Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[Cornstock]

Originally Posted by Rain Man

My understanding is that a credit rating isn't about your net worth or your ability to pay so much as it is your actual history of paying. A person with debt who pays on it unerringly is perceived as a very positive risk, even better than a person without debt who doesn't have a record of unerring payment.

Agreed, history to repay, but additionally, your profitability to banks. Explains why so many old guys' credit score drops from 825 to 798 when they have their house paid off, even though they are making more money than they ever have, and have never missed a payment in their life.

They aren't being as profitable to a bank, so their score drops

[DaneMcCloud]

Originally Posted by DaFace

I suppose that's true in a way, but credit scores are meant to help banks know how much risk they'll be taking that you won't pay them back. It has nothing to do with whether it's a financially-responsible decision for you to hold additional credit.

The bottom line for me is that if I was earning $60k a year but $50k in debt with CC companies with 20% interest, I'd be freaking out and probably unable to sleep.

[DaFace]

Originally Posted by DaneMcCloud

The bottom line for me is that if I was earning $60k a year but $50k in debt with CC companies with 20% interest, I'd be freaking out and probably unable to sleep.

Agreed.

[SAUTO]

Originally Posted by hometeam

Dont think im not dreamin!

Gonna be cool and get my shit handled first.

That's a very good idea.

[Demonpenz]

I had like an 820 credit score when I bought a car and I am a dumbass.

[Amnorix]

Originally Posted by Rain Man

My understanding is that a credit rating isn't about your net worth or your ability to pay so much as it is your actual history of paying. A person with debt who pays on it unerringly is perceived as a very positive risk, even better than a person without debt who doesn't have a record of unerring payment.

This. And, to carry it one step further, the bank or other lender will look at your "balance sheet" overall to determine whether ot make the loan. Your credit score is only one indicator, primarily around "reliability". Even with 800+ he couldn't/shouldn't be able to buy a $1 million house on $50k of income or whatever.

[Amnorix]

Originally Posted by hometeam

I have been making 40-60 grand a year for about 12 years. I have no savings, no retirement (I started to build one at one point but cashed it in in an emergency)

About 20k in high interest debt, 30k in low interest debt, and owe about 78k on my house thats worth 85. (edit: recalculated, 22k in high interest, 17k in low interest with 12 of that at 0%)

Unfortunately at this new company I'm not vested for 6 years, but I will max. My 6 percent for the 3 they give.

I dunno really anything about any kind of IRA, no idea what a brokerage account is. I have kind of been living paycheck to paycheck and doing racecar shit :/

I am going to start researching investments as well, but I wont start investing until i get my 10k CC debt paid off, hopefully feb/march. My house is at 5.25 right now which is higher than I can get, but I wanted to finish the transition to the new job before I went in for a streamline refi at somewhere around 3.25.

DaFace's post says it all in terms of the priority list. Get that CC paid off asap.

Once you pay off the CC and have started the matching 401(k), etc. what you would REALLY like to do is refinance the house and NOT pay PMI. This requires that you have paid down 20% of the house based on valuation. PMI is money out of your pocket solely for the benefit of the bank and is COMPLETELY BAD.

Here are your numbers:

owe about 78k on my house thats worth 85

So, what you're looking to do is (1) be certain it's worth $85K, and (2) cobble together $17K so you can refinance to get a loan for $68K at a LOWER interest rate and NO PMI.

That will save you quite alot every month. Based on your numbers, you already have $7K of that $17K, so you need $10K more to make it happen.

[Amnorix]

Originally Posted by DaneMcCloud

The bottom line for me is that if I was earning $60k a year but $50k in debt with CC companies with 20% interest, I'd be freaking out and probably unable to sleep.

I'm not kidding when I tell you that some disturbingly HUGE percentage of America is basically in this boat, which is a huge part of why people are so disaffected and voted for "Hope and Change" in 2008 and for Trump in 2016.

MEDIAN savings (half of population above, half below) for people aged 56-61 is $17,000. SEVENTEEN thousand. It's ****ing mind-boggling.

Nearly half of American families have no retirement account savings at all.

Whereas the average savings of a family with members in the 32-to-37 age range is $31,644, the median savings is a bleak $480. At the other end, the average savings of families 56 to 61 — those nearest to retirement — is $163,557. The median is $17,000.

http://www.businessinsider.com/how-m...irement-2016-3

[mikeyis4dcats.]

google reddit personal finance and sign up

[Pushead2]

Originally Posted by mikeyis4dcats.

google reddit personal finance and sign up

this - solid place for advice.

[Red Beans]

Originally Posted by Amnorix

DaFace's post says it all in terms of the priority list. Get that CC paid off asap.

Once you pay off the CC and have started the matching 401(k), etc. what you would REALLY like to do is refinance the house and NOT pay PMI. This requires that you have paid down 20% of the house based on valuation. PMI is money out of your pocket solely for the benefit of the bank and is COMPLETELY BAD.

He may, and I emphasize may, be eligible to refinance and not pay PMI, depending upon his credit score and the lender. My wife and I were pretty satisfied with our current rate and lender (Arvest- 30 year fixed at 4.2%). I looked into refinancing through Quicken Loans, they dropped our rate to 3.4% and waived the PMI based on my credit score. It was nice to tell Arvest to **** right on off and not waste 120$ per month.

[Jewish Rabbi]

Originally Posted by hometeam

I have A+ credit as well. Have been thinking about looking into some debt transfer options and turning some of that high interest debt into low interest debt, but dont know if thats worth any fees etc.

Not that this really matters as you shouldn't be opening new lines of credit anyway, but there's no way you have A+ credit carrying a balance equal to your yearly income.

[Buehler445]

Originally Posted by Red Beans

He may, and I emphasize may, be eligible to refinance and not pay PMI, depending upon his credit score and the lender. My wife and I were pretty satisfied with our current rate and lender (Arvest- 30 year fixed at 4.2%). I looked into refinancing through Quicken Loans, they dropped our rate to 3.4% and waived the PMI based on my credit score. It was nice to tell Arvest to **** right on off and not waste 120$ per month.

PMI is a federal thing IIRC. Your house probably appreciated since you bought it and got you over the threshold. Credit score might have something to do with it but I'd bet the appraisal was what triggered it.

[lewdog]

Originally Posted by Amnorix

I'm not kidding when I tell you that some disturbingly HUGE percentage of America is basically in this boat, which is a huge part of why people are so disaffected and voted for "Hope and Change" in 2008 and for Trump in 2016.

MEDIAN savings (half of population above, half below) for people aged 56-61 is $17,000. SEVENTEEN thousand. It's ****ing mind-boggling.









http://www.businessinsider.com/how-m...irement-2016-3

All of this is so mind blowing to me.

And no offense Hometeam, I think you clearly stated you weren't great with money, but it blows my mind someone can rack up debt like that in a housing area this is so cheap ($85k mortgage?). This seems to be a common trend across the country though.

I wouldn't worry about investing in anything outside of your 401k since you have never had one and have nothing saved for retirement. Take the highest contribution you can that maxes your employer match. Bump up your contributions after that according to getting your debt paid off. The 401k is a great investment vehicle for you to lower your taxable income on the higher salary.

[eDave]

Originally Posted by lewdog

All of this is so mind blowing to me.

And no offense Hometeam, I think you clearly stated you weren't great with money, but it blows my mind someone can rack up debt like that in a housing area this is so cheap ($85k mortgage?). This seems to be a common trend across the country though.

I wouldn't worry about investing in anything outside of your 401k since you have never had one and have nothing saved for retirement. Take the highest contribution you can that maxes your employer match. Bump up your contributions after that according to getting your debt paid off. The 401k is a great investment vehicle for you to lower your taxable income on the higher salary.

Having a family hurts savings initiatives. Notice the stark increase once the kids are out of the house and college is paid for. Still not a lot but enough to survive an emergency. I suspect those older peeps are invested.

I don't have $17K in savings and I'd consider myself in a great place financially.