Posted on 04/17/2009 6:21:04 PM PDT by FromLori
Chrissakes. A-holes like this need to go to work in the tin mines or somewhere--get acquainted with reality.
“That means even with a six figure salary he was living pay check to pay check.”
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That seems to be fairly common. I have never been able to understand why someone spends years learning to make a sizable income and then goes to the limit on spending so that they still live with no cushion as if they were earning ten dollars an hour.
“The government jobs are continuing to grow.”
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That is what frosts me! I have long said that every government hire should be counted as two unemployed rather than being counted as another person employed. Why don’t we just put all the unemployed on a government job and see how great things are then?
If you go Roth IRA, you have age restrictions and tax penalties the insurance program does not have. The tax benefits are the same except for the mortgage deduction.
Well call those "Golden Handcuffs."
My husband was axed at age 55 so he started his own company five years ago. For the first three years, it was a good deal and we saved since as a consultant, he didn’t know how long the jobs would last. The fourth year was bad (2007) but we got through it because of my job and our savings. Last year was great, but with the election of Obama, we knew it would be bad this year...and so it is. We paid off all of our debt except our house and will see how long the savings from last year will help....of course, we ended up paying 12 THOUSAND extra on TOP of the money already withheld in state and fed taxes because of our increase in salary last year. So, the money we had hoped would help us through a bad year this year has gone to the government.
Is there any wonder that small business owners were out in mass on Tea Party day?????
There is a new version of the 401k that is not very widespread called a ROTH 401k. You pay taxes on the money going in, but you do not pay taxes on the gain. It does have similar age restrictions and tax penalties as the ROTH IRA.
I wasn't suggesting to invest only the interest that would have been generated by the mortgage. Invest the equivalent of the entire payment minus however much you feel you need to pay for insurance. That's where I got the $600 - $60 = $540.
As far as paying taxes now or later (i.e., 401k vs ROTH 401k or tradtional IRA vs ROTH IRA), if the tax rate stays the same, you end up with essentially the same amount of money either way. For example, $5,500 invested today at 10% becomes $180k in 35 years. If you put it in a traditional IRA, you save $1,833 on taxes which you can also invest in a non-tax-deferred account and make an additional $60k or so in the same time frame. Total value after 35 years for both accounts would be about $240k but take away that 33% in taxes you have to pay as it is withdrawn and you end up with approximately $160k.
Invest the starting $5,500 in a ROTH IRA or ROTH 401k and you get to keep the entire $180k.
I am not a fan of deferred accounts. I prefer the insurance to the stock market. I was in several Vanguard accounts in the 80s with my 457. They did okay. IIRC correctly, they've been on of the strongest.
I like having no loss of prinicple for building retirement, ezpecially when you're getting close and don't want to experience downturns like 2000-2006 or last year.
Roth is preferable for my money to 401k, but the insurance program doesn't have the restrictions and penalties.
I like the insurance because you can use it throughout your life to avoid non-preferred debt and don't have to pay it back. No tax penalty.
2000-2003.
I agree with you that if you are aggressive, you can likely hold a mortgage and invest it at a differential that will pay you some money back. In addition, Pres. Obama’s inflation making machine will probably make paying back debt in future years a happier proposition than doing so, today.
By the time somebody get to the point of paying off his/her house, most people have been fairly smart with their money. Our society has simply built debt up in such a way that most people do not get out of debt.
As intended.
I think you are being too critical on people that choose not to leverage their house. It’s an issue of safety and comfort. Besides, not having a house payment means paying more monthly income into investments (instead of a house payment) and the end result will still likely mean good tidings.
Leveraging a mortgage into a good investment is great for you. It is NOT for everybody. I doubt you are a fan of Dave Ramsey, but Dave says that personal finance is 90% personal. You are discounting that. There is a level of benefit and peace in having no debt on your house and that has real value.
I
The second reason is simply ignorance of the difference between preferred and non-preferred debt (I notice you don't make that distinction) and lack of understanding of how money works.
In our education and planning process, we do not do any transactions or sell any policies unless we are sure the client knows what they are doing. Many agenst have sold this policy and it was written incorrectly. Lawsuits and client suffering all over.
The programs we sell cannot be sold by 95% of the agents in the business because the companies will not let them do so without the required training.
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