Finance 101

[StrobeNGH]

For those who pay tithing, or make regular charitable contributions:

If you have a lot of stock, consider donating the stock, instead of giving cash.
For tithing, this is called a "donation in kind."

The great thing about this is that not only do you get to deduct the amount of the contribution at the time of your donation, but you also don't have to pay any taxes for the sale of the stock (and neither does the charitable organization/church you donated the stock to).

 

[I Lean]

I buy most things on one credit card (gets paid off every month), because it gives me 3% cash back on any food, fuel, or auto-related purchases, and 1% on anything else.

 

[Spork]

So you a CPA or something? What's the deal with bagging on TurboTax?

Sure it sounds nice to have an "in" with an accountant but I don't think it's going to happen. If you own your own business, have overly complex taxes, or lack of confidence in your abilities then go for the CPA. But for just a mortage, a 9-5 job,and 2 kids I doubt you're going to do anything but lighten your wallet by $300.

 

[dunatic67]

On the subject of 401k's:
They are great for an employed person working with a company who matches contributions. (I agree- free money!)
1st 401k myth: put your money in now pre-tax and remove it later when you are in a lower tax bracket. You MAY be in a lower tax bracket at retirement, but when has the percentages of those brackets gone down? IRA's are the best income source the government has created for itself yet. Starting at 70 1/2 yrs old they will tell you how much to take out each year or you willbe penalized. Go and ask someone in this age group about it- I'm sure you will get an ear full!
I would recommend Roth IRA's where applicable as well as other investments to round out your retirement.
The old adage is "Don't put all your eggs in one basket!" Don't put them all in the IRA basket.

 

[waynehartwig]

Also my understanding is Visa Debit is covered no different then a regular Visa Credit Card? Zero Liability?

Get into that situation once, and you will know the truth. On this topic, I am speaking from experience.

Another thing people do that hurts them is 90 days same as cash, how many people you know that actually pay in full after 90 days, almost none.

Sure, and for those people it's a very bad idea. For others that WILL pay it off before even then 80 day mark, it's an excellent idea. It's a very good way to use other peoples money as leverage to create more for you. Believe me when I say the debtor is not banking on people paying it off before the deadline.

Hell I am just happy I learned the hard way, I am almost debt free, (don't think you do not need medical) which should be payed off this year. I don't live paycheck to paycheck, I have an emergency fund, all that makes it a hell of a lot easier then worrying what bills you have to pay.

Granted maybe yourself and a few others are good at using credit cards and paying stuff off quick, Sad thing is MOST americans suck at it, Its a bad habit. Even people that make say 6 figures are in debt like crazy, it doesn't make sense to me.

I am by NO means and expert here just I have learned a few things the last say 12 years that changed my way of thinking completely.

Word.

That's a good way to be! Don't get me wrong, I'm not bagging on you or people like you. However credit can be your friend if you understand it very well and are very self disciplined. Some people can't be trusted, and for them credit is their worse enemy. Especially in today's world, that everything revolves around credit. You can have it and not be in debt. I recently pulled my 3 bureaus and have less than $5k total revolving credit showing on my report, and I know all of that has been paid and new stuff is there that isn't showing - so probably still have $5k, but it's different money, make sense? My bureaus are also like 30 pages long. I have about 20 open accounts - various mortgages, my Jeep lease, etc. But I have about 200 closed accounts showing up - all paid in full, on time as agreed and closed by ME, not my credit source. I also only have a couple inquiries showing (recently bought another house).

 

[waynehartwig]

So you a CPA or something? What's the deal with bagging on TurboTax?

Sure it sounds nice to have an "in" with an accountant but I don't think it's going to happen. If you own your own business, have overly complex taxes, or lack of confidence in your abilities then go for the CPA. But for just a mortage, a 9-5 job,and 2 kids I doubt you're going to do anything but lighten your wallet by $300.

Nope, not me. I don't even have a business degree of any sort.

There are some things Turbo Tax won't do for you.... Just so you know, I've bought Turbo Tax every year since way back in the DOS days. I've used it. I use it ever year for my mother, sister and brothers' taxes - I don't use it for mine. I even used it on my wifes taxes before we were married. I also use Quicken and Quickbooks religiously. So don't think I'm an Intuit hater, because I'm not. It's the right product for some people, but not all.

Seriously, if you are married, have a house, kids, or etc (any or all of the above) you should seek the advice of a CPA. It literally will be worth your $'s spent. But you gotta ask questions. You can't sit there like you are afraid of the person and what he does. Take advantage of their time, you paid for it. If you show them innitiative, they will offer suggestions.

 

[richs88rocker]

So I am in a option Arm. (Smooth talker sounded great) Now i see the downfalls to it. how do I get out of it? and what type of loan should I go with?

 

[waynehartwig]

On the subject of 401k's:
They are great for an employed person working with a company who matches contributions. (I agree- free money!)
1st 401k myth: put your money in now pre-tax and remove it later when you are in a lower tax bracket. You MAY be in a lower tax bracket at retirement, but when has the percentages of those brackets gone down? IRA's are the best income source the government has created for itself yet. Starting at 70 1/2 yrs old they will tell you how much to take out each year or you willbe penalized. Go and ask someone in this age group about it- I'm sure you will get an ear full!
I would recommend Roth IRA's where applicable as well as other investments to round out your retirement.
The old adage is "Don't put all your eggs in one basket!" Don't put them all in the IRA basket.

Couldn't agree more! For most I would recommend taking taxes now. If you are making 6 figures, though, do it later (unless you are 20). Or half now and half later. Me, I really think taxes are going to keep going up, and because of it I have all of my taxes taken out now. That way I have access to all of my money at any time tax and penalty free.

I would also have several accounts set up. Use your companies and match their max, but no more. Then go to your favorite bank or etc, and open some revolving market accounts or IRA's. Reason being most 401k's have penalties associated with them for early withdrawl. Even if it's a life emergency. If you have several revolvling accounts have them mature at different times. Then you can have access to that money if you need it - penalty free. It's your money, and I hate people that say I can't spend it - without paying a huge penalty. The only bad thing about this is most of these short termers have a lower return than a longer term would.

 

[waynehartwig]

So I am in a option Arm. (Smooth talker sounded great) Now i see the downfalls to it. how do I get out of it? and what type of loan should I go with?

I'm not a CPA, so don't take this to the bank. But it all depends on your situation and what your future situation will be. Meaning, do you plan on keeping your house until you die? Or will you be moving again in 2-5 years?

It costs you money to refinance. In fees, points, etc...etc...etc... Depending on your situation, it could be $2-3k - or even more. In other words, you have to figure out if refinancing would save you more money than keeping the ARM.

Don't feel like you were taken, either. For some people ARM's are the way to go. Others it can be their worst enemy.

This new house I bought is a 5 year ARM with no pre payment penalties. I did the ARM for several reasons over a fixed. One, I don't plan on having this house in 3, let alone 5 years. Two, I was able to buy the house with $0 down (paid closing costs was it). Three, I have no mortgage insurance! Instead they added .5% onto the interest rate (look at your statements and see how much of your payment goes to mortgage insurance, it's way more than .5%). Four, at the time, the ARM had a lower rate than a Fixed. Five, it has a lifetime cap of 9.5%. Six, did I mention it has no pre payment penalties? Because this is a biggie....

My house in Pleasant Grove is was a fixed, because it was the better deal and I intended on staying around a lot longer than the 2 years I did.

 

[JeeperG]

Mr. Wayne financial guy,

If I walk into a store and Cody corners me to buy a $3,500 Plasma
What do I do?
Do I walk away?
Do I give into his objective and purchase it on loan from who knows where, giving him a bigger paycheck?
Do I pull out cash and negotiate telling him how much better a PS3 is over a Wii?
Please Mr. Wayne financial guy help

 

[waynehartwig]

When you get a home a loan...

Do not buy points! Do pay at least 20% down and all of your closing costs.

Buying points is a great way to save you money every month, if you intend on staying in the house for a long period of time (life of the loan). If you aren't you just gave them 10% for free! That 10% is much better spent as a down payment. 10% down will get you lower rates than at 0% down, because you bought a point and have no money left for a down payment.

Going in with 20% down, eliminates the need for mortgage insurance - which is a huge monthly savings to you! This also gives you built in equity and a lower house payment.

Some mortgage companies will do two loans, 80/20 split. This is a good deal because you then have $0 down, but have all of the benifits of coming in with 20% down (no mortgage insurance!). However, sometimes the rates are higher and you will have two mortgage payments every month. But the second won't be much more than the money you spend on the mortgage insurance - plus it all goes to build your equity. Mortgage insurance is a loss and you will never see that money again. Nor does it benifit you in anyway...

Just to be clear... Mortgage insurance is NOT the same as home owners insurance. Mortgage insurance protects the lender from you defaulting on the loan. If your house is foreclosed on, the lender still get's all of their money. Home owners protects you against being sued, etc.

 

[waynehartwig]

Mr. Wayne financial guy,

If I walk into a store and Cody corners me to buy a $3,500 Plasma
What do I do?
Do I walk away?
Do I give into his objective and purchase it on loan from who knows where, giving him a bigger paycheck?
Do I pull out cash and negotiate telling him how much better a PS3 is over a Wii?
Please Mr. Wayne financial guy help

Well, Mr. Plasma, you should walk away and put the $3500 on an investment.

 

[JeeperG]

Well, Mr. Plasma, you should walk away and put the $3500 on an investment.

Thanks Mr. Home Depot.

 

[kirk86CJ]

Most places will have specials where you can get one for .9% for 20 or 30 years (obviously depending on your credit - 780 and higher will get you great deals here!).
Do you own a home? If so, then you already understand the tax benifits. Buy a class A and reap the same benifits TWICE! Yes, a class A is considered a second owner occupied home! Meaning all of the maintenance, interest (on a .9% there isn't much), etc. is all tax deductable.

Questions:
You wrote .9%, not 9% Are you serious? You can get rates less than 1% ?
Also I agree with deducting interest, but what about maintenance? You can't deduct maintenance on a house?

Good info by the way...
Kirk

 

[waynehartwig]

All I'm saying is credit can be your friend, or it can be your worst nightmare. For most of America, it's the latter. If you have the need to impress, then you will be the Dr making 6 figures with absolutely NO assetts and on the brink of bankruptcy - even though you have a 6 figure income and a 5 million dollar house in Park City.

Having a solid credit background is a great leverage tool for negotiating as well. You can get auto loans at 0% for the life of the loan. You can also get lower interest rates on real estate. Etc.

Bottom line, if you have a negative credit rating then you have shown the banks you are a financial risk. If you have NO credit, then you are a liability. If you have pages and pages of credit, you show that you are credit worthy and responsible about your spending. These are the people that get lower interest rates, etc.

 

[waynehartwig]

Questions:
You wrote .9%, not 9% Are you serious? You can get rates less than 1% ?
Also I agree with deducting interest, but what about maintenance? You can't deduct maintenance on a house?

Good info by the way...
Kirk

Dead serious and consult your CPA. La Mesa RV has these specials all the time. I don't think there is a La Mesa in SLC anymore, so you will have to go out of state. Which can also be benificial, in that you don't pay taxes on your purchase. And if you walk in with a 780+ score, you can negotiate the rate lower than their lowest advertised rate.

 

[waynehartwig]

Thanks Mr. Home Depot.

 

[waynehartwig]

Also one of the biggest I can give, but hardest to complete....

Associate with big money people. You will have the financials of the type of people you associate with. If you associate with people in debt, living in an aprtment, you too will be in the same situation. If you associate with people making 6 and 7 figure incomes... The problem is finding the successful ones to be your friend. These people have it all, so you have to bring something to the table. You can start by networking.

 

[Cody]

Mr. Wayne financial guy,

If I walk into a store and Cody corners me to buy a $3,500 Plasma
What do I do?
Do I walk away?
Do I give into his objective and purchase it on loan from who knows where, giving him a bigger paycheck?
Do I pull out cash and negotiate telling him how much better a PS3 is over a Wii?
Please Mr. Wayne financial guy help

OK first of all, I would never sell a plasma to anyone that I had any affiliation with.....I just wouldn't be able to sleep at night.

2nd, I wouldn't get paid if you use our credit program or not. It's all the same to me.

3rd. PS3 is better than a wii, although ultimately I bet 75% of the 1st gen ps3's will prove to be defective (there is a reason sony has pushed back the release of the ps3 adn their stand alone blue ray player for over a year)

4th. I don't work for Circuit City anymore so it's really a non issue

5th. Cody Rules

 

[Herzog]

OK first of all, I would never sell a plasma to anyone that I had any affiliation with.....I just wouldn't be able to sleep at night.

2nd, I wouldn't get paid if you use our credit program or not. It's all the same to me.

3rd. PS3 is better than a wii, although ultimately I bet 75% of the 1st gen ps3's will prove to be defective (there is a reason sony has pushed back the release of the ps3 adn their stand alone blue ray player for over a year)

4th. I don't work for Circuit City anymore so it's really a non issue

5th. Cody Rules

#5 always gets me.