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DNK
Sep 18, 2004

Lemon Trees posted:

Is there a standard list of expense categories to use while budgeting? Recently had a pedicure done, and I'm not sure what category to put it in.

Health

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Anne Whateley
Feb 11, 2007
:unsmith: i like nice words
Make up your own categories. That would be entertainment/fun imo, unless it was like medically necessary

Anne Whateley fucked around with this message at 21:28 on Jan 25, 2023

Unsinkabear
Jun 8, 2013

Ensign, raise the beariscope.





DNK posted:

Health

Referee
Aug 25, 2004

"Winning is great, sure, but if you are really going to do something in life, the secret is learning how to lose. Nobody goes undefeated all the time. If you can pick up after a crushing defeat, and go on to win again, you are going to be a champion someday."
(Wilma Rudolph)

Lemon Trees posted:

Is there a standard list of expense categories to use while budgeting? Recently had a pedicure done, and I'm not sure what category to put it in.

If it was my budget that would go in “Personal Care” (that’s massages, haircuts, stuff like that)

YeahTubaMike
Mar 24, 2005

*hic* Gotta finish thish . . .
Doctor Rope

Anne Whateley posted:

Make up your own categories. That would be entertainment/fun imo, unless it was like medically necessary

:emptyquote:

edit: actually I would put it under travel if I got a pedi while I was on vacation, but otherwise yeah, entertainment/fun

dpkg chopra
Jun 9, 2007

Fast Food Fight

Grimey Drawer

YeahTubaMike posted:

:emptyquote:

edit: actually I would put it under travel if I got a pedi while I was on vacation, but otherwise yeah, entertainment/fun

Does this Shell purchase fall under “gas” or “11pm overpriced snacks”? It was 3 months ago so we’ll never know.

dpkg chopra fucked around with this message at 21:54 on Jan 26, 2023

YeahTubaMike
Mar 24, 2005

*hic* Gotta finish thish . . .
Doctor Rope
As someone who has never had a car, I don't know. If I knew for sure it was a snack, I'd just put it under fast food. :shrug:

spwrozek
Sep 4, 2006

Sail when it's windy

if you don't have a car isn't the answer obvious?

dpkg chopra
Jun 9, 2007

Fast Food Fight

Grimey Drawer
Following up on my Healthcare benefits question from a few days ago, these are the details for my wife's plan, which is what we currently have.

Plan: OXF-LIB EPO 6AB 1000-NY
Employee Only: $81.92 - Employee + Spouse: $172.81

Dental + Vision plans $0 for both (there was only option for both).

That's all monthly.

--------------

And for my job, my offering is:

These are all bi-weekly.

Plan: Anthem PPO 500
Employee Only: $52.46 - Employee + Spouse: $247.91

Plan: Anthem PPO 1000
Employee Only: $24.09 - Employee + Spouse: $185.49

Plan: Anthem HSA PPO 3000
Employee Only: $0.00 - Employee + Spouse: $134.81

Dental Plan: Anthem Dental PPO Low
Employee Only: $1.24 - Employee + Spouse: $10.15

Dental Plan: Anthem Dental PPO High
Employee Only: $8.73 - Employee + Spouse: $25.45

Vision Plan: Anthem Vision PPO
Employee Only: $0.30 - Employee + Spouse: $2.42

I imagine that the specifics of the plan will probably come into play, but I didn't want to vomit a shitload of information when maybe the overview was enough.

spwrozek
Sep 4, 2006

Sail when it's windy

All things being equal:

Health - wife by herself, you on your $0 hdhp (this will depend on out of pocket costs and your health care use)
Dental and vision -both on the wife's

H110Hawk
Dec 28, 2006
Comparing apples to apples (loooooool at two opaque health plans being comparable by a consumer) the 1000 deductible PPO for your job is roughly $50/month for just you vs $90/month on your wife's plan. If the copays for the services you commonly use (doctors, prescriptions (check their formulary!), procedures) are similar then it looks like being on two different insurances could come out cheaper. If you're both big consumers of healthcare due to chronic health conditions you might want to put yourself on her insurance, and then just you on yours if that's allowed. Given yours costs >$400/month to put your spouse on it would have to be a lot of co-pays to make that up.

The $500 deductible plan costs $650 in pre-tax money to save $500 in post-tax money. If you are regularly hitting your deductible this is a net savings, if you don't, it's not. It could be a literal coin toss as one surprise surgery will nuke any benefit there.

asur
Dec 28, 2012
Do you have expected healthcare costs? Assuming that max out of pocket is equal across all plans then the 500 plan is never worth taking, the 1000 plan is better than the 3000 plan if you spend approximately $1650 on healthcare and worse if you spend less.

Assuming the plans are reasonably equal then you on the 1000/3000 and your wife on her own is the cheapest option. Juggling two plans kind of sucks, but it's several grand more to have you both on the same plan.

Edit: I thought medical plan deduction was post tax, but if I'm.wrong then there is a spot where the 500 plan is worth it.

H110Hawk
Dec 28, 2006
Premiums are pre-tax iirc.

dpkg chopra
Jun 9, 2007

Fast Food Fight

Grimey Drawer
Thanks all.

The in-network deductible limits for my wife's plan are $1000/$2000 (individual/family), and for my 1000 plan, $1000/$3000.

Out-of-Pocket limits are: $2500/$5000 vs. $5000/$10000.

Then of course you get into the granular bullshit, but as a general rule my wife's plan has some copays and 0% coinsurance, while my plan has mostly $0 copays and a 20% coinsurance.

Edit: we are both mostly healthy 36 year olds. My wife has two prescription medications she takes regularly, none of them critical, mostly for prevention, and a family propensity for diabetes that hasn't quite manifested on her. Other than that, nothing of note.

Edit 2: in my case, I'm fairly confident that I could get away with an HDPA and financially responsible enough to make sure to set the premium difference into a medical emergency fund, if that changes anything.

dpkg chopra fucked around with this message at 00:12 on Jan 28, 2023

IOwnCalculus
Apr 2, 2003





dpkg chopra posted:

Edit 2: in my case, I'm fairly confident that I could get away with an HDPA and financially responsible enough to make sure to set the premium difference into a medical emergency fund, if that changes anything.

I would absolutely go for the HDHP + HSA for you, then. When you have the HDHP you can deposit pre-tax money into the HSA. You can withdraw at any time for qualified medical expenses, or for whatever you want at retirement, without paying any taxes on that money.

Busy Bee
Jul 13, 2004
I have a few very basic questions about how US Treasury purchases works on Fidelity. I watched a few videos online and my basic understanding is that there are "auctions" where you can purchase some US Treasury with a estimated yield that matures at a certain date. I also understand that usually US Treasury purchases are usually better than locking up the cash in a CD since with the CD your money is locked in for that time period but with a US Treasury, you can sell it at any time.
  1. If I purchase a US Treasury at an estimated 4.70% yield from Fidelity with a 1 year to maturity, what happens if I decide to sell it early since I need the cash?
  2. Is the 4.70% yield guaranteed or can the rate vary?
  3. Do I need to do anything if I purchase a US Treasury on Fidelity except to place the buy order? I assume that at the end of the maturity date and if I choose "No" on Auto Roll, the cash becomes available in the account I purchased it in.
  4. I see that the 3+ year long US Treasury's on Fidelity have a frequency of "semi-annual" - does this mean that the on a semi-annual basis, the interest of the treasury turns into cash in my account or am I not allowed to touch the cash until the treasury matures?
  5. Would this also be the case for some new issue CD's I see on Fidelity that have a frequency of monthly / semi-annual?

Ham Equity
Apr 16, 2013

i hosted a great goon meet and all i got was this lousy avatar
Grimey Drawer

Busy Bee posted:

I have a few very basic questions about how US Treasury purchases works on Fidelity. I watched a few videos online and my basic understanding is that there are "auctions" where you can purchase some US Treasury with a estimated yield that matures at a certain date. I also understand that usually US Treasury purchases are usually better than locking up the cash in a CD since with the CD your money is locked in for that time period but with a US Treasury, you can sell it at any time.
  1. If I purchase a US Treasury at an estimated 4.70% yield from Fidelity with a 1 year to maturity, what happens if I decide to sell it early since I need the cash?
  2. Is the 4.70% yield guaranteed or can the rate vary?
  3. Do I need to do anything if I purchase a US Treasury on Fidelity except to place the buy order? I assume that at the end of the maturity date and if I choose "No" on Auto Roll, the cash becomes available in the account I purchased it in.
  4. I see that the 3+ year long US Treasury's on Fidelity have a frequency of "semi-annual" - does this mean that the on a semi-annual basis, the interest of the treasury turns into cash in my account or am I not allowed to touch the cash until the treasury matures?
  5. Would this also be the case for some new issue CD's I see on Fidelity that have a frequency of monthly / semi-annual?

You have to buy them through the worst website in the world, but I would suggest looking at iBonds instead:

https://www.treasurydirect.gov/savings-bonds/i-bonds/

You can only buy $10,000, you can't redeem it before 12 months, if you redeem it before five years, you lose the last three months of interest, and you can only buy $10,000 worth per year, but the interest rate is pretty drat good right now (6.89%).

Busy Bee
Jul 13, 2004

Ham Equity posted:

You have to buy them through the worst website in the world, but I would suggest looking at iBonds instead:

https://www.treasurydirect.gov/savings-bonds/i-bonds/

You can only buy $10,000, you can't redeem it before 12 months, if you redeem it before five years, you lose the last three months of interest, and you can only buy $10,000 worth per year, but the interest rate is pretty drat good right now (6.89%).

Thanks for the suggestion :) I already purchased some recently so I wanted to explore other options, especially on Fidelity.

pmchem
Jan 22, 2010


Ham Equity posted:

You have to buy them through the worst website in the world, but I would suggest looking at iBonds instead:

https://www.treasurydirect.gov/savings-bonds/i-bonds/

You can only buy $10,000, you can't redeem it before 12 months, if you redeem it before five years, you lose the last three months of interest, and you can only buy $10,000 worth per year, but the interest rate is pretty drat good right now (6.89%).

careful on your terms, there.

"I Bonds" are the treasury inflation linked bonds. that's what you were recommending. "I Bonds" or "I-Bonds"

"iBonds" are a registered trademark of Blackrock, and are ETFs used to build (non-inflation-linked) bond ladders:
https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders

KYOON GRIFFEY JR
Apr 12, 2010



Runner-up, TRP Sack Race 2021/22

Busy Bee posted:

I have a few very basic questions about how US Treasury purchases works on Fidelity. I watched a few videos online and my basic understanding is that there are "auctions" where you can purchase some US Treasury with a estimated yield that matures at a certain date. I also understand that usually US Treasury purchases are usually better than locking up the cash in a CD since with the CD your money is locked in for that time period but with a US Treasury, you can sell it at any time.
  1. If I purchase a US Treasury at an estimated 4.70% yield from Fidelity with a 1 year to maturity, what happens if I decide to sell it early since I need the cash?
  2. Is the 4.70% yield guaranteed or can the rate vary?
  3. Do I need to do anything if I purchase a US Treasury on Fidelity except to place the buy order? I assume that at the end of the maturity date and if I choose "No" on Auto Roll, the cash becomes available in the account I purchased it in.
  4. I see that the 3+ year long US Treasury's on Fidelity have a frequency of "semi-annual" - does this mean that the on a semi-annual basis, the interest of the treasury turns into cash in my account or am I not allowed to touch the cash until the treasury matures?
  5. Would this also be the case for some new issue CD's I see on Fidelity that have a frequency of monthly / semi-annual?

Just to be insanely pedantic, there are a few terms that you are using sort of interchangeably that are actually different. There is a secondary market for bonds, which makes this important.
1) Yield is the return on investment from the bond.
2) Rate is what the bond pays relative to its face value over the term. Some treasuries are sold at a discount to face, some treasuries are sold as coupon bonds. Anything 52 weeks and shorter is sold at a discount to face. Everything longer is sold as coupon bonds with periodic interest payments.

The reason these two are different is that over time the rate changes on treasuries, but all treasuries (edit of the same duration) have equal risk. Therefore, if you have a T-Note with a high coupon rate relative to current rates, it will be sold at a premium to par, meaning that the yield is the same as a newly-purchased equivalent bond. The opposite is also the case; treasuries with low coupon rates relative to current rates will be sold at a discount to par to equalize yield. This is only important in the secondary market; yield and rate are the same for bonds that are held to maturity.

To answer your actual questions
1) If you sell a T-bill early, it is sold on the secondary market. Precisely how much you receive depends on how long you held the bond and what current yields are. For duration, if you held the 52-week T-bill bond for 1/4 of the term, you'll get 1/4 of the yield. Yields are market based and can vary.
2) The rate is fixed for the term of the bond. If you hold a bond to maturity, the rate and yield are the same. If you choose to sell the bond on the secondary market before maturity, the yield will vary based on market rates. See above.
3) No, you can just buy the bond. It works slightly differently for coupon bonds versus discount bonds. For short term discount bonds, you won't receive anything until maturity, on which you will receive face value of the bond. For coupon bonds, you will receive regular interest payments.
4) Semi-annual frequency means that it is a coupon bond that pays every 6 months. Coupon interest payments are made in cash to your account. You can do whatever you want with this cash.
5) I can't speak specifically to those CDs but generally yes, a monthly frequency means your interest is paid every month, and semi-annual would mean every 6 months.

CongoJack
Nov 5, 2009

Ask Why, Asshole
Is there ever a point where it makes sense to put extra money into paying off a mortgage rather than into like an IRA? In this hypothetical the person has their emergency fund, does their 401k match and then has some money left over. They live in the US and don’t plan on selling the home.

If the interest rate on a mortgage is like 3% I imagine the answer is no, but at what point does it start to be a good option?

Fezziwig
Jun 7, 2011
I guess if you had a mortgage that was super high (10% plus?) and you didn't have the capability to refinance to a lower rate it would make sense.

Otherwise, it makes more sense to take the tax-advantaged space and get ~7% return assuming 100% equities in your retirement accounts.

DNK
Sep 18, 2004

It’s basically never financially sound to accelerate payments on 3% debt of any kind.

You can buy 1 year treasury government debt for 4.66% return right now. 10 year is 3.52%.

H110Hawk
Dec 28, 2006

Busy Bee posted:

I have a few very basic questions about how US Treasury purchases works on Fidelity.

Make sure you're filtering by "new issue", you can only do this on specific days.

TooMuchAbstraction
Oct 14, 2012

I spent four years making
Waves of Steel
Hell yes I'm going to turn my avatar into an ad for it.
Fun Shoe
Yeah, from a financial standpoint, you keep that 3% debt as long as you can. From a psychological standpoint, if the debtor really doesn't like being in debt or something, then maybe you can justify paying it off early. But it's costing you money in the long run.

WithoutTheFezOn
Aug 28, 2005
Oh no

CongoJack posted:

If the interest rate on a mortgage is like 3% I imagine the answer is no, but at what point does it start to be a good option?
When your expected return, after taxes, is lower than your mortgage rate.

Technomancer
May 7, 2007
For all your technomagical needs

DNK posted:

It’s basically never financially sound to accelerate payments on 3% debt of any kind.

My situation is almost identical, but with some differences that makes it a bit less clear-cut.

I just signed my mortgage at a variable rate (starting at 6.1% on February 22 - yes, I'm pissed), with around 114k still left to pay. My payments are setup so that I will finish paying my condo by the time I reach retirement in mid 2030 (yeah, I'm old). Both my tax deferment and tax-free accounts (I'm not in the US) are full, so I can't put any additional money in them.

My salary is good enough that I still have money left over every two weeks, approximately $500, and I'm wondering what I should do with it. I can make additional payments on my condo, which is not taxable and would lower the interest. Or I could invest it in a Vanguard ETF in a taxable account, where 50% of any capital gain and all dividends will be taxed. I'm kinda mixed on this one, but my first instinct is to go with making additional payment on the mortgage since the return is guaranteed and non-taxable, but I'm not 100% sure. Any advice?

Technomancer fucked around with this message at 18:26 on Feb 3, 2023

Medullah
Aug 14, 2003

FEAR MY SHARK ROCKET IT REALLY SUCKS AND BLOWS
Yeah in that situation I'd be paying as much as I can off. That was me with my first mortgage, I got an adjustable rate and it ended up going up like crazy

Guinness
Sep 15, 2004

My 30 yr is fixed at 2.69% and I typically am able to itemize federal deductions so I can claim mortgage interest. Even my HYSA is paying 3.3% right now.

Letting this poo poo ride forever.

Busy Bee
Jul 13, 2004

KYOON GRIFFEY JR posted:

Just to be insanely pedantic, there are a few terms that you are using sort of interchangeably that are actually different. There is a secondary market for bonds, which makes this important.
1) Yield is the return on investment from the bond.
2) Rate is what the bond pays relative to its face value over the term. Some treasuries are sold at a discount to face, some treasuries are sold as coupon bonds. Anything 52 weeks and shorter is sold at a discount to face. Everything longer is sold as coupon bonds with periodic interest payments.

The reason these two are different is that over time the rate changes on treasuries, but all treasuries (edit of the same duration) have equal risk. Therefore, if you have a T-Note with a high coupon rate relative to current rates, it will be sold at a premium to par, meaning that the yield is the same as a newly-purchased equivalent bond. The opposite is also the case; treasuries with low coupon rates relative to current rates will be sold at a discount to par to equalize yield. This is only important in the secondary market; yield and rate are the same for bonds that are held to maturity.

To answer your actual questions
1) If you sell a T-bill early, it is sold on the secondary market. Precisely how much you receive depends on how long you held the bond and what current yields are. For duration, if you held the 52-week T-bill bond for 1/4 of the term, you'll get 1/4 of the yield. Yields are market based and can vary.
2) The rate is fixed for the term of the bond. If you hold a bond to maturity, the rate and yield are the same. If you choose to sell the bond on the secondary market before maturity, the yield will vary based on market rates. See above.
3) No, you can just buy the bond. It works slightly differently for coupon bonds versus discount bonds. For short term discount bonds, you won't receive anything until maturity, on which you will receive face value of the bond. For coupon bonds, you will receive regular interest payments.
4) Semi-annual frequency means that it is a coupon bond that pays every 6 months. Coupon interest payments are made in cash to your account. You can do whatever you want with this cash.
5) I can't speak specifically to those CDs but generally yes, a monthly frequency means your interest is paid every month, and semi-annual would mean every 6 months.

Thank you for the clarification.

Let's say I put $1,000 into a 3 month T-Bill with an expected yield of 4.5. At the end of the 3 month period, I will have $1,045. If I hold this T-Bill to maturity, then the yield and rate are the same but if I choose to sell it, then the yield will change since I will have to sell it on the secondary market. Are there times when the yield on the secondary market becomes higher where it would be beneficial to sell the T-Bill before maturity? Or is it usually recommended to hold onto it until maturity unless you need the cash before it matures?

Right now, it seems that on Fidelity the yields on the T-Bills secondary market are higher than the "new issue" T-Bills - what's the difference here and why would I not want to buy it from the secondary market?

And besides the yield, maturity rate, pay frequency, and call protection - is there anything else I should consider or note before purchasing T-Bills?

The Leck
Feb 27, 2001

Busy Bee posted:

I have a few very basic questions about how US Treasury purchases works on Fidelity. I watched a few videos online and my basic understanding is that there are "auctions" where you can purchase some US Treasury with a estimated yield that matures at a certain date. I also understand that usually US Treasury purchases are usually better than locking up the cash in a CD since with the CD your money is locked in for that time period but with a US Treasury, you can sell it at any time.
  1. If I purchase a US Treasury at an estimated 4.70% yield from Fidelity with a 1 year to maturity, what happens if I decide to sell it early since I need the cash?
  2. Is the 4.70% yield guaranteed or can the rate vary?
  3. Do I need to do anything if I purchase a US Treasury on Fidelity except to place the buy order? I assume that at the end of the maturity date and if I choose "No" on Auto Roll, the cash becomes available in the account I purchased it in.
  4. I see that the 3+ year long US Treasury's on Fidelity have a frequency of "semi-annual" - does this mean that the on a semi-annual basis, the interest of the treasury turns into cash in my account or am I not allowed to touch the cash until the treasury matures?
  5. Would this also be the case for some new issue CD's I see on Fidelity that have a frequency of monthly / semi-annual?
I can answer a few of these, but I'll defer to people with more experience on others.

1) As posted above, there's a robust secondary market. I haven't used it, so others can chime in on how easy it is to deal with.
2) In addition to the answer above about the rate being fixed for the term of the bill, the projected yield on new issues isn't exactly correct - you might get a slightly higher or lower rate depending on participation in the auction. It's pretty close though, and I suspect that if the tiny difference between the projected rate and the actual rate matters to you, you're not posting here.
3) Exactly, when the term ends, you get the cash in your account.

Busy Bee posted:

Thank you for the clarification.

Let's say I put $1,000 into a 3 month T-Bill with an expected yield of 4.5. At the end of the 3 month period, I will have $1,045. If I hold this T-Bill to maturity, then the yield and rate are the same but if I choose to sell it, then the yield will change since I will have to sell it on the secondary market. Are there times when the yield on the secondary market becomes higher where it would be beneficial to sell the T-Bill before maturity? Or is it usually recommended to hold onto it until maturity unless you need the cash before it matures?

Right now, it seems that on Fidelity the yields on the T-Bills secondary market are higher than the "new issue" T-Bills - what's the difference here and why would I not want to buy it from the secondary market?

And besides the yield, maturity rate, pay frequency, and call protection - is there anything else I should consider or note before purchasing T-Bills?
Just to clarify, with the shorter bills (the discount or zero-coupon bonds that KYOON GRIFFEY JR mentioned), it's a little different from how you described - you buy them at a discount, then redeem them for the face value. So a 3 month bill with a 4.5% annual rate would cost you $988 or thereabouts (if my math is right), then when it matures, you get $1000 for it, making a 4.5% annual yield. You can see the current price of any bills that you currently have in your account that you would get (minus bid-ask spread) if you were to sell. As an example, I've added one of the ones from my account below - it's a 3 month bill purchased back in November for $989.45. The current price is getting pretty close to the par value, as you might expect being only a few weeks out from maturity.

nitsuga
Jan 1, 2007

TooMuchAbstraction posted:

Yeah, from a financial standpoint, you keep that 3% debt as long as you can. From a psychological standpoint, if the debtor really doesn't like being in debt or something, then maybe you can justify paying it off early. But it's costing you money in the long run.

How does it end up costing you? Similar situation here, but I have a healthy emergency fund and can relatively easily fund my 401K and IRA. Just doesn’t make sense to me how paying off debt early is detrimental, even if it’s just 4% or so. Opportunity cost?

ultrafilter
Aug 23, 2007

It's okay if you have any questions.


nitsuga posted:

How does it end up costing you? Similar situation here, but I can relatively easily fund my 401K and IRA. Just doesn’t make sense to me how paying off debt early is detrimental, even if it’s just 4% or so. Opportunity cost?

Paying down your mortgage is equivalent to buying bonds that pay your mortgage's interest rate. If you can buy bonds that pay a higher interest rate for the same price, you're forgoing future income by making the mortgage payments.

SpelledBackwards
Jan 7, 2001

I found this image on the Internet, perhaps you've heard of it? It's been around for a while I hear.

Opportunity cost. You're better off putting money into an instrument that will on average return 7-10% than to pay off debt that's 3-4%. You'll more in gains on the former than you'll accrue in interest on the latter over the same period of time, from a pure numbers perspective.

This of course assumes those returns on investments are guaranteed (lol) and ignores any psychological benefit to paying off debt.

nitsuga
Jan 1, 2007

Ok, fair. Not in a position to do so yet, but that helps clarify my options.

Motronic
Nov 6, 2009

ultrafilter posted:

Paying down your mortgage is equivalent to buying bonds that pay your mortgage's interest rate. If you can buy bonds that pay a higher interest rate for the same price, you're forgoing future income by making the mortgage payments.

Am I missing something? It seems much worse than that. Bonds are saleable even before maturity. It's the definition of liquidity, where home equity is very much the opposite of liquidity. Especially your primary residence.

ultrafilter
Aug 23, 2007

It's okay if you have any questions.


Motronic posted:

Am I missing something? It seems much worse than that. Bonds are saleable even before maturity. It's the definition of liquidity, where home equity is very much the opposite of liquidity. Especially your primary residence.

Sure, bonds can be sold, but home equity loans exist too, so money you put into paying down your mortgage principal still has some option value. That's not a level of detail that's necessary for the question asked, though.

PerniciousKnid
Sep 13, 2006

Busy Bee posted:

Are there times when the yield on the secondary market becomes higher where it would be beneficial to sell the T-Bill before maturity? Or is it usually recommended to hold onto it until maturity unless you need the cash before it matures?

I'd say it's basically like stocks, the bond is worth what it's worth at any given time, whether you keep it or sell it. Performing a transaction to sell it is slightly harder than not doing so, and you may have capital gains/losses if you care about that.

Guinness
Sep 15, 2004

There's a very high risk that HELOC rates will be higher than your mortgage rate. If you locked in a historically low fixed rate mortgage you're almost certainly not going to get anywhere close to that rate with a HELOC. That means you're paying even more to get that liquidity back out and sours the math.

e.g. right now the 30-yr fixed is at about 6% while HELOCs are 7-8% or more.

If you really want to pay off your mortgage for psychological reason early then go for it, it's not a bad decision, but if you're locked in on a low rate it is absolutely a financially suboptimal one in many ways. It gives you fewer options and less flexibility.

I'd rather have the money more liquid in other instruments with higher returns, because I can always use it to cover the mortgage if I were to ever need to pay it off.

Like right now holding cash is literally paying me more interest than my mortgage is costing me. Putting extra mortgage payments into an HYSA is mathematically superior, to say nothing of better investments.

Debt is a powerful tool when used wisely, and mortgages are some of the cheapest debt you will ever have access to (:patriot:). And if you originated or refi'd a mortgage in the past 3-5 years you likely have locked in a historically low rate.

All of that assumes that you actually save/invest the extra mortgage payments and don't go buy a boat with it, of course.

Guinness fucked around with this message at 21:34 on Feb 4, 2023

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TooMuchAbstraction
Oct 14, 2012

I spent four years making
Waves of Steel
Hell yes I'm going to turn my avatar into an ad for it.
Fun Shoe
I have a 401k where a nontrivial portion of the fund balance is in stocks in the company I was working for at the time. I'd prefer to have a more broad market investment. Is it possible to rebalance that fund without, like, paying early withdrawal penalties or something? My impression was that any time you sell a stock, it's a taxable event, even if you only sell it so you can buy something else in the same account.

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