Unlocking Legal Jargon: How AI Legalese Decoder Can Enhance Your Weekday Help and Victory Thread for the Week of May 06, 2024
- May 8, 2024
- Posted by: legaleseblogger
- Category: Related News
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Best alternatives to cash in the Bank of America/Merrill ecosystem while having relative liquidity (<1 week). ~50k available so can’t qualify for preferred deposit (100k minimum)
if I want an alternative to cash for yield while having relative liquidity (<1 week) are my only options HYSA and Money Market Funds?
First time poster, hoping to get some quick advice.
I have an old rust bucket car that I’m wanting to replace and I’m looking to invest in a 2024 Honda Accord. The thing will cost about $33k in total and I’ll be paying $400ish a month after my down payment. I make just under $4k a month, pay $1100 for rent, and have other minor billings.
I hear people talk about the 33% rule all the time and the fact that I’ll be shelling out close to 40% of my monthly income to rent + car payments makes me a little nervous since I had it pretty good before with only 25% going to rent. I have shallow credit and I don’t plan on buying a house anytime soon so maybe this could help me build credit. I semi-regularly repair things on my current car (2009 Toyota Camry) and the excessive rust makes me feel awful being seen with it. I’m also nervous to make a big down payment and take out half of my savings. Conflicted.
Anyway, TLDR, is 40% of monthly income too much for rent + car payments?
I want to open a HYSA but need $10,000 in new money. Is it ok if I write a check for 10k to a trusted family member for them to deposit and then turn around and write me a check in my name so I can use it to open my account? I don’t know how else I will get $10k in new money… all of my money is at this same bank in a regular savings account.
TLDR: How do I allocate income of $9K per month after taxes, expenses, and discretionary spending?
Priorities:
* Save for a house and car
* Contribute to a SEP or other retirement savings
* Emergency fund
I’m 35, single, no kids.
Last fall, I started an LLC and I am a W2 employee of that LLC. My net income after payroll taxes and withholding for my salary and setting aside quarterly tax for the non-salary disbursements is $156K a year. This is fixed and predictable because I am in a contract role (see note at end for more detail).
My health insurance is through the state exchange (I pay for this from the business so it’s not coming out of my personal net income calculation). I have not set up a SEP yet because I wanted to pay off debt before contributing to retirement. I am now debt free.
I have $105K in retirement funds that I contributed prior to September (mostly Roth 403b contributions, $16K is in a Roth IRA).
I’d like my next goal to be saving up for a house. I’m thinking $200K for a down payment, and buying within 2-3 years. I will also probably want a new car in the next couple of years (nothing fancy, I drive a 2015 Honda Civic sedan now and am fine with something similar). I’m wondering what I should realistically be saving for those things, what I should start saving for retirement, and what I should save as a cushion for any unexpected expenses.
My monthly expenses for housing, utilities, and food come to $2K. I’ll to reserve another $2K for discretionary spending. That leaves me with $9K a month to save for the cushion, the house/car, or SEP contributions.
Relevant info on my current role: the company that is paying my contract originally wanted to hire me as a W2 employee, but they haven’t figured out how to pay out-of-state workers so this arrangement is intended to be temporary. My base salary would be $165K (with benefits) if they ever get their stuff together. Their intent is to do that by this fall. I’m not really pressed about it either way, and I would be surprised if they’re ready by then.
I did read the r/personalfinance recommendations on emergency funds, but I believe my monthly expenses are unusually low so I don’t know if I should rely on that as a good basis for what to set aside.
What would you do? Thanks.
This forum has been invaluable in helping my spouse and I improve our financial situation over the last couple of years! After an embarrassing amount of time living paycheck to paycheck, we’ve eliminated high-interest debt, saved up a sizable emergency fund, and are now contributing to a three-fund retirement portfolio. Things have become more complicated recently (which is a little bit intimidating), and I’m hoping someone can look over my situation here and answer a few questions/confirm I’m understanding things correctly. I’ve done my best to glean what I can from prior posts–apologies if this has been covered already.
Background Info:
My spouse and I (both early 40s) are filing married/separate to minimize her student loan payment while working towards PSLF. We both made 2023 contributions to Roth IRAs which, when I started doing our taxes, I realized we were ineligible for. I contacted the custodians to recharacterize the $ to newly created traditional IRAs. We both have Simple IRAs (mine current employer and hers a past).
Me:
2023 Wages: $50ish K
Simple IRA (current employer): $20k
Roth IRA: $25k (made $600 2023 contributions, recharacterized those to new Traditional IRA in April 2024)
Traditional IRA (created April 2024 with uncharacterized 2023 Roth contributions): $600
HSA (set up in 2023): $3,800
Spouse:
2023 Wages: $60ish K
Simple IRA (past employer): $45k
401(k) (current employer): $15k
PH&S 457(b) (current employer): $0
Roth IRA (created in 2023, made $3,000 in contributions, recharacterized to new traditional IRA in April 2024): $0
Traditional IRA (created April 2024 with recharacterized 2023 Roth contributions): $3k
Our plans for 2024: We will to try and roll her old Simple IRA into her 401(k) with her current employer which, as I understand it, would let us convert the traditional IRA we set up to recharacterize her 2023 Roth contributions into a Roth. Since my Simple IRA is currently getting contributions throughout the year from employer, we can’t do a backdoor Roth for me, and will just keep my $600 Traditional IRA as is.
Questions:
1) Is my understanding of this process accurate?: Because we are MFS, we can’t deduct our traditional IRA contributions. Form 8606 essentially classifies these as already taxed and is what prevents the $ from being taxed a second time next year as income when it is converted into a Roth.
2) What’s the most advantageous way for us to invest our savings in 2024 and future years while filing married/separately? I anticipate being able to tuck away $10-15 K this year in addition to what’s currently being taken from our paychecks (me: 3% + 3% employer match, spouse: 6% + 3% employer match). I can’t contribute to my HSA in 2024 because we set up a FSA with my spouse’s employer (oops. At the time we were unaware this would prevent me from using the HSA). Provided we can roll her Simple IRA into her 401k, I’m planning to contribute $7k to her traditional IRA and then convert it and the 2023 contributions. Is this smart? What’s our best way to go with the other $3k-8k of money we anticipate being able to save for retirement this year?
3) Do I need to keep filing an 8606 with my taxes every year that my traditional IRA has $ now? Or, do I only file an 8606 for years where my basis changes (i.e. I add more non-deductible money to account/convert it).
Thanks a ton for any help y’all can provide!
Question on transfer from HYSA to HSA for paying medical bills
Hi, very new to how investing works and stumbled upon HSA and have been thinking about how we should utilize it given below scenario:
My wife and I are expecting medical bills from her recent pregnancy which are still in the process of being adjusted by insurance. Given this, the money that we would most likely use to pay for these has been put into our HYSA account (as our emergency fund).
I hope someone could confirm if this idea is wise and how would we go about it come tax season.
Basically, my thinking is that we could withdraw from HYSA, and then transfer it to a new HSA. And then from that HSA, pay up the anticipated medical bills (and make it non-taxable)
Ive read and people are saying to just use separate money instead of using HSA because of its triple tax benefit (and just present receipts later) but Im quite confused with which one is the better idea. And if this is the case, should we just itemize this for deduction?
And how should we report the gains from the HYSA given that it was “used up” and transferred to HSA?
Appreciate you putting your response to much simpler terms for my better understanding.
Thank you!
My wife and I are 26. Thus far, our philosophy has been to throw money into our 401K, but we’re starting to learn more and more about this stuff and take it seriously. Right now, we’re contributing roughly 12% to our traditional 401Ks, and roughly 5% to Roth 401Ks. My job will split the amount that they match between the Trad and the Roth (as in I only get $200 either way, but I could get $100 into both), hers goes into only the Trad. Is there ever a world in which it makes sense to keep money in the Roth401K vs opening separate Roth IRAs and diverting all that money into IRAs and adding some extra? We don’t own a house yet, but would like to in the next 5 years, and I will be honest and say that the idea of being able to withdraw our contributions back out later is appealing, almost like a savings account just for a down payment that we can’t touch that’s earning 8%.
I hope this fits here, if not, sorry in advance. I have had some horrendous spending habits coupled with loss of income the past 2 years that have accumulated to $45k debt and I am drowning in payments. I don’t know what to do.
Amex 1 $25k – minimum payments $950
Amex 2 $3,400 – minimum payments $171
WF $16,800 – minimum payments $550
I am in sales and I used to make nearly $200k and at the moment I am bringing in about $2500 / month. Things should get better soon but theres no telling when. I don’t know what to do at all. Those payments along with other bills I cant make.
Mortgage $1830 among others.
I still have a 401k from a job I left 5 years ago, since I never rolled it over to anywhere. I’ve been thinking of going back to the company in the next few years, so should I keep the 401k? Or do brokers make you start a new 401k? Or should I ask my broker directly what they do?
I just inherited 300k euro in liquid assets. What would you do in my situation? Put all into the stock market right away? Slowly build a portfolio? Put in a high yield and wait for some kind of market crash and put all in then? Just go some simple bond? I’m not going to need the money in years. Market almost in ATH now so feels a bit high?
I do not have any high interest debt
Open to all suggestion, look forward to hear what YOU would do in my situation. I appreciate your input!
If I have a car loan (6.6%) that I could pay off from a HYSA (4.25%) without touching my six months emergency savings, is there any reason I should NOT do so immediately?
This car purchase was an emergency after my prior vehicle was totaled in an accident.
Just a small victory
Had some good help with accounting this week making the journey towards r/fire concrete.
I also have a tonne of budget to spend before my company year ends
I’m signing up for a few courses, for pleasure and awareness, not just directly related to my career
Ai governance and AI alignment
What would you study if it were free?
I started working 6 months ago and have the equivalent of ~$4000 as my emergency “do not touch” savings. I drop in ~$500 a month in there. Total in my account is ~$6k.
The highest interest rate I’ve seen a savings account with an investment of under $50,000 is 0.4% in my region, while I’ve seen people here suggest a HYSA with a rate of 5%. I’ve only seen those rates if I have 10x more than what I have for the initial investment.
Should I open the account anyway? Or are there any good alternatives?
Paid off my student loans today! About 34k over 7 years. Definitely could have been sooner if I’d been a bit more disciplined but it feels really good to be done with it
I also have a 20k car loan but now I’m feeling really confident about getting that paid off in the next year or so, and then I’ll only have a mortgage for debt
Advice for a starting a retirement account- Roth IRA or CDs?
I’m 23 years old and in a good financial situation. Id like to start a retirement fund now so I’m looking for advice on what to open.
(To my understanding) I can go the route of a Roth IRA since Im in a very low tax bracket right now, I can get taxed at a lower rate and not later when I’m making more money. But it has lower immediate APYs than if I open a CD. More accessible though.
If I open a CD I can get a much high immediate APY and keep rolling it over. But I have to remember to deal with that and I can’t touch it if something comes up..
Am I understanding this correctly?
I have a good $10,000 in my savings (and still growing), I live with my parents as I’m in school and working full time which is why I have good money right now as I don’t pay rent. My parents are also a good safety net as they are doing well and can help in emergencies and I always pay them back. So I feel if I put my money in a CD with a really great APY and keep rolling it over that will be the best option even if if there is a big purchase I need to make in the event of an emergency because I’ll have my savings and worse come to worst, my parents, to fall on.
Thoughts ?
Husband and I will make ~128k together next year and are tentatively planning on having 12-20k in a HYSA as our “emergency fund” and nest egg since we are hoping to have a baby in the next 12-18 months. I know emergency funds are somewhat arbitrary but is that stupidly low? Or stupidly high, I have some very high interest student loans that we are hoping to refinance, but no other high interest debt. TIA!
I currently have 40K in savings in a brick and mortar bank local to me. It is earing 2.3%. I want to open an Ally account for the higher yield but not really sure how much money i should roll over into this new account. I still need to keep my local bank account for cash deposits. The local bank is a credit union and they dont have any minimums and fees like most. But they charge me for checks for a basic checking account. ALLY offers free checks so that is also why i would like to open an account there as i use checks often. Any advice is appreciated.
Is there an app that will link to my accounts and that can give me an analysis/readout of exactly how much money I’ve saved each month? I know there are a lot of apps that can help you budget, but basically I want an app that can at a glance analyze my statements for say the past 6 months and say “in November, you saved x, in December, you saved Y”
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Just wanted to give a thank you to this community for all the people who take the time to give great advice, [I made a post in one of these threads awhile back](https://www.reddit.com/r/personalfinance/comments/1ah8fv9/comment/kory0m5/), there was one commenter in particular that I wanted to thank, but they deleted their comment.
I took their advice to go for getting PMI removed early. It took a few tries, as my mortgage company kept dropping the ball, but finally on the third times the charm, I was able to complete the whole process.
I didn’t have to pay for a full appraisal, just an IPBO (Interior Broker Price Opinion), which cost less than $200, and today I got the message that PMI was officially removed! and confirmed that it’s no longer showing up in my Escrow portal. So I’ll recoup the cost for the IPBO in about 5 months, and ends up saving me several thousand overall.
Hi, this is my first time here so hopefully I’m not breaking any sub rules. But I have a question. I have some money invested in funds with Fidelity but I also recently set up an automated investment account with Wealthfront. Does anyone here know what the logistics would be if I sold the former in order to add it to the latter? The thing mostly holding me back is if it would cause any headaches at tax time. this is really not a lot of money I would be moving, though, it’s around $7,000. So should I just leave things as they are, or streamline them for myself by moving the money to Wealthfront? (Also, my Roth IRA is with Fidelity if that makes any difference. My other thought was to just wait to sell the funds when it comes time for next year’s annual contribution.)
I’m looking for a high yield account that allows me to pay off my credit cards directly from this account. I’d like to keep cash in here earning interest, rather than having to manually move cash to my checking account before my credit card auto pay every month. Does anyone know of any accounts that allow for this?
If I had 50k to spare, where would be the best place to invest it in for passive income?
My little knowledge is to just throw it in a brokerage account (e.g. Vanguard) and put it all into like VTSAX or something.
For info, I have:
* 6 month emergency fund
* currently 401k maxing (matching with employer, but just maxing it out through the year)
* maxed out IRA
* no debt
* 29 y/o
* no plans to buy a house within 3-4 years
I recently won a large amount of money & prizes on a TV show (approximately $62K in cash, $14K in prizes).
My partner and I are relatively well off. We are married and have three children. Our total combined income last year was $188K – I received a $7700 raise this year while my partner’s income stayed the same. We own our home, subject to a mortgage with a balance of $365K. I live in a state with relatively low income taxes.
I am kind of at a loss of what to do with this money. 7% will be withheld for California non-resident taxes (though I expect to get a good portion of it back). I expect to pay approximately $14,000 to the federal government on my winnings. One of my prizes is a trip, which I will take in the next tax year to avoid earning that income this year, which should reduce my 2024 tax liability ever so slightly.
That leaves me with right around $44,000 in cash.
I’m clearly going to put that in a HYSA or short term high interest T-bills until I figure out what to do with it. I have some credit card debt, but it’s manageable and close to being paid off from just our income, but its still significant (a few thousand bucks). My partner’s car has a note on it, but it’s pre-COVID low interest and it makes no sense to pay it off given the differential in its interest rate and a HYSA. My car is leased.
Any suggestions on a) how to further reduce my tax liability, and b) further investment of the money.
Private company offering Phantom Stock, what kind of attorney/who do I talk to about the contract/terms I’ve been given? I’ve been working for the same company for 15years, small private assembly manufacturer been in business 20 years. Owners have been vocal about the next chapter, open saying its built to sell one day and want to use this a golden handcuffs. I know really nothing about these stock programs besides what I’ve read. Its usually not pretty with comments on these plans for the employee, but I believe I’m in a different situation but want to make sure.
Hello! Recently, I paid off all of my credit card debt from when I stupidly engaged in a lifestyle I couldn’t afford from the ages of 22-28. Over the last two years, I paid off 14k in credit card debt. During that span, I went from making 100k to 130k in NYC, so that really helped me knock the debt out. I was also paying on my student loans due to the 0% interest from the onset of the pandemic, just trying to take advantage of the situation.
With my expenses and paying off my credit card debt, I’m basically starting from scratch at 30, but it feels good. I do have 60k in a 401k and have about 3k in a HYSA (basically one month of rent and food). My remaining student debt is 16k at about 4% interest. Should I continue to prioritize a larger emergency fund over this student debt? I plan on starting an IRA outside of my company’s 401k program, as well. With the average return on the market vs my 4% interest, should I even prioritize an IRA over the student debt? At my current rate, the student debt would be knocked out in about 5 years.
Thank you!
34 years old. Expecting to work another 25-30 years. I’m currently in 100% VT/VTWAX except for my 401k which is a TDF. When should I start thinking about re-balancing and investing more in bonds?
For money market fund yields and expense ratios, do I get the yield, or do I get the yield minus expense ratio?
For example, if a money market fund pays out 5.4% with an 0.11% ER, do I get 5.4% or 5.29%?
I have a former 401k that is now a traditional ira in vanguard. I don’t want to deal with them with the whole bs about fees so want to transfer it to schwab in a rollover account . Is there anything concerning taxes that I need to worry about?
I’ve inherited a large amount of very low cost basis stock (some stuff from the ’80s with 10,000%+ appreciation) and am trying to leave many of the positions. This year I have a pretty low income, but am expecting to make ~$200k/yr in the near future. There are losers in the portfolio (for harvesting loss against gains), but they are substantially outweighed by the winners. I was looking at donations as a possible route to reduce my tax load. My thought is as follows:
My income would have about 30-35% tax rate (state/local + federal). From what I understand, donations of appreciated stock are allowed at a maximum of 30% of AGI. So rather then paying capital gains tax *and* tax on income, can I offset ~60k a year by matching my 30% tax with 30% donation (donating positions with the lowest basis). Or am I missing something with this plan? Is there a better way to offset these positions?
I am using cashapp for income taxes, I had excess contributions to my roth IRA last year which I removed, but I had earnings from those contributions, how do I report this in the cashapp interface? I can’t find it, I think I’m supposed to input it in form 5329 but cashapp doesn’t give me access to this form
Is it your experience that Experian credit scores are usually lower by a good margin than Equifax and Transunion? I ask because I’ve been monitoring my credit scores for a few years now and that’s almost always in the case for me. For instance right now my Equifax score is 43 points higher than Experian and my TransUnion is 42 points higher. I realize that some of that depends on what is being reported to which credit monitoring site but there’s nothing major that’s on Experian that isn’t on the other two. Experience showed more credit inquiries than the other two but most of those have dropped off. If this hasn’t been your experience than what should I be looking at to figure it out?
$55k in high yield savings – I’m typically pretty low risk with investment but better to put a chunk in VOO?
My understanding of VOO and similar ETFs is that it’s best to invest if you don’t need the money within 5 years. I have a wedding to pay for (in a year, ~$15k) and I’d like to buy a house eventually (in 2-3 years). Does it make sense invest half of my savings? 20%? The main goal here is to earn a good bit more than the 4.5% interest I’m gaining from high yield savings.
Side notes – I have an employer matched 401k and I put at least $2000/month in my high yield savings.
I’m really good at making sure I have enough money in the correct accounts for my automatic payments to come out on time and correctly and I always pay off my credit cards every month.
Currently what I am doing is keeping as much money as possible in my HYSA and only taking money out of it if I have more expenses on my CC than I get paid for in that two weeks. I moved into a new apartment and am going to be paying much more in rent each month and I’m thinking that I’ll continue what I’m doing but have the monthly rent come out of the HYSA.
I know that HYSA has a withdrawal limit of 6/month but at most I would be using 3 if I continue in this way. I’d like to automate more, but I’m not sure what that might look like. Thoughts?
Last Friday I received a deposit to my chequing account from Honda Canada Finance Inc.
I don’t work for Honda, drive a Honda, and I haven’t received any bursaries from Honda. Absolutely no reason to be receiving money from them.
I called my bank to ask what’s up & they said everything is legit from their end & asked me if I was expecting a deposit from Honda. I said no & that I’d figure out why I received it. They said cool & now I’m here.
What do I do with the money? Is it mine now? It’s not an insignificant amount (to me) so I’m not sure what to do. Is it just mine? Do I contact Honda Canada Finance Inc to try to give it back?
I am so sorry for my ignorance, but I am not sure what to do. I am 32 years old and I’m an engineer in the US that makes $110,000 a year in a decent cost of living area. Each month I put $2000 in my Wells Fargo Savings Account. I like my savings account because it is the place where most of my cash goes and I look at it like my cash resevoir. I usually only keep $2,000 or so in my checking accountat a time.
I bank with Wells Fargo and I know they made mistakes in the past, but I’ve been very happy with them to be honest. It’s a large bank and I’ve been using them for over 20 years or so. I have personally had no issues with them. When I check my bank accounts, they advertise that they have CDs. They have a 4 month plan, 7 month plan, 1 year plan, and so forth. The APRs for these CDs is around 4% for each of these (each plan has a slightly different APR though).
Now, should I just leave all my cash that is not in my checking account in my savings account ? Or should I take 50% or more of that cash and put it in a CD ? Isn’t there a penalty for taking money out of a CD early ? Wouldn’t I lose money if I do this ? I am worried maybe I would need that money to do car repairs or something one day and then they will penalize me hard for taking that emergency money out. What should I do ? I have about $25,000 in cash in my savings currently. Should I just continue to do what I’m doing and stick with the savings account ? I also have $40,000 in 401K money, but I don’t think that is relevant here.
Thanks for the help. I’m not sure what the best strategy is here.