Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 08-09-2021, 06:39 AM   #41
Thinks s/he gets paid by the post
 
Join Date: Oct 2019
Posts: 2,675
Quote:
Originally Posted by ERD50 View Post
But in this case, I think OP is borrowing only to avoid selling and paying cap gains tax. He has the money.

I did a similar thing to buy our home this year - took out a Line Of Credit from my broker, as I wanted to simplify the purchase and pay cash. I'll get a mortgage soon.

-ERD50

Yes, I borrowed only to avoid cap gains, and we have the money.
Also the plan is for this to be for one year only. They want to get the house mortgage ready asap, as they know mortgage rates are low and could increase.
Time2 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-09-2021, 08:47 AM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 10,961
Quote:
Originally Posted by Dtail View Post
I did once and it worked out, but not again.
Heh, heh, son asked me to co-sign a loan with him. I said "no" but gifted him a "starter amount" for the business he wanted to open (a bar/restaurant) Looking over the paperwork for the loan, there was virtually no limit to my liability (theoretically, about $100K, but that could have sky rocketed under certain conditions.) Guess what. The business went bust. Not sure how he ever got out from under. His next venture - same thing - did well until his partner absconded with the church funds - er, well, you know. His third attempt did very well, he also bought a house which he made a fortune on. Then he blew it all on a farm which, to this day, I don't know if he is out from under it.

My point. NEVER co-sign anything when you are retired. You have no way to make up a loss that may be relatively unlimited. A young person can find a way out of a big loss (bankruptcy if need be) but bankruptcy for a retired person is a very sad thing indeed. Just sayin' so YMMV.
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 08-09-2021, 09:09 AM   #43
Full time employment: Posting here.
 
Join Date: Apr 2011
Location: Castro Valley
Posts: 774
Quote:
Originally Posted by flyingaway View Post
Wow, a Financial Manager Data Analytics at Cisco still needs financial help from parents. I did not expect that. This comment is about Cisco, not about your daughter.
My daughter does have a very good salary from Cisco, but the SF Bay Area is extremely expensive. She didn't specifically need our help or even ask for our help. In the process of buying a house it turned out that the best choice required a little bit more money. Giving her a boost was something that was very easy for us to provide.
jkern is offline   Reply With Quote
Old 08-09-2021, 09:44 AM   #44
Thinks s/he gets paid by the post
 
Join Date: Apr 2015
Posts: 3,927
Quote:
Originally Posted by Koolau View Post
I can't think under what circumstances we would borrow money to help our kids. We don't lend to them either. IF we think they need assistance (with for instance a down payment on a house or with school loans) we will gift them money (and have several times.) BUT only if we have the money.

A wise person once said that you can't borrow money for retirement (well, I suppose a reverse mortgage might qualify) so let your kids do the borrowing and you help out where you can. YMMV
This is our thoughts, also.
__________________
Give a Man a fish, he will eat for a day.
Teach a Man to fish, he will eat for a lifetime.
pacergal is offline   Reply With Quote
Old 08-09-2021, 11:25 AM   #45
Recycles dryer sheets
4legsgood's Avatar
 
Join Date: Nov 2017
Location: Seattle
Posts: 339
Quote:
Originally Posted by pacergal View Post
This is our thoughts, also.
OP explained this in a way I like, they have assets but don't want to sell and pay (assume higher rate) taxes so opened Interactive Brokers account which has unbelievably low margin loan rates and transferred assets then took out a margin loan. I've made a mental bookmark on this approach to use as needed.

Another approach is to gift stock if your gift-ee has lower tax rate, which I have done.
__________________
Retired 2015 at age 55...50/45/5 AA
4legsgood is offline   Reply With Quote
Old 08-09-2021, 11:53 AM   #46
Thinks s/he gets paid by the post
 
Join Date: Jun 2021
Posts: 1,052
Quote:
Originally Posted by Teacher Terry View Post
Retired Happy, yes that disability does qualify him for services. That diagnosis used to be called Asperger’s. I have helped clients with that disability. Hopefully your state is not under order of selection which basically means they serve the most disabled first and there’s a waiting list for others. That situation is fairly rare and hopefully not the case.
He does not have Asperger's. He was first classified as having communication and language development disability, before the days of when Autism Spectrum Disorder was coined.

To be specific, he has auditory processing disorder so he finds it difficult to process and retain what he hears.

His reading comprehension is very good and has high IQ, hence he successfully pursued 2 separate Bachelor degrees to improve his chances for employment. I had spoken to some of these agencies who told me that with his 2 Bachelor degrees, he would be deemed unsuitable for their assistance.
RetiredHappy is online now   Reply With Quote
Old 08-09-2021, 02:55 PM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 6,770
Quote:
Originally Posted by ERD50 View Post
But in this case, I think OP is borrowing only to avoid selling and paying cap gains tax. He has the money.

I did a similar thing to buy our home this year - took out a Line Of Credit from my broker, as I wanted to simplify the purchase and pay cash. I'll get a mortgage soon.

-ERD50
I don't think I would borrow even in that scenario or for that reason, but I understand the concept and the reasoning and what (and @Time2) are saying.

And again, I haven't been in that situation yet with my kids, and I haven't yet done any proactive planning or preparation. So it's possible that when the time comes I might do the same thing myself. But I think in general I would try to avoid it just because it's not my preferred way of going about things. No judgment implied.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 08-09-2021, 03:20 PM   #48
Recycles dryer sheets
 
Join Date: Oct 2019
Location: Glasgow
Posts: 184
My daughter bought a house recently with her partner. I returned all her dig money she had paid into our house for her keep, as I previously did with my son. I also gave her a contribution towards her deposit reducing the interest she would pay on the mortgage by a fair amount.

The hoops I have had to go through since then to comply with anti laundering regulations has been an eye opener.
Jim59 is offline   Reply With Quote
Old 08-09-2021, 06:06 PM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Teacher Terry's Avatar
 
Join Date: Jun 2014
Posts: 6,043
Happy, the college degrees wouldn’t disqualify people from VR services. I have worked with people with master’s degrees and we have helped clients obtain college degrees. What services are offered are individual depending on the person’s disability and what is necessary to obtain and maintain employment.
Teacher Terry is online now   Reply With Quote
Old 08-09-2021, 06:56 PM   #50
Thinks s/he gets paid by the post
 
Join Date: Jun 2021
Posts: 1,052
Quote:
Originally Posted by Teacher Terry View Post
Happy, the college degrees wouldnít disqualify people from VR services. I have worked with people with masterís degrees and we have helped clients obtain college degrees. What services are offered are individual depending on the personís disability and what is necessary to obtain and maintain employment.
I looked at the CA website and it indicated there are criteria to qualify, one being on SSI. He is not on SSI.
RetiredHappy is online now   Reply With Quote
Old 08-09-2021, 07:13 PM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Teacher Terry's Avatar
 
Join Date: Jun 2014
Posts: 6,043
If you are on SSDI or SSI you have presumed eligibility and don’t need to provide medical records or other records to qualify. Other people apply and are told to obtain a copy of their medical records which would have a diagnosis, school records if they have a diagnosis from childhood, etc. Most of our clients are not on either. I have been retired for awhile but did this work in 3 states and since the program is 78% federally funded the criteria to qualify is determined by them.

What you read was how people automatically qualify which is what I talk about above. Above that is who may apply and may qualify for VR and it lists 3 federal criteria: you have a disability that affects your ability to work, you can benefit from the services and need the services to obtain or maintain employment. I just went to their website and the criteria hasn’t changed. If your son doesn’t have a childhood diagnosis or recent diagnosis VR will pay for the person to be evaluated by the appropriate professional to see if they qualify for a diagnosis. Many of the people can’t afford to do that because they aren’t working.
Teacher Terry is online now   Reply With Quote
Old 08-09-2021, 07:44 PM   #52
Thinks s/he gets paid by the post
 
Join Date: Jun 2021
Posts: 1,052
Quote:
Originally Posted by Teacher Terry View Post
If you are on SSDI or SSI you have presumed eligibility and don’t need to provide medical records or other records to qualify. Other people apply and are told to obtain a copy of their medical records which would have a diagnosis, school records if they have a diagnosis from childhood, etc. Most of our clients are not on either. I have been retired for awhile but did this work in 3 states and since the program is 78% federally funded the criteria to qualify is determined by them.

What you read was how people automatically qualify which is what I talk about above. Above that is who may apply and may qualify for VR and it lists 3 federal criteria: you have a disability that affects your ability to work, you can benefit from the services and need the services to obtain or maintain employment. I just went to their website and the criteria hasn’t changed. If your son doesn’t have a childhood diagnosis or recent diagnosis VR will pay for the person to be evaluated by the appropriate professional to see if they qualify for a diagnosis. Many of the people can’t afford to do that because they aren’t working.
He had been seeing clinicians since 3 yo and had written diagnosis since 7 and a ton of speech and behavioral diagnosis and tests up to his college entry.

One of my challenges is that he is proud and does not want assistance, other than from me. He does not want to admit that he has ASD even though it is apparent in interviews and prolonged interaction with others. He has some involuntary ticks as well as going off into space during interactions. Changes are very difficult for him.
RetiredHappy is online now   Reply With Quote
Old 08-09-2021, 07:59 PM   #53
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Teacher Terry's Avatar
 
Join Date: Jun 2014
Posts: 6,043
It’s a voluntary program and you have to want to work to be accepted. Maybe you could explain that your taxes pay for the program and everyone is only one accident or illness away from having a disability that could affect their ability to work.
Teacher Terry is online now   Reply With Quote
Old 08-09-2021, 08:59 PM   #54
Recycles dryer sheets
 
Join Date: Mar 2021
Posts: 155
Quote:
Originally Posted by Time2 View Post
The question how much financial help to give kids has been discussed before, with many opinions given on the subject. I recently helped my kids but expect 100% to be paid back. It starts with one of my kids and spouse trying to buy an FHA Repo, no problem qualifying, but then problem after problem creating delay after delay, to the point, 6 months had elapsed.
After reading about how MMM made an impulse home purchase, I looked into his method, at about the 4 month time frame, just in case I had to help with the purchase. Following his write up, I did the following.
I opened an Interactive Brokers account and moved my Taxable account of Vangaurd mutual funds there. I don't want to sell and incur the tax hit. The account has Margin use available. I can margin up to 50% of my balance. I went 39%. More on that later*. I recently wired their homes purchase price to my bank. Then I had a mortgage written between them and me. I wired the money to the title company. They have the house I have a mortgage. The plan is for them to complete all repairs and make it ready for a traditional mortgage. I expect them to get a new mortgage within one year, I had the contract written for two years just in case. The interest rate for the margin loan is 1.35%. *If the market had a flash crash, causing my margin to go above the 50%, IBKR would sell some of my mutual funds to bring it back to 50%. I don't want that to happen. As a precaution, I opened a home equity loan against my house, I will transfer $100,000 into my IBKR account bringing my margin loan down to about 33%. The Home equity loan is only 0.99% for the first 6 months. I wrote the mortgage at 4% for the first year an 6% for the second, I hope that 6% is a big incentive for them to get the house mortgage ready.
I thought this might help others if they have funds they don't want to sell, but would like to make use of the money. More details on MMM blog.
Haven't read all the replies but this isn't a good idea.

What if they cannot or will not get a "traditional" mortgage within a year? Would you forecloae in the property? Would you be willing to forecloae on the mortgage if you had a lein on the property?

It is bad business loaning money to friends and family unless you never expect it back and mentally write it off as a gift if things go wrong.

Ask me how I learned this the very hard way
Safire is offline   Reply With Quote
Old 08-09-2021, 09:34 PM   #55
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 10,961
Quote:
Originally Posted by Safire View Post
Haven't read all the replies but this isn't a good idea.

What if they cannot or will not get a "traditional" mortgage within a year? Would you forecloae in the property? Would you be willing to forecloae on the mortgage if you had a lein on the property?

It is bad business loaning money to friends and family unless you never expect it back and mentally write it off as a gift if things go wrong.

Ask me how I learned this the very hard way
Never loan money to friends or relatives. It ruins their memories.
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 08-11-2021, 07:42 AM   #56
Confused about dryer sheets
HolaDEA's Avatar
 
Join Date: Aug 2021
Posts: 8
When my dad passed away, he left good sized 401k behind. He was blue collar but saved aggressively. I thought my mom would be set, but my sister has had significant health problems, is going though a divorce, and has four kids. She brings all her problems to my mom to solve by writing a check. My mom just canít say no. I really worry about my mom having enough money and also what my sister expects to do when my mom passes. I donít care if my sister takes all my moms assets but I hope she doesnít expect to start dipping into my pockets.
HolaDEA is offline   Reply With Quote
Old 08-11-2021, 08:19 AM   #57
Thinks s/he gets paid by the post
 
Join Date: Oct 2019
Posts: 2,675
Quote:
Originally Posted by Safire View Post
Haven't read all the replies but this isn't a good idea.

What if they cannot or will not get a "traditional" mortgage within a year? Would you forecloae in the property? Would you be willing to forecloae on the mortgage if you had a lein on the property?

I doubt I would foreclose, but I may keep the contract at 6%, and slowly sell off some mutual funds to get rid of my loan. 1 year from now, they should easily have an income over $200k, so I would hope they will qualify for a mortgage on a $240k house.

Quote:
It is bad business loaning money to friends and family unless you never expect it back and mentally write it off as a gift if things go wrong.

Ask me how I learned this the very hard way

Yes, in the end if there was a default, it would be subtracted from her inheritance.
I do hope this is all over in one year though. One reason being, I can't control my income for tax planning if I have interest income.
Time2 is offline   Reply With Quote
Old 08-11-2021, 08:42 AM   #58
Thinks s/he gets paid by the post
 
Join Date: Apr 2010
Posts: 4,765
Quote:
Originally Posted by Koolau View Post
Heh, heh, son asked me to co-sign a loan with him. I said "no" but gifted him a "starter amount" for the business he wanted to open (a bar/restaurant) Looking over the paperwork for the loan, there was virtually no limit to my liability (theoretically, about $100K, but that could have sky rocketed under certain conditions.) Guess what. The business went bust. Not sure how he ever got out from under. His next venture - same thing - did well until his partner absconded with the church funds - er, well, you know. His third attempt did very well, he also bought a house which he made a fortune on. Then he blew it all on a farm which, to this day, I don't know if he is out from under it.

My point. NEVER co-sign anything when you are retired. You have no way to make up a loss that may be relatively unlimited. A young person can find a way out of a big loss (bankruptcy if need be) but bankruptcy for a retired person is a very sad thing indeed. Just sayin' so YMMV.
Agree completely. We would never co sign a loan for anyone...child or relative.

Why....there is a clear reason why lenders do not feel they are a good credit risk and require a guarantor. That speaks volumes to us.

At one point we were considering helping a SIL's business. We decided against it. If his business was going to go bankrupt any monies we would have provided would go into the creditor pool. We decided to hold our powder and wait.. If the did go bankrupt we would be more than happy to assist financially after the fact.

Fortunately the business stayed afloat and flourished. Those hard times made him a much better manager.
brett is offline   Reply With Quote
Old 08-13-2021, 03:27 PM   #59
Recycles dryer sheets
 
Join Date: Nov 2015
Posts: 307
My parents have gifted me money for down payment, but they would never co-sign for anything, which makes perfect sense. They justify it as advanced inheritance, rather me enjoy it while they are living.

Lending to or borrowing from family just seems super awkward.

What if you need to foreclose?
teej1985 is online now   Reply With Quote
Old 08-13-2021, 07:56 PM   #60
Confused about dryer sheets
 
Join Date: Jun 2018
Posts: 7
Quote:
Originally Posted by Gallaher View Post
I have two kids trying to figure out how to buy homes.
They donít like my advice, ďsave moreĒ. They entered adulthood years ago.

Neither are savers. In fact both tend to be ďblowersĒ.
I hate wasting money but I like a nice quality of life.
We will leave something for the kids but Iím moving more towards supporting charities and blowing most myself.
Most of what my kids get is likely to turn into consumable assets: cars, clothes, restaurants. Iíd rather see some of my money have a positive impact on the world.
Itís curious that our kids are like us in many ways but so different in others.
I would always help them with basics. Would never co-sign a loan with them.
I can so relate. I was given nothing other than a good raising by my parents. Iím now in the same place as you. I worked and saved and sacrificed for 50 years. Now my children refuse to work and have squandered any so called ďhelpĒ I have given them. One of the biggest regrets I have is not being able to really help them because any way I tried was a waste of time and money. Iíve decided to hopefully exit this world with $1 in the bank but if there is more it will go to charity where it can actually help others.
hogfan55 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
having a social life while saving money?? travelbug_ali FIRE and Money 154 10-07-2019 02:29 PM
Kids when young vs. kids when old(er) jjquantz FIRE and Money 43 07-29-2014 10:14 AM
What is the difference b/w having or NOT having a beneficiary? swampwiz Life after FIRE 14 06-15-2010 12:16 AM
Having all of your money at one brokerage summer2007 FIRE and Money 18 02-07-2008 09:29 AM

» Quick Links

 
All times are GMT -6. The time now is 12:31 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2022, vBulletin Solutions, Inc.