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Old 11-26-2008, 05:01 PM   #41
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Originally Posted by youbet View Post
Yeah, it's great to have like-minded folks to gossip with about people living their lives differently than yourself!

There seem to be no threads as popular as threads where someone criticizes someone else's lifestyle and others jump in to pile on!
Oh yeah, and you're just as pure as the wind driven snow. GMAB

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Old 11-27-2008, 09:39 AM   #42
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Originally Posted by Independent View Post
I'll agree with this. Money is fungible - it's all the same. If you "need" to spend, you get it from the cheapest source. Cashing out your 401k is cheaper than piling up credit card debt.

OTOH, the big problem is separating needs from wants. This board is full of LBYM types who would love to educate their friends and family on the difference (I'm one of them).

So I'll go ahead and get my pet peeve in. I see lots of media discussion on saving, and contributing to your 401k, and investing wisely. I don't see nearly as much discussion of the notion of getting out of debt. If I had the ear of the "average" American, I'd say you should focus on your GOOD Date (Get Out Of Debt Date). When do you plan to be completely out of debt? Age 50? Age 45? Age 65? It's foolish to think that you are "saving" until your debts are gone.
I don't think it matters if you have debts as long as you have enough assets to pay them off. I saved in my 401K rather than paying off my house early. Much better tax advantages. Getting less so now that I cannot deduct interest on the house any more.

In theory, theory and practice are the same. In practice, they are not.
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Old 11-27-2008, 01:02 PM   #43
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Originally Posted by Lazarus View Post
I don't think it matters if you have debts as long as you have enough assets to pay them off. I saved in my 401K rather than paying off my house early. Much better tax advantages. Getting less so now that I cannot deduct interest on the house any more.
I'll agree with this. My post was a tangent on the thread so I didn't want to make it too long.

For most people, the debt/savings combination that works is a 401k and a mortgage. If the loan is on a credit card, or the saving is taxable, the numbers are likely to be different.

If I were advising someone who can do the math, I'd recommend looking at savings minus debt and focus on when that number will turn positive. I'd remind them that they need to take a haircut on the traditional IRA/401k assets to reflect the taxes they'll pay when they withdraw.

I think that some people will discover that they are on a path that will keep them net debtors until 60+, and that may help them understand their financial situation.

If I were making tax law, I'd get rid of the complexities in the tax law that simultaneously give people incentives to borrow and incentives to save.
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Old 11-27-2008, 11:57 PM   #44
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Two working adults can retire on two social security checks if they don't have high expenses. Say they get 1,500 each that is 3K per month without a mortgage they will be fine. The problem is when one dies and the other is left with only half the income but the bills aren't half. They have one less person to feed and cloth but if they were sharing a car the widow/widower is left with the car insurance bill and other expenses, property taxes might not go down if they already got a low income elderly discount. Utilities are the same amount and if they start needing medicine or have a home or car repair they can't recover. So even if you see a 75 year old couple living fine on SS they might get in deep trouble later also they might have a part time job or grow a garden when they are younger retired but can't at 80.

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