Surviving the crash

[sobo]

I don't know, are you a geriatric cat? Otherwise, it's
anthropomorphism.


If you're in a position to call those kind of shots, great, if you'd rather play video games and smoke weed than drive heavy equipment because of the risk of post accident drug testing, while bubbleguming about the cost of living, sorry, no sympathy.


That's comparing apples and uranium, but ok.

Pretty much think we are agreeing with each other here...

And the apples to uranium thing is pretty phuq'n funny. Gonna steal that...

 

[Jbsheepdog]

I pay 70% of my income towards my mortgage. It used to be 25% and I saved 30% into retirement funds. Now I can't do that anymore (or won't - I am done working after 50 years of it). But I do have 75% equity and enough in retirement funds to pay off what I owe 2X over. Plus I increase my equity by $30K every year.

Why not pay off your mortgage with retirement funds? You would have more monthly cash flow, not have to pay the rest of the interest and not to mention you wouldn't be anyone's slave.

 

[Longwalkhome]

Why not pay off your mortgage with retirement funds? You would have more monthly cash flow, not have to pay the rest of the interest and not to mention you wouldn't be anyone's slave.

Measured against 10% inflation the retirement funds are losing money especially if you add in the 25% tax as you cash them out. Paying off interest bearing debts it kinda depends if the interest is deductible, is the deduction beating inflation.

Personally I would rather live debt free but a cash cushion is sure a comfort for emergencies.

 

[The Heretic]

Measured against 10% inflation the retirement funds are losing money especially if you add in the 25% tax as you cash them out. Paying off interest bearing debts it kinda depends if the interest is deductible, is the deduction beating inflation.

Personally I would rather live debt free but a cash cushion is sure a comfort for emergencies.

Why not pay off your mortgage with retirement funds? You would have more monthly cash flow, not have to pay the rest of the interest and not to mention you wouldn't be anyone's slave.

1) I have a plan, short term and long term. Short term I plan to sell my property next year. It has taken a few years to get to this point where I am ready to do this, but the plan has always been that when I retire, I would sell, pay off what I can of the remaining amount owed, and then buy land (possibly with buildings) further out towards the coastal range. Land with a southern exposure and more gentle terrain. I hope to have as little debt on that property as possible - that remains TBD. My "kids" plan to sell their house (suburbia Beaverton) and build on the land I buy and use anything left over to pay off any remaining debt - if possible. The property will be in a trust between us.

2) My current property has more than doubled in value over what I paid for it - at least on paper. My neighbors sold their plot, which half the size of mine and has one tenth the timber, for a very good price that I would be quite satisfied to get for mine. I have had significant timber income from my property. By the time I sell my property, I will have lived here for free and made a profit above what I paid for it - including paying the down payment, interest and property taxes - the latter two of which are deductions on my taxes (for 2022, I will have had $40K+ in gross income, and I will only pay about $200 in taxes on that income because most of that was not taxable income and deductions covered the rest).

The increase in value of the property more than covers the cost of the interest and property taxes, and my principal goes down by $600 every month, increasing my equity.

3) I play the tax game with my retirement funds:

• I convert $ from my IRA to my Roth IRA. If I am careful and keep that conversion under ~$20K, because of my deductions/etc., and because my main income is Social Security, I wind up paying almost nothing in taxes on the conversion. I can keep that up for another 4-5 years. Any $ in my Roth, I won't pay taxes on later if I withdraw those funds later - the principal is counted as taxable income when I convert it, but any withdrawal later (including earnings) will not be; it will be tax free. The Roth is my emergency fund - it is about 15% the size of my IRA, but the more I move to the Roth, the less I will pay in taxes on RMDs from the IRA. I can keep that up until I am 74 - about 5 years from now. The more I move to my Roth, the smaller my traditional IRA will be when I am forced to take RMDs (the IRA, with its much larger principal, will still grow more than the Roth, but I am mitigating that growth by moving as much as I can to the Roth without paying taxes on the conversion).
• The average long term stock market growth is 10% - I have a mix of stocks and other investments in my retirement funds, so over the years I have earned an average of 7%. I pay 4% interest on my mortgage - the principal is less than half of what is in my IRAs, so it is wiser to earn 7% on that principal than it is to use it to pay off the smaller mortgage that costs less than I earn in my IRAs. Also, right now, my tax bracket is less than 10% - if I keep my taxable income low - indeed, for 2022, my effective tax rate was less than 1 percent. This is a strategy recommended by a lot of financial experts; don't cash out interest earning principal to pay off debt, if the interest it earns is considerably more than the interest you pay on debt - especially if the debt is smaller. More so, with an asset that is growing in value - like real estate generally does.
• Withdrawing enough $ from my IRA to pay off my mortgage would bump me up into the 35% tax bracket - almost the highest bracket (37% is the highest?). That is a losing strategy; I would effectively pay much more in taxes than I would save in interest - a LOT more.
• Additionally, the stock market is down right now. I am down 15% from where my IRAs were a year ago. Buy low, sell high is the general rule. I would not only lose that 15% in value, but I would also lose any future earnings on what I cash out - gone, permanently gone.
• Add to that, if I cash out $ from retirement funds to pay off the mortgage and in the same year sell my property, I pay taxes not just on the cash from my IRA, but also pay taxes on the profit from the real estate sale (any profit over $250K for a single filer is taxable as capital gains). I would take a BIG hit in taxes - bigger than I want to. Not wise at all. Downright stupid as a matter of fact. Also, the lower my income, the lower the capital gains tax rate I pay on the real estate profit.
• Also, once I turn 75 and have to take RMDs, the plan in the long run, is to take the minimum and then reinvest those funds in whatever makes the most sense from a tax and earnings perspective. If I keep the RMDs down to the minimum, I hope to pay less than 10% tax on them because my income will be as low as it is now.
• Finally, all that aside, I saved as much as I could into a 401K (now converted to an IRA) while working, and I am trying to conserve those funds, for my daughter. My daughter may not be able to work until FRA (full retirement age) and is not able to put aside funds into a 401K. I want to leave her as much of my retirement funds as I can, and hopefully she and her husband won't have much, if any, mortgage payments on our joint property, and will only have property taxes/maintenance to pay in it, plus their other living expenses. If my plan for my retirement funds pan out, the funds should double in value in ten years, giving them more than enough to live on from those funds alone - probably enough for both of us to live on (assuming I live that long).

So overall, I am trying very hard not to touch those retirement funds unless I have to. Stuff happens, but no sense in doing something stupid just to feel good about being debt free in the short term. I like being debt free; I was able to be that way for about 5 years before I bought my property, but I was paying as much for rent as I am for my mortgage (not including the down payment, which I wasn't earning much interest on). Investing wisely in real estate at the right time, was probably the best investment I ever made.

YMMV

 

[Longwalkhome]

There is a lot more information out there than I want to type out and most of us have our sources so I will drop that.

Plans are good but like war as things happen our plans go to heck. I planned to retire and me and my wife travel until we die. My wife died at 58 due to cancer. So I am a bit jaded on plans.

I read when ever I sit and resting gives me time to think. My projects are the best part of life but I never planned on shooting to rise in cost so much. I would have should have if I only had known.

Things are changing so fast that folks are too busy to see because inflation keeps you busy. Markets are changing in a huge way with interest rates climbing. People are losing jobs and companies are closing. Did you know China is buying out distressed American companies, that covid works many wonders huh.

I cashed out a CD to have some work on the house done. 10% inflation meant I was losing money and as the economy crashes finding good contractors is going to be difficult so now that some materials are available now is my time.

 

[Jbsheepdog]

The average long term stock market growth is 10% - I have a mix of stocks and other investments in my retirement funds, so over the years I have earned an average of 7%. I pay 4% interest on my mortgage - the principal is less than half of what is in my IRAs, so it is wiser to earn 7% on that principal than it is to use it to pay off the smaller mortgage that costs less than I earn in my IRAs. Also, right now, my tax bracket is less than 10% - if I keep my taxable income low - indeed, for 2022, my effective tax rate was less than 1 percent. This is a strategy recommended by a lot of financial experts; don't cash out interest earning principal to pay off debt, if the interest it earns is considerably more than the interest you pay on debt - especially if the debt is smaller. More so, with an asset that is growing in value - like real estate generally does.

• Additionally, the stock market is down right now. I am down 15% from where my IRAs were a year ago. Buy low, sell high is the general rule. I would not only lose that 15% in value, but I would also lose any future earnings on what I cash out - gone, permanently gone.

With this logic why not take out another mortgage on your property so you have 0 equity and put it all in the market. You'd "come out ahead" on paper. But your analysis doesn't measure risk. If you calculated for risk you'd come out behind

 

[Longwalkhome]

I read a lot and sort through the propaganda to try and figure out the consequences so I know what's to come.

I Annalise news by source and try to determine if its manipulation or honest events.

For instance I have read that gold will be $4,000 by the end of the year. Read that every year since gold became legal.

So is the event trying to sell you and manipulate your behavior?

For our lifetime the things that happen will be about timing, where you are in your life when something happens.

We try as survivors to build a life, lifestyle and foundation it takes to get through as best we can for the place in life we are born into.

Survivors tend to do better than most.

 

[The Heretic]

With this logic why not take out another mortgage on your property so you have 0 equity and put it all in the market. You'd "come out ahead" on paper. But your analysis doesn't measure risk. If you calculated for risk you'd come out behind

I am retired so I cannot put any more into either IRA directly or into a 401K. Plus, as I said I am paying 70% of my income to my mortgage - I don't have the income to pay for yet another mortgage, nor would a lender approve another mortgage, and I would not want to anyway.

 

[Longwalkhome]

From what I was reading we may have a big financial crisis take place very soon. A lot of pieces in the puzzle but they all point in the same direction.

Congress isn't in session yet they are supposed to raise the debt sealing in two days. Looks like they don't care or it's set on automatic.

Saudi Arabia is talking to the CCP to move away from the petro dollar and go to the petroyuan. I guess nobody trust the dollar as inflation wipes out its value.

Russia has been selling oil for gold, they won't use the dollar.

Looks like the cost of living is going to rise.

 

[Burt Gummer]

Get your $$ out of the banks. Just go, even now, and try to make a significant withdrawal. Preparations are in place for the dig gov currency already and that means paper, private digital BC, etc, will all be cancelled out. So many warning signs, but no one seems to care.

 

[nwslopoke]

Get your $$ out of the banks. Just go, even now, and try to make a significant withdrawal. Preparations are in place for the dig gov currency already and that means paper, private digital BC, etc, will all be cancelled out. So many warning signs, but no one seems to care.

All $3? At least I can keep it to small bills.

 

[ma96782]

During the late 80s (the DOT COM bust)........well, I adjusted to my losses with some music.

Aloha, Mark

 

[sobo]

Note Robin Williams at the 3:00 mark. Hilarious...

 

[Reperio]

Get your $$ out of the banks. Just go, even now, and try to make a significant withdrawal. Preparations are in place for the dig gov currency already and that means paper, private digital BC, etc, will all be cancelled out. So many warning signs, but no one seems to care.

Weeks old news. The banks are not facing a collapse in their entirety. Credit unions in particular are fairly isolated from this. The bail ins that have occurred so far, like in Cypress for example, affected about 10% of depositors - those with over 100k.

The sky has been falling for a while now. Don't get me wrong, I am subscribed to this thread for a reason. I have take cash out to store and prepped like crazy. But this banking system situation isn't going to unfold quite like all these independent content creators are saying it will.

The worst case scenario will likely be not being able to get your deposits out in cash form during some sort of transition period, again, if not in a credit union. They are not ready to initiate a CBDC yet; when they announce that, then I would expect a lot more volatility.

Anyone with enough funds to exceed the FDIC or NCUSIF limits per account is fully aware of how it works and likely has a financial advisor, not to mention the bank makes this perfectly clear to their customers in this class.

 

[Longwalkhome]

Dear Mr. Speaker:
I write to keep you apprised of actions the Treasury Department is taking in regard to the debt limit. In my letter of January 13, 2023, I noted that Public Law 117-73 increased the statutory debt limit to a level of $31.381 trillion, and informed you that beginning on January 19, the outstanding debt of the United States was projected to reach the statutory limit. This letter serves to notify you, pursuant to 5 U.S.C. § 8348(l)(2), of the extraordinary measures Treasury began using today.
First, I have determined that, by reason of the statutory debt limit, I will be unable to fully invest the portion of the Civil Service Retirement and Disability Fund (CSRDF) not immediately required to pay beneficiaries, and that a "debt issuance suspension period" will begin on Thursday, January 19, 2023, and last through Monday, June 5, 2023. My predecessors have declared debt issuance suspension periods under similar circumstances. With these determinations, the Treasury Department will suspend additional investments of amounts credited to, and redeem a portion of the investments held by, the CSRDF, as expressly authorized by law.
In addition, because the Postal Accountability and Enhancement Act of 2006 provides that investments in the Postal Service Retiree Health Benefits Fund (PSRHBF) shall be made in the same manner as investments for the CSRDF, Treasury will suspend additional investments of amounts credited to the PSRHBF. By law, the CSRDF and the PSRHBF will be made whole once the debt limit is increased or suspended. Federal retirees and employees will be unaffected by these actions.
As I stated in my January 13 letter, the period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the U.S. Government months into the future. I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.
Sincerely,
Janet L. Yellen

 

[The Heretic]

Weeks old news. The banks are not facing a collapse in their entirety. Credit unions in particular are fairly isolated from this. The bail ins that have occurred so far, like in Cypress for example, affected about 10% of depositors - those with over 100k.

The sky has been falling for a while now. Don't get me wrong, I am subscribed to this thread for a reason. I have take cash out to store and prepped like crazy. But this banking system situation isn't going to unfold quite like all these independent content creators are saying it will.

The worst case scenario will likely be not being able to get your deposits out in cash form during some sort of transition period, again, if not in a credit union. They are not ready to initiate a CBDC yet; when they announce that, then I would expect a lot more volatility.

Anyone with enough funds to exceed the FDIC or NCUSIF limits per account is fully aware of how it works and likely has a financial advisor, not to mention the bank makes this perfectly clear to their customers in this class.

If there is some kind of collapse/transition/whatever, do the doomsayers really think that paper money is going to be worth much, if anything?

Is the chance of that happening worth the huge tax hit (40%+) I would take by pulling $500K from my IRAs - i.e., devaluing $500k down to $300K? And what would I do with $300K?

 

[Reperio]

100%. Once you are on the ride it isn't easy to get off.

I never paid into 401k or an IRA. Giving the banksters or government a loan to gamble with didn't seem wise in the long run. And deferring taxes is just delaying the Piper, and trying to pay the bill later with a weaker dollar while inflation has ballooned.

We've all heard how the market returns about 10% in the long term, yet everyone I know who was on track to retire early at 50-55 never have, and continue to work 10-20 years longer than they want too. Meanwhile the fecal stains at Moody's, JP Morgan, Standard & Poors, HSBC (who had a Director go on to become one of the FBI's finest Directors /s), BoA, et. al get regularly fined for silver manipulating, fraudulent loans, predatory lending, false advertising, and numerous other crimes. But nobody goes to prison and they remain in business.

Obviously Clinton was helping us when he vetoed the bill to audit the Fed, and he said, "I am afraid I cannot allow that at this time, as it would undermine the American People's confidence in our banking system." Who wouldn't trust a guy who also said, "It depends on what your definition of 'Is' is"?

 

[The Heretic]

I never paid into 401k or an IRA. Giving the banksters or government a loan to gamble with didn't seem wise in the long run. And deferring taxes is just delaying the Piper, and trying to pay the bill later with a weaker dollar while inflation has ballooned.

I explained earlier how I am playing the game with the tax system.

I didn't go into detail about how I started with maxing out my contributions to my 401K and IRAs to lower my taxes by lowering my taxable income. When a person is in a higher tax bracket, putting $25K-$30K into tax deferred funds, that helps significantly. Putting $ into real estate that appreciates as fast or faster than the stock market, and being able to deduct the interest and property taxes - that helps a lot too. Then being able to exclude $250K-$500K of capital gains helps.

Then being in a 10% tax bracket after retirement (due to much lower income), helps a lot. Having a low taxable income (in no small part because much/most of my Social Security income is not taxable) helps tremendously. Juggling some of the funds in my IRAs before I have to take RMDs so that my RMDs are smaller, lets me pay much lower taxes on the RMDs.

Now yes, inflation is taking a bite out of my income and impacting my future plans - but not much I can do about that. I did spend a considerable amount of $ on stuff over the years, so much of what I have now, especially real estate, and much of that stuff I still have. Some things I bought I have taken a hit on, but other things I am glad I bought when I did because they would cost me a lot more now.

We've all heard how the market returns about 10% in the long term, yet everyone I know who was on track to retire early at 50-55 never have, and continue to work 10-20 years longer than they want too.

A lot of people wanted to retire early, myself especially - I never wanted to work for 50+ years - I would have loved to just travel and otherwise take it easy from the outset of adulthood. But I had responsibilities to my daughter and it just took that long before I could retire. If I knew then (when I was a teenager) what I know now, I could have retired early and/or been able to do the things I want to do, much earlier - but that is life. I did the best I could given my early stupid mistakes - considering how badly I made decisions early on, I have recovered from those goof ups fairly well.

 

[Siglvr]

"A lot of people wanted to retire early, myself especially - I never wanted to work for 50+ years - I would have loved to just travel and otherwise take it easy from the outset of adulthood. But I had responsibilities to my daughter and it just took that long before I could retire. If I knew then (when I was a teenager) what I know now, I could have retired early and/or been able to do the things I want to do, much earlier - but that is life. I did the best I could given my early stupid mistakes - considering how badly........"

Don't worry, be happy.

 

[The Heretic]

Don't worry, be happy.

It (life) is what it is. Not happy with the way it turned out - like I said, if I was wise I would have done things a lot differently.

But I am doing okay, and things could have turned out much much worse. There are a LOT of people out there who are in dire circumstances and barely surviving (or not even that) so I am not going to complain much.