Best Way to Pay for a Large Purchase?

drunkenbeagle said:
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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So I have a traditional IRA in place from rolled-over 401k plans. All that was originally pre-tax money. The only mechanism to make contributions would be with taxed funds. That seems a bit messy.
 
deadstick said:
So I have a traditional IRA in place from rolled-over 401k plans. All that was originally pre-tax money. The only mechanism to make contributions would be with taxed funds. That seems a bit messy.
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The problem with rolling over a 401k into an IRA is that it makes you pay a pro-rata tax on ROTH conversions. Leaving it in the 401k, it doesn't count. So at the moment, that's a big negative of 401k rollovers, hopefully Congress will fix that.

Another problem with taxed vs untaxed IRAs is that the IRS doesn't track the difference, so you need to keep paperwork from every tax year until you die. That also kind of stinks.

You can also bite the bullet and pay the tax bill to convert the existing IRA to a ROTH. If it isn't big, and it is a year you didn't make a lot, and you expect to be doing lots of ROTH conversion in the future, that might not be a bad idea.

You do get a full IRA deduction up to $98,000 MAGI if you are married in 2015, which is a lot of people, if you have a 401k at work.
 
SpiceWeasel said:
Well, I get a pay raise in 7 months! Woo hoo!

I did my best to keep the payment as low as possible: my down payment on my condo was $38,000. It was my savings. All of it. So I'm currently borrowing $124,000 at 4.5% that has been paid down for about a year so far. 1156 sq ft condo, $155,000 sale price.

It's an asset, that's why I purchased rather than continue to rent.
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I may be the only one to think this way but a condo you live in is not an asset... it does not produce any cash flow. It is an expense because it sucks up your money. Regardless, congrats on the purchase.
 
ATN_Pilot said:
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.
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I'm not worried about my credit score... Never been a problem. Never been turned down for loans when I've needed them and always a good rate.
 
My work 401(k) is both Roth IRA and post-tax IRA. What is the advantage of doing a separate transaction to a different 401k that is not employer funded/directed? Is it only to access different funds?

Do people's employers not have Roth 401(k)s? I've had that at both airlines, so I split my contribution to pre- and post-tax deductions.
 
SpiceWeasel said:
My work 401(k) is both Roth IRA and post-tax IRA. What is the advantage of doing a separate transaction to a different 401k that is not employer funded/directed? Is it only to access different funds?

Do people's employers not have Roth 401(k)s? I've had that at both airlines, so I split my contribution to pre- and post-tax deductions.
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Lots of 401ks don't have a Roth option. We didn't have it at Pinnacle years ago. They added it while I was there. The plan I have for my employees doesn't have it. I could add it, but no one seems to care, so I haven't bothered with the paperwork yet.
 
ATN_Pilot said:
Words mean things, no matter what you "consider" them.

The mortgage note is the liability. The payment you make towards the note is the expenditure. And the condo is the asset.
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Well I'll take my demented way of viewing things like finance, cars, and booze and sit by myself in the corner!
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Avalon781ML said:
I do actually... But I don't consider something that draws money away from my income column to be considered an asset... its an expenditure or liability.
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It's an asset just not a great asset. You're still building equity but you have limitations from condo fees and a limited amount of improvements you can do to the property.
 
Cessnaflyer said:
It's an asset just not a great asset. You're still building equity but you have limitations from condo fees and a limited amount of improvements you can do to the property.
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Perhaps but A) he doesn't own it outright which (to me) means it isn't an asset (yet). B) COA/HOA in general and their associated fees (to me) unless properly managed are BS (another story for another time). C) limited amount of improvements indeed if any at all! Further stifling any type of ability to turn a liability into an asset.
Sure my way of viewing this is flawed but its served me well during the last 9 years. I don't see cars, houses, boats, or planes as assets but as liabilities.
 
Avalon781ML said:
Perhaps but A) he doesn't own it outright which (to me) means it isn't an asset (yet). B) COA/HOA in general and their associated fees (to me) unless properly managed are BS (another story for another time). C) limited amount of improvements indeed if any at all! Further stifling any type of ability to turn a liability into an asset.
Sure my way of viewing this is flawed but its served me well during the last 9 years. I don't see cars, houses, boats, or planes as assets but as liabilities.
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What do you view as an asset?
 
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