nachomc

iTrader: (7)

I need to make some adjustments to how I utilize my income and I thought you guys might be able to help.

1. Given my current tax situation, I want to modify my w-4 such that I either get very little back, or owe very little at the end of the year. I'd like to take the tax savings month to month so that I can invest it, and hopefully make money from that money.
2. I also need to start putting money in to my 401k. Every year I say I'm going to start doing it, but I always buy something big - car, house, whatever, instead. I finally have nothing left to buy that makes more sense than putting money in to my 401k.

Do you guys have anyone you use and/or could recommend? Or, has anyone here figured this out on their own and wouldn't mind helping me?

Thanks

STi deede

You should meet with a real finanical planner. 401k is just one investment vehicle. I think that you should meet with someone that knows all the options to go over them and create a personalized finanical plan. It's worth the cost and helps to break down you goals into bite sized pieces.

Good luck.

famink

iTrader: (1)

another option to the 401k is the IRA in witch you can shealter 3000 a year into a retirment plan you can also do the same for your wife. with that you can drop up to 6000 off your taxable income.

what do you claim now on your W-2? I went with the M+4 with a wife and 2 kids

nachomc

iTrader: (7)

Right now I claim 2 on my w-4.

famink

iTrader: (1)

There are equations that can be done to find out how to pay exactly the right amount, so you only get a tiny amount back. My wife Christy handles everything here. She uses a program called Turbo Tax Premier (the more complicated tax program for corporations, individuals etc...), you can calculate the next years earnings, and you can figure the 401k (non-taxable income) as well. She said if you want to know how to do it she can email you step by step instructions. Also with 401k's through your company try to give the max the company will match. If your company doesn't do matching, check out an IRA. Also non-taxable until retirement. Another tax savings!! Once you know where you sit, then you can change the W-4.

Egan

iTrader: (14)

I'll send you a PM with the info on my financial planner. He has worked out great and is a no pressure kind of guy. I currently have my stocks, RothIRA, annuities, and money market account through the firm he works for (Wachovia, used to be Prudential).

nachomc

iTrader: (7)

Thanks, dude. I was hoping you'd reply.

nachomc

iTrader: (7)

Yeah, man, I'll PM you my email.

illy

iTrader: (5)

I know this isn't a direct answer to your question, but I have been taking an alternate route to saving money for the future.

I agree that a home (especially in the Sac area right now) is the best investment one can have, however you still pay interest on your mortage which is essentially a garaunteed passage of your money to someone else, regardless of the tax benefits. I have stopped contributing anything over what is matched by my employer with regards to stocks and have decided to make a mad dash at paying off my house.

If I had confidence that the stock market would return more than the rate of my loan per year (Around 5.5%), I would start investing, but considering the amount of money stock investing has lost me over the past 3 years, I am sticking with the house plan.

Paying off debt of any kind in my opinion is the best course of action for me and I don't even worry about 401k's, money markets (nowhere near making over what my mortgage rate is) and the like.

Salty

iTrader: (14)

When was the last time you've refinanced your home? If the equity is high enough you can cash-out , have title cut you a check and put that into an IRA/401k or whatever.


Just put it all into a savings bond and watch it double


EDIT: May even be able to get you an Interest Only loan so your payment might actually decrease so there's no major impact on your monthly bill routine. They're a great loan if you're a)not planning on staying in that home and; b) live in a real estate market where equity keeps building. I know for a fact that "b" is true. Not to mention you can always make payments towards the principle if you want. Just as if you wanted to pay off your car. There's a lot of options.

famink

iTrader: (1)

do not I repeat do not do this if your trying to keep your money to you. Equity in a home is the best savings acount you can have as far as investments go, especaily if you live in an area like "b". These interest only loans are just that, someone else's interests', not yours...............................:shakeshead:

Salty

iTrader: (14)

Wait a minute here...


First of all I’m not going to get Matt into anything bad. I personally have interest only loans on 2 homes in a thriving equity market here.

He said he wanted to have money to put into an IRA. That said, it's my understanding that he a)may have some debts that take priority when he gets his pay check or; b)may be living on a pretty tight income etc.

You can get an Interest only refinance to pay off any existing debts (if any). this opens the gateway for extra monthly money to be contributed towards an investment/retirement account. Furthermore, his payment will probably be anywhere from $200-300+ less a month than his current mortgage.
.
Take this saved money figure and add it to what he had in monthly debt that’s already been paid from the equity in the property. This will only add to the cash that he can invest at his own leisure, my friend. Not to mention, he can always contribute more $$$ towards the principle of the home if he’s met his monthly investment goals.

The equity will keep building in his current property from the start of the Interest Only loan as this vast "savings account" you mentioned.

How do you think investors make their money? do you think investors I deal with from the Bay Area pay on principle when they know "b" will always be an increasing factor in this booming area-market? Hell no. It would be like putting your eggs in one slow-moving basket.

Salty

iTrader: (14)

I wonder if you and I have the same guy?

famink

iTrader: (1)

"He said he wanted to have money to put into an IRA. That said, it's my understanding that he a)may have some debts that take priority when he gets his pay check or; b)may be living on a pretty tight income etc."

First if your outflow is greater than your inflow you need to adjust your spending! Simple economics. We all hate to deprive ourselves of anything, but when you can't afford to buy something and get yourself into debt you are robbing yourself every month and paying someone else to live for free!!! Start with your smallest debt first pay that one off first and keep working to pay off your debts.

Second: if he wants to plan for retirement doesn't it make sense to have your house paid off!!! Hello! If I refinance my home and only pay interest I get caught up in I have extra money now!!! (really I don't I just used some else's money to pay my debt and I am paying interest on borrowed money to pay back borrowed money the cycle continues until it gets out of control)

Yes the equity will rise and he may be able to get $100,000 dollars in equity over several years depending on the market. However when he sells this home this money will go to pay real estate brokers, agents taxes etc. etc. etc. Now what is he left with? How can he afford now to buy in this new market where homes are going for two and three times what he paid for his???

"You can get an Interest only refinance to pay off any existing debts (if any). this opens the gateway for extra monthly money to be contributed towards an investment/retirement account. Furthermore, his payment will probably be anywhere from $200-300+ less a month than his current mortgage."

PAY ATTENTION $200-$300 less that is your principal! Bad advice, if your financial planner told you to do this FIRE HIM!!! So if he is putting away money for retirement off of borrowed money and is not getting the same interest rate for his money growing he is still losing money and potentially his home. We don't want to pay a mortgage when we retire.

"Take this saved money figure and add it to what he had in monthly debt that’s already been paid from the equity in the property. This will only add to the cash that he can invest at his own leisure, my friend."

--- How so, it is still borrowed money that he owes to some one else!!!! His debts haven't really been paid they have been hidden in a home loan! They are still there.

"Not to mention, he can always contribute more $$$ towards the principle of the home if he’s met his monthly investment goals."

This is true he could, however if he is living on a tight budget as you said, where is this money coming from and is he making adequate principle payments to lower the interest that he has to continue to pay. Your interest will never decrease if you are not paying your principle payment. Over five years if you are paying $875 in interest no principle and saving only $200 or $300 in retirment you are losing money!! Interest paid: $52,500. Principle Nothing!! Retirement: $18000. And you can dig yourself into a deeper hole. Now interest earned on the $18000 at best with NO RISK maybe 7%. Very unlikely. And remember you have paid nothing to principle. So if you have a $250,000 loan, you still have a $250,000 dollar loan. If things continue to grow as they have over five years that house could be worth twice as much, or to buy something similar will cost that much. If he was forced to sell for some reason could he afford to buy now?

(How do you think investors make their money? do you think investors I deal with from the Bay Area pay on principle when they know "b" will always be an increasing factor in this booming area- market. Hell no. It’s like putting your eggs in one slow-moving basket.)

-Let me tell you how many neighbors I have in Sparks Nevada who all came from the bay area with slick advisors who could no longer afford their lifestyles after the Silicon Valley laid off so many workers. If you can't afford to pay your mortgage you couldn't afford your house. Financial advisors-good ones, look after the goals of the customer instead of padding the pockets of banks whom give kickbacks to the bad "financial advisors". If you want to get out of debt you have to simplify your life for a little while. Read the book "Rich man-Poor man" It will give you so much insight concerning the lies society has told you. But if you want to take the chance of losing everything be my guest. Just do your homework first. Look at ammortization calculators, look at interest calculators. See if you aren't losing money with an interest only loan. If you put yourself on the path to pay off your mortgage in ten years--it can be done, then you are free to play with your earnings--and lots to put away for retirement or college or vacations--whatever you choose. But it is YOUR choice!

The real goal is saving for retirement. We shouldn't do that on borrowed money!

nachomc

iTrader: (7)

Heh, ok, guys.

The only debts I have are the house and the cars. I've got one credit card that has a minimal balance. I don't want to refinance my house because I've got an awesome loan right now and I definitely won't use equity to pay off my cars. While the extra money per month would be nice, I don't need it and they'll be paid off in a couple years anyway.

Basically what I want to do is maximize my tax savings, and start getting some money invested because I want to have a good retirement and I know that starting to plan early makes things better later in life.

I think what I'll do is meet with the guy Mike referred me to and see what he recommends. Thanks for the help, all