Edwards nails it: Tax Fairness

LadyT said:
I don't think there are outrageous minimums but SF would know better than me on this.
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There is no minimum for a Roth or 401(k). However, the question is one of access. If the Sunny side up saver is to prevent people from just rolling the same $500 over every year to generate income, then the money needs a time element attached - that's complexity. Why not just a simple tax-exempt account with deposits and withdrawals at will?
 
Watermark said:
SF, I should've been clearer. The house is a one time expense (or a 10 year expense, I wouldn't recommend getting a 30 year loan on something). But mostly people already own a house by the time they're getting 200K a year.

Of course property taxes are taxed yearly. Don't insult my intelligence, SF. It was pretty obvious that I used incorrect language there.
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Did not mean to insult you Water... just correcting what I saw... it did not seem obvious to me.

Also... getting a ten year loan to buy a home is pretty much unheard of... most are 15 year or 30 year loans. Although some people have used ARMS or interest only loans due to financing requirements.

In a low interest rate environment it makes sense to lock in long term rates. I have a 30 year fixed on my property at 5.45%. It doesn't stop me from paying it off prior to 30 years, but it gives me the flexibility to stretch it to 30 at those low rates.

If we were in a declining interest rate environment (like the 80s) or a high rate environment(like the 70's), then the ARMS would make more sense.

All depends on the economic environment.
 
Superfreak said:
Did not mean to insult you Water... just correcting what I saw... it did not seem obvious to me.

Also... getting a ten year loan to buy a home is pretty much unheard of... most are 15 year or 30 year loans. Although some people have used ARMS or interest only loans due to financing requirements.

In a low interest rate environment it makes sense to lock in long term rates. I have a 30 year fixed on my property at 5.45%. It doesn't stop me from paying it off prior to 30 years, but it gives me the flexibility to stretch it to 30 at those low rates.

If we were in a declining interest rate environment (like the 80s) or a high rate environment(like the 70's), then the ARMS would make more sense.

All depends on the economic environment.
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Oh, OK. Sheesh, I just can't imagine getting a 30-year loan on anything, but I don't have a house. I just heard of the 30 year loan somewhere and I immediately thought it was ridiculous and that most people got the shorter loans :dunno:. I know more about this than most 18 year olds, though, so don't just mark me as ignorant ;). LOL.
 
Troglodyte27 said:
There is no minimum for a Roth or 401(k). However, the question is one of access. If the Sunny side up saver is to prevent people from just rolling the same $500 over every year to generate income, then the money needs a time element attached - that's complexity. Why not just a simple tax-exempt account with deposits and withdrawals at will?
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The Roth is actually very accessible. Minimums at most places are a couple hundred dollars. You can open a Roth at your bank, a brokerage firm, an online brokerage etc.... you can invest in CDs, stocks, bonds etc... very flexible.

You always have the ability to pull your principle out tax free (because it goes in as after tax money) and penalty free. Any gains you have on the money need to stay in until you are 59.5. (unless you use Reg T distributions... but that is probably more complex than we need to get here)
 
Superfreak said:
The Roth is actually very accessible. Minimums at most places are a couple hundred dollars. You can open a Roth at your bank, a brokerage firm, an online brokerage etc.... you can invest in CDs, stocks, bonds etc... very flexible.

You always have the ability to pull your principle out tax free (because it goes in as after tax money) and penalty free. Any gains you have on the money need to stay in until you are 59.5. (unless you use Reg T distributions... but that is probably more complex than we need to get here)
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Retirment accounts...

I want to get one of those one day. Where the hell do you get into one, anyway?
 
Watermark said:
Oh, OK. Sheesh, I just can't imagine getting a 30-year loan on anything, but I don't have a house. I just heard of the 30 year loan somewhere and I immediately thought it was ridiculous and that most people got the shorter loans :dunno:. I know more about this than most 18 year olds, though, so don't just mark me as ignorant ;). LOL.
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I did not mark you as ignorant. You do no substantially more than most people your age. Just try not to get defensive :) ... I was just trying to help you understand why someone would take out a 30 year vs. an interest only or an ARM.

Most of the problems within the subprime market are due to ARMS and interest only loans. The fixed rate loans do not see the increases in mortgage payments that the ARMS and interest only loans do.
 
Yeah, and Trog, we probably could afford a vacation. We just never really thought about it. We put it mostly into other stuff, and we save a bunch. It's just the way we spend, more than how we spend, I shouldn't have brought us into the equation whenever talking with Tiana.

Tiana, is COL in Jersey really about 4 times more than in Mississippi?
 
Watermark said:
Retirment accounts...

I want to get one of those one day. Where the hell do you get into one, anyway?
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If you have earned income, you can start up an account pretty much at any financial institution. Given your age I would suggest looking into the Roth IRA for starters. Very low minimums.... and you can invest it in mutual funds, ETFs, stocks, bonds or CD's .... The investment would grow tax free for you for at least the next 51 years. The power of compounding is tremendous... the earlier you start, the greater the effect.
 
Superfreak said:
If you have earned income, you can start up an account pretty much at any financial institution. Given your age I would suggest looking into the Roth IRA for starters. Very low minimums.... and you can invest it in mutual funds, ETFs, stocks, bonds or CD's .... The investment would grow tax free for you for at least the next 51 years. The power of compounding is tremendous... the earlier you start, the greater the effect.
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What about 401Ks, though? Are they better if I'm offered one by my employer?
 
LadyT said:
I definitely don't think its rich. Especially if you are trying to buy a home in these parts for the first time. If you purchased a house 10 years ago when the market was down considerably, then yes, you are living pretty well. But if you're a first time homebuyer, with kids, a car note, mortgage, and other bills, I think it presumptious to think that an additional $1000 or whatever the amount he wants to raise it is marginal. That's significant. Now you could argue that those individuals could take it out of a vacation fund or do with out a particular luxury or have it creep into their savings but why the hell should they? Congress needs to stop spending like drunken sailors.
the burden shouldn't be on us.........no....you know what it is on us. We need to start electing people that know how to balance a budget and pinch a few penny's.
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Lady T is dropping knowledge!!!

5,000 cool points for you! :)
 
Watermark said:
Tiana, is COL in Jersey really about 4 times more than in Mississippi?
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I would say it depends on what parts of Jersey and MS you are talking about. Cost of housing I would guess is at least three times on average, probably closer to four. Food is probably only 10-15% higher in Jersey. Healthcare is probably a bit higher, but not by too much. Transportation is hard to gauge given that many more people in Jersey use public transit... thus different cost structures.

Alcohol is about 40 times higher in the Jersey area... friggin bastards!:mad:
 
Watermark said:
What about 401Ks, though? Are they better if I'm offered one by my employer?
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It will depend on whether or not your employer matches your contributions. Up to their match...yes, the 401ks are "better" in the sense that you are getting extra money from your employer.

The Roth IRA however will typically allow you more flexibility in your investment choices. (note: many firms are now allowing IDAs within their 401k's so as to eliminate that difference... so depends on your firm)
 
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