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Author Topic: I am retired and have a question...  (Read 62561 times)

reinko

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Re: I am retired and have a question...
« Reply #75 on: March 27, 2015, 08:21:04 AM »
Don't sweat it - they're not.

Yerp.

Stafford is @ 4.66% for both subsidized and subsidized, while Parent PLUS is 7.2%, and Grad PLUS are 6.2%.

g0lden3agle

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Re: I am retired and have a question...
« Reply #76 on: March 27, 2015, 09:03:43 AM »
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.



Didn't you just give a reason why what he said is correct?  If after-tax cost on mortgage debt is considerably less, wouldn't you want to pay that off last?

GGGG

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Re: I am retired and have a question...
« Reply #77 on: March 27, 2015, 09:06:54 AM »
Yerp.

Stafford is @ 4.66% for both subsidized and subsidized, while Parent PLUS is 7.2%, and Grad PLUS are 6.2%.


Not only that, but the student loan interest is a federal tax deduction whether or not you itemize.  (Depending on your income of course.)

g0lden3agle

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Re: I am retired and have a question...
« Reply #78 on: March 27, 2015, 09:10:34 AM »
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.


Gotcha.  I agree with interest rates that you have it's a lot easier to make that call.  As the interest rates on whatever debt you have go higher and higher the decision to invest vs. pay off debt starts getting more and more gray, where it almost comes down to personal preference.

At the end of the day as long as you're saving the money and putting it towards something that's either knocking down debt or earning money for you, you can't really go wrong.

JWags85

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Re: I am retired and have a question...
« Reply #79 on: March 27, 2015, 09:38:37 AM »
Yerp.

Stafford is @ 4.66% for both subsidized and subsidized, while Parent PLUS is 7.2%, and Grad PLUS are 6.2%.

They have absolutely come down then, cause my last Stafford in 2012 was 6.8% and my Grad PLUS from that year (taken because costs rose $500 above my Stafford's per semester by the time I graduated) were at 7.9%.

So its not like its some ridiculous rate from the distant past.


Not only that, but the student loan interest is a federal tax deduction whether or not you itemize.  (Depending on your income of course.)

Yeah, funny enough, that was a great deduction, but as Jay Bee made the comment about penalizing success, as I've used that graduate degree to my advantage and have progressed in my career, I won't be getting that deduction in 2015 as the government has deemed I'm now too affluent.
« Last Edit: March 27, 2015, 09:41:30 AM by JWags85 »

GGGG

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Re: I am retired and have a question...
« Reply #80 on: March 27, 2015, 09:48:07 AM »
Yeah, funny enough, that was a great deduction, but as Jay Bee made the comment about penalizing success, as I've used that graduate degree to my advantage and have progressed in my career, I won't be getting that deduction in 2015 as the government has deemed I'm now too affluent.


Just remember what the IRS' middle name is.

Coleman

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Re: I am retired and have a question...
« Reply #81 on: March 27, 2015, 09:54:28 AM »
Don't sweat it - they're not.

Actually, they are if you were in grad school around 2009-2011, when I was.
« Last Edit: March 27, 2015, 09:57:51 AM by Bleuteaux »

Coleman

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Re: I am retired and have a question...
« Reply #82 on: March 27, 2015, 09:56:33 AM »
Yeah, funny enough, that was a great deduction, but as Jay Bee made the comment about penalizing success, as I've used that graduate degree to my advantage and have progressed in my career, I won't be getting that deduction in 2015 as the government has deemed I'm now too affluent.

Ditto. It was nice the first year out of grad school, when I only had 6 months worth of income for that year. I haven't been able to use the student loan interest deduction since. Oh well, good problem to have I guess.
« Last Edit: March 27, 2015, 11:29:49 AM by Bleuteaux »

Chicos' Buzz Scandal Countdown

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Re: I am retired and have a question...
« Reply #83 on: March 27, 2015, 10:14:35 AM »
Didn't you just give a reason why what he said is correct?  If after-tax cost on mortgage debt is considerably less, wouldn't you want to pay that off last?
Thanks, G0lden3agle... been doing my best to not take that the wrong way over here.
"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

4everwarriors

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Re: I am retired and have a question...
« Reply #84 on: March 27, 2015, 10:58:44 AM »
I mostly scoop while in the sh!tter at work.

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




They got one of those on your bottled water delivery trunk?
"Give 'Em Hell, Al"

Benny B

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Re: I am retired and have a question...
« Reply #85 on: March 27, 2015, 11:45:33 AM »
What are the requirements for an FHA loan?

Not sure what it is now, but the material difference in 2010 was the down payment... 3% vs. 10%-20% for conventional.  I think the credit score requirement was a bit lower, but not by much (we were well above both thresholds, so this wasn't an issue), but they were much more lax when it came to documenting employment (in our situation, the bank could accept a letter from my wife's employer that she was on maternity leave in lieu of paycheck-stubs and as verification of employment under the FHA loan but there were more hoops for a conventional loan).

The only downside to FHA - for us - was that if you amortized over 30 years, you're locked in to PMI for at least 7 years (and thereafter, until you have 20-25% equity or so).  There was a bit more paperwork, and an FHA inspection is required so if you're buying a "fixer-upper" you may not qualify for FHA (unless you go the 204k route, which is another matter altogether).

That all said, again I reiterate this was a good situation for my wife and I given the market and circumstances at the time... YMMV.  Jaybee says it best:

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.
Wow, I'm very concerned for Benny.  Being able to mimic Myron Medcalf's writing so closely implies an oncoming case of dementia.

Benny B

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Re: I am retired and have a question...
« Reply #86 on: March 27, 2015, 11:50:58 AM »

Not only that, but the student loan interest is a federal tax deduction whether or not you itemize.  (Depending on your income of course.)

I know people who make well over $100k/year who are paying upwards of 20% of their after-tax income towards student loans yet don't qualify for the interest deduction.  For those keeping score at home, that's a mortgage payment on a $350,000 home.

Student loans suck.
Wow, I'm very concerned for Benny.  Being able to mimic Myron Medcalf's writing so closely implies an oncoming case of dementia.

muwarrior69

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Re: I am retired and have a question...
« Reply #87 on: March 27, 2015, 12:01:25 PM »
When I went to graduate school my Company paid for both books and tuition. Don't Companies pay for that anymore?

JWags85

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Re: I am retired and have a question...
« Reply #88 on: March 27, 2015, 12:30:09 PM »
When I went to graduate school my Company paid for both books and tuition. Don't Companies pay for that anymore?

Its becoming increasingly rare, likely due to the rising rate of tuition and the proliferation of graduate degrees in the marketplace.  I have two friends in part time MBA programs at GE Capital and Unilever that are getting tuition reimbursement, but both have required 2-3 year stints with the company afterwards.  The Unilever deal actually requires payment upfront and then disbursements following program completion within that contracted timeline.

My employer at the time I began grad school would pay no more than $5K a year.  The idea was for certification courses and other forms of classes I believe, not full grad school.  If you went over $2500 a year, then the 2 year stint with the company afterwards kicked in, or you reimbursed the company.  I get it for a full tuition, but for $5K, that was laughable as I was planning to leave immediately after graduation, so thanks but no thanks.

warriorchick

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Re: I am retired and have a question...
« Reply #89 on: March 27, 2015, 01:04:10 PM »
One reason to pay off student loans first (all other things being equal):  Should you face some sort of financial tragedy and have to declare bankruptcy, your student loans won't go away like your other debts will. 
Have some patience, FFS.

Coleman

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Re: I am retired and have a question...
« Reply #90 on: March 27, 2015, 01:05:21 PM »
Its becoming increasingly rare, likely due to the rising rate of tuition and the proliferation of graduate degrees in the marketplace.  I have two friends in part time MBA programs at GE Capital and Unilever that are getting tuition reimbursement, but both have required 2-3 year stints with the company afterwards.  The Unilever deal actually requires payment upfront and then disbursements following program completion within that contracted timeline.

My employer at the time I began grad school would pay no more than $5K a year.  The idea was for certification courses and other forms of classes I believe, not full grad school.  If you went over $2500 a year, then the 2 year stint with the company afterwards kicked in, or you reimbursed the company.  I get it for a full tuition, but for $5K, that was laughable as I was planning to leave immediately after graduation, so thanks but no thanks.

Not to mention, even if you do get reimbursed, you still have to pay up front, which might not be possible for everyone.

warriorchick

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Re: I am retired and have a question...
« Reply #91 on: March 27, 2015, 01:11:33 PM »
Not to mention, even if you do get reimbursed, you still have to pay up front, which might not be possible for everyone.

Just take out a student loan and pay it back the minute you get reimbursed.  Interest won't even get a chance to accumulate.

One thing to note: you get taxed on any tuition benefits over $5,250 per year.  I believe that is a relatively new rule.
« Last Edit: March 27, 2015, 01:15:24 PM by warriorchick »
Have some patience, FFS.

mu03eng

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Re: I am retired and have a question...
« Reply #92 on: March 27, 2015, 01:36:21 PM »
Its becoming increasingly rare, likely due to the rising rate of tuition and the proliferation of graduate degrees in the marketplace.  I have two friends in part time MBA programs at GE Capital and Unilever that are getting tuition reimbursement, but both have required 2-3 year stints with the company afterwards.  The Unilever deal actually requires payment upfront and then disbursements following program completion within that contracted timeline.

My employer at the time I began grad school would pay no more than $5K a year.  The idea was for certification courses and other forms of classes I believe, not full grad school.  If you went over $2500 a year, then the 2 year stint with the company afterwards kicked in, or you reimbursed the company.  I get it for a full tuition, but for $5K, that was laughable as I was planning to leave immediately after graduation, so thanks but no thanks.

I completed my MBA at Marquette with tuition reimbursement through by employer (Rockwell Automation).  $8000 a year in reimbursement, I have to pay for the classes upfront and then if I got the grades they would reimburse within 6 weeks of completing the class.  It only went to tuition, no books or incidentals.  I also "owe" 3 years for the "debt" to be forgiven.  If I leave before a year after I owe it all, before 2 years 2/3rd, before 3 years 1/3rd.

Only complaint was they wouldn't cover in-person/distance learning hybrids....had to attend in person which meant Madison, MU, UWM, or MSOE.
"A Plan? Oh man, I hate plans. That means were gonna have to do stuff. Can't we just have a strategy......or a mission statement."

GooooMarquette

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Re: I am retired and have a question...
« Reply #93 on: March 27, 2015, 01:45:21 PM »
When I went to graduate school my Company paid for both books and tuition. Don't Companies pay for that anymore?

A few still do, but as others have said, it seems to be less common than it used to be.

True story:  I was teaching a health law course in a nearby MBA program a few years back.  In the first lecture, I started with the basic intro stuff (my background, what we'd cover in the course, etc), and then I asked the six students to introduce themselves and tell us why they were in the MBA program and taking the class.  Five of the six simply said that they were taking it because their employer was paying.

It was not the most motivated group of students I've ever seen....

Coleman

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Re: I am retired and have a question...
« Reply #94 on: March 27, 2015, 01:46:58 PM »
My company used to pay for MBAs but everyone would get the free MBA and then leave for another job.

Now you can only get tuition reimbursement if your manager approves and it is directly applicable to your current job. MBAs don't count.

Avenue Commons

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Re: I am retired and have a question...
« Reply #95 on: March 27, 2015, 04:17:39 PM »
One reason to pay off student loans first (all other things being equal):  Should you face some sort of financial tragedy and have to declare bankruptcy, your student loans won't go away like your other debts will. 


That's an incredibly negative way to live one's life.

Focus on what you can control, not planning for the worst.
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Chicos' Buzz Scandal Countdown

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Re: I am retired and have a question...
« Reply #96 on: March 27, 2015, 04:24:10 PM »
That's an incredibly negative way to live one's life.

Focus on what you can control, not planning for the worst.
Good to know... Considering downside is living ones life poorly?
"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

warriorchick

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Re: I am retired and have a question...
« Reply #97 on: March 27, 2015, 05:09:07 PM »
Good to know... Considering downside is living ones life poorly?

Exactly.  That's why I don't have any medical insurance.  Thinking that I might get seriously ill a is an incredibly negative way to live my life. 
Have some patience, FFS.

JWags85

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Re: I am retired and have a question...
« Reply #98 on: March 27, 2015, 06:44:05 PM »
Exactly.  That's why I don't have any medical insurance.  Thinking that I might get seriously ill a is an incredibly negative way to live my life. 

Fun fact, I had a friend in college whose family "didn't believe" in health insurance.  They felt it was a waste of money.  Well both him and his brother broken bones within a month of each other (his hand requiring surgery and pins, and his brother's collarbone).  His parents had to pay close to $25K out of pocket.

They sure showed the man!

Jay Bee

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Re: I am retired and have a question...
« Reply #99 on: March 28, 2015, 08:57:03 AM »
Didn't you just give a reason why what he said is correct?  If after-tax cost on mortgage debt is considerably less, wouldn't you want to pay that off last?

I'm trying to get him thinking, but now you're stealing his thunder. I'm glad to see you're at least thinking now.

The point is you MUST THINK and consider the specifics. And challenge that thinking.

Now... consider this (again, among the multitudes of considerations that may be relevant)...

The student interest deduction does not require you to itemize to take it. Taking a standard deduction instead of itemizing and taking a mortgage interest deduction may be the best route for your tax situation... in that case, you receive a "tax-savings (lol)" on the student interest... but you get no incremental benefit for the mortgage interest. Still want to pay off the student loan first?

Also remember... the considerations are not only about the current year and current situation.. you must also project into the future. Intelligent planning. So many angles to consider.
Thanks for ruining summer, Canada.

 

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