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How much money in interest is this going to save vs. paying $2000/month towards the car loan?
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Oct 4, 2013 04:02
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MrKatharsis posted:How much money in interest is this going to save vs. paying $2000/month towards the car loan? Sorry, I'm not sure what you mean. My car loan is 1.9% and the market could return much more than that so it's a pretty dumb idea mathematically, but ~debt is evil~ and I want a debt-free party or vacation so.
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Oct 4, 2013 15:36
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I mean if you're only 5-6 months away from paying off the car, why change strategies now?
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Oct 4, 2013 15:59
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MrKatharsis posted:I mean if you're only 5-6 months away from paying off the car, why change strategies now? I just worked it out. The interest is about $25/month. I understand what you're saying, but what's the cost of paying off the car with the RRSP?
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Oct 4, 2013 17:16
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You're just deferring the debt; instead of being a car loan it's a LLP reimbursement. If you're already on track to pay it off in six months without doing that, then you'd truly take the debt down.
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Oct 4, 2013 17:40
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Yeah you aren't really debt-free if you have to pay back the retirement account. vvvvvv Your debt is still a fraction of what it was when you started this thread, being almost there is worth being happy about! I'm sure finally paying that car loan off will feel great either way. Jeffrey of YOSPOS fucked around with this message at 18:27 on Oct 4, 2013 |
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Oct 4, 2013 17:41
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Jeffrey posted:Yeah you aren't really debt-free if you have to pay back the retirement account.  Well, the important thing for me, and the only thing that bothers me about the car loan, is to get right-side up on the car. It seems like a pretty big risk to own something that's worth 10k less than what I owe someone for it.
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Oct 4, 2013 17:46
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tuyop posted:
I agree with this. Get right-side-up on the car loan, and then call your auto insurance company and remove the gap insurance. That should save a few bucks, and put you in a position where if you suddenly needed to, you could sell the car and be rid of the rest of the loan. But, don't borrow more than you need to to get reasonably right-side up on the loan. Borrowing from your retirement account has the drawback that the money you took out isn't earning anything as the market gradually rises. You want that money in the account, building up your retirement. I think you are doing well with the money situation now, though. It's complicated, but with all your payouts and discharges and poo poo, you've gotten bailed out of the horrendous debt burden you've been living with for years. It's OK to feel good about that, just don't let it get to your head too much.
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Oct 4, 2013 20:08
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Alright, so I need to make a decision about this soonish. My severance pay has landed in my Questrade account but it's not invested in anything. The market value of the 1000 I put in there in July is only 949 now anyway, so I'm not expecting miracles. I'm just following Canadian Couch Potato's "The Complete Couch Potato" portfolio with like an 80/20 stock bond mix including REITs as stocks, instead of the 70/30 recommended. The current disposition of my RRSP is (if anyone cares): Cash: 6627.87 (CAD) 13.23 (USD) Market Value: 665.87 CAD 275.56 USD My "positions": VTI 19.01% VXUS: 10.87% XBB: 9.49% XRB: 9.5% XRE: 4.72% ZCN: 29.08% ZRE: 17.33% There's another windfall coming in from my move that will be at least about 3650 but max 4500. That means that our current debt repayment pool will be 9180 (3650 balance + 3650 windfall + 2880 "savings" - 1000 insurance deductible) by the end of October. My pension money should come in by mid-November, depending. Is it possible that it's wise to wait to claim my value transfer? We're not talking about huge sums of money here, just like 8-12k into the RRSP. So, should I: A. Leave the money as cash until my pension comes in, making my QT RRSP balance ~17000 and then withdrawing some amount and combining that with the cash in the repayment pool to repay my car loan in full? B. Invest the money now, wait for pension money, and then proceed with A, selling the investments at that time? C. Ignore the investments and pension/severance windfall as a source of debt repayment and just use the 9180 and money over the next few months (3 months, actually) for repaying the car loan? (edit: This means investing the 6600 cash now) tuyop fucked around with this message at 19:10 on Oct 7, 2013 |
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Oct 7, 2013 19:03
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Can you make an educated guess about rate of return, then do the math for the three options? That's what I would do but I don't really feel like doing the math for you, maybe someone else will.
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Oct 7, 2013 19:15
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Jeffrey posted:Can you make an educated guess about rate of return, then do the math for the three options? That's what I would do but I don't really feel like doing the math for you, maybe someone else will. Well, the risk of A and B is that I could potentially miss out on good market returns while I pay back the money that I withdraw or hold out on investing. The benefit could be improved dollar-cost averaging if there's some kind of loss or volatility across the asset allocation over the next 3-6 months. Either way, I don't think it's worth much anxiety because it's a relatively small amount of money compared to like 10, 20, 40 years of investing and retirement planning.
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Oct 7, 2013 19:33
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I think I'm leaning for C, Tuyop. You may consider waiting to invest more until after we (the USA) crash the economy though, you may get some awesome 'deals'...lol :-/
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Oct 7, 2013 19:51
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SiGmA_X posted:I think I'm leaning for C, Tuyop. Feels a lot like timing the market to me, though it doesn't take a genius to figure out that there will be some economic fallout when the whole federal government of the world's most powerful country decides they just don't want to play with each other anymore and shuts down.
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Oct 7, 2013 20:01
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tuyop posted:Feels a lot like timing the market to me, though it doesn't take a genius to figure out that there will be some economic fallout when the whole federal government of the world's most powerful country decides they just don't want to play with each other anymore and shuts down. It's definitely market timing. Consider that maybe if the US government shutdown gets resolved soon and the fallout isn't too bad, the market might rebound rapidly (because it's priced in severe consequences already). Really nobody knows if we're due for the market to go way up or way down or just be flat. (Actually what tends to happen is money moves between different asset classes within the market, so if you have a diverse portfolio you are somewhat insulated from one part of the market plunging. Having all parts of the market plunge simultaneously is pretty rare.) But I think you're timing the market either way, sorta. Either you're chasing gains by investing when you still have outstanding debts, or you're being conservative by paying off outstanding debts while keeping your money out of the market (and potentially missing gains). That's why the correct approach is to try really hard not to think about the possibility of losses or gains in the near future in the market; don't count on a certain rate of return at all. Just either put money into your loan or put it into retirement, depending on which is more important for your long-term financial health. To maximize your retirement accounts, ignoring volatility, investing sooner rather than later gives your money the most time in which to accumulate. However, if we're talking about a matter of a few months here or there, it's not going to make much difference 30 years from now. To minimize risk if something very bad happens and you need to sell the car, or get in an accident and the car gets totaled, being right-side-up on your loan as soon as possible is a good idea. On the other hand, you have the cash to absorb a loss of the car if that were to happen, so it's not a huge priority right this instant. Sooo, since it's kinda hard to pick one (investing for retirement vs. car payment) as clearly better than the other, I'd say split the money, put some into retirement funds and use some to accelerate payments on your car. Effectively that means C, because that's keeping some of your money invested while paying faster against your car loan than you are required to. It's simpler, has less complex pieces that might fail, still gets your car paid down relatively quickly, and is a plan you can alter at some point down the line without penalty if conditions change. Leperflesh fucked around with this message at 09:13 on Oct 8, 2013 |
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Oct 8, 2013 09:10
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Finally, time for a let's play of finance, with thread particiaption! I vote C. Market Chat: It's all about being both aggressive and defensive, so I'd maybe suggest waiting until you've learned more about them. Also, please stay away from them, knowing your luck, I'd rather you didn't crash the economy into a tree.
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Oct 8, 2013 13:33
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Oh, and speaking of buying things that we don't need but don't have either, we've been contributing to the "household goods" line above the monthly expenditures for... awhile now, 25 here, 45 there, thinking we would buy a new kitchen gadget at some point. Well, we noticed this weekend that that balance was $540, and there happened to be a 32" HDTV on Kijiji (same model retails for $330 at Best Buy) for $170! And toeshoes wanted an old DS so we got one of those with games for $70 as well. This is cool because I think it's one of the first times we've actually put away small amounts of money to buy a thing(s) we've wanted for awhile. It's a pretty stress-free way of going about it! Will try this again in the future.
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Oct 8, 2013 14:44
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tuyop posted:Oh, and speaking of buying things that we don't need but don't have either, we've been contributing to the "household goods" line above the monthly expenditures for... awhile now, 25 here, 45 there, thinking we would buy a new kitchen gadget at some point. Well, we noticed this weekend that that balance was $540, and there happened to be a 32" HDTV on Kijiji (same model retails for $330 at Best Buy) for $170! And toeshoes wanted an old DS so we got one of those with games for $70 as well. This is exactly what budgeting is supposed to look like. Good job!
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Oct 8, 2013 15:22
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Nocheez posted:This is exactly what budgeting is supposed to look like. Good job! To me it sounds more like they noticed they had this money and then it started burning a hole in their pocket, hence buying crap like a DS and mediocre TV, but at least it was out of money that was kinda budgeted for that stuff.
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Oct 9, 2013 08:25
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I'm convinced that this dumbphone experiment is a pretty big failure. This month is another $150 bill, and most of it looks like 1-800 numbers so I don't really get that (I'll call them, don't worry). Since switching out the smartphones, we've averaged $85/month for phone use.Rudager posted:To me it sounds more like they noticed they had this money and then it started burning a hole in their pocket, hence buying crap like a DS and mediocre TV, but at least it was out of money that was kinda budgeted for that stuff. What would you say if we had bought a $500 food processor? Would this be better because that's what we'd explicitly saved the money for? tuyop fucked around with this message at 13:18 on Oct 9, 2013 |
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Oct 9, 2013 12:36
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Rudager posted:To me it sounds more like they noticed they had this money and then it started burning a hole in their pocket, hence buying crap like a DS and mediocre TV, but at least it was out of money that was kinda budgeted for that stuff. As long as they're spending money they saved for X purpose, who cares.
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Oct 9, 2013 13:35
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tuyop posted:and most of it looks like 1-800 numbers so I don't really get that You still get charged minutes for using your phone even when calling a 1-800 number. You know that right?
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Oct 9, 2013 14:08
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tuyop posted:I'm convinced that this dumbphone experiment is a pretty big failure. This month is another $150 bill, and most of it looks like 1-800 numbers so I don't really get that (I'll call them, don't worry). Since switching out the smartphones, we've averaged $85/month for phone use. Pretty sure 1-800 numbers are not free from a cellphone, at least they aren't in the US. Can you setup alerts for minutes to get texted when you get close? It sounds like you're paying a bunch in overages, which seems like on a smartphone it would mean going over as well, and going over with data also.
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Oct 9, 2013 14:09
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RheaConfused posted:You still get charged minutes for using your phone even when calling a 1-800 number. You know that right? I didn't know that and never had that problem before, strangely enough! MrEnigma posted:Pretty sure 1-800 numbers are not free from a cellphone, at least they aren't in the US. Nope, but I check semi-regularly. I don't really know what happened here. I've been spending a lot of time on the phone for pension and health insurance bullshit and they were 1-800s so I thought that wouldn't cost. It kind of sucks, normally I would just use a phone at the office, but now I have no office.  And yeah, it's not like having a smartphone gets you out of paying for voice, just that all of my old plans used to have like 400 voice minutes and I never used that much. Though I think I may use more than the 100 minutes per month that we pay for now that this is my only phone.
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Oct 9, 2013 14:27
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tuyop posted:And yeah, it's not like having a smartphone gets you out of paying for voice, just that all of my old plans used to have like 400 voice minutes and I never used that much. Though I think I may use more than the 100 minutes per month that we pay for now that this is my only phone.
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Oct 9, 2013 15:10
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tuyop posted:I'm convinced that this dumbphone experiment is a pretty big failure. This month is another $150 bill, and most of it looks like 1-800 numbers so I don't really get that (I'll call them, don't worry). Since switching out the smartphones, we've averaged $85/month for phone use. That sucks. What carrier do you have? My husband and I both have dumbphones with unlimited talk, unlimited text, and 50MB data shared that we have yet to even use 10% of in a given month (mostly because using the internet on a dumbphone isn't what you would call user-friendly). We have Verizon and it's like $107 a month for both phones with tax and "fees". It's not like we got in on some super-secret plan, it's on their website. Unlimited talk, text, and 50mb data for $50/month per phone. I was told (but not really convinced because everyone you talk to tells you something different) that it's their cheapest plan.
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Oct 9, 2013 21:51
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razz posted:That sucks. What carrier do you have? My husband and I both have dumbphones with unlimited talk, unlimited text, and 50MB data shared that we have yet to even use 10% of in a given month (mostly because using the internet on a dumbphone isn't what you would call user-friendly). We have Verizon and it's like $107 a month for both phones with tax and "fees". He's getting dicked because he's Canadian, and apparently while you get free healthcare, you get especially screwed by the telcos.
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Oct 9, 2013 22:03
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tuyop posted:Feels a lot like timing the market to me, though it doesn't take a genius to figure out that there will be some economic fallout when the whole federal government of the world's most powerful country decides they just don't want to play with each other anymore and shuts down. I hope we don't default. USA govt angers me. It's very likely they'll figure it out minutes before the deadline happens, they usually do.. That's a different discussion though, one I don't want to continue because grrr politics! Also, good work using saved money for a related purpose. I could see you spending $700 when you had $540 saved if this was 2 years ago (ikea table comes to mind). So good on you and Toeshoes spending $240 of your allocated funds.
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Oct 9, 2013 23:28
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I didn't really think about the possibility of a market crash, and I just bought like 6500 worth of various ETFs like, today. Should I sell them and wait a week and a half? It all lost $17 today! 
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Oct 10, 2013 00:05
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tuyop posted:I didn't really think about the possibility of a market crash, and I just bought like 6500 worth of various ETFs like, today. Should I sell them and wait a week and a half? It all lost $17 today! Don't worry so much about it - if this actually happens, it's even money that you'd be better off burning your paper money for warmth than worrying about your investments anyways.
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Oct 10, 2013 00:42
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tuyop posted:I didn't really think about the possibility of a market crash, and I just bought like 6500 worth of various ETFs like, today. Should I sell them and wait a week and a half? It all lost $17 today! I can't tell if you're joking. Anyway, don't panic, and don't be obsessive over markets. Don't check them everyday, you'll just freak the gently caress out (I know I used to); keep yourself up to date on the news for whatever you invest in, but don't spend a lot of time looking at the markets, it just adds stress in your life. (Don't ignore them though, just don't watch them like you would watch a baby.) Edit: Usually poo poo hits the fan when people are completely stupid. If everyone pulls out of the markets, the markets will crash. If everyone tries to withdraw their life savings from a bank, the bank will fail because it doesn't have all the money it owes people because it gets lent out. People are dumb, they panic and make economic cycles worse with their stupid behavior. haplesscardsharp fucked around with this message at 05:54 on Oct 10, 2013 |
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Oct 10, 2013 05:45
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tuyop posted:I'm convinced that this dumbphone experiment is a pretty big failure. This month is another $150 bill, and most of it looks like 1-800 numbers so I don't really get that (I'll call them, don't worry). Since switching out the smartphones, we've averaged $85/month for phone use. Did you change your phone habits? If not, what did you expect to happen? To me this sounds like your old patterns of making assumptions and not thinking ahead. Re: US vs Canadian phones... I'm a US ex-pat, and I was paying $120/mo for my plan in the US. Was doing $45/mo in Canada (only 400MB, but there's wifi everywhere, so who cares). But I don't call or text anybody, and I don't need to be online every minute of every day, so now I'm on prepaid for $0/mo. It's awesome. I do more crosswords now, instead of browsing aggregate sites. tuyop posted:What would you say if we had bought a $500 food processor? Would this be better because that's what we'd explicitly saved the money for? Kind of, because that was the plan. Part of budgeting is sticking to plans. I think people are worried that your mindset is still that of instant gratification. And so now what happens to the food processor that you had saved for? Are you not getting one? What happened to that plan? Regardless, it came from a category that was put aside for that stuff, a little at a time. So I think that's good. It's a thing you wanted, and you had the money set aside for that kind of random thing. Old Fart fucked around with this message at 00:05 on Oct 11, 2013 |
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Oct 11, 2013 00:03
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Old Fart posted:Did you change your phone habits? Yes, I used to use my office phone to make all my calls during the day. Now I don't have an office phone, so... I suppose I've been directing my attention elsewhere (university, getting out of the army, moving, pension, etc.) and totally hosed up and didn't plan or optimize this at all.
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Oct 11, 2013 00:56
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So Tuyop, I'm not sure when (or if) the organization looking after your vocational rehab portion has contacted you yet. But if you haven't heard, you're in for a pleasant surprise. I talked to my counselor today, and she was going over all the new allowances put in place at the beginning of October. A few noteworthy one's are up to $60 a month for internet, full reimbursement of parking at school, gas money on a per/km basis and the two that I found best: One is full reimbursement for a computer/laptop if you can provide proof you need one for school due to medical reasons and when helping you look for a job after you're done your school they will only consider jobs that match your pay grade on release or the base corporal pay (whichever is higher).
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Oct 12, 2013 08:26
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MagicCube posted:So Tuyop, I'm not sure when (or if) the organization looking after your vocational rehab portion has contacted you yet. But if you haven't heard, you're in for a pleasant surprise. I talked to my counselor today, and she was going over all the new allowances put in place at the beginning of October. A few noteworthy one's are up to $60 a month for internet, full reimbursement of parking at school, gas money on a per/km basis and the two that I found best: One is full reimbursement for a computer/laptop if you can provide proof you need one for school due to medical reasons and when helping you look for a job after you're done your school they will only consider jobs that match your pay grade on release or the base corporal pay (whichever is higher). Wow, that is good news! I got the internet/utility one already in a lump sum in September, but I'll followup on all that other stuff. Thanks, man.
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Oct 12, 2013 14:09
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tuyop posted:I didn't really think about the possibility of a market crash, and I just bought like 6500 worth of various ETFs like, today. Should I sell them and wait a week and a half? It all lost $17 today! Haha, what a schlub. It is foolish that you invested the entire sum into the secondary market in one single set of trades. A smarter and more prudent move for "long-term investing" would have been to invest the $6500 into the secondary market over the span of two business quarters into the ETF of choice with 4 or 5 separate trades. In this case specifically, when you consider the possibility the US government reaching an impasse with its budget by 23:59 ET October 17, $6500 invested into an already overgrown stock market is extremely imprudent. This might be a very costly lesson for you.
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Oct 13, 2013 01:35
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30 years from now, it'll hardly matter. Dollar-cost averaging is much less important when you have a very long horizon.
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Oct 13, 2013 01:42
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Leperflesh posted:30 years from now, it'll hardly matter. Dollar-cost averaging is much less important when you have a very long horizon. That is correct. For a new "investor" slamming $6500 into a set of securities at a very volatile time in the markets, the possibility of losing an astounding amount of money on paper will take a lot of emotional fortitude to bear. Somebody who is worried over the loss of $17 doesn't seem to me like they are considering this a 30 year investment. Basically, Tuyop, before you invested this money, did you consider how you would feel if you were to wake up one morning and find out that you lost 50% of your investment? If it doesn't bother you, there are two possible reasons why. Either you are a psychopath who doesn't feel emotional distress or you are investing with a time horizon of at least 30 years from now. Based on what I've seen in the last few pages, I don't think you are either of these. Quite frankly, you have no business putting money into the market unless you are either of those two. usernamen_01 fucked around with this message at 01:59 on Oct 13, 2013 |
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Oct 13, 2013 01:57
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usernamen_01 posted:That is correct. We talked about it, the possibility of losing everything, and it's really the case that neither of us are about to: A. Lose our earning potential or desire to continue working. Sure we'd like to take an extended vacation/sabbatical at some point, but the timing and expense of anything we end up doing is entirely up to us. B. Need the money for anything in the next year or two. If we want (or need) to buy $6500 worth of stuff, the most likely solution is to just stop "saving" for a couple of months until we have that balance in our accounts. So, given that, and our overall relative emotional detachment to our account balances*, we invested the money and don't really care what happens beyond due diligence like trying to keep a balanced portfolio and not timing the market by waiting for the crash. The next thing we have to do is invest the ~35k of my pension. 25 of which can't be accessed for the next 35 years. I'm very interested in what strategy you think is best to manage this amount (wait a quarter in between ETF purchases?), because it represents about a year of hard savings for us rather than two months. * A lot of things have changed in the past three years, but this isn't one of them. My wife and I don't really give any fucks about money. We care about freedom, which we correlate to savings rate, lifestyle and how we value the way we spend our time. When I hated my job, and had to continue doing it because of debt, that was a very serious problem for us. At this point, thanks to you guys, toeshoes could stop working tomorrow and we could live on my income and vice versa. Neither of us is trapped and losing everything in the RRSP wouldn't change that. I mean, I imagine that in the next month that $6500 could be worth, what, $1300 if we end up with something equivalent to the Great Depression (stocks losing 80% of their value)? Or like $2000 if we're at the peak of something like the dot-com bubble? Then what? Well, we just continue as usual and in two, five, or 10 years we end up back where we started or higher, since we'd keep buying funds while they're on "sale". Unless you're talking about some kind of social collapse or apocalypse. And I don't mean to be disrespectful. I'm sure losing most of our money overnight would be crushing in a lot of ways, but we have no illusions that investing in the market is without risk.
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Oct 13, 2013 03:06
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tuyop posted:The next thing we have to do is invest the ~35k of my pension. 25 of which can't be accessed for the next 35 years. I'm very interested in what strategy you think is best to manage this amount (wait a quarter in between ETF purchases?), because it represents about a year of hard savings for us rather than two months. People always say "diversify" like it is going out of style in the world of investing. What they don't tell you is that the stock market, in and of itself, is not a diversified place for all of your capital. When you buy an ETF, just for example, you are tying the value of whatever capital you place into it with the perception other people have of it for continued growth and profit. Essentially, your personal investment is now a communal one of which you have absolutely no control of whatsoever. My recommendation is to invest primarily in yourself rather than exclusively in the greedy, amorphous laundry machine known as the market. Open a private business, buy some real estate in your town or others, learn a trade or a skill that other people want and will continue to want for the next 30 years. You, not the stock market, are the greatest personal wealth creating engine that you will likely ever encounter. Tying your hopes and dreams for fiscal solidarity to it ignores a critical maxim that spans the gauntlet of all investment activities; past performance does not guarantee future results. The market has done fine for the last 30 years, but it would be unwise to invest everything you have in the hope that it will do the same 30 years from now.
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Oct 13, 2013 04:13
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usernamen_01 posted:People always say "diversify" like it is going out of style in the world of investing. What they don't tell you is that the stock market, in and of itself, is not a diversified place for all of your capital. When you buy an ETF, just for example, you are tying the value of whatever capital you place into it with the perception other people have of it for continued growth and profit. Essentially, your personal investment is now a communal one of which you have absolutely no control of whatsoever. Yes, I agree! But these things (investing in the market, and your community/real estate and human capital) aren't mutually exclusive, right? Especially when you have to consider taxes from severance packages and pensions as well.
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Oct 13, 2013 05:31
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