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Author Topic: I am retired and have a question...  (Read 62569 times)

Jay Bee

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Re: I am retired and have a question...
« Reply #50 on: March 25, 2015, 05:32:58 PM »
ZFB has been spending less lately. Instead of higher cost escorts he's just visiting low-cost Jack-shacks. End result is the same, but he saves tons of time & money.
Thanks for ruining summer, Canada.

4everwarriors

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Re: I am retired and have a question...
« Reply #51 on: March 25, 2015, 05:45:06 PM »
Sure 'bout that? Thought F*ckin' frequented the neighborhood glory hole, ai na?
"Give 'Em Hell, Al"

Spaniel with a Short Tail

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Re: I am retired and have a question...
« Reply #52 on: March 25, 2015, 10:02:01 PM »
I post usually at night because using the phone is a PITA. I stay away from accessing any website I can't justify to an investigator.

As for all you in your late 20s - early 30s concerned about PMI, see if your parents or in-laws or other relatives are an option for a loan to get you out of PMI territory. If financially able, your parents will be happy to help - they'd rather do it when alive than wait until they're dead. And in a couple of decades when you're well off...pay it forward.

MU82

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Re: I am retired and have a question...
« Reply #53 on: March 25, 2015, 10:06:59 PM »
My main advice to the 20-somethings and 30-somethings is don't buy a house till you really can afford it.

A house is not an investment; it's a place to live. If you are really lucky, you will make a little money over time, but it's often not as much as one thinks it is after all the extras are figured in: closing costs for buying; closing costs for selling; property tax; insurance; maintenance; minor repairs; major repairs. And all that is in addition to the interest and principal, of course.

There are folks who buy a house for 300K and sell 5 years later for 330K and think they actually "made money" on the deal. In all likelihood, they lost money, and quite a bit of it because of all the extras.

Renting gets a bad rap. My wife and I were between houses in 2007, thought we would rent for 4 months. Because of circumstances, we ended up renting for 40 months. I thought we would hate it but we actually liked it. We liked not having to do yardwork, liked not having to shovel snow, liked not having to worry about maintenance, and especially liked that we could leave if we wanted to without being tied down by a house to sell.

When we moved to N.C., we bought a house. Owning is fine, but frankly, I miss a lot about renting. In Chicago, we rented in Lakeview, walking distance to Lincoln Park Zoo, the lake and all kinds of entertainment. Bus line downtown outside our front door. El right down the street. To buy that convenience, a decent condo would have cost us $500K minimum and a house would have been 7 figures. Our rent wasn't cheap but it wasn't outrageous for all we got, including a doorman. As I said, I miss it sometimes.

Buy a house because you want a house and because you need a place to live. Don't buy it because you think you're supposed to by a certain age or because yahoos tell you "renting is throwing money away" or because you look at it as an investment.
“It’s not how white men fight.” - Tucker Carlson

Avenue Commons

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Re: I am retired and have a question...
« Reply #54 on: March 25, 2015, 11:47:35 PM »
Do both.

I respect Dave Ramsey and agree with a lot of his stuff, but the idea that you should put off saving for retirement until you are debt free seems insane to me. My student loans have a 5% interest rate and I would have left a ton of money on the table (work 401k match and an average of about 10% annual returns in the stock market since I have started working) if I followed his advice.

Pay your debts and save at the same time.

Student loans are low interest and aren't considered bad debt. I only pay the minimums on my student loans because there have been years inflation was higher than the interest rate I have. I'm in my 40s and make more than I deserve and still do it that way.

Don't ever forget to live your life. The future is uncertain and the end is always near. It's not all about "the future." How many bums are on the street because they didn't save enough? None. You'll figure it out.
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g0lden3agle

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Re: I am retired and have a question...
« Reply #55 on: March 26, 2015, 07:09:23 AM »
Student loans are low interest and aren't considered bad debt. I only pay the minimums on my student loans because there have been years inflation was higher than the interest rate I have. I'm in my 40s and make more than I deserve and still do it that way.

Don't ever forget to live your life. The future is uncertain and the end is always near. It's not all about "the future." How many bums are on the street because they didn't save enough? None. You'll figure it out.


What are your loans' interest rates at?  What sort of rates would make you switch your strategy?

warriorchick

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Re: I am retired and have a question...
« Reply #56 on: March 26, 2015, 08:10:43 AM »
My main advice to the 20-somethings and 30-somethings is don't buy a house till you really can afford it.

A house is not an investment; it's a place to live. If you are really lucky, you will make a little money over time, but it's often not as much as one thinks it is after all the extras are figured in: closing costs for buying; closing costs for selling; property tax; insurance; maintenance; minor repairs; major repairs. And all that is in addition to the interest and principal, of course.

There are folks who buy a house for 300K and sell 5 years later for 330K and think they actually "made money" on the deal. In all likelihood, they lost money, and quite a bit of it because of all the extras.

Renting gets a bad rap. My wife and I were between houses in 2007, thought we would rent for 4 months. Because of circumstances, we ended up renting for 40 months. I thought we would hate it but we actually liked it. We liked not having to do yardwork, liked not having to shovel snow, liked not having to worry about maintenance, and especially liked that we could leave if we wanted to without being tied down by a house to sell.

When we moved to N.C., we bought a house. Owning is fine, but frankly, I miss a lot about renting. In Chicago, we rented in Lakeview, walking distance to Lincoln Park Zoo, the lake and all kinds of entertainment. Bus line downtown outside our front door. El right down the street. To buy that convenience, a decent condo would have cost us $500K minimum and a house would have been 7 figures. Our rent wasn't cheap but it wasn't outrageous for all we got, including a doorman. As I said, I miss it sometimes.

Buy a house because you want a house and because you need a place to live. Don't buy it because you think you're supposed to by a certain age or because yahoos tell you "renting is throwing money away" or because you look at it as an investment.

What you are saying is true if you end up moving around, but maybe not if you plan to stay put for awhile.  When you rent, you are always paying the current market rate for housing, but when you purchase, you are locking in most of the costs up front.

We still live in the first house we bought 25 years ago. At the time, we were childless newlyweds. A lot of our friends were buying condos or smaller houses, but we got a place we knew would serve our long-term needs.  We have refinanced a few times, and what we pay for our mortgage and property taxes (after the income tax deductions) is less than the rent on a decent two-bedroom apartment in our area.  We certainly could have paid off our mortgage by now, but our investments are earning more than the interest rate we are paying.
« Last Edit: March 26, 2015, 08:52:13 AM by warriorchick »
Have some patience, FFS.

chapman

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Re: I am retired and have a question...
« Reply #57 on: March 26, 2015, 08:22:30 AM »
What you are saying is true if you end up moving around, but maybe not if you plan to stay put for awhile.  When you rent, you are always paying the current market rate for housing, but when you purchase, you are locking in most of the costs up front.

True; was a big driver for us to buy a couple years back.  Our rent went up double digits two years in a row; just read a story showing the average increases here are still well ahead of national averages.  Take even a modest average increase and scale it out 5, 10, 20 years, then compare to the mortgage which will be fixed for that entire time and may eventually pale in comparison.  Also nice that the rates were so low (and are still pretty low) that the after-tax effective rate can be exceeded by investments without even trying, so there's not even an incentive to accelerate payments.

Badgerhater

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Re: I am retired and have a question...
« Reply #58 on: March 26, 2015, 11:23:34 AM »
If you are handy with a hammer and pipe wrench then consider buying a duplex -- living in one unit and renting out the other.  You collect a rent check and half of your house maintenance expenses become deductible business expenses.  You may pay some cap gains when you sell, but you have over the course of the years you owned the place generated income that cut your owning costs significantly.

When you are ready to move into a new house, you can rent out the other half and the place will cash flow to the point it helps pay the mortgage on your other house.   When you do finally sell, you have a nice pile of cash to pay down the mortgage on your other house.

I would only recommend this in areas where you can get good tenants with money.
« Last Edit: March 26, 2015, 11:29:13 AM by Badgerhater »

jficke13

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Re: I am retired and have a question...
« Reply #59 on: March 26, 2015, 01:12:56 PM »
Student loans are low interest and aren't considered bad debt. I only pay the minimums on my student loans because there have been years inflation was higher than the interest rate I have. [...]


Not anymore; not even close. Student loan interest rates are going off at 6% on the low end and plenty are north of 8%.

GooooMarquette

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Re: I am retired and have a question...
« Reply #60 on: March 26, 2015, 01:18:21 PM »
Not anymore; not even close. Student loan interest rates are going off at 6% on the low end and plenty are north of 8%.

Yeah, the student loan interest depends totally on when you went to school.  I went in the 80s, so I had plenty of loans with double-digit interest rates.  Got those suckers paid off as quickly as I could.

MU82

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Re: I am retired and have a question...
« Reply #61 on: March 26, 2015, 01:55:18 PM »
What you are saying is true if you end up moving around, but maybe not if you plan to stay put for awhile.  When you rent, you are always paying the current market rate for housing, but when you purchase, you are locking in most of the costs up front.

We still live in the first house we bought 25 years ago. At the time, we were childless newlyweds. A lot of our friends were buying condos or smaller houses, but we got a place we knew would serve our long-term needs.  We have refinanced a few times, and what we pay for our mortgage and property taxes (after the income tax deductions) is less than the rent on a decent two-bedroom apartment in our area.  We certainly could have paid off our mortgage by now, but our investments are earning more than the interest rate we are paying.

Excellent points, chick.

You bought a house to live in long-term. Hopefully it will have turned out to be an outstanding investment, too.

I agree that when you rent you are paying the current market rate and when you buy you are locking in costs up front. That didn't work too well for those who bought in Phoenix or Vegas in 2006, when they felt they had better buy -- even if they had to win bidding wars -- because, by gosh, they would "miss out" before prices went even higher!

As far as paying off the mortgage, that's an individual choice. I like being unencumbered, but I certainly understand your reasons for not paying off your mortgage. Many financial experts would say I was foolish for doing so, and I could give a rat's rear what they say!

Real estate is very local and a principal residence should be viewed as long-term, just as you did. Congrats!
“It’s not how white men fight.” - Tucker Carlson

warriorchick

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Re: I am retired and have a question...
« Reply #62 on: March 26, 2015, 02:09:55 PM »
Excellent points, chick.

You bought a house to live in long-term. Hopefully it will have turned out to be an outstanding investment, too.

I agree that when you rent you are paying the current market rate and when you buy you are locking in costs up front. That didn't work too well for those who bought in Phoenix or Vegas in 2006, when they felt they had better buy -- even if they had to win bidding wars -- because, by gosh, they would "miss out" before prices went even higher!

As far as paying off the mortgage, that's an individual choice. I like being unencumbered, but I certainly understand your reasons for not paying off your mortgage. Many financial experts would say I was foolish for doing so, and I could give a rat's rear what they say!

Real estate is very local and a principal residence should be viewed as long-term, just as you did. Congrats!

Gotta give jsglow credit where it is due.  If it were up to me, we would have joined many of our friends in moving up to a bigger, fancier house than we needed, because, hey, we could afford it, and why not show off how successful we are?  But in retrospect, I am glad we stayed put.
Have some patience, FFS.

brandx

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Re: I am retired and have a question...
« Reply #63 on: March 26, 2015, 02:46:12 PM »
Excellent points, chick.

You bought a house to live in long-term. Hopefully it will have turned out to be an outstanding investment, too.

I agree that when you rent you are paying the current market rate and when you buy you are locking in costs up front. That didn't work too well for those who bought in Phoenix or Vegas in 2006, when they felt they had better buy -- even if they had to win bidding wars -- because, by gosh, they would "miss out" before prices went even higher!

As far as paying off the mortgage, that's an individual choice. I like being unencumbered, but I certainly understand your reasons for not paying off your mortgage. Many financial experts would say I was foolish for doing so, and I could give a rat's rear what they say!

Real estate is very local and a principal residence should be viewed as long-term, just as you did. Congrats!

I agree with all of what you say. We waited until I was 35 to buy a house and then paid if off in 15 years (with a 30 year mortgage that started at 13.5% in the 80s).

I too prefer no debt, but can see reasons for buying early especially with the low rates. But as you said, don't buy a home as an investment; do it because that is where you want to live long term.

Chicos' Buzz Scandal Countdown

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Re: I am retired and have a question...
« Reply #64 on: March 26, 2015, 03:32:37 PM »
Student loans are low interest and aren't considered bad debt. I only pay the minimums on my student loans because there have been years inflation was higher than the interest rate I have. I'm in my 40s and make more than I deserve and still do it that way.

Don't ever forget to live your life. The future is uncertain and the end is always near. It's not all about "the future." How many bums are on the street because they didn't save enough? None. You'll figure it out.

how are student loans not bad debt? Arguably it's the worst kind, since you can't get rid of it even through bankruptcy. Not an expert on poverty but I'd say the ability to live well within your means (which means by definition accumulating some savings) will probably help you weather storms better than without.
"Half a billion we used to do about every two months...or as my old boss would say, 'you're on the hook for $8 million a day come hell or high water-.    Never missed in 6 years." - Chico apropos of nothing

jficke13

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Re: I am retired and have a question...
« Reply #65 on: March 26, 2015, 03:36:47 PM »
how are student loans not bad debt? Arguably it's the worst kind, since you can't get rid of it even through bankruptcy. Not an expert on poverty but I'd say the ability to live well within your means (which means by definition accumulating some savings) will probably help you weather storms better than without.

Some student loans are not "bad debt." Some are. We shouldn't paint with too broad a brush.

$200k in debt from 4 years undergrad at MU, 3 years of law school at MU, and no job? Student loan = bad debt. Same debt but a $100k year job at a big firm? Student loan = good debt.

Coleman

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Re: I am retired and have a question...
« Reply #66 on: March 26, 2015, 03:45:09 PM »
Some student loans are not "bad debt." Some are. We shouldn't paint with too broad a brush.

$200k in debt from 4 years undergrad at MU, 3 years of law school at MU, and no job? Student loan = bad debt. Same debt but a $100k year job at a big firm? Student loan = good debt.

+1

I took on $30k in graduate school debt and I know I am easily making 50% more than I would have had I only had my MU undergraduate degree (which left me no debt thanks to scholarships and generous help from my parents). It sort of sucks starting 30 grand in the hole, but its worth it in the long run.

JWags85

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Re: I am retired and have a question...
« Reply #67 on: March 26, 2015, 04:27:49 PM »
+1

I took on $30k in graduate school debt and I know I am easily making 50% more than I would have had I only had my MU undergraduate degree (which left me no debt thanks to scholarships and generous help from my parents). It sort of sucks starting 30 grand in the hole, but its worth it in the long run.

I took on between $60-$70K for grad school, but my first job was a 60% raise from my previous position, and at my next raise is will put me probably the same % above where I would be similarly if I hadn't gone.  So my loans are very annoying, but I don't regret it financially in the least.

As for loans, mine that I got between 2010-2012 average out to around 7% (most were at 6.8%).  Even looking at potential re-financing would only get me down to 4%-ish, which would then extend them out another few years.  Not a brutal double-digit rate, but still not a sure guarantee to beat from an investment/cost of money perspective.

brandx

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Re: I am retired and have a question...
« Reply #68 on: March 26, 2015, 06:14:35 PM »
I took on between $60-$70K for grad school, but my first job was a 60% raise from my previous position, and at my next raise is will put me probably the same % above where I would be similarly if I hadn't gone.  So my loans are very annoying, but I don't regret it financially in the least.

As for loans, mine that I got between 2010-2012 average out to around 7% (most were at 6.8%).  Even looking at potential re-financing would only get me down to 4%-ish, which would then extend them out another few years.  Not a brutal double-digit rate, but still not a sure guarantee to beat from an investment/cost of money perspective.

As an old guy, saddling students with 6.8% on loans where they know minimum payments are the norm is disgusting.

We should be encouraging education and helping our young people keep this as the greatest country on Earth. Instead, we are falling behind other industrialized countries, especially in the sciences.

Jay Bee

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Re: I am retired and have a question...
« Reply #69 on: March 26, 2015, 06:40:06 PM »
There is some horsecrap advice and thinking in this thread.

The answer to most topics mentioned in the thread is "it depends."

The median financial acumen of Scoop is not strong.

As for the original post... I own a company, but much of what we do is provide services (top-notch) to our clients. On a normal day at a client location I don't even think about Scoop. I'm incredibly focused, efficient and excellent in what I do. Fortunately (and well deserved), I have certain days during the "work week" where I can muddle through the MUScoop muck at a leisurely pace, but for the most part it's very early in the AM or at night.

As for the money talk... two quick things for now...

1) I find it interesting that a couple of folks with a similar background to me have the similar thoughts on vehicles. I refuse to pay a ton for a car. Granted, I want certain things in a car: leather interior with heated seats, sunroof, SUV... but past that there aren't many requirements. I want a care that works and is comfortable when I'm sitting in it. Why pay $30k+ more than is needed for that? It's bizarre to me. That said, if you LIKE cars and get off on a "nice car," cool, more power to you. It's just not my thing. Financially it's irrational, but mostly I just don't care about the newest, priciest cars. (Houses are a different story... 3,500 sq ft per person may seem a bit much, but I like to pace.)

2) Relative to much of this fine nation and my humble upbringing, my current financial status is great. However, I would like to accumulate more wealth. Scoop family, please leave me money in your will or even better, begin making gifts this year! You may gift me $14,000 in 2015 without any IRS reporting requirements attached. Just send it to me and we're good. I will do interesting things with it. Thanks in advance for your generosity.

Thanks for ruining summer, Canada.

ZiggysFryBoy

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Re: I am retired and have a question...
« Reply #70 on: March 26, 2015, 09:52:56 PM »
ZFB has been spending less lately. Instead of higher cost escorts he's just visiting low-cost Jack-shacks. End result is the same, but he saves tons of time & money.

I mostly scoop while in the sh!tter at work.

if it's pink and it stinks....


Chicos' Buzz Scandal Countdown

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Re: I am retired and have a question...
« Reply #71 on: March 26, 2015, 11:26:06 PM »
Some student loans are not "bad debt." Some are. We shouldn't paint with too broad a brush.

$200k in debt from 4 years undergrad at MU, 3 years of law school at MU, and no job? Student loan = bad debt. Same debt but a $100k year job at a big firm? Student loan = good debt.
sure I'm not arguing against investing in yourself and using loans to do that, im just saying once you have the education part done why pay student debt off last?

If you have, say, $100k in total debt.... $50k left on mortgage and $50k in student loan debt. If interest rates were the same, pay the student debt down more aggressively. Even more so if the student loan debt is at 7% and your mortgage is likely near 3-4%?

Bad debt != bad investment
"Half a billion we used to do about every two months...or as my old boss would say, 'you're on the hook for $8 million a day come hell or high water-.    Never missed in 6 years." - Chico apropos of nothing

Jay Bee

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Re: I am retired and have a question...
« Reply #72 on: March 27, 2015, 04:40:34 AM »
If you have, say, $100k in total debt.... $50k left on mortgage and $50k in student loan debt. If interest rates were the same, pay the student debt down more aggressively.

I don't mean this in the wrong way, but this is stupid.

It depends on the specifics, but let me ax you something on one of the many considerations to be made...

With student debt interest deduction (adjustment) phase-outs being what they are (another law that penalizes success), your after-tax cost on the mortgage debt can be considerably less in the example you gave.

Don't go by anyone's "rule of thumb" or unsupportable views. Consider your situation careful from a multitude of angles, or find someone to help you do so.

Thanks for ruining summer, Canada.

Avenue Commons

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Re: I am retired and have a question...
« Reply #73 on: March 27, 2015, 04:41:51 AM »
What are your loans' interest rates at?  What sort of rates would make you switch your strategy?

One of them is 1.5% and the other is 3.5%. Down to about $50k total.  It's from grad school from late 1990s into early 2000s. Marquette is paid off and I don't remember what the rate was. Both are lower than my mortgage rate. I have the ability to pay it off entirely, but I'd rather invest the cash at a higher rate of return.

I had no idea loans were 6-8% now. That definitely would change my strategy. Between that and the overall cost I might have not gone to grad school or at least thought a lot harder about it. I definitely would have just paid it off outright at those rates.

As for the idea of "bad debt" a mortgage provider will treat student loans very differently when assessing your credit risk than if it's consumer debt. $50k in grad student loans they won't blink at. If it's credit cards you'll be in trouble.
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Jay Bee

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Re: I am retired and have a question...
« Reply #74 on: March 27, 2015, 04:53:18 AM »
I had no idea loans were 6-8% now.

Don't sweat it - they're not.
Thanks for ruining summer, Canada.