Skip to content
New issue

Have a question about this project? Sign up for a free GitHub account to open an issue and contact its maintainers and the community.

Sign up for GitHub

By clicking “Sign up for GitHub”, you agree to our terms of service and privacy statement. We’ll occasionally send you account related emails.

Already on GitHub? Sign in to your account

Peter Jackson feedback #2

Closed
wants to merge 9 commits into from
Closed

Peter Jackson feedback #2

Show file tree
Hide file tree
Changes from all commits
Commits
Show all changes
9 commits
Select commit Hold shift + click to select a range
92cc13c
Add my personal favorite references for money management
peteonrails Dec 20, 2013
eb04681
Add some details on HSA accounts
peteonrails Dec 20, 2013
1f056a2
Fix formatting on HSA
peteonrails Dec 20, 2013
88d868d
Add notes on Brokerage Sweep accounts as a primary savings vehicle
peteonrails Dec 20, 2013
caccf23
Add notes on debt payments
peteonrails Dec 20, 2013
c2ec6f8
Add notes on annual budgeting
peteonrails Dec 20, 2013
4d97668
Add notes on annual budgeting
peteonrails Dec 20, 2013
30eb9ee
Add notes on a brokerage account
peteonrails Dec 20, 2013
08c4c1a
Setting annual goals.
peteonrails Dec 20, 2013
File filter

Filter by extension

Filter by extension
Conversations
Failed to load comments.
Loading
Jump to
Jump to file
Failed to load files.
Loading
Diff view
Diff view
20 changes: 19 additions & 1 deletion README.md
View file
Open in desktop
Original file line number Diff line number Diff line change
Expand Up @@ -12,11 +12,14 @@ jollyjerry@gmail.com.
* Never keep a balance on credit cards, autopay everything in full
* Ask for a credit increase every 6 months
* Refinance for a lower interest rate on mortgages or large loans
* Extra principal payments earn an instant ROI equal to your interest rate times 1+(your tax rate). It is hard to guarantee a 6% ROI annually on any investment. Prepay when possible.
* Get to 22% equity and drop PMI.
Copy link
Owner

Choose a reason for hiding this comment

The reason will be displayed to describe this comment to others. Learn more.

PMI = Private Mortgage Insurance?

Copy link
Author

Choose a reason for hiding this comment

The reason will be displayed to describe this comment to others. Learn more.

Yep! If you pay it, then paying extra principal is worth it to drop the PMI faster in most of my calculated use cases.


## Short term savings

* Enough cash for emergencies and upcoming large purchases. e.g. cars, weddings,
kids, college, accidents, vacations
* It's OK to keep this in your brokerage sweep account. In fact, have your direct deposit put there and schedule a transfer to your checking account in an amount that covers your budgeted expenses.

## Long term savings

Expand All @@ -25,11 +28,23 @@ jollyjerry@gmail.com.
* Individual Retirement Account (IRA)
* Charitable giving. Contributions to eligible organizations can be itemized as
a deduction
* Stick to low cost index funds. Fees matter.
* If possible, use alternate weighting in your index funds (equal weight or similar) as opposed to market-cap weighting.
* One should omit complex, laborious, expensive, unreliable tactics that are alleged by some to enable one to achieve higher returns than the stock market average.


## Annual Budgets
* Save more money annually by making small monthly adjustments.
* Buy items in bulk if we will use them over the course of a year. A 10% discount on a case of wine (that we would buy by the bottle anyway) is an instant 10% return (actually more, but read The Only Investment Guide since it's complex math.)
* Caulk all of the drafty parts of the house. Best investment possible.
* Annually, review all expense categories in aggregate (eg. $1200 for cable TV). Find ways to reduce those numbers (eg. $90 for Netflix) and save or invest the difference ($1110 goes to your brokerage).
Copy link
Owner

Choose a reason for hiding this comment

The reason will be displayed to describe this comment to others. Learn more.

👍 we only spot check our finances monthly and look for big changes month over month. An annual review will help identify spending categories we can optimize.

* Set annual goals for your financial account balances. See goals.ods. When you hit a goal, celebrate.

## Extras

* Health Savings Account (HSA)
* Health Savings Account (HSA) - 1) Do not invest until balance would exceed minimum to avoid fees 2) preferably a plan that allows investment in index funds like Wells Fargo or Health Savings Administrators 3) Continue to pay medical expenses out of pocket when possible to maximize tax deferred growth
Copy link
Owner

Choose a reason for hiding this comment

The reason will be displayed to describe this comment to others. Learn more.

I had no idea HSA's could be used as brokerage accounts to invest again. Getting to invest pre-tax money is awesome!

Copy link
Author

Choose a reason for hiding this comment

The reason will be displayed to describe this comment to others. Learn more.

This revelation alone makes the time spent submitting the PR worth it to me. Of the $6450 I put into my HSA, I keep $2000 in cash and the rest as Vanguard 500 Index Fund. I'll do everything I can to keep from tapping it since I believe this investment to be the best deal around.

There is no other investment that is both tax-free on the way in, and tax-free on the way out, including gains. So long as you use it on health related expenses, which you will always have.

Copy link
Owner

Choose a reason for hiding this comment

The reason will be displayed to describe this comment to others. Learn more.

Nice, just found out HSABank also has investment options

Copy link

Choose a reason for hiding this comment

The reason will be displayed to describe this comment to others. Learn more.

Also make sure you contribute up to the max into your HSA for a great above-the-line tax deduction. $3250 for single, $6450 for families. You can make this contribution up to April 15 for the previous tax year. For instance, if your company put $2000 into your HSA, you can put $1250 in.

* 529 plan - saving for education expenses
* Brokerage Account - Keep at least *some* post-tax invements in stocks, even if you replicate the holdings of a mutual fund or index. Sell your losers for tax-loss harvesting, use your winners to fund charitable giving.
Copy link
Owner

Choose a reason for hiding this comment

The reason will be displayed to describe this comment to others. Learn more.

I've heard this advice before, but never understood tax-loss harvesting. For example, if you invest $100 and sell at $50, you can harvest the $50 loss in taxes, but you've still lost $50? Can tax benefits ever overcome your losses?

Copy link
Author

Choose a reason for hiding this comment

The reason will be displayed to describe this comment to others. Learn more.

If you believe the investment to still be worth holding, then you can buy the stock back after 31 days and continue to hold it, but you get to take the loss in the current year on your taxes. You've, in effect, bought down your cost basis.

If you do not believe the stock to be worth holding any more, then you can use to losses to offset other gains, or just take some money off your taxes. In this case, yes you've lost the money.

Most people who refer to tax-loss-harvesting actually mean the first thing: they buy back after the lockout period at the lower price.

With respect to charitable giving of stocks: read The Only Investment Guide You'll Ever Need to see why giving an appreciated stock is actually much more beneficial than selling the stock and giving the proceeds. It's more than just the tax deduction on the full amount. I have a hard time explaining it, but the numbers in the book make it clear.

Copy link
Author

Choose a reason for hiding this comment

The reason will be displayed to describe this comment to others. Learn more.

Of course, my advice on stocks is ALWAYS "Buy low, sell high". It makes no sense to only ever sell your losers.


## Tools

Expand All @@ -40,3 +55,6 @@ jollyjerry@gmail.com.

* [I Will Teach You to be Rich](http://www.amazon.com/gp/product/0761147489/ref=as_li_qf_sp_asin_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0761147489&linkCode=as2&tag=what0d-20)
* [Quora Personal Finance](http://www.quora.com/Personal-Finance)
* [How To Get Rich](http://www.amazon.com/How-Get-Rich-Greatest-Entrepreneurs/dp/1591842719)
* [The Only Investment Guide You Will Ever Need](http://www.amazon.com/Only-Investment-Guide-Youll-Ever/dp/0547447256/ref=sr_1_1?s=books&ie=UTF8&qid=1387568480&sr=1-1&keywords=only+investment+guide)
* [Money and Other Subjects](http://www.andrewtobias.com/column)
Binary file added goals.ods
View file
Open in desktop
Binary file not shown.