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I'm Debt free!!!!!
Old 11-17-2007, 09:45 AM   #1
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I'm Debt free!!!!!

It's taken almost 8 years, but I'm there. Not much savings yet (~$5,700). But I have some stock that will vest in about 3 weeks (~$7,000).

I have a couple of questions.

For the stock that will vest, can I simply roll it into my checking account at BoA--or will I have to pay taxes?

Second, I'm looking to purchase a home and would like to know of a good calculator to use to approximate how much I may qualify for. My credit score average is 628 (I know, not stellar), but I want to know how much I could afford on a $90 K annual salary (bonus ~$16 K after taxes).

Thank you all for the help!

Woo-hoo!
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Old 11-17-2007, 10:41 AM   #2
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congratulations on being debt free. that is a hugh first step and you should see your savings grow quickly. I can't comment on company stocks, as I have no experience there.

re: mortgage - you should not look at what you can qualify for, but what you are comfortable paying. Even in this tight credit market, I suspect that lenders still grant larger loans than many here are willing to take on. Generally all debt should not exceed about 33% of gross, and house debt about 25% (others will cheerfully correct me if my percentages are a bit off). But, that assumes you are not savings significant chunks of income for FIRE. Obvously, putting aside savings reduces available cash and the amount of debt you can comfortably carry.

Finally, do you have $$ for a down payment? you should consider saving to put 20% down to avoid PMI.
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Old 11-17-2007, 03:39 PM   #3
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Congrats Mary,
Are those stock options that will vest?
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Old 11-17-2007, 10:00 PM   #4
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Quote:
Originally Posted by Mary_From_Georgia View Post
It's taken almost 8 years, but I'm there. Not much savings yet (~$5,700). But I have some stock that will vest in about 3 weeks (~$7,000).

I have a couple of questions.

For the stock that will vest, can I simply roll it into my checking account at BoA--or will I have to pay taxes?
If the stock is not in a tax deferred plan at your employer, such as a 401k plan, and if you get cash rather than stock certificates, I'd think it is just a normal taxable sale of stock. You say "roll it into your checking account----that sounds like you would get the cash proceeds?

What I don't know is what tax cost basis you would have for it. I'd suggest talking with your employer HR dept folks about that stock, and is it considered taxable to employee, and what is cost basis for you? They may refer you to a tax professional for such questions.
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Old 11-18-2007, 06:41 AM   #5
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Congrats Mary,
Are those stock options that will vest?
Yes Dex. They vest Dec 15th.
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Old 11-18-2007, 08:25 AM   #6
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Since they are options then you can pick your time to buy/sell before they expire.

If you do a immediate buy and sell then the taxes are usually deducted by your company.

Your company should have given you some info about them when they were awarded to you.
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Old 11-18-2007, 12:22 PM   #7
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Yes Dex. They vest Dec 15th.
If you do a "sell to cover" transaction, the most common, the proceeds to you will be taxable as ordinary income, including FICA, and will appear on your check stub and W2.
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Old 11-18-2007, 01:24 PM   #8
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If it's for a large amount, watch out if you get in the next tax bracket. My company, or the brokerage service it uses, only allows 28% (?) to be deducted for federal taxes. We used to be able to specify how much to withhold, some people withheld huge amounts to cover other taxable stock sales.

This leaves me short for the part that is taxed at a higher rate. I came up short last year but didn't have a penalty because I did have > 110% of the previous year's amount withheld. This year I have to be a lot more careful. I'm having them take extra out of each paycheck, the other option is to pay quarterly estimates.
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Old 11-20-2007, 12:05 PM   #9
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It's taken almost 8 years, but I'm there. Woo-hoo!
Congrats on eliminating your debt. That is an important first step.
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