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Credit card transfer for wifes IRA

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  • Avatar Panscan 
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    Joined: 03/18/2017

    Ok, I see your guys points on this being gaming the system. However, some of the attitude toward just buckling down and repaying is a little off base and out of touch. I came out with a lot of debt and it’s the only reasonable option and my wife is an FMg with debt too.

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    how exactly is it the only reasonable option? pretty sure a doctor in america can pay off a ton of debt if they want to

    #238754 Reply
    Avatar Panscan 
    Participant
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    Joined: 03/18/2017

    400k is really not that much for 2 doctors… you could crush that in a few years…

     

    I thought you were going to say like 1 million and I didnt even notice the spouse was a doctor. you’re literally at worst like 1:1 debt:income and for all we know one of you will make.

     

    tons of people graduating with 200k debt and 1 physician income, which is probably a worse spot to be in than yours. refinance it and start digging.

    #238756 Reply
    SerrateAndDominate SerrateAndDominate 
    Participant
    Status: Physician
    Posts: 470
    Joined: 02/01/2018

    No silver spoon
    No pslf

    I will have a life after loans

    I don’t think anyone is blaming you for playing the rules of the game. But that idea is just milking it for more than you should

    Earn everything.

    #238758 Reply
    Liked by Lordosis
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2857
    Joined: 09/18/2018
    I blame the cost of education more than anything else.

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    A little bit of rationalization there. Was your wife’s retirement contribution paid to your medical school? I do not mean to be critical, but your taxes will be funding a lower payment too. Just not directly.

    repaying is a little off base and out of touch. I came out with a lot of debt and it’s the only reasonable option and my wife is an FMg with debt too.

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    Plan for the worst and hope for the best. There are a multitude of things that can happen that wipe out your plans. So with a two physicians with a debt, what is your plan if PSLF forgiveness becomes doubtful or impossible? Ten years of qualified payments is a long long time. Would you still be satisfied using a credit card to fund an IRA? Life is not always reasonable. Many things don’t have a rule preventing actions in your life. Just saying, get in touch with your ethics.

    I want to have loan forgiveness for a credit card debt. Same as going on an international vacation maxing the student loan. The fact is that funds are being spent not on medical school loans, but it’s ok because their isn’t a law against it. Out of touch? Ethical? You decide, there is no law against it.

    Please don’t take this as a slam. Just another point of view for you to chew on.

     

    #238759 Reply
    Avatar jacoavlu 
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    Status: Physician, Small Business Owner
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    Joined: 03/01/2018

    what is your current marginal federal plus state tax rate?

    if your marginal rate is low you’re shooting yourself in the foot a bit long term because you should be maxing out Roth space not tax deferred in those years

    if your marginal rate is high then I don’t understand why you’d need to do a balance transfer, you should have plenty of cash flow to max out deferred accounts and still be able to pay your bills

    if your marginal rate is high but still cash flow strapped then spending needs to be critically assessed

    so what’s the situation?

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238762 Reply
    Lordosis Lordosis 
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    Status: Physician
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    Joined: 02/11/2019

    @jacovlu I am under the impression that this is more about lowering taxable income then saving for retirement.

    OP but he is right if you are a low tax bracket right now Roth would be better but it will not help decrease your PSLF payments. However the difference would be small and with the extra Roth you might be better off in the end.

    “Never let your sense of morals prevent you from doing what is right.”

    #238791 Reply
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 668
    Joined: 06/18/2018

    “I’m giving back to a non for profit as well.”

    Are you working at less than market rate? If not, you’re not giving anything back.

    #238794 Reply
    Avatar jacoavlu 
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    Status: Physician, Small Business Owner
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    Joined: 03/01/2018

    I get that this is about lowering the payment. But the credit card transfer is only needed if OP can’t afford the retirement contributions otherwise, right?

    Would prefer to have the complete story.

    And how much would the executed plan actually lower the loan payment? And only for a year or so right?

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238816 Reply
    Lordosis Lordosis 
    Participant
    Status: Physician
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    Joined: 02/11/2019

    I get that this is about lowering the payment. But the credit card transfer is only needed if OP can’t afford the retirement contributions otherwise, right?

    Would prefer to have the complete story.

    And how much would the executed plan actually lower the loan payment? And only for a year or so right?

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    Sorry I thought you missed that point.  I agree it would be very minor.

    Sounds like OP cannot to max retirement which is why he is contemplating this.

    “Never let your sense of morals prevent you from doing what is right.”

    #238817 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2282
    Joined: 03/01/2018

    Agree. So what if the question was:

    “I realize the long term benefits of saving, and maxing out Roth space while in our early low tax years. This year we can’t afford to max out all available space, but I’ll be an attending next year and cash flow will improve. So, what do you think of using a 0% credit card intro offer effectively as a one year zero interest loan, in order to max out Roth deferral this year? I’m confident we can pay the balance off before interest kicks in, and we’ll be able to max out all tax advantaged space next year with our increased household income.”

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238818 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2282
    Joined: 03/01/2018

    But I still want to know answers to my original question

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238820 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2693
    Joined: 01/03/2017

    Agree. So what if the question was:

    “I realize the long term benefits of saving, and maxing out Roth space while in our early low tax years. This year we can’t afford to max out all available space, but I’ll be an attending next year and cash flow will improve. So, what do you think of using a 0% credit card intro offer effectively as a one year zero interest loan, in order to max out Roth deferral this year? I’m confident we can pay the balance off before interest kicks in, and we’ll be able to max out all tax advantaged space next year with our increased household income.”

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    That would change things because there is no PSLF (or trying to take unnecessary advantage of it) in your scenario. I would understand the thought process in your scenario but routine use of balance transfers has no place in wealth building.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #238861 Reply
    Liked by Lordosis
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2282
    Joined: 03/01/2018

    Agreed.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238873 Reply
    Liked by Tim
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1666
    Joined: 02/11/2019

    I think the OP gave up and we are just arguing the same point with each other 😛

    “Never let your sense of morals prevent you from doing what is right.”

    #238875 Reply
    Liked by Brains428, Tim

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