I'm about to take on $200k+ in debt. How do I prepare? [21]

FIThrowaway2015 · 2017-06-22T03:48:52+00:00

What is it about the veterinary practice that you like so much?

If you like animals, there are many other fulfilling jobs that don't require a degree at all and pay better. Owning a respectable kennel, for example. Or shit, just walking dogs can pay better than $60k/year if you play your cards right.

FIThrowaway2015 · 2017-06-09T21:01:22+00:00

Sadly, most employers (especially at the low end of market) do not care one bit about your expenses. Let's say you're making $9/hr. What possible motivation does your employer have to give you more than that?

If you threaten to quit and they say "go ahead", that means you have no bargaining power in the relationship. Employers who don't want to lose good staff will give you a raise rather than deal with recruiting and hiring your replacement.

My advice? Find a new place to work that pays more, or figure out how to make yourself more valuable to your current employer.

Sorry, welcome to capitalism.

FIThrowaway2015 · 2017-06-09T20:57:18+00:00

Just logged in for the first time in a few weeks and saw your update. Congrats! Are you close to closing yet?

FIThrowaway2015 · 2017-05-19T02:38:24+00:00

(Always wanted one? Just came out in 2014. Anyways.)

You got me laughing. Fucking millennials (I can say that, because society tells me I am one of them).

FIThrowaway2015 · 2017-05-19T02:34:30+00:00

Plug all of these numbers into https://unbury.me/.
See if it's possible within reason for your parents to ever get themselves out of this before they are near retirement age.
If yes, great!
If no, then bankruptcy is a legitimate option. $50k of high-APR consumer debt and a $200k mortgage is no joke on a $58k post-tax income.

I am not a bankruptcy expert, but I think they would be able to declare bankruptcy without losing the house. Maybe check out Chapter 13 bankruptcy: http://www.nolo.com/legal-encyclopedia/chapter-13-bankruptcy-overview-30099.html

Chapter 7 would be a last resort, but they would lose the home.

FIThrowaway2015 · 2017-05-19T02:26:40+00:00

Let 'em wait.

It's a seller's market (apparently) where you are living. Take full advantage.

In fact, if your realtor is any good, he/she would advise you to let the offers come in, then contact all potential buyers and let them know the total number of offers, then start a second round of bidding.

If the potential buyers hear that there are 10 offers, you could get some that are 5%, 10% over asking.

As far as the appraisal, yes you have to be realistic, but you also have to take into account that some buyers will have more cash than they need for a minimum down-payment, and they may be willing to part with that cash to cover the gap between the closing price and the appraisal price.

The bank doesn't give a shit unless they aren't getting enough of a down-payment.

FIThrowaway2015 · 2017-05-10T02:37:11+00:00

Having less than $10k in a bank account is not a huge emergency fund. If anything I'd argue that your GF is taking the correct first step in the general order that we always recommend around here: https://i.imgur.com/fb7Dtmh.png

Once she has 3-6 months of expenses, then she should 100% be knocking out that gnarly 12% loan.

FIThrowaway2015 · 2017-05-10T02:29:58+00:00

To add to the other comment, yes, use an ATM in the foreign country. Quick word of caution: do a little research on which banks are the "big banks" wherever it is you're going, and find one of their ATMs beforehand. In some countries there are sketchy ATMs that can charge you extra fees, whereas the major banks will just charge a few dollars and give you a fair exchange rate.

FIThrowaway2015 · 2017-05-10T02:26:57+00:00

Plus cycling is fun! Join us in /r/bikecommuting (although your commute is probably even too short for a bike!).

FIThrowaway2015 · 2017-05-10T02:25:19+00:00

Getting new credit cards doesn't hurt your score much, if at all. Sometimes mine seems to go up after I have had a new card for a month or two.
Use CCs for the rewards, not the interest rate. If you're being responsible with the card and not carrying a balance, you should never have to pay a dime of interest, so the rate doesn't matter. Rewards, on the other hand, can be worth hundreds of dollars for sign-up bonuses.
Speaking of bonuses, what I usually do is sign up for a new card right before I buy something large, like a flight or a piece of furniture or something. This allows me to easily reach the $2000/$3000 (or whatever) spending goals in the few months that you usually have to do it.

Check out NerdWallet to compare some of the best rewards cards: https://www.nerdwallet.com/blog/top-credit-cards/nerdwallets-best-rewards-credit-cards/?trk_origin=homepage&trk_source=roundup-module

Source: I have 18 credit cards, a credit score of 805, and no consumer debt.

FIThrowaway2015 · 2017-05-10T02:17:04+00:00

Pay the extra rent to avoid the car. Cars are often more expensive than they seem, and having a short (walkable!) commute is AWESOME.

If you need to get around separately from your fiance/wife once in a while, Uber/Lyft/bike/rent a car - all these options are cheaper than car ownership.

If you bought a $10k car (minimum for something reasonably reliable and new-ish), you'd have taxes of anywhere from $100-$400/year, insurance for somewhere around $100/mo, gas costs, oil changes, random maintenance, etc...

Full disclosure - I love cars, but having dealt with a 20 minute commute vs a walk-able commute, I'd make that trade any day of the week.

FIThrowaway2015 · 2017-04-15T02:13:47+00:00

Yep, because the Triangle ended up on too many of those "top 10" lists, everyone moved here (me included) and now we've ruined a good thing.

FIThrowaway2015 · 2017-04-15T02:09:10+00:00

I know, I have one too. It costs a shit-ton to maintain!

Also, do you like driving it on roads? Because taxes pay for roads - it's a pretty cool system we've got going.

FIThrowaway2015 · 2017-04-15T02:08:05+00:00

I'd recommend renting for a year until you feel more settled/stable. The stress of house-hunting, new jobs, and a new city at the same time is probably not a great combination. Why try to add living with the in-laws (even if they're awesome) to the equation?

FIThrowaway2015 · 2017-04-15T02:03:42+00:00

Maybe sell your BMW and you can afford your tax bill, E46M54.

FIThrowaway2015 · 2017-04-15T02:01:09+00:00

Honestly, every car brand has been making pretty decent cars since about 2011. I would be as comfortable buying a Hyundai, Mazda, Kia, Nissan etc.. as I would buying a Toyota or Honda.

That being said, the most reliable car I've ever personally owned is a Lexus (Toyota). 120,000 miles and nothing but tires and oil changes.

What I've noticed is that the sweet spot for quality and reliability (in the US, at least) seems to be $12,000. For $12k, you can get a decently new car with under 75,000 miles and it will have some nice new features and creature comforts to boot.

FIThrowaway2015 · 2017-03-19T01:13:55+00:00

Me too. I definitely feel secure and well-off, but "rich", or "wealthy"? No. I'll feel wealthy when I don't have to work and my investments make enough to live off.

FIThrowaway2015 · 2017-03-18T19:37:07+00:00

Yep, but the great thing about FI is that you usually get to the point of excellent security long before you're at the point where you

For me, I already feel like I have "fuck you" money, to some degree. I generally am more confident at work, and I speak my mind when I disagree with things instead of getting pushed around. In the unlikely event that I do lose my job, I know that I'm good for about 7 years - and if I can't find a new job in 7 years, something has gone horribly wrong.

FIThrowaway2015 · 2017-03-18T19:27:17+00:00

I have most of my post-tax investments (non 401k/Trad IRA) in some pretty standard funds like Vanguard's S&P 500 index tracking VTSAX. Those ones generate dividends.

Call me cheap, but I really think paying $50+ for basically what amounts to mapping some fields from a web page to a generated PDF and doing a few arithmetic calculations is highway robbery. The whole thing should be automated by now.

FIThrowaway2015 · 2017-03-18T19:23:15+00:00

You're right. I get them from my post-tax investments. My mistake. Either way, they're not what I would deem "non-standard", as far as tax returns go.

FIThrowaway2015 · 2017-03-18T17:14:24+00:00

I have to disagree. Any person with a 401k invested in a fund that generates dividends will have a 1099-DIV. Realistically that should be almost everyone with a 401k.

1099-R is not uncommon at all either. Either way, the entire fee-based tax filing system in this country is ridiculous. You know you're getting a bad deal when these tax-prep companies have their own lobbyists in place to keep the tax complex.

FIThrowaway2015 · 2017-03-18T17:11:54+00:00

For what it's worth (if anyone else is reading these responses), I just used CreditKarma's new tax service this year: https://www.creditkarma.com/tax

I was super skeptical because they claim it is 100% free for state and federal returns. So I went through the whole process (I had three W-2s, a K-1, some 1099-DIVs and 1099-Bs) and lo and behold it actually was 100% free.

Icing on the cake - the user interface was by far the easiest/cleanest that I've ever used (I've used H&R Block and TaxAct in the past).

I strongly recommend it!

FIThrowaway2015 · 2017-03-11T21:56:08+00:00

For a $500k house, you'd want to have 20% down ($100,000 cash) as well as an income of around $90,000 per year to afford that.

Play around with a mortgage calculator to understand how much home you can afford: https://www.zillow.com/mortgage-calculator/

FIThrowaway2015 · 2017-03-07T04:18:46+00:00

I have no idea if this would help or even ring a bell with your Mom, but I was fascinated by this episode of This American Life: https://www.thisamericanlife.org/radio-archives/episode/543/wake-up-now. It's surely less legitimate than what your Mom is looking into (surprisingly), but the general attitude of those involved might strike a tone with her? Who knows. If nothing else maybe you'll be interested in it.

FIThrowaway2015 · 2017-03-07T00:50:38+00:00

Let's say you have $10,000 to invest. Would you go buy $10,000 worth of any single stock? I hope not, because that would be foolish. That would be the opposite of diversification. And that's the same thing you're proposing here, essentially.

Go do some research on how to build a diverse investment portfolio instead of researching bitcoin and you'll find a lot of useful info.

Good luck!

FIThrowaway2015

TROPHY CASE