Income and taxes question, theoretical.

[15ThreePoint7]

that sucks! You sound young. I assume time is on your side. A common feature or many successful people is failure. its how they overcome. I hope you keep fighting. Sometimes it’s good to lick your wounds and buy the toy. But keep the eye on the prize. You know a teacher only earns during the school year. I’ve seen smart teachers get into their 1st house, make sacrifices buy another and another. By retirement they have a school pension and $6-8k/mo. income from 3 houses! Most can live quite comfortably on that. If you do the math on 6-7% compound interest in a stock portfolio simply buying the S&P500 you can have similar results over a working career. These are strategies of simple people not bank CEOs. These are the wealth building strategies under attack buy the coming political trends...aka taxes.

Lol, I'm 43. I was Homeless at one point well before I met my wife. We have a roof over our heads, a couple of decent cars. Three houses? One would be nice.

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[fatbillybob]

Lol, I'm 43. I was Homeless at one point well before I met my wife. We have a roof over our heads, a couple of decent cars. Three houses? One would be nice.

You still have 20+ years to retirement. Time is still on your side. It is much easier to win a baseball game with base hits. Take the Thanksgiving weekend and read up on simple financial planning. Start simple. Financial planers talk about tightening your belt and control expenses like stopping the $6 lattes at starbucks. But that advice is just giving you a fish eating for a day. The deeper corollary they miss is teaching you to fish. Skipping the latte's is what your Dad tells you. Figuring out what latte's you can skip is fishing. You don't have to live like a monk but you can live smart and grow your knowledge base just like we come here and learn whether we really need to spend another $40 bucks for the TPMS programing tool.

 

[15ThreePoint7]

I already make coffee at home. Get the free phone when I get a cell phone, budget etc. When I buy lunch I am getting the 2 for 3 bucks at dunkin next door. Otherwise I eat a meal replacement bar that costs 1.75. I buy my clothes from walmart, my shoes from the clearance rack. I cut my own hair. I have a 20 tear old leather jacket I bought from Target. I get my glasses at America's best. It's not like I'm wasteful or live beyond my means.

I currently have medical bills that are almost equal to what I would bring home (after tax) in 2.5-3 years. I get frequent kidney stones that send me to the ER at least twice a year. I have insurance but after my deductibles and what the insurance does not pay, I would need to pay 1/4 of my income to cover what I incur during the year. 2 years ago it was an ACL rupture, blood clot, PE. Last year I had more stones than usual. This year I tore my rotator cuff.

Even with all that, and being on a payment plan with my medical bills. We saved up and were trying to buy a house. Everything looked good, except multiple collections, all medical. The thing is, you can have 10 different collection accounts on your report stemming from one Hospital stay, and as you pay one, another pops up. I was able to dispute several and have several removed (like a bill that was 78 dollars that grew to 400), and more popped up. I will need to file for bankruptcy, in order to get out of this hole. However with my health, I might end up in the same hole in a few years.

Oh well, I just keep going.

 

[Kong76]

I was pissed that a majority of these companies used the tax break they got and bought back stock.

 

[fatbillybob]

Geeze what a terrible story! All I can offer is the hope things will get better for you. Buying your house is not the only investment. There are many who never want to own a house. The expenses of a house has to be offset by appreciation what you could rent it for etc etc... Depending on the times and market rent vs buy is a math problem. But over time buying usually is a net gain to your bottom line. If you got the down payment but getting killed by creditscore fish a different way. A conservative ETF portfoilio can be started with the down and generate about 6%/year compounded. That turns out to be a big number in 20 years. Sometimes you are eleigible for tax advantaged accounts like ROTH IRAs and 401K plans from work. Those plans magnify your return because they are tax advantaged. See a broker like schwab and do your own research and develop a conservative portfolio with an advisor and grow it. Bank money is like dead money getting 0.2% not even keeping pace with inflation. Your dollar in the bank today is worth less tomorrow. We are forced to take risk and invest just to tread water. On the medical side sometimes you can buy HSA medical plans or have HSA options at work. This allows you to put money into the HSA with a pretax dollar and pay your non-covered expenses like co-pays and deductibles from the HSA with a before tax dollar. This magnifies your money. This account grows with you and you keep it forever. There are also work sponsored FSA's that do the same thing except the gottcha is if you don't spend what you put in it the IRS takes it from you. So you gotta be careful.

 

[Kong76]

^ Great advice and knowledge. Most don't realize the benefits of HSAs. To the OP about losing 5k in a day. You don't actually lose anything until you cash out. Stock values will drop or rise but you still own the same amount of stock. Only time I would pucker up is if I am near retirement but at that time you should already have moved everything to safer pastures.

 

[wazslow]

^ Great advice and knowledge. Most don't realize the benefits of HSAs. To the OP about losing 5k in a day. You don't actually lose anything until you cash out. Stock values will drop or rise but you still own the same amount of stock. Only time I would pucker up is if I am near retirement but at that time you should already have moved everything to safer pastures.

X2. OP, you are doing yourself a huge disservice by not investing money. You are way behind, but at 43 still have time to put together a chunk of change towards retirement if you start now. Im 40 yrs old and my family and I are in great financial shape, but I've saved and planned for a long time. Time is your biggest asset. From reading your posts, I'd suggest a Roth IRA where you invest with after tax dollars but the gains aren't taxed. Put whatever you can in each month, invest in a few mutual funds, you'll be surprised what's in there in 20+ years. I can't imagine relying on only Social Security for retirement.

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