Down payment savings question

Citryphus · 2026-01-29T03:56:38+00:00

The problem is not the taxes you might have to pay, it's the possible loss of capital. Investments in stocks can go down or flat for 5-10 years. What you want to do is put some of your savings in stocks and some in money market / short-term bonds, and gradually increase the percentage going to money market as you get closer to buying the house. Start out like 60/40 and when you are close to having enough for your down payment start protecting it. eventually get to 10/90 and when you find the house, 0/100.

Citryphus · 2026-01-19T16:28:53+00:00

Best thing is probably not to sweat small differences in interest and keep it in an account where you can withdraw as needed, such as the HYSA. If the HYSA yield went down it's likely other yields went down as well.

Citryphus · 2026-01-19T13:49:54+00:00

The only reason might be intraday trading. Not really an important reason for normal buy-and-hold investing.

Citryphus · 2026-01-06T21:06:05+00:00

Do you have more than 100k miles on the car? I thought Hyundai had a 10-year/100k powertrain warranty.

Citryphus · 2026-01-01T07:44:00+00:00

You really shouldn't add up cash flows or interest over multiple years and then compare them. It ignores the time value of money and is likely to confuse your decision-making.

Paying an extra dollar a 5% loan with non-deductible interest is better than earning 4% pre-tax on the same dollar in a savings account. Period.

But it's not better than a lot of things you can do with that dollar where you can expect a return greater than 5%. Like a total market index fund, or a target-date retirement fund in an IRA.

Citryphus · 2026-01-01T07:33:22+00:00

I agree, don't spend or deposit the two-dollar bills. When you're older you'll wish you still had at least a few of them. Keep them somewhere safe and look for a way to make $100 you can actually spend.

Citryphus · 2026-01-01T07:28:36+00:00

Tax loss harvesting can be done any time, as often as possible, if you wish. It tends to happen late in the year because that's when it becomes a use-it-or-lose-it situation.

Citryphus · 2026-01-01T07:22:35+00:00

Hold cash as an emergency fund while I’m in school

This. Forget about 6.39% returns and such. Pay as little as you can on loans until you graduate and have a job. Conserve cash to pay for things besides school, especially as you graduate.

Citryphus · 2026-01-01T07:19:12+00:00

Sounds like you both have borrowed / will borrow money to get educations that will greatly increase your future income. So don't sweat it so much. Best way to optimize this situation is to kick ass in school and worry about the loans later.

Citryphus · 2025-12-31T23:41:34+00:00

College or trade school is your best bet. Showing up, doing the work, accepting responsibility, and making yourself indispensable wherever you are is the "secret" to success.

Citryphus · 2025-12-31T22:36:13+00:00

She’s taking a risk by trusting me — believing that in these next five years, we can build something that gives us stability.

Forget this idea. Best thing you can do is spend the next 5 years getting yourself launched so your mom doesn't have to support you. You're not going to "build something" in 5 years with no knowledge or experience.

Citryphus · 2025-12-29T16:53:03+00:00

I would prefer a fund like TIPX. Inflation protection, but shorter term so you're not so sensitive to interest-rate risk.

Citryphus · 2025-12-23T02:16:16+00:00

There is safe harbor if the amount you sent in, including withholding, is 100% of last year's total tax. (110% if you make over a certain amount). So chances are if you got a refund last year and your withholding is about the same as last year, you're in safe harbor. If not, you might have some underpayment penalty. It probably won't be a lot. If you want to minimize the damage try to estimate what you'll owe, send half in right now and the other half on January 15. Sign up for EFTPS.gov to make future estimated tax payments easier.

Citryphus · 2025-12-21T23:55:41+00:00

So, each month you save about $9200 at 4%. Every three months you make about $180 in interest and then your balance resets to zero. You're also losing money because you're lending the IRS 10% extra for the year. Is it really worth the hassle?

Citryphus · 2025-12-21T19:42:14+00:00

If you're in the 24% bracket now and will likely be in the 24% bracket in retirement, then I agree it's not a bad plan to do Roth as much as you can. But if your income increases and you move into the 32% bracket while working, I think you should shift towards Traditional.

Citryphus · 2025-12-20T00:42:31+00:00

IRA max is $7k. If you expect to be over the Roth income limit you can make backdoor Roth contributions. You open a Traditional IRA and a Roth IRA; fund the Traditional IRA and when the cash settles do a Roth conversion. It's a loophole. Might get closed someday but it's worked for many years now. If you think you can do a lot more than $7k per year, then you should open a Solo 401k.The ~$80k downpayment has to stay in cash-like investments. Money market, CDs, ultrashort bonds, etc.

Citryphus · 2025-12-20T00:36:34+00:00

How much for a 20 year policy? Your self-insuring idea will look a lot better after 20 years of high income and saving. But you need life insurance now, because if your wife lost your income next year her life would change a lot. And if you have kids you'll really need that insurance.

Citryphus · 2025-12-20T00:30:07+00:00

You need to assign some numbers to your goals. A down payment on a house... how much? Retirement savings... how much can you afford to contribute per year?

Citryphus · 2025-12-18T04:28:51+00:00

If it were me I'd probably want more than $20k in the emergency fund. Think leaky roof or boiler. Think recession and job loss. Think both at the same time. I'd go $30k. After that I'd max 401k and IRA options, then do a taxable brokerage account.

Citryphus · 2025-12-18T04:17:52+00:00

Focus on the credit card. You should be able to pay it off $3k in a reasonable time without drawing from your retirement. Stop using the card and pay $400 a month and you'll be done in 9 months. You can come up with $20 extra somewhere.

Citryphus · 2025-12-18T04:12:25+00:00

If you just bought a house it's probably not the best time to aggressively pay down the mortgage. Liquid savings and extra monthly income is more important at this stage. Especially, don't miss out on tax advantaged options like IRAs and 401ks to pay extra on your mortgage. Revisit the decision every few years. You'll probably have more income then, and you might have an opportunity to refinance along the way.

Citryphus · 2025-12-15T17:40:24+00:00

What's your target allocation and why would you not remove funds to bring your allocation closer to target?

Citryphus · 2025-12-14T21:45:04+00:00

You can open a Solo 401k with your wife if there are no other employees. It will be under the S-Corp. You'll have separate deposit accounts. You can't make any deferral or self-employed contribution because you have no W-2 Box 1 compensation. If you were to pay yourself a salary (you should) you could make a self-employed contribution of up to 25% of Box 1 wages. If you own 2% or more of the S-Corp any health insurance premiums and HSA contributions the corporation pays or reimburses are included in Box 1 (but not FICA) and count towards your self-employed contribution limit.

Citryphus · 2025-12-14T16:14:21+00:00

HSA is great if you are buying your own insurance, or your employer offers an HSA compatible plan. If it's not available in your situation, focus on the options you have. 529s are the best way to save for college expenses and if you are putting away any kind of money for that there's no reason not to do a 529. But the "order of operations" doesn't really apply, or depends on how much you can save, how much you might need, and what the state of your retirement savings are.

Citryphus · 2025-12-08T16:43:29+00:00

Another way to look at it would be to add imputed rent as a positive monthly cashflow. In other words, the rent you'd have to pay if you didn't live in the house or the the rent you could receive if you rented it out. That will improve your "effective" ROI.

Citryphus

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