How have you planned on paying taxes on the forgiveness in 2020?
As of today loans forgiven for public service aren’t taxable. Hopefully that remains cause my wife has about a year’s worth of payments left to make in that program too.
Edit add: She’s been making payments for like 9 years and the principal has gone down about $150. Cool system we have here folks.
This, thank god
Ah yeah, sorry. Forgot she was a teacher
Thought I read somewhere that 99% of loan forgiveness applications are being rejected. Is that still the case?
Yes that’s the case.
Some I’m sure are legitimate but others are for absurd reasons. For example, my wife certifies her employment every year to verify the job she has qualifies for the program. Her yearly verification has been rejected in the past because the person completing it used two different color pens. Or because they didn’t completely right out the date (think 1/1/19 vs. 1/1/2019).
Yup, that’s why our fingers are crossed. We’re very confident we’ve done everything correctly, but who knows.
They leave it up to the companies that don’t get repaid to determine who qualifies. There was an infuriating Michael Lewis podcast on this. Literally 99.9% of applications are rejected.
Yeah, after listening to that Michael Lewis podcast and reading some follow up stories, I’d be nervous as hell about having $200k of loans that I expected to be forgiven. Good luck.
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I think the majority of us who are hoping for forgiveness aren’t doing so through the current system but keeping our fingers crossed on a system that arises with a new regime.
Haven’t listened to the podcast yet (prolly won’t because this whole situation is depressing emough) but the PSLF program was implemented in 2007 and at the time there was only one eligible repayment plan that you had to pay under. Since then there have been several types of repayment plans added. So for the first group of eligible folks seeking forgiveness in 2017-2019 many were denied due to making payments under the wrong plan.
For anyone looking into this program currently, you can submit yearly certifications that essentially verify the payments you’ve made count towards the required 120 individual payments. So at the end when you submit your forgivnesss plan there’s some level of confidence it will be approved.
It’s mind boggling it needs to be this complicated.
Yeah, we’ve certified every year.
Looking for some general retirement advice for my dad. Basically making sure I don’t steer him too wrong. It’s like 90% family blog and 10% actual retirement advice though
He’s going to retire in a year or so from his job. I believe he has a pension with the job and maybe 300k or so additional stock (maybe? I haven’t asked, I just know he has some). The house they’re in is the house be bought before I born. Unfortunately the area they moved it to has become pretty much a trailer park and he hasn’t been able to keep up with repairs. So if he sold it it’s probably worth 60 to maybe 100k at most. All paid off. No debts now that I know of.
He wants
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To fix up the house to make it look good. Stone walls, sand and polish the wood floors, remodel the bathrooms and bedrooms, etc. (on a side note my dad has the most terrible 70’s aesthetic. He told me he wanted to make the bathroom all stone and have a stone chute come out where the shower head would be and the water would pour out of the stone chute on your head while fake plants would ring the walls)
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Make and sell some breakfast syrup that’s a family recipe. It’s been a life long dream that he’s talked about forever but never got around to doing
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Move out and buy something in a retirement community in Arizona. It’s where my sister lives. No one else would be close to him though. They’d compensate by either buying tickets to fly out and see us or getting an RV.
I’ve told him that 1. wasn’t really practical. I know it’s been a dream of his to finally fix up the house to a presentable level. I’m sure he felt a lot of shame that us kids were ashamed of our house growing up, but I told him he’d never get the money out of the house if he were to fix it up. No one would buy a 200- 300k house ( the value in a house with our square footage fixed up to where he wanted it to be) in the area so it’d be best to sell it off to do 3) or find a retirement place closer to the rest of his kids
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I wasn’t too worried about. He said he was planning on spending 10k or so. I figured he could fulfill a life long dream, the upside would be long odds and small, but the downside wouldn’t be bad either. He’d be putting mostly his own time in and any capital he’d buy probably could be sold off at some price. I looked at it as taking on a hobby and I figured as long as I kept an eye on him it wouldn’t get out of control
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I told him it was an ok idea though I’d prefer if they found some community closer to more of us kids. He told me that he wanted to but the costs in the area were really high and Florida and Arizona had more cost effective options. I told him that an option would be to ride the wheels off the current house, saving up the money that would be spent on rent in a retirement community and spending time rotating between kids so he spent as much time away from the house as he wanted. If and when they started having physical issues with the house then they could look into a retirement community or move in with us. (First born means I’m the one to watch them. My dad brought my grandma in so it’s a bit of a family tradition).
So what do ya’ll think? I was hoping for some general steering advice, potential pitfalls, stuff like that as I really hadn’t had much experience with parental retirement.
All of that seems reasonable to me.
Try to get him to sell the house as is, lowering the price to whatever it takes to sell it. That will be tough because he will have an emotional attachment to it. 2 and 3 seem fine though.
Honestly if it were my dad I wouldn’t try very hard at all to convince him to sell it as is. He’s probably going to do what he wants to do. Give it a shot though I guess.
Stone chute shower sounds tight.
That’s good. Since it’s new territory and recouping from a bad retirement decision sucks I’m glad none of the options sounds too bad.
If I teach my kids 1 thing and 1 thing only (financially) it will be to max out tax advantaged accounts starting with their first job. Obviously a luxury to do this but I’ll gladly reimburse them and fund Roths when they’re in their 20s. The graph of results starting at 25 vs. 35, assuming any reasonable rate of return, is staggering.
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I was 48 before I could afford to max out my tax advantaged space. Regardless of what the graphs say, even if people are smart enough to do it many cannot afford to.
Retirement tax planning is fun, but the effective tax rate on investments is so low that it’s not really that important. Much more important to avoid high-interest debt and lifestyle creep.
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My dad did the same for me as soon as I got a job that reported income (so like 16). Absolutely the best financial gift you can get in a middle class family. Probably not legal but in a world where Amazon can shelter billions in income idgaf.