Best Way to Pay for a Large Purchase?

CFIscare said:
I'm almost to the point where I think I should stop putting money into my savings account. What's the best place to put it? 401k?
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Max that out if you can, especially if you work for a company that matches anything. After that a ROTH IRA (if you make less than about $180,000) and then start looking at mutual funds. Best advice is to find a good financial planner, even if you don't have a bunch of money you can put away.
 
ATN_Pilot said:
See, this is what I'm talking about. You claimed to have haggled down prices in the hospital, when all you really did was catch them in the act of trying to cheat you and put a stop to it. Apples and bacon. As do I. But this isn't Turkey. We don't haggle over everyday purchases. And people who claim that they do so successfully aren't being truthful.
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I got 20% off at the hospital for tests after waiting the bill (my deductible) to go a month late. They offered it to have me pay it in full (over $1000). I did that a few times that year each time I had tests done. Not saying I haggled but learned of it and used it.

BTW my deductible was credited at the full value.
 
ComplexHiAv8r said:
I got 20% off at the hospital for tests after waiting the bill (my deductible) to go a month late. They offered it to have me pay it in full (over $1000). I did that a few times that year each time I had tests done. Not saying I haggled but learned of it and used it.

BTW my deductible was credited at the full value.
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You realize that after a bill goes 30 days late, they have the right to put a negative report on your credit, right? I would not recommend this strategy.
 
CFIscare said:
I'm almost to the point where I think I should stop putting money into my savings account. What's the best place to put it? 401k?
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Only up until the match you get. After that, max out a Roth IRA.

The 401k isn't as great a deal as it is made out to be. You still pay social security tax on the money that goes in. (For many of you, that is close to what you pay in income tax). And you will pay income tax when the money comes out. A regular taxable account will owe taxes on capital gains and dividends, which will be lower for many/most people, possibly zero. Plus, you can get the money out whenever you want/need.

Plus, do you think tax laws will be the same when you retire, or do you think Congress will means test social security (so the rich fat cats that saved for retirement are no longer eligable?) I suspect that is likely to happen.

I personally max out a 401k and IRA, and save in a brokerage account. I can't deduct the IRA, but because of a loophole in the current tax code, I convert them to ROTH IRAs in future years. The brokerage account has had the best return, but it also has the most risk and is the smallest account. I suggest everyone open a brokerage account (ETrade is good), for the simple reason that they have great deals on fee free ATM cards, right @Rocketman99?
 
BobDDuck said:
Max that out if you can, especially if you work for a company that matches anything. After that a ROTH IRA (if you make less than about $180,000) and then start looking at mutual funds. Best advice is to find a good financial planner, even if you don't have a bunch of money you can put away.
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Most of the financial planners I have seen aren't a great deal. They usually charge 1% of assets per year, and put clients in half S&P 500, 25% bond funds, 25% cash. I have never seen one outperform the S&P. And you pay 100 basis points per year for that? No thanks. I know a few of them, both independant and for large firms. Their goal is to have enough assets under management to live off of. Their returns typically suck.

If you are under 45, put everything in an S&P 500 index. EVERY PENNY. Anyone that tells you that it isn't diversified is trying to sell you something. If they insist, ask to see a portfolio they manage that beat the S&P for 3, 5 and 10 years. They can't.
 
drunkenbeagle said:
If you are under 45, put everything in an S&P 500 index. EVERY PENNY. Anyone that tells you that it isn't diversified is trying to sell you something. If they insist, ask to see a portfolio they manage that beat the S&P for 3, 5 and 10 years. They can't.
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Best advice on this forum. And it's the exact same advice given by the guy to the left. Unless you can devote large sums of time to actively managing your investments, put it all in a S&P ETF, reinvest dividends, and don't touch it until you retire.
 
ATN_Pilot said:
put it all in a S&P ETF, reinvest dividends, and don't touch it until you retire.
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Which is hopefully early :) But yeah, that is the best investment advice out there. And it is dead simple.

True story, I looked at my neighbor's portfolio last month, because he didn't think his financial planner was worth it. $200k portfolio. In the interest of being "diversified," half of it was in an S&P Index, 25% in cash, 25% in a managed fund. It returned 6% last year, minus 1% for the financial planner. The planner still made 2 grand. But the portfolio under-performed the S&P by more the 50%!!! The S&P did 11%, plus a 2% dividend or so. I think that it is insane to pay someone 2 grand a year to under-perform the market, by more than half, every year. That's $14,000 the financial planner cost him last year. And about the same the year before. In the last 3 years, the financial planner has made 6 grand, for under-performing the market by at least $50,000. Trust me, you can do it yourself. Buy the SPY, SPX, IVV, or any of the many clones out there. That's it. Hit the easy button.
 
drunkenbeagle said:
Most of the financial planners I have seen aren't a great deal. They usually charge 1% of assets per year, and put clients in half S&P 500, 25% bond funds, 25% cash. I have never seen one outperform the S&P. And you pay 100 basis points per year for that? No thanks. I know a few of them, both independant and for large firms. Their goal is to have enough assets under management to live off of. Their returns typically suck.

If you are under 45, put everything in an S&P 500 index. EVERY PENNY. Anyone that tells you that it isn't diversified is trying to sell you something. If they insist, ask to see a portfolio they manage that beat the S&P for 3, 5 and 10 years. They can't.
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Every penny.
 
drunkenbeagle said:
I personally max out a 401k and IRA, and save in a brokerage account. I can't deduct the IRA, but because of a loophole in the current tax code, I convert them to ROTH IRAs in future years. The brokerage account has had the best return, but it also has the most risk and is the smallest account. I suggest everyone open a brokerage account (ETrade is good), for the simple reason that they have great deals on fee free ATM cards, right @Rocketman99?
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If you have an employer sponsored 401k and you max it out, you can't contribute to a traditional IRA. They follow the same limits for total contribution (2014 was $17500, 2015 $18000). To roll over to a Roth from a pre-tax account (401k, etc) you have to pay the waived tax on those funds because Roths are funded with post-tax money (therefore not paying tax twice on the same money). This is exactly what happened when we got out of the TSP.
 
deadstick said:
If you have an employer sponsored 401k and you max it out, you can't contribute to a traditional IRA. They follow the same limits for total contribution (2014 was $17500, 2015 $18000).
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This is 100% not true.

Anyone with income can contribute to an IRA. It does not matter if you max out your 401k or not. If you have a 401k or other qualified retirement plan at work, THE LIMIT FOR WHAT YOU CAN DEDUCT goes down, should you make an IRA contribution.

Even if you are over the limit to contribute to an IRA and deduct it, you can still make IRA contributions. There are post-tax traditional IRA contributions, you need to file form 8606 with the IRS to tell them it is post-tax. I do this every year.
 
So I have a question for the financial types here, my wife needs $5000 worth of dental work after two failed root canals and not being able to chew on the right side of her mouth for a year they have decided to do implants. Not covered by our ins, and no we don't just have $5000 laying around to use after finally being off first year pay late last year we don't have a lot (or any) spare cash laying around. Any idea's on how to pay for it?
 
If you're over the limit, what's the advantage of putting funds in an IRA instead of a brokerage account?
 
Eagle421flyer said:
So I have a question for the financial types here, my wife needs $5000 worth of dental work after two failed root canals and not being able to chew on the right side of her mouth for a year they have decided to do implants. Not covered by our ins, and no we don't just have $5000 laying around to use after finally being off first year pay late last year we don't have a lot (or any) spare cash laying around. Any idea's on how to pay for it?
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Can you pay it off over the course of 12 or 18 months?
Apply for a credit card with interest free on purchases for that length of time.

EDIT in case it's not obvious. Don't make the minimum payments as stated. Make the equal payments so that it is paid off on time. The penalties for not paying off the balance are hefty. Worst case the end of the term do a 0% balance transfer to another card.
No one should ever pay interest on credit cards.
 
drunkenbeagle said:
Which is hopefully early :) But yeah, that is the best investment advice out there. And it is dead simple. True story, I looked at my neighbor's portfolio last month, because he didn't think his financial planner was worth it. $200k portfolio. In the interest of being "diversified," half of it was in an S&P Index, 25% in cash, 25% in a managed fund. It returned 6% last year, minus 1% for the financial planner. The planner still made 2 grand. But the portfolio under-performed the S&P by more the 50%!!! The S&P did 11%, plus a 2% dividend or so. I think that it is insane to pay someone 2 grand a year to under-perform the market, by more than half, every year. That's $14,000 the financial planner cost him last year. And about the same the year before. In the last 3 years, the financial planner has made 6 grand, for under-performing the market by at least $50,000. Trust me, you can do it yourself. Buy the SPY, SPX, IVV, or any of the many clones out there. That's it. Hit the easy button.
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What I got out of this post is that I need to start up a financial planning division. :)
 
Eagle421flyer said:
So I have a question for the financial types here, my wife needs $5000 worth of dental work after two failed root canals and not being able to chew on the right side of her mouth for a year they have decided to do implants. Not covered by our ins, and no we don't just have $5000 laying around to use after finally being off first year pay late last year we don't have a lot (or any) spare cash laying around. Any idea's on how to pay for it?
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Non-rev to someplace that isn't the USA and get dental work done there. Seriously.
 
deadstick said:
If you're over the limit, what's the advantage of putting funds in an IRA instead of a brokerage account?
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Once money is in the IRA, you still don't pay capital gains or dividends taxes. For a young guy like me, that adds up over time.

Also, you can convert the IRA into a ROTH IRA, with no income limit test in the future. There are some tax implications on this, so it takes some research first.
 
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