Dave Ramsay's target audience isn't a person who is paying off their credit cards every month, saving/investing a sizable chunk of their income, and makes more than the median US household income. I would argue TMB has a disproportionately high amount of these type of people as compared to the national average, and probably even higher in this thread. Vilifying him is pretty fucking stupid when it's obvious his advice is geared toward the more financially illiterate and/or insolvent, and he's made a mint doing it.
That's kinda clever and I've never thought of that. Are there limitations to the number of yearly disbursements one can take? Obviously in theory that wouldn't be an issue.
You have to understand his audience. People who are savvy investors with good investments spread everywhere, don't have mountains of debt. These are people who have a serious addiction to spending, and build debt at rapid pace. You have to also include the mental gains for people in serious debt. The point of the debt snowball in starting with the smallest, is actually seeing a debt disappear. Don't have the facts, but for people with multiple debts across many platforms, I believe they have proven a much higher chance of paying off all debts when doing the snowball, over attacking the highest rates first, as it usually takes longer to get the first one gone. For those of us that can do the math, and understand why paying off the highest rate first is advantageous, we don't have all the debts. It's an apples and oranges comparison that we can't always understand, cause we aren't anywhere near their shoes. Lastly, wtf at keeping a mortgage forever. Just because you can outgain it in the stock market, you are still taking a bite out of your gains. If you are paying a home at 3.5% and making 5% in the market, you're only netting 1.5%, and not putting extra money in each month. But paying off your loan faster, and dumping your mortgage payment into an investment account still netting 5% and you're going to grow faster by a clean 5% + $x of mortgage funds adding every month.
I would take to be more aggressive in the Roth because of the tax free growth and limited contribution amount (plus the future exclusion if you make too much). JMO though.
I have no idea, but due to the nature of my industry, I also have far more than 6 months of living expenses liquid, so if I have to hit the Roth, I would likely do so all at once or in a limited number of instances.
can someone in here tell me about 'back door roths'? married filing jointly, not able to do a traditional roth
For a given tax year... Contribute money to a traditional ira account, of which there are no income limits, up to yearly contribution limit Convert that traditional ira to a roth Pay taxes on the conversion ??? Tax free profits on growth
Re: bullet 3. If you can't contribute to a Roth, you're not going to get a deduction on the IRA contribution so there is no tax on the conversion. Where you will have to pay taxes on the conversion to a Roth is if you have previously contributed to an IRA (or done a rollover IRA) and those contributions had a tax-deduction on them. Then it gets more complicated and you have to differentiate between the contributions that received tax-deductions and those that did not in figuring out what your tax-liability is on the conversion.
Yep. I asked my guy 9 different ways but HOWWWW do you convert it? And each time he became more annoyed and was like YOU JUST FUCKING CONVERT IT THATS IT. Tldr: its easy
yeah, i'm not blaming anyone. workers are pouring all their wages into health, education and housing. i knew that most people would have small 401k contributions, what i didn't realize was how many have zero 401k contributions.
You guys are both idiots. Just because people are stupid and most of the people that take Ramsey's advice are idiots doesn't mean he gets a pass on giving shitty advice. They are in their predicament because they have made shitty decisions and have a fucked up thought process. That's what needs to change. No intelligent person in the financial world would ever recommend a strategy of paying off the smallest debts first. You always pay the highest interest rate first. Period. If you codify the individual with regards to this topic you aren't changing their behavior or mindset. It's the equivalent of me congratulating my 300 lb patient on avoiding a shitty meal for last Sunday's dinner. Fuck that one meal. They are called lifestyle modifications for a reason. And with regards to this idiotic retort: Pick up a calculator and do the math princess. If you pay off a $250,000 house and then pocket the $1500/month mortgage (I used 4% apr) while investing $100,000/year at 7.5% in the stock market (lol at your 5% number) you come out $2 million behind at the end of your 30 year mortgage. $8 million vs $10 million 2 fucking million dollars asshole. Imgur not linking... https://i.imgur.com/spvcKWB.jpg
Why is it terrible advice? Surely at some point it makes sense to taper off retirement savings and start saving for ... idk.. a house? A small business?
The lack of ability or desire of the American public to save for retirement is going to become an increasingly big problem.
I think you mean coddle, champ. Drew was asking for generic beginner personal finance/investing question. Skoolie coming in and advocating for real estate investment is a niche thing and not really applicable to most people. The list I posted is a very conservative, retirement-investment-vehicle approach. Most people don't get past the emergency fund/max IRA stage, and it's certainly up to the individual as to what is best for them. You could take out a loan against your 401k for a house downpayment. The prudence of that would be up to the individual, however it's not like the money is completely inaccessible.
You can still save for retirement just don't lock it all into vehicles that handcuff the money for the next 30 years.
yeah that's what i mean. It is possible to over-invest for retirement. But Name P. Redacted provided some context that I apparently missed before, namely that the person was looking for beginner investing advice.
you can if you go 100% into a 401k but if you've balanced between a 401k and a personalized fund that can be tapped into whenever you choose, like I advocate, not at all.
I just realized I only did 28 years instead of 30 on my excel sheet. It's defintely more than a $2 million difference. It's funny you don't even need a fancy excel spread sheet to prove this. A six year old knows 7.5%>4%.
ok 'asshole', you did the math wrong. People can't invest $100,000 a year if they are paying off a mortgage. Or lets say they can, and they drop the mortgage, now they are investing say $125,000 at the same rate, because you aren't paying a mortgage. So you are saying they invest the same amount each year, when in reality they can't, because they are paying off a mortgage. You're opening up new funds to add to your investment edit with math $100M/year investment at 7.5% after 30 years = $11.115MM (this doesn't even take out the interest on your mortgage that you are losing) $118M/year investment at 7.5% after 30 years = $13.116MM ($1500 mortgage x 12)
Wrong. I had the person who paid off their mortgage with a hypothetical $100,000 to invest annually, which is the money they have left over after all bills are paid including the $1500 mortgage that they don't have to pay. ALTERNATIVELY, I subtracted $1500 from the $100,000 for the person who did not pay off their mortgage (column c in the excel spreadsheet). So in year 1 you see they finish with ($250,000+$100,000)*1.075-1500=$367,250. As you can see over time subtracting the $1500 they are still paying on their mortgage is peanuts compared to the interest from the stock market they are making by not doing so. Fucking math, how does it work.
People that have a $25,000 house obviously. Changed the formula to subtract $18000 annually instead of the erroneous $1500. Difference has shrunk but still sizable at $1.2 million: http://i.imgur.com/guv7GlW.jpg
You've screwed up by not giving the first person their $250,000 to invest on day 1 by not paying off their house. Also if you are going to sneak entire paragraphs in old posts via edit give us a heads up or make a new post. Otherwise you are just being disingenuous.
What are you confused about mothfucker? The math is pure and eloquent. http://i.imgur.com/guv7GlW.jpg You guys are just mad because you are wrong.
Suddenly Name P. Redacted and dahldennsull have drawn quiet Here's some Johnny Manziel vs OU to fill the void:
Can someone recommend a good Roth IRA to go with? E trade, or whatever. I am currently just investing in my company's 401... 6 percent and they will put in 4. I am a few years away from making the big bucks, but I do have 2-3k a year I could throw at something else so it isn't just in my savings account. I also do not want to have to manage this daily/weekly and have to make trades all the time. The roth is appealing because if something crazy happened and I needed the money I could get it out without huge penalties.
wealthfront or betterment have low fees and give you a broad investment strategy with basically zero work