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educate me 401-k

  1. #1376
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k


    Yeah. I wasn't smart and missed out on all of that. I was certain I was not spending more than 5-7 more years in this house and by my math the closing costs killed it every time. I'm still at ~4.5% with ~15 left. So it isn't hard to keep the math looking good. Doing the math now it looks like rolling out as much as $15k could have almost no impact on our payment thanks to the potential rate drop (assuming 3.5% @ 15 years). Only downside is it would cost me +/-$2k up front (closing).

    Gunna have to do more maths on this one.. I'm actually half of the mind to reset to a 30 year and take the ~$500/mo lower monthly. Not sure I'm in the no-debt-is-the-best-debt camp some of ya'll are.

    I admit I don't fully understand HELOCs. But they seem more convenient as I don't actually know (exactly) how much I'd need for improvements. But those look to be in the 5% range.

    Door #3 is make fewer improvements at a much slower pace without the debts.

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  2. #1377
    Super Moderator TheIglu's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by csmutty View Post
    Interestingly enough the rate for a 10 year is 3.5% where the rate for a 15 is 3.375%. Wtf?Attachment 51074
    Inverted Yield Curve


    This hasn't really worked out well in the past.

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  3. #1378
    Super Moderator TheIglu's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    Yeah. I wasn't smart and missed out on all of that. I was certain I was not spending more than 5-7 more years in this house and by my math the closing costs killed it every time. I'm still at ~4.5% with ~15 left. So it isn't hard to keep the math looking good. Doing the math now it looks like rolling out as much as $15k could have almost no impact on our payment thanks to the potential rate drop (assuming 3.5% @ 15 years). Only downside is it would cost me +/-$2k up front (closing).

    Gunna have to do more maths on this one.. I'm actually half of the mind to reset to a 30 year and take the ~$500/mo lower monthly. Not sure I'm in the no-debt-is-the-best-debt camp some of ya'll are.

    I admit I don't fully understand HELOCs. But they seem more convenient as I don't actually know (exactly) how much I'd need for improvements. But those look to be in the 5% range.

    Door #3 is make fewer improvements at a much slower pace without the debts.
    Think of a HELOC as a credit card with a wicked good rate. That's all. And they give you a checkbook to use as well as a card.

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  4. #1379
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by RandyO View Post
    got my IRA statement today, 5.6% gain in one month, biggest I've seen in a long time
    Yeah. I get excited when I look at those YTD returns.

    And then I get reminded that we were ~20% in the hole just before the 1st of the year.

    If it weren't for new contributions I think I'd be right about where I was 1 year ago. Meh.

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  5. #1380
    Angry Gumball RandyO's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    Yeah. I get excited when I look at those YTD returns.

    And then I get reminded that we were ~20% in the hole just before the 1st of the year.

    If it weren't for new contributions I think I'd be right about where I was 1 year ago. Meh.
    I had a slump, but not that much, down maybe 5%. I'm about 15% ahead of where I was a year ago, and at 66, I am no longer making contributions
    fwiw, my broker in Madison, WI is affiliated with Robert W Baird, has most of my $$ in Pacific Funds

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  6. #1381
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    Up 15% over the last 12 is amazing. I'm not familiar with any investment that has had returns that good. Way less downside too?!

    You're in retirement (ie draw-down).. yet these seem really aggressive!

    Can you share what funds? Best I can tell most of the POxxx funds went off a cliff last December and haven't really fully recovered yet.

    educate me 401-k-screen-shot-2019-07-09-a

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  7. #1382
    Angry Gumball RandyO's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    Up 15% over the last 12 is amazing. I'm not familiar with any investment that has had returns that good. Way less downside too?!

    You're in retirement (ie draw-down).. yet these seem really aggressive!

    Can you share what funds? Best I can tell most of the POxxx funds went off a cliff last December and haven't really fully recovered yet.

    educate me 401-k-screen-shot-2019-07-09-a
    financial reports confuse me, the not 15% i the past year, since my broker took me out of American Mutual funds 3 years ago and put me in Pacific
    the 5.6% is what I calculate comparing my account statements from last month to this month, I may have money that is other investments than Pacific, but the majority is there

    Madison, WI may seem an odd place for a person from NH to do his investing. My broker is a long time trusted family friend that has done well for the family, my dad, now 93 years old, makes more money from his investments than he ever made when he was working, socking money away into tax deffer ed accounts backfired on him.

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    RandyO
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  8. #1383
    Lifer loudbeard's Avatar
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    Re: educate me 401-k

    Recommendations on actual good books to read on the subject of wealth building?

    I can't stomach the Tony Robbins and Gary Vaynerchuks of the world. I also got pissed at literally every "expecting dad" book I read. I'm looking for something that's short on gimmicks and long on substance. Bonus points if it's not written like a self-help book, those things are the worst.

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  9. #1384
    Backwoods lobster boy number9's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by loudbeard View Post
    Recommendations on actual good books to read on the subject of wealth building?
    John Bogle - Little Book of Common Sense Investing

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  10. #1385
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    May not be what you are looking for, but have you read the reddit /r/pf wiki articles? I believe they are a pretty good read.
    Start here. Then read the XX to XX by-age series, at least starting with your age bracket and working up-hill. Maybe one bracket back to see if you've missed anything critical.
    Print out the flowchart and stick it to the fridge.

    They have a book list too. I'm honestly not much of a book reader. My wife questions if I am illiterate. So I have no real suggestions from the personal.

    Everyone is different with this stuff. For example some good friends of mine were headed for divorce (and bankruptcy) court until they got on the Dave Ramsey program. I can only barely tolerate his stuff.

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    Last edited by nhbubba; 07-09-19 at 06:03 PM.

  11. #1386
    Lifer Chippertheripper's Avatar
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    Re: educate me 401-k

    Wealth building 101:
    Don’t have any fun hobbies, they’re all expensive.
    Marry a rich spousal type.
    Prosper.


    Life is expensive, and fun moreso. So what’s a ripper to do?

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  12. #1387
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    It's a spectrum from full on narcissistic bliss to staunch uptightedness. Each of us falls somewhere on it. Even within our particular slice of that spectrum there is strategy and room for optimization. I'm an engineer by trade. We live to optimize.


    So I found this series the other day. I backed into the series via a link to this one discussing the concept of an asset allocation "glide path" to fend of sequence of return risk. Admittedly some heavy-ish shit. IMO this is just a progression towards the ever sharper end of the spear, optimizing your optimizations. Diminishing returns on effort, arguably not the key to anything in particular. Interesting as hell to me. I've decided to start at the top and started reading each of his posts in that series.

    This one lays things a bit more on the table and while a bit click-baity is probably worth a read by some of you cats (ie Iglu).

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  13. #1388
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    Re: educate me 401-k

    Quote Originally Posted by Chippertheripper View Post
    Wealth building 101:
    Don’t have any fun hobbies, they’re all expensive.
    Marry a rich spousal type.
    Prosper.


    Life is expensive, and fun moreso. So what’s a ripper to do?
    Have fun, die poor. It won't matter when you're dead. (this puts me in the full on narcissist bliss camp. Wooot! )

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  14. #1389
    Super Moderator TheIglu's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by Chippertheripper View Post
    Wealth building 101:
    Don’t have any fun hobbies, they’re all expensive.
    Marry a rich spousal type.
    Prosper.


    Life is expensive, and fun moreso. So what’s a ripper to do?
    Or,

    Disassociate "fun" with that newest fanciest thing, or the insistence that a heavy flow of money is required for fun.




    Loudbeard, what is your definition of "wealth"?

    What are your goals for having wealth?



    Example:

    I want to be wealthy so I can have a vacation house, new truck, new bike, and go on two/three nice week long vacations abroad with the family each year, and leave this world eventually with the ability to not have my kids worry about money for most of their life.

    or

    I want to be wealthy so I can not have to go to work anymore and spend 52 weeks a year with my family.

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  15. #1390
    Lifer tsorfas's Avatar
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    Re: educate me 401-k

    What is wealth... that’s tough question to answer.
    I guess society associates wealth with big houses, money, cars, etc.
    I like to think of it more of can I provide my family a comfortable lifestyle?

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  16. #1391
    Lifer loudbeard's Avatar
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    Re: educate me 401-k

    For me the cornerstone of wealth is personal freedom. "Fuck you" money, if you will. I want the freedom where if either I or my employer decides to say "fuck you," I'll have the real freedom to find another situation where I want to be rather than landing somewhere out of necessity.

    I've built my emergency fund, at least stage 1, which is 3 months salary pre-tax. I want to double that but I need to eliminate my higher interest debt first, should be able to make that happen by the end of the year. At that point I'll be in a position where I have a significant amount of discretionary income. I will finish school about a year after that and expect to increase my salary by a 1/3 at that point. Part of my problem now is I've worked my way into the position I have currently, but I'd have an extremely difficult time finding the same role/title/salary elsewhere. I can make the same (or better) money as a field service engineer, but that would require me to travel significantly.

    Ultimately I want a higher level of job satisfaction, I want to not have to feel like 55 hours a week is normal and required, I want to work on my house and property, I want to teach my son all things sports, and I want to build a "cool" motorcycle I can take to track days. Oh yeah, and I don't want to work until I'm 70.

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    I went to MMI I know what Im doing here chief

  17. #1392
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    ^^^ That's the dream. More or less.

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  18. #1393
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    Re: educate me 401-k

    Quote Originally Posted by loudbeard View Post
    Ultimately I want a higher level of job satisfaction, I want to not have to feel like 55 hours a week is normal and required, I want to work on my house and property, I want to teach my son all things sports, and I want to build a "cool" motorcycle I can take to track days. Oh yeah, and I don't want to work until I'm 70.
    Nailed it

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  19. #1394
    Super Moderator TheIglu's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by loudbeard View Post
    For me the cornerstone of wealth is personal freedom. "Fuck you" money, if you will. I want the freedom where if either I or my employer decides to say "fuck you," I'll have the real freedom to find another situation where I want to be rather than landing somewhere out of necessity.

    I've built my emergency fund, at least stage 1, which is 3 months salary pre-tax. I want to double that but I need to eliminate my higher interest debt first, should be able to make that happen by the end of the year. At that point I'll be in a position where I have a significant amount of discretionary income. I will finish school about a year after that and expect to increase my salary by a 1/3 at that point. Part of my problem now is I've worked my way into the position I have currently, but I'd have an extremely difficult time finding the same role/title/salary elsewhere. I can make the same (or better) money as a field service engineer, but that would require me to travel significantly.

    Ultimately I want a higher level of job satisfaction, I want to not have to feel like 55 hours a week is normal and required, I want to work on my house and property, I want to teach my son all things sports, and I want to build a "cool" motorcycle I can take to track days. Oh yeah, and I don't want to work until I'm 70.
    We're in very similar boats, except I'm in the job already that has relatively low hours and a ton of flexibility. End result, I get to do what I want for vacations/fun, and still see my kid plenty every day. Just turned down an offer in hand for a higher paying job a month ago that would mean I'd see her under an hour a day, and have to travel. Nope. No thanks.


    As far as accumulating wealth, was doing some research recently about vehicles and how they make you go broke.

    Let's say you decide to buy that $35,000 new vehicle (or more, with your trade/down payment, point here is loan amount), and you end up with 0% interest.

    That's $583 a month for 5 years.



    Now let's say instead, you put that $583 into a broad market ETF.

    After 5 years, at that same $583 a month, with 7% annual return (on average, over the long term, that's pretty much what the market returns), you'd have $40,232.17

    Opportunity cost of $5232.17. Likely more than that if you end up with a higher than 0% interest rate.


    So instead, you decide to love the one you're with for 5 years, but put those payments into an investment account. Borrow from yourself after 5 years and buy that new vehicle in cash. You just saved almost 15% on that new car purchase. Nevermind the compounding interest on the money you saved (actually, ends up basically being "buy 3 cars, get the 4th free!")


    To put things in perspective.

    Let's say you bought 10 year old vehicles in cash every 5 years or so, making it so you never need a payment.

    If you can still put away that $583 a month, assuming the average return of 7% long term, after 20 years, you'd have $286,804.46 sitting there.



    Yeah. Chew on that cud for a bit. Is driving a new vehicle every 5 years worth missing out on staring at nearly $300k in cash after 4 vehicles?

    And this is all assuming a $35k loan vehicle after trade of old vehicle. Y'all know most half tons with the bells and whistles are higher than that by a big chunk.

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    Last edited by TheIglu; 07-11-19 at 08:57 AM.
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  20. #1395
    Super Moderator TheIglu's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    Up 15% over the last 12 is amazing. I'm not familiar with any investment that has had returns that good. Way less downside too?!

    You're in retirement (ie draw-down).. yet these seem really aggressive!

    Can you share what funds? Best I can tell most of the POxxx funds went off a cliff last December and haven't really fully recovered yet.

    educate me 401-k-screen-shot-2019-07-09-a
    Really. That's nuts returns, but completely possible provided it isn't based on a wide market based ETF.

    This is what I'm looking at for my Bogleheads inspired retirement portfolio.

    educate me 401-k-returns-png

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  21. #1396
    Lifer tsorfas's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by TheIglu View Post
    We're in very similar boats, except I'm in the job already that has relatively low hours and a ton of flexibility. End result, I get to do what I want for vacations/fun, and still see my kid plenty every day. Just turned down an offer in hand for a higher paying job a month ago that would mean I'd see her under an hour a day, and have to travel. Nope. No thanks.


    As far as accumulating wealth, was doing some research recently about vehicles and how they make you go broke.

    Let's say you decide to buy that $35,000 new vehicle (or more, with your trade/down payment, point here is loan amount), and you end up with 0% interest.

    That's $583 a month for 5 years.



    Now let's say instead, you put that $583 into a broad market ETF.

    After 5 years, at that same $583 a month, with 7% annual return (on average, over the long term, that's pretty much what the market returns), you'd have $40,232.17

    Opportunity cost of $5232.17. Likely more than that if you end up with a higher than 0% interest rate.


    So instead, you decide to love the one you're with for 5 years, but put those payments into an investment account. Borrow from yourself after 5 years and buy that new vehicle in cash. You just saved almost 15% on that new car purchase. Nevermind the compounding interest on the money you saved (actually, ends up basically being "buy 3 cars, get the 4th free!")


    To put things in perspective.

    Let's say you bought 10 year old vehicles in cash every 5 years or so, making it so you never need a payment.

    If you can still put away that $583 a month, assuming the average return of 7% long term, after 20 years, you'd have $286,804.46 sitting there.



    Yeah. Chew on that cud for a bit. Is driving a new vehicle every 5 years worth missing out on staring at nearly $300k in cash after 4 vehicles?

    And this is all assuming a $35k loan vehicle after trade of old vehicle. Y'all know most half tons with the bells and whistles are higher than that by a big chunk.
    although the math is sort of hit or miss that puts things in perspective. you can be smart and enjoy newer vehicles.
    example: I bought my 2013 Mazda 3 for $7500 off sticker with 0%. my monthly was $300 with $5000 down.
    Put over 160k miles on it with nothing but oil changes, 3 sets of tires (one was snows), 1 brakes change, 1 transmission flush. zero repairs or break downs for the total life of the vehicle. kept for a little over one year after it was paid off and sold it for $8000. So it cost me roughly $12k net to drive a fully loaded brand new vehicle for 6 years and saved on repairs. Now i know thats not the norm but it can be done both ways.

    On the other end now that we bought the CX-5 for the baby (nearly $40k after interest is calculated) we plan on keeping that for at least 10 years.
    So maybe a new car every 5 years is really bad on your finances, but stretching that new car to 7-10+ years when factoring in maintenance savings and if it makes you happier to drive a newer-ish vehicle good balance can be found.

    that being said I would love to take my $475 payment with 3% and get 7% return on it instead.

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  22. #1397
    Super Moderator TheIglu's Avatar
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    Re: educate me 401-k

    It’s a balance for sure. Gotta have transportation either way, and driving a clunker sucks.

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  23. #1398
    Lifer gixxer72's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by loudbeard View Post
    For me the cornerstone of wealth is personal freedom. "Fuck you" money, if you will. I want the freedom where if either I or my employer decides to say "fuck you," I'll have the real freedom to find another situation where I want to be rather than landing somewhere out of necessity.

    I've built my emergency fund, at least stage 1, which is 3 months salary pre-tax. I want to double that but I need to eliminate my higher interest debt first, should be able to make that happen by the end of the year. At that point I'll be in a position where I have a significant amount of discretionary income. I will finish school about a year after that and expect to increase my salary by a 1/3 at that point. Part of my problem now is I've worked my way into the position I have currently, but I'd have an extremely difficult time finding the same role/title/salary elsewhere. I can make the same (or better) money as a field service engineer, but that would require me to travel significantly.

    Ultimately I want a higher level of job satisfaction, I want to not have to feel like 55 hours a week is normal and required, I want to work on my house and property, I want to teach my son all things sports, and I want to build a "cool" motorcycle I can take to track days. Oh yeah, and I don't want to work until I'm 70.
    What constitutes fuck you money? Iíd say itís well into 7 figures. You get that by inheritance or lottery if youíre lucky. For the rest of us itís either owning a very successful business or working as a corporate executive or similar high salary position. Neither of those come with less than 55 hrs per week...

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  24. #1399
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    Re: educate me 401-k

    Quote Originally Posted by gixxer72 View Post
    What constitutes fuck you money? I’d say it’s well into 7 figures. You get that by inheritance or lottery if you’re lucky. For the rest of us it’s either owning a very successful business or working as a corporate executive or similar high salary position. Neither of those come with less than 55 hrs per week...
    How are you defining well into 7 figures? I had one of those high hours, lots of international travel gigs for years, but have since left for a 40hr/week position which has a lot better work/life balance. I plan on retiring at 55 with investment accounts having 2 commas.

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  25. #1400
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    For me, FU money is enough where you can cover your base expenses off investment income. I figure I'm neither the spendiest type here, nor the biggest tightwad. But for my family "well into" 7 figures is not a requirement. Only a little into 7 figures.

    I may still work to cover toys and that cherry on top. But it will be "from a position of fuck you".



    Honestly I'm already working from a position of "meh, whatever". I'm not quite ready to rage quit if someone pees in my cheerios. But I also don't lose sleep every time the layoff rumor flares up.

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