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This is also true. And you touched on the 401k match...something I neglected to mention. Free money.
The 401k match should really be priority number one for everybody. Free money like you said, but there's also a vesting period you have to meet. With very few people remaining with their employers long term, it's important to get that free money and get it vested before you move on. Many places it's 3-5 years before vesting.
My employer gives me matching dollar for dollar up to 4% of my income and then a 5% safe haven on top of that. So, just by packing away 4% of my income, I'm investing a total of 13% of my income (4% from me and 9% from my employer). Saving that much beginning in my mid twenties makes me feel pretty damn good. And then my wife's employer matches very well too. At this rate, we'll be living better in retirement than we do currently.
Of course, I'm not planning on social security being there by the time I need it so we obviously gotta make up for that lost income.
"People don't care how much you know until they know how much you care." - Mark Dantonio.
It's not worthwhile once you begin to add in your state income, property taxes and charitable donations? That has to be, combined, more then the standard marital deduction.
Not necessarily. It's not enough for me to itemize either. I'll report back on February when I do my taxes, but I don't think it will be for me.
It's not huge but if you pay 6-7K in state income taxes, 4-5k in property taxes, donate a couple grand to charity, then a few grand in mortgage interest surely must put you over the top, right?
This post was edited by vator88 16 months ago
My property taxes are only about 2k and pretty sure my state taxes aren't that high either.
i absolutely hate how my company describes the 401k match. they say it is $0,50 per $1.00 I contribute up to 4% of my gross. BUT what they mean the 4% of my gross is of the $1.00 I contribute in which they are only matching half, so in reality they only match 2% of my gross.
No boat or house boat :)
I did hear you could get a mortgage on an RV though...
Yes but if you don't contribute 4% then you don't get 2% so what they state is more correct.
Haven't run the actual numbers yet but if it's over, it won't be by much. Around that break-even point, you can think of your mortgage interest as tax-free if you want, but I'd be getting about the same deduction either way.
That' a good gauge on how lazy someone is. At least it is in my case.
Risk tolerance should be defined by how old you are...young people can take more risks because they have a longer investment timeframe. And they should reduce their exposure as they get older to maintain/protect their nest egg.
And it's funny that people are claiming that investing in things is not a good idea because it's "risky"...you bought a house didn't you? That right there is risky, because there's no guarantee real estate will always appreciate. It's an investment that will gain or lose value just like anything else (read: 2007).
Full never go full retard. You have now made very general statements about investing that add no value To this conversation. Yes everyone knows these points and thank you for being an ass. These statements are to spur discussion on investing. Relax.
What, are you German-Irish?
Chitown Badger is nailing it in this thread.
Pushing extra $ to the mortgage rather than into a 401K or Roth is just stupid. Especially when you are young.
The formula to early retirement is simple and boring. Live below your means, don't carry credit card debt, and push lots of money into retirement accounts (401K & Roth). Diversify that retirement $ across multiple index funds or other low load funds. Occasionally rebalance, but otherwise leave it alone.
That being said, I do put an extra $200 a month towards my mortgage. It makes it a nice round number. I know it is dumb, but I just hate debt.
Ok, I will give that to you too. However, risk tolerance plays a factor. A lazy person doesn't want to get stranded. That is a lot of work.
boat - (noun) a hole in the water into which the owner throws money
But, everyone needs some kind of entertainment, and it's tough to beat a day on the water.
I think the first thing people have to do is stop looking at their house as an investment. It really isn't. It's your home. It will only work as an investment if you sell it (assuming you aren't underwater). The problem with that though is that if you sell your home, you still have to buy or rent somewhere else to live. A house is really just an expense.
Of course, I'm in a relatively ideal situation. My wife and I just bought our first house and it looks like, by no skill of our own, we pretty much timed the bottom of the market in East Lansing. Combine that with a great interest rate and I'd be throwing money away putting extra money into my mortgage payment. Especially because, thanks to home prices being so low, we were able to skip the "starter home" and were able to buy a house we can raise a family in. We are likely going to be in this house for the next 30 years.
Your last sentence just depressed the hell out of me.
I thought the exact same thing.
Smart man right here.
This is the answer I have chosen. Invest 15% of earnings in retirement, throw everything else at the house.
Since this is settled: MET, MESP, or combination?
Wondering if the people saying to pay off the house before investing are of an older generation. I remember there was a time where your house was looked at as your retirement savings or at least a portion of it. Now all those people are regretting that advice.
Many people lost their jobs and home value recently. Stocks also plummeted. People are scarred and scared still. How would you feel about your choice if you lose your job, your home value drops and your stock value drops?
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