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Old 03-29-2013, 01:21 PM   #21
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I found Mint to be a nice place to track spending and I agree on the net worth as you have to monkey around with some accounts that clearly have a bug working with them, e.g. Vanguard. The manual monthly entry is my way of dealing with these.

I found NetWorthIQ before Mint. All manual entry, but I like the "feel" and simplicity of it. Not very well maintained, but I use it as a tool more than anything...

Here's what you may see if you use it. They also provide charts to show progress.
https://www.networthiq.com/people/MadeinMex
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Old 03-29-2013, 05:14 PM   #22
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My parents are in the Penfed process right now also for the 2.49% HEL. They have had a similar customer service experience (not great). I read on the Bogleheads forum it's really hit or miss who you get servicing your loan application. Once the HEL is in place however most have been satisfied.
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Old 03-30-2013, 10:34 AM   #23
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Whats the hurry...seems like you are wishing the next 7 years of your life away.

I am a big fan of a stay at home parent.

Bob
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Old 06-28-2013, 11:53 AM   #24
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Quick quarterly update:


Been on bogleheads forum and have started to move my accounts towards a simple three fund portfolio.

PenFed has been dragging its feet for unclear reasons and still don't have the HEL in place. We have been making some pretty aggressive extra payments to our two remaining mortgages and will likely have those paid off within 5 years anyways.

I have thought about starting a UTMA account (in addition to 529) for my son for future expenses.

I think we are on pace for 2020 with our bridge from 45 to 60 using our non retirement accounts being the main issue.

Non RA - $525k
RA - 390k
Primary home - 390k equity (owe 200k)
Rental 1 - 190k
Rental 2- 160k (owe 250k)
529 - 5k
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Old 06-28-2013, 02:32 PM   #25
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Quick quarterly update:

Been on bogleheads forum and have started to move my accounts towards a simple three fund portfolio....
Just curious, which three funds did you pick?

I am personally impressed with what you have already accomplished.

ER has definitely been the light at the end of the tunnel getting me through some rough patches. Just don't forget to enjoy some time with your young one(s), spouse and any other loved ones now; you will never get that time back. Yes, it is a tough balancing act.
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Old 06-28-2013, 05:44 PM   #26
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Just curious, which three funds did you pick?

I am personally impressed with what you have already accomplished.

ER has definitely been the light at the end of the tunnel getting me through some rough patches. Just don't forget to enjoy some time with your young one(s), spouse and any other loved ones now; you will never get that time back. Yes, it is a tough balancing act.

I chose VTI, VXUS, BND. Goal is a 50/30/20 allocation. I like the low expense ratios of ETFs and also not having a limit on frequent trading. I had some commodities in my portfolio which are mostly gone now, hence the poor returns over the last 6+ months.

Thank you. We have a great life even though we LBOM. I'm a goal oriented person so having that light at the end of the tunnel keeps me motivated. DW's job is to remind me to stop and smell the roses.
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Old 06-28-2013, 08:31 PM   #27
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I have thought about starting a UTMA account (in addition to 529) for my son for future expenses.
You will pay tax at your rate (kiddie tax till age 24) for any UTMA account dividends/interest/capital gains and have to bother with all the tax returns, etc. If this is strictly for college, then everything into a 529 is much easier (no tax returns till you withdraw).

You can use a UTMA for any expenses while 529 is just for college tuition, books, and room/board. You are stuck if your kid doesn't go to college, but you can transfer to other beneficiaries if that does happen.
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Old 06-29-2013, 06:33 AM   #28
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You will pay tax at your rate (kiddie tax till age 24) for any UTMA account dividends/interest/capital gains and have to bother with all the tax returns, etc. If this is strictly for college, then everything into a 529 is much easier (no tax returns till you withdraw).

You can use a UTMA for any expenses while 529 is just for college tuition, books, and room/board. You are stuck if your kid doesn't go to college, but you can transfer to other beneficiaries if that does happen.
It is my understanding that the first $950 in unearned income is tax exempt, the next 950 is taxed at the kiddie rate, and then anything above is taxed at our rate. While certainly not the tax haven it once was, it does save us a bit in taxes. I dont mind the extra tax forms.

Expenses will mainly be for pre-colleges expenses (i.e. possible private high school, travel, summer camps..,etc). We have a 529 set up for college. The UTMA would be in addition to that.
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Old 06-29-2013, 07:36 AM   #29
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Also, the max for a 401k is up to 51k (your 401 k administrator may not tell you this) and I would contribute to a nondeductible IRA. Good luck!
5971, I am impressed. Love the quarterly update accountability approach as well. I tried a similar communication approach on a diet plan once and sadly had similar results as you: my assets ballooned


Joking aside.... I do not want steer the conversation down a different path, but can someone share with me a link that further describes the 401k contribution comment above? I thought the limit was $17,500 per year and approximately $5k more if you are over 55
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Old 06-29-2013, 07:43 AM   #30
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..............
Joking aside.... I do not want steer the conversation down a different path, but can someone share with me a link that further describes the 401k contribution comment above? I thought the limit was $17,500 per year and approximately $5k more if you are over 55
I think that this depends on the individual 401(k) plan rules. My ex-employer allowed us to contribute the maximum, though anything over the (now $17,500) was after tax. As a result I ended up with over 100K after tax money in my 401(k).
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Old 06-29-2013, 08:24 PM   #31
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It is my understanding that the first $950 in unearned income is tax exempt, the next 950 is taxed at the kiddie rate, and then anything above is taxed at our rate. While certainly not the tax haven it once was, it does save us a bit in taxes. I dont mind the extra tax forms.

Expenses will mainly be for pre-colleges expenses (i.e. possible private high school, travel, summer camps..,etc). We have a 529 set up for college. The UTMA would be in addition to that.
Yes, there is a tax benefit and more flexibility in what you can spend it on. In NH, you also can exempt up to $1200 of int/dividends so there may be state tax benefits too.

However, given the 100% tax free nature of a 529, you may want to consider funding it before the UMTA to enjoy the most years of tax free growth.
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Old 06-29-2013, 10:22 PM   #32
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Joking aside.... I do not want steer the conversation down a different path, but can someone share with me a link that further describes the 401k contribution comment above? I thought the limit was $17,500 per year and approximately $5k more if you are over 55
My employer allowed after tax contributions to 401k. They also allowed what is known as in service withdrawals. This was a huge advantage because these funds could then be immediately rolled over to a Roth IRA. Between DW and myself, we were effectively contributing a total of 100 k per year to our Roth IRAs for the past few years since 2009. The advantage is the ability to bypass the normal 5k per your limits to Roth IRA contributions.

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Old 06-30-2013, 07:15 AM   #33
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Yes, there is a tax benefit and more flexibility in what you can spend it on. In NH, you also can exempt up to $1200 of int/dividends so there may be state tax benefits too.

However, given the 100% tax free nature of a 529, you may want to consider funding it before the UMTA to enjoy the most years of tax free growth.
Thank you for clarifying. You are right.
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Old 06-30-2013, 07:23 AM   #34
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My employer allowed after tax contributions to 401k. They also allowed what is known as in service withdrawals. This was a huge advantage because these funds could then be immediately rolled over to a Roth IRA. Between DW and myself, we were effectively contributing a total of 100 k per year to our Roth IRAs for the past few years since 2009. The advantage is the ability to bypass the normal 5k per your limits to Roth IRA contributions.

-gauss
Wow. I've never heard of this. Kind of a super back door Roth?

I honestly could stand to learn more about my 401k. We've switched plans a few times in the last 5 years, but right now we are on pace for $51k this year.
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Old 06-30-2013, 01:52 PM   #35
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Super Back door! Yes, I was very excited about it when I discovered it. The problem is that many 401k plans do not allow the after-tax contributions. I think it may be more common in older, large, legacy companies.

You might get a hint if it is allowed or not if you go to the web site for your 401k and look at the contribution options. A more advanced maneuver would be to pull down the plan document (often available on the web site also), or call the plan administrators.

My Megacorp would allow contributions of up to 50% of salary and it is limited to the current year IRS defined contribution limit (~51k).

Since my plan allowed "in-service withdrawals", I was able to do the Roth IRA rollovers at any time. A second strategy, which I have not investigated, that may be possible would to convert the funds to a Roth 401k in your plan if that is available.

If you have lots of pre-tax 401k $ already in the plan, then you should study the concept of "isolating the basis" over at fairmark.com before you do any conversions, otherwise you may get stuck with an unexpected tax bill do to the pro-rata rules. This probably wouldn't be possible if you don't have the "in-service withdrawal" option available since it relies on the flexibility when you combine rollover/conversions between IRAs and 401ks.

Feel free to PM if you want to talk more about it.

-gauss


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Old 07-05-2013, 04:40 PM   #36
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Been following this forum for a while. This is my first post. I just turned 37 and the wife and I are planning on retiring in 7 years on a budget of about $80-90k/yr.

We are currently debt free except two 10 year mortgages (one rental) which we will have paid off by our 7 year deadline.

One of the things that may throw a wrench in our plan is saving for college. We have a 2 yr old currently and I have already started putting some money in a 529 plan, but I have no idea how much college is going to set us back in 15 years.

We have about $700k in non-retirement funds currently and about $300k in a mix of IRAs and 401(k). We will also be relying on some income from our rental property.

Hope we can make it!
Welcome. I am 40 and we plan to to semi-retirement around 45 and full retirement at 48. It will not matter that much but one variable is the cost of collge for our 2 year old child which I am concerned about just like you.

It is something I been trying to research and estimate this recently. After looking over the data recently I feel that it might not be as bad I thought it was. Of course it depends on what bad means. I thought it was going to be bad reading all these scary articles in the media about how in the last decade college costs has been going up 8% every year and will continue to do so.

I looked into it and found that the large increases has really been for public universities which are at lower cost than private univerisities and the rate of increase for private universities has not been as high. In other words, colleges which are expensive have not increased as a much as the less expensive ones. So your worst case scenerio for a expensive private university is not as bad as what the price tag today plus 8% nominal price increase every year.

I do all my planning for retirement in 2013 dollars and I wanted to model how much will it cost to put my child through and expensive private university in 2013 dollars 16 years from now. I used one expensive private university, one Yale U, as a target for my estimates as it would represent the worst case scenerio in terms cost. I picked it because that is where I went and a lot of my relatives went as well and if my DS could get in I would like him to continue the family tradition.

The data points I used are Yale college tuition+room+board in 1976, then in 1990 (year I started to attend there) and then 2012 (last know data.) So I can then try to figure out what costs my DS will encounter in 2029 when he will start to attend.

I found 1976 cost was $6425, 1990 cost was $20820, and 2012 cost is $55300. There will be personal expenses but I will assume my DS will work on campus to pay for it himself.

What we find is Yale costs went up by an average of 8.8% in 1976-1990 and up an average of 4.5% in 1990-2012. So the rate in increase is actually decreasing. Of coure we have to calibrate against inflation as some of this increase are just reflecting overall inflation in the economy. I found that inflation rose by an average of 6.2% in 1976-1990 and inflation went up by an average of 2.7% in 1990-2012. So doing the math shows Yale costs went up an average 2.4% above inflation during the 1976-1990 period. Also Yale costs went up by an average of 1.8% above inflation during 1990-2012. So if anything the "surge" in college costs is worst during the pre-1990 period than the last couple of decades when there was a supposed unpresedented increase in college costs.

I think it has more to do with lower cost private and public universities moving their prices in line with places like Yale mostly to capture all those student loans and goverment subsidies over the last couple of decades so it does seem to be a massive jump in prices for those places. But for the highest cost places which is the worst case scenerio the situation does not look that bad. I can live with 1.8% higher than inflation. So it is not bad depending on what bad means.

What does this mean for me. Well, if Yale cost $55300 in 2012 and if I assume (a big if) my DS attends Yale in 2029-2033, and if I assume the same 1.8% increase per year on top of inflation (I am pretty sure it would be lower, something like 1.5% as I think this student loan bubble will burst soon) I am left with a cost of $77K per year in 2013 dollars. So that I what I model for as a worst case scenerio. All other scenerios will cost less then that. I should be able to adjust our earnings and investments a few years before our DS attends college to extract some finnacial aid (like I had my parents do a couple of years before I attended college to achieve the same goal which worked) but I will not count on it. It will just be an added bonus.
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Old 09-10-2013, 09:17 PM   #37
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Quick quarterly update. Not much to report. I did start a UTMA account in addition to our existing 529. I've been applying most of our monthly surplus to our two remaining mortgages. MINT.com has us rapidly approaching 1.8 M in net worth (including primary home). It would be nice to hit 2M by the time we hit 40.

Non-RA and cash: $550k
RA : 400k
Primary home 430k (owe 175k)
Rentals: 400k (owe 200k)
529/UTMA: 10k
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Old 09-10-2013, 10:00 PM   #38
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Quick quarterly update. Not much to report. I did start a UTMA account in addition to our existing 529. I've been applying most of our monthly surplus to our two remaining mortgages. MINT.com has us rapidly approaching 1.8 M in net worth (including primary home). It would be nice to hit 2M by the time we hit 40.

Non-RA and cash: $550k
RA : 400k
Primary home 430k (owe 175k)
Rentals: 400k (owe 200k)
529/UTMA: 10k
I'm not sure how you have concluded that your Net Worth is approaching $1.8 M. The equation is: Net Worth = Assets - Liabilities.

Assets = $550k + $400k + $430k + $400k + $10k = $1,790k (or $1.79 M)
Liabilities = $175k + $200k = $375k
Therefore, Net Worth = $1,790k - $375k = $1,415k (or $1.415 M).

Of course, there may be another asset class that you haven't mentioned above.
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Old 09-11-2013, 06:45 AM   #39
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Sorry. The way I listed the numbers is confusing. The first number I listed for our real estate is the approximate amount of equity in our homes based upon zillow (total property value of 1.2M and 375k in mortgages)
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Old 09-11-2013, 09:39 AM   #40
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Sorry. The way I listed the numbers is confusing. The first number I listed for our real estate is the approximate amount of equity in our homes based upon zillow (total property value of 1.2M and 375k in mortgages)
Just keep in mind zillow's numbers are not very accurate.
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