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Money and your relationship with it.

Discussion in 'Tilted Life and Sexuality' started by cynthetiq, Sep 17, 2016.

  1. cynthetiq

    cynthetiq Administrator Staff Member Donor

    Location:
    New York City
    why no tax benefit? you should be able to claim your mortgage interest still as a deduction. I can't imagine why you shouldn't itemize. What kind of accountant are you using?
     
  2. Lindy

    Lindy Moderator Staff Member

    Location:
    Nebraska
    The standard deduction for a single taxpayer in 2016 is $6300. If your total itemized deductions (mortgage, medical, stat & local taxes, health insurance, etc.) add up to less than the standard deduction you save by taking the standard. Plus it's a lot less hassle and decreases the chance for an audit.


    The mortgage tax benefit is often illusory, even in a high bracket. Unless you already have an emergency reserve fund, and really value the flexibility of keeping liquid cash on hand to take advantage of opportunities. The mortgage should be the last debt to be paid off, after credit cards, car, etc.

    But even in the 30% marginal tax bracket on a 4% loan with $200k balance you pay the bank $8,000 to avoid paying Uncle Sam $2,400.

    Simplified - you actually pay somewhat less than $8,000 because the balance is declining throughout the year.
     
    • Like Like x 3
  3. cynthetiq

    cynthetiq Administrator Staff Member Donor

    Location:
    New York City
    I don't disagree. Liquid money makes for better opportunity cost in other investments. But knowing that us monkeys aren't always looking for such things, rarely even paying attention, avoiding the $2,400 makes for a different lost opportunity which is the appreciation of the subject property.

    It all depends on the market and where the appreciation is happening if it is happening at all.

    Of course it's all about having tax planning and preparation.
     
    • Like Like x 2
  4. cynthetiq

    cynthetiq Administrator Staff Member Donor

    Location:
    New York City
    Oddly enough my parents accountant and financial planner is suggesting that they buy another house because they need more deductions. I'm not all convinced that they do need to do such a thing, but the money is really not doing anything anyways so the opportunity cost of better appreciation is a better direction for them. I'm still trying to understand the Medicare implications but I believe the trust is involved. I guess this means I have to ask the hard question when I see the parents.
     
  5. Lindy

    Lindy Moderator Staff Member

    Location:
    Nebraska
    Could also probably make a case for maintaining a low interest mortgage if you really believe that a big increase in interest rates is coming soon.
     
    • Like Like x 3
  6. POPEYE

    POPEYE Very Tilted

    Location:
    Tulsa
    What @Lindy said. I couldn't get enough to exceed the standard deduction.
     
    • Like Like x 2
  7. Derwood

    Derwood Slightly Tilted

    Location:
    Columbus, OH
    To get back to the original question:

    I grew up feeling comfortable enough, but my parents did a great job hiding when they were struggling. My dad worked in an unstable industry and we moved around a lot. They made the best of their investments and now live a very comfortable retirement.

    My wife was in the same situation (blue collar dad, stay at home mom) and didn't grow up with much money.

    When we got married, we were both still in school, and were definitely squeezing by. I became a miser with my money and have taken a long time to get comfortable with being freer with it.

    My wife now has a very good job that lets us live a nicer life than either of us had growing up. We don't live luxuriously, but our kids have some nicer things and can do some more activities than we could. My job pays a lot less than my wife's, but I put nearly all of it into the bank and have nearly a year's salary tucked away.

    I just turned 42 and my wife turned 40, and my biggest financial concern is lack of a plan for retirement. My wife doesn't seem concerned, but Social Security and 401k isn't going to cut it in 25 years.
     
    • Like Like x 1
  8. genuinemommy

    genuinemommy Moderator Staff Member

    @Derwood , I can relate to your experience there.

    I look at the life I'm able to provide for my children and I'm so happy that they have more than I did as a child.
    I've blathered more about this in my blog. I'll spare this thread those huge blocks of text.
     
    Last edited: Mar 8, 2017
  9. martian

    martian Server Monkey Staff Member

    Location:
    Mars
    I think this is a very interesting thing to say. As a new parent I've been thinking about how to approach this subject with my own child(ren). I think that financial literacy is a very important skill that doesn't get taught well enough or often enough, but I also understand the impulse to shield your children from the stress of financial issues. I get why parents hide it from their kids when they're struggling, but I'm not completely convinced it's the right thing to do, in other words.

    When and how to talk to your kids about money seems like it should be a fairly common parenting issue but I don't know if I've ever encountered much discussion around it.
     
    • Like Like x 4
  10. ralphie250

    ralphie250 Fully Erect Donor

    Location:
    At work..
    I have no money therefore I have no relationship with it

    Sent from my VS990 using Tapatalk
     
  11. Derwood

    Derwood Slightly Tilted

    Location:
    Columbus, OH
    ...
    --- Double Post Merged, Mar 8, 2017, Original Post Date: Mar 8, 2017 ---
    Their struggles happened while I was in elementary school and my sister in preschool. By the time we settled in Pennsylvania and they became more financially stable, I was in middle school.
     
    • Like Like x 1
  12. I love my money. Makes me feel secure. Not going back to my financial hole I was in a few years ago.
     
    • Like Like x 3
  13. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    This is my issue right now. I'm 40, and I have almost no assets. This means all I have down the road right now is the Canada Pension Plan and eventually Old Age Security. Those two won't add up to much. Combined, they might add up to $1,200/month today. In other words, if I can't dig myself out and start building wealth, I might not be able to retire.
     
  14. cynthetiq

    cynthetiq Administrator Staff Member Donor

    Location:
    New York City
    Retire? What's that?
     
    • Like Like x 2
  15. Fangirl

    Fangirl Very Tilted

    Location:
    Arizona
    This is my reality too. Can't even think about retirement beyond wondering how that will be achieved financially.
     
    Last edited: Mar 11, 2017
    • Like Like x 1
  16. redux

    redux Very Tilted

    Location:
    Foggy Bottom
    I have been contributing to a 403(b) retirement annuity foo 30+ years, with a 5% matching contributions from employer(s). Last week, I met with a TIAA-CREF adviser to get an early glance at what might lie ahead for retirement. We discussed the current allocation mix, continued contributions (and matches) for the next 7+ years, other investments (various mutual funds), Social Security, current and projected lifestyle expenses, etc.

    He crunched the numbers with a program using 500 different market simulations and a goal of a minimum monthly annuity payment of $7,200 (in today's dollars) for 30+ years was achieved in 90% of the simulations.

    My advice is to contribute to a retirement plan as early as you can and as much as you can.
     
    • Like Like x 1
  17. genuinemommy

    genuinemommy Moderator Staff Member

    I have started thinking of my time as money. I am becoming more selfish with the time I give away. I need to see a benefit. My body only has so much energy to give.
     
    • Like Like x 2
  18. cynthetiq

    cynthetiq Administrator Staff Member Donor

    Location:
    New York City
    Yes.

    My time is worth money. I give it away freely when someone else has something of value to give away too. Be selfish with your time to those who are selfish with theirs and their knowledge.
     
    Last edited: Mar 18, 2017
    • Like Like x 1
  19. ralphie250

    ralphie250 Fully Erect Donor

    Location:
    At work..
    when I was younger I was very frugal with money, now im not as frugal, guess I learned responsabilities
     
  20. Derwood

    Derwood Slightly Tilted

    Location:
    Columbus, OH
    wait, what?