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01-21-2020, 12:38 AM | #23 | |
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It was only about $60k, I haven't bought a new car in 15 years and I really don't like monthly debt payments. Last edited by flybigjet; 01-21-2020 at 12:44 AM.. |
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01-21-2020, 12:45 AM | #24 |
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You paid 10% early withdrawal penalty and 20% in taxes by the IRS to fund your car?
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01-21-2020, 12:54 AM | #25 | |
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And taxes are taxes. Not much point in saving your entire life and then getting old or dying and not being able to enjoy something in life that you want-- I've been income reinvesting for over 30 years, saving a good portion of my income every year and living well within (or even below) my means-- it doesn't hurt to take some cash out once ever 15 years or so to get yourself a toy. I'm sure there were financially more prudent ways to do it, but as it is (since I don't have kids), I'm going to have to find a charity I really like before I shuffle off this mortal coil. Yes, I'll get hit with cap gains-- but there are ways to minimize that hit going forward throughout the year. R. |
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01-21-2020, 04:42 AM | #26 |
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1.21 GigaWatts??!
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01-21-2020, 05:43 AM | #27 | |
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01-21-2020, 08:15 AM | #28 | |
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The market's kind of irrational lately, and it makes me a little nervous. And, I only took out about $40k for the car to decrease the size of the monthly payment down to something that was reasonable (i.e. doesn't impact my life at all). What's the purpose of saving, if not to use the funds occasionally? Last edited by flybigjet; 01-21-2020 at 08:22 AM.. |
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01-21-2020, 09:24 AM | #29 | |
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Nobody takes the money with them, he might as well enjoy it now. |
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01-21-2020, 09:29 AM | #30 | |
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01-21-2020, 11:26 AM | #31 | |
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The interest is $3,124.86 on a $40,000 5 year loan. You setup an auto withdrawal on $719 per month to make the payment and in 5 years of a 6.5% return your car is paid off and you have an extra $4,223 in your account. That's before you even calculate the taxes, which will always be higher when you take a lump sum like that instead of $719 a month. |
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01-21-2020, 11:30 AM | #32 | |
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01-21-2020, 11:39 AM | #33 | |
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What about the taxes he'll pay on the *estimated* 6.5% interest he makes - that baked in to the extra $4K leftover? Yes the taxes are higher in lump sum, but you can trigger them in a year where your income is lower if he has a corp to have a net wash. |
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01-21-2020, 11:41 AM | #34 | |
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Car will be paid off in a year as I put down a reasonable down payment-- $5k on a credit card (paid off with cash available, but worth it to use the card for points), and $40k from investments-- so total loan value (including taxes) is about $17k? That's less than $400 interest over the course of the loan and gives me the discretionary income to have available to reinvest when the market turns south (which I think it will-- this growth is madness). I'm not a fan of debt-- it's just a personal thing about the way I was raised. If it helps, in my mind, I've been making a car payment to myself for 15 years-- so now was the time to take the money out and use it for the purpose I saved it for. And, cap gains are 15% at the moment, so if I had left the money in the market (and they were underperforming stocks anyway) eventually, I would have had to pay tax pulling the money out-- at some point, you're going to get hit with a tax bill. So, now or later. I don't see much of a difference. I'm still on track for my "have this much in savings when you walk out the door", so to me this way of doing things made sense. Maybe it's a little "instant gratification", but since I could afford it and it wouldn't hurt me, so what? Just how I see it. R. Last edited by flybigjet; 01-21-2020 at 11:48 AM.. |
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01-21-2020, 11:46 AM | #35 |
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01-21-2020, 11:56 AM | #36 |
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01-21-2020, 12:39 PM | #38 |
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Where are you getting 4% on fixed income?
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01-21-2020, 12:55 PM | #39 |
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01-21-2020, 02:20 PM | #41 | |
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Retirement wise, is your net worth on track for someone your age (30s = $300-400K, 40s = $500-700K, 50s = $700K-1.3M)? When you talk about this 39% gain in the past 2 years, is this 4 figures, 5 figures, 6 figures? What were these investments in? Stocks? Funds? Do you have any other investment/retirement accounts? If so, how well are they funded?
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01-21-2020, 02:43 PM | #43 |
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01-21-2020, 03:05 PM | #44 |
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Boy - they would really flip if they saw I was getting 8.00% on my 18mo CD's invested at a foreign national bank, wouldn't they?
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