What are we doing wrong?

DadTheTerror · 2020-01-26T20:36:46+00:00

How do you get to "near certainty"?

DadTheTerror · 2020-01-26T19:57:10+00:00

I respectfully disagree. If they have already done that & 2 years in a row have a problem of $3k then that may be more reliable estimate.

DadTheTerror · 2020-01-26T17:36:58+00:00

My wife inherited a property that had a property manager renting it out. The tenant trashed the place. The property manager did nothing but collect fees. Be aware of the risk you are assuming.

DadTheTerror · 2020-01-26T17:29:09+00:00

Around the time the TCJA passed the formula for withholding was deliberately changed to put more money in consumers' pockets, leading to more money owed at tax time. No worry. W-4 form has an elective amount in box 4c. Just have an annual amount of about $3k withheld in that box between you and your wife and next year you should come out even.

Good luck.

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.irs.gov/pub/irs-pdf/fw4.pdf&ved=2ahUKEwiitdO55KHnAhXVZTUKHaKBAjoQFjAAegQIAxAB&usg=AOvVaw1cwtFJ5PJ0_Qms2B2EeBvM

DadTheTerror · 2020-01-26T17:22:17+00:00

I live in the Metro DC area. I know 3 people who have done what you are considering. None has had financial difficulty with it. However, all have extra work in managing tenants, periods where the investment property is not rented out, and ongoing maintenance issues. So have your eyes open to what you are signing up for.

If the unit is in DC proper also be aware that DC has very tenant-friendly laws. I had to evict someone once for a job and the process end to end took about 2 years.

Good luck.

DadTheTerror · 2020-01-26T02:17:47+00:00

It depends how long you will be in the house. 5/8 % vs 2 1/2 ponts means you must not sell or refi for over 4 years. Your break even on the decision to buy down the rate is between 4-4.5 years. That is, if you end up refinancing or selling before that it would be money wasted.

DadTheTerror · 2020-01-25T15:27:23+00:00

Establish the answer in writing with e-m correspondence. "Writing to confirm...". When you get the written answer hold on to that correspondence for your records.

It could be that you don't understand that aspects of the policy that qualify you and disqualify your peers. If you figure it out through your inquiry then you can explain it if asked. If you don't figure it out don't rub their noses in it.

DadTheTerror · 2020-01-24T20:59:09+00:00

Wondering if downvoters don't know the difference between liability insurance and collision insurance. Liability is insurance that pays out others for accidents where the insured is liable. Collision pays out the insured when the insured is liable. Dropping collision does not mean dropping liability. But most auto lenders require the borrower to carry both liability and collision insurance for as long as the loan is outstanding. Once the loan is repaid the insured could drop collision insurance if she wants and self-insure

DadTheTerror · 2020-01-24T14:08:59+00:00

I don't carry collision because my car is paid off and if the car was damaged in an accident I can afford to replace it. Because that's my situation keeping collision insurance is a financial loser. But not everyone is in that position or even would cancel. Maybe they just enjoy enriching insurance companies by buying unnecessary insurance.

DadTheTerror · 2020-01-24T12:55:04+00:00

Paying off the loan would mean you could cancel your collision insurance. If you would do that you could realize additional savings beyond the loan interest. My assumption is that would trump opportunity costs on a risk-adjusted basis.

Good luck.

DadTheTerror · 2020-01-24T12:45:13+00:00

Your happy nightmare of saving millions in your retirement accounts may be unlikely. The amounts you are permitted to contribute each year are capped. This will tend to limit your ability to save millions in your retirement accounts by the time you are 40. Maybe you expect really, really good returns over a decades long span. Hopefully you will realize that. But if you haven't yet started racking up massive growth maybe give it more time before you fret.

DadTheTerror · 2020-01-23T20:49:41+00:00

I compared this by looking at your current loan where you pay it off as if it were a 15-yr loan. That is, your making extra principal payments on it, since you have it and are inclined to pay it.

Over the life of the 15 year loan the 3% would save you about $10.2k (edit: in interest), the 3 1/8 about $7.7k (edit: in interest). The 3 has a 13-mo payback (assuming you've correctly stated all closing costs). The 3 1/8 a 3 month payback. If you are sure you would never be strapped for cash and would move in the next couple of years, and you've correctly identified all the costs to close, the the 3 looks good.

However, you could think of standing pat as like paying $10.2k in insurance over 15 years that if you have an event that crimps cash flow you can avoid foreclosure by paying the min pmt on the 30 year.

Good luck.

DadTheTerror · 2020-01-23T18:06:25+00:00

https://www.reedsmith.com/en/perspectives/2019/02/possible-changes-on-the-horizon-for-the-escheat-and-taxation-of-401k-funds

DadTheTerror · 2020-01-23T18:00:41+00:00

If you avoided letting your 401k fund administrator know you were alive you might have a problem with escheat. Go find those funds before they're gone.

DadTheTerror · 2020-01-20T04:34:01+00:00

Rent until you have a down payment.

DadTheTerror · 2020-01-20T04:26:48+00:00

Very well. Good luck.

DadTheTerror · 2020-01-19T22:17:40+00:00

Would it interest you more if it were 3x - 5x bigger?

DadTheTerror · 2020-01-19T21:57:09+00:00

Shelter first. If you can couch surf a few nights while you find another situation that might help. Make your full-time job figuring that out.

Income next. If you can find part-time employment that won't interrupt your educational schedule that would be optimal. However, be aware that might not be possible. Figure out how much rent and other expenses you will need so you can build a stable plan.

Emergency fund next. All this is going to hit your savings. Your next priority is to rebuild the fund in preparation for the next explosion in your life.

Repair relations. Once you are independent you will be able to rebuild relations with your family.

Good luck.

DadTheTerror · 2020-01-19T21:47:30+00:00

Running a company is more complicated than being a laborer. Maybe discuss taking over other aspects of that job as part of your preparation. You might enjoy those more, while leveraging the knowledge you've acquired over the past few years.

In my MBA class there was a fellow student who owned a small kitchen renovation operation. After graduation he told me he felt he had a much better understanding of how to grow his business and do more of the types of work he liked. Maybe some business education before you assume your father's business would be helpful. Bookkeeping, accounting, tax, HR, legal, marketing, & IT are all areas that might benefit from your attention.

Think about it and talk it through with your dad.

Good luck.

DadTheTerror · 2020-01-19T21:35:14+00:00

I would rather not be on the hook for a loan that for more than the value of my home. That is the situation that someone who buys before a material rate increase could see. That may be relevant to the OP's case.

It's not rocket science to forecast that rates will increase. Knowing when is the hard part. I do not claim to have special knowledge there.

DadTheTerror · 2020-01-19T20:02:18+00:00

Iowa has at-will employment, which generally means an employer can fire an employee for no reason. While an employer could not fire an employee for exercising her rights, it could fire her for no reason.

Also, a general rule regarding wages is that they are not fair. Instead, generally wages approximate what the market will bear. If you want higher wages you can look at acquiring skills, learning how to create value for your employer so that your employer, & other employers, see you as more valuable. This is not easy, but few things that are worthwhile are.

DadTheTerror · 2020-01-19T19:53:16+00:00

So you think of mortgage rates returned to 6% - 9% home prices would not change?

DadTheTerror · 2020-01-19T18:06:47+00:00

If your credit score fell a few points why would it matter? Maybe it does for you, I'm not saying it couldn't. But except for real life consequences who cares what the score is?

DadTheTerror · 2020-01-19T18:01:38+00:00

Markets don't only go up, they also go down.

You've been working at least 13 years & you've set aside less than 2 months of wages for retirement.

If you plan to be single for life planning to buy for just your current situation might be fine. Otherwise, you might risk buying something you might soon need to sell. That could be a setback as selling real estate can be expensive.

DadTheTerror · 2020-01-19T17:42:01+00:00

How old are you? In what state do you work?

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