remember that foreign income exclusion doesn't apply to the income from your 401k, so you pay the taxes as if you're in the US. You can not use foreign taxes credit as well (but depending on the tax treaty with the country you're moving to, your 401k income might not be taxable there). In some cases you may end up with double taxation: US will tax your 401k income as you're a US citizen and the income is derived from the US sources, and the foreign country will tax the income based on its own laws. This is not a tax advice, and this answer was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer." }, { "docid": "67731", "title": "", "text": "\"Property taxes, where they exist, are generally levied by cities, counties and other local-level administrative bodies like MUDs, and are the primary source of revenue at these levels of government. These taxes pay the lion's share of the expenses for basic services provided by a city or county: There are federal dollars, other revenue sources (State lottery revenues often go toward public schools for instance), and \"\"usage fees\"\" (vehicle registration, utility bills, toll roads) at play as well, but a lot of that money covers larger-scale infrastructure development (freeways/interstates) and specialized \"\"earmarks\"\" (political backscratching involving this bridge or that dam in a Congresscritter's home district, a few national initiatives from the President's budget like first-responder technology upgrades for improved disaster/terrorism readiness). Property taxes are the main funding for the day-to-day government operations at the most visible level to the average resident. The theory behind using a property tax instead of some other form of taxation (like income) is that the value of the property and the quality of services provided to the resident(s) of that property are interrelated; the property is valuable in part because the infrastructure is well-maintained and nearby schools/hospitals are good, and by the same token, affluent residents expect high-quality services. Property taxes are also easier to levy, because most of the work can be done by the tax assessor; monitor recent sale prices, do drive-bys through neighborhoods, come up with a number and send the resident the bill. That's opposed to sales taxes which businesses operating in the jurisdiction have to calculate, collect and turn over, or income taxes which require residents to fill out paperwork to calculate how much they owe. The justification is eminent domain. It's very simple; when you buy land in the U.S. and a State thereof, you are still a citizen and/or resident of that State and the U.S., and subject to their laws. You're not creating your own country when you buy a house. As such, the government charges you for the facilities and services they provide in your area and your State, which are then your privilege to use. Obviously roads aren't free; a one-mile stretch behind my house is costing the county $15 million to expand it from 2-lane to 4-lane. Here's the kicker; you've already been paying these taxes. You think your landlord's just going to take the property taxes for the whole apartment complex on the chin? He's out to make money, and doing that requires charging a sufficient amount to cover costs, including taxes he incurs. You just never see \"\"allocated property taxes\"\" as an item on your rent statement, just like you don't see \"\"allocated landowner mortgage\"\", \"\"allocated facilities maintenance\"\", \"\"allocated gross margin\"\" etc. You know you're getting shafted, paying someone else's financing with a little extra on the side to boot. That's why you want a house. Unfortunately, not being able to pay these taxes is a grim reality for some people, old and young, and government generally doesn't go easy on delinquent homeowners. After medical bills and mortgage delinquency, property tax delinquency is the number three reason for bankruptcy, and only a mortgage or property tax delinquency can cause your home to be seized and sold. Well that and using it for criminal enterprise, but unless you're running a meth lab in your half-million-dollar home or financing it with coke money I wouldn't worry about that score. Retirement planners figure property taxes into cost of living, and they do often advise a downgrade from the 2-story house you raised your children in to something smaller (for many reasons, including lower taxes). There really isn't a way to structure a completely \"\"pay-as-you-go\"\" metropolitan area, and you wouldn't want to live in it if there were. Imagine every strip of asphalt in the county being a toll road where your transponder (TollTag, EZ-Pass, etc) or license plate was scanned and you were billed at each intersection. In addition to being a huge invasion of privacy, the cost to maintain this network (and your cost to use it) would skyrocket. Imagine 911 asking for a credit card number before dispatching police, fire or EMS (Ambulance services already do bill on a per-event basis, but you'd be surprised how few people pay and how little power a county EMS has to enforce collection; without a property tax and Medicaid to cover the difference, EMS service could not be provided in most counties).\"" }, { "docid": "84528", "title": "", "text": "\"Tax US corporate \"\"persons (citizens)\"\" under the same regime as US human persons/citizens, i.e., file/pay taxes on all income earned annually with deductions for foreign taxes paid. Problem solved for both shareholders and governments. [US Citizens and Resident Aliens Abroad - Filing Requirements](https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad-filing-requirements) &gt;If you are a U.S. citizen or resident alien living or traveling outside the United States, **you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States.** Thing is, we know solving this isn't the point. It is to misdirect and talk about everything, but the actual issues, i.e., the discrepancy between tax regimes applied to persons and the massive inequality it creates in tax responsibility. Because that would lead to the simple solutions that the populace need/crave. My guess is most US human persons would LOVE to pay taxes only on what was left AFTER they covered their expenses.\"" }, { "docid": "208015", "title": "", "text": "Put simply, the advice to never sell a home in CA is based on Note that #2 is unusual: property taxes that do not change as the home value rises came about because of a voter ballot measure, CA Prop 13. So in California, selling your home will expose the buyer of your home to more property taxes than you had to pay. This has some odd consequences: This is all fairly unique. I know property taxes in Tennnessee change as the home increases in value." }, { "docid": "248651", "title": "", "text": "Many states have a simple method for assessing income tax on nonresidents. If you have $X income in State A where you claim nonresident status and $Y income overall, then you owe State A a fraction (X/Y) of the income tax that would have been due on $Y income had you been a resident of State A. In other words, compute the state income tax on $Y as per State A rules, and send us (X/Y) of that amount. If you are a resident of State B, then State B will tax you on $Y but give you some credit for taxes paid to State A. Thus, you might be required to file a State A income tax return regardless of how small $X is. As a practical matter, many commercial real-estate investments are set up as limited partnerships in which most of the annual taxable income is a small amount of portfolio income (usually interest income that you report on Schedule B of Form 1040), and the annual bottom line is lots of passive losses which the limited partners report (but do not get to deduct) on the Federal return. As a result, State A is unlikely to come after you for the tax on, say, $100 of interest income each year because it will cost them more to go after you than they will recover from you. But, when the real estate is sold, there will (hopefully) be a big capital gain, most of which will be sheltered from Federal tax since the passive losses finally get to be deducted. At this point, State A is not only owed a lot of money (it knows nothing of your passive losses etc) but, after it processes the income tax return that you filed for that year, it will likely demand that you file income tax returns for previous years as well." } ]

[ { "docid": "136804", "title": "", "text": "Technically you owe 'self-employment' taxes not FICA taxes because they are imposed under a different law, SECA. However, since SE taxes are by design exactly the same rates as combining the two halves of FICA (employer and employee) it is quite reasonable to treat them as equivalent. SE taxes (and income tax also) are based on your net self-employment income, after deducting business expenses (but not non-business items like your home mortgage, dependent exemptions, etc which factor only into income tax). You owe SE Medicare tax 2.9% on all your SE net income (unless it is under $400) adjusted down by 7.65% to compensate for the fact that the employer half of FICA is excluded from gross income before the employee half is computed. You owe SE Social Security tax 12.4% on your adjusted SE net income unless and until the total income subject to FICA+SECA, i.e. your W-2 wages plus your adjusted SE net income, exceeds a cap that varies with inflation and is $127,200 for 2017. OTOH if FICA+SECA income exceeds $200k single or $250k joint you owe Additional Medicare tax 0.9% on the excess; if your W-2 income (alone) exceeds this limit your employer should withhold for it. However the Additional Medicare tax is part of 'Obamacare' (PPACA) which the new President and Republican majorities have said they will 'repeal and replace'; whether any such replacement will affect this for TY 2017 is at best uncertain at this point. Yes SE taxes are added to income tax on your 1040 with schedule SE attached (and schedule C/CEZ, E, F as applicable to your business) (virtually so if you file electronically) and paid together. You are supposed to pay at least 90% during the year by having withholding increased on your W-2 job, or by making 'quarterly' estimated payments (IRS quarters are not exactly quarters, but close), or any combination. But if this is your first year (which you don't say, but someone who had gone through this before probably wouldn't ask) you may get away with not paying during the year as normally required; specifically, if your W-2 withholding is not enough to cover your increased taxes for this year (because of the additional income and SE taxes) but it is enough to cover your tax for the previous year and your AGI that year wasn't over $150k, then there is a 'safe harbor' and you won't owe any form-2210 penalty -- although you must keep enough money on hand to pay the tax by April 15. But for your second year and onwards, your previous year now includes SE amounts and this doesn't help. Similar/related:" } ]

[ { "docid": "396792", "title": "", "text": "\"Paypal linked with my bank account. 1.Can I use my Saving bank account to receive payments from my clients? Or is it necessary to open a current account? Yes you can get funds into your savings account. However it is advisable to keep a seperate account as it would help with your IT Returns. 2.I will be paying a certain % as commission on every sales to a couple of sales guys (who are not my employees but only working on commission). Can I show this as an expense in my IT returns? As you are earning as freelancer, you are eligible for certain deductions like Phone calls, Laptop, other hardware, payments to partners. It is important that you maintain a book of records. An accountant for a small fee of Rs 5 K should be able to help you. In the Returns you have to show Net income after all these deductions, there is no place to enter expenses. 3.Since I will be receiving all the payments in Euros so am I falling under a category of \"\"Exporter of services\"\"? The work you are doing can be Free Lancing. 4.Do I need an Import Export Code (IEC) for smoothly running this small business? You can run this without one as Free lancing. IEC would be when you grow big and are looking for various benefits under tax and pay different taxes and are incorporated as a company.\"" }, { "docid": "68609", "title": "", "text": "\"I was told if I moved my 401k into a Roth IRA that school purposes is one reasons you can withdraw money without having to pay a tax. Incorrect. You will need to pay tax on the amount converted, since a 401(k) is pre-tax and a Roth IRA is after-tax. It will be added to your regular income, so you will pay tax at your marginal tax rate. is there any hidden tax or fee at all for withdrawing money from a Roth IRA for educational purposes? You still will need to pay the tax on the amount converted, but you'll avoid the 10% penalty for early withdrawal. I know that tuition, books and fees are covered for educational purposes. Can I take out of my Roth IRA for living expenses while I'm attending school? Rent, gas, food, etc... Room and board, yes, so long as you are half-time, but not gas/food Possibly only room and board for staying on-campus, but I'm not certain, although I doubt you could call your normal house payment \"\"education expense\"\" with my 401k being smaller, would it just be better to go ahead and cash the whole thing and just pay the tax and use it for whatever I need it for? What is the tax if I just decide to cash the whole thing in? You pay your marginal tax rate PLUS a 10% penalty for early withdrawal. So no, this is probably not a wise move financially unless you're on the verge of bankruptcy or foreclosure (where distress costs are much higher then the 10% penalty) I can't answer the other questions regarding grants; I would talk to the financial aid department at your school. Bottom line, transferring your 401(k) is very likely a bad idea unless you can afford to pay the tax in cash (meaning without borrowing). My advice would be to leave your 401(k) alone (it's meant for retirement not for school or living expenses) Ideally, you should pay for as much as you can out of cash flow, and don't take out more student loans. That may mean taking fewer classes, getting another part time job, finding a different (cheaper) school, applying for more grants and scholarships, etc. I would not in ANY circumstance cash out your 401(k) to pay for school. You'll be much worse off in the long run, and there are much cheaper ways to get money.\"" }, { "docid": "398806", "title": "", "text": "I have some more inputs to investigate: India has dual tax avoidance treaty signed with european countries so that NRIs dont pay tax in both countries. Please check if India has some agreement with Swiss Also for freelance job that is delivered from India, u need to make sure where you have to pay taxes as you are still in India so the term NRI will not hold good here. Also, if Swiss company is paying tax there, and you are a freelancer from India(resident in india) how to tax filing /rate etc has to be investigated. Also, can you apply for tax back from swiss( a portion of tax paid can be refunded eg: in Germany) but I dont know if this is true for Freelancers and also for people out side SWISS. Bip" }, { "docid": "453639", "title": "", "text": "(All for US.) Yes you (will) have a realized long-term capital gain, which is taxable. Long-term gains (including those distributed by a mutual fund or other RIC, and also 'qualified' dividends, both not relevant here) are taxed at lower rates than 'ordinary' income but are still bracketed almost (not quite) like ordinary income, not always 15%. Specifically if your ordinary taxable income (after deductions and exemptions, equivalent to line 43 minus LTCG/QD) 'ends' in the 25% to 33% brackets, your LTCG/QD income is taxed at 15% unless the total of ordinary+preferred reaches the top of those brackets, then any remainder at 20%. These brackets depend on your filing status and are adjusted yearly for inflation, for 2016 they are: * single 37,650 to 413,350 * married-joint or widow(er) 75,300 to 413,350 * head-of-household 50,400 to 441,000 (special) * married-separate 37,650 to 206,675 which I'd guess covers at least the middle three quintiles of the earning/taxpaying population. OTOH if your ordinary income ends below the 25% bracket, your LTCG/QD income that 'fits' in the lower bracket(s) is taxed at 0% (not at all) and only the portion that would be in the ordinary 25%-and-up brackets is taxed at 15%. IF your ordinary taxable income this year was below those brackets, or you expect next year it will be (possibly due to status/exemption/deduction changes as well as income change), then if all else is equal you are better off realizing the stock gain in the year(s) where some (or more) of it fits in the 0% bracket. If you're over about $400k a similar calculation applies, but you can afford more reliable advice than potential dogs on the Internet. (update) Near dupe found: see also How are long-term capital gains taxed if the gain pushes income into a new tax bracket? Also, a warning on estimated payments: in general you are required to pay most of your income tax liability during the year (not wait until April 15); if you underpay by more than 10% or $1000 (whichever is larger) you usually owe a penalty, computed on Form 2210 whose name(?) is frequently and roundly cursed. For most people, whose income is (mostly) from a job, this is handled by payroll withholding which normally comes out close enough to your liability. If you have other income, like investments (as here) or self-employment or pension/retirement/disability/etc, you are supposed to either make estimated payments each 'quarter' (the IRS' quarters are shifted slightly from everyone else's), or increase your withholding, or a combination. For a large income 'lump' in December that wasn't planned in advance, it won't be practical to adjust withholding. However, if this is the only year increased, there is a safe harbor: if your withholding this year (2016) is enough to pay last year's tax (2015) -- which for most people it is, unless you got a pay cut this year, or a (filed) status change like marrying or having a child -- you get until next April 15 (or next business day -- in 2017 it is actually April 18) to pay the additional amount of this year's tax (2016) without underpayment penalty. However, if you split the gain so that both 2016 and 2017 have income and (thus) taxes higher than normal for you, you will need to make estimated payment(s) and/or increase withholding for 2017. PS: congratulations on your gain -- and on the patience to hold anything for 10 years!" }, { "docid": "232544", "title": "", "text": "\"I agree that you should have received both a 1099 and a W2 from your employer. They may be reluctant to do that because some people believe that could trigger an IRS audit. The reason is that independent contractor vs employee is supposed to be defined by your job function, not by your choice. If you were a contractor and then switched to be an employee without changing your job description, then the IRS could claim that you should have always been an employee the entire time, and so should every one of the other contractors that work for that company with a similar job function. It's a hornet's nest that the employer may not want to poke. But that's not your problem; what should you do about it? When you say \"\"he added my Federal and FICA W/H together\"\", do you mean that total appears in box 4 of your 1099? If so, it sounds like the employer is expecting you to re-pay the employer portion of FICA. Can you ask them if they actually paid it? If they did, then I don't see them having a choice but to issue a W2, since the IRS would be expecting one. If they didn't pay your FICA, then the amount this will cost you is 7.65% of what would have been your W2 wages. IMHO it would be reasonable for you to request that they send you a check for that extra amount. Note: even though that amount will be less than $600 and you won't receive a 1099 in 2017 for it, legally you'll still have to pay tax on that amount so I think a good estimate would be to call it 10% instead. Depending on your personality and your relationship with the employer, if they choose not to \"\"make you whole\"\", you could threaten to fill out form SS-8. Additional Info: (Thank you Bobson for bringing this up.) The situation you find yourself in is similar to the concept of \"\"Contract-to-Hire\"\". You start off as a contractor, and later convert to an employee. In order to avoid issuing a 1099 and W2 to the same person in a single tax year, companies typically utilize one of the following strategies: Your particular situation is closest to situation 2, but the reverse. Instead of retroactively calling you a W2 employee the entire time, your employer is cheating and attempting to classify you as a 1099 contractor the entire time. This is frowned upon by the IRS, as well as the employee since as you discovered it costs you more money in the form of employer FICA. From your description it sounds like your employer was trying to do you a favor and didn't quite follow through with it. What they should have done was never switch you to W2 in the first place (if you really should have been a contractor), or they should have done the conversion properly without stringing you along.\"" }, { "docid": "528361", "title": "", "text": "You will be categorized as self employed. Will I have to register myself as a company or can go on unregistered and work You can register a company or can use an umbrella company or work as a sole trader. Remember as a sole trader you are legally responsible for you company's activities, an if a company sues you for your work he can take compensation from your personal assets. As a company your liability ends with the company, if your company is sued. Your personal assets are outside the purview of the lawsuit, but the court can attach that also but those are rare. This doesn't matter if you use an umbrella company. If you intend to be doing this for a short time(maybe a year or so), go for an umbrella company. Else register a company. will take you 5 minutes to form one. Depending on your earning you might need to register for VAT too. A comprehensive guide for self employed on HMRC. what would i need to be sound in uk and to be fit to work online as a freelancer? The same as above. Will it include paying any tax or paying any insurance Yes you have register for National Insurance(NI), before you can pay yourself a salary. The benefit of a company is you pay yourself a minimum salary, below the limit above which you have to contribute for NI, and take the rest as dividends. And pay no tax on it, till you don't exceed the limits. When the money comes in my account, will i be accountable to government of uk, to tell the source of income? If you are operating through a company, yes you would need to show your income(including source) and expenditure when you do your annual returns. What should i be knowing, like health insurance and things that are necessities in uk for a freelancer ? No health insurance as NHS exists. You can take out health insurance if you don't want to get into queues in NHS." }, { "docid": "498631", "title": "", "text": "\"Do I need an Investment Adviser? No, but you may want to explore the idea of having one. Is he going to tell me anything that my accountant can't? Probably. How much expertise are you expecting from your accountant here? Do you think your accountant knows everything within the realms of money from taxes, insurance products, investments and all your choices and what would work or wouldn't? Seems like it could be a tall order to my mind. My accountant did say to come to him for advice on investment/business issues. So, he is willing, but is he able? Not asking about his competence, but rather \"\"is there something that only an Investment Adviser can provide, by law, that an accountant can't\"\"? Not that I know though don't forget how much expertise are you expecting here from one person. Is this person intended to answer all your money questions? But isn't that something that my accountant could/should do? Perhaps though how well are you expecting one person to be aware of so much stuff? I want you to know all the tax law so I can minimize taxes, maximize my investment returns, cover me with adequate insurance, and protect my savings seems like a bit much to put on one entity. Do I need either of them? Won't the Internet and sites like this one suffice? Need no. However, how much time are you prepared to spend learning the basics of strategies that work for you? How much money are you prepared to put into things to learn what works and doesn't? While it is your decision, consider how to what extent do you diagnose your medical issues through the internet versus going to see a doctor? Be careful of how much of a do it yourself approach you want to go here and recognize that there are multiple approaches that may work. The question is which trade-offs are OK for you.\"" }, { "docid": "427727", "title": "", "text": "I've given up on trying to understand how the allowances correspond to my number of dependents. What I do instead to achieve the same end goal of having the right amount of money withheld is using a paycheck calculator. If I get paid 24 times a year (twice a month) and I figure I'm going to owe about $6,000 of taxes, then every paycheck needs to have $250 of federal tax withheld from it to make sure I am covered. Go to the paycheck calculator and play with the allowance numbers until you get $250 as the federal tax withheld and then submit a new W4 to your employer. This is the only reliable way I've found to figure this out on my own. Because my calculations are done in dollars instead of exemptions, etc. and my taxes do not wildly fluctuate year-to-year this works well for me." }, { "docid": "445994", "title": "", "text": "Yes, you can do what you are contemplating doing, and it works quite well. Just don't get the university's payroll office too riled by going in each June, July, August and September to adjust your payroll withholding! Do it at the end of the summer when perhaps most of your contract income for the year has already been received and you have a fairly good estimate for what your tax bill will be for the coming year. Don't forget to include Social Security and Medicare taxes (both employee's share as well as employer's share) on your contract income in estimating the tax due. The nice thing about paying estimated taxes via payroll deduction is that all that tax money can be counted as having been paid in four equal and timely quarterly payments of estimated tax, regardless of when the money was actually withheld from your university paycheck. You could (if you wanted to, and had a fat salary from the university, heh heh) have all the tax due on your contract income withheld from just your last paycheck of the year! But whether you increase the withholding in August or in December, do remember to change it back after the last paycheck of the year has been received so that next year's withholding starts out at a more mellow pace." }, { "docid": "205341", "title": "", "text": "\"Am I on crack, or do the perceived tax savings via S-Corp distributions really not matter at a certain level of business income? You're not on crack. Generally, if all the income is generated by your own personal services - this is the outcome. The benefit of S-Corp is when you have employees who generate your income, and you distribute to yourself profits that come out of other's personal services. In this case your distributions are exempt from FICA since it is not in fact a self-employment income. You'd still have to pay yourself a reasonable salary for your position (as a manager/officer), but it wouldn't have to cover all of the available profits. So if the IRS takes a position against you it would be that your salary should be to include the whole profits, since it is the compensation to you for the personal services that produced the income to the corporation (you). In many cases they might agree that a salary at the SS maximum limit would be reasonable - but that's only a speculation of mine. In that case you might gain some portion of the medicare tax (with the recent law changes at the levels you're talking about you'll pay some medicare anyway). There are a lot of accountants who take more aggressive position saying that not all of the distributions are liable for SE taxes, even if you're the sole employee of the corporation. These cases often end up in the Tax Court, and whatever the outcome, your legal fees become higher than the FICA savings. What is probably missing in your picture is the SS limit of (currently $112K) above which you don't pay social security tax, so whether you get it as a salary or as a distribution - that limit is the same. That is why you don't see a significant difference. I know there are a lot of accountants who'd disagree, but I would argue that for a sole employee of your company, S-Corp doesn't provide significant benefits over the disregarded LLC taxation, but has some additional overhead that adds to your expenses. Here's a link to a lawyer's blog where he suggests (and says many accountants follow) 60/40 division between salary and distributions. I.e.: his take, similarly to mine, is that most of the earnings have to be treated as salary. In your case, when the total is about 300K - you indeed will not get any FICA savings with such a division other than some of the medicare. Unusually low wages when compared to distributions can draw unwanted IRS scrutiny and an audit. An unfavorable audit will likely result in some portion of the distributions being reclassified as earned income for federal income tax purposes, which results in a deficiency assessment (i.e., a tax bill), interest on those unpaid taxes, and IRS penalties. The article also talks about the Watson case (one of the Tax Court cases I referred to), which can be used as the guidelines for determining the \"\"reasonable\"\" compensation. Talk to your tax adviser. I'm neither a tax adviser nor a tax professional. For a tax advice contact a CPA/EA licensed in your state. This is not a tax advice, just my personal opinion.\"" }, { "docid": "447651", "title": "", "text": "Is the remaining amount tax free? As in, if the amount shown (which I can sell) on etrade is $5000 then if I sell the entire shares will my bank account be increased by $5000? The stocks they sell are withholding. So let's say you had $7000 of stock and they sold $2000 for taxes. That leaves you with $5000. But the actual taxes paid might be more or less than $2000. They go in the same bucket as the rest of your withholding. If too much is withheld, you get a refund. Too little and you owe them. Way too little and you have to pay penalties. At the end of the year, you will show $7000 as income and $2000 as withheld for taxes from that transaction. You may also have a capital gain if the stock increases in price. They do not generally withhold on stock sales, as they don't necessarily know what was your gain and what was your loss. You usually have to handle that yourself. The main point that I wanted to make is that the sale is not tax free. It's just that you already had tax withheld. It may or may not be enough." }, { "docid": "144190", "title": "", "text": "You can receive funds from US Client as an individual. There is no legal requirement for you to have a company. If the transactions are large say more than 20 lacs in a year, its advisable to open a Private Ltd. Although its simple opening & Registering a company [A CA or a Laywer would get one at a nominal price of Rs 5000] you can do yourself. Whatever be the case, its advisable to have seperate accounts for this business / professional service transactions. Maintain proper records of the funds received. There are certain benefits you can claim, a CA can help you. Paying taxes in Advance is your responsibility and hence make sure you keep paying every quarter as advance tax. Related questions Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? Freelancer in India working for Swiss Company Freelancing to UK company from India How do I account for money paid to colleagues out of my professional income?" }, { "docid": "163881", "title": "", "text": "\"Since you're also looking for alternative means of funding, have you considered doing part-time work -- during the holidays or on some of the weekends? With this kind of financing you have to watch out that the work does not interfere with your study. On the other hand it can be valuable work experience that can come in handy later in your life, such as when applying for your first \"\"real\"\" job. The kind of work you can do will depend a lot on the subject you are studying and what qualifications you have. For example, if you are studying computer science, there are a lot of freelance opportunities in programming. One of these could lead right to your first job after university. The two broad types of work you can do are: For freelance: Try searching for \"\"[subject] student freelance\"\" and look at sites like oDesk. Read up on tax concerns, research how to price your time, and start doing! For employment: Browse the job boards at your university. Contact businesses to ask for part-time opportunities. Hope this helps to open one of the alternative paths here. If you go down this road, remember to keep your priorities in mind. Especially the freelance work can easily interfere with your study and delay you unnecessarily. Good luck!\"" }, { "docid": "469972", "title": "", "text": "\"It's a tough thing to do. You should look for a salaried position. Your freelance skills will be much better received, if you've worked for a couple of companies doing programming full time. Nothing beats working at it all day long for a few years. If you're set on being freelance, write some utility that will be popular, and submit it to Freshmeat.net. Now that's asking a lot. Those on the Web looking for programmers will most likely want you to work for 'sweat equity'. That is, a share in the company for you labour. In other words \"\"FREE\"\". I've done my share of those, and if you're just getting into this, you should steer away from them. You may hit the jackpot, but you won't sleep for the next few years ;-)\"" }, { "docid": "388713", "title": "", "text": "As a new (very!) small business, the IRS has lots of advice and information for you. Start at https://www.irs.gov/businesses/small-businesses-self-employed and be sure you have several pots of coffee or other appropriate aid against somnolence. By default a single-member LLC is 'disregarded' for tax purposes (at least for Federal, and generally states follow Federal although I don't know Mass. specifically), although it does have other effects. If you go this route you simply include the business income and expenses on Schedule C as part of your individual return on 1040, and the net SE income is included along with your other income (if any) in computing your tax. TurboTax or similar software should handle this for you, although you may need a premium version that costs a little more. You can 'elect' to have the LLC taxed as a corporation by filing form 8832, see https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc . In principle you are supposed to do this when the entity is 'formed', but in practice AIUI if you do it by the end of the year they won't care at all, and if you do it after the end of the year but before or with your first affected return you qualify for automatic 'relief'. However, deciding how to divide the business income/profits into 'reasonable pay' to yourself versus 'dividends' is more complicated, and filling out corporation tax returns in addition to your individual return (which is still required) is more work, in addition to the work and cost of filing and reporting the LLC itself to your state of choice. Unless/until you make something like $50k-100k a year this probably isn't worth it. 1099 Reporting. Stripe qualifies as a 'payment network' and under a recent law payment networks must annually report to IRS (and copy to you) on form 1099-K if your account exceeds certain thresholds; see https://support.stripe.com/questions/will-i-receive-a-1099-k-and-what-do-i-do-with-it . Note you are still legally required to report and pay tax on your SE income even if you aren't covered by 1099-K (or other) reporting. Self-employment tax. As a self-employed person (if the LLC is disregarded) you have to pay 'SE' tax that is effectively equivalent to the 'FICA' taxes that would be paid by your employer and you as an employee combined. This is 12.4% for Social Security unless/until your total earned income exceeds a cap (for 2017 $127,200, adjusted yearly for inflation), and 2.9% for Medicare with no limit (plus 'Additional Medicare' tax if you exceed a higher threshold and it isn't 'repealed and replaced'). If the LLC elects corporation status it has to pay you reasonable wages for your services, and withhold+pay FICA on those wages like any other employer. Estimated payments. You are required to pay most of your individual income tax, and SE tax if applicable, during the year (generally 90% of your tax or your tax minus $1,000 whichever is less). Most wage-earners don't notice this because it happens automatically through payroll withholding, but as self-employed you are responsible for making sufficient and timely estimated payments, and will owe a penalty if you don't. However, since this is your first year you may have a 'safe harbor'; if you also have income from an employer (reported on W-2, with withholding) and that withholding is sufficent to pay last year's tax, then you are exempt from the 'underpayment' penalty for this year. If you elect corporation status then the corporation (which is really just you) must always make timely payments of withheld amounts, according to one of several different schedules that may apply depending on the amounts; I believe it also must make estimated payments for its own liability, if any, but I'm not familiar with that part." }, { "docid": "124009", "title": "", "text": "Graduating from college is probably one of the most fulfilling triumphs you’ll ever achieve in your entire life. However, that joy also brings bigger responsibilities in life that could affect tax time too. This specific time in your life will have a lot to offer and before the winds of change take you to wherever you dream of, here are some advices from [Southbourne Tax Group](http://www.thesouthbournegroup.com/) to make your taxes easier where you can get a refund during filing time and save money as well. If your modified adjusted gross income is below $80,000 and you’re single, up to $2,500 of the interest portion of your student loan payments can be tax deductible, and below $160,000 for married person filing jointly. Job hunting expenses can be tax deductible too but there are exceptions such as expenses involved in your search for a new job in a new career field and working full-time for the first time. Major tax breaks are expected in case you are moving to a new and different city for your first job. Get a jump start on retirement savings with your company’s 401(k). Each year, you can secure up to $18,000 from your income taxes by contributing on one. If you have a family coverage, you could secure $6,750 from contributing to a health savings account in case you are enrolled in a high-deductible health plan. And if you are single, you can secure up to $3,400. Placing your money into a flexible spending account could keep an added $2,600 out of your taxable income. Getting big deductions for business expenses is possible if you are planning to be a freelancer or to be your own boss as a new college graduate. Southbourne Group also advises saving at least 25% of what you’re earning for the IRS. Research more about lifetime learning credit and understand its importance. You can claim up to $2,000 of a tax credit for post-secondary work at eligible educational institutions. This is possible if your adjusted gross income is below $65,000 as a single filer, or below $131,000 as a married person filing jointly. Saving money has a lot of benefits and one of which is cutting your tax bill. If you’re a married person filing jointly and have an adjusted gross income of less than $62,000, you may qualify for the saver’s credit, while for a single filer, it should be below $31,000. That can reduce your tax bill by up to 50% of the first $2,000 if you’re a single filer, or $4,000 if you’re a married person filing jointly you contribute to an eligible retirement plan. Southbourne Tax Group doesn’t want you to overspend on tax software and getting professional help in this regard. The firm suggests using the free packages from trusted tax software companies if your tax situation is quite simple. Get that professional help at Volunteer Income Tax Assistance program, which can help you meet with a pro at little or no cost." }, { "docid": "61936", "title": "", "text": "Sure! Started working since I was 12, used that money to buy a car, and was working full time starting at 15 years old. By 17 had two full time jobs and banked all that money, besides buying a car. At 18 fulfilled my dream and was hired as a police officer. Did the academy for 6 months, saving all of that money to buy a trailer to live in for cheap. Max out pay for my department was 5 years, so by 23 years old I was making 68,000 a year. With overtime and details included( I basically worked anytime I could, 8 hour shift with either an 8 hour detail or double shift) usually kept one day off, working my other day off. My take home for the year after taxes was somewhere around 90k give or take, with my living expenses barely passing 25k a year. Banked all that money for years. When I hit 25ish I got together with my now wife, also an officer making the same amount. She also received about 300k from a settlement. So with both of our salaries plus money invested since I was about 14, annual take home was about 200k. Saved for 2 more years and at 28, used the 300k to buy a house and pay off any vehicles and credit card debt. Paid cash for the house so no mortgage, no car payments, just utilities and taxes for the year. With the budget set we were able to retire living just like we were. There is a lot more to it but that's the quick summary!" }, { "docid": "450925", "title": "", "text": "How to send the full loan amount from Saudi Arabia (money exchange), because I have a money transfer limit? There is no limit for sending money into India. Just use the right banking channel and transfer the funds. If I sent to India, what about tax and all that in India? In a financial year if you are outside of India for more than 182 days, you are Non-Resident for tax purposes. Any money you earn outside of India is tax free in India. i.e. there is no tax for this funds in India. If it is possible to send the money, to whom do I have to send it (my account, or my parents account) Whatever is convenient, preferably to your own NRE/NRO account. Any documents I have to show for tax issues (in case tax) You have to establish that you are NRI and hence this funds are not taxable. Hence its best you transfer into NRE/NRO account. If you transfer to your parents account, you would need a gift deed to make this non-taxable to your parents. I have savings account my self in Axis Bank, for the past 3 years I am paying taxes, if I send to my Axis Bank account how can I withdraw the full amount (10 lakhs (1,000,000)) on single day Withdrawal is possible by cash or cheque You can write a check, do a NEFT/RTGS transfer to your loan account, you can withdraw cash by giving some notice time to the Branch Manager of your Branch." }, { "docid": "316074", "title": "", "text": "\"I've been in a similar situation before. While contracting, sometimes the recruiting agency would allow me to choose between being a W2 employee or invoicing them via Corp-2-Corp. I already had a company set up (S-Corp) but the considerations are similar. Typically the C2C rate was higher than the W2 rate, to account for the extra 7.65% FICA taxes and insurance. But there were a few times where the rate offered was identical, and I still choose C2C because it enabled me to deduct many of my business expenses that I wouldn't have otherwise been able to deduct. In my case the deductions turned out to be greater than the FICA savings. Your case is slightly different than mine though in that I already had the company set up so my company related costs were \"\"sunk\"\" as far as my decision was concerned. For you though, the yearly costs associated with running the business must be factored in. For example, suppose the following: Due to these expenses you need to make up $3413 in tax deductions due to the LLC. If your effective tax rate on the extra income is 30%, then your break even point is approximately $8K in deductions (.3*(x+3413)=3413 => x = $7963) So with those made up numbers, if you have at least $8K in legitimate additional business expenses then it would make sense to form an LLC. Otherwise you'd be better off as a W2. Other considerations:\"" } ]

[ { "docid": "127974", "title": "", "text": "There is a shortcut you can use when calculating federal estimated taxes. Some states may allow the same type of estimation, but I know at least one (my own--Illinois) that does not. The shortcut: you can completely base your estimated taxes for this year on last year's tax return and avoid any underpayment penalty. A quick summary can be found here (emphasis mine): If your prior year Adjusted Gross Income was $150,000 or less, then you can avoid a penalty if you pay either 90 percent of this year's income tax liability or 100 percent of your income tax liability from last year (dividing what you paid last year into four quarterly payments). This rule helps if you have a big spike in income one year, say, because you sell an investment for a huge gain or win the lottery. If wage withholding for the year equals the amount of tax you owed in the previous year, then you wouldn't need to pay estimated taxes, no matter how much extra tax you owe on your windfall. Note that this does not mean you will not owe money when you file your return next April; this shortcut ensures that you pay at least the minimum allowed to avoid penalty. You can see this for yourself by filling out the worksheet on form 1040ES. Line 14a is what your expected tax this year will be, based on your estimated income. Line 14b is your total tax from last year, possibly with some other modifications. Line 14c then asks you to take the lesser of the two numbers. So even if your expected tax this year is one million dollars, you can still base your estimated payments on last year's tax." } ]

[ { "docid": "526158", "title": "", "text": "For the first four months of the year, when you were an employee, the health insurance premiums were paid for with pre-tax money. When you receive your W-2 at the end of the year, the amount in Box 1 of the W-2 will be reduced by the amount you paid for health insurance. You can't deduct it on your tax return because it has already been deducted for you. Now that you are a 1099 independent contractor, you are self-employed and eligible for the self-employed health insurance deduction. However, as you noted, the COBRA premiums are likely not eligible for this deduction, because the policy is in your old employer's name. See this question for details, but keep in mind that there are conflicting answers on that question." }, { "docid": "260795", "title": "", "text": "Whether you're self-employed or not, knowing exactly how much tax you will pay is not always an easy task. Various actions you can take (e.g., charitable donations, IRA contributions, selling stocks) may increase or reduce your tax liability. One tool I've found useful for estimating federal taxes is the Excel 1040 spreadsheet. This is a spreadsheet version of the income tax return form. It is not official and is not created by the IRS, but is maintained as a labor of love by a private individual. In practice, however, it is pretty much an accurate implementation of the tax calculation algorithms encoded in the tax forms and instructions. The nice thing about it is that it's a spreadsheet. You can plug numbers into various slots in the spreadsheet and see how they affect your federal tax liability. (You may also owe state taxes depending on what state you live in.) Of course, the estimates you get by doing this are only (at most) as accurate as your estimates of the various numbers you plug in. Still, I think it's a free and useful way to get a ballpark estimate of your tax liability based on numbers that you can more easily estimate (e.g., how much money you expect to earn)." }, { "docid": "232544", "title": "", "text": "\"I agree that you should have received both a 1099 and a W2 from your employer. They may be reluctant to do that because some people believe that could trigger an IRS audit. The reason is that independent contractor vs employee is supposed to be defined by your job function, not by your choice. If you were a contractor and then switched to be an employee without changing your job description, then the IRS could claim that you should have always been an employee the entire time, and so should every one of the other contractors that work for that company with a similar job function. It's a hornet's nest that the employer may not want to poke. But that's not your problem; what should you do about it? When you say \"\"he added my Federal and FICA W/H together\"\", do you mean that total appears in box 4 of your 1099? If so, it sounds like the employer is expecting you to re-pay the employer portion of FICA. Can you ask them if they actually paid it? If they did, then I don't see them having a choice but to issue a W2, since the IRS would be expecting one. If they didn't pay your FICA, then the amount this will cost you is 7.65% of what would have been your W2 wages. IMHO it would be reasonable for you to request that they send you a check for that extra amount. Note: even though that amount will be less than $600 and you won't receive a 1099 in 2017 for it, legally you'll still have to pay tax on that amount so I think a good estimate would be to call it 10% instead. Depending on your personality and your relationship with the employer, if they choose not to \"\"make you whole\"\", you could threaten to fill out form SS-8. Additional Info: (Thank you Bobson for bringing this up.) The situation you find yourself in is similar to the concept of \"\"Contract-to-Hire\"\". You start off as a contractor, and later convert to an employee. In order to avoid issuing a 1099 and W2 to the same person in a single tax year, companies typically utilize one of the following strategies: Your particular situation is closest to situation 2, but the reverse. Instead of retroactively calling you a W2 employee the entire time, your employer is cheating and attempting to classify you as a 1099 contractor the entire time. This is frowned upon by the IRS, as well as the employee since as you discovered it costs you more money in the form of employer FICA. From your description it sounds like your employer was trying to do you a favor and didn't quite follow through with it. What they should have done was never switch you to W2 in the first place (if you really should have been a contractor), or they should have done the conversion properly without stringing you along.\"" }, { "docid": "40044", "title": "", "text": "You may also want to consider Delaware and Nevada as possible corporate homes. They are common choices for out of state corporations. You may find that they are better options. Will earnings prior to forming the LLC have to be claimed as self-employment income? If so, would it be easier to wait until the next calendar year to form the LLC? Earnings after forming the Limited Liability Corporation (LLC) will probably have to be claimed as self-employment income. See How LLC Members Are Taxed for more discussion. In particular, read the section on self-employment taxes: The current rule is that any owner who works in or helps manage the business must pay this tax on his or her distributive share (rightful share of profits). However, owners who are not active in the LLC -- that is, those who have merely invested money but don't provide services or make management decisions for the LLC -- may be exempt from paying self-employment taxes on their share of profits. The regulations in this area are a bit complicated, but if you actively manage or work in your LLC, you can expect to pay self-employment tax on all LLC profits allocated to you. As I read it, you actively work in the LLC, so it is unlikely that you can avoid paying self-employment taxes. So it shouldn't make any difference when you officially start an LLC. You'll have to pay self-employment taxes before and after creating the LLC regardless. If you don't want to pay self-employment taxes, you may want to consider forming a Subchapter C corporation. They don't have the same tax structure as Subchapter S corporations or LLCs. You would be paid some kind of wage, salary, or commission and the corporation would pay the employer's side of the payroll taxes. Note that Subchapter S corporations and LLCs exist because they usually pay less in tax than Subchapter C corporations do. Even including the self-employment taxes that you owe. A CPA should be able to guide you in making these decisions and help you with setup. The one time that I started a corporation, I just paid a few hundred dollars to a service and they filed the paperwork for me. That included state fees and notice costs. The CPA probably has a service association already." }, { "docid": "105264", "title": "", "text": "\"Actually, the other answer isn't strictly correct. It's an estimate, giving a lower bound that gets less accurate as income increases. Consider: U.S. income tax is based on a progressive tax system where there are income bracket levels with increasing tax rates. Example: Given U.S. 2009 federal tax rates for an individual filing as \"\"single\"\": Imagine somebody making $100000. Assuming no other credits, deductions, or taxes, then income tax based on the above brackets & rates would be calculated as follows: Meaning the average tax rate for the single individual earning $100,000 is 21.72%. However, a pre-tax deduction from that income actually comes off at the top marginal tax rate. Consider the same calculation but with taxable income reduced to $99,000 instead (i.e. simulating a pre-tax $1000 deduction): That's a difference of $280, which is more than the $217.20 savings that would have been estimated if just using the average tax rate method. Consequently, when trying to determine how much money would be saved by a tax deduction, it makes better sense to estimate using the marginal tax rate, which in this case was 28%. It gets a little trickier if the deduction crosses a bracket boundary. (Left as an exercise to the reader :-) Finally, in the case of the deduction being discussed, it also looks like payroll FICA taxes paid by the employee (Social Security's 6.2%, and Medicare's 1.45%) would be avoided as well; so add that to the marginal tax rate savings. The surest way to know how much would be saved, though, would be to do one's income tax return calculation without the deduction, and then with, and compare the numbers. Tax software can make this very easy to do.\"" }, { "docid": "586026", "title": "", "text": "Forms 1099 and W2 are mutually exclusive. Employers file both, not the employees. 1099 is filed for contractors, W2 is filed for employees. These terms are defined in the tax code, and you may very well be employee, even though your employer pays you as a contractor and issues 1099. You may complain to the IRS if this is the case, and have them explain the difference to the employer (at the employer's expense, through fines and penalties). Employers usually do this to avoid providing benefits (and by the way also avoid paying payroll taxes). If you're working as a contractor, lets check your follow-up questions: where do i pay my taxes on my hourly that means does the IRS have a payment center for the tax i pay. If you're an independent contractor (1099), you're supposed to pay your own taxes on a quarterly basis using the form 1040-ES. Check this page for more information on your quarterly payments and follow the links. If you're a salaried employee elsewhere (i.e.: receive W2, from a different employer), then instead of doing the quarterly estimates you can adjust your salary withholding at that other place of work to cover for your additional income. To do that you submit an updated form W4 there, check with the payroll department on details. Is this a hobby tax No such thing, hobby income is taxed as ordinary income. The difference is that hobby cannot be at loss, while regular business activity can. If you're a contractor, it is likely that you're not working at loss, so it is irrelevant. what tax do i pay the city? does this require a sole proprietor license? This really depends on your local laws and the type of work you're doing and where you're doing it. Most likely, if you're working from your employer's office, you don't need any business license from the city (unless you have to be licensed to do the job). If you're working from home, you might need a license, check with the local government. These are very general answers to very general questions. You should seek a proper advice from a licensed tax adviser (EA/CPA licensed in your state) for your specific case." }, { "docid": "580747", "title": "", "text": "\"The short answer is - \"\"Your employer should typically deduct enough every paycheck so you don't owe anything on April 15th, and no more.\"\" The long answer is \"\"Your employer may make an error in how much to deduct, particularly if you have more than 1 job, or have any special deductions/income. Calculate your estimated total taxes for the year by estimating all your income and deductions on a paper copy of a tax return [I say paper copy so that you become familiar with what the income and deductions actually are, whereas plugging into an online spreadsheet makes you blind to what's actually going on]. Compare that with what your employer deducts every paycheck, * the number of paychecks in the year. This tells you how much extra you will pay / be refunded on April 15th, as accurately as you can estimate your income and deductions.\"\"\"" }, { "docid": "57229", "title": "", "text": "Your clients should not send you 1099-MISC if they paid with a credit card. You can refer them to this text in the instructions for the form 1099-MISC: Payments made with a credit card or payment card and certain other types of payments, including third party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. See the separate Instructions for Form 1099-K. By sending out the 1099-MISC, your clients are essentially saying that they paid you directly (check or cash) in addition to the payment they made with a credit card (which will be reported on 1099-K). In case of an audit, you'll have trouble convincing the IRS that it didn't happen. I suggest asking the clients not to do this to you, since it may cost you significant amounts to fight the IRS later on. In any case, you report on your tax return what you really got, not what the 1099 says. If you have two 1099's covering the same income - there's no legal obligation to report the income twice. You do not have to pay twice the tax just because you have stupid clients. But you may have troubles explaining it to the IRS, especially if you're dealing with cash in your business. If you want to avoid matching issues, consider reporting all the 1099s, and then subtracting the duplicates and attaching a statement (the software will do it automatically when you add the description in the miscellaneous item) about what it is." }, { "docid": "569645", "title": "", "text": "I agree with your strategy of using a conservative estimate to overpay taxes and get a refund next year. As a self-employed individual you are responsible for paying self-employment tax (which means paying Social Security and Medicare tax for yourself as both: employee and an employer.) Current Social Security Rate is 6.2% and Medicare is 1.45%, so your Self-employment tax is 15.3% (7.65%X2) Assuming you are single, your effective tax rate will be over 10% (portion of your income under $ 9,075), but less than 15% ($9,075-$36,900), so to adopt a conservative approach, let's use the 15% number. Given Self-employment and Federal Income tax rate estimates, very conservative approach, your estimated tax can be 30% (Self-employment tax plus income tax) Should you expect much higher compensation, you might move to the 25% tax bracket and adjust this amount to 40%." }, { "docid": "259924", "title": "", "text": "As others have mentioned yes it is taxable. Whether it goes through payroll and has FICA taken out is your issue in terms that you need to report it and you will an extra 7.5% self employment taxes that would normally be covered by your employer. Your employer may have problems but that isn't your issue. Contrary to what other users are saying chances are there won't be any penalties for you. Best case you have already paid 100% of last years tax liability and you can file your normal tax return with no issues. Worst case you need to pay quarterly taxes on that amount in the current quarter. IRS quarters are a little weird but I think you need to pay by Jan 15th for a December payment. You don't have to calculate your entire liability you can just fill out the very short form and attach a check for about what you will owe. There is a form you can fill out to show what quarter you received the money and you paid in it is a bit more complex but will avoid the penalty. For penalties quarterly taxes count in the quarter received where as payroll deductions count as if they were paid in the first quarter of the year. From the IRS The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay your tax through withholding, or do not pay enough tax that way, you might also have to pay estimated taxes. If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller." }, { "docid": "505617", "title": "", "text": "Be sure to consider the difference between Roth 401K and standard 401K. The Roth 401K is taxed as income then put into your account. So the money you put into the Roth 401K is taxed as income for the current year, however, any interest you accumulate over the years is not taxed when you withdraw the money. So to break it down: You may also want to look into Self Directed 401K, which can be either standard or Roth. Check if your employer supports this type of account. But if you're self employed or 1099 it may be a good option." }, { "docid": "533808", "title": "", "text": "\"There are way too many details missing to be able to give you an accurate answer, and it would be too localized in terms of time & location anyway -- the rules change every year, and your local taxes make the answer useless to other people. Instead, here's how to figure out the answer for yourself. Use a tax estimate calculator to get a ballpark figure. (And keep in mind that these only provide estimates, because there are still a lot of variables that are only considered when you're actually filling out your real tax return.) There are a number of calculators if you search for something like \"\"tax estimator calculator\"\", some are more sophisticated than others. (Fair warning: I used several of these and they told me a range of $2k - $25k worth of taxes owed for a situation like yours.) Here's an estimator from TurboTax -- it's handy because it lets you enter business income. When I plug in $140K ($70 * 40 hours * 50 weeks) for business income in 2010, married filing jointly, no spouse income, and 4 dependents, I get $30K owed in federal taxes. (That doesn't include local taxes, any itemized deductions you might be eligible for, IRA deductions, etc. You may also be able to claim some expenses as business deductions that will reduce your taxable business income.) So you'd net $110K after taxes, or about $55/hour ($110k / 50 / 40). Of course, you could get an answer from the calculator, and Congress could change the rules midway through the year -- you might come out better or worse, depending on the nature of the rule changes... that's why I stress that it's an estimate. If you take the job, don't forget to make estimated tax payments! Edit: (some additional info) If you plan on doing this on an ongoing basis (i.e. you are going into business as a contractor for this line of work), there are some tax shelters that you can take advantage of. Most of these won't be worth doing if you are only going to be doing contract work for a short period of time (1-2 years). These may or may not all be applicable to you. And do your research into these areas before diving in, I'm just scratching the surface in the notes below.\"" }, { "docid": "557603", "title": "", "text": "\"Employers withhold at rates specified in Circular E issued by the IR. You can request that additional money be withheld (not an issue here) or you can have reduced withholding by claiming additional allowances on a W-4 (i.e., more than just for you and spouse and dependents) if you believe that this will result in withholding that will more closely match the tax due. (Note added in edit):Page 2 of the W-4 form has worksheets that can be used to figure out how many additional allowances to request. Also, I wonder if your withholding will be 37% or final tax bill be 26% of your adjusted gross income. The tax brackets are the tax on marginal income. If you are in the 28% tax bracket, you owe 28 cents in tax for each additional dollar of income, not 28 cents in tax for every dollar of income. Your overall tax might well be less than 20% of your income. As a specific example, in 2011 a married taxpayer filing jointly would be in the (highest) 35% tax bracket if the taxable income was $379,150 or more (marginal tax rate of 35% is applicable to every dollar more than $379,150) but the tax on $379,150 itself works out to be $102,574 or 27.05% of the taxable income. So if you do expect to be earning around $350K or more in salary between now and December 31 to hit that 26% that you expect you will owe, you might want to consider paying a tax accountant for advice on how to fill out your W-4 form for your new employer rather than relying on an Internet forum such as this for free advice. Note added in edit: Your comment \"\"... it is a cocktail of ... federal taxes, state taxes, local taxes, health care ...\"\" on the earlier version of my answer does raise the question of whether you want your employer to withhold 26% instead of 37% and have the money go to meet all these obligations or just 26% towards your Federal income tax liability only. The Federal W-4 form affects only how much money is withheld from your paycheck and sent to the US Treasury. Some of the money that each of your employers withholds (Social Security and Medicare taxes) is not affected by what you put down on the W-4 form. Now, if you hold two jobs and the total income shown on your W-2s is larger than the SS limit, you will have had too much Social Security taxes withheld, and the excess will be a credit towards your Federal income tax liability. You have self-employment income too on which you owe Social Security and Medicare taxes and you are making estimated tax payments. The excess Social Security tax payment can count towards this too (as well as income tax on your Schedule C income). Thus, if your new employer is withholding too much, you might be able to skip making the fourth quarterly payment of estimated tax or make a reduced payment (there is no requirement that the four installments must be equal). In short, there are lots of ramifications that you need to take into account before deciding that 26% is the right number. Instead of filling out a W-4 all by yourself right away, I strongly recommend reading up a lot on income taxes, or play with a tax preparation program (last year's version will do a pretty good job of at least getting you in the right ballpark), or consult with a tax accountant.\"" }, { "docid": "110202", "title": "", "text": "There's no additional income tax burden created when you decide to make Roth IRA contributions, your Roth IRA contributions are taxed at the same time all your income is taxed. If you earned that $100 by working a job, then your employer likely withheld taxes when they paid you. If you earned it through self-employment, then you'll pay estimated taxes on that income quarterly, etc. In any case when you file your annual tax return the actual taxes owed vs taxes paid gets reconciled and you're left with a refund or owe an additional sum." }, { "docid": "467390", "title": "", "text": "For Federal Return, Schedule H and its Instructions are a great start. You are the nanny's employer, and are responsible for FICA (social security and medicare) withholding, and also paying the employer portion. You will offer her a W4 so she can tell you how much federal and state tax to withhold. You'll use Circular E the employer's tax guide to calculate withholding. In January, you'll give her a W-2, and file the information with your own tax return. For State, some of the above applies, but as I recall, in my state, I had to submit withholding quarterly separate from my return. As compared to Federal, where I adjusted my own withholding so at year end the tax paid was correct. Unemployment insurance also needs to be paid, I believe this is state. This issue is non-political - I told my friends at the IRS that (a) the disparity between state and federal to handle the nanny tax was confusing for those of us trying to comply, and (b) even though we are treated as an employer, a 'guide to the nanny tax' would be helpful, a single IRS doc that doesn't mix non-nanny type issues into the mix. In the end, if a service is cost effective, go for it, your time is valuable, and thi is something that only lasts a few years." }, { "docid": "158409", "title": "", "text": "You do not need to file 1099-MISC to yourself if you're running as a sole proprietor - you are yourself. However, you do not deduct this amount from your business income and report it as royalties either. Your self-published book is your business income subject to SE tax. You can only deduct the actual costs of producing/writing, and the remaining amount is your Schedule C income." }, { "docid": "79411", "title": "", "text": "\"This is not an end-all answer but it'll get you started I have been through accounting courses in college as well as worked as a contractor (files as sole proprietor) for a few years but IANAA (I am not an accountant). Following @MasonWheeler's answer, if you're making that much money you should hire a bean counter to at least overlook your bookkeeping. What type of business? First, if you're the sole owner of the business you will most likely file as a sole proprietorship. If you don't have an official business entity, you should get it registered officially asap, and file under that name. The problem with sole proprietorships is liability. If you get sued, not only are your business' assets vulnerable but they can go after your personal assets too (including house/cars/etc). Legally, you and your business are considered one and the same. To avoid liability issues, you could setup a S corporation. Basically, the business is considered it's own entity and legal matters can only take as much as the business owns. You gain more protection but if you don't explicitly keep your business finances separate from your personal finances, you can get into a lot of trouble. Also, corporations generally pay out more in taxes. Technically, since the business is it's own entity you'll need to pay yourself a 'reasonable salary'. If you skip the salary and pay yourself the profits directly (ie evade being taxed on income/salary) the IRS will shut you down (that's one of the leading causes of corporations being shut down). You can also pay distribute bonuses on top of that but it would be wise to burn the words 'within reason' into your memory first. The tax man gets mad if you short him on payroll taxes. S corporations are complicated, if you go that route definitely seek help from an accountant. Bookkeeping If you're not willing to pay a full time accountant you'll need to do a lot of studying about how this works. Generally, even if you have a sole proprietorship it's best to have a separate bank account for all of your business transactions. Every source/drain of money will fall into one of 3 categories... Assets - What your business owns: Assets can be categorized by liquidity. Meaning how fast you can transform them directly into cash. Just because a company is worth a lot doesn't necessarily mean it has a lot of cash. Some assets depreciate (lose value over time) whereas some are very hard to transform back into cash based on the value and/or market fluctuations (like property). Liabilities - What you owe others and what others owe you: Everything you owe and everything that is owed to you gets tracked. Just like credit cards, it's completely possible to owe more than you own as long as you can pay the interest to maintain the loans. Equity - the net worth of the company: The approach they commonly teach in schools is called double-entry bookkeeping where they use the equation: In practice I prefer the following because it makes more sense: Basically, if you account for everything correctly both sides of the equation should match up. If you choose to go the sole proprietorship route, it's smart to track everything I've mentioned above but you can choose to keep things simple by just looking at your Equity. Equity, the heart of your business... Basically, every transaction you make having to do with your business can be simplified down to debits (money/value) increasing and credits (money/value) decreasing. For a very simple company you can assess this by looking at net profits. Which can be calculated with: Revenues, are made up of money earned by services performed and goods sold. Expenses are made up of operating costs, materials, payroll, consumables, interest on liabilities, etc. Basically, if you brought in 250K but it cost you 100K to make that happen, you've made 150K for the year in profit. So, for your taxes you can count up all the money you've made (Revenues), subtract all of the money you've paid out (Expenses) and you'll know how much profit you've made. The profit is what you pay taxes on. The kicker is, there are gray areas when it comes to deducting expenses. For instance, you can deduct the expense of using your car for business but you need to keep a log and can only expense the miles you traveled explicitly for business. Same goes for deducting dedicated workspaces in your house. Basically, do the research if you're not 100% sure about a deduction. If you don't keep detailed books and try to expense stuff without proof, you can get in trouble if the IRS comes knocking. There are always mythical stories about 'that one guy' who wrote off his boat on his taxes but in reality, you can go to jail for tax fraud if you do that. It comes down to this. At the end of the year, if your business took in a ton of money you'll owe a lot in taxes. The better you can justify your expenses, the more you can reduce that debt. One last thing. You'll also have to pay your personal federal/state taxes (including self-employment tax). That means medicare/social security, etc. If this is your first foray into self-employment you're probably not familiar with the fact that 1099 employers pick up 1/2 of the 15% medicare/social security bill. Typically, if you have an idea of what you make annually, you should be paying this out throughout the year. My pay as a contractor was always erratic so I usually paid it out once/twice a year. It's better to pay too much than too little because the gov't will give you back the money you overpaid. At the end of the day, paying taxed sucks more if you're self-employed but it balances out because you can make a lot more money. If as you said, you've broken six figures, hire a damn accountant/adviser to help you out and start reading. When people say, \"\"a business degree will help you advance in any field,\"\" it's subjects like accounting are core requirements to become a business undergrad. If you don't have time for more school and don't want to pay somebody else to take care of it, there's plenty of written material to learn it on your own. It's not rocket surgery, just basic arithmetic and a lot of business jargon (ie almost as much as technology).\"" }, { "docid": "450808", "title": "", "text": "\"One way to do these sorts of calculations is to use the spreadsheet version of IRS form 1040 available here. This is provided by a private individual and is not an official IRS tool, but in practice it is usually accurate enough for these purposes. You may have to spend some time figuring out where to enter the info. However, if you enter your self-employment income on Schedule C, this spreadsheet will calculate the self-employment tax as well as the income tax. An advantage is that it is the full 1040, so you can also select the standard deduction and the number of exemptions you are entitled to, enter ordinary W-2 income, even capital gains, etc. Of course you can also make use of other tax software to do this, but in my experience the \"\"Excel 1040\"\" is more convenient, as most websites and tax-prep software tend to be structured in a linear fashion and are more cumbersome to update in an ad-hoc way for purposes like tax estimation. You can do whatever works for you, but I would recommend taking a look at the Excel 1040. It is a surprisingly useful tool.\"" }, { "docid": "137225", "title": "", "text": "I've had zero taxable income for the past 2 years and yet the calculations say I owe the government $250 for each year for the Self Employment tax. How can they charge a non-zero tax on my income when my taxable income is zero? That is theft. That demands reform." } ]

[ { "docid": "88477", "title": "", "text": "This is wrong. It should be or Now, to get back to self-employment tax. Self-employment tax is weird. It's a business tax. From the IRS perspective, any self-employed person is a business. So, take your income X and divide by 1.0765 (6.2% Social Security and 1.45% Medicare). This gives your personal income. Now, to calculate the tax that you have to pay, multiply that by .153 (since you have to pay both the worker and employer shares of the tax). So new calculation or they actually let you do which is better for you (smaller). And your other calculations change apace. And like I said, you can simplify Q1se to and your payment would be Now, to get to the second quarter. Like I said, I'd calculate the income through the second quarter. So recalculate A based on your new numbers and use that to calculate Q2i. or Note that this includes income from both the first and second quarters. We'll reduce to just the second quarter later. This also has you paying for all of June even though you may not have been paid when you make the withholding payment. That's what they want you to do. But we aren't done yet. Your actual payment should be or Because Q2ft and Q2se are what you owe for the year so far. Q1ft + Q1se is what you've already paid. So you subtract those from what you need to pay in the second quarter. In future quarters, this would be All that said, don't stress about it. As a practical matter, so long as you don't owe $1000 or more when you file your actual tax return, they aren't going to care. So just make sure that your total payments match by the payment you make January 15th. I'm not going to try to calculate for the state. For one thing, I don't know if your state uses Q1i or Q1pi as its base. Different states may have different rules on that. If you can't figure it out, just use Q1i, as that's the bigger one. Fix it when you file your annual return. The difference in withholding is going to be relatively small anyway, less than 1% of your income." } ]

[ { "docid": "345942", "title": "", "text": "Am I required to send form 1099 to non-US citizens who are not even residing in the US? Since they're not required to file US taxes, do I still have to send the form to them? That's tricky. You need to get W8/W9 from them, and act accordingly. You may need to withhold 30% (or different percentage, depending on tax treaty they claim on W8). If you withhold taxes, you also need to file form 1042. I suggest you talk to a tax professional. Is it fine to expose my ITIN (taxpayer identification number) to individuals or companies who I send the form to them. Since the form requires me to write my TIN/EIN, what would be the risks of this and what precautions should be taken to avoid inappropriate/illegal use? No, it is not OK. But if you pay these people directly - you don't have much choice, so deal with it. Get a good insurance for identity theft, and don't transact with people you don't trust. One alternative would be to pay through a payment processor (Paypal or credit cards) - see your next question. I send payments via PayPal and wire transfer. Should I send form 1099-MISC or 1099-K? Paypal is a corporation, so you don't need to send 1099 to Paypal. Whatever Paypal sends to others - it will issue the appropriate forms. Similarly if you use a credit card for payment. When you send money through Paypal - you don't send money directly to your business counterparts. You send money to Paypal." }, { "docid": "308255", "title": "", "text": "Let me first start off by saying that you need to be careful with an S-Corp and defined contribution plans. You might want to consider an LLC or some other entity form, depending on your state and other factors. You should read this entire page on the irs site: S-Corp Retirement Plan FAQ, but here is a small clip: Contributions to a Self-Employed Plan You can’t make contributions to a self-employed retirement plan from your S corporation distributions. Although, as an S corporation shareholder, you receive distributions similar to distributions that a partner receives from a partnership, your shareholder distributions aren’t earned income for retirement plan purposes (see IRC section 1402(a)(2)). Therefore, you also can’t establish a self-employed retirement plan for yourself solely based on being an S corporation shareholder. There are also some issues and cases about reasonable compensation in S-Corp. I recommend you read the IRS site's S Corporation Compensation and Medical Insurance Issues page answers as I see them, but I recommend hiring CPA You should be able to do option B. The limitations are in place for the two different types of contributions: Elective deferrals and Employer nonelective contributions. I am going to make a leap and say your talking about a SEP here, therefore you can't setup one were the employee could contribute (post 1997). If your doing self employee 401k, be careful to not make the contributions yourself. If your wife is employed the by company, here calculation is separate and the company could make a separate contribution for her. The limitation for SEP in 2015 are 25% of employee's compensation or $53,000. Since you will be self employed, you need to calculate your net earnings from self-employment which takes into account the eductible part of your self employment tax and contributions business makes to SEP. Good read on SEPs at IRS site. and take a look at chapter 2 of Publication 560. I hope that helps and I recommend hiring a CPA in your area to help." }, { "docid": "533808", "title": "", "text": "\"There are way too many details missing to be able to give you an accurate answer, and it would be too localized in terms of time & location anyway -- the rules change every year, and your local taxes make the answer useless to other people. Instead, here's how to figure out the answer for yourself. Use a tax estimate calculator to get a ballpark figure. (And keep in mind that these only provide estimates, because there are still a lot of variables that are only considered when you're actually filling out your real tax return.) There are a number of calculators if you search for something like \"\"tax estimator calculator\"\", some are more sophisticated than others. (Fair warning: I used several of these and they told me a range of $2k - $25k worth of taxes owed for a situation like yours.) Here's an estimator from TurboTax -- it's handy because it lets you enter business income. When I plug in $140K ($70 * 40 hours * 50 weeks) for business income in 2010, married filing jointly, no spouse income, and 4 dependents, I get $30K owed in federal taxes. (That doesn't include local taxes, any itemized deductions you might be eligible for, IRA deductions, etc. You may also be able to claim some expenses as business deductions that will reduce your taxable business income.) So you'd net $110K after taxes, or about $55/hour ($110k / 50 / 40). Of course, you could get an answer from the calculator, and Congress could change the rules midway through the year -- you might come out better or worse, depending on the nature of the rule changes... that's why I stress that it's an estimate. If you take the job, don't forget to make estimated tax payments! Edit: (some additional info) If you plan on doing this on an ongoing basis (i.e. you are going into business as a contractor for this line of work), there are some tax shelters that you can take advantage of. Most of these won't be worth doing if you are only going to be doing contract work for a short period of time (1-2 years). These may or may not all be applicable to you. And do your research into these areas before diving in, I'm just scratching the surface in the notes below.\"" }, { "docid": "57229", "title": "", "text": "Your clients should not send you 1099-MISC if they paid with a credit card. You can refer them to this text in the instructions for the form 1099-MISC: Payments made with a credit card or payment card and certain other types of payments, including third party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. See the separate Instructions for Form 1099-K. By sending out the 1099-MISC, your clients are essentially saying that they paid you directly (check or cash) in addition to the payment they made with a credit card (which will be reported on 1099-K). In case of an audit, you'll have trouble convincing the IRS that it didn't happen. I suggest asking the clients not to do this to you, since it may cost you significant amounts to fight the IRS later on. In any case, you report on your tax return what you really got, not what the 1099 says. If you have two 1099's covering the same income - there's no legal obligation to report the income twice. You do not have to pay twice the tax just because you have stupid clients. But you may have troubles explaining it to the IRS, especially if you're dealing with cash in your business. If you want to avoid matching issues, consider reporting all the 1099s, and then subtracting the duplicates and attaching a statement (the software will do it automatically when you add the description in the miscellaneous item) about what it is." }, { "docid": "247473", "title": "", "text": "I can only address this part of it: For instance with a 10k net income, 9293 is the limit for 401k from employee. How is this calculated? I believe this limit is total for all sources too, which I'm confused about. How it's calculated is that when you are self-employed you also pay the employer portion of the FICA taxes. This comes off above the line and is not considered income. The 401k contribution limit takes this into account." }, { "docid": "467390", "title": "", "text": "For Federal Return, Schedule H and its Instructions are a great start. You are the nanny's employer, and are responsible for FICA (social security and medicare) withholding, and also paying the employer portion. You will offer her a W4 so she can tell you how much federal and state tax to withhold. You'll use Circular E the employer's tax guide to calculate withholding. In January, you'll give her a W-2, and file the information with your own tax return. For State, some of the above applies, but as I recall, in my state, I had to submit withholding quarterly separate from my return. As compared to Federal, where I adjusted my own withholding so at year end the tax paid was correct. Unemployment insurance also needs to be paid, I believe this is state. This issue is non-political - I told my friends at the IRS that (a) the disparity between state and federal to handle the nanny tax was confusing for those of us trying to comply, and (b) even though we are treated as an employer, a 'guide to the nanny tax' would be helpful, a single IRS doc that doesn't mix non-nanny type issues into the mix. In the end, if a service is cost effective, go for it, your time is valuable, and thi is something that only lasts a few years." }, { "docid": "454184", "title": "", "text": "I'm not sure how this gets entered in TurboTax, but this income from the company should be included in the Schedule C (or C-EZ) Line 1 Gross Receipts total, along with all of your 1099-MISC income from your business and any other income that your business took in. You don't need a 1099 from them, and the IRS doesn't care (at least from your perspective) if you got a 1099 or not; in fact, they probably expect you to have some non-1099 income. We don't know why the company chose not to issue 1099 forms, but luckily it isn't your concern. You can fill out your tax return properly without it. Note: This answer assumes that you didn't have any tax withheld from your checks from this company. If you did have tax withheld, you'll need to insist on a 1099 to show that." }, { "docid": "514084", "title": "", "text": "\"Congratulations on getting married! As far as the IRS is concerned, you are a married couple for all of this year for tax purposes. The 2014 HSA contribution limit for you and your husband together is $6550. This limit applies to both of you together, whether you file jointly or separately. So it looks like you and your husband have excess contributions this year. You'll need to withdraw some contributions, either in your account or your husband's account, to get under $6550 total for the year. If you choose to take this money out of your account, since you have already spent this money out of your HSA, you won't actually receive a check from the withdrawal. Instead, the money that you have already spent will be recategorized from a normal HSA medical distribution to an excess contribution withdrawal. When you get your 1099-SA form from your HSA bank at tax time, the distributions will be coded as excess contributions distributions. In addition, the form will include the amount of any earnings (interest) that you received on your excess contributions. At tax time, you'll need to examine your W-2 form from your employer closely. If the form does not include the amount that the employer HSA contribution in your taxable income, you'll need to add this amount as \"\"Other income\"\" on your taxes. You'll also need to include any earnings on the excess contributions reported on the 1099-SA. Since your husband funds his own HSA and doesn't have any employer contributions to it, you might find it easier to withdraw the excess contributions from his HSA instead of yours. To do this, you need to tell his HSA bank that the withdrawal is an excess contribution withdrawal so that it gets reported correctly on his 1099-SA. There won't be any changes to his W-2, and the only \"\"other income\"\" he'll need to report is any earnings on the excess contributions from his 1099-SA. The instructions for Form 8889, line 13 explain what to do in the event of an excess contribution (note: The text here is from the 2013 version of the instructions): Line 13 If you or someone on your behalf (or your employer) contributed more to your HSA than is allowable, you may have to pay an additional tax on the excess contributions. Figure the excess contributions using the following instructions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the additional tax. Excess Contributions You Make To figure your excess contributions (including those made on your behalf), subtract your deductible contributions (line 13) from your actual contributions (line 2). However, you can withdraw some or all of your excess contributions for 2013 and they will be treated as if they had not been contributed if: You make the withdrawal by the due date, including extensions, of your 2013 tax return (but see the Note under Excess Employer Contributions, later), You do not claim a deduction for the amount of the withdrawn contributions, and You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. Excess Employer Contributions Excess employer contributions are the excess, if any, of your employer's contributions over your limitation on line 8. If you made a qualified HSA funding distribution (line 10) during the tax year, reduce your limitation (line 8) by that distribution before you determine whether you have excess employer contributions. If the excess was not included in income on Form W-2, you must report it as “Other income” on your tax return. However, you can withdraw some or all of the excess employer contributions for 2013 and they will be treated as if they had not been contributed if: You make the withdrawal by the due date, including extensions, of your 2013 tax return (but see the following Note), You do not claim an exclusion from income for the amount of the withdrawn contributions, and You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. There are further instructions on what to do if you don't take care of this until a future year, but it is much better and easier if you take care of this before the end of this year, and handle it correctly on your tax return. I believe that this is how it will all work; however, you'll want to confirm all of this with someone who knows what they are talking about and can look at your individual situation. Hopefully, this answer gives you enough information to be able to ask the right questions.\"" }, { "docid": "18647", "title": "", "text": "One possibility that I use: I set up an LLC and get paid through that entity. Then I set up a payroll service through Bank of America and set up direct deposit so that it is free. I pay myself at 70% of my hourly rate based on the number of hours I work, and the payroll service does all the calculations for me and sets up the payments to the IRS. Typically money is left over in my business account. When tax time rolls around, I have a W2 from my LLC and a 1099 from the company I work for. I put the W2 into my personal income, and for the business I enter the revenue on the 1099 and the payroll expenses from paying myself; the left over in the business account is taxed as ordinary income. Maybe it's overkill, but setting up the LLC makes it possible to (a) set up a solo 401(k) and put up to $51k away tax-free, and (b) I can write off business expenses more easily." }, { "docid": "114835", "title": "", "text": "If you are being paid money in exchange for services that you are providing to your cousin, then that is income, are legally you are required to declare it as self-employment income, and pay taxes when you file your tax return (and if you have a significant amount of self-employment income, you're supposed make payments every quarter of your estimated tax liability. The deposit itself will not be taxed, however." }, { "docid": "158409", "title": "", "text": "You do not need to file 1099-MISC to yourself if you're running as a sole proprietor - you are yourself. However, you do not deduct this amount from your business income and report it as royalties either. Your self-published book is your business income subject to SE tax. You can only deduct the actual costs of producing/writing, and the remaining amount is your Schedule C income." }, { "docid": "82284", "title": "", "text": "\"See Publication 505, specifically the section on \"\"Annualized Income Installment Method\"\", which says: If you do not receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method. The publication includes a worksheet and explanation of how to calculate the estimated tax due for each period when you have unequal income. If you had no freelance income during a period, you shouldn't owe any estimated tax for that period. However, the process for calculating the estimated tax using this method is a good bit more complex and confusing than using the \"\"short\"\" method (in which you just estimate how much tax you will owe for the year and divide it into four equal pieces). Therefore, in future years you might want to still use the equal-payments method if you can swing it. (It's too late for this year since you missed the April deadline for the first payment.) If you can estimate the total amount of freelance income you'll receive (even though you might not be able to estimate when you'll receive it), you can probably still use the simpler method. If you really have no idea how much money you'll make over the year, you could either use the more complex computation, or you could use a very high estimate to ensure you pay enough tax, and you'll get a refund if you pay too much.\"" }, { "docid": "582922", "title": "", "text": "You receive a 1099-misc for the value of the car. You claim that as income (even though you received goods rather than cash). When you sell the car, it would be much like selling any posession, and would cause no tax consequence unless the sale price was much different than the value... When you sell the car, you may have received more or less than the value of the car (likely less). If you sold it for more, then you might need to claim the additional money as income (perhaps short term capital gains). If you sold it for less, but to a friend or relative, then you might think you could claim a loss, but the tax collector would just claim that you had given them a gift, and attempt to collect the tax from them. Contest winners often have the frustration that they are taxed at the full value of the item(s) won, even though they would not value the item at that amount. And contest prizes often do not sell for the full value stated on the 1099, and often for much less. Marginal tax rates were higher prior to Reagan, and when a contest winner would sell an item for 80% of the value, they often paid most of the proceeds to taxes." }, { "docid": "105264", "title": "", "text": "\"Actually, the other answer isn't strictly correct. It's an estimate, giving a lower bound that gets less accurate as income increases. Consider: U.S. income tax is based on a progressive tax system where there are income bracket levels with increasing tax rates. Example: Given U.S. 2009 federal tax rates for an individual filing as \"\"single\"\": Imagine somebody making $100000. Assuming no other credits, deductions, or taxes, then income tax based on the above brackets & rates would be calculated as follows: Meaning the average tax rate for the single individual earning $100,000 is 21.72%. However, a pre-tax deduction from that income actually comes off at the top marginal tax rate. Consider the same calculation but with taxable income reduced to $99,000 instead (i.e. simulating a pre-tax $1000 deduction): That's a difference of $280, which is more than the $217.20 savings that would have been estimated if just using the average tax rate method. Consequently, when trying to determine how much money would be saved by a tax deduction, it makes better sense to estimate using the marginal tax rate, which in this case was 28%. It gets a little trickier if the deduction crosses a bracket boundary. (Left as an exercise to the reader :-) Finally, in the case of the deduction being discussed, it also looks like payroll FICA taxes paid by the employee (Social Security's 6.2%, and Medicare's 1.45%) would be avoided as well; so add that to the marginal tax rate savings. The surest way to know how much would be saved, though, would be to do one's income tax return calculation without the deduction, and then with, and compare the numbers. Tax software can make this very easy to do.\"" }, { "docid": "292769", "title": "", "text": "\"As ApplePie discusses, \"\"tax bracket\"\" without any modifiers refers to a single jurisdiction's marginal tax rate. In your case, this is either your California's \"\"tax bracket\"\" or your Federal \"\"tax bracket\"\" (not including marginal Social Security and Medicare taxes). But if someone says \"\"combined state and federal tax bracket\"\", they probably mean the combination of your state and federal income tax brackets (again, lot including sales taxes, business and occupational taxes, social security taxes, and medicare taxes). The math to combine the state and federal marginal tax rates is a bit tricky, because most people can deduct either their state and local income taxes, or their state and local general sales taxes when computing their income for federal income tax purposes. (The federal \"\"alternative minimum tax\"\" restricts this deduction for some people.) For a single person earning $ 100,000 of salaries and wages in California, whose state income taxes are close to their standard deduction, the calculations for the combined marginal income tax rate look something like this: As mentioned above, this understates the tax bite on marginal \"\"earned income\"\". To find the true marginal rate, we need to add in Social Security taxes, Medicare taxes, sales taxes, and business & occupation taxes. The Social Security and Medicare taxes are sometimes called \"\"self employment taxes\"\". This math omits unemployment insurance and workers' compensation insurance, because those taxes are typically capped well below $ 100,000 per year of income. This math also omits B & O taxes, because this question is California specific. If an employer wishes to increase an employee's pay by $ 1,076.50, the first $ 76.50 will go to the employer's share of Social Security and Medicare taxes. The remaining $ 1,000.00 will be subject to the combined marginal income tax rate discussed above, plus will have $ 76.50 go to the employee's share of Social Security and Medicare taxes. The employee might buy some extra things with some of their extra money, and pay sales tax on them. In 2016, a 9 % sales tax rate was common in California's largest cities. The IRS estimated that (for a single person with no dependents making $ 100,000 per year who did not buy a boat, RV, motor vehicle, or major home construction), about 9 % of their marginal gross income was subject to sales tax.\"" }, { "docid": "583245", "title": "", "text": "If the income is more than the value on the 1099-MISC - then yes. Depending on how long you've held the car, the difference would be short term/long term capital gain. You cannot deduct loss, though, since it is a personal property and not investment." }, { "docid": "418630", "title": "", "text": "\"Most states that have income tax base their taxes on the income reported on your federal return, with some state-specific adjustments. So answering your last question first: Yes, if it matters for federal, it will matter for state (in most cases). For estimating the tax liability, I would not use the effective rate but rather use the rate for your highest tax bracket and apply that to your estimated hobby income, assuming that you primary job income won't be wildly higher or lower than last year. As @keshlam noted in a comment, this income is coming on top of whatever else you earn, so it will be taxed at your top rate. Finally, I'd check again whether this is really \"\"hobby\"\" income or if it is \"\"self-employment\"\" income. Self-employment income will be subject to self-employment tax, which comes on top of the regular income tax.\"" }, { "docid": "194017", "title": "", "text": "To get the factors you want, start with a complete amortization calculator and a tax deduction calculator, filling in values for your down payment, purchase price, tax rates, and mortgage rate. If you are talking about a specific property, you should be able to get taxes for the current year, and perhaps using historical values estimate taxes going out. Some calculators will include PMI (which you should avoid like the plague in an actual purchase). Given some preliminary data, you can calculate your insurance. So once you have your PITI (principal, interest, tax, and insurance) monthly payment and tax deduction, you can calculate how much you spend a month on the house minus the deduction. To estimate maintenance costs, you could either figure out about what you'd need to replace in the given time you plan to stay put and use a rough estimate on what it is. You can also use some rough estimates like this (1% of the property value yearly!) or this (moving the number up to a whopping 2%). Don't forget closing costs as a buyer and seller. You can find estimates for these as well, and they are a function of the purchase price (usually around 2%). So to figure out how much it costs you to live in a house for X months, you can do So your total cost is Total Return Is: You can adjust that total return for inflation using this calculator to get your total return adjusted for inflation. If projecting into the future, you can try a formula found here. To figure out the return on your investment, use So to figure out the total return adjusted you need for a given ROI, find" }, { "docid": "106673", "title": "", "text": "This sounds like a rental fee as described in the instructions for the 1099-MISC. Enter amounts of $600 or more for all types of rents, such as any of the following. ... Non-Employee compensation does not seem appropriate because you did not perform a service. You mention that your tax-preparer brought this up. I think you will need to consult with a CPA to receive a more reliable opinion. Make sure to bring the contract that describes the situation with you. From there, you may need to consult a tax attorney, but the CPA should be able to help you figure out what your next step is." } ]

[ { "docid": "582864", "title": "", "text": "\"There are a couple of things that are missing from your estimate. In addition to your standard deduction, you also have a personal exemption of $4050. So \"\"D\"\" in your calculation should be $6300 + $4050 = $10,350. As a self-employed individual, you need to pay both the employee and employer side of the Social Security and Medicare taxes. Instead of 6.2% + 1.45%, you need to pay (6.2% + 1.45%) * 2 = 15.3% self-employment tax. In addition, there are some problems with your calculation. Q1i (Quarter 1 estimated income) should be your adjusted annual income divided by 4, not 3 (A/4). Likewise, you should estimate your quarterly tax by estimating your income for the whole year, then dividing by 4. So Aft (Annual estimated federal tax) should be: Quarterly estimated federal tax would be: Qft = Aft / 4 Annual estimated self-employment tax is: Ase = 15.3% * A with the quarterly self-employment tax being one-fourth of that: Qse = Ase / 4 Self employment tax gets added on to your federal income tax. So when you send in your quarterly payment using Form 1040-ES, you should send in Qft + Qse. The Form 1040-ES instructions (PDF) comes with the \"\"2016 Estimated Tax Worksheet\"\" that walks you through these calculations.\"" } ]

[ { "docid": "79411", "title": "", "text": "\"This is not an end-all answer but it'll get you started I have been through accounting courses in college as well as worked as a contractor (files as sole proprietor) for a few years but IANAA (I am not an accountant). Following @MasonWheeler's answer, if you're making that much money you should hire a bean counter to at least overlook your bookkeeping. What type of business? First, if you're the sole owner of the business you will most likely file as a sole proprietorship. If you don't have an official business entity, you should get it registered officially asap, and file under that name. The problem with sole proprietorships is liability. If you get sued, not only are your business' assets vulnerable but they can go after your personal assets too (including house/cars/etc). Legally, you and your business are considered one and the same. To avoid liability issues, you could setup a S corporation. Basically, the business is considered it's own entity and legal matters can only take as much as the business owns. You gain more protection but if you don't explicitly keep your business finances separate from your personal finances, you can get into a lot of trouble. Also, corporations generally pay out more in taxes. Technically, since the business is it's own entity you'll need to pay yourself a 'reasonable salary'. If you skip the salary and pay yourself the profits directly (ie evade being taxed on income/salary) the IRS will shut you down (that's one of the leading causes of corporations being shut down). You can also pay distribute bonuses on top of that but it would be wise to burn the words 'within reason' into your memory first. The tax man gets mad if you short him on payroll taxes. S corporations are complicated, if you go that route definitely seek help from an accountant. Bookkeeping If you're not willing to pay a full time accountant you'll need to do a lot of studying about how this works. Generally, even if you have a sole proprietorship it's best to have a separate bank account for all of your business transactions. Every source/drain of money will fall into one of 3 categories... Assets - What your business owns: Assets can be categorized by liquidity. Meaning how fast you can transform them directly into cash. Just because a company is worth a lot doesn't necessarily mean it has a lot of cash. Some assets depreciate (lose value over time) whereas some are very hard to transform back into cash based on the value and/or market fluctuations (like property). Liabilities - What you owe others and what others owe you: Everything you owe and everything that is owed to you gets tracked. Just like credit cards, it's completely possible to owe more than you own as long as you can pay the interest to maintain the loans. Equity - the net worth of the company: The approach they commonly teach in schools is called double-entry bookkeeping where they use the equation: In practice I prefer the following because it makes more sense: Basically, if you account for everything correctly both sides of the equation should match up. If you choose to go the sole proprietorship route, it's smart to track everything I've mentioned above but you can choose to keep things simple by just looking at your Equity. Equity, the heart of your business... Basically, every transaction you make having to do with your business can be simplified down to debits (money/value) increasing and credits (money/value) decreasing. For a very simple company you can assess this by looking at net profits. Which can be calculated with: Revenues, are made up of money earned by services performed and goods sold. Expenses are made up of operating costs, materials, payroll, consumables, interest on liabilities, etc. Basically, if you brought in 250K but it cost you 100K to make that happen, you've made 150K for the year in profit. So, for your taxes you can count up all the money you've made (Revenues), subtract all of the money you've paid out (Expenses) and you'll know how much profit you've made. The profit is what you pay taxes on. The kicker is, there are gray areas when it comes to deducting expenses. For instance, you can deduct the expense of using your car for business but you need to keep a log and can only expense the miles you traveled explicitly for business. Same goes for deducting dedicated workspaces in your house. Basically, do the research if you're not 100% sure about a deduction. If you don't keep detailed books and try to expense stuff without proof, you can get in trouble if the IRS comes knocking. There are always mythical stories about 'that one guy' who wrote off his boat on his taxes but in reality, you can go to jail for tax fraud if you do that. It comes down to this. At the end of the year, if your business took in a ton of money you'll owe a lot in taxes. The better you can justify your expenses, the more you can reduce that debt. One last thing. You'll also have to pay your personal federal/state taxes (including self-employment tax). That means medicare/social security, etc. If this is your first foray into self-employment you're probably not familiar with the fact that 1099 employers pick up 1/2 of the 15% medicare/social security bill. Typically, if you have an idea of what you make annually, you should be paying this out throughout the year. My pay as a contractor was always erratic so I usually paid it out once/twice a year. It's better to pay too much than too little because the gov't will give you back the money you overpaid. At the end of the day, paying taxed sucks more if you're self-employed but it balances out because you can make a lot more money. If as you said, you've broken six figures, hire a damn accountant/adviser to help you out and start reading. When people say, \"\"a business degree will help you advance in any field,\"\" it's subjects like accounting are core requirements to become a business undergrad. If you don't have time for more school and don't want to pay somebody else to take care of it, there's plenty of written material to learn it on your own. It's not rocket surgery, just basic arithmetic and a lot of business jargon (ie almost as much as technology).\"" }, { "docid": "223170", "title": "", "text": "Since your YouTube income is considered self-employment income and because you probably already made more than $400 in net income (after deducting expenses from the $4000 you've received so far), you will have to pay self-employment tax and file a return. This is according to the IRS's Publication 17 (2016), Your Federal Income Tax, so assumes the same rules for 2016 will remain in effect for 2017: You are self-employed if you: Carry on a trade or business as a sole proprietor, Are an independent contractor, Are a member of a partnership, or Are in business for yourself in any other way. Self-employment can include work in addition to your regular full-time business activities, such as certain part-time work you do at home or in addition to your regular job. You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1). Also, you must file Form 1040 and Schedule SE (Form 1040), Self-Employment Tax, if: Your net earnings from self-employment (excluding church employee income) were $400 or more, or You had church employee income of $108.28 or more. (See Table 1-3.) Use Schedule SE (Form 1040) to figure your self-employment tax. Self-employment tax is comparable to the social security and Medicare tax withheld from an employee's wages. For more information about this tax, see Pub. 334, Tax Guide for Small Business. I'd also note that your predicted income is getting close to the level where you would need to pay Estimated Taxes, which for self-employed people work like the withholding taxes employers remove their employees paychecks and pay to the government. If you end up owing more than $1000 when you file your return you could be assessed penalties for not paying the Estimated Taxes. There is a grace period if you had to pay no taxes in the previous year (2016 in this case), that could let you escape those penalties." }, { "docid": "308255", "title": "", "text": "Let me first start off by saying that you need to be careful with an S-Corp and defined contribution plans. You might want to consider an LLC or some other entity form, depending on your state and other factors. You should read this entire page on the irs site: S-Corp Retirement Plan FAQ, but here is a small clip: Contributions to a Self-Employed Plan You can’t make contributions to a self-employed retirement plan from your S corporation distributions. Although, as an S corporation shareholder, you receive distributions similar to distributions that a partner receives from a partnership, your shareholder distributions aren’t earned income for retirement plan purposes (see IRC section 1402(a)(2)). Therefore, you also can’t establish a self-employed retirement plan for yourself solely based on being an S corporation shareholder. There are also some issues and cases about reasonable compensation in S-Corp. I recommend you read the IRS site's S Corporation Compensation and Medical Insurance Issues page answers as I see them, but I recommend hiring CPA You should be able to do option B. The limitations are in place for the two different types of contributions: Elective deferrals and Employer nonelective contributions. I am going to make a leap and say your talking about a SEP here, therefore you can't setup one were the employee could contribute (post 1997). If your doing self employee 401k, be careful to not make the contributions yourself. If your wife is employed the by company, here calculation is separate and the company could make a separate contribution for her. The limitation for SEP in 2015 are 25% of employee's compensation or $53,000. Since you will be self employed, you need to calculate your net earnings from self-employment which takes into account the eductible part of your self employment tax and contributions business makes to SEP. Good read on SEPs at IRS site. and take a look at chapter 2 of Publication 560. I hope that helps and I recommend hiring a CPA in your area to help." }, { "docid": "427727", "title": "", "text": "I've given up on trying to understand how the allowances correspond to my number of dependents. What I do instead to achieve the same end goal of having the right amount of money withheld is using a paycheck calculator. If I get paid 24 times a year (twice a month) and I figure I'm going to owe about $6,000 of taxes, then every paycheck needs to have $250 of federal tax withheld from it to make sure I am covered. Go to the paycheck calculator and play with the allowance numbers until you get $250 as the federal tax withheld and then submit a new W4 to your employer. This is the only reliable way I've found to figure this out on my own. Because my calculations are done in dollars instead of exemptions, etc. and my taxes do not wildly fluctuate year-to-year this works well for me." }, { "docid": "272248", "title": "", "text": "\"I have done similar software work. You do not need an LLC to write off business expenses. The income and expenses go on Schedule C of your tax return. It is easy to write off even small expenses such as travel - if you keep records. The income should be reported to you on a 1099 form, filled out by your client, not yourself. For a financial advisor you should find one you can visit with personally and who operates as a \"\"fee-only\"\" advisor. That means they will not try to sell you something that they get a commission on. You might pay a few $hundred per visit. There are taxes that you have to pay (around 15%) due to self-employment income. These taxes are due 4 times a year and paid with an \"\"estimated tax\"\" form. See the IRS web site, and in particular schedule SE. Get yourself educated about this fast and make the estimated tax payments on time so you won't run into penalties at the end of the year.\"" }, { "docid": "569645", "title": "", "text": "I agree with your strategy of using a conservative estimate to overpay taxes and get a refund next year. As a self-employed individual you are responsible for paying self-employment tax (which means paying Social Security and Medicare tax for yourself as both: employee and an employer.) Current Social Security Rate is 6.2% and Medicare is 1.45%, so your Self-employment tax is 15.3% (7.65%X2) Assuming you are single, your effective tax rate will be over 10% (portion of your income under $ 9,075), but less than 15% ($9,075-$36,900), so to adopt a conservative approach, let's use the 15% number. Given Self-employment and Federal Income tax rate estimates, very conservative approach, your estimated tax can be 30% (Self-employment tax plus income tax) Should you expect much higher compensation, you might move to the 25% tax bracket and adjust this amount to 40%." }, { "docid": "196399", "title": "", "text": "I can't find specific information for Form 1099-DIV for this tax year. However, I found this quote for next tax season that talks about Form 1099-B: Due date for certain statements sent to recipients. The due date for furnishing statements to recipients for Forms 1099-B, 1099-S, and 1099-MISC (if amounts are reported in box 8 or 14) is February 15, 2018. [emphasis added] I know many brokerages bundle the 1099-DIV with the 1099-B, so one might assume that the deadlines are the same. February 15 seems consistent with the messages I got from my brokerages that said the forms will be mailed by mid-February." }, { "docid": "40044", "title": "", "text": "You may also want to consider Delaware and Nevada as possible corporate homes. They are common choices for out of state corporations. You may find that they are better options. Will earnings prior to forming the LLC have to be claimed as self-employment income? If so, would it be easier to wait until the next calendar year to form the LLC? Earnings after forming the Limited Liability Corporation (LLC) will probably have to be claimed as self-employment income. See How LLC Members Are Taxed for more discussion. In particular, read the section on self-employment taxes: The current rule is that any owner who works in or helps manage the business must pay this tax on his or her distributive share (rightful share of profits). However, owners who are not active in the LLC -- that is, those who have merely invested money but don't provide services or make management decisions for the LLC -- may be exempt from paying self-employment taxes on their share of profits. The regulations in this area are a bit complicated, but if you actively manage or work in your LLC, you can expect to pay self-employment tax on all LLC profits allocated to you. As I read it, you actively work in the LLC, so it is unlikely that you can avoid paying self-employment taxes. So it shouldn't make any difference when you officially start an LLC. You'll have to pay self-employment taxes before and after creating the LLC regardless. If you don't want to pay self-employment taxes, you may want to consider forming a Subchapter C corporation. They don't have the same tax structure as Subchapter S corporations or LLCs. You would be paid some kind of wage, salary, or commission and the corporation would pay the employer's side of the payroll taxes. Note that Subchapter S corporations and LLCs exist because they usually pay less in tax than Subchapter C corporations do. Even including the self-employment taxes that you owe. A CPA should be able to guide you in making these decisions and help you with setup. The one time that I started a corporation, I just paid a few hundred dollars to a service and they filed the paperwork for me. That included state fees and notice costs. The CPA probably has a service association already." }, { "docid": "110202", "title": "", "text": "There's no additional income tax burden created when you decide to make Roth IRA contributions, your Roth IRA contributions are taxed at the same time all your income is taxed. If you earned that $100 by working a job, then your employer likely withheld taxes when they paid you. If you earned it through self-employment, then you'll pay estimated taxes on that income quarterly, etc. In any case when you file your annual tax return the actual taxes owed vs taxes paid gets reconciled and you're left with a refund or owe an additional sum." }, { "docid": "204187", "title": "", "text": "The taxes that are deducted from you paycheck are estimated from the expected annual income you receive from the employer. In the same way, the employer will deduct from that expected annual income the tax deductions you would get for the number of dependents you specify. Hence your net income will be lower, your annual tax obligation also, which can than be calculated down to the period of your paycheck." }, { "docid": "93638", "title": "", "text": "You need to clarify with Bob what your agreement is. If you and Bob are working together on these jobs as partners, you should get a written partnership agreement done by a lawyer who works with software industry entity formation. You can legally be considered a partnership if you are operating a business together, even if there is nothing in writing. The partnership will have its own tax return, and you each will be allocated 50% of the profits/losses (if that's what you agree to). This amount will be reported on your own individual 1040 as self-employment income. Since you have now lost all the expense deductions you would have taken on your Schedule C, and any home office deduction, it's a good idea to put language in the partnership agreement stating that the partnership will reimburse partners for their out-of-pocket expenses. If Bob is just hiring you as a contractor, you give him your SSN, and he issues you a 1099, like any other client. This should be a situation where you invoice him for the amount you are charging. Same thing with Joe - figure out if you're hiring him as an independent contractor, or if you have a partnership. Either way, you will owe income and self-employment tax on your profits. In the case of a partnership, the amount will be on the K-1 from the partnership return. For an independent contractor who's operating as a sole proprietor, you report the income you invoiced for and received, and deduct your expenses, including independent contractors that you hired, on your Schedule C. Talk to your tax guy about quarterly estimated payments. If you don't have a tax guy, go get one. Find somebody people in your city working in your industry recommend. A good tax person will save you more money than they cost. IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law." }, { "docid": "536849", "title": "", "text": "\"I've done various side work over the years -- computer consulting, writing, and I briefly had a video game company -- so I've gone through most of this. Disclaimer: I have never been audited, which may mean that everything I put on my tax forms looked plausible to the IRS and so is probably at least generally right, but it also means that the IRS has never put their stamp of approval on my tax forms. So that said ... 1: You do not need to form an LLC to be able to claim business expenses. Whether you have any expenses or not, you will have to complete a schedule C. On this form are places for expenses in various categories. Note that the categories are the most common type of expenses, there's an \"\"other\"\" space if you have something different. If you have any property that is used both for the business and also for personal use, you must calculate a business use percentage. For example if you bought a new printer and 60% of the time you use it for the business and 40% of the time you use it for personal stuff, then 60% of the cost is tax deductible. In general the IRS expects you to calculate the percentage based on amount of time used for business versus personal, though you are allowed to use other allocation formulas. Like for a printer I think you'd get away with number of pages printed for each. But if the business use is not 100%, you must keep records to justify the percentage. You can't just say, \"\"Oh, I think business use must have been about 3/4 of the time.\"\" You have to have a log where you write down every time you use it and whether it was business or personal. Also, the IRS is very suspicious of business use of cars and computers, because these are things that are readily used for personal purposes. If you own a copper mine and you buy a mine-boring machine, odds are you aren't going to take that home to dig shafts in your backyard. But a computer can easily be used to play video games or send emails to friends and relatives and lots of things that have nothing to do with a business. So if you're going to claim a computer or a car, be prepared to justify it. You can claim office use of your home if you have one or more rooms or designated parts of a room that are used \"\"regularly and exclusively\"\" for business purposes. That is, if you turn the family room into an office, you can claim home office expenses. But if, like me, you sit on the couch to work but at other times you sit on the couch to watch TV, then the space is not used \"\"exclusively\"\" for business purposes. Also, the IRS is very suspicious of home office deductions. I've never tried to claim it. It's legal, just make sure you have all your ducks in a row if you claim it. Skip 2 for the moment. 3: Yes, you must pay taxes on your business income. If you have not created an LLC or a corporation, then your business income is added to your wage income to calculate your taxes. That is, if you made, say, $50,000 salary working for somebody else and $10,000 on your side business, then your total income is $60,000 and that's what you pay taxes on. The total amount you pay in income taxes will be the same regardless of whether 90% came from salary and 10% from the side business or the other way around. The rates are the same, it's just one total number. If the withholding on your regular paycheck is not enough to cover the total taxes that you will have to pay, then you are required by law to pay estimated taxes quarterly to make up the difference. If you don't, you will be required to pay penalties, so you don't want to skip on this. Basically you are supposed to be withholding from yourself and sending this in to the government. It's POSSIBLE that this won't be an issue. If you're used to getting a big refund, and the refund is more than what the tax on your side business will come to, then you might end up still getting a refund, just a smaller one. But you don't want to guess about this. Get the tax forms and figure out the numbers. I think -- and please don't rely on this, check on it -- that the law says that you don't pay a penalty if the total tax that was withheld from your paycheck plus the amount you paid in estimated payments is more than the tax you owed last year. So like lets say that this year -- just to make up some numbers -- your employer withheld $4,000 from your paychecks. At the end of the year you did your taxes and they came to $3,000, so you got a $1,000 refund. This year your employer again withholds $4,000 and you paid $0 in estimated payments. Your total tax on your salary plus your side business comes to $4,500. You owe $500, but you won't have to pay a penalty, because the $4,000 withheld is more than the $3,000 that you owed last year. But if next year you again don't make estimated payment, so you again have $4,000 withheld plus $0 estimated and then you owe $5,000 in taxes, you will have to pay a penalty, because your withholding was less than what you owed last year. To you had paid $500 in estimated payments, you'd be okay. You'd still owe $500, but you wouldn't owe a penalty, because your total payments were more than the previous year's liability. Clear as mud? Don't forget that you probably will also owe state income tax. If you have a local income tax, you'll owe that too. Scott-McP mentioned self-employment tax. You'll owe that, too. Note that self-employment tax is different from income tax. Self employment tax is just social security tax on self-employed people. You're probably used to seeing the 7-whatever-percent it is these days withheld from your paycheck. That's really only half your social security tax, the other half is not shown on your pay stub because it is not subtracted from your salary. If you're self-employed, you have to pay both halves, or about 15%. You file a form SE with your income taxes to declare it. 4: If you pay your quarterly estimated taxes, well the point of \"\"estimated\"\" taxes is that it's supposed to be close to the amount that you will actually owe next April 15. So if you get it at least close, then you shouldn't owe a lot of money in April. (I usually try to arrange my taxes so that I get a modest refund -- don't loan the government a lot of money, but don't owe anything April 15 either.) Once you take care of any business expenses and taxes, what you do with the rest of the money is up to you, right? Though if you're unsure of how to spend it, let me know and I'll send you the address of my kids' colleges and you can donate it to their tuition fund. I think this would be a very worthy and productive use of your money. :-) Back to #2. I just recently acquired a financial advisor. I can't say what a good process for finding one is. This guy is someone who goes to my church and who hijacked me after Bible study one day to make his sales pitch. But I did talk to him about his fees, and what he told me was this: If I have enough money in an investment account, then he gets a commission from the investment company for bringing the business to them, and that's the total compensation he gets from me. That commission comes out of the management fees they charge, and those management fees are in the same ballpark as the fees I was paying for private investment accounts, so basically he is not costing me anything. He's getting his money from the kickbacks. He said that if I had not had enough accumulated assets, he would have had to charge me an hourly fee. I didn't ask how much that was. Whew, hadn't meant to write such a long answer!\"" }, { "docid": "487791", "title": "", "text": "It's hard to answer without knowing all of the details (i.e. what was your salary for each of the options), but I think you probably made a good choice. 1099: Would have required you to pay self-employment tax, but also would have allowed you to deduct business expenses. W2 with benefits: Likely would have been beneficial if you needed healthcare (since group plans can be cheaper than individual plans, and healthcare payments aren't taxed), but if you don't use the healthcare, that would have been a waste. W2, no benefits: Assuming your salary here falls between the 1099 and the W2 with benefits, it seems like a good compromise for your situation." }, { "docid": "77245", "title": "", "text": "Careful. I would personally need a LOT more than $5 more per hour to go from W-2 employment to 1099 employment. It boils down to two reasons: (1) employers pay a huge amount of taxes on behalf of their employees, and (2) you would have to pay all of your own withholding up front. Your current proposal from them doesn't account for that. There are also risks that you face as a 1099. On the first item, your employer currently pays 6.2% of your Social Security tax. You pay the other 6.2%. If you go to 1099 status, you will be self-employed as an independent contractor and have to pay the full 12.4% out of your increased 1099 wages. On the second item, your employer also does your withholding out of your paychecks based on what you tell them on a form W-4. If you're disciplined enough to pay this out yourself in estimated taxes every time you get a paycheck, great. Many people aren't and just see a much bigger paycheck with no taxes out of it, and end up with a large tax bill at the end of the year. Overall, there are some other considerations like healthcare and other benefits. These will not be available to you as a 1099 employee. You can also be terminated spontaneously, unless you have a specific contract length with the company. As I see it, not including any benefits you would receive, you're looking at LESS money in your pocket at $50/hr as a contractor than at your $48/hr. Your pay net social security deductions is: $48 x 40 hrs x 52 weeks = 99,840 * .938 = 93,649.92. As a 1099 @ $50/hr you would net $50 x 40 hrs x 52 weeks = 104,000 * .876 = 91,104. Then there are the rest of taxes, etc to figure out your real take-home pay. I'm not a tax advisor, but I would be very careful to get the whole picture figured out before jumping. I would ask for a lot more with the added risk you would take as an independent, too." }, { "docid": "357340", "title": "", "text": "Someone messed up here. My tax accountant says she is supposed to enter the values as they are on the W2 and CompanyB said they will not issue a new W2 because they were not involved in the refund of the money. Correct. We decided that we will enter a value different from 12b-d, subtract the money that was refunded to me because it's already on the 1099. Incorrect. Is there an alternative to avoid paying taxes twice on the 401k overages? If not, is there a better way to do this to minimize the risk of an audit? You should enter the amounts in W2 as they are. Otherwise things won't tie at the IRS and they will come back asking questions. The amount in box 12-D was deducted from your wages pre-tax, so you didn't pay tax on it. The distribution is taxable, and if it was made before the tax day next year - only taxable once. So if you withdrew the same year of the contribution, as it sounds like you did, you will only pay tax on it once because the amounts were not included in your salary. If the 1099-R is marked with the correct code, the IRS will be able to match the excess contribution (box 12-D) and the removal of the excess contribution (1099-R with the code) and it will all tie, no-one will audit you. The accountant is probably clueless as to how her software works. By default, the accounting software will add the excess contribution on W2 box 12-D back into wages, and it will be added to taxable income on your tax return. However, when you type in the 1099 with the proper code, this should be reversed by the software, and if it is not - should be manually overridden. This should be done at the adjustment entry, not the W2 entry screen, since a copy of the W2 will be transmitted with your tax return and should match the actual W2 transmitted by your employer. If she doesn't know what she's doing, find someone who does." }, { "docid": "467390", "title": "", "text": "For Federal Return, Schedule H and its Instructions are a great start. You are the nanny's employer, and are responsible for FICA (social security and medicare) withholding, and also paying the employer portion. You will offer her a W4 so she can tell you how much federal and state tax to withhold. You'll use Circular E the employer's tax guide to calculate withholding. In January, you'll give her a W-2, and file the information with your own tax return. For State, some of the above applies, but as I recall, in my state, I had to submit withholding quarterly separate from my return. As compared to Federal, where I adjusted my own withholding so at year end the tax paid was correct. Unemployment insurance also needs to be paid, I believe this is state. This issue is non-political - I told my friends at the IRS that (a) the disparity between state and federal to handle the nanny tax was confusing for those of us trying to comply, and (b) even though we are treated as an employer, a 'guide to the nanny tax' would be helpful, a single IRS doc that doesn't mix non-nanny type issues into the mix. In the end, if a service is cost effective, go for it, your time is valuable, and thi is something that only lasts a few years." }, { "docid": "178697", "title": "", "text": "\"This seems to depend on what kind of corporation you have set up. If you're set up as a sole proprietor, then the Solo 401k contributions, whether employee or employer, will be deducted from your gross income. Thus they don't reduce it. If you're set up as an S-Corp, then the employer contributions, similar to large employer contributions, will be deducted from wages, and won't show up in Box 1 on your W-2, so they would reduce your gross income. (Note, employee contributions also would go away from Box 1, but would still be in Box 3 and 5 for FICA/payroll tax purposes). This is nicely discussed in detail here. The IRS page that discusses this in more (harder to understand) detail is here. Separately, I think a discussion of \"\"Gross Income\"\" is merited, as it has a special definition for sole proprietorships. The IRS defines it in publication 501 as: Gross income. Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. For a list of community property states, see Community property states under Married Filing Separately, later. Self-employed persons. If you are self-employed in a business that provides services (where products are not a factor), your gross income from that business is the gross receipts. If you are self-employed in a business involving manufacturing, merchandising, or mining, your gross income from that business is the total sales minus the cost of goods sold. In either case, you must add any income from investments and from incidental or outside operations or sources. So I think that regardless of 401(k) contributions, your gross income is your gross receipts (if you're a contractor, it's probably the total listed on your 1099(s)).\"" }, { "docid": "327078", "title": "", "text": "\"Does he need to file a tax return in this situation? Will the IRS be concerned that he did not file even if he received a 1099? No. However, if you don't file the IRS may come back asking why, or \"\"make up\"\" a return for you assuming that the whole amount on the 1099-MISC is your net earnings. So in the end, I suspect you'll end up filing even though you don't have to, just to prove that you don't have to. Bottom line - if you have 1099 income (or any other income reported to the IRS that brings you over the filing threshold), file a return.\"" }, { "docid": "263361", "title": "", "text": "Each way you go is a little bit of a gamble. Owning equity in the company is best in situations where you can trade and sell that equity, or where the dilution of your royalty product would affect your returns, or if you can maintain a certain equity stake without working at the company or if you can hold out on taking equity to reinvest profits for the purposes of growth. The royalty is best in situations where you're getting a portion of the gross, since you get paid as a creditor, no matter how the company is performing, or if you intend to collect royalties after you leave the company. Now for your situation: if your royalties are fluctuating with profit instead of gross and your equity is tied to your continued partnership and not subject to potential growth... then they're pretty much both workarounds for the same thing, you've removed the particular advantages for each way of receiving payment. If the company ever does buy out or go public, how much of your additional X earning a month would you have to then re-invest to get an equity stake? And for royalties, if another developer came aboard, or your company bought another company, how much would this dilute your IP contribution? So, aside from the gambling nature of the issue, I'm not sure your tax calculation is right. You can take equity profit as dividend, as long as you're collecting a sufficient salary (this prevents a business from declaring all profits as a dividend). This would put those profits into a different tax bracket, 15% capital gains. Or if all profits are equitably split, you could take part as salary, part as dividend. As well, as someone who's making active income off of their IP, not passive income, you're supposed to file a Schedule C, not a Schedule E, so your royalties would include your self employment taxes. The schedule E is for royalties where the author isn't actively in the field or actually self employed in that area, or if you own royalties on something you didn't create. Should you keep the royalties then go to another job field or retire then your royalties could go on a Schedule E. Now, a tax advantage may exist on a Schedule C if you can write off certain health and business expenses reducing your income that you can't on a Schedule E, though it'd probably be difficult to write off more than the adjusted self employment cost savings of a Schedule E." } ]

[ { "docid": "450808", "title": "", "text": "\"One way to do these sorts of calculations is to use the spreadsheet version of IRS form 1040 available here. This is provided by a private individual and is not an official IRS tool, but in practice it is usually accurate enough for these purposes. You may have to spend some time figuring out where to enter the info. However, if you enter your self-employment income on Schedule C, this spreadsheet will calculate the self-employment tax as well as the income tax. An advantage is that it is the full 1040, so you can also select the standard deduction and the number of exemptions you are entitled to, enter ordinary W-2 income, even capital gains, etc. Of course you can also make use of other tax software to do this, but in my experience the \"\"Excel 1040\"\" is more convenient, as most websites and tax-prep software tend to be structured in a linear fashion and are more cumbersome to update in an ad-hoc way for purposes like tax estimation. You can do whatever works for you, but I would recommend taking a look at the Excel 1040. It is a surprisingly useful tool.\"" } ]

[ { "docid": "435405", "title": "", "text": "\"(Insert the usual disclaimer that I'm not any sort of tax professional; I'm just a random guy on the Internet who occasionally looks through IRS instructions for fun. Then again, what you're doing here is asking random people on the Internet for help, so here goes.) The gigantic book of \"\"How to File Your Income Taxes\"\" from the IRS is called Publication 17. That's generally where I start to figure out where to report what. The section on Royalties has this to say: Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income. In most cases, you report royalties in Part I of Schedule E (Form 1040). However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040). It sounds like you are receiving royalties from a copyright, and not as a self-employed writer. That means that you would report the income on Schedule E, Part I. I've not used Schedule E before, but looking at the instructions for it, you enter this as \"\"Royalty Property\"\". For royalty property, enter code “6” on line 1b and leave lines 1a and 2 blank for that property. So, in Line 1b, part A, enter code 6. (It looks like you'll only use section A here as you only have one royalty property.) Then in column A, Line 4, enter the royalties you have received. The instructions confirm that this should be the amount that you received listed on the 1099-MISC. Report on line 4 royalties from oil, gas, or mineral properties (not including operating interests); copyrights; and patents. Use a separate column (A, B, or C) for each royalty property. If you received $10 or more in royalties during 2016, the payer should send you a Form 1099-MISC or similar statement by January 31, 2017, showing the amount you received. Report this amount on line 4. I don't think that there's any relevant Expenses deductions you could take on the subsequent lines (though like I said, I've not used this form before), but if you had some specific expenses involved in producing this income it might be worth looking into further. On Line 21 you'd subtract the 0 expenses (or subtract any expenses you do manage to list) and put the total. It looks like there are more totals to accumulate on lines 23 and 24, which presumably would be equally easy as you only have the one property. Put the total again on line 26, which says to enter it on the main Form 1040 on line 17 and it thus gets included in your income.\"" }, { "docid": "79411", "title": "", "text": "\"This is not an end-all answer but it'll get you started I have been through accounting courses in college as well as worked as a contractor (files as sole proprietor) for a few years but IANAA (I am not an accountant). Following @MasonWheeler's answer, if you're making that much money you should hire a bean counter to at least overlook your bookkeeping. What type of business? First, if you're the sole owner of the business you will most likely file as a sole proprietorship. If you don't have an official business entity, you should get it registered officially asap, and file under that name. The problem with sole proprietorships is liability. If you get sued, not only are your business' assets vulnerable but they can go after your personal assets too (including house/cars/etc). Legally, you and your business are considered one and the same. To avoid liability issues, you could setup a S corporation. Basically, the business is considered it's own entity and legal matters can only take as much as the business owns. You gain more protection but if you don't explicitly keep your business finances separate from your personal finances, you can get into a lot of trouble. Also, corporations generally pay out more in taxes. Technically, since the business is it's own entity you'll need to pay yourself a 'reasonable salary'. If you skip the salary and pay yourself the profits directly (ie evade being taxed on income/salary) the IRS will shut you down (that's one of the leading causes of corporations being shut down). You can also pay distribute bonuses on top of that but it would be wise to burn the words 'within reason' into your memory first. The tax man gets mad if you short him on payroll taxes. S corporations are complicated, if you go that route definitely seek help from an accountant. Bookkeeping If you're not willing to pay a full time accountant you'll need to do a lot of studying about how this works. Generally, even if you have a sole proprietorship it's best to have a separate bank account for all of your business transactions. Every source/drain of money will fall into one of 3 categories... Assets - What your business owns: Assets can be categorized by liquidity. Meaning how fast you can transform them directly into cash. Just because a company is worth a lot doesn't necessarily mean it has a lot of cash. Some assets depreciate (lose value over time) whereas some are very hard to transform back into cash based on the value and/or market fluctuations (like property). Liabilities - What you owe others and what others owe you: Everything you owe and everything that is owed to you gets tracked. Just like credit cards, it's completely possible to owe more than you own as long as you can pay the interest to maintain the loans. Equity - the net worth of the company: The approach they commonly teach in schools is called double-entry bookkeeping where they use the equation: In practice I prefer the following because it makes more sense: Basically, if you account for everything correctly both sides of the equation should match up. If you choose to go the sole proprietorship route, it's smart to track everything I've mentioned above but you can choose to keep things simple by just looking at your Equity. Equity, the heart of your business... Basically, every transaction you make having to do with your business can be simplified down to debits (money/value) increasing and credits (money/value) decreasing. For a very simple company you can assess this by looking at net profits. Which can be calculated with: Revenues, are made up of money earned by services performed and goods sold. Expenses are made up of operating costs, materials, payroll, consumables, interest on liabilities, etc. Basically, if you brought in 250K but it cost you 100K to make that happen, you've made 150K for the year in profit. So, for your taxes you can count up all the money you've made (Revenues), subtract all of the money you've paid out (Expenses) and you'll know how much profit you've made. The profit is what you pay taxes on. The kicker is, there are gray areas when it comes to deducting expenses. For instance, you can deduct the expense of using your car for business but you need to keep a log and can only expense the miles you traveled explicitly for business. Same goes for deducting dedicated workspaces in your house. Basically, do the research if you're not 100% sure about a deduction. If you don't keep detailed books and try to expense stuff without proof, you can get in trouble if the IRS comes knocking. There are always mythical stories about 'that one guy' who wrote off his boat on his taxes but in reality, you can go to jail for tax fraud if you do that. It comes down to this. At the end of the year, if your business took in a ton of money you'll owe a lot in taxes. The better you can justify your expenses, the more you can reduce that debt. One last thing. You'll also have to pay your personal federal/state taxes (including self-employment tax). That means medicare/social security, etc. If this is your first foray into self-employment you're probably not familiar with the fact that 1099 employers pick up 1/2 of the 15% medicare/social security bill. Typically, if you have an idea of what you make annually, you should be paying this out throughout the year. My pay as a contractor was always erratic so I usually paid it out once/twice a year. It's better to pay too much than too little because the gov't will give you back the money you overpaid. At the end of the day, paying taxed sucks more if you're self-employed but it balances out because you can make a lot more money. If as you said, you've broken six figures, hire a damn accountant/adviser to help you out and start reading. When people say, \"\"a business degree will help you advance in any field,\"\" it's subjects like accounting are core requirements to become a business undergrad. If you don't have time for more school and don't want to pay somebody else to take care of it, there's plenty of written material to learn it on your own. It's not rocket surgery, just basic arithmetic and a lot of business jargon (ie almost as much as technology).\"" }, { "docid": "282681", "title": "", "text": "\"It is legal. They're probably going to give you a 1099-MISC, which is required of businesses for many cash payments over $600 in value to all sorts of counterparties. (Probably box 3 of 1099-MISC as is typical in \"\"cash for keys\"\" situations where one is paid to vacate early) A 1099-MISC is not necessarily pure income, but in this case, you do have money coming in. This money isn't a return of your security deposit or a gift. The payment could possibly be construed by you as a payment to make you whole, but the accounting for this would be on you. This is not a typical situation for IRS reporting. However, if you are uncomfortable with potentially explaining to the IRS how you implemented advice from strangers over the internet, the safest course is to report it all as income. Look at it this way: you did enter into a mutual contract, where you were paid consideration to release your leasehold interests in the property.\"" }, { "docid": "88477", "title": "", "text": "This is wrong. It should be or Now, to get back to self-employment tax. Self-employment tax is weird. It's a business tax. From the IRS perspective, any self-employed person is a business. So, take your income X and divide by 1.0765 (6.2% Social Security and 1.45% Medicare). This gives your personal income. Now, to calculate the tax that you have to pay, multiply that by .153 (since you have to pay both the worker and employer shares of the tax). So new calculation or they actually let you do which is better for you (smaller). And your other calculations change apace. And like I said, you can simplify Q1se to and your payment would be Now, to get to the second quarter. Like I said, I'd calculate the income through the second quarter. So recalculate A based on your new numbers and use that to calculate Q2i. or Note that this includes income from both the first and second quarters. We'll reduce to just the second quarter later. This also has you paying for all of June even though you may not have been paid when you make the withholding payment. That's what they want you to do. But we aren't done yet. Your actual payment should be or Because Q2ft and Q2se are what you owe for the year so far. Q1ft + Q1se is what you've already paid. So you subtract those from what you need to pay in the second quarter. In future quarters, this would be All that said, don't stress about it. As a practical matter, so long as you don't owe $1000 or more when you file your actual tax return, they aren't going to care. So just make sure that your total payments match by the payment you make January 15th. I'm not going to try to calculate for the state. For one thing, I don't know if your state uses Q1i or Q1pi as its base. Different states may have different rules on that. If you can't figure it out, just use Q1i, as that's the bigger one. Fix it when you file your annual return. The difference in withholding is going to be relatively small anyway, less than 1% of your income." }, { "docid": "196920", "title": "", "text": "From the 1099 instructions: File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year Your accounting method doesn't matter. You file 1099 for the year you paid the money." }, { "docid": "259924", "title": "", "text": "As others have mentioned yes it is taxable. Whether it goes through payroll and has FICA taken out is your issue in terms that you need to report it and you will an extra 7.5% self employment taxes that would normally be covered by your employer. Your employer may have problems but that isn't your issue. Contrary to what other users are saying chances are there won't be any penalties for you. Best case you have already paid 100% of last years tax liability and you can file your normal tax return with no issues. Worst case you need to pay quarterly taxes on that amount in the current quarter. IRS quarters are a little weird but I think you need to pay by Jan 15th for a December payment. You don't have to calculate your entire liability you can just fill out the very short form and attach a check for about what you will owe. There is a form you can fill out to show what quarter you received the money and you paid in it is a bit more complex but will avoid the penalty. For penalties quarterly taxes count in the quarter received where as payroll deductions count as if they were paid in the first quarter of the year. From the IRS The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay your tax through withholding, or do not pay enough tax that way, you might also have to pay estimated taxes. If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller." }, { "docid": "327078", "title": "", "text": "\"Does he need to file a tax return in this situation? Will the IRS be concerned that he did not file even if he received a 1099? No. However, if you don't file the IRS may come back asking why, or \"\"make up\"\" a return for you assuming that the whole amount on the 1099-MISC is your net earnings. So in the end, I suspect you'll end up filing even though you don't have to, just to prove that you don't have to. Bottom line - if you have 1099 income (or any other income reported to the IRS that brings you over the filing threshold), file a return.\"" }, { "docid": "232544", "title": "", "text": "\"I agree that you should have received both a 1099 and a W2 from your employer. They may be reluctant to do that because some people believe that could trigger an IRS audit. The reason is that independent contractor vs employee is supposed to be defined by your job function, not by your choice. If you were a contractor and then switched to be an employee without changing your job description, then the IRS could claim that you should have always been an employee the entire time, and so should every one of the other contractors that work for that company with a similar job function. It's a hornet's nest that the employer may not want to poke. But that's not your problem; what should you do about it? When you say \"\"he added my Federal and FICA W/H together\"\", do you mean that total appears in box 4 of your 1099? If so, it sounds like the employer is expecting you to re-pay the employer portion of FICA. Can you ask them if they actually paid it? If they did, then I don't see them having a choice but to issue a W2, since the IRS would be expecting one. If they didn't pay your FICA, then the amount this will cost you is 7.65% of what would have been your W2 wages. IMHO it would be reasonable for you to request that they send you a check for that extra amount. Note: even though that amount will be less than $600 and you won't receive a 1099 in 2017 for it, legally you'll still have to pay tax on that amount so I think a good estimate would be to call it 10% instead. Depending on your personality and your relationship with the employer, if they choose not to \"\"make you whole\"\", you could threaten to fill out form SS-8. Additional Info: (Thank you Bobson for bringing this up.) The situation you find yourself in is similar to the concept of \"\"Contract-to-Hire\"\". You start off as a contractor, and later convert to an employee. In order to avoid issuing a 1099 and W2 to the same person in a single tax year, companies typically utilize one of the following strategies: Your particular situation is closest to situation 2, but the reverse. Instead of retroactively calling you a W2 employee the entire time, your employer is cheating and attempting to classify you as a 1099 contractor the entire time. This is frowned upon by the IRS, as well as the employee since as you discovered it costs you more money in the form of employer FICA. From your description it sounds like your employer was trying to do you a favor and didn't quite follow through with it. What they should have done was never switch you to W2 in the first place (if you really should have been a contractor), or they should have done the conversion properly without stringing you along.\"" }, { "docid": "569645", "title": "", "text": "I agree with your strategy of using a conservative estimate to overpay taxes and get a refund next year. As a self-employed individual you are responsible for paying self-employment tax (which means paying Social Security and Medicare tax for yourself as both: employee and an employer.) Current Social Security Rate is 6.2% and Medicare is 1.45%, so your Self-employment tax is 15.3% (7.65%X2) Assuming you are single, your effective tax rate will be over 10% (portion of your income under $ 9,075), but less than 15% ($9,075-$36,900), so to adopt a conservative approach, let's use the 15% number. Given Self-employment and Federal Income tax rate estimates, very conservative approach, your estimated tax can be 30% (Self-employment tax plus income tax) Should you expect much higher compensation, you might move to the 25% tax bracket and adjust this amount to 40%." }, { "docid": "42665", "title": "", "text": "I believe it's not only legal, but correct and required. A 1099 is how a business reports payments to others, and they're required by the IRS to send them for payments of $600 or more (for miscalleneous payments like this). The payment is an expense to the landlord and income to you, and the 1099 is how that's documented (although note that if they don't send you a 1099, it's still income to you and you still need to report it as such). It's similar to getting a 1099-INT for interest payments or a 1099-DIV for dividend payments. You'll get a 1099-MISC for a miscellaneous payment. If you were an employee they'd send you a W-2, not a 1099." }, { "docid": "336917", "title": "", "text": "\"It seems I can make contributions as employee-elective, employer match, or profit sharing; yet they all end up in the same 401k from my money since I'm both the employer and employee in this situation. Correct. What does this mean for my allowed limits for each of the 3 types of contributions? Are all 3 types deductible? \"\"Deductible\"\"? Nothing is deductible. First you need to calculate your \"\"compensation\"\". According to the IRS, it is this: compensation is your “earned income,” which is defined as net earnings from self-employment after deducting both: So assuming (numbers for example, not real numbers) your business netted $30, and $500 is the SE tax (half). You contributed $17.5 (max) for yourself. Your compensation is thus 30-17.5-0.5=12. Your business can contribute up to 25% of that on your behalf, i.e.: $4K. Total that you can contribute in such a scenario is $21.5K. Whatever is contributed to a regular 401k is deferred, i.e.: excluded from income for the current year and taxed when you withdraw it from 401k (not \"\"deducted\"\" - deferred).\"" }, { "docid": "114835", "title": "", "text": "If you are being paid money in exchange for services that you are providing to your cousin, then that is income, are legally you are required to declare it as self-employment income, and pay taxes when you file your tax return (and if you have a significant amount of self-employment income, you're supposed make payments every quarter of your estimated tax liability. The deposit itself will not be taxed, however." }, { "docid": "526158", "title": "", "text": "For the first four months of the year, when you were an employee, the health insurance premiums were paid for with pre-tax money. When you receive your W-2 at the end of the year, the amount in Box 1 of the W-2 will be reduced by the amount you paid for health insurance. You can't deduct it on your tax return because it has already been deducted for you. Now that you are a 1099 independent contractor, you are self-employed and eligible for the self-employed health insurance deduction. However, as you noted, the COBRA premiums are likely not eligible for this deduction, because the policy is in your old employer's name. See this question for details, but keep in mind that there are conflicting answers on that question." }, { "docid": "454184", "title": "", "text": "I'm not sure how this gets entered in TurboTax, but this income from the company should be included in the Schedule C (or C-EZ) Line 1 Gross Receipts total, along with all of your 1099-MISC income from your business and any other income that your business took in. You don't need a 1099 from them, and the IRS doesn't care (at least from your perspective) if you got a 1099 or not; in fact, they probably expect you to have some non-1099 income. We don't know why the company chose not to issue 1099 forms, but luckily it isn't your concern. You can fill out your tax return properly without it. Note: This answer assumes that you didn't have any tax withheld from your checks from this company. If you did have tax withheld, you'll need to insist on a 1099 to show that." }, { "docid": "137225", "title": "", "text": "I've had zero taxable income for the past 2 years and yet the calculations say I owe the government $250 for each year for the Self Employment tax. How can they charge a non-zero tax on my income when my taxable income is zero? That is theft. That demands reform." }, { "docid": "290045", "title": "", "text": "You should get a 1099-MISC for the $5000 you got. And your broker should send you a 1099-B for the $5500 sale of Google stock. These are two totally separate things as far as the US IRS is concerned. 1) You made $5000 in wages. You will pay income tax on this as well as FICA and other state and local taxes. 2) You will report that you paid $5000 for stock, and sold it for $5500 without holding it for one year. Since this was short term, you will pay tax on the $500 in income you made. These numbers will go on different parts of your tax form. Essentially in your case, you'll have to pay regular income tax rates on the whole $5500, but that's only because short term capital gains are treated as income. There's always the possibility that could change (unlikely). It also helps to think of them separately because if you held the stock for a year, you would pay different tax on that $500. Regardless, you report them in different ways on your taxes." }, { "docid": "583245", "title": "", "text": "If the income is more than the value on the 1099-MISC - then yes. Depending on how long you've held the car, the difference would be short term/long term capital gain. You cannot deduct loss, though, since it is a personal property and not investment." }, { "docid": "204187", "title": "", "text": "The taxes that are deducted from you paycheck are estimated from the expected annual income you receive from the employer. In the same way, the employer will deduct from that expected annual income the tax deductions you would get for the number of dependents you specify. Hence your net income will be lower, your annual tax obligation also, which can than be calculated down to the period of your paycheck." }, { "docid": "360925", "title": "", "text": "With your income so high, your marginal tax rate should be pretty easy to determine. You are very likely in the 33% tax bracket (married filing jointly income range of $231,450 to $413,350), so your wife's additional income will effectively be taxed at 33% plus 15% for self-employment taxes. Rounding to 50% means you need to withhold $19,000 over the year (or slightly less depending on what business expenses you can deduct). You could use a similar calculation for CA state taxes. You can either just add this gross additional amount to your withholdings, or make an estimated tax payment every quarter. Any difference will be made up when you file your 2017 taxes. So long as you withhold 100% of your total tax liability from last year, you should not have any underpayment penalties." } ]

[ { "docid": "232063", "title": "", "text": "Some items are VAT Exempt or Reduced, but in short you will pay it on almost any all consumer goods. Assuming you are a visitor to the UK from a non-EU nation then Her Majesty will refund you with the appropriate paperwork" } ]

[ { "docid": "286846", "title": "", "text": "A VAT means that the cost of goods in your country just went up by that VAT percentage. This would mostly effect how the poor and middle class spend their money which currently is very selective. Additional economy slow downs can generate another recession. That's what I understand, anyway. The numbers in this numbers game are very very important and is difficult to generate in theoretics." }, { "docid": "141111", "title": "", "text": "\"The Dutch tax office is pretty decent, although slightly overburdened. Don't expect a lot of help, but they're not generally known for making a lot of problems. Digital copies are fine, for instance. They will send you your first VAT notice. You probably would have known if your company would have been incorporated, so I'll assume you're just trading as a natural person. That means you still have to file VAT returns, but the business income is just filed annually as \"\"other income\"\". For the VAT part, you'll need to invoice your customers. Keep a copy of those invoices for your own bookkeeping, and keep track of the matching customer payments. Together these form the chief evidence of your VAT obligation. You also have a VAT deduction from your purchases (it's a Value-Added Tax, after all). Again, keep receipts. The usual VAT period is 3 months, so you'd pay VAT 4 times a year. But if you would pay less than 1883 euro, you might not need to pay at all and just need to file annually The income part is easy with the receipts you had for VAT purposes anyway. Dutch Tax Office, VAT, in English\"" }, { "docid": "97852", "title": "", "text": "Legally, do I have anything to worry about from having an incorrectly filed W-4? What you did wasn't criminal. When you submitted the form it was correct. Unfortunately as your situation changed you didn't adjust the form, that mistake does have consequences. Is there anything within my rights I can do to get the company to take responsibility for their role in this situation, or is it basically my fault? It is basically your fault. The company needs a w-4 for each employee. They will use that W-4 for every paycheck until the government changes the regulation, or your employment ends, or you submit a new form. Topic 753 - Form W-4 – Employee's Withholding Allowance Certificate If an employee qualifies, he or she can also use Form W-4 (PDF) to tell you not to deduct any federal income tax from his or her wages. To qualify for this exempt status, the employee must have had no tax liability for the previous year and must expect to have no tax liability for the current year. However, if the employee can be claimed as a dependent on a parent's or another person's tax return, additional limitations may apply; refer to the instructions for Form W-4. A Form W-4 claiming exemption from withholding is valid for only the calendar year in which it is filed with the employer. To continue to be exempt from withholding in the next year, an employee must give you a new Form W-4 claiming exempt status by February 15 of that year. If the employee does not give you a new Form W-4, withhold tax as if he or she is single, with no withholding allowances. However, if you have an earlier Form W-4 (not claiming exempt status) for this employee that is valid, withhold as you did before. (I highlighted the key part) Because you were claiming exempt they should have required you to update that form each year. In your case that may not have applied because of the timing of the events. When do you submit a new form? Anytime your situation changes. Sometimes the change is done to adjust withholding to modify the amount of a refund. Other times failure to update the form can lead to bigger complication: when your marital status changes, or the number of dependents changes. In these situations you could have a significant amount of under-withheld, which could lead to a fine later on. As a side note this is even more true for the state version of a W-4. Having a whole years worth of income tax withholding done for the wrong state will at a minimum require you to file in multiple states, it could also result in a big surprise if the forgotten state has higher tax rate. Will my (now former) employee be responsible for paying their portion of the taxes that were not withheld during the 9 months I was full-time, tax Exempt? For federal and state income taxes they are just a conduit. They take the money from your paycheck, and periodically send it to the IRS and the state capital. Unless you could show that the pay stubs said taxes were being withheld, but the w-2 said otherwise; they have no role in judging the appropriateness of your W-4 with one exception. Finally, and I am not too hopeful on this one, but is there anything I can do to ease this tax burden? I understand that the IRS is owed no matter what. You have one way it might workout. For many taxpayers who have a large increase in pay from one year to the next, they can take advantage of a safe-harbor in the tax law. If they had withheld as much money in 2015 as they paid in 2014, they have reached the safe-harbor. They avoid the penalty for under withholding. Note that 2014 number is not what you paid on tax day or what was refunded, but all your income taxes for the entire year. Because in your case your taxes for the year 2014 were ZERO, that might mean that you automatically reach the safe-harbor for 2015. That makes sense because one of the key requirements of claiming exempt is that you had no liability the year before. It won't save you from paying what you owe but it can help avoid a penalty. Lessons" }, { "docid": "387165", "title": "", "text": "It's quite common for VAT-registered businesses to quote ex-VAT prices for supply to other businesses. However you're right that when you make an order you will be invoiced and ultimately have to pay the VAT-inclusive price, assuming your supplier is VAT registered. If you're not clear on this then you should check since it obviously makes quite a difference. Since your business is not VAT-registered you cannot charge VAT to your customers." }, { "docid": "393953", "title": "", "text": "You only pay VAT if you buy from a VAT-registered company; if they are not registered, you don't pay. So, thinking about your supplier, if they are VAT-registered they will charge you VAT, if they are not they won't. The buyer's status makes no difference, the seller doesn't get involved in whether the buyer is able to reclaim or not (based on their VAT-registered status)." }, { "docid": "233702", "title": "", "text": "Can I apply for limited company now, while fully time employed, and not take any business until I get a contract? Some employment contracts may include non-compete clauses or similar which expressly forbid you engaging in other employment or becoming self-employed while simultaneously working for your current employer. You may want to check this out before making any moves to register as a limited company. You may forfeit long-term benefits (such as a pension) you have built up at your present employer if they catch wind of a conflict of interest. As noted in an earlier answer, the setup process for a limited company is extremely simple in the UK, so there is no reason you need to take these steps in advance of leaving your current employment. During my resignation period scout for contracts... Should I wait weeks before actually deciding to search for contracts? Depending on the type of IT work you intend to be contracting for, you may find yourself shut out from major work if you are not VAT registered. It is a requirement to register for VAT when you breach certain earnings limits (see HMRC's website) but you can voluntarily register with HMRC before these limits if you wish. Being VAT registered increases your bookkeeping and oversight requirements, which makes you appear more attractive to larger enterprises / corporations than a non-VAT registered firm. It also suggests some degree of stability and a plan to stick around for the long haul. This might be a catch-22 situation - if you want to get noticed and land the sizable contracts, you will almost certainly require a VAT registration regardless of your overall yearly earnings. It would be advisable to engage the services of a professional advisor before becoming VAT registered, but this and the subsequent professional advice you may require for putting in VAT claims may not be a fee you wish to pay upfront if you are only attracting a small volume of work." }, { "docid": "315516", "title": "", "text": "Been digging through all the EU VAT directives and have called HMRC as well.. There does not seem to be any lower threshhold for charging VAT into the EU. If you sell £10 of goods/services you have to charge VAT and file a VAT return. Your options are: 1) Register for MOSS and file a single VAT return in your home country for all countries. In the UK this means that you also have to be VAT registered and have to charge VAT locally as well - even if you are below the UK threshold. 2) Register and file a VAT return in every EU country you sell into. You also have to apply the correct VAT rate for each country (typically 15% to 27%), and you have to keep at least two pieces of evidence for the customer location. eg. billing address, IP address, etc." }, { "docid": "66246", "title": "", "text": "It looks like there's some confusion about the purchase price and reclaiming VAT. You should pay your supplier the total amount (£10 + VAT in this scenario, so £12) - look for this figure on the invoice or receipt. The supplier doesn't normally expect you to work this out for yourself, so I'd be a little surprised if it's not on there? As Dumbcoder's said, you'd then be able to claim the VAT back from HMRC if you were VAT registered. But seeing as you're not, then you don't need to worry about claiming it. And as for selling the product without VAT, you can (and probably should) increase the unit price to cover the extra cost, otherwise you'll be operating at a loss. Hope this helps!" }, { "docid": "409980", "title": "", "text": "In 2012, the standard deduction is $5950 for a single person. Let's assume you are very charitable, and by coincidence you donate exactly $5950 to charity. Everything that falls under itemized deductions would then be deductible. So, if your property tax is $6000, in your example - Other adjustments come into play, including an exemption of $3850, I am just showing the effect of the property tax. The bottom line is that deductions come off income, not off your tax bill. The saving from a deduction is $$ x your tax bracket." }, { "docid": "325576", "title": "", "text": "Of course this ignores that fact the companies remit some pretty hefty VAT (Value Added Taxes) when they sell all there stuff. There is a 20% VAT on what they sell, then subtract the VAT of the stuff they buy, and I'll ballpark they are sending a good 10% of Gross (So 300 million Pounds) to Her Majesty's Treasury every year. Not bad for selling overpriced coffee." }, { "docid": "69873", "title": "", "text": "\"I am not sure if I would get any benefit besides the hourly payment as an intern. What are the benefits I can expect while working for this company (or any other software company) Probably none. Changes from company to company but usually only full-time employees are entitled for benefits. For example, could I ask them to reimburse my bus fare or fuel costs in addition to the hourly pay? You can always ask:-) If it's not in the offer - better ask now, you'll get paid what is written in the offer you accepted. Highly unlikely though. What kind of an \"\"employee\"\" is an intern? (Read about exempt and non-exempt employee, but that's all very confusing) As intern you're non-exempt. As a professional (i.e.: Not part of internship) you would be exempt. Since this is the second time, since my interview, that I have requested, and been offered a higher rate, should I continue to ask them for a value near a $35/hr rate Have you asked them for $35? Or just for more? Anyway, I don't think that if they raised the offer from $17 to $21.75 that there's a chance for you to get $35 from them.\"" }, { "docid": "431395", "title": "", "text": "\"First, let's look at the tax brackets for single taxpayers in 2016: The cutoff between the 25% and 28% tax bracket is $91,150. You said that your gross is $87,780. This will be reduced by deductions and exemptions (at least $10,350). Your rental income will increase your income, but it is offset in part by your rental business expenses. For this year, you will almost certainly be in the 25% bracket, whether or not you receive your backpay this year. Next year, if you receive your backpay then and your salary is $11k higher, I'm guessing you'll be close to the edge. It is important to remember that the tax brackets are marginal. This means that when you move up to the next tax bracket, it is only the amount of income that puts you over the top that is taxed at the higher rate. (You can see this in the chart above.) So if, for example, your taxable income ends up being $91,160, you'll be in the 28% tax bracket, but only $10 of your income will be taxed at 28%. The rest will be taxed at 25% or lower. As a result, this probably isn't worth worrying about too much. A bit more explanation, requested by the OP: Here is how to understand the numbers in the tax bracket chart. Let's take a look at the second line, $9,276-$37,650. The tax rate is explained as \"\"$927.50 plus 15% of the amount over $9,275.\"\" The first $9,275 of your taxable income is taxed at a 10% rate. So if your total taxable income falls between $9,276 and $37,650, the first $9,275 is taxed at 10% (a tax of $927.50) and the amount over $9,275 is taxed at 15%. On each line of the chart, the amount of tax from all the previous brackets is carried down, so you don't have to calculate it. When I said that you have at least $10,350 in deductions and exemptions, I got that number from the standard deduction and the personal exemption amount. For 2016, the standard deduction for single taxpayers is $6,300. (If you itemize your deductions, you might be able to deduct more.) Personal exemptions for 2016 are at $4,050 per person. That means you get to reduce your taxable income by $4,050 for each person in your household. Since you are single with no dependents, your standard deduction plus the personal exemption for yourself will result in a reduction of at least $10,350 on your taxable income.\"" }, { "docid": "439109", "title": "", "text": "Assuming this to be in the UK, and I suspect the rules are similar elsewhere, this indeed may be true. There is a threshold beneath which a business does not have to register for VAT - currently a turnover of £81,000. A non VAT registered business does not charge VAT but also cannot reclaim the VAT on their business expenses. For some businesses below the threshold it is worthwhile registering because the amount they can reclaim is significant. However, there are also many small businesses that do a lot of cash only jobs so as to not put the money through the books and therefore avoid any tax liability. There are also many who will get the the customer to buy materials direct to avoid including these in their turnover. Like every type of tax rule there is a grey area between people trying to avoid paying more tax than is needed and dodgy deals to avoid paying their fair share of tax." }, { "docid": "175951", "title": "", "text": "Unfortunately, the tax system in the U.S. is probably more complicated than it looks to you right now. First, you need to understand that there will be taxes withheld from your paycheck, but the amount that they withhold is simply a guess. You might pay too much or too little tax during the year. After the year is over, you'll send in a tax return form that calculates the correct tax amount. If you have paid too little over the year, you'll have to send in the rest, but if you've paid too much, you'll get a refund. There are complicated formulas on how much tax the employer withholds from your paycheck, but in general, if you don't have extra income elsewhere that you need to pay tax on, you'll probably be close to breaking even at tax time. When you get your paycheck, the first thing that will be taken off is FICA, also called Social Security, Medicare, or the Payroll tax. This is a fixed 7.65% that is taken off the gross salary. It is not refundable and is not affected by any allowances or deductions, and does not come in to play at all on your tax return form. There are optional employee benefits that you might need to pay a portion of if you are going to take advantage of them, such as health insurance or retirement savings. Some of these deductions are paid with before-tax money, and some are paid with after tax money. The employer will calculate how much money they are supposed to withhold for federal and state taxes (yes, California has an income tax), and the rest is yours. At tax time, the employer will give you a form W-2, which shows you the amount of your gross income after all the before-tax deductions are taken out (which is what you use to calculate your tax). The form also shows you how much tax you have paid during the year. Form 1040 is the tax return that you use to calculate your correct tax for the year. You start with the gross income amount from the W-2, and the first thing you do is add in any income that you didn't get a W-2 for (such as interest or investment income) and subtract any deductions that you might have that are not taxable, but were not paid through your paycheck (such as moving expenses, student loan interest, tuition, etc.) The result is called your adjusted gross income. Next, you take off the deductions not covered in the above section (property tax, home mortgage interest, charitable giving, etc.). You can either take the standard deduction ($6,300 if you are single), or if you have more deductions in this category than that, you can itemize your deductions and declare the correct amount. After that, you subtract more for exemptions. You can claim yourself as an exemption unless you are considered a dependent of someone else and they are claiming you as a dependent. If you claim yourself, you take off another $4,000 from your income. What you are left with is your taxable income for the year. This is the amount you would use to calculate your tax based on the bracket table you found. California has an income tax, and just like the federal tax, some state taxes will be deducted from your paycheck, and you'll need to fill out a state tax return form after the year is over to calculate the correct state tax and either request a refund or pay the remainder of the tax. I don't have any experience with the California income tax, but there are details on the rates on this page from the State of California." }, { "docid": "42924", "title": "", "text": "If you mostly do work for businesses/individuals who are VAT registered it's a no-brainer to become VAT registered yourself... Although you will have to charge your customers VAT (and pass this on to HMRC) because they are VAT-registered they will reclaim the amount so it won't actually 'cost' them anything. At the same time, you can reclaim all the VAT you're currently being charged on your business expenditure (business equipment, tickets to business events, business software, accountancy/other business services you pay for, web hosting etc etc etc) However, if most of your clients are not VAT-registered it's not worth you registering. You would have to charge your customers an extra 20% (and they wouldn't be able to claim it back!) and you would have to pass this on to HMRC. Although you could still claim for goods and services you purchase for business use, essentially you'd just be another tax collector for HMRC. That said, at the end of the day it's up to you! VAT returns are quarterly and dead simple. Just keep a spreadsheet with your invoices (output tax) and receipts (input tax) and then do some basic maths to submit the final numbers to HMRC. No accountant required!" }, { "docid": "267111", "title": "", "text": "There's one huge difference. Generally speaking, the entire burden of paying VAT is intended to be placed upon end consumers, and not upon businesses themselves. So ditching corporation tax and increasing VAT would mean shifting a huge amount of the tax burden from corporations to every-day people. Such a policy could kill the party that attempted to push it." }, { "docid": "453257", "title": "", "text": "No, there is no special leniency given to first time tax payers. In general, this shouldn't be an issue. The IRS collects your taxes out of every one of your paychecks throughout the entire year in what is called a Withholding Tax. The amount that the IRS withholds is calculated on your W-4 Form that you file with your employer whenever you take a new job. The form helps you calculate the right number of allowances to claim (usually this is the number of personal exemptions, but depending upon if you work a second job, are married and your spouse works, or if you itemize, the number of allowances can be increased. WITHHOLDING TAX Withholding tax (also known as “payroll withholding”) is essentially income tax that is withheld from your wages and sent directly to the IRS by your employer. In other words, it’s like a credit against the income taxes that you must pay for the year. By subtracting this money from each paycheck that you receive, the IRS is basically withholding your anticipated tax payment as you earn it. In general, most people overestimate their tax liability. This is bad for them, because they have essentially given the IRS an interest free loan (and weren't able to use the money to earn interest themselves.) I haven't heard of any program targeted at first time tax payers to tell them to file a return, but considering that most tax payers overpay they should or they are giving the government a free grant." }, { "docid": "322246", "title": "", "text": "\"In a nutshell - Value Added Tax. America, as usual, discovers what others have known and used for years. The idea of not taxing income that's tied to it is ridiculous. If you're only taxing spending but not income, people will just take spending elsewhere (Canada, Mexico, further away), and the economy will go down the drain. That's similar to the way people avoid paying sales tax now, except that it will be in orders of magnitude. Why should a corporation by office supplies in the US, if it has a branch in China? Edit Also, Fair Tax doesn't take into account moving money overseas. I've mentioned living elsewhere down below, and that also got me thinking of how I personally would certainly gain from that ridiculous thing called \"\"Fair Tax\"\". Basically, that's exactly how the \"\"rich folks\"\", those who push for it, will gain from it. Being able to move money out of the US basically makes it a perfect tax shelter. You don't pay taxes on the income (that you have in the US), and you don't pay taxes on the spendings (that you have elsewhere, because in that country income is taxable so you only pay VAT or sales taxes). This means that all the wealthy people, while investing and gaining money from the American economy (stocks, property, etc), will actually not be spending it in the US. Thus, no taxes paid to the US, dollars flowing out. Perfect. Actually, I should be all for this stupid idea. Very fair to me, no need to pay any taxes at all, because food will probably be exempt anyway.\"" }, { "docid": "592111", "title": "", "text": "\"Money in your NRE/NRO account is your property and moving it to the U.K. is not a taxable event in the U.K. or in India. Extra paperwork is needed for transfer from an NRO account to prove that you have indeed paid taxes (or had taxes withheld) on the money in the NRO account to the Indian Government. Search this site for \"\"15CB\"\" and \"\"15CA\"\" for details.\"" } ]

[ { "docid": "591940", "title": "", "text": "\"I'm thinking about visiting the UK and I'm wondering which things are affected by the VAT and which are not. Most consumer goods are subject to VAT at the standard rate. Most food sold in shops is zero-rated, with the exception of a handful of luxury foods. Food in cafes/restaurants and some takeaway food is subject to VAT at the standard rate. Most paper books are zero rated (IIRC books that come with CDs are an exception). Some services are exempt, insurance is a notable one, so are some transactions with charities. Some small buisnesses and sole traders may not be VAT registered in which case there is no VAT for you to pay (but they can't reclaim VAT on the goods and services they buy). (there is a distinction between zero-rated and exempt but it's not relavent to you as a customer). Some goods have special rules, notably second hand goods. Prices are normally given inclusive of VAT. The exception to this is suppliers who mostly deal in business to business transactions. Also as a non-UK resident is there a way to get a rebate/reimbursement on this tax? There is something called the \"\"retail export scheme\"\" which can get you a refund but there are a number of catches.\"" } ]

[ { "docid": "297588", "title": "", "text": "Not doing this would defeat the entire purpose of a VAT. The reason for a VAT rather than a simple sales tax is that it's harder to evade. Having a simple sales tax with the type of rates that VAT taxes typically are is unworkable because evasion is too easy. Imagine I'm a retailer. I buy products from a wholesaler and sell them to consumers. With a sales tax, if I don't charge the customer sales tax, the customer is happy and I don't care (assuming I don't get caught). And if I keep the sales tax but don't report the sale, I make a lot of money. Now, imagine a VAT. If I don't charge the customer the VAT, I lose money since I paid the VAT on the wholesale products. And if I don't report the sale, how do I claim my VAT refund?" }, { "docid": "358242", "title": "", "text": "I mean, yeah, that is true. Your point is a valid concern and I do think it could potentially reduce the number of EU students studying in the U.K. It is something the British need to keep an eye on over the next decade. But think about it ... to go to the US to study as a European, you need a student visa as well and our influx of foreign students coming to study in America continues to grow. You need a student visa to go pretty much anywhere in the world besides the 28 EU countries. I think the main factor is having a strong university network as a nation and the U.K. definitely has that. They had it before the EU was even created. As long as the U.K. has that strong education foundation, people will continue to study there. Not to mention, students go for the added benefit of improving their English skills. https://www.google.com/amp/www.pewresearch.org/fact-tank/2013/11/12/record-number-of-international-students-studying-in-u-s/%3famp=1" }, { "docid": "475607", "title": "", "text": "The plumber will apply for and receive a refund of the amount of VAT he paid on the purchase amount. That's the cornerstone of how VAT works, as opposed to a sales tax. So for example: (Rounded approximate amounts for simplicity) Now, at each point, the amount between (original cost VAT) and (new VAT) is refunded. So by the end, a total of £3 VAT is paid on the pipe (not £6.2); and at each point the business 'adding value' at that stage pays that much. The material company adds £1 value; the producer adds £4 value; the supplier adds £5 value; the plumber adds £5 value. Each pays some amount of VAT on that amount, typically 20% unless it's zero/reduced rated. So the pipe supplier pays £1 but gets a £0.2 refund, so truly pays £0.8. The plumber pays £3 (from your payment) but gets a £2 refund. So at each level somebody paid a bit, and then that bit is then refunded to the next person up the ladder, with the final person in the chain paying the full amount. The £0.2 is refunded to the producer, the £1 is refunded to the supplier, the £2 is refunded to the plumber." }, { "docid": "540421", "title": "", "text": "\"This is the best tl;dr I could make, [original](https://www.cnbc.com/2017/10/20/france-emmanuel-macron-theresa-may-problem-nobody-explained-brexit-consequences-british.html) reduced by 57%. (I'm a bot) ***** &gt; French President Emmanuel Macron told CNBC Friday that the problem that U.K. Prime Minister Theresa May has is that nobody explained to the British people the consequences of a Brexit vote. &gt; When asked if the European Union would be able to make some verbal concessions to allow May to sell a Brexit deal at home, Macron told CNBC that there&amp;#039;s no room for such unofficial compromises. &gt; &amp;quot;The objectives are fixed, they&amp;#039;re conducted from the European side by Michel Barnier, and we have to respect that,&amp;quot; Macron told CNBC, referring to the EU&amp;#039;s approach of discussing citizens&amp;#039; rights, financial settlement and the Irish border, before moving on to talks on trade. ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/77pzsw/nobody_explained_the_consequences_of_brexit_to/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ \"\"Version 1.65, ~232167 tl;drs so far.\"\") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr \"\"PM's and comments are monitored, constructive feedback is welcome.\"\") | *Top* *keywords*: **European**^#1 **told**^#2 **Brexit**^#3 **U.K.**^#4 **Macron**^#5\"" }, { "docid": "307531", "title": "", "text": "In this situation I would recommend figuring out about what you would need to pay in taxes for the year. You have two figures (your salary and dependents) , but not others. Will you contribute to a 401K, do you itemize deductions, etc... If things are uncertain, I would figure my taxes as if I took the standard deduction. For argument's sake let's assume that comes out to $7300. I would then add $500 on to my total to cover potential increases in taxes/fees. You can adjust this up or down based on your ability to absorb having to pay or the uncertainty in your first calcuation. So now $7800, divide by 26 (the amount of paychecks you receive in a year) = $300 Then I would utilize a payroll calculator to adjust my exemptions and additional witholding so my federal withholding is as close as possible to this number. Or you can sit with your payroll department and do the same." }, { "docid": "141111", "title": "", "text": "\"The Dutch tax office is pretty decent, although slightly overburdened. Don't expect a lot of help, but they're not generally known for making a lot of problems. Digital copies are fine, for instance. They will send you your first VAT notice. You probably would have known if your company would have been incorporated, so I'll assume you're just trading as a natural person. That means you still have to file VAT returns, but the business income is just filed annually as \"\"other income\"\". For the VAT part, you'll need to invoice your customers. Keep a copy of those invoices for your own bookkeeping, and keep track of the matching customer payments. Together these form the chief evidence of your VAT obligation. You also have a VAT deduction from your purchases (it's a Value-Added Tax, after all). Again, keep receipts. The usual VAT period is 3 months, so you'd pay VAT 4 times a year. But if you would pay less than 1883 euro, you might not need to pay at all and just need to file annually The income part is easy with the receipts you had for VAT purposes anyway. Dutch Tax Office, VAT, in English\"" }, { "docid": "175951", "title": "", "text": "Unfortunately, the tax system in the U.S. is probably more complicated than it looks to you right now. First, you need to understand that there will be taxes withheld from your paycheck, but the amount that they withhold is simply a guess. You might pay too much or too little tax during the year. After the year is over, you'll send in a tax return form that calculates the correct tax amount. If you have paid too little over the year, you'll have to send in the rest, but if you've paid too much, you'll get a refund. There are complicated formulas on how much tax the employer withholds from your paycheck, but in general, if you don't have extra income elsewhere that you need to pay tax on, you'll probably be close to breaking even at tax time. When you get your paycheck, the first thing that will be taken off is FICA, also called Social Security, Medicare, or the Payroll tax. This is a fixed 7.65% that is taken off the gross salary. It is not refundable and is not affected by any allowances or deductions, and does not come in to play at all on your tax return form. There are optional employee benefits that you might need to pay a portion of if you are going to take advantage of them, such as health insurance or retirement savings. Some of these deductions are paid with before-tax money, and some are paid with after tax money. The employer will calculate how much money they are supposed to withhold for federal and state taxes (yes, California has an income tax), and the rest is yours. At tax time, the employer will give you a form W-2, which shows you the amount of your gross income after all the before-tax deductions are taken out (which is what you use to calculate your tax). The form also shows you how much tax you have paid during the year. Form 1040 is the tax return that you use to calculate your correct tax for the year. You start with the gross income amount from the W-2, and the first thing you do is add in any income that you didn't get a W-2 for (such as interest or investment income) and subtract any deductions that you might have that are not taxable, but were not paid through your paycheck (such as moving expenses, student loan interest, tuition, etc.) The result is called your adjusted gross income. Next, you take off the deductions not covered in the above section (property tax, home mortgage interest, charitable giving, etc.). You can either take the standard deduction ($6,300 if you are single), or if you have more deductions in this category than that, you can itemize your deductions and declare the correct amount. After that, you subtract more for exemptions. You can claim yourself as an exemption unless you are considered a dependent of someone else and they are claiming you as a dependent. If you claim yourself, you take off another $4,000 from your income. What you are left with is your taxable income for the year. This is the amount you would use to calculate your tax based on the bracket table you found. California has an income tax, and just like the federal tax, some state taxes will be deducted from your paycheck, and you'll need to fill out a state tax return form after the year is over to calculate the correct state tax and either request a refund or pay the remainder of the tax. I don't have any experience with the California income tax, but there are details on the rates on this page from the State of California." }, { "docid": "476173", "title": "", "text": "Yes, you can. That the books were purchased from abroad is irrelevant: you incurred an expense in the course of earning your income. If the books are expensive (>$300 per set iirc) you will need to deprecate them over a reasonable life time rather than claiming the entire amount up front. It doesn't matter whether what you got was a VAT Invoice; as long as you have some reasonable documentation of the expense you're ok." }, { "docid": "295407", "title": "", "text": "\"The IRS W-8BEN form (PDF link), titled \"\"Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding\"\", certifies that you are not an American for tax purposes, so they won't withhold tax on your U.S. income. You're also to use W-8BEN to identify your country of residence and corresponding tax identification number for tax treaty purposes. For instance, if you live in the U.K., which has a tax treaty with the U.S., your W-8BEN would indicate to the U.S. that you are not an American, and that your U.S. income is to be taxed by the U.K. instead of tax withheld in the U.S. I've filled in that form a couple of times when opening stock trading accounts here in Canada. It was requested by the broker because in all likelihood I'd end up purchasing U.S.-listed stocks that would pay dividends. The W-8BEN is needed in order to reduce the U.S. withholding taxes on those dividends. So I would say that the ad revenue provider is requesting you file one so they don't need to withhold full U.S. taxes on your ad revenue. Detailed instructions on the W-8BEN form are also available from the IRS: Instruction W-8BEN (PDF link). On the subject of ad revenue, Google also has some information about W8-BEN: Why can't I submit a W8-BEN form as an individual?\"" }, { "docid": "269646", "title": "", "text": "I find that there are two violation of law , prima facie , if someone earns money by depositing in the online account and then not reporting it ( including in his total income for the year ) and not bringing in India. Income Tax Act violation 1. It is simply comcealment liable for penalty & prosecution under I.T.Act. 2. You should know that anyone who is resident of India as per income Tax Act and having taxable income ( gross total income exceeding exemption limit) will have to fill up the column in his/her income tax return whether Previously these column were not in the Income Tax Return. So , now anyone who is liable to file return of Income can be tried for false return if he has hiddne assets aborad. 2. FEMA violation RBI permits remittance under Liberalized Remittance Scheme. However this scheme can not be used for certain purpose . It is important to examine whether RBI prohibits use of remittance for any entity or business you have described. You can read following FAQ on RBI site Q. 30. What are the prohibited items under the Scheme? Ans. The remittance facility under the Scheme is not available for the following: i) Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000; ii) Remittance from India for margins or margin calls to overseas exchanges / overseas counter-party; iii) Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market; iv) Remittance for trading in foreign exchange abroad; v) Remittance by a resident individual for setting up a company abroad; vi) Remittances directly or indirectly to Bhutan, Nepal, Mauritius and Pakistan; vii) Remittances directly or indirectly to countries identified by the Financial Action Task Force (FATF) as “non co-operative countries and territories”, from time to time; and viii) Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks. You will have to examine , if the remittance was NOT done for purpose not allowed by RBI under LRS . If you clear this , you can say there is no violation and your violation is restricted to I.T.Act only." }, { "docid": "42924", "title": "", "text": "If you mostly do work for businesses/individuals who are VAT registered it's a no-brainer to become VAT registered yourself... Although you will have to charge your customers VAT (and pass this on to HMRC) because they are VAT-registered they will reclaim the amount so it won't actually 'cost' them anything. At the same time, you can reclaim all the VAT you're currently being charged on your business expenditure (business equipment, tickets to business events, business software, accountancy/other business services you pay for, web hosting etc etc etc) However, if most of your clients are not VAT-registered it's not worth you registering. You would have to charge your customers an extra 20% (and they wouldn't be able to claim it back!) and you would have to pass this on to HMRC. Although you could still claim for goods and services you purchase for business use, essentially you'd just be another tax collector for HMRC. That said, at the end of the day it's up to you! VAT returns are quarterly and dead simple. Just keep a spreadsheet with your invoices (output tax) and receipts (input tax) and then do some basic maths to submit the final numbers to HMRC. No accountant required!" }, { "docid": "132693", "title": "", "text": "First, you'll need to find a service that can handle transferring that amount of money, whether it's using a bank, or wire transferring service. Any major Wall Street bank (Wells Fargo, Chase, Bank of America, etc.) should be able to handle it. You could also use services such as Western Union. As for your legal and tax obligations, according to Western Union: Individuals in Canada and the U.K. don’t have any tax considerations, unless international payments are received as income or in the form of capital gains. Only then must they report it on their income taxes, says Ilyas Patel, director at Ilyas Patel Chartered Certified Accountants based in Preston, U.K., and the director of Tax Expert, a tax advice website. To that end, when considering their tax obligations, individuals should take care to look into the reporting requirements on foreign income or gifts ranging up to a certain amount. For example, in the U.S., the Internal Revenue Service (IRS) requires individuals who receive more than $100,000 U.S. dollars from a foreign source to report it on a Form 3520. “You may not owe taxes on the money, but it informs the IRS that you received it,” Gragg says, stressing the importance of consulting with a professional. “They’re looking for certain terrorist activities and other illegal activity.” Due to the large sum of money your transferring, it would be in your best interest to speak with a banker (maybe even a lawyer or CPA) about this." }, { "docid": "342694", "title": "", "text": "After a bit of rooting around the HMRC sites, I found this page which says this: One key difference is that digitised products are classed as electronically-supplied services for VAT and customs duties. These services are: For VAT purposes, the place of supply of these services is the country in which the customer lives. If you supply electronic services to a business customer in another European Union (EU) country, the customer accounts for any VAT due in that country. You should not charge UK VAT. If you supply electronic services to a consumer, charity or government body in another EU country, you have to account for UK VAT. If you supply electronic services to anyone in a country outside the EU, you don't pay any VAT. If, as a UK business, you buy electronic services from a company outside the UK, you have to account for VAT. If I read this correctly, I as the supplier of the website need to account for VAT only if the sponsor is a consumer, charity or government body in another EU country. It is not covered in this site, but I assume I must also account for VAT for a customer based in the UK. So in answer to the original question, a customer from Canada (which is currently outside the EU) would account for the VAT themselves, and I would simply charge the gross amount." }, { "docid": "308330", "title": "", "text": "From http://www.taxrates.cc/html/cayman-islands-tax-rates.html: There is no income tax, corporate tax, sales tax, capital gains tax, wealth tax, inheritance tax, property tax, gift tax or any other kind of direct taxation in Cayman Islands. Cayman Islands government receives the majority of its income from indirect taxation. There is no income tax or capital gains tax or corporation tax in Cayman Islands imposed on Cayman individuals and Cayman Islands companies. An import duty of 5% to 20% is levied against goods imported into the islands. Some items are tax exempt like baby formula, books and cameras. Tax on automobiles depends on the class and make of the model. Tax can reach up to 40% for expensive car models. Financial institutions that operate in the islands are charged a flat licensing fee by the government. A 10% government tax is placed on all tourist accommodations in addition to the small fee each tourist pays upon getting on the Caymans. The Cayman Islands government charges licensing fees to financial institutions that operate in the islands as well as work permit fees for expatriate employees ranging from around US$ 500 for a clerk to around US$ 20,000 for a CEO." }, { "docid": "325576", "title": "", "text": "Of course this ignores that fact the companies remit some pretty hefty VAT (Value Added Taxes) when they sell all there stuff. There is a 20% VAT on what they sell, then subtract the VAT of the stuff they buy, and I'll ballpark they are sending a good 10% of Gross (So 300 million Pounds) to Her Majesty's Treasury every year. Not bad for selling overpriced coffee." }, { "docid": "12940", "title": "", "text": "This is a frequent problem for anyone with a large amount of deductions, whether it is student loan interest, home mortgage interest, charitable contributions, or anything else. As an employee getting your tax withheld from your check, your options to reduce the amount withheld are limited. The HR department has no control over how much they withhold; the amount is calculated using a standard formula based on the number of exemptions you tell them. The number of exemptions you claim on your W-4 form does not have to match reality. If you currently have 1 exemption claimed, ask them what the withholding would be if you claimed 4 exemptions. If that's not enough, go higher. As long as you are not withholding so little that you have a large tax bill at the end of the year, you are fine. Of course, when you do your taxes, you need to have the correct number of exemptions claimed on your 1040, but this number does not need to match your W-4." }, { "docid": "385121", "title": "", "text": "\"Books would be considered Personal-Use Property according to Canada's income tax laws. The most detailed IT I was able to find is IT-332R, which says: GAINS AND LOSSES 3. A gain on the disposition of personal-use property is normally a capital gain within the meaning of paragraph 39(1)(a). Where the property is a principal residence, the gain > is computed under paragraph 40(2)(b) or (c). 4. Under subparagraph 40(2)(g)(iii), a loss on a disposition of personal-use property, other than listed personal property, is deemed to be nil. [...] This part of the bulletin indicates that a gain might be considered a capital gain - not income. However, you don't get to book a loss as a capital loss. This is the first hint that your book sale - which is actually an exempt capital loss - shouldn't go on your tax return unless it's one of the \"\"listed\"\" items: LISTED PERSONAL PROPERTY 7. Listed personal property is defined in paragraph 54(e) to mean personal-use property that is all or any portion of, or any interest in or right to, any (a) print, etching, drawing, painting, sculpture, or other similar work of art, (b) jewellery, (c) rare folio, rare manuscript, or rare book, (d) stamp, or (e) coin. So unless you're selling rare books, the disposition (sale) of them is essentially exempt as income, regardless of whether you sold it at a profit or at a loss. If it is rare, then you might be able to consider it a capital loss, which doesn't help you much unless you had other capital gains, but you can carry over capital losses to future years. There's also a newer IT related to hobbies and \"\"collecting\"\" items, IT-334R2. This one says: 11. In order for any activity or pursuit to be regarded as a source of income, there must be a reasonable expectation of profit. Where such an expectation does not exist (as is the case with most hobbies), neither amounts received nor expenses incurred are included in the income computation for tax purposes and any excess of expenses over receipts is a personal or living expense, the deduction of which is denied by paragraph 18(1)(h). On the other hand, if the hobby or pastime results in receipts of revenue in excess of expenses, that fact is a strong indication that the hobby is a venture with an expectation of profit; if so, the net income may be taxable as income from a business. The current version of IT-504, Visual Artists and Writers, discusses the concept of \"\"a reasonable expectation of profit\"\" in greater detail. Where a hobby consists of collecting personal-use property or listed personal property, dispositions should be accounted for as described in the current version of IT-332, Personal-Use Property. (emphasis mine) In other words, if it's not the type of thing where you'd make a tax deduction when you bought it in the first place, then you clearly don't need to report it as income when you sell it. Just to be absolutely clear here: The fact that you are selling them at a loss is not actually what's important here. What's important is that, if the books aren't collectibles, then you would have had no expectation of profit. If you did have that expectation then you could have made a tax deduction when you first purchased them. So in this case, it is probably not necessary for you to report the income; however, for the benefit of other readers, in some cases you might need to report it under \"\"other income\"\" or book it as a capital gain/loss, depending on what those personal items are and whether or not you made a net profit.\"" }, { "docid": "318266", "title": "", "text": "It looks like businesses selling services (like software downloads) from outside the EU to the UK have to register for VAT if the amount of such sales goes over the UK VAT registration threshold: [If] the value of the taxable supplies you make is over a specified threshold [then] you must register for VAT So it seems plausible that this business does have some requirement to charge VAT on its sales, but clearly it should have done so at the time of sale, not months later. As you say, UK and EU law require that prices are displayed including relevant taxes. Since this business is in the US, they might be able to claim that those rules don't apply to them. But I'm not aware of even US businesses being able to claim sales tax from a US customer months after originally making a sale, and it goes against all reasonable principles of law if they would be able to do it. So the business should really just accept that they screwed up and they'll now have to take the hit and pay the tax themselves. They can work as if the pre-tax price was $12.99/1.2 = $10.825, leaving $2.165 they need to hand over to HMRC. I don't think there's any legal way they can demand money from you now, and certainly for such a low sum of money there's no practical way they could. I can't find anything definitive one way or the other, but I suppose it's possible that HMRC would consider you the importer under these circumstances and so liable for the VAT yourself. But I don't know of any practial way to actually report this to HMRC or pay them the money, and again given the amount there's no realistic chance they'd want to chase you for it. In your shoes I would either ignore the email, or write back and politely tell them that they should have advertised the cost at the time and you're not willing to pay extra now. And you might want to keep an eye on the card you used to pay them to make sure they don't try to just charge it anyway. EDIT: as pointed out in a comment, the company behind this (or at least one with a very similar problem and wording in their emails!) did end up acknowledging that they can't actually do this and that they'll need to pay the tax out of the money they already collected, as I described above. It seems they didn't contact the people they originally emailed to let them know this, though. There's some more discussion here." }, { "docid": "464385", "title": "", "text": "I was just thinking ahead, can I apply for Limited company now, while fully time employed, and not take any business until I get a contract. Yes. You can open as many companies you want(assuming you are sane). There is no legal provisions regarding who can open a company. What happens if I create a company and it has no turnover at all? Does this complicate things later? After you open a company, you have to submit your yearly statements to Companies House, whether you have a billion pounds turnover or 0. If you claim VAT that has also to be paid after you register for VAT. VAT registration is another registration different from opening a limited company. Is it the same if I decided to take a 1,2 or x month holiday and the company again will not incur any turnover? Turnover is year end, so at the year end you have to submit your yearly results, whether you took a 12 month holiday or a week's holiday. Is it a OK to do this in foresight or should I wait weeks before actually deciding to search for contracts. No need to open a limited company now, if you are so paranoid. Opening a company in UK takes 5 minutes. So you can open a company after landing a contract." } ]

[ { "docid": "406156", "title": "", "text": "I'd pile up as much cash as you can in a savings account - you will need money for the move (even if it's just gas money) and it's going to be hard to predict where house prices are going so you might or might not be underwater when it comes time to sell the house. Or you might be so deep underwater by then that the extra money doesn't make much of a difference anymore anyway. Once you're actually in the process of selling the house, you can figure out if you can (or need to) use the savings to cover the shortfall, closing costs or if you just built up a little wealth during the time you put the money aside." } ]

[ { "docid": "510219", "title": "", "text": "I recognize you are probably somewhere in the middle of various steps here... but I'd start and go through one-by-one in a disciplined way. That helps to cut through the overwhelming torrent of information that's out there. Here is my start at a general checklist: others can feel free to edit it or add their input. How 'much' house would you like to buy in terms of $$$ and bedrooms/sq ft. You can start pretty general here, but the idea is to figure out if you can actually afford a brand new 4bd/3ba 2,500 sq ft house (upwards of $500K in your neck of the woods according to trulia.com). Or maybe with your current resources you'll be looking at something like a townhome that is more entry-level but still yours. Some might recommend that this is a good time to talk to any significant others/whomevers and understand/manage expectations. My wife usually cares a lot about schools at this stage, but I think it's too early. Just ballpark whether you're looking at a $500K house, a $300K house, or a $200K townhome. How much house can you afford in terms of monthly payments only... (not considering other costs like utilities yet). Looking around at calculators like this one from bankrate.com can help you figure this out. Set the interest rate @ 5%, 30-year loan, and change the 'mortgage amount' until you have something that is about 80%-90% of what you currently pay in rent each month. I'll get to 'why' to undershoot your rent payment later. Crap... can't afford my dream house... If you don't have the down payment to make the numbers work (remember that this doesn't even include closing costs yet), there are other loan options like FHA loans that can go as low as about 5% down payment. The math would be the same but you replace 0.8 with 0.95. Then, look at your personal budget. Come up with general estimates of what you currently bring in and spend each month overall. Just ballpark it... Next, figure what you currently spend towards housing in particular. Whether you are paying for it or your landlord is paying for it, someone pays for a lot of different things for housing. For now, my list would include (1) Rent, (2) Mortgage Payment, (3) Electricity, (4) Gas, (5) Sewer, (6) Water, (7) Trash, (8) Other utilities... TV/Internet/Phone, (9) Property Insurance, (10) Renter's Insurance, and (11) Property Taxes. I would put it into a table in Excel somewhere that has 3 columns... The first has the labels, the second will have what you spend now, and the third will have what you might spend on each one as a homeowner. If you pay it now, put it in the second column. If your landlord pays it right now, leave it out as that's included in your rent payment. Obviously each cell won't be filled in. Fill in the rest of the third column. You won't pay rent anymore, but you will have a mortgage payment. You probably have a good estimate of any electricity bills, etc that you currently pay, but those may be slightly higher in a house vs. a condo or an apartment. As for things like sewer, water, trash or other 'community' utilities, my bet would be that your landlord pays for those. If you need a good estimate ask around with some co-workers or friends that own their own places. They would also be a good resource for property insurance estimates... shooting from the hip I would say about $100/month based on this website. (I'm not affiliated). The real 'ouch' is going to be property tax rates. Based on the data from this website, your county is about 9% of property value. So add that into the third column as well. Can you really afford a house? round 2 Now... add up the third column and see how that monthly expense amount on housing compares against your current monthly budget. If it's over, you don't have to give up, but you should just understand how much your decision to purchase a house will strain your budget. Also, you should use this information to look again at 'how much house can you afford.' Now, do some more research. If you need to get a revised loan amount based on the FHA loan decision, then use the bankrate calculator to find out what the monthly payment is for a 95% loan against your target price. But remember that an FHA loan will also carry PMI that is extra on top of your monthly payment. Or, if you need to revise your mortgage payment downwards (or upwards) change the loan amount accordingly. Once you've got the numbers set, look for properties that fit. This way you can have a meaningful discussion with yourself or other stakeholders about what you can afford. As far as arranging financing... a realtor will be able and willing to point you in the right direction for obtaining funding, etc. And at that point you can just check anything you're offered by shopping interest rates, etc against what the internet has to say. Feel free to ask us, too... it's hard to give much better direction without more specifics." }, { "docid": "322033", "title": "", "text": "This may effect how much, or under what terms a bank is willing to loan us I don't think this is likely, an investment is an investment whether it is money in a savings account or a loan. However, talk to your bank. Is it worth getting something by a lawyer? Definitely, you need a lawyer and so do your parents. There is a general presumption at law that arrangements between family members are not meant to be contracts. You definitely want this to be a contract and engaging lawyers will make sure that it is. You also definitely want this to be a proper mortgage so that you get first call on the property should your parents die or go bankrupt. In addition, a lawyer will be able to advise you of the pitfalls that you haven't seen. If both of my parents were to pass away before the money is returned, would that document be enough to ensure that the loan is returned promptly? No, see above. Tax implications: Will this count as taxable income for me? And if so, presumably my parents can still count it as a tax deduction? Definitely, however the ATO is very keen that these sorts of arrangements do not result in tax minimisation. Your parents will get a deduction at the rate charged; you will pay tax on the greater of the rate charged or a fair commercial rate i.e. what your parents would be paying a bank. For example, if the going bank mortgage rate is 5.5% and you charged 2% they get the deduction for 2%, you pay tax as though they had paid 5.5%. Property prices collapse, and my parents aren't able to make their repayments, bank forecloses on the place and sells it, but not even enough to cover the outstanding loan, meaning my parents no longer have our money. (I could of course double down and pay their monthly repayments for them in this case). First, property prices collapsing have no impact on whether your parents can pay the loan. If they can it doesn't matter what the property is worth. If they can't then it will be sold as quickly as possible for an amount that covers (as far as possible) the first mortgagee's indebtedness. It is only in reading this far that I realise that there will still be a bank as first mortgagee. This massively increases the risk profile. Any other risks I have missed? Yes, among others: Any mitigations for any identified risks? Talk to a lawyer. Talk to an accountant. Talk to an insurance professional. Anything I flagged as a risk that is not actually an issue? No Assuming you would advise doing this, what fraction of savings would you recommend keeping as a rainy day fund that can be accessed immediately? I wouldn't, 100%." }, { "docid": "284153", "title": "", "text": "With the calculator in hand (Excel :) you should follow this advise and save a bundle. 1) Calculate how much you are willing to spend per month. 2) Take the longest (in years) mortgage you can find and cheepest (Euribor+0,2% is better than Euribor+1%). 3) Save the amount you are not spending on your mortgage. Whenever the mortgage cost changes (once a year), calculate whether you get more interests on your savings or on a down payment (look at the total cost). Then decide if you make a down payment or keep on saving. My 0,02€ We took a 20 year mortgage and blindly payed every time we'd have 3K€. We payed our house in 6 years. The total cost of the mortgage was way down this way. However, the above theory has a better yield overall." }, { "docid": "131365", "title": "", "text": "but then they make suggestions such as paying extra each month on your mortgage. How else does one pay off his mortgage early other than by paying extra each month? The principal and interest are fixed, no matter how much money you throw at them. The interest rate is fixed. The total interest paid varies depending on how much extra you pay towards the principal. You'll pay the same amount every month regardless. That's factually incorrect. just put the extra money into savings At 1.2%, if you're smart enough to put it in an on-line savings account. until you have enough to pay off the mortgage Which costs you 3.5%. This way, the money is locked up in your home. Who says that all of your money must be locked up in your home? (I'm sure that there are financial advisors who recommend that you throw every single spare dime into extra mortgage payments, but they're rare.) Am I missing something? Yes: the mathematical sense to see that a 3.5% loan costs more than than 1.2% savings earns you" }, { "docid": "15487", "title": "", "text": "You should plan on your monthly payment (Principal + Interest + Escrow) being a conservative percentage of your take home pay. No matter your cash savings, if your housing is 60% of your take home pay you are going to have trouble keeping up on the house. My target for housing is that a 15 year, fixed rate mortgage should be under 25% of my take home pay. For some people, they find that too conservative. I think the exact percent is a risk/reward preference. Some people like the 25% number but look at a 30 year mortgage. Whatever you do, don't buy a house at the limit of what the bank thinks you can afford :) Historically, they have been more willing for me to spend my money than I have been." }, { "docid": "337286", "title": "", "text": "\"We’re buying the home right over $200,000 so that means he will only need to put down (as a ‘gift’) roughly $7000. I'm with the others, don't call this a gift unless it is a gift. I'd have him check with the bank that previously refused him a mortgage if putting both of you on a mortgage would allay their concerns. Your cash flow would be paying the mortgage payment and if you failed to do so, then they could fall back on his. That may make more sense to them, even if they would deny each of you a loan on your own. This works for them because either of you is responsible for the whole loan. It works for him because he was already willing to be responsible for the whole loan. And your alternative plan makes you responsible for the whole loan, so this is just as good for you. At what percentage would you suggest splitting ownership and future expenses? Typically a cash/financing partnership would be 50/50, but since it’s only a 3.5% down-payment instead of 20% is that still fair? Surprisingly enough, a 3.5% down-payment that accumulates is about half the equity of a 20% down-payment. So your suggestion of a 25%-75% split makes sense if 20% would give a 50%-50% split. I expected it to be considerably lower. The way that I calculated it was to have his share increase by his equity share of the \"\"rent\"\" which I set to the principal plus interest payment for a thirty year loan. With a 20% down-payment, this would give him 84% equity. With 3.5%, about 40% equity. I'm not sure why 84% equity should be the equivalent of a 50% share, but it may be a side effect of other expenses. Perhaps taking property taxes out would reduce the equity share. Note that if you increase the down-payment to 20%, your mortgage payment will drop substantially. The difference in interest between 3.5% and 20% equity is a couple hundred dollars. Also, you'll be able to eliminate any PMI payment at 20%. It could be argued that if he pays a third of the monthly mortgage payment, that that would give him the same 50% equity stake on a 3.5% down-payment as he would get with a 20% down-payment. The problem there is that then he is effectively subsidizing your monthly payment. If he were to stop doing that for some reason, you'd have what is effectively a 50% increase in your rent. It would be safer for you to handle the monthly payment while he handles the down-payment. If you couldn't pay the mortgage, it sounds like he is in a position to buy out your equity, rent the property, and take over the mortgage payment. If he stopped being able to pay his third of the mortgage, it's not evident that you'd be able to pick up the slack from him much less buy him out. And it's unlikely that you'd find someone else willing to replace him under those terms. But your brother could construct things such that in the face of tragedy, you'd inherit his equity in the house. If you're making the entire mortgage payment, that's a stable situation. He's not at risk because he could take over the mortgage if necessary. You're not at risk because you inherit his equity share and can afford the monthly payment. So even in the face of tragedy, things can go on. And that's important, as otherwise you could lose your equity in the house.\"" }, { "docid": "107068", "title": "", "text": "I'm also a UK, Ltd company contractor that has pondered the same topic. I afraid, however, that I don't understand the maths in the original question. Mortgage interest is flat for the term of the mortgage rather than compounded, so, ignoring the tapering at the end of the lifespan of the mortgage, I get the amount of interest to something like £9,300 (7500 x 0.05 x 25). Does this make the decision any easier for you? As you point out, the total cost of this overpayment from your company account is £12,500. Using the above figure, it would take over 13 years to recoup the £5,000 difference (at £375 interest a year). I used to be of the same opinion that the mortgage should be paid off at all costs first. But now I'm coming round to the American way of thinking; £12,500 invested in a pension with a 5% yield will easily outstrip the interest saved by making the over payment - 12500 x 1.05 ^ 25 = £43,300 - over 250% better off (£43,300 / (£9,300 + £7,500)). I now make no mortgage overpayments at all and instead pay all the money into my pension. This (amongst other things) keeps me below the upper earnings tax threshold, so I'm only paying corporation tax for the money I'm drawing as dividends. There's a massive caveat to this though; I'm 49. I should be able to draw the tax free element of my pension pot in six years time and pay my mortgage off and it's quite unlikely that the government will be changing pensions policy in that time (but drawing 25% tax free has been a feature of pensions for quite some time). I can then chose to keep working or retire. If my pension is still doing well (9% ish pa at the moment), I could chose to not pay my mortgage off at all. In the next twenty or so years, however, all this could change. In your position I would do a bit of both. Make a regular overpayment to pay down your mortgage (even a small amount that you'll barely notice will make quite a difference to the end date of your mortgage - £100 a month will take years off). I didn't start paying properly into my pension until fairly recently and so If you're not already, I'd also make quite substantial, regular payments into one now, directly from your company, 15-17.5% of your gross drawings. Leaving it until later will only make it more painful. Then when you get to retirement age, no matter what, you'll have a decent pension pot. An actuary I worked with pointed out that if you pay something into a pension, when you retire you should have some sort of pot; if you pay nothing, you are absolutely guaranteed to have nothing. And finally, if you haven't already, fix your mortgage. We're three years into a five year fix. The variable rate we were going to be transferred to was 3.99%. We fixed, not because of wanting any sense of security, but because the fixed rate was 2.59% with no fee. There are much better rates than that about now. Rates are starting to rise, so it's a good time." }, { "docid": "22519", "title": "", "text": "I think we would be good with paying around $1200 monthly mortgage fees (with all other property fees included like tax etc.) You probably can't get a $250k house for $1,200 a month including taxes and insurance. Even at a 4% rate and 20% down, your mortgage payment alone will be $954, and with taxes and insurance on top of that you're going to be over $1,200. You might get a lower rate but even a drop to 3% only lowers the payment $90/month. Getting a cheaper house (which also reduces taxes and insurance) is the best option financially. What to do with the $15k that I have? If you didn't have a mortgage I'd say to keep 3-6 months of living expenses in an emergency fund, so I wouldn't deplete that just to get a mortgage. You're either going to be Since 1) the mortgage payment would be tight and 2) you aren't able to save for a down payment, my recommendation is for you to rent until you can make a 20% down payment and have monthly payment that is 25% of your take-home pay or less. Which means either your income goes up (which you indicate is a possibility) or you look for less house. Ideally that would be on a 15-year note, since you build equity (and reduce interest) much more quickly than a 3-year note, but you can get the same effect by making extra principal payments. Also, very few people stay in their house for 30 years - 5 years is generally considered the cutoff point between renting and buying. Since you're looking at a 10-year horizon it makes sense to buy a house once you can afford it." }, { "docid": "334488", "title": "", "text": "I think it is just semantics, but this example demonstrates what they mean by that: If you put $100 in a CD today, it will grow and you will be able to take out a greater amount plus the original principal at a later time. If you put $100 extra on your house payment today, you may save some money in the long run, but you won't have an asset that you wouldn't otherwise have at the end of the term that you can draw on without selling the property. But of course, you can't live on the street, so you need another house. So ultimately you can't easily realize the investment. If you get super technical, you could probably rationalize it as an investment, just like you could call clipping coupons investing, but it all comes down to what your financial goals are. What the advisers are trying to tell you is that you shouldn't consider paying down your mortgage early as an acceptable substitute for socking away some money for retirement or other future expenses. House payments for a house you live in should be considered expenses, in my opinion. So my view is that paying off a note early is just a way of cutting expenses." }, { "docid": "178496", "title": "", "text": "\"As the answer above states, future inflation mitigates \"\"unwise\"\" for a longer term mortgage, at least in financial-only terms. But consider that, if you lose your ability to make payments for long enough time ANYTIME during term, the lending institution has a right to repossess, leaving you with NOTHING or worse for all the maintenance you've had to do. You can never know, but eleven years into my mortgage, I lost enough of my income for just long enough time to have to sell for just enough to pay the remainder of the mortgage and walk away with empty pockets. To help clarify understanding even better, contrast the 30-yr mortgage with the other extreme: save up and own from day one. When I did the math a few years ago, buying with a 30-year mortgage would cost cumulatively almost 3 times the real house value in mortgage payments with never the freedom to suspend payments when I might need to. Being a freedom-loving American, I determined to buy a house with cash. DON'T FORGET that mortgageable properties are over-priced just because buyers less wise than you are so willing to borrow to buy them, so I decided to buy some fixer-upper that no bank would lend on. I found such a fixer-upper, paid cash, never have to worry about repossession by a lender, can continue to save up for my dream home which I'll own a lot sooner, and will have a nice increase in house value while I fix it up to help get me there, and NO INSURANCE PAYMENTS to some insurer who'll tell me what I can't do with MY property. Let the next buyer of your fixed-up, paid-off house pay YOU the over-priced amount they are willing to pay just because THEY can get that 30-year mortgage, and you enjoy the freedom to dream and adjust your budget to the needs of the moment and end up with a house in 30 years (15, more realistically) that is 2.5 times more valuable. And keep from fighting with your spouse over finances in the meantime.\"" }, { "docid": "273925", "title": "", "text": "\"You're making $100k together per year: you're not in the donut hole, you're in the top 25% of all households, and the top 10% of non-family households (as yours would be). To be blunt, you're not in the \"\"rely on assistance\"\" area: you're in the \"\"save up for your downpayment\"\" sector. My suggestion would be to figure out a way to save more than $200-$400 a month for now. $100k gross income means you have about $8k net income per month; $2k for rent and other necessities means you have $6k per month that you can potentially save. Even half of that - $3k per month - means you have $24000 saved by the end of this year, and $36000 on an annual basis. As far as marriage or domestic partnership - I wouldn't get into one based on whether it helps you afford a home. It might be a good idea because it helps you handle some of the details arising when you have joint property, perhaps, but not solely for the financial aspect. And as far as how much home is realistic? $250k is certainly realistic if you can save up enough for a good down payment. Try to get to the 20-25% range. If you're already halfway there, another year of renting won't kill you, and it will mean no PMI and much better rates. Also consider a 15 year mortgage; we're in the same general income category as you and manage a 15 year on a $250k range house quite nicely. It doesn't add all that much to your monthly payment amount, compared to what you'd expect - particularly since the monthly payment includes property taxes which won't increase based on the length of the mortgage. Now that we have actual numbers from the OP: So, without cutting anything, you have $2k yourself you can be saving. (This assumes your rent number of $1345 is your portion of rent, and not the 100% amount.) That's $24000 per year, just by yourself. On top of that, you've got another $40k or so coming from your partner, at least some of which should be available as well if he/she is going to be co-owning? But if not, at least you have about $2000 a month you can be saving. You could also downsize the car, cut cable TV, downsize the phone, and have another $500 or so available - but it doesn't really look like you need to do that, given how much you have available now. I'd look at what you're doing with that ~$2000 per month right now, and see how you can free most of it up. You haven't mentioned a few things like utilities, not sure if that's just forgetfulness or if your partner is paying them; so perhaps not all of it is available. But - even $1000 a month is $12000 to add to the $20000 you have now, which makes a big dent in that down payment.\"" }, { "docid": "64257", "title": "", "text": "So the principle is true. Assuming that you get paid bi-weekly, you end up getting three paychecks two months during the year. Typically that is in January and July/August. So if things were different, and your mortgage was setup so you paid half a monthly payment each paycheck, then you would wind up making one full extra payment per year. Making that extra payment, most often, reduces the mortgage by 7 years on a 30 year note. While true, many of these companies charge exorbitant fees for the right for you to do so, so the principal reduction is not commensurate with what you are paying. You can simply do this yourself without paying fees. On those extra pay days, pay half a payment to principal only, and no fee, no fuss. This is pretty easy to do with most mortgage companies as they have online payments and it is just a matter of filling out a web form. For me this does not even cost a stamp as they pull from my checking account at another bank." }, { "docid": "117509", "title": "", "text": "What kind of financial analysis would make you comfortable about this decision? The HELOC and ARM are the biggest red flags to me in your current situation. While I don't expect interest rates to skyrocket in the near future, they introduce an interest rate risk that is easy to get rid of. Getting rid of the HELOC and converting to a fixed mortgage would be my first priority. If you also want to upgrade to a new home at the same time (meaning buy a new home contingent on the sale of your first, paying off the HELOC and mortgage), that's fine, but make sure that you can comfortably afford the payment on a fixed-rate mortgage with at least 20% down. I would not take additional cash out of your equity just to save it. You're going to pay more in interest that you're going to get in savings. From there things get trickier. While many people would keep the first property on a mortgage and rent it out, I am not willing to be a landlord for a part-time job, especially when the interest on the mortgage gouges my return on the rent. PLus leverage increases the risks as well - all it takes is to go one or two months without rent and you can find yourself unable to make a mortgage payment, wrecking your credit and possibly risking foreclosure. So my options in order of precedence would be: At what point does it make sense to become a landlord? The complicated answer is when the benefits (rent, appreciation) relative to the costs (maintenance, interest, taxes, etc.) and risks (lost rent, bad renters, home value variance) give you a better return that you could find in investments of similar risk. The simple answer is when you can pay cash for it. That takes interest and lost rent out of the equation. Again, some are willing to take those risks and pay 20% down on rental property. Some are able to make it work. Some of those go broke or lose their properties. when calculating the 20% down of a new property, does that need to be liquid funds, or can that be based on the value of the home you are selling You can make the purchase of the new home contingent on the sale of the first if you need to get the equity out of it to make the 20%. Do NOT refinance the first just to pull out the equity to make a down payment. It's not worth the fees of a refinance." }, { "docid": "39676", "title": "", "text": "Awesome, you are a math guy. Very good for you. In theory, what you are proposing, should work out great as the math works out great. However have you taken a economics or finance coursework? The math that they do in these class will leave a most math guys uncomfortable with the imprecision even when one is comfortable with chaos theory. Personal finance is worse. If it were about math things like reverse mortgages, payday lenders, and advances on one income tax returns would not exist. The risk derived from the situation you describe is one born out of behavior. Sometimes it is beyond control of the person attempting your scheme. Suppose one of these happen: In my opinion the market is risky enough without borrowing money in order to invest. Its one thing to not pay extra principle to a mortgage in order to put that money in play in the market, it is another thing to do what you are suggesting. While their may be late fees associated with a mortgage payment, a fixed rate mortgage will not change if you late on payment(s). On these balance transfer CC schemes they will jack your rate up for any excuse possible. I read an article that the most common way to end up with a 23%+ credit card was to start out with a 0% balance transfer. One thing that is often overlooked is that the transfer fee paid jacks up the stated rate of the card. In the end, get out of consumer debt, have an emergency fund, then start investing. Building a firm financial foundation is the best way to go about it. Without one it will be difficult to make headway. With one your net worth will increase faster then you imagined possible." }, { "docid": "396792", "title": "", "text": "\"Paypal linked with my bank account. 1.Can I use my Saving bank account to receive payments from my clients? Or is it necessary to open a current account? Yes you can get funds into your savings account. However it is advisable to keep a seperate account as it would help with your IT Returns. 2.I will be paying a certain % as commission on every sales to a couple of sales guys (who are not my employees but only working on commission). Can I show this as an expense in my IT returns? As you are earning as freelancer, you are eligible for certain deductions like Phone calls, Laptop, other hardware, payments to partners. It is important that you maintain a book of records. An accountant for a small fee of Rs 5 K should be able to help you. In the Returns you have to show Net income after all these deductions, there is no place to enter expenses. 3.Since I will be receiving all the payments in Euros so am I falling under a category of \"\"Exporter of services\"\"? The work you are doing can be Free Lancing. 4.Do I need an Import Export Code (IEC) for smoothly running this small business? You can run this without one as Free lancing. IEC would be when you grow big and are looking for various benefits under tax and pay different taxes and are incorporated as a company.\"" }, { "docid": "247778", "title": "", "text": "It's sad. My mother lost her job after a brutal divorce. BOA bought up Countrywide, then when my mother pleaded for assistance BOA said they could not help her unless she was behind/in default of her mortgage. She tried to do a deed-in-lieu with a lawyer and BOA refused to accept the deed-in-lieu many times. Then BOA sold her mortgage to Green Tree (?) and they refused her deed-in-lieu as well. This went on for over 2 years and they foreclosed on the house. I told my mother to sue because they should have accepted her deed-in-lieu because it was approved by the court in her bankruptcy but she was tired of trying to save her house that she just walked away. 6 months after she left and moved in with my sister Green Tree called her offering a refinance at a lower rate and a mortgage payment that was less than a typical car payment. Now 5 years later my mom is just going to pay cash for her house and never do a mortgage again." }, { "docid": "220032", "title": "", "text": "So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence." }, { "docid": "174308", "title": "", "text": "\"I'll start by focussing on the numbers. I highly recommend you get comfortable with spreadsheets to do these calculations on your own. I assume a $200K loan, the mortgage for a $250K house. Scale this up or down as appropriate. For the rate, I used the current US average for the 30 and 15 year fixed loans. You can see 2 things. First, even with that lower rate to go 15 years, the payment required is 51% higher than with the 30. I'll get back to that. Second, to pay the 30 at 15 years, you'd need an extra $73. Because now you are paying at a 15 year pace, but with a 30 year rate. This is $876/yr to keep that flexibility. These are the numbers. There are 2 camps in viewing the longer term debt. There are those who view debt as evil, the $900/mo payment would keep them up at night until it's gone, and they would prefer to have zero debt regardless of the lifestyle choices they'd need to make or the alternative uses of that money. To them, it's not your house as long as you have a mortgage. (But they're ok with the local tax assessor having a statutory lien and his hand out every quarter.) The flip side are those who will say this is the cheapest money you'll ever see, and you should have as large a mortgage as you can, for as long as you can. Treat the interest like rent, and invest your money. My own view is more in the middle. Look at your situation. I'd prioritize In my opinion, it makes little sense to focus on the mortgage unless and until the first 5 items above are in place. The extra $459 to go to 15? If it's not stealing from those other items or making your cash flow tight, go for it. Keep one subtle point in mind, risk is like matter and energy, it's not created or destroyed but just moved around. Those who offer the cliche \"\"debt creates risk\"\" are correct, but the risk is not yours, it's the lender's. Looking at your own finances, liquidity is important. You can take the 15 year mortgage, and 10 years in, lose your job. The bank still wants its payments every month. Even if you had no mortgage, the tax collector is still there. To keep your risk low, you want a safety net that will cover you between jobs, illness, new babies being born, etc. I've gone head to head with people insisting on prioritizing the mortgage payoff ahead of the matched 401(k) deposit. Funny, they'd prefer to owe $75K less, while that $75K could have been deposited pretax (so $100K, for those in the 25% bracket) and matched, to $200K. Don't make that mistake.\"" }, { "docid": "187739", "title": "", "text": "Yes, a mortgage is debt. It's unique in that you have a house which should be worth far more than the mortgage. After the mortgage crisis, many found their homes under water i.e. worth less than the mortgage. The word debt is a simple noun for money owed, it carries no judgement or negative connotation except when it's used to buy short lived items with money one doesn't have. Aside from my mortgage, I get a monthly credit card bill which I pay in full. That's debt too, only it carried no interest and rewards me with 2% cash back. Many people would avoid this as it's still debt." } ]

[ { "docid": "517299", "title": "", "text": "You say you are underwater by $10k-15k. Does that include the 6% comission that selling will cost you? If you are underwater and have to sell anyway, why would you want to give the bank any extra money? A loss will be taken on the sale. Personally i would want the bank to take as much of that loss as possible, rather than myself. Depending on the locale the mortgage may or may not be non-recourse, ie the loan contract implies that the bank can take the house from you if you default, but if 'non-recourse' the bank has no legal way to demand more money from you. Getting the bank to cooperate on a short sale might be massively painful. If you have $ in your savings, you might have more leverage to nego with the bank on how much money you have to give them in the event the loan is not 'non-recourse'. Note that even if not 'non-recourse', it's not clear it would be worth the banks time and money to pursue any shortfall after a sale or if you just walk away and mail the keys to the bank. If you're not worried about your credit, the most financially beneficial action for you might be to simply stop paying the mortgage at all and bank the whole payments. It will take the bank some time to get you out of the house and you can live cost-free during that time. You may feel a moral obligation to the bank. I would not feel this way. The banks and bankers took a ton of money out of selling mortgages to buyers and then selling securities based on the mortgages to investors. They looted the whole system and pushed prices up greatly in the process, which burned most home buyers and home owners. It's all about business -my advice is to act like a business does and minimize your costs. The bank should have required a big enough downpayment to cover their risk. If they did not, then they are to blame for any loss they incur. This is the most basic rule of finance." } ]

[ { "docid": "21468", "title": "", "text": "\"If you've already got emergency savings sufficient for your needs, I agree that you'd be better served by sending that $500 to your student loan(s). I, personally, house the bulk of my emergency savings in CDs because I'm not planning to touch it and it yields a little better than a vanilla savings account. To address the comment about liquidity. In addition to my emergency savings I keep plain vanilla savings accounts for miscellaenous sudden expenses. To me \"\"emergency\"\" means lost job, not new water pump for my car; I have other budgeted savings for that but would spend it on a credit card and reimburse myself anyway so liquidity there isn't even that important. The 18 month CDs I use are barely less liquid than vanilla savings and the penalty is just a couple months of the accrued interest. When you compare a possible early distribution penalty against the years of increased yield you're likely to come out ahead after years of never touching your emergency savings, unless you're budgeted such that a car insurance deductible is an emergency expense. Emergency funds should be guaranteed and non-volatile. If I lose my job, 90 days of accrued interest isn't a hindrance to breaking open some of my CDs, and the process isn't so daunting that I'd meaningfully harm my finances. Liquidity in 2017 and liquidity in whatever year a text book was initially written are two totally different animals. My \"\"very illiquid\"\" brokerage account funds are only one transaction and 3 settlement days less liquid than my \"\"very liquid\"\" savings account. There's no call the bank, sell the security, wait for it to clear, my brokerage cuts a check, mail the check, cash the check, etc. I can go from Apple stock on Monday to cash in my hand on like Thursday. On the web portal for the bank that holds my CDs I can instantly transfer the funds from a CD to my checking account there net of a negligible penalty for early distribution. To call CDs illiquid in 2017 is silly.\"" }, { "docid": "372782", "title": "", "text": "\"You'd have to check the terms of your contract. On most installment loans, I think, they calculate interest monthly, not daily. That is, if you make 3 payments of $96 over the course of the month instead of one payment of $288 at the end of the month (but before the due date), it makes absolutely zero difference to their interest calculation. They just total up your payments for the month. That's how my mortgage works and how some past loans I've had worked. All you'd accomplish is to cost yourself some time, postage if you're mailing payments, and waste the bank's time processing multiple payments. If the loan allows you to make pre-payments -- which I think most loans today do -- then what DOES work is to make an extra payment or an overpayment. If you have a few hundred extra dollars, make an extra payment. This reduces your principle and reduces the amount of interest you pay every month for the remainder of the loan. And if you're paying $1 less in interest, then that extra dollar goes against principle, which further reduces the amount you pay in interest the next month. This snowballs and can save you a lot in the long run. Better still, instead of paying $288 each month, pay, say, $300. Then every month you're nibbling away at the principle faster and faster. For example, I calculate that if you're paying $288 per month, you'll pay the loan off in 72 months and pay a total of $6062 in interest. Pay $300 per month and you'll pay it off in 67 months with a total of $6031 interest. Okay, not a huge deal. Pay $350 per month and you pay it off in 55 months with $5449 interest. (I just did quick calculations with a spreadsheet, not accurate to the penny, but close enough for comparison.) PS This is different from \"\"revolving credit\"\", like credit cards, where interest is calculated on the \"\"average daily balance\"\". With a credit card, making multiple payments would indeed reduce your interest. But not by much. If you pay $100 every 10 days instead of $300 at the end, then you're saving the interest on 20 days x $100 + 10 days x $100, so 12.5% = 0.03% per day, so 0.03% x ($2000+$1000) = 90 cents. If you're mailing your payments, the postage is 49 cents x 2 extra payments = 98 cents. You're losing 8 cents per month by doing this.\"" }, { "docid": "178496", "title": "", "text": "\"As the answer above states, future inflation mitigates \"\"unwise\"\" for a longer term mortgage, at least in financial-only terms. But consider that, if you lose your ability to make payments for long enough time ANYTIME during term, the lending institution has a right to repossess, leaving you with NOTHING or worse for all the maintenance you've had to do. You can never know, but eleven years into my mortgage, I lost enough of my income for just long enough time to have to sell for just enough to pay the remainder of the mortgage and walk away with empty pockets. To help clarify understanding even better, contrast the 30-yr mortgage with the other extreme: save up and own from day one. When I did the math a few years ago, buying with a 30-year mortgage would cost cumulatively almost 3 times the real house value in mortgage payments with never the freedom to suspend payments when I might need to. Being a freedom-loving American, I determined to buy a house with cash. DON'T FORGET that mortgageable properties are over-priced just because buyers less wise than you are so willing to borrow to buy them, so I decided to buy some fixer-upper that no bank would lend on. I found such a fixer-upper, paid cash, never have to worry about repossession by a lender, can continue to save up for my dream home which I'll own a lot sooner, and will have a nice increase in house value while I fix it up to help get me there, and NO INSURANCE PAYMENTS to some insurer who'll tell me what I can't do with MY property. Let the next buyer of your fixed-up, paid-off house pay YOU the over-priced amount they are willing to pay just because THEY can get that 30-year mortgage, and you enjoy the freedom to dream and adjust your budget to the needs of the moment and end up with a house in 30 years (15, more realistically) that is 2.5 times more valuable. And keep from fighting with your spouse over finances in the meantime.\"" }, { "docid": "125482", "title": "", "text": "\"There is a term for this. If you google \"\"House Hacking\"\" you will get lots of articles and advice. Some of it will pertain to multifamily properties but a good amount should be owner occupied and renting bedrooms. I would play with a mortgage calculator like Whats My Payment. Include Principle, interest, taxes and insurance see how much it will cost. At 110k your monthly fixed payments will depend on a number of factors (down payment, interest, real estate tax rate and insurance cost) but $700-$1000 would be a decent guess in my area. Going off that with two roommates willing to pay $500 a month you would have no living expenses except any maintenance or utilities. With your income I would expect you could make the payment alone if needed (and it may be needed) so it seems fairly low risk from my perspective. You need somewhere to live you are used to roommates and you can pay the entire cost yourself in a worst case. Some more things to consider.. Insurance will be more expensive, you want to ensure you as the landlord you are covered if anything happens. If a tenant burns down your house or trips and falls and decides to sue you insurance will protect you. Capital Expenses (CapEx) replacing things as they wear out. On a home the roof, siding, flooring and all mechanicals(furnace, water heater, etc.) have a lifespan and will need to be replaced. On rental properties a portion of rent should be set aside to replace these things in the future. If a roof lasts 20yrs,costs $8,000 and your roof is 10years old you should be setting aside $70 a month so in the future when this know expense comes up it is not a hardship. Taxes Yes there is a special way to report income from an arrangement like this. You will fill out a Schedule E form in addition to your regular tax documents. You will also be able to write off a percent of housing expenses and depreciation on the home. I have been told it is not a simple tax situation and to consult a CPA that specializes in real estate.\"" }, { "docid": "322033", "title": "", "text": "This may effect how much, or under what terms a bank is willing to loan us I don't think this is likely, an investment is an investment whether it is money in a savings account or a loan. However, talk to your bank. Is it worth getting something by a lawyer? Definitely, you need a lawyer and so do your parents. There is a general presumption at law that arrangements between family members are not meant to be contracts. You definitely want this to be a contract and engaging lawyers will make sure that it is. You also definitely want this to be a proper mortgage so that you get first call on the property should your parents die or go bankrupt. In addition, a lawyer will be able to advise you of the pitfalls that you haven't seen. If both of my parents were to pass away before the money is returned, would that document be enough to ensure that the loan is returned promptly? No, see above. Tax implications: Will this count as taxable income for me? And if so, presumably my parents can still count it as a tax deduction? Definitely, however the ATO is very keen that these sorts of arrangements do not result in tax minimisation. Your parents will get a deduction at the rate charged; you will pay tax on the greater of the rate charged or a fair commercial rate i.e. what your parents would be paying a bank. For example, if the going bank mortgage rate is 5.5% and you charged 2% they get the deduction for 2%, you pay tax as though they had paid 5.5%. Property prices collapse, and my parents aren't able to make their repayments, bank forecloses on the place and sells it, but not even enough to cover the outstanding loan, meaning my parents no longer have our money. (I could of course double down and pay their monthly repayments for them in this case). First, property prices collapsing have no impact on whether your parents can pay the loan. If they can it doesn't matter what the property is worth. If they can't then it will be sold as quickly as possible for an amount that covers (as far as possible) the first mortgagee's indebtedness. It is only in reading this far that I realise that there will still be a bank as first mortgagee. This massively increases the risk profile. Any other risks I have missed? Yes, among others: Any mitigations for any identified risks? Talk to a lawyer. Talk to an accountant. Talk to an insurance professional. Anything I flagged as a risk that is not actually an issue? No Assuming you would advise doing this, what fraction of savings would you recommend keeping as a rainy day fund that can be accessed immediately? I wouldn't, 100%." }, { "docid": "224062", "title": "", "text": "This depends in part on the bank holding your loan and the loan agreement. Some loans will accept partial payments and apply them immediately; some will not accept partial payments at all, and some will accept the payment but hold the funds until the payment is at least your complete payment. You should check your loan agreement to find out how the payment will be processed, as well as how it will be applied. It also is relevant how interest is calculated and accrued; if your interest is a daily rate, then you may save some money this way, but if it's a monthly rate then you wouldn't necessarily. Either way you wouldn't really save very much money; in your particular case you'd be saving $0.15 per month (.025/24 = .001 semimonthly interest rate, $150 paid halfway through the month means you pay .001*150 less interest). Is that $0.15 worth it? Up to you I guess. If you're paying that for 5 year loan, you'll end up ahead $9 at the end of it. Finally, there is a kind of program often offered to new mortgage holders where you pay every two weeks (like your paycheck) and thus 'pay down your mortgage faster by saving on interest', which is true, but it's because you make 26 half payments per year instead of 12 full (or 24 half) payments, not primarily because of particular savings on interest due to timing (and of course the program offerer has to make money somewhere!). Paying an extra 8.33% each year is certainly a good way to pay off your loan faster, but it's not primarily due to the frequency of those payments." }, { "docid": "22519", "title": "", "text": "I think we would be good with paying around $1200 monthly mortgage fees (with all other property fees included like tax etc.) You probably can't get a $250k house for $1,200 a month including taxes and insurance. Even at a 4% rate and 20% down, your mortgage payment alone will be $954, and with taxes and insurance on top of that you're going to be over $1,200. You might get a lower rate but even a drop to 3% only lowers the payment $90/month. Getting a cheaper house (which also reduces taxes and insurance) is the best option financially. What to do with the $15k that I have? If you didn't have a mortgage I'd say to keep 3-6 months of living expenses in an emergency fund, so I wouldn't deplete that just to get a mortgage. You're either going to be Since 1) the mortgage payment would be tight and 2) you aren't able to save for a down payment, my recommendation is for you to rent until you can make a 20% down payment and have monthly payment that is 25% of your take-home pay or less. Which means either your income goes up (which you indicate is a possibility) or you look for less house. Ideally that would be on a 15-year note, since you build equity (and reduce interest) much more quickly than a 3-year note, but you can get the same effect by making extra principal payments. Also, very few people stay in their house for 30 years - 5 years is generally considered the cutoff point between renting and buying. Since you're looking at a 10-year horizon it makes sense to buy a house once you can afford it." }, { "docid": "255703", "title": "", "text": "\"Which option will save you the most money in the long run? That is tough. Assuming you stay healthy, don't lose your job, don't experience a pay cut or any major emergency that drains your savings, then applying the $6000 to the higher interest loan will save you more money in the long run. However, the difference in savings is a few hundred dollars. Not much really. So, in this case, I'd put the $6k towards the smaller loan. Why? Because then you'd pay it off faster. Once that's done, you open up your cash flow by the minimum monthly payment you would have had on that loan. Assuming they both have the same or similar number of months left, by paying the smaller loan off sooner, you'd open up $X month, where $X is your minimum monthly payment. This could be useful to you if you want to take on some other debt (like buying a house) because it lowers your debt to income ratio. If you put that money towards the higher loan, your DTI won't change until the normal time you would have paid off the smaller loan. Even if you are not looking to purchase anything that requires you to have a lower DTI, paying the smaller loan off sooner increases your cash flow sooner (because your monthly payment on the higher loan doesn't change just because you lowered the balance by $6k). So you'd be more robust to emergencies if your current income doesn't allow for much savings. A major emergency could wipe out all savings from paying down the bigger balance. So, I'd suggest: Edit: TripeHound asked a question, pretty much requesting more details for why I was biased towards paying off the smaller loan first. What follows is my response, with a bit of reorganization: Typically, people asking these questions don't have so much wealth that \"\"which loan to pay first?\"\" is an academic question. They need to make smart financial decisions. While paying the highest interest loan saves the most money in interest - that only occurs under the assumption that nothing bad will ever happen to you until the loans are paid off. In reality, other things happen. Tires blow out, children get sick, you get laid off and so the \"\"best\"\" thing to do is the one that maximizes your long term financial health, even if it comes at the expense of a few $k more interest. Each loan has a minimum monthly payment. Let's assume, barring any windfalls of additional cash, you will just make the minimum payments each month towards a loan. If you pay off the smaller loan first, that increases your available monthly cash flow. At that point, you can put extra towards the other loan. However, if an emergency should come up, or you need to save for a vacation, you can do that, without negatively impacting the second loan, because you'd just drop back to its minimum payment. Putting the money towards the higher balance loan would mean it takes you longer to reach this point as the time to reach payoff on the first loan will not change ($6k only reduces the $25.6k loan to $19.6k) so you never gain the flexibility of additional cash flow until the time you would have paid off the $13.5k originally. I'd rather have a few hundred dollars each month that I can choose to use to make additional loan payments, eat out, pay for car repairs, pay for emergencies than be forced to dip into credit or worse, pay day loans, should an emergency happen.\"" }, { "docid": "272279", "title": "", "text": "What options do I have? Realistically? Get a regular full time job. Work at it for a year or so and then see about buying a house. That said, I recently purchased a decent home. I am self-employed and my income is highly erratic. Due to how my clients pay me, my business might go a couple months with absolutely no deposits. However, I've been at this for quite a few years. So, even though my business income is erratic, I pay myself regularly once a month. In order to close the deal with the mortgage company I had to provide 5 years worth of statements on my business AND my personal bank accounts. Also I had about a 30% down payment. This gave the bank enough info to realize that I could absolutely make the payments and we closed the deal. I'd say that if you have little to no actual financial history, don't have a solid personal income and don't have much of a down payment then you probably have no business buying a house at this point. The first time something goes wrong (water heater, ac, etc) you'll be in a world of trouble." }, { "docid": "220032", "title": "", "text": "So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence." }, { "docid": "175649", "title": "", "text": "\"You are assuming 100% occupancy and 100% rent collection. This is unrealistic. You could get lucky and find that long term tenant with great credit that always pays their bills... but in reality that person usually buys a home they do not rent long term. So you will need to be prepared for periods of no renters and periods of non payment. The expenses here I would expect could wipe out more than you can make in \"\"profit\"\" based on your numbers. Have you checked to find out what the insurance on a rental property is? I am guessing it will go up probably 200-500 a year possibly more depending on coverage. You will need a different type of insurance for rental property. Have you checked with your mortgage provider to make sure that you can convert to a rental property? Some mortgages (mine is one) restrict the use of the home from being a rental property. You may be required to refinance your home which could cost you more, in addition if you are under water it will be hard to find a new financier willing to write that mortgage with anything like reasonable terms. You are correct you would be taking on a new expense in rental. It is non deductible, and the IRS knows this well. As Littleadv's answer stated you can deduct some expenses from your rental property. I am not sure that you will have a net wash or loss when you add those expenses. If you do then you have a problem since you have a business losing money. This does not even address the headaches that come with being a landlord. By my quick calculations if you want to break even your rental property should be about 2175/Month. This accounts for 80% occupancy and 80% rental payment. If you get better than that you should make a bit of a profit... dont worry im sure the house will find a way to reclaim it.\"" }, { "docid": "187590", "title": "", "text": "\"Your question isn't great, but I will attempt to answer this piece as it seems really the root of your personal finance question: I want to convince my wife to make this move because it will save us at least 800 month, but she fails to see how buying a second home is financially sound because we have to lose our savings and we have to pay interest on our second home. And... Her logic is it will take almost 5 years to get back our down payment and we have to pay interest as well. So how can this move help our family financially in the long run? ... Is she right? She is mostly wrong. First, consider that there is no \"\"ROI\"\" really on your down payment. Assuming you are paying what your home would sell for the next day, then your \"\"RIO\"\" is already yours (minus realtor fees). She is talking about cash on hand, not ROI. I will use an example without taking into account risk of home markets going down or other risks to ownership. Example: Let's say you pay $2800 a month in mortgage interest+principle at 5.5% apr and $200 a month in taxes+insurance on a $360k loan ($400k house). In this example let's say the same house if you were to rent it is $3800 a month. Understand the Opportunity Cost of renting (the marginal amount it costs you to NOT buy). So far, your opportunity cost is $800 a month. The principle of your house will be increasing with each payment. In our example, it's about $400 for the first payment, and will increase with each payment made while decreasing the interest payment (Suggest you look at an amortization table for your specific mortgage example). So, you're real number is now $1200 a month opportunity cost. Consider also the fact that the $400 a month is sitting in a savings account of sorts. While most savings accounts give you less than 1% in returns and then charge taxes on that gain, your home may (or may not be) much higher than that and won't charge you taxes on the gains when you sell it (If you live in it for a period of time as defined by the IRS.) Let's assume a conservative long term appreciation rate of 3%. That's $12k a year on a $400k house. So, now you're at $2200 a month opportunity cost. In this example I didn't touch on your tax savings of ownership. I also didn't touch on the maintenance cost of ownership or the maintenance cost of renting (your deposit + other fees) which all should be considered. You may have other costs involved in renting. For instance: The cost of not being able to fully utilize your rental as your own house. This may be an even simpler and more convincing way to explain it: On the $2800 mortgage example, you will be paying around $19k in interest and $2400 on taxes, insurance = $23k per year (number could be way different in your example). That is basically throw away money you're never getting back. On the rental, 100% of your rent at $3800 a month is throw away money you're never getting back. That's $45,600 a year.\"" }, { "docid": "271459", "title": "", "text": "\"Why isn't the above the business model of a loan? It is the model of some types of loans. It's called a \"\"Line of credit\"\" (LOC). I have two them, one for my business, and one for me personally. (Why does this question exist:) Is it an 30-year loan or a 10-year loan? As you mentioned, the concept of term doesn't exist for these types of loans. As long as I pay the interest and don't go over the max of my credit limit, I could keep the money indefinitely. Due to this, lines of credit almost always have a variable interest rate. (In the US they are tied to the Prime rate.) (Why does this question exist:) If you pay extra, do you want the extra to go toward the interest or toward the principal? Again, this concept also doesn't exist with a LOC. There is a minimum payment that you must make each month, but there is nothing that prevents you from making the minimum payment and then immediately taking the exact payment you made back out again. Of course this increases the total you owe, and eventually you would hit your maximum credit limit and would no longer be able to take the full payment back out. Years ago I maxed out my business line and didn't have enough money to make the payment so my bank was nice enough to raise my limit for me (so I could take enough out to make the payment), but if I did that multiple times I'm sure they would have eventually said no. Fortunately my clients finally paid me and I paid off the line, but I still keep the LOC today even though I rarely use it. By the way, beyond traditional LOCs, they also exist in other forms, both secured and unsecured. A common secured product in the US is a 2nd lien holder to a home (the first being the mortgage), called a HELOC (Home Equity Line Of Credit). Many banks also offer unsecured LOCs on a checking account which they sometimes call \"\"overdraft protection\"\". Update: based on a comment to this answer, I now realize that the full question now becomes something similar to: Given that the Line of Credit loan model exists, why aren't all loans like this? or, refining it further: What advantages do other loan types have over the Line of Credit model, specifically finite term loans? A main advantage of a term loan over a line of credit is that the bank knows when they will get the money back. If every loan a bank made was a LOC product, and no one ever paid it back, then they'd eventually run out of money. That's obviously an oversimplification but the principle (pun intended) holds. To prevent this the bank would have to call due the loan, and doing this usually leaves customers angry. Years ago I had a business LOC with a bank that discontinued their business LOC product, and called every customer's loan due. I had a balance and they offered to convert it to a 5 year term loan, which I did, but I was so mad at them that I switched banks and paid off the term loan shortly after. Another advantage of a term loan is it forces the customer to be a little more responsible. Lines of credit can be dangerous for those that misuse it because if the amount owed is driven up due to bad behavior, there is nothing to force the bad behavior to stop. A perfect example of this can be found with governments. Some governments borrow money until their line of credit is used up, and then they just keep increasing their credit limit. There is no incentive for the officials in charge of the government to stop doing this because it isn't even their money. If those lines of credits were converted to term loans, the government would be forced to increase revenue and/or decrease expenses, which is the only way to get out of debt. Some other advantages of term loans over a LOC:\"" }, { "docid": "7332", "title": "", "text": "\"It all has to do with risk and reward. The risk is that interest rates will rise. To entice you to go with the variable, they make it so it is cheaper if interest rates never rise. Your job is to guess whether interest rates are likely to go up or not. In a first approximation, you should go fixed. The bank employs very smart people whose entire job is to know whether interest rates will go up or not. Those people chose the price difference between the two, and it's sure to favour the bank. That is, the risk of extra payments you'll make on the variable is probably more than the enticement. But, some people can't sleep at night if their payments (or more realistically, the interest part of their payments) might double. If that's you, go fixed. If that's not you, understand that the enticement actually has to be turned up a bit, to get more people to go variable, because of the sleeping-at-night feature. Think long and hard about your budget and what would happen if your payment jumped. If you could handle it, variable might be the better choice. Personally, I have been taking \"\"variable\"\" on my mortgage for decades (and now I don't have one) and never once regretted it. I also counselled my oldest child to take variable on her mortgage. Over this century so far, if rates ticked up, they didn't tick up to the level the fixed was offered at. Mostly they have sat flat. But if ever there was a world in which \"\"past performance does not predict future results\"\" it would be interest rate trends. Do your own research.\"" }, { "docid": "99521", "title": "", "text": "With an annual income of $120,000 you can be approved for a $2800 monthly payment on your mortgage. The trickier problem is that you will save quite a bit on that mortgage payment if you can avoid PMI, which means that you should be targeting a 20% down-payment on your next purchase. With a $500,000 budget for a new home, that means you should put $100,000 down. You only have $75,000 saved, so you can either wait until you save another $25,000, or you can refinance your current property for $95k+ $25k = $120k which would give you about a $575 monthly payment (at 30 years at 4%) on your current property. Your new property should be a little over $1,900 per month if you finance $400,000 of it. Those figures do not include property tax or home owners insurance escrow payments. Are you prepared to have about $2,500 in mortgage payments should your renters stop paying or you can't find renters? Those numbers also do not include an emergency fund. You may want to wait even longer before making this move so that you can save enough to still have an emergency fund (worth 6 months of your new higher expenses including the higher mortgage payment on the new house.) I don't know enough about the rest of your expenses, but I think it's likely that if you're willing to borrow a little more refinancing your current place that you can probably make the numbers work to purchase a new home now. If I were you, I would not count on rental money when running the numbers to be sure it will work. I would probably also wait until I had saved $100,000 outright for the down-payment on the new place instead of refinancing the current place, but that's just a reflection of my more conservative approach to finances. You may have a larger appetite for risk, and that's fine, then rental income will probably help you pay down any money you borrow in the refinancing to make this all worth it." }, { "docid": "34308", "title": "", "text": "\"As others have pointed out, you can't just pick a favorable number and rent for that amount. If you want to rent out your house, you must rent it for a value that a renter would agree to. For example there is a house on my street that has been looking for renters for 3 years. They want $2,500 a month. This covers their mortgage, and a little bit more for taxes and repairs. It has never been rented once. Other homes in my neighborhood rent for around $1,000 a month. There is no value to a renter in renting a house that is $1,500 more then a similar house 2 doors down. Now what you can look at is cost mitigation. So I am using data from my area. Houses in my part of Florida must have A/C running in the wet months to keep the moisture from ruining the house. This can easily be $100 a month (usually more). The city requires you to have water service, even when not occupied, though the cost is very small. Same with waste, which is a flat fee: $20 a month. Yard watering is a must during the dry months (if you want to keep grass). Let's say that comes out to $50 a month, year round. Pest control is a must, especially if your house has wooden parts (like floors or a roof). Even modest pest control is $25 a month. Property taxes around $240 a month. Let's say your mortgage is around $1,000 a month. That means to sit empty your house would cost $1,435. Now if you were to rent the house, a lot of those costs could \"\"go away\"\" by becoming the tenants' responsibility. Your cost of the house sitting full would be $1,240. Let's pad that with 10% for repairs and go with $1,364. Now let's assume you can rent for $1,000 a month. Keep in mind all these rates are about right for my area but will change based on size and amenities. Your choices are let the house sit empty for $1,435 a month or fill it and only \"\"lose\"\" $240 a month. Keep in mind that in both cases you will be gaining equity. So what a lot of people do around here is rent out their houses and pay the $240 as an investment. For every $240 they pay, they get $1,000 in equity (well, interest and fees aside, but you get the point). It's not a money maker for them right now, but as they get older two things happen. That $240 a month \"\"payment\"\" pays off their mortgage, so they end up owning the house outright. Then that $240 a month payment turns to extra income. And at some point, their rental can be sold for (let's guess) $400,000. SO they paid $86,400 and got back $400,000. All the while they are building equity in their rental and in the home they are living in. The important take away from this, is that it's not a source of income for the landlord as much as it is an investment. You will likely not be able to rent a house for more then a mortgage + costs + taxes, but it does make a good investment vehicle.\"" }, { "docid": "39676", "title": "", "text": "Awesome, you are a math guy. Very good for you. In theory, what you are proposing, should work out great as the math works out great. However have you taken a economics or finance coursework? The math that they do in these class will leave a most math guys uncomfortable with the imprecision even when one is comfortable with chaos theory. Personal finance is worse. If it were about math things like reverse mortgages, payday lenders, and advances on one income tax returns would not exist. The risk derived from the situation you describe is one born out of behavior. Sometimes it is beyond control of the person attempting your scheme. Suppose one of these happen: In my opinion the market is risky enough without borrowing money in order to invest. Its one thing to not pay extra principle to a mortgage in order to put that money in play in the market, it is another thing to do what you are suggesting. While their may be late fees associated with a mortgage payment, a fixed rate mortgage will not change if you late on payment(s). On these balance transfer CC schemes they will jack your rate up for any excuse possible. I read an article that the most common way to end up with a 23%+ credit card was to start out with a 0% balance transfer. One thing that is often overlooked is that the transfer fee paid jacks up the stated rate of the card. In the end, get out of consumer debt, have an emergency fund, then start investing. Building a firm financial foundation is the best way to go about it. Without one it will be difficult to make headway. With one your net worth will increase faster then you imagined possible." }, { "docid": "448791", "title": "", "text": "One way to reduce the monthly payment due each month is to do everything to eliminate one of the loans. Make the minimum payment to the others, but put everything into eliminating one of the loans. Of course this assumes that you have separate loans for each year of school. Make sure that in trying to get aggressive on the loan repayment that you don't neglect the saving for a down payment. Each dollar you can put down will save you money on the mortgage. It might also allow you to reduce the mortgage insurance payments. If you pay one student loan back aggressively but can't eliminate it you might be worse off because you spent your savings but it didn't help you qualify for the mortgage. One way to maximize the impact is to not make the extra payments until you are ready to apply for the mortgage. Ask the lender if you qualify with all the student loans, or if you need to eliminate one. If you don't need to eliminate a loan, then apply the extra funds to a larger down payment or pay points to reduce the interest rate." }, { "docid": "20796", "title": "", "text": "\"I've had a mortgage changing hands with mid size companies for many years with no problems. I've handled many complex financial and technical transactions with multiple parties with no problems over the course decades. Then, after my last refinance, my mortgage fell into the hands of JP Morgan Chase. The bank sent one letter to let me know of the transfer, and in the next week they sent my loan to collections for what I later found to be Chase's process error in the transfer. For the next three months, I ended up in customer service hell as one Chase group threatened to foreclose on my house while another group told me to ignore the imminent foreclosure notices. One started to \"\"investigate\"\" the transfer while the collections group tried to make me pay my mortgage payment twice. The mess only ended up being taken care of after I tracked down the old owner of my loan and had them refund the \"\"lost\"\" payment directly to me - normally they would have sent it to the company buying the loan, but could not get Chase to accept the payment. Then I paid Chase that exact same mortgage payment. All the time the Chase internal investigations and collections department were completely incapable of a simple call to previous holder of the loan. A company handling millions of mortgage transactions is somehow incapable of handling a minor glitch in a mortgage transfer? It's either utter incompetence or total malice in picking up extra penalty fees or maybe an occasional forclosure if homeowners didn't say on top of the details. This is what we used our collective tax dollars to bail out.\"" } ]

[ { "docid": "248619", "title": "", "text": "Conversions must be done during the calendar year. This would apply to both IRA and 401(k) accounts. For IRAs, deposits may be made until 4/15, and the same holds for Solo 401(k) accounts. For conversions, the IRA permits a recharacterization, basically, a do-over, which reverses the conversion, any or all, in case you have any reason it should not have been done. That has a deadline of 10/15, i.e. 4/15 plus 6 month extension. The 401(k) conversion has no such provision. Simple answer 12/31 of the given year." } ]

[ { "docid": "396257", "title": "", "text": "All the answers that show the equivalency of 401(k) pre-tax and Roth 401(k) post-tax using equivalent contributions are correct assuming equivalent tax rates upon withdrawal. There is some potential gain if your tax rate upon retirement is higher than your working tax rate, but often people calculate a smaller percentage of their working income for their retirement income, which may offset a higher tax-rate anyway. In my mind, the primary advantage of a Roth 401(k) is that it effectively allows you to contribute more for retirement if you are currently maxing out your contributions in a regular 401(k) and IRA and want to contribute more. Doing so can be a big advantage when you are young and can benefit from those additional dollars being put into your retirement account early. This is effectively what is illustrated by the Fidelity calculation, and is something to consider if you are of the mind to aggressively save early for retirement. The reason Roth allows you to contribute more is because traditional IRA contributions are capped. Suppose the cap is $5500. Suppose also you immediately rollover your traditional IRA to a Roth IRA. This is a post-tax contribution, and growth on that is tax-free. If you maxed out your employer pre-tax 401(k) to $17500 and maxed out your IRA, you have maxed out your retirement contributions to $23000. Suppose two doublings, then the 401(k) has grown to $70000, and the IRA has grown to $22000. However, the withdrawal from the 401(k) is taxed, so assuming 25%, the total is $74500 after tax. Now, suppose instead you maxed out your employer Roth 401(k) post-tax instead, so you have put in $17500 post tax. And now, also max out your IRA. Now, all of your $23000 grows tax-free. So upon two doublings, you walk away with $92000. This is because you maxed out your contribution post-tax, meaning it was as if you were allowed to contribute $23333 to your pre-tax 401(k). So if you intend to max out your retirement account contributions, and are looking to contribute even more to retirement accounts, one way is two change over to contributing into the employer Roth 401(k)." }, { "docid": "551545", "title": "", "text": "401(k)'s can be rolled over into IRAs. You can roll all of your former company 401(k)'s into a single IRA, managed by whatever company you like. Many employers will not let you transfer money out of your 401(k) while you're still a current employee, though, so you may be stuck with the 401(k) used by your current company until you leave. You'll have to check with your 401(k) administrator to be sure. You won't incur any taxes as long as you execute the rollovers properly. The best way to do it is to coordinate the transfer directly between your old 401(k) and your new IRA, so the check is never sent directly to you." }, { "docid": "123027", "title": "", "text": "I know in the instance that if my MAGI exceeds a certain point, I can not contribute the maximum to the Roth IRA; a traditional IRA and subsequent backdoor is the way to go. My understanding is that if you ever want to do a backdoor Roth, you don't want deductible funds in a Traditional account, because you can't choose to convert only the taxable funds. From the bogleheads wiki: If you have any other (non-Roth) IRAs, the taxable portion of any conversion you make is prorated over all your IRAs; you cannot convert just the non-deductible amount. In order to benefit from the backdoor, you must either convert your other IRAs as well (which may not be a good idea, as you are usually in a high tax bracket if you need to use the backdoor), or else transfer your deductible IRA contributions to an employer plan such as a 401(k) (which may cost you if the 401(k) has poor investment options)." }, { "docid": "308150", "title": "", "text": "\"If I understand correctly, the Traditional IRA, if you have 401k with an employer already, has the following features: Actually, #1 and #2 are characteristics of Roth IRAs, not Traditional IRAs. Only #3 is a characteristic of a Traditional IRA. Whether you have a 401(k) with your employer or not makes absolutely no difference in how your IRAs are taxed for the vast majority of people. (The rules for IRAs are different if you have a very high income, though). You're allowed to have and contribute to both kinds of accounts. (In fact, I personally have both). Traditional IRAs are tax deferred (not tax-free as people sometimes mistakenly call them - they're very different), meaning that you don't have to pay taxes on the contributions or profits you make inside the account (e.g. from dividends, interest, profits from stock you sell, etc.). Rather, you pay taxes on any money you withdraw. For Roth IRAs, the contributions are taxed, but you never have to pay taxes on the money inside the account again. That means that any money you get over and above the contributions (e.g. through interest, trading profits, dividends, etc.) are genuinely tax-free. Also, if you leave any of the money to people, they don't have to pay any taxes, either. Important point: There are no tax-free retirement accounts in the U.S. The distinction between different kinds of IRAs basically boils down to \"\"pay now or pay later.\"\" Many people make expensive mistakes in their retirement strategy by not understanding that point. Please note that this applies equally to Traditional and Roth 401(k)s as well. You can have Roth 401(k)s and Traditional 401(k)s just like you can have Roth IRAs and Traditional IRAs. The same terminology and logic applies to both kinds of accounts. As far as I know, there aren't major differences tax-wise between them, with two exceptions - you're allowed to contribute more money to a 401(k) per year, and you're allowed to have a 401(k) even if you have a high income. (By way of contrast, people with very high incomes generally aren't allowed to open IRAs). A primary advantage of a Traditional IRA is that you can (in theory, at least) afford to contribute more money to it due to the tax break you're getting. Also, you can defer taxes on any profits you make (e.g. through dividends or selling stock at a profit), so you can grow your money faster.\"" }, { "docid": "102501", "title": "", "text": "Theoretically there is limited demand for risky investments, so higher-risk asset classes should outperform lower-risk asset classes over sufficiently long time periods. In practice, I believe this is true, but it could be several decades before a risky portfolio starts to outperform a more conservative one. Stocks are considered more risky than most assets. Small-cap stocks and emerging market stocks are particularly high-risk. I would consider low-fee ETFs in these areas, like VB or VWO. If you want to seek out the absolute riskiest investments, you could pick individual stocks of companies in dire financial situations, as Bank of America was a couple years ago. Most importantly, if you don't expect to need the money soon, I would maximize your contribution to tax-advantaged accounts since they will grow exponentially faster than taxable accounts. Over 50 years, a 401(k) or IRA will generally grow at least 50% more than a taxable account, maybe more depending on the tax-efficiency of your investments. Try to contribute the maximum ($17,500 for most people in 2014) if you can. If you can save more than that, I'd suggest contributing a Roth 401k rather than a traditional 401(k) - since Roth contributions are post-tax, the effective contribution limit is higher. Also contribute to a Roth IRA (up to $5,500 in 2014), using a backdoor Roth if necessary." }, { "docid": "84228", "title": "", "text": "First, I believe that you can't just divide the losses over a number of years. I know that would be ideal as it might let you use the losses to only offset 25% income. A loss that gets you below zero taxable income would carry forward to the next year. That said, I think it would be a great strategy to use the loss to offset a Roth conversion, in your case, from the traditional 401(k) to Roth 401(k). Keep in mind, as you've seen from using the 2016 tax year TurboTax, you should be able to make a fairly good estimate for your 2017 return. This could effectively use all of the loss to offset 25% income. I'd look at the current projection and convert say 75-80% of the target amount immediately, then in November when the 2017 software comes out, convert the rest to get as close to your goal as you can." }, { "docid": "4181", "title": "", "text": "\"As other responders said, you can certainly roll over multiple 401(k) into a single account. An added benefit of such rollover (besides the ease of tracking) is that you can shop around for your Rollover IRA provider and find the one that gives you the specific mutual funds that you want to invest in, the lowest expenses, etc. - in short, find the best fit to your priorities. There are also \"\"lemon\"\" 401(k) plans and if you are in one of them, get out! And rollover is the way out. There is also one possibility to keep an eye on as it happens rarely, but it does happen - rolling a 401(k) over into another 401(k). I've done it once when I started a job at a company that had a great 401(k) with a good selection of low-cost mutual funds. I rolled the 401(k) from one previous job in to this 401(k) to take advantage of it. At the same time I kept a Rollover IRA, combining the 401(k) from all other jobs; it had more investment options and provided some flexibility.\"" }, { "docid": "422979", "title": "", "text": "The fact that you are planning to move abroad does not affect the decision to contribute to a 401(k). The reason for this is that after you leave your employer, you can roll all the money over from your 401(k) into a self-directed traditional IRA. That money can stay invested until retirement, and it doesn't matter where you are living before or after retirement age. So, when deciding whether or not to use a 401(k), you need to look at the details of your employer's plan: Does your employer offer a match? If so, you should definitely take advantage of it. Are there good investments available inside the 401(k)? Some plans offer very limited options. If you can't find anything good to invest in, you don't want to contribute anything beyond the match; instead, contribute to an IRA, where you can invest in a fund that you like. The other reason to use a 401(k) is that the contribution limits can be higher. If you want to invest more than you are allowed to in an IRA, the 401(k) might allow that. In your case, since there is no match, it is up to you whether you want to participate or not. An IRA will allow more flexibility in investing options. If you need to invest more than your IRA limit, the 401(k) might allow that. When you leave your employer, you should probably roll any 401(k) money into an IRA." }, { "docid": "69774", "title": "", "text": "\"I am failing to see why would a person get an IRA, instead of just putting the same amount of money into a mutual fund (like Vanguard) or something like that. Well, this isn't a meaningful distinction. The mutual fund may or may not be in an IRA. Similarly, the mutual fund may or may not be in a 401(k), however. So I'm going to treat your question as if it's \"\"why would a person get a mutual fund (like Vanguard) or something like that in an IRA, instead of just putting the same amount of money into the same mutual fund in a 401(k).\"\" Same mutual fund, same amount of money, narrowing your question to the difference between the two types of accounts, as stated in your question's title. Others have answered that to the extent that you really have no choice other than \"\"pick which type of account to use for a given bundle of money\"\", other than nobody having mentioned the employer match. Even if there were no other difference at all in tax treatment, it's pretty typical that 401(k) contributions will be matched by free money from the employer. No IRA can compete with that. But, that's not the only choice either: Many of us contribute to both the 401(k) and the IRA. Why? Because we can. I'm not suggesting that just-anybody can, but, if you max out the employer matching in the 401(k), or if you max out the tax-advantaged contribution limit in the 401(k), and you still have more money that you want to save in a tax-advantaged retirement account this year, you can do so. The IRA is available, it's not \"\"instead-of\"\" the 401(k).\"" }, { "docid": "289064", "title": "", "text": "\"If you are the sole owner (or just you and your spouse) and expect to be that way for a few years, consider the benefits of an individual 401(k). The contribution limits are higher than an IRA, and there are usually no fees involved. You can google \"\"Individual 401k\"\" and any of the major investment firms (Fidelity, Schwab, etc) will set one up free of charge. This option gives you a lot of freedom to decide how much money to put away without any plan management fees. The IRS site has all the details in an article titled One-Participant 401(k) Plans. Once you have employees, if you want to set up a retirement plan for them, you'll need to switch to a traditional, employer-sponsored 401k, which will involve some fees on your part. I seem to recall $2k/yr in fees when I had a sponsored 401(k) for my company, and I'm sure this varies widely. If you have employees and don't feel a need to have a company-wide retirement plan, you can set up your own personal IRA and simply not offer a company plan to your employees. The IRA contribution limits are lower than an individual 401(k), but setting it up is easy and fee-free. So basically, if you want to spend $0 on plan management fees, get an individual 401(k) if you are self-employed, or an IRA for yourself if you have employees.\"" }, { "docid": "344526", "title": "", "text": "Rolling a 401(k) to an IRA should be your default best option. Rolling a 401(k) to another 401(k) is rarely the best option, but that does happen. I've done it once when I started a job at a company that had a great 401(k) with a good selection of low-cost mutual funds. I rolled the 401(k) from one previous job in to this 401(k) to take advantage of it. In all other cases, I rolled 401(k)s from previous jobs to my Rollover IRA, which gave me the most freedom of investment options. Finally, with 401(k)-to-Roth IRA rollovers, it's important to decouple two concepts so you can analyze it as a sum of two transactions:" }, { "docid": "88539", "title": "", "text": "There are two significant drawbacks to this type of transfer. They were the reasons why I kept my American 401(k) as-is and started funding my Canadian RRSP from zero balance. 1. Taxes - a large chunk of your 401(k) will be lost to taxes. There is probably no way to transfer the funds without making a 401(k)/IRA withdrawal, which will incur the US federal tax and the 10% early-withdrawal penalty. When the money went into the 401(k), you got a tax deduction in the US and the tax break is supposed be repaid later when you make a withdrawal (that's basically how tax deferral works). It's unlikely that any country will let you take a deduction first and send the payback to a foreign country. The withdrawal amount may also be taxable in Canada (Canadians generally pay taxes on their global income and that includes pensions and distributions from foreign retirement plans). Foreign tax credit will apply of course, to eliminate double taxation, but it's of little help if your marginal Canadian tax rate is higher than your average US tax rate. 2. Expenses. Your RRSP will have to be invested in something and mutual fund management expenses are generally higher in Canada than in the US. For example, my employer-sponsored RRSP has a Standard & Poor's stock index fund that charges 1.5% and that is considered low-cost. It also offers a number of managed funds with expenses in excess of 2% that I simply ignore. You can probably invest your American 401(k)/IRA in mutual funds more efficiently." }, { "docid": "67410", "title": "", "text": "\"The tax code is a hodgepodge of rules that are often tough to explain. The reality is that it's our Congress that writes the tax code, and they often have conflicting goals among themselves. In theory, someone said \"\"How about we force withdrawals at some point. After all, these are retirement accounts, not 'give your kid a huge inheritance account'.\"\" And the discussion continued from there. The age 70-1/2 was arbitrary. 70 happens to be the age for maximum Social Security benefits. But the average retirement age is 63. To make things more confusing, one can easily start taking IRA or 401(k) withdrawals at age 59-1/2, but for 401(k) as early as 55 if you separate from the job at 55 or later. One can also take withdrawals earlier from an IRA with tax, but no penalty using Sec 72(t) rules (such as 72(t)(2)(A)(iv) on Substantially Equal Periodic Payments). To add to the confusion, Roth IRA? No RMDs. Roth 401(k), RMDs once separated from service. Since the money has already been taxed, it's the tax on the growth the government loses. My advice to the reader would be to move the Roth 401(k) to a Roth IRA before 70-1/2. My advice to congress would be to change the code to have the same rules for both accounts. Whether one agrees that a certain rule is 'fair' to them or others is up to them. I think we can agree that the rules are remarkably complex, from origin to execution. And a moving target. You can see just from the history of this site how older questions are often revisited as code changes occur.\"" }, { "docid": "3059", "title": "", "text": "Too long for a comment - It's great that you are saving to the match on the 401(k). Does your company offer a Roth 401(k)? If so, you might consider that, instead. From the numbers you offered, you are likely in the 15% bracket now, but will find you move to 25% in years to come. The 2014 tax rates are out and how the 15% bracket ending at $36,900. (Over $47,000 gross income). I'd rather see you pay tax at 15% now, and use pre-tax accounts as your income rises. If the Roth is available." }, { "docid": "525645", "title": "", "text": "HCE is defined as being above 120k$ or in the top 20 % of the company. The exact cutoff point might be different for each company. Typically, only the base salary is considered for that, but it's the company's (and 401(k)-plan's) decision. The IRS does not require HCE treatment; the IRS requires that 401(k) plans have a 'fair' distribution of usage between all employees. Very often, employees with lower income save (over-proportionally) less in their 401(k), and there is a line where the 401(k) plan is no longer acceptable to the IRS. HCE is a way for companies to ensure this forced balance; by limiting the amount of 401(k) savings for HCE, the companies ensure that the share of all contributions by below-HCE is appropriate. They will calculate/define the HCE cutoff point so that the required distribution is surely achieved. One of the consequences is that when you move over the HCE cutoff point, you can suddenly save a lot less in your 401(k). Nothing can be done about that. See this IRS page: https://www.irs.gov/retirement-plans/plan-participant-employee/definitions Highly Compensated Employee - An individual who: Owned more than 5% of the interest in the business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from the business of more than $115,000 (if the preceding year is 2014; $120,000 if the preceding year is 2015 or 2016), and, if the employer so chooses, was in the top 20% of employees when ranked by compensation." }, { "docid": "124042", "title": "", "text": "Yours two funds are redundant. Both are designed to have a mix of bonds and stocks and allow you to put all your money in them. Pick the one that has the lowest fees and stick with that (I didn't look at the funds you didn't select...they didn't look great either). Although all your funds have high fees, some are higher than others, so don't ignore fees. When you have decided on your portfolio weights, prioritize your money thus: Contribute enough to your 401(k) to get the full match from your employer Put everything else toward paying off that credit card until you have 0 balance. It's ok to use the card, but let it be little enough that you pay your statement balance off each month so you pay no interest. Then set aside some savings and invest any retirement money into a Roth IRA. At your income level your taxes are low so Roth is better than traditional IRA or 401(k). If you max out your Roth, put any other retirement savings in your 401(k)." }, { "docid": "417257", "title": "", "text": "You might want to bring this fancy new IRS rule to your employer's attention. If your employer sets it up, an After-Tax 401(k) Plan allows employees to contribute after-tax money above the $18k/year limit into a special 401(k) that allows deferral of tax on all earnings until withdrawal in retirement. Now, if you think about it, that's not all that special on its own. Since you've already paid tax on the contribution, you could imitate the above plan all by yourself by simply investing in things that generate no income until the day you sell them and then just waiting to sell them until retirement. So basically you're locking up money until retirement and getting zero benefit. But here's the cool part: the new IRS rule says you can roll over these contributions into a Roth 401(k) or Roth IRA with no extra taxes or penalties! And a Roth plan is much better, because you don't have to pay tax ever on the earnings. So you can contribute to this After-Tax plan and then immediately roll over into a Roth plan and start earning tax-free forever. Now, the article I linked above gets some important things slightly wrong. It seems to suggest that your company is not allowed to create a brand new 401(k) bucket for these special After-Tax contributions. And that means that you would have to mingle pre-tax and post-tax dollars in your existing Traditional 401(k), which would just completely destroy the usefulness of the rollover to Roth. That would make this whole thing worthless. However, I know from personal experience that this is not true. Your company can most definitely set up a separate After-Tax plan to receive all of these new contributions. Then there's no mingling of pre-tax and post-tax dollars, and you can do the rollover to Roth with the click of a button, no taxes or penalties owed. Now, this new plan still sits under the overall umbrella of your company's total retirement plan offerings. So the total amount of money that you can put into a Traditional 401(k), a Roth 401(k), and this new After-Tax 401(k) -- both your personal contributions and your company's match (if any) -- is still limited to $53k per year and still must satisfy all the non-discrimination rules for HCEs, etc. So it's not trivial to set up, and your company will almost certainly not be able to go all the way to $53k, but they could get a lot closer than they currently do." }, { "docid": "406561", "title": "", "text": "\"The limit on SEP IRA is 25%, not 20%. If you're self-employed (filing on Schedule C), then it's taken on net earning, which in your example would be 25% of $90,000. (https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people) JoeTaxpayer is correct as regards the 401(k) limits. The elective deferrals are per person - That's a cap in sum across multiple plans and across both traditional and Roth if you have those. In general, it's actually across other retirement plan types too - See below. If you're self-employed and set-up a 401(k) for your own business, the elective deferral is still aggregated with any other 401(k) plans in which you participate that year, but you can still make the employer contribution on your own plan. This IRS page is current a pretty good one on this topic: https://www.irs.gov/retirement-plans/one-participant-401k-plans Key quotes that are relevant: The business owner wears two hats in a 401(k) plan: employee and employer. Contributions can be made to the plan in both capacities. The owner can contribute both: •Elective deferrals up to 100% of compensation (“earned income” in the case of a self-employed individual) up to the annual contribution limit: ◦$18,000 in 2015 and 2016, or $24,000 in 2015 and 2016 if age 50 or over; plus •Employer nonelective contributions up to: ◦25% of compensation as defined by the plan, or ◦for self-employed individuals, see discussion below It continues with this example: The amount you can defer (including pre-tax and Roth contributions) to all your plans (not including 457(b) plans) is $18,000 in 2015 and 2016. Although a plan's terms may place lower limits on contributions, the total amount allowed under the tax law doesn’t depend on how many plans you belong to or who sponsors those plans. EXAMPLE Ben, age 51, earned $50,000 in W-2 wages from his S Corporation in 2015. He deferred $18,000 in regular elective deferrals plus $6,000 in catch-up contributions to the 401(k) plan. His business contributed 25% of his compensation to the plan, $12,500. Total contributions to the plan for 2015 were $36,500. This is the maximum that can be contributed to the plan for Ben for 2015. A business owner who is also employed by a second company and participating in its 401(k) plan should bear in mind that his limits on elective deferrals are by person, not by plan. He must consider the limit for all elective deferrals he makes during a year. Notice in the example that Ben contributed more that than his elective limit in total (his was $24,000 in the example because he was old enough for the $6,000 catch-up in addition to the $18,000 that applies to everyone else). He did this by declaring an employer contribution of $12,500, which was limited by his compensation but not by any of his elective contributions. Beyond the 401(k), keep in mind that elective contributions are capped across different types of retirement plans as well, so if you have a SEP IRA and a solo 401(k), your total contributions across those plans are also capped. That's also mentioned in the example. Now to the extent that you're considering different types of plans, that's a whole question in itself - One that might be worth consulting a dedicated tax advisor. A few things to consider (not extensive list): As for payroll / self-employment tax: Looks like you will end up paying Medicare, including the new \"\"Additional Medicare\"\" tax that came with the ACA, but not SS: If you have wages, as well as self-employment earnings, the tax on your wages is paid first. But this rule only applies if your total earnings are more than $118,500. For example, if you will have $30,000 in wages and $40,000 in selfemployment income in 2016, you will pay the appropriate Social Security taxes on both your wages and business earnings. In 2016, however, if your wages are $78,000, and you have $40,700 in net earnings from a business, you don’t pay dual Social Security taxes on earnings more than $118,500. Your employer will withhold 7.65 percent in Social Security and Medicare taxes on your $78,000 in earnings. You must pay 15.3 percent in Social Security and Medicare taxes on your first $40,500 in self-employment earnings and 2.9 percent in Medicare tax on the remaining $200 in net earnings. https://www.ssa.gov/pubs/EN-05-10022.pdf Other good IRS resources:\"" }, { "docid": "261369", "title": "", "text": "From your updated information, it seems like you are not eligible to deduct a Traditional IRA contribution, at your income since you are covered by a 401(k) at work. Therefore, contributing to a Roth IRA is the only real option in terms of IRAs. However, if you want to have some pre-tax contributions, you can change some or all of your Roth 401(k) to Traditional 401(k)." } ]

[ { "docid": "527010", "title": "", "text": "\"the deadline for roth conversions is december 31st. more precisely, roth conversions are considered to have happened in the tax year the distribution was taken. this creates a kind of loop hole for people who do an ira rollover (not a trustee-to-trustee transfer). technically, you can take money out of your traditional ira on december 31st and hold it for 60 days before deciding to roll it over into either another traditional ira or a roth ira. if you decide to put it in another traditional account, it is not a taxable event. but if you decide to put it in a roth account, the \"\"conversion\"\" is considered to have happened in december. unfortunately non-trustee rollovers are tricky. for one, the source trustee will probably take withholding that you will have to make up with non-ira funds. and rollovers are limitted to a certain number per year. also, if you miss the 60-day deadline, you will have to pay an early-withdrawal penalty (with some exceptions). if you really want to push the envelope, you could try to do this with a 60-day-rule extension, but i wouldn't try it. source: https://www.irs.gov/publications/p590a/ch01.html oddly, recharacterizations (basically reverse roth conversions) have a deadline of october 15th of the year after the original roth conversion it is reversing. so, you could do the conversion in december, then you have up to 10 months to change your mind and \"\"undo\"\" the conversion with a \"\"recharacterization\"\". again, this is tricky business. at the very least, you should be aware that the tax calculations for recharacterization are different if you convert the funds into a new empty roth account vs an existing roth account with a previous balance. honestly, if you want to get into the recharacterization business, you can probably save more on taxes by converting in january before 20-month stock market climb rather than simply converting in the year your tax brackets are low. that is the typical recharacterization strategy. source: https://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-IRAs-Recharacterization-of-Roth-Rollovers-and-Conversions\"" } ]

[ { "docid": "570805", "title": "", "text": "\"Basically, a 401(k) can have what is called a \"\"loan\"\", but is more properly a \"\"structured withdrawal and repayment agreement\"\". This allows you to access your nest egg to pay for unforeseen expenses, without having to actually cash it out and pay the 10% penalty plus taxes. You can get up to half of your current savings, with an absolute cap of $50k, minus the balance of any other loan outstanding. While there is a balance outstanding, you must make regular scheduled payments. The agreement does include an interest rate, but basically that interest money goes into your account. The downside of a 401(k) loan is the inflexibility; you must pay the scheduled amount, and you also have to keep the job for which you're paying into the 401(k); if you quit or are fired, the balance of the loan must usually be paid in 60 days, or else the financial institution will consider the unpaid balance a \"\"withdrawal\"\" and notify the IRS to that effect. Now, with a Roth account, it works a little differently. Basically, contributions to any Roth account (IRA or 401(k)) are post-tax. But, that means the money's now yours; there is no penalty or additional taxes levied on any amount you cash out. So, a loan basically just provides structure; you withdraw, then pay back under structured terms. But, if you need a little cash for a good reason, it's usually better just to cash out some of the principal of a Roth account and then be disciplined enough to pay back into it.\"" }, { "docid": "484349", "title": "", "text": "\"I humbly disagree with #2. the use of Roth or pre-tax IRA depends on your circumstance. With no match in the 401(k), I'd start with an IRA. If you have more than $5k to put in, then some 401(k) would be needed. Edit - to add detail on Roth decision. I was invited to write a guest article \"\"Roth IRAs and your retirement income\"\" some time ago. In it, I discuss the large amount of pretax savings it takes to generate the income to put you in a high bracket in retirement. This analysis leads me to believe the risk of paying tax now only to find tHat you are in a lower bracket upon retiring is far greater than the opposite. I think if there were any generalization (I hate rules of thumb, they are utterly pick-apartable) to be made, it's that if you are in the 15% bracket or lower, go Roth. As your income puts you into 25%, go pretax. I believe this would apply to the bulk of investors, 80%+.\"" }, { "docid": "267998", "title": "", "text": "\"I'd suggest you avoid the Roth for now and use pretax accounts to get the greatest return. I'd deposit to the 401(k), enough to get as much match as permitted, then use a traditional IRA. You should understand how tax brackets work, and aim to use pre-tax to the extent it helps you avoid the 25% rate. If any incremental deposit would be 15% money, use Roth for that. Most discussions of the pre-tax / post tax decision talk about 2 rates. That at the time of deposit and time of withdrawal. There are decades in between that shouldn't be ignored. If you have any life change, a marriage, child, home purchase, etc, there's a chance your marginal bracket drops back down to 15%. That's the time to convert to Roth, just enough to \"\"top off\"\" the 15% bracket. Last, I wouldn't count on that pension, there's too much time until you retire to count on that income. Few people stay at one job long enough to collect on the promise of a pension that takes 30+ years to earn, and even if you did, there's the real chance the company cancels the plan long before you retire.\"" }, { "docid": "123027", "title": "", "text": "I know in the instance that if my MAGI exceeds a certain point, I can not contribute the maximum to the Roth IRA; a traditional IRA and subsequent backdoor is the way to go. My understanding is that if you ever want to do a backdoor Roth, you don't want deductible funds in a Traditional account, because you can't choose to convert only the taxable funds. From the bogleheads wiki: If you have any other (non-Roth) IRAs, the taxable portion of any conversion you make is prorated over all your IRAs; you cannot convert just the non-deductible amount. In order to benefit from the backdoor, you must either convert your other IRAs as well (which may not be a good idea, as you are usually in a high tax bracket if you need to use the backdoor), or else transfer your deductible IRA contributions to an employer plan such as a 401(k) (which may cost you if the 401(k) has poor investment options)." }, { "docid": "468473", "title": "", "text": "\"Pete and Noah addressed the math, showing how this is, in effect, converting a 30yr to a ~23yr mortgage, at a cost, plus payment about 8% higher (1 extra payment per year). No magic there. The real issue, as I see it, is whether this is the best use of the money. Keep in mind, once you pay extra principal, which in effect is exactly what this is, it's not easy to get it back. As long as you have any mortgage at all, you have the need for liquidity, enough to pay your mortgage, tax, utilities, etc, if you find yourself between jobs or to get through any short term crisis. I've seen people choose the \"\"sure thing\"\" prepayment VS the \"\"risky\"\" 401(k) deposit. Ignoring a match is passing up a 50% or 100% return in most cases. Too good to pass up. 2 points to add - I avoided the further tangent of the tax benefit of IRA/401(k) deposits. It's too long a discussion, today's rate for the money saved, vs the rate on withdrawal. Worth considering, but not part of my answer. The other discussion I avoid is Nicholas' thoughts on the long term market return of 10% vs today's ~4% mortgage rate. This has been debated elsewhere and morphs into a \"\"pre-pay vs invest\"\" question.\"" }, { "docid": "525645", "title": "", "text": "HCE is defined as being above 120k$ or in the top 20 % of the company. The exact cutoff point might be different for each company. Typically, only the base salary is considered for that, but it's the company's (and 401(k)-plan's) decision. The IRS does not require HCE treatment; the IRS requires that 401(k) plans have a 'fair' distribution of usage between all employees. Very often, employees with lower income save (over-proportionally) less in their 401(k), and there is a line where the 401(k) plan is no longer acceptable to the IRS. HCE is a way for companies to ensure this forced balance; by limiting the amount of 401(k) savings for HCE, the companies ensure that the share of all contributions by below-HCE is appropriate. They will calculate/define the HCE cutoff point so that the required distribution is surely achieved. One of the consequences is that when you move over the HCE cutoff point, you can suddenly save a lot less in your 401(k). Nothing can be done about that. See this IRS page: https://www.irs.gov/retirement-plans/plan-participant-employee/definitions Highly Compensated Employee - An individual who: Owned more than 5% of the interest in the business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from the business of more than $115,000 (if the preceding year is 2014; $120,000 if the preceding year is 2015 or 2016), and, if the employer so chooses, was in the top 20% of employees when ranked by compensation." }, { "docid": "518562", "title": "", "text": "What is the question? Are you just trying to confirm that for self-employed, a Solo 401(k) is flexible, and a great tool to level out your tax rates? Sure. A W2 employee can turn on and off his 401(k) deduction any time, and bump the holding on each check as high as 75% in some cases. So in a tight stretch, I'd save to the match, but later on, top off the maximum for the year. To the points you listed - Your observation is interesting, but a bit long for what you seem to be asking. Keep in mind, there are 2 great features that you don't mention - a Roth Solo 401(k) flavor which offers even more flexibility for variable income, and loan provisions, up to $50,000 available to borrow from the account. My fellow blogger The Financial Buff offered an article Solo 401k Providers and Their Scope of Services that did a great job addressing this." }, { "docid": "233794", "title": "", "text": "\"It's going to be quite a challenge to give a definitive answer to any \"\"Why\"\" question about law, and especially so for a question about tax law. One would need to try to dig up statements made by the legislators (and/or their aides) crafting and debating the law. As it is, tax law is already inconsistent in many ways. (Why are there people who can't contribute to a Roth IRA directly but can contribute to a Traditional and then immediately convert it to Roth? Why are maximum limits for 401(k) plans and IRAs separate rather than being one combined \"\"retirement\"\" savings maximum?) In the absence of some specific legislative statements saying that it was set up this way for some specific purpose, one must assume that it was written with the some goals as all tax law: As a compromise between various ideas, trying to accomplish some specific purpose. Feel free to add in some level of inefficiency and it being hard to completely understand the entirely of the tax law, which leads to things perhaps not being as \"\"tidy\"\" as one might hope for. But there's no reason to think that the people crafting the tax advantages for HSA plans had any reason to use 401(k) plans as a template, or wanted them to accomplish the same goals.\"" }, { "docid": "99921", "title": "", "text": "\"What ever you convert from the 401(k) will be subject to tax. The bigger issue is that there's no \"\"do over\"\" no ability to recharacterize the conversion if when you do your taxes, you realize you need to undo some. I'd suggest transferring from the 401(k) to the traditional IRA first and then convert, just bring aware of the prorata taxation that will be due.\"" }, { "docid": "272789", "title": "", "text": "For reporting purposes, most IRA firms prefer that you roll the 401(k) funds into a Rollover or Traditional IRA and then convert to the ROTH from there. The mid-air conversions (401(k) directly into a ROTH) can get tricky when you go to do your taxes the following year if the 1099 form from the releasing custodian and the 5498 form from the accepting custodian have different numbers due to the conversion amount and taxes withheld if any." }, { "docid": "481793", "title": "", "text": "I moved from contributing 10% to maxing as my salary rose over the course of three years after graduation. Because of my raises, my monthly take home still increased, so it was a pretty painless way to increase my 401(k) contribution and also avoid lifestyle inflation. That said, I would not do it if you have any credit card debt, school loans, or an auto loan. Pay that off first. Then work on maxing the 401(k). Personally I rate owning a home behind that, but that's partially because I'm in an area where the rent ratios are barely on the side of buying, so I don't find buying to be a pressing matter. One thing to investigate is if your company offers a Roth 401(k) option. It's a nice option where you can go Roth without worrying about income limits. My personal experience does not include a Roth IRA because when I still qualified for one I didn't know much about them, and now that I know about them I have the happy issue of not qualifying." }, { "docid": "45053", "title": "", "text": "\"To answer, I'm going to make a few assumptions. First, the ideal scenario for a pre-tax 401(k) is the deposit goes in at a 25% tax rate (i.e. the employee is in that bracket) but withdrawn at 15%. This may be true for many, but not all. It's to illustrate a point. The SPY (S&P 500 index ETF) has a cost of .09% per year. If your 401(k) fees are anywhere near 1% per year total, over 10 years you've paid nearly 10% in fees, vs less than 1% for the ETF. Above, I suggest the ideal is that the 401(k) saves you 10% on your taxes, but if you pay 10% over the decade, the benefit is completely negated. I can add to the above that funds outside the retirement accounts give off dividends which are tax favored, and if you were to sell ETFs held over a year, they receive favorable cap-gains rates. The \"\"deposit to get the matching funds\"\" should always be good advice, it would take many years of high fees to destroy that. But even that seemingly reasonable 1% fee can make any other deposits a bad approach. Keep in mind, when retired you will have a zero bracket (in 2011, the combined standard deduction and exemption) adding to $9500, as well as a 10% bracket (the next $8500), so having some pretax money to take advantage of those brackets will help. Last, the average person changes jobs now and then. The ability to transfer the funds from the (bad) 401(k) to an IRA where you can control the investments is an option I'd not ignore in the analysis. I arbitrarily picked 1% to illustrate my thoughts. The same math will show a long time employee will get hurt by even .5%/yr if enough time passes. What are the fees in your 401(k)? Edit - Study of 401(k) fees - put out by the Dept of Labor. Unfortunately, it's over 10 years old, but it speaks to my point. Back then, even a 2000 participant plan with $60M in assets had 110 basis points (this is 1.1%) in fees on average. Whatever the distribution is, those above this average shouldn't even participate in their plans (except for matching) and those on the other side should look at their expenses. As Radix07 points out below, yes, for those just shy of retirement, the fee has less impact, and of course, they have a better idea if they will retire in a lower bracket. Those who have some catching up to do, may benefit despite the fees.\"" }, { "docid": "144109", "title": "", "text": "\"Yes, it can be done. See \"\"Scenario 4\"\" at Isolating 401(k) basis - Fairmark.com. Though that article is primarily about getting after-tax 401(k) money into a Roth IRA, Scenario 4 applies to the scenario you are asking about. At a high level you do exactly what you say -- transfer the pre-tax money from your trad IRAs to a 401(k) (btw, a solo 401(k) will work for this also -- doesn't have to be your employer's -- but then you need to be eligible to set up a solo 401(k)). This is allowed because qualified plans can't accept after after-tax traditional IRA money, so the transfer overrides the usual pro rata rules and \"\"strains\"\" the basis out and leaves it in the trad IRA. However, there's a mismatch between the intent of Congress (as indicated by the Joint Committee on Taxation report on the law) and the actual text of the law as detailed in the Fairmark article which while it doesn't stop you from doing this adds a couple of hoops to jump through if you want to be in total compliance with the law.\"" }, { "docid": "551545", "title": "", "text": "401(k)'s can be rolled over into IRAs. You can roll all of your former company 401(k)'s into a single IRA, managed by whatever company you like. Many employers will not let you transfer money out of your 401(k) while you're still a current employee, though, so you may be stuck with the 401(k) used by your current company until you leave. You'll have to check with your 401(k) administrator to be sure. You won't incur any taxes as long as you execute the rollovers properly. The best way to do it is to coordinate the transfer directly between your old 401(k) and your new IRA, so the check is never sent directly to you." }, { "docid": "590711", "title": "", "text": "\"As Mhoran answered, typical match, but some have no match at all, so not bad. The loan provision means you can borrow up to $50k or 50% of your balance, whichever is less. 5 year payback for any loan, but a 10 year payback for a home purchase. I am on the side of \"\"don't do it\"\" but finance is personal, and in some situations it does make sense. The elephant in this room is the expenses within the 401(k). Simply put, a high enough expense will wipe out any benefit from tax deferral. If you are in this situation, I recommend depositing to the match, but not a cent more. Last, do they offer a Roth 401(k) option? There's a high probability you will never be in as low a tax bracket as the next few years, now's the time to focus on the Roth deposits, if not in the 401(k), then in an IRA.\"" }, { "docid": "228694", "title": "", "text": "\"This is the infographic from the Fidelity. It exemplifies what's wrong with the financial industry, and the sad state of innumeracy that we are in. To be clear, Fidelity treats the 401(k) correctly, although the assumption that the withdrawals are all at a marginal 28% is a poor one. The Roth side, they assume the $5000 goes in at a zero tax rate. This is nonsense, as Elaine can't deposit $5000, she has to pay tax first, no? She'd deposit $3600, and would have the identical $27,404 at withdrawal time. And this is pure nonsense - \"\"Let’s look at the numbers another way. Tom takes the $1,400 he saved in taxes from his $5,000 pretax contributions, and invests that money in a taxable brokerage account. That could boost his total at age 75 to $35,445.\"\" The $1400 saved is in his 401(k) already, there's no extra $1400. $5000 went in pretax. Let me go one more step, and explain what I think Joe meant in his comment below - tax table first - At retirement, say a couple has exactly $168,850 of income. With the $20K in standard deduction and exemptions, they are right at the top of the 25% bracket. And have a federal tax bill of $28,925. Overall, an effective rate of 17%. Of course this is a blend from 0%-25%, and I maintain that if some money could have gone in post tax while in the 10%/15% brackets, that would be great, but in the end, if it all skims off at 25%, and comes out at an effective 17%, that's not too bad. The article is incorrect. Misleading. And offends any of us that have any respect for numbers. And the fact that the article claim that \"\"87% found this helpful\"\" just makes me... sad. I've said it elsewhere, and will repeat, there are not just two points in time. The ability to convert Traditional 401(k) to Roth 401(k), and if in IRAs, not just convert, but also recharacterize, opens up other possibilities. It's worth a bit of attention and ongoing paperwork to minimize your lifetime tax bill. Time makes no difference. There is no \"\"crossover point\"\" as with other financial decisions. For this illustration, the results are identical regardless of time. By the way, in today's dollars, it would take $4M pretax to produce an annual withdrawal of $160K. This number is about top 2-3%. The 90%ers need not worry about saving their way to a higher tax bracket.\"" }, { "docid": "152096", "title": "", "text": "The simplest answer is that you can convert the IRA to a Roth, and since it was already taxed, pay no tax on conversion. If, in your hypothetical situation, you happen to have an IRA already in place, you are subject to pro-rata rules on conversions, e.g. your balance is total $40K, $10K 'not deducted', a conversion is 75% taxed, convert $20K and the tax is on $15K of that money. But, there also might be a time when you are able to transfer IRA money into a 401(k), effectively removing the pretax deposits, and leaving just post tax money for a free conversion." }, { "docid": "94496", "title": "", "text": "First of all, there are some differences between the retirement accounts that you mentioned regarding taxes. Traditional IRA and 401(k) accounts allow you to make pre-tax contributions, giving you an immediate tax deduction when you contribute. Roth IRA, Roth 401(k) are funded with after tax money, and a non-retirement account is, of course, also funded with after tax money. So if you are looking for the immediate tax deduction, this is a point in favor of the retirement accounts. Roth IRA & Roth 401(k) accounts allow the investment to grow tax-free, which means that the growth is not taxed, even when taking the investment out at retirement. With Traditional IRA and 401(k) accounts, you need to pay tax on the gains realized in the account when you withdraw the money, just as you do with a non-retirement account. This is a point in favor of the Roth retirement accounts. To answer your question about capital gains, yes, it is true that you do not have a capital gain until an investment is sold. So, discounting the contribution tax deductions of the retirement accounts, if you only bought individual stocks that never paid a dividend, and never sold them until retirement, you are correct that it really wouldn't matter if you had it in a regular brokerage account or in a traditional IRA. However, even people dedicated to buy-and-hold rarely actually buy only individual stocks and hold them for 30 years. There are several different circumstances that will generally happen in the time between now and when you want to withdraw the money in retirement that would be taxable events if you are not in a retirement account: If you sell an investment and buy a different one, the gains would be taxable. If you want to rebalance your holdings, this also involves selling a portion of your investments. For example, if you want to maintain an 80% stock/20% bond ratio, and your stock values have gone up to 90%, you might want to sell some stock and buy bonds. Or if you are getting closer to retirement, you might decide to go with a higher percentage of bonds. This would trigger capital gains. Inside a mutual fund, anytime the management sells investments inside the fund and realizes capital gains, these gains are passed on to the investors, and are taxable. (This happens more often with managed funds than index funds, but still happens occasionally with index funds.) Dividends earned by the investments are taxable. Any of these events in a non-retirement account would trigger taxes that need to be paid immediately, even if you don't withdraw a cent from your account." }, { "docid": "69774", "title": "", "text": "\"I am failing to see why would a person get an IRA, instead of just putting the same amount of money into a mutual fund (like Vanguard) or something like that. Well, this isn't a meaningful distinction. The mutual fund may or may not be in an IRA. Similarly, the mutual fund may or may not be in a 401(k), however. So I'm going to treat your question as if it's \"\"why would a person get a mutual fund (like Vanguard) or something like that in an IRA, instead of just putting the same amount of money into the same mutual fund in a 401(k).\"\" Same mutual fund, same amount of money, narrowing your question to the difference between the two types of accounts, as stated in your question's title. Others have answered that to the extent that you really have no choice other than \"\"pick which type of account to use for a given bundle of money\"\", other than nobody having mentioned the employer match. Even if there were no other difference at all in tax treatment, it's pretty typical that 401(k) contributions will be matched by free money from the employer. No IRA can compete with that. But, that's not the only choice either: Many of us contribute to both the 401(k) and the IRA. Why? Because we can. I'm not suggesting that just-anybody can, but, if you max out the employer matching in the 401(k), or if you max out the tax-advantaged contribution limit in the 401(k), and you still have more money that you want to save in a tax-advantaged retirement account this year, you can do so. The IRA is available, it's not \"\"instead-of\"\" the 401(k).\"" } ]

[ { "docid": "159936", "title": "", "text": "\"The statistic you cited comes from the Federal Reserve Board's Survey of Consumer Finances, a survey that they do every three years, most recently in 2013. This was reported in the September 2014 issue of the Federal Reserve Bulletin. They list the percentage of Americans with any type of debt as 74.5 in 2013, down slightly from 74.9 in 2010. The Bulletin also has a table with a breakdown of the types of debt that people have, and primary residence mortgages are at the top of the list. So the answer is yes, the 75% statistic includes Americans with home mortgages.* The bigger question is, are you really \"\"in debt\"\" if you have a home mortgage? The answer to that is also yes. When you take out a mortgage, you really do own the house. You decide who lives there, you decide what changes you are going to make to it, and you are responsible for the upkeep. But the mortgage debt you have is secured by the house. This means that if you refuse to pay, the bank is allowed to take possession of the house. They don't even get the \"\"whole\"\" house, though; they will sell it to recoup their losses, and give you back whatever equity you had in the house after the loan is satisfied. Is it good debt? Many people think that if you are borrowing money to purchase an appreciating asset, the debt is acceptable. With this definition, a car loan is bad, credit card debt is very bad, and a home mortgage might be okay. Even Dave Ramsey, radio host and champion of the debt-free lifestyle, is not opposed to home mortgages. Home mortgages allow people to purchase a home that they would otherwise be unable to afford. * Interestingly, according to the bulletin appendix, credit card balances were only included as debt for the survey purposes if there was a balance after the most recent bill was paid, not including purchases made after the bill. So people that do not carry a balance on their credit card were not considered \"\"in debt\"\" in this statistic.\"" } ]

[ { "docid": "279229", "title": "", "text": "The financial reasons, beyond simply owning your home outright, are: You're no longer paying interest. Yes, the interest is tax-deductible in the U.S. (though not in Canada), but the tax savings is a percentage of a percentage; if you paid, say, $8000 in interest last year, at the 25% marginal rate you effectively save $2000 off your taxes. But, if you paid off your home and had that $8000 in your pocket, you'd pay the $2000 in taxes but you'd have $6000 left over. Which is the better deal? In Canada, the decision gets even easier; you pay taxes on the interest money either way, so you're either spending the $8000 in interest, lost forever as cost of capital, or on other things. Whatever you're earning is going into your own pocket, not the bank's. Similar to the interest, but also including principal, a home you own outright is a mortgage payment you don't have to make. You can now use that money, principal and interest, for other things. Whether these advantages outweigh those of anything else you could do with a few hundred grand depends primarily on the rate of return. If you got in at the bottom of the mortgage crisis (which is pretty much right now) and got a rate in the 3-4% range, with no MIP or other payment on top, then almost anything you can do with the amount you'd need to pay off a mortgage principal would get you a better rate of return. However, you'll need some market savvy to avoid risks. In most cases when someone has pretty much any debt and a big wad of cash they're considering how to spend, I usually recommend paying off the debt, because that is, in effect, a risk-free way to increase the net rate of return on your total wealth and income. Balancing debt with investments always carries with it the risk that the investment will fail, leaving you stuck with the debt. Paying the debt on the other hand will guarantee that you don't have to pay interest on that outstanding amount anymore, so it's no longer offsetting whatever gains you are making in the market on your savings or future investments." }, { "docid": "423628", "title": "", "text": "A: Rollover the cash from the previous account into the new one a low-cost IRA like Vanguard. This, and only this. Because your mortgage is, less than 4%, while your retirement plan will earn 7% over the long term. I have no 'retirement' plans because Because you're 28. and essentially will be happy working until I die Unless circumstances change. but as far as I see it this is not such a bad deal because it is like paying taxes on income. (Principal says I will lose up to 30%) You're ignoring the 10% early withdrawal penalty. I am wise with my money for the most part Then don't piss away $3,000 just for a temporary feel good. I earn a high salary in a tech job. As a result of being under 20%, I am paying mortgage insurance of about $300/mo. So -- after building up an Emergency Fund -- throw as much as possible of your high salary against your mortgage to get rid of the PMI." }, { "docid": "886", "title": "", "text": "I believe this argument is most often used when considering which debts to pay back first, or when there are other options available such as investment options, building up an emergency fund, or saving for a large purchase. In that case, it's simply justifying making minimum payments and paying more over the life of the loan in exchange for larger liquidity in the present. Unfortunately, when it comes to choosing between which debts to pay (e.g. My mom pays more than the minimum on her car because she can't deduct auto loan interest, despite her mortgage carrying a higher interest rate), it's only beneficial if the tax savings offsets the interest savings difference. The formula for that is: tax bracket > (1 - (target loan interest rate / mortgage interest rate)) That said, most people don't think in the long term, either by natural shortsightedness, or by necessity (need to have an emergency fund)." }, { "docid": "95778", "title": "", "text": "\"The expression \"\"in debt\"\" when talking about a person's financial affairs means that the sum of debit balances on all accounts exceeds the sum of credit balances on all accounts. A mortgage account is not excluded from that. This definition also does not consider whether any of the debt is secured, or ownership of assets (shares, property, chattels, etc). So, someone with a mortgage of one million dollars for a home that is worth two million is in debt by one million dollars, until they they sell the home (for that amount) and pay down the mortgage. That means \"\"in debt\"\" is not necessarily a statement about net worth.\"" }, { "docid": "479050", "title": "", "text": "The hard and fast rule is to pay off high interest loans first, but each individual's situation is different so there are some things to consider. Student loan interest is tax deductible up to $2,500. Will your student loan interest exceed $2,500 for the year? If so I would try to pay down the student loan first to bring down the total interest for the year so that you get as much interest back as possible on your tax return. Also, it may be beneficial to pay off the car first to close that account so that you are only left with the 1 loan. Once you have the car loan payment out of the way you can dedicate that amount to paying off the student loan. I'm in almost the same situation as you. I currently have a mortgage and car payment. In 6 months my grace period will be over, and my student loan payments will start. I have $100k in student loan debt. So I will have a $1,100 mortgage payment, $1,100 student loan payment, and $700 car payment (car loan is 0%). I don't want to have 3 loans active so I will pay off my car loan in a 2-3 months to get that out of the way. Then I will pay down my student loan by paying $700 extra every month." }, { "docid": "319773", "title": "", "text": "I have heard that it is better for your credit score to pay them down over time. Will it make much of a difference? I have never heard that, however, the financial institutions (who are charging you an amount of interest which was at one time in the not so distant past classified and punishable in state criminal codes) really enjoy you thinking that way. You are clearly capable of doing the math yourself. While I don't know the exact numbers, I am totally confident that you will find in about 5 or 10 minutes (if that long) that eliminating debt of any kind in your life will pay an immediate return that beats the great majority of other investments in terms of risk/reward. After the immediate financial return, there is a quieter, subtler, and even greater long term benefit. Basic principle: Highest Rates First Perhaps this decision could be considered slightly less important than deciding not to smoke during your youth; but I would put it as a close second. You are already in a position where you can see the damage that your prior decisions (about financial debt) have produced. Run the clock back to the time in your life when you were debt free. Now, pay off that debt with the big check, and start from zero. Now, turn on your psychic powers and predict the same amount of time, in the future, with the same amount of money (don't even try to adjust for inflation; just use flat dollars) WITHOUT losing the money which you have given to the financial institutions during this previous part of your life. Do you now see why the financial institutions want you to think about slowly paying them off instead of waking up tomorrow without owing them anything ?" }, { "docid": "536262", "title": "", "text": "\"littleadv's first comment - check the note - is really the answer. But your issue is twofold - Every mortgage I've had (over 10 in my lifetime) allows early principal payments. The extra principal can only be applied at the same time as the regular payment. Think of it this way - only at that moment is there no interest owed. If a week later you try to pay toward only principal, the system will not handle it. Pretty simple - extra principal with the payment due. In fact, any mortgage I've had that offered a monthly bill or coupon book will have that very line \"\"extra principal.\"\" By coincidence, I just did this for a mortgage on my rental. I make these payments through my bank's billpay service. I noted the extra principal in the 'notes' section of the virtual check. But again, the note will explicitly state if there's an issue with prepayments of principal. The larger issue is that your friend wishes to treat the mortgage like a bi-weekly. The bank expects the full amount as a payment and likely, has no obligation to accept anything less than the full amount. Given my first comment above here is the plan for your friend to do 99% of what she wishes: Tell her, there's nothing magic about bi-weekly, it's a budget-clever way to send the money, but over a year, it's simply paying 108% of the normal payment. If she wants to burn the mortgage faster, tell her to add what she wishes every month, even $10, it all adds up. Final note - There are two schools of thought to either extreme, (a) pay the mortgage off as fast as you can, no debt is the goal and (b) the mortgage is the lowest rate you'll ever have on borrowed money, pay it as slow as you can, and invest any extra money. I accept and respect both views. For your friend, and first group, I'm compelled to add - Be sure to deposit to your retirement account's matched funds to gain the entire match. $1 can pay toward your 6% mortgage or be doubled on deposit to $2 in your 401(k), if available. And pay off all high interest debt first. This should stand to reason, but I've seen people keep their 18% card debt while prepaying their mortgage.\"" }, { "docid": "565428", "title": "", "text": "\"Debts do not inherit to the children. You are absolutely not liable for your parent's debt, in any way whatsoever. ** Collection agents will lie about this; tricking you is their job, and your job is to tell them Heck no, do I look like an idiot? When a person dies, all their personal assets (and debts) go to a fictitious entity called the Estate. This is a holder for the person's assets until they can be dispositioned finally. The estate is managed by a living person, sometimes a company (law firm), called an Executor. Similar to a corporation which is shutting down business, the Executor's job is to act on behalf of the Estate, and in the Estate's best interest (not his own). For instance he can't decide, in his capacity as executor, to give all the estate's money to himself. He has to loyally and selflessly follow state law and any living-trust or wills that may be in place. This role is not for everyone. You can't just decide \"\"la la la, I'm going to live in their house now\"\", that is squatting. The house is an asset and someone inherited that, as dictated by will, trust or state law. That has to be worked out legally. Once they inherit the house, you have to negotiate with them about living there. If you want to live there now, negotiate to rent the house from the estate. This is an efficient way to funnel money into the estate for what I discuss later.** The Estate has assets, and it has debts. Some debts extinguish on the death of the natural person, e.g. student loans, depending on the contract and state law. Did you know corporations are considered a \"\"person\"\"? (that's what Citizens United was all about.) So are estates - both are fictitious persons. The executor can act like a person in that sense. If you have unsecured debt, how can a creditor motivate you to pay? They can annoy and harass you. They can burn your credit rating. Or they can sue you and try to take your assets - but suing is also expensive for them. This is not widely understood, but anyone at any time can go to their creditors and say \"\"Hey creditor, I'm not gonna pay you $10,000. Tough buffaloes. You can sue me, good luck with that. Or, I'll make you a deal. I'll offer you $2000 to settle this debt. What say you? And you'll get one of two answers. Either \"\"OK\"\" or \"\"Nice try, let's try $7000.\"\" If the latter, you start into the cycle of haggling, \"\"3000.\"\" \"\"6000.\"\" \"\"4000.\"\" \"\"5000. \"\"Split the difference, $4500.\"\" \"\"OK.\"\" This is always a one-time, lump sum, one-shot payoff, never partial payments. Creditors will try to convince you to make partial payments. Don't do it. Anyone can do that at any time. Why don't living people do this every day? How about an Estate? Estates are fictitious persons, they don't have a \"\"morality\"\", they have a fiduciary duty. Do they plan on borrowing any more money? Nope. Their credit rating is already 0. They owe no loyalty to USBank. Actually, the executor's fiduciary duty is to get the most possible money for the assets, and settle the debts for the least. So I argue it's unethical to fail to haggle down this debt. If an executor is \"\"not a haggler\"\" or has a moral issue with shortchanging creditors, he is shortchanging the heirs, and he can be sued for that personally - because he has a fiduciary duty to the heirs, not Chase Bank. Like I say, the job is not for everyone. The estate should also make sure to check the paperwork for any other way to escape the debt: does it extinguish on death? Is the debt time-barred? Can they really prove it's valid? Etc. It's not personal, it's business. The estate should not make monthly payments (no credit rating to protect) and should not pay one dime to a creditor except for a one-shot final settlement. Is it secured debt? Let them take the asset. (unless an heir really wants it). When a person dies with a lot of unsecured debt, it's often the case that they don't have a lot of cash lying around. The estate must sell off assets to raise the cash to settle with the creditors. Now here's where things get ugly with the house. ** The estate should try to raise money any other way, but it may have to sell the house to pay the creditors. For the people who would otherwise inherit the house, it may be in their best interest to pay off that debt. Check with lawyers in your area, but it may also be possible for the estate to take a mortgage on the house, use the mortgage cash to pay off the estate's debts (still haggle!), and then bequeath the house-and-mortgage to the heirs. The mortgage lender would have to be on-board with all of this. Then, the heirs would owe the mortgage. Good chance it would be a small mortgage on a big equity, e.g. a $20,000 mortgage on a $100,000 house. Banks love those.\"" }, { "docid": "474837", "title": "", "text": "I'm not an attorney, nor am I a licensed tax adviser. I suggest you talk to these two types of professionals. From my limited knowledge, without proper documentation/organization, I can't see how the IRS/State will not consider this as a rent payment. The mortgage responsibility is of the person signing the mortgage contract, and you're under no obligation to pay that person anything. Had you not lived at the property, you might argue that it was a gift (although I'm not sure if it would stand), but since you do live in the property - it is quite obviously a rent payment. Putting your name on the deed may mitigate this slightly but I'm not sure how much - since you're still not obligated to pay the mortgage. However this is probably moot since it is unlikely for a bank to give a mortgage on a property to person A when it is also owned by a person B, without that person B being side to the mortgage contract." }, { "docid": "30311", "title": "", "text": "\"You're in good shape as long as your income stays. Your only variable-rate debt now is your private student loan. I think you'd be wise to pay that down first, and you sense that already. Worst-case, in the event of a bankruptcy, student loans usually cannot be discharged, so that isn't a way out. Once that loan is gone, apply what you were paying to your other student loan to knock that out. You might investigate refinancing your home (to another 30-year fixed). You may be able to shave a half-percent off if your credit is stellar. Given the size of the mortgage, this could be several thousand out of pocket, so consider that when figuring out potential payback time. Consider using any \"\"free time\"\" to starting up a side business (I'm assuming you both have day jobs but that may not be a correct assumption). Start with what you know well. You and your wife are experts in something, and have passion about something. Go with that. Use the extra income from that to either pay down your debts faster, or just reinvest in the business so that you can offset the income on your taxes. Again, you're in good shape. Just do what you can to protect and grow your income streams.\"" }, { "docid": "467166", "title": "", "text": "The principal and interest are fixed, no matter how much money you throw at them. This is not correct. If I pay an extra $1000 in principal this month, then my mortgage balance is decreased. So slightly less interest accrues before my next payment. That means my next payment will be slightly more toward principal and slightly less toward interest than it would have been if I hadn't made an extra principal payment. This means that my principal will eventually drop to zero earlier than it would have if I had not made the extra payment, and I will end up making fewer total payments than I would have without the extra principal payments. Of course, the effect is even stronger if I make regular extra payments rather than a single one. Like paying off any debt, you can consider this payment essentially a risk free investment paying whatever is the interest rate on that debt. You know that by making this payment, you reduce your interest payments over the coming years by the interest rate on that amount. Edit: In comments you said, you will pay your mortgage off earlier but you won't drop the amount required to pay each month. Look at a mortgage amortization table to see this. This isn't because of the amortization table, it's because of the contract terms between you and the lender. After you make an extra principal payment, a new amortization schedule has to be calculated one way or another. It would be possible to re-calculate a new reduced monthly payment keeping the number of payments remaining fixed. Or you can calculate a new repayment schedule keeping the total monthly payment fixed and reducing the number of payments. It happens the banks prefer to do the 2nd of these rather than the first, so that's the terms they offer when lending. Perhaps someone more knowledgeable can comment on why they prefer that. In any case, by reducing your principal you improve your personal balance sheet and build equity in the mortgaged property so that, for example, if you sell you'll keep more of the proceeds and use less to pay off your loan." }, { "docid": "437879", "title": "", "text": "\"First, I would recommend getting rid of this ridiculous debt, or remember this day and this answer, \"\"you will be living this way for many years to come and maybe worse, no/not enough retirement\"\". Hold off on any retirement savings right now so that the money can be used to crush this debt. Without knowing all of your specifics (health insurance deductions, etc.) and without any retirement contribution, given $190,000 you should probably be taking home around $12,000 per month total. Assuming a $2,000 mortgage payment (30 year term), that is $10,000 left per month. If you were serious about paying this off, you could easily live off of $3,000 per month (probably less) and have $7,000 left to throw at the student loan debt. This assumes that you haven't financed automobiles, especially expensive ones or have other significant debt payments. That's around 3 years until the entire $300,000 is paid! I have personally used and endorse the snowball method (pay off smallest to largest regardless of interest rate), though I did adjust it slightly to pay off some debts first that had a very high monthly payment so that I would then have this large payment to throw at the next debt. After the debt is gone, you now have the extra $7,000 per month (probably more if you get raises, bonuses etc.) to enjoy and start saving for retirement and kid's college. You may have 20-25 years to save for retirement; at $4,000 per month that's $1 million in just savings, not including the growth (with moderate growth this could easily double or more). You'll also have about 14 years to save for college for this one kid; at $1,500 per month that's $250,000 (not including investment growth). This is probably overkill for one kid, so adjust accordingly. Then there's at least $1,500 per month left to pay off the mortgage in less than half the time of the original term! So in this scenario, conservatively you might have: Obviously I don't know your financials or circumstances, so build a good budget and play with the numbers. If you sacrifice for a short time you'll be way better off, trust me from experience. As a side note: Assuming the loan debt is 50/50 you and your husband, you made a good investment and he made a poor one. Unless he is a public defender or charity attorney, why is he making $60,000 when you are both attorneys and both have huge student loan debt? If it were me, I would consider a job change. At least until the debt was cleaned up. If he can make $100,000 to $130,000 or more, then your debt may be gone in under 2 years! Then he can go back to the charity gig.\"" }, { "docid": "529312", "title": "", "text": "\"The basic optimization rule on distributing windfalls toward debt is to pay off the highest interest rate debt first putting any extra money into that debt while making minimum payments to the other creditors. If the 5k in \"\"other debt\"\" is credit card debt it is virtually certain to be the highest interest rate debt. Pay it off immediately. Don't wait for the next statement. Once you are paying on credit cards there is no grace period and the sooner you pay it the less interest you will accrue. Second, keep 10k for emergencies but pretend you don't have it. Keep your spending as close as possible to what it is now. Check the interest rate on the auto loan v student loans. If the auto loan is materially higher pay it off, then pay the remaining 20k toward the student loans. Added this comment about credit with a view towards the OP's future: Something to consider for the longer term is getting your credit situation set up so that should you want to buy a new car or a home a few years down the road you will be paying the lowest possible interest. You can jump start your credit by taking out one or two secured credit cards from one of the banks that will, in a few years, unsecure your account, return your deposit, and leave no trace you ever opened a secured account. That's the route I took with Citi and Wells Fargo. While over spending on credit cards can be tempting, they are, with a solid payment history, the single most important positive attribute on a credit report and impact FICO scores more than other type of credit or debt. So make an absolute practice of only using them for things you would buy anyway and always, always, pay each monthly bill in full. This one thing will make it far easier to find a good rental, buy a car on the best terms, or get a mortgage at good rates. And remember: Credit is not equal to debt. Maximize the former and minimize the latter.\"" }, { "docid": "353186", "title": "", "text": "Should I use the money to pay off student loans and future grad expenses for me? Yes. The main drawback to student loans is that they cannot be gotten rid of except by paying them off (other than extreme circumstances such as death or complete disability). A mortgage, car loan, or other collateralized loans can be dealt with by selling the underlying collateral. Credit card loans can be discharged in bankruptcy. Stop borrowing for college, pay for it in cash, then decide what to do with the rest. Make sure you have a comfortable amount saved for emergencies in a completely liquid account (not a retirement account or CDs), and continue to pay off with the rest. You might also consider putting some away for your kids' college, so I want to get my older son into a private middle school for 2 years. They have a hardy endowment and may offer us a decent need based scholarship if we look worthy on paper I have a hard time getting behind this plan with a 238K mortgage. If you want to apply for scholarships that's great - but don't finagle your finances to look like you're poor when you have a quarter-million-dollar house. If you want to save some for private school then do that out of what you have. Otherwise either rearrange your priorities so you can afford it or private school might not be in the cards for you. That said- while it was a blessing to be able to pay off the second mortgage and credit cards, your hesitancy to pay off the student loans makes me wonder if you will start living within your means after the loans are paid off. My concern is that your current spending levels that got you in this much debt in the first place will put you back in debt in the near future, and you won't have another inheritance to help pull you out. I know that wasn't your question, but I felt like I needed to add that to my answer as well." }, { "docid": "299176", "title": "", "text": "The key thing to consider in a question like this is, What return am I getting on my investment versus what interest am I paying on the loan? If the investment returns more than what you're paying on the loan, than it makes sense to keep the investment and pay off the loan with other income. If the investment returns less, than it makes sense to cash it out to pay off the loan. One complicating factor is taxes. In the case of an IRA, you're not paying taxes on the profits. You do pay a tax penalty for an early withdrawal. Those are both factors that tend to make keeping the money in the IRA more desirable. And of course, if the choice is between keeping your investment and defaulting on the loan, you probably want to close out the investment. I don't know what return you're getting on your IRA, but it's probably more than 6.8%. I'd have to check but I think my retirement funds got over 20% last year. If you're not getting 6.8%, you might want to investigate switching to another investment fund. I'm sure there's a lot I don't know about your situation, but I'd think that keeping the IRA would be a better plan. If you can't add to it for some time well you get these debts paid off, well, that's how it is." }, { "docid": "11791", "title": "", "text": "I would apply extra cash left over at the end of the month as follows, in order of priority: Realize, though, that this is my take on priority. My experience has been that a liquidity crisis is much more stressful than having a mortgage or other debt -- illiquid wealth is almost useless when you need cash. So if you still have strong feelings about retiring that debt after considering the liquidity issue, go ahead and swap #3 and #4 above. Make plans to pay off the mortgage over the next 10 years. Find a mortgage payoff calculator and make extra monthly payments that keep you on a 10 year schedule. I'd strongly suggest making sure your retirement savings are on track, though. Time is on your side here, and your required monthly contribution will be low now while you're still in your 20s." }, { "docid": "274870", "title": "", "text": "\"Mortgage is a (secured) debt, a combination of a promissory note, and a security interest providing the mortage holder a secured interest in the property. Yes, you are \"\"in debt\"\". But that depends upon whether you define the term \"\"in debt\"\" as a debt appearing on the balance sheet, or the net of assets - liabilities is less than zero, whether you have a \"\"debt\"\" expense on the income statement (budget), or whether the net of income - expenses is less than zero. One person might look at their budget, find the (monthly) mortgage payment listed, and judge that they have a debt payment, and thus are \"\"in debt\"\". Or they might look at their expenses, find they exceed their income, and judge that they are \"\"in debt\"\". Another person might look at their balance sheet, compare assets to liabilities, and only say they were \"\"in debt\"\" when their liabilities exceeded their assets. Some people view mortgage debt as \"\"good debt\"\", as they view certain debts as \"\"good\"\" and others as \"\"bad\"\". Trust me, having a high mortgage payment (higher 30% of your net income) is hard, and over 40% is bad. Consider you balance sheet and your income statement. On your balance sheet, the house appears on the \"\"asset\"\" side with an (estimated) value, while the \"\"mortgage\"\" (really, the promissory note part of the mortgage) appears on the \"\"liability\"\" side. On your income statement, your house does not appear on the income side, but the mortgage (promissory note) payment appears on the expense side. So, you clearly have both a \"\"liability\"\" with a clearly-defined value and an \"\"expense\"\" with a clearly-defined payment. But do you have an \"\"asset\"\"? According to an accountant, you have an \"\"asset\"\" and a \"\"liability\"\". But you do not have a business asset that is producing revenue (income), nor do you have a business asset that can be amortized and expensed to reduce taxable income. When we think about an asset, does the word have the connotation of some thing with value, something that produces income? Well, by that measure, a house only provides income when we rent it out, and only has value when we consider selling it. As millions of families discovered during the housing (price) collapse, when the market price of your \"\"asset\"\" falls substantially, your personal financial status can fall negative and you can be \"\"broke\"\".\"" }, { "docid": "123013", "title": "", "text": "On paper the whole 6 months living costs sounds (and is) great, but in real life there are a lot of things that you need to consider. For example, my first car was constantly falling apart and was an SUV that got 16MPG. I have to travel for work (about 300 miles per week) so getting a sedan that averages close to 40MPG saves me more in gas and maintenance than the monthly payment for the new car costs. When our apartment lease was up, the new monthly rent would have been $1685 per month, we got a 30 year mortgage with a monthly payment of $1372. So buying a house actually let us put aside more each month. We have just under 3 months of living expenses set aside (1 month in liquid assets, 2 months in a brokerage account) and I worry about it. I wish we had a better buffer, but in our case the house and car made more sense as an early investment compared to just squirreling away all our savings. Also, do you have any debt? Paying off debt (student loans, credit card debt, etc.) should often take top priority. Have some rainy day funds, of course, but pay down debts, and then create a personal financial plan for what works best in your situation. That would be my suggestion." }, { "docid": "180295", "title": "", "text": "I am going to give advice that is slightly differently based on my own experiences. First, regarding the financing, I have found that the dealers do in fact have access to the best interest rates, but only after negotiating with a better financing offer from a bank. When I bought my current car, the dealer was offering somewhere around 3.3%, which I knew was way above the current industry standard and I knew I had good credit. So, like I did with my previous car and my wife's car, I went to local and national banks, came back with deals around 2.5 or 2.6%. When I told the dealer, they were able to offer 2.19%. So it's ok to go with the dealer's financing, just never take them at face value. Whatever they offer you and no matter how much they insist it's the best deal, never believe it! They can do better! With my first car, I had little credit history, similar to your situation, and interest rates were much higher then, like 6 - 8%. The dealer offered me 10%. I almost walked out the door laughing. I went to my own bank and they offered me 8%, which was still high, but better than 10%. Suddenly, the dealer could do 7.5% with a 0.25% discount if I auto-pay through my checking account. Down-payment wise, there is nothing wrong with a 35% down payment. When I purchased my current car, I put 50% down. All else being equal, the more cash down, the better off you'll be. The only issue is to weigh that down payment and interest rate against the cost of other debts you may have. If you have a 7% student loan and the car loan is only 3%, you're better off paying the minimum on the car and using your cash to pay down your student loan. Unless your student loan balance is significantly more than the 8k you need to finance (like a 20k or 30k loan). Also remember that a car is a depreciating asset. I pay off cars as fast as I can. They are terrible debt to have. A home can rise in value, offsetting a mortgage. Your education keeps you employed and employable and will certainly not make you dumber, so that is a win. But a car? You pay $15k for a car that will be worth $14k the next day and $10k a year from now. It's easy to get underwater with a car loan if the down payment is small, interest rate high, and the car loses value quickly. To make sure I answer your questions: Do you guys think it's a good idea to put that much down on the car? If you can afford it and it will not interfere with repayment of much higher interest debts, then yes. A car loan is a major liability, so if you can minimize the debt, you'll be better off. What interest rate is reasonable based on my credit score? I am not a banker, loan officer, or dealer, so I cannot answer this with much credibility. But given today's market, 2.5 - 4% seems reasonable. Do you think I'll get approved? Probably, but only one way to find out!" } ]

[ { "docid": "108302", "title": "", "text": "\"I think you're thinking that \"\"in debt\"\" doesn't just mean \"\"owes a debt\"\" but somehow means \"\"owes more debt in total than the assets\"\". That condition, owing money without offsetting assets, is \"\"having a negative net worth\"\". If you have a mortgage then you have a debt and you are in debt. You may have a positive net worth, if you have equity in the house and your car and such like, and have cash in the bank. You may have a negative net worth if you owe more than you own. But either way you are technically in debt. Knowing that, it's not surprising that 75% of Americans are in debt. It's surprising that 25% are not. They have no credit card, no car loan, no mortgage, no line of credit, no student loans. Is it because they've paid all that off? Or because they are deadly poor and own nothing and can't be lent anything? You can't just say it's bad to have debt. It's bad to have too much debt, to have a negative net worth, to be in the habit of borrowing to finance a lifestyle you can't actually afford, and so on. But it's perfectly normal to have a debt or two. That's how our system mostly works.\"" } ]

[ { "docid": "188015", "title": "", "text": "This is a case where human nature and arithmetic lead to different results. Depending on the your income, the effective interest rate on the mortgage is probably right around 2.5%. So purely by arithmetic, the absolute cheapest way to go is to put the $11k to the bigger car loan, then pay off the mortgage, then the smaller car loan. The Debt Snowball is more effective however, because it works better for people. Progress is demonstrated quickly, which maintains (and often enhances) motivation to continue. I can say as a case in point, having tried both methods, that if does indeed work. So, I am with you ... pay off the car loan first, and roll that payment into the bigger car loan. If you add no extra dollars, you should get the small loan paid off in 6 to 8 months and the bigger car loan in another 16 to 18 months. It sounds like from your message that you have another $1500 or so a month. If that is the case ... small loan paid off in two months, bigger loan paid off in another year. If you stick with the Ramsay program, you then build an emergency fund and start investing. Good luck!" }, { "docid": "11791", "title": "", "text": "I would apply extra cash left over at the end of the month as follows, in order of priority: Realize, though, that this is my take on priority. My experience has been that a liquidity crisis is much more stressful than having a mortgage or other debt -- illiquid wealth is almost useless when you need cash. So if you still have strong feelings about retiring that debt after considering the liquidity issue, go ahead and swap #3 and #4 above. Make plans to pay off the mortgage over the next 10 years. Find a mortgage payoff calculator and make extra monthly payments that keep you on a 10 year schedule. I'd strongly suggest making sure your retirement savings are on track, though. Time is on your side here, and your required monthly contribution will be low now while you're still in your 20s." }, { "docid": "479050", "title": "", "text": "The hard and fast rule is to pay off high interest loans first, but each individual's situation is different so there are some things to consider. Student loan interest is tax deductible up to $2,500. Will your student loan interest exceed $2,500 for the year? If so I would try to pay down the student loan first to bring down the total interest for the year so that you get as much interest back as possible on your tax return. Also, it may be beneficial to pay off the car first to close that account so that you are only left with the 1 loan. Once you have the car loan payment out of the way you can dedicate that amount to paying off the student loan. I'm in almost the same situation as you. I currently have a mortgage and car payment. In 6 months my grace period will be over, and my student loan payments will start. I have $100k in student loan debt. So I will have a $1,100 mortgage payment, $1,100 student loan payment, and $700 car payment (car loan is 0%). I don't want to have 3 loans active so I will pay off my car loan in a 2-3 months to get that out of the way. Then I will pay down my student loan by paying $700 extra every month." }, { "docid": "597679", "title": "", "text": "\"Leverage here is referring to \"\"financial leverage\"\". This is the practice of \"\"levering\"\" [ie increasing, like the use of a lever to increase the amount of weight you can lift] the value of your investment by taking on debt. For example: if you have 100k in cash, you can buy a 100k rental property. Assume the property makes 10k a year, net of expenses [10%]. Now assume the bank will also give you a 100k mortgage, at 3%. You could take the mortgage, plus your cash, and buy a 200k rental property. This would earn you 20k from the rental property, less 3k a year in interest costs [the 3%]. Your total income would be 17k, and since you only used 100k of your own money, your rate of return would now be 17% instead of 10%. This is financial leveraging. Note that this increases your risk, because if your investment fails not only have you lost your own money, you now need to pay back the bank. \"\"Beta riders\"\" appears to be negative commentary on investors who use Beta to calculate the value of a particular stock, without regard to other quantitative factors. Therefore \"\"leveraged beta riders\"\" are those who take on additional risk [by taking on debt to invest], and invest in a manner that the author would perhaps considered \"\"blindly\"\" following Beta. However, I have never seen this term before, and it appears tainted by the author's views on Quants. A \"\"quant process driven discipline\"\" appears to be positive commentary on investors who use detailed quantitative analysis to develop rules which they rigorously follow to invest. I have never seen this exact phrasing before, and like the above, it appears tainted by the author's views on Quants. I am not providing any opinion on whether \"\"beta riding\"\" or \"\"quant processes\"\" are good or bad things; this is just my attempt to interpret the quote as you presented it. Note that I did not go to the article to get context, so perhaps something else in the article could skew the language to mean something other than what I have presented.\"" }, { "docid": "596111", "title": "", "text": "\"If I were you, I would rent. Wait to buy a home. Here is why: When you say that renting is equal in cost to a 30-year mortgage, you are failing to consider several aspects. See this recent answer for a list of things that need to be considered when comparing buying and renting. You have no down payment. Between the two of you, you have $14,000, but this money is needed for both your emergency fund and your fiancée's schooling. In your words: \"\"we can’t reeaallllly afford a home.\"\" A home is a big financial commitment. If you buy a home before you are financially ready, it will be continuous trouble. If you need a cosigner, you aren't ready to buy a home. I would absolutely advise whoever you are thinking about cosigning for you not to do so. It puts them legally on the hook for a house that you can't yet afford. You aren't married yet. You should never buy something as big as a home with someone you aren't married to; there are just too many things that can go wrong. (See comments for more explanation.) Wait until you are married before you buy. Your income is low right now. And that is okay for now; you've been able to avoid the credit card debt that so many people fall into. However, you do have student loans to pay, and taking on a huge new debt right now would be potentially disastrous for you. Your family income will eventually increase when your fiancée gets her degree and gets a job, and at that time, you will be in a much better situation to consider buying a house. You need to move \"\"ASAP.\"\" Buying a house when you are in a hurry is a generally a bad idea. When you look for a home, you need to take some time looking so you aren't rushed into a bad deal that you will regret. Even if you decide you want to buy, you should first find a place to rent; then you can take your time finding the right house. To answer your question about escrow: When you own a house, two of the required expenses that you will have besides the mortgage payment are property taxes and homeowner's insurance. These are large payments that are only due once a year. The bank holding the mortgage wants to make sure that they get paid. So to help you budget for these expenses and to ensure that these expenses are paid, the bank will add these to your monthly mortgage payment, and set them aside in a savings account (called an escrow account). Then when these bills come due once a year, they are paid for out of the escrow account.\"" }, { "docid": "559745", "title": "", "text": "\"@fredsbend, Hope this helps! \"\"I understand that a reverse mortgage can be paid out in two ways: A lump sum and monthly payments. I figure that if you take the lump sum, eventually, the bank wants you to start paying it back.\"\" Answer: Actually, there are 3 payout options, or 4 if you consider a combination payout as another one. There's a lump sum, a line of credit, or the monthly payout, or a combination. \"\"I figure that if you take the monthly payments, eventually, the bank stops paying out and wants you to pay it back. In both situations, interest accrues and this is how the bank makes money off of the deal\"\". Answer: The only time the monthly payments would stop would be if the borrower defaults on the lenders' terms or they no longer live at home. You are right though, and interest does accrue on whichever payment is decided on. I'm not sure how the lender makes money, probably by the interest, but I know borrowers are protected against high rates and owing more than your house. Here's an article I found that goes over the protections more in detail: https://www.americanadvisorsgroup.com/news/6-consumer-protections-reverse-mortgage-loan-borrowers. \"\"But what determines when you have to begin paying back the reverse mortgage? Some sources online seem to say that it's based only on if you die or would like to sell/move. That can't be right in all situations, because you could end up with a massive debt on a property more than its value.\"\" Answer: There are a lot of protections or regulations in place to protect anyone who takes out a reverse mortgage. One being, you can't owe MORE than your house is valued at during the time of repayment, a reverse mortgage is a non-recourse loan. In the instance that your house is less than you owe, you either sell the home and the proceeds are used to pay the loan and you keep the rest OR if you owe more than the house proceeds of the home go to the lender. Either way, you're not left paying for a \"\"mortgage\"\" without the house. In the case the parent, grandparent passes, then the heirs would have a choice of either paying back the reverse mortgage in payments, OR they can sell the house, heirs are protected during this as well to make sure they're not left with major debt in case of anything. Is there a formula to figure out when the bank stops the monthly payments and then wants it back? **Answer:**The amount becomes due if loan terms are not met, but the lender will discuss the options if it comes to that. Is there a different formula for when the lump sum would have to be paid back?\"\" Answer: Each payout option has the same terms and the same pay back terms. As long as terms are met, the lender can't ask for early repayment.\"" }, { "docid": "134063", "title": "", "text": "Plus you already have money in a 529 plan that is meant for college expenses (and cannot be used to pay student loans) - use that money for what it's for. I disagree with @DStanley, as a current college student I would say to take out loans. Most of the time I am against loans though. So WHY? There are very few times you will receive loans at 0% interest (for 4+ years). You have money saved currently, but you do not know what the future entails. If you expend all of your money on tuition and your car breaks down, what do you do? You can not used student loans to pay for your broken car.Student loans, as long as they are subsidized, serve as a wonderful risk buffer. You can pay off your loans with summer internships and retain the initial cash you had for additional activities that make college enjoyable, i.e - Fraternity/ Sorority, clubs, dinners, and social nights. Another benefit to taking these loans would assist in building credit, with an additional caveat being to get a credit card. In general, debt/loans/credit cards are non-beneficial. But, you have to establish debt to allow others to know that you can repay. Establishing this credit rating earlier than later is critical to cheaper interest rates on (say) a mortgage. You have made it through, you have watched your expenses, and you can pay your debt. Finish It. If you do it right, you will not have loans when you graduate, you will have a stunning credit rating, and you will have enjoyed college to its fullest potential (remember, you only really go through it once.) But this is contingent on: Good luck, EDIT: I did not realize the implication of this penalty which made me edit the line above to include: (to the extent you can per year) For now, student loan repayment isn't considered a qualified educational expense. This means that if you withdraw from a 529 to pay your debts, you may be subject to income taxes and penalties.Source Furthermore, Currently, taxpayers who use 529 plan money for anything other than qualified education expenses are subject to a 10% federal tax penalty. Source My advice with this new knowledge, save your 529 if you plan on continuing higher education at a more prestigious school. If you do not, use it later in your undergraduate years." }, { "docid": "536262", "title": "", "text": "\"littleadv's first comment - check the note - is really the answer. But your issue is twofold - Every mortgage I've had (over 10 in my lifetime) allows early principal payments. The extra principal can only be applied at the same time as the regular payment. Think of it this way - only at that moment is there no interest owed. If a week later you try to pay toward only principal, the system will not handle it. Pretty simple - extra principal with the payment due. In fact, any mortgage I've had that offered a monthly bill or coupon book will have that very line \"\"extra principal.\"\" By coincidence, I just did this for a mortgage on my rental. I make these payments through my bank's billpay service. I noted the extra principal in the 'notes' section of the virtual check. But again, the note will explicitly state if there's an issue with prepayments of principal. The larger issue is that your friend wishes to treat the mortgage like a bi-weekly. The bank expects the full amount as a payment and likely, has no obligation to accept anything less than the full amount. Given my first comment above here is the plan for your friend to do 99% of what she wishes: Tell her, there's nothing magic about bi-weekly, it's a budget-clever way to send the money, but over a year, it's simply paying 108% of the normal payment. If she wants to burn the mortgage faster, tell her to add what she wishes every month, even $10, it all adds up. Final note - There are two schools of thought to either extreme, (a) pay the mortgage off as fast as you can, no debt is the goal and (b) the mortgage is the lowest rate you'll ever have on borrowed money, pay it as slow as you can, and invest any extra money. I accept and respect both views. For your friend, and first group, I'm compelled to add - Be sure to deposit to your retirement account's matched funds to gain the entire match. $1 can pay toward your 6% mortgage or be doubled on deposit to $2 in your 401(k), if available. And pay off all high interest debt first. This should stand to reason, but I've seen people keep their 18% card debt while prepaying their mortgage.\"" }, { "docid": "556219", "title": "", "text": "While I agree with keshlam@ that the gym had no reason (or right) to ask for your SSN, giving false SSN to obtain credit or services (including gym membership) may be considered a crime. While courts disagree on whether you can be charged with identity theft in this scenario, you may very well be charged with fraud, and if State lines are crossed (which in case of store cards is likely the case) - it would be a Federal felony charge. Other than criminal persecution, obviously not paying your debt will affect your credit report. Since you provided false identity information, the negative report may not be matched to you right away, but it may eventually. In the case the lender discovers later that you materially misrepresented information on your mortgage application - they may call on your loan and either demand repayment in full at once or foreclose on you. Also, material misrepresentation of facts on loan application is also a criminal fraud. Again, if State lines are crossed (which in most cases, with mortgages they are), it becomes a Federal wire fraud case. On mortgage application you're required to disclose your debts, and that includes lines of credits (store cards and credit cards are the same thing) and unpaid debts (like your gym membership, if its in collection)." }, { "docid": "220032", "title": "", "text": "So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence." }, { "docid": "40312", "title": "", "text": "I would personally look at consolidating your debt at a lower interest rate by refinancing your mortgage. I would leave any retirement funds alone unless it was absolutely necessary to touch it with no other avenues available. However, once you have consolidated your debt into the mortgage I would pay more than the minimum amount so that you don't take too long to pay it off. I would put about 50% of the freed-up cash flow back into the repayments, that way you will be paying more debt off quicker and you will have additional cash flow to help your monthly budget. Another good point would be to go through your monthly budget to see if there is any expenses you could reduce or eliminate." }, { "docid": "257644", "title": "", "text": "I notice that a lot happened four months ago. You were denied credit twice. Your income went up from $20k to $60k. I'm wondering if you were denied credit based on your $20k income. Since you couldn't provide proof of your income I wonder if they used $0 for your income. Debt to income ratio is one significant factor included in the credit score calculation. You may not have a lot of debt, but if you don't have any income even a few hundred dollars on a credit card would throw your debt to income ratio into a panic. I'm assuming that your change from $20k to $60k income involved a change of jobs. Perhaps now you can provide proof of income. You would certainly need to do that before being approved for a mortgage. Well that's my two cents about what may (or may not) have gone wrong last time. As for what to do next I would agree that the most helpful thing you could do is check your credit score and fix any errors that might negatively impact your credit score. (There might also be non-errors that need addressed such as open credit accounts that you thought you had closed.) When building credit history, time is on your side. If you just go on living your life and paying your bills promptly, your credit will slowly climb to an acceptable level. Unfortunately in the time frame you mentioned (~1 year) there isn't really enough time to build it significantly. You bring up a valid point about credit applications reducing your credit score. Of course, that effect is somewhat minimal and temporary (2 yrs according to the thread linked to above). But again 1 year is not enough to recover. If you're considering applying for additional credit as a means to improve your credit score it may be too late to reap the benefits before your mortgage application. Of course if you could pay off any debts, that would help your debt to income ratio. But it would also reduce any house down payment you could save up and thereby increase the amount of your mortgage. Better just save those pennies (or preferably Washingtons and Benjamins) to put toward a down payment." }, { "docid": "315158", "title": "", "text": "I maintain a strong bias against taking on any debt, of any sort, and I feel it serves me well. This is not to say I would never take on a debt, like a car loan, mortgage, or educational loan. It's just that there is a built in bias against it. The reason that bias is good is that, in my view, taking on (unforced) debt presents the following problems: Therefore, the standing no-debt bias. That said, if there is a very compelling reason to take on unforced debt, it could override the bias. The best example I know is that my mother bought a house with a mortgage when she had the cash, because CDs at that time were paying far more than the mortgage interest rate (this was back around the 80s when CDs hit an absurd 18%!). To not take on that debt would be refusing free money! But that's a rare case. Today, CDs and other guaranteed interest streams are at historical lows, so this factor is really not in play." }, { "docid": "299176", "title": "", "text": "The key thing to consider in a question like this is, What return am I getting on my investment versus what interest am I paying on the loan? If the investment returns more than what you're paying on the loan, than it makes sense to keep the investment and pay off the loan with other income. If the investment returns less, than it makes sense to cash it out to pay off the loan. One complicating factor is taxes. In the case of an IRA, you're not paying taxes on the profits. You do pay a tax penalty for an early withdrawal. Those are both factors that tend to make keeping the money in the IRA more desirable. And of course, if the choice is between keeping your investment and defaulting on the loan, you probably want to close out the investment. I don't know what return you're getting on your IRA, but it's probably more than 6.8%. I'd have to check but I think my retirement funds got over 20% last year. If you're not getting 6.8%, you might want to investigate switching to another investment fund. I'm sure there's a lot I don't know about your situation, but I'd think that keeping the IRA would be a better plan. If you can't add to it for some time well you get these debts paid off, well, that's how it is." }, { "docid": "581697", "title": "", "text": "\"First to actually answer the question \"\"how long at these rates/payments?\"\"- These is nothing magic or nefarious about what the bank is doing. They add accrued interest and take your payment off the new total. I'd make higher payments to the 8.75% debt until it's gone, $100/mo extra and be done. The first debt, if you bump it to $50 will be paid in 147 months, at $75/mo, 92 months. Everything you pay above the minimum goes right to the principal balance and gets you closer to paying it off. The debt snowball is not the ideal way to pay off your debt. Say I have one 24% credit card the bank was nice enough to give me a $20,000 line of credit on. I also have 20 cards each with $1000 in credit, all at 6%. The snowball dictates that the smallest debt be paid first, so while I pay the minimum on the 24% card, the 6% cards get paid off one by one, but I'm supposed to feel good about the process, as I reduce the number of cards every few months. The correct way to line up debt is to pay off the (tax adjusted) highest rate first, as an extra $100 to the 24% card saves you $2/mo vs 50 cents/mo for the 6% cards. I wrote an article discussing the Debt Snowball which links to a calculator where you can see the difference in methods. I note that if the difference from lowest to highest rate is small, the Snowball method will only cost you a small amount more. If, by coincidence, the balances are close, the difference will also be small. The above aside, it's the rest of your situation that will tell you the right path for you. For example, a matched 401(k) deposit should take priority over most debt repayment. The $11,000 might be better conserved for a house downpayment as that $66/mo is student loan and won't count as the housing debt, rather \"\"other debt\"\" and part of the higher ratio when qualifying for the mortgage. If you already have taken this into account, by all means, pay off the 8.75% debt asap, then start paying off the 3% faster. Keep in mind, this is likely the lowest rate debt one can have and once paid off, you can't withdraw it again. So it's important to consider the big picture first. (Are you depositing to a retirement account? Is it a 401(k) and are you getting any matching from the company?)\"" }, { "docid": "159936", "title": "", "text": "\"The statistic you cited comes from the Federal Reserve Board's Survey of Consumer Finances, a survey that they do every three years, most recently in 2013. This was reported in the September 2014 issue of the Federal Reserve Bulletin. They list the percentage of Americans with any type of debt as 74.5 in 2013, down slightly from 74.9 in 2010. The Bulletin also has a table with a breakdown of the types of debt that people have, and primary residence mortgages are at the top of the list. So the answer is yes, the 75% statistic includes Americans with home mortgages.* The bigger question is, are you really \"\"in debt\"\" if you have a home mortgage? The answer to that is also yes. When you take out a mortgage, you really do own the house. You decide who lives there, you decide what changes you are going to make to it, and you are responsible for the upkeep. But the mortgage debt you have is secured by the house. This means that if you refuse to pay, the bank is allowed to take possession of the house. They don't even get the \"\"whole\"\" house, though; they will sell it to recoup their losses, and give you back whatever equity you had in the house after the loan is satisfied. Is it good debt? Many people think that if you are borrowing money to purchase an appreciating asset, the debt is acceptable. With this definition, a car loan is bad, credit card debt is very bad, and a home mortgage might be okay. Even Dave Ramsey, radio host and champion of the debt-free lifestyle, is not opposed to home mortgages. Home mortgages allow people to purchase a home that they would otherwise be unable to afford. * Interestingly, according to the bulletin appendix, credit card balances were only included as debt for the survey purposes if there was a balance after the most recent bill was paid, not including purchases made after the bill. So people that do not carry a balance on their credit card were not considered \"\"in debt\"\" in this statistic.\"" }, { "docid": "290434", "title": "", "text": "\"If by \"\"investment\"\" you mean something that pays you money that you can spend, then no. But if you view \"\"investment\"\" as something that improves your balance sheet / net worth by reducing debt and reducing how much money you're throwing away in interest each month, then the answer is definitely yes, paying down debt is a good investment to improve your overall financial condition. However, your home mortgage might not be the first place to start looking for pay-downs to save money. Credit cards typically have much higher interest rates than mortgages, so you would save more money by working on eliminating your credit card debt first. I believe Suze Orman said something like: If you found an investment that paid you 25% interest, would you take it? Of course you would! Paying down high interest debt reduces the amount of interest you have to pay next month. Your same amount of income will be able to go farther, do more because you'll be paying less in interest. Pay off your credit card debt first (and keep it off), then pay down your mortgage. A few hundred dollars in extra principal paid in the first few years of a 30 year mortgage can remove years of interest payments from the mortgage term. Whether you plan to keep your home for decades or you plan to move in 10 years, having less debt puts you in a stronger financial position.\"" }, { "docid": "150607", "title": "", "text": "\"In England, currently and for most of the last fifty years, the standard length of the mortgage term is 25 years. A mortgage can be either a capital-and-interest mortgage, or interest-only. In the former, you pay off part of the original loan each month, plus the interest on the amount borrowed. In the latter, you only pay interest each month, and the original amount borrowed never reduces: you pay premiums on a life insurance policy, additionally, which is designed to pay off the original sum borrowed at the end of the 25 years. No one in England thinks that a 25 year loan has any drawbacks. The main point to appreciate is that the longer the period of the loan, the less you need to pay each month, because you are repaying the original loan - the capital - over a longer period of time. Thus, in principle, a mortgage is easier to repay the longer the term is, because the monthly payment is less. If you have a 12 year mortgage, you must pay back the original amount borrowed in half the time: the capital element in your payment each month is double what it would be if repaid over 25 years - i.e. if repaid over a period twice as long. Only if the borrower is less than 25 years away from retirement is a 25 years mortgage seen as a bad idea, by the lender - because, obviously, the lender relies on the borrower having an income sufficient to keep up the repayments. There are many complicating factors: an interest-only mortgage, where you pay back the original amount borrowed from the maturity proceeds from a life policy, puts you in a situation where the original capital sum never reduces, so you always pay the same each month. But on a straight repayment mortgage, the traditional type, you pay less and less each month as time goes by, for you are reducing the capital outstanding each month, and because that is reducing so is the amount of interest you pay each month (as this is calculated on the outstanding capital amount). There are snags to avoid, if you can. For example, some mortgage contracts impose penalties if the borrower repays more than the due monthly amount, hence in effect the borrower faces a - possibly heavy - financial penalty for early repayment of the loan. But not all mortgages include such a condition. If house prices are on a rising trend, the market value of the property will soon be worth considerably more than the amount owed on the mortgage, especially where the mortgage debt is reducing every month, as each repayment is made; so the bank or other lender will not be worried about lending over a 25 year term, because if it forecloses there should normally be no difficulty in recovering the outstanding amount from the sale proceeds. If the borrower falls behind on the repayments, or house prices fall, he may soon get into difficulties; but this could happen to anyone - it is not a particular problem of a 25 year term. Where a default in repayment occurs, the bank will often suggest lengthening the mortgage term, from 25 years to 30 years, in order to reduce the amount of the monthly repayment, as a means of helping the borrower. So longer terms than 25 years are in fact a positive solution in a case of financial difficulty. Of course, the longer the term the greater the amount that the borrower will pay in total. But the longer the term, the less he will pay each month - at least on a traditional capital-and-interest mortgage. So it is a question of balancing those two competing factors. As long as you do not have a mortgage condition that penalises the borrower for paying off the loan more quickly, it can make sense to have as long a term as possible, to begin with, which can be shortened by increasing the monthly repayment as fast as circumstances allow. In England, we used to have tax relief on mortgage payments, and so in times gone by it did make sense to let the mortgage run the full 25 years, in order to get maximum tax relief - the rules were very complex, but it tended to maximise your tax relief by paying over the longest possible period. But today, with no income tax relief given on mortgage payments, that is no longer a consideration in this country. The practical position is, of course, that you can never tell how long it might take you to pay off a mortgage. It is a gamble as to whether your income will rise in future years, and whether your job will last until your mortgage is paid off. You might fall ill, you might be made redundant, you might be demoted. Mortgage interest rates might rise. It is never possible to say that you \"\"can\"\" pay off the loan in a short time. If you hope to do so, the only matters that actually fall within your control are the conditions of the mortgage contract itself. Get a good lawyer. Tell him to watch out for early-redemption penalties. Get a good financial adviser. Tell him to work out what you will need to pay in additional premiums on your life policy if you are considering taking an interest-only mortgage. Try to fix your mortgage rate in the first few years, for as long as possible, so that in your most vulnerable period, with the greatest amount owing, you are insulated against unexpected interest rate fluctuations. Only the initial conditions can be controlled, so it might be prudent to take as long a term as possible, even though a prudent borrower will leave himself room to reduce that term, and a prudent lender will leave room to extend it, in case of unpredictable changes in the financial circumstances. In England, most lenders are, in my experience, reluctant to grant mortgages for less than 25 years. That is simply a policy. Rightly or wrongly, the borrower usually has no choice about the length of the mortgbage term. Hence, in the UK it can be difficult to find a choice of interest rates based on differing mortgage terms. I am aware that the situation in the USA is rather different, but if I personally were faced with the choice I would be uncomfortable about taking on a short term mortgage, because of the factors I have outlined above.\"" }, { "docid": "63698", "title": "", "text": "I agree with you that you need to consolidate this debt using a loan. It may be hard to find a bank or credit organization that will give you an unsecured personal loan for that much money. I know of one, called Lending Club (Disclaimer - I'm an investor on this platform. Not trying to advertise, it's just the only place I know of off the top of my head) that facilitates loans like this, but instead of a bank financing the loan, the loan is split up accross hundreds of investors who each contribute a small amount (such as $25). They have rates anywhere between 5-30%, based on your credit profile(s), and I believe they have some loan amounts that go up to the area that you're discussing. Regarding buying the house - The best thing you can do when trying to buy a house is to save up a 20% downpayment, if at all possible. Below this amount, you may be asked to pay for 'PMI' - Private Mortgage Insurance. This is a charge that doesn't go away for quite a while (until you've paid them 20% of the appraised value of the home), where you pay a premium because you didn't have the 20% downpayment for the house. I would suggest you try to eliminate your credit card debt as soon as possible, and would recommend the same for your father. Getting your utilization down and reconsolidating the large debts with a loan will help to reduce interest charges and get you a reasonable, fixed payment. Whether you decide to pay off your own balances using your savings account is up to you; if it were me, personally, I'd do so immediately rather than trying to pay it off over time. But if you lose money to taxes by withdrawing the money from your 'tax free savings account', it may not be a beneficial situation. Treat debt, especially credit card debt, like an emergency at all times, and you'll find yourself in a better place as a result. Credit card debt and balances are and should be temporary, and their rates and fees are structured that way. If, for any reason, you expect that a credit card's balance will remain for an extended period of time, you may want to consider whether it would be advantageous for you to consolidate the debt into a loan, instead." } ]

[ { "docid": "366448", "title": "", "text": "Yes. A mortgage is a kind of debt. Someone lends you money to buy your house, and you owe them the money, so you have debt." } ]

[ { "docid": "275410", "title": "", "text": "\"TARP was ~$475 billion of loans to institutions. Loans that are to be paid back, with interest (albeit very low interest). A significant percentage of the TARP loans have been (or will be) paid back. So, the final price tag of the TARP was only a few $billion (pretty low considering the scale of the program). There is ~$10 trillion in mortgage debt outstanding. That's a much higher price tag than TARP. Secondly, paying off the mortgages = no repayment to the government as there was with TARP. The initial price tag of your plan would be ~$10 trillion, instead of a few $billion. Furthermore how does a government with >$15 trillion in debt already come up with an extra ~$10 trillion to pay off people's mortgages? Should the government go deeper into debt? Print more money and trigger inflation? (Note: Some people like to talk about a \"\"secret bailout\"\" by the Fed, implying that the true cost of TARP was much higher than claimed by the government. The \"\"secret bailout\"\" was a series of short-term low/no interest loans to banks. Because they were loans, which were paid back, my point still stands.) Some other issues to consider: Remember that the principal balance of your mortgage is only a small portion of your payments to the bank. Over 30 years, you pay a lot of $$$ in interest to the bank (that's how banks make a profit). Banks are expecting that revenue, and it is factored into their financial projections. If those revenue streams suddenly disappeared, I expect it would majorly screw the up the financial industry. Many people bought houses during the real estate boom, when housing prices were inflated far beyond the \"\"real\"\" value of the house. Is it right to overpay for these houses? This rewards the banks for accepting the inflated value during the appraisal process. (Loan modification forces banks to accept the \"\"real\"\" value of the house.) The financial crisis was triggered by people buying houses they could not afford. Should they be rewarded with a free house for making poor financial decisions?\"" }, { "docid": "27268", "title": "", "text": "First of all, realize that buying a home isn't really an investment. It is cheaper to rent. In recent years, people were able to sell their houses for astronomical profits, but that won't be happening much in the future. Additionally, there are many hidden costs of owning a home. Regarding the mortgage interest tax deduction, don't buy a house just to get this. It is like spending $1 to get back some amount of money less than $1. So just keep that in mind. Are you debt free? If not, pay off your other debts before buying a home. I follow the advice of Dave Ramsey, so I'll echo it here. Make sure you have an emergency fund and no debt. At this point I think you are ready to buy a house. When you do, put down as much as you can; above 20% if possible. Then get a 15 year fixed rate mortgage. At this point, start saving for your kid's college (if you believe in that) and paying down your home. Having no mortgage is a dream many people never have. I cannot wait until I have no mortgage. Don't get suckered into getting a high priced loan. Pay down as much of the price of the house as possible up front. This gives you flexibility too. What if you need to sell quickly? Well, you will have equity from the get-go, so this will be much easier. Good luck with your purchase!" }, { "docid": "886", "title": "", "text": "I believe this argument is most often used when considering which debts to pay back first, or when there are other options available such as investment options, building up an emergency fund, or saving for a large purchase. In that case, it's simply justifying making minimum payments and paying more over the life of the loan in exchange for larger liquidity in the present. Unfortunately, when it comes to choosing between which debts to pay (e.g. My mom pays more than the minimum on her car because she can't deduct auto loan interest, despite her mortgage carrying a higher interest rate), it's only beneficial if the tax savings offsets the interest savings difference. The formula for that is: tax bracket > (1 - (target loan interest rate / mortgage interest rate)) That said, most people don't think in the long term, either by natural shortsightedness, or by necessity (need to have an emergency fund)." }, { "docid": "315158", "title": "", "text": "I maintain a strong bias against taking on any debt, of any sort, and I feel it serves me well. This is not to say I would never take on a debt, like a car loan, mortgage, or educational loan. It's just that there is a built in bias against it. The reason that bias is good is that, in my view, taking on (unforced) debt presents the following problems: Therefore, the standing no-debt bias. That said, if there is a very compelling reason to take on unforced debt, it could override the bias. The best example I know is that my mother bought a house with a mortgage when she had the cash, because CDs at that time were paying far more than the mortgage interest rate (this was back around the 80s when CDs hit an absurd 18%!). To not take on that debt would be refusing free money! But that's a rare case. Today, CDs and other guaranteed interest streams are at historical lows, so this factor is really not in play." }, { "docid": "597679", "title": "", "text": "\"Leverage here is referring to \"\"financial leverage\"\". This is the practice of \"\"levering\"\" [ie increasing, like the use of a lever to increase the amount of weight you can lift] the value of your investment by taking on debt. For example: if you have 100k in cash, you can buy a 100k rental property. Assume the property makes 10k a year, net of expenses [10%]. Now assume the bank will also give you a 100k mortgage, at 3%. You could take the mortgage, plus your cash, and buy a 200k rental property. This would earn you 20k from the rental property, less 3k a year in interest costs [the 3%]. Your total income would be 17k, and since you only used 100k of your own money, your rate of return would now be 17% instead of 10%. This is financial leveraging. Note that this increases your risk, because if your investment fails not only have you lost your own money, you now need to pay back the bank. \"\"Beta riders\"\" appears to be negative commentary on investors who use Beta to calculate the value of a particular stock, without regard to other quantitative factors. Therefore \"\"leveraged beta riders\"\" are those who take on additional risk [by taking on debt to invest], and invest in a manner that the author would perhaps considered \"\"blindly\"\" following Beta. However, I have never seen this term before, and it appears tainted by the author's views on Quants. A \"\"quant process driven discipline\"\" appears to be positive commentary on investors who use detailed quantitative analysis to develop rules which they rigorously follow to invest. I have never seen this exact phrasing before, and like the above, it appears tainted by the author's views on Quants. I am not providing any opinion on whether \"\"beta riding\"\" or \"\"quant processes\"\" are good or bad things; this is just my attempt to interpret the quote as you presented it. Note that I did not go to the article to get context, so perhaps something else in the article could skew the language to mean something other than what I have presented.\"" }, { "docid": "467166", "title": "", "text": "The principal and interest are fixed, no matter how much money you throw at them. This is not correct. If I pay an extra $1000 in principal this month, then my mortgage balance is decreased. So slightly less interest accrues before my next payment. That means my next payment will be slightly more toward principal and slightly less toward interest than it would have been if I hadn't made an extra principal payment. This means that my principal will eventually drop to zero earlier than it would have if I had not made the extra payment, and I will end up making fewer total payments than I would have without the extra principal payments. Of course, the effect is even stronger if I make regular extra payments rather than a single one. Like paying off any debt, you can consider this payment essentially a risk free investment paying whatever is the interest rate on that debt. You know that by making this payment, you reduce your interest payments over the coming years by the interest rate on that amount. Edit: In comments you said, you will pay your mortgage off earlier but you won't drop the amount required to pay each month. Look at a mortgage amortization table to see this. This isn't because of the amortization table, it's because of the contract terms between you and the lender. After you make an extra principal payment, a new amortization schedule has to be calculated one way or another. It would be possible to re-calculate a new reduced monthly payment keeping the number of payments remaining fixed. Or you can calculate a new repayment schedule keeping the total monthly payment fixed and reducing the number of payments. It happens the banks prefer to do the 2nd of these rather than the first, so that's the terms they offer when lending. Perhaps someone more knowledgeable can comment on why they prefer that. In any case, by reducing your principal you improve your personal balance sheet and build equity in the mortgaged property so that, for example, if you sell you'll keep more of the proceeds and use less to pay off your loan." }, { "docid": "150607", "title": "", "text": "\"In England, currently and for most of the last fifty years, the standard length of the mortgage term is 25 years. A mortgage can be either a capital-and-interest mortgage, or interest-only. In the former, you pay off part of the original loan each month, plus the interest on the amount borrowed. In the latter, you only pay interest each month, and the original amount borrowed never reduces: you pay premiums on a life insurance policy, additionally, which is designed to pay off the original sum borrowed at the end of the 25 years. No one in England thinks that a 25 year loan has any drawbacks. The main point to appreciate is that the longer the period of the loan, the less you need to pay each month, because you are repaying the original loan - the capital - over a longer period of time. Thus, in principle, a mortgage is easier to repay the longer the term is, because the monthly payment is less. If you have a 12 year mortgage, you must pay back the original amount borrowed in half the time: the capital element in your payment each month is double what it would be if repaid over 25 years - i.e. if repaid over a period twice as long. Only if the borrower is less than 25 years away from retirement is a 25 years mortgage seen as a bad idea, by the lender - because, obviously, the lender relies on the borrower having an income sufficient to keep up the repayments. There are many complicating factors: an interest-only mortgage, where you pay back the original amount borrowed from the maturity proceeds from a life policy, puts you in a situation where the original capital sum never reduces, so you always pay the same each month. But on a straight repayment mortgage, the traditional type, you pay less and less each month as time goes by, for you are reducing the capital outstanding each month, and because that is reducing so is the amount of interest you pay each month (as this is calculated on the outstanding capital amount). There are snags to avoid, if you can. For example, some mortgage contracts impose penalties if the borrower repays more than the due monthly amount, hence in effect the borrower faces a - possibly heavy - financial penalty for early repayment of the loan. But not all mortgages include such a condition. If house prices are on a rising trend, the market value of the property will soon be worth considerably more than the amount owed on the mortgage, especially where the mortgage debt is reducing every month, as each repayment is made; so the bank or other lender will not be worried about lending over a 25 year term, because if it forecloses there should normally be no difficulty in recovering the outstanding amount from the sale proceeds. If the borrower falls behind on the repayments, or house prices fall, he may soon get into difficulties; but this could happen to anyone - it is not a particular problem of a 25 year term. Where a default in repayment occurs, the bank will often suggest lengthening the mortgage term, from 25 years to 30 years, in order to reduce the amount of the monthly repayment, as a means of helping the borrower. So longer terms than 25 years are in fact a positive solution in a case of financial difficulty. Of course, the longer the term the greater the amount that the borrower will pay in total. But the longer the term, the less he will pay each month - at least on a traditional capital-and-interest mortgage. So it is a question of balancing those two competing factors. As long as you do not have a mortgage condition that penalises the borrower for paying off the loan more quickly, it can make sense to have as long a term as possible, to begin with, which can be shortened by increasing the monthly repayment as fast as circumstances allow. In England, we used to have tax relief on mortgage payments, and so in times gone by it did make sense to let the mortgage run the full 25 years, in order to get maximum tax relief - the rules were very complex, but it tended to maximise your tax relief by paying over the longest possible period. But today, with no income tax relief given on mortgage payments, that is no longer a consideration in this country. The practical position is, of course, that you can never tell how long it might take you to pay off a mortgage. It is a gamble as to whether your income will rise in future years, and whether your job will last until your mortgage is paid off. You might fall ill, you might be made redundant, you might be demoted. Mortgage interest rates might rise. It is never possible to say that you \"\"can\"\" pay off the loan in a short time. If you hope to do so, the only matters that actually fall within your control are the conditions of the mortgage contract itself. Get a good lawyer. Tell him to watch out for early-redemption penalties. Get a good financial adviser. Tell him to work out what you will need to pay in additional premiums on your life policy if you are considering taking an interest-only mortgage. Try to fix your mortgage rate in the first few years, for as long as possible, so that in your most vulnerable period, with the greatest amount owing, you are insulated against unexpected interest rate fluctuations. Only the initial conditions can be controlled, so it might be prudent to take as long a term as possible, even though a prudent borrower will leave himself room to reduce that term, and a prudent lender will leave room to extend it, in case of unpredictable changes in the financial circumstances. In England, most lenders are, in my experience, reluctant to grant mortgages for less than 25 years. That is simply a policy. Rightly or wrongly, the borrower usually has no choice about the length of the mortgbage term. Hence, in the UK it can be difficult to find a choice of interest rates based on differing mortgage terms. I am aware that the situation in the USA is rather different, but if I personally were faced with the choice I would be uncomfortable about taking on a short term mortgage, because of the factors I have outlined above.\"" }, { "docid": "57392", "title": "", "text": "But cash talks. If you can save yourself a grand or two a month in mortgage overpayment, and have the cash for 1st and last month's rent plus deposit, a job or two, etc. That crap means more than a credit score. Plus don't rent from people you can't talk to about with what is going on in your life. My personal credit has always been shit (because the morality associated with debt is complete bullshit) since my 20s and I have never had a problem renting, because I let my landlords know I am human and that paying rent on time and in full is my top bill to pay. People are beginning to realize that FICO scores are pretty meaningless in this Lesser Depression. e: prepositional indifference" }, { "docid": "333219", "title": "", "text": "\"All of the provided advice is great, but a slightly different viewpoint on debt is worth mentioning. Here are the areas that you should concentrate your efforts and the (rough) order you should proceed. Much of the following is predicated upon your having a situation where you need to get out of debt, and learn to better budget and control your spending. You may already have accomplished some of these steps, or you may prioritize differently. Many people advise prioritizing contributing to a 401(k) savings plan. But with the assumption that you need advise because you have debt trouble, you are probably paying absurd interest rates, and any savings you might have will be earning much lower rates than you are paying on consumer debt. If you are already contributing, continue the plan. But remember, you are looking for advice because your financial situation is in trouble, so you need to put out the fire (your present problem), and learn how to manage your money and plan for the future. Compose a budget, comprised of the following three areas (the exact percentages are fungible, fit them to your circumstances). Here is where planning can get fun, when you have freed yourself from debt, and you can make choices that resonate with your individual goals. Once you have \"\"put out the fire\"\" of debt, then you should do two things at the same time. As you pay off debt (and avoid further debt), you will find that saving for both independence and retirement become easier. The average American household may have $8000+ credit card debt, and at 20-30%, the interest payments are $150-200/month, and the average car payment is nearly $500/month. Eliminate debt and you will have $500-800/month that you can comfortably allocate towards retirement. But you also need to learn (educate yourself) how to invest your money to grow your money, and earn income from your savings. This is an area where many struggle, because we are taught to save, but we are not taught how to invest, choose investments wisely and carefully, and how to decide our goals. Investing needs to be addressed separately, but you need to learn how. Live in an affordable house, and pay off your mortgage. Consider that the payment on a mortgage on even a modest $200K house is over $1000/month. Combine saving the money you would have paid towards a mortgage payment with the money you would have paid towards credit card debt or a car loan. Saving becomes easy when you are freed from these large debts.\"" }, { "docid": "524018", "title": "", "text": "\"First off, the \"\"mortgage interest is tax deductible\"\" argument is a red herring. What \"\"tax deductible\"\" sounds like it means is \"\"if I pay $100 on X, I can pay $100 less on my taxes\"\". If that were true, you're still not saving any money overall, so it doesn't help you any in the immediate term, and it's actually a bad idea long-term because that mortgage interest compounds, but you don't pay compound interest on taxes. But that's not what it actually means. What it actually means is that you can deduct some percentage of that $100, (usually not all of it,) from your gross income, (not from the final amount of tax you pay,) which reduces your top-line \"\"income subject to taxation.\"\" Unless you're just barely over the line of a tax bracket, spending money on something \"\"tax deductible\"\" is rarely a net gain. Having gotten that out of the way, pay down the mortgage first. It's a very simple matter of numbers: Anything you pay on a long-term debt is money you would have paid anyway, but it eliminates interest on that payment (and all compoundings thereof) from the equation for the entire duration of the loan. So--ignoring for the moment the possibility of extreme situations like default and bank failure--you can consider it to be essentially a guaranteed, risk-free investment that will pay you dividends equal to the rate of interest on the loan, for the entire duration of the loan. The mortgage is 3.9%, presumably for 30 years. The car loan is 1.9% for a lot less than that. Not sure how long; let's just pull a number out of a hat and say \"\"5 years.\"\" If you were given the option to invest at a guaranteed 3.9% for 30 years, or a guaranteed 1.9% for 5 years, which would you choose? It's a no-brainer when you look at it that way.\"" }, { "docid": "556219", "title": "", "text": "While I agree with keshlam@ that the gym had no reason (or right) to ask for your SSN, giving false SSN to obtain credit or services (including gym membership) may be considered a crime. While courts disagree on whether you can be charged with identity theft in this scenario, you may very well be charged with fraud, and if State lines are crossed (which in case of store cards is likely the case) - it would be a Federal felony charge. Other than criminal persecution, obviously not paying your debt will affect your credit report. Since you provided false identity information, the negative report may not be matched to you right away, but it may eventually. In the case the lender discovers later that you materially misrepresented information on your mortgage application - they may call on your loan and either demand repayment in full at once or foreclose on you. Also, material misrepresentation of facts on loan application is also a criminal fraud. Again, if State lines are crossed (which in most cases, with mortgages they are), it becomes a Federal wire fraud case. On mortgage application you're required to disclose your debts, and that includes lines of credits (store cards and credit cards are the same thing) and unpaid debts (like your gym membership, if its in collection)." }, { "docid": "270844", "title": "", "text": "\"Disclaimer: I am a law student, not a lawyer, and don't claim to have a legal opinion one way or another. My answer is intended to provide a few potentially relevant examples from case law in order to make the point that you should be cautious (and seek proper advice if you think that caution is warranted). Nor am I claiming that the facts in these cases are the same as yours; merely that they highlight the flexible approach that the courts take in such cases, and the fact that this area of law is complicated. I don't think it is sensible to just assume that there is no way that your girlfriend could acquire property rights as a rent paying tenant if arranged on an informal basis with no evidence of the intention of the arrangement. One of the answers mentions a bill which is intended to give non-married partners more rights than they have presently. But the existence of that bill doesn't prove the absence of any existing law, it merely suggests a possible legal position that might exist in the future. A worst-case assumption should also be made here, since you're considering the possibility of what can go wrong. So let's say for the sake of the argument that you have a horrible break up and your girlfriend is willing to be dishonest about what the intentions were regarding the flat (e.g. will claim that she understood the arrangement to be that she would acquire ownership rights in exchange for paying two thirds of the monthly mortgage repayment). Grant v Edwards [1986] Ch 638 - Defendant had property in the name of himself and his brother. Claimant paid nothing towards the purchase price or towards mortgage payments, but paid various outgoings and expenses. The court found a constructive trust in favor of the claimant, who received a 50% beneficial interest in the property. Abbot v Abbot [2007] UKPC 53, [2008] 1 FLR 1451 - Defendant's mother gifted land to a couple with the intention that it be used as a matrimonial home. However it was only put into the defendant's name. The mortgage was paid from a joint account. The claimant was awarded a 50% share. Thompson v Hurst [2012] EWCA Civ 1752, [2014] 1 FLR 238 - Defendant was a council tenant. Later, she formed a relationship with the claimant. They subsequently decided to buy the house from the council, but it was done in the defendant's name. The defendant had paid all the rent while a tenant, and all the mortgage payments while an owner, as well as all utility bills. The claimant sometimes contributed towards the council tax and varying amounts towards general household expenses (housekeeping, children, etc.). During some periods he paid nothing at all, and at other times he did work around the house. Claimant awarded 10% ownership. Aspden v Elvy [2012] EWHC 1387 (Ch), [2012] 2 FCR 435 - The defendant purchased a property in her sole name 10 years after the couple had separated. The claimant helped her convert the property into a house. He did much of the manual work himself, lent his machinery, and contributed financially to the costs. He was awarded a 25% share. Leeds Building Society v York [2015] EWCA Civ 72, [2015] HLR 26 (p 532) - Miss York and Mr York had a dysfunctional and abusive relationship and lived together from 1976 until his death in 2009. In 1983 Mr York bought a house with a mortgage. He paid the monthly mortgage repayments and other outgoings. At varous times Miss York contributed her earnings towards household expenses, but the judge held that this did \"\"not amount to much\"\" over the 33 year period, albeit it had helped Mr York being able to afford the purchase in the first place. She also cooked all the family meals and cared for the daughter. She was awarded a 25% share. Conclusion: Don't make assumptions, consider posting a question on https://law.stackexchange.com/ , consider legal advice, and consider having a formal contract in place which states the exact intentions of the parties. It is a general principle of these kinds of cases that the parties need to have intended for the person lacking legal title to acquire a beneficial interest, and proof to the contrary should make such a claim likely to fail. Alternatively, decide that the risk is low and that it's not worth worrying about. But make a considered decision either way.\"" }, { "docid": "353186", "title": "", "text": "Should I use the money to pay off student loans and future grad expenses for me? Yes. The main drawback to student loans is that they cannot be gotten rid of except by paying them off (other than extreme circumstances such as death or complete disability). A mortgage, car loan, or other collateralized loans can be dealt with by selling the underlying collateral. Credit card loans can be discharged in bankruptcy. Stop borrowing for college, pay for it in cash, then decide what to do with the rest. Make sure you have a comfortable amount saved for emergencies in a completely liquid account (not a retirement account or CDs), and continue to pay off with the rest. You might also consider putting some away for your kids' college, so I want to get my older son into a private middle school for 2 years. They have a hardy endowment and may offer us a decent need based scholarship if we look worthy on paper I have a hard time getting behind this plan with a 238K mortgage. If you want to apply for scholarships that's great - but don't finagle your finances to look like you're poor when you have a quarter-million-dollar house. If you want to save some for private school then do that out of what you have. Otherwise either rearrange your priorities so you can afford it or private school might not be in the cards for you. That said- while it was a blessing to be able to pay off the second mortgage and credit cards, your hesitancy to pay off the student loans makes me wonder if you will start living within your means after the loans are paid off. My concern is that your current spending levels that got you in this much debt in the first place will put you back in debt in the near future, and you won't have another inheritance to help pull you out. I know that wasn't your question, but I felt like I needed to add that to my answer as well." }, { "docid": "590145", "title": "", "text": "\"Your main reason to not pay off your debts right now seems to be: Enjoy life while \"\"I am young\"\" and not miss opportunities to have fun? I think the good news is that having fun usually does not require spending a lot of money. I would propose that most of the times when we considered something fun it had more to do with who we were with than what we were actually doing. Of course there are many fun things that are expensive, but there are even more fun things that require little money at all. My suggestion to you would be to prioritize your debt in a responsible way such that you have a plan to pay it off quickly, but if something comes along that does require extra money, don't be afraid to make an adjustment. For example, you can try to put 2000€ towards your debt every month, but if some exciting adventure comes along that you really want to do and it costs 1000€ one month, you shouldn't feel like you absolutely must turn it down. That month you could put 1000€ towards debt and the other 1000€ towards the adventure. I wouldn't recommend taking an adventure every month, but I wouldn't always turn one down either. Besides, I think most of the time you can have lots of fun for free.\"" }, { "docid": "385736", "title": "", "text": "\"So, let's take a mortgage loan that allows prepayment without penalty. Say I have a 30 year mortgage and I have paid it for 15 years. By the 16th year almost all the interest on the 30 year loan has been paid to the bank This is incorrect thinking. On a 30 year loan, at year 15 about 2/3's of the total interest to be paid has been paid, and the principal is about 1/3 lower than the original loan amount. You may want to play with some amortization calculators that are freely available to see this in action. If you were to pay off the balance, at that point, you would avoid paying the remaining 1/3 of interest. Consider a 100K 30 year mortgage at 4.5% In month two the payment breaks down with $132 going to principal, and $374 going to interest. If, in month one, you had an extra $132 and directed it to principal, you would save $374 in interest. That is a great ROI and why it is wonderful to get out of debt as soon as possible. The trouble with this is of course, is that most people can barely afford the mortgage payment when it is new so lets look at the same situation in year 15. Here, $271 would go to principal, and $235 to interest. So you would have to come up with more money to save less interest. It is still a great ROI, but less dramatic. If you understand the \"\"magic\"\" of compounding interest, then you can understand loans. It is just compounding interest in reverse. It works against you.\"" }, { "docid": "596111", "title": "", "text": "\"If I were you, I would rent. Wait to buy a home. Here is why: When you say that renting is equal in cost to a 30-year mortgage, you are failing to consider several aspects. See this recent answer for a list of things that need to be considered when comparing buying and renting. You have no down payment. Between the two of you, you have $14,000, but this money is needed for both your emergency fund and your fiancée's schooling. In your words: \"\"we can’t reeaallllly afford a home.\"\" A home is a big financial commitment. If you buy a home before you are financially ready, it will be continuous trouble. If you need a cosigner, you aren't ready to buy a home. I would absolutely advise whoever you are thinking about cosigning for you not to do so. It puts them legally on the hook for a house that you can't yet afford. You aren't married yet. You should never buy something as big as a home with someone you aren't married to; there are just too many things that can go wrong. (See comments for more explanation.) Wait until you are married before you buy. Your income is low right now. And that is okay for now; you've been able to avoid the credit card debt that so many people fall into. However, you do have student loans to pay, and taking on a huge new debt right now would be potentially disastrous for you. Your family income will eventually increase when your fiancée gets her degree and gets a job, and at that time, you will be in a much better situation to consider buying a house. You need to move \"\"ASAP.\"\" Buying a house when you are in a hurry is a generally a bad idea. When you look for a home, you need to take some time looking so you aren't rushed into a bad deal that you will regret. Even if you decide you want to buy, you should first find a place to rent; then you can take your time finding the right house. To answer your question about escrow: When you own a house, two of the required expenses that you will have besides the mortgage payment are property taxes and homeowner's insurance. These are large payments that are only due once a year. The bank holding the mortgage wants to make sure that they get paid. So to help you budget for these expenses and to ensure that these expenses are paid, the bank will add these to your monthly mortgage payment, and set them aside in a savings account (called an escrow account). Then when these bills come due once a year, they are paid for out of the escrow account.\"" }, { "docid": "134063", "title": "", "text": "Plus you already have money in a 529 plan that is meant for college expenses (and cannot be used to pay student loans) - use that money for what it's for. I disagree with @DStanley, as a current college student I would say to take out loans. Most of the time I am against loans though. So WHY? There are very few times you will receive loans at 0% interest (for 4+ years). You have money saved currently, but you do not know what the future entails. If you expend all of your money on tuition and your car breaks down, what do you do? You can not used student loans to pay for your broken car.Student loans, as long as they are subsidized, serve as a wonderful risk buffer. You can pay off your loans with summer internships and retain the initial cash you had for additional activities that make college enjoyable, i.e - Fraternity/ Sorority, clubs, dinners, and social nights. Another benefit to taking these loans would assist in building credit, with an additional caveat being to get a credit card. In general, debt/loans/credit cards are non-beneficial. But, you have to establish debt to allow others to know that you can repay. Establishing this credit rating earlier than later is critical to cheaper interest rates on (say) a mortgage. You have made it through, you have watched your expenses, and you can pay your debt. Finish It. If you do it right, you will not have loans when you graduate, you will have a stunning credit rating, and you will have enjoyed college to its fullest potential (remember, you only really go through it once.) But this is contingent on: Good luck, EDIT: I did not realize the implication of this penalty which made me edit the line above to include: (to the extent you can per year) For now, student loan repayment isn't considered a qualified educational expense. This means that if you withdraw from a 529 to pay your debts, you may be subject to income taxes and penalties.Source Furthermore, Currently, taxpayers who use 529 plan money for anything other than qualified education expenses are subject to a 10% federal tax penalty. Source My advice with this new knowledge, save your 529 if you plan on continuing higher education at a more prestigious school. If you do not, use it later in your undergraduate years." }, { "docid": "37636", "title": "", "text": "Rich people use debt for various reasons. The question should not assume that billionaires don't use debt. They also pay lower interest rates on that debt because they have enough collateral that their debt is safer than a typical mortgage. Many rich people will use interest only mortgages on their primary residences so that they can keep their stock earning at higher growth rates than the mortgage interest that they are paying all while writing off a portion of that mortgage interest on their taxes. Taking an artificially low salary and receiving equity for the larger portion of compensation is also a tax strategy to limit the amount of taxes owed on that income. If paid directly in stock grants, that will count as income, but if paid in options, then the purchased stock will only be taxed at the lower capital gains rates if the stock is held for a year after the options are exercised. Every billionaire will have complicated tax avoidance strategies that will require multi-year planning for the best long-term minimization of taxes. Debt is a strategic part of that planning. Also consider that a major part of that upscale lifestyle (corporate jets, fancy meals, etc.) is on the company dime because the CEO is always on the clock. As long as he is meeting with business prospects or doing other company business, those expenses will be justified for the corporation and not attributed as income." }, { "docid": "222914", "title": "", "text": "\"I want to caveat that I am not an active investor in Australia, you most likely should seek out other investors in your market and ask them for advice/mentorship, but since you came here I can give you some generalized advice. When investing in real estate there are a two main rules of thumb to quickly determine if the property will be a good investment. The 50% rule and the 2% (or 1%) rule. The 50% rules says that in general 50% if the income from the property will go to expenses not including debt service. If you are bringing in $1000 a month 500 of that will go to utilities, taxes, repair, capital expenditures, advertising, lawn care, etc. That leave you with 500 to pay the mortgage and if anything is left that can be cash flow. As this is your first property and it is in \"\" a relatively bad neighbourhood\"\" you might consider bumping that up to 60% just to make sure you have padding. The 1 or 2% rules says that the monthly rent should be 1(or 2) percent of the purchase price in this case the home is bought at 150,000. If the rent is 1,500 a month it might be a good investment but if it rents for 3,000 a month it probably is a good investment. There are other factors to consider if a home meets the 2% rule it might be in a rough neighborhood which increases turnover which in general is the biggest expense in an investment property. If a property meets one or both of these rules you should take a closer look at it and with proper due diligence determine that it is a deal. These rules are just hard and fast guidelines to property analysis, they may need to be adapted to you market. For example these rules will not hold in most (all?) big cities.\"" } ]

[ { "docid": "187739", "title": "", "text": "Yes, a mortgage is debt. It's unique in that you have a house which should be worth far more than the mortgage. After the mortgage crisis, many found their homes under water i.e. worth less than the mortgage. The word debt is a simple noun for money owed, it carries no judgement or negative connotation except when it's used to buy short lived items with money one doesn't have. Aside from my mortgage, I get a monthly credit card bill which I pay in full. That's debt too, only it carried no interest and rewards me with 2% cash back. Many people would avoid this as it's still debt." } ]

[ { "docid": "40312", "title": "", "text": "I would personally look at consolidating your debt at a lower interest rate by refinancing your mortgage. I would leave any retirement funds alone unless it was absolutely necessary to touch it with no other avenues available. However, once you have consolidated your debt into the mortgage I would pay more than the minimum amount so that you don't take too long to pay it off. I would put about 50% of the freed-up cash flow back into the repayments, that way you will be paying more debt off quicker and you will have additional cash flow to help your monthly budget. Another good point would be to go through your monthly budget to see if there is any expenses you could reduce or eliminate." }, { "docid": "222914", "title": "", "text": "\"I want to caveat that I am not an active investor in Australia, you most likely should seek out other investors in your market and ask them for advice/mentorship, but since you came here I can give you some generalized advice. When investing in real estate there are a two main rules of thumb to quickly determine if the property will be a good investment. The 50% rule and the 2% (or 1%) rule. The 50% rules says that in general 50% if the income from the property will go to expenses not including debt service. If you are bringing in $1000 a month 500 of that will go to utilities, taxes, repair, capital expenditures, advertising, lawn care, etc. That leave you with 500 to pay the mortgage and if anything is left that can be cash flow. As this is your first property and it is in \"\" a relatively bad neighbourhood\"\" you might consider bumping that up to 60% just to make sure you have padding. The 1 or 2% rules says that the monthly rent should be 1(or 2) percent of the purchase price in this case the home is bought at 150,000. If the rent is 1,500 a month it might be a good investment but if it rents for 3,000 a month it probably is a good investment. There are other factors to consider if a home meets the 2% rule it might be in a rough neighborhood which increases turnover which in general is the biggest expense in an investment property. If a property meets one or both of these rules you should take a closer look at it and with proper due diligence determine that it is a deal. These rules are just hard and fast guidelines to property analysis, they may need to be adapted to you market. For example these rules will not hold in most (all?) big cities.\"" }, { "docid": "188015", "title": "", "text": "This is a case where human nature and arithmetic lead to different results. Depending on the your income, the effective interest rate on the mortgage is probably right around 2.5%. So purely by arithmetic, the absolute cheapest way to go is to put the $11k to the bigger car loan, then pay off the mortgage, then the smaller car loan. The Debt Snowball is more effective however, because it works better for people. Progress is demonstrated quickly, which maintains (and often enhances) motivation to continue. I can say as a case in point, having tried both methods, that if does indeed work. So, I am with you ... pay off the car loan first, and roll that payment into the bigger car loan. If you add no extra dollars, you should get the small loan paid off in 6 to 8 months and the bigger car loan in another 16 to 18 months. It sounds like from your message that you have another $1500 or so a month. If that is the case ... small loan paid off in two months, bigger loan paid off in another year. If you stick with the Ramsay program, you then build an emergency fund and start investing. Good luck!" }, { "docid": "95778", "title": "", "text": "\"The expression \"\"in debt\"\" when talking about a person's financial affairs means that the sum of debit balances on all accounts exceeds the sum of credit balances on all accounts. A mortgage account is not excluded from that. This definition also does not consider whether any of the debt is secured, or ownership of assets (shares, property, chattels, etc). So, someone with a mortgage of one million dollars for a home that is worth two million is in debt by one million dollars, until they they sell the home (for that amount) and pay down the mortgage. That means \"\"in debt\"\" is not necessarily a statement about net worth.\"" }, { "docid": "247449", "title": "", "text": "\"I'll assume you live in the US for the start of my answer - Do you maximize your retirement savings at work, at least getting your employer's match in full, if they do this. Do you have any other debt that's at a higher rate? Is your emergency account funded to your satisfaction? If you lost your job and tenant on the same day, how long before you were in trouble? The \"\"pay early\"\" question seems to hit an emotional nerve with most people. While I start with the above and then segue to \"\"would you be happy with a long term 5% return?\"\" there's one major point not to miss - money paid to either mortgage isn't liquid. The idea of owing out no money at all is great, but paying anything less than \"\"paid in full\"\" leaves you still owing that monthly payment. You can send $400K against your $500K mortgage, and still owe $3K per month until paid. And if you lose your job, you may not so easily refinance the remaining $100K to a lower payment so easily. If your goal is to continue with real estate, you don't prepay, you save cash for the next deal. Don't know if that was your intent at some point. Disclosure - my situation - Maxing out retirement accounts was my priority, then saving for college. Over the years, I had multiple refinances, each of which was a no-cost deal. The first refi saved with a lower rate. The second, was in early 2000s when back interest was so low I took a chunk of cash, paid principal down and went to a 20yr from the original 30. The kid starts college, and we target retirement in 6 years. I am paying the mortgage (now 2 years into a 10yr) to be done the month before the kid flies out. If I were younger, I'd be at the start of a new 30 yr at the recent 4.5% bottom. I think that a cost of near 3% after tax, and inflation soon to near/exceed 3% makes borrowing free, and I can invest conservatively in stocks that will have a dividend yield above this. Jane and I discussed the plan, and agree to retire mortgage free.\"" }, { "docid": "462668", "title": "", "text": "\"This is a hard question to answer. Government debt and mortgages are loosely related. Banks typically use yields on government bonds to determine mortgage interest rates. The banks must be able to get higher rates from the mortgage otherwise they would buy government bonds. Your question mentions default so I'm assuming a country has reneged on its promise to pay either the principal or interest on government bonds. The main thing to consider is \"\"Who does not get their money?\"\". In other words, who does the government decide not to pay. This is the important part. The government will have some money so they could pay some bond holders. They must decide who to shaft. For example, let's look at who holds Greek government debt. Around 70% of Greek government debt is held outside Greece. See table below. The Greek government could decide to default only on the debt to foreign holders. In that case the banks in France and Switzerland would take the loss on their bonds. This could cause severe problems in France and Switzerland depending on the percentage of Greek bonds that make up the banks' assets. Greek banks would still face losses, however, since the price of their Greek bond holdings would drop sharply when the government defaults. Interestingly, the losses for the Greek banks may be smaller than the losses faced by the French and Swiss banks. This is usually the favored option chosen by government since the French and Swiss don't vote in Greece. Yields on Greek government bonds would rise dramatically. If your Greek mortgage is an adjustable rate mortgage then you could see some big adjustments upward. If you live in France or Switzerland then the bank that owns your mortgage may go under if Greece defaults. During liquidation the bank will sell their assets which includes mortgages and you will probably not notice any difference in your mortgage. As I stated earlier: this is a hard question to answer since the two financial instruments involved (bonds and mortgages) are similar but may or may not be related.\"" }, { "docid": "278626", "title": "", "text": "At the area where I live (Finland), banks typically charge a lot more for additional mortgage credit taken after purchasing the house. So, if you are planning to purchase a house, and pay it with a mortgage, you get a very good rate, but if you pay back the mortgage and then realize you need additional credit, you get a much worse rate. So, if this is applicable to your area as well, I would simply buy stocks after you have paid enough of the mortgage that it is only 50% of the house price or so. This is especially good advice if you are young. Also, if your mortgage is a fixed rate and not an adjustable rate mortgage, you probably have a very low permanent interest rate on it as interest rates are low currently (adjustable rate mortgages will also have a low rate but it will surely go up). Some people say there's a bubble currently in the stock market, but actually the bubble is in the bond market. Stocks are expensive because the other alternatives (bonds) are expensive as well. Paying back your mortgage is equivalent to investing money in bonds. I don't invest in bonds at the current ridiculously low interest rates; I merely invest in stocks and have a small cash reserve that will become even smaller as I discover new investment opportunities. I could pay back a significant percentage (about 50%) of the loans I have by selling my stocks and using my cash reserves. I don't do that; I invest in stocks instead, and am planning to increase my exposure to the stock market at a healthy pace. Also, consider the fact that mortgage is cheap credit. If you need additional credit for consumption due to e.g. becoming suddenly unemployed, you will get it only at very expensive rates, if at all. If you're very near the retirement age (I'm not), this advice may not be applicable to you. Edit: and oh, if your mortgage is fixed rate, and interest rates have come down, the bank will require you to pay the opportunity cost of the unpaid interests. So, you may need to pay more than you owe the bank. Edit2: let's assume the bank offered you a 4% fixed rate for a 10-year loan, which you agreed to. Now let's also assume interest rates of new agreements have come down to 2%. It would be a loss to the bank to pay back the amount of the loan (because the bank cannot get 4% by offering somebody else a new loan, only 2%), unless you paid also 10 years * (4% - 2%) * amount = 20% * amount of lost interest income. At least where I live, in fixed rate loans, one needs to pay back the bank this opportunity cost of unpaid interests." }, { "docid": "220032", "title": "", "text": "So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence." }, { "docid": "556219", "title": "", "text": "While I agree with keshlam@ that the gym had no reason (or right) to ask for your SSN, giving false SSN to obtain credit or services (including gym membership) may be considered a crime. While courts disagree on whether you can be charged with identity theft in this scenario, you may very well be charged with fraud, and if State lines are crossed (which in case of store cards is likely the case) - it would be a Federal felony charge. Other than criminal persecution, obviously not paying your debt will affect your credit report. Since you provided false identity information, the negative report may not be matched to you right away, but it may eventually. In the case the lender discovers later that you materially misrepresented information on your mortgage application - they may call on your loan and either demand repayment in full at once or foreclose on you. Also, material misrepresentation of facts on loan application is also a criminal fraud. Again, if State lines are crossed (which in most cases, with mortgages they are), it becomes a Federal wire fraud case. On mortgage application you're required to disclose your debts, and that includes lines of credits (store cards and credit cards are the same thing) and unpaid debts (like your gym membership, if its in collection)." }, { "docid": "275410", "title": "", "text": "\"TARP was ~$475 billion of loans to institutions. Loans that are to be paid back, with interest (albeit very low interest). A significant percentage of the TARP loans have been (or will be) paid back. So, the final price tag of the TARP was only a few $billion (pretty low considering the scale of the program). There is ~$10 trillion in mortgage debt outstanding. That's a much higher price tag than TARP. Secondly, paying off the mortgages = no repayment to the government as there was with TARP. The initial price tag of your plan would be ~$10 trillion, instead of a few $billion. Furthermore how does a government with >$15 trillion in debt already come up with an extra ~$10 trillion to pay off people's mortgages? Should the government go deeper into debt? Print more money and trigger inflation? (Note: Some people like to talk about a \"\"secret bailout\"\" by the Fed, implying that the true cost of TARP was much higher than claimed by the government. The \"\"secret bailout\"\" was a series of short-term low/no interest loans to banks. Because they were loans, which were paid back, my point still stands.) Some other issues to consider: Remember that the principal balance of your mortgage is only a small portion of your payments to the bank. Over 30 years, you pay a lot of $$$ in interest to the bank (that's how banks make a profit). Banks are expecting that revenue, and it is factored into their financial projections. If those revenue streams suddenly disappeared, I expect it would majorly screw the up the financial industry. Many people bought houses during the real estate boom, when housing prices were inflated far beyond the \"\"real\"\" value of the house. Is it right to overpay for these houses? This rewards the banks for accepting the inflated value during the appraisal process. (Loan modification forces banks to accept the \"\"real\"\" value of the house.) The financial crisis was triggered by people buying houses they could not afford. Should they be rewarded with a free house for making poor financial decisions?\"" }, { "docid": "319773", "title": "", "text": "I have heard that it is better for your credit score to pay them down over time. Will it make much of a difference? I have never heard that, however, the financial institutions (who are charging you an amount of interest which was at one time in the not so distant past classified and punishable in state criminal codes) really enjoy you thinking that way. You are clearly capable of doing the math yourself. While I don't know the exact numbers, I am totally confident that you will find in about 5 or 10 minutes (if that long) that eliminating debt of any kind in your life will pay an immediate return that beats the great majority of other investments in terms of risk/reward. After the immediate financial return, there is a quieter, subtler, and even greater long term benefit. Basic principle: Highest Rates First Perhaps this decision could be considered slightly less important than deciding not to smoke during your youth; but I would put it as a close second. You are already in a position where you can see the damage that your prior decisions (about financial debt) have produced. Run the clock back to the time in your life when you were debt free. Now, pay off that debt with the big check, and start from zero. Now, turn on your psychic powers and predict the same amount of time, in the future, with the same amount of money (don't even try to adjust for inflation; just use flat dollars) WITHOUT losing the money which you have given to the financial institutions during this previous part of your life. Do you now see why the financial institutions want you to think about slowly paying them off instead of waking up tomorrow without owing them anything ?" }, { "docid": "461879", "title": "", "text": "I think people are conflating two orthogonal sets of terms. Unsecured/secured and good/bad are not synonyms. Debt may be secured or unsecured. If I take a loan against a car or house it is typically secured, so the object is collateral against the loan. Bad debt in financial terms is a loan that is not expected to be recovered. A bank might write off a loan or a portion of a loan as bad debt if the borrower goes bankrupt or into administration for example. Both secured and unsecured loans may be considered bad debt. I think the context in which the question is being asked is how to distinguish between sensible and inadvisable borrowing. An extreme example of inadvisable borrowing would be to buy a PC on a store card. PCs devalue very quickly and a store card may charge 30% APR, so paying the minimum off each month would mean paying more than twice the sticker price for a product that is now worth less than half the original borrowed amount. On the other hand, a 3% mortgage when borrowing less than 60% of the value of a property is a good bet from a lender's perspective, and would be a good debt to have (not as good as no debt, but better thhan a high APR one)." }, { "docid": "261300", "title": "", "text": "First, I must say I am a Ramsey fan. Here's the thing, the borrower is slave to the lender, so if you eat Thanksgiving dinner with your generous relative next week, the food will taste different. Before I was a Dave fan, I borrowed money from my cousin once, and that debt was always hanging over my head. At times, it made hanging out awkward since I had money to 'go out' but not money to 'pay back.' It felt great once I paid him off, but the awkwardness was never cool. I'm sure some will disagree (Dave wouldn't), but if you TEMPORARILY stop your 8% contribution, and combine that with your current margin, you could pay off the debt from your cash flow and complete your emergency fund. Since you said that $11k is 1.5 month's expenses, you would essentially need to double that for a three-month fund or quadruple it for a six month fund. I know $300 may not seem like a lot, but since I value family over money, I would pay that off today out of the $11k and then replenish and fill the emergency fund. Also, your expenses will have dropped by $300/mo., so it will take less money to get to three or six month's expenses. Once that's complete, get your full 8% contribution. FYI: I consider margin to be the difference between your income and your outgo." }, { "docid": "303177", "title": "", "text": "So I will attempt to answer the other half of the question since people have given good feedback on the mortgage costs of your various options. Assumptions: It is certain that I am off on some (or all) of these assumptions, but they are still useful for drawing a comparison. If you were to make your mortgage payment, then contribute whatever you have left over to savings, this is where you would be at the end of 30 years. Wait, so the 30 year mortgage has me contributing $40k less to savings over the life of the loan, but comes out with a $20k higher balance? Yes, because of the way compounding interest works getting more money in there faster plays in your favor, but only as long as your savings venue is earning at a higher rate than the cost of the debt your are contrasting it with. If we were to drop the yield on your savings to 3%, then the 30yr would net you $264593, while the 15yr ends up with $283309 in the bank. Similarly, if we were to increase the savings yield to 10% (not unheard of for a strong mutual fund), the 30yr nets $993418, while the 15yr comes out at $684448. Yes in all cases, you pay more to the bank on a 30yr mortgage, but as long as you have a decent investment portfolio, and are making the associated contributions, your end savings come out ahead over the time period. Which sounds like it is the more important item in your overall picture. However, just to reiterate, the key to making this work is that you have an investment portfolio that out performs the interest on the loan. Rule of thumb is if the debt is costing you more than the investment will reliably earn, pay the debt off first. In reality, you need your investments to out perform the interest on your debt + inflation to stay ahead overall. Personally, I would be looking for at least an 8% annual return on your investments, and go with the 30 year option. DISCLAIMER: All investments involve risk and there is no guarantee of making any given earnings target." }, { "docid": "186071", "title": "", "text": "\"It very much comes down to question of semantics and your particular situation. Some people do not view a house (and most upgrades) as an investment, but rather an expense. I certainly agree that this is probably the case if you pay someone else to make the repairs and upgrades. However, if you are a serious DIYer, that may not be the case. Of course, if the house is a money pit and/or you were unfortunate to buy when prices where ridiculously high, you'll have a hard time making any money on this \"\"investment.\"\" To continue this game of semantics, you may also consider the value you extract from your home while you are living in it. On to the mortgage itself. Chances are that it is a long term, relatively low rate loan and that the interest is deductible. So, there are some disadvantages to paying it down early, even without early payment penalties. Paying down early on the principal is a disadvantage from a tax perspective. How much of a disadvantage hinges on the rate. Now, a debt is a liability on your personal balance sheet. It drags down any returns you may have from investing. However, a home lone is not generally subject to the cardinal rule of paying off your high interest debt before investing. It should not be relatively high and it pays for something necessary. It may be that any credit card debt you have may have paid for something considered necessary. However, with the relatively high interest rates, you have to question just how necessary any credit card debt really is. Not to mention that there is no tax advantage. So, it comes down to the fact that a home loan should be relatively low interest, paying for something you must have and that you hopefully have some tax advantage from the interest you pay on it.\"" }, { "docid": "134063", "title": "", "text": "Plus you already have money in a 529 plan that is meant for college expenses (and cannot be used to pay student loans) - use that money for what it's for. I disagree with @DStanley, as a current college student I would say to take out loans. Most of the time I am against loans though. So WHY? There are very few times you will receive loans at 0% interest (for 4+ years). You have money saved currently, but you do not know what the future entails. If you expend all of your money on tuition and your car breaks down, what do you do? You can not used student loans to pay for your broken car.Student loans, as long as they are subsidized, serve as a wonderful risk buffer. You can pay off your loans with summer internships and retain the initial cash you had for additional activities that make college enjoyable, i.e - Fraternity/ Sorority, clubs, dinners, and social nights. Another benefit to taking these loans would assist in building credit, with an additional caveat being to get a credit card. In general, debt/loans/credit cards are non-beneficial. But, you have to establish debt to allow others to know that you can repay. Establishing this credit rating earlier than later is critical to cheaper interest rates on (say) a mortgage. You have made it through, you have watched your expenses, and you can pay your debt. Finish It. If you do it right, you will not have loans when you graduate, you will have a stunning credit rating, and you will have enjoyed college to its fullest potential (remember, you only really go through it once.) But this is contingent on: Good luck, EDIT: I did not realize the implication of this penalty which made me edit the line above to include: (to the extent you can per year) For now, student loan repayment isn't considered a qualified educational expense. This means that if you withdraw from a 529 to pay your debts, you may be subject to income taxes and penalties.Source Furthermore, Currently, taxpayers who use 529 plan money for anything other than qualified education expenses are subject to a 10% federal tax penalty. Source My advice with this new knowledge, save your 529 if you plan on continuing higher education at a more prestigious school. If you do not, use it later in your undergraduate years." }, { "docid": "30311", "title": "", "text": "\"You're in good shape as long as your income stays. Your only variable-rate debt now is your private student loan. I think you'd be wise to pay that down first, and you sense that already. Worst-case, in the event of a bankruptcy, student loans usually cannot be discharged, so that isn't a way out. Once that loan is gone, apply what you were paying to your other student loan to knock that out. You might investigate refinancing your home (to another 30-year fixed). You may be able to shave a half-percent off if your credit is stellar. Given the size of the mortgage, this could be several thousand out of pocket, so consider that when figuring out potential payback time. Consider using any \"\"free time\"\" to starting up a side business (I'm assuming you both have day jobs but that may not be a correct assumption). Start with what you know well. You and your wife are experts in something, and have passion about something. Go with that. Use the extra income from that to either pay down your debts faster, or just reinvest in the business so that you can offset the income on your taxes. Again, you're in good shape. Just do what you can to protect and grow your income streams.\"" }, { "docid": "463260", "title": "", "text": "The answer will vary person to person and situation to situation. But the basic concept to always consider is this: What interest rate am I paying on my debt? 10%? 18%? And what interest rate am I making on my savings/investment, etc? 3%? 7%? It won't give you a hard and fast answer, but will definitely let you know if you should take a closer look at it. I'd suggest talking to a financial planner about it. Find a fee-based planner that you can turn to intermittently to make sure you are on the right track...not a commission-based planner, a fee-based one. (with respectful apologies to any commission-based planners who may read this.) My instinct is usually to pay off the debt, try to clean everything up so you don't have anything outstanding that is charging you interest. Debt is clutter, it's stressful, it can be a reminder of money you wish you hadn't spent. As long as you have access to money in case of emergency, job loss, etc, get your debt paid off and keep it paid off. You'll sleep much better." }, { "docid": "432307", "title": "", "text": "Note that after 15 years, the tax exemption is €36800 per person, which includes both the principal you desposited and the accumulated interest. It's possible that you will have a higher balance than this in your savings account at this point and would still owe tax on the interest accumulated above the exempted amount. After 20 years, you get the full tax exemption, the lesser of your portion of the mortgage debt and €162000 per person. In direct answer to your questions: I'm not aware of any exceptions to the 15 year rule for allowing the accumulated interest to be tax free when selling your house. If your accumulated interest is low enough, you might consider just paying the tax on it as it would give you the most flexibility in choosing a new mortgage. This is why I asked about more details about your interest rate and how long the mortgage has been running. It may, however, possible to couple the savings account to a new ABN AMRO Bankspaar mortgage when you buy a new house. You should check your mortgage terms and conditions. For example, Section 23.12 in ABN AMRO's terms and conditions from 2010 describes this. See here. It is probably best, however, to speak directly with either your mortgage broker or with a mortgage adviser with ABN AMRO. If your mortgage broker still worked on commission (aflsuitprovisie) when you closed your mortgage, then they are obligated to assist you with this type of question. In order to qualify for the tax exemption, you must use the saved value to pay off debt on your primary residence (eigenwoningschuld). Decoupling the savings account entirely from a mortgage will disqualify you from the tax advantages. You will owe tax on all accumulated interest." } ]

[ { "docid": "534099", "title": "", "text": "If you owe money to someone else then you are in debt, at least in the common meaning of the word. What you happen to own, or what you spent that money on doesn't alter that fact. Are people considered in debt if their only 'debt' is the mortgage/loan for their house, or are these people excluded from the statistic? The only way to answer that for sure is to look at who compiled the statistic and exactly what methodology they used." } ]

[ { "docid": "159936", "title": "", "text": "\"The statistic you cited comes from the Federal Reserve Board's Survey of Consumer Finances, a survey that they do every three years, most recently in 2013. This was reported in the September 2014 issue of the Federal Reserve Bulletin. They list the percentage of Americans with any type of debt as 74.5 in 2013, down slightly from 74.9 in 2010. The Bulletin also has a table with a breakdown of the types of debt that people have, and primary residence mortgages are at the top of the list. So the answer is yes, the 75% statistic includes Americans with home mortgages.* The bigger question is, are you really \"\"in debt\"\" if you have a home mortgage? The answer to that is also yes. When you take out a mortgage, you really do own the house. You decide who lives there, you decide what changes you are going to make to it, and you are responsible for the upkeep. But the mortgage debt you have is secured by the house. This means that if you refuse to pay, the bank is allowed to take possession of the house. They don't even get the \"\"whole\"\" house, though; they will sell it to recoup their losses, and give you back whatever equity you had in the house after the loan is satisfied. Is it good debt? Many people think that if you are borrowing money to purchase an appreciating asset, the debt is acceptable. With this definition, a car loan is bad, credit card debt is very bad, and a home mortgage might be okay. Even Dave Ramsey, radio host and champion of the debt-free lifestyle, is not opposed to home mortgages. Home mortgages allow people to purchase a home that they would otherwise be unable to afford. * Interestingly, according to the bulletin appendix, credit card balances were only included as debt for the survey purposes if there was a balance after the most recent bill was paid, not including purchases made after the bill. So people that do not carry a balance on their credit card were not considered \"\"in debt\"\" in this statistic.\"" }, { "docid": "150607", "title": "", "text": "\"In England, currently and for most of the last fifty years, the standard length of the mortgage term is 25 years. A mortgage can be either a capital-and-interest mortgage, or interest-only. In the former, you pay off part of the original loan each month, plus the interest on the amount borrowed. In the latter, you only pay interest each month, and the original amount borrowed never reduces: you pay premiums on a life insurance policy, additionally, which is designed to pay off the original sum borrowed at the end of the 25 years. No one in England thinks that a 25 year loan has any drawbacks. The main point to appreciate is that the longer the period of the loan, the less you need to pay each month, because you are repaying the original loan - the capital - over a longer period of time. Thus, in principle, a mortgage is easier to repay the longer the term is, because the monthly payment is less. If you have a 12 year mortgage, you must pay back the original amount borrowed in half the time: the capital element in your payment each month is double what it would be if repaid over 25 years - i.e. if repaid over a period twice as long. Only if the borrower is less than 25 years away from retirement is a 25 years mortgage seen as a bad idea, by the lender - because, obviously, the lender relies on the borrower having an income sufficient to keep up the repayments. There are many complicating factors: an interest-only mortgage, where you pay back the original amount borrowed from the maturity proceeds from a life policy, puts you in a situation where the original capital sum never reduces, so you always pay the same each month. But on a straight repayment mortgage, the traditional type, you pay less and less each month as time goes by, for you are reducing the capital outstanding each month, and because that is reducing so is the amount of interest you pay each month (as this is calculated on the outstanding capital amount). There are snags to avoid, if you can. For example, some mortgage contracts impose penalties if the borrower repays more than the due monthly amount, hence in effect the borrower faces a - possibly heavy - financial penalty for early repayment of the loan. But not all mortgages include such a condition. If house prices are on a rising trend, the market value of the property will soon be worth considerably more than the amount owed on the mortgage, especially where the mortgage debt is reducing every month, as each repayment is made; so the bank or other lender will not be worried about lending over a 25 year term, because if it forecloses there should normally be no difficulty in recovering the outstanding amount from the sale proceeds. If the borrower falls behind on the repayments, or house prices fall, he may soon get into difficulties; but this could happen to anyone - it is not a particular problem of a 25 year term. Where a default in repayment occurs, the bank will often suggest lengthening the mortgage term, from 25 years to 30 years, in order to reduce the amount of the monthly repayment, as a means of helping the borrower. So longer terms than 25 years are in fact a positive solution in a case of financial difficulty. Of course, the longer the term the greater the amount that the borrower will pay in total. But the longer the term, the less he will pay each month - at least on a traditional capital-and-interest mortgage. So it is a question of balancing those two competing factors. As long as you do not have a mortgage condition that penalises the borrower for paying off the loan more quickly, it can make sense to have as long a term as possible, to begin with, which can be shortened by increasing the monthly repayment as fast as circumstances allow. In England, we used to have tax relief on mortgage payments, and so in times gone by it did make sense to let the mortgage run the full 25 years, in order to get maximum tax relief - the rules were very complex, but it tended to maximise your tax relief by paying over the longest possible period. But today, with no income tax relief given on mortgage payments, that is no longer a consideration in this country. The practical position is, of course, that you can never tell how long it might take you to pay off a mortgage. It is a gamble as to whether your income will rise in future years, and whether your job will last until your mortgage is paid off. You might fall ill, you might be made redundant, you might be demoted. Mortgage interest rates might rise. It is never possible to say that you \"\"can\"\" pay off the loan in a short time. If you hope to do so, the only matters that actually fall within your control are the conditions of the mortgage contract itself. Get a good lawyer. Tell him to watch out for early-redemption penalties. Get a good financial adviser. Tell him to work out what you will need to pay in additional premiums on your life policy if you are considering taking an interest-only mortgage. Try to fix your mortgage rate in the first few years, for as long as possible, so that in your most vulnerable period, with the greatest amount owing, you are insulated against unexpected interest rate fluctuations. Only the initial conditions can be controlled, so it might be prudent to take as long a term as possible, even though a prudent borrower will leave himself room to reduce that term, and a prudent lender will leave room to extend it, in case of unpredictable changes in the financial circumstances. In England, most lenders are, in my experience, reluctant to grant mortgages for less than 25 years. That is simply a policy. Rightly or wrongly, the borrower usually has no choice about the length of the mortgbage term. Hence, in the UK it can be difficult to find a choice of interest rates based on differing mortgage terms. I am aware that the situation in the USA is rather different, but if I personally were faced with the choice I would be uncomfortable about taking on a short term mortgage, because of the factors I have outlined above.\"" }, { "docid": "341837", "title": "", "text": "It is important to consider your overall financial goals (especially in the 3-5 year range). If you have another financial goal which cannot be met without that additional money then meeting that financial goal might take priority over what I am about to say. Your mortgage rate is another important factor to consider when answering this question. Extra mortgage payments are equivalent to investing that money in a VERY low risk investment with an equivalent yield of the mortgage rate because you will be paying that much less per year in interest. (Actually, when you consider that mortgage interest is often tax-deductible the equivalent yield should be reduced by your income tax rate.) Typically it is not possible to find such a low risk investment with a yield as high as your mortgage rate. For example current mortgage rates are over twice as high as the yield of a one year CD. Also keep in mind that additional mortgage payments help you build equity. This equity will most likely be applied to your next home purchase. If so their effect will be in place throughout the life of your next mortgage too." }, { "docid": "275410", "title": "", "text": "\"TARP was ~$475 billion of loans to institutions. Loans that are to be paid back, with interest (albeit very low interest). A significant percentage of the TARP loans have been (or will be) paid back. So, the final price tag of the TARP was only a few $billion (pretty low considering the scale of the program). There is ~$10 trillion in mortgage debt outstanding. That's a much higher price tag than TARP. Secondly, paying off the mortgages = no repayment to the government as there was with TARP. The initial price tag of your plan would be ~$10 trillion, instead of a few $billion. Furthermore how does a government with >$15 trillion in debt already come up with an extra ~$10 trillion to pay off people's mortgages? Should the government go deeper into debt? Print more money and trigger inflation? (Note: Some people like to talk about a \"\"secret bailout\"\" by the Fed, implying that the true cost of TARP was much higher than claimed by the government. The \"\"secret bailout\"\" was a series of short-term low/no interest loans to banks. Because they were loans, which were paid back, my point still stands.) Some other issues to consider: Remember that the principal balance of your mortgage is only a small portion of your payments to the bank. Over 30 years, you pay a lot of $$$ in interest to the bank (that's how banks make a profit). Banks are expecting that revenue, and it is factored into their financial projections. If those revenue streams suddenly disappeared, I expect it would majorly screw the up the financial industry. Many people bought houses during the real estate boom, when housing prices were inflated far beyond the \"\"real\"\" value of the house. Is it right to overpay for these houses? This rewards the banks for accepting the inflated value during the appraisal process. (Loan modification forces banks to accept the \"\"real\"\" value of the house.) The financial crisis was triggered by people buying houses they could not afford. Should they be rewarded with a free house for making poor financial decisions?\"" }, { "docid": "475629", "title": "", "text": "Paying off your student loan before buying a house is certainly a great risk reduction move for you. It will lower your debt to income ratio allowing your mortgage approval to go easier and it will free up more of your dollars to pay for the many miscellaneous projects that come with buying a house. I think that if you are considering paying off your student loan before buying a house that means that your student loans are an amount you can fathom paying off and that you are motivated to be rid of your student loan debt. Go for it and pay off your student loan." }, { "docid": "57392", "title": "", "text": "But cash talks. If you can save yourself a grand or two a month in mortgage overpayment, and have the cash for 1st and last month's rent plus deposit, a job or two, etc. That crap means more than a credit score. Plus don't rent from people you can't talk to about with what is going on in your life. My personal credit has always been shit (because the morality associated with debt is complete bullshit) since my 20s and I have never had a problem renting, because I let my landlords know I am human and that paying rent on time and in full is my top bill to pay. People are beginning to realize that FICO scores are pretty meaningless in this Lesser Depression. e: prepositional indifference" }, { "docid": "559370", "title": "", "text": "First, what country are you in? Canada doesn't offer a mortgage interest tax deduction, the US does. This changes the math a bit, and in the US, the current after tax cost of a mortgage is below our long term inflation rate. Is the mortgage your only debt? I've seen people religiously pay extra each month to their 6% mortgage while carrying 18% interest debt on credit cards. Next, there are company matched retirement plans, in the US, a 401(k) plan, where if you put up to 6% or so of your pay into the account, it's effectively doubled upon deposit. I'd be sure not to miss such an opportunity. After these considerations, prepaying is equal to buying a risk free fixed instrument. If that appeals to you, and you've considered the above first, go for it. Keep in mind, money paid to the mortgage isn't easily borrowed back, short of a HELOC. I'd strongly advise that your emergency fund be fully funded (6 months worth of spending) before starting to make extra mortgage payments." }, { "docid": "536262", "title": "", "text": "\"littleadv's first comment - check the note - is really the answer. But your issue is twofold - Every mortgage I've had (over 10 in my lifetime) allows early principal payments. The extra principal can only be applied at the same time as the regular payment. Think of it this way - only at that moment is there no interest owed. If a week later you try to pay toward only principal, the system will not handle it. Pretty simple - extra principal with the payment due. In fact, any mortgage I've had that offered a monthly bill or coupon book will have that very line \"\"extra principal.\"\" By coincidence, I just did this for a mortgage on my rental. I make these payments through my bank's billpay service. I noted the extra principal in the 'notes' section of the virtual check. But again, the note will explicitly state if there's an issue with prepayments of principal. The larger issue is that your friend wishes to treat the mortgage like a bi-weekly. The bank expects the full amount as a payment and likely, has no obligation to accept anything less than the full amount. Given my first comment above here is the plan for your friend to do 99% of what she wishes: Tell her, there's nothing magic about bi-weekly, it's a budget-clever way to send the money, but over a year, it's simply paying 108% of the normal payment. If she wants to burn the mortgage faster, tell her to add what she wishes every month, even $10, it all adds up. Final note - There are two schools of thought to either extreme, (a) pay the mortgage off as fast as you can, no debt is the goal and (b) the mortgage is the lowest rate you'll ever have on borrowed money, pay it as slow as you can, and invest any extra money. I accept and respect both views. For your friend, and first group, I'm compelled to add - Be sure to deposit to your retirement account's matched funds to gain the entire match. $1 can pay toward your 6% mortgage or be doubled on deposit to $2 in your 401(k), if available. And pay off all high interest debt first. This should stand to reason, but I've seen people keep their 18% card debt while prepaying their mortgage.\"" }, { "docid": "56794", "title": "", "text": "\"Taking out your equity when refinancing means that you take out a new loan for the full value of your house (perhaps less 20% as a down payment on the new mortgage, otherwise you'll be paying insurance), pay off your old lender, and keep the rest for yourself. The result is much the same as using as a HELOC or home equity loan (or a second mortgage), except it's all rolled into a single new mortgage. The advantage is that the interest rate on a first mortgage is going to be lower than on HELOC or equivalent, and the equity requirements may be lower (e.g. a HELOC may only let you borrow against the amount of equity that exceeds 25% or 30%, while a new mortgage will require you only to have 20% equity). This is especially attractive to those whose homes have appreciated significantly since they bought them, especially if they have a lot of high-interest debt (e.g. credit cards) they want to pay off. Of course, rolling credit card debt into a 30-year mortgage isn't actually paying it off, but the monthly payments will be a lot lower, and if you're lucky and your home appreciates further, you can pay it off fully when you sell the property and still have paid a lot less interest. The downside is that you have turned unsecured debt into secured debt, which puts your home at risk if you find yourself unable to pay. In your case, you don't yet have even 20% equity in your home, so I wouldn't recommend this. :-) Equity is simply the difference between the amount you still owe on your home and the amount you'd get if you were to sell it. Until you do sell it, this amount is tentative, based on the original purchase price and, perhaps, an intervening appraisal that shows that the property has appreciated. That is really all that it is and there's nothing magic about it, except that since you own your home, you have equity in it, while as a renter, you would not. It used to be (decades ago, when you needed 20% down to get a mortgage) that selling was the only time you'd be able to do anything with the equity in your home. Now you can \"\"take it out\"\" as described above (or borrow against it) thanks to various financial products. It is sometimes tempting to consider equity roughly equivalent to \"\"profit.\"\" But some of it is your own money, contributed through the down payment, your monthly principal payment, and improvements you have made -- so \"\"cashing out\"\" isn't all profit, it's partly just you getting your own money back. And there are many additional expenses involved in owning a home, such as interest, property taxes, maintenance, utilities, and various fees, not to mention the commissions when you buy or sell, which the equity calculation doesn't consider. Increasing equity reflects that you own a desirable property in a desirable location, that you have maintained and maybe even improved it, that you are financially responsible (i.e., paying your mortgage, taxes, etc.), and that your financial interests are aligned with your neighbors. All those things feel pretty good, and they should. Otherwise, it is just a number that the banks will sometimes let you borrow against. :-)\"" }, { "docid": "439593", "title": "", "text": "How does paying off a mortgage early work? Example: I have a 30 year fixed rate mortgage of 3.5%, the amount borrowed is $300,000. I have just inherited $300,000. I am in the first year of the mortgage. Can I give the bank the $300,000 to clear the mortgage, or must I pay off the total interest that was agreed upon for the 30 year term? This depends on the country regulation and your agreement. Generally speaking the calculations are on daily reducing balance. so you just pay 300K I'm curious why the bank would let you do this, since they will lose out on a lot of profit" }, { "docid": "597679", "title": "", "text": "\"Leverage here is referring to \"\"financial leverage\"\". This is the practice of \"\"levering\"\" [ie increasing, like the use of a lever to increase the amount of weight you can lift] the value of your investment by taking on debt. For example: if you have 100k in cash, you can buy a 100k rental property. Assume the property makes 10k a year, net of expenses [10%]. Now assume the bank will also give you a 100k mortgage, at 3%. You could take the mortgage, plus your cash, and buy a 200k rental property. This would earn you 20k from the rental property, less 3k a year in interest costs [the 3%]. Your total income would be 17k, and since you only used 100k of your own money, your rate of return would now be 17% instead of 10%. This is financial leveraging. Note that this increases your risk, because if your investment fails not only have you lost your own money, you now need to pay back the bank. \"\"Beta riders\"\" appears to be negative commentary on investors who use Beta to calculate the value of a particular stock, without regard to other quantitative factors. Therefore \"\"leveraged beta riders\"\" are those who take on additional risk [by taking on debt to invest], and invest in a manner that the author would perhaps considered \"\"blindly\"\" following Beta. However, I have never seen this term before, and it appears tainted by the author's views on Quants. A \"\"quant process driven discipline\"\" appears to be positive commentary on investors who use detailed quantitative analysis to develop rules which they rigorously follow to invest. I have never seen this exact phrasing before, and like the above, it appears tainted by the author's views on Quants. I am not providing any opinion on whether \"\"beta riding\"\" or \"\"quant processes\"\" are good or bad things; this is just my attempt to interpret the quote as you presented it. Note that I did not go to the article to get context, so perhaps something else in the article could skew the language to mean something other than what I have presented.\"" }, { "docid": "341348", "title": "", "text": "This is how its done I am a certain french bank, aka sg I have some PIIGS debt, I can use this as collateral at face value (100), with the ECB in order to secure cash... Lets say I use 1mn of BTPS (italian debt), this has an MTM (clean) of 88. I use that 88 to get me 100 (1mn) of cash, from which I buy another BTPS, for (88), of which I use as collateral pledged to the ECB to get this, get another BTPS. So now I am long 3 BTPS, all pledged to the ECB and I have 36 in cash and I owe the ECB 300+r in 3 years. remember the yield on my shitty btps is a lot higher than the interest on the deposits. Secondly, I have three years, so I don't need to give a fuck about the mark to market on the notes (I could even buy a 2 year and n month note maturing just before). So I can make some free yield at the ECB's expense. Also this frees up 36 in cash, of which I can use to meet short term funding instead of tapping the bond market, this trade can be made infinitely, although the ECB might catch on. You can view it as getting a mortgage on your house to buy another house, then mortgaging house #2 to buy house #3, and so on." }, { "docid": "274870", "title": "", "text": "\"Mortgage is a (secured) debt, a combination of a promissory note, and a security interest providing the mortage holder a secured interest in the property. Yes, you are \"\"in debt\"\". But that depends upon whether you define the term \"\"in debt\"\" as a debt appearing on the balance sheet, or the net of assets - liabilities is less than zero, whether you have a \"\"debt\"\" expense on the income statement (budget), or whether the net of income - expenses is less than zero. One person might look at their budget, find the (monthly) mortgage payment listed, and judge that they have a debt payment, and thus are \"\"in debt\"\". Or they might look at their expenses, find they exceed their income, and judge that they are \"\"in debt\"\". Another person might look at their balance sheet, compare assets to liabilities, and only say they were \"\"in debt\"\" when their liabilities exceeded their assets. Some people view mortgage debt as \"\"good debt\"\", as they view certain debts as \"\"good\"\" and others as \"\"bad\"\". Trust me, having a high mortgage payment (higher 30% of your net income) is hard, and over 40% is bad. Consider you balance sheet and your income statement. On your balance sheet, the house appears on the \"\"asset\"\" side with an (estimated) value, while the \"\"mortgage\"\" (really, the promissory note part of the mortgage) appears on the \"\"liability\"\" side. On your income statement, your house does not appear on the income side, but the mortgage (promissory note) payment appears on the expense side. So, you clearly have both a \"\"liability\"\" with a clearly-defined value and an \"\"expense\"\" with a clearly-defined payment. But do you have an \"\"asset\"\"? According to an accountant, you have an \"\"asset\"\" and a \"\"liability\"\". But you do not have a business asset that is producing revenue (income), nor do you have a business asset that can be amortized and expensed to reduce taxable income. When we think about an asset, does the word have the connotation of some thing with value, something that produces income? Well, by that measure, a house only provides income when we rent it out, and only has value when we consider selling it. As millions of families discovered during the housing (price) collapse, when the market price of your \"\"asset\"\" falls substantially, your personal financial status can fall negative and you can be \"\"broke\"\".\"" }, { "docid": "27268", "title": "", "text": "First of all, realize that buying a home isn't really an investment. It is cheaper to rent. In recent years, people were able to sell their houses for astronomical profits, but that won't be happening much in the future. Additionally, there are many hidden costs of owning a home. Regarding the mortgage interest tax deduction, don't buy a house just to get this. It is like spending $1 to get back some amount of money less than $1. So just keep that in mind. Are you debt free? If not, pay off your other debts before buying a home. I follow the advice of Dave Ramsey, so I'll echo it here. Make sure you have an emergency fund and no debt. At this point I think you are ready to buy a house. When you do, put down as much as you can; above 20% if possible. Then get a 15 year fixed rate mortgage. At this point, start saving for your kid's college (if you believe in that) and paying down your home. Having no mortgage is a dream many people never have. I cannot wait until I have no mortgage. Don't get suckered into getting a high priced loan. Pay down as much of the price of the house as possible up front. This gives you flexibility too. What if you need to sell quickly? Well, you will have equity from the get-go, so this will be much easier. Good luck with your purchase!" }, { "docid": "319773", "title": "", "text": "I have heard that it is better for your credit score to pay them down over time. Will it make much of a difference? I have never heard that, however, the financial institutions (who are charging you an amount of interest which was at one time in the not so distant past classified and punishable in state criminal codes) really enjoy you thinking that way. You are clearly capable of doing the math yourself. While I don't know the exact numbers, I am totally confident that you will find in about 5 or 10 minutes (if that long) that eliminating debt of any kind in your life will pay an immediate return that beats the great majority of other investments in terms of risk/reward. After the immediate financial return, there is a quieter, subtler, and even greater long term benefit. Basic principle: Highest Rates First Perhaps this decision could be considered slightly less important than deciding not to smoke during your youth; but I would put it as a close second. You are already in a position where you can see the damage that your prior decisions (about financial debt) have produced. Run the clock back to the time in your life when you were debt free. Now, pay off that debt with the big check, and start from zero. Now, turn on your psychic powers and predict the same amount of time, in the future, with the same amount of money (don't even try to adjust for inflation; just use flat dollars) WITHOUT losing the money which you have given to the financial institutions during this previous part of your life. Do you now see why the financial institutions want you to think about slowly paying them off instead of waking up tomorrow without owing them anything ?" }, { "docid": "157728", "title": "", "text": "A common rule of thumb is the 28/36 ratio. It's described here. In your case, with a gross (?) salary of £50,000, that means that you should spend no more than 28% of it, or £1,167 per month on housing. You may be able to swing a bit more because you have no debts and a modest amount in your savings. The 36% part comes in as the amount you can spend servicing all your debt, including mortgage. In your case, based on a gross (?) salary of £50,000, that'd be £1,500 per month. Again, that is to cover your housing costs and any additional debt you are servicing. So, you need to figure out how much you could bring in through rent to make up the rest. As at least one other person has commented, the rule of thumb is that your mortgage should be no more than 2.5 - 3 times your income. I personally think you are not a good candidate for a mortgage of the size you are discussing. That said, I no longer live in England. If you could feel fairly secure getting someone to pay you enough in rent to bring down your total mortgage and loan repayment amounts to £1,500 or so a month, you may want to consider it. Remember, though, that it may not always be easy to find renters." }, { "docid": "367355", "title": "", "text": "Which strategy makes more sense: Check your new Fidelity 401k plan. Make sure it has a good group of funds available at very low fees. If it does, roll over your Principal 401k to your new 401k. Call Principal and have them transfer the funds directly to Fidelity. Do not have them send you a check. If the new plan doesn't have a good fund lineup, or has high fees, create a rollover IRA and roll your old 401k plan into it. Again, have Principal transfer the funds directly. Consider using Vanguard or other very-low-cost funds in your IRA. Taking the money out of your old 401k to pay toward your mortgage has several disadvantages. You will pay taxes and a penalty. Your mortgage rate is very good, and since you are probably in a high tax bracket and perhaps itemize deductions, the effective rate is even less. And you lose liquidity that might come in handy down the road. You can always change your mind later, but for now don't pay down your mortgage using your 401k money. As a result of being under 20%, I am paying mortgage insurance of about $300/mo. This is wasted money. Save aggressively and get your mortgage down to 80% so that you can get rid of that PMI. If you are earning a high salary, you should be able to get there in reasonably short order. If you are maxing out your 401k ($18,000 per year), you might be better off putting it on pause and instead using that money to get rid of the PMI. I have no 'retirement' plans because I enjoy working and have plans to start a company, and essentially will be happy working until I die You are young. Your life will change over time. Everyone young seems to choose one of two extremes: In the end, very few choose either of these paths. For now, just plan on retiring somewhere close to normal retirement age. You can always change your plans later." }, { "docid": "437706", "title": "", "text": "Your comment regarding your existing finances is very relevant and helpful. You need to understand that generally in personal finance circles, when a strong earning 22 year-old is looking for a loan it's usually a gross spending problem. Their car costs $1,000 /month and their bar tabs are adding up so the only logical thing to do is get a loan. Most 22-year-olds don't have a mortgage soaking up their income, or a newborn. With all of this in mind I essentially agree with DStanley and, personally, and many people here would probably disagree, I'd stop the 401(K) contribution and use that money to pay the debt. You're still very young from a retirement standpoint, let the current balance ride and forego the match until the debt is paid. I think this is more about being debt free at 22 quickly than it's about how much marginal money could be saved via 401(k) or personal loan or this strategy or that strategy. I think at your age, you'll benefit greatly from simply being debt free. There are other very good answers on this site and other places regarding the pitfalls of a 401(k) loan. The most serious of which is that you have an extremely limited time to pay the entire loan upon leaving the company. Failure to repay in that situation incurs tax liability and penalties. From my quick math, assuming your contribution is 8% of $70,000 /year, you're contributing something in the neighborhood of $460/month to your 401(k). If you stopped contributing you'd probably take home a high $300 number net of taxes. It'll take around 20 months to pay the loan off using this contribution money without considering your existing payments, in total you're probably looking at closer to 15 months. You'll give up something in the neighborhood of $3,500 in match funds over the repayment time. But again, you're 22, you'll resume your contributions at 24; still WAY ahead of most people from a retirement savings standpoint. I don't think my first retirement dollar was contributed until I was about 29. Sure, retirement savings is important, but if you've already started at age 22 you're probably going to end up way ahead of most either way. When you're 60 you're probably not going to bemoan giving up a few grand of employer match in your 20s. That's what I would do. Edit: I actually like stannius's suggestion in the comments below. IF there's enough vested in your plan that is also available for withdrawal that you could just scoop $6,500 out of your 401(k) net of the 10% penalty and federal and state taxes (which would be on the full amount) to pay the debt, I'd consider that instead of stopping the prospective contributions. That way you could continue your contributions and receive the match contributions on a prospective basis. I doubt this is a legitimate option because it's very common for employers to restrict or forbid withdrawal of employee and/or employer contributions made during your employment, but it would be worth looking in to." }, { "docid": "423628", "title": "", "text": "A: Rollover the cash from the previous account into the new one a low-cost IRA like Vanguard. This, and only this. Because your mortgage is, less than 4%, while your retirement plan will earn 7% over the long term. I have no 'retirement' plans because Because you're 28. and essentially will be happy working until I die Unless circumstances change. but as far as I see it this is not such a bad deal because it is like paying taxes on income. (Principal says I will lose up to 30%) You're ignoring the 10% early withdrawal penalty. I am wise with my money for the most part Then don't piss away $3,000 just for a temporary feel good. I earn a high salary in a tech job. As a result of being under 20%, I am paying mortgage insurance of about $300/mo. So -- after building up an Emergency Fund -- throw as much as possible of your high salary against your mortgage to get rid of the PMI." } ]

[ { "docid": "274870", "title": "", "text": "\"Mortgage is a (secured) debt, a combination of a promissory note, and a security interest providing the mortage holder a secured interest in the property. Yes, you are \"\"in debt\"\". But that depends upon whether you define the term \"\"in debt\"\" as a debt appearing on the balance sheet, or the net of assets - liabilities is less than zero, whether you have a \"\"debt\"\" expense on the income statement (budget), or whether the net of income - expenses is less than zero. One person might look at their budget, find the (monthly) mortgage payment listed, and judge that they have a debt payment, and thus are \"\"in debt\"\". Or they might look at their expenses, find they exceed their income, and judge that they are \"\"in debt\"\". Another person might look at their balance sheet, compare assets to liabilities, and only say they were \"\"in debt\"\" when their liabilities exceeded their assets. Some people view mortgage debt as \"\"good debt\"\", as they view certain debts as \"\"good\"\" and others as \"\"bad\"\". Trust me, having a high mortgage payment (higher 30% of your net income) is hard, and over 40% is bad. Consider you balance sheet and your income statement. On your balance sheet, the house appears on the \"\"asset\"\" side with an (estimated) value, while the \"\"mortgage\"\" (really, the promissory note part of the mortgage) appears on the \"\"liability\"\" side. On your income statement, your house does not appear on the income side, but the mortgage (promissory note) payment appears on the expense side. So, you clearly have both a \"\"liability\"\" with a clearly-defined value and an \"\"expense\"\" with a clearly-defined payment. But do you have an \"\"asset\"\"? According to an accountant, you have an \"\"asset\"\" and a \"\"liability\"\". But you do not have a business asset that is producing revenue (income), nor do you have a business asset that can be amortized and expensed to reduce taxable income. When we think about an asset, does the word have the connotation of some thing with value, something that produces income? Well, by that measure, a house only provides income when we rent it out, and only has value when we consider selling it. As millions of families discovered during the housing (price) collapse, when the market price of your \"\"asset\"\" falls substantially, your personal financial status can fall negative and you can be \"\"broke\"\".\"" } ]

[ { "docid": "367355", "title": "", "text": "Which strategy makes more sense: Check your new Fidelity 401k plan. Make sure it has a good group of funds available at very low fees. If it does, roll over your Principal 401k to your new 401k. Call Principal and have them transfer the funds directly to Fidelity. Do not have them send you a check. If the new plan doesn't have a good fund lineup, or has high fees, create a rollover IRA and roll your old 401k plan into it. Again, have Principal transfer the funds directly. Consider using Vanguard or other very-low-cost funds in your IRA. Taking the money out of your old 401k to pay toward your mortgage has several disadvantages. You will pay taxes and a penalty. Your mortgage rate is very good, and since you are probably in a high tax bracket and perhaps itemize deductions, the effective rate is even less. And you lose liquidity that might come in handy down the road. You can always change your mind later, but for now don't pay down your mortgage using your 401k money. As a result of being under 20%, I am paying mortgage insurance of about $300/mo. This is wasted money. Save aggressively and get your mortgage down to 80% so that you can get rid of that PMI. If you are earning a high salary, you should be able to get there in reasonably short order. If you are maxing out your 401k ($18,000 per year), you might be better off putting it on pause and instead using that money to get rid of the PMI. I have no 'retirement' plans because I enjoy working and have plans to start a company, and essentially will be happy working until I die You are young. Your life will change over time. Everyone young seems to choose one of two extremes: In the end, very few choose either of these paths. For now, just plan on retiring somewhere close to normal retirement age. You can always change your plans later." }, { "docid": "290434", "title": "", "text": "\"If by \"\"investment\"\" you mean something that pays you money that you can spend, then no. But if you view \"\"investment\"\" as something that improves your balance sheet / net worth by reducing debt and reducing how much money you're throwing away in interest each month, then the answer is definitely yes, paying down debt is a good investment to improve your overall financial condition. However, your home mortgage might not be the first place to start looking for pay-downs to save money. Credit cards typically have much higher interest rates than mortgages, so you would save more money by working on eliminating your credit card debt first. I believe Suze Orman said something like: If you found an investment that paid you 25% interest, would you take it? Of course you would! Paying down high interest debt reduces the amount of interest you have to pay next month. Your same amount of income will be able to go farther, do more because you'll be paying less in interest. Pay off your credit card debt first (and keep it off), then pay down your mortgage. A few hundred dollars in extra principal paid in the first few years of a 30 year mortgage can remove years of interest payments from the mortgage term. Whether you plan to keep your home for decades or you plan to move in 10 years, having less debt puts you in a stronger financial position.\"" }, { "docid": "188015", "title": "", "text": "This is a case where human nature and arithmetic lead to different results. Depending on the your income, the effective interest rate on the mortgage is probably right around 2.5%. So purely by arithmetic, the absolute cheapest way to go is to put the $11k to the bigger car loan, then pay off the mortgage, then the smaller car loan. The Debt Snowball is more effective however, because it works better for people. Progress is demonstrated quickly, which maintains (and often enhances) motivation to continue. I can say as a case in point, having tried both methods, that if does indeed work. So, I am with you ... pay off the car loan first, and roll that payment into the bigger car loan. If you add no extra dollars, you should get the small loan paid off in 6 to 8 months and the bigger car loan in another 16 to 18 months. It sounds like from your message that you have another $1500 or so a month. If that is the case ... small loan paid off in two months, bigger loan paid off in another year. If you stick with the Ramsay program, you then build an emergency fund and start investing. Good luck!" }, { "docid": "261300", "title": "", "text": "First, I must say I am a Ramsey fan. Here's the thing, the borrower is slave to the lender, so if you eat Thanksgiving dinner with your generous relative next week, the food will taste different. Before I was a Dave fan, I borrowed money from my cousin once, and that debt was always hanging over my head. At times, it made hanging out awkward since I had money to 'go out' but not money to 'pay back.' It felt great once I paid him off, but the awkwardness was never cool. I'm sure some will disagree (Dave wouldn't), but if you TEMPORARILY stop your 8% contribution, and combine that with your current margin, you could pay off the debt from your cash flow and complete your emergency fund. Since you said that $11k is 1.5 month's expenses, you would essentially need to double that for a three-month fund or quadruple it for a six month fund. I know $300 may not seem like a lot, but since I value family over money, I would pay that off today out of the $11k and then replenish and fill the emergency fund. Also, your expenses will have dropped by $300/mo., so it will take less money to get to three or six month's expenses. Once that's complete, get your full 8% contribution. FYI: I consider margin to be the difference between your income and your outgo." }, { "docid": "590145", "title": "", "text": "\"Your main reason to not pay off your debts right now seems to be: Enjoy life while \"\"I am young\"\" and not miss opportunities to have fun? I think the good news is that having fun usually does not require spending a lot of money. I would propose that most of the times when we considered something fun it had more to do with who we were with than what we were actually doing. Of course there are many fun things that are expensive, but there are even more fun things that require little money at all. My suggestion to you would be to prioritize your debt in a responsible way such that you have a plan to pay it off quickly, but if something comes along that does require extra money, don't be afraid to make an adjustment. For example, you can try to put 2000€ towards your debt every month, but if some exciting adventure comes along that you really want to do and it costs 1000€ one month, you shouldn't feel like you absolutely must turn it down. That month you could put 1000€ towards debt and the other 1000€ towards the adventure. I wouldn't recommend taking an adventure every month, but I wouldn't always turn one down either. Besides, I think most of the time you can have lots of fun for free.\"" }, { "docid": "123013", "title": "", "text": "On paper the whole 6 months living costs sounds (and is) great, but in real life there are a lot of things that you need to consider. For example, my first car was constantly falling apart and was an SUV that got 16MPG. I have to travel for work (about 300 miles per week) so getting a sedan that averages close to 40MPG saves me more in gas and maintenance than the monthly payment for the new car costs. When our apartment lease was up, the new monthly rent would have been $1685 per month, we got a 30 year mortgage with a monthly payment of $1372. So buying a house actually let us put aside more each month. We have just under 3 months of living expenses set aside (1 month in liquid assets, 2 months in a brokerage account) and I worry about it. I wish we had a better buffer, but in our case the house and car made more sense as an early investment compared to just squirreling away all our savings. Also, do you have any debt? Paying off debt (student loans, credit card debt, etc.) should often take top priority. Have some rainy day funds, of course, but pay down debts, and then create a personal financial plan for what works best in your situation. That would be my suggestion." }, { "docid": "432307", "title": "", "text": "Note that after 15 years, the tax exemption is €36800 per person, which includes both the principal you desposited and the accumulated interest. It's possible that you will have a higher balance than this in your savings account at this point and would still owe tax on the interest accumulated above the exempted amount. After 20 years, you get the full tax exemption, the lesser of your portion of the mortgage debt and €162000 per person. In direct answer to your questions: I'm not aware of any exceptions to the 15 year rule for allowing the accumulated interest to be tax free when selling your house. If your accumulated interest is low enough, you might consider just paying the tax on it as it would give you the most flexibility in choosing a new mortgage. This is why I asked about more details about your interest rate and how long the mortgage has been running. It may, however, possible to couple the savings account to a new ABN AMRO Bankspaar mortgage when you buy a new house. You should check your mortgage terms and conditions. For example, Section 23.12 in ABN AMRO's terms and conditions from 2010 describes this. See here. It is probably best, however, to speak directly with either your mortgage broker or with a mortgage adviser with ABN AMRO. If your mortgage broker still worked on commission (aflsuitprovisie) when you closed your mortgage, then they are obligated to assist you with this type of question. In order to qualify for the tax exemption, you must use the saved value to pay off debt on your primary residence (eigenwoningschuld). Decoupling the savings account entirely from a mortgage will disqualify you from the tax advantages. You will owe tax on all accumulated interest." }, { "docid": "536262", "title": "", "text": "\"littleadv's first comment - check the note - is really the answer. But your issue is twofold - Every mortgage I've had (over 10 in my lifetime) allows early principal payments. The extra principal can only be applied at the same time as the regular payment. Think of it this way - only at that moment is there no interest owed. If a week later you try to pay toward only principal, the system will not handle it. Pretty simple - extra principal with the payment due. In fact, any mortgage I've had that offered a monthly bill or coupon book will have that very line \"\"extra principal.\"\" By coincidence, I just did this for a mortgage on my rental. I make these payments through my bank's billpay service. I noted the extra principal in the 'notes' section of the virtual check. But again, the note will explicitly state if there's an issue with prepayments of principal. The larger issue is that your friend wishes to treat the mortgage like a bi-weekly. The bank expects the full amount as a payment and likely, has no obligation to accept anything less than the full amount. Given my first comment above here is the plan for your friend to do 99% of what she wishes: Tell her, there's nothing magic about bi-weekly, it's a budget-clever way to send the money, but over a year, it's simply paying 108% of the normal payment. If she wants to burn the mortgage faster, tell her to add what she wishes every month, even $10, it all adds up. Final note - There are two schools of thought to either extreme, (a) pay the mortgage off as fast as you can, no debt is the goal and (b) the mortgage is the lowest rate you'll ever have on borrowed money, pay it as slow as you can, and invest any extra money. I accept and respect both views. For your friend, and first group, I'm compelled to add - Be sure to deposit to your retirement account's matched funds to gain the entire match. $1 can pay toward your 6% mortgage or be doubled on deposit to $2 in your 401(k), if available. And pay off all high interest debt first. This should stand to reason, but I've seen people keep their 18% card debt while prepaying their mortgage.\"" }, { "docid": "243397", "title": "", "text": "\"There will be many who will judge your proposal on the idea that subsidized loans should be available to those who need them, and should not be used by others who are simply trying to profit from them. Each school has a pool of money available to offer for subsidized and unsubsidized loans. If they are giving you a subsidized loan, they cannot allocate it to someone else who needs it. Once you weigh the investment risks, I agree that it is analogous to investing rather than repaying your mortgage quickly. If you understand the risks, there's no reason why you shouldn't consider other options about what to do with the money. I am more risk averse, so I happen to prefer paying down the mortgage quickly after all other investment/savings goals have been met. Where you fit on that continuum will answer the question of whether or not it is a \"\"bad idea\"\".\"" }, { "docid": "56794", "title": "", "text": "\"Taking out your equity when refinancing means that you take out a new loan for the full value of your house (perhaps less 20% as a down payment on the new mortgage, otherwise you'll be paying insurance), pay off your old lender, and keep the rest for yourself. The result is much the same as using as a HELOC or home equity loan (or a second mortgage), except it's all rolled into a single new mortgage. The advantage is that the interest rate on a first mortgage is going to be lower than on HELOC or equivalent, and the equity requirements may be lower (e.g. a HELOC may only let you borrow against the amount of equity that exceeds 25% or 30%, while a new mortgage will require you only to have 20% equity). This is especially attractive to those whose homes have appreciated significantly since they bought them, especially if they have a lot of high-interest debt (e.g. credit cards) they want to pay off. Of course, rolling credit card debt into a 30-year mortgage isn't actually paying it off, but the monthly payments will be a lot lower, and if you're lucky and your home appreciates further, you can pay it off fully when you sell the property and still have paid a lot less interest. The downside is that you have turned unsecured debt into secured debt, which puts your home at risk if you find yourself unable to pay. In your case, you don't yet have even 20% equity in your home, so I wouldn't recommend this. :-) Equity is simply the difference between the amount you still owe on your home and the amount you'd get if you were to sell it. Until you do sell it, this amount is tentative, based on the original purchase price and, perhaps, an intervening appraisal that shows that the property has appreciated. That is really all that it is and there's nothing magic about it, except that since you own your home, you have equity in it, while as a renter, you would not. It used to be (decades ago, when you needed 20% down to get a mortgage) that selling was the only time you'd be able to do anything with the equity in your home. Now you can \"\"take it out\"\" as described above (or borrow against it) thanks to various financial products. It is sometimes tempting to consider equity roughly equivalent to \"\"profit.\"\" But some of it is your own money, contributed through the down payment, your monthly principal payment, and improvements you have made -- so \"\"cashing out\"\" isn't all profit, it's partly just you getting your own money back. And there are many additional expenses involved in owning a home, such as interest, property taxes, maintenance, utilities, and various fees, not to mention the commissions when you buy or sell, which the equity calculation doesn't consider. Increasing equity reflects that you own a desirable property in a desirable location, that you have maintained and maybe even improved it, that you are financially responsible (i.e., paying your mortgage, taxes, etc.), and that your financial interests are aligned with your neighbors. All those things feel pretty good, and they should. Otherwise, it is just a number that the banks will sometimes let you borrow against. :-)\"" }, { "docid": "322900", "title": "", "text": "\"Buy and Hope is a common investment strategy. It's also one that will keep you poor. Instead of thinking about saving money to put against a credit card or line of credit using your own job and hard-earned dollars, why not use someone else's money? If you have enough of a down payment for a property of your own, consider a duplex, triplex, or 4-plex where you live in one of the units. Since you will be living there you only need 5% down as opposed to 20% down if you do not live there. This arrangement gives you a place to live while you have other people paying your mortgage and other debts. If done properly, you can find a place that is cash-flow positive so you basically live rent-free. This all assumes you have a down payment and a bank that will work with you. Your best bet is to discuss your situation with a mortgage broker. They know all the rules, and which banks have the best deal for you. A mortgage broker works on your behalf and is paid by the lending institution, not you. There are various caveats with this strategy, and they all revolve around knowing what to do and how to execute the plan. I suggest Googling Robert Kiyosaki and reading \"\"Rich Dad Poor Dad\"\" before taking this journey. He offers a number of free and paid seminars that teach people how to purchase real estate and make it pay. I have taken the free evening seminar and the $500 weekend seminar on how to purchase properties and make money with them. Note that I have no affiliation with Kiyosaki, and I do find his methods to work.\"" }, { "docid": "524018", "title": "", "text": "\"First off, the \"\"mortgage interest is tax deductible\"\" argument is a red herring. What \"\"tax deductible\"\" sounds like it means is \"\"if I pay $100 on X, I can pay $100 less on my taxes\"\". If that were true, you're still not saving any money overall, so it doesn't help you any in the immediate term, and it's actually a bad idea long-term because that mortgage interest compounds, but you don't pay compound interest on taxes. But that's not what it actually means. What it actually means is that you can deduct some percentage of that $100, (usually not all of it,) from your gross income, (not from the final amount of tax you pay,) which reduces your top-line \"\"income subject to taxation.\"\" Unless you're just barely over the line of a tax bracket, spending money on something \"\"tax deductible\"\" is rarely a net gain. Having gotten that out of the way, pay down the mortgage first. It's a very simple matter of numbers: Anything you pay on a long-term debt is money you would have paid anyway, but it eliminates interest on that payment (and all compoundings thereof) from the equation for the entire duration of the loan. So--ignoring for the moment the possibility of extreme situations like default and bank failure--you can consider it to be essentially a guaranteed, risk-free investment that will pay you dividends equal to the rate of interest on the loan, for the entire duration of the loan. The mortgage is 3.9%, presumably for 30 years. The car loan is 1.9% for a lot less than that. Not sure how long; let's just pull a number out of a hat and say \"\"5 years.\"\" If you were given the option to invest at a guaranteed 3.9% for 30 years, or a guaranteed 1.9% for 5 years, which would you choose? It's a no-brainer when you look at it that way.\"" }, { "docid": "475629", "title": "", "text": "Paying off your student loan before buying a house is certainly a great risk reduction move for you. It will lower your debt to income ratio allowing your mortgage approval to go easier and it will free up more of your dollars to pay for the many miscellaneous projects that come with buying a house. I think that if you are considering paying off your student loan before buying a house that means that your student loans are an amount you can fathom paying off and that you are motivated to be rid of your student loan debt. Go for it and pay off your student loan." }, { "docid": "220032", "title": "", "text": "So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence." }, { "docid": "421736", "title": "", "text": "At this time there is one advantage of having a 30 year loan right now over a 15 year loan. The down side is you will be paying 1% higher interest rate. So the question is can you beat 1% on the money you save every month. So Lets say instead of going with 15 year mortgage I get a 30 and put the $200 monthly difference in lets say the DIA fund. Will I make more on that money than the interest I am losing? My answer is probably yes. Plus lets factor in inflation. If we have any high inflation for a few years in the middle of that 30 not only with the true value of what you owe go down but the interest you can make in the bank could be higher than the 4% you are paying for your 30 year loan. Just a risk reward thing I think more people should consider." }, { "docid": "423628", "title": "", "text": "A: Rollover the cash from the previous account into the new one a low-cost IRA like Vanguard. This, and only this. Because your mortgage is, less than 4%, while your retirement plan will earn 7% over the long term. I have no 'retirement' plans because Because you're 28. and essentially will be happy working until I die Unless circumstances change. but as far as I see it this is not such a bad deal because it is like paying taxes on income. (Principal says I will lose up to 30%) You're ignoring the 10% early withdrawal penalty. I am wise with my money for the most part Then don't piss away $3,000 just for a temporary feel good. I earn a high salary in a tech job. As a result of being under 20%, I am paying mortgage insurance of about $300/mo. So -- after building up an Emergency Fund -- throw as much as possible of your high salary against your mortgage to get rid of the PMI." }, { "docid": "134063", "title": "", "text": "Plus you already have money in a 529 plan that is meant for college expenses (and cannot be used to pay student loans) - use that money for what it's for. I disagree with @DStanley, as a current college student I would say to take out loans. Most of the time I am against loans though. So WHY? There are very few times you will receive loans at 0% interest (for 4+ years). You have money saved currently, but you do not know what the future entails. If you expend all of your money on tuition and your car breaks down, what do you do? You can not used student loans to pay for your broken car.Student loans, as long as they are subsidized, serve as a wonderful risk buffer. You can pay off your loans with summer internships and retain the initial cash you had for additional activities that make college enjoyable, i.e - Fraternity/ Sorority, clubs, dinners, and social nights. Another benefit to taking these loans would assist in building credit, with an additional caveat being to get a credit card. In general, debt/loans/credit cards are non-beneficial. But, you have to establish debt to allow others to know that you can repay. Establishing this credit rating earlier than later is critical to cheaper interest rates on (say) a mortgage. You have made it through, you have watched your expenses, and you can pay your debt. Finish It. If you do it right, you will not have loans when you graduate, you will have a stunning credit rating, and you will have enjoyed college to its fullest potential (remember, you only really go through it once.) But this is contingent on: Good luck, EDIT: I did not realize the implication of this penalty which made me edit the line above to include: (to the extent you can per year) For now, student loan repayment isn't considered a qualified educational expense. This means that if you withdraw from a 529 to pay your debts, you may be subject to income taxes and penalties.Source Furthermore, Currently, taxpayers who use 529 plan money for anything other than qualified education expenses are subject to a 10% federal tax penalty. Source My advice with this new knowledge, save your 529 if you plan on continuing higher education at a more prestigious school. If you do not, use it later in your undergraduate years." }, { "docid": "886", "title": "", "text": "I believe this argument is most often used when considering which debts to pay back first, or when there are other options available such as investment options, building up an emergency fund, or saving for a large purchase. In that case, it's simply justifying making minimum payments and paying more over the life of the loan in exchange for larger liquidity in the present. Unfortunately, when it comes to choosing between which debts to pay (e.g. My mom pays more than the minimum on her car because she can't deduct auto loan interest, despite her mortgage carrying a higher interest rate), it's only beneficial if the tax savings offsets the interest savings difference. The formula for that is: tax bracket > (1 - (target loan interest rate / mortgage interest rate)) That said, most people don't think in the long term, either by natural shortsightedness, or by necessity (need to have an emergency fund)." }, { "docid": "597679", "title": "", "text": "\"Leverage here is referring to \"\"financial leverage\"\". This is the practice of \"\"levering\"\" [ie increasing, like the use of a lever to increase the amount of weight you can lift] the value of your investment by taking on debt. For example: if you have 100k in cash, you can buy a 100k rental property. Assume the property makes 10k a year, net of expenses [10%]. Now assume the bank will also give you a 100k mortgage, at 3%. You could take the mortgage, plus your cash, and buy a 200k rental property. This would earn you 20k from the rental property, less 3k a year in interest costs [the 3%]. Your total income would be 17k, and since you only used 100k of your own money, your rate of return would now be 17% instead of 10%. This is financial leveraging. Note that this increases your risk, because if your investment fails not only have you lost your own money, you now need to pay back the bank. \"\"Beta riders\"\" appears to be negative commentary on investors who use Beta to calculate the value of a particular stock, without regard to other quantitative factors. Therefore \"\"leveraged beta riders\"\" are those who take on additional risk [by taking on debt to invest], and invest in a manner that the author would perhaps considered \"\"blindly\"\" following Beta. However, I have never seen this term before, and it appears tainted by the author's views on Quants. A \"\"quant process driven discipline\"\" appears to be positive commentary on investors who use detailed quantitative analysis to develop rules which they rigorously follow to invest. I have never seen this exact phrasing before, and like the above, it appears tainted by the author's views on Quants. I am not providing any opinion on whether \"\"beta riding\"\" or \"\"quant processes\"\" are good or bad things; this is just my attempt to interpret the quote as you presented it. Note that I did not go to the article to get context, so perhaps something else in the article could skew the language to mean something other than what I have presented.\"" } ]

[ { "docid": "95778", "title": "", "text": "\"The expression \"\"in debt\"\" when talking about a person's financial affairs means that the sum of debit balances on all accounts exceeds the sum of credit balances on all accounts. A mortgage account is not excluded from that. This definition also does not consider whether any of the debt is secured, or ownership of assets (shares, property, chattels, etc). So, someone with a mortgage of one million dollars for a home that is worth two million is in debt by one million dollars, until they they sell the home (for that amount) and pay down the mortgage. That means \"\"in debt\"\" is not necessarily a statement about net worth.\"" } ]

[ { "docid": "242023", "title": "", "text": "What can you give them as security? 1. A fixed/floating charge over assets 2. Negative covenants/Non-subordination agreements 3. Real Mortgage 4. Chattel Mortgage 5. Personal or inter-business Guarantees Essentially a bond is just a debt agreement, it is when you sell standardised bonds over a market that regulation comes into it. Now I am from Australia, so I can't comment on US policies etc..." }, { "docid": "278801", "title": "", "text": "\"I am going to respond to a very thin sliver of what's going on. Skip ahead 4 years. When buying that house, is it better to have $48K in the bank but a $48K student loan, or to have neither? That $48K may very well be what it would take to put you over the 20% down payment threshhold thus avoiding PMI. Banks let you have a certain amount of non-mortgage debt before impacting your ability to borrow. It's the difference between the 28% for the mortgage, insurance and property tax, and the total 38% debt service. What I offer above is a bit counter-intuitive, and I only mention it as you said the house is a priority. I'm answering as if you asked \"\"how do I maximize my purchasing power if I wish to buy a house in the next few years?\"\"\"" }, { "docid": "462668", "title": "", "text": "\"This is a hard question to answer. Government debt and mortgages are loosely related. Banks typically use yields on government bonds to determine mortgage interest rates. The banks must be able to get higher rates from the mortgage otherwise they would buy government bonds. Your question mentions default so I'm assuming a country has reneged on its promise to pay either the principal or interest on government bonds. The main thing to consider is \"\"Who does not get their money?\"\". In other words, who does the government decide not to pay. This is the important part. The government will have some money so they could pay some bond holders. They must decide who to shaft. For example, let's look at who holds Greek government debt. Around 70% of Greek government debt is held outside Greece. See table below. The Greek government could decide to default only on the debt to foreign holders. In that case the banks in France and Switzerland would take the loss on their bonds. This could cause severe problems in France and Switzerland depending on the percentage of Greek bonds that make up the banks' assets. Greek banks would still face losses, however, since the price of their Greek bond holdings would drop sharply when the government defaults. Interestingly, the losses for the Greek banks may be smaller than the losses faced by the French and Swiss banks. This is usually the favored option chosen by government since the French and Swiss don't vote in Greece. Yields on Greek government bonds would rise dramatically. If your Greek mortgage is an adjustable rate mortgage then you could see some big adjustments upward. If you live in France or Switzerland then the bank that owns your mortgage may go under if Greece defaults. During liquidation the bank will sell their assets which includes mortgages and you will probably not notice any difference in your mortgage. As I stated earlier: this is a hard question to answer since the two financial instruments involved (bonds and mortgages) are similar but may or may not be related.\"" }, { "docid": "299591", "title": "", "text": "The home owner does not start foreclosure, the bank decides when to foreclose. Therefore you cannot really decide a time to foreclose if you are trying to time the decision. The process You miss payments, and the banks will send you a late notice for the missing payments. Expect many notices. The bank will call you at home, on your cell phone and at work. They will mail you letters regarding the missing payments. If you continue to miss payments, the bank will probably demand the loan be paid in full. You will owe the bank the full balance of the principle, all past due interest, all past due late charges and junk fees. The bank won't even take a normal monthly payment from you should you try to pay your regular payment again. Some law enforcement will notify you on the bank's intent to foreclose. The bank has begun legal proceedings. Legal notices are published in the local newspaper. Soon the notices and the legal waiting period will expire. Court proceedings happen. The court will then allow the bank to foreclose. Notices to into the paper again about the updated status of the foreclosure. The house is sold at auction. Money from the auction is used to pay taxes owned, then mortgages, then other liens or creditors who file. Further debt for the home owner Taxes When sold, if the mortgage debt exceeds the home's fair market value, US Federal Tax rules say the selling price as the fair market value. The fair market value can still be higher than the tax basis (which I think is the value of the house at the time of original purchase plus improvements.). If the fair market value is higher, you will own taxes on sale. However tax rules in the US say if you have owned the home more than two years and make less than $250,000 in the transaction ($500,000 if married) you will not owe any tax. State taxes can be different. Additionally, if the mortgage lender forgives the debt and doesn't create a deficiency, that income is taxable as well. This is more an more common these days. There are exceptions if the home is your primary residence. This whole process an take several months to occur, but depends on where you live. If you continue to live in the home after the auction, the new owner must evict you from the property which is another set of legal proceedings. Your credit and ability to buy are home will be damaged for the next several years. I am not so sure on how PMI works for the banks, but I know they are getting some money back." }, { "docid": "341348", "title": "", "text": "This is how its done I am a certain french bank, aka sg I have some PIIGS debt, I can use this as collateral at face value (100), with the ECB in order to secure cash... Lets say I use 1mn of BTPS (italian debt), this has an MTM (clean) of 88. I use that 88 to get me 100 (1mn) of cash, from which I buy another BTPS, for (88), of which I use as collateral pledged to the ECB to get this, get another BTPS. So now I am long 3 BTPS, all pledged to the ECB and I have 36 in cash and I owe the ECB 300+r in 3 years. remember the yield on my shitty btps is a lot higher than the interest on the deposits. Secondly, I have three years, so I don't need to give a fuck about the mark to market on the notes (I could even buy a 2 year and n month note maturing just before). So I can make some free yield at the ECB's expense. Also this frees up 36 in cash, of which I can use to meet short term funding instead of tapping the bond market, this trade can be made infinitely, although the ECB might catch on. You can view it as getting a mortgage on your house to buy another house, then mortgaging house #2 to buy house #3, and so on." }, { "docid": "556219", "title": "", "text": "While I agree with keshlam@ that the gym had no reason (or right) to ask for your SSN, giving false SSN to obtain credit or services (including gym membership) may be considered a crime. While courts disagree on whether you can be charged with identity theft in this scenario, you may very well be charged with fraud, and if State lines are crossed (which in case of store cards is likely the case) - it would be a Federal felony charge. Other than criminal persecution, obviously not paying your debt will affect your credit report. Since you provided false identity information, the negative report may not be matched to you right away, but it may eventually. In the case the lender discovers later that you materially misrepresented information on your mortgage application - they may call on your loan and either demand repayment in full at once or foreclose on you. Also, material misrepresentation of facts on loan application is also a criminal fraud. Again, if State lines are crossed (which in most cases, with mortgages they are), it becomes a Federal wire fraud case. On mortgage application you're required to disclose your debts, and that includes lines of credits (store cards and credit cards are the same thing) and unpaid debts (like your gym membership, if its in collection)." }, { "docid": "159936", "title": "", "text": "\"The statistic you cited comes from the Federal Reserve Board's Survey of Consumer Finances, a survey that they do every three years, most recently in 2013. This was reported in the September 2014 issue of the Federal Reserve Bulletin. They list the percentage of Americans with any type of debt as 74.5 in 2013, down slightly from 74.9 in 2010. The Bulletin also has a table with a breakdown of the types of debt that people have, and primary residence mortgages are at the top of the list. So the answer is yes, the 75% statistic includes Americans with home mortgages.* The bigger question is, are you really \"\"in debt\"\" if you have a home mortgage? The answer to that is also yes. When you take out a mortgage, you really do own the house. You decide who lives there, you decide what changes you are going to make to it, and you are responsible for the upkeep. But the mortgage debt you have is secured by the house. This means that if you refuse to pay, the bank is allowed to take possession of the house. They don't even get the \"\"whole\"\" house, though; they will sell it to recoup their losses, and give you back whatever equity you had in the house after the loan is satisfied. Is it good debt? Many people think that if you are borrowing money to purchase an appreciating asset, the debt is acceptable. With this definition, a car loan is bad, credit card debt is very bad, and a home mortgage might be okay. Even Dave Ramsey, radio host and champion of the debt-free lifestyle, is not opposed to home mortgages. Home mortgages allow people to purchase a home that they would otherwise be unable to afford. * Interestingly, according to the bulletin appendix, credit card balances were only included as debt for the survey purposes if there was a balance after the most recent bill was paid, not including purchases made after the bill. So people that do not carry a balance on their credit card were not considered \"\"in debt\"\" in this statistic.\"" }, { "docid": "123013", "title": "", "text": "On paper the whole 6 months living costs sounds (and is) great, but in real life there are a lot of things that you need to consider. For example, my first car was constantly falling apart and was an SUV that got 16MPG. I have to travel for work (about 300 miles per week) so getting a sedan that averages close to 40MPG saves me more in gas and maintenance than the monthly payment for the new car costs. When our apartment lease was up, the new monthly rent would have been $1685 per month, we got a 30 year mortgage with a monthly payment of $1372. So buying a house actually let us put aside more each month. We have just under 3 months of living expenses set aside (1 month in liquid assets, 2 months in a brokerage account) and I worry about it. I wish we had a better buffer, but in our case the house and car made more sense as an early investment compared to just squirreling away all our savings. Also, do you have any debt? Paying off debt (student loans, credit card debt, etc.) should often take top priority. Have some rainy day funds, of course, but pay down debts, and then create a personal financial plan for what works best in your situation. That would be my suggestion." }, { "docid": "157728", "title": "", "text": "A common rule of thumb is the 28/36 ratio. It's described here. In your case, with a gross (?) salary of £50,000, that means that you should spend no more than 28% of it, or £1,167 per month on housing. You may be able to swing a bit more because you have no debts and a modest amount in your savings. The 36% part comes in as the amount you can spend servicing all your debt, including mortgage. In your case, based on a gross (?) salary of £50,000, that'd be £1,500 per month. Again, that is to cover your housing costs and any additional debt you are servicing. So, you need to figure out how much you could bring in through rent to make up the rest. As at least one other person has commented, the rule of thumb is that your mortgage should be no more than 2.5 - 3 times your income. I personally think you are not a good candidate for a mortgage of the size you are discussing. That said, I no longer live in England. If you could feel fairly secure getting someone to pay you enough in rent to bring down your total mortgage and loan repayment amounts to £1,500 or so a month, you may want to consider it. Remember, though, that it may not always be easy to find renters." }, { "docid": "474837", "title": "", "text": "I'm not an attorney, nor am I a licensed tax adviser. I suggest you talk to these two types of professionals. From my limited knowledge, without proper documentation/organization, I can't see how the IRS/State will not consider this as a rent payment. The mortgage responsibility is of the person signing the mortgage contract, and you're under no obligation to pay that person anything. Had you not lived at the property, you might argue that it was a gift (although I'm not sure if it would stand), but since you do live in the property - it is quite obviously a rent payment. Putting your name on the deed may mitigate this slightly but I'm not sure how much - since you're still not obligated to pay the mortgage. However this is probably moot since it is unlikely for a bank to give a mortgage on a property to person A when it is also owned by a person B, without that person B being side to the mortgage contract." }, { "docid": "56794", "title": "", "text": "\"Taking out your equity when refinancing means that you take out a new loan for the full value of your house (perhaps less 20% as a down payment on the new mortgage, otherwise you'll be paying insurance), pay off your old lender, and keep the rest for yourself. The result is much the same as using as a HELOC or home equity loan (or a second mortgage), except it's all rolled into a single new mortgage. The advantage is that the interest rate on a first mortgage is going to be lower than on HELOC or equivalent, and the equity requirements may be lower (e.g. a HELOC may only let you borrow against the amount of equity that exceeds 25% or 30%, while a new mortgage will require you only to have 20% equity). This is especially attractive to those whose homes have appreciated significantly since they bought them, especially if they have a lot of high-interest debt (e.g. credit cards) they want to pay off. Of course, rolling credit card debt into a 30-year mortgage isn't actually paying it off, but the monthly payments will be a lot lower, and if you're lucky and your home appreciates further, you can pay it off fully when you sell the property and still have paid a lot less interest. The downside is that you have turned unsecured debt into secured debt, which puts your home at risk if you find yourself unable to pay. In your case, you don't yet have even 20% equity in your home, so I wouldn't recommend this. :-) Equity is simply the difference between the amount you still owe on your home and the amount you'd get if you were to sell it. Until you do sell it, this amount is tentative, based on the original purchase price and, perhaps, an intervening appraisal that shows that the property has appreciated. That is really all that it is and there's nothing magic about it, except that since you own your home, you have equity in it, while as a renter, you would not. It used to be (decades ago, when you needed 20% down to get a mortgage) that selling was the only time you'd be able to do anything with the equity in your home. Now you can \"\"take it out\"\" as described above (or borrow against it) thanks to various financial products. It is sometimes tempting to consider equity roughly equivalent to \"\"profit.\"\" But some of it is your own money, contributed through the down payment, your monthly principal payment, and improvements you have made -- so \"\"cashing out\"\" isn't all profit, it's partly just you getting your own money back. And there are many additional expenses involved in owning a home, such as interest, property taxes, maintenance, utilities, and various fees, not to mention the commissions when you buy or sell, which the equity calculation doesn't consider. Increasing equity reflects that you own a desirable property in a desirable location, that you have maintained and maybe even improved it, that you are financially responsible (i.e., paying your mortgage, taxes, etc.), and that your financial interests are aligned with your neighbors. All those things feel pretty good, and they should. Otherwise, it is just a number that the banks will sometimes let you borrow against. :-)\"" }, { "docid": "290434", "title": "", "text": "\"If by \"\"investment\"\" you mean something that pays you money that you can spend, then no. But if you view \"\"investment\"\" as something that improves your balance sheet / net worth by reducing debt and reducing how much money you're throwing away in interest each month, then the answer is definitely yes, paying down debt is a good investment to improve your overall financial condition. However, your home mortgage might not be the first place to start looking for pay-downs to save money. Credit cards typically have much higher interest rates than mortgages, so you would save more money by working on eliminating your credit card debt first. I believe Suze Orman said something like: If you found an investment that paid you 25% interest, would you take it? Of course you would! Paying down high interest debt reduces the amount of interest you have to pay next month. Your same amount of income will be able to go farther, do more because you'll be paying less in interest. Pay off your credit card debt first (and keep it off), then pay down your mortgage. A few hundred dollars in extra principal paid in the first few years of a 30 year mortgage can remove years of interest payments from the mortgage term. Whether you plan to keep your home for decades or you plan to move in 10 years, having less debt puts you in a stronger financial position.\"" }, { "docid": "212563", "title": "", "text": "At an income of $95K you are on the edge of qualify for $500,000 mortgage (once you have a down payment). Yes the fastest way to qualify for a $500,000 condo is to save for a down payment. I am suggesting that might not be the best long term financial plan. You are only going to qualify for a 30 year term. You still have a student loan where interest is not tax deductible. You have put you yourself in a long term debt position and if you lose your job a potential cash flow problem with a risk of losing the condo. Since you are living at home I would go after that student debt. Looks like you could pay it off in like a year. I don't know prices in you area but maybe go in at less than $500,000 for your first home." }, { "docid": "536262", "title": "", "text": "\"littleadv's first comment - check the note - is really the answer. But your issue is twofold - Every mortgage I've had (over 10 in my lifetime) allows early principal payments. The extra principal can only be applied at the same time as the regular payment. Think of it this way - only at that moment is there no interest owed. If a week later you try to pay toward only principal, the system will not handle it. Pretty simple - extra principal with the payment due. In fact, any mortgage I've had that offered a monthly bill or coupon book will have that very line \"\"extra principal.\"\" By coincidence, I just did this for a mortgage on my rental. I make these payments through my bank's billpay service. I noted the extra principal in the 'notes' section of the virtual check. But again, the note will explicitly state if there's an issue with prepayments of principal. The larger issue is that your friend wishes to treat the mortgage like a bi-weekly. The bank expects the full amount as a payment and likely, has no obligation to accept anything less than the full amount. Given my first comment above here is the plan for your friend to do 99% of what she wishes: Tell her, there's nothing magic about bi-weekly, it's a budget-clever way to send the money, but over a year, it's simply paying 108% of the normal payment. If she wants to burn the mortgage faster, tell her to add what she wishes every month, even $10, it all adds up. Final note - There are two schools of thought to either extreme, (a) pay the mortgage off as fast as you can, no debt is the goal and (b) the mortgage is the lowest rate you'll ever have on borrowed money, pay it as slow as you can, and invest any extra money. I accept and respect both views. For your friend, and first group, I'm compelled to add - Be sure to deposit to your retirement account's matched funds to gain the entire match. $1 can pay toward your 6% mortgage or be doubled on deposit to $2 in your 401(k), if available. And pay off all high interest debt first. This should stand to reason, but I've seen people keep their 18% card debt while prepaying their mortgage.\"" }, { "docid": "160193", "title": "", "text": "\"It may be the case that some of your debts have a flat regular fee in addition to the interest, which will go away when the debt is completely paid. For example, my mortgage has an approximately $400/year \"\"package fee\"\" as well as its (quite low) interest. When I finish paying the mortgage, I won't have to pay that fee anymore, so it is theoretically possible that spending extra money on paying off my mortgage would be better than spending it on paying off some other debt. I think it's unlikely that it would actually ever be my optimal move in practice, but the point is, there may be an advantage, financial or otherwise, to getting rid of a particular debt, other than merely removing the burden of interest. Those are special situations, though, and in the majority of cases, starting with the highest interest loan will be the right move.\"" }, { "docid": "299176", "title": "", "text": "The key thing to consider in a question like this is, What return am I getting on my investment versus what interest am I paying on the loan? If the investment returns more than what you're paying on the loan, than it makes sense to keep the investment and pay off the loan with other income. If the investment returns less, than it makes sense to cash it out to pay off the loan. One complicating factor is taxes. In the case of an IRA, you're not paying taxes on the profits. You do pay a tax penalty for an early withdrawal. Those are both factors that tend to make keeping the money in the IRA more desirable. And of course, if the choice is between keeping your investment and defaulting on the loan, you probably want to close out the investment. I don't know what return you're getting on your IRA, but it's probably more than 6.8%. I'd have to check but I think my retirement funds got over 20% last year. If you're not getting 6.8%, you might want to investigate switching to another investment fund. I'm sure there's a lot I don't know about your situation, but I'd think that keeping the IRA would be a better plan. If you can't add to it for some time well you get these debts paid off, well, that's how it is." }, { "docid": "565428", "title": "", "text": "\"Debts do not inherit to the children. You are absolutely not liable for your parent's debt, in any way whatsoever. ** Collection agents will lie about this; tricking you is their job, and your job is to tell them Heck no, do I look like an idiot? When a person dies, all their personal assets (and debts) go to a fictitious entity called the Estate. This is a holder for the person's assets until they can be dispositioned finally. The estate is managed by a living person, sometimes a company (law firm), called an Executor. Similar to a corporation which is shutting down business, the Executor's job is to act on behalf of the Estate, and in the Estate's best interest (not his own). For instance he can't decide, in his capacity as executor, to give all the estate's money to himself. He has to loyally and selflessly follow state law and any living-trust or wills that may be in place. This role is not for everyone. You can't just decide \"\"la la la, I'm going to live in their house now\"\", that is squatting. The house is an asset and someone inherited that, as dictated by will, trust or state law. That has to be worked out legally. Once they inherit the house, you have to negotiate with them about living there. If you want to live there now, negotiate to rent the house from the estate. This is an efficient way to funnel money into the estate for what I discuss later.** The Estate has assets, and it has debts. Some debts extinguish on the death of the natural person, e.g. student loans, depending on the contract and state law. Did you know corporations are considered a \"\"person\"\"? (that's what Citizens United was all about.) So are estates - both are fictitious persons. The executor can act like a person in that sense. If you have unsecured debt, how can a creditor motivate you to pay? They can annoy and harass you. They can burn your credit rating. Or they can sue you and try to take your assets - but suing is also expensive for them. This is not widely understood, but anyone at any time can go to their creditors and say \"\"Hey creditor, I'm not gonna pay you $10,000. Tough buffaloes. You can sue me, good luck with that. Or, I'll make you a deal. I'll offer you $2000 to settle this debt. What say you? And you'll get one of two answers. Either \"\"OK\"\" or \"\"Nice try, let's try $7000.\"\" If the latter, you start into the cycle of haggling, \"\"3000.\"\" \"\"6000.\"\" \"\"4000.\"\" \"\"5000. \"\"Split the difference, $4500.\"\" \"\"OK.\"\" This is always a one-time, lump sum, one-shot payoff, never partial payments. Creditors will try to convince you to make partial payments. Don't do it. Anyone can do that at any time. Why don't living people do this every day? How about an Estate? Estates are fictitious persons, they don't have a \"\"morality\"\", they have a fiduciary duty. Do they plan on borrowing any more money? Nope. Their credit rating is already 0. They owe no loyalty to USBank. Actually, the executor's fiduciary duty is to get the most possible money for the assets, and settle the debts for the least. So I argue it's unethical to fail to haggle down this debt. If an executor is \"\"not a haggler\"\" or has a moral issue with shortchanging creditors, he is shortchanging the heirs, and he can be sued for that personally - because he has a fiduciary duty to the heirs, not Chase Bank. Like I say, the job is not for everyone. The estate should also make sure to check the paperwork for any other way to escape the debt: does it extinguish on death? Is the debt time-barred? Can they really prove it's valid? Etc. It's not personal, it's business. The estate should not make monthly payments (no credit rating to protect) and should not pay one dime to a creditor except for a one-shot final settlement. Is it secured debt? Let them take the asset. (unless an heir really wants it). When a person dies with a lot of unsecured debt, it's often the case that they don't have a lot of cash lying around. The estate must sell off assets to raise the cash to settle with the creditors. Now here's where things get ugly with the house. ** The estate should try to raise money any other way, but it may have to sell the house to pay the creditors. For the people who would otherwise inherit the house, it may be in their best interest to pay off that debt. Check with lawyers in your area, but it may also be possible for the estate to take a mortgage on the house, use the mortgage cash to pay off the estate's debts (still haggle!), and then bequeath the house-and-mortgage to the heirs. The mortgage lender would have to be on-board with all of this. Then, the heirs would owe the mortgage. Good chance it would be a small mortgage on a big equity, e.g. a $20,000 mortgage on a $100,000 house. Banks love those.\"" }, { "docid": "220032", "title": "", "text": "So My question is. Is my credit score going to be hit? Yes it will affect your credit. Not as much as missing payments on the debt, which remains even if the credit line is closed, and not as much as missing payments on other bills... If so what can I do about it? Not very much. Nothing worth the time it would take. Like you mentioned, reopening the account or opening another would likely require a credit check and the inquiry will add another negative factor. In this situation, consider the impact on your credit as fact and the best way to correct it is to move forward and pay all your bills on time. This is the number one key to improving credit score. So, right now, the key task is finding a new job. This will enable you to make all payments on time. If you pay on time and do not overspend, your credit score will be fine. Can I contact the creditors to appeal the decision and get them to not affect my score at the very least? I know they won't restore the account without another credit check). Is there anything that can be done directly with the credit score companies? Depending on how they characterize the closing of the account, it may be mostly a neutral event that has a negative impact than a negative event. By negative events, I'm referring to bankruptcy, charge offs, and collections. So the best way to recover is to keep credit utilization below 30% and pay all your bills and debt payments on time. (You seem to be asking how to replace this line of credit to help you through your unemployment.) As for the missing credit line and your current finances, you have to find a way forward. Opening new credit account while you're not employed is going to be very difficult, if not impossible. You might find yourself in a situation where you need to take whatever part time gig you can find in order to make ends meet until your job search is complete. Grocery store, fast food, wait staff, delivery driver, etc. And once you get past this period of unemployment, you'll need to catch up on all bills, then you'll want to build your emergency fund. You don't mention one, but eating, paying rent/mortgage, keeping current on bills, and paying debt payments are the reasons behind the emergency fund, and the reason you need it in a liquid account. Source: I'm a veteran of decades of bad choices when it comes to money, of being unemployed for periods of time, of overusing credit cards, and generally being irresponsible with my income and savings. I've done all those things and am now paying the price. In order to rebuild my credit, and provide for my retirement, I'm having to work very hard to save. My focus being financial health, not credit score, I've brought my bottom line from approximately 25k in the red up to about 5k in the red. The first step was getting my payments under control. I have also been watching my credit score. Two years of on time mortgage payments, gradual growth of score. Paid off student loans, uptick in score. Opened new credit card with 0% intro rate to consolidate a couple of store line of credit accounts. Transferred those balances. Big uptick. Next month when utilization on that card hits 90%, downtick that took back a year's worth of gains. However, financially, I'm not losing 50-100 a month to interest. TLDR; At certain times, you have to ignore the credit score and focus on the important things. This is one of those times for you. Find a job. Get back on your feet. Then look into living debt free, or working to achieve financial independence." }, { "docid": "559370", "title": "", "text": "First, what country are you in? Canada doesn't offer a mortgage interest tax deduction, the US does. This changes the math a bit, and in the US, the current after tax cost of a mortgage is below our long term inflation rate. Is the mortgage your only debt? I've seen people religiously pay extra each month to their 6% mortgage while carrying 18% interest debt on credit cards. Next, there are company matched retirement plans, in the US, a 401(k) plan, where if you put up to 6% or so of your pay into the account, it's effectively doubled upon deposit. I'd be sure not to miss such an opportunity. After these considerations, prepaying is equal to buying a risk free fixed instrument. If that appeals to you, and you've considered the above first, go for it. Keep in mind, money paid to the mortgage isn't easily borrowed back, short of a HELOC. I'd strongly advise that your emergency fund be fully funded (6 months worth of spending) before starting to make extra mortgage payments." } ]

[ { "docid": "176596", "title": "", "text": "\"Parts of what you want are possible, but taken as a whole, you're out of luck. First of all, there is no master database of every cardholder in the country. The only way to check if information is correct is to ask the issuing bank. The AVS system is a way to automate doing so, but it's possible to call the bank directly and verbally verify the address. That means you're subject to the whims of what the issuing bank chooses to support. Banks that are part of the Visa and MasterCard networks generally only verify the numeric parts (address, apartment number, zipcode). AmEx can also verify the cardholder name. But if the bank doesn't have support for validating something, you can't validate it. Separately, there is a \"\"verify-only\"\" transaction which some processors support, which will do exactly what you want: Return AVS values without ever charging the card. However, processors require you to have the \"\"approved merchant account\"\" you don't want to have to have. Without being a merchant, you shouldn't have access to other people's credit cards anyway. Would you really want anyone in the country to be able to verify anyone else's address whenever they want? In short, whatever purpose you have for wanting this probably falls into one of three categories:\"" } ]

[ { "docid": "367730", "title": "", "text": "I think you'll find that a credit card does have an account number and sort code, I have had a Visa card previously and currently have a Mastercard. Both were paid by Direct Debit, and I could then transfer money to the account when I wanted to pay more than the minimum payment off. Check the introductory letter from the card provider, it should be on there, failing that, contact the provider and ask them for the details, how to pay, or a direct debit mandate for either the whole amount or the minimum amount." }, { "docid": "276906", "title": "", "text": "How often do you need to actually go to a bank? atm's, debit and credit cards work where ever. you can even deposit checks by taking a picture of them. dealing with cash would be more troublesome though." }, { "docid": "567201", "title": "", "text": "\"A bona-fide company never needs your credit card details, certainly not your 3-digit-on-back-of-card #, to issue a refund. On an older charge, they might have to work with their merchant provider. But they should be able to do it within the credit card handling system, and in fact are required to. Asking for details via email doesn't pass the \"\"sniff test\"\" either. To get a credit card merchant account, a company needs to go through a security assessment process called PCI-DSS. Security gets drummed into you pretty good. Of course they could be using one of the dumbed-down services like Square, but those services make refunds ridiculously easy. How did you come to be corresponding on this email address? Did they initially contact you? Did you find it on a third party website? Some of those are fraudulent and many others, like Yelp, it's very easy to insert false contact information for a business. Consumer forums, even moreso. You might take another swing at finding a proper contact for the company. Stop asking for a cheque. That also circumvents the credit card system. And obviously a scammer won't send a check... at least not one you'd want! If all else fails: call your bank and tell them you want to do a chargeback on that transaction. This is where the bank intervenes to reverse the charge. It's rather straightforward (especially if the merchant has agreed in principle to a refund) but requires some paperwork or e-paperwork. Don't chargeback lightly. Don't use it casually or out of laziness or unwillingness to speak with the merchant, e.g. to cancel an order. The bank charges the merchant a $20 or larger investigation fee, separate from the refund. Each chargeback is also a \"\"strike\"\"; too many \"\"strikes\"\" and the merchant is barred from taking credit cards. It's serious business. As a merchant, I would never send a cheque to an angry customer. Because if I did, they'd cash the cheque and still do a chargeback, so then I'd be out the money twice, plus the investigation fee to boot.\"" }, { "docid": "463449", "title": "", "text": "\"Like a lot of businesses, they win on the averages, which means lucrative customers subsidize the money-losers. This is par for the course. It's the health club model. The people who show up everyday are subsidized by the people who never show but are too guilty to cancel. When I sent 2 DVDs a day to Netflix, they lost their shirt on me, and made it up on the customers who don't. In those \"\"free to play\"\" MMOs, actually 95-99% of the players never pay and are carried by the 1-5% who spend significantly. In business thinking, the overall marketing cost of acquiring a new customer is pretty big - $50 to $500. On the other side of the credit card swiper, they pay $600 bounty for new merchant customers - there are salesmen who live on converting 2-3 merchants a month. That's because as a rule, customers tend to lock-in. That's why dot-coms lose millions for years giving you a free service. Eventually they figure out a revenue model, and you stay with it despite the new ads, because changing is inconvenient. When you want to do a banking transaction, they must provide the means to do that. Normal banks have the staggering cost of a huge network of branch offices where you can walk in and hand a check to a teller. The whole point of an ATM is to reduce the cost of that. Chase has 3 staffed locations in my zipcode and 6 ATMs. Schwab has 3 locations in my greater metro, which contains over 400 zipcodes. If you're in a one-horse town like French Lick, Bandera or Detroit, no Schwab for miles. So for Schwab, a $3 ATM fee isn't expensive, it's cheap - compared to the cost of serving you any other way. There may also be behind-the-scenes agreements where the bank that charged you $3 refunds some of it to Schwab after they refund you. It doesn't really cost $3 to do a foreign ATM transaction. Most debit cards have a Visa or Mastercard logo. Many places will let you run it as an ATM card with a PIN entry. However everyone who takes Visa/MC must take it as a credit card using a signature. In that case, the merchant pays 2-10% depending on several factors.** Of this, about 1.4% goes to the issuing bank. This is meant to cover the bank's risk of credit card defaults. But drawing from a bank account where they can decline if the money isn't there, that risk is low so it's mostly gravy. You may find Schwab is doing OK on that alone. Also, don't use debit cards at any but the most trusted shops -- unless you fully understand how, in fraud situations, credit cards and debit cards compare -- and are comfortable with the increased risks. ** there are literally dozens of micro-fees depending on their volume, swipe vs chip, ATM vs credit, rewards cards, fixed vs online vs mobile, etc. (Home Depot does OK, the food vendor at the Renaissance Faire gets slaughtered). This kind of horsepuckey is why small-vendor services like Square are becoming hugely popular; they flat-rate everything at around 2.7%. Yay!\"" }, { "docid": "9471", "title": "", "text": "Definitely a scam. Don't call him or do anything. Stay calm, there is no damage done yet. I met someone online three weeks ago. ... Left his wallet, debit card, credit cards, drivers license, etc. in the room In the entire world its only you he can bank upon ... someone whom hes met online just few weeks ago; there are no relatives, friends !!! why would the hotel manager Fed-Ex or UPS the items to my home address ... and not to his own address? Upon receipt, the engineer will give me his password to the Bank of America account so he can access his account Why doesn't he have internet? I am supposed to call him in the next hour or so and let him know if I will be doing this tomorrow. Don't call. Don't reply. The $150 is just a starter bait to see if one is gullible enough to take it and then there is more and more by different ways." }, { "docid": "213370", "title": "", "text": "Debit cards with the Visa or Mastercard symbol on them work technically everywhere where credit cards work. There are some limitations where the respective business does not accept them, for example car rentals want a credit card for potential extra charges; but most of the time, for day-to-day shopping and dining, debit cards work fine. However, you should read up the potential risks. A credit card gives you some security by buffering incorrect/fraudulent charges from your account, and credit card companies also help you reverse incorrect charges, before you ever have to pay for it. If you use a debit card, it is your money on the line immediately - any incorrect charge, even accidential, takes your money from your account, and it is gone while you work on reversing the charge. Any theft, and your account can be cleaned out, and you will be without money while you go after the thief. Many people consider the debit card risk too high, and don't use them for this reason. However, many people do use them - it is up to you." }, { "docid": "456098", "title": "", "text": "\"The credit card may have advantages in at least two cases: In some instances (at least in the US), a merchant will put a \"\"hold\"\" on a credit card without charging it. This happens a lot at hotels, for example, which use the hold as collateral against damages and incidental charges. On a credit card this temporarily reduces your credit limit but never appears on your bill. I've never tried to do it on a debit card, but my understanding is that they either reject the debit card for this purpose or they actually make the withdrawal and then issue a refund later. You'll actually need to account for this in your cash flow on the debit card but not on the credit card. If you get a fraudulent charge on your credit card, it impacts that account until you detect it and go through the fraud resolution process. On a debit card, the fraudulent charge may ripple through the rest of your life. The rent payment that you made by electronic transfer or (in the US) by check, for example, is now rejected because your bank account is short by the amount of the fraud even if you didn't use the debit card to pay it. Eventually this will probably get sorted out, but it has potential to create a bigger mess than is necessary. Personally, I never use my debit card. I consider it too risky with no apparent benefit.\"" }, { "docid": "577480", "title": "", "text": "**Bakgrunn** Som en prosess, [risikostyring](http://www.mitre.org/publications/systems-engineering-guide/acquisition-systems-engineering/risk-management/risk-management-approach-and-plan) brukes til å identifisere og unngå potensialet kostnader, timeplan og ytelse og teknisk risiko til et system, ta en proaktiv og strukturert tilnærming til å håndtere negative resultater, svare på dem hvis de oppstår, og identifisere potensielle muligheter som kan skjules i situasjonen. Risiko tilnærming og [plan operationalize](http://dymanassociatesprojects.com/) målsettingene ledelse. Fordi ingen to prosjekter er like, burde risiko tilnærming og plan være avpasset å omfanget og kompleksiteten i enkeltprosjekter. Andre hensyn inkluderer roller, ansvar og størrelsen på prosjektgruppen, risiko administrasjon prosessene nødvendig eller anbefalt av regjeringen organisasjonen og de risikoen verktøyene tilgjengelig for prosjektet. Risikoen oppstår hele spekteret av regjeringen og dens [ulike bedrifter](https://twitter.com/dymanassociates), systemer-av-systemer og individuelle systemer. På systemnivå sentre risiko fokus vanligvis på utviklingen. Risiko finnes i operasjoner, krav, design, utvikling, integrasjon, testing, opplæring, fielding, etc. For systemer-av-systemer, avhengighet risikoen stige til toppen. Jobber konsekvent over system-av-systemer [synkronisere evneutvikling og fielding](http://dymanassociatesprojects.tumblr.com/), vurderer om de skal grensesnitt, sammen, eller integrere, og risiko forbundet med disse banene alle kommet i forgrunnen i system-av-systemer miljø. På organisasjonsnivå blir styring og kompleksitet risiko mer fremtredende. Styring risikoen av ulike hele bedriften til fordel for virksomheten vil sildre ned til det system-av-systemer og individuelle systemer, som resulterer i potensielt uventede krav og kanskje suboptimal løsninger på lavt nivå som kan være fordelaktig på organisasjonsnivå. Den ukjente øker og risikoen forbundet med disse-teknikker i guiden delen på Enterprise Engineering, som løse koblinger, samlet arkitekturer og porteføljestyring, kan hjelpe MITRE SE lindre disse risikoene." }, { "docid": "498775", "title": "", "text": "If you are solvent enough, and organised enough to pay your credit card bill in full each month, then use the credit card. There are no disadvantages and several plus points, already mentioned. Use the debit card when you would be surcharged for using the credit card, or where you can negotiate a discount for not subjecting the vendor to credit card commission." }, { "docid": "38720", "title": "", "text": "A search quickly led to http://www.cardfellow.com/blog/debit-card-credit-card-difference-charges/ which shows the difference in merchant fees charged. A $200 charge costs $3.50-$3.60, a debit charge, $2.34-$2.39 but a PIN Debit, $1.87. The debit cards are a full percent less cost to the merchant, so the money collected is less to use for rewards. (I can't help but wonder how my card gives me 2% cash back, no fee, when I never pay interest.)" }, { "docid": "346784", "title": "", "text": "\"Yes it is possible, the Google Summer of Code students have been doing so for years. They get a Prepaid card and then can spend that in there local countries. They have the billing address as Google and the shipping address as their own. A few retailers have trouble but that just their systems. The trouble people have had is more in transferring the money to their personal accounts, usually there is a charge on this transfer. Transfer money from US (\"\"prepaid\"\") VISA Debit to AU bank account\"" }, { "docid": "447478", "title": "", "text": "I don't know of any that are comparable to credit cards. There's a reason for that. Debit cards, being newer, have a much lower interchange rate. Since collecting on debt is risky and less predictable, rewards / miles are paid from those interchange fees. This means with a debit card there's less money to pay you with. So what can you do? Assuming your credit isn't terrible, you can just open a credit card account and pay in full for purchases by the grace period. I don't know how all cards work, but my grace period allows me to pay in full by the billing date (roughly a month from purchase) and incur no finance charges. In effect, I get a small 30 day loan with no interest, and a cash back incentive (I dislike miles). You're also less liable for fraud via CC than debit." }, { "docid": "570263", "title": "", "text": "The two things are materially different. Point number 1. With a credit card, the bank (and card network) earn a fee every time you spend on your card. You swipe a $100 dinner, the credit card company makes about $3. You pay it back, they may not make any interest but they've made their $3. Additionally, if you have a $1,000,000 credit limit, you've only actually borrowed $100; which brings me to point number 2. Point number 2. A credit limit of $X is not in any way the same as a loan for $X. When you seek a personal loan, the lender hands you money in equal amount to your loan, less any origination fees that may apply. Your loan for $8,000 results in $8,000 being wired to your account. Your credit limit is only a loan when you actually charge something. Until then its a simple (adjustable) risk limit set by the bank's underwriters. Point number 3. Your credit report contains no income information. It's up to the lender to determine what sort of risk they're willing to take. Some personal lenders are just fine with stated income and employer contact information. Some lenders want to see some pay-stubs. Some lenders will lend $X on stated income but won't lend $X+1 without income verification. Some will lend the money at a lower interest rate if you do prove your income and employment. It's all lender specific. Credit card issuers are clearly lax on the income verification piece of the equation because of points number 1 and 2. Point number 4. If you're getting a loan for your required mortgage down-payment you are a much bigger repayment risk than you realize." }, { "docid": "444543", "title": "", "text": "Debit cards can be riskier than credit cards. That's why I personally avoid debit cards unless I have a very good reason to go that direction (e.g. HSA accounts). To explain the risk, consider what happens if someone steals the card or number and starts using it: Credit card: You get a big bill, which you dispute and eventually get dismissed. Debit card: Your bank account balance drops, you don't have access to cash, and your checks start bouncing and you rack up bounced check charges with your bank and stores where you write checks. Eventually, you convince the bank it was fraud and they refund the money to your account. The big difference is that while it is going on you are out the money with a debit card, and with a credit card the BANK is out the money. The above scenario happened to my brother and it wasn't pretty. He was having to borrow money to pay his rent and groceries while the bank sorted it out." }, { "docid": "335532", "title": "", "text": "In Canada, there are many stores that take debit (Interac) but don't take Visa or MasterCard. For example, a corner store. In the US the reverse is often true: every tiny place seems to take Visa or MasterCard, but not debit. A Visa debit card looks like a Visa card to the merchant. It therefore has the benefit of being usable at places that only take Visa. (Substitute MasterCard as necessary.) This benefit is very small in Canada, less so elsewhere. Meanwhile the money is actually coming out of your bank account just like a debit card, which therefore has the benefit that you're not borrowing money, can't accidentally overspend, and run no risk of incurring interest charges. It is also a way to get what appears to be a credit card when you can't qualify for credit. If you do the majority of your spending in Canada, you don't need a Visa or MasterCard debit card. Your regular debit card (Interac) will work fine for you. If you have a credit card anyway (from another bank or whatever) then again, you don't need a debit card that can pretend to be a credit card." }, { "docid": "170141", "title": "", "text": "\"There are two fundamentally different reasons merchants will give cash discounts. One is that they will not have to pay interchange fees on cash (or pay much lower fees on no-reward debit cards). Gas stations in my home state of NJ already universally offer different cash and credit prices. Costco will not even take Visa and MasterCard credit cards (debit only) for this reason. The second reason, not often talked about but widely known amongst smaller merchants, is that they can fail to declare the sale (or claim a smaller portion of the sale) to the authorities in order to reduce their tax liability. Obviously the larger stores will not risk their jobs for this, but smaller owner-operated (\"\"mom and pop\"\") stores often will. This applies to both reduced sales tax liability and income tax liability. This used to be more limited per sale (but more widespread overall), since tax authorities would look closely for a mismatch between declared income and spending, but with an ever-larger proportion of customers paying by credit card, merchants can take a bigger chunk of their cash sales off the books without drawing too much suspicion. Both of the above are more applicable to TVs than cars, since (1) car salesmen make substantial money from offering financing and (2) all cars must be registered with the state, so alternative records of sales abound. Also, car prices tend to be at or near the credit limit of most cards, so it is not as common to pay for them in this way.\"" }, { "docid": "444590", "title": "", "text": "I was hoping to comment on the original question, but it looks to me like the asker lives in the EU, where credit cards are a lot less common and a lot of the arguments (car rental, building up of credit etc) brought forward by people living in the US just don't apply. In fact especially airlines (and other merchants) will charge you extra when using a credit card instead of a debit card and this can add up fairly quickly. I hold a credit card purely for travelling outside the EU and occasionally I will travel for work and make my own arrangements, then it can come in handy as I am able to reclaim my expenses before I have to pay my credit card bill (in this case I will also claim the extra credit card fees from my employer). This however is for my personal convenience and not strictly necessary. (I could fill out a bunch of paperwork and claim the costs from my employer as an advance.) In the EU I find that if my VISA debit card will not work in a shop, neither will my credit card, so on that note it's pretty pointless. So to answer the asker question: If you live (and travel) in the EU you don't need a credit card, ever. If you travel to the US, it would be advantageous to get one. Occasionally banks will offer you a credit card for free and there's no harm in taking it (apart from the fact that you have one more card to keep track off), but if you do, set up a direct debit to pay it off automatically. And as other people have said: Don't spend money you don't have. If you are not absolutely sure you can't do this, don't get a credit card." }, { "docid": "102746", "title": "", "text": "Deposit on a Debit Card have a different effect, and many people don't understand it (and make a big stink), or cannot afford it (or both). Either of it results in lots of trouble for the business: In addition, having a credit card showes that some bank trusts the customer with an unsecured credit of this height, which is some reassurance for the business. A debit card proves only that he was able to get a checking account, which needs much less liquidity and stability." }, { "docid": "571801", "title": "", "text": "In most cases, a debit card can be charged like a credit card so there is typically no strict need for a credit card. However, a debit card provides weaker guarantees to the merchant that an arbitrary amount of money will be available. This is for several reasons: As such, there are a few situations where a credit card is required. For example, Amazon requires a credit card for Prime membership, and car rental companies usually require a credit card. The following does not apply to the OP and is provided for reference. Debit cards don't build credit, so if you've never had a credit card or loan before, you'll likely have no credit history at all if you've never had a credit card. This will make it very difficult to get any nontrivially-sized loan. Also, some employers (typically if the job you're applying for involves financial or other highly sensitive information) check credit when hiring, and not having credit puts you at a disadvantage." } ]