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  • Avatar ITEngineer 
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    Joined: 05/09/2017
    I do and will continue to reduce exposure to risk assets as my nest egg grows. At $10M, I would be 40-50% in stocks.

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    No worries about future inflation? (just asking, not predicting it)

    Stocks are pretty inflation proof (vs bonds and cash)

    Avatar ITEngineer 
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    It’s also fraud as these children are clearly not independent and receiving support from their parents.

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    I’m at a total loss on how this works. Who pays for their healthcare? Are they apply for Medicaid too? I assume they don’t own a vehicle and do their own grocery shopping. I figured existing laws would allow them to be charged with fraud without having to change the system too much. I’m probably totally ignorant here.

    Avatar ITEngineer 
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    Have owned a Genisis for 13 years and it still works well

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    Me too! I had gone through (2) $200 grills in 4 years when I bought it. I believe I paid $650 for it and got the side burner and pull out shelves.

    Two years ago I switched to Charcoal and there is no looking back.

    If you cannot do charcoal, I would definitely recommend a weber. And a spare propane tank. Or even get a natural gas line and never worry about propane again!

    in reply to: To grill or not to grill? #235046 Reply
    Avatar ITEngineer 
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    12/15 of the payments are just me paying my credit card as soon as a balance appears

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    Curious – What’s the logic/thought process here? Why not wait for your statement balance (and have that automatically paid)? It would definitely simplify your life. You appear to be doing extra work for no benefit (then complaining about the mortgage lender doing extra work for no benefit)

    This is a nice friendly question! I’ve seen comments like this from others but definitely don’t understand the goal of paying off the credit card multiple times a month.

    in reply to: Ridiculous questions from mortgage lender #235038 Reply
    Avatar ITEngineer 
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    Checkbook. No

    Credit Card – Absolutely. That’s how I make sure all expenses got recorded.

    Avatar ITEngineer 
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    NO change to the Social Security COLA.

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    Wow! My bad here. You’re right it’s just for income tax rates. I must have assumed that SS benefits were changed too.

    in reply to: Social Security #225831 Reply
    Avatar ITEngineer 
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    My parents are in retirement both in their 70s and live on a tight budget. They still have ~120K to pay off of their house (I know, long story). My father’s retirement 401K requires a minimum distribution every year.

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    Something doesn’t add up in this story. If they had $200k in 401k and were age 80, they would be required to take $10k. That would still take 10 years to pay off the mortgage. If they had $500k they would be required to take out $26k which would be 5 years but….. if they have that much money, why are they living on such a tight budget?

    Taxes are just at the regular income tax rates (10,12,22%) so none of this should take a big bite out of the RMD.

    in reply to: Tax-free money for house in retirement? #225816 Reply
    Avatar ITEngineer 
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    Start using the chain CPI: This will over time subtly reduce the increase in benefits.

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    I’m not sure if people realized this or not, but the IRS switched to Chained CPI last year as directed by the Tax Cuts and Jobs Act.

    From a long term solvency perspective, taxes need to be raised or benefits need to be reduced. I personally feel that benefits need to be reduced either through an increase to the retirement age or means testing, as the FICA taxes are already regressive enough on the poor and middle class.

    I’m not sure society is ready to deal with the outcome of a meritocracy combined with the consequences of people making good financial choices vs people whom might have made poor ones. I work with tech people whom barely fund their 401k and panicked in 2002 & 2009. Meanwhile, I’ll have 40-50 years of savings of low cost index funds and I’ll be able to vacation wherever I want, live wherever I want, buy whatever I want….while irresponsible ones will be demanding a bigger safety net creating more political backlash. I’m not sure what the right answer is (except be careful, financial and human capital in my world is highly mobile).

    in reply to: Social Security #225804 Reply
    Avatar ITEngineer 
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    model 3, which has lower cost of ownership than a Camry or Accord.

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    How are you coming to this conclusion? The M3 is about a year old….hardly enough time to know how it’s going to depreciate and what its ongoing maintenance is.

    Did you buy Tesla’s expensive annual maintenance package?

    (This is an honest question from another EV owner…..but not a Tesla)

    in reply to: Tesla model 3 or Audi a5? #222636 Reply
    Liked by Zaphod
    Avatar ITEngineer 
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    I haven’t stepped foot into a bank since 2002. Granted, the first internet bank I picked (NetBank) went bankrupt in 2007 (before the financial crisis) I don’t see the need at all.

    What banking services require a brick and mortar store front? (curious as to what others think)

    Since I have zero skin in this game, I don’t care what you chose to do. Do whatever makes you comfortable. I’m glad you stepped out and deposited your Emergency fund into a higher interest rate account though. Congrats.

    in reply to: Online Bank #216147 Reply
    Avatar ITEngineer 
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    I would remove the links to your account numbers.

    What happens if the Walnut farm doesn’t produce as expected? What is the backup plan there if that income does not materialize? A natural disaster could wipe out income for years. I assume they had more money saved but used it to purchase the farm (or investment).

    $45k/year seems low for SS Benefits. Is he planning on taking them early? Given the amount of risk with the farm, I would encourage them to delay claiming for as long as possible to maximize that benefit.

    He’s currently paying ~$13k year to get an $18.5k dividend. You could get a better rate of return by putting all the money in bank accounts earning 2% a year. I assume the salesman gets another commission when these accounts are rolled over into an annuity. Is he comfortable losing the Death Benefit? Right now it’s approximately $1M higher than the Cash Value.

    Has there been discussion on cashing these policies out and investing them in a Taxable account? What is his investment strategy? What is the $1.5M invested in?

    @ Jim – I think this is a great candidate for “Inappropriate Whole Life Insurance of the Week”. x7.

    Avatar ITEngineer 
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    Let’s say the valuation of the real estate company is about $5M on the books, but if the properties were sold on the open market, maybe about $50M.

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    This doesn’t make sense to me. If the properties are worth $50M, I would hope the underlying company is worth a lot more than $5M. Otherwise I would tell you to sell the properties and invest elsewhere. Unless you have $50M in debt behind those assets, but I read this as the real estate company has $50M in equity behind it. Plus, if the company is only worth $5M, no Estate taxes will be owed. You are well under the $11.2M Federal limit.

    First Thoughts – Is a $4M policy enough to cover your estate taxes here? It doesn’t sound like enough.

    Scenario 1: An Estate has $50M in stock. Estate taxes of $10M are due. I wouldn’t carry any insurance, I would just sell $10M in stock, pay taxes, and leave the $40M to the beneficiaries.

    Scenario 2: A family owned manufacturing company is worth $50M. The company cannot be broken up and $10M of insurance (or some other liquid asset) would be needed to keep the business intact if no advanced planning was enacted.

    I get the feeling that you don’t need insurance, you need some sort of estate transition plan for the business. Remember – your parents can pass you $15k each (mom and dad separately) every year to you and your brother, tax free. They can start transferring these companies to you long before you pass. That’s $60k a year and more if there are spouses to transfer assets too as well (up to $120k). If you assume your father lives another decade, that’s $1.2M in wealth that can be transferred long before any Estate comes into play.

    I would focus on this generational transfer before I worried about the next one (passing it along to your children) It doesn’t sound like there is a good plan in place (I could be very wrong here) and it’s not clear to me who’s running the business now, or if your father will run it until he dies (which is probably too late)
    I’m glad to hear that it has already survived multi-generation transfers but it might have been a lot smaller and easier to move in the past.

    in reply to: Life Insurance review- Non Medical professional. #214736 Reply
    Avatar ITEngineer 
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    They are still paying into it instead of me right now

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    Isn’t this one easy? Just tell them you will never take over the payments (unless I miss-understand what is going on here) and they can decide whether to continue to pay or cut their losses.

    I remember having a similar conversation with my parents when I was 22’ish and out of college. I told them I was not going to take over payments of the Whole Life policy that their FA had sold them when I was a small child. They stopped paying as well and cashed it out. If only they had never purchased it…..

    in reply to: Inappropriate Whole Life Policy of the Week #214244 Reply
    Liked by Hank
    Avatar ITEngineer 
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    Last year was our first year on an HDHP as my large employer switched over. Unfortunately, while never ever having any major medical expenses for two decades, my wife was diagnosed with cancer and we exhausted the fund (and then some).

    There was a second surgery this year (Feb) and while we will ‘eventually’ get all the money in the HSA by December 2019 to pay that bill, it wasn’t available in February so we setup a payment plan with the hospital. Hopefully there are no medical expenses for anyone else in the family this year, but my wife has hit her max so she’s covered 100% till next January.

    I wish I could have had the plan for the last 5-7 years. That way, there would have been a large pot of money I could have used to pay these bills. On the flip side, I paid $50 and $150 for the delivery of my two children (now people pay the individual max which is $6850)

    For the record, we made ‘zero’ financial sacrifices in 2018 even with this surprise. Why? I knew I was liable for $7000 out of pocket so I set $7000 aside just in case on Jan 1 2018. Unfortunately we had to use it.

    Hopefully this rambling makes sense…..

    in reply to: HSAs and Medical Debt #211853 Reply
    Avatar ITEngineer 
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    mistyped, fixed. couldnt count that day or overally optimistic.

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    It’s all good. I’m not keeping score. And I have no skin in the game, so if you go Scenario 1 or 2….I hope you are happy with whatever decision you make.

    in reply to: Inherited IRAs #209781 Reply
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