Yeah… you can blame me for the entirety of 2020.
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Rent and housing prices will keep going up and you’ll keep not wanting to jump into housing.
I bought with 10% down <3 years ago and refinanced to remove PMI in December; didn’t even need an appraisal as I got a good deal (house appraised for more than I paid for it back then) and housing prices have gone up, so now I have no PMI.
This is first time we haven’t had PMI actually. In 2012 we bought a house for 220k with 3% down and sold it in 2016 for 320k, which netted us a check at closing for more than all of our mortgage payments combined.
The other house we had we only had for 2 years so it went up 25k so only got like 20k at closing which didn’t cover the mortgage payments for those 2 years, but that was because we had to sell early to buy our current home due to changing needs.
But we could sell our house right now and get back over half the total mortgage payments we’ve made in the past 3 years.
If we had rented since 2012 for say $1500/month (much less than we woulda had to pay) then that’s $150k down the drain with no tax benefits.
Instead we’ve paid $240k after down payments but got back a little over $120k at closings for last 2 homes and didn’t have to pay for 6 months when laid off last year and the houses woulda rented for $2000-2500/month rather than $1500 and we have a little over $100k in equity currently so if we sold today after real estate fees we’d be <$50k down after 8 years of living or $520/month for the past 8 years.
That doesn’t include some maintenance but not more than $10-15k and we’ve saved more than that on taxes in 8 years.
Obviously not everywhere has prices going up but if you buy in the right area it’s much better than renting.
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That’s probably too much cash. I keep more than I probably should too, so I kind of understand the feeling. Although I’ve got my reasons, it’s probably -EV. Here are some thoughts
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I don’t think you need an advisor. Posting on bogleheads is a fine way to go and will almost always get you at least as good advice, if not better. And sometimes the advice is to consult a professional. Although, in your case, I don’t think that would be the advice.
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If you want better answers you may want to post the AA of your retirement accounts.
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I assume you’re doing backdoor Roths. It’s not a ton, but it’s a great place to stick cash if you’re not doing it already.
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If you think you’re going to have kids in the future, another good thing to do is to fund a 529. California’s 529 is among the best, imo, but you can pick any state. Just fund it with yourself as the beneficiary and once the kids are born, you can always transfer portions over to them. This allows you to get years of tax-free growth before they’re even born. If you end up not having kids, you can get the money out with a penalty, which is not great (but not that terrible either, imo), so you are going to need to be pretty damn sure kids are in your future.
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Also buying a home is a hedge against inflation.
Buy one at a mortgage you can afford and it won’t go up (well a bit with property tax) and may go down when refinancing.
Rent will just keep inflating and if we have higher inflation then we will have higher rent bumps.
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Yeah the 30 year fixed mortgage is the biggest free roll in the game.
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It’s also highly leveraged
You put down 20% (or less) but get the increase in value on the whole 100% of the home’s value
Real estate fees eat into that of course
Became a homeowner a few months ago for the first time in my life. Paid cash. I can’t express how liberating it is to be off the endless mortgage/rent treadmill.
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Here is a yearly reminder to check the “Net Expense Ratio” on your retirement funds. My buddy just told me he had a decent chunk in a fund with a expense ratio of 1.35%… that is absolutely absurd.
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Not sure if this goes in STONKS or Personal Finance…just wanted to check with the hivemind that I’m not missing something here.
Started a new job and new health plan kicked in Jan 1. It is a PPO plan, and while not advertised as an “HDHP”, it has a $10K deductible and $12.7K out-of-pocket maximum (family coverage). The company does not sponsor an HSA with it, but based on these amounts, I believe it is HSA eligible? Company did offer an FSA, which I declined, because I was fairly sure I can just do an HSA on my own. I have an existing HSA from a previous employer/health plan, and I plan to just shove the max into there,
I’m not missing anything, am I? It just seemed odd to me that the health plan wasn’t advertised as HSA-eligible.
It’s my understanding that not all HDHPs are HSA eligible. I have a HD plan through the Exchange, but I would’ve had to pay a higher premium for essentially the same plan with the same insurer if I also wanted an HSA.
Thanks, not sure how I missed it in all my research but I think I fell victim to this:
Many people are under the mistaken impression that as long as their health insurance plan’s deductible and out-of-pocket limits meet certain IRS-prescribed targets, they are eligible to contribute to an HSA.
In actuality, few are HSA-eligible, because the IRS specifies—deep in its guidelines—that “except for preventive care, [the] plan may not provide benefits for any year until the deductible for that year is met.” That means that a slightly more generous plan, which pays for any portion of things like prescription drugs or specialist visits or an X-ray (with or without a co-pay or co-insurance) before the deductible is met is not HSA-eligible.
In which case I kinda bungled it by not contributing to the FSA. Thankfully expenses should be low so the lost tax-benefit won’t be huge, but it’s still more than 0. Argh.
Do people here have a will, power of attorney, etc.?
If so, did you go DIY or use a lawyer? This is something that I’ve been neglecting to do for years and may finally get around to.
For a durable power of attorney, there shouldn’t be any need to go to a lawyer IMO. Find a form from your state or go on legal zoom or whatever if you can’t find a legit free resource. They all say basically the same thing. The one we use in MD is basically a menu of options (e.g. medical decisions, financial transactions, managing investments, buying and selling property, etc) and you initial for every power that you want to give to your agent.
Wills are a different ballgame, and I’d suggest visiting a lawyer.
We went to an attorney to get our wills done. I think we also created powers of attorney? Basically we got wills and created a revocable trust; the attorney took care of transferring our house into the trust, and I transferred an investment account into the trust.
This was almost 10 years ago, and I periodically think to myself that we should go in for a checkup to see if everything is in order and consistent with what we want. But then I immediately forget about it.
Note: The fact that our house was in a trust made refinancing our mortgage slightly more complicated. There’s also the possibility that placing the house in the trust was a technical breach of the mortgage terms, but there weren’t any repurcussions.
Attorney, very similar experience to spidercrab, absolutely essential to get done if you have kids, otherwise probably nice for your heirs but not critical unless you’re likely to have estate tax considerations, IMO. Check your states rules on inheritance tax, in some states this applies at shockingly low wealth levels.
Edit: you do this primarily to avoid probate. In some states, like CA, probate is hell. In others it’s relatively efficient.
I did what spidercrab did, except the mechanics of the trust are different (optimal strategy varies by state you live in).
You should get an attorney and do it right.
There is no negative in me lowering my 401k contribution percentage to 0% to get the fullest of my bonus as long as I make up the missed week during the remaining weekly paychecks right?
Shouldn’t be. I’ve worked places where this was actually the optimal strategy because of how the 401K match worked. I’m going to do a terrible job describing it, but basically the match was capped per paycheck, and there was no true up at the end of the year if you ultimately fell short of the maximum company match.
After I figured it out I started zeroing out my bonus check and just doing 401K on my regular biweekly paychecks.
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This does a good job of explaining it: Does Your Employer Penalize Aggressive Saving? Odds Are, Yes. - Resource Planning Group
This helps a lot and i believe is applicable in my scenario. I appreciate it!