Budgeting/Expense Tracking - Practicalities

[FUEGO]

I believe the blowback you are getting is from the idea that you are walking away from a debt commitment that you made - which in the other government programs you mentioned are not the case, and you profited from that action, beyond the original intent of the program.

It's similar to walking away from a note/mortgage on a home you purchased "just because you can", even though you may be able to continue to make the payments and the home continues to meet yours and your family’s needs.

I am still agreeing to pay my loan for 25 years pursuant to the Income Based Repayment program. I think the appropriate analogy is not walking away from a mortgage note, but rather entering into one of the Making Homes Affordable loan mod programs where they drastically reduce your interest rate and/or chip in a little principal money. I mean, I'll still pay something on my loans. Just probably not the full amount, and certainly not on the current payment schedule.

I mean, why are we even arguing? It is only six figures of debt we are talking about here. What's a hundred thousand(s) among friends? Our country spends billions every day and I don't really know where any of it goes. I just want my share of the largess.

After all, we have fulfilled the societal goal of a well educated citizenry, hence no one can complain too much that the taxpayers are paying for my student loans. (ok, tongue out of cheek!)

 

[Keim]

I mean, I really really want to repay the debt, but I don't want to work an extra 6-12 months to do so. Especially since I have found a government program that will allow me to pursue my dreams without repaying my loans in full!

To each his own, I suppose. For me retiring slightly earlier would not be worth my sense of honor and dignity.

But you are correct, it is the system at fault. There are ways to play games.

 

[FUEGO]

To each his own, I suppose. For me retiring slightly earlier would not be worth my sense of honor and dignity.

But you are correct, it is the system at fault. There are ways to play games.

I just don't see participation in a government program open to anyone as losing my honor or dignity. I try to avoid paying income taxes as much as possible, an honorable pursuit I think most here on this forum join me in, particularly at this time of year. Depriving the government of tax revenue or requiring them to expend funds for student loan forgiveness is equally (dis)honorable in my book, dollar for dollar.

But hey, to each his own.

 

[Keim]

Anybody here do Cash for Clunkers? Anybody get tax credits for energy efficiency home improvements or hybrid/electric car purchases? Anybody get the Homebuyer's tax credit? Anybody ever send their kids to state universities when they could afford to pay full price at private schools? Anybody ever file for social security benefits or medicare benefits even though they have ample income to support themselves in perpetuity?

Because I would certainly hope that members of a forum, the majority of which are millionaires, would not take advantage of government programs unless they really needed them.

I don't see the comparison, Fuego. The above were designed to meet specific purposes. As long as people meet those purposes, they do nothing wrong.

The program you utilized was also designed to meet a purpose. And you agreed to participate in it with certain terms and agreements lined out. You are now planning to get out of doing what you agreed to do.

Perhaps a better comparison would be to ask if anyone had taken advantage of need based scholarships by incorrectly demonstrating their need. That would be closer to representing the manipulation you are writing about.

 

[Keim]

I just don't see participation in a government program open to anyone as losing my honor or dignity. I try to avoid paying income taxes as much as possible, an honorable pursuit I think most here on this forum join me in, particularly at this time of year. Depriving the government of tax revenue or requiring them to expend funds for student loan forgiveness is equally (dis)honorable in my book, dollar for dollar.

But hey, to each his own.

I don't find participation in such a program beneath my dignity. Manipulation is.

 

[grasshopper]

Just wait your house and yard will be tp'ed with all missing TP.

 

[Amethyst]

Heavens. I thought I was obsessive about tracking, but it never occurred to me to track TP as a separate expense! TP is part of "groceries."

We used to have a cat who regularly shredded whole rolls of TP, on or off the roller. (He was a dear, good cat, otherwise). Would you have advised counting his hobby as TP, or as "pet expense"?

Amethyst

288 rolls of TP in 7 months? That's more than a roll a day! If it was me, I'd call a family meeting....

 

[LauAnn]

Since you are already tracking the number of gallons that you are using, go a step further and track your gas mileage (mpg) and cost per mile driven. You need to note your odometer reading when you gas up.

Good idea!

 

[FUEGO]

Heavens. I thought I was obsessive about tracking, but it never occurred to me to track TP as a separate expense! TP is part of "groceries."

We used to have a cat who regularly shredded whole rolls of TP, on or off the roller. (He was a dear, good cat, otherwise). Would you have advised counting his hobby as TP, or as "pet expense"?

Amethyst

I bought the 288 rolls at one time from amazon dot com. For $36. Back in Sept 2010. We are still using the rolls but they are almost all gone. That's how I know how much we use! I would never be anal enough to track TP as a separate expense...

 

[FUEGO]

I don't see the comparison, Fuego. The above were designed to meet specific purposes. As long as people meet those purposes, they do nothing wrong.

The program you utilized was also designed to meet a purpose. And you agreed to participate in it with certain terms and agreements lined out. You are now planning to get out of doing what you agreed to do.

Perhaps a better comparison would be to ask if anyone had taken advantage of need based scholarships by incorrectly demonstrating their need. That would be closer to representing the manipulation you are writing about.

I'm not manipulating anything. My taxable income will shrink when I ER - there is nothing I can do about that. I make a bunch more than I spend. I intend to withdraw money and realize income in quantities sufficient to enable my spending during ER. I may do a little planning to optimize my withdrawals to minimize taxes. The income based repayment plan has me pay on my loans based on my taxable income over a certain amount. I am meticulous about proper reporting on my income tax forms (I don't like federal prison). I am not doing anything illegal.

Taking advantage of need based scholarships by lying or misrepresenting yourself is fraud. No ifs ands or buts. I am simply reporting my taxable income and having my student loan payments modified based on my income, including reduced to zero if my income doesn't exceed certain thresholds. To equate that to purposeful misrepresentation and fraud is ridiculous.

Would my perceived evil be tempered if I told you, in addition to planning on being an artist/writer/poet, that I intend to volunteer lots of time helping inner city and immigrant youth and developing infrastructure in some developing countries. The money that I save from the student loan forgiveness would be put to use in these endeavors. Does that make a difference? Not saying I will do that, but I'm not saying I won't either.

 

[easysurfer]

The land we live in (US) is in the land of the law first and morality second. Not saying that I totally agree with the approach.

In a way, it's sort of like this couple I knew who had filed for bankruptcy. Yet before they did this, they racked up a nice wedding dress and other expenses. Don't know the exact timing of when that's okay, when not, but in their case when the creditors came knocking...they pretty much told them to talk to their lawyer. Eventually, they negotiated a much lower payoff on the debt and just paid say about $1000 instead of $10,000. Illegal? No. Immoral or good strategy? You be the judge.

 

[FUEGO]

Does all this TP have an adverse effect on your home's plumbing? Do you get a lot of stoppages? Just honestly curious about how these things work...

As far as I can tell, no. Not in doses less than 50 sheets at a time.

 

[FUEGO]

The land we live in (US) is in the land of the law first and morality second. Not saying that I totally agree with the approach.

In a way, it's sort of like this couple I knew who had filed for bankruptcy. Yet before they did this, they racked up a nice wedding dress and other expenses. Don't know the exact timing of when that's okay, when not, but in their case when the creditors came knocking...they pretty much told them to talk to their lawyer. Eventually, they negotiated a much lower payoff on the debt and just paid say about $1000 instead of $10,000. Illegal? No. Immoral or good strategy? You be the judge.

I follow the law. Trying to read moral intent into laws passed by politicians is challenging.

My proposal in another thread to go back to grad school just to get another couple hundred thousand in student loans, THEN not repay them would be akin to the bankruptcy situation you discuss, since I would go into it not planning on repaying it. When DW and I contracted this student loan debt starting in 1996, we both fully planned on paying it all back. We still do, subject to the income based repayment provisions (which will likely forgive most of it). But if those rules change and we end up paying it all back over time, I am completely ok with that. We did agree to pay the debt after all.

 

[W2R]

As far as I can tell, no. Not in doses less than 50 sheets at a time.

Thanks. That is good to know.

 

[easysurfer]

I follow the law. Trying to read moral intent into laws passed by politicians is challenging.

My proposal in another thread to go back to grad school just to get another couple hundred thousand in student loans, THEN not repay them would be akin to the bankruptcy situation you discuss, since I would go into it not planning on repaying it. When DW and I contracted this student loan debt starting in 1996, we both fully planned on paying it all back. We still do, subject to the income based repayment provisions (which will likely forgive most of it). But if those rules change and we end up paying it all back over time, I am completely ok with that. We did agree to pay the debt after all.

I dunno. Going back to the bankruptcy situation. They did make the mimimum payments so legally there was "intent" to pay before filing bankruptcy. Yet at the same time..all I can say is I'm glad it wasn't me. Actually, now that I remember, it was a wedding ring instead of a wedding dress...if that makes a difference. I would have just got a cheaper ring instead. I have too weak a conscience.

 

[NW-Bound]

Agreed. I personally think the policy is ridiculous that we can borrow hundreds of thousands and not worry a whole heck of a lot about ever repaying it. But thems the breaks, and this is one of the very few social welfare benefits that I can take advantage of.

I will say that I invested a significant portion of the student loan borrowing over the 2001-2006 period, so that has probably produced positive returns by now (versus carrying costs of under 1%, all tax deductible).

You can call it whatever you want. Letter, spirit, etc. Law does not imply morality.

...This is America!

Proud? I guess I'm happy that I finally get some payola from some crazy government program. I doubt I'll get much out of other social programs I'm currently paying for (medicare, SS particularly). So I'm just gettin mine while the getting is good. I am most certainly not proud of our system that leaks money like a sieve.

I follow the law. Trying to read moral intent into laws passed by politicians is challenging.

Anybody here do Cash for Clunkers? Anybody get tax credits for energy efficiency home improvements or hybrid/electric car purchases? Anybody get the Homebuyer's tax credit? Anybody ever send their kids to state universities when they could afford to pay full price at private schools? Anybody ever file for social security benefits or medicare benefits even though they have ample income to support themselves in perpetuity?

Because I would certainly hope that members of a forum, the majority of which are millionaires, would not take advantage of government programs unless they really needed them.

Same as many here I would not do what you are about to do. It just did not feel right. But I can see your points about taking advantage of whatever the system is offering you.

Yes, we all take the tax deductions and credits that we are eligible to take. When my father was hospitalized, my mother spent a lot of time arguing with the Medicare case worker to get my father whatever treatments that she could get. I am sure that people who were not so persistent would get less.

Perhaps my closest friend who is an ardent libertarian is right after all. Left alone, people would know how to take care of themselves. Most people are not stupid. Who are we to say who needs or deserves more help than some others? In the spirit of leveling the playing field so to speak, we are actually creating other perceived unfairnesses. I said "perceived" because as you said, how can we ever agree to the basic definition of fairness?

I also admire your frankness. Here to your ER plan.

 

[Packman]

My federal student loans qualify for debt forgiveness. I think private loans and some other types of federal loans (parent PLUS loans??) don't qualify. And my government employment qualifies. Or at least it seems to qualify. There is no way of knowing until 10 years later per the current rules.

Isn't debt forgiveness considered taxable income?

 

[Keim]

Easy, Fuego. I don't perceive you as evil or even wrong. You are simply making a choice that is different from what I would decide. Ultimately you are the one that has to be able to sleep at night.

It is the system I think is wrong, and easily manipulated.

I'm not manipulating anything. My taxable income will shrink when I ER - there is nothing I can do about that. I make a bunch more than I spend. I intend to withdraw money and realize income in quantities sufficient to enable my spending during ER. I may do a little planning to optimize my withdrawals to minimize taxes. The income based repayment plan has me pay on my loans based on my taxable income over a certain amount. I am meticulous about proper reporting on my income tax forms (I don't like federal prison). I am not doing anything illegal.

Taking advantage of need based scholarships by lying or misrepresenting yourself is fraud. No ifs ands or buts. I am simply reporting my taxable income and having my student loan payments modified based on my income, including reduced to zero if my income doesn't exceed certain thresholds. To equate that to purposeful misrepresentation and fraud is ridiculous.

Would my perceived evil be tempered if I told you, in addition to planning on being an artist/writer/poet, that I intend to volunteer lots of time helping inner city and immigrant youth and developing infrastructure in some developing countries. The money that I save from the student loan forgiveness would be put to use in these endeavors. Does that make a difference? Not saying I will do that, but I'm not saying I won't either.

 

[ERD50]

Anybody here do Cash for Clunkers? Anybody get tax credits for energy efficiency home improvements or hybrid/electric car purchases? ...

I don't see the comparison, Fuego. The above were designed to meet specific purposes. As long as people meet those purposes, they do nothing wrong. ...

I've not read every post in this thread, but there are many examples of people meeting the letter of the law on those programs "designed to meet specific purposes", yet they didn't meet the spirit of the law (if there is such a thing).

Take Cash for Clunkers - A person with an old gas guzzler was looking to buy a new, small car anyway. So they give up their old gas guzzler for the "Cash for Clunkers" even though they were going to buy that new car anyhow. Then they buy a gas guzzler to replace the one they had (maybe they need a big vehicle to haul things). Maybe the old gas guzzler was only driven 2,000 miles a year, they only used it when they needed to haul stuff. And the new "efficient" car is driven 12,000 miles a year - which one uses more gasoline?

edit/add: Or the neighbor that gets an "energy credit" for a new efficient furnace (one that needed replacing anyway), yet, they turn the thermostat higher/lower than I would and use more energy than I do with my older, marginally less efficient furnace/AC? What's right about that? Or they buy an EV in an area that gets it's electric power from coal - which can end up creating more pollution than the 'bad, old' Internal Combusion Engine?

Again, I have not read every post, but it appears that FUEGO met the letter of the law. So give him a break and blame Congress for all this needless manipulation instead. These are not "unintended consequences", they ARE the consequences of passing "one size fits all" legislation. You either accept that there will be outlier 'violations', or you say that Congress should drop all this manipulation - OK, one more option, Congress writes perfectly effective laws, but that's not gonna happen.

-ERD50

 

[Keim]

SO true, Ha.

 

[easysurfer]

Since I've FIRE'd and am in a lower tax bracket, when I put "Retired" in the occupation line I feel like I've broken the law

 

[SecondCor521]

I will say that I invested a significant portion of the student loan borrowing over the 2001-2006 period, so that has probably produced positive returns by now (versus carrying costs of under 1%, all tax deductible).

Yes, I made money on the portion of the loans that I invested instead of boozing it up with law school classmates. I went to a taxpayer subsidized law school and received some taxpayer funded grants as well, so tuition just didn't require that much money, hence I invested the rest.

I follow the law.

FUEGO,

The above quotes seem to imply that you:

a. Borrowed money on student loans
b. Used a portion of the proceeds for something other than qualified educational expenses (i.e., you invested them), and
c. Deducted the student loan interest on your federal income tax return.

Since you state that you follow the law, I trust that I have misunderstood something. According to IRS Publication 970:

a. "Student loan interest is interest you paid during the year on a qualified student loan."
b. "[A qualified student loan] is a loan you took out solely to pay qualified education expenses (defined later)..." (emphasis mine)
c. "For purposes of the student loan interest deduction, [qualified education] expenses are the total costs of attending an eligible educational institution, including graduate school."

Link to relevant portion of IRS Publication 970.

Link to relevant portion of the United States Code (Title 26).

If I have understood your situation correctly -- and it's quite possible I haven't -- then you should not be deducting the interest on any student loans where you invested any portion of the proceeds.

2Cor521

 

[WanderALot]

That only saved me $18 a year on an annualized basis. And I now know that 288 rolls lasts roughly 7 months in our household.

Whoa! That's more than a roll a day!

EDIT: Never mind, I see this has been hashed already...

 

[Walt34]

Hey, preaching to the choir here! I know it is a ridiculous level of consumption. They use 10x what I use. I have tried to train the 3 ladies in the house about the proper quantity of TP

This seems to be a universal female pattern of behavior. This very topic came up at work the other day and the consensus was the same. When DW and I got married I noticed an immediate and dramatic um, "disappearance" of TP. It seemed to evaporate quickly.

I also know that some things are worth arguing about and some things are not. TP is in the latter category.

 

[easysurfer]

Agreed...TP is a neccessity and not worth arguing about. Have to save that for more important battles like how to stack the dishwasher.